HOUSE AMENDED
PRIOR PRINTER'S NOS. 1237, 1277, 1290, PRINTER'S NO. 1328
1297, 1314
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, HOUSE OF REPRESENTATIVES,
DECEMBER 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.
1 Section 206. Annual budget of authority.
2 Section 207. Annual report to be filed; annual audits.
3 Section 208. Limit on city borrowing.
4 Section 209. Financial plan of an assisted city.
5 Section 210. Powers and duties of authority with respect to
6 financial plans.
7 Section 211. Limitation on authority and on assisted cities to
8 file petition for relief under Federal
9 bankruptcy law.
10 Section 212. Investment of funds.
11 Section 213. Sovereign immunity.
12 Chapter 7. Miscellaneous Provisions
13 Section 701. Appropriation.
14 Section 702. General rights and prohibitions.
15 Section 703. Nondiscrimination.
16 Section 704. Construction of act.
17 Section 705. Limitation of authority powers.
18 Section 706. Suspension and repeal.
19 Section 707. Effective date.
20 The General Assembly of the Commonwealth of Pennsylvania
21 hereby enacts as follows:
22 CHAPTER 1
23 GENERAL PROVISIONS
24 Section 101. Short title.
25 This act shall be known and may be cited as the
26 Intergovernmental Cooperation Authority Act for Cities of the
27 Second Class.
28 Section 102. Purpose and legislative intent.
29 (a) Policy.--It is hereby declared to be a public policy of
30 the Commonwealth to exercise its retained sovereign powers with
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1 regard to taxation and matters of Statewide concern in a manner
2 calculated to foster the fiscal integrity of cities of the
3 second class to assure that these cities provide for the health,
4 safety and welfare of their citizens; pay principal and interest
5 owed on their debt obligations when due; meet financial
6 obligations to their employees, vendors and suppliers; and
7 provide for proper financial planning procedures and budgeting
8 practices. The inability of a city of the second class to
9 provide essential services to its citizens as a result of a
10 fiscal emergency is hereby determined to affect adversely the
11 health, safety and welfare not only of the citizens of that
12 municipality but also of other citizens in this Commonwealth.
13 (b) Legislative intent.--
14 (1) It is the intent of the General Assembly to:
15 (i) provide cities of the second class with the
16 legal tools with which such cities can perform essential
17 municipal services; and
18 (ii) foster sound financial planning and budgetary
19 practices for cities of the second class, which cities
20 shall be charged with the responsibility to exercise
21 efficient and accountable fiscal practices, such as:
22 (A) increased managerial accountability;
23 (B) consolidation or elimination of inefficient
24 city programs and authorities;
25 (C) reevaluation of tax-exemption policies with
26 regard to real property taxes;
27 (D) increased collection of existing tax
28 revenues;
29 (E) privatization of appropriate city services;
30 (F) sale of city assets as appropriate;
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1 (G) improvement of procurement practices,
2 including competitive bidding procedures; and
3 (H) review of compensation and benefits of city
4 employees; and
5 (iii) exercise its powers consistent with the rights
6 of citizens to home rule and self-government.
7 (2) The General Assembly further declares that this
8 legislation is intended to remedy the apparent fiscal
9 emergency confronting cities of the second class through the
10 implementation of sovereign powers of the Commonwealth. To
11 safeguard the rights of the citizens to the electoral process
12 and home rule, the General Assembly intends to exercise its
13 power in an appropriate manner with the elected officers of
14 cities of the second class.
15 Section 103. Legislative findings.
16 It is hereby determined and declared as a matter of
17 legislative finding that:
18 (1) Cities of the second class have encountered
19 recurring financial difficulties which may affect the
20 performance of necessary municipal services to the detriment
21 of the health, safety and general welfare of residents of
22 such cities.
23 (2) It is critically important that cities of the second
24 class maintain their creditworthiness.
25 (3) Due to the economic and social interrelationship
26 among all citizens in our economy, the fiscal integrity of
27 cities of the second class is a matter of concern to
28 residents of the entire Commonwealth, and the financial
29 problems of such cities have a direct and negative effect on
30 the entire Commonwealth.
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1 (4) Because cities of the second class consume a
2 substantial proportion of the products of Pennsylvania's
3 farms, factories, manufacturing plants and service
4 enterprises, economic difficulties confronting cities of the
5 second class detrimentally affect the economy of the
6 Commonwealth as a whole and become a matter of Statewide
7 concern.
8 (5) Because residents of cities of the second class
9 contribute a substantial proportion of all Commonwealth tax
10 revenues, a disruption of the economic and social life of
11 such cities may have a significant detrimental effect upon
12 Commonwealth revenues.
13 (6) The financial difficulties of cities of the second
14 class can best be addressed and resolved by cooperation
15 between governmental entities.
16 (7) The Constitution of Pennsylvania grants
17 municipalities authority to cooperate with other governmental
18 entities in the exercise of any function or responsibility.
19 (8) The Commonwealth retains certain sovereign powers
20 with respect to cities of the second class, among them the
21 powers to authorize and levy taxes, to authorize the
22 incurring of indebtedness and to provide financial assistance
23 that may be necessary to assist cities in solving their
24 financial problems.
25 (9) The Commonwealth may attach conditions to grants of
26 authority to incur indebtedness or assistance to cities of
27 the second class in order to ensure that deficits are
28 eliminated and access to capital markets is achieved and
29 maintained.
30 (10) Such conditions shall be incorporated into
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1 intergovernmental cooperation agreements between the
2 Commonwealth or its instrumentalities and cities of the
3 second class.
4 (11) Cities of the second class and the Commonwealth
5 will benefit from the creation of an independent authority
6 composed of members experienced in finance and management
7 which may advise such cities, the General Assembly and the
8 Governor concerning solutions to fiscal problems cities of
9 the second class may face.
10 (12) The creation of such an authority will allow such
11 cities to continue to provide the necessary municipal
12 services for their residents and to contribute to the economy
13 of the Commonwealth.
14 (13) Several task forces have studied the fiscal
15 condition of a city of the second class and have published
16 findings and suggestions regarding the fiscal structure of
17 the city and actions that could be taken concerning
18 preservation of the financial viability of the city into the
19 future. Those reports, widely known as the Competitive
20 Pittsburgh report, the PGH 21 report and the Governor's
21 Pittsburgh Economic Improvement Task Force report should be
22 evaluated by the authority in making its recommendations to
23 the city. However, it is intended that the authority
24 established by this act examine the fiscal affairs of the
25 entire city of the second class, including all of its
26 authorities and related corporate entities.
27 Section 104. Definitions.
28 The following words and phrases when used in this act shall
29 have the meanings given to them in this section unless the
30 context clearly indicates otherwise:
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1 "Assisted city." A city of the second class which receives
2 assistance from the Intergovernmental Cooperation Authority for
3 Cities of the Second Class. The term includes any municipal
4 authority, other authority or other corporate entity which
5 directly or indirectly performs a governmental function on
6 behalf of the city, is directly or indirectly controlled by the
7 city or to which the city has direct or indirect power of
8 appointment or has directly or indirectly pledged or designated
9 the city's revenues or the city's credit.
10 "Authority." The Intergovernmental Cooperation Authority for
11 Cities of the Second Class established in section 201.
12 "Board." The governing board of the Intergovernmental
13 Cooperation Authority for Cities of the Second Class.
14 "City." A city of the second class.
15 "City account." A trust fund held for the exclusive benefit
16 of an assisted city.
17 "Corporate entity." A municipal authority, other authority
18 or other corporate entity which performs a governmental function
19 on behalf of the city or to which the city has power of
20 appointment or has pledged or designated revenues.
21 "Deficit." Such negative fund balance in any principal
22 operating fund or funds of a city or corporate entity existing
23 at the beginning of a fiscal year or projected to exist as of
24 the close of a fiscal year, as may be more specifically
25 identified, calculated and set forth in an intergovernmental
26 cooperation agreement or financial plan of an assisted city
27 described in section 209.
