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 payroll preparation tax pursuant to section 303 of
27the Local Tax Enabling Act. A municipality imposing a tax
28under this paragraph may levy a tax at a rate as provided in
29this section and as certified by the coordinator and approved
30by the court. When imposing a tax under this paragraph the

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

15Section 141. Jurisdiction of court of common pleas.

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

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

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

8Section 7. The act is amended by adding a chapter to read:

9CHAPTER 1-A

10EARLY INTERVENTION PROGRAM

11SUBCHAPTER A

12PRELIMINARY PROVISIONS

13Section 101-A. Definitions.

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

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

20"Keystone Principles." The Keystone Principles and Criteria
21for Growth Investment and Resource Conservation adopted May 31,
222005, by the Economic Development Cabinet to foster and measure
23the effectiveness of sustainable economic development and
24conservation of resources through the investment of Commonwealth
25funds in its municipalities.

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

28Section 102-A. Program objectives.

29The Early Intervention Program established by this chapter
30provides a municipality with a preemptive step for the purpose

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

7(1) Provide the resources to assist a municipality in
8identifying, prioritizing and addressing the financial
9difficulties confronting it, while ensuring its short-term
10and long-term goals and objectives are adequately taken into
11account.

12(2) Engage in a management review of its operations and
13provide recommendations that will enhance financial
14administration, management and service delivery of a
15municipality.

16(3) Strengthen the ability of a municipality to develop,
17adopt, implement and monitor multiyear financial management
18plans and to incorporate the process into its annual budget
19process.

20(4) Implement a system of multiyear revenue and
21expenditure trend analysis, monitoring and forecasting so
22that a municipality can better anticipate and plan for future
23financial circumstances.

24(5) Promote multimunicipal and regional planning,
25cooperation strategies and cost-sharing opportunities between
26two or more municipalities.

27(6) Support the adoption by a municipality of best
28management practices and efficiency measures to increase the
29financial stability of a municipality.

30(7) Further the integration of sound community and

1economic development strategies to encourage the economic
2growth of the tax base of a municipality over a multiyear
3period.

4SUBCHAPTER B

5ADMINISTRATIVE PROVISIONS

6Section 103-A. Authorization.

7The Early Intervention Program is established to authorize
8the center to provide guidance and assistance through grants to
9a municipality seeking to ensure fiscal stability by developing
10and implementing long-term financial, managerial and economic
11development strategies.

12Section 104-A. Grants.

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

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

1be offset by an in-kind match.

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

4(1) The development of multiyear financial management
5plan for a municipality.

6(2) The development of multimunicipal or regional
7intergovernmental cooperation initiatives and cost-sharing
8strategies.

9(3) A study to improve the management and operational
10practices and financial administration procedures of a
11municipality.

12(4) A merger or consolidation feasibility study.

13(5) The implementation of any of the eligible activities
14identified in paragraphs (1) through (4).

15(6) Training and capacity-building activities that meet
16basic requirements established in guidelines developed by the
17center which assist the municipality in the implementation of
18plan recommendations.

19(7) Contracts with professional consultants to develop
20and implement recommendations related to eligible activities.

21Section 105-A. Application.

22A program application must be submitted by the applicant
23municipality on a form prescribed by the department utilizing
24the electronic single application format and include or
25demonstrate all of the following:

26(1) The name and address of the municipality or, in the
27case of a multimunicipal application, the municipalities.

28(2) The name of a contact person.

29(3) The execution of a supporting resolution authorizing
30the submission of the application and committing the

1resources of the municipality or, in the case of a
2multimunicipal application, municipalities.

3(4) The single application shall be signed by the
4authorized officer of the municipality or, in the case of a
5multimunicipal application, municipalities.

6(5) Any other information required by the department.

7Section 106-A. Evaluation criteria.

8The center shall evaluate a program application on the basis
9of municipal financial characteristics and the quality of the
10proposed program, including the extent to which the program is
11estimated to improve the administrative, operational and
12financial management capacity of the applicant municipality. The
13following factors shall be considered in the evaluation:

14(1) The current and projected financial condition of the
15municipality.

16(2) The economic and demographic condition of the
17municipality.

18(3) The proactive measures the municipality has taken to
19manage its finances in a responsible manner, including
20attempts to reduce expenditures, increase revenues, adopt
21sound management practices, establish municipal priorities
22and adhere to generally accepted financial management, budget
23and financial reporting standards.

24(4) The extent to which the municipality has
25demonstrated its willingness and commitment to engage in a
26multimunicipal or regional strategy and has examined whether
27certain municipal services can be provided through a council
28of governments, a county government or other structure.

29(5) The extent to which the municipality has
30demonstrated its willingness and commitment to improve its

1financial and administrative operation through the adoption
2and implementation of a multiyear financial management plan.

3(6) Where it has received assistance and funding from
4the department, past performance by the municipality.

5(7) Where applicable, the elements of the Keystone
6Principles shall be included as part of the evaluation
7criteria.

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

9Section 107-A. Award.

10The secretary shall announce by letter applications selected
11for funding. The contact person specified in the application
12shall be sent the offer letter. All funding decisions shall be
13made subject to the availability of funds.

14Section 108-A. Guidelines.

15The department shall establish guidelines consistent with
16this chapter, particularly the program requirements and
17measurements to ensure a municipality is provided with adequate
18guidance. The program shall include a requirement of a financial
19audit of the municipality, prepared by an independent accountant
20or firm, for the fiscal year immediately preceding the
21application for funds under this chapter. The department may
22establish guidelines for the audit, and the requirement may be
23satisfied by any previous audit prepared in accordance with the
24guidelines.

25Section 8. Section 203(c) <-and (g) of the act, amended June
2630, 1992 (P.L.336, No.69),<- is <-are amended to read:

27Section 203. Procedure for determination.

28* * *

29(c) Investigation.--After receiving the request but before
30the public hearing, the secretary may make an investigation into

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

5* * *

<-6(g) Appeal.--A determination by the secretary under this 
7[act] section is appealable pursuant to [Title 2 of the 
8Pennsylvania Consolidated Statutes (relating to administrative 
9law and procedure)] 2 Pa.C.S. Ch. 7 Subch. A (relating to 
10judicial review of Commonwealth agency action).

11Section 9. Sections 221(d) and (e), 222 and 223 of the act
12are amended to read:

13Section 221. Designation.

14* * *

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

18(1) Present, at a public meeting within 45 days of the
19execution of the contract between the department and the
20coordinator, a list of the coordinator's preliminary
21findings, as to the financial condition of municipality. The
22list of findings shall include, but is not limited to, a
23quantification of all operating deficits for the current
24fiscal year and a projection of revenues and operating
25expenses for the next three fiscal years, all outstanding
26debt obligations, the cost and term of all outstanding
27contracts, and other relevant information.

28(2) Solicit, not later than the date of the
29coordinator's presentation described in paragraph (1),
30comments relating to the issues associated with the

1municipality's distress from such persons and entities who:

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

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

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

10(3) Consider all comments submitted within 30 days of
11the coordinator's presentation described in paragraph (1)
12before preparing and administering a plan designed to relieve
13the financial distress of the municipality which the
14coordinator has been appointed to serve.

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

16(1) Apply for grants and loans pursuant to Chapter 3, as
17[he] the coordinator deems necessary.

18(2) Investigate the tax-exempt status of any property
19within a distressed municipality and advise the governing
20body of the municipality to appeal the assessment or exempt
21status of property within the distressed municipality.

22(3) Solicit and negotiate payments in lieu of taxes from
23institutions of public charity and other tax-exempt property
24owners in the municipality.

25Section 222. Access to information.

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

28(b) Enforcement where records in possession of official or 
29public employee.--If the coordinator believes that an official
30or employee of the municipality or an authority is not answering

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

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

15Section 223. Public and private meetings.

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

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

26Section 10. The act is amended by adding a section to read:

27Section 224.1. Performance of coordinator.

28(a) Review of coordinator.--Beginning on July 1, 2015, the
29secretary, or his designee, shall conduct an annual review of
30each coordinator appointed under section 221 to assess whether

1the coordinator's performance has been in compliance with the
2requirements of the coordinator's contract, if any, and the
3provisions of this act.

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

7Section 11. Section 241 of the act, amended or added June
830, 1992 (P.L.336, No. 69) and July 5, 2012 (P.L.1104, No.133)
9and repealed in part October 13, 1994 (P.L.596, No.90), is
10amended to read:

11Section 241. Contents.

12A plan formulated by the appointed coordinator shall be
13consistent with applicable law and shall include any of the
14following factors which are relevant to alleviating the
15financially distressed status of the municipality:

16(1) Projections of revenues and expenditures for the
17current year and the next [three] five years, both assuming
18the continuation of present operations and as impacted by the
19measures in the plan. The projections must include an 
20itemization of the following:

21(i) Projected revenues, including:

22(A) Local taxes.

23(B) Licenses, permits and fines.

24(C) Sales and rentals.

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

26(E) Any other sources of projected revenue.

27(ii) Projected expenditures, including:

28(A) Debt service.

29(B) Workforce.

30(C) Elected and executive officials.

1(D) Financial management.

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

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

6(G) Other professional services.

7(H) Public safety.

8(I) Community and economic development.

9(J) Any other applicable expenditures.

10(2) Recommendations which will:

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

13(ii) Eliminate deficits and deficit funds.

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

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

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

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

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

30(viii) Propose a reduction of debt due on specific

1claims by an amortized or lump-sum payment considered to
2be the most reasonable disposition of each claim possible
3for the municipality considering the totality of
4circumstances.

5(3) Possible changes in collective bargaining agreements
6and permanent and temporary staffing level changes or changes
7in organization.

8(4) Recommended changes in municipal ordinances or
9rules.

10(5) Recommendations for special audits or further
11studies.

12(6) An analysis of whether conditions set forth in
13section 261 exist, whether specific exclusive Federal
14remedies could help relieve the municipality's financial
15distress and whether filing a Federal debt adjustment action
16under Subchapter D is deemed to be appropriate.

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

22(7.1) An analysis of whether the economic conditions
23within the municipality are so severe that it is no longer
24viable and should consolidate or merge with an adjacent
25municipality or municipalities in accordance with 53 Pa.C.S.
26Ch. 7 (relating to alteration of territory or corporate
27entity and dissolution) or disincorporate in accordance with
28Chapter 4.

29(8) An analysis of whether functional consolidation of
30or privatization of existing municipal services is

1appropriate and feasible and recommendations for where and
2how this could be done.

3(9) A capital budget which addresses infrastructure
4deficiencies.

5(10) Recommendations for greater use of Commonwealth
6economic and community development programs.

7(10.1) Recommendations for enhanced cooperation and
8changes in land use planning and zoning, including regional
9approaches that would promote economic development and
10improve residential, commercial and industrial use
11availability within and around the municipality.

12(11) Notwithstanding any other provision of law, limits
13on projected expenditures for individual collective
14bargaining units that may not be exceeded by the distressed
15municipality, giving due consideration to the projection of
16revenue and expenses under paragraph (1).

17(12) An analysis of current revenue sources and
18recommendation to modify revenue sources, including the
19subjects and rates of taxation of the distressed municipality
20in accordance with section 123. Recommendations relating to a
21modification of revenue sources shall be made with
22consideration to the effect on economic development,
23employment and an equitable distribution of tax burden. The
24analysis and recommendations shall be presented to the court
25in any proceeding under section 123. The analysis shall
26address:

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

30(ii) Collection rates, methods and costs of existing

1and, to the extent possible, proposed revenue sources,
2including code enforcement and tax collection.

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

6(iv) Revenue as defined in section 103.

7Section 12. Section 242(a) of the act, amended December 19,
81988 (P.L.1272, No.157), is amended and the section is amended
9by adding a subsection to read:

10Section 242. Publication.

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

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

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

24(7) All parties who have petitioned the secretary under
25section 203.

26* * *

27(c.1) Solicitation of comments.--The coordinator shall, no
28later than the date of filing, solicit comments on the
29coordinator's plan to be presented at the public meeting from
30such persons and entities which submitted timely comments under

1section 221(d)(2).

2* * *

3Section 13. Section 245 of the act, amended December 19,
41988 (P.L.1272, No.157), is amended to read:

5Section 245. Adoption by municipality.

6Not later than 25 days following the coordinator's public
7meeting, the municipal governing body shall either enact an
8ordinance approving the implementation of the plan, including
9enactment of necessary related ordinances and revisions to
10ordinances, or shall reject the plan and proceed under section
11246. If the ordinance takes effect in a municipality operating
12under an optional plan form of government or a home rule
13charter, the chief executive officer [may] shall issue an order
14directing the implementation of the plan no later than seven
15days from the enactment of the ordinance by the governing body.

16Section 14. Section 246(d)(3) of the act is amended to read:

17Section 246. Preparation and action on alternate plan.

