PRIOR PRINTER'S NOS. 1237, 1277, 1290 PRINTER'S NO. 1297
No. 940 Session of 2003
INTRODUCED BY ORIE, WAGNER, LOGAN, BRIGHTBILL, KITCHEN, EARLL,
CORMAN, D. WHITE, CONTI AND RAFFERTY, OCTOBER 23, 2003
AS AMENDED ON THIRD CONSIDERATION, NOVEMBER 25, 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 (iii) exercise its powers consistent with the rights
4 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 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 appointed by the Governor.
27 (vi) The Secretary of the Budget, the director of
28 finance of each assisted city and any person appointed,
29 prior to the effective date of this act, as coordinator
30 for the assisted city pursuant to section 221(a) of the
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1 act of July 10, 1987 (P.L.246, No.47), known as the
2 Municipalities Financial Recovery Act, shall serve as ex
3 officio members of the board. The board and any appointed
4 coordinator shall cooperate in the sharing of reports,
5 information and recommendations with regard to the
6 assisted city. The ex officio members may not vote and
7 shall not be counted for purposes of establishing a
8 quorum. The Secretary of the Budget and the director of
9 finance of each assisted city may designate in writing a
10 representative of their respective offices to attend
11 meetings of the board on their behalf.
12 (2) All members and designees must have substantial
13 experience in finance or management.
14 (3) All members of the board must be residents of this
15 Commonwealth and, except the Secretary of the Budget and any
16 person appointed, prior to the effective date of this act, as
17 coordinator for the assisted city pursuant to section 221(a)
18 of the Municipalities Financial Recovery Act, must either be
19 residents of the assisted city or have their primary places
20 of business or employment in that city.
21 (b) Term.--Appointing authorities shall appoint the initial
22 members of the board within ten days of the effective date of
23 this act, and the appointed members shall select a chairperson
24 from among themselves at the initial organizational meeting of
25 the board and upon any subsequent vacancy in the office of
26 chairperson. The term of a board member shall begin on the date
27 of the appointment. A member's term shall be coterminous with
28 that of the appointing authority. The member selected as
29 chairperson shall serve in that capacity for two years from the
30 date of selection or for the duration of his term on the board,
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1 whichever is less, and may be reelected to subsequent two-year
2 terms. An appointed board member shall serve at the pleasure of
3 the member's appointing authority. Whenever a vacancy occurs
4 among the appointed members on the board, whether prior to or on
5 the expiration of a term, the appointing authority who
6 originally appointed the board member whose seat has become
7 vacant shall appoint a successor member within 30 days of the
8 vacancy. A member appointed by an appointing authority to fill a
9 vacancy occurring prior to the expiration of a term shall serve
10 the unexpired term.
11 (c) Organization.--The appointees of the President pro
12 tempore of the Senate and the Speaker of the House of
13 Representatives shall set a date, time and place for the initial
14 organizational meeting of the board within five days of the
15 appointment of the initial members of the board. The initial
16 organizational meeting shall be held within 20 days of the
17 effective date of this act. In addition to chairperson, the
18 members shall elect such other officers as they may determine. A
19 member may hold more than one office of the board at any time.
20 (d) Meetings.--After the initial organizational meeting, the
21 board shall meet as frequently as it deems appropriate but at
22 least once during each quarter of the fiscal year. In addition,
23 a meeting of the board shall be called by the chairperson if a
24 request for a meeting is submitted to the chairperson by at
25 least two members of the board. A majority of the board shall
26 constitute a quorum for the purpose of conducting the business
27 of the board and for all other purposes. All actions of the
28 board shall be taken by a majority of the board. The provisions
29 of 65 Pa.C.S. Ch. 7 (relating to open meetings) shall apply to
30 the board.
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1 (e) Expenses.--A member shall not receive compensation or
2 remuneration, but shall be entitled to reimbursement for all
3 reasonable and necessary actual expenses.
4 (f) Employees and agents.--The board shall fix and determine
5 the number of employees of the authority and their respective
6 compensation and duties. The board may contract for or receive
7 the loan of services of persons in the employ of other
8 government agencies, and other government agencies shall be
9 authorized to make such employees available. The board may
10 retain an executive director upon a majority vote. The board
11 may, by a majority vote, hire an independent general counsel to
12 the authority and may engage consultants and contract for other
13 professional services upon a majority vote. The board may, upon
14 the approval of a majority, delegate to the executive director
15 such powers of the board as the board deems necessary to carry
16 out the purposes of the authority, subject in every case to the
17 supervision and control of the board.
18 (g) Public officials and party officers; conflicts of
19 interest prohibited.--
20 (1) Except for the Secretary of the Budget, the director
21 of finance of an assisted city and any person appointed,
22 prior to the effective date of this act, as coordinator for
23 the assisted city pursuant to section 221(a) of the
24 Municipalities Financial Recovery Act, neither members of the
25 board nor the executive director shall seek or hold a
26 position as any other public official within this
27 Commonwealth or as a party officer while in the service of
28 the authority. Members of the board and the executive
29 director shall not seek election as public officials or party
30 officers for one year after their service with the authority.
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1 Members of the board and the executive director may serve as
2 appointive public officials any time after their periods of
3 service with the authority.
4 (2) Employees and agents of the authority shall not seek
5 or hold other positions as public officials or party officers
6 while in the employ of the authority. The authority may
7 receive the loan of services of persons in other government
8 agencies in accordance with subsection (f), notwithstanding
9 that such persons are public officials. Employees of the
10 authority shall not seek election as public officials or
11 party officers for one year after leaving the employ of the
12 authority.
13 (3) No member of the board or employee of the authority
14 may directly or indirectly be a party to or be interested in
15 any contract or agreement with the authority or with the
16 assisted city. No member or employee may use his office or
17 employment or any confidential information received through
18 his office or employment for the private pecuniary benefit of
19 himself, a member of his immediate family, or a business with
20 which he or a member of his immediate family is associated.
21 Any member or employee who shall willfully violate this
22 provision shall forfeit his office or employment and shall be
23 subject to such other criminal and civil sanctions as may be
24 imposed by law. Any contract or agreement knowingly made in
25 contravention of this provision is void.
26 (h) Statutes applying to authority.--
27 (1) The provisions of the following acts shall apply to
28 the authority:
29 (i) 65 Pa.C.S. Ch. 7 (relating to open meetings).
30 (ii) The act of June 21, 1957 (P.L.390, No.212),
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1 referred to as the Right-to-Know Law.