28 "Federal agency." The United States, the President of the
29 United States and any department or corporation, agency or
30 instrumentality created, designated or established by the United
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1 States.
2 "Governing body." The legislative body of a city.
3 "Government agency." The Governor, departments, boards,
4 commissions, authorities and other officers and agencies of
5 State government, including those which are not subject to the
6 policy supervision and control of the Governor, any political
7 subdivision, municipal or other local authority, and any officer
8 or agency of any such political subdivision or local authority,
9 but the term does not include any court or other officer or
10 agency of the unified judicial system or the General Assembly or
11 its officers and agencies.
12 "Intergovernmental cooperation agreement." Any agreement
13 made by the authority and a city under the provisions of section
14 203(d).
15 "Party officer." The following members or officers of any
16 political party:
17 (1) a member of a national committee;
18 (2) a chairman, vice chairman, secretary, treasurer or
19 counsel of a State committee or member of the executive
20 committee of a State committee;
21 (3) a county chairman, vice chairman, counsel, secretary
22 or treasurer of a county committee; or
23 (4) a chairman, vice chairman, counsel, secretary,
24 treasurer or ward leader of a city or municipal committee.
25 "Public official." Any elected or appointed official or
26 employee in the executive, legislative or judicial branch of the
27 Commonwealth or any political subdivision thereof, provided that
28 it shall not include members of advisory boards that have no
29 authority to expend public funds other than reimbursement for
30 personal expense or to otherwise exercise the power of the
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1 Commonwealth or any political subdivision thereof. The term
2 shall not include any appointed official who receives no
3 compensation other than reimbursement for actual expenses.
4 "QUALIFIED MAJORITY." A MAJORITY OF THE BOARD WHICH INCLUDES <--
5 ANY FOUR VOTING MEMBERS.
6 CHAPTER 2
7 INTERGOVERNMENTAL COOPERATION AUTHORITY FOR
8 CITIES OF THE SECOND CLASS
9 Section 201. Authority established.
10 A body corporate and politic to be known as the
11 Intergovernmental Cooperation Authority for Cities of the Second
12 Class is established as a public authority and instrumentality
13 of the Commonwealth, exercising public powers of the
14 Commonwealth as an agency and instrumentality thereof. The
15 exercise by the authority of the powers conferred by this act is
16 hereby declared to be and shall for all purposes be deemed and
17 held to be the performance of an essential public function.
18 Section 202. Governing board.
19 (a) Composition of board.--
20 (1) The powers and duties of the authority shall be
21 exercised by a governing board composed of five members:
22 (i) One member shall be appointed by the President
23 pro tempore of the Senate.
24 (ii) One member shall be appointed by the Minority
25 Leader of the Senate.
26 (iii) One member shall be appointed by the Speaker
27 of the House of Representatives.
28 (iv) One member shall be appointed by the Minority
29 Leader of the House of Representatives.
30 (v) One member shall be appointed by the Governor.
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1 (vi) The Secretary of the Budget AND the director of <--
2 finance of each assisted city and any person appointed, <--
3 prior to the effective date of this act, as coordinator
4 for the assisted city pursuant to section 221(a) of the
5 act of July 10, 1987 (P.L.246, No.47), known as the
6 Municipalities Financial Recovery Act, shall serve as ex
7 officio members of the board. The board and any appointed <--
8 coordinator shall cooperate in the sharing of reports,
9 information and recommendations with regard to the
10 assisted city. The ex officio members may not vote and
11 shall not be counted for purposes of establishing a
12 quorum. The Secretary of the Budget and the director of
13 finance of each assisted city may designate in writing a
14 representative of their respective offices to attend
15 meetings of the board on their behalf.
16 (2) All members and designees must have substantial
17 experience in finance or management.
18 (3) All members of the board must be residents of this
19 Commonwealth and, except the Secretary of the Budget and any <--
20 person appointed, prior to the effective date of this act, as
21 coordinator for the assisted city pursuant to section 221(a)
22 of the Municipalities Financial Recovery Act, must either be
23 residents of the assisted city or have their primary places
24 of business or employment in that city.
25 (b) Term.--Appointing authorities shall appoint the initial
26 members of the board within ten days of the effective date of
27 this act, and the appointed members shall select a chairperson
28 from among themselves at the initial organizational meeting of
29 the board and upon any subsequent vacancy in the office of
30 chairperson. The term of a board member shall begin on the date
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1 of the appointment. A member's term shall be coterminous with
2 that of the appointing authority. The member selected as
3 chairperson shall serve in that capacity for two years from the
4 date of selection or for the duration of his term on the board,
5 whichever is less, and may be reelected to subsequent two-year
6 terms. An appointed board member shall serve at the pleasure of
7 the member's appointing authority. Whenever a vacancy occurs
8 among the appointed members on the board, whether prior to or on
9 the expiration of a term, the appointing authority who
10 originally appointed the board member whose seat has become
11 vacant shall appoint a successor member within 30 days of the
12 vacancy. A member appointed by an appointing authority to fill a
13 vacancy occurring prior to the expiration of a term shall serve
14 the unexpired term.
15 (c) Organization.--The appointees of the President pro
16 tempore of the Senate and the Speaker of the House of
17 Representatives shall set a date, time and place for the initial
18 organizational meeting of the board within five days of the
19 appointment of the initial members of the board. The initial
20 organizational meeting shall be held within 20 days of the
21 effective date of this act. In addition to chairperson, the
22 members shall elect such other officers as they may determine. A
23 member may hold more than one office of the board at any time.
24 (d) Meetings.--After the initial organizational meeting, the
25 board shall meet as frequently as it deems appropriate but at
26 least once during each quarter of the fiscal year. In addition,
27 a meeting of the board shall be called by the chairperson if a
28 request for a meeting is submitted to the chairperson by at
29 least two members of the board. A majority of the board shall
30 constitute a quorum for the purpose of conducting the business
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1 of the board and for all other purposes. All actions of the
2 board shall be taken by a majority of the board, EXCEPT THAT <--
3 ACTIONS IN RELATION TO SECTION 203(C)(4)(XXX) SHALL BE TAKEN BY
4 A QUALIFIED MAJORITY. The provisions of 65 Pa.C.S. Ch. 7
5 (relating to open meetings) shall apply to the board.
6 (e) Expenses.--A member shall not receive compensation or
7 remuneration, but shall be entitled to reimbursement for all
8 reasonable and necessary actual expenses.
9 (f) Employees and agents.--The board shall fix and determine
10 the number of employees of the authority and their respective
11 compensation and duties. The board may contract for or receive
12 the loan of services of persons in the employ of other
13 government agencies, and other government agencies shall be
14 authorized to make such employees available. The board may
15 retain an executive director upon a majority vote. The board
16 may, by a majority vote, hire an independent general counsel to
17 the authority and may engage consultants and contract for other
18 professional services upon a majority vote. The board may, upon
19 the approval of a majority, delegate to the executive director
20 such powers of the board as the board deems necessary to carry
21 out the purposes of the authority, subject in every case to the
22 supervision and control of the board.
23 (g) Public officials and party officers; conflicts of
24 interest prohibited.--
25 (1) Except for the Secretary of the Budget AND the <--
26 director of finance of an assisted city and any person <--
27 appointed, prior to the effective date of this act, as
28 coordinator for the assisted city pursuant to section 221(a)
29 of the Municipalities Financial Recovery Act, neither members
30 of the board nor the executive director shall seek or hold a
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1 position as any other public official within this
2 Commonwealth or as a party officer while in the service of
3 the authority. Members of the board and the executive
4 director shall not seek election as public officials or party
5 officers for one year after their service with the authority.
6 Members of the board and the executive director may serve as
7 appointive public officials any time after their periods of
8 service with the authority.
