AN ACT

 

1Amending the act of July 10, 1987 (P.L.246, No.47), entitled "An
2act empowering the Department of Community Affairs to declare
3certain municipalities as financially distressed; providing
4for the restructuring of debt of financially distressed
5municipalities; limiting the ability of financially
6distressed municipalities to obtain government funding;
7authorizing municipalities to participate in Federal debt
8adjustment actions and bankruptcy actions under certain
9circumstances; and providing for consolidation or merger of
10contiguous municipalities to relieve financial distress,"
11further providing for title of act; providing for declaration
12of fiscal emergencies and receivership in municipalities;
13authorizing certain taxes; providing for disincorporation of
14municipalities and the establishment of unincorporated
15service districts; establishing the Unincorporated Service
16District Trust Fund; and making extensive amendments,
17additions and editorial changes.

18The General Assembly of the Commonwealth of Pennsylvania
19hereby enacts as follows:

20Section 1. The title of the act of July 10, 1987 (P.L.246,
21No.47), known as the Municipalities Financial Recovery Act, is
22amended to read:

23AN ACT

24Amending the act of July 10, 1987 (P.L.246, No.47), entitled "An
25act empowering the Department of Community [Affairs] and
 

1Economic Development to assist municipalities in avoiding 
2financial distress; declare certain municipalities as
3financially distressed; providing for the restructuring of
4debt of financially distressed municipalities; limiting the
5ability of financially distressed municipalities to obtain
6government funding; authorizing municipalities to participate
7in Federal debt adjustment actions and bankruptcy actions
8under certain circumstances; authorizing certain taxes; and
9providing for [consolidation or merger of contiguous
10municipalities to relieve financial distress] the 
11disincorporation of municipalities and the establishment of 
12unincorporated service districts.

13Section 2. Section 102 of the act, amended Oct. 20, 2011 
14(P.L.318, No.79), is amended to read:

15Section 102. Purpose and legislative intent.

16(a) Policy.--It is hereby declared to be a public policy of
17the Commonwealth to foster fiscal integrity of municipalities so
18that they provide for the health, safety and welfare of their
19citizens; pay principal and interest on their debt obligations
20when due; meet financial obligations to their employees, vendors
21and suppliers; and provide for proper financial accounting
22procedures, budgeting and taxing practices. The failure of a
23municipality to do so is hereby determined to affect adversely
24the health, safety and welfare not only of the citizens of the
25municipality but also of other citizens in this Commonwealth.

26(b) Legislative intent.--The General Assembly finds and 
27declares as follows:

28(1) It is the intent of the General Assembly to:

29(i) Enact procedures to provide municipalities
30showing early indicators of financial distress with

1training and technical and financial assistance.

2[(i)] (ii) Enact procedures and provide powers and
3guidelines to ensure fiscal integrity of municipalities
4while leaving principal responsibility for conducting the
5governmental affairs of a municipality, including
6choosing the priorities for and manner of expenditures
7based on available revenues, to the charge of its elected
8officials, consistent with the public policy set forth in
9this section.

10[(ii)] (iii) Enact procedures for the adjustment of
11municipal debt by negotiated agreement with creditors.

12[(iii)] (iv) Provide for the exercise of the
13Commonwealth's sovereign and plenary police power in
14emergency fiscal conditions to protect the health, safety
15and welfare of a municipality's citizens when local
16officials are unwilling or unable to accept a solvency
17plan developed for the benefit of the [community]
18municipality.

19(v) Provide for the exercise of the Commonwealth's
20sovereign and plenary power to establish and abolish
21local government units and provide essential services in
22areas of this Commonwealth in which the fiscal integrity
23of existing local government units cannot be sustained.

24(2) Changing and deteriorating economic conditions,
25developing technologies and attendant unemployment erode
26local tax bases and threaten essential municipal services.
27Under such circumstances, such distressed governmental units
28may no longer be viable and that the citizens of those
29communities should be granted the opportunity in accordance 
30with law to voluntarily consolidate or merge their

1municipalities with other municipalities in an effort to
2allow municipal boundaries to reflect the geographic and
3economic realities of a distressed area, to merge a common
4community of interest, to take advantage of economies of
5scale in providing services and to create an expanded revenue
6base to provide necessary public services to the citizens of
7financially distressed municipalities.

8(3) Policies of certain municipalities are so
9ineffective and the financial conditions so severe that the
10provision of vital and necessary services is threatened.

11(4) Sustained failure of a municipality to enact or
12implement a fiscal plan to adequately address or prevent
13insolvency after repeated opportunities to do so:

14(i) constitutes a fiscal emergency; and

15(ii) signifies:

16(A) a breakdown in the function of municipal
17government;

18(B) a dereliction of its elected officials'
19paramount public duty to safeguard the health, safety
20and welfare of its citizens; and

21(C) a threat to the fiscal stability of
22neighboring communities.

23(5) Pursuant to the Commonwealth's paramount right and
24duty to maintain law and order and protect and preserve the
25health, safety and welfare of its citizens and ensure
26compliance with this act under Article IX of the Constitution
27of Pennsylvania, the Governor is authorized to act in the
28face of a fiscal emergency under paragraph (4)(i) and
29dereliction of official duty under paragraph (4)(ii)(B).

30(6) Municipalities may face such deteriorated economic
 

1conditions that all reasonable efforts to restore economic 
2viability have failed and merger or consolidation cannot 
3occur through any means provided by law. It is the intent of 
4the General Assembly that, for municipalities incapable of 
5continuing to function as general purpose units of local 
6government, procedures exist to ensure the provision of 
7essential and vital public services to the residents of those 
8areas absent a functioning municipal government.

9Section 3. Section 103 of the act, repealed Oct. 13, 1994
10(P.L.596, No.90) and added July 5, 2012 (P.L.1104, No.133), is 
11amended to read:

12Section 103. Definitions.

13The following words and phrases when used in this act shall
14have the meanings given to them in this section unless the
15context clearly indicates otherwise:

16"Arbitration settlement." An adjustment or settlement of a
17collective bargaining agreement or dispute. The term includes a
18final or binding arbitration award or other determination.

19"Authority." A municipal authority, parking authority or any
20other authority or corporate entity that is directly or
21indirectly controlled by a distressed municipality or to which a
22distressed municipality has power of appointment.

23"Basis of accounting." Revenues and expenditures may be
24recognized on the cash, modified accrual or full accrual basis
25of accounting, provided that basis is applied consistently
26throughout the fiscal periods reported for evaluation purposes.

27"Chief executive officer." Mayor in a mayor-council form of
28government or manager in a council-manager form of government of
29a city operating under an optional form of government pursuant
30to the act of July 15, 1957 (P.L.901, No.399), known as the

1Optional Third Class City Charter Law; a mayor of a city of the
2first class under the act of April 21, 1949 (P.L.665, No.155),
3known as the First Class City Home Rule Act; or an individual
4serving in such capacity as designated by a home rule charter or
5optional plan pursuant to the act of April 13, 1972 (P.L.184,
6No.62), known as the Home Rule Charter and Optional Plans Law.

7"Claim." Right to payment, whether or not the right is
8reduced to judgment, liquidated, unliquidated, fixed,
9contingent, matured, unmatured, disputed, undisputed, legal,
10equitable, secured or unsecured; or right to an equitable remedy
11for breach of performance if the breach gives rise to a right to
12payment, whether or not the right to an equitable remedy is
13reduced to judgment, fixed, contingent, matured, unmatured,
14disputed, undisputed, secured or unsecured.

15"Commonwealth agency." The Governor and the departments,
16boards, commissions, authorities and other officers and agencies
17of this Commonwealth, whether or not subject to the policy
18supervision and control of the Governor.

19"Creditor." An individual, partnership, corporation,
20association, estate, trust, governmental unit or the governing
21board of a pension fund of a municipality that has a claim
22against a municipality.

23"Deficit." The excess of expenditures over revenues, stated
24as a percentage of revenue, during an accounting period. This
25calculation shall include all governmental fund types and all
26proprietary fund types, but shall exclude all fiduciary fund
27types of the municipality.

28"Department." The Department of Community [Affairs] and 
29Economic Development of the Commonwealth.

30"Expenditures." Reductions in fund equity, including current

1operating expenses that require the use of fund equity, debt
2service and capital outlays. The term shall not include
3interfund transfers.

4"Fund equity." Excess of assets of a fund over its
5liabilities.

6"Governing body." The council in cities, boroughs and
7incorporated towns; the board of commissioners in counties; the
8board of commissioners in townships of the first class; the
9board of supervisors in townships of the second class; or the
10legislative policy-making body in home rule municipalities.

11"Matured claim." A claim that has been reduced to judgment
12or liquidated in amount by agreement for a period of 90 days
13prior to the filing of a petition to commence fiscal distress
14proceedings under this act.

15"Municipal record." A financial record [and] or document of
16a municipality or of [an authority incorporated by a
17municipality, excluding confidential] an authority or other 
18corporate entity which directly or indirectly performs a 
19governmental function on behalf of the municipality, is directly 
20or indirectly controlled by the municipality or to which the 
21municipality has direct or indirect power of appointment or has 
22directly or indirectly pledged or designated the municipality's 
23revenues or the municipality's credit. The term does not 
24include:

25(1) Confidential information relating to personnel
26matters and matters relating to the initiation and conduct of
27investigations of violations of law. To the extent such 
28information is included in a financial record or document 
29otherwise subject to this definition, it shall be redacted 
30and the remainder subject to disclosure as otherwise provided
 

1by this act.

2(2) A financial record or document in the custody or
3control of an entity other than a municipality, municipal
4authority or other authority, except if the document relates
5to services or governmental functions performed by the
6municipality, municipal authority or on behalf of the
7municipality or municipal authority, or the revenues or
8credit of the municipality or a municipal authority.

9"Municipality." Every county, city, borough, incorporated
10town, township and home rule municipality.

11"Plan" or "recovery plan." A recovery plan developed under
12this act.

13"Revenues." Additions to fund equity other than from
14interfund transfers, proceeds of debt and proceeds of
15disposition of general fixed assets.

16"Secretary." The Secretary of Community [Affairs] and 
17Economic Development of the Commonwealth.

18Section 4. Section 121(a), (b) and (c) of the act are
19amended to read:

20Section 121. Powers and duties of department.

21(a) Compile financial data.--

22(1) A power and duty of the department shall be to
23maintain accurate and current information and data on the
24fiscal status of municipalities to determine if criteria set
25forth in section 201 exist and, if so, whether the existence
26of those factors validly indicates fiscal distress.

27(2) In compiling the information and data, the
28department shall mail, before January 1 of each year, a
29Survey of Financial Condition form to each municipality
30applicable to the municipality's prior fiscal year.

1(i) The survey shall seek information necessary to
2determine the fiscal status of a municipality, shall be
3concise to facilitate prompt response and shall contain
4an attestation clause to be signed by the presiding
5officer of the municipality's governing body. [The actual
6survey form shall not exceed two pages in length.]

7(ii) The survey shall be provided to the municipal
8clerk or municipal secretary along with tax information
9forms in accordance with law.

10(iii) The survey shall include information based on
11the criteria specified in section 201.

12(iv) The survey shall include information relating
13to the basis of accounting utilized by municipalities.

14(b) Assess data.--A power and duty of the department shall
15be to apply the criteria of section 201 to data and information
16on the fiscal status of municipalities to assess the validity
17and applicability of an indication of municipal financial
18distress. In assessing validity and applicability, the
19department shall undertake a review process, including, but not
20limited to, consultation, correspondence and visits with a
21municipality which appears to be financially distressed,
22notwithstanding the provisions of section 2501-C(e) and (f) of
23the act of April 9, 1929 (P.L.177, No.175), known as The
24Administrative Code of 1929, which limits department
25intervention to incidences when such is requested by the
26municipality. If the department [assesses] determines that a
27municipality needs assistance to correct minor fiscal problems,
28the department shall offer appropriate recommendations, 
29including a recommendation that the municipality submit an 
30application as provided in Chapter 1-A. If the municipality

1adopts those recommendations, the department need take no
2further action.

3(c) Notify agencies of determination.--Upon the making of a
4determination by the secretary that a municipality is distressed
5pursuant to section 203(f), the department shall immediately
6notify the heads of all Commonwealth agencies of the
7determination. The department shall, by January 1 of each year 
8thereafter, notify the heads of all Commonwealth agencies of the
9priority funding requirement for distressed municipalities as 
10provided in section 282.

11* * *

12Section 5. Section 122 of the act is amended by adding a
13subsection to read:

14Section 122. Duties of Commonwealth agencies.

15* * *

16(c) Waiver of certain administrative mandates.--

17(1) Notwithstanding any provision of law and at the
18request of the coordinator or receiver, a Commonwealth agency
19may exempt a distressed municipality from the application of
20a regulatory requirement, if the following conditions are
21satisfied:

22(i) The regulatory requirement is not expressly
23required by Federal law or regulation, or an act of the
24Commonwealth, and is not related to the rights or terms
25and conditions of employment by the municipality.

26(ii) The waiver of the regulatory mandate will not
27likely affect public health and safety.

28(2) It is the intent of this subsection that distressed
29municipalities be considered for relief from regulatory
30mandates that, due to financial distress or the

1implementation of recovery measures, are unduly burdensome on
2the municipality and would not undermine the regulatory
3purposes of the agency if waived.

4Section 6. Sections 123 and 141 of the act, amended July 11,
51996 (P.L.645, No.108), are amended to read:

6Section 123. Powers and duties of municipalities.

7(a) File completed survey.--On or before March 15 of each
8year, every municipality shall return to the department a
9completed Survey of Financial Conditions referred to in section
10121(a). No municipality shall receive its alloted payments
11pursuant to the act of June 1, 1956 (1955 P.L.1944, No.655),
12referred to as the Liquid Fuels Tax Municipal Allocation Law,
13unless it complies with the provisions of this section,
14notwithstanding a provision of law to the contrary, including 
15any provisions which require payment prior to March 15, and the
16Department of Transportation may not disburse funds to a
17municipality pursuant to the Liquid Fuels Tax Municipal
18Allocation Law until notified by the department that the
19municipality has complied with the provisions of this section.

20(b) File applications for grants and loans.--A financially
21distressed municipality may apply to the secretary for emergency
22financial aid in the form of a grant or loan pursuant to Chapter
233.

24(c) Right to petition court for tax increase.--

25(1) After a municipality has adopted a plan under
26[Subchapter C] Subchapters C and C.1 of Chapter 2, it may
27petition the court of common pleas of the county in which the
28municipality is located to increase its rates of taxation for
29earned income of residents and nonresidents, real property,
30or both, beyond maximum rates provided by law.

1(1.1) In addition to the right under paragraph (1), a
2municipality may petition the court to <-increase the rate of a
3local services tax and levy a payroll preparation tax as
4provided in subsection (d).

5(2) If a tax increase above existing limits is granted
6by the courts or a tax is approved as provided in subsection 
7(d), the increase shall be effective for a period of one
8year. The one-year increase shall run from the date specified
9in the petition filed with the court or, if no such date is
10specified, from the beginning of the current fiscal year of
11the municipality. Subsequent increases in rates of taxation
12or the imposition of a tax under subsection (d) may be
13granted by the court upon annual petition of the municipality
14until the termination date of the plan adopted by the 
15municipality under Chapter 2. The additional amount of taxes
16resulting from the petition shall not be subject to sharing
17with a school district.

18(3) A petition filed by a city of the second class A or 
19a home rule municipality that was previously a city of the 
20second class A under this subsection may not include an
21increase in a tax on nonresident income unless the
22municipality certifies to the court, with regard to those
23provisions of the plan having a measurable fiscal impact,
24that:

25(i) the municipality has substantially implemented
26the provisions which are within the authority of the
27chief executive officer or governing body, including, but
28not limited to, provisions of the plan that call for
29increasing existing tax rates levied on residents and
30increasing fees charged by the municipality;

1(ii) the municipality has taken those actions
2required to obtain the approval of other parties for
3those provisions which may not be implemented without
4such approval, including, but not limited to, the
5approval of a court, local electors or any collective
6bargaining unit; and

7(iii) the additional income from the aforementioned
8actions is insufficient to balance the municipal budget,
9necessitating additional revenue from an increase in the
10tax on nonresident income.