2 (iii) Except as set forth in paragraph (2), the act
3 of July 19, 1957 (P.L.1017, No.451), known as the State
4 Adverse Interest Act.
5 (iv) The act of October 4, 1978 (P.L.883, No.170),
6 referred to as the Public Official and Employee Ethics
7 Law.
8 (2) Notwithstanding the provisions of the State Adverse
9 Interest Act, the Secretary of the Budget and the director of
10 finance of each assisted city shall, while serving as ex
11 officio members of the board, also serve in their official
12 capacities with respect to the negotiation and execution of
13 intergovernmental cooperation agreements and other agreements
14 between an assisted city and the authority.
15 (i) Advisory committee.--
16 (1) The board may appoint by majority vote an advisory
17 committee comprised of professionals engaged in municipal
18 management and finance or other experts as it may deem
19 necessary. The members of an advisory committee shall reside
20 within an assisted city or a county within the statistical
21 metropolitan area in which the assisted city is located.
22 (2) The provisions of subsection (g) shall be applicable
23 to members of an advisory committee; however, the board may
24 allow city council to designate a liaison from city council
25 to serve on an advisory committee.
26 (3) An advisory committee shall consist of no more than
27 six members, excluding any council liaison.
28 Section 203. Powers and duties.
29 (a) General powers and duties.--The authority is established
30 for the purposes, without limitation, by itself or by agreement
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1 in cooperation with others, of assisting cities in solving their
2 budgetary and financial problems.
3 (b) Specific duties.--The authority shall have the powers
4 and its duties shall be:
5 (1) To assist cities in achieving financial stability in
6 any manner consistent with the purposes and powers described
7 by this act.
8 (2) To assist cities in avoiding defaults, eliminating
9 and financing deficits, maintaining sound budgetary practices
10 and avoiding the interruption of municipal services.
11 (3) To negotiate intergovernmental cooperation
12 agreements with cities containing such terms and conditions
13 as will enable such cities to eliminate and avoid deficits,
14 maintain sound budgetary practices and avoid interruption of
15 municipal services.
16 (4) To make annual signed reports within 120 days after
17 the close of the assisted city's fiscal year, commencing with
18 the fiscal year ending December 31, 2003, to the Governor and
19 the General Assembly describing the city's financial
20 condition and the authority's progress with respect to
21 restoring the financial stability of assisted cities and
22 achieving balanced budgets for assisted cities. Such reports
23 shall be filed with the Governor, with the presiding officers
24 of the Senate and the House of Representatives, with the
25 chairperson and minority chairperson of the Appropriations
26 Committee of the Senate and the chairperson and the minority
27 chairperson of the Appropriations Committee of the House of
28 Representatives and with the governing body, mayor and
29 controller of the assisted city and be publicly available in
30 the assisted city during normal business hours for public
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1 inspection, and may be reproduced by any member of the public
2 at commercial costs of reproduction. Such report shall
3 clearly show by consistent category the last five years of
4 operating revenues and expenditures, capital expenditures,
5 gross and net indebtedness transactions, including a schedule
6 of principal and interest, five-year projections of the
7 assisted city's operating and capital budgets, and the entire
8 projected indebtedness transactions, including a schedule of
9 principal and interest of such indebtedness until any and all
10 debt has been completely retired. Such report shall contain a
11 narrative explaining progress of the assisted city in meeting
12 its annual and five-year budgetary objectives, an appraisal
13 by the authority of the progress the assisted city is making
14 to achieve its goals, and an appraisal of the extent to which
15 the assisted city is making a good faith effort to achieve
16 its goals. Such report shall disclose any violations of
17 Federal and State law that the authority may have discovered.
18 Such report shall include as appendices all historical loans
19 or other contracts entered into by the assisted city and its
20 authorities.
21 (c) Specific powers.--In addition to the powers and duties
22 set forth elsewhere in this act, the authority shall have the
23 specific powers:
24 (1) To obtain copies of all reports and documents
25 regarding the revenues, expenditures, budgets, deficits,
26 costs, plans, operations, estimates and any other financial
27 or budgetary matters of an assisted city.
28 (2) To obtain additional reports and information on the
29 above matters in such form as are deemed necessary by the
30 authority.
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1 (3) To make factual findings concerning an assisted
2 city's budgetary and fiscal affairs.
3 (4) To make recommendations to an assisted city
4 concerning conditions of approval of budgets and financial
5 plans. Recommendations under this paragraph may include:
6 (i) Consolidation or merger of services performed by
7 an assisted city, school, county or other surrounding
8 municipality.
9 (ii) Consolidation of public safety services.
10 (iii) Appropriate staffing levels of city
11 departments and corporate entities.
12 (iv) Cooperative agreements or contractual
13 arrangements between health care facilities licensed by
14 the Department of Health.
15 (v) Financial or contractual obligations of the
16 assisted city.
17 (vi) Contributions of nonprofit or charitable
18 organizations which receive the benefit of municipal
19 services provided by the assisted city.
20 (vii) Reduction or restructuring of debt
21 obligations.
22 (viii) Cooperative agreements between the assisted
23 city and the county in which it is located or
24 municipalities which border the assisted city.
25 (ix) Cooperative agreements between the assisted
26 city and the school district in which it is located.
27 (x) Collective bargaining agreements and other
28 contracts of the assisted city.
29 (xi) Elimination, sale or transfer of assisted city
30 services or property.
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1 (xii) Implementation of cost-saving measures by the
2 assisted city.
3 (xiii) Increased managerial accountability.
4 (xiv) Performance of government operations and
5 delivery of municipal services.
6 (xv) Reevaluation of tax-exemption policies and
7 practices with regard to real property taxation within
8 the assisted city.
9 (xvi) Improvements in procurement practices.
10 (xvii) Implementation of user fees for services,
11 including sewage, water treatment and refuse collection.
12 (xviii) Privatization and competitive bidding of
13 appropriate assisted city services.
14 (xix) Increased collection of fines and costs
15 relating to parking violations or violations of other
16 city ordinances.
17 (xx) When appropriate, filing for bankruptcy under
18 11 U.S.C. Ch. 9 (relating to adjustment of debts of a
19 municipality).
20 (xxi) The use of technology to achieve cost savings.
21 (xxii) A study of health care and other benefits
22 offered by the assisted city to its employees.
23 (xxiii) The sale of the assisted city's worker's
24 compensation fund.
25 (xxiv) The sale of unencumbered assets of the
26 assisted city or its authorities.
27 (xxv) The elimination or reorganization of
28 authorities or departments.
29 (xxvi) The use by the assisted city of revenues
30 received under the act of July 28, 1953 (P.L.723,
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1 No.230), known as the Second Class County Code.
