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| PRIOR PRINTER'S NO. 1372 | PRINTER'S NO. 1407 |
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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| SENATE BILL |
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| INTRODUCED BY PICCOLA, PILEGGI, EARLL, VANCE, FOLMER, GORDNER, WAUGH, ALLOWAY, BAKER, ERICKSON, ORIE, BROWNE AND TOMLINSON, JUNE 17, 2011 |
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| SENATOR EARLL, COMMUNITY, ECONOMIC AND RECREATIONAL DEVELOPMENT, AS AMENDED, JUNE 22, 2011 |
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| AN ACT |
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1 | Amending the act of July 10, 1987 (P.L.246, No.47), entitled "An |
2 | act empowering the Department of Community Affairs to declare |
3 | certain municipalities as financially distressed; providing |
4 | for the restructuring of debt of financially distressed |
5 | municipalities; limiting the ability of financially |
6 | distressed municipalities to obtain government funding; |
7 | authorizing municipalities to participate in Federal debt |
8 | adjustment actions and bankruptcy actions under certain |
9 | circumstances; and providing for consolidation or merger of |
10 | contiguous municipalities to relieve financial distress," |
11 | further providing for Commonwealth agency payments or |
12 | assistance; providing for review of coordinator, for the | <-- |
13 | establishment of a management board for distressed third |
14 | class cities and for powers of management boards; prohibiting |
15 | distressed third class cities from filing Federal bankruptcy |
16 | petitions; and making editorial changes. |
17 | The General Assembly of the Commonwealth of Pennsylvania |
18 | hereby enacts as follows: |
19 | Section 1. Section 251(a) of the act of July 10, 1987 |
20 | (P.L.246, No.47), known as the Municipalities Financial Recovery |
21 | Act, is amended and the section is amended by adding a |
22 | subsection to read: |
23 | Section 251. Commonwealth agency payments or assistance. |
24 | (a) Withholding of certain Commonwealth funds.--Except as |
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1 | provided in section 302(b), upon certification by the |
2 | [secretary] department that a financially distressed |
3 | municipality has failed to adopt a plan or implement an adopted |
4 | plan as proposed under this act or has adopted a plan which is |
5 | inadequate to address the municipality's financial distress, the |
6 | municipality shall not receive a grant, loan, entitlement or |
7 | payment from the Commonwealth or any of its agencies. Moneys |
8 | withheld shall be held in escrow by the Commonwealth until the |
9 | [secretary] department has rescinded the certification. |
10 | (a.1) Disposition of assets.--Subsection (a) shall apply to |
11 | the failure of a distressed city or a management board |
12 | established under section 603(a) if the city or management board |
13 | fails to identify, sell, lease or otherwise dispose of assets in |
14 | accordance with section 605. |
15 | * * * |
16 | Section 1.1. The act is amended by adding a section to read: | <-- |
17 | Section 254. Review and investigation of coordinators. |
18 | (a) Initial review.--The department shall conduct a review |
19 | of all coordinators appointed or serving during 2010. The review |
20 | under this subsection shall be conducted by October 1, 2011. |
21 | Within 30 days of the completed review, the department shall |
22 | determine if the coordinator has failed to develop an adequate |
23 | plan or to implement the plan in an appropriate or adequate |
24 | manner. If the coordinator has failed to develop or implement |
25 | the plan in an appropriate or adequate manner, the department |
26 | shall remove the coordinator and appoint a new coordinator. |
27 | (b) Additional reviews.--The department shall conduct a |
28 | review of all coordinators appointed for service or serving |
29 | during 2011 and each year thereafter. The review under this |
30 | subsection shall be conducted by June 30. Within 30 days of the |
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1 | completed review, the department shall determine if the |
2 | coordinator has failed to develop an adequate plan or to |
3 | implement the plan in an appropriate manner. If the coordinator |
4 | has failed to develop an adequate plan or to implement the plan |
5 | in an appropriate manner, the department shall remove the |
6 | coordinator and appoint a new coordinator. |
7 | (c) Investigations.--In addition to the review under |
8 | subsection (a) or (b), the department shall investigate a |
9 | complaint as to the failure of the coordinator to develop an |
10 | adequate plan or to implement the plan in an appropriate or |
11 | adequate manner. The complaint must be brought by: |
12 | (1) a petition from at least two members of the |