11(d) Additional tax options and limitations.--After a
12municipality has adopted a plan under Subchapter C or C.1 of
13Chapter 2 and with the approval of the court, it may adopt an
14ordinance imposing <-the following:

15(1) A local services tax pursuant to Chapter 3 of the
16act of December 31, 1965 (P.L.1257, No.511), known as The
17Local Tax Enabling Act, at a rate not to exceed $156. A
18municipality adopting an ordinance under this paragraph shall
19be prohibited from imposing any additional tax on earned
20income pursuant to subsection (c). A municipality levying the
21local services tax at a rate in excess of $52 shall, by
22ordinance, exempt any person from the local services tax
23whose total earned income and net profits from all sources
24within the municipality is less than $15,600 for the calendar
25year in which the local services tax is levied.

26(2) A a<- payroll preparation tax pursuant to section 303
27of the <-act of December 31, 1965 (P.L.1257, No.511), known as
28The Local Tax Enabling Act. A municipality imposing a tax
29under this paragraph may levy a tax at a rate as provided in
30this section and as certified by the coordinator and approved

1by the court. When imposing a tax under this paragraph the
2municipality may impose the tax not to exceed a rate that is
3sufficient to produce revenues equal to revenues collected as
4a result of a business privilege tax and a mercantile tax
5under Chapter 3 of The Local Tax Enabling Act in the
6preceding fiscal year. A municipality adopting a payroll
7preparation tax under this paragraph shall suspend the levy
8of a business privilege tax or mercantile tax until
9expiration of the payroll preparation tax authorized under
10this paragraph at which time the municipality may resume its
11levy of the business privilege tax or mercantile tax. The
12authority provided by this paragraph is limited to those
13municipalities levying a business privilege or mercantile
14tax, on a flat-rate or millage basis, in the year of the
15filing of a petition as provided in subsection (c).

16Section 141. Jurisdiction of court of common pleas.

17(a) Increases in tax rates.--The court of common pleas of
18each county shall have jurisdiction to hear a petition filed by
19a municipality which has adopted a [final] plan pursuant to
20Subchapter C or C.1 of Chapter 2 to increase rates of taxation
21for earned income on residents and nonresidents, real property,
22or both, beyond maximum rates provided by law in accordance with 
23section 123. The court may extend annually the increased taxing
24powers of the municipality until the termination date of the
25plan adopted by the municipality pursuant to Chapter 2.

26(b) Involuntary compromises of delinquent taxes.--The court
27of common pleas of each county may hear a petition filed by at
28least two taxing authorities having taxing power over the
29properties within a municipality which has adopted a [final]
30plan pursuant to Subchapter C or C.1 of Chapter 2 if the

1petition requests a compromise of delinquent taxes due on a
2property in that municipality. The court may order the property
3to be sold at a sheriff's sale and the proceeds to be divided
4among all authorities which are owed taxes for the property
5sold. If the property is sold at sheriff's sale and if the
6proceeds are insufficient to satisfy tax liens on the property,
7the court shall order a proration of the sale proceeds among the
8taxing authorities which fixed the liens.

9Section 7. The act is amended by adding a chapter to read:

10CHAPTER 1-A

11EARLY INTERVENTION PROGRAM

12SUBCHAPTER A

13PRELIMINARY PROVISIONS

14Section 101-A. Definitions.

15The following words and phrases when used in this chapter
16shall have the meanings given them in this section unless the
17context clearly indicates otherwise:

18"Center." The Governor's Center for Local Government
19Services of the Department of Community and Economic Development
20of the Commonwealth.

21"Keystone Principles." The Keystone Principles and Criteria
22for Growth Investment and Resource Conservation adopted May 31,
232005, by the Economic Development Cabinet to foster and measure
24the effectiveness of sustainable economic development and
25conservation of resources through the investment of Commonwealth
26funds in its municipalities.

27"Program." The Early Intervention Program established by
28this chapter.

29Section 102-A. Program objectives.

30The Early Intervention Program established by this chapter

1provides a municipality with a preemptive step for the purpose
2of seeking guidance and assistance from the Commonwealth to
3develop long-term financial management, administrative, service
4delivery and economic development strategies that the
5municipality can implement to avert a fiscal crisis and provide
6fiscal stability. The specific objectives of the Early
7Intervention Program include the following and are meant to:

8(1) Provide the resources to assist a municipality in
9identifying, prioritizing and addressing the financial
10difficulties confronting it, while ensuring its short-term
11and long-term goals and objectives are adequately taken into
12account.

13(2) Engage in a management review of its operations and
14provide recommendations that will enhance financial
15administration, management and service delivery of a
16municipality.

17(3) Strengthen the ability of a municipality to develop,
18adopt, implement and monitor multiyear financial management
19plans and to incorporate the process into its annual budget
20process.

21(4) Implement a system of multiyear revenue and
22expenditure trend analysis, monitoring and forecasting so
23that a municipality can better anticipate and plan for future
24financial circumstances.

25(5) Promote multimunicipal and regional planning,
26cooperation strategies and cost-sharing opportunities between
27two or more municipalities.

28(6) Support the adoption by a municipality of best
29management practices and efficiency measures to increase the
30financial stability of a municipality.

1(7) Further the integration of sound community and
2economic development strategies to encourage the economic
3growth of the tax base of a municipality over a multiyear
4period.

5SUBCHAPTER B

6ADMINISTRATIVE PROVISIONS

7Section 103-A. Authorization.

8The Early Intervention Program is established to authorize
9the center to provide guidance and assistance through grants to
10a municipality seeking to ensure fiscal stability by developing
11and implementing long-term financial, managerial and economic
12development strategies.

13Section 104-A. Grants.

14(a) General rule.--A grant may be awarded by the center to a
15municipality or two or more municipalities cooperating together
16to ensure fiscal stability through the development and
17implementation of long-term financial, managerial and economic
18development strategies in an amount not exceeding $200,000
19during the first fiscal year that commences on the effective
20date of this section, adjusted for inflation in subsequent years
21by an amount not to exceed an annual cost-of-living adjustment
22calculated by applying the percentage change in the Consumer
23Price Index immediately prior to the date the adjustment is due
24to take effect. To be eligible for a grant for implementation
25funding, a municipality must meet the basic training
26requirements established in guidelines developed by the center.

27(b) Match.--The grant amount is subject to a 50% financial
28match by the municipality to which the grant was provided,
29unless the center determines a match by the municipality of a
30lesser amount not less than 10% is warranted. The center may

1authorize any portion of the municipality's financial match to
2be offset by an in-kind match.

3(c) Eligible activities.--A grant shall be used for the
4following eligible activities:

5(1) The development of multiyear financial management
6plan for a municipality.

7(2) The development of multimunicipal or regional
8intergovernmental cooperation initiatives and cost-sharing
9strategies.

10(3) A study to improve the management and operational
11practices and financial administration procedures of a
12municipality.

13(4) A merger or consolidation feasibility study.

14(5) The implementation of any of the eligible activities
15identified in paragraphs (1) through (4).

16(6) Training and capacity-building activities that meet
17basic requirements established in guidelines developed by the
18center which assist the municipality in the implementation of
19plan recommendations.

20(7) Contracts with professional consultants to develop
21and implement recommendations related to eligible activities.

22Section 105-A. Application.

23A program application must be submitted by the applicant
24municipality on a form prescribed by the department utilizing
25the electronic single application format and include or
26demonstrate all of the following:

27(1) The name and address of the municipality or, in the
28case of a multimunicipal application, the municipalities.

29(2) The name of a contact person.

30(3) The execution of a supporting resolution authorizing

1the submission of the application and committing the
2resources of the municipality or, in the case of a
3multimunicipal application, municipalities.

4(4) The single application shall be signed by the
5authorized officer of the municipality or, in the case of a
6multimunicipal application, municipalities.

7(5) Any other information required by the department.

8Section 106-A. Evaluation criteria.

9The center shall evaluate a program application on the basis
10of municipal financial characteristics and the quality of the
11proposed program, including the extent to which the program is
12estimated to improve the administrative, operational and
13financial management capacity of the applicant municipality. The
14following factors shall be considered in the evaluation:

15(1) The current and projected financial condition of the
16municipality.

17(2) The economic and demographic condition of the
18municipality.

19(3) The proactive measures the municipality has taken to
20manage its finances in a responsible manner, including
21attempts to reduce expenditures, increase revenues, adopt
22sound management practices, establish municipal priorities
23and adhere to generally accepted financial management, budget
24and financial reporting standards.

25(4) The extent to which the municipality has
26demonstrated its willingness and commitment to engage in a
27multimunicipal or regional strategy and has examined whether
28certain municipal services can be provided through a council
29of governments, a county government or other structure.

30(5) The extent to which the municipality has

1demonstrated its willingness and commitment to improve its
2financial and administrative operation through the adoption
3and implementation of a multiyear financial management plan.

4(6) Where it has received assistance and funding from
5the department, past performance by the municipality.

6(7) Where applicable, the elements of the Keystone
7Principles shall be included as part of the evaluation
8criteria.

9(8) Any other factors the center considers relevant.

10Section 107-A. Award.

11The secretary shall announce by letter applications selected
12for funding. The contact person specified in the application
13shall be sent the offer letter. All funding decisions shall be
14made subject to the availability of funds.

15Section 108-A. Guidelines.

16The department shall establish guidelines consistent with
17this chapter, particularly the program requirements and
18measurements to ensure a municipality is provided with adequate
19guidance. The program shall include a requirement of a financial
20audit of the municipality, prepared by an independent accountant
21or firm, for the fiscal year immediately preceding the
22application for funds under this chapter. The department may
23establish guidelines for the audit, and the requirement may be
24satisfied by any previous audit prepared in accordance with the
25guidelines.

26Section 8. Section 203(c) and (g) of the act, amended June
2730, 1992 (P.L.336, No.69), are amended to read:

28Section 203. Procedure for determination.

29* * *

30(c) Investigation.--After receiving the request but before

1the public hearing, the secretary may make an investigation into
2the financial affairs of the municipality. The results of the
3investigation or any study previously conducted by the
4department under Chapter 1-A or section 121 shall be placed in
5the record of the public hearing.

6* * *

7(g) Appeal.--A determination by the secretary under this 
8[act] section is appealable pursuant to [Title 2 of the 
9Pennsylvania Consolidated Statutes (relating to administrative 
10law and procedure)] 2 Pa.C.S. Ch. 7 Subch. A (relating to 
11judicial review of Commonwealth agency action).

12Section 9. Sections 221(d) and (e), 222 and 223 of the act
13are amended to read:

14Section 221. Designation.

15* * *

16(d) Duties.--The coordinator shall [prepare and administer a
17plan designed to relieve the financial distress of the
18municipality which he has been appointed to serve.]:

19(1) Present, at a public meeting within 45 days of the
20execution of the contract between the department and the
21coordinator, a list of the coordinator's preliminary
22findings, as to the financial condition of municipality. The
23list of findings shall include, but is not limited to, a
24quantification of all operating deficits for the current
25fiscal year and a projection of revenues and operating
26expenses for the next three fiscal years, all outstanding
27debt obligations, the cost and term of all outstanding
28contracts, and other relevant information.

29(2) Solicit, not later than the date of the
30coordinator's presentation described in paragraph (1),

1comments relating to the issues associated with the
2municipality's distress from such persons and entities who:

3(i) have participated in the early intervention
4process;

5(ii) have provided consultation on behalf of the
6municipality relating to the issues associated with its
7distress; or

8(iii) are elected officials or employees of the
9municipality or labor organizations representing
10employees of the municipality.

11(3) Consider all comments submitted within 30 days of
12the coordinator's presentation described in paragraph (1)
13before preparing and administering a plan designed to relieve
14the financial distress of the municipality which the
15coordinator has been appointed to serve.

16(e) Powers.--The coordinator may [apply]:

17(1) Apply for grants and loans pursuant to Chapter 3, as
18[he] the coordinator deems necessary.

19(2) Investigate the tax-exempt status of any property
20within a distressed municipality and advise the governing
21body of the municipality to appeal the assessment or exempt
22status of property within the distressed municipality.

23(3) Solicit and negotiate payments in lieu of taxes from
24institutions of public charity and other tax-exempt property
25owners in the municipality.

26Section 222. Access to information.

27(a) General rule.--The coordinator shall have full access to
28all municipal records.

29(b) Enforcement where records in possession of official or 
30public employee.--If the coordinator believes that an official

1or employee of the municipality or an authority is not answering
2questions accurately or completely or is not furnishing
3information requested, the coordinator may notify the official
4or employee in writing to furnish answers to questions or to
5furnish documents or records, or both. If the official or
6employee refuses, the coordinator may seek a subpoena in the
7court of common pleas to compel testimony and furnish records
8and documents. An action in mandamus shall lie to enforce the
9provisions of this section.

10(c) Enforcement where records in possession of other
11persons.--If the coordinator believes that a person is not
12furnishing information related to municipal records and that
13person is not subject to subsection (b), the coordinator may
14seek a subpoena in the court of common pleas to compel testimony
15and furnish records and documents.

16Section 223. Public and private meetings.

17(a) Public meetings authorized.--The coordinator may hold
18public meetings as defined in [the act of July 3, 1986 (P.L.388, 
19No.84), known as the Sunshine Act] 65 Pa.C.S. Ch. 7 (relating to 
20open meetings), in connection with plan preparation.

21(b) Private meetings authorized.--Notwithstanding the
22provisions of [the Sunshine Act] 65 Pa.C.S. Ch. 7, private
23negotiation sessions may be conducted by the coordinator between
24the municipality and the individual creditors in an effort to
25obtain the consent of each creditor to the proposed adjustment
26and handling of specific claims against the municipality.

27Section 10. The act is amended by adding a section to read:

28Section 224.1. Performance of coordinator.

29(a) Review of coordinator.--Beginning on July 1, 2015, the
30secretary, or his designee, shall conduct an annual review of

1each coordinator appointed under section 221 to assess whether
2the coordinator's performance has been in compliance with the
3requirements of the coordinator's contract, if any, and the
4provisions of this act.

5(b) Termination of coordinator.--An unfavorable review under
6this section may constitute grounds for termination of the
7coordinator's contract for cause.

8Section 11. Section 241 of the act, amended or added June
930, 1992 (P.L.336, No. 69) and July 5, 2012 (P.L.1104, No.133)
10and repealed in part October 13, 1994 (P.L.596, No.90), is
11amended to read:

12Section 241. Contents.

13A plan formulated by the appointed coordinator shall be
14consistent with applicable law and shall include any of the
15following factors which are relevant to alleviating the
16financially distressed status of the municipality:

17(1) Projections of revenues and expenditures for the
18current year and the next [three] five years, both assuming
19the continuation of present operations and as impacted by the
20measures in the plan. The projections must include an 
21itemization of the following:

22(i) Projected revenues, including:

23(A) Local taxes.

24(B) Licenses, permits and fines.

25(C) Sales and rentals.

26(D) Federal, State and county grants and loans.

27(E) Any other sources of projected revenue.

28(ii) Projected expenditures, including:

29(A) Debt service.

30(B) Workforce.

1(C) Elected and executive officials.

2(D) Financial management.

3(E) Infrastructure costs, including highways,
4roads and wastewater systems.

5(F) Maintenance costs, including recycling and
6trash collection, disposal and removal.

7(G) Other professional services.

8(H) Public safety.

9(I) Community and economic development.

10(J) Any other applicable expenditures.

11(2) Recommendations which will:

12(i) Satisfy judgments, past due accounts payable,
13and past due and payable payroll and fringe benefits.

14(ii) Eliminate deficits and deficit funds.

15(iii) Restore to special fund accounts money from
16those accounts that was used for purposes other than
17those specifically authorized.

18(iv) Balance the budget, avoid future deficits in
19funds and maintain current payments of payroll, [fringe]
20benefits and accounts through possible revenue
21enhancement recommendations, including tax or fee
22changes.

23(v) Avoid a fiscal emergency condition in the
24future.

25(vi) Enhance the ability of the municipality to
26negotiate new general obligation bonds, lease rental
27debt, funded debt and tax and revenue anticipation
28borrowing.

