PRIOR PRINTER'S NO. 1237 PRINTER'S NO. 1277
No. 940 Session of 2003
INTRODUCED BY ORIE, WAGNER, LOGAN, BRIGHTBILL, KITCHEN, EARLL,
CORMAN, D. WHITE, CONTI AND RAFFERTY, OCTOBER 23, 2003
SENATOR EARLL, FINANCE, AS AMENDED, NOVEMBER 18, 2003
AN ACT
1 Providing for intergovernmental cooperation in cities of the
2 second class; establishing an intergovernmental authority;
3 providing for financing, for bankruptcy and for sovereign
4 immunity; and making an appropriation.
5 TABLE OF CONTENTS
6 Chapter 1. General Provisions
7 Section 101. Short title.
8 Section 102. Purpose and legislative intent.
9 Section 103. Legislative findings.
10 Section 104. Definitions.
11 Chapter 2. Intergovernmental Cooperation Authority for Cities
12 of the Second Class
13 Section 201. Authority established.
14 Section 202. Governing board.
15 Section 203. Powers and duties.
16 Section 204. Term of existence.
17 Section 205. Fiscal year.
18 Section 206. Annual budget of authority.
19 Section 207. Annual report to be filed; annual audits.
1 Section 208. Limit on city borrowing.
2 Section 209. Financial plan of an assisted city.
3 Section 210. Powers and duties of authority with respect to
4 financial plans.
5 Section 211. Limitation on authority and on assisted cities to
6 file petition for relief under Federal
7 bankruptcy law.
8 Section 212. Investment of funds.
9 Section 213. Sovereign immunity.
10 Chapter 7. Miscellaneous Provisions
11 Section 701. Appropriation.
12 Section 702. General rights and prohibitions.
13 Section 703. Nondiscrimination.
14 Section 704. Construction of act.
15 Section 705. Limitation of authority powers.
16 Section 706. Suspension and repeal.
17 Section 707. Effective date.
18 The General Assembly of the Commonwealth of Pennsylvania
19 hereby enacts as follows:
20 CHAPTER 1
21 GENERAL PROVISIONS
22 Section 101. Short title.
23 This act shall be known and may be cited as the
24 Intergovernmental Cooperation Authority Act for Cities of the
25 Second Class.
26 Section 102. Purpose and legislative intent.
27 (a) Policy.--It is hereby declared to be a public policy of
28 the Commonwealth to exercise its retained sovereign powers with
29 regard to taxation and matters of Statewide concern in a manner
30 calculated to foster the fiscal integrity of cities of the
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1 second class to assure that these cities provide for the health,
2 safety and welfare of their citizens; pay principal and interest
3 owed on their debt obligations when due; meet financial
4 obligations to their employees, vendors and suppliers; and
5 provide for proper financial planning procedures and budgeting
6 practices. The inability of a city of the second class to
7 provide essential services to its citizens as a result of a
8 fiscal emergency is hereby determined to affect adversely the
9 health, safety and welfare not only of the citizens of that
10 municipality but also of other citizens in this Commonwealth.
11 (b) Legislative intent.--
12 (1) It is the intent of the General Assembly to:
13 (i) provide cities of the second class with the
14 legal tools with which such cities can perform essential
15 municipal services; and
16 (ii) foster sound financial planning and budgetary
17 practices for cities of the second class, which cities
18 shall be charged with the responsibility to exercise
19 efficient and accountable fiscal practices, such as:
20 (A) increased managerial accountability;
21 (B) consolidation or elimination of inefficient
22 city programs and authorities;
23 (C) reevaluation of tax-exemption policies with
24 regard to real property taxes;
25 (D) increased collection of existing tax
26 revenues;
27 (E) privatization of appropriate city services;
28 (F) sale of city assets as appropriate;
29 (G) improvement of procurement practices,
30 including competitive bidding procedures; and
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1 (H) review of compensation and benefits of city
2 employees; and
3 (iv) (III) exercise its powers consistent with the <--
4 rights of citizens to home rule and self-government.
5 (2) The General Assembly further declares that this
6 legislation is intended to remedy the apparent fiscal
7 emergency confronting cities of the second class through the
8 implementation of sovereign powers of the Commonwealth. To
9 safeguard the rights of the citizens to the electoral process
10 and home rule, the General Assembly intends to exercise its
11 power in an appropriate manner with the elected officers of
12 cities of the second class.
13 Section 103. Legislative findings.
14 It is hereby determined and declared as a matter of
15 legislative finding that:
16 (1) Cities of the second class have encountered
17 recurring financial difficulties which may affect the
18 performance of necessary municipal services to the detriment
19 of the health, safety and general welfare of residents of
20 such cities.
21 (2) It is critically important that cities of the second
22 class maintain their creditworthiness.
23 (3) Due to the economic and social interrelationship
24 among all citizens in our economy, the fiscal integrity of
25 cities of the second class is a matter of concern to
26 residents of the entire Commonwealth, and the financial
27 problems of such cities have a direct and negative effect on
28 the entire Commonwealth.
29 (4) Because cities of the second class consume a
30 substantial proportion of the products of Pennsylvania's
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1 farms, factories, manufacturing plants and service
2 enterprises, economic difficulties confronting cities of the
3 second class detrimentally affect the economy of the
4 Commonwealth as a whole and become a matter of Statewide
5 concern.
6 (5) Because residents of cities of the second class
7 contribute a substantial proportion of all Commonwealth tax
8 revenues, a disruption of the economic and social life of
9 such cities may have a significant detrimental effect upon
10 Commonwealth revenues.
11 (6) The financial difficulties of cities of the second
12 class can best be addressed and resolved by cooperation
13 between governmental entities.
14 (7) The Constitution of Pennsylvania grants
15 municipalities authority to cooperate with other governmental
16 entities in the exercise of any function or responsibility.
17 (8) The Commonwealth retains certain sovereign powers
18 with respect to cities of the second class, among them the
19 powers to authorize and levy taxes, to authorize the
20 incurring of indebtedness and to provide financial assistance
21 that may be necessary to assist cities in solving their
22 financial problems.
23 (9) The Commonwealth may attach conditions to grants of
24 authority to incur indebtedness or assistance to cities of
25 the second class in order to ensure that deficits are
26 eliminated and access to capital markets is achieved and
27 maintained.
28 (10) Such conditions shall be incorporated into
29 intergovernmental cooperation agreements between the
30 Commonwealth or its instrumentalities and cities of the
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1 second class.
2 (11) Cities of the second class and the Commonwealth
3 will benefit from the creation of an independent authority
4 composed of members experienced in finance and management
5 which may advise such cities, the General Assembly and the
6 Governor concerning solutions to fiscal problems cities of
7 the second class may face.
8 (12) The creation of such an authority will allow such
9 cities to continue to provide the necessary municipal
10 services for their residents and to contribute to the economy
11 of the Commonwealth.
12 (13) Several task forces have studied the fiscal
13 condition of a city of the second class and have published
14 findings and suggestions regarding the fiscal structure of
15 the city and actions that could be taken concerning
16 preservation of the financial viability of the city into the
17 future. Those reports, widely known as the Competitive
18 Pittsburgh report, the PGH 21 report and the Governor's
19 Pittsburgh Economic Improvement Task Force report should be
20 evaluated by the authority in making its recommendations to
21 the city. HOWEVER, IT IS INTENDED THAT THE AUTHORITY <--
22 ESTABLISHED BY THIS ACT EXAMINE THE FISCAL AFFAIRS OF THE
23 ENTIRE CITY OF THE SECOND CLASS, INCLUDING ALL OF ITS
24 AUTHORITIES AND RELATED CORPORATE ENTITIES.
25 Section 104. Definitions.
26 The following words and phrases when used in this act shall
27 have the meanings given to them in this section unless the
28 context clearly indicates otherwise:
29 "Assisted city." A city of the second class which receives
30 assistance from the Intergovernmental Cooperation Authority for
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1 Cities of the Second Class. The term includes any municipal
2 authority, other authority or other corporate entity which
3 DIRECTLY OR INDIRECTLY performs a governmental function on <--
4 behalf of the city, IS DIRECTLY OR INDIRECTLY CONTROLLED BY THE <--
5 CITY or to which the city has DIRECT OR INDIRECT power of <--
6 appointment or has DIRECTLY OR INDIRECTLY pledged or designated <--
7 revenues. DESIGNATED THE CITY'S REVENUES OR THE CITY'S CREDIT. <--
8 "Authority." The Intergovernmental Cooperation Authority for
9 Cities of the Second Class established in section 201.
10 "Board." The governing board of the Intergovernmental
11 Cooperation Authority for Cities of the Second Class.
12 "City." A city of the second class.