9 (2) Employees and agents of the authority shall not seek
10 or hold other positions as public officials or party officers
11 while in the employ of the authority. The authority may
12 receive the loan of services of persons in other government
13 agencies in accordance with subsection (f), notwithstanding
14 that such persons are public officials. Employees of the
15 authority shall not seek election as public officials or
16 party officers for one year after leaving the employ of the
17 authority.
18 (3) No member of the board or employee of the authority
19 may directly or indirectly be a party to or be interested in
20 any contract or agreement with the authority or with the
21 assisted city. No member or employee may use his office or
22 employment or any confidential information received through
23 his office or employment for the private pecuniary benefit of
24 himself, a member of his immediate family, or a business with
25 which he or a member of his immediate family is associated.
26 Any member or employee who shall willfully violate this
27 provision shall forfeit his office or employment and shall be
28 subject to such other criminal and civil sanctions as may be
29 imposed by law. Any contract or agreement knowingly made in
30 contravention of this provision is void.
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1 (h) Statutes applying to authority.--
2 (1) The provisions of the following acts shall apply to
3 the authority:
4 (i) 65 Pa.C.S. Ch. 7 (relating to open meetings).
5 (ii) The act of June 21, 1957 (P.L.390, No.212),
6 referred to as the Right-to-Know Law.
7 (iii) Except as set forth in paragraph (2), the act
8 of July 19, 1957 (P.L.1017, No.451), known as the State
9 Adverse Interest Act.
10 (iv) The act of October 4, 1978 (P.L.883, No.170),
11 referred to as the Public Official and Employee Ethics
12 Law.
13 (2) Notwithstanding the provisions of the State Adverse
14 Interest Act, the Secretary of the Budget and the director of
15 finance of each assisted city shall, while serving as ex
16 officio members of the board, also serve in their official
17 capacities with respect to the negotiation and execution of
18 intergovernmental cooperation agreements and other agreements
19 between an assisted city and the authority.
20 (i) Advisory committee.--
21 (1) The board may appoint by majority vote an advisory
22 committee comprised of professionals engaged in municipal
23 management and finance or other experts as it may deem
24 necessary. The members of an advisory committee shall reside
25 within an assisted city or a county within the statistical
26 metropolitan area in which the assisted city is located.
27 (2) The provisions of subsection (g) shall be applicable
28 to members of an advisory committee; however, the board may
29 allow city council to designate a liaison from city council
30 to serve on an advisory committee.
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1 (3) An advisory committee shall consist of no more than
2 six members, excluding any council liaison.
3 Section 203. Powers and duties.
4 (a) General powers and duties.--The authority is established
5 for the purposes, without limitation, by itself or by agreement
6 in cooperation with others, of assisting cities in solving their
7 budgetary and financial problems.
8 (b) Specific duties.--The authority shall have the powers
9 and its duties shall be:
10 (1) To assist cities in achieving financial stability in
11 any manner consistent with the purposes and powers described
12 by this act.
13 (2) To assist cities in avoiding defaults, eliminating
14 and financing deficits, maintaining sound budgetary practices
15 and avoiding the interruption of municipal services.
16 (3) To negotiate intergovernmental cooperation
17 agreements with cities containing such terms and conditions
18 as will enable such cities to eliminate and avoid deficits,
19 maintain sound budgetary practices and avoid interruption of
20 municipal services.
21 (4) To make annual signed reports within 120 days after
22 the close of the assisted city's fiscal year, commencing with
23 the fiscal year ending December 31, 2003, to the Governor and
24 the General Assembly describing the city's financial
25 condition and the authority's progress with respect to
26 restoring the financial stability of assisted cities and
27 achieving balanced budgets for assisted cities. Such reports
28 shall be filed with the Governor, with the presiding officers
29 of the Senate and the House of Representatives, with the
30 chairperson and minority chairperson of the Appropriations
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1 Committee of the Senate and the chairperson and the minority
2 chairperson of the Appropriations Committee of the House of
3 Representatives and with the governing body, mayor and
4 controller of the assisted city and be publicly available in
5 the assisted city during normal business hours for public
6 inspection, and may be reproduced by any member of the public
7 at commercial costs of reproduction. Such report shall
8 clearly show by consistent category the last five years of
9 operating revenues and expenditures, capital expenditures,
10 gross and net indebtedness transactions, including a schedule
11 of principal and interest, five-year projections of the
12 assisted city's operating and capital budgets, and the entire
13 projected indebtedness transactions, including a schedule of
14 principal and interest of such indebtedness until any and all
15 debt has been completely retired. Such report shall contain a
16 narrative explaining progress of the assisted city in meeting
17 its annual and five-year budgetary objectives, an appraisal
18 by the authority of the progress the assisted city is making
19 to achieve its goals, and an appraisal of the extent to which
20 the assisted city is making a good faith effort to achieve
21 its goals. Such report shall disclose any violations of
22 Federal and State law that the authority may have discovered.
23 Such report shall include as appendices all historical loans
24 or other contracts entered into by the assisted city and its
25 authorities.
26 (c) Specific powers.--In addition to the powers and duties
27 set forth elsewhere in this act, the authority shall have the
28 specific powers:
29 (1) To obtain copies of all reports and documents
30 regarding the revenues, expenditures, budgets, deficits,
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1 costs, plans, operations, estimates and any other financial
2 or budgetary matters of an assisted city.
3 (2) To obtain additional reports and information on the
4 above matters in such form as are deemed necessary by the
5 authority.
6 (3) To make factual findings concerning an assisted
7 city's budgetary and fiscal affairs.
8 (4) To make recommendations to an assisted city
9 concerning conditions of approval of budgets and financial
10 plans. Recommendations under this paragraph may include:
11 (i) Consolidation or merger of services performed by
12 an assisted city, school, county or other surrounding
13 municipality.
14 (ii) Consolidation of public safety services.
15 (iii) Appropriate staffing levels of city
16 departments and corporate entities.
17 (iv) Cooperative agreements or contractual
18 arrangements between health care facilities licensed by
19 the Department of Health.
20 (v) Financial or contractual obligations of the
21 assisted city.
22 (vi) Contributions of nonprofit or charitable
23 organizations which receive the benefit of municipal
24 services provided by the assisted city.
25 (vii) Reduction or restructuring of debt
26 obligations.
27 (viii) Cooperative agreements between the assisted
28 city and the county in which it is located or
29 municipalities which border the assisted city.
30 (ix) Cooperative agreements between the assisted
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1 city and the school district in which it is located.
2 (x) Collective bargaining agreements and other
3 contracts of the assisted city.
4 (xi) Elimination, sale or transfer of assisted city
5 services or property.
6 (xii) Implementation of cost-saving measures by the
7 assisted city.
8 (xiii) Increased managerial accountability.
9 (xiv) Performance of government operations and
10 delivery of municipal services.
11 (xv) Reevaluation of tax-exemption policies and
12 practices with regard to real property taxation within
13 the assisted city.
14 (xvi) Improvements in procurement practices.
15 (xvii) Implementation of user fees for services,
16 including sewage, water treatment and refuse collection.
17 (xviii) Privatization and competitive bidding of
18 appropriate assisted city services.
19 (xix) Increased collection of fines and costs
20 relating to parking violations or violations of other
21 city ordinances.
22 (xx) When appropriate, filing for bankruptcy under
23 11 U.S.C. Ch. 9 (relating to adjustment of debts of a
24 municipality).
25 (xxi) The use of technology to achieve cost savings.
26 (xxii) A study of health care and other benefits
27 offered by the assisted city to its employees.
28 (xxiii) The sale of the assisted city's worker's
29 compensation fund.
30 (xxiv) The sale of unencumbered assets of the
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1 assisted city or its authorities.
2 (xxv) The elimination or reorganization of
3 authorities or departments.