2 (xxvii) The use of budgetary practices and
3 principles as they relate to forecasting, public
4 openness, projections, estimates, tax policy, lending,
5 borrowing and strategic planning.
6 (xxviii) The transfers of employees and assets by
7 and between bureaus, departments and authorities of the
8 assisted city.
9 (xxix) Prior suggestions published by others prior
10 to the enactment of this act with regard to the assisted
11 city.
12 (XXX) REVIEWING THE TAXING AUTHORITY OF THE CITY AS <--
13 COMPARED WITH THE TAXING AUTHORITY OF SCHOOL DISTRICTS OF
14 THE FIRST CLASS A.
15 (5) To make recommendations to the Governor and the
16 General Assembly regarding legislation or resolutions which
17 relate to an assisted city's fiscal stability. THE AUTHORITY <--
18 SHALL SUBMIT A PRELIMINARY REPORT OF THE RECOMMENDATIONS TO
19 THE GOVERNOR AND THE GENERAL ASSEMBLY WITHIN 90 DAYS OF THE
20 EFFECTIVE DATE OF THIS ACT.
21 (6) To exercise powers of review concerning the
22 budgetary and fiscal affairs of the assisted city consistent
23 with this act and the city's home rule charter or other
24 optional plan of government.
25 (7) To receive revenues from any source, directly or by
26 assignment, pledge or otherwise.
27 (8) To sue and be sued, implead and be impleaded,
28 interplead, complain and defend in all courts.
29 (9) To adopt, use and alter at will a corporate seal.
30 (10) To make bylaws for the management and regulation of
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1 its affairs and adopt rules, regulations and policies in
2 connection with the performance of its functions and duties
3 which, notwithstanding any other provision of law to the
4 contrary, shall not be subject to review pursuant to the act
5 of June 25, 1982 (P.L.633, No.181), known as the Regulatory
6 Review Act.
7 (11) To make and enter into contracts and other
8 instruments necessary or convenient for the conduct of its
9 business and the exercise of the powers of the authority.
10 (12) To appoint officers, agents, employees and servants
11 and to prescribe their duties and to fix their compensation
12 as set forth in section 202(f).
13 (13) To retain counsel and auditors to render such
14 professional services as the authority deems appropriate. The
15 authority shall not be considered either an executive agency
16 or an independent agency for the purpose of the act of
17 October 15, 1980 (P.L.950, No.164), known as the Commonwealth
18 Attorneys Act, but shall possess the same status for such
19 purpose as the Auditor General, State Treasurer and the
20 Pennsylvania Public Utility Commission, except that the
21 provisions of section 204(b) and (f) of the Commonwealth
22 Attorneys Act shall not apply to the authority;
23 notwithstanding 42 Pa.C.S. Ch. 85 (relating to matters
24 affecting government units), the authority, through its legal
25 counsel, shall defend actions brought against the authority
26 or its members, officers, officials and employees when acting
27 within the scope of their official duties.
28 (14) To cooperate with any Federal agency or government
29 agency.
30 (15) To acquire, by gift or otherwise, purchase, hold,
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1 receive, lease, sublease and use any franchise, license,
2 property, real, personal or mixed, tangible or intangible or
3 any interest therein. However, the authority shall be
4 absolutely limited in its power to acquire real property
5 under this act to real property that will be used only for
6 the office space in which the authority will conduct its
7 daily business if necessary. If possible, an assisted city
8 shall provide office space to the authority at no cost to the
9 authority as part of an intergovernmental cooperation
10 agreement.
11 (16) To sell, transfer, convey and dispose of any
12 property, real, personal or mixed, tangible or intangible or
13 any interest therein.
14 (17) To enter into contracts for group insurance and to
15 contribute to retirement plans for the benefit of its
16 employees and to enroll its employees in an existing
17 retirement system of a government agency.
18 (18) To accept, purchase or borrow equipment, supplies,
19 services or other things necessary or convenient to the work
20 of the authority from other government agencies, and all
21 government agencies are authorized to sell, lend or grant to
22 the authority such equipment, supplies, services or other
23 things necessary or convenient to the work of the authority.
24 (19) To invest any funds held by the authority as set
25 forth in section 212.
26 (20) To receive and hold assets, moneys and funds from
27 any source, including, but not limited to, appropriations,
28 grants, gifts.
29 (21) To procure insurance, guarantees and sureties the
30 authority determines necessary or desirable for its purposes.
20030S0940B1297 - 21 -
1 (22) To pledge the credit of the authority as the
2 authority determines necessary or desirable for its purposes.
3 (23) To do all acts and things necessary or convenient
4 for the promotion of its purposes and the general welfare of
5 the authority and to carry out the powers granted to it by
6 this act or any other acts.
7 (d) Intergovernmental cooperation agreements.--The authority
8 shall have the power and its duty shall be to enter into and to
9 implement fully such intergovernmental cooperation agreements
10 with cities as are approved by a majority of the board. The
11 following shall apply:
12 (1) A city may enter into an intergovernmental
13 cooperation agreement in which it, consistent with this act,
14 covenants to cooperate or agree in the exercise of any
15 function, power or responsibility with, or delegate or
16 transfer any function, power or responsibility to, the
17 authority upon the adoption by the governing body of such
18 city of an ordinance authorizing and approving the
19 intergovernmental cooperation agreement.
20 (2) An ordinance that authorizes a city to enter into an
21 intergovernmental cooperation agreement with the authority
22 shall specify:
23 (i) the purpose and objectives of the agreement;
24 (ii) the conditions of the agreement; and
25 (iii) the term of the agreement, including
26 provisions relating to its termination.
27 (e) Limitation.--Notwithstanding any purpose or general or
28 specific power granted by this act or any other act, whether
29 express or implied, the authority shall have no power to pledge
30 the credit or taxing powers of the Commonwealth.
20030S0940B1297 - 22 -
1 Section 204. Term of existence.
2 The authority shall exist for a term of at least seven years.
3 If, after seven years, an assisted city has had annual operating
4 budgets and five-year financial plans approved by the board for
5 at least the three immediately preceding years, the Secretary of
6 Community and Economic Development shall certify that the
7 authority is no longer needed; and the provisions of this
8 chapter will no longer be in effect 90 days following that
9 certification. Upon termination of the authority, records and
10 documents of the authority shall be transferred to the director
11 of finance of the assisted city. The authority shall submit a
12 final report on its activities and the city's fiscal condition
13 to the Governor and the General Assembly within 60 days of its
14 termination.