13 "City account." A trust fund held for the exclusive benefit
14 of an assisted city.
15 "Corporate entity." A municipal authority, other authority
16 or other corporate entity which performs a governmental function
17 on behalf of the city or to which the city has power of
18 appointment or has pledged or designated revenues.
19 "Deficit." Such negative fund balance in any principal
20 operating fund or funds of a city or corporate entity existing
21 AT THE BEGINNING OF A FISCAL YEAR or projected to exist as of <--
22 the close of a fiscal year, as may be more specifically
23 identified, calculated and set forth in an intergovernmental
24 cooperation agreement or financial plan of an assisted city
25 described in section 209.
26 "Federal agency." The United States, the President of the
27 United States and any department or corporation, agency or
28 instrumentality created, designated or established by the United
29 States.
30 "Governing body." The legislative body of a city.
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1 "Government agency." The Governor, departments, boards,
2 commissions, authorities and other officers and agencies of
3 State government, including those which are not subject to the
4 policy supervision and control of the Governor, any political
5 subdivision, municipal or other local authority, and any officer
6 or agency of any such political subdivision or local authority,
7 but the term does not include any court or other officer or
8 agency of the unified judicial system or the General Assembly or
9 its officers and agencies.
10 "Intergovernmental cooperation agreement." Any agreement
11 made by the authority and a city under the provisions of section
12 203(d).
13 "Party officer." The following members or officers of any
14 political party:
15 (1) a member of a national committee;
16 (2) a chairman, vice chairman, secretary, treasurer or
17 counsel of a State committee or member of the executive
18 committee of a State committee;
19 (3) a county chairman, vice chairman, counsel, secretary
20 or treasurer of a county committee; or
21 (4) a chairman, vice chairman, counsel, secretary,
22 treasurer or ward leader of a city or municipal committee.
23 "Public official." Any elected or appointed official or
24 employee in the executive, legislative or judicial branch of the
25 Commonwealth or any political subdivision thereof, provided that
26 it shall not include members of advisory boards that have no
27 authority to expend public funds other than reimbursement for
28 personal expense or to otherwise exercise the power of the
29 Commonwealth or any political subdivision thereof. The term
30 shall not include any appointed official who receives no
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1 compensation other than reimbursement for actual expenses.
2 CHAPTER 2
3 INTERGOVERNMENTAL COOPERATION AUTHORITY FOR
4 CITIES OF THE SECOND CLASS
5 Section 201. Authority established.
6 A body corporate and politic to be known as the
7 Intergovernmental Cooperation Authority for Cities of the Second
8 Class is established as a public authority and instrumentality
9 of the Commonwealth, exercising public powers of the
10 Commonwealth as an agency and instrumentality thereof. The
11 exercise by the authority of the powers conferred by this act is
12 hereby declared to be and shall for all purposes be deemed and
13 held to be the performance of an essential public function.
14 Section 202. Governing board.
15 (a) Composition of board.--
16 (1) The powers and duties of the authority shall be
17 exercised by a governing board composed of five members:
18 (i) One member shall be appointed by the President
19 pro tempore of the Senate.
20 (ii) One member shall be appointed by the Minority
21 Leader of the Senate.
22 (iii) One member shall be appointed by the Speaker
23 of the House of Representatives.
24 (iv) One member shall be appointed by the Minority
25 Leader of the House of Representatives.
26 (v) One member shall be selected by majority vote of <--
27 the members appointed under subparagraphs (i) through
28 (iv). APPOINTED BY THE GOVERNOR. <--
29 (vi) The Secretary of the Budget and, the director <--
30 of finance of each assisted city AND ANY PERSON <--
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1 APPOINTED, PRIOR TO THE EFFECTIVE DATE OF THIS ACT, AS
2 COORDINATOR FOR THE ASSISTED CITY PURSUANT TO SECTION
3 221(A) OF THE ACT OF JULY 10, 1987 (P.L.246, NO.47),
4 KNOWN AS THE MUNICIPALITIES FINANCIAL RECOVERY ACT, shall
5 serve as ex officio members of the board. THE BOARD AND <--
6 ANY APPOINTED COORDINATOR SHALL COOPERATE IN THE SHARING
7 OF REPORTS, INFORMATION AND RECOMMENDATIONS WITH REGARD
8 TO THE ASSISTED CITY. The ex officio members may not vote
9 AND shall not be counted for purposes of establishing a <--
10 quorum. and THE SECRETARY OF THE BUDGET AND THE DIRECTOR <--
11 OF FINANCE OF EACH ASSISTED CITY may designate in writing
12 a representative of their respective offices to attend
13 meetings of the board on their behalf.
14 (2) All members and designees must have substantial
15 experience in finance or management.
16 (3) All members of the board must be residents of this
17 Commonwealth and, except the Secretary of the Budget AND ANY <--
18 PERSON APPOINTED, PRIOR TO THE EFFECTIVE DATE OF THIS ACT, AS
19 COORDINATOR FOR THE ASSISTED CITY PURSUANT TO SECTION 221(A)
20 OF THE MUNICIPALITIES FINANCIAL RECOVERY ACT, must either be
21 residents of the assisted city or have their primary places
22 of business or employment in that city.
23 (b) Term.--Appointing authorities shall appoint the initial
24 members of the board within ten days of the effective date of
25 this act, and the appointed members shall select a member under <--
26 subsection (a)(1)(v) CHAIRPERSON FROM AMONG THEMSELVES at the <--
27 initial organizational meeting of the board AND UPON ANY <--
28 SUBSEQUENT VACANCY IN THE OFFICE OF CHAIRPERSON. The term of a
29 board member shall begin on the date of the appointment or <--
30 selection. A member's term shall be coterminous with that of the
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1 appointing authority. However, the term of the member selected <--
2 under subsection (a)(1)(v) shall be two years from the date of
3 selection, provided that the chairperson's term shall continue
4 if reappointed for another term or until a replacement is
5 appointed or selected. An THE MEMBER SELECTED AS CHAIRPERSON <--
6 SHALL SERVE IN THAT CAPACITY FOR TWO YEARS FROM THE DATE OF
7 SELECTION OR FOR THE DURATION OF HIS TERM ON THE BOARD,
8 WHICHEVER IS LESS, AND MAY BE REELECTED TO SUBSEQUENT TWO-YEAR
9 TERMS. AN appointed board member shall serve at the pleasure of
10 the member's appointing authority., and the member selected <--
11 under subsection (a)(1)(v) may be removed upon a majority vote
12 of the appointed members. Whenever a vacancy occurs among the
13 appointed members on the board, whether prior to or on the
14 expiration of a term, the appointing authority who originally
15 appointed the board member whose seat has become vacant shall
16 appoint a successor member within 30 days of the vacancy. If a <--
17 vacancy occurs with respect to the board member selected under
18 subsection (a)(1)(v), the appointing members of the board shall
19 select a successor member within 30 days of the vacancy. A
20 member appointed by an appointing authority, or selected under <--
21 subsection (a)(1)(v), to fill a vacancy occurring prior to the
22 expiration of a term shall serve the unexpired term.
23 (c) Organization.--The appointees of the President pro
24 tempore of the Senate and the Speaker of the House of
25 Representatives shall set a date, time and place for the initial
26 organizational meeting of the board within five days of the
27 appointment of the initial members of the board. The initial
28 organizational meeting shall be held within 20 days of the
29 effective date of this act. The member selected under subsection <--
30 (a)(1)(v) shall serve as chairperson. The IN ADDITION TO <--
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1 CHAIRPERSON, THE members shall elect such other officers as they
2 may determine. A member may hold more than one office of the
3 board at any time.
4 (d) Meetings.--After the initial organizational meeting, the
5 board shall meet as frequently as it deems appropriate but at
6 least once during each quarter of the fiscal year. In addition,
7 a meeting of the board shall be called by the chairperson if a
8 request for a meeting is submitted to the chairperson by at
9 least two members of the board. A majority of the board shall
10 constitute a quorum for the purpose of conducting the business
11 of the board and for all other purposes. All actions of the
12 board shall be taken by a majority of the board. The provisions
13 of 65 Pa.C.S. Ch. 7 (relating to open meetings) shall apply to
14 the board.
15 (e) Expenses.--A member shall not receive compensation or
16 remuneration, but shall be entitled to reimbursement for all
17 reasonable and necessary actual expenses.