4 (xxvi) The use by the assisted city of revenues
5 received under the act of July 28, 1953 (P.L.723,
6 No.230), known as the Second Class County Code.
7 (xxvii) The use of budgetary practices and
8 principles as they relate to forecasting, public
9 openness, projections, estimates, tax policy, lending,
10 borrowing and strategic planning.
11 (xxviii) The transfers of employees and assets by
12 and between bureaus, departments and authorities of the
13 assisted city.
14 (xxix) Prior suggestions published by others prior
15 to the enactment of this act with regard to the assisted
16 city.
17 (xxx) Reviewing the taxing authority of the city as
18 compared with the taxing authority of school districts of
19 the first class A.
20 (5) To make recommendations to the Governor and the
21 General Assembly regarding legislation or resolutions which
22 relate to an assisted city's fiscal stability. The authority
23 shall submit a preliminary report of the recommendations to
24 the Governor and the General Assembly within 90 days of the
25 effective date of this act.
26 (6) To exercise powers of review concerning the
27 budgetary and fiscal affairs of the assisted city consistent
28 with this act and the city's home rule charter or other
29 optional plan of government.
30 (7) To receive revenues from any source, directly or by
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1 assignment, pledge or otherwise.
2 (8) To sue and be sued, implead and be impleaded,
3 interplead, complain and defend in all courts.
4 (9) To adopt, use and alter at will a corporate seal.
5 (10) To make bylaws for the management and regulation of
6 its affairs and adopt rules, regulations and policies in
7 connection with the performance of its functions and duties
8 which, notwithstanding any other provision of law to the
9 contrary, shall not be subject to review pursuant to the act
10 of June 25, 1982 (P.L.633, No.181), known as the Regulatory
11 Review Act.
12 (11) To make and enter into contracts and other
13 instruments necessary or convenient for the conduct of its
14 business and the exercise of the powers of the authority.
15 (12) To appoint officers, agents, employees and servants
16 and to prescribe their duties and to fix their compensation
17 as set forth in section 202(f).
18 (13) To retain counsel and auditors to render such
19 professional services as the authority deems appropriate. The
20 authority shall not be considered either an executive agency
21 or an independent agency for the purpose of the act of
22 October 15, 1980 (P.L.950, No.164), known as the Commonwealth
23 Attorneys Act, but shall possess the same status for such
24 purpose as the Auditor General, State Treasurer and the
25 Pennsylvania Public Utility Commission, except that the
26 provisions of section 204(b) and (f) of the Commonwealth
27 Attorneys Act shall not apply to the authority;
28 notwithstanding 42 Pa.C.S. Ch. 85 (relating to matters
29 affecting government units), the authority, through its legal
30 counsel, shall defend actions brought against the authority
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1 or its members, officers, officials and employees when acting
2 within the scope of their official duties.
3 (14) To cooperate with any Federal agency or government
4 agency.
5 (15) To acquire, by gift or otherwise, purchase, hold,
6 receive, lease, sublease and use any franchise, license,
7 property, real, personal or mixed, tangible or intangible or
8 any interest therein. However, the authority shall be
9 absolutely limited in its power to acquire real property
10 under this act to real property that will be used only for
11 the office space in which the authority will conduct its
12 daily business if necessary. If possible, an assisted city
13 shall provide office space to the authority at no cost to the
14 authority as part of an intergovernmental cooperation
15 agreement.
16 (16) To sell, transfer, convey and dispose of any
17 property, real, personal or mixed, tangible or intangible or
18 any interest therein.
19 (17) To enter into contracts for group insurance and to
20 contribute to retirement plans for the benefit of its
21 employees and to enroll its employees in an existing
22 retirement system of a government agency.
23 (18) To accept, purchase or borrow equipment, supplies,
24 services or other things necessary or convenient to the work
25 of the authority from other government agencies, and all
26 government agencies are authorized to sell, lend or grant to
27 the authority such equipment, supplies, services or other
28 things necessary or convenient to the work of the authority.
29 (19) To invest any funds held by the authority as set
30 forth in section 212.
20030S0940B1328 - 21 -
1 (20) To receive and hold assets, moneys and funds from
2 any source, including, but not limited to, appropriations,
3 grants, gifts.
4 (21) To procure insurance, guarantees and sureties the
5 authority determines necessary or desirable for its purposes.
6 (22) To pledge the credit of the authority as the
7 authority determines necessary or desirable for its purposes.
8 (23) To do all acts and things necessary or convenient
9 for the promotion of its purposes and the general welfare of
10 the authority and to carry out the powers granted to it by
11 this act or any other acts.
12 (d) Intergovernmental cooperation agreements.--The authority
13 shall have the power and its duty shall be to enter into and to
14 implement fully such intergovernmental cooperation agreements
15 with cities as are approved by a majority of the board. The
16 following shall apply:
17 (1) A city may enter into an intergovernmental
18 cooperation agreement in which it, consistent with this act,
19 covenants to cooperate or agree in the exercise of any
20 function, power or responsibility with, or delegate or
21 transfer any function, power or responsibility to, the
22 authority upon the adoption by the governing body of such
23 city of an ordinance authorizing and approving the
24 intergovernmental cooperation agreement.
25 (2) An ordinance that authorizes a city to enter into an
26 intergovernmental cooperation agreement with the authority
27 shall specify:
28 (i) the purpose and objectives of the agreement;
29 (ii) the conditions of the agreement; and
30 (iii) the term of the agreement, including
20030S0940B1328 - 22 -
1 provisions relating to its termination.
2 (e) Limitation.--Notwithstanding any purpose or general or
3 specific power granted by this act or any other act, whether
4 express or implied, the authority shall have no power to pledge
5 the credit or taxing powers of the Commonwealth.
6 Section 204. Term of existence.
7 The authority shall exist for a term of at least seven years.
8 If, after seven years, an assisted city has had annual operating
9 budgets and five-year financial plans approved by the board for
10 at least the three immediately preceding years, the Secretary of
11 Community and Economic Development shall certify that the
12 authority is no longer needed; and the provisions of this
13 chapter will no longer be in effect 90 days following that
14 certification. Upon termination of the authority, records and
15 documents of the authority shall be transferred to the director
16 of finance of the assisted city. The authority shall submit a
17 final report on its activities and the city's fiscal condition
18 to the Governor and the General Assembly within 60 days of its
19 termination.
20 Section 205. Fiscal year.
21 The fiscal year of the authority shall be the same as the
22 fiscal year of the Commonwealth.
23 Section 206. Annual budget of authority.
24 (a) Budget.--Before March 1, 2004, for the fiscal year July
25 1, 2004, to June 30, 2005, and before October 15, 2005, and each
26 October 15 thereafter, the authority shall adopt a budget by a
27 majority of the board setting forth in reasonable detail the
28 projected expenses of operation of the authority for the ensuing
29 fiscal year, including the salary and benefits of the executive
30 director and any other employees of the authority, and the
20030S0940B1328 - 23 -
1 projected revenues of the authority to be derived from
2 investment earnings and any other moneys of the authority which
3 are estimated to be available to pay the operating expenses set
4 forth in the budget. A copy of the authority's budget shall be
5 submitted to the Governor and to the General Assembly. The
6 authority or its designated representatives may be afforded an
7 opportunity to appear before the Governor and the Appropriations
8 Committee of the Senate and the Appropriations Committee of the
9 House of Representatives regarding the authority's budget.
10 (b) Limit on operating expenses.--Following the submission
11 of the authority's budget to the Governor and the General
12 Assembly and any hearing held by an appropriations committee
13 under subsection (a), the General Assembly, by concurrent
14 resolution with presentment to the Governor, in accordance with
15 section 9 of Article III of the Constitution of Pennsylvania,
16 may limit the operating expenses of the authority. In that
17 event, it shall be unlawful for the authority to spend more for
18 operating expenses than the limit established for that fiscal
19 year by the concurrent resolution. If the General Assembly does
20 not adopt a concurrent resolution prior to May 30, the
21 authority's budget shall be deemed approved for that fiscal
22 year.
