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PRINTER'S NO. 2210
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1935
Session of
2021
INTRODUCED BY WHITE, McCLINTON, SOLOMON, R. BROWN, DRISCOLL,
KINSEY, MIZGORSKI, NEILSON, PENNYCUICK, SANCHEZ, SMITH,
TOMLINSON, TWARDZIK, C. WILLIAMS AND D. WILLIAMS,
SEPTEMBER 29, 2021
REFERRED TO COMMITTEE ON URBAN AFFAIRS, SEPTEMBER 29, 2021
AN ACT
Amending the act of June 5, 1991 (P.L.9, No.6), entitled "An act
providing for the financial stability of cities of the first
class; establishing an authority empowered to assist cities
of the first class in their financial affairs and to issue
findings and recommendations to cities of the first class and
to the General Assembly; creating the authority and providing
for its powers and duties; authorizing each city of the first
class and the authority to enter into intergovernmental
cooperation agreements and specifying certain terms of such
agreements and ordinances whereby cities of the first class
enter into such agreements; empowering the authority to incur
indebtedness, receive revenues, acquire the obligations of
assisted cities, make loans and offer other financial
assistance to such cities subject to conditions; establishing
procedures for the preparation and review of financial plans
of cities of the first class while bonds of the authority are
outstanding and providing remedies for failure to adhere to
such plans; requiring certain contracts to be consistent with
the financial plan; making certain provisions with respect to
short-term borrowing by cities of the first class;
establishing procedures for handling authority funds, and
providing for certain payments to the authority; providing
security for bonds and notes issued by the authority;
authorizing the creation of a debt service reserve fund and
providing for its maintenance; granting to the holders of the
authority's indebtedness and to the authority certain
remedies in the event of default by the authority or by an
assisted city on authorized obligations; authorizing cities
of the first class to receive financial assistance from the
authority under certain terms and conditions; establishing
the method for the appointment and composition of the
authority board; prohibiting the authority and assisted
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cities from filing a petition under Federal bankruptcy
statutes; authorizing an appropriation for authority
operating expenses; authorizing cities of the first class to
impose an optional sales and use tax; authorizing cities of
the first class to impose certain taxes for the authority;
authorizing emergency payment deferral; and providing
jurisdiction for challenges to this act," in general
provisions, further providing for purpose and legislative
intent, for legislative findings and for definitions; in
Pennsylvania Intergovernmental Cooperation Authority, further
providing for powers and duties, for term of existence of
authority, for financial plan of an assisted city, for powers
and duties of authority with respect to financial plans and
for limitation on authority and on assisted cities to file
petition for relief under Federal bankruptcy law; in bonds
and funds of authority, further providing for bonds, for
final date for issuance of bonds and for city payment of
authority bonds; in Pennsylvania Intergovernmental
Cooperation Authority tax, further providing for duration of
tax; in miscellaneous provisions, providing for applicability
of other law; and making related repeals.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 102(b) of the act of June 5, 1991 (P.L.9,
No.6), known as the Pennsylvania Intergovernmental Cooperation
Authority Act for Cities of the First Class, is amended to read:
Section 102. Purpose and legislative intent.
(a) * * *
(b) Legislative intent.--
(1) It is the intent of the General Assembly to:
(i) provide cities of the first class with the legal
tools with which such cities can eliminate budget
deficits that render them unable to perform essential
municipal services;
(ii) create an authority that will enable cities of
the first class to access capital markets for deficit
elimination and seasonal borrowings to avoid default on
existing obligations and chronic cash shortages that will
disrupt the delivery of municipal services[;] and to
maintain and enhance the sound financial planning and
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budgetary practices that the authority has fostered;
(iii) foster sound financial planning and budgetary
practices that will address the underlying problems which
result in such deficits for cities of the first class[,]
and that will allow for the maintenance and enhancement
of the sound fiscal status of such cities, which [city]
cities shall be charged with the responsibility to
exercise efficient and accountable fiscal practices, such
as:
(A) increased managerial accountability;
(B) consolidation or elimination of inefficient
city programs;
(C) recertification of tax-exempt properties;
(D) increased collection of existing tax
revenues;
(E) privatization of appropriate city services;
(F) sale of city assets as appropriate;
(G) improvement of procurement practices
including competitive bidding procedures; and
(H) review of compensation and benefits of city
employees; and
(iv) exercise its powers consistent with the rights
of citizens to home rule and self-government.