18* * *

19(d) Review by secretary.--

20* * *

21(3) If the secretary is of the opinion that the plan,
22when implemented, will not overcome the municipality's
23financial problems, the secretary shall inform the
24municipality of the following:

25(i) The secretary's determination.

26(ii) The reasons for the determination.

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

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

1Section 15. Section 247(a)(4) of the act, amended June 30,
21992 (P.L.336, No.69), is amended to read:

3Section 247. Plan implementation.

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

7* * *

8(4) Terminate the plan upon its completion in accordance 
9with Subchapter C.1.

10* * *

11Section <-15.1 <-16. The act is amended by adding a section to
12read:

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 <-16 <-17. Sections 248 and 250 of the act are amended
15to read:

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 17. Section 252(a) of the act, amended July 5, 2012
3(P.L.1104, No.133), is amended to read:

4Section 252. Plan not affected by certain collective bargaining
5agreements or settlements.

6(a) General rule.--Except as provided in subsection (b), a
7collective bargaining agreement or arbitration settlement
8executed after the adoption of a plan under this subchapter or
9Subchapter C.1 shall not in any manner violate, expand or
10diminish its provisions.

11* * *

12Section 18. Section 253 of the act is <-amended by adding a 
13subsection to read:

14Section 253. Termination of status.

15* * *

16(d) Duration of distressed status.--Notwithstanding the
17provisions of this section, the duration of distressed status
18shall be limited as set forth in Subchapter C.1.

<-19repealed:

20[Section 253. Termination of status.

21(a) Determination by secretary.--Following a duly advertised
22public hearing with notices given as provided in section 203,
23the secretary may issue a determination that the conditions
24which led to the earlier determination of municipal financial
25distress are no longer present. The determination shall rescind
26the status of municipal financial distress and shall include a
27statement of facts as part of the final order.

28(b) Determination upon petition by a municipality.--A
29financially distressed municipality may petition the secretary
30to make a determination that the conditions which led to the

1earlier determination of municipal financial distress are no
2longer present. Upon receiving the petition, the secretary may
3issue a determination to rescind following a duly advertised
4public hearing with notices given as provided in section 203.

5(c) Factors to consider.--In determining whether the
6conditions which led to the earlier determination of municipal
7financial distress are no longer present, the secretary shall
8consider that:

9(1) Monthly reports submitted by the coordinator to the
10department under section 247(a)(3) indicate that termination
11of the status of municipal financial distress is appropriate.

12(2) Accrued deficits in the municipality have been
13eliminated.

14(3) Obligations issued to finance all or part of the
15municipality's deficit have been retired.

16(4) The municipality has operated, for a period of at
17least one year, under a positive current operating fund
18balance or equity, as evidenced by the municipality's audited
19financial statements prepared in accordance with generally
20accepted accounting principles.]

21Section 19. The act is amended by adding a subchapter to
22read:

23SUBCHAPTER C.1

24DURATION OF DISTRESSED STATUS

25Section 254. <-Five-year limitation <-Limitation of status.

26(a) Termination date.--

27(1) Except as otherwise provided in this subchapter, no
28municipality shall be subject to the provisions of this act
29after five years from the effective date of an ordinance
30enacted in accordance with section 245 or 246. No amendment

1to a plan shall affect the termination date as determined
2from the date of enactment of the original ordinance.

3(2) Nothing in this section shall be construed to:

4(i) prohibit a municipality from participating in an
5early intervention program as provided in Chapter 1-A or
6reentering distressed status in accordance with this act
7after a termination of status in accordance with this
8subchapter.

9(ii) Prohibit termination of status proceedings in
10accordance with section<- 253 <-255.1 prior to the
11termination date as provided in this section.

12(b) Distressed municipalities.--

13(1) Municipalities operating pursuant to a recovery plan
14on the effective date of this section shall be subject to a
15termination date five years from the effective date of the
16most recent recovery plan or amendment enacted in accordance
17with this act, provided, however, that municipalities subject
18to a plan that will remain in effect for one year or less on
19the effective date of this subsection shall be subject to a
20termination date three years from the termination date of the
21current plan or plan amendment.

22(2) If its distressed status has not been rescinded <-or 
23has been continued in accordance with section 710.1, a
24municipality operating under Chapter 7 shall be subject to a 
<-25final termination date <-no more than five years from the
26termination date of receivership. <-Section 255 shall not apply 
27to a termination of status under this paragraph.

28Section 255. Coordinator's report.

29(a) General rule.--<-In <-Not later than 180 days after the
30beginning of the final year of distressed status as determined

1in accordance with section 254(a) and <-(b) <-(b)(1), the
2coordinator shall prepare a report stating the financial
3condition of the municipality and include one of the following
4findings:

5(1) Conditions within the municipality warrant a
6termination in status in accordance with section <-253. <-255.1.
7A report containing a recommendation under this paragraph
8shall address each of the factors set forth in section
9255.1(c).

10(2) Conditions are such that the municipality should be
11disincorporated in accordance with Chapter 4.

12(3) Conditions <-as specified in section 261 exist and the
13governing body should initiate proceedings for Federal debt
14readjustment under Subchapter D.

15(4) The elected and appointed officials of the
16municipality have demonstrated a failure to adequately
17implement recovery measures and a receiver should be
18appointed in accordance with Chapter 7. For purposes of this
19paragraph, a failure to adequately implement recovery
20measures shall be considered a fiscal emergency. <-are such
21that the secretary should request a determination of a fiscal
22emergency in accordance with Chapter 6.

<-23(5) <-(4) A three-year exit plan in accordance with
24section 256 is warranted.

25(b) Filing and notice.--

26(1) The report shall be filed with the same parties as
27provided in section 242(a). The date of filing shall be the
28date on which the municipal clerk or municipal secretary
29places a true and correct copy of the report on file for
30public inspection in the municipal office.

1(2) On the date of filing, notice that the report has
2been filed and is open for public inspection in the municipal
3office shall be published by the coordinator in the county
4legal reporter and in one or more newspapers with general
5circulation serving the area in which the municipality is
6located. The department shall pay for the cost of the
7publication of the notice. The notice shall contain the
8following information:

9(i) A statement that a report regarding the status
10of the municipality's financial distress was filed
11pursuant to this act.

12(ii) The date and place of filing.

13(iii) A statement that the public has 15 days from
14the date of filing in which to file written comments on
15the report.

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

18(v) A summary of the report and findings of the
19coordinator.

20(vi) The date and place of a public meeting to
21receive comments on the report.

22(c) Written comments.--Written comments on the report may be
23filed with the coordinator. Written comments shall be made no
24later than 15 days after the date of filing. Written comments
25judged by the coordinator to have value to the plan may be used
26to develop a revised report.

27(d) Public meeting.--A meeting conducted by the coordinator
28in the municipality shall be set for a date not later than 20
29days after the date of filing the report. The coordinator shall
30request in writing that the chief executive officer, each member

1of the municipal governing body and the chief financial officer
2of the municipality be present at the coordinator's meeting.
3Comments on the plan shall be received by the coordinator at
4that time. The coordinator has the discretion whether to
5consider comments made on the report.

6(e) Revision of report.--

7(1) Nothing in this section shall be construed to
8preclude the coordinator from revising a report of his own
9initiative.

10(2) Neither the secretary nor the chief executive
11officer or the governing body, as appropriate, may revise the
12coordinator's report.

13(3) If the coordinator decides to revise the report, the
14coordinator shall consult with the secretary and either the
15chief executive officer or the governing body throughout the
16revision of the report and shall give consideration to
17comments they may propose.

18(4) A revised report shall be completed and delivered to
19each party cited in section 242(a) within ten days from the
20date of the coordinator's public meeting on the original
21report.

<-22Section 255.1. Termination of status.

23(a) Public hearing.--Within 30 days of the date for the
24filing of a final report containing a finding as provided in
25section 255(a)(1) the secretary shall conduct a public hearing,
26advertised with notices given as provided in section 203.

27(b) Determination.--Within 90 days of the conclusion of the
28public hearing, the secretary shall issue an administrative
29determination of whether the termination of status is
30appropriate and reasons for the determination. The determination

1shall include findings addressing each of the factors in
2subsection (c) and shall consider information provided in the
3report of the coordinator and any additional information
4received during the public hearing.

5(c) Factors to consider.--If the secretary concludes that
6substantial evidence supports an affirmative determination for
7each of the following factors, the determination shall be that
8distressed status will be rescinded. The secretary shall
9consider whether:

10(1) Operational deficits of the municipality have been
11eliminated and the financial condition of the municipality,
12as evidenced by audited financial statements prepared in
13accordance with generally accepted accounting principles and
14projections of future revenues and expenditures, demonstrates
15a reasonable probability of future balanced budgets absent
16participation in this act.

17(2) Obligations issued to finance the municipality's
18debt have been retired, reduced or reissued in a manner that
19has adequately refinanced outstanding principle and interest
20and has permitted timely debt service and reasonable
21probability of continued timely debt service absent
22participation in this act.

23(3) The municipality has negotiated and resolved all
24claims or judgments that would have placed the municipality
25in imminent jeopardy of financial default.

26(4) The reasonably projected revenues of the
27municipality are sufficient to fund ongoing necessary
28expenditures, including pension obligations and the
29continuation or negotiation of collective bargaining
30agreements and the provision of municipal services.

1Projections of revenues shall include any anticipated tax or
2fee increases to fund ongoing expenditures for the first five
3years after a termination of distressed status.

4(d) Appeal.--A labor organization that is a party to a
5collective bargaining agreement with a financially distressed
6municipality and any other party withstanding under section 202
7may appeal the determination of the secretary pursuant to 2
8Pa.C.S. Ch. 7 Subch. A (relating to judicial review of
9Commonwealth agency action).

10(e) Suspension of subsequent proceedings.--The coordinator
11and secretary shall not take any action under sections 256 and
12257 until a final decision is issued for any appeal under
13subsection (d) or (f). The duration of distressed status of the
14municipality shall be extended subject to subsequent action in
15accordance with section 257.

16(f) Action of the secretary preserved.--Except as otherwise
17provided in chapters 6 and 7, the secretary may, following a
18duly advertised public hearing with notices given as provided in
19section 203, at any time issue a determination as provided in
20this section upon written recommendation of the coordinator
21setting forth a discussion of each of the factors specified in
22subsection (c). The determination may be appealed in accordance
23with subsection (d).

24Section 256. Exit plan.

25(a) General rule.--If recommended in a final report under
26section 255, the coordinator shall within 90 days of the public
27meeting referred to in section 255 prepare an exit plan for the
28municipality. The exit plan shall be subject to the same filing,
29notice, public meeting and revision procedures as specified in
30section 255.

1(b) Contents of exit plan.--The exit plan prepared by the
2coordinator shall contain such elements as may be necessary to
3ensure termination of distressed status after three years,
4including, but not limited to:

5(1) The sale, lease, conveyance, assignment or other use
6or disposition of the assets of the distressed municipality.

7(2) Functional consolidation of or privatization of
8existing municipal services.

9(3) The execution, approval, modification, rejection,
10renegotiation or termination of contracts or agreements of
11the distressed municipality, provided, however, that the
12provisions of section 252 shall apply to any exit plan
13adopted in accordance with this subchapter.

14(4) Changes in the form of municipal government or the
15configuration of elected or appointed municipal officials and
16employees as permitted by law.

17(c) Adoption of plan.--

18(1) Not later than 45 days following the coordinator's
19public meeting, the municipal governing body shall enact an
20ordinance approving the implementation of the plan, including
21enactment of necessary related ordinances and revisions to
22ordinances.

23(2) If the ordinance takes effect in a municipality
24operating under an optional plan form of government or a home
25rule charter, the chief executive officer shall issue an
26order directing the implementation of the plan no later than
27seven days from the enactment of the ordinance by the
28governing body.

29(3) If the governing body fails to adopt and implement
30the plan, the secretary shall, upon a written determination

1by the coordinator, request that the Governor <-declare a
2fiscal emergency and initiate proceedings under Chapter 7
<-3make a determination of a fiscal emergency in accordance with
4Chapter 6.

5(4) The requirements of this subsection shall be
6suspended if the coordinator first provides a recommendation
7to the secretary that the municipality should be
8disincorporated under Chapter 4.

9Section 257. Postreport procedures.

10(a) Five-year procedures.--The secretary shall, upon written
11recommendation from the coordinator and after filing a final
12report under section 255, take one of the following actions:

13(1) Terminate the distressed status of the municipality
14effective 90 days after<- filing a final report containing a
15finding as provided in section 255(a)(1) <-a determination or
16final decision requiring termination of status as provided in
17section 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), <-authorize an
25application of the governing body to proceed with a municipal
26debt adjustment action under Subchapter D. The distressed
27status of the municipality shall not be rescinded during the
28term of the municipal debt adjustment plan.

29(4) After filing a final report containing a
30recommendation under section 255(a)(4), petition the Governor

1to declare a fiscal emergency and initiate proceedings under
2Chapter 7. <-request a determination of a fiscal emergency in
3accordance with Chapter 6.