18 (f) Employees and agents.--The board shall fix and determine
19 the number of employees of the authority and their respective
20 compensation and duties. The board may contract for or receive
21 the loan of services of persons in the employ of other
22 government agencies, and other government agencies shall be
23 authorized to make such employees available. The board may
24 retain an executive director upon a majority vote. The board
25 may, by a majority vote, hire an independent general counsel to
26 the authority and may engage consultants and contract for other
27 professional services upon a majority vote. The board may, upon
28 the approval of a majority, delegate to the executive director
29 such powers of the board as the board deems necessary to carry
30 out the purposes of the authority, subject in every case to the
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1 supervision and control of the board.
2 (g) Public officials and party officers; CONFLICTS OF <--
3 INTEREST PROHIBITED.--
4 (1) Except for the Secretary of the Budget and, the <--
5 director of finance of an assisted city AND ANY PERSON <--
6 APPOINTED, PRIOR TO THE EFFECTIVE DATE OF THIS ACT, AS
7 COORDINATOR FOR THE ASSISTED CITY PURSUANT TO SECTION 221(A)
8 OF THE MUNICIPALITIES FINANCIAL RECOVERY ACT, neither members
9 of the board nor the executive director shall seek or hold a
10 position as any other public official within this
11 Commonwealth or as a party officer while in the service of
12 the authority. Members of the board and the executive
13 director shall not seek election as public officials or party
14 officers for one year after their service with the authority.
15 Members of the board and the executive director may serve as
16 appointive public officials any time after their periods of
17 service with the authority.
18 (2) Employees and agents of the authority shall not seek
19 or hold other positions as public officials or party officers
20 while in the employ of the authority. The authority may
21 receive the loan of services of persons in other government
22 agencies in accordance with subsection (f), notwithstanding
23 that such persons are public officials. Employees of the
24 authority shall not seek election as public officials or
25 party officers for one year after leaving the employ of the
26 authority.
27 (3) NO MEMBER OF THE BOARD OR EMPLOYEE OF THE AUTHORITY <--
28 MAY DIRECTLY OR INDIRECTLY BE A PARTY TO OR BE INTERESTED IN
29 ANY CONTRACT OR AGREEMENT WITH THE AUTHORITY OR WITH THE
30 ASSISTED CITY. NO MEMBER OR EMPLOYEE MAY USE HIS OFFICE OR
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1 EMPLOYMENT OR ANY CONFIDENTIAL INFORMATION RECEIVED THROUGH
2 HIS OFFICE OR EMPLOYMENT FOR THE PRIVATE PECUNIARY BENEFIT OF
3 HIMSELF, A MEMBER OF HIS IMMEDIATE FAMILY, OR A BUSINESS WITH
4 WHICH HE OR A MEMBER OF HIS IMMEDIATE FAMILY IS ASSOCIATED.
5 ANY MEMBER OR EMPLOYEE WHO SHALL WILLFULLY VIOLATE THIS
6 PROVISION SHALL FORFEIT HIS OFFICE OR EMPLOYMENT AND SHALL BE
7 SUBJECT TO SUCH OTHER CRIMINAL AND CIVIL SANCTIONS AS MAY BE
8 IMPOSED BY LAW. ANY CONTRACT OR AGREEMENT KNOWINGLY MADE IN
9 CONTRAVENTION OF THIS PROVISION IS VOID.
10 (h) Statutes applying to authority.--
11 (1) The provisions of the following acts shall apply to
12 the authority:
13 (i) 65 Pa.C.S. Ch. 7 (relating to open meetings).
14 (ii) The act of June 21, 1957 (P.L.390, No.212),
15 referred to as the Right-to-Know Law.
16 (iii) Except as set forth in paragraph (2), the act
17 of July 19, 1957 (P.L.1017, No.451), known as the State
18 Adverse Interest Act.
19 (iv) The act of October 4, 1978 (P.L.883, No.170),
20 referred to as the Public Official and Employee Ethics
21 Law.
22 (2) Notwithstanding the provisions of the State Adverse
23 Interest Act, the Secretary of the Budget and the director of
24 finance of each assisted city shall, while serving as ex
25 officio members of the board, also serve in their official
26 capacities with respect to the negotiation and execution of
27 intergovernmental cooperation agreements and other agreements
28 between an assisted city and the authority.
29 (i) Advisory committees COMMITTEE.-- <--
30 (1) The board may appoint by majority vote an advisory
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1 committee comprised of professionals engaged in municipal
2 management and finance or other experts as it may deem
3 necessary. The members of an advisory committee shall reside
4 within an assisted city or a county within the statistical
5 metropolitan area in which the assisted city is located.
6 (2) The provisions of subsection (g) shall be applicable
7 to members of an advisory committee; however, the board may
8 allow city council to designate a liaison from city council
9 to serve on an advisory committee.
10 (3) An advisory committee shall consist of no more than
11 six members, excluding any council liaison.
12 Section 203. Powers and duties.
13 (a) General powers and duties.--The authority is established
14 for the purposes, without limitation, by itself or by agreement
15 in cooperation with others, of assisting cities in solving their
16 budgetary and financial problems.
17 (b) Specific duties.--The authority shall have the powers
18 and its duties shall be:
19 (1) To assist cities in achieving financial stability in
20 any manner consistent with the purposes and powers described
21 by this act.
22 (2) To assist cities in avoiding defaults, eliminating
23 and financing deficits, maintaining sound budgetary practices
24 and avoiding the interruption of municipal services.
25 (3) To negotiate intergovernmental cooperation
26 agreements with cities containing such terms and conditions
27 as will enable such cities to eliminate and avoid deficits,
28 maintain sound budgetary practices and avoid interruption of
29 municipal services.
30 (4) To make annual SIGNED reports within 120 days after <--
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1 the close of the assisted city's fiscal year, commencing with
2 the fiscal year ending December 31, 2003, to the Governor and
3 the General Assembly describing the city's financial
4 condition and the authority's progress with respect to
5 restoring the financial stability of assisted cities and
6 achieving balanced budgets for assisted cities. Such reports
7 shall be filed with the Governor, with the presiding officers
8 of the Senate and the House of Representatives, with the
9 chairperson and minority chairperson of the Appropriations
10 Committee of the Senate and the chairperson and the minority
11 chairperson of the Appropriations Committee of the House of
12 Representatives and with the governing body, mayor and
13 controller of the assisted city AND BE PUBLICLY AVAILABLE IN <--
14 THE ASSISTED CITY DURING NORMAL BUSINESS HOURS FOR PUBLIC
15 INSPECTION, AND MAY BE REPRODUCED BY ANY MEMBER OF THE PUBLIC
16 AT COMMERCIAL COSTS OF REPRODUCTION. SUCH REPORT SHALL
17 CLEARLY SHOW BY CONSISTENT CATEGORY THE LAST FIVE YEARS OF
18 OPERATING REVENUES AND EXPENDITURES, CAPITAL EXPENDITURES,
19 GROSS AND NET INDEBTEDNESS TRANSACTIONS, INCLUDING A SCHEDULE
20 OF PRINCIPAL AND INTEREST, FIVE-YEAR PROJECTIONS OF THE
21 ASSISTED CITY'S OPERATING AND CAPITAL BUDGETS, AND THE ENTIRE
22 PROJECTED INDEBTEDNESS TRANSACTIONS, INCLUDING A SCHEDULE OF
23 PRINCIPAL AND INTEREST OF SUCH INDEBTEDNESS UNTIL ANY AND ALL
24 DEBT HAS BEEN COMPLETELY RETIRED. SUCH REPORT SHALL CONTAIN A
25 NARRATIVE EXPLAINING PROGRESS OF THE ASSISTED CITY IN MEETING
26 ITS ANNUAL AND FIVE-YEAR BUDGETARY OBJECTIVES, AN APPRAISAL
27 BY THE AUTHORITY OF THE PROGRESS THE ASSISTED CITY IS MAKING
28 TO ACHIEVE ITS GOALS, AND AN APPRAISAL OF THE EXTENT TO WHICH
29 THE ASSISTED CITY IS MAKING A GOOD FAITH EFFORT TO ACHIEVE
30 ITS GOALS. SUCH REPORT SHALL DISCLOSE ANY VIOLATIONS OF
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1 FEDERAL AND STATE LAW THAT THE AUTHORITY MAY HAVE DISCOVERED.
2 SUCH REPORT SHALL INCLUDE AS APPENDICES ALL HISTORICAL LOANS
3 OR OTHER CONTRACTS ENTERED INTO BY THE ASSISTED CITY AND ITS
4 AUTHORITIES.
5 (c) Specific powers.--In addition to the powers and duties
6 set forth elsewhere in this act, the authority shall have the
7 specific powers:
8 (1) To obtain copies of all reports AND DOCUMENTS <--
9 regarding the revenues, expenditures, budgets, deficits,
10 costs, plans, operations, estimates and any other financial
11 or budgetary matters of an assisted city.