23 (c) Funding.--After July 1, 2005, upon request of the
24 authority and pursuant to the limits established in subsection
25 (b), the city shall annually fund any portion of the budget of
26 the authority which exceeds the authority's State appropriation,
27 including its reasonable and necessary expenses and costs
28 incurred for consultants engaged by the board to carry out its
29 duties.
30 (d) Examination of books.--The chairperson and minority
20030S0940B1328 - 24 -
1 chairperson of the Appropriations Committee of the Senate and
2 the chairperson and minority chairperson of the Appropriations
3 Committee of the House of Representatives shall have the right
4 at any time to examine the books, accounts and records of the
5 authority.
6 Section 207. Annual report to be filed; annual audits.
7 The authority shall file a signed annual report with the
8 chairperson and the minority chairperson of the Appropriations
9 Committee of the Senate and chairperson and the minority
10 chairperson of the Appropriations Committee of the House of
11 Representatives, which shall make provisions for the accounting
12 of revenues and expenses. The authority shall have its books,
13 accounts and records audited annually in accordance with
14 generally accepted auditing standards by an independent auditor
15 who shall be a certified public accountant, and a copy of his
16 audit report shall be attached to and be made a part of the
17 authority's annual report. A concise financial statement shall
18 be published annually in the Pennsylvania Bulletin.
19 Section 208. Limit on city borrowing.
20 A city and its corporate entities may not borrow or receive
21 funds for any lawful purpose unless the city has entered into an
22 intergovernmental cooperation agreement with the authority and
23 there is an approved financial plan in effect.
24 Section 209. Financial plan of an assisted city.
25 (a) Requirement of a financial plan.--An assisted city shall
26 develop, implement and periodically revise a financial plan as
27 described in this section.
28 (b) Elements of plan.--The financial plan shall include:
29 (1) Projected revenues and expenditures of the principal
30 operating fund or funds of the assisted city for five fiscal
20030S0940B1328 - 25 -
1 years consisting of the current fiscal year and the next four
2 fiscal years.
3 (2) Plan components that will:
4 (i) eliminate any projected deficit for the current
5 fiscal year and for subsequent fiscal years;
6 (ii) restore to special fund accounts money from
7 those accounts used for purposes other than those
8 specifically authorized;
9 (iii) balance the current fiscal year budget and
10 subsequent budgets in the financial plan through sound
11 budgetary practices, including, but not limited to,
12 reductions in expenditures, improvements in productivity,
13 increases in revenues or a combination of these steps;
14 (iv) provide procedures to avoid a fiscal emergency
15 condition in the future; and
16 (v) enhance the ability of the assisted city to
17 access short-term and long-term credit markets.
18 (c) Standards for formulation of plan.--
19 (1) All projections of revenues and expenditures in a
20 financial plan shall be based on prudent, reasonable and
21 appropriate assumptions and methods of estimation, all such
22 assumptions and methods to be consistently applied and
23 reported in the financial plan. The financial plan of an
24 assisted city shall not include projected revenue that in
25 order to be collected requires the enactment by the General
26 Assembly of new taxing powers.
27 (2) All revenue and appropriation estimates shall be on
28 a modified accrual basis in accordance with generally
29 accepted standards agreed to by the authority such as those
30 promulgated by the Governmental Accounting Standards Board.
20030S0940B1328 - 26 -
1 Revenue estimates shall recognize revenues in the accounting
2 period in which they become both measurable and available.
3 Estimates of city-generated revenues shall be based on
4 current or proposed tax rates, historical collection patterns
5 and generally recognized econometric models. Estimates of
6 revenues to be received from the State government shall be
7 based on historical patterns, currently available levels or
8 on levels proposed in a budget by the Governor. Estimates of
9 revenues to be received from the Federal Government shall be
10 based on historical patterns, currently available levels or
11 on levels proposed in a budget by the President or in a
12 congressional budget resolution. Nontax revenues shall be
13 based on current or proposed rates, charges or fees,
14 historical patterns and generally recognized econometric
15 models. Appropriation estimates shall include, at a minimum,
16 all obligations incurred during the fiscal year and estimated
17 to be payable during the fiscal year or in the 24-month
18 period following the close of the current fiscal year and all
19 obligations of prior fiscal years not covered by encumbered
20 funds from prior fiscal years. Any deviations from these
21 standards of estimating revenues and appropriations proposed
22 to be used by an assisted city shall be specifically
23 disclosed and shall be approved by a majority of the board.
24 (3) All cash flow projections shall be based upon
25 reasonable and appropriate assumptions as to sources and uses
26 of cash, including, but not limited to, reasonable and
27 appropriate assumptions as to the timing of receipt and
28 expenditure thereof, and shall provide for operations of the
29 assisted city to be conducted within the resources so
30 projected. All estimates shall take due account of the past
20030S0940B1328 - 27 -
1 and anticipated collection, expenditure and service demand
2 experience of the assisted city and of current and projected
3 economic conditions.
4 (d) Form of plan.--Each financial plan shall, consistent
5 with the requirements of an assisted city's home rule charter or
6 optional plan of government:
7 (1) be in such form and shall contain:
8 (i) for each of the first two fiscal years covered
9 by the financial plan, such information as shall reflect
10 an assisted city's total expenditures by fund and by lump
11 sum amount for each board, commission, department or
12 office of an assisted city; and
13 (ii) for the remaining three fiscal years of the
14 financial plan, such information as shall reflect an
15 assisted city's total expenditures by fund and by lump
16 sum amount for major object classification;
17 (2) include projections of all revenues and expenditures
18 for five fiscal years, including, but not limited to,
19 projected capital expenditures and short-term and long-term
20 debt incurrence and cash flow forecasts by fund for the first
21 year of the financial plan;
22 (3) include a schedule of projected capital commitments
23 of the assisted city and proposed sources of funding for such
24 commitments; and
25 (4) be accompanied by a statement describing, in
26 reasonable detail, the significant assumptions and methods of
27 estimation used in arriving at the projections contained in
28 such plan.
29 (e) Annual submission of plan.--On or before December 30, <--
30 2003 WITHIN 90 DAYS OF THE EFFECTIVE DATE OF THIS SECTION, an <--
20030S0940B1328 - 28 -
1 assisted city shall develop, and the authority shall review and
2 act upon, an initial five-year financial plan which includes a
3 report on the status of implementation of prior published
4 suggestions regarding consolidation and cost savings. During
5 each subsequent fiscal year, the mayor or chief executive
6 officer of each assisted city shall, at least 100 days prior to
7 the beginning of its fiscal year or on such other date as the
8 authority may approve upon the request of the assisted city,
9 prepare and submit its proposed five-year plan. At the same time
10 the plan is submitted, the mayor or chief executive officer
11 shall also submit to the authority:
12 (1) the mayor's or chief executive officer's proposed
13 annual operating budget and capital budget which shall be
14 consistent with the first year of the financial plan and
15 which shall be prepared in accordance with the assisted
16 city's home rule charter or other optional plan of
17 government; and
18 (2) a statement by the mayor or chief executive officer
19 that such budget:
20 (i) is consistent with the financial plan;
21 (ii) contains funding adequate for debt service
22 payments, legally mandated services and lease payments
23 securing bonds of other government agencies;
24 (iii) is based upon prudent, reasonable and
25 appropriate assumptions and methods of estimation; and
26 (iv) complies with any balanced budget requirements
27 contained in the charter and ordinances of the city or
28 State law.
29 (f) Balanced budget requirement.--The mayor of every city
30 and assisted city shall submit, and the city council of every
20030S0940B1328 - 29 -
1 city and assisted city shall adopt, a balanced budget each year
2 consistent with the requirements of 53 Pa.C.S. § 3016 (relating
3 to form and adoption of budget), and the city's or assisted
4 city's home rule charter or other optional plan of government. A
5 balanced budget of a city or assisted city shall not include
6 projected revenues that in order to be collected require the
7 enactment by the General Assembly of new taxing powers or the
8 approval of a court of common pleas of the county in which the
9 city or assisted city is located. The failure of a city or
10 assisted city to comply with this subsection shall result in the
11 withholding of Commonwealth funds pursuant to section 210(e) and
12 (f).