15 Section 205. Fiscal year.
16 The fiscal year of the authority shall be the same as the
17 fiscal year of the Commonwealth.
18 Section 206. Annual budget of authority.
19 (a) Budget.--Before March 1, 2004, for the fiscal year July
20 1, 2004, to June 30, 2005, and before October 15, 2005, and each
21 October 15 thereafter, the authority shall adopt a budget by a
22 majority of the board setting forth in reasonable detail the
23 projected expenses of operation of the authority for the ensuing
24 fiscal year, including the salary and benefits of the executive
25 director and any other employees of the authority, and the
26 projected revenues of the authority to be derived from
27 investment earnings and any other moneys of the authority which
28 are estimated to be available to pay the operating expenses set
29 forth in the budget. A copy of the authority's budget shall be
30 submitted to the Governor and to the General Assembly. The
20030S0940B1297 - 23 -
1 authority or its designated representatives may be afforded an
2 opportunity to appear before the Governor and the Appropriations
3 Committee of the Senate and the Appropriations Committee of the
4 House of Representatives regarding the authority's budget.
5 (b) Limit on operating expenses.--Following the submission
6 of the authority's budget to the Governor and the General
7 Assembly and any hearing held by an appropriations committee
8 under subsection (a), the General Assembly, by concurrent
9 resolution with presentment to the Governor, in accordance with
10 section 9 of Article III of the Constitution of Pennsylvania,
11 may limit the operating expenses of the authority. In that
12 event, it shall be unlawful for the authority to spend more for
13 operating expenses than the limit established for that fiscal
14 year by the concurrent resolution. If the General Assembly does
15 not adopt a concurrent resolution prior to May 30, the
16 authority's budget shall be deemed approved for that fiscal
17 year.
18 (c) Funding.--After July 1, 2005, upon request of the
19 authority and pursuant to the limits established in subsection
20 (b), the city shall annually fund any portion of the budget of
21 the authority which exceeds the authority's State appropriation,
22 including its reasonable and necessary expenses and costs
23 incurred for consultants engaged by the board to carry out its
24 duties.
25 (d) Examination of books.--The chairperson and minority
26 chairperson of the Appropriations Committee of the Senate and
27 the chairperson and minority chairperson of the Appropriations
28 Committee of the House of Representatives shall have the right
29 at any time to examine the books, accounts and records of the
30 authority.
20030S0940B1297 - 24 -
1 Section 207. Annual report to be filed; annual audits.
2 The authority shall file a signed annual report with the
3 chairperson and the minority chairperson of the Appropriations
4 Committee of the Senate and chairperson and the minority
5 chairperson of the Appropriations Committee of the House of
6 Representatives, which shall make provisions for the accounting
7 of revenues and expenses. The authority shall have its books,
8 accounts and records audited annually in accordance with
9 generally accepted auditing standards by an independent auditor
10 who shall be a certified public accountant, and a copy of his
11 audit report shall be attached to and be made a part of the
12 authority's annual report. A concise financial statement shall
13 be published annually in the Pennsylvania Bulletin.
14 Section 208. Limit on city borrowing.
15 A city and its corporate entities may not borrow or receive
16 funds for any lawful purpose unless the city has entered into an
17 intergovernmental cooperation agreement with the authority and
18 there is an approved financial plan in effect.
19 Section 209. Financial plan of an assisted city.
20 (a) Requirement of a financial plan.--An assisted city shall
21 develop, implement and periodically revise a financial plan as
22 described in this section.
23 (b) Elements of plan.--The financial plan shall include:
24 (1) Projected revenues and expenditures of the principal
25 operating fund or funds of the assisted city for five fiscal
26 years consisting of the current fiscal year and the next four
27 fiscal years.
28 (2) Plan components that will:
29 (i) eliminate any projected deficit for the current
30 fiscal year and for subsequent fiscal years;
20030S0940B1297 - 25 -
1 (ii) restore to special fund accounts money from
2 those accounts used for purposes other than those
3 specifically authorized;
4 (iii) balance the current fiscal year budget and
5 subsequent budgets in the financial plan through sound
6 budgetary practices, including, but not limited to,
7 reductions in expenditures, improvements in productivity,
8 increases in revenues or a combination of these steps;
9 (iv) provide procedures to avoid a fiscal emergency
10 condition in the future; and
11 (v) enhance the ability of the assisted city to
12 access short-term and long-term credit markets.
13 (c) Standards for formulation of plan.--
14 (1) All projections of revenues and expenditures in a
15 financial plan shall be based on prudent, reasonable and
16 appropriate assumptions and methods of estimation, all such
17 assumptions and methods to be consistently applied and
18 reported in the financial plan. The financial plan of an
19 assisted city shall not include projected revenue that in
20 order to be collected requires the enactment by the General
21 Assembly of new taxing powers.
22 (2) All revenue and appropriation estimates shall be on
23 a modified accrual basis in accordance with generally
24 accepted standards agreed to by the authority such as those
25 promulgated by the Governmental Accounting Standards Board.
26 Revenue estimates shall recognize revenues in the accounting
27 period in which they become both measurable and available.
28 Estimates of city-generated revenues shall be based on
29 current or proposed tax rates, historical collection patterns
30 and generally recognized econometric models. Estimates of
20030S0940B1297 - 26 -
1 revenues to be received from the State government shall be
2 based on historical patterns, currently available levels or
3 on levels proposed in a budget by the Governor. Estimates of
4 revenues to be received from the Federal Government shall be
5 based on historical patterns, currently available levels or
6 on levels proposed in a budget by the President or in a
7 congressional budget resolution. Nontax revenues shall be
8 based on current or proposed rates, charges or fees,
9 historical patterns and generally recognized econometric
10 models. Appropriation estimates shall include, at a minimum,
11 all obligations incurred during the fiscal year and estimated
12 to be payable during the fiscal year or in the 24-month
13 period following the close of the current fiscal year and all
14 obligations of prior fiscal years not covered by encumbered
15 funds from prior fiscal years. Any deviations from these
16 standards of estimating revenues and appropriations proposed
17 to be used by an assisted city shall be specifically
18 disclosed and shall be approved by a majority of the board.
19 (3) All cash flow projections shall be based upon
20 reasonable and appropriate assumptions as to sources and uses
21 of cash, including, but not limited to, reasonable and
22 appropriate assumptions as to the timing of receipt and
23 expenditure thereof, and shall provide for operations of the
24 assisted city to be conducted within the resources so
25 projected. All estimates shall take due account of the past
26 and anticipated collection, expenditure and service demand
27 experience of the assisted city and of current and projected
28 economic conditions.
