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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY HICKERNELL, BOYD, CALTAGIRONE, CREIGHTON, CUTLER, DENLINGER, GEIST, GINGRICH, GROVE, HENNESSEY, HORNAMAN, KILLION, KORTZ, MILLARD, MILLER, MURT, ROCK, ROSS, SAYLOR, SCAVELLO, SIPTROTH, STERN, TRUE AND CLYMER, FEBRUARY 26, 2009 |
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| REFERRED TO COMMITTEE ON LOCAL GOVERNMENT, FEBRUARY 26, 2009 |
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| AN ACT |
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1 | Amending the act of February 1, 1966 (1965 P.L.1656, No.581), |
2 | entitled "An act concerning boroughs, and revising, amending |
3 | and consolidating the law relating to boroughs," further |
4 | providing for investment of borough funds. |
5 | The General Assembly of the Commonwealth of Pennsylvania |
6 | hereby enacts as follows: |
7 | Section 1. Section 1316 of the act of February 1, 1966 (1965 |
8 | P.L.1656, No.581), known as The Borough Code, amended or added |
9 | November 2, 1979 (P.L.458, No.94) and December 13, 1982 (P.L. |
10 | 1145, No.261), is amended to read: |
11 | Section 1316. Investment of Funds.--(a) Council shall |
12 | invest borough funds consistent with sound business practice. |
13 | (b) Council shall provide for an investment program subject |
14 | to restrictions contained in this act and in any other |
15 | applicable statute and any rules and regulations adopted by |
16 | council. |
17 | (c) Authorized types of investments for borough funds shall |
18 | be: |
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1 | (i) United States Treasury bills. |
2 | (ii) Short-term obligations of the United States Government |
3 | or its agencies or instrumentalities. |
4 | (iii) Deposits in savings accounts or time deposits, other |
5 | than certificates of deposit, or share accounts of institutions |
6 | insured by the Federal Deposit Insurance Corporation or the |
7 | Federal Savings and Loan Insurance Corporation or the National |
8 | Credit Union Share Insurance Fund or the Pennsylvania Deposit |
9 | Insurance Corporation or the Pennsylvania Savings Association |
10 | Insurance Corporation to the extent that such accounts are so |
11 | insured, and, for any amounts above the insured maximum, |
12 | provided that approved collateral as provided by law therefore |
13 | shall be pledged by the depository. |
14 | (iv) Obligations of the United States of America or any of |
15 | its agencies or instrumentalities backed by the full faith and |
16 | credit of the United States of America, the Commonwealth of |
17 | Pennsylvania or any of its agencies or instrumentalities backed |
18 | by the full faith and credit of the Commonwealth, or of any |
19 | political subdivision of the Commonwealth of Pennsylvania or any |
20 | of its agencies or instrumentalities backed by the full faith |
21 | and credit of the political subdivision. |
22 | (v) Shares of an investment company registered under the |
23 | Investment Company Act of 1940, whose shares are registered |
24 | under the Securities Act of 1933, provided that the only |
25 | investments of that company are in the authorized investments |
26 | for borough funds listed in (i) through (iv). |
27 | (vi) Certificates of deposit purchased from institutions |
28 | insured by the Federal Deposit Insurance Corporation or the |
29 | Federal Savings and Loan Insurance Corporation or the National |
30 | Credit Union Share Insurance Fund or the Pennsylvania Deposit |
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1 | Insurance Corporation or the Pennsylvania Savings Association |
2 | Insurance Corporation to the extent that such accounts are so |
3 | insured. However, for any amounts above the insured maximum, |
4 | such certificates of deposit shall be collateralized by a pledge |
5 | or assignment of assets of the institution, and such collateral |
6 | may include loans (including interest in pools of loans) secured |
7 | by first mortgage liens on real property. Certificates of |
8 | deposit purchased from commercial banks shall be limited to an |
9 | amount equal to twenty percent of a bank's total capital and |
10 | surplus. Certificates of deposit purchased from savings and loan |
11 | associations or savings banks shall be limited to an amount |