13 (g) Authority review and approval of plan.--
14 (1) The authority shall promptly review each financial
15 plan, proposed operating budget and capital budget submitted
16 by the assisted city. In conducting such review, the
17 authority shall request from the city controller of the
18 assisted city an opinion or certification prepared in
19 accordance with generally accepted auditing standards, with
20 respect to the reasonableness of the assumptions and
21 estimates in the financial plan. The city controller and
22 other elected officials shall comply with any such request
23 from the authority. Not more than 30 days after submission of
24 a financial plan and proposed operating budget, the authority
25 shall determine whether:
26 (i) the financial plan projects balanced budgets,
27 based upon prudent, reasonable and appropriate
28 assumptions as described in this section, for each year
29 of the plan; and
30 (ii) the proposed operating budget and capital
20030S0940B1328 - 30 -
1 budget are consistent with the proposed financial plan.
2 If the authority determines that these criteria are
3 satisfied, the authority shall approve such financial plan by
4 a majority vote.
5 (2) The authority shall not be bound by any opinions or
6 certifications of the city controller of the assisted city
7 issued pursuant to this subsection.
8 (3) If the authority fails to take any action within 30
9 days on a financial plan, the financial plan as submitted
10 shall be deemed approved. However, if during the 30 days a
11 written request by two members of the authority board for a
12 meeting and vote on the question of approval of the financial
13 plan has been submitted to the chairperson and a meeting and
14 vote do not take place, the financial plan shall be deemed
15 disapproved.
16 (h) Authority disapproval of plan.--
17 (1) If the authority disapproves the proposed financial
18 plan, the authority shall, when it notifies an assisted city
19 of its decision, state in writing in reasonable detail the
20 reasons for such disapproval, including the amount of any
21 estimated budget imbalance.
22 (2) The assisted city shall submit a revised financial
23 plan to the authority within 15 days of such disapproval,
24 which revised plan eliminates the budget imbalance. Not more
25 than 15 days after the submission of such revised financial
26 plan, the authority shall determine whether the revised plan
27 satisfies the criteria set forth in subsection (g)(1). If the
28 authority determines that these criteria are satisfied, the
29 authority shall approve such financial plan by a majority
30 vote. If the authority shall not so approve the financial
20030S0940B1328 - 31 -
1 plan, then the authority shall, in accordance with section
2 210(e), certify the assisted city's noncompliance with the
3 financial plan to the Secretary of the Budget, the President
4 pro tempore of the Senate and the Speaker of the House of
5 Representatives.
6 (i) Revisions to plan.--
7 (1) The plan shall be revised on an annual basis to
8 include the operating budget for the next fiscal year and to
9 extend the plan for an additional fiscal year. In addition,
10 the mayor or chief executive officer of a city shall, within
11 90 days of assuming office, propose revisions to the
12 financial plan or certify to the authority that he or she
13 adopts the existing plan. An assisted city may, during the
14 course of a fiscal year, submit proposed revisions to the
15 financial plan and shall submit a proposed revision for any
16 amendment to the city's operating or capital budget.
17 (2) The authority shall review each proposed revision
18 within 20 days of its submission. The authority shall approve
19 the revision if it will not, based on prudent, reasonable and
20 appropriate assumptions, cause the plan to become imbalanced.
21 Proposed revisions shall become part of the financial plan
22 upon the approval of a majority of the authority board,
23 unless some other method of approval is permitted by
24 authority rules and regulations approved by a majority or
25 pursuant to an agreement with the city contained in an
26 intergovernmental cooperation agreement. If the authority
27 fails to take action within 20 days on a proposed revision,
28 such submission shall be deemed approved unless a written
29 request for a meeting and vote has been made in accordance
30 with subsection (g)(3) in which event, if a meeting and vote
20030S0940B1328 - 32 -
1 does not take place, the proposed revision shall be deemed
2 disapproved.
3 (3) If the governing body of a city adopts a budget
4 inconsistent with an approved financial plan, the assisted
5 city shall submit the enacted budget to the authority as a
6 proposed revision to the plan. The authority shall review the
7 proposed revision within 30 days of its submission, in
8 accordance with the criteria set forth in subsection (g) and
9 the approval process set forth in paragraph (2).
10 (j) Supplemental reports.--Within 45 days of the end of each
11 fiscal quarter, or monthly if a variation from the financial
12 plan has been determined in accordance with section 210(c), the
13 mayor or chief executive officer of an assisted city shall
14 provide the authority with reports describing actual or current
15 estimates of revenues and expenditures compared to budgeted
16 revenues and expenditures for such period reflected in its cash
17 flow forecast. Each report required under this section shall
18 indicate any variance between actual or current estimates and
19 budgeted revenues, expenditures and cash for the period covered
20 by such report. An assisted city shall also provide periodic
21 reports on debt service requirements in conformity with section
22 210(b).
23 (k) Effect of plan upon contracts and collective bargaining
24 agreements.--
25 (1) A contract or collective bargaining agreement in
26 existence in an assisted city prior to the approval by the
27 authority of a financial plan submitted pursuant to this
28 section shall remain effective after approval of such plan
29 until such contract or agreement expires.
30 (2) After the approval by the authority of a financial
20030S0940B1328 - 33 -
1 plan submitted pursuant to this section, an assisted city
2 shall execute contracts and collective bargaining agreements
3 in compliance with such plan. If an assisted city executes a
4 contract or a collective bargaining agreement which is not in
5 compliance with the plan, the contract or agreement shall not
6 be void or voidable solely by reason of such noncompliance,
7 but the assisted city shall submit to the authority a
8 proposed revision to the plan which demonstrates that
9 revenues sufficient to pay the costs of the contract or
10 collective bargaining agreement will be available in the
11 affected fiscal years of the plan.
12 (l) Effect of plan upon certain arbitration awards.--
13 (1) After the approval by the authority of a financial
14 plan submitted pursuant to this section, any determination of
15 a board of arbitration established pursuant to the provisions
16 of the act of June 24, 1968 (P.L.237, No.111), referred to as
17 the Policemen and Firemen Collective Bargaining Act,
18 providing for an increase in wages or fringe benefits of any
19 employee of an assisted city under the plan, in addition to
20 considering any standard or factor required to be considered
21 by applicable law, shall take into consideration and accord
22 substantial weight to:
23 (i) the approved financial plan; and
24 (ii) relevant market factors, such as the financial
25 situation of the assisted city, inflation, productivity,
26 size of work force and pay and benefit levels in
27 economically and demographically comparable political
28 subdivisions.
29 (2) Such determination shall be in writing and a copy
30 thereof shall be forwarded to each party to the dispute and
20030S0940B1328 - 34 -
1 the authority. Any determination of the board of arbitration
2 which provides for an increase in wages or fringe benefits of
3 any employee of an assisted city shall state with specificity
4 in writing all factors which the board of arbitration took
5 into account in considering and giving substantial weight to
6 the factors referred to in paragraph (1).
7 (3) Any party to a proceeding before a board of
8 arbitration may appeal to the court of common pleas to
9 review:
10 (i) consideration under paragraph (1); or
11 (ii) failure of the board of arbitration to issue a
12 determination under paragraph (2).
13 (4) An appeal under paragraph (3) must be commenced not
14 later than 30 days after the issuance of a final
15 determination by the board of arbitration.