12 (2) To obtain additional reports AND INFORMATION on the <--
13 above matters in such form as are deemed necessary by the
14 authority.
15 (3) To make factual findings concerning an assisted
16 city's budgetary and fiscal affairs.
17 (4) To make recommendations to an assisted city
18 concerning its budgetary and fiscal affairs CONDITIONS OF <--
19 APPROVAL OF BUDGETS AND FINANCIAL PLANS. Recommendations
20 under this paragraph may include:
21 (i) Consolidation or merger of services performed by
22 an assisted city, school, county or other surrounding
23 municipality.
24 (ii) Consolidation of public safety services.
25 (iii) Appropriate staffing levels of city
26 departments and corporate entities.
27 (iv) Cooperative agreements or contractual
28 arrangements between health care facilities licensed by
29 the Department of Health.
30 (v) Financial or contractual obligations of the
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1 assisted city.
2 (vi) Contributions of nonprofit or charitable
3 organizations which receive the benefit of municipal
4 services provided by the assisted city.
5 (vii) Reduction or restructuring of debt
6 obligations.
7 (viii) Cooperative agreements between the assisted
8 city and the county in which it is located or
9 municipalities which border the assisted city.
10 (ix) Cooperative agreements between the assisted
11 city and the school district in which it is located.
12 (x) Collective bargaining agreements and other
13 contracts of the assisted city.
14 (xi) Elimination, sale or transfer of assisted city
15 services or property.
16 (xii) Implementation of cost-saving measures by the
17 assisted city.
18 (xiii) Increased managerial accountability.
19 (xiv) Performance of government operations and
20 delivery of municipal services.
21 (xv) Reevaluation of tax-exemption policies and
22 practices with regard to real property taxation within
23 the assisted city.
24 (xvi) Improvements in procurement practices.
25 (xvii) Implementation of user fees for services,
26 including sewage, water treatment and refuse collection.
27 (xviii) Privatization and competitive bidding of
28 appropriate assisted city services.
29 (xix) Increased collection of fines and costs
30 relating to parking violations or violations of other
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1 city ordinances.
2 (xx) When appropriate, filing for bankruptcy under
3 11 U.S.C. Ch. 9 (relating to adjustment of debts of a
4 municipality).
5 (XXI) THE USE OF TECHNOLOGY TO ACHIEVE COST SAVINGS. <--
6 (XXII) A STUDY OF HEALTH CARE AND OTHER BENEFITS
7 OFFERED BY THE ASSISTED CITY TO ITS EMPLOYEES.
8 (XXIII) THE SALE OF THE ASSISTED CITY'S WORKER'S
9 COMPENSATION FUND.
10 (XXIV) THE SALE OF UNENCUMBERED ASSETS OF THE
11 ASSISTED CITY OR ITS AUTHORITIES.
12 (XXV) THE ELIMINATION OR REORGANIZATION OF
13 AUTHORITIES OR DEPARTMENTS.
14 (XXVI) THE USE BY THE ASSISTED CITY OF REVENUES
15 RECEIVED UNDER THE ACT OF JULY 28, 1953 (P.L.723,
16 NO.230), KNOWN AS THE SECOND CLASS COUNTY CODE.
17 (XXVII) THE USE OF BUDGETARY PRACTICES AND
18 PRINCIPLES AS THEY RELATE TO FORECASTING, PUBLIC
19 OPENNESS, PROJECTIONS, ESTIMATES, TAX POLICY, LENDING,
20 BORROWING AND STRATEGIC PLANNING.
21 (XXVIII) THE TRANSFERS OF EMPLOYEES AND ASSETS BY
22 AND BETWEEN BUREAUS, DEPARTMENTS AND AUTHORITIES OF THE
23 ASSISTED CITY.
24 (xxi) (XXIX) Prior suggestions published by others <--
25 prior to the enactment of this act with regard to the
26 assisted city.
27 (5) To make recommendations to the Governor and the
28 General Assembly regarding legislation or resolutions which
29 relate to an assisted city's fiscal stability.
30 (6) To exercise powers of review concerning the
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1 budgetary and fiscal affairs of the assisted city consistent
2 with this act and the city's home rule charter or other
3 optional plan of government.
4 (7) To receive revenues from any source, directly or by
5 assignment, pledge or otherwise.
6 (8) To sue and be sued, implead and be impleaded,
7 interplead, complain and defend in all courts.
8 (9) To adopt, use and alter at will a corporate seal.
9 (10) To make bylaws for the management and regulation of
10 its affairs and adopt rules, regulations and policies in
11 connection with the performance of its functions and duties
12 which, notwithstanding any other provision of law to the
13 contrary, shall not be subject to review pursuant to the act
14 of June 25, 1982 (P.L.633, No.181), known as the Regulatory
15 Review Act.
16 (11) To make and enter into contracts and other
17 instruments necessary or convenient for the conduct of its
18 business and the exercise of the powers of the authority.
19 (12) To appoint officers, agents, employees and servants
20 and to prescribe their duties and to fix their compensation
21 as set forth in section 202(f).
22 (13) To retain counsel and auditors to render such
23 professional services as the authority deems appropriate. The
24 authority shall not be considered either an executive agency
25 or an independent agency for the purpose of the act of
26 October 15, 1980 (P.L.950, No.164), known as the Commonwealth
27 Attorneys Act, but shall possess the same status for such
28 purpose as the Auditor General, State Treasurer and the
29 Pennsylvania Public Utility Commission, except that the
30 provisions of section 204(b) and (f) of the Commonwealth
20030S0940B1277 - 20 -
1 Attorneys Act shall not apply to the authority;
2 notwithstanding 42 Pa.C.S. Ch. 85 (relating to matters
3 affecting government units), the authority, through its legal
4 counsel, shall defend actions brought against the authority
5 or its members, officers, officials and employees when acting
6 within the scope of their official duties.
7 (14) To cooperate with any Federal agency or government
8 agency.
9 (15) To acquire, by gift or otherwise, purchase, hold,
10 receive, lease, sublease and use any franchise, license,
11 property, real, personal or mixed, tangible or intangible or
12 any interest therein. However, the authority shall be
13 absolutely limited in its power to acquire real property
14 under this act to real property that will be used only for
15 the office space in which the authority will conduct its
16 daily business if necessary. If possible, an assisted city
17 shall provide office space to the authority at no cost to the
18 authority as part of an intergovernmental cooperation
19 agreement.
20 (16) To sell, transfer, convey and dispose of any
21 property, real, personal or mixed, tangible or intangible or
22 any interest therein.
23 (17) To enter into contracts for group insurance and to
24 contribute to retirement plans for the benefit of its
25 employees and to enroll its employees in an existing
26 retirement system of a government agency.
27 (18) To accept, purchase or borrow equipment, supplies,
28 services or other things necessary or convenient to the work
29 of the authority from other government agencies, and all
30 government agencies are authorized to sell, lend or grant to
20030S0940B1277 - 21 -
1 the authority such equipment, supplies, services or other
2 things necessary or convenient to the work of the authority.
3 (19) To invest any funds held by the authority as set
4 forth in section 212.
5 (20) To receive and hold assets, moneys and funds from
6 any source, including, but not limited to, appropriations,
7 grants, gifts.
8 (21) To procure insurance, guarantees and sureties the
9 authority determines necessary or desirable for its purposes.
10 (22) To pledge the credit of the authority as the
11 authority determines necessary or desirable for its purposes.
12 (23) To do all acts and things necessary or convenient
13 for the promotion of its purposes and the general welfare of
14 the authority and to carry out the powers granted to it by
15 this act or any other acts.
16 (d) Intergovernmental cooperation agreements.--The authority
17 shall have the power and its duty shall be to enter into and to
18 implement fully such intergovernmental cooperation agreements
19 with cities as are approved by a majority of the board. The
20 following shall apply:
21 (1) A city may enter into an intergovernmental
22 cooperation agreement in which it, consistent with this act,
23 covenants to cooperate or agree in the exercise of any
24 function, power or responsibility with, or delegate or
25 transfer any function, power or responsibility to, the
26 authority upon the adoption by the governing body of such
27 city of an ordinance authorizing and approving the
28 intergovernmental cooperation agreement.
29 (2) An ordinance that authorizes a city to enter into an
30 intergovernmental cooperation agreement with the authority
20030S0940B1277 - 22 -
1 shall specify:
2 (i) the purpose and objectives of the agreement;
3 (ii) the conditions of the agreement; and
4 (iii) the term of the agreement, including
5 provisions relating to its termination.
6 (e) Limitation.--Notwithstanding any purpose or general or
7 specific power granted by this act or any other act, whether
8 express or implied, the authority shall have no power to pledge
9 the credit or taxing powers of the Commonwealth.