29 (d) Form of plan.--Each financial plan shall, consistent
30 with the requirements of an assisted city's home rule charter or
20030S0940B1297 - 27 -
1 optional plan of government:
2 (1) be in such form and shall contain:
3 (i) for each of the first two fiscal years covered
4 by the financial plan, such information as shall reflect
5 an assisted city's total expenditures by fund and by lump
6 sum amount for each board, commission, department or
7 office of an assisted city; and
8 (ii) for the remaining three fiscal years of the
9 financial plan, such information as shall reflect an
10 assisted city's total expenditures by fund and by lump
11 sum amount for major object classification;
12 (2) include projections of all revenues and expenditures
13 for five fiscal years, including, but not limited to,
14 projected capital expenditures and short-term and long-term
15 debt incurrence and cash flow forecasts by fund for the first
16 year of the financial plan;
17 (3) include a schedule of projected capital commitments
18 of the assisted city and proposed sources of funding for such
19 commitments; and
20 (4) be accompanied by a statement describing, in
21 reasonable detail, the significant assumptions and methods of
22 estimation used in arriving at the projections contained in
23 such plan.
24 (e) Annual submission of plan.--On or before December 30,
25 2003, an assisted city shall develop, and the authority shall
26 review and act upon, an initial five-year financial plan which
27 includes a report on the status of implementation of prior
28 published suggestions regarding consolidation and cost savings.
29 During each subsequent fiscal year, the mayor or chief executive
30 officer of each assisted city shall, at least 100 days prior to
20030S0940B1297 - 28 -
1 the beginning of its fiscal year or on such other date as the
2 authority may approve upon the request of the assisted city,
3 prepare and submit its proposed five-year plan. At the same time
4 the plan is submitted, the mayor or chief executive officer
5 shall also submit to the authority:
6 (1) the mayor's or chief executive officer's proposed
7 annual operating budget and capital budget which shall be
8 consistent with the first year of the financial plan and
9 which shall be prepared in accordance with the assisted
10 city's home rule charter or other optional plan of
11 government; and
12 (2) a statement by the mayor or chief executive officer
13 that such budget:
14 (i) is consistent with the financial plan;
15 (ii) contains funding adequate for debt service
16 payments, legally mandated services and lease payments
17 securing bonds of other government agencies;
18 (iii) is based upon prudent, reasonable and
19 appropriate assumptions and methods of estimation; and
20 (iv) complies with any balanced budget requirements
21 contained in the charter and ordinances of the city or
22 State law.
23 (f) Balanced budget requirement.--The mayor of every city
24 and assisted city shall submit, and the city council of every
25 city and assisted city shall adopt, a balanced budget each year
26 consistent with the requirements of 53 Pa.C.S. § 3016 (relating
27 to form and adoption of budget), and the city's or assisted
28 city's home rule charter or other optional plan of government. A
29 balanced budget of a city or assisted city shall not include
30 projected revenues that in order to be collected require the
20030S0940B1297 - 29 -
1 enactment by the General Assembly of new taxing powers or the
2 approval of a court of common pleas of the county in which the
3 city or assisted city is located. The failure of a city or
4 assisted city to comply with this subsection shall result in the
5 withholding of Commonwealth funds pursuant to section 210(e) and
6 (f).
7 (g) Authority review and approval of plan.--
8 (1) The authority shall promptly review each financial
9 plan, proposed operating budget and capital budget submitted
10 by the assisted city. In conducting such review, the
11 authority shall request from the city controller of the
12 assisted city an opinion or certification prepared in
13 accordance with generally accepted auditing standards, with
14 respect to the reasonableness of the assumptions and
15 estimates in the financial plan. The city controller and
16 other elected officials shall comply with any such request
17 from the authority. Not more than 30 days after submission of
18 a financial plan and proposed operating budget, the authority
19 shall determine whether:
20 (i) the financial plan projects balanced budgets,
21 based upon prudent, reasonable and appropriate
22 assumptions as described in this section, for each year
23 of the plan; and
24 (ii) the proposed operating budget and capital
25 budget are consistent with the proposed financial plan.
26 If the authority determines that these criteria are
27 satisfied, the authority shall approve such financial plan by
28 a majority vote.
29 (2) The authority shall not be bound by any opinions or
30 certifications of the city controller of the assisted city
20030S0940B1297 - 30 -
1 issued pursuant to this subsection.
2 (3) If the authority fails to take any action within 30
3 days on a financial plan, the financial plan as submitted
4 shall be deemed approved. However, if during the 30 days a
5 written request by two members of the authority board for a
6 meeting and vote on the question of approval of the financial
7 plan has been submitted to the chairperson and a meeting and
8 vote do not take place, the financial plan shall be deemed
9 disapproved.
10 (h) Authority disapproval of plan.--
11 (1) If the authority disapproves the proposed financial
12 plan, the authority shall, when it notifies an assisted city
13 of its decision, state in writing in reasonable detail the
14 reasons for such disapproval, including the amount of any
15 estimated budget imbalance.
16 (2) The assisted city shall submit a revised financial
17 plan to the authority within 15 days of such disapproval,
18 which revised plan eliminates the budget imbalance. Not more
19 than 15 days after the submission of such revised financial
20 plan, the authority shall determine whether the revised plan
21 satisfies the criteria set forth in subsection (g)(1). If the
22 authority determines that these criteria are satisfied, the
23 authority shall approve such financial plan by a majority
24 vote. If the authority shall not so approve the financial
25 plan, then the authority shall, in accordance with section
26 210(e), certify the assisted city's noncompliance with the
27 financial plan to the Secretary of the Budget, the President
28 pro tempore of the Senate and the Speaker of the House of
29 Representatives.
30 (i) Revisions to plan.--
20030S0940B1297 - 31 -
1 (1) The plan shall be revised on an annual basis to
2 include the operating budget for the next fiscal year and to
3 extend the plan for an additional fiscal year. In addition,
4 the mayor or chief executive officer of a city shall, within
5 90 days of assuming office, propose revisions to the
6 financial plan or certify to the authority that he or she
7 adopts the existing plan. An assisted city may, during the
8 course of a fiscal year, submit proposed revisions to the
9 financial plan and shall submit a proposed revision for any
10 amendment to the city's operating or capital budget.
11 (2) The authority shall review each proposed revision
12 within 20 days of its submission. The authority shall approve
13 the revision if it will not, based on prudent, reasonable and
14 appropriate assumptions, cause the plan to become imbalanced.