4(b) Exit plan procedures.--The secretary may, after the
5adoption of a plan under section 256(c) and upon written
6recommendation of the coordinator:

7(1) issue a determination in accordance with section <-253
8255.<-1; or

9(2) <-petition the Governor to initiate proceedings under
10Chapter 7 <-request a determination of a fiscal emergency in
11accordance with Chapter 6.

12(c) Postexit plan procedures.--If three years have elapsed
13since the adoption of an exit plan without a recommendation as
14provided in subsection (b), the secretary shall<-, upon a written
15recommendation of the coordinator:

16(1) authorize an application of the governing body to
17proceed with a municipal debt adjustment action under
18Subchapter D. Notwithstanding any other provision of this
19act, the distressed status of the municipality shall not be
20rescinded during the term of the municipal debt adjustment
21plan; or

22(2) terminate the distressed status of the municipality
23effective on the date of a final order establishing an
24unincorporated district under Chapter 4. <-terminate the
25distressed status of the municipality.

26Section 20. Section 261(a)(4) of the act, amended July 5, 
272012 (P.L.1104, No.133), is amended <-and the section is amended 
28by adding a subsection to read:

29Section 261. Filing municipal debt adjustment under Federal
30law.

1(a) <-[Authorization.--In the event one of the following
2conditions is present, a<-] General authorization.--A municipality
3is hereby authorized to apply to the department to file a
4municipal debt adjustment action pursuant to the Bankruptcy Code
5(11 U.S.C. § 101 et seq.)<-, if at least one of the following 
6conditions is present:

7* * *

8[(4) A majority of the current or immediately preceding
9governing body of a municipality determined to be financially
10distressed has failed to adopt a plan or to carry out the
11recommendations of the coordinator pursuant to this act.]

<-12(a.1) Filing after determination of distress.--The
13municipality's authorization under subsection (a) shall continue
14after the issuance of a declaration of distress under section
15203, so long as the municipality is not in a state of fiscal
16emergency pursuant to a declaration under section 602. A
17municipality that is in a state of fiscal emergency shall not be
18authorized under subsection (a) to apply to the department to
19file a municipal debt adjustment.

20* * *

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

23Section 281. Eligibility.

24If a municipality has been determined to be distressed under
25section 203(f) and is not subject to funding restrictions under
26section 251 or 264, it shall be eligible for economic and
27community development assistance as provided in section 282.
28Merger or consolidation [under Chapter 4] of a distressed
29municipality with a municipality may not be deemed to diminish
30the successor municipality's eligibility or priority status for

1economic assistance under this chapter.

2Section 22. Section 282(b) of the act, added June 30, 1992
3(P.L.336, No.69), is amended and the section is amended by
4adding a subsection to read:

5Section 282. Priority.

6* * *

7(b) Releases of funds.--Funds granted to a distressed
8municipality shall only be released upon concurrence by the
9coordinator or receiver that the program to be funded is
10consistent with efforts to alleviate the financially distressed
11status of the municipality as provided in this act.

12(b.1) Release of funds to unincorporated district.--Funds
13granted to an unincorporated district shall be released to the
14administrator in accordance with section 441.

15* * *

16Section 23. Chapter 4 heading of the act is amended to read:

17CHAPTER 4

18[CONSOLIDATION OR MERGER OF]<- COLLECTIVE

19BARGAINING IN MERGED OR CONSOLIDATED

20MUNICIPALITIES AND ECONOMICALLY NONVIABLE

21MUNICIPALITIES

22Section 24. Chapter 4 of the act is amended by adding
23subchapters to read:

24SUBCHAPTER C

25DISINCORPORATION OF NONVIABLE MUNICIPALITIES

26Section 431. Definitions

27The following words and phrases when used in this subchapter
28shall have the meanings given to them in this section unless the
29context clearly indicates otherwise:

30"Administrator." A service district administrator appointed

1pursuant to section 434.

2"District." An unincorporated service district created by
3section 441.

4"District advisory committee." A service district advisory
5committee established by section 442.

6"Governing standards." Provisions within an essential
<-7service <-services plan providing for certain conduct of residents
8and property owners as provided by section 436(c).

9"Municipality." A county, city, borough, incorporated town,
10township or home rule municipality that does not provide police
11service or fire service through its employees. The term does not
12include a city of the first class.

13"Restricted Account." An account established in the State
14Treasury as provided by section 445.1.

15Section 431.1. Determination of nonviability.

16(a) General rule.--Upon recommendation of a coordinator
17appointed under Chapter 2 or a receiver appointed under Chapter
187, the secretary shall consider whether all of the following
19conditions have been met in determining that a municipality is
20nonviable:

21(1) The municipality is unable to function as a general
22purpose unit of government to provide essential services to
23its residents and property owners.

24(2) The municipality has experienced such deteriorated
25economic conditions and a collapse of its tax base that all
26reasonable efforts to restore economic viability have failed.

27(3) Efforts to merge or consolidate the municipality
28with a neighboring municipality are unachievable or will not
29result in viability.

30(b) Notice and recommendation.--If the secretary determines

1that a municipality is nonviable under all of the conditions
2provided in subsection (a), the secretary shall provide notice
3to the governing body of the municipality of the secretary's
4determination and recommend that the municipality be
5disincorporated under this subchapter.

6Section 432. Procedure for disincorporation.

7(a) Ordinance.--Within 45 days of a determination of
8nonviability under section 431.1, the governing body may enact
9an ordinance, subject to review by the court of common pleas
10under section 433, that will initiate the disincorporation of
11the municipality. The ordinance shall be advertised as required
12by law but it may not become effective until the court has
13issued its decree under section 433.

14(b) Petition by electors.--If the governing body of the
15municipality fails to pass an ordinance authorized under
16subsection (a), then a petition signed by registered electors of
17the municipality comprising at least 51% of the number of
18electors voting for the office of Governor in the last
19gubernatorial general election may be submitted to the court
20within 60 days of the failure of the governing body to enact an
21ordinance as provided in subsection (a).

22(c) Action filed by secretary.--If no ordinance is filed for
23review under subsection (a) and no petition is filed under
24subsection (b) with the court within the time specified, the
25secretary may file an action in the court of common pleas
26petitioning the court to issue a decree under section 433(e),
27provided that one of the following conditions has been met:

28(1) the municipality has adopted a plan or amended plan
29under Chapter 2 which recommends that the municipality be
30disincorporated; or

1(2) the municipality refuses to adopt a plan or amended
2plan proposed by a coordinator under Chapter 2 which
3recommends that the municipality be disincorporated.

4Section 433. Judicial review of ordinance or petition.

5(a) Filing and notice.--Upon presentation to the court of
6the filing of an ordinance under section 432(a) or a petition
7under section 432(b) or (c), the court shall direct the
8prothonotary to give notice of the filing of the ordinance or
9petition in a newspaper of general circulation in the county
10where the municipality is located once a week for four
11consecutive weeks and once in the county legal journal, if any,
12during the four-week period. The notice shall provide the date
13the ordinance or petition was filed and specify that exceptions
14to the ordinance or petition may be filed within 45 days of the
15date of the filing of the ordinance or petition by any of the
16following:

17(1) the governing body of the municipality;

18(2) a taxpayer of the municipality;

19(3) any creditor or bondholder of the municipality; or

20(4) any collective bargaining unit or contractor of the
21municipality.

22(b) Notice of hearing.--No later than 60 days after the date
23of the filing of the ordinance or petition, the court shall
24conduct a hearing on the ordinance or petition and exceptions
25filed thereto. Notice of the hearing shall be provided by the
26court to those receiving notice under subsection (a) and to all
27other parties that have filed exceptions in accordance with
28subsection (a).

29(c) Hearing proceedings.--

30(1) The governing body of the municipality and all other

1individuals and entities which have filed exceptions under
2subsection (a) shall be parties to the proceedings and shall
3be entitled to present testimony or other evidence relevant
4to the nonviability of the municipality or relevant to
5exceptions timely filed, provided that the court, in its
6discretion, may consolidate testimony related to similar
7exceptions.

8(2) The coordinator or receiver, or another designee of
9the secretary, shall testify about the progress of the
10municipality under the adopted recovery plan under Chapter 2
11or plan adopted under Chapter 7 and render an opinion
12regarding the viability of the municipality.

13(3) The court may examine pertinent financial
14information and any audits prepared by a certified public
15accountant of the municipality and receive additional
16evidence relevant to the matter, including, but not limited
17to, evidence relating to:

18(i) The effect of disincorporation, including
19provisions for services that would be continued to be
20provided to residents and property owners of the proposed
21disincorporated area.

22(ii) Additional plans, proceedings or strategies
23that could ensure that the municipality remain viable.

24(iii) The effect of the disincorporation on any
25bonds, other obligations or agreements of the
26municipality.

27(d) Costs and fees.--Court costs and filing fees associated
28with proceedings under this subchapter shall be paid by the
29department.

30(e) Judicial decree.--

1(1) The court shall issue a decree approving the
2validity of the ordinance or granting the petition unless it
3finds, by clear and convincing evidence, that the
4municipality should continue to exist as a separate municipal
5corporation because of a reasonable expectation that the
6municipality is viable.

7(2) Upon issuance of the judicial decree, the department
8and governing body of the municipality shall engage in the
9duties required by this subchapter to prepare for
10disincorporation. The disincorporation shall take effect upon
11the execution of disincorporation under section 439.

12(3) Upon the failure of the court to issue a judicial
13decree under this subsection following the hearing, the
14secretary shall determine whether:

15(i) the recovery plan for the municipality shall
16remain in effect, provided that the limitations under
17Subchapter C.1 do not yet apply;

18(ii) the elected and appointed officials of the
19municipality have demonstrated a failure to adequately
20implement recovery measures and, if so, <-that a receiver
21should be appointed in accordance with Chapter 7. For
22purposes of this subparagraph, a failure to adequately
23implement recovery measures shall be considered a fiscal
24emergency <-request a determination of a fiscal emergency
25in accordance with Chapter 6;

26(iii) conditions within the municipality warrant a
27termination in status in accordance with section <-253
<-28255.1; or

29(iv) conditions as set forth in section 261 exist
30and, if so, that the governing body should initiate

1proceedings for federal debt readjustment under
2Subchapter D of Chapter 2.

3Section 434. Service district administrator.

4(a) Appointment.--No later than 30 days following a decree
5of the court of common pleas under section 433(e), the secretary
6shall appoint a service district administrator. The
7administrator must have a minimum of five years' experience and
8demonstrable expertise in business, financial or State or local
9budgetary matters and be a resident of this Commonwealth for at
10least one year prior to appointment.

11(b) Compensation and expenses.--The administrator's
12compensation and reimbursement for actual and necessary expenses
13shall be paid by the Commonwealth. The date and amount of
14compensation shall be established by the secretary. The
15department may require the compensation and expenses of the
16administrator to be reimbursed by an assessment for
17administrative costs under Subchapter D.

18(c) Revocation and vacancy.--The secretary may revoke the
19appointment of an administrator at any time. A vacancy in the
20office of the administrator by way of revocation or resignation
21shall be filled in the same manner as the original appointment.

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

23(1) Seek or hold a position as any other elected or
24appointed public official within this Commonwealth or as a
25political party officer during the term of the
26administrator's tenure.

27(2) Seek election as a public official or political
28party officer for one year after the person's service as
29administrator has ended.

30(3) Engage in any conduct prohibited by the act of July

119, 1957 (P.L.1017, No.451), known as the State Adverse
2Interest Act, or 65 Pa.C.S. Ch. 11 (relating to ethics
3standards and financial disclosure).

4(e) Liability.--

5(1) The administrator shall not be liable personally for
6any obligations of the municipality or unincorporated service
7district.

8(2) It is declared to be the intent of the General
9Assembly that the administrator shall enjoy sovereign and
10official immunity as provided in 1 Pa.C.S. § 2310 (relating
11to sovereign immunity reaffirmed; specific waiver) and shall
12remain immune from suit except as provided by and subject to
13the provisions of 42 Pa.C.S. Ch. 85 Subchs. A (relating to
14general provisions) and B (relating to actions against
15Commonwealth parties).

16(f) Powers and duties.--Notwithstanding any other provision
17of law, the administrator shall have the following powers and
18duties:

19(1) To require the municipality to take actions
20necessary for disincorporation under section 439, including:

21(i) The sale, conveyance, assignment or other use or
22disposition of the municipality's assets as provided by
23law.

24(ii) The repayment of debt, bonds or other
25obligations before disincorporation.

26(iii) Any other action necessary to implement the
27disincorporation.

28(2) To seek a writ of mandamus against the governing
29body to carry out this subchapter.

30(3) To identify essential services which should be

1provided to the residents and property owners of the district
2after the municipality is disincorporated.

3(4) To approve, disapprove, modify, reject, terminate or
4renegotiate contracts and agreements to provide services to
5the residents and property owners of the district.

6(5) To deposit all funds collected to administer
7Subchapter D in the municipality's restricted account and to
8requisition moneys from the restricted account.