10 Section 204. Term of existence.
11 The authority shall exist for a term of at least seven years.
12 If, after seven years, an assisted city has had annual operating
13 budgets and five-year financial plans approved by the board for
14 at least the three immediately preceding years, the Secretary of
15 Community and Economic Development shall certify that the
16 authority is no longer needed; and the provisions of this
17 chapter will no longer be in effect 90 days following that
18 certification. Upon termination of the authority, records and
19 documents of the authority shall be transferred to the director
20 of finance of the assisted city. The authority shall submit a
21 final report on its activities and the city's fiscal condition
22 to the Governor and the General Assembly within 60 days of its
23 termination.
24 Section 205. Fiscal year.
25 The fiscal year of the authority shall be the same as the
26 fiscal year of the Commonwealth.
27 Section 206. Annual budget of authority.
28 (a) Budget.--Before March 1 of each year, the authority
29 shall adopt a budget by a majority of the board setting forth in
30 reasonable detail the projected expenses of operation of the
20030S0940B1277 - 23 -
1 authority for the ensuing fiscal year, including the salary and
2 benefits of the executive director and any other employees of
3 the authority, and the projected revenues of the authority to be
4 derived from investment earnings and any other moneys of the
5 authority which are estimated to be available to pay the
6 operating expenses set forth in the budget. A copy of the
7 authority's budget shall be submitted to the Governor and to the
8 General Assembly. The authority or its designated
9 representatives may be afforded an opportunity to appear before
10 the Governor and the Appropriations Committee of the Senate and
11 the Appropriations Committee of the House of Representatives
12 regarding the authority's budget.
13 (b) Limit on operating expenses.--Following the submission
14 of the authority's budget to the Governor and the General
15 Assembly and any hearing held by an appropriations committee
16 under subsection (a), the General Assembly, by concurrent
17 resolution with presentment to the Governor, in accordance with
18 section 9 of Article III of the Constitution of Pennsylvania,
19 may limit the operating expenses of the authority. In that
20 event, it shall be unlawful for the authority to spend more for
21 operating expenses than the limit established for that fiscal
22 year by the concurrent resolution. If the General Assembly does
23 not adopt a concurrent resolution prior to May 30, the
24 authority's budget shall be deemed approved for that fiscal
25 year.
26 (c) Funding.--After July 1, 2005, upon request of the
27 authority and pursuant to the limits established in subsection
28 (b), the city shall annually fund any portion of the budget of
29 the authority which exceeds the authority's State appropriation,
30 including its reasonable and necessary expenses and costs
20030S0940B1277 - 24 -
1 incurred for consultants engaged by the board to carry out its
2 duties.
3 (d) Examination of books.--The chairperson and minority
4 chairperson of the Appropriations Committee of the Senate and
5 the chairperson and minority chairperson of the Appropriations
6 Committee of the House of Representatives shall have the right
7 at any time to examine the books, accounts and records of the
8 authority.
9 Section 207. Annual report to be filed; annual audits.
10 The authority shall file an A SIGNED annual report with the <--
11 chairperson and the minority chairperson of the Appropriations
12 Committee of the Senate and chairperson and the minority
13 chairperson of the Appropriations Committee of the House of
14 Representatives, which shall make provisions for the accounting
15 of revenues and expenses. The authority shall have its books,
16 accounts and records audited annually in accordance with
17 generally accepted auditing standards by an independent auditor
18 who shall be a certified public accountant, and a copy of his
19 audit report shall be attached to and be made a part of the
20 authority's annual report. A concise financial statement shall
21 be published annually in the Pennsylvania Bulletin.
22 Section 208. Limit on city borrowing.
23 A city and its corporate entities may not borrow or receive
24 funds for any lawful purpose unless the city has entered into an
25 intergovernmental cooperation agreement with the authority and
26 there is an approved financial plan in effect.
27 Section 209. Financial plan of an assisted city.
28 (a) Requirement of a financial plan.--An assisted city shall
29 develop, implement and periodically revise a financial plan as
30 described in this section.
20030S0940B1277 - 25 -
1 (b) Elements of plan.--The financial plan shall include:
2 (1) Projected revenues and expenditures of the principal
3 operating fund or funds of the assisted city for five fiscal
4 years consisting of the current fiscal year and the next four
5 fiscal years.
6 (2) Plan components that will:
7 (i) eliminate any projected deficit for the current
8 fiscal year and for subsequent fiscal years;
9 (ii) restore to special fund accounts money from
10 those accounts used for purposes other than those
11 specifically authorized;
12 (iii) balance the current fiscal year budget and
13 subsequent budgets in the financial plan through sound
14 budgetary practices, including, but not limited to,
15 reductions in expenditures, improvements in productivity,
16 increases in revenues or a combination of these steps;
17 (iv) provide procedures to avoid a fiscal emergency
18 condition in the future; and
19 (v) enhance the ability of the assisted city to
20 access short-term and long-term credit markets.
21 (c) Standards for formulation of plan.--
22 (1) All projections of revenues and expenditures in a
23 financial plan shall be based on PRUDENT, reasonable and <--
24 appropriate assumptions and methods of estimation, all such
25 assumptions and methods to be consistently applied AND <--
26 REPORTED IN THE FINANCIAL PLAN. The financial plan of an
27 assisted city shall not include projected revenue that in
28 order to be collected requires the enactment by the General
29 Assembly of new taxing powers.
30 (2) All revenue and appropriation estimates shall be on
20030S0940B1277 - 26 -
1 a modified accrual basis in accordance with generally
2 accepted standards agreed to by the authority such as those
3 promulgated by the Governmental Accounting Standards Board.
4 Revenue estimates shall recognize revenues in the accounting
5 period in which they become both measurable and available.
6 Estimates of city-generated revenues shall be based on
7 current or proposed tax rates, historical collection patterns
8 and generally recognized econometric models. Estimates of
9 revenues to be received from the State government shall be
10 based on historical patterns, currently available levels or
11 on levels proposed in a budget by the Governor. Estimates of
12 revenues to be received from the Federal Government shall be
13 based on historical patterns, currently available levels or
14 on levels proposed in a budget by the President or in a
15 congressional budget resolution. Nontax revenues shall be
16 based on current or proposed rates, charges or fees,
17 historical patterns and generally recognized econometric
18 models. Appropriation estimates shall include, at a minimum,
19 all obligations incurred during the fiscal year and estimated
20 to be payable during the fiscal year or in the 24-month
21 period following the close of the current fiscal year and all
22 obligations of prior fiscal years not covered by encumbered
23 funds from prior fiscal years. Any deviations from these
24 standards of estimating revenues and appropriations proposed
25 to be used by an assisted city shall be specifically
26 disclosed and shall be approved by a majority of the board.
27 (3) All cash flow projections shall be based upon
28 reasonable and appropriate assumptions as to sources and uses
29 of cash, including, but not limited to, reasonable and
30 appropriate assumptions as to the timing of receipt and
20030S0940B1277 - 27 -
1 expenditure thereof, and shall provide for operations of the
2 assisted city to be conducted within the resources so
3 projected. All estimates shall take due account of the past
4 and anticipated collection, expenditure and service demand
5 experience of the assisted city and of current and projected
6 economic conditions.
7 (d) Form of plan.--Each financial plan shall, consistent
8 with the requirements of an assisted city's home rule charter or
9 optional plan of government:
10 (1) be in such form and shall contain:
11 (i) for each of the first two fiscal years covered
12 by the financial plan, such information as shall reflect
13 an assisted city's total expenditures by fund and by lump
14 sum amount for each board, commission, department or
15 office of an assisted city; and
16 (ii) for the remaining three fiscal years of the
17 financial plan, such information as shall reflect an
18 assisted city's total expenditures by fund and by lump
19 sum amount for major object classification;
20 (2) include projections of all revenues and expenditures
21 for five fiscal years, including, but not limited to,
22 projected capital expenditures and short-term and long-term
23 debt incurrence and cash flow forecasts by fund for the first
24 year of the financial plan;
25 (3) include a schedule of projected capital commitments
26 of the assisted city and proposed sources of funding for such
27 commitments; and
28 (4) be accompanied by a statement describing, in
29 reasonable detail, the significant assumptions and methods of
30 estimation used in arriving at the projections contained in
20030S0940B1277 - 28 -
1 such plan.
2 (e) Annual submission of plan.--On or before November 30,
3 2003, an assisted city shall develop, and the authority shall
4 review and act upon, an initial five-year financial plan which
5 includes a report on the status of implementation of prior
6 published suggestions regarding consolidation and cost savings.