29(vii) Consider changes in accounting and automation
30procedures for the financial benefit of the municipality.

1(viii) Propose a reduction of debt due on specific
2claims by an amortized or lump-sum payment considered to
3be the most reasonable disposition of each claim possible
4for the municipality considering the totality of
5circumstances.

6(3) Possible changes in collective bargaining agreements
7and permanent and temporary staffing level changes or changes
8in organization.

9(4) Recommended changes in municipal ordinances or
10rules.

11(5) Recommendations for special audits or further
12studies.

13(6) An analysis of whether conditions set forth in
14section 261 exist, whether specific exclusive Federal
15remedies could help relieve the municipality's financial
16distress and whether filing a Federal debt adjustment action
17under Subchapter D is deemed to be appropriate.

18[(7) An analysis of whether the economic conditions of
19the municipality are so severe that it is reasonable to
20conclude that the municipality is no longer viable and should
21consolidate or merge with an adjacent municipality or
22municipalities.]

23(7.1) An analysis of whether the economic conditions
24within the municipality are so severe that it is no longer
25viable and should consolidate or merge with an adjacent
26municipality or municipalities in accordance with 53 Pa.C.S.
27Ch. 7 (relating to alteration of territory or corporate
28entity and dissolution) or disincorporate in accordance with
29Chapter 4.

30(8) An analysis of whether functional consolidation of

1or privatization of existing municipal services is
2appropriate and feasible and recommendations for where and
3how this could be done.

4(9) A capital budget which addresses infrastructure
5deficiencies.

6(10) Recommendations for greater use of Commonwealth
7economic and community development programs.

8(10.1) Recommendations for enhanced cooperation and
9changes in land use planning and zoning, including regional
10approaches that would promote economic development and
11improve residential, commercial and industrial use
12availability within and around the municipality.

13(11) Notwithstanding any other provision of law, limits
14on projected expenditures for individual collective
15bargaining units that may not be exceeded by the distressed
16municipality, giving due consideration to the projection of
17revenue and expenses under paragraph (1).

18(12) An analysis of current revenue sources and
19recommendation to modify revenue sources, including the
20subjects and rates of taxation of the distressed municipality
21in accordance with section 123. Recommendations relating to a
22modification of revenue sources shall be made with
23consideration to the effect on economic development,
24employment and an equitable distribution of tax burden. The
25analysis and recommendations shall be presented to the court
26in any proceeding under section 123. The analysis shall
27address:

28(i) The tax bases of current and recommended revenue
29sources from both within and outside of the distressed
30municipality.

1(ii) Collection rates, methods and costs of existing
2and, to the extent possible, proposed revenue sources,
3including code enforcement and tax collection.

4(iii) The current fee, charge, penalty and fine
5provisions of municipal enactments related to municipal
6services and police powers.

7(iv) Revenue as defined in section 103.

8Section 12. Section 242(a) of the act, amended December 19,
91988 (P.L.1272, No.157), is amended and the section is amended
10by adding a subsection to read:

11Section 242. Publication.

12(a) Filing.--Within [90] 120 days of an executed contract
13between the department and the coordinator, the coordinator
14shall formulate a plan for relieving the municipality's
15financial distress and shall deliver true and correct copies of
16it to:

17(1) The municipal clerk or municipal secretary, who
18shall immediately place the copy on file for public
19inspection in the municipal office.

20(2) The secretary.

21(3) Each member of the municipal governing body.

22(4) The mayor.

23(5) The chief financial officer of the municipality.

24(6) The solicitor of the municipal governing body.

25(7) All parties who have petitioned the secretary under
26section 203.

27* * *

28(c.1) Solicitation of comments.--The coordinator shall, no
29later than the date of filing, solicit comments on the
30coordinator's plan to be presented at the public meeting from

1such persons and entities which submitted timely comments under
2section 221(d)(2).

3* * *

4Section 13. Section 245 of the act, amended December 19,
51988 (P.L.1272, No.157), is amended to read:

6Section 245. Adoption by municipality.

7Not later than 25 days following the coordinator's public
8meeting, the municipal governing body shall either enact an
9ordinance approving the implementation of the plan, including
10enactment of necessary related ordinances and revisions to
11ordinances, or shall reject the plan and proceed under section
12246. If the ordinance takes effect in a municipality operating
13under an optional plan form of government or a home rule
14charter, the chief executive officer [may] shall issue an order
15directing the implementation of the plan no later than seven
16days from the enactment of the ordinance by the governing body.

17Section 14. Section 246(d)(3) of the act is amended to read:

18Section 246. Preparation and action on alternate plan.

19* * *

20(d) Review by secretary.--

21* * *

22(3) If the secretary is of the opinion that the plan,
23when implemented, will not overcome the municipality's
24financial problems, the secretary shall inform the
25municipality of the following:

26(i) The secretary's determination.

27(ii) The reasons for the determination.

28(iii) The applicability of sections 251 and 264 to
29the municipality.

30(iv) The applicability of Chapters 6 and 7 to the

1municipality.

2Section 15. Section 247(a)(4) of the act, amended June 30,
31992 (P.L.336, No.69), is amended to read:

4Section 247. Plan implementation.

5(a) Coordinator's plan.--If the coordinator's plan is
6adopted by the municipal governing body, the coordinator shall
7be charged with implementing his plan and shall:

8* * *

9(4) Terminate the plan upon its completion in accordance 
10with Subchapter C.1.

11* * *

12Section 16. The act is amended by adding a section to read:

13Section 247.1. Annual budget.

14(a) Proposed budget.--Notwithstanding any provision of law
15or home rule charter to the contrary, a municipality subject to
16a plan under this chapter shall, at least 150 days prior to the
17end of its current fiscal year, commence development of a
18proposed annual budget for the next fiscal year that implements
19the provisions of the plan or makes other changes to the
20management of the municipality necessary to implement the
21provisions of the plan. The proposed budget shall be prepared by
22the governing body or the chief executive officer, as the case
23may be.

24(b) Coordinator review.--At least 90 days prior to the end
25of the fiscal year, the governing body or chief executive
26officer shall submit the proposed budget to the coordinator. The
27coordinator shall review the proposed budget to verify that the
28proposed budget conforms with the plan. The coordinator shall
29make any modifications necessary to the proposed budget to meet
30the objectives of the plan.

1(c) Return of proposed budget.--After completion of the
2coordinator's review, the coordinator shall, at least 45 days
3before the end of the municipality's fiscal year, submit the
4proposed budget, together with the coordinator's modifications,
5if any, to the municipality for adoption in accordance with law.

6(d) Notification to secretary.--Within 30 days of the
7municipality's adoption of the budget, or the municipality's
8failure to timely adopt a budget, the coordinator shall notify
9the secretary whether or not the adopted budget, if any,
10conforms to the plan. Upon a determination that the budget does
11not conform to the plan, or that the municipality has not timely
12adopted a budget, the secretary may take action as provided for
13by this act.

14Section 17. Sections 248 and 250 of the act are amended to
15read:

16Section 248. Failure to adopt or implement plan.

17If no plan is adopted or implemented pursuant to this
18chapter, then sections 251 and 264 shall apply[.] and, upon a 
19written recommendation of the coordinator, the secretary may 
20request a determination of a fiscal emergency in accordance with 
21Chapter 6.

22Section 250. Debt provisions.

23Adoption of a plan in accordance with this subchapter and 
24Subchapter C.1 by ordinance is a condition precedent for the
25approval of long-term debt or funding debt under [the act of
26July 12, 1972 (P.L.781, No.185), known as the Local Government
27Unit Debt Act] 53 Pa.C.S. Pt. VII Subpt. B (relating to 
28indebtedness and borrowing). A debt financing provision of the
29plan may be waived by agreement of the lender and the
30municipality; but any such waiving must be expressly set forth

1in the indenture or contract securing the debt.

2Section 18. Section 253 of the act is repealed:

3[Section 253. Termination of status.

4(a) Determination by secretary.--Following a duly advertised
5public hearing with notices given as provided in section 203,
6the secretary may issue a determination that the conditions
7which led to the earlier determination of municipal financial
8distress are no longer present. The determination shall rescind
9the status of municipal financial distress and shall include a
10statement of facts as part of the final order.

11(b) Determination upon petition by a municipality.--A
12financially distressed municipality may petition the secretary
13to make a determination that the conditions which led to the
14earlier determination of municipal financial distress are no
15longer present. Upon receiving the petition, the secretary may
16issue a determination to rescind following a duly advertised
17public hearing with notices given as provided in section 203.

18(c) Factors to consider.--In determining whether the
19conditions which led to the earlier determination of municipal
20financial distress are no longer present, the secretary shall
21consider that:

22(1) Monthly reports submitted by the coordinator to the
23department under section 247(a)(3) indicate that termination
24of the status of municipal financial distress is appropriate.

25(2) Accrued deficits in the municipality have been
26eliminated.

27(3) Obligations issued to finance all or part of the
28municipality's deficit have been retired.

29(4) The municipality has operated, for a period of at
30least one year, under a positive current operating fund

1balance or equity, as evidenced by the municipality's audited
2financial statements prepared in accordance with generally
3accepted accounting principles.]

4Section 19. The act is amended by adding a subchapter to
5read:

6SUBCHAPTER C.1

7DURATION OF DISTRESSED STATUS

8Section 254. Limitation of status.

9(a) Termination date.--

10(1) Except as otherwise provided in this subchapter, no
11municipality shall be subject to the provisions of this act
12after five years from the effective date of an ordinance
13enacted in accordance with section 245 or 246. No amendment
14to a plan shall affect the termination date as determined
15from the date of enactment of the original ordinance.

16(2) Nothing in this section shall be construed to:

17(i) prohibit a municipality from participating in an
18early intervention program as provided in Chapter 1-A or
19reentering distressed status in accordance with this act
20after a termination of status in accordance with this
21subchapter.

22(ii) Prohibit termination of status proceedings in
23accordance with section 255.1 prior to the termination
24date as provided in this section.

25(b) Distressed municipalities.--

26(1) Municipalities operating pursuant to a recovery plan
27on the effective date of this section shall be subject to a
28termination date five years from the effective date of the
29most recent recovery plan or amendment enacted in accordance
30with this act, provided, however, that municipalities subject

1to a plan that will remain in effect for one year or less on
2the effective date of this subsection shall be subject to a
3termination date three years from the termination date of the
4current plan or plan amendment.

5(2) If its distressed status has not been rescinded or
6has been continued in accordance with section 710.1, a
7municipality operating under Chapter 7 shall be subject to a
8final termination date no more than five years from the
9termination date of receivership. Section 255 shall not apply
10to a termination of status under this paragraph.

11Section 255. Coordinator's report.

12(a) General rule.--Not later than 180 days after the
13beginning of the final year of distressed status as determined
14in accordance with section 254(a) and (b)(1), the coordinator
15shall prepare a report stating the financial condition of the
16municipality and include one of the following findings:

17(1) Conditions within the municipality warrant a
18termination in status in accordance with section 255.1. A
19report containing a recommendation under this paragraph shall
20address each of the factors set forth in section 255.1(c).

21(2) Conditions are such that the municipality should be
22disincorporated in accordance with Chapter 4.

23(3) Conditions are such that the secretary should
24request a determination of a fiscal emergency in accordance
25with Chapter 6.

26(4) A three-year exit plan in accordance with section
27256 is warranted.

28(b) Filing and notice.--

29(1) The report shall be filed with the same parties as
30provided in section 242(a). The date of filing shall be the

1date on which the municipal clerk or municipal secretary
2places a true and correct copy of the report on file for
3public inspection in the municipal office.

4(2) On the date of filing, notice that the report has
5been filed and is open for public inspection in the municipal
6office shall be published by the coordinator in the county
7legal reporter and in one or more newspapers with general
8circulation serving the area in which the municipality is
9located. The department shall pay for the cost of the
10publication of the notice. The notice shall contain the
11following information:

12(i) A statement that a report regarding the status
13of the municipality's financial distress was filed
14pursuant to this act.

15(ii) The date and place of filing.

16(iii) A statement that the public has 15 days from
17the date of filing in which to file written comments on
18the report.

19(iv) The name and address of the coordinator to whom
20written comments should be sent.

21(v) A summary of the report and findings of the
22coordinator.

23(vi) The date and place of a public meeting to
24receive comments on the report.

25(c) Written comments.--Written comments on the report may be
26filed with the coordinator. Written comments shall be made no
27later than 15 days after the date of filing. Written comments
28judged by the coordinator to have value to the plan may be used
29to develop a revised report.

30(d) Public meeting.--A meeting conducted by the coordinator

1in the municipality shall be set for a date not later than 20
2days after the date of filing the report. The coordinator shall
3request in writing that the chief executive officer, each member
4of the municipal governing body and the chief financial officer
5of the municipality be present at the coordinator's meeting.
6Comments on the plan shall be received by the coordinator at
7that time. The coordinator has the discretion whether to
8consider comments made on the report.

9(e) Revision of report.--

10(1) Nothing in this section shall be construed to
11preclude the coordinator from revising a report of his own
12initiative.

13(2) Neither the secretary nor the chief executive
14officer or the governing body, as appropriate, may revise the
15coordinator's report.

16(3) If the coordinator decides to revise the report, the
17coordinator shall consult with the secretary and either the
18chief executive officer or the governing body throughout the
19revision of the report and shall give consideration to
20comments they may propose.

21(4) A revised report shall be completed and delivered to
22each party cited in section 242(a) within ten days from the
23date of the coordinator's public meeting on the original
24report.

25Section 255.1. Termination of status.

26(a) Public hearing.--Within 30 days of the date for the
27filing of a final report containing a finding as provided in
28section 255(a)(1) the secretary shall conduct a public hearing,
29advertised with notices given as provided in section 203.

30(b) Determination.--Within 90 days of the conclusion of the

1public hearing, the secretary shall issue an administrative
2determination of whether the termination of status is
3appropriate and reasons for the determination. The determination
4shall include findings addressing each of the factors in
5subsection (c) and shall consider information provided in the
6report of the coordinator and any additional information
7received during the public hearing.

8(c) Factors to consider.--If the secretary concludes that
9substantial evidence supports an affirmative determination for
10each of the following factors, the determination shall be that
11distressed status will be rescinded. The secretary shall
12consider whether:

13(1) Operational deficits of the municipality have been
14eliminated and the financial condition of the municipality,
15as evidenced by audited financial statements prepared in
16accordance with generally accepted accounting principles and
17projections of future revenues and expenditures, demonstrates
18a reasonable probability of future balanced budgets absent
19participation in this act.

20(2) Obligations issued to finance the municipality's
21debt have been retired, reduced or reissued in a manner that
22has adequately refinanced outstanding principle and interest
23and has permitted timely debt service and reasonable
24probability of continued timely debt service absent
25participation in this act.

26(3) The municipality has negotiated and resolved all
27claims or judgments that would have placed the municipality
28in imminent jeopardy of financial default.

29(4) The reasonably projected revenues of the
30municipality are sufficient to fund ongoing necessary

1expenditures, including pension obligations and the
2continuation or negotiation of collective bargaining
3agreements and the provision of municipal services.
4Projections of revenues shall include any anticipated tax or
5fee increases to fund ongoing expenditures for the first five
6years after a termination of distressed status.

7(d) Appeal.--A labor organization that is a party to a
8collective bargaining agreement with a financially distressed
9municipality and any other party withstanding under section 202
10may appeal the determination of the secretary pursuant to 2
11Pa.C.S. Ch. 7 Subch. A (relating to judicial review of
12Commonwealth agency action).

13(e) Suspension of subsequent proceedings.--The coordinator
14and secretary shall not take any action under sections 256 and
15257 until a final decision is issued for any appeal under
16subsection (d) or (f). The duration of distressed status of the
17municipality shall be extended subject to subsequent action in
18accordance with section 257.

19(f) Action of the secretary preserved.--Except as otherwise
20provided in chapters 6 and 7, the secretary may, following a
21duly advertised public hearing with notices given as provided in
22section 203, at any time issue a determination as provided in
23this section upon written recommendation of the coordinator
24setting forth a discussion of each of the factors specified in
25subsection (c). The determination may be appealed in accordance
26with subsection (d).

27Section 256. Exit plan.