13 | governing body of the municipality; or |
14 | (2) a petition signed by 30 residents of the |
15 | municipality. |
16 | Section 2. The act is amended by adding a chapter to read: |
17 | CHAPTER 6 |
18 | CITIES OF THE THIRD CLASS |
19 | Section 601. Definitions. |
20 | "City." A city of the third class. | <-- |
21 | "City." A city of the third class which: | <-- |
22 | (1) has opted to be governed by a mayor-council form of |
23 | government under: |
24 | (i) the act of July 15, 1957 (P.L.901, No.399), |
25 | known as the Optional Third Class City Charter Law; or |
26 | (ii) 53 Pa.C.S. Pt. III Subpt. E (relating to home |
27 | rule and optional plan government); and |
28 | (2) has a population in excess of 45,000. |
29 | "Controlled authority." A municipal authority, parking |
30 | authority or other authority or corporate entity which is | <-- |
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1 | directly or indirectly controlled by a distressed city or to |
2 | which a distressed city has powers of appointment. |
3 | "County." The county in which a distressed city is located. |
4 | "Distressed city." A city which has been determined to be |
5 | financially distressed under section 203(f). The term includes |
6 | any controlled authority or other corporate entity which | <-- |
7 | directly performs a governmental function on behalf of the city |
8 | and which is directly or indirectly controlled by the city or to |
9 | which the city has direct or indirect power of appointment or |
10 | has pledged or designated the city's revenues or the city's |
11 | credit. |
12 | "Management board." The city management board. |
13 | Section 602. Applicability. |
14 | A distressed city shall be subject to the provisions of this |
15 | chapter and Chapters 2 and 3. If a conflict between this chapter |
16 | and any other provision of this act occurs, the provisions of |
17 | this chapter shall prevail. |
18 | Section 603. Management board. |
19 | (a) Establishment.--A management board shall be established |
20 | if a distressed city fails to adopt or implement the secretary | <-- |
21 | determines that the distressed city has not implemented the |
22 | coordinator's plan in accordance with sections 245 and 247(a). A |
23 | distressed city shall be deemed to have failed to adopt and | <-- |
24 | implement the coordinator's plan if it takes any action to |
25 | approve an alternative plan under section 246. |
26 | (b) Composition.--A management board established under |
27 | subsection (a) shall be comprised of the following: |
28 | (1) Two members appointed by the Governor. |
29 | (2) One member appointed by the board of commissioners |
30 | of the county who shall be a resident of the county at the | <-- |
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1 | time of appointment and shall maintain county residence while |
2 | a member of the board. |
3 | (b.1) Public officials, party officers; conflicts of | <-- |
4 | interest prohibited.-- |
5 | (1) Members of the board shall not: |
6 | (i) Seek or hold a position as any other public |
7 | official within this Commonwealth or as a party officer |
8 | while in the service of the management board. |
9 | (ii) Seek election as public officials or party |
10 | officers for one year after their service with the |
11 | management board. |
12 | (2) Members of the board may serve as appointive public |
13 | officials any time after their periods of service with the |
14 | management board. |
15 | (3) (i) No member of the board may: |
16 | (A) Directly or indirectly be a party to or have |
17 | an interest in any contract or agreement with the |
18 | authority or with the distressed city. |
19 | (B) Use his office or any confidential |
20 | information received through his office for the |
21 | private pecuniary benefit of himself, a member of his |
22 | immediate family or a business with which he or a |
23 | member of his immediate family is associated. |
24 | (ii) Any member who willfully violates this |
25 | paragraph shall forfeit his office and shall be subject |
26 | to any other criminal and civil sanctions as may be |
27 | imposed by law. Any contract or agreement knowingly made |
28 | in contravention of this paragraph shall be void. |
29 | (c) Experience.--All members and their designees shall: | <-- |
30 | (1) Have experience in finance or management. |
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1 | (2) Be residents of this Commonwealth. |
2 | (c) Experience and residence.-- | <-- |
3 | (1) All members and their designees shall have |
4 | experience in finance or management. |
5 | (2) All members and their designees shall be residents |
6 | of this Commonwealth. |
7 | (3) At least one member under subsection (b)(1) shall be |
8 | a resident of the distressed city for which the board is |
9 | being appointed. |
10 | (d) Term.--Members shall be appointed within seven days of |