9(6) To apply for grants, loans or payments under any
10economic and community development program funded by the
11Commonwealth.

12(7) To establish fees which may be assessed to fund
13essential services provided by contract or intergovernmental
14cooperation agreements under Subchapter D.

15(8) To meet and consult with the municipal governing
16body before disincorporation and the district advisory
17committee after the establishment of the district.

18(9) To meet and consult with county officials to
19prevent, abate and mediate blight as permissible by law.

20(10) To contract for professional services to aid in the
21administrator's duties under this subchapter and Subchapter
22D.

23(11) To seek enforcement of any provision of this
24subchapter and Subchapter D.

25(12) To seek invalidation of any act by the governing
26body of the municipality in conflict with the administrator's
27essential services plan.

28Section 435. Powers and duties of municipality.

29(a) General rule.--After the review of the court of common
30pleas resulting in a decree under section 433(e), but not less

1than 30 days before the date set by the administrator for
2disincorporation to take effect, the governing body of the
3municipality shall:

4(1) Enact a budget in the municipality's projected final
5year that funds the municipality's functions until the date
6of disincorporation and provides for the payment of every
7current obligation of the municipality before the date of
8disincorporation. All remaining municipal funds as of the
9date of disincorporation shall be transferred to the
10municipality's restricted account.

11(2) Provide for the transfer and administration of any
12municipal pension obligation to a private or public pension
13fund. Nothing in this paragraph shall be construed to
14authorize a modification of the pension benefits due to any
15current or past employee of the municipality.

16(3) Provide for the appointment of the district advisory
17committee to assist the administrator after the
18disincorporation of the municipality.

19(b) Corporate powers reserved.--After the review of the
20court of common pleas resulting in a decree under section 433(e)
21until the date of disincorporation, the governing body shall
22retain all corporate powers otherwise authorized by law, except
23that it shall not take any action inconsistent with the
24administrator's plan for disincorporation.

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

26(1) The governing body of the municipality may adopt
27recommended governing standards which may be included by the
28administrator in the essential services plan as the governing
29standards of the district.

30(2) If the governing body adopts recommended governing

1standards, the following shall apply:

2(i) No later than 30 days following a decree of the
3court of common pleas under section 433(e), the governing
4body shall provide written notice to the administrator
5that the governing body intends to adopt an ordinance
6containing recommended governing standards for the
7inclusion in the essential services plan.

8(ii) No later than 60 days following the notice
9provided under subparagraph (i), the governing body shall
10adopt an ordinance containing recommended governing
11standards for inclusion in the essential services plan.
12The ordinance may incorporate, by reference, any
13previously enacted ordinance of the municipality.

14(d) Powers of district advisory committee authorized.--After
15the review of the court of common pleas resulting in a decree
16under section 433(e) but prior to the date of disincorporation,
17in addition to the powers provided for under this subchapter,
18the governing body of the municipality may advise the
19administrator in the manner provided for the district advisory
20committee under Subchapter D in the formation and amendment of
21the essential services plan.

22Section 436. Essential services plan.

23(a) Formation.--The administrator shall, within 90 days
24following appointment and in consultation with the department,
25develop an essential services plan to provide essential services
26after the date of disincorporation. The essential services plan
27shall provide for:

28(1) Negotiation of contracts for the provision of vital
29and necessary services, not otherwise provided by an
30authority, as defined under Chapters 6 and 7. If the
 

1municipality participates in a regional police or fire 
2department through an intergovernmental cooperation 
3agreement, the essential services plan may provide for 
4continued service from that regional department by contract 
5or by renegotiating the intergovernmental cooperation 
6agreement.

7(2) Local emergency management in accordance with the
8plan and program of the Pennsylvania Emergency Management
9Agency. The administrator shall consult with the emergency
10management organization of the county where the district is
11located to develop a plan which serves the district in a
12substantially similar manner as plans required for a
13political subdivision under 35 Pa.C.S. Ch. 75 Subch. A
14(relating to general provisions). The plan shall include a
15procedure for a declaration of a disaster emergency to be
16made in the district and the designation of a local
17coordinator of emergency management. The administrator is
18authorized to negotiate any contracts which are necessary to
19provide for the execution of a plan formed under this
20paragraph.

21(3) Payment of the lawful financial obligations of the
22unincorporated service district, including any transferred
23current obligation of the municipality and service of any
24debt incurred by the municipality in the manner provided by
25Subchapter D, after the disincorporation of the municipality.

26(4) Assessment of fees as provided by Subchapter D.

27(5) Disposition of all municipal property by sale, lease
28or conveyance for any of the following purposes:

29(i) Payment of outstanding debt obligations.

30(ii) Provision of services by an entity contracting

1with the unincorporated service district.

2(iii) Possession of title by the Commonwealth as
3provided by Subchapter D.

4(6) Termination of all contracts with the municipality.

5(7) Administration of the unincorporated service
6district, which may include reimbursement to the department
7for the compensation of the administrator.

8(8) Establishment of the date of disincorporation of the
9municipality as provided for by section 439.

10(9) Establishment of the name of the district. A
11district established by this act shall be named "The
12Unincorporated District of ........................."

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

14(1) Provide for the levy of any taxes.

15(2) Terminate an obligation to repay any debt, except
16that the plan may designate the unincorporated service
17district as the servicer of a debt and may specify that a
18debt secured by the collection of taxes shall be secured by
19the assessment of fees sufficient to satisfy the service
20obligations of the debt.

21(3) Assess and collect a higher amount of fees in the
22district's first full calendar year totaling 5% more than the
23total taxes levied in the municipality's final year before
24disincorporation.

25(4) Authorize the incurrence of any debt by the
26district, except as provided under section 441(k).

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

28(1) The essential services plan shall provide for
29governing standards, which standards shall include:

30(i) Rules and conduct related to the maintenance of

1property, conduct in public places and the parking of
2vehicles in public places which shall protect the health,
3safety and welfare of the residents and property owners
4of the district to the extent such rules and conduct
5could have been adopted by the municipality by ordinance.

6(ii) Fines and other relief which may be granted by
7a court presiding over a civil action brought for a
8violation of the governing standards.

9(2) If the governing body of the municipality adopts
10recommended governing standards as provided in section
11435(c), the administrator shall include the recommended
12governing standards in the essential services plan unless the
13administrator finds that the recommended governing standards
14are unlawful, unconstitutional or would substantially impede
15the administration of the essential services plan.

16Section 437. Proposed essential services plan.

17(a) Filing.--Within 90 days of the appointment of the
18administrator, the administrator shall deliver true and correct
19copies of the proposed essential services plan to:

20(1) The municipal clerk or municipal secretary, who
21shall immediately place the copy on file for public
22inspection in the municipal office.

23(2) The secretary.

24(3) Each member of the municipal governing body.

25(4) The chief executive officer of the municipality.

26(5) The chief financial officer of the municipality.

27(6) The solicitor of the municipal governing body.

28(b) Date of filing.--For purposes of this section, the date
29of filing the proposed essential services plan shall be the date
30on which the municipal clerk or municipal secretary places a

1true and correct copy of the proposed essential services plan on
2file for public inspection in the municipal office.

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

4(1) On the date of filing, notice that a proposed
5essential services plan has been filed and is open for public
6inspection in the municipal office shall be published by the
7administrator in the county legal reporter and in one or more
8newspapers with general circulation serving the area in which
9the municipality is located. The cost for publishing the
10notice shall be borne by the department. The notice shall
11contain the following:

12(i) A statement that a proposed essential services
13plan has been filed regarding the provision of essential
14services to the residents and property owners of the
15unincorporated service district which shall succeed the
16municipality after disincorporation.

17(ii) The date and place of filing.

18(iii) A statement that the public has 15 days from
19the date of filing in which to file written comments
20relating to the proposed essential services plan.

21(iv) The name and address of the administrator to
22whom written comments should be sent.

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

24(2) Notice of an administrator's public meeting on the
25proposed essential services plan shall be published by the
26administrator in the county legal reporter and in one or more
27newspapers with general circulation serving the area in which
28the municipality is located. The department shall bear the
29cost for publishing the notice. The notice shall contain the
30following:

1(i) A statement that the purpose of the
2administrator's public meeting is to receive public
3comments on the proposed essential services plan.

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

5(3) The administrator may combine the publication of the
6notice that a proposed essential services plan has been filed
7with the publication of the notice of the public meeting.

8(d) Comment period.--Written comments on the proposed
9essential services plan may be filed with the administrator.
10Written comments shall be made no later than 15 days after the
11date of filing. Written comments judged by the administrator to
12have value to the proposed essential services plan may be used
13to develop revisions for a final essential services plan.

14(e) Administrator's public meeting.--A meeting conducted by
15the administrator in the municipality shall be set for a date no
16later than 20 days after the date of filing the proposed
17essential services plan. The administrator shall request in
18writing that the chief executive officer, each member of the
19municipal governing body and the chief financial officer of the
20municipality to be present at the service administrator's
21meeting. At that meeting, the administrator shall:

22(1) Present a summary of the proposed essential services
23plan.

24(2) Receive public comment on the proposed essential
25services plan.

26(3) Allow the members of the governing body of the
27municipality to present written and oral comments requesting
28revisions of the proposed essential services plan.

29Section 438. Final essential services plan.

30(a) Amendment of plan.--

1(1) The administrator shall consider all timely
2submitted written comments, comments presented at the public
3meeting and requests for revision in the amendment of the
4publicly presented proposed essential services plan before
5publishing a final essential services plan.

6(2) In the event that the administrator does not
7incorporate the requests for revision by the members of the
8governing body of the municipality regarding the levels of
9services provided under the proposed essential services plan
10or the basis for the calculation of fees assessed under the
11proposed essential services plan, the administrator shall
12state in the proposed essential services plan why the
13requested revisions were not feasible to incorporate in the
14final essential services plan.

15(b) Notice of final essential services plan.--Within 45 days
16of the public meeting the administrator shall file the final
17essential services plan with the persons listed in section
18437(a) and provide notice of the publication of the final
19essential services plan in the manner provided in section
20437(c)(1)(i), (ii) and (v).

21(c) Appeal.--

22(1) Any person aggrieved by the final essential services
23plan may appeal the plan to the court of common pleas within
2430 days of notice of the filing of the final essential
25services plan. For purposes of this section, notice shall
26constitute the date that the person received actual notice of
27the final essential services plan, or the date that notice of
28the filing of the final essential services plan is first
29published in a newspaper with general circulation serving the
30area in which the municipality is located.

1(2) No appeal of a final essential services plan shall
2constitute an automatic stay of the essential services plan.

3(3) The appeal shall be sustained only where the court
4finds that the final essential services plan is unlawful or
5unconstitutional, or the conduct of the administrator is
6arbitrary or capricious.

7Section 439. Disincorporation of municipality.

8(a) Effects of disincorporation.--On the date of
9disincorporation, the following shall occur:

10(1) Notwithstanding any other provision of law, the
11terms of office of all elected officials of the municipality
12shall end and no person shall be elected or appointed to fill
13any vacancy of office.

14(2) All ordinances of the municipality shall be
15nullified.

16(3) All corporate powers granted to the municipality
17under its charter, municipal code or any other provision of
18law shall terminate.

19(4) The municipality shall be deemed by operation of law
20to be disincorporated. The area formerly contained within the
21municipality shall be an unincorporated service district as
22provided under Subchapter D.

23(b) Duties of administrator.--On or before the date of
24disincorporation, the administrator shall:

25(1) Execute all contracts for the provision of services
26and otherwise implement the essential services plan, which
27shall take effect on the date of disincorporation.

28(2) Provide notice of assessments to the property owners
29of the unincorporated service district according to the
30procedure provided in section 443(b) which may be a partial

1year assessment as provided by section 443(e).

2(3) Provide notice to the Governor and all Commonwealth
3agencies that the municipality has been disincorporated and
4the date of disincorporation.

5(c) Duties of county.--Effective on the date of
6disincorporation, notwithstanding any other provision of law,
7the county in which the municipality is located shall:

8(1) Adopt a zoning ordinance which applies to the
9unincorporated service district and adopts the substantive
10provisions of the municipality's zoning ordinance, if any, as
11it was in effect before nullification by subsection (a)(2).

12(2) Adopt an official map for the unincorporated service
13district which adopts the substance of the municipality's
14official map, if any, as it was in effect before
15nullification by subsection (a)(2).

16(3) Unless the county has adopted a subdivision and land
17development ordinance prior to the date of disincorporation
18of the municipality, adopt a subdivision and land development
19ordinance which shall apply to any unincorporated service
20district within the county.

21(4) Provide for the administration of the zoning
22ordinance and the subdivision and land development ordinance
23as they apply to the unincorporated service district and any
24other provisions of the act of July 31, 1968 (P.L.805,
25No.247), known as the Pennsylvania Municipalities Planning
26Code, that may be applicable.