7 During each subsequent fiscal year, the mayor or chief executive
8 officer of each assisted city shall, at least 100 days prior to
9 the beginning of its fiscal year or on such other date as the
10 authority may approve upon the request of the assisted city,
11 prepare and submit its proposed five-year plan. At the same time
12 the plan is submitted, the mayor or chief executive officer
13 shall also submit to the authority:
14 (1) the mayor's or chief executive officer's proposed
15 annual operating budget and capital budget which shall be
16 consistent with the first year of the financial plan and
17 which shall be prepared in accordance with the assisted
18 city's home rule charter or other optional plan of
19 government; and
20 (2) a statement by the mayor or chief executive officer
21 that such budget:
22 (i) is consistent with the financial plan;
23 (ii) contains funding adequate for debt service
24 payments, legally mandated services and lease payments
25 securing bonds of other government agencies; and <--
26 (iii) is based upon CONSERVATIVE, reasonable and <--
27 appropriate assumptions and methods of estimation; AND <--
28 (IV) COMPLIES WITH ANY BALANCED BUDGET REQUIREMENTS
29 CONTAINED IN THE CHARTER AND ORDINANCES OF THE CITY OR
30 STATE LAW.
20030S0940B1277 - 29 -
1 (F) BALANCED BUDGET REQUIREMENT.--THE MAYOR OF EVERY CITY
2 AND ASSISTED CITY SHALL SUBMIT, AND THE CITY COUNCIL OF EVERY
3 CITY AND ASSISTED CITY SHALL ADOPT, A BALANCED BUDGET EACH YEAR
4 CONSISTENT WITH THE REQUIREMENTS OF 53 PA.C.S. § 3016 (RELATING
5 TO FORM AND ADOPTION OF BUDGET), AND THE CITY'S OR ASSISTED
6 CITY'S HOME RULE CHARTER OR OTHER OPTIONAL PLAN OF GOVERNMENT. A
7 BALANCED BUDGET OF A CITY OR ASSISTED CITY SHALL NOT INCLUDE
8 PROJECTED REVENUES THAT IN ORDER TO BE COLLECTED REQUIRE THE
9 ENACTMENT BY THE GENERAL ASSEMBLY OF NEW TAXING POWERS OR THE
10 APPROVAL OF A COURT OF COMMON PLEAS OF THE COUNTY IN WHICH THE
11 CITY OR ASSISTED CITY IS LOCATED. THE FAILURE OF A CITY OR
12 ASSISTED CITY TO COMPLY WITH THIS SUBSECTION SHALL RESULT IN THE
13 WITHHOLDING OF COMMONWEALTH FUNDS PURSUANT TO SECTION 210(E) AND
14 (F).
15 (f) (G) Authority review and approval of plan.-- <--
16 (1) The authority shall promptly review each financial
17 plan, proposed operating budget and capital budget submitted
18 by the assisted city. In conducting such review, the
19 authority shall request from the city controller of the
20 assisted city an opinion or certification prepared in
21 accordance with generally accepted auditing standards, with
22 respect to the reasonableness of the assumptions and
23 estimates in the financial plan. The city controller and
24 other elected officials shall comply with any such request
25 from the authority. Not more than 30 days after submission of
26 a financial plan and proposed operating budget, the authority
27 shall determine whether:
28 (i) the financial plan projects balanced budgets,
29 based upon reasonable PRUDENT, REASONABLE AND APPROPRIATE <--
30 assumptions as described in this section, for each year
20030S0940B1277 - 30 -
1 of the plan; and
2 (ii) the proposed operating budget and capital
3 budget are consistent with the proposed financial plan.
4 If the authority determines that these criteria are
5 satisfied, the authority shall approve such financial plan by
6 a majority vote.
7 (2) The authority shall not be bound by any opinions or
8 certifications of the city controller of the assisted city
9 issued pursuant to this subsection.
10 (3) If the authority fails to take any action within 30
11 days on a financial plan, the financial plan as submitted
12 shall be deemed approved. However, if during the 30 days a
13 written request by two members of the authority board for a
14 meeting and vote on the question of approval of the financial
15 plan has been submitted to the chairperson and a meeting and
16 vote do not take place, the financial plan shall be deemed
17 disapproved.
18 (g) (H) Authority disapproval of plan.-- <--
19 (1) If the authority disapproves the proposed financial
20 plan, the authority shall, when it notifies an assisted city
21 of its decision, state in writing in reasonable detail the
22 reasons for such disapproval, including the amount of any
23 estimated budget imbalance.
24 (2) The assisted city shall submit a revised financial
25 plan to the authority within 15 days of such disapproval,
26 which revised plan eliminates the budget imbalance. Not more
27 than 15 days after the submission of such revised financial
28 plan, the authority shall determine whether the revised plan
29 satisfies the criteria set forth in subsection (f)(1) (G)(1). <--
30 If the authority determines that these criteria are
20030S0940B1277 - 31 -
1 satisfied, the authority shall approve such financial plan by
2 a majority vote. If the authority shall not so approve the
3 financial plan, then the authority shall, in accordance with
4 section 210(e), certify the assisted city's noncompliance
5 with the financial plan to the Secretary of the Budget, the
6 President pro tempore of the Senate and the Speaker of the
7 House of Representatives.
8 (h) (I) Revisions to plan.-- <--
9 (1) The plan shall be revised on an annual basis to
10 include the operating budget for the next fiscal year and to
11 extend the plan for an additional fiscal year. In addition,
12 the mayor or chief executive officer of a city shall, within
13 90 days of assuming office, propose revisions to the
14 financial plan or certify to the authority that he or she
15 adopts the existing plan. An assisted city may, during the
16 course of a fiscal year, submit proposed revisions to the
17 financial plan and shall submit a proposed revision for any
18 amendment to the city's operating or capital budget.
19 (2) The authority shall review each proposed revision
20 within 20 days of its submission. The authority shall approve
21 the revision if it will not, based on reasonable PRUDENT, <--
22 REASONABLE AND APPROPRIATE assumptions, cause the plan to
23 become imbalanced. Proposed revisions shall become part of
24 the financial plan upon the approval of a majority of the
25 authority board, unless some other method of approval is
26 permitted by authority rules and regulations approved by a
27 majority or pursuant to an agreement with the city contained
28 in an intergovernmental cooperation agreement. If the
29 authority fails to take action within 20 days on a proposed
30 revision, such submission shall be deemed approved unless a
20030S0940B1277 - 32 -
1 written request for a meeting and vote has been made in
2 accordance with subsection (f)(3) (G)(3) in which event, if a <--
3 meeting and vote does not take place, the proposed revision
4 shall be deemed disapproved.
5 (3) If the governing body of a city adopts a budget
6 inconsistent with an approved financial plan, the assisted
7 city shall submit the enacted budget to the authority as a
8 proposed revision to the plan. The authority shall review the
9 proposed revision within 30 days of its submission, in
10 accordance with the criteria set forth in subsection (f) (G) <--
11 and the approval process set forth in paragraph (2).
12 (i) (J) Supplemental reports.--Within 45 days of the end of <--
13 each fiscal quarter, or monthly if a variation from the
14 financial plan has been determined in accordance with section
15 210(c), the mayor or chief executive officer of an assisted city
16 shall provide the authority with reports describing actual or
17 current estimates of revenues and expenditures compared to
18 budgeted revenues and expenditures for such period reflected in
19 its cash flow forecast. Each report required under this section
20 shall indicate any variance between actual or current estimates
21 and budgeted revenues, expenditures and cash for the period
22 covered by such report. An assisted city shall also provide
23 periodic reports on debt service requirements in conformity with
24 section 210(b).
25 (j) (K) Effect of plan upon contracts and collective <--
26 bargaining agreements.--
27 (1) A contract or collective bargaining agreement in
28 existence in an assisted city prior to the approval by the
29 authority of a financial plan submitted pursuant to this
30 section shall remain effective after approval of such plan
20030S0940B1277 - 33 -
1 until such contract or agreement expires.
2 (2) After the approval by the authority of a financial
3 plan submitted pursuant to this section, an assisted city
4 shall execute contracts and collective bargaining agreements
5 in compliance with such plan. If an assisted city executes a
6 contract or a collective bargaining agreement which is not in
7 compliance with the plan, the contract or agreement shall not
8 be void or voidable solely by reason of such noncompliance,
9 but the assisted city shall submit to the authority a
10 proposed revision to the plan which demonstrates that
11 revenues sufficient to pay the costs of the contract or
12 collective bargaining agreement will be available in the
13 affected fiscal years of the plan.