11 | the determination by the department that the requirements of |
12 | subsection (a) have occurred. Members shall select a chairperson |
13 | who shall serve for a term of two years. Members appointed by |
14 | the Governor shall have a term coterminous with the appointing |
15 | authority. A member appointed by the county commissioners shall |
16 | have a term coterminous with the chairman of the board of |
17 | commissioners. If a vacancy occurs, the appointing authority who |
18 | originally appointed the management board member whose seat has |
19 | become vacant shall appoint a successor member within 30 days of |
20 | the vacancy. A member appointed to fill a vacancy occurring |
21 | prior to the expiration of a term shall serve the unexpired |
22 | term. |
23 | (e) Organization.--The Governor shall set a date, time and | <-- |
24 | (e) Organization.-- | <-- |
25 | (1) The Governor shall set a date, time and place for |
26 | the initial organization meeting of the management board |
27 | within five days of the appointment of the members of the |
28 | management board. The initial organizational meeting shall be |
29 | held within 15 days of the appointment under subsection (d). |
30 | Members shall elect other officers as they deem necessary. | <-- |
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1 | (2) Members shall elect other officers as they deem | <-- |
2 | necessary. |
3 | (f) Meetings.--Following the initial organizational meeting, |
4 | the management board shall meet as frequently as it deems |
5 | appropriate but at least once during each quarter of the fiscal |
6 | year. A meeting of the management board shall be called by the |
7 | chairperson if a request for a meeting is submitted by the other |
8 | two members of the management board. A majority of the |
9 | management board shall constitute a quorum. All actions of the |
10 | management board shall be taken by a majority of the management |
11 | board. The following statutes shall apply to the management |
12 | board: |
13 | (1) 65 Pa.C.S. Chs. 7 (relating to open meetings) and 11 |
14 | (relating to ethics standards and financial disclosure). |
15 | (2) The act of July 19, 1957 (P.L.1017, No.451), known |
16 | as the State Adverse Interest Act. |
17 | (3) The act of February 14, 2008 (P.L.6, No.3), known as |
18 | the Right-to-Know Law. |
19 | (g) Expenses.--A member shall not receive compensation or |
20 | remuneration but shall be entitled to reimbursement for all |
21 | reasonable and necessary expenses. |
22 | (h) Employees.--The department shall provide administrative |
23 | and other support to the management board. The management board |
24 | may contract for or receive the loan of services of other |
25 | individuals employed by other government agencies. |
26 | (i) Commonwealth agency.--A management board established |
27 | under this chapter shall constitute a public authority and |
28 | instrumentality of the Commonwealth, exercising the powers of |
29 | the Commonwealth. The exercise of the powers of the management |
30 | board shall be deemed to be an essential government function. |
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1 | (j) Sovereign immunity.--Members of the board shall not be | <-- |
2 | liable personally for any obligations of the management board. |
3 | It is declared to be the intent of the General Assembly that the |
4 | board and its members shall enjoy sovereign and official |
5 | immunity as provided in 1 Pa.C.S. § 2310 (relating to sovereign |
6 | immunity reaffirmed; specific waiver) and shall remain immune |
7 | from suit except as provided by and subject to the provisions of |
8 | 42 Pa.C.S. Ch. 85 Subchs. A (relating to general provisions) and |
9 | B (relating to actions against Commonwealth parties). |
10 | Section 604. Powers and duties. |
11 | The Notwithstanding any other provision of law, the | <-- |
12 | management board shall have the following powers and duties: |
13 | (1) To implement the coordinator's plan. |
14 | (2) To make changes to the coordinator's plan as |
15 | necessary to achieve financial stability of the distressed |
16 | city. |
17 | (3) To negotiate intergovernmental cooperation |
18 | agreements with distressed cities between the distressed city | <-- |
19 | and other political subdivisions in order to eliminate and |
20 | avoid deficits, maintain sound budgetary practices and avoid |
21 | interruption of municipal services. |
22 | (4) To make annual reports for submission to the |
23 | department within 120 days after the close of the distressed |
24 | city's fiscal year. |
25 | (5) To have all powers necessary or appropriate to cause |
26 | the sale, lease or other disposition of the distressed city's |
27 | assets under section 605. |
28 | (6) If necessary to implement the coordinator's plan, to | <-- |
29 | exercise all of the powers and authority of the distressed |
30 | city and its elected officials in the management of the |