15 Proposed revisions shall become part of the financial plan
16 upon the approval of a majority of the authority board,
17 unless some other method of approval is permitted by
18 authority rules and regulations approved by a majority or
19 pursuant to an agreement with the city contained in an
20 intergovernmental cooperation agreement. If the authority
21 fails to take action within 20 days on a proposed revision,
22 such submission shall be deemed approved unless a written
23 request for a meeting and vote has been made in accordance
24 with subsection (g)(3) in which event, if a meeting and vote
25 does not take place, the proposed revision shall be deemed
26 disapproved.
27 (3) If the governing body of a city adopts a budget
28 inconsistent with an approved financial plan, the assisted
29 city shall submit the enacted budget to the authority as a
30 proposed revision to the plan. The authority shall review the
20030S0940B1297 - 32 -
1 proposed revision within 30 days of its submission, in
2 accordance with the criteria set forth in subsection (g) and
3 the approval process set forth in paragraph (2).
4 (j) Supplemental reports.--Within 45 days of the end of each
5 fiscal quarter, or monthly if a variation from the financial
6 plan has been determined in accordance with section 210(c), the
7 mayor or chief executive officer of an assisted city shall
8 provide the authority with reports describing actual or current
9 estimates of revenues and expenditures compared to budgeted
10 revenues and expenditures for such period reflected in its cash
11 flow forecast. Each report required under this section shall
12 indicate any variance between actual or current estimates and
13 budgeted revenues, expenditures and cash for the period covered
14 by such report. An assisted city shall also provide periodic
15 reports on debt service requirements in conformity with section
16 210(b).
17 (k) Effect of plan upon contracts and collective bargaining
18 agreements.--
19 (1) A contract or collective bargaining agreement in
20 existence in an assisted city prior to the approval by the
21 authority of a financial plan submitted pursuant to this
22 section shall remain effective after approval of such plan
23 until such contract or agreement expires.
24 (2) After the approval by the authority of a financial
25 plan submitted pursuant to this section, an assisted city
26 shall execute contracts and collective bargaining agreements
27 in compliance with such plan. If an assisted city executes a
28 contract or a collective bargaining agreement which is not in
29 compliance with the plan, the contract or agreement shall not
30 be void or voidable solely by reason of such noncompliance,
20030S0940B1297 - 33 -
1 but the assisted city shall submit to the authority a
2 proposed revision to the plan which demonstrates that
3 revenues sufficient to pay the costs of the contract or
4 collective bargaining agreement will be available in the
5 affected fiscal years of the plan.
6 (l) Effect of plan upon certain arbitration awards.--
7 (1) After the approval by the authority of a financial
8 plan submitted pursuant to this section, any determination of
9 a board of arbitration established pursuant to the provisions
10 of the act of June 24, 1968 (P.L.237, No.111), referred to as
11 the Policemen and Firemen Collective Bargaining Act,
12 providing for an increase in wages or fringe benefits of any
13 employee of an assisted city under the plan, in addition to
14 considering any standard or factor required to be considered
15 by applicable law, shall take into consideration and accord
16 substantial weight to:
17 (i) the approved financial plan; and
18 (ii) relevant market factors, such as the financial
19 situation of the assisted city, inflation, productivity,
20 size of work force and pay and benefit levels in
21 economically and demographically comparable political
22 subdivisions.
23 (2) Such determination shall be in writing and a copy
24 thereof shall be forwarded to each party to the dispute and
25 the authority. Any determination of the board of arbitration
26 which provides for an increase in wages or fringe benefits of
27 any employee of an assisted city shall state with specificity
28 in writing all factors which the board of arbitration took
29 into account in considering and giving substantial weight to
30 the factors referred to in paragraph (1).
20030S0940B1297 - 34 -
1 (3) Any party to a proceeding before a board of
2 arbitration may appeal to the court of common pleas to
3 review:
4 (i) consideration under paragraph (1); or
5 (ii) failure of the board of arbitration to issue a
6 determination under paragraph (2).
7 (4) An appeal under paragraph (3) must be commenced not
8 later than 30 days after the issuance of a final
9 determination by the board of arbitration.
10 (5) The decision of the board of arbitration shall be
11 vacated and remanded to the board of arbitration if the court
12 finds:
13 (i) that the board of arbitration failed to take
14 into consideration and accord substantial weight to the
15 factors referred to in paragraph (1); or
16 (ii) that the board of arbitration has failed to
17 issue a determination under paragraph (2).
18 (6) If, after the exhaustion of all appeals, the final
19 arbitration award is not in compliance with the approved
20 financial plan, the award shall not be void or voidable
21 solely by reason of such noncompliance, but the assisted city
22 shall submit to the authority a proposed revision to the plan
23 which demonstrates that revenues sufficient to pay the costs
24 of the award will be available in the affected fiscal years
25 of the plan.
26 Section 210. Powers and duties of authority with respect to
27 financial plans.
28 (a) Formulation and approval of plan.--To advance the
29 financial recovery of each assisted city, the authority shall
30 require the assisted city to submit a five-year financial plan
20030S0940B1297 - 35 -
1 in accordance with section 209. With regard to the formulation
2 of such plan, the authority shall:
3 (1) Consult with an assisted city as it prepares the
4 financial plan.
5 (2) Prescribe the form of the financial plan.
6 (3) Prescribe the supporting information required in
7 connection with such plan, such information to include at a
8 minimum:
9 (i) debt service payments due or projected to be due
10 during the relevant fiscal years;
11 (ii) payments for legally mandated services included
12 in the plan and due or projected to be due during the
13 relevant fiscal years; and
14 (iii) a statement in reasonable detail of the
15 significant assumptions and methods of estimation used in
16 arriving at the projections in the plan.
17 (4) Exercise any rights of approval or disapproval and
18 issue such recommendations as are authorized by this act in
19 accordance with the standards for formulation of the plan set
20 forth in section 209(c).
21 (b) Authority functions after plan is approved.--After a
22 financial plan has been approved, the authority shall:
23 (1) Receive and review:
24 (i) the financial reports submitted by the mayor or
25 chief executive officer of a city under section 209(j);
26 (ii) reports concerning the debt service
27 requirements on all bonds, notes of the assisted city and
28 lease payments of the assisted city securing bonds or
29 other government agencies for the following quarter,
30 which reports shall be in such form and contain such
20030S0940B1297 - 36 -
1 information as the authority shall determine, and which
2 shall be issued no later than 60 days prior to the
3 beginning of the quarter to which they pertain, and shall
4 be updated immediately upon each issuance of bonds or
5 notes, by the assisted city or execution of a lease
6 securing bonds of another government agency, after the
7 date of such report to reflect any change in debt service
8 requirements as a result of such issuance; and
9 (iii) any additional information provided by the
10 assisted city concerning changed conditions or unexpected
11 events which may affect the assisted city's adherence to
12 the financial plan. The reports described in subparagraph
13 (ii) shall be certified by the city controller.