27(5) Amend the county's comprehensive plan to the extent
28necessary to be consistent with the requirements of this
29subsection.

30(d) Property succession.--Immediately following

1disincorporation the area formerly contained within the
2municipality shall, by operation of law, be deemed an
3unincorporated service district under Subchapter D, the
4Commonwealth shall succeed in title to all property, including
5all real property, personal property and moneys in any municipal
6account, of the disincorporated municipality to be held in trust
7for the benefit of the residents and property owners of the
8unincorporated service district as provided under Subchapter D.

9SUBCHAPTER D

10UNINCORPORATED SERVICE DISTRICT

11Section 441. Establishment of unincorporated service district.

12(a) General rule.--The area formerly contained within a
13municipality shall, after disincorporation under Subchapter C,
14become an unincorporated service district. The district shall be
15an entity of the Commonwealth established for the special
16purpose of providing essential services to the citizens living
17within the district until such time as the district is
18incorporated as a municipality or made a part of a merged or
19consolidated with an existing municipality under section 447.

20(b) Authorized administrative authority.--All powers
21providing for the administration of the district shall be vested
22in the department through the administrator as provided in this
23subchapter. The district advisory committee shall not possess
24the corporate powers of the governing body of any municipality
25or any authority, except as provided by this subchapter.

26(c) Corporate powers prohibited.--Nothing in this subchapter
27shall be construed as authorizing the district to exercise
28corporate powers for the administration of a local government,
29including the power to levy taxes, establish elected or
30appointed offices and purchase, sell or convey property, except

1that the residents of the district may incorporate a
2municipality or merge or consolidate with an existing
3municipality as provided for in section 447.

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

5(1) All assets not sold by the municipality during the
6process of its disincorporation shall be conveyed to the
7Commonwealth to be held in trust for the benefit of the
8residents and property owners of the district.

9(2) The administrator shall serve as trustee of the
10property and provide for the repair and maintenance of all
11real property and roadways held in trust for the benefit of
12the residents and property owners of the district through the
13collection of assessments under this subchapter and
14administration of payments distributed to the district as
15provided in subsection (f).

16(3) Nothing in this subsection shall be construed as
17providing the express approval of the General Assembly to
18dispose of or use any lands acquired with funds under the act
19of June 22, 1964 (Sp.Sess., P.L.131, No.8), known as the
20Project 70 Land Acquisition and Borrowing Act, for purposes
21other than those provided by that act, except that the
22Commonwealth may succeed in title of the property for the
23limited purposes established by this subsection.

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

25(1) All debt incurred by the municipality before the
26establishment of the district shall be held by the district
27for administration by the administrator. Any such debt shall
28be secured by the assets conveyed to the Commonwealth and
29held in trust under subsection (d) and serviced by fees
30collected under this subchapter.

1(2) Nothing in this section shall be construed to
2authorize the Commonwealth to guarantee any debt incurred by
3a municipality or district with the full faith and credit of
4the Commonwealth, revenues from the General Fund or any other
5source of revenue not derived from fees assessed for the
6administration of this subchapter or gains from the sale of
7assets of the former municipality.

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

9(1) A district shall be eligible to receive any
10financial grant, loan or payment and participate in any
11program for which it was eligible when it was a municipality,
12including, but not limited to, payments distributed pursuant
13to the act of June 1, 1956 (1955 P.L.1944, No.655), referred
14to as the Liquid Fuels Tax Municipal Allocation Law, all
15programs administered by the Pennsylvania Infrastructure
16Investment Authority and all economic and community
17development programs funded by the Commonwealth.

18(2) A district shall continue to receive priority in all
19economic and community development programs funded by the
20Commonwealth as provided for by Subchapter E of Chapter 2.

21(3) The administrator may apply for and shall manage any
22funds distributed to the district pursuant to this section.

23(g) Credit for fees assessed.--The payment of fees under
24this subchapter by a resident of a district shall constitute a
25credit against the collection of any income tax by a
26municipality on nonresidents, if applicable.

27(h) Relationship with existing municipal and other
28authorities preserved.--

29(1) All authorities established to provide services to
30the residents and property owners of a municipality prior to

1disincorporation shall continue to serve the residents and
2property owners of a district, and all members of the
3authority appointed by the governing body of the municipality
4prior to disincorporation shall continue to serve out the
5remainder of the members' terms.

6(2) Notwithstanding the provisions of 53 Pa.C.S. § 5607
7(relating to purposes and powers) or any other provision of
8law, subsequent appointments to the authority board which
9would otherwise be made by the governing body of the
10municipality shall be made by the administrator in
11consultation with the district advisory committee.

12(i) Governing standards enforceable.--

13(1) The governing standards included in the essential
14services plan shall be enforceable by the filing of a civil
15action by the administrator or any aggrieved property owner
16or resident of the district.

17(2) A violation of the governing standards shall
18constitute a public nuisance.

19(3) A magisterial district court or another court of
20competent jurisdiction presiding over a civil action brought
21under this subsection may find relief for the filing party
22according to the relief provided for in the essential
23services plan or any other relief which is available by law
24for the abatement of a public nuisance.

25(j) Pennsylvania Construction Code applicable.--

26(1) The act of November 10, 1999 (P.L.491, No.45), known
27as the Pennsylvania Construction Code Act, shall apply to all
28construction, alteration, repair and occupancy of all
29buildings within the district as though the district were a
30municipality which opted not to adopt the uniform

1construction code by ordinance.

2(2) The administrator shall receive any application for
3a construction permit and provide appropriate notices to an
4applicant of a construction permit and the Department of
5Labor and Industry as provided under section 501(e) of the
6Pennsylvania Construction Code Act.

7(k) Incurrence of debt limited.--The district shall not
8incur debts not provided for in subsection (e), except that the
9administrator may utilize such mechanisms as are necessary to
10incur temporary debts, or make purchases on credit, on behalf of
11and for the limited purpose of managing the cash flow for the
12district. All obligations incurred under this subsection shall
13be satisfied in full within one year and secured only by the
14anticipation of the collection of assessments under section 443.

15Section 442. Service district advisory committee.

16(a) Establishment.--Each service district shall establish a
17service district advisory committee.

18(b) Composition.--The district advisory committee shall be
19composed of three persons who are at least 18 years of age,
20including two resident property owners of the district and one
21owner of a business within the district, if any, who may or may
22not be a resident of the district.

23(c) Appointment by governing body.--At least 30 days prior
24to the date of disincorporation, the governing body of the
25former municipality shall appoint three members of the district
26advisory committee. The governing body shall designate that one
27appointee serve a term of one year, one appointee serve a term
28of two years and one appointee serve a term of three years.

29(d) Vacancy.--At the expiration of the term of a member of
30the district advisory committee, the remaining members of the

1committee shall appoint a person to fill the vacancy. In the
2event that the remaining members of the committee are unable to
3agree on a person to fill the vacancy or there is more than one
4vacancy, the administrator shall select a person or persons to
5fill the vacancy. All persons appointed to fill a vacancy on the
6district advisory committee shall have a term of three years
7beginning on the date of appointment.

8(e) Advise administrator.--The district advisory committee
9shall, at least once every three months, meet with the
10administrator and may make recommendations to the administrator
11for revisions to the essential services plan, including
12revisions to the levels of services provided to the residents
13and property owners of the district and methodology of rate
14calculation. The administrator shall consider all
15recommendations of the district advisory committee.

16(f) Advise county on land use issues.--The district advisory
17committee may provide recommendations on behalf of the residents
18and property owners of the district to any county official
19regarding any land use-related matter.

20(g) Advise department on incorporation.--The district
21advisory committee may provide recommendations to the department
22at any time that the residents of the district and the
23department consider the feasibility of incorporating as a viable
24municipality or merger or consolidation with an existing
25municipality.

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

27(1) Amendments to the governing standards may be
28recommended by a majority vote of the district advisory
29committee or by a petition signed by registered electors of
30the municipality comprising at least 10% of the number of

1electors voting for the office of Governor in the last
2gubernatorial general election.

3(2) Upon receipt of a recommendation made under this
4subsection, the administrator shall include the recommended
5amendments to the governing standard as a proposed plan
6amendment under section 444, unless the administrator finds
7that the recommended amendment of the governing standards is
8unlawful, unconstitutional or would substantially impede the
9administration of the essential services plan.

10(i) Restrictions.--The district advisory committee shall
11have no authority to act as a municipal governing body.

12(j) Open meetings.--The district advisory committee shall be
13an agency for purposes of the open meeting provisions of 65
14Pa.C.S. Ch.7 (relating to open meetings).

15Section 443. Assessments.

16(a) Authority to assess.--The administrator may establish
17assessments on a front foot or benefit-conferred basis, or a
18combination of both, on all real property within the district to
19provide for:

20(1) The cost of all essential services provided to the
21district.

22(2) The service of all debts held in trust by the
23Commonwealth which were incurred by the former municipality
24prior to disincorporation.

25(3) The necessary construction, maintenance or repair of
26facilities or properties which have been conveyed to the
27Commonwealth and are held in trust for the benefit of the
28district.

29(4) Reimbursement to the department of its reasonable
30costs of administration of the district, including, but not

1limited to, the compensation of the administrator and the
2collection of assessments authorized under this section.

3(5) Other costs incurred by the district or
4administrator in the execution of this subchapter, including
5a reserve of no more than 15% of the annual estimated costs
6of the essential services plan in the restricted account
7established in section 445 to provide for the provision of
8unforeseeable costs.

9(b) Establishment of assessment.--

10(1) No later than October 1 of the year preceding the
11year for which the assessment applies, the administrator
12shall establish a schedule of assessment for all real
13property within the unincorporated district.

14(2) The administrator shall provide written personal
15notice to each property owner of each property of the
16assessment due for the ensuing year no later than November 1
17of the year preceding the year for which the assessment
18applies.

19(3) As used in this subsection, "personal notice" shall
20mean and include notice upon the owner of a property either
21by personal service upon the owner or by certified mail to
22the owner at the owner's last known address or where service,
23after a reasonable attempt, shall not have been successfully
24made by either of these two methods, then by leaving notice
25at or upon the property.

26(c) Appeal of assessment.--Any person wishing to challenge
27the reasonableness of the assessment may file a suit in the
28court of common pleas within 30 days of receiving the notice
29provided in subsection (b).

30(d) Payment of assessments.--Payment of the assessment in

1full shall be due no later than March 1, unless the
2administrator has provided for installment payments in
3accordance with subsection (e).

4(e) Installments.--The administrator may provide for the
5payment of assessments by equal installments on a quarterly or
6semiannual basis as follows:

7(1) The administrator shall provide written personal
8notice of the installment plan to owners containing the date
9installments are due, interest and prepayment.

10(2) The rate of interest for the installments shall be
11established by the administrator at a rate of 6% per year.

12(3) If any of the installments remain unpaid for 60 days
13after the same has become due and payable, the entire unpaid
14assessment, plus unpaid accrued interest and any costs, shall
15be due and payable and the administrator shall proceed to
16collect the assessment due as provided in subsection (g).

17(4) A property owner upon whom an assessment has been
18made may pay all or as many of the installments before the
19same are due, with interest and costs to the due date of the
20next installment.

21(f) First year assessment.--The administrator may provide
22for a partial assessment for the calendar year in which the
23disincorporation of the municipality occurs. The due date for a
24partial year assessment and installment schedule may be set by
25the administrator, provided that no assessment shall be due
26sooner than 60 days after the administrator provides written
27personal notice of the assessment under the procedure in
28subsection (a).

29(g) Delinquent assessments.--Assessments remaining unpaid on
30December 31 of the year in which they are due shall be

1delinquent and subject to interest at a rate of 10% per year
2from the date of filing as a lien in accordance with the act of
3May 16, 1923 (P.L.207, No.153), referred to as the Municipal
4Claim and Tax Lien Law.

5(h) Liens.--An assessment, together with all charges,
6expenses and fees, including reasonable attorney fees necessary
7for its collection, shall be a lien upon the real property
8benefited. The lien shall have the same priority and may be
9collected in the same manner as a municipal lien in accordance
10with the Municipal Claim and Tax Lien Law or through a civil
11action initiated by the administrator.

12(i) Limited assessment of public property.--An assessment
13under this section on property held by the Federal Government,
14the Commonwealth and any other public property shall be limited
15to an assessment for those services which are directly consumed
16by the property, including, but not limited to, water service,
17sewer service and waste collection.

18Section 444. Amendment of essential services plan.

19(a) Periodic review.--No less than once per year, the
20administrator shall meet with the district advisory committee to
21consider the adequacy of the essential services plan and
22consider any request for revision of the essential services plan
23made by the district advisory committee.

24(b) Filing of amendment.--The administrator may file a
25proposed essential services plan amendment with the secretary
26and each member of the district advisory committee at any time.
27The district advisory committee may request a public meeting to
28consider the amendment within five days of the filing of a
29proposed essential services plan amendment.