16 (5) The decision of the board of arbitration shall be
17 vacated and remanded to the board of arbitration if the court
18 finds:
19 (i) that the board of arbitration failed to take
20 into consideration and accord substantial weight to the
21 factors referred to in paragraph (1); or
22 (ii) that the board of arbitration has failed to
23 issue a determination under paragraph (2).
24 (6) If, after the exhaustion of all appeals, the final
25 arbitration award is not in compliance with the approved
26 financial plan, the award shall not be void or voidable
27 solely by reason of such noncompliance, but the assisted city
28 shall submit to the authority a proposed revision to the plan
29 which demonstrates that revenues sufficient to pay the costs
30 of the award will be available in the affected fiscal years
20030S0940B1328 - 35 -
1 of the plan.
2 Section 210. Powers and duties of authority with respect to
3 financial plans.
4 (a) Formulation and approval of plan.--To advance the
5 financial recovery of each assisted city, the authority shall
6 require the assisted city to submit a five-year financial plan
7 in accordance with section 209. With regard to the formulation
8 of such plan, the authority shall:
9 (1) Consult with an assisted city as it prepares the
10 financial plan.
11 (2) Prescribe the form of the financial plan.
12 (3) Prescribe the supporting information required in
13 connection with such plan, such information to include at a
14 minimum:
15 (i) debt service payments due or projected to be due
16 during the relevant fiscal years;
17 (ii) payments for legally mandated services included
18 in the plan and due or projected to be due during the
19 relevant fiscal years; and
20 (iii) a statement in reasonable detail of the
21 significant assumptions and methods of estimation used in
22 arriving at the projections in the plan.
23 (4) Exercise any rights of approval or disapproval and
24 issue such recommendations as are authorized by this act in
25 accordance with the standards for formulation of the plan set
26 forth in section 209(c).
27 (b) Authority functions after plan is approved.--After a
28 financial plan has been approved, the authority shall:
29 (1) Receive and review:
30 (i) the financial reports submitted by the mayor or
20030S0940B1328 - 36 -
1 chief executive officer of a city under section 209(j);
2 (ii) reports concerning the debt service
3 requirements on all bonds, notes of the assisted city and
4 lease payments of the assisted city securing bonds or
5 other government agencies for the following quarter,
6 which reports shall be in such form and contain such
7 information as the authority shall determine, and which
8 shall be issued no later than 60 days prior to the
9 beginning of the quarter to which they pertain, and shall
10 be updated immediately upon each issuance of bonds or
11 notes, by the assisted city or execution of a lease
12 securing bonds of another government agency, after the
13 date of such report to reflect any change in debt service
14 requirements as a result of such issuance; and
15 (iii) any additional information provided by the
16 assisted city concerning changed conditions or unexpected
17 events which may affect the assisted city's adherence to
18 the financial plan. The reports described in subparagraph
19 (ii) shall be certified by the city controller.
20 (2) Determine, on the basis of information and reports
21 described in paragraph (1), whether an assisted city has
22 adhered to the financial plan.
23 (c) Variation from the plan.--If the authority determines,
24 based upon reports submitted by an assisted city under
25 subsection (b) or independent audits, examinations or studies of
26 the assisted city's finances obtained under subsection (i)(3),
27 that an assisted city's actual revenues and expenditures vary
28 from those estimated in the financial plan, the authority shall
29 require the city to provide such additional information as the
30 authority deems necessary to explain the variation. The
20030S0940B1328 - 37 -
1 authority shall take no action with respect to an assisted city
2 for departures from the financial plan in a fiscal quarter if:
3 (1) the city provides a written explanation for the
4 variation that the authority deems reasonable;
5 (2) the city proposes remedial action which the
6 authority believes will restore the assisted city's overall
7 compliance with the financial plan;
8 (3) information provided by the city in the immediately
9 succeeding quarterly financial report demonstrates that the
10 assisted city is taking such remedial action and otherwise
11 complying with the plan; and
12 (4) the assisted city submits monthly supplemental
13 reports in accordance with section 209(j) until it regains
14 compliance with the financial plan.
15 (d) Authority may make recommendations.--The authority may
16 at any time issue recommendations as to how an assisted city may
17 achieve compliance with the financial plan and shall provide
18 copies of such recommendations to the mayor or chief executive
19 officer and the governing body of the city and to the officials
20 named in section 203(b)(5) 203(B)(4). <--
21 (e) When Commonwealth shall withhold funds.--
22 (1) The authority shall certify to the Secretary of the
23 Budget an assisted city's noncompliance with the financial
24 plan during any period when the authority has determined by
25 the vote of a majority that the assisted city has not adhered
26 to the plan and has not taken acceptable remedial action
27 during the next quarter following such departure from the
28 plan.
29 (2) The authority shall certify to the Secretary of the
30 Budget that an assisted city is not in compliance with the
20030S0940B1328 - 38 -
1 plan if the assisted city:
2 (i) has no financial plan approved by the authority,
3 has failed to provide requested documents or has failed
4 to file a financial plan with the authority; OR <--
5 (ii) has failed to file mandatory revisions to the
6 plan or reports as required by section 209(i), (j), (k)
7 or (l).; or <--
8 (iii) has not been compelled to file a financial
9 plan, a mandatory revision to the plan or a report
10 through a mandamus action authorized under subsection
11 (j).
12 (3) If the authority certifies that an assisted city is
13 not in compliance with the financial plan under paragraph (1)
14 or (2), the Secretary of the Budget shall notify the city
15 that such certification has been made and that each grant,
16 loan, entitlement or payment to the assisted city by the
17 Commonwealth shall be suspended pending compliance with the
18 financial plan. Funds withheld shall be held in escrow by the
19 Commonwealth until compliance with the plan is restored as
20 set forth in paragraph (4). Funds held in escrow pursuant to
21 this subsection shall not lapse pursuant to section 621 of
22 the act of April 9, 1929 (P.L.177, No.175), known as The
23 Administrative Code of 1929, or any other law.
24 (4) The authority shall, by majority vote, determine
25 when the conditions which caused an assisted city to be
26 certified as not in compliance with the financial plan have
27 ceased to exist and shall promptly notify the Secretary of
28 the Budget of such vote. The Secretary of the Budget shall
29 thereupon release all funds held in escrow, together with all
30 interest and income earned thereon during the period held in
20030S0940B1328 - 39 -
1 escrow, and the disbursements of amounts in the city account
2 shall resume.
3 (f) Exemptions.--Notwithstanding the provisions of
4 subsection (e), the following shall not be withheld from an
5 assisted city:
6 (1) funds granted or allocated to an assisted city
7 directly from an agency of the Commonwealth or from the
8 Federal Government for distribution by the Commonwealth after
9 the declaration of a disaster resulting from a catastrophe;
10 (2) funds for capital projects under contract in
11 progress;
12 (3) pension fund payments required by law; and
13 (4) funds the assisted city has pledged to repay bonds
14 or notes.
15 (g) Effect of Commonwealth's failure to disburse funds.--The
16 provisions of subsection (e) shall not apply and an assisted
17 city shall not be found to have departed from the financial plan
18 due to the Commonwealth's failure to pay any money, including
19 payment of Federal funds distributed by or through the
20 Commonwealth, due to the assisted city from moneys appropriated
21 by the General Assembly.
22 (h) Assisted city to determine expenditure of available
23 funds.--Nothing in this act shall be construed to limit the
24 power of an assisted city to determine, from time to time,
25 within available funds of the assisted city, the purposes for
26 which expenditures are to be made by the assisted city and the
27 amounts of such expenditures then permitted under the financial
28 plan of the assisted city.