14 (2) Determine, on the basis of information and reports
15 described in paragraph (1), whether an assisted city has
16 adhered to the financial plan.
17 (c) Variation from the plan.--If the authority determines,
18 based upon reports submitted by an assisted city under
19 subsection (b) or independent audits, examinations or studies of
20 the assisted city's finances obtained under subsection (i)(3),
21 that an assisted city's actual revenues and expenditures vary
22 from those estimated in the financial plan, the authority shall
23 require the city to provide such additional information as the
24 authority deems necessary to explain the variation. The
25 authority shall take no action with respect to an assisted city
26 for departures from the financial plan in a fiscal quarter if:
27 (1) the city provides a written explanation for the
28 variation that the authority deems reasonable;
29 (2) the city proposes remedial action which the
30 authority believes will restore the assisted city's overall
20030S0940B1297 - 37 -
1 compliance with the financial plan;
2 (3) information provided by the city in the immediately
3 succeeding quarterly financial report demonstrates that the
4 assisted city is taking such remedial action and otherwise
5 complying with the plan; and
6 (4) the assisted city submits monthly supplemental
7 reports in accordance with section 209(j) until it regains
8 compliance with the financial plan.
9 (d) Authority may make recommendations.--The authority may
10 at any time issue recommendations as to how an assisted city may
11 achieve compliance with the financial plan and shall provide
12 copies of such recommendations to the mayor or chief executive
13 officer and the governing body of the city and to the officials
14 named in section 203(b)(5).
15 (e) When Commonwealth shall withhold funds.--
16 (1) The authority shall certify to the Secretary of the
17 Budget an assisted city's noncompliance with the financial
18 plan during any period when the authority has determined by
19 the vote of a majority that the assisted city has not adhered
20 to the plan and has not taken acceptable remedial action
21 during the next quarter following such departure from the
22 plan.
23 (2) The authority shall certify to the Secretary of the
24 Budget that an assisted city is not in compliance with the
25 plan if the assisted city:
26 (i) has no financial plan approved by the authority,
27 has failed to provide requested documents or has failed
28 to file a financial plan with the authority;
29 (ii) has failed to file mandatory revisions to the
30 plan or reports as required by section 209(i), (j), (k)
20030S0940B1297 - 38 -
1 or (l); or
2 (iii) has not been compelled to file a financial
3 plan, a mandatory revision to the plan or a report
4 through a mandamus action authorized under subsection
5 (j).
6 (3) If the authority certifies that an assisted city is
7 not in compliance with the financial plan under paragraph (1)
8 or (2), the Secretary of the Budget shall notify the city
9 that such certification has been made and that each grant,
10 loan, entitlement or payment to the assisted city by the
11 Commonwealth shall be suspended pending compliance with the
12 financial plan. Funds withheld shall be held in escrow by the
13 Commonwealth until compliance with the plan is restored as
14 set forth in paragraph (4). Funds held in escrow pursuant to
15 this subsection shall not lapse pursuant to section 621 of
16 the act of April 9, 1929 (P.L.177, No.175), known as The
17 Administrative Code of 1929, or any other law.
18 (4) The authority shall, by majority vote, determine
19 when the conditions which caused an assisted city to be
20 certified as not in compliance with the financial plan have
21 ceased to exist and shall promptly notify the Secretary of
22 the Budget of such vote. The Secretary of the Budget shall
23 thereupon release all funds held in escrow, together with all
24 interest and income earned thereon during the period held in
25 escrow, and the disbursements of amounts in the city account
26 shall resume.
27 (f) Exemptions.--Notwithstanding the provisions of
28 subsection (e), the following shall not be withheld from an
29 assisted city:
30 (1) funds granted or allocated to an assisted city
20030S0940B1297 - 39 -
1 directly from an agency of the Commonwealth or from the
2 Federal Government for distribution by the Commonwealth after
3 the declaration of a disaster resulting from a catastrophe;
4 (2) funds for capital projects under contract in
5 progress;
6 (3) pension fund payments required by law; and
7 (4) funds the assisted city has pledged to repay bonds
8 or notes.
9 (g) Effect of Commonwealth's failure to disburse funds.--The
10 provisions of subsection (e) shall not apply and an assisted
11 city shall not be found to have departed from the financial plan
12 due to the Commonwealth's failure to pay any money, including
13 payment of Federal funds distributed by or through the
14 Commonwealth, due to the assisted city from moneys appropriated
15 by the General Assembly.
16 (h) Assisted city to determine expenditure of available
17 funds.--Nothing in this act shall be construed to limit the
18 power of an assisted city to determine, from time to time,
19 within available funds of the assisted city, the purposes for
20 which expenditures are to be made by the assisted city and the
21 amounts of such expenditures then permitted under the financial
22 plan of the assisted city.
23 (i) Documents and examinations to be reviewed or undertaken
24 by the authority.--The authority shall:
25 (1) receive from an assisted city and review the
26 reports, documents, budgetary and financial planning data and
27 other information prepared by or on behalf of such assisted
28 city and which are to be made available to the authority
29 under this act;
30 (2) inspect and copy such books, records and information
20030S0940B1297 - 40 -
1 of an assisted city as the authority deems necessary to
2 accomplish the purposes of this act; and
3 (3) conduct or cause to be conducted such independent
4 audits, examinations or studies of an assisted city's
5 finances as the authority deems appropriate.
6 (j) Remedies of authority for failure of an assisted city to
7 file financial plans and reports.--In the event that an assisted
8 city shall fail to file with the authority any financial plan,
9 revision to a financial plan, report or other information
10 required to be filed with the authority pursuant to this act,
11 the authority, in addition to all other rights which the
12 authority may have at law or in equity, shall have the right by
13 mandamus to compel the assisted city and the officers, employees
14 and agents thereof to file with the authority the financial
15 plan, revision to a financial plan, report or other information
16 which the assisted city has failed to file. The authority shall
17 give the assisted city written notice of the failure of the
18 assisted city to file and of the authority's intention to
19 initiate an action under this subsection and shall not initiate
20 such an action earlier than ten days after the giving of such
21 notice.
22 Section 211. Limitation on authority and on assisted cities to
23 file petition for relief under Federal bankruptcy
24 law.