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1 | distressed city's financial affairs. |
2 | (7) To approve or disapprove contracts and agreements in |
3 | accordance with section 606(a)(2). |
4 | Section 605. Sale of assets. |
5 | (a) Authority.--The management board shall have the |
6 | authority to determine by a majority vote that it is in the best | <-- |
7 | financial interests of the distressed city to sell, lease or |
8 | dispose of assets determined by the management board to be |
9 | nonessential and owned by the distressed city or by an | <-- |
10 | authority, including a controlled authority. |
11 | (b) Sale, lease or other disposition.--The management board |
12 | shall: |
13 | (1) Identify appropriate assets for sale, lease or other |
14 | disposition and direct the appropriate officials of the |
15 | distressed city or controlled authority to take all action |
16 | necessary or appropriate for the consummation of the sale, |
17 | lease or other disposition of assets. |
18 | (2) Direct the sale, lease or other disposal of assets |
19 | in conformity with all applicable competitive bidding |
20 | requirements. |
21 | (3) Undertake a competitive bidding process, determine |
22 | the winning bidder and enter into an agreement of sale, lease |
23 | or other disposition with the winning bidder. |
24 | (4) Take all action necessary to complete the sale, |
25 | lease or disposition of the assets. |
26 | (c) Approval.--The approval of the governing body or chief |
27 | executive officer of the distressed city or controlled authority | <-- |
28 | shall not be required to complete a sale, lease or other |
29 | disposition under this section. |
30 | (d) Proceeds.--The proceeds of the sale, lease or other |
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1 | disposition of assets of a distressed city or controlled | <-- |
2 | authority shall be applied to the payment of any unpaid debt |
3 | obligations owed by the distressed city, as determined by the |
4 | management board. Any proceeds remaining after the payment of |
5 | these obligations shall be applied at the discretion of the |
6 | management board to restructure or to provide escrow for the |
7 | payment of the distressed city's future debt obligations. |
8 | (e) Enforcement.--The powers and authority of a management | <-- |
9 | board under this chapter shall be enforceable by a suit brought |
10 | by the management board in the court of common pleas. The court |
11 | may direct the appropriate officials of a distressed city or |
12 | controlled authority by order of mandamus to perform any act |
13 | necessary to consummate the sale, lease or other disposition of |
14 | assets as required under this chapter. |
15 | (e) Enforcement.--Notwithstanding any other provision of | <-- |
16 | law, the management board may, if necessary to implement the |
17 | coordinator's plan, exercise all the powers and authority of the |
18 | distressed city and its elected officials in the management of |
19 | the distressed city's financial affairs and the implementation |
20 | of the coordinator’s plan, including the power and authority to |
21 | sell, lease or otherwise dispose of the distressed city's assets |
22 | under this section. The management board may direct the |
23 | officials of the distressed city or controlled authority to |
24 | perform any act deemed necessary by the board to properly manage |
25 | the distressed city's financial affairs and implement the |
26 | coordinator's plan. The management board's directives may be |
27 | enforced by order of mandamus in the court of common pleas where |
28 | the distressed city is situated. |
29 | (f) Removal.--If a management board determines that a |
30 | controlled authority is not taking the action necessary to sell, |
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1 | lease or dispose of assets, the management board may remove the |
2 | management board members of the controlled authority and appoint | <-- |
3 | new management board members. | <-- |
4 | Section 606. Effect on contracts. |
5 | (a) Contracts and collective bargaining agreements.-- |
6 | (1) A contract or collective bargaining agreement in |
7 | existence in a distressed city prior to the approval of a |
8 | coordinator's plan or the establishment of a management board |
9 | shall remain in effect after approval of the plan until the |
10 | contract or agreement expires. |
11 | (2) Following approval of the coordinator's plan, a |
12 | distressed city shall execute contracts and collective |
13 | bargaining agreements in compliance with the plan. If a |
14 | management board has been appointed, the distressed city |
15 | shall execute contracts and agreements only with the approval |
16 | of the management board. |
17 | (b) Arbitration.--Following approval of the coordinator's |
18 | plan or the appointment of a management board, a determination |