28(a) General rule.--If recommended in a final report under
29section 255, the coordinator shall within 90 days of the public
30meeting referred to in section 255 prepare an exit plan for the

1municipality. The exit plan shall be subject to the same filing,
2notice, public meeting and revision procedures as specified in
3section 255.

4(b) Contents of exit plan.--The exit plan prepared by the
5coordinator shall contain such elements as may be necessary to
6ensure termination of distressed status after three years,
7including, but not limited to:

8(1) The sale, lease, conveyance, assignment or other use
9or disposition of the assets of the distressed municipality.

10(2) Functional consolidation of or privatization of
11existing municipal services.

12(3) The execution, approval, modification, rejection,
13renegotiation or termination of contracts or agreements of
14the distressed municipality, provided, however, that the
15provisions of section 252 shall apply to any exit plan
16adopted in accordance with this subchapter.

17(4) Changes in the form of municipal government or the
18configuration of elected or appointed municipal officials and
19employees as permitted by law.

20(c) Adoption of plan.--

21(1) Not later than 45 days following the coordinator's
22public meeting, the municipal governing body shall enact an
23ordinance approving the implementation of the plan, including
24enactment of necessary related ordinances and revisions to
25ordinances.

26(2) If the ordinance takes effect in a municipality
27operating under an optional plan form of government or a home
28rule charter, the chief executive officer shall issue an
29order directing the implementation of the plan no later than
30seven days from the enactment of the ordinance by the

1governing body.

2(3) If the governing body fails to adopt and implement
3the plan, the secretary shall, upon a written determination
4by the coordinator, request that the Governor make a
5determination of a fiscal emergency in accordance with
6Chapter 6.

7(4) The requirements of this subsection shall be
8suspended if the coordinator first provides a recommendation
9to the secretary that the municipality should be
10disincorporated under Chapter 4.

11Section 257. Postreport procedures.

12(a) Five-year procedures.--The secretary shall, upon written
13recommendation from the coordinator and after filing a final
14report under section 255, take one of the following actions:

15(1) Terminate the distressed status of the municipality
16effective 90 days after a determination or final decision
17requiring termination of status as provided in section 255.1.

18(2) After filing a final report containing a
19recommendation under section 255(a)(2), terminate the
20distressed status of the municipality effective on the date
21of a final order establishing an unincorporated district
22under Chapter 4.

23(3) After filing a final report containing a
24recommendation under section 255(a)(3), request a
25determination of a fiscal emergency in accordance with
26Chapter 6.

27(b) Exit plan procedures.--The secretary may, after the
28adoption of a plan under section 256(c) and upon written
29recommendation of the coordinator:

30(1) issue a determination in accordance with section

1255.1; or

2(2) request a determination of a fiscal emergency in
3accordance with Chapter 6.

4(c) Postexit plan procedures.--If three years have elapsed
5since the adoption of an exit plan without a recommendation as
6provided in subsection (b), the secretary shall terminate the
7distressed status of the municipality.

8Section 20. Section 261(a)(4) of the act, amended July 5, 
92012 (P.L.1104, No.133), is amended and the section is amended 
10by adding a subsection to read:

11Section 261. Filing municipal debt adjustment under Federal
12law.

13(a) [Authorization.--In the event one of the following
14conditions is present, a] General authorization.--A municipality
15is hereby authorized to apply to the department to file a
16municipal debt adjustment action pursuant to the Bankruptcy Code
17(11 U.S.C. § 101 et seq.), if at least one of the following 
18conditions is present:

19* * *

20[(4) A majority of the current or immediately preceding
21governing body of a municipality determined to be financially
22distressed has failed to adopt a plan or to carry out the
23recommendations of the coordinator pursuant to this act.]

24(a.1) Filing after determination of distress.--The
25municipality's authorization under subsection (a) shall continue
26after the issuance of a declaration of distress under section
27203, so long as the municipality is not in a state of fiscal
28emergency pursuant to a declaration under section 602. A
29municipality that is in a state of fiscal emergency shall not be
30authorized under subsection (a) to apply to the department to

1file a municipal debt adjustment.

2* * *

3Section 21. Section 281 of the act, added June 30, 1992
4(P.L.336, No.69), is amended to read:

5Section 281. Eligibility.

6If a municipality has been determined to be distressed under
7section 203(f) and is not subject to funding restrictions under
8section 251 or 264, it shall be eligible for economic and
9community development assistance as provided in section 282.
10Merger or consolidation [under Chapter 4] of a distressed
11municipality with a municipality may not be deemed to diminish
12the successor municipality's eligibility or priority status for
13economic assistance under this chapter.

14Section 22. Section 282(b) of the act, added June 30, 1992
15(P.L.336, No.69), is amended and the section is amended by
16adding a subsection to read:

17Section 282. Priority.

18* * *

19(b) Releases of funds.--Funds granted to a distressed
20municipality shall only be released upon concurrence by the
21coordinator or receiver that the program to be funded is
22consistent with efforts to alleviate the financially distressed
23status of the municipality as provided in this act.

24(b.1) Release of funds to unincorporated district.--Funds
25granted to an unincorporated district shall be released to the
26administrator in accordance with section 441.

27* * *

28Section 23. Chapter 4 heading of the act is amended to read:

29CHAPTER 4

30[CONSOLIDATION OR MERGER OF] ECONOMICALLY NONVIABLE

1MUNICIPALITIES

2Section 24. Chapter 4 of the act is amended by adding
3subchapters to read:

4SUBCHAPTER C

5DISINCORPORATION OF NONVIABLE MUNICIPALITIES

6Section 431. Definitions

7The following words and phrases when used in this subchapter
8shall have the meanings given to them in this section unless the
9context clearly indicates otherwise:

10"Administrator." A service district administrator appointed
11pursuant to section 434.

12"District." An unincorporated service district created by
13section 441.

14"District advisory committee." A service district advisory
15committee established by section 442.

16"Governing standards." Provisions within an essential
17services plan providing for certain conduct of residents and
18property owners as provided by section 436(c).

19"Municipality." A county, city, borough, incorporated town,
20township or home rule municipality that does not provide police
21service or fire service through its employees. The term does not
22include a city of the first class.

23"Restricted Account." An account established in the State
24Treasury as provided by section 445.1.

25Section 431.1. Determination of nonviability.

26(a) General rule.--Upon recommendation of a coordinator
27appointed under Chapter 2 or a receiver appointed under Chapter
287, the secretary shall consider whether all of the following
29conditions have been met in determining that a municipality is
30nonviable:

1(1) The municipality is unable to function as a general
2purpose unit of government to provide essential services to
3its residents and property owners.

4(2) The municipality has experienced such deteriorated
5economic conditions and a collapse of its tax base that all
6reasonable efforts to restore economic viability have failed.

7(3) Efforts to merge or consolidate the municipality
8with a neighboring municipality are unachievable or will not
9result in viability.

10(b) Notice and recommendation.--If the secretary determines
11that a municipality is nonviable under all of the conditions
12provided in subsection (a), the secretary shall provide notice
13to the governing body of the municipality of the secretary's
14determination and recommend that the municipality be
15disincorporated under this subchapter.

16Section 432. Procedure for disincorporation.

17(a) Ordinance.--Within 45 days of a determination of
18nonviability under section 431.1, the governing body may enact
19an ordinance, subject to review by the court of common pleas
20under section 433, that will initiate the disincorporation of
21the municipality. The ordinance shall be advertised as required
22by law but it may not become effective until the court has
23issued its decree under section 433.

24(b) Petition by electors.--If the governing body of the
25municipality fails to pass an ordinance authorized under
26subsection (a), then a petition signed by registered electors of
27the municipality comprising at least 51% of the number of
28electors voting for the office of Governor in the last
29gubernatorial general election may be submitted to the court
30within 60 days of the failure of the governing body to enact an

1ordinance as provided in subsection (a).

<-2(c) Action filed by secretary.--If no ordinance is filed for
3review under subsection (a) and no petition is filed under
4subsection (b) with the court within the time specified, the
5secretary may file an action in the court of common pleas
6petitioning the court to issue a decree under section 433(e),
7provided that one of the following conditions has been met:

8(1) the municipality has adopted a plan or amended plan
9under Chapter 2 which recommends that the municipality be
10disincorporated; or

11(2) the municipality refuses to adopt a plan or amended
12plan proposed by a coordinator under Chapter 2 which
13recommends that the municipality be disincorporated.

14Section 433. Judicial review of ordinance or petition.

15(a) Filing and notice.--Upon presentation to the court of
16the filing of an ordinance under section 432(a) or a petition
17under section 432(b) <-or (c), the court shall direct the
18prothonotary to give notice of the filing of the ordinance or
19petition in a newspaper of general circulation in the county
20where the municipality is located once a week for four
21consecutive weeks and once in the county legal journal, if any,
22during the four-week period. The notice shall provide the date
23the ordinance or petition was filed and specify that exceptions
24to the ordinance or petition may be filed within 45 days of the
25date of the filing of the ordinance or petition by any of the
26following:

27(1) the governing body of the municipality;

28(2) a taxpayer of the municipality;

29(3) any creditor or bondholder of the municipality; or

30(4) any collective bargaining unit or contractor of the

1municipality.

2(b) Notice of hearing.--No later than 60 days after the date
3of the filing of the ordinance or petition, the court shall
4conduct a hearing on the ordinance or petition and exceptions
5filed thereto. Notice of the hearing shall be provided by the
6court to those receiving notice under subsection (a) and to all
7other parties that have filed exceptions in accordance with
8subsection (a).

9(c) Hearing proceedings.--

10(1) The governing body of the municipality and all other
11individuals and entities which have filed exceptions under
12subsection (a) shall be parties to the proceedings and shall
13be entitled to present testimony or other evidence relevant
14to the nonviability of the municipality or relevant to
15exceptions timely filed, provided that the court, in its
16discretion, may consolidate testimony related to similar
17exceptions.

18(2) The coordinator or receiver, or another designee of
19the secretary, shall testify about the progress of the
20municipality under the adopted recovery plan under Chapter 2
21or plan adopted under Chapter 7 and render an opinion
22regarding the viability of the municipality.

23(3) The court may examine pertinent financial
24information and any audits prepared by a certified public
25accountant of the municipality and receive additional
26evidence relevant to the matter, including, but not limited
27to, evidence relating to:

28(i) The effect of disincorporation, including
29provisions for services that would be continued to be
30provided to residents and property owners of the proposed

1disincorporated area.

2(ii) Additional plans, proceedings or strategies
3that could ensure that the municipality remain viable.

4(iii) The effect of the disincorporation on any
5bonds, other obligations or agreements of the
6municipality.

7(d) Costs and fees.--Court costs and filing fees associated
8with proceedings under this subchapter shall be paid by the
9department.

10(e) Judicial decree.--

11(1) The court shall issue a decree approving the
12validity of the ordinance or granting the petition unless it
13finds, by clear and convincing evidence, that the
14municipality should continue to exist as a separate municipal
15corporation because of a reasonable expectation that the
16municipality is viable.

17(2) Upon issuance of the judicial decree, the department
18and governing body of the municipality shall engage in the
19duties required by this subchapter to prepare for
20disincorporation. The disincorporation shall take effect upon
21the execution of disincorporation under section 439.

22(3) Upon the failure of the court to issue a judicial<-
23decree under this subsection following the hearing, the
24secretary shall determine whether:

25Section 433.1. Failure to initiate disincorporation.<-

26(a) Conditions prior to determination.--The secretary shall
27issue a determination under subsection (b) within 30 days of
28either:

29(1) the final day for filing a petition under section
30432(b), if judicial review under section 433 has not been

1initiated; or

2(2) a final adjudication pursuant to a hearing held
3under section 433 finding that the municipality should
4continue to exist as a separate municipal corporation because
5of a reasonable expectation that the municipality is viable.

6(b) Determination.--The secretary shall determine whether:

7(i) the recovery plan for the municipality shall<-
8remain in effect, provided that the limitations under
9Subchapter C.1 do not yet apply;

10(1) the recovery plan for the municipality shall remain<-
11in effect subject to the limitations of chapter 2, subchapter
12C.1 and, if the coordinator has previously issued a report
13pursuant to section 255, the secretary shall direct the
14coordinator to prepare an exit plan according to section 256;

15(ii) the elected and appointed officials of the<-

16(2) the elected and appointed officials of the<-
17municipality have demonstrated a failure to adequately
18implement recovery measures and, if so, request a
19determination of a fiscal emergency in accordance with
20Chapter 6;

21(iii) conditions within the municipality warrant a<-

22(3) conditions within the municipality warrant a<-
23termination in status in accordance with section 255.1; or

24(iv) conditions as set forth in section 261 exist<-

25(4) conditions as set forth in section 261 exist<- and, if
26so, that the governing body should initiate proceedings for 
27federal debt readjustment under Subchapter D of Chapter 2.

28Section 434. Service district administrator.

29(a) Appointment.--No later than 30 days following a decree
30of the court of common pleas under section 433(e), the secretary

1shall appoint a service district administrator. The
2administrator must have a minimum of five years' experience and
3demonstrable expertise in business, financial or State or local
4budgetary matters and be a resident of this Commonwealth for at
5least one year prior to appointment.

6(b) Compensation and expenses.--The administrator's
7compensation and reimbursement for actual and necessary expenses
8shall be paid by the Commonwealth. The date and amount of
9compensation shall be established by the secretary. The
10department may require the compensation and expenses of the
11administrator to be reimbursed by an assessment for
12administrative costs under Subchapter D.

13(c) Revocation and vacancy.--The secretary may the elected
14and appointed officials of the revoke the appointment of an
15administrator at any time. A vacancy in the office of the
16administrator by way of revocation or resignation shall be
17filled in the same manner as the original appointment.

18(d) Prohibitions.--An administrator may not:

19(1) Seek or hold a position as any other elected or
20appointed public official within this Commonwealth or as a
21political party officer during the term of the
22administrator's tenure.

23(2) Seek election as a public official or political
24party officer for one year after the person's service as
25administrator has ended.

26(3) Engage in any conduct prohibited by the act of July
2719, 1957 (P.L.1017, No.451), known as the State Adverse
28Interest Act, or 65 Pa.C.S. Ch. 11 (relating to ethics
29standards and financial disclosure).

30(e) Liability.--

1(1) The administrator shall not be liable personally for
2any obligations of the municipality or unincorporated service
3district.

4(2) It is declared to be the intent of the General
5Assembly that the administrator shall enjoy sovereign and
6official immunity as provided in 1 Pa.C.S. § 2310 (relating
7to sovereign immunity reaffirmed; specific waiver) and shall
8remain immune from suit except as provided by and subject to
9the provisions of 42 Pa.C.S. Ch. 85 Subchs. A (relating to
10general provisions) and B (relating to actions against
11Commonwealth parties).

12(f) Powers and duties.--Notwithstanding any other provision
13of law, the administrator shall have the following powers and
14duties:

15(1) To require the municipality to take actions
16necessary for disincorporation under section 439, including:

17(i) The sale, conveyance, assignment or other use or
18disposition of the municipality's assets as provided by
19law.

20(ii) The repayment of debt, bonds or other
21obligations before disincorporation.

22(iii) Any other action necessary to implement the
23disincorporation.

24(2) To seek a writ of mandamus against the governing
25body to carry out this subchapter.

26(3) To identify essential services which should be
27provided to the residents and property owners of the district
28after the municipality is disincorporated.

29(4) To approve, disapprove, modify, reject, terminate or
30renegotiate contracts and agreements to provide services to

1the residents and property owners of the district.

2(5) To deposit all funds collected to administer
3Subchapter D in the municipality's restricted account and to
4requisition moneys from the restricted account.

5(6) To apply for grants, loans or payments under any
6economic and community development program funded by the
7Commonwealth.

8(7) To establish fees which may be assessed to fund
9essential services provided by contract or intergovernmental
10cooperation agreements under Subchapter D.

11(8) To meet and consult with the municipal governing
12body before disincorporation and the district advisory
13committee after the establishment of the district.

14(9) To meet and consult with county officials to
15prevent, abate and mediate blight as permissible by law.

16(10) To contract for professional services to aid in the
17administrator's duties under this subchapter and Subchapter
18D.