25 (a) Limitation on bankruptcy filing.--Notwithstanding any
26 other provision of law, the authority and any assisted city
27 shall not be authorized to file a petition for relief under 11
28 U.S.C. Ch. 9 (relating to adjustments of debts of a
29 municipality) or any successor Federal bankruptcy law, and no
30 government agency shall authorize the authority or such city to
20030S0940B1297 - 41 -
1 become a debtor under 11 U.S.C. Ch. 9 or any successor Federal
2 bankruptcy law.
3 (b) Bankruptcy filing approval.--In addition to the
4 limitation set forth in subsection (a), and notwithstanding any
5 other provision of law, no city shall be authorized to file a
6 petition for relief under 11 U.S.C. Ch. 9 or any successor
7 Federal bankruptcy law, unless such petition has been submitted
8 to, and the filing thereof has been approved in writing by the
9 Governor. The Governor is designated, in accordance with 11
10 U.S.C. § 109(c)(2) (relating to who may be a debtor), as the
11 organization of the Commonwealth which shall have power to
12 approve or disapprove the filing of any such petition of a
13 political subdivision, and to approve or disapprove any plan of
14 readjustment of the debts of any such political subdivision
15 prepared, filed and submitted with the petition to the court, as
16 provided under 11 U.S.C. Ch. 9.
17 (c) Review of bankruptcy petition.--
18 (1) When any such petition shall be submitted to the
19 Governor for approval, accompanied with a proposed plan of
20 readjustment of the debts of a city, the Governor shall make
21 a careful and thorough investigation of the financial
22 condition of such city, of its assets and liabilities, of its
23 sinking fund, and whether the affairs thereof are managed in
24 a careful, prudent and economic manner in order to ascertain
25 whether the presentation of such petition is justified, or
26 represents an unjust attempt by such city to evade payment of
27 some of its contractual obligations, and, if the Governor
28 believes that such petition should be approved, whether the
29 plan of readjustment submitted will be helpful to the
30 financial condition of the city and is feasible and, at the
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1 same time, fair and equitable to all creditors.
2 (2) The Governor shall also, prior to giving his
3 approval, ascertain the amount, if any, of the obligations of
4 any such petitioning city which is held by any agency or
5 agencies of the State government as trust funds and shall,
6 before approving any such petition and plan of readjustment,
7 consult with and give every such agency an opportunity to be
8 heard and the privilege to examine the findings of the
9 Governor resulting from the investigation required to be made
10 under this act, and shall likewise hear any other creditor of
11 such city, whether resident in or outside this Commonwealth,
12 who shall apply therefor.
13 (3) The Governor, if he approves a petition, shall,
14 before giving his approval, require such modification in the
15 proposed plan for readjusting the debts as to him appears
16 proper.
17 Section 212. Investment of funds.
18 Funds of the authority which are not required for immediate
19 use may be invested in obligations of an assisted city or in
20 obligations of the Federal Government or of the Commonwealth or
21 obligations which are legal investments for Commonwealth funds.
22 However, no money may be invested in obligations issued by or
23 obligations guaranteed by an assisted city without the approval
24 of a majority of the board.
25 Section 213. Sovereign immunity.
26 Members of the board shall not be liable personally for any
27 obligations of the authority. It is hereby declared to be the
28 intent of the General Assembly that the authority created by
29 this act and its members, officers, officials and employees
30 shall enjoy sovereign and official immunity, as provided in 1
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1 Pa.C.S. § 2310 (relating to sovereign immunity reaffirmed;
2 specific waiver), and shall remain immune from suit except as
3 provided by and subject to the provisions of 42 Pa.C.S. §§ 8501
4 (relating to definitions) through 8528 (relating to limitations
5 on damages).
6 CHAPTER 7
7 MISCELLANEOUS PROVISIONS
8 Section 701. Appropriation.
9 The sum of $200,000 is hereby appropriated from the General
10 Fund to the Intergovernmental Cooperation Authority for Cities
11 of the Second Class as a continuing appropriation for the
12 purpose of providing operating funds for the Intergovernmental
13 Cooperation Authority for Cities of the Second Class. This
14 appropriation shall lapse June 30, 2005.
15 Section 702. General rights and prohibitions.
16 Nothing in this act shall limit the rights or impair the
17 obligations of any assisted city to comply with the provisions
18 of any contract in effect on the effective date of this act or
19 shall in any way impair the rights of the obligees of any
20 assisted city with respect to any such contract.
21 Section 703. Nondiscrimination.
22 The authority shall comply in all respects with the
23 nondiscrimination and contract compliance plans used by the
24 Department of General Services to assure that all persons are
25 accorded equality of opportunity in employment and contracting
26 by the authority and its contractors, subcontractors, assignees,
27 lessees, agents, vendors and suppliers.
28 Section 704. Construction of act.
29 (a) Liberal construction.--The provisions of this act
30 providing for security for and rights and remedies of obligees
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1 of the authority shall be liberally construed to achieve the
2 purposes stated and provided for by this act.
3 (b) Severability.--If any provision of the title or any
4 chapter, section or clause of this act, or the application
5 thereof to any person, party, corporation, public or private,
6 shall be judged invalid by a court of competent jurisdiction,
7 such order or judgment shall be confined in its operation to the
8 controversy in which it was rendered and shall not affect or
9 invalidate the remainder of any provision of the title or any
10 chapter or any section or clause of this act, or the application
11 of any part thereof to any other person, party, corporation,
12 public or private, or circumstance, and, to this end, the
13 provisions of the title or any chapter, section or clause of
14 this act hereby are declared to be severable. It is hereby
15 declared as the legislative intent that this act would have been
16 adopted had any provision declared unconstitutional not been
17 included herein.
18 Section 705. Limitation of authority powers.
19 Except as provided in section 210(i), nothing contained in
20 this act shall be construed to confer upon the authority any
21 powers with respect to a school district.
22 Section 706. Suspension and repeal.
23 (a) Suspension.-- Unless a determination of municipal
24 financial distress is issued to a city of the second class by
25 the Secretary of Community and Economic Development prior to the
26 effective date of this act, the provisions of the act of July
27 10, 1987 (P.L.246, No.47), known as the Municipalities Financial
28 Recovery Act, with the exception of section 123(a), are
29 suspended as to cities of the second class until the termination
30 of the authority established by this act. If the provisions of
20030S0940B1297 - 45 -
1 this act and the Municipalities Financial Recovery Act are
2 determined to be in conflict, the provisions of this act shall
3 govern.
4 (b) General.--All other acts or parts of acts are repealed
5 insofar as they are inconsistent with this act.
6 Section 707. Effective date.
7 This act shall take effect immediately.
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