30(c) Notice of amendment.--No later than the date that the

1administrator files the proposed essential services plan
2amendment, the administrator shall provide notice to the public
3of the amended essential services plan using the procedure
4provided for by section 437(c)(1). If the district advisory
5committee requests a public hearing, the administrator shall
6schedule a public meeting within 30 days of the date that the
7proposed essential services plan amendment was filed and provide
8notice of the public meeting using the procedure provided for by
9section 437(c)(2).

10(d) Comment period.--Written comments on the proposed
11essential services plan amendment may be filed with the
12administrator. Written comments must be made no later than 15
13days after the date of filing. Written comments judged by the
14administrator to have value to the essential services plan may
15be used to develop revisions for a final essential services plan
16amendment.

17(e) Administrator's public meeting.--If a public meeting is
18scheduled at the request of the district advisory committee, the
19administrator shall request in writing that the members of the
20district advisory committee be present at the administrator's
21meeting. At that meeting, the administrator shall:

22(1) Present a summary of the proposed essential services
23plan amendment.

24(2) Receive public comment on the proposed essential
25services plan amendment.

26(3) Allow the members of the district advisory committee
27to present written and oral comments requesting revisions of
28the proposed essential services plan amendment.

29(f) Final essential services plan amendment.--The
30administrator shall consider all timely submitted written

1comments, comments presented at the public meeting and requests
2for revision in the amendment of the publicly presented proposed
3essential services plan before filing a final essential services
4plan amendment. In the event that the administrator does not
5incorporate the requests for revision by the district advisory
6committee regarding the levels of services provided under the
7essential services plan or the basis for the calculation of fees
8assessed under the essential services plan, the administrator
9shall state in the essential services plan amendment why the
10requested revisions were not feasible to incorporate in the
11final essential services plan.

12(g) Emergency essential services plan amendment.--
13Notwithstanding the requirements provided by this section for
14the adoption of a final essential services plan amendment, where
15the secretary finds that there is or will be an imminent threat
16to public safety, human health or the environment, the secretary
17may provide a waiver to the administrator allowing the
18administrator to immediately publish an emergency essential
19services plan amendment. An emergency essential services plan
20amendment shall take effect immediately.

21(h) Notice of final essential services plan amendment.--The
22administrator shall provide notice of the publication of the
23final essential services plan amendment or emergency essential
24services plan amendment in the manner provided in section 437(c)
25(1)(i), (ii) and (v). Upon providing notice as required by this
26chapter, the administrator may execute any contract necessary to
27administer the essential services plan, as amended.

28(i) Appeal.--

29(1) Any person aggrieved by a final essential services
30plan amendment or emergency essential services plan amendment

1may appeal the final essential services plan amendment to the
2court of common pleas within 30 days of notice of the filing
3of the final essential services plan amendment.

4(2) For purposes of this section, notice shall
5constitute the date that the person received actual notice of
6the final essential services plan amendment, or the date that
7notice of the filing of the final essential services plan
8amendment is first published in a newspaper with general
9circulation serving the area in which the municipality is
10located.

11(3) An appeal of a final essential services plan
12amendment shall be limited to the amended portion of the
13essential services plan.

14(4) No appeal of a final essential services plan
15amendment shall constitute an automatic stay of any portion
16of the essential services plan.

17(5) The appeal shall be sustained only where the court
18finds that the final essential services plan amendment is
19unlawful or unconstitutional, or the conduct of the
20administrator is arbitrary or capricious.

21Section 445. Unincorporated Service District Trust Fund.

22(a) Establishment.--There is hereby established a special
23fund in the State Treasury, separate and apart from all other
24public moneys or funds of the Commonwealth, to be known as the
25Unincorporated Service District Trust Fund. The purpose of this
26fund shall be to hold moneys from unincorporated service
27districts and pay for the expenses and obligations of
28administrators, unincorporated service districts and the
29department pursuant to Subchapter C. The department shall
30allocate funds specific to a district in a restricted account

1pursuant to section 445.1.

2(b) Appropriation.--As much as may be necessary of such
3moneys and interest in the special fund established under
4subsection (a) is hereby appropriated for the purposes
5authorized by this subchapter.

6Section 445.1. Restricted accounts.

7(a) Establishment.--There is established in the
8Unincorporated Service District Trust Fund a restricted account
9for each unincorporated service district. The administrator for
10each district shall deposit all moneys collected by assessments,
11delinquent municipal tax receipts, and proceeds from the sale of
12municipal assets authorized under this subchapter into the
13restricted account not later than 30 days after collection. Any
14interest accrued on the account shall be credited to the account
15for purposes of meeting the requirements of this subchapter. The
16restricted account shall be used to pay for the expenses and
17obligations of the administrator and the unincorporated service
18district. The department may pay for the compensation and
19expenses of the administrator from the restricted account.

20(b) Appropriation.--As much as may be necessary of such
21moneys and interest in the restricted account established under
22subsection (a) is hereby appropriated for the purposes
23authorized by this subchapter.

24Section 446. Audit.

25The Auditor General shall conduct an annual audit of the
26district. The audit shall include a review of the services
27rendered under the essential services plan, the proceeds
28generated by the assessments levied pursuant to section 443 and
29all transactions made by the administrator on behalf of the
30district.

1Section 447. Merger and consolidation; incorporation of
2municipal corporation.

3(a) Merger and consolidation.--

4(1) For the limited purpose of merging or consolidating
5with one or more surrounding municipalities under 53 Pa.C.S.
6Ch. 7 Subch. C (relating to consolidation and merger), the
7residents of the district may file a petition with the county
8board of elections as provided in 53 Pa.C.S. §§ 735 (relating
9to initiative of electors seeking consolidation or merger
10without new home rule charter) and 735.1 (relating to
11initiative of electors seeking consolidation or merger with
12new home rule charter).

13(2) Residents of the district may be nominated to, and
14serve on, a commission formed to study merger or
15consolidation of the district with one or more
16municipalities.

17(3) Upon favorable action by the electorate on
18consolidation or merger, the administrator, in consultation
19with the district advisory committee, may enter into a merger
20or consolidation agreement with the governing bodies of other
21municipalities in accordance with 53 Pa.C.S. § 737 (relating
22to consolidation or merger agreement) and shall provide for
23the transition of the district into a consolidated or merged
24municipality with the same powers and duties as provided by
25law to governing bodies of municipalities.

26(4) The administrator may expend district funds to the
27extent authorized by law for the purpose of merger,
28consolidation or incorporation as provided in subsection (b).

29(b) Incorporation as municipality.--If the secretary
30determines that the district could be incorporated as a viable

1municipality, the residents of the district may establish or
2incorporate the territory of the district as a municipality as
3provided by law.

4(c) Grants permitted.--The department may issue any loan or
5grant authorized under Chapter 3 to a merged, consolidated or
6subsequently incorporated municipality, including the territory
7of the district to provide transitional assistance.

8(d) Assets in trust.--All assets conveyed to the
9Commonwealth to be held in trust, not otherwise transferred
10under the essential services plan or sold to repay the debt of
11the former municipality, shall be conveyed to a merged,
12consolidated or subsequently incorporated municipality,
13including the territory of the district.

14(e) Assumption of debt.--All debt obligations held in trust
15by the Commonwealth on behalf of the former municipality for
16service by a district shall be assumed by a merged, consolidated
17or subsequently incorporated municipality, including the
18territory of the district.

19Section 25. Chapter 5 of the act is repealed:

20[CHAPTER 5

21FUNDING

22Section 501. Appropriation.

23The sum of $5,000,000, appropriated under section 210 of the
24act of July 1, 1986 (P.L.1776, No.5A), known as the General
25Appropriation Act of 1986, shall be used to carry out the
26provisions of this act. The appropriation shall be distributed
27as follows:

28(1) $500,000 shall be used by the department for
29administrative expenses necessary to carry out the provisions
30of this act.

1(2) $4,500,000 shall be used to provide grants and loans
2to municipalities determined to be financially distressed
3pursuant to this act.]

4Section 26. Chapter 6 heading of the act, added October 20,
52011 (P.L.318, No.79), is amended to read:

6CHAPTER 6

7FISCAL EMERGENCIES IN [CITIES OF THE

8THIRD CLASS] MUNICIPALITIES

9Section 27. Sections 601, 602 and 603 of the act, renumbered
10and added October 20, 2011 (P.L.318, No.79), are amended to
11read:

12Section 601. Definitions.

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

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

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

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

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

29"Fiscal emergency." A determination made by the Governor
30under section 602(b).

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

3"Municipality." A municipality as defined in section 103,
4other than a city of the first class.

5"Vital and necessary services." Basic and fundamental
6municipal services, including any of the following:

7(1) Police and fire services.

8(2) Ambulance and rescue services.

9(3) Water supply and distribution.

10(4) Wastewater services.

11(5) Refuse collection and disposal.

12(6) Snow removal.

13(7) Payroll and pension obligations.

14(8) Fulfillment of payment of debt obligations or any
15other financial obligations.

16Section 602. Declaration of fiscal emergency.

17(a) Fiscal emergency.--The Governor determines a fiscal
18emergency exists if the distressed [city] municipality:

19(1) (i) is insolvent or is projected to be insolvent
20within 180 days or less; <-[or<-] and

21(ii) is unable to ensure the continued provision of
22vital and necessary services; <-[and<-] or

23(2) [(i)<-] has failed to adopt or implement<-:

24(i) the coordinator's plan in accordance with 
25Subchapter C or C.1 of Chapter 2; or

26(ii) <-[has failed to adopt or implement<-] an
27alternative plan that the secretary has approved under
28section 246.

29(b) Governor.--Upon making a determination that a state of
30fiscal emergency exists, the Governor may declare a state of

1fiscal emergency within the distressed [city] municipality.
2Immediately upon making the declaration, the Governor shall:

3(1) Provide written notice of the declaration to the 
4governing body and, if applicable, the chief executive 
5officer of the distressed [city] municipality along with a 
6concise statement of facts supporting the determination.

7(2) Direct the secretary to, within ten days of the
8Governor's declaration, develop an emergency action plan to
9ensure that vital and necessary services are maintained
10within the [city] municipality during the state of fiscal
11emergency.

12(c) Secretary.--In developing the emergency action plan, the
13secretary shall consider the financial plan prepared by the
14coordinator under Subchapter C of Chapter 2 and any other
15available plan or information the secretary deems appropriate
16and may employ financial or legal experts to assist in
17addressing the fiscal emergency. Notwithstanding any law to the
18contrary, the employment of such experts shall not be subject to
19contractual competitive bidding procedures.

20Section 603. Notification by the secretary.

21(a) Notice.--Upon completion of the emergency action plan,
22the secretary shall cause the plan to be posted on the
23department's publicly accessible Internet website and shall
24provide written notice of the emergency action plan by overnight
25delivery service, providing proof of receipt, to all members of
26the governing body and, if applicable, the chief executive
27officer of the distressed [city] municipality.

28(b) Publication.--The secretary shall publish once in a
29newspaper of general circulation notice that the emergency
30action plan has been completed. The notice shall specify the

1publicly accessible Internet address of the department's website
2where the plan is posted.

3Section 28. Sections 604, 605, 606, 607, 608, 609 and 610 of
4the act, added October 20, 2011 (P.L.318, No.79), are amended to
5read:

6Section 604. Powers of the Governor.

7(a) Powers.--During the state of fiscal emergency, the
8Governor may exercise the authority of the elected or appointed
9officials of the distressed [city] municipality or authority as
10necessary to ensure the provision of vital and necessary
11services and may delegate the authority to the secretary or a
12designee of the secretary. The emergency powers of the Governor
13shall include the following:

14(1) The power to collect funds payable to the distressed
15[city] municipality and authority and use those funds to pay
16for vital and necessary services.

17(2) The power to obtain emergency financial aid for the
18distressed [city] municipality and authority under Chapter 3
19to pay for vital and necessary services.

20(3) The power to enter into contracts and agreements on
21behalf of the distressed [city] municipality and authority to
22pay for vital and necessary services.

23(4) The power to modify the emergency action plan as
24necessary to ensure the provision of vital and necessary
25services.

26(5) Any other power of the elected or appointed
27officials of the distressed [city] municipality or authority
28to ensure the provision of vital and necessary services.

29(b) Orders.--The Governor may issue an order to an elected
30or appointed official of the distressed [city] municipality or

1an authority to implement any provision of the emergency action
2plan or refrain from taking any action that would interfere with
3the powers granted to the Governor or the goals of the plan. An
4order issued under this subsection shall be enforceable under
5section 606.

6(c) Authorization prohibited.--Neither this chapter nor the
7emergency action plan shall be interpreted to authorize the
8Governor to:

9(1) Unilaterally levy taxes.

10(2) Unilaterally abrogate, alter or otherwise interfere
11with a lien, charge, covenant or relative priority that is:

12(i) held by a holder of a debt obligation of a
13distressed [city] municipality; and

14(ii) granted by the contract, law, rule or
15regulation governing the debt obligation.