19(11) To seek enforcement of any provision of this
20subchapter and Subchapter D.

21(12) To seek invalidation of any act by the governing
22body of the municipality in conflict with the administrator's
23essential services plan.

24Section 435. Powers and duties of municipality.

25(a) General rule.--After the review of the court of common
26pleas resulting in a decree under section 433(e), but not less
27than 30 days before the date set by the administrator for
28disincorporation to take effect, the governing body of the
29municipality shall:

30(1) Enact a budget in the municipality's projected final

1year that funds the municipality's functions until the date
2of disincorporation and provides for the payment of every
3current obligation of the municipality before the date of
4disincorporation. All remaining municipal funds as of the
5date of disincorporation shall be transferred to the
6municipality's restricted account.

7(2) Provide for the transfer and administration of any
8municipal pension obligation to a private or public pension
9fund. Nothing in this paragraph shall be construed to
10authorize a modification of the pension benefits due to any
11current or past employee of the municipality.

12(3) Provide for the appointment of the district advisory
13committee to assist the administrator after the
14disincorporation of the municipality.

15(b) Corporate powers reserved.--After the review of the
16court of common pleas resulting in a decree under section 433(e)
17until the date of disincorporation, the governing body shall
18retain all corporate powers otherwise authorized by law, except
19that it shall not take any action inconsistent with the
20administrator's plan for disincorporation.

21(c) Establishment of governing standards for district.--

22(1) The governing body of the municipality may adopt
23recommended governing standards which may be included by the
24administrator in the essential services plan as the governing
25standards of the district.

26(2) If the governing body adopts recommended governing
27standards, the following shall apply:

28(i) No later than 30 days following a decree of the
29court of common pleas under section 433(e), the governing
30body shall provide written notice to the administrator

1that the governing body intends to adopt an ordinance
2containing recommended governing standards for the
3inclusion in the essential services plan.

4(ii) No later than 60 days following the notice
5provided under subparagraph (i), the governing body shall
6adopt an ordinance containing recommended governing
7standards for inclusion in the essential services plan.
8The ordinance may incorporate, by reference, any
9previously enacted ordinance of the municipality.

10(d) Powers of district advisory committee authorized.--After
11the review of the court of common pleas resulting in a decree
12under section 433(e) but prior to the date of disincorporation,
13in addition to the powers provided for under this subchapter,
14the governing body of the municipality may advise the
15administrator in the manner provided for the district advisory
16committee under Subchapter D in the formation and amendment of
17the essential services plan.

18Section 436. Essential services plan.

19(a) Formation.--The administrator shall, within 90 days
20following appointment and in consultation with the department,
21develop an essential services plan to provide essential services
22after the date of disincorporation. The essential services plan
23shall provide for:

24(1) Negotiation of contracts for the provision of vital
25and necessary services, not otherwise provided by an
26authority, as defined under Chapters 6 and 7. If the
27municipality participates in a regional police or fire
28department through an intergovernmental cooperation
29agreement, the essential services plan may provide for
30continued service from that regional department by contract

1or by renegotiating the intergovernmental cooperation
2agreement.

3(2) Local emergency management in accordance with the
4plan and program of the Pennsylvania Emergency Management
5Agency. The administrator shall consult with the emergency
6management organization of the county where the district is
7located to develop a plan which serves the district in a
8substantially similar manner as plans required for a
9political subdivision under 35 Pa.C.S. Ch. 75 Subch. A
10(relating to general provisions). The plan shall include a
11procedure for a declaration of a disaster emergency to be
12made in the district and the designation of a local
13coordinator of emergency management. The administrator is
14authorized to negotiate any contracts which are necessary to
15provide for the execution of a plan formed under this
16paragraph.

17(3) Payment of the lawful financial obligations of the
18unincorporated service district, including any transferred
19current obligation of the municipality and service of any
20debt incurred by the municipality in the manner provided by
21Subchapter D, after the disincorporation of the municipality.

22(4) Assessment of fees as provided by Subchapter D.

23(5) Disposition of all municipal property by sale, lease
24or conveyance for any of the following purposes:

25(i) Payment of outstanding debt obligations.

26(ii) Provision of services by an entity contracting
27with the unincorporated service district.

28(iii) Possession of title by the Commonwealth as
29provided by Subchapter D.

30(6) Termination of all contracts with the municipality.

1(7) Administration of the unincorporated service
2district, which may include reimbursement to the department
3for the compensation of the administrator.

4(8) Establishment of the date of disincorporation of the
5municipality as provided for by section 439.

6(9) Establishment of the name of the district. A
7district established by this act shall be named "The
8Unincorporated District of ........................."

9(b) Restrictions.--An essential services plan may not:

10(1) Provide for the levy of any taxes.

11(2) Terminate an obligation to repay any debt, except
12that the plan may designate the unincorporated service
13district as the servicer of a debt and may specify that a
14debt secured by the collection of taxes shall be secured by
15the assessment of fees sufficient to satisfy the service
16obligations of the debt.

17(3) Assess and collect a higher amount of fees in the
18district's first full calendar year totaling 5% more than the
19total taxes levied in the municipality's final year before
20disincorporation.

21(4) Authorize the incurrence of any debt by the
22district, except as provided under section 441(k).

23(c) Governing standards of the district.--

24(1) The essential services plan shall provide for
25governing standards, which standards shall include:

26(i) Rules and conduct related to the maintenance of
27property, conduct in public places and the parking of
28vehicles in public places which shall protect the health,
29safety and welfare of the residents and property owners
30of the district to the extent such rules and conduct

1could have been adopted by the municipality by ordinance.

2(ii) Fines and other relief which may be granted by
3a court presiding over a civil action brought for a
4violation of the governing standards.

5(2) If the governing body of the municipality adopts
6recommended governing standards as provided in section
7435(c), the administrator shall include the recommended
8governing standards in the essential services plan unless the
9administrator finds that the recommended governing standards
10are unlawful, unconstitutional or would substantially impede
11the administration of the essential services plan.

12Section 437. Proposed essential services plan.

13(a) Filing.--Within 90 days of the appointment of the
14administrator, the administrator shall deliver true and correct
15copies of the proposed essential services plan to:

16(1) The municipal clerk or municipal secretary, who
17shall immediately place the copy on file for public
18inspection in the municipal office.

19(2) The secretary.

20(3) Each member of the municipal governing body.

21(4) The chief executive officer of the municipality.

22(5) The chief financial officer of the municipality.

23(6) The solicitor of the municipal governing body.

24(b) Date of filing.--For purposes of this section, the date
25of filing the proposed essential services plan shall be the date
26on which the municipal clerk or municipal secretary places a
27true and correct copy of the proposed essential services plan on
28file for public inspection in the municipal office.

29(c) Notices of proposed essential services plan.--

30(1) On the date of filing, notice that a proposed

1essential services plan has been filed and is open for public
2inspection in the municipal office shall be published by the
3administrator in the county legal reporter and in one or more
4newspapers with general circulation serving the area in which
5the municipality is located. The cost for publishing the
6notice shall be borne by the department. The notice shall
7contain the following:

8(i) A statement that a proposed essential services
9plan has been filed regarding the provision of essential
10services to the residents and property owners of the
11unincorporated service district which shall succeed the
12municipality after disincorporation.

13(ii) The date and place of filing.

14(iii) A statement that the public has 15 days from
15the date of filing in which to file written comments
16relating to the proposed essential services plan.

17(iv) The name and address of the administrator to
18whom written comments should be sent.

19(v) Summary of the proposed essential services plan.

20(2) Notice of an administrator's public meeting on the
21proposed essential services plan shall be published by the
22administrator in the county legal reporter and in one or more
23newspapers with general circulation serving the area in which
24the municipality is located. The department shall bear the
25cost for publishing the notice. The notice shall contain the
26following:

27(i) A statement that the purpose of the
28administrator's public meeting is to receive public
29comments on the proposed essential services plan.

30(ii) The date and place of the meeting.

1(3) The administrator may combine the publication of the
2notice that a proposed essential services plan has been filed
3with the publication of the notice of the public meeting.

4(d) Comment period.--Written comments on the proposed
5essential services plan may be filed with the administrator.
6Written comments shall be made no later than 15 days after the
7date of filing. Written comments judged by the administrator to
8have value to the proposed essential services plan may be used
9to develop revisions for a final essential services plan.

10(e) Administrator's public meeting.--A meeting conducted by
11the administrator in the municipality shall be set for a date no
12later than 20 days after the date of filing the proposed
13essential services plan. The administrator shall request in
14writing that the chief executive officer, each member of the
15municipal governing body and the chief financial officer of the
16municipality to be present at the service administrator's
17meeting. At that meeting, the administrator shall:

18(1) Present a summary of the proposed essential services
19plan.

20(2) Receive public comment on the proposed essential
21services plan.

22(3) Allow the members of the governing body of the
23municipality to present written and oral comments requesting
24revisions of the proposed essential services plan.

25Section 438. Final essential services plan.

26(a) Amendment of plan.--

27(1) The administrator shall consider all timely
28submitted written comments, comments presented at the public
29meeting and requests for revision in the amendment of the
30publicly presented proposed essential services plan before

1publishing a final essential services plan.

2(2) In the event that the administrator does not
3incorporate the requests for revision by the members of the
4governing body of the municipality regarding the levels of
5services provided under the proposed essential services plan
6or the basis for the calculation of fees assessed under the
7proposed essential services plan, the administrator shall
8state in the proposed essential services plan why the
9requested revisions were not feasible to incorporate in the
10final essential services plan.

11(b) Notice of final essential services plan.--Within 45 days
12of the public meeting the administrator shall file the final
13essential services plan with the persons listed in section
14437(a) and provide notice of the publication of the final
15essential services plan in the manner provided in section
16437(c)(1)(i), (ii) and (v).

17(c) Appeal.--

18(1) Any person aggrieved by the final essential services
19plan may appeal the plan to the court of common pleas within
2030 days of notice of the filing of the final essential
21services plan. For purposes of this section, notice shall
22constitute the date that the person received actual notice of
23the final essential services plan, or the date that notice of
24the filing of the final essential services plan is first
25published in a newspaper with general circulation serving the
26area in which the municipality is located.

27(2) No appeal of a final essential services plan shall
28constitute an automatic stay of the essential services plan.

29(3) The appeal shall be sustained only where the court
30finds that the final essential services plan is unlawful or

1unconstitutional, or the conduct of the administrator is
2arbitrary or capricious.

3Section 439. Disincorporation of municipality.

4(a) Effects of disincorporation.--On the date of
5disincorporation, the following shall occur:

6(1) Notwithstanding any other provision of law, the
7terms of office of all elected officials of the municipality
8shall end and no person shall be elected or appointed to fill
9any vacancy of office.

10(2) All ordinances of the municipality shall be
11nullified.

12(3) All corporate powers granted to the municipality
13under its charter, municipal code or any other provision of
14law shall terminate.

15(4) The municipality shall be deemed by operation of law
16to be disincorporated. The area formerly contained within the
17municipality shall be an unincorporated service district as
18provided under Subchapter D.

19(b) Duties of administrator.--On or before the date of
20disincorporation, the administrator shall:

21(1) Execute all contracts for the provision of services
22and otherwise implement the essential services plan, which
23shall take effect on the date of disincorporation.

24(2) Provide notice of assessments to the property owners
25of the unincorporated service district according to the
26procedure provided in section 443(b) which may be a partial
27year assessment as provided by section 443(e).

28(3) Provide notice to the Governor and all Commonwealth
29agencies that the municipality has been disincorporated and
30the date of disincorporation.

1(c) Duties of county.--Effective on the date of
2disincorporation, notwithstanding any other provision of law,
3the county in which the municipality is located shall:

4(1) Adopt a zoning ordinance which applies to the
5unincorporated service district and adopts the substantive
6provisions of the municipality's zoning ordinance, if any, as
7it was in effect before nullification by subsection (a)(2).

8(2) Adopt an official map for the unincorporated service
9district which adopts the substance of the municipality's
10official map, if any, as it was in effect before
11nullification by subsection (a)(2).

12(3) Unless the county has adopted a subdivision and land
13development ordinance prior to the date of disincorporation
14of the municipality, adopt a subdivision and land development
15ordinance which shall apply to any unincorporated service
16district within the county.

17(4) Provide for the administration of the zoning
18ordinance and the subdivision and land development ordinance
19as they apply to the unincorporated service district and any
20other provisions of the act of July 31, 1968 (P.L.805,
21No.247), known as the Pennsylvania Municipalities Planning
22Code, that may be applicable.

23(5) Amend the county's comprehensive plan to the extent
24necessary to be consistent with the requirements of this
25subsection.

26(d) Property succession.--Immediately following
27disincorporation the area formerly contained within the
28municipality shall, by operation of law, be deemed an
29unincorporated service district under Subchapter D, the
30Commonwealth shall succeed in title to all property, including

1all real property, personal property and moneys in any municipal
2account, of the disincorporated municipality to be held in trust
3for the benefit of the residents and property owners of the
4unincorporated service district as provided under Subchapter D.

5SUBCHAPTER D

6UNINCORPORATED SERVICE DISTRICT

7Section 441. Establishment of unincorporated service district.

8(a) General rule.--The area formerly contained within a
9municipality shall, after disincorporation under Subchapter C,
10become an unincorporated service district. The district shall be
11an entity of the Commonwealth established for the special
12purpose of providing essential services to the citizens living
13within the district until such time as the district is
14incorporated as a municipality or made a part of a merged or
15consolidated with an existing municipality under section 447.

16(b) Authorized administrative authority.--All powers
17providing for the administration of the district shall be vested
18in the department through the administrator as provided in this
19subchapter. The district advisory committee shall not possess
20the corporate powers of the governing body of any municipality
21or any authority, except as provided by this subchapter.

22(c) Corporate powers prohibited.--Nothing in this subchapter
23shall be construed as authorizing the district to exercise
24corporate powers for the administration of a local government,
25including the power to levy taxes, establish elected or
26appointed offices and purchase, sell or convey property, except
27that the residents of the district may incorporate a
28municipality or merge or consolidate with an existing
29municipality as provided for in section 447.

30(d) Assets held by Commonwealth in trust.--

1(1) All assets not sold by the municipality during the
2process of its disincorporation shall be conveyed to the
3Commonwealth to be held in trust for the benefit of the
4residents and property owners of the district.

5(2) The administrator shall serve as trustee of the
6property and provide for the repair and maintenance of all
7real property and roadways held in trust for the benefit of
8the residents and property owners of the district through the
9collection of assessments under this subchapter and
10administration of payments distributed to the district as
11provided in subsection (f).

12(3) Nothing in this subsection shall be construed as
13providing the express approval of the General Assembly to
14dispose of or use any lands acquired with funds under the act
15of June 22, 1964 (Sp.Sess., P.L.131, No.8), known as the
16Project 70 Land Acquisition and Borrowing Act, for purposes
17other than those provided by that act, except that the
18Commonwealth may succeed in title of the property for the
19limited purposes established by this subsection.

20(e) Former municipal debt secured by entrusted assets.--

21(1) All debt incurred by the municipality before the
22establishment of the district shall be held by the district
23for administration by the administrator. Any such debt shall
24be secured by the assets conveyed to the Commonwealth and
25held in trust under subsection (d) and serviced by fees
26collected under this subchapter.

27(2) Nothing in this section shall be construed to
28authorize the Commonwealth to guarantee any debt incurred by
29a municipality or district with the full faith and credit of
30the Commonwealth, revenues from the General Fund or any other

1source of revenue not derived from fees assessed for the
2administration of this subchapter or gains from the sale of
3assets of the former municipality.

4(f) Eligibility for State grants and programs unaffected.--

5(1) A district shall be eligible to receive any
6financial grant, loan or payment and participate in any
7program for which it was eligible when it was a municipality,
8including, but not limited to, payments distributed pursuant
9to the act of June 1, 1956 (1955 P.L.1944, No.655), referred
10to as the Liquid Fuels Tax Municipal Allocation Law, all
11programs administered by the Pennsylvania Infrastructure
12Investment Authority and all economic and community
13development programs funded by the Commonwealth.

14(2) A district shall continue to receive priority in all
15economic and community development programs funded by the
16Commonwealth as provided for by Subchapter E of Chapter 2.