(2) The General Assembly further declares that this
legislation is intended to remedy the fiscal emergency
confronting cities of the first class through the
implementation of sovereign powers of the Commonwealth with
respect to taxation, indebtedness and matters of Statewide
concern and to ensure that such an emergency does not repeat
itself. To safeguard the rights of the citizens to the
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electoral process and home rule, the General Assembly intends
to exercise its power in an appropriate manner with the
elected officers of cities of the first class.
(3) The General Assembly further declares that this
legislation is intended to authorize the imposition of a tax
or taxes to provide a source of funding for an
intergovernmental cooperation authority to enable it to
assist cities of the first class and to incur debt of such
authority for such purposes; however, the General Assembly
intends that such debt shall not be a debt or liability of
the Commonwealth or a city of the first class nor shall debt
of the authority payable from and secured by such source of
funding create a charge directly or indirectly against
revenues of the Commonwealth or a city of the first class.
Section 2. Section 103 of the act is amended by adding
paragraphs to read:
Section 103. Legislative findings.
It is hereby determined and declared as a matter of
legislative finding:
* * *
(23) That the authority and each assisted city have
demonstrated the soundness and effectiveness of the tools
provided for by this act in maintaining and enhancing the
fiscal soundness of cities of the first class and that the
continued existence and use of such tools will allow each
assisted city to further maintain and enhance fiscal
soundness.
(24) That cities of the first class have ongoing
critical infrastructure and other capital needs and the
ability of cities of the first class to access the capital
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markets at favorable interest rates through bonds issued by
the authority will maintain and enhance the ability of cities
of the first class to meet the capital needs.
Section 3. The definition of "assisted city" in section 104
of the act is amended to read:
Section 104. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Assisted city." A city of the first class which receives
assistance, including oversight or consultation, from the
Pennsylvania Intergovernmental Cooperation Authority created by
this act.
* * *
Section 4. Sections 203(c)(8), 204, 209(a), (b), (e) and (h)
(1), 210(a), 211(a) and (d), 301(e), 319, 320 and 602 of the act
are amended to read:
Section 203. Powers and duties.
* * *
(c) Specific powers.--In addition to the powers and duties
set forth elsewhere in this act, the authority shall have the
specific powers:
* * *
(8) To [exercise, while any bonds issued by the
authority to assist the city remain outstanding,] exercise
powers of review concerning the budgetary and fiscal affairs
of [that] the city consistent with this act and the city's
home rule charter or other optional plan of government.
* * *
Section 204. Term of existence of authority.
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(a) General rule.--The authority shall have continuing
existence and succession [for a term not exceeding one year
after all of its liabilities, including, without limitation, its
bonds, have been fully paid and discharged.] until the later of:
(1) January 2, 2047; or
(2) one year after all of the authority's liabilities,
including without limitation, its bonds, have been fully paid
or discharged or, in the case of authority bonds, one year
after provision for such payment shall have been made as
provided for in the applicable bond indenture.
(b) Property at termination.--Upon the termination of the
existence of the authority, all of its rights and properties,
including funds remaining in the debt service reserve fund,
shall be paid to the Commonwealth to the extent the Commonwealth
has contributed such rights or property; otherwise, such rights
or property shall pass to and be vested in the assisted city.
Section 209. Financial plan of an assisted city.
(a) Requirement of a financial plan.--[While any bonds
issued by the authority to assist a city remain outstanding,]
Until such time as the authority's existence is terminated as
provided in section 204, an assisted city shall develop,
implement and periodically revise a financial plan as described
in this section. The authority shall not provide the net
proceeds of the initial bond issue described in section 317 and
any subsequent bond issue, other than any amounts necessary to
enable such city to pay principal of or interest on its
outstanding bonds, or lease payments securing bonds of other
government agencies, which payments, in the authority's
discretion, may be made directly to the paying agents for such
bonds, until the authority and the city have agreed upon such a
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plan.
(b) Elements of plan.--The financial plan shall include:
(1) Projected revenues and expenditures of the principal
operating fund or funds of the city for five fiscal years
consisting of the current fiscal year and the next four
fiscal years.