16(3) Unilaterally impair or modify existing bonds, notes,
17municipal securities or other lawful contractual or legal
18obligations of the distressed [city] municipality or
19authority<-[, except as otherwise ordered by a court of
20competent jurisdiction<-].

21(4) Authorize the use of the proceeds of the sale,
22lease, conveyance, assignment or other use or disposition of
23the assets of the distressed [city] municipality or
24authorities in a manner contrary to section 707.

25(5) Pledge the full faith and credit of the
26Commonwealth.

27Section 605. Elected and appointed officials.

28During a fiscal emergency, the authorities and appointed and
29elected officials of the distressed [city] municipality shall
30continue to carry out the duties of their respective offices,

1except that no decision or action shall conflict with an
2emergency action plan, order or exercise of power by the
3Governor under section 604.

4Section 606. Mandamus.

5The Governor may petition Commonwealth Court to issue a writ
6of mandamus upon any elected or appointed official of the
7distressed [city] municipality or authority to secure compliance
8with an order issued under section 604(b). The court shall grant
9the relief requested within 14 days of the filing of the
10petition if it determines that the order was issued in
11compliance with this chapter.

12Section 607. Consent agreement.

13(a) Negotiations.--Within eight days of the declaration of a
14fiscal emergency, the governing body and, if applicable, the
15chief executive officer of the distressed [city] municipality
16shall convene a special public meeting to negotiate a consent
17agreement. The meeting shall be attended by the secretary or
18secretary's designee. Negotiations among creditors and any of
19the parties in this subsection shall be conducted in accordance
20with section 223(b).

21(b) Contents.--

22(1) The consent agreement shall incorporate a plan
23setting forth measures designed to provide long-term
24financial stability to the distressed [city] municipality
25after the termination of the fiscal emergency.

26(2) The consent agreement shall include all of the
27following:

28(i) Continued provision of vital and necessary
29services.

30(ii) Payment of the lawful financial obligations of
 

1the distressed [city] municipality and authority. This 
2subparagraph includes debt obligations, municipal 
3securities, lease rental obligations, legal obligations 
4and consensual modifications of existing obligations, 
5except as otherwise ordered by a court of competent 
6jurisdiction.

7(iii) Timely deposit of required payments to the
8pension fund for the distressed [city] municipality and
9each authority or the fund in which the distressed [city]
10municipality and each authority participates.

11(iv) Legislative and administrative actions to be
12taken by the elected or appointed officials of the
13distressed [city] municipality during the term of the
14consent agreement.

15(3) The consent agreement may include:

16(i) The sale, lease, conveyance, assignment or other
17use or disposition of the assets of the distressed [city]
18municipality or authority.

19(ii) Approval, modification, rejection,
20renegotiation or termination of contracts or agreements
21of the distressed [city] municipality or authorities.

22(iii) Execution of new contracts or agreements.

23(4) The consent agreement may not include any of the
24following:

25(i) Projections of revenue from a tax or tax rate
26not currently authorized by law.

27(ii) Provisions that unilaterally abrogate, alter or
28otherwise interfere with a lien, charge, covenant or
29relative priority, that is:

30(A) held by a holder of a debt obligation of a

1distressed [city] municipality; and

2(B) granted by the contract, law, rule or
3regulation governing the debt obligation.

4(iii) Provisions that unilaterally impair or modify
5existing bonds, notes, municipal securities or other
6lawful contractual or legal obligations of the distressed
7[city] municipality or authority<-[, except as otherwise
8ordered by a court of competent jurisdiction<-].

9(iv) Provisions that authorize the use of the
10proceeds of the sale, lease, conveyance, assignment or
11other use or disposition of the assets of the distressed
12[city] municipality or authorities in a manner contrary
13to section 707.

14(v) Any increase in the rate of an earned income tax
15imposed on nonresident workers.

16(c) Ordinance.--Notwithstanding any law to the contrary, the
17following shall apply:

18(1) Upon approval by a majority vote of the governing
19body of the distressed [city] municipality, the consent
20agreement shall be presented to the secretary within 20 days
21of the declaration of fiscal emergency.

22(2) The secretary shall approve or disapprove the
23consent agreement within three days.

24(3) If the secretary determines that the consent
25agreement is sufficient to overcome the distressed [city's]
26municipality's financial distress and approves the agreement,
27the governing body shall enact the consent agreement in the
28form of an ordinance within seven days of approval by the
29secretary.

30(4) The ordinance shall provide that, in the event of a

1breach or unilateral modification of the consent decree by
2the governing body or an elected or appointed official, the
3Governor may institute or reinstitute proceedings under
4Chapter 7.

5(d) Consent to proceedings under Chapter 7.--In addition to
6breach or modification of the consent agreement under subsection
7(c), the following shall be deemed consent to proceedings under
8Chapter 7:

9(1) Failure of the governing body of the distressed
10[city] municipality to convene or the failure of a quorum of
11the governing body to participate in a special public meeting
12required by subsection (a).

13(2) Failure of the governing body or, if applicable, the
14chief executive officer to enact a valid ordinance under
15subsection (c).

16(3) Failure of the distressed [city] municipality to
17comply with the consent agreement or provision of an
18ordinance enacted under subsection (c).

19(4) Enactment by the distressed [city] municipality of
20an amendment to the ordinance enacted in subsection (c) in
21violation of subsection (e).

22(e) Amendment.--The ordinance may be amended upon the
23approval of the secretary.

24(f) Collective bargaining.--A collective bargaining
25agreement or arbitration settlement executed following the
26enactment of an ordinance under this section may not in any
27manner violate, expand or diminish the provisions of the consent
28agreement<-, provided, however, that the provisions of section 252 
29shall apply to any consent agreement adopted in accordance with 
30this subchapter.

1Section 608. Termination of fiscal emergency and suspension of
2powers.

3(a) [Financial] Fiscal emergency.--A fiscal emergency shall
4end upon certification by the secretary that the [city is no
5longer financially distressed.] municipality:

6(1) is solvent and is not projected to be insolvent
7within 180 days or less; and

8(2) is able to ensure the continued provision of vital
9and necessary services after the termination of the fiscal
10emergency.

11(b) Governor's powers.--The emergency powers of the Governor
12under this chapter shall be suspended upon the enactment and
13continued implementation of an ordinance under section 607 or
14entry of a judicial order appointing a receiver under section
15702.

16Section 609. Restrictions.

17(a) Earned income tax on nonresidents.--A distressed [city]
18municipality subject to this chapter or Chapter 7 may not
19petition a court of common pleas for an increase in the rate of
20an earned income tax imposed on nonresident workers under
21section 123(c) [until the secretary terminates the distress
22status of the city under section 253] unless the conditions 
23under section 710.1(c) are met.

24(b) Municipal debt adjustment.--A distressed [city]
25municipality subject to this chapter or Chapter 7 may not file a
26municipal debt adjustment action under the Bankruptcy Code (11
27U.S.C. § 101 et seq.) except to the extent authorized under
28Chapter 7.

29Section 610. Applicability.

30(a) Statement.--

1(1) This chapter shall apply only to distressed [cities]
2municipalities.

3(2) Except as set forth in subsection (b), nothing in
4this chapter is intended to limit or otherwise abrogate the
5applicability of any other part of this act.

6(b) Conflict.--If there is a conflict between a provision of
7this chapter and any other provision of this act, the provision
8of this chapter shall prevail.

9Section 29. Chapter 7 heading of the act, added October 20,
102011 (P.L.318, No.79), is amended to read:

11CHAPTER 7

12RECEIVERSHIP IN [CITIES OF THE

13THIRD CLASS] MUNICIPALITIES

14Section 30. Sections 701, 702, 703, 704, 705(g), 706, 707,
15708 and 709 of the act, added October 20, 2011 (P.L.318, No.79),
16are amended to read:

17Section 701. Definitions.

18The following words and phrases when used in this chapter
19shall have the meanings given to them in this section unless the
20context clearly indicates otherwise:

21"Authority." A municipal authority, parking authority or any
22other authority or corporate entity that is directly or
23indirectly controlled by a distressed [city] municipality or to
24which a distressed [city] municipality has power of appointment.
25The term shall not include a joint municipal authority.

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

27"Debt obligations." Any obligation to pay money, including
28amounts owed for payments relating to lease rental debt, debt
29service, bonds, notes, guarantees for bonds or notes, trust
30indentures, contracts or other agreements.

1"Distressed [city] municipality." A [city] municipality
2which has been determined to be financially distressed under
3section 203(f).

4"Fiscal emergency." A determination made by the Governor
5under section 602(b)<- or as provided in Subchapter C.1 of Chapter 
62.

7"Insolvent." Unable to meet all financial obligations as
8they become due, including payment of debt obligations.

9"Vital and necessary services." Basic and fundamental
10municipal services, including any of the following:

11(1) Police and fire services.

12(2) Ambulance and rescue services.

13(3) Water supply and distribution.

14(4) Wastewater services.

15(5) Refuse collection and disposal.

16(6) Snow removal.

17(7) Payroll and pension obligations.

18(8) Fulfillment of payment of debt obligations or any
19other financial obligations.

20Section 702. Receivership.

21(a) Receiver.--Following the issuance of a declaration of
22fiscal emergency under section 602(b) <-or as provided in 
23Subchapter C.1 of Chapter 2, the Governor may direct the
24secretary to file a petition in Commonwealth Court to appoint
25the individual named in the petition as a receiver for the
26distressed [city] municipality. The court shall have no
27authority to appoint anyone other than the individual named in
28the petition as the receiver.

29(b) Service and notice.--

30(1) The secretary shall serve the petition upon:

1(i) the governing body of the distressed [city]
2municipality;

3(ii) the chief executive officer of the distressed
4[city] municipality; and

5(iii) the governing body of each authority.

6(2) The secretary must publish notice of the filing of
7the petition once in a newspaper of general circulation.

8(c) Hearing.--Upon notification of the Governor of the
9failure of the distressed [city] municipality to adopt a valid
10ordinance under section 607 <-or a notification by the secretary 
11as provided in Subchapter C.1 of Chapter 2, Commonwealth Court
12shall conduct a hearing within 15 days on the petition.

13(d) Determination.--No later than 60 days following the
14filing of a petition under this section, the court shall issue
15an order under subsection (e) if it finds by a preponderance of
16the evidence that all of the following apply:

17(1) Thirty days have passed since the declaration of a
18fiscal emergency.

19(2) There has been a failure by:

20(i) the governing body of the distressed [city]
21municipality to adopt an ordinance under section 607;

22(ii) the governing body of the distressed [city]
23municipality to implement an ordinance under section 607;
24[or]

25(iii) an elected or appointed official of the
26distressed city or authority to strictly comply with an
27order issued by the Governor under section 604[.]; or

28(iv) (Reserved).

29(3) A fiscal emergency under section 602(a)<- or 
30Subchapter C.1 of Chapter 2 continues to exist.

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

2(1) set forth the findings under subsection (d);

3(2) grant the petition and declare the distressed [city]
4municipality to be in receivership;

5(3) appoint the individual named in the petition to be
6the receiver for a period not to exceed two years, subject to
7extension under section 710(b);

8(4) direct the receiver to develop a recovery plan
9within 30 days under section 703 and submit it to the court,
10the secretary, the governing body and, if applicable, the
11chief executive officer of the distressed [city]
12municipality; and

13(5) require and empower the receiver to implement the
14emergency action plan developed by the secretary under
15section 602 until a recovery plan developed by the receiver
16is approved by the court under section 703.

17(f) Additional actions.--

18(1) The Governor may direct the secretary to file a
19petition in Commonwealth Court to appoint an individual named
20in the petition as a receiver for the distressed [city]
21municipality if the distressed [city] municipality fails to
22comply with or has amended the ordinance without the approval
23of the secretary under section 607(d)(3) or (4).

24(2) The court shall conduct a hearing on the petition
25under paragraph (1) within 15 days of the filing of the
26petition.

27(3) No later than 60 days following the filing of the 
28petition under paragraph (1), the court shall issue an order 
29under subsection (e) if it finds by a preponderance of the 
30evidence that the distressed [city] municipality has failed
 

1to comply with section 607(d)(3) or (4).

2Section 703. Recovery plan.

3(a) Issuance.--Within 30 days of the appointment of the
4receiver, the recovery plan required under section 702(e)(4)
5shall be furnished to Commonwealth Court, the secretary and the
6governing body and, if applicable, the chief executive officer
7of the distressed [city] municipality.

8(b) Contents.--The receiver shall consider the plan prepared
9by the coordinator under section 241 and any other existing
10alternate plans in the development of the recovery plan. The
11following shall apply:

12(1) The recovery plan shall provide for all of the
13following:

14(i) Continued provision of vital and necessary
15services.

16(ii) Payment of the lawful financial obligations of 
17the distressed [city] municipality and authorities. This 
18subparagraph includes debt obligations, municipal 
19securities, lease rental obligations, legal obligations 
20and consensual modifications of existing obligations.