17(3) The administrator may apply for and shall manage any
18funds distributed to the district pursuant to this section.

19(g) Credit for fees assessed.--The payment of fees under
20this subchapter by a resident of a district shall constitute a
21credit against the collection of any income tax by a
22municipality on nonresidents, if applicable.

23(h) Relationship with existing municipal and other
24authorities preserved.--

25(1) All authorities established to provide services to
26the residents and property owners of a municipality prior to
27disincorporation shall continue to serve the residents and
28property owners of a district, and all members of the
29authority appointed by the governing body of the municipality
30prior to disincorporation shall continue to serve out the

1remainder of the members' terms.

2(2) Notwithstanding the provisions of 53 Pa.C.S. § 5607
3(relating to purposes and powers) or any other provision of
4law, subsequent appointments to the authority board which
5would otherwise be made by the governing body of the
6municipality shall be made by the administrator in
7consultation with the district advisory committee.

8(i) Governing standards enforceable.--

9(1) The governing standards included in the essential
10services plan shall be enforceable by the filing of a civil
11action by the administrator or any aggrieved property owner
12or resident of the district.

13(2) A violation of the governing standards shall
14constitute a public nuisance.

15(3) A magisterial district court or another court of
16competent jurisdiction presiding over a civil action brought
17under this subsection may find relief for the filing party
18according to the relief provided for in the essential
19services plan or any other relief which is available by law
20for the abatement of a public nuisance.

21(j) Pennsylvania Construction Code applicable.--

22(1) The act of November 10, 1999 (P.L.491, No.45), known
23as the Pennsylvania Construction Code Act, shall apply to all
24construction, alteration, repair and occupancy of all
25buildings within the district as though the district were a
26municipality which opted not to adopt the uniform
27construction code by ordinance.

28(2) The administrator shall receive any application for
29a construction permit and provide appropriate notices to an
30applicant of a construction permit and the Department of

1Labor and Industry as provided under section 501(e) of the
2Pennsylvania Construction Code Act.

3(k) Incurrence of debt limited.--The district shall not
4incur debts not provided for in subsection (e), except that the
5administrator may utilize such mechanisms as are necessary to
6incur temporary debts, or make purchases on credit, on behalf of
7and for the limited purpose of managing the cash flow for the
8district. All obligations incurred under this subsection shall
9be satisfied in full within one year and secured only by the
10anticipation of the collection of assessments under section 443.

11Section 442. Service district advisory committee.

12(a) Establishment.--Each service district shall establish a
13service district advisory committee.

14(b) Composition.--The district advisory committee shall be
15composed of three persons who are at least 18 years of age,
16including two resident property owners of the district and one
17owner of a business within the district, if any, who may or may
18not be a resident of the district.

19(c) Appointment by governing body.--At least 30 days prior
20to the date of disincorporation, the governing body of the
21former municipality shall appoint three members of the district
22advisory committee. The governing body shall designate that one
23appointee serve a term of one year, one appointee serve a term
24of two years and one appointee serve a term of three years.

25(d) Vacancy.--At the expiration of the term of a member of
26the district advisory committee, the remaining members of the
27committee shall appoint a person to fill the vacancy. In the
28event that the remaining members of the committee are unable to
29agree on a person to fill the vacancy or there is more than one
30vacancy, the administrator shall select a person or persons to

1fill the vacancy. All persons appointed to fill a vacancy on the
2district advisory committee shall have a term of three years
3beginning on the date of appointment.

4(e) Advise administrator.--The district advisory committee
5shall, at least once every three months, meet with the
6administrator and may make recommendations to the administrator
7for revisions to the essential services plan, including
8revisions to the levels of services provided to the residents
9and property owners of the district and methodology of rate
10calculation. The administrator shall consider all
11recommendations of the district advisory committee.

12(f) Advise county on land use issues.--The district advisory
13committee may provide recommendations on behalf of the residents
14and property owners of the district to any county official
15regarding any land use-related matter.

16(g) Advise department on incorporation.--The district
17advisory committee may provide recommendations to the department
18at any time that the residents of the district and the
19department consider the feasibility of incorporating as a viable
20municipality or merger or consolidation with an existing
21municipality.

22(h) Recommended amendment of governing standards.--

23(1) Amendments to the governing standards may be
24recommended by a majority vote of the district advisory
25committee or by a petition signed by registered electors of
26the municipality comprising at least 10% of the number of
27electors voting for the office of Governor in the last
28gubernatorial general election.

29(2) Upon receipt of a recommendation made under this
30subsection, the administrator shall include the recommended

1amendments to the governing standard as a proposed plan
2amendment under section 444, unless the administrator finds
3that the recommended amendment of the governing standards is
4unlawful, unconstitutional or would substantially impede the
5administration of the essential services plan.

6(i) Restrictions.--The district advisory committee shall
7have no authority to act as a municipal governing body.

8(j) Open meetings.--The district advisory committee shall be
9an agency for purposes of the open meeting provisions of 65
10Pa.C.S. Ch.7 (relating to open meetings).

11Section 443. Assessments.

12(a) Authority to assess.--The administrator may establish
13assessments on a front foot or benefit-conferred basis, or a
14combination of both, on all real property within the district to
15provide for:

16(1) The cost of all essential services provided to the
17district.

18(2) The service of all debts held in trust by the
19Commonwealth which were incurred by the former municipality
20prior to disincorporation.

21(3) The necessary construction, maintenance or repair of
22facilities or properties which have been conveyed to the
23Commonwealth and are held in trust for the benefit of the
24district.

25(4) Reimbursement to the department of its reasonable
26costs of administration of the district, including, but not
27limited to, the compensation of the administrator and the
28collection of assessments authorized under this section.

29(5) Other costs incurred by the district or
30administrator in the execution of this subchapter, including

1a reserve of no more than 15% of the annual estimated costs
2of the essential services plan in the restricted account
3established in section 445 to provide for the provision of
4unforeseeable costs.

5(b) Establishment of assessment.--

6(1) No later than October 1 of the year preceding the
7year for which the assessment applies, the administrator
8shall establish a schedule of assessment for all real
9property within the unincorporated district.

10(2) The administrator shall provide written personal
11notice to each property owner of each property of the
12assessment due for the ensuing year no later than November 1
13of the year preceding the year for which the assessment
14applies.

15(3) As used in this subsection, "personal notice" shall
16mean and include notice upon the owner of a property either
17by personal service upon the owner or by certified mail to
18the owner at the owner's last known address or where service,
19after a reasonable attempt, shall not have been successfully
20made by either of these two methods, then by leaving notice
21at or upon the property.

22(c) Appeal of assessment.--Any person wishing to challenge
23the reasonableness of the assessment may file a suit in the
24court of common pleas within 30 days of receiving the notice
25provided in subsection (b).

26(d) Payment of assessments.--Payment of the assessment in
27full shall be due no later than March 1, unless the
28administrator has provided for installment payments in
29accordance with subsection (e).

30(e) Installments.--The administrator may provide for the

1payment of assessments by equal installments on a quarterly or
2semiannual basis as follows:

3(1) The administrator shall provide written personal
4notice of the installment plan to owners containing the date
5installments are due, interest and prepayment.

6(2) The rate of interest for the installments shall be
7established by the administrator at a rate of 6% per year.

8(3) If any of the installments remain unpaid for 60 days
9after the same has become due and payable, the entire unpaid
10assessment, plus unpaid accrued interest and any costs, shall
11be due and payable and the administrator shall proceed to
12collect the assessment due as provided in subsection (g).

13(4) A property owner upon whom an assessment has been
14made may pay all or as many of the installments before the
15same are due, with interest and costs to the due date of the
16next installment.

17(f) First year assessment.--The administrator may provide
18for a partial assessment for the calendar year in which the
19disincorporation of the municipality occurs. The due date for a
20partial year assessment and installment schedule may be set by
21the administrator, provided that no assessment shall be due
22sooner than 60 days after the administrator provides written
23personal notice of the assessment under the procedure in
24subsection (a).

25(g) Delinquent assessments.--Assessments remaining unpaid on
26December 31 of the year in which they are due shall be
27delinquent and subject to interest at a rate of 10% per year
28from the date of filing as a lien in accordance with the act of
29May 16, 1923 (P.L.207, No.153), referred to as the Municipal
30Claim and Tax Lien Law.

1(h) Liens.--An assessment, together with all charges,
2expenses and fees, including reasonable attorney fees necessary
3for its collection, shall be a lien upon the real property
4benefited. The lien shall have the same priority and may be
5collected in the same manner as a municipal lien in accordance
6with the Municipal Claim and Tax Lien Law or through a civil
7action initiated by the administrator.

8(i) Limited assessment of public property.--An assessment
9under this section on property held by the Federal Government,
10the Commonwealth and any other public property shall be limited
11to an assessment for those services which are directly consumed
12by the property, including, but not limited to, water service,
13sewer service and waste collection.

14Section 444. Amendment of essential services plan.

15(a) Periodic review.--No less than once per year, the
16administrator shall meet with the district advisory committee to
17consider the adequacy of the essential services plan and
18consider any request for revision of the essential services plan
19made by the district advisory committee.

20(b) Filing of amendment.--The administrator may file a
21proposed essential services plan amendment with the secretary
22and each member of the district advisory committee at any time.
23The district advisory committee may request a public meeting to
24consider the amendment within five days of the filing of a
25proposed essential services plan amendment.

26(c) Notice of amendment.--No later than the date that the
27administrator files the proposed essential services plan
28amendment, the administrator shall provide notice to the public
29of the amended essential services plan using the procedure
30provided for by section 437(c)(1). If the district advisory

1committee requests a public hearing, the administrator shall
2schedule a public meeting within 30 days of the date that the
3proposed essential services plan amendment was filed and provide
4notice of the public meeting using the procedure provided for by
5section 437(c)(2).

6(d) Comment period.--Written comments on the proposed
7essential services plan amendment may be filed with the
8administrator. Written comments must be made no later than 15
9days after the date of filing. Written comments judged by the
10administrator to have value to the essential services plan may
11be used to develop revisions for a final essential services plan
12amendment.

13(e) Administrator's public meeting.--If a public meeting is
14scheduled at the request of the district advisory committee, the
15administrator shall request in writing that the members of the
16district advisory committee be present at the administrator's
17meeting. At that meeting, the administrator shall:

18(1) Present a summary of the proposed essential services
19plan amendment.

20(2) Receive public comment on the proposed essential
21services plan amendment.

22(3) Allow the members of the district advisory committee
23to present written and oral comments requesting revisions of
24the proposed essential services plan amendment.

25(f) Final essential services plan amendment.--The
26administrator shall consider all timely submitted written
27comments, comments presented at the public meeting and requests
28for revision in the amendment of the publicly presented proposed
29essential services plan before filing a final essential services
30plan amendment. In the event that the administrator does not

1incorporate the requests for revision by the district advisory
2committee regarding the levels of services provided under the
3essential services plan or the basis for the calculation of fees
4assessed under the essential services plan, the administrator
5shall state in the essential services plan amendment why the
6requested revisions were not feasible to incorporate in the
7final essential services plan.

8(g) Emergency essential services plan amendment.--
9Notwithstanding the requirements provided by this section for
10the adoption of a final essential services plan amendment, where
11the secretary finds that there is or will be an imminent threat
12to public safety, human health or the environment, the secretary
13may provide a waiver to the administrator allowing the
14administrator to immediately publish an emergency essential
15services plan amendment. An emergency essential services plan
16amendment shall take effect immediately.

17(h) Notice of final essential services plan amendment.--The
18administrator shall provide notice of the publication of the
19final essential services plan amendment or emergency essential
20services plan amendment in the manner provided in section 437(c)
21(1)(i), (ii) and (v). Upon providing notice as required by this
22chapter, the administrator may execute any contract necessary to
23administer the essential services plan, as amended.

24(i) Appeal.--

25(1) Any person aggrieved by a final essential services
26plan amendment or emergency essential services plan amendment
27may appeal the final essential services plan amendment to the
28court of common pleas within 30 days of notice of the filing
29of the final essential services plan amendment.

30(2) For purposes of this section, notice shall

1constitute the date that the person received actual notice of
2the final essential services plan amendment, or the date that
3notice of the filing of the final essential services plan
4amendment is first published in a newspaper with general
5circulation serving the area in which the municipality is
6located.

7(3) An appeal of a final essential services plan
8amendment shall be limited to the amended portion of the
9essential services plan.

10(4) No appeal of a final essential services plan
11amendment shall constitute an automatic stay of any portion
12of the essential services plan.

13(5) The appeal shall be sustained only where the court
14finds that the final essential services plan amendment is
15unlawful or unconstitutional, or the conduct of the
16administrator is arbitrary or capricious.

17Section 445. Unincorporated Service District Trust Fund.

18(a) Establishment.--There is hereby established a special
19fund in the State Treasury, separate and apart from all other
20public moneys or funds of the Commonwealth, to be known as the
21Unincorporated Service District Trust Fund. The purpose of this
22fund shall be to hold moneys from unincorporated service
23districts and pay for the expenses and obligations of
24administrators, unincorporated service districts and the
25department pursuant to Subchapter C. The department shall
26allocate funds specific to a district in a restricted account
27pursuant to section 445.1.

28(b) Appropriation.--As much as may be necessary of such
29moneys and interest in the special fund established under
30subsection (a) is hereby appropriated for the purposes

1authorized by this subchapter.

2Section 445.1. Restricted accounts.

3(a) Establishment.--There is established in the
4Unincorporated Service District Trust Fund a restricted account
5for each unincorporated service district. The administrator for
6each district shall deposit all moneys collected by assessments,
7delinquent municipal tax receipts, and proceeds from the sale of
8municipal assets authorized under this subchapter into the
9restricted account not later than 30 days after collection. Any
10interest accrued on the account shall be credited to the account
11for purposes of meeting the requirements of this subchapter. The
12restricted account shall be used to pay for the expenses and
13obligations of the administrator and the unincorporated service
14district. The department may pay for the compensation and
15expenses of the administrator from the restricted account.

16(b) Appropriation.--As much as may be necessary of such
17moneys and interest in the restricted account established under
18subsection (a) is hereby appropriated for the purposes
19authorized by this subchapter.

20Section 446. Audit.

21The Auditor General shall conduct an annual audit of the
22district. The audit shall include a review of the services
23rendered under the essential services plan, the proceeds
24generated by the assessments levied pursuant to section 443 and
25all transactions made by the administrator on behalf of the
26district.

27Section 447. Merger and consolidation; incorporation of
28municipal corporation.

29(a) Merger and consolidation.--

30(1) For the limited purpose of merging or consolidating

1with one or more surrounding municipalities under 53 Pa.C.S.
2Ch. 7 Subch. C (relating to consolidation and merger), the
3residents of the district may file a petition with the county
4board of elections as provided in 53 Pa.C.S. §§ 735 (relating
5to initiative of electors seeking consolidation or merger
6without new home rule charter) and 735.1 (relating to
7initiative of electors seeking consolidation or merger with
8new home rule charter).

9(2) Residents of the district may be nominated to, and
10serve on, a commission formed to study merger or
11consolidation of the district with one or more
12municipalities.

13(3) Upon favorable action by the electorate on
14consolidation or merger, the administrator, in consultation
15with the district advisory committee, may enter into a merger
16or consolidation agreement with the governing bodies of other
17municipalities in accordance with 53 Pa.C.S. § 737 (relating
18to consolidation or merger agreement) and shall provide for
19the transition of the district into a consolidated or merged
20municipality with the same powers and duties as provided by
21law to governing bodies of municipalities.

22(4) The administrator may expend district funds to the
23extent authorized by law for the purpose of merger,
24consolidation or incorporation as provided in subsection (b).

25(b) Incorporation as municipality.--If the secretary
26determines that the district could be incorporated as a viable
27municipality, the residents of the district may establish or
28incorporate the territory of the district as a municipality as
29provided by law.

30(c) Grants permitted.--The department may issue any loan or

1grant authorized under Chapter 3 to a merged, consolidated or
2subsequently incorporated municipality, including the territory
3of the district to provide transitional assistance.