14 (k) (L) Effect of plan upon certain arbitration awards.-- <--
15 (1) After the approval by the authority of a financial
16 plan submitted pursuant to this section, any determination of
17 a board of arbitration established pursuant to the provisions
18 of the act of June 24, 1968 (P.L.237, No.111), referred to as
19 the Policemen and Firemen Collective Bargaining Act,
20 providing for an increase in wages or fringe benefits of any
21 employee of an assisted city under the plan, in addition to
22 considering any standard or factor required to be considered
23 by applicable law, shall take into consideration and accord
24 substantial weight to:
25 (i) the approved financial plan; and
26 (ii) relevant market factors, such as the financial
27 situation of the assisted city, inflation, productivity,
28 size of work force and pay and benefit levels in
29 economically and demographically comparable political
30 subdivisions.
20030S0940B1277 - 34 -
1 (2) Such determination shall be in writing and a copy
2 thereof shall be forwarded to each party to the dispute and
3 the authority. Any determination of the board of arbitration
4 which provides for an increase in wages or fringe benefits of
5 any employee of an assisted city shall state with specificity
6 in writing all factors which the board of arbitration took
7 into account in considering and giving substantial weight to
8 the factors referred to in paragraph (1).
9 (3) Any party to a proceeding before a board of
10 arbitration may appeal to the court of common pleas to
11 review:
12 (i) consideration under paragraph (1); or
13 (ii) failure of the board of arbitration to issue a
14 determination under paragraph (2).
15 (4) An appeal under paragraph (3) must be commenced not
16 later than 30 days after the issuance of a final
17 determination by the board of arbitration.
18 (5) The decision of the board of arbitration shall be
19 vacated and remanded to the board of arbitration if the court
20 finds:
21 (i) that the board of arbitration failed to take
22 into consideration and accord substantial weight to the
23 factors referred to in paragraph (1); or
24 (ii) that the board of arbitration has failed to
25 issue a determination under paragraph (2).
26 (6) If, after the exhaustion of all appeals, the final
27 arbitration award is not in compliance with the approved
28 financial plan, the award shall not be void or voidable
29 solely by reason of such noncompliance, but the assisted city
30 shall submit to the authority a proposed revision to the plan
20030S0940B1277 - 35 -
1 which demonstrates that revenues sufficient to pay the costs
2 of the award will be available in the affected fiscal years
3 of the plan.
4 Section 210. Powers and duties of authority with respect to
5 financial plans.
6 (a) Formulation and approval of plan.--To advance the
7 financial recovery of each assisted city, the authority shall
8 require the assisted city to submit a five-year financial plan
9 in accordance with section 209. With regard to the formulation
10 of such plan, the authority shall:
11 (1) Consult with an assisted city as it prepares the
12 financial plan.
13 (2) Prescribe the form of the financial plan.
14 (3) Prescribe the supporting information required in
15 connection with such plan, such information to include at a
16 minimum:
17 (i) debt service payments due or projected to be due
18 during the relevant fiscal years;
19 (ii) payments for legally mandated services included
20 in the plan and due or projected to be due during the
21 relevant fiscal years; and
22 (iii) a statement in reasonable detail of the
23 significant assumptions and methods of estimation used in
24 arriving at the projections in the plan.
25 (4) Exercise any rights of approval or disapproval and
26 issue such recommendations as are authorized by this act in
27 accordance with the standards for formulation of the plan set
28 forth in section 209(c).
29 (b) Authority functions after plan is approved.--After a
30 financial plan has been approved, the authority shall:
20030S0940B1277 - 36 -
1 (1) Receive and review:
2 (i) the financial reports submitted by the mayor or
3 chief executive officer of a city under section 209(i) <--
4 209(J); <--
5 (ii) reports concerning the debt service
6 requirements on all bonds, notes of the assisted city and
7 lease payments of the assisted city securing bonds or
8 other government agencies for the following quarter,
9 which reports shall be in such form and contain such
10 information as the authority shall determine, and which
11 shall be issued no later than 60 days prior to the
12 beginning of the quarter to which they pertain, and shall
13 be updated immediately upon each issuance of bonds or
14 notes, by the assisted city or execution of a lease
15 securing bonds of another government agency, after the
16 date of such report to reflect any change in debt service
17 requirements as a result of such issuance; and
18 (iii) any additional information provided by the
19 assisted city concerning changed conditions or unexpected
20 events which may affect the assisted city's adherence to
21 the financial plan. The reports described in subparagraph
22 (ii) shall be certified by the city controller.
23 (2) Determine, on the basis of information and reports
24 described in paragraph (1), whether an assisted city has
25 adhered to the financial plan.
26 (c) Variation from the plan.--If the authority determines,
27 based upon reports submitted by an assisted city under
28 subsection (b) or independent audits, examinations or studies of
29 the assisted city's finances obtained under subsection (i)(3),
30 that an assisted city's actual revenues and expenditures vary
20030S0940B1277 - 37 -
1 from those estimated in the financial plan, the authority shall
2 require the city to provide such additional information as the
3 authority deems necessary to explain the variation. The
4 authority shall take no action with respect to an assisted city
5 for departures from the financial plan in a fiscal quarter if:
6 (1) the city provides a written explanation for the
7 variation that the authority deems reasonable;
8 (2) the city proposes remedial action which the
9 authority believes will restore the assisted city's overall
10 compliance with the financial plan;
11 (3) information provided by the city in the immediately
12 succeeding quarterly financial report demonstrates that the
13 assisted city is taking such remedial action and otherwise
14 complying with the plan; and
15 (4) the assisted city submits monthly supplemental
16 reports in accordance with section 209(i) 209(J) until it <--
17 regains compliance with the financial plan.
18 (d) Authority may make recommendations.--The authority may
19 at any time issue recommendations as to how an assisted city may
20 achieve compliance with the financial plan and shall provide
21 copies of such recommendations to the mayor or chief executive
22 officer and the governing body of the city and to the officials
23 named in section 203(b)(5).
24 (e) When Commonwealth shall withhold funds.--
25 (1) The authority shall certify to the Secretary of the
26 Budget an assisted city's noncompliance with the financial
27 plan during any period when the authority has determined by
28 the vote of a majority that the assisted city has not adhered
29 to the plan and has not taken acceptable remedial action
30 during the next quarter following such departure from the
20030S0940B1277 - 38 -
1 plan.
2 (2) The authority shall certify to the Secretary of the
3 Budget that an assisted city is not in compliance with the
4 plan if the assisted city:
5 (i) has no financial plan approved by the authority,
6 has failed to provide requested documents or has failed
7 to file a financial plan with the authority;
8 (ii) has failed to file mandatory revisions to the
9 plan or reports as required by section 209(h), (i), (j) <--
10 or (k) 209(I), (J), (K) OR (L); or <--
11 (iii) has not been compelled to file a financial
12 plan, a mandatory revision to the plan or a report
13 through a mandamus action authorized under subsection
14 (j).
15 (3) If the authority certifies that an assisted city is
16 not in compliance with the financial plan under paragraph (1)
17 or (2), the Secretary of the Budget shall notify the city
18 that such certification has been made and that each grant,
19 loan, entitlement or payment to the assisted city by the
20 Commonwealth shall be suspended pending compliance with the
21 financial plan. Funds withheld shall be held in escrow by the
22 Commonwealth until compliance with the plan is restored as
23 set forth in paragraph (4). Funds held in escrow pursuant to
24 this subsection shall not lapse pursuant to section 621 of
25 the act of April 9, 1929 (P.L.177, No.175), known as The
26 Administrative Code of 1929, or any other law.
27 (4) The authority shall, by majority vote, determine
28 when the conditions which caused an assisted city to be
29 certified as not in compliance with the financial plan have
30 ceased to exist and shall promptly notify the Secretary of
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1 the Budget of such vote. The Secretary of the Budget shall
2 thereupon release all funds held in escrow, together with all
3 interest and income earned thereon during the period held in
4 escrow, and the disbursements of amounts in the city account
5 shall resume.
6 (f) Exemptions.--Notwithstanding the provisions of
7 subsection (e), the following shall not be withheld from an
8 assisted city:
9 (1) funds granted or allocated to an assisted city
10 directly from an agency of the Commonwealth or from the
11 Federal Government for distribution by the Commonwealth after
12 the declaration of a disaster resulting from a catastrophe;
13 (2) funds for capital projects under contract in
14 progress;
15 (3) pension fund payments required by law; and
16 (4) funds the assisted city has pledged to repay bonds
17 or notes.
18 (g) Effect of Commonwealth's failure to disburse funds.--The
19 provisions of subsection (e) shall not apply and an assisted
20 city shall not be found to have departed from the financial plan
21 due to the Commonwealth's failure to pay any money, including
22 payment of Federal funds distributed by or through the
23 Commonwealth, due to the assisted city from moneys appropriated
24 by the General Assembly.