(2) Plan components that will:
(i) eliminate any projected deficit for the current
fiscal year and for subsequent fiscal years;
(ii) restore to special fund accounts money from
those accounts used for purposes other than those
specifically authorized;
(iii) balance the current fiscal year budget and
subsequent budgets in the financial plan through sound
budgetary practices, including, but not limited to,
reductions in expenditures, improvements in productivity,
increases in revenues or a combination of these steps;
(iv) provide procedures to avoid a fiscal emergency
condition in the future; and
(v) enhance the ability of the city to regain,
improve or maximize access to the short-term and long-
term credit markets.
* * *
(e) Annual submission of plan.--An assisted city shall
develop, and the authority shall review and act upon, an initial
five-year financial plan for the city as soon as practicable
after the effective date of this act. During each subsequent
fiscal year while [bonds of the authority are outstanding,] the
requirements of subsection (a) are applicable, the mayor or
chief executive officer of each assisted city shall, at least
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100 days prior to the beginning of its fiscal year or on such
other date as the authority may approve upon the request of the
assisted city, prepare and submit its proposed five-year plan.
At the same time the plan is submitted, the mayor or chief
executive officer shall also submit to the authority:
(1) the mayor's or chief executive officer's proposed
annual operating budget and capital budget which shall be
consistent with the first year of the financial plan and
which shall be prepared in accordance with the assisted
city's home rule charter or other optional plan of
government; and
(2) a statement by the mayor or chief executive officer
that such budget:
(i) is consistent with the financial plan;
(ii) contains funding adequate for debt service
payments, legally mandated services and lease payments
securing bonds of other government agencies; and
(iii) is based upon reasonable and appropriate
assumptions and methods of estimation.
* * *
(h) Revisions to plan.--
(1) While [any bonds of the authority remain
outstanding,] the requirements of subsection (a) remain
applicable, the plan shall be revised on an annual basis to
include the operating budget for the next fiscal year and to
extend the plan for an additional fiscal year. In addition,
the mayor or chief executive officer of an assisted city
shall, within 90 days of assuming office, propose revisions
to the financial plan or certify to the authority that he or
she adopts the existing plan. A city may, during the course
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of a fiscal year, submit proposed revisions to the financial
plan and shall submit a proposed revision for any amendment
to the city's operating or capital budget.
* * *
Section 210. Powers and duties of authority with respect to
financial plans.
(a) Formulation and approval of plan.--To enhance the
security of bonds issued by the [authority, to minimize the need
for future borrowing by the] authority and to advance the
financial recovery or fiscal health of each assisted city, the
authority shall require such city to submit a five-year
financial plan in accordance with section 209. With regard to
the formulation of such plan, the authority shall:
(1) Consult with an assisted city as it prepares the
financial plan.
(2) Prescribe the form of the financial plan, insofar as
that form is consistent with an assisted city's home rule
charter or other optional plan of government and with this
act.
(3) Prescribe the supporting information required in
connection with such plan, such information to include at a
minimum:
(i) debt service payments due or projected to be due
during the relevant fiscal years;
(ii) payments for legally mandated services included
in the plan and due or projected to be due during the
relevant fiscal years; and
(iii) a statement in reasonable detail of the
significant assumptions and methods of estimation used in
arriving at the projections in the plan.
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(4) Exercise any rights of approval or disapproval and
issue such recommendations as are authorized by this act in
accordance with the standards for formulation of the plan set
forth in section 209(c).
* * *
Section 211. Limitation on authority and on assisted cities to
file petition for relief under Federal bankruptcy
law.
(a) Limitation on bankruptcy filing.--Notwithstanding any
other provision of law, so long as the authority shall have
[outstanding any bonds issued pursuant to this act,] any power
or duty under this act, the authority and any assisted city
shall not be authorized to file a petition for relief under 11
U.S.C. Ch. 9 (relating to bankruptcy) or any successor Federal
bankruptcy law, and no government agency shall authorize the
authority or such city to become a debtor under 11 U.S.C. Ch. 9
or any successor Federal bankruptcy law.
* * *
(d) Effective date.--Subsections (b) and (c) shall take
effect on the effective date of this act and shall apply to an
assisted city whenever the authority does not have any
[outstanding bonds issued pursuant to] power or duty under this
act.
Section 301. Bonds.