4(d) Assets in trust.--All assets conveyed to the
5Commonwealth to be held in trust, not otherwise transferred
6under the essential services plan or sold to repay the debt of
7the former municipality, shall be conveyed to a merged,
8consolidated or subsequently incorporated municipality,
9including the territory of the district.

10(e) Assumption of debt.--All debt obligations held in trust
11by the Commonwealth on behalf of the former municipality for
12service by a district shall be assumed by a merged, consolidated
13or subsequently incorporated municipality, including the
14territory of the district.

15Section 25. Chapter 5 of the act is repealed:

16[CHAPTER 5

17FUNDING

18Section 501. Appropriation.

19The sum of $5,000,000, appropriated under section 210 of the
20act of July 1, 1986 (P.L.1776, No.5A), known as the General
21Appropriation Act of 1986, shall be used to carry out the
22provisions of this act. The appropriation shall be distributed
23as follows:

24(1) $500,000 shall be used by the department for
25administrative expenses necessary to carry out the provisions
26of this act.

27(2) $4,500,000 shall be used to provide grants and loans
28to municipalities determined to be financially distressed
29pursuant to this act.]

30Section 26. Chapter 6 heading of the act, added October 20,

12011 (P.L.318, No.79), is amended to read:

2CHAPTER 6

3FISCAL EMERGENCIES IN [CITIES OF THE

4THIRD CLASS] MUNICIPALITIES

5Section 27. Sections 601, 602 and 603 of the act, renumbered
6and added October 20, 2011 (P.L.318, No.79), are amended to
7read:

8Section 601. Definitions.

9The following words and phrases when used in this chapter
10shall have the meanings given to them in this section unless the
11context clearly indicates otherwise:

12"Authority." A municipal authority, parking authority or any
13other authority or corporate entity that is directly or
14indirectly controlled by a distressed [city] municipality or to
15which a distressed [city] municipality has power of appointment.
16The term shall not include a joint municipal authority.

17["City." A city of the third class.]

18"Debt obligations." Any obligation to pay money, including
19amounts owed for payments relating to lease rental debt, debt
20service, bonds, notes, guarantees for bonds or notes, trust
21indentures, contracts or other agreements.

22"Distressed [city] municipality." A [city] municipality
23which has been determined to be financially distressed under
24section 203(f).

25"Fiscal emergency." A determination made by the Governor
26under section 602(b).

27"Insolvent." Unable to meet all financial obligations as
28they become due, including payment of debt obligations.

29"Municipality." A municipality as defined in section 103,
30other than a city of the first class.

1"Vital and necessary services." Basic and fundamental
2municipal services, including any of the following:

3(1) Police and fire services.

4(2) Ambulance and rescue services.

5(3) Water supply and distribution.

6(4) Wastewater services.

7(5) Refuse collection and disposal.

8(6) Snow removal.

9(7) Payroll and pension obligations.

10(8) Fulfillment of payment of debt obligations or any
11other financial obligations.

12Section 602. Declaration of fiscal emergency.

13(a) Fiscal emergency.--The Governor determines a fiscal
14emergency exists if the distressed [city] municipality:

15(1) (i) is insolvent or is projected to be insolvent
16within 180 days or less; [or] and

17(ii) is unable to ensure the continued provision of
18vital and necessary services; [and] or

19(2) [(i)] has failed to adopt or implement:

20(i) the coordinator's plan in accordance with 
21Subchapter C or C.1 of Chapter 2; or

22(ii) [has failed to adopt or implement] an
23alternative plan that the secretary has approved under
24section 246.

25(b) Governor.--Upon making a determination that a state of
26fiscal emergency exists, the Governor may declare a state of
27fiscal emergency within the distressed [city] municipality.
28Immediately upon making the declaration, the Governor shall:

29(1) Provide written notice of the declaration to the 
30governing body and, if applicable, the chief executive
 

1officer of the distressed [city] municipality along with a 
2concise statement of facts supporting the determination.

3(2) Direct the secretary to, within ten days of the
4Governor's declaration, develop an emergency action plan to
5ensure that vital and necessary services are maintained
6within the [city] municipality during the state of fiscal
7emergency.

8(c) Secretary.--In developing the emergency action plan, the
9secretary shall consider the financial plan prepared by the
10coordinator under Subchapter C of Chapter 2 and any other
11available plan or information the secretary deems appropriate
12and may employ financial or legal experts to assist in
13addressing the fiscal emergency. Notwithstanding any law to the
14contrary, the employment of such experts shall not be subject to
15contractual competitive bidding procedures.

16Section 603. Notification by the secretary.

17(a) Notice.--Upon completion of the emergency action plan,
18the secretary shall cause the plan to be posted on the
19department's publicly accessible Internet website and shall
20provide written notice of the emergency action plan by overnight
21delivery service, providing proof of receipt, to all members of
22the governing body and, if applicable, the chief executive
23officer of the distressed [city] municipality.

24(b) Publication.--The secretary shall publish once in a
25newspaper of general circulation notice that the emergency
26action plan has been completed. The notice shall specify the
27publicly accessible Internet address of the department's website
28where the plan is posted.

29Section 28. Sections 604, 605, 606, 607, 608, 609 and 610 of
30the act, added October 20, 2011 (P.L.318, No.79), are amended to

1read:

2Section 604. Powers of the Governor.

3(a) Powers.--During the state of fiscal emergency, the
4Governor may exercise the authority of the elected or appointed
5officials of the distressed [city] municipality or authority as
6necessary to ensure the provision of vital and necessary
7services and may delegate the authority to the secretary or a
8designee of the secretary. The emergency powers of the Governor
9shall include the following:

10(1) The power to collect funds payable to the distressed
11[city] municipality and authority and use those funds to pay
12for vital and necessary services.

13(2) The power to obtain emergency financial aid for the
14distressed [city] municipality and authority under Chapter 3
15to pay for vital and necessary services.

16(3) The power to enter into contracts and agreements on
17behalf of the distressed [city] municipality and authority to
18pay for vital and necessary services.

19(4) The power to modify the emergency action plan as
20necessary to ensure the provision of vital and necessary
21services.

22(5) Any other power of the elected or appointed
23officials of the distressed [city] municipality or authority
24to ensure the provision of vital and necessary services.

25(b) Orders.--The Governor may issue an order to an elected
26or appointed official of the distressed [city] municipality or
27an authority to implement any provision of the emergency action
28plan or refrain from taking any action that would interfere with
29the powers granted to the Governor or the goals of the plan. An
30order issued under this subsection shall be enforceable under

1section 606.

2(c) Authorization prohibited.--Neither this chapter nor the
3emergency action plan shall be interpreted to authorize the
4Governor to:

5(1) Unilaterally levy taxes.

6(2) Unilaterally abrogate, alter or otherwise interfere
7with a lien, charge, covenant or relative priority that is:

8(i) held by a holder of a debt obligation of a
9distressed [city] municipality; and

10(ii) granted by the contract, law, rule or
11regulation governing the debt obligation.

12(3) Unilaterally impair or modify existing bonds, notes,
13municipal securities or other lawful contractual or legal
14obligations of the distressed [city] municipality or
15authority[, except as otherwise ordered by a court of
16competent jurisdiction].

17(4) Authorize the use of the proceeds of the sale,
18lease, conveyance, assignment or other use or disposition of
19the assets of the distressed [city] municipality or
20authorities in a manner contrary to section 707.

21(5) Pledge the full faith and credit of the
22Commonwealth.

23Section 605. Elected and appointed officials.

24During a fiscal emergency, the authorities and appointed and
25elected officials of the distressed [city] municipality shall
26continue to carry out the duties of their respective offices,
27except that no decision or action shall conflict with an
28emergency action plan, order or exercise of power by the
29Governor under section 604.

30Section 606. Mandamus.

1The Governor may petition Commonwealth Court to issue a writ
2of mandamus upon any elected or appointed official of the
3distressed [city] municipality or authority to secure compliance
4with an order issued under section 604(b). The court shall grant
5the relief requested within 14 days of the filing of the
6petition if it determines that the order was issued in
7compliance with this chapter.

8Section 607. Consent agreement.

9(a) Negotiations.--Within eight days of the declaration of a
10fiscal emergency, the governing body and, if applicable, the
11chief executive officer of the distressed [city] municipality
12shall convene a special public meeting to negotiate a consent
13agreement. The meeting shall be attended by the secretary or
14secretary's designee. Negotiations among creditors and any of
15the parties in this subsection shall be conducted in accordance
16with section 223(b).

17(b) Contents.--

18(1) The consent agreement shall incorporate a plan
19setting forth measures designed to provide long-term
20financial stability to the distressed [city] municipality
21after the termination of the fiscal emergency.

22(2) The consent agreement shall include all of the
23following:

24(i) Continued provision of vital and necessary
25services.

26(ii) Payment of the lawful financial obligations of 
27the distressed [city] municipality and authority. This 
28subparagraph includes debt obligations, municipal 
29securities, lease rental obligations, legal obligations 
30and consensual modifications of existing obligations,
 

1except as otherwise ordered by a court of competent 
2jurisdiction.

3(iii) Timely deposit of required payments to the
4pension fund for the distressed [city] municipality and
5each authority or the fund in which the distressed [city]
6municipality and each authority participates.

7(iv) Legislative and administrative actions to be
8taken by the elected or appointed officials of the
9distressed [city] municipality during the term of the
10consent agreement.

11(3) The consent agreement may include:

12(i) The sale, lease, conveyance, assignment or other
13use or disposition of the assets of the distressed [city]
14municipality or authority.

15(ii) Approval, modification, rejection,
16renegotiation or termination of contracts or agreements
17of the distressed [city] municipality or authorities.

18(iii) Execution of new contracts or agreements.

19(4) The consent agreement may not include any of the
20following:

21(i) Projections of revenue from a tax or tax rate
22not currently authorized by law.

23(ii) Provisions that unilaterally abrogate, alter or
24otherwise interfere with a lien, charge, covenant or
25relative priority, that is:

26(A) held by a holder of a debt obligation of a
27distressed [city] municipality; and

28(B) granted by the contract, law, rule or
29regulation governing the debt obligation.

30(iii) Provisions that unilaterally impair or modify

1existing bonds, notes, municipal securities or other
2lawful contractual or legal obligations of the distressed
3[city] municipality or authority[, except as otherwise
4ordered by a court of competent jurisdiction].

5(iv) Provisions that authorize the use of the
6proceeds of the sale, lease, conveyance, assignment or
7other use or disposition of the assets of the distressed
8[city] municipality or authorities in a manner contrary
9to section 707.

10(v) Any increase in the rate of an earned income tax
11imposed on nonresident workers.

12(c) Ordinance.--Notwithstanding any law to the contrary, the
13following shall apply:

14(1) Upon approval by a majority vote of the governing
15body of the distressed [city] municipality, the consent
16agreement shall be presented to the secretary within 20 days
17of the declaration of fiscal emergency.

18(2) The secretary shall approve or disapprove the
19consent agreement within three days.

20(3) If the secretary determines that the consent
21agreement is sufficient to overcome the distressed [city's]
22municipality's financial distress and approves the agreement,
23the governing body shall enact the consent agreement in the
24form of an ordinance within seven days of approval by the
25secretary.

26(4) The ordinance shall provide that, in the event of a
27breach or unilateral modification of the consent decree by
28the governing body or an elected or appointed official, the
29Governor may institute or reinstitute proceedings under
30Chapter 7.

1(d) Consent to proceedings under Chapter 7.--In addition to
2breach or modification of the consent agreement under subsection
3(c), the following shall be deemed consent to proceedings under
4Chapter 7:

5(1) Failure of the governing body of the distressed
6[city] municipality to convene or the failure of a quorum of
7the governing body to participate in a special public meeting
8required by subsection (a).

9(2) Failure of the governing body or, if applicable, the
10chief executive officer to enact a valid ordinance under
11subsection (c).

12(3) Failure of the distressed [city] municipality to
13comply with the consent agreement or provision of an
14ordinance enacted under subsection (c).

15(4) Enactment by the distressed [city] municipality of
16an amendment to the ordinance enacted in subsection (c) in
17violation of subsection (e).

18(e) Amendment.--The ordinance may be amended upon the
19approval of the secretary.

20(f) Collective bargaining.--A collective bargaining
21agreement or arbitration settlement executed following the
22enactment of an ordinance under this section may not in any
23manner violate, expand or diminish the provisions of the consent
24agreement, provided, however, that the provisions of section 252 
25shall apply to any consent agreement adopted in accordance with 
26this subchapter.

27Section 608. Termination of fiscal emergency and suspension of
28powers.

29(a) [Financial] Fiscal emergency.--A fiscal emergency shall
30end upon certification by the secretary that the [city is no

1longer financially distressed.] municipality:

2(1) is solvent and is not projected to be insolvent
3within 180 days or less; and

4(2) is able to ensure the continued provision of vital
5and necessary services after the termination of the fiscal
6emergency.

7(b) Governor's powers.--The emergency powers of the Governor
8under this chapter shall be suspended upon the enactment and
9continued implementation of an ordinance under section 607 or
10entry of a judicial order appointing a receiver under section
11702.

12Section 609. Restrictions.

13(a) Earned income tax on nonresidents.--A distressed [city]
14municipality subject to this chapter or Chapter 7 may not
15petition a court of common pleas for an increase in the rate of
16an earned income tax imposed on nonresident workers under
17section 123(c) [until the secretary terminates the distress
18status of the city under section 253] unless the conditions 
19under section 710.1(c) are met.

20(b) Municipal debt adjustment.--A distressed [city]
21municipality subject to this chapter or Chapter 7 may not file a
22municipal debt adjustment action under the Bankruptcy Code (11
23U.S.C. § 101 et seq.) except to the extent authorized under
24Chapter 7.

25Section 610. Applicability.

26(a) Statement.--

27(1) This chapter shall apply only to distressed [cities]
28municipalities.

29(2) Except as set forth in subsection (b), nothing in
30this chapter is intended to limit or otherwise abrogate the

1applicability of any other part of this act.

2(b) Conflict.--If there is a conflict between a provision of
3this chapter and any other provision of this act, the provision
4of this chapter shall prevail.

5Section 29. Chapter 7 heading of the act, added October 20,
62011 (P.L.318, No.79), is amended to read:

7CHAPTER 7

8RECEIVERSHIP IN [CITIES OF THE

9THIRD CLASS] MUNICIPALITIES

10Section 30. Sections 701, 702, 703, 704, 705(g), 706, 707,
11708 and 709 of the act, added October 20, 2011 (P.L.318, No.79),
12are amended to read:

13Section 701. Definitions.

14The following words and phrases when used in this chapter
15shall have the meanings given to them in this section unless the
16context clearly indicates otherwise:

17"Authority." A municipal authority, parking authority or any
18other authority or corporate entity that is directly or
19indirectly controlled by a distressed [city] municipality or to
20which a distressed [city] municipality has power of appointment.
21The term shall not include a joint municipal authority.

22["City." A city of the third class.]

23"Debt obligations." Any obligation to pay money, including
24amounts owed for payments relating to lease rental debt, debt
25service, bonds, notes, guarantees for bonds or notes, trust
26indentures, contracts or other agreements.

27"Distressed [city] municipality." A [city] municipality
28which has been determined to be financially distressed under
29section 203(f).

30"Fiscal emergency." A determination made by the Governor

1under section 602(b).

2"Insolvent." Unable to meet all financial obligations as
3they become due, including payment of debt obligations.

4"Vital and necessary services." Basic and fundamental
5municipal services, including any of the following:

6(1) Police and fire services.

7(2) Ambulance and rescue services.

8(3) Water supply and distribution.

9(4) Wastewater services.

10(5) Refuse collection and disposal.

11(6) Snow removal.

12(7) Payroll and pension obligations.

13(8) Fulfillment of payment of debt obligations or any
14other financial obligations.

15Section 702. Receivership.

16(a) Receiver.--Following the issuance of a declaration of
17fiscal emergency under section 602(b), the Governor may direct
18the secretary to file a petition in Commonwealth Court to
19appoint the individual named in the petition as a receiver for
20the distressed [city] municipality. The court shall have no
21authority to appoint anyone other than the individual named in
22the petition as the receiver.