29 (i) Documents and examinations to be reviewed or undertaken
30 by the authority.--The authority shall:
20030S0940B1328 - 40 -
1 (1) receive from an assisted city and review the
2 reports, documents, budgetary and financial planning data and
3 other information prepared by or on behalf of such assisted
4 city and which are to be made available to the authority
5 under this act;
6 (2) inspect and copy such books, records and information
7 of an assisted city as the authority deems necessary to
8 accomplish the purposes of this act; and
9 (3) conduct or cause to be conducted such independent
10 audits, examinations or studies of an assisted city's
11 finances as the authority deems appropriate.
12 (j) Remedies of authority for failure of an assisted city to
13 file financial plans and reports.--In the event that an assisted
14 city shall fail to file with the authority any financial plan,
15 revision to a financial plan, report or other information
16 required to be filed with the authority pursuant to this act,
17 the authority, in addition to all other rights which the
18 authority may have at law or in equity, shall have the right by
19 mandamus to compel the assisted city and the officers, employees
20 and agents thereof to file with the authority the financial
21 plan, revision to a financial plan, report or other information
22 which the assisted city has failed to file. The authority shall
23 give the assisted city written notice of the failure of the
24 assisted city to file and of the authority's intention to
25 initiate an action under this subsection and shall not initiate
26 such an action earlier than ten days after the giving of such
27 notice.
28 Section 211. Limitation on authority and on assisted cities to
29 file petition for relief under Federal bankruptcy
30 law.
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1 (a) Limitation on bankruptcy filing.--Notwithstanding any
2 other provision of law, the authority and any assisted city
3 shall not be authorized to file a petition for relief under 11
4 U.S.C. Ch. 9 (relating to adjustments of debts of a
5 municipality) or any successor Federal bankruptcy law, and no
6 government agency shall authorize the authority or such city to
7 become a debtor under 11 U.S.C. Ch. 9 or any successor Federal
8 bankruptcy law.
9 (b) Bankruptcy filing approval.--In addition to the
10 limitation set forth in subsection (a), and notwithstanding any
11 other provision of law, no city shall be authorized to file a
12 petition for relief under 11 U.S.C. Ch. 9 or any successor
13 Federal bankruptcy law, unless such petition has been submitted
14 to, and the filing thereof has been approved in writing by the
15 Governor. The Governor is designated, in accordance with 11
16 U.S.C. § 109(c)(2) (relating to who may be a debtor), as the
17 organization of the Commonwealth which shall have power to
18 approve or disapprove the filing of any such petition of a
19 political subdivision, and to approve or disapprove any plan of
20 readjustment of the debts of any such political subdivision
21 prepared, filed and submitted with the petition to the court, as
22 provided under 11 U.S.C. Ch. 9.
23 (c) Review of bankruptcy petition.--
24 (1) When any such petition shall be submitted to the
25 Governor for approval, accompanied with a proposed plan of
26 readjustment of the debts of a city, the Governor shall make
27 a careful and thorough investigation of the financial
28 condition of such city, of its assets and liabilities, of its
29 sinking fund, and whether the affairs thereof are managed in
30 a careful, prudent and economic manner in order to ascertain
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1 whether the presentation of such petition is justified, or
2 represents an unjust attempt by such city to evade payment of
3 some of its contractual obligations, and, if the Governor
4 believes that such petition should be approved, whether the
5 plan of readjustment submitted will be helpful to the
6 financial condition of the city and is feasible and, at the
7 same time, fair and equitable to all creditors.
8 (2) The Governor shall also, prior to giving his
9 approval, ascertain the amount, if any, of the obligations of
10 any such petitioning city which is held by any agency or
11 agencies of the State government as trust funds and shall,
12 before approving any such petition and plan of readjustment,
13 consult with and give every such agency an opportunity to be
14 heard and the privilege to examine the findings of the
15 Governor resulting from the investigation required to be made
16 under this act, and shall likewise hear any other creditor of
17 such city, whether resident in or outside this Commonwealth,
18 who shall apply therefor.
19 (3) The Governor, if he approves a petition, shall,
20 before giving his approval, require such modification in the
21 proposed plan for readjusting the debts as to him appears
22 proper.
23 Section 212. Investment of funds.
24 Funds of the authority which are not required for immediate
25 use may be invested in obligations of an assisted city or in
26 obligations of the Federal Government or of the Commonwealth or
27 obligations which are legal investments for Commonwealth funds.
28 However, no money may be invested in obligations issued by or
29 obligations guaranteed by an assisted city without the approval
30 of a majority of the board.
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1 Section 213. Sovereign immunity.
2 Members of the board shall not be liable personally for any
3 obligations of the authority. It is hereby declared to be the
4 intent of the General Assembly that the authority created by
5 this act and its members, officers, officials and employees
6 shall enjoy sovereign and official immunity, as provided in 1
7 Pa.C.S. § 2310 (relating to sovereign immunity reaffirmed;
8 specific waiver), and shall remain immune from suit except as
9 provided by and subject to the provisions of 42 Pa.C.S. §§ 8501
10 (relating to definitions) through 8528 (relating to limitations
11 on damages).
12 CHAPTER 7
13 MISCELLANEOUS PROVISIONS
14 Section 701. Appropriation.
15 The sum of $200,000 is hereby appropriated from the General
16 Fund to the Intergovernmental Cooperation Authority for Cities
17 of the Second Class as a continuing appropriation for the
18 purpose of providing operating funds for the Intergovernmental
19 Cooperation Authority for Cities of the Second Class. This
20 appropriation shall lapse June 30, 2005.
21 Section 702. General rights and prohibitions.
22 Nothing in this act shall limit the rights or impair the
23 obligations of any assisted city to comply with the provisions
24 of any contract in effect on the effective date of this act or
25 shall in any way impair the rights of the obligees of any
26 assisted city with respect to any such contract.
27 Section 703. Nondiscrimination.
28 The authority shall comply in all respects with the
29 nondiscrimination and contract compliance plans used by the
30 Department of General Services to assure that all persons are
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1 accorded equality of opportunity in employment and contracting
2 by the authority and its contractors, subcontractors, assignees,
3 lessees, agents, vendors and suppliers.
4 Section 704. Construction of act.
5 (a) Liberal construction.--The provisions of this act
6 providing for security for and rights and remedies of obligees
7 of the authority shall be liberally construed to achieve the
8 purposes stated and provided for by this act.
9 (b) Severability.--If any provision of the title or any
10 chapter, section or clause of this act, or the application
11 thereof to any person, party, corporation, public or private,
12 shall be judged invalid by a court of competent jurisdiction,
13 such order or judgment shall be confined in its operation to the
14 controversy in which it was rendered and shall not affect or
15 invalidate the remainder of any provision of the title or any
16 chapter or any section or clause of this act, or the application
17 of any part thereof to any other person, party, corporation,
18 public or private, or circumstance, and, to this end, the
19 provisions of the title or any chapter, section or clause of
20 this act hereby are declared to be severable. It is hereby
21 declared as the legislative intent that this act would have been
22 adopted had any provision declared unconstitutional not been
23 included herein.
24 Section 705. Limitation of authority powers.
25 Except as provided in section 210(i), nothing contained in
26 this act shall be construed to confer upon the authority any
27 powers with respect to a school district.
28 Section 706. Suspension and repeal.
29 (a) Suspension.-- Unless a determination of municipal <--
30 financial distress is issued to a city of the second class by
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1 the Secretary of Community and Economic Development prior to the
2 effective date of this act, the (A) SUSPENSION.--THE provisions <--
3 of the act of July 10, 1987 (P.L.246, No.47), known as the
4 Municipalities Financial Recovery Act, with the exception of
5 section 123(a), are suspended as to cities of the second class
6 until the termination of the authority established by this act.
7 If the provisions of this act and the Municipalities Financial
8 Recovery Act are determined to be in conflict, the provisions of
9 this act shall govern.
10 (b) General.--All other acts or parts of acts are repealed
11 insofar as they are inconsistent with this act.
12 Section 707. Effective date.
13 This act shall take effect immediately.
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