25 (h) Assisted city to determine expenditure of available
26 funds.--Nothing in this act shall be construed to limit the
27 power of an assisted city to determine, from time to time,
28 within available funds of the assisted city, the purposes for
29 which expenditures are to be made by the assisted city and the
30 amounts of such expenditures then permitted under the financial
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1 plan of the assisted city.
2 (i) Documents and examinations to be reviewed or undertaken
3 by the authority.--The authority shall:
4 (1) receive from an assisted city and review the
5 reports, documents, budgetary and financial planning data and
6 other information prepared by or on behalf of such assisted
7 city and which are to be made available to the authority
8 under this act;
9 (2) inspect and copy such books, records and information
10 of an assisted city as the authority deems necessary to
11 accomplish the purposes of this act; and
12 (3) conduct or cause to be conducted such independent
13 audits, examinations or studies of an assisted city's
14 finances as the authority deems appropriate.
15 (j) Remedies of authority for failure of an assisted city to
16 file financial plans and reports.--In the event that an assisted
17 city shall fail to file with the authority any financial plan,
18 revision to a financial plan, report or other information
19 required to be filed with the authority pursuant to this act,
20 the authority, in addition to all other rights which the
21 authority may have at law or in equity, shall have the right by
22 mandamus to compel the assisted city and the officers, employees
23 and agents thereof to file with the authority the financial
24 plan, revision to a financial plan, report or other information
25 which the assisted city has failed to file. The authority shall
26 give the assisted city written notice of the failure of the
27 assisted city to file and of the authority's intention to
28 initiate an action under this subsection and shall not initiate
29 such an action earlier than ten days after the giving of such
30 notice.
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1 Section 211. Limitation on authority and on assisted cities to
2 file petition for relief under Federal bankruptcy
3 law.
4 (a) Limitation on bankruptcy filing.--Notwithstanding any
5 other provision of law, the authority and any assisted city
6 shall not be authorized to file a petition for relief under 11
7 U.S.C. Ch. 9 (relating to adjustments of debts of a
8 municipality) or any successor Federal bankruptcy law, and no
9 government agency shall authorize the authority or such city to
10 become a debtor under 11 U.S.C. Ch. 9 or any successor Federal
11 bankruptcy law.
12 (b) Bankruptcy filing approval.--In addition to the
13 limitation set forth in subsection (a), and notwithstanding any
14 other provision of law, no city shall be authorized to file a
15 petition for relief under 11 U.S.C. Ch. 9 or any successor
16 Federal bankruptcy law, unless such petition has been submitted
17 to, and the filing thereof has been approved in writing by the
18 Governor. The Governor is designated, in accordance with 11
19 U.S.C. § 109(c)(2) (relating to who may be a debtor), as the
20 organization of the Commonwealth which shall have power to
21 approve or disapprove the filing of any such petition of a
22 political subdivision, and to approve or disapprove any plan of
23 readjustment of the debts of any such political subdivision
24 prepared, filed and submitted with the petition to the court, as
25 provided under 11 U.S.C. Ch. 9.
26 (c) Review of bankruptcy petition.--
27 (1) When any such petition shall be submitted to the
28 Governor for approval, accompanied with a proposed plan of
29 readjustment of the debts of a city, the Governor shall make
30 a careful and thorough investigation of the financial
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1 condition of such city, of its assets and liabilities, of its
2 sinking fund, and whether the affairs thereof are managed in
3 a careful, prudent and economic manner in order to ascertain
4 whether the presentation of such petition is justified, or
5 represents an unjust attempt by such city to evade payment of
6 some of its contractual obligations, and, if the Governor
7 believes that such petition should be approved, whether the
8 plan of readjustment submitted will be helpful to the
9 financial condition of the city and is feasible and, at the
10 same time, fair and equitable to all creditors.
11 (2) The Governor shall also, prior to giving his
12 approval, ascertain the amount, if any, of the obligations of
13 any such petitioning city which is held by any agency or
14 agencies of the State government as trust funds and shall,
15 before approving any such petition and plan of readjustment,
16 consult with and give every such agency an opportunity to be
17 heard and the privilege to examine the findings of the
18 Governor resulting from the investigation required to be made
19 under this act, and shall likewise hear any other creditor of
20 such city, whether resident in or outside this Commonwealth,
21 who shall apply therefor.
22 (3) The Governor, if he approves a petition, shall,
23 before giving his approval, require such modification in the
24 proposed plan for readjusting the debts as to him appears
25 proper.
26 Section 212. Investment of funds.
27 Funds of the authority which are not required for immediate
28 use may be invested in obligations of an assisted city or in
29 obligations of the Federal Government or of the Commonwealth or
30 obligations which are legal investments for Commonwealth funds.
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1 However, no money may be invested in obligations issued by or
2 obligations guaranteed by an assisted city without the approval
3 of a majority of the board.
4 Section 213. Sovereign immunity.
5 Members of the board shall not be liable personally for any
6 obligations of the authority. It is hereby declared to be the
7 intent of the General Assembly that the authority created by
8 this act and its members, officers, officials and employees
9 shall enjoy sovereign and official immunity, as provided in 1
10 Pa.C.S. § 2310 (relating to sovereign immunity reaffirmed;
11 specific waiver), and shall remain immune from suit except as
12 provided by and subject to the provisions of 42 Pa.C.S. §§ 8501
13 (relating to definitions) through 8528 (relating to limitations
14 on damages).
15 CHAPTER 7
16 MISCELLANEOUS PROVISIONS
17 Section 701. Appropriation.
18 The sum of $200,000 is hereby appropriated from the General
19 Fund to the Intergovernmental Cooperation Authority for Cities
20 of the Second Class as a continuing appropriation for the
21 purpose of providing operating funds for the Intergovernmental
22 Cooperation Authority for Cities of the Second Class. This
23 appropriation shall lapse June 30, 2005.
24 Section 702. General rights and prohibitions.
25 Nothing in this act shall limit the rights or impair the
26 obligations of any assisted city to comply with the provisions
27 of any contract in effect on the effective date of this act or
28 shall in any way impair the rights of the obligees of any
29 assisted city with respect to any such contract.
30 Section 703. Nondiscrimination.
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1 The authority shall comply in all respects with the
2 nondiscrimination and contract compliance plans used by the
3 Department of General Services to assure that all persons are
4 accorded equality of opportunity in employment and contracting
5 by the authority and its contractors, subcontractors, assignees,
6 lessees, agents, vendors and suppliers.
7 Section 704. Construction of act.
8 (a) Liberal construction.--The provisions of this act
9 providing for security for and rights and remedies of obligees
10 of the authority shall be liberally construed to achieve the
11 purposes stated and provided for by this act.
12 (b) Severability.--If any provision of the title or any
13 chapter, section or clause of this act, or the application
14 thereof to any person, party, corporation, public or private,
15 shall be judged invalid by a court of competent jurisdiction,
16 such order or judgment shall be confined in its operation to the
17 controversy in which it was rendered and shall not affect or
18 invalidate the remainder of any provision of the title or any
19 chapter or any section or clause of this act, or the application
20 of any part thereof to any other person, party, corporation,
21 public or private, or circumstance, and, to this end, the
22 provisions of the title or any chapter, section or clause of
23 this act hereby are declared to be severable. It is hereby
24 declared as the legislative intent that this act would have been
25 adopted had any provision declared unconstitutional not been
26 included herein.
27 Section 705. Limitation of authority powers.
28 Except as provided in section 210(i), nothing contained in
29 this act shall be construed to confer upon the authority any
30 powers with respect to a school district.
20030S0940B1277 - 45 -
1 Section 706. Suspension and repeal.
2 (a) Suspension.--The UNLESS A DETERMINATION OF MUNICIPAL <--
3 FINANCIAL DISTRESS IS ISSUED TO A CITY OF THE SECOND CLASS BY
4 THE SECRETARY OF COMMUNITY AND ECONOMIC DEVELOPMENT PRIOR TO THE
5 EFFECTIVE DATE OF THIS ACT, THE provisions of the act of July
6 10, 1987 (P.L.246, No.47), known as the Municipalities Financial
7 Recovery Act, WITH THE EXCEPTION OF SECTION 123(A), are <--
8 suspended as to cities of the second class until the termination
9 of the authority established by this act. IF THE PROVISIONS OF <--
10 THIS ACT AND THE MUNICIPALITIES FINANCIAL RECOVERY ACT ARE
11 DETERMINED TO BE IN CONFLICT, THE PROVISIONS OF THIS ACT SHALL
12 GOVERN.
13 (b) General.--All other acts or parts of acts are repealed
14 insofar as they are inconsistent with this act.
15 Section 707. Effective date.
16 This act shall take effect immediately.
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