* * *
(e) Use of proceeds.--The proceeds of an issue of bonds may
be used to pay the costs of issuance of such bonds, to pay costs
of administration of authority assistance to a city, to fund
reserves for such bonds, to capitalize interest on such bonds
for a period not to exceed 12 months, to fund an existing or
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projected deficit of a city or to provide for other financial
assistance to a city, to finance any cash flow deficit of a city
or of the authority or to purchase any obligations of a city
issued to finance cash flow deficits or to pay the costs of
capital projects; provided that the authority shall not issue
bonds to finance the costs of a capital project in and for an
assisted city unless it receives the request described in
subsection (g). [accompanied by a certification that the
assisted city cannot obtain financing for such capital projects
at reasonable rates except through the issuance of authority
bonds and that the construction or acquisition of such capital
projects is a material element of such city's approved financial
plan and the authority determines by a qualified majority of the
board that the capital project is:
(1) an emergency capital project which must necessarily
be undertaken as a direct result of an order by a court of
competent jurisdiction or for the repair or replacement of an
existing facility that had been placed in service prior to
the effective date of this act and is owned or occupied by a
city on the effective date of this act; or
(2) a capital project necessary to achieve savings and
balanced budgets under an approved financial plan.
In addition to the requirement of a qualified majority of the
board, the Governor and either the Auditor General or State
Treasurer shall certify that a capital project under paragraph
(2) is a capital project necessary to achieve savings and
balanced budgets under an approved financial plan of an assisted
city. Proceeds of the initial bond issue of the authority may be
applied to reimburse the Commonwealth for the advance set forth
in section 701 and to fund up to $500,000 of initial operating
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expenses of the authority.]
* * *
Section 319. [Final date] Time for issuance of bonds.
(a) General rule.--No bond shall be issued for the purpose
of financing [a capital project or] a deficit, other than a cash
flow deficit, on a date later than December 31, 1994. No bond
shall be issued for the purpose of financing a cash flow deficit
on a date later than December 31, 1996.
(b) Bonds issued after January 2, 2022.--Upon the initial
issuance of any bond on or after January 2, 2022, for the
purpose of financing a capital project, additional bonds for the
purpose of financing a capital project may only be issued
beginning on each successive 10-year anniversary of the date of
the initial issuance; provided that one or more series of the
bonds may be issued from time to time during the first three
years after the initial issuance and during the first three
years of each 10-year period that begins on each 10-year
anniversary of the initial issuance.
(c) Applicability.--The limitations provided in this section
shall not apply to any bond to be issued to refund an
outstanding bond issued under this act.
Section 320. City payment of authority bonds.
An assisted city shall have the right at any time to deposit
funds with the authority in an amount sufficient to pay for the
defeasance of all or part of the authority's bonds. The assisted
city depositing funds with the authority pursuant to this
section shall have the right to designate to the authority the
maturities of bonds or portions thereof subject to defeasance by
such deposit. [If an assisted city pays to the authority an
amount sufficient to pay for the defeasance of all of the
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authority's bonds, the assisted city shall be deemed to have no
further obligations under this act.]
Section 602. Duration of tax.
Any tax imposed under this chapter shall continue in effect
until [all bonds of the authority which are secured by the
authority's pledge of such tax revenues are no longer
outstanding.] such time as the authority's existence is
terminated, as provided in section 204. For as long as [any such
bonds remain outstanding,] the authority remains in existence,
no governing body of a city shall repeal any ordinance or reduce
the rate of tax imposed for the authority under this act.
Section 5. The act is amended by adding a section to read:
Section 707.1. Applicability of other law.
The following laws shall not apply to a city of the first
class that has entered into and remains subject to an
intergovernmental cooperation agreement under this act:
(1) Article XVI-C of the act of April 9, 1929 (P.L.343,
No.176), known as The Fiscal Code.
(2) The provisions of 62 Pa.C.S. Ch. 39 (relating to
contracts for public works).
Section 6. Repeals are as follows:
(1) The General Assembly finds that the repeals under
paragraph (2) are necessary to effectuate this act.
(2) The following acts or parts of acts are repealed:
(i) Section 1610-C 4. of the act of April 9, 1929
(P.L.343, No.176), known as The Fiscal Code.
(ii) 62 Pa.C.S. ยง 3938(3).
Section 7. This act shall take effect in 60 days.
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