21(iii) Timely deposit of required payments to the
22pension fund in which the distressed [city] municipality
23and each authority participates.

24(2) The recovery plan may include:

25(i) the sale, lease, conveyance, assignment or other
26use or disposition of the assets of the distressed [city]
27municipality or authority;

28(ii) the approval, modification, rejection,
29renegotiation or termination of contracts or agreements
30of the distressed [city] municipality or authorities,

1except to the extent prohibited by the Constitutions of
2the United States and Pennsylvania;

3(iii) the execution of new contracts or agreements;
4and

5(iv) other information the receiver deems
6appropriate.

7(c) Restrictions.--The recovery plan may not do any of the
8following:

9(1) Unilaterally levy taxes.

10(2) Unilaterally abrogate, alter or otherwise interfere
11with a lien, charge, covenant or relative priority that is:

12(i) held by a holder of a debt obligation of a
13distressed [city] municipality; and

14(ii) granted by the contract, law, rule or
15regulation governing the debt obligation.

16(3) Unilaterally impair or modify existing bonds, notes,
17municipal securities or other lawful contractual or legal
18obligations of the distressed [city] municipality or
19authority<-[, except as otherwise ordered by a court of
20competent jurisdiction<-].

21(4) Authorize the use of the proceeds of the sale,
22lease, conveyance, assignment or other use or disposition of
23the assets of the distressed [city] municipality or authority
24in a manner contrary to section 707.

25(d) Confirmation.--Commonwealth Court shall conduct a
26hearing on the recovery plan within 30 days of the receipt of
27the plan from the receiver. The court shall confirm the plan
28within 60 days of the receipt of the plan unless it finds clear
29and convincing evidence that the plan is arbitrary, capricious
30or wholly inadequate to alleviate the fiscal emergency in the

1distressed [city] municipality.

2(e) Modification of plan.--The receiver shall notify the
3Commonwealth Court of any modification to the plan. The court
4may conduct a hearing on the modification within 30 days of its
5receipt. The court shall confirm the modification within 60 days
6of receipt of notification of the modification unless it finds
7clear and convincing evidence that the recovery plan as modified
8is arbitrary, capricious or wholly inadequate to alleviate the
9fiscal emergency in the distressed [city] municipality.

10Section 704. Confirmation.

11(a) Effect of confirmation.--The confirmation of the
12recovery plan and any modification to the receiver's plan under
13section 703 shall have the effect of:

14(1) imposing on the elected and appointed officials of
15the distressed [city] municipality or an authority a
16mandatory duty to undertake the acts set forth in the
17recovery plan;

18(2) suspending the authority of the elected and
19appointed officials of the distressed [city] municipality or
20an authority to exercise power on behalf of the distressed
21[city] municipality or authority pursuant to law, charter,
22ordinance, rule or regulation to the extent that the power
23would interfere with the powers granted to the receiver or
24the goals of the recovery plan; and

25(3) superseding the emergency action plan developed by
26the secretary under section 602.

27(b) Form of government.--Confirmation of the recovery plan
28and any modification to the plan under section 703 shall not be
29construed to:

30(1) change the form of government of the distressed

1[city] municipality or an authority; or

2(2) except as set forth in subsection (a), affect powers
3and duties of elected and appointed officials of the
4distressed [city] municipality or an authority.

5(c) Collective bargaining.--A collective bargaining
6agreement or arbitration settlement executed after confirmation
7of a recovery plan may not, in any manner, violate, expand or
8diminish the provisions of the recovery plan<-, provided, however, 
9that the provisions of section 252 shall apply to any recovery 
10plan adopted in accordance with this chapter.

11Section 705. Receiver.

12* * *

13(g) Liability.--The receiver shall not be liable personally 
14for any obligations of the distressed [city] municipality or 
15authority. It is declared to be the intent of the General 
16Assembly that the receiver shall enjoy sovereign and official 
17immunity as provided in 1 Pa.C.S. § 2310 (relating to sovereign 
18immunity reaffirmed; specific waiver) and shall remain immune 
19from suit except as provided by and subject to the provisions of 
2042 Pa.C.S. Ch. 85 Subchs. A (relating to general provisions) and 
21B (relating to actions against Commonwealth parties).

22Section 706. Powers, duties and prohibited actions.

23(a) Powers and duties.--Notwithstanding any other provision
24of law, the receiver shall have the following powers and duties:

25(1) To require the distressed [city] municipality or
26authority to take actions necessary to implement the recovery
27plan under section 703.

28(2) To modify the recovery plan as necessary to achieve
29financial stability of the distressed [city] municipality and
30authorities in accordance with section 703.

1(3) To require the distressed [city] municipality or
2authority to negotiate intergovernmental cooperation
3agreements between the distressed [city] municipality and
4other political subdivisions in order to eliminate and avoid
5deficits, maintain sound budgetary practices and avoid
6interruption of municipal services.

7(4) To submit quarterly reports to the governing body
8and, if applicable, the chief executive officer of the
9distressed [city] municipality and to the department. The
10reports shall be posted on [the] a publicly accessible
11Internet website [for] maintained by the distressed [city]
12municipality.

13(5) To require the distressed [city] municipality or
14authority to cause the sale, lease, conveyance, assignment or
15other use or disposition of the distressed [city's]
16municipality's or authority's assets in accordance with
17section 707.

18(6) To approve, disapprove, modify, reject, terminate or
19renegotiate contracts and agreements with the distressed
20[city] municipality or authority, except to the extent
21prohibited by the Constitutions of the United States and
22Pennsylvania.

23(7) To direct the distressed [city] municipality or
24authority to take any other action to implement the recovery
25plan.

26(8) To attend executive sessions of the governing body
27of the distressed [city] municipality or authority and make
28reports to the public on implementation of the recovery plan.

29(9) [After July 1, 2012, to] To file a municipal debt 
30adjustment action under the Bankruptcy Code (11 U.S.C. § 101
 

1et seq.) and to act on the [city's] municipality's behalf in 
2the proceeding. The power under this paragraph shall only be 
3exercised upon the written authorization of the secretary. 
4The filing of a municipal debt adjustment action under this 
5paragraph and any plan of the receiver accepted by the 
6Federal court shall be considered a modification of the 
7recovery plan, except that the modification shall not be 
8subject to judicial review under section 709. A recovery plan 
9submitted to and approved by the Federal court under a 
10Federal municipal debt adjustment action may include Federal 
11remedies not otherwise available under this chapter.

12(10) To meet and consult with the advisory committee
13under section 711.

14(11) To employ financial or legal experts deemed
15necessary to develop and implement the recovery plan.
16Notwithstanding any law to the contrary, the employment of
17such experts shall not be subject to contractual competitive
18bidding procedures.

19(b) Authorization prohibited.--Neither this chapter nor the
20recovery plan shall be interpreted to authorize the receiver to
21do any of the following:

22(1) Unilaterally levy taxes.

23(2) Unilaterally abrogate, alter or otherwise interfere
24with a lien, charge, covenant or relative priority that is:

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

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

29(3) Unilaterally impair or modify existing bonds, notes,
30municipal securities or other lawful contractual or legal

1obligations of the distressed [city] municipality or
2authority<-[, except as otherwise ordered by a court of
3competent jurisdiction<-].

4(4) Authorize the use of the proceeds of the sale, 
5lease, conveyance, assignment or other use or disposition of 
6the assets of the distressed [city] municipality or authority 
7in a manner contrary to section 707.

8Section 707. Use or disposition of assets.

9(a) Use of proceeds.--The proceeds from any sale, lease,
10conveyance, assignment or other use or disposition of assets of
11the distressed [city] municipality or authority shall be applied
12to the payment of outstanding debt obligations owed by the
13distressed [city] municipality or authority, subject to any
14lien, charge, covenant, restriction, contract, law, rule or
15regulation, that encumbers or is otherwise applicable to the
16assets. Proceeds remaining after payment of outstanding debt
17obligations owed by the distressed [city] municipality or
18authority may be used by the receiver to restructure or provide
19escrow for the payment of future debt obligations or to meet
20operating and capital needs of the distressed [city]
21municipality or authority.

22(b) Prohibitions.--Nothing under this section shall be
23construed to authorize the receiver to unilaterally abrogate,
24alter or otherwise interfere with a lien, charge, covenant or
25relative priority that is:

26(1) held by a holder of a debt obligation of a
27distressed [city] municipality; and

28(2) granted by the contract, law, rule or regulation
29governing the debt obligation.

30Section 708. Elected and appointed officials.

1(a) Orders.--The receiver may issue an order to an elected
2or appointed official of the distressed [city] municipality or
3an authority to:

4(1) implement any provision of the recovery plan; and

5(2) refrain from taking any action that would interfere
6with the powers granted to the receiver or the goals of the
7recovery plan.

8(b) Enforcement.--An order issued under subsection (a) shall
9be enforceable under section 709.

10Section 709. Judicial actions.

11(a) Action by receiver.--The receiver may petition
12Commonwealth Court to issue a writ of mandamus upon any elected
13or appointed official of the distressed [city] municipality or
14authority to secure compliance with an order issued under
15section 708. The court shall grant or deny the relief within 14
16days of the filing of the petition. The court shall grant the
17relief requested if it determines that the order was issued in
18compliance with this chapter.

19(b) Action by elected or appointed officials.--Any elected 
20or appointed official of a distressed [city] municipality or 
21authority may petition Commonwealth Court to enjoin any action 
22of the receiver that is contrary to this chapter.

23Section 30.1. Section 710 of the act is amended by adding a
24subsection to read:

25Section 710. Termination of receivership.

26* * *

27(c) Termination of fiscal emergency.--Notwithstanding the
28date of expiration of receivership under subsection (a) or an
29extension of receivership under subsection (b), the receivership
30shall terminate upon the secretary's termination of a fiscal

1emergency under section 608(a).

2Section 31. The act is amended by adding a section to read:

3Section 710.1. Continuation of recovery plan.

4(a) Administrative determination required.--Within 30 days
5of the termination or expiration of the receivership under
6section 710, the secretary shall issue one of the following
7administrative determinations:

8(1) conditions within the municipality warrant a
9termination in status in accordance with section <-253 <-255.1;
10or

11(2) the municipality continues to be financially
12distressed.

13(b) Appointment of coordinator.--Upon a determination under
14subsection (a)(2), a recovery plan adopted under section 703
15shall remain in effect and be deemed to be a plan adopted under
16Chapter 2. The secretary shall appoint a coordinator in
17accordance with section 221. The receiver may be appointed as
18coordinator. The coordinator shall implement the recovery plan
19under section 247(a) subject to the following:

20(1) The plan shall be subject to amendment in accordance
21with section 249, provided that nothing in this section shall
22authorize the impairment of existing lawful contractual or
23legal obligations of the distressed municipality except where
24otherwise permitted by law.

25(2) The coordinator may exercise the same powers and
26duties of this chapter as a receiver for the purposes of
27issuing orders under section 708, and seek enforcement of
28such orders under section 709. The Commonwealth Court shall
29retain jurisdiction to hear an action under this paragraph.

30(3) The plan shall terminate as provided in section

1254(b)(2)<-, subject to further proceedings in accordance with
2Chapter 2, Subchapter C.1.

3(c) Conditions for increasing taxes on nonresident income.--
4Notwithstanding any other provision of law, a municipality
5exiting receivership and subject to a determination under
6subsection (a)(2) shall be subject to the same requirements as a
7city of the second class A under section 123(c)(3) before being
8authorized to increase the rate of taxation on nonresident
9income.

10Section 32. Sections 711(a) and (b) and 712(a)(1) of the
11act, added October 20, 2011 (P.L.312, No.79), are amended to
12read:

13Section 711. Municipal financial recovery advisory committee.

14(a) Establishment.--[There is established a] A municipal
15financial recovery advisory committee is established to meet and
16consult with the receiver in carrying out the duties under this
17chapter. The sole function of the advisory committee shall be to
18provide recommendations and feedback to the receiver on the
19implementation of the recovery plan.

20(b) Composition.--The advisory committee established under
21subsection (a) shall be comprised of the following:

22(1) The chief executive officer, if any, of the
23distressed [city] municipality or a designee.

24(2) The president of the governing body of the
25distressed [city] municipality or a designee.

26(3) One member appointed by the county commissioners of
27the county where the distressed [city] municipality is
28located.

29(4) One member appointed by the Governor.

30* * *

1Section 712. Applicability.

2(a) Statement.--

3(1) This chapter shall apply only to distressed [cities]
4municipalities.

5* * *

6Section 33. This act shall apply as follows:

7(1) The addition of section 122(c) of the act shall 
8apply to any and all regulations in effect on the effective 
9date of this section.

10(2) The amendment or addition of sections 608, 710 and
11710.1(a) and (b) of the act shall not apply to a municipality
12that entered receivership prior to the effective date of this
13section and shall not supersede or constitute grounds to
14modify any order of court issued prior to the effective date
15of this section.

16Section 34. This act shall take effect in 60 days.