19 | of a board of arbitration established under the act of June 24, |
20 | 1968 (P.L.237, No.111), referred to as the Policemen and Firemen |
21 | Collective Bargaining Act, providing for an increase in wages or |
22 | fringe benefits of any employee of a distressed city shall, in |
23 | addition to considering any standard or factor required to be |
24 | considered by law, take into consideration and accord |
25 | substantial weight to: |
26 | (1) The approved financial coordinator's plan or the | <-- |
27 | determination of the management board. |
28 | (2) Relevant market factors, such as the financial |
29 | situation of the distressed city, inflation, productivity, |
30 | size of work force and pay and benefit levels in economically |
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1 | and demographically comparable political subdivisions. |
2 | (c) Determination.--A determination shall be in writing and |
3 | a copy shall be forwarded to each party to the dispute and to |
4 | the board of arbitration. A determination of the board of |
5 | arbitration which provides for an increase in wages or fringe |
6 | benefits of an employee of an assisted city shall state with |
7 | specificity in writing all factors which the board of |
8 | arbitration took into account in considering and giving |
9 | substantial weight to the factors referred to under subsection |
10 | (b)(1). |
11 | (d) Parties.--A party to a proceeding before a board of |
12 | arbitration or the management board may appeal to the court of |
13 | common pleas to review: |
14 | (1) Consideration under subsection (b)(1). |
15 | (2) Failure of the board of arbitration to issue a |
16 | determination under subsection (c). |
17 | (e) Appeal.--An appeal under subsection (d) must be |
18 | commenced not later than 30 days after the issuance of a final |
19 | determination by the board of arbitration. |
20 | (f) Decision.--The decision of the board of arbitration |
21 | shall be vacated and remanded to the board of arbitration if the |
22 | court finds: |
23 | (1) That the board of arbitration failed to take into |
24 | consideration and accord substantial weight to the factors |
25 | referred to under subsection (b). |
26 | (2) That the board of arbitration has failed to issue a |
27 | determination under subsection (c). |
28 | (g) Proposed revision.--If, after exhaustion of all appeals, |
29 | the final arbitration award is not in compliance with the |
30 | approved financial coordinator's plan or is unacceptable to the | <-- |
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1 | management board, the award shall be void. |
2 | Section 607. Limitation on bankruptcy. |
3 | Notwithstanding any other provision of law, including section |
4 | 261, no distressed city may file a petition for relief under 11 |
5 | U.S.C. Ch. 9 (relating to adjustment of debts of a municipality) |
6 | or any other Federal bankruptcy law, and no government agency |
7 | may authorize the distressed city to become a debtor under 11 |
8 | U.S.C. Ch. 9 or any other Federal bankruptcy law. |
9 | Section 3. The heading of Chapter 6 and section 601 of the |
10 | act are renumbered to read: |
11 | CHAPTER [6] 20 |
12 | TECHNICAL PROVISIONS |
13 | Section [601] 2001. Repeals. |
14 | Section 2501-C(e) and (f) of the act of April 9, 1929 |
15 | (P.L.177, No.175), known as The Administrative Code of 1929, are |
16 | repealed insofar as they are inconsistent with this act. |
17 | The act of June 11, 1935 (P.L.323, No.146), entitled "An act |
18 | designating the Department of Internal Affairs as the agency of |
19 | the Commonwealth to approve or disapprove petitions to courts, |
20 | and plans for the readjustment of debts of political |
21 | subdivisions, under the act of Congress relating to the |
22 | bankruptcy of political subdivisions; and defining the powers |
23 | and duties of said department in relation thereto," is repealed |
24 | insofar as it relates to a municipality as defined in section |
25 | 103 of this act. |
26 | Section 4. Section 602 of the act, amended December 19, 1988 |
27 | (P.L.1272, No.157), is renumbered to read: |
28 | Section [602] 2002. Expiration. |
29 | Section 203(a)(5) shall expire upon publication in the |
30 | Pennsylvania Bulletin of the notice required under section |
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1 | 121(f). |
2 | Section 5. Section 603 of the act is renumbered to read: |
3 | Section [603] 2003. Effective date. |
4 | This act shall take effect in 60 days. |
5 | Section 6. The provisions of this act are severable. If any |
6 | provision of this act or its application to any person or |
7 | circumstance is held invalid, the invalidity shall not affect |
8 | other provisions or applications of this act which can be given |
9 | effect without the invalid provision or application. |
10 | Section 7. This act shall take effect immediately. |
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