23(b) Service and notice.--

24(1) The secretary shall serve the petition upon:

25(i) the governing body of the distressed [city]
26municipality;

27(ii) the chief executive officer of the distressed
28[city] municipality; and

29(iii) the governing body of each authority.

30(2) The secretary must publish notice of the filing of

1the petition once in a newspaper of general circulation.

2(c) Hearing.--Upon notification of the Governor of the
3failure of the distressed [city] municipality to adopt a valid
4ordinance under section 607, Commonwealth Court shall conduct a
5hearing within 15 days on the petition.

6(d) Determination.--No later than 60 days following the
7filing of a petition under this section, the court shall issue
8an order under subsection (e) if it finds by a preponderance of
9the evidence that all of the following apply:

10(1) Thirty days have passed since the declaration of a
11fiscal emergency.

12(2) There has been a failure by:

13(i) the governing body of the distressed [city]
14municipality to adopt an ordinance under section 607;

15(ii) the governing body of the distressed [city]
16municipality to implement an ordinance under section 607;
17[or]

18(iii) an elected or appointed official of the
19distressed city or authority to strictly comply with an
20order issued by the Governor under section 604[.]; or

21(iv) (Reserved).

22(3) A fiscal emergency under section 602(a) continues to
23exist.

24(e) Order.--An order issued under this subsection shall:

25(1) set forth the findings under subsection (d);

26(2) grant the petition and declare the distressed [city]
27municipality to be in receivership;

28(3) appoint the individual named in the petition to be
29the receiver for a period not to exceed two years, subject to
30extension under section 710(b);

1(4) direct the receiver to develop a recovery plan
2within 30 days under section 703 and submit it to the court,
3the secretary, the governing body and, if applicable, the
4chief executive officer of the distressed [city]
5municipality; and

6(5) require and empower the receiver to implement the
7emergency action plan developed by the secretary under
8section 602 until a recovery plan developed by the receiver
9is approved by the court under section 703.

10(f) Additional actions.--

11(1) The Governor may direct the secretary to file a
12petition in Commonwealth Court to appoint an individual named
13in the petition as a receiver for the distressed [city]
14municipality if the distressed [city] municipality fails to
15comply with or has amended the ordinance without the approval
16of the secretary under section 607(d)(3) or (4).

17(2) The court shall conduct a hearing on the petition
18under paragraph (1) within 15 days of the filing of the
19petition.

20(3) No later than 60 days following the filing of the 
21petition under paragraph (1), the court shall issue an order 
22under subsection (e) if it finds by a preponderance of the 
23evidence that the distressed [city] municipality has failed 
24to comply with section 607(d)(3) or (4).

25Section 703. Recovery plan.

26(a) Issuance.--Within 30 days of the appointment of the
27receiver, the recovery plan required under section 702(e)(4)
28shall be furnished to Commonwealth Court, the secretary and the
29governing body and, if applicable, the chief executive officer
30of the distressed [city] municipality.

1(b) Contents.--The receiver shall consider the plan prepared
2by the coordinator under section 241 and any other existing
3alternate plans in the development of the recovery plan. The
4following shall apply:

5(1) The recovery plan shall provide for all of the
6following:

7(i) Continued provision of vital and necessary
8services.

9(ii) Payment of the lawful financial obligations of 
10the distressed [city] municipality and authorities. This 
11subparagraph includes debt obligations, municipal 
12securities, lease rental obligations, legal obligations 
13and consensual modifications of existing obligations.

14(iii) Timely deposit of required payments to the
15pension fund in which the distressed [city] municipality
16and each authority participates.

17(2) The recovery plan may include:

18(i) the sale, lease, conveyance, assignment or other
19use or disposition of the assets of the distressed [city]
20municipality or authority;

21(ii) the approval, modification, rejection,
22renegotiation or termination of contracts or agreements
23of the distressed [city] municipality or authorities,
24except to the extent prohibited by the Constitutions of
25the United States and Pennsylvania;

26(iii) the execution of new contracts or agreements;
27and

28(iv) other information the receiver deems
29appropriate.

30(c) Restrictions.--The recovery plan may not do any of the

1following:

2(1) Unilaterally levy taxes.

3(2) Unilaterally abrogate, alter or otherwise interfere
4with a lien, charge, covenant or relative priority that is:

5(i) held by a holder of a debt obligation of a
6distressed [city] municipality; and

7(ii) granted by the contract, law, rule or
8regulation governing the debt obligation.

9(3) Unilaterally impair or modify existing bonds, notes,
10municipal securities or other lawful contractual or legal
11obligations of the distressed [city] municipality or
12authority[, except as otherwise ordered by a court of
13competent jurisdiction].

14(4) Authorize the use of the proceeds of the sale,
15lease, conveyance, assignment or other use or disposition of
16the assets of the distressed [city] municipality or authority
17in a manner contrary to section 707.

18(d) Confirmation.--Commonwealth Court shall conduct a
19hearing on the recovery plan within 30 days of the receipt of
20the plan from the receiver. The court shall confirm the plan
21within 60 days of the receipt of the plan unless it finds clear
22and convincing evidence that the plan is arbitrary, capricious
23or wholly inadequate to alleviate the fiscal emergency in the
24distressed [city] municipality.

25(e) Modification of plan.--The receiver shall notify the
26Commonwealth Court of any modification to the plan. The court
27may conduct a hearing on the modification within 30 days of its
28receipt. The court shall confirm the modification within 60 days
29of receipt of notification of the modification unless it finds
30clear and convincing evidence that the recovery plan as modified

1is arbitrary, capricious or wholly inadequate to alleviate the
2fiscal emergency in the distressed [city] municipality.

3Section 704. Confirmation.

4(a) Effect of confirmation.--The confirmation of the
5recovery plan and any modification to the receiver's plan under
6section 703 shall have the effect of:

7(1) imposing on the elected and appointed officials of
8the distressed [city] municipality or an authority a
9mandatory duty to undertake the acts set forth in the
10recovery plan;

11(2) suspending the authority of the elected and
12appointed officials of the distressed [city] municipality or
13an authority to exercise power on behalf of the distressed
14[city] municipality or authority pursuant to law, charter,
15ordinance, rule or regulation to the extent that the power
16would interfere with the powers granted to the receiver or
17the goals of the recovery plan; and

18(3) superseding the emergency action plan developed by
19the secretary under section 602.

20(b) Form of government.--Confirmation of the recovery plan
21and any modification to the plan under section 703 shall not be
22construed to:

23(1) change the form of government of the distressed
24[city] municipality or an authority; or

25(2) except as set forth in subsection (a), affect powers
26and duties of elected and appointed officials of the
27distressed [city] municipality or an authority.

28(c) Collective bargaining.--A collective bargaining
29agreement or arbitration settlement executed after confirmation
30of a recovery plan may not, in any manner, violate, expand or

1diminish the provisions of the recovery plan, provided, however, 
2that the provisions of section 252 shall apply to any recovery 
3plan adopted in accordance with this chapter.

4Section 705. Receiver.

5* * *

6(g) Liability.--The receiver shall not be liable personally 
7for any obligations of the distressed [city] municipality or 
8authority. It is declared to be the intent of the General 
9Assembly that the receiver shall enjoy sovereign and official 
10immunity as provided in 1 Pa.C.S. § 2310 (relating to sovereign 
11immunity reaffirmed; specific waiver) and shall remain immune 
12from suit except as provided by and subject to the provisions of 
1342 Pa.C.S. Ch. 85 Subchs. A (relating to general provisions) and 
14B (relating to actions against Commonwealth parties).

15Section 706. Powers, duties and prohibited actions.

16(a) Powers and duties.--Notwithstanding any other provision
17of law, the receiver shall have the following powers and duties:

18(1) To require the distressed [city] municipality or
19authority to take actions necessary to implement the recovery
20plan under section 703.

21(2) To modify the recovery plan as necessary to achieve
22financial stability of the distressed [city] municipality and
23authorities in accordance with section 703.

24(3) To require the distressed [city] municipality or
25authority to negotiate intergovernmental cooperation
26agreements between the distressed [city] municipality and
27other political subdivisions in order to eliminate and avoid
28deficits, maintain sound budgetary practices and avoid
29interruption of municipal services.

30(4) To submit quarterly reports to the governing body

1and, if applicable, the chief executive officer of the
2distressed [city] municipality and to the department. The
3reports shall be posted on [the] a publicly accessible
4Internet website [for] maintained by the distressed [city]
5municipality.

6(5) To require the distressed [city] municipality or
7authority to cause the sale, lease, conveyance, assignment or
8other use or disposition of the distressed [city's]
9municipality's or authority's assets in accordance with
10section 707.

11(6) To approve, disapprove, modify, reject, terminate or
12renegotiate contracts and agreements with the distressed
13[city] municipality or authority, except to the extent
14prohibited by the Constitutions of the United States and
15Pennsylvania.

16(7) To direct the distressed [city] municipality or
17authority to take any other action to implement the recovery
18plan.

19(8) To attend executive sessions of the governing body
20of the distressed [city] municipality or authority and make
21reports to the public on implementation of the recovery plan.

22(9) [After July 1, 2012, to] To file a municipal debt 
23adjustment action under the Bankruptcy Code (11 U.S.C. § 101 
24et seq.) and to act on the [city's] municipality's behalf in 
25the proceeding. The power under this paragraph shall only be 
26exercised upon the written authorization of the secretary. 
27The filing of a municipal debt adjustment action under this 
28paragraph and any plan of the receiver accepted by the 
29Federal court shall be considered a modification of the 
30recovery plan, except that the modification shall not be
 

1subject to judicial review under section 709. A recovery plan 
2submitted to and approved by the Federal court under a 
3Federal municipal debt adjustment action may include Federal 
4remedies not otherwise available under this chapter.

5(10) To meet and consult with the advisory committee
6under section 711.

7(11) To employ financial or legal experts deemed
8necessary to develop and implement the recovery plan.
9Notwithstanding any law to the contrary, the employment of
10such experts shall not be subject to contractual competitive
11bidding procedures.

12(b) Authorization prohibited.--Neither this chapter nor the
13recovery plan shall be interpreted to authorize the receiver to
14do any of the following:

15(1) Unilaterally levy taxes.

16(2) Unilaterally abrogate, alter or otherwise interfere
17with a lien, charge, covenant or relative priority that is:

18(i) held by a holder of a debt obligation of a
19distressed [city] municipality; and

20(ii) granted by the contract, law, rule or
21regulation governing the debt obligation.

22(3) Unilaterally impair or modify existing bonds, notes,
23municipal securities or other lawful contractual or legal
24obligations of the distressed [city] municipality or
25authority[, except as otherwise ordered by a court of
26competent jurisdiction].

27(4) Authorize the use of the proceeds of the sale, 
28lease, conveyance, assignment or other use or disposition of 
29the assets of the distressed [city] municipality or authority 
30in a manner contrary to section 707.

1Section 707. Use or disposition of assets.

2(a) Use of proceeds.--The proceeds from any sale, lease,
3conveyance, assignment or other use or disposition of assets of
4the distressed [city] municipality or authority shall be applied
5to the payment of outstanding debt obligations owed by the
6distressed [city] municipality or authority, subject to any
7lien, charge, covenant, restriction, contract, law, rule or
8regulation, that encumbers or is otherwise applicable to the
9assets. Proceeds remaining after payment of outstanding debt
10obligations owed by the distressed [city] municipality or
11authority may be used by the receiver to restructure or provide
12escrow for the payment of future debt obligations or to meet
13operating and capital needs of the distressed [city]
14municipality or authority.

15(b) Prohibitions.--Nothing under this section shall be
16construed to authorize the receiver to unilaterally abrogate,
17alter or otherwise interfere with a lien, charge, covenant or
18relative priority that is:

19(1) held by a holder of a debt obligation of a
20distressed [city] municipality; and

21(2) granted by the contract, law, rule or regulation
22governing the debt obligation.

23Section 708. Elected and appointed officials.

24(a) Orders.--The receiver may issue an order to an elected
25or appointed official of the distressed [city] municipality or
26an authority to:

27(1) implement any provision of the recovery plan; and

28(2) refrain from taking any action that would interfere
29with the powers granted to the receiver or the goals of the
30recovery plan.

1(b) Enforcement.--An order issued under subsection (a) shall
2be enforceable under section 709.

3Section 709. Judicial actions.

4(a) Action by receiver.--The receiver may petition
5Commonwealth Court to issue a writ of mandamus upon any elected
6or appointed official of the distressed [city] municipality or
7authority to secure compliance with an order issued under
8section 708. The court shall grant or deny the relief within 14
9days of the filing of the petition. The court shall grant the
10relief requested if it determines that the order was issued in
11compliance with this chapter.

12(b) Action by elected or appointed officials.--Any elected 
13or appointed official of a distressed [city] municipality or 
14authority may petition Commonwealth Court to enjoin any action 
15of the receiver that is contrary to this chapter.

16Section 30.1. Section 710 of the act is amended by adding a
17subsection to read:

18Section 710. Termination of receivership.

19* * *

20(c) Termination of fiscal emergency.--Notwithstanding the
21date of expiration of receivership under subsection (a) or an
22extension of receivership under subsection (b), the receivership
23shall terminate upon the secretary's termination of a fiscal
24emergency under section 608(a).

25Section 31. The act is amended by adding a section to read:

26Section 710.1. Continuation of recovery plan.

27(a) Administrative determination required.--Within 30 days
28of the termination or expiration of the receivership under
29section 710, the secretary shall issue one of the following
30administrative determinations:

1(1) conditions within the municipality warrant a
2termination in status in accordance with section 255.1; or

3(2) the municipality continues to be financially
4distressed.

5(b) Appointment of coordinator.--Upon a determination under
6subsection (a)(2), a recovery plan adopted under section 703
7shall remain in effect and be deemed to be a plan adopted under
8Chapter 2. The secretary shall appoint a coordinator in
9accordance with section 221. The receiver may be appointed as
10coordinator. The coordinator shall implement the recovery plan
11under section 247(a) subject to the following:

12(1) The plan shall be subject to amendment in accordance
13with section 249, provided that nothing in this section shall
14authorize the impairment of existing lawful contractual or
15legal obligations of the distressed municipality except where
16otherwise permitted by law.

17(2) The coordinator may exercise the same powers and
18duties of this chapter as a receiver for the purposes of
19issuing orders under section 708, and seek enforcement of
20such orders under section 709. The Commonwealth Court shall
21retain jurisdiction to hear an action under this paragraph.

22(3) The plan shall terminate as provided in section
23254(b)(2).

24(c) Conditions for increasing taxes on nonresident income.--
25Notwithstanding any other provision of law, a municipality
26exiting receivership and subject to a determination under
27subsection (a)(2) shall be subject to the same requirements as a
28city of the second class A under section 123(c)(3) before being
29authorized to increase the rate of taxation on nonresident
30income.

1Section 32. Sections 711(a) and (b) and 712(a)(1) of the
2act, added October 20, 2011 (P.L.312, No.79), are amended to
3read:

4Section 711. Municipal financial recovery advisory committee.

5(a) Establishment.--[There is established a] A municipal
6financial recovery advisory committee is established to meet and
7consult with the receiver in carrying out the duties under this
8chapter. The sole function of the advisory committee shall be to
9provide recommendations and feedback to the receiver on the
10implementation of the recovery plan.

11(b) Composition.--The advisory committee established under
12subsection (a) shall be comprised of the following:

13(1) The chief executive officer, if any, of the
14distressed [city] municipality or a designee.

15(2) The president of the governing body of the
16distressed [city] municipality or a designee.

17(3) One member appointed by the county commissioners of
18the county where the distressed [city] municipality is
19located.

20(4) One member appointed by the Governor.

21* * *

22Section 712. Applicability.

23(a) Statement.--

24(1) This chapter shall apply only to distressed [cities]
25municipalities.

26* * *

27Section 33. This act shall apply as follows:

28(1) The addition of section 122(c) of the act shall
29apply to any and all regulations in effect on the effective
30date of this section.

1(2) The amendment or addition of sections 608, 710 and
2710.1(a) and (b) of the act shall not apply to a municipality
3that entered receivership prior to the effective date of this
4section and shall not supersede or constitute grounds to
5modify any order of court issued prior to the effective date
6of this section.

7Section 34. This act shall take effect in 60 days.