12 | equal to twenty percent of an institution's assets minus |
13 | liabilities. |
14 | (vii) Any investment authorized by 20 Pa.C.S. Ch.73 |
15 | (relating to fiduciaries investments) shall be an authorized |
16 | investment for any pension or retirement fund. |
17 | (viii) Bankers' acceptances issued by domestic banks to |
18 | secure international trade transactions, provided that the |
19 | bankers' acceptances are guaranteed by the full faith and credit |
20 | of the domestic bank and the United States of America importer. |
21 | (ix) Commercial paper and prime commercial paper as defined |
22 | in subsection (e), provided that the treasurer shall not, at any |
23 | time, have invested in prime commercial paper more than an |
24 | aggregate of such total sum as the council shall have |
25 | prescribed. |
26 | (d) In making investments of borough funds, council shall |
27 | have authority: |
28 | (i) To permit assets pledged as collateral under subsection |
29 | (c)(iii), to be pooled in accordance with the act of August 6, |
30 | 1971 (P.L.281, No.72), entitled "An act standardizing the |
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1 | procedures for pledges of assets to secure deposits of public |
2 | funds with banking institutions pursuant to other laws; |
3 | establishing a standard rule for the types, amounts and |
4 | valuations of assets eligible to be used as collateral for |
5 | deposits of public funds; permitting assets to be pledged |
6 | against deposits on a pooled basis; and authorizing the |
7 | appointment of custodians to act as pledgees of assets," |
8 | relating to pledges of assets to secure deposits of public |
9 | funds. |
10 | (ii) To combine moneys from more than one fund under borough |
11 | control for the purchase of a single investment, provided that |
12 | each of the funds combined for the purpose shall be accounted |
13 | for separately in all respects and that the earnings from the |
14 | investment are separately and individually computed and |
15 | recorded, and credited to the accounts from which the investment |
16 | was purchased. |
17 | (iii) To join with one or more other political subdivisions |
18 | and municipal authorities in accordance with [the act of July |
19 | 12, 1972 (P.L.762, No.180), entitled "An act relating to |
20 | intergovernmental cooperation,"] 53 Pa.C.S. Ch. 23 Subch. A |
21 | (relating to intergovernmental cooperation) in the purchase of a |
22 | single investment, provided that the requirements of subclause |
23 | (ii) on separate accounting of individual funds and separate |
24 | computation, recording and crediting of the earnings therefrom |
25 | are adhered to. |
26 | (e) As used in this section, "commercial paper" shall mean |
27 | unsecured promissory notes issued at a discount from par by any |
28 | industrial, common carrier, public utility or finance company |
29 | and "prime commercial paper" shall mean notes issued by |
30 | corporations whose credit has been approved by a nationally |
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1 | recognized credit rating service. The treasurer shall have |
2 | obtained the following prior to any commitment to purchase |
3 | commercial paper: |
4 | (i) A certification or other evidence that the commercial |
5 | paper is rated prime by a nationally recognized credit rating |
6 | service. |
7 | (ii) A certification or other evidence that the commercial |
8 | paper proposed to be delivered is not subordinate to any other |
9 | debt of the issuer. |
10 | (iii) A certificate or other evidence that there is no |
11 | litigation pending or threatened affecting the commercial paper. |
12 | (iv) A certificate or other evidence that the issuer is not |
13 | in default as to the payment of principal and interest upon any |
14 | of its outstanding obligations. |
15 | (v) A certificate or other evidence that the issuer was |
16 | incorporated within the United States of America, is transacting |
17 | business within the United States of America, and has assets of |
18 | one billion dollars ($1,000,000,000) or more, or is a wholly |
19 | owned subsidiary of a Pennsylvania corporation having assets of |
20 | one billion dollars ($1,000,000,000) or more. |
21 | Section 2. This act shall take effect in 60 days. |
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