Bill Text: PA SB1151 | 2011-2012 | Regular Session | Amended

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Bill Title: Further providing for purpose and legislative intent; providing for fiscal emergencies in third class cities and for receivership for third class cities; and making editorial changes.

Spectrum: Partisan Bill (Republican 12-0)

Status: (Passed) 2011-10-20 - Act No. 79 [SB1151 Detail]

Download: Pennsylvania-2011-SB1151-Amended.html

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PRIOR PRINTER'S NOS. 1372, 1407, 1435, 1447, 1605 PRINTER'S NO. 1665
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 1151 Session of2011
INTRODUCED BY PICCOLA, PILEGGI, EARLL, VANCE, GORDNER, WAUGH, ALLOWAY, BAKER, ERICKSON, ORIE, BROWNE AND TOMLINSON, JUNE 17, 2011
SENATE AMENDMENTS TO HOUSE AMENDMENTS, OCTOBER 17, 2011
AN ACT
Amending the act of July 10, 1987 (P.L.246, No.47), entitled "An
act empowering the Department of Community Affairs to declare
certain municipalities as financially distressed; providing
for the restructuring of debt of financially distressed
municipalities; limiting the ability of financially
distressed municipalities to obtain government funding;
authorizing municipalities to participate in Federal debt
adjustment actions and bankruptcy actions under certain
circumstances; and providing for consolidation or merger of
contiguous municipalities to relieve financial distress,"
further providing for purpose and legislative intent;
providing for fiscal emergencies in third class cities and
for receivership for third class cities; and making editorial
changes.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 102 of the act of July 10, 1987 (P.L.246,
No.47), known as the Municipalities Financial Recovery Act, is
amended to read:
Section 102. Purpose and legislative intent.
(a) Policy.--It is hereby declared to be a public policy of
the Commonwealth to foster fiscal integrity of municipalities so
that they provide for the health, safety and welfare of their
citizens; pay [due] principal and interest on their debt <--
obligations when due; meet financial obligations to their
employees, vendors and suppliers; and provide for proper
financial accounting procedures, budgeting and taxing practices.
The failure of a municipality to do so is hereby determined to
affect adversely the health, safety and welfare not only of the
citizens of the municipality but also of other citizens in this
Commonwealth.
(b) Legislative intent.--The General Assembly finds and
declares as follows:
(1) It is the intent of the General Assembly to:
(i) Enact procedures and provide powers and
guidelines to ensure fiscal integrity of municipalities
while leaving principal responsibility for conducting the
governmental affairs of a municipality, including
choosing the priorities for and manner of expenditures
based on available revenues, to the charge of its elected
officials, consistent with the public policy set forth in
this section.
(ii) Enact procedures for the adjustment of
municipal debt by negotiated agreement with creditors.
(iii) Provide for the exercise of the Commonwealth's
sovereign and plenary police power in emergency fiscal
conditions to protect the health, safety and welfare of a
municipality's citizens when local officials are
unwilling or unable to accept a solvency plan developed
for the benefit of the community.
(2) [The General Assembly further recognizes that
changing] Changing and deteriorating economic conditions,
developing technologies and attendant unemployment erode
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local tax bases and threaten essential municipal services.
Under such circumstances, [the General Assembly believes
that] such distressed governmental units may no longer be
viable and that the citizens of those communities should be
granted the opportunity to voluntarily consolidate or merge
their municipalities with other municipalities in an effort
to allow municipal boundaries to reflect the geographic and
economic realities of a distressed area, to merge a common
community of interest, to take advantage of economies of
scale in providing services and to create an expanded revenue
base to provide necessary public services to the citizens of
financially distressed municipalities.
(3) Policies of certain municipalities are so
ineffective and the financial conditions so severe that the
provision of vital and necessary services is threatened.
(4) Sustained failure of a municipality to enact or
implement a fiscal plan to adequately address or prevent
insolvency after repeated opportunities to do so:
(i) constitutes a fiscal emergency; and
(ii) signifies:
(A) a breakdown in the function of municipal
government;
(B) a dereliction of its elected officials'
paramount public duty to safeguard the health, safety
and welfare of its citizens; and
(C) a threat to the fiscal stability of
neighboring communities.
(5) The Governor must act, in the face of a fiscal <--
emergency under paragraph (4)(i) and dereliction of official
duty under paragraph (4)(ii)(B), pursuant Pursuant to the <--
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Commonwealth's paramount right and duty to maintain law and
order and protect and preserve the health, safety and welfare
of its citizens and ensure compliance with this act under
Article IX of the Constitution of Pennsylvania, the Governor <--
is authorized to act in the face of a fiscal emergency under
paragraph (4)(i) and dereliction of official duty under
paragraph (4)(ii)(B).
Section 2. The act is amended by adding chapters to read:
CHAPTER 6
FISCAL EMERGENCIES IN CITIES OF THE THIRD CLASS
Section 601. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Authority." A municipal authority, parking authority or any
other authority or corporate entity that is directly or
indirectly controlled by a distressed city or to which a
distressed city has power of appointment. The term shall not <--
include a joint municipal authority.
"City." A city of the third class.
"Debt obligations." Any obligation to pay money, including
amounts owed for payments relating to lease rental debt, debt
service, bonds, notes, guarantees for bonds or notes, trust
indentures, contracts or other agreements. <--
"Distressed city." A city which has been determined to be
financially distressed under section 203(f).
"Fiscal emergency." A determination made by the Governor
under section 602(b).
"Insolvent." Unable to meet all financial obligations as
they become due, including payment of debt obligations.
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"Vital and necessary services." Basic and fundamental
municipal services, including any of the following:
(1) Police and fire services.
(2) Ambulance and rescue services.
(3) Water supply and distribution.
(4) Wastewater services.
(5) Refuse collection and disposal.
(6) Snow removal.
(7) Fulfillment of financial obligations necessary for <--
the continued provision of one or more basic and fundamental
municipal services, including payroll Payroll and pension <--
obligations, lease rental debt and all other debt <--
obligations.
(8) Fulfillment of payment of debt obligations or any <--
other financial obligations.
Section 602. Declaration of fiscal emergency.
(a) Fiscal emergency.--A The Governor determines a fiscal <--
emergency exists if the distressed city:
(1) (i) is insolvent or is projected to be insolvent
within 180 days or less; or
(ii) is unable to ensure the continued provision of
vital and necessary services; and
(2) (i) has failed to adopt or fully implement the <--
coordinator's plan; or
(ii) has failed to adopt or fully implement an <--
alternative plan that the secretary has approved under
section 246.
(b) Governor.--Upon making a determination that a state of
fiscal emergency exists, the Governor may declare a state of
fiscal emergency within the distressed city. Immediately upon
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making the declaration, the Governor shall:
(1) Provide written notice of the declaration to the
governing body and chief executive officer of the distressed <--
city along with a concise statement of facts supporting the
determination.
(2) Direct the secretary to, within ten days of the
Governor's declaration, develop an emergency action plan to
ensure that vital and necessary services are maintained
within the city during the state of fiscal emergency.
(c) Secretary.--In developing the emergency action plan, the
secretary shall consider the financial plan prepared by the
coordinator under Subchapter C of Chapter 2 and any other
available plan or information the secretary deems appropriate
and may employ financial or legal experts to assist in
addressing the fiscal emergency. Notwithstanding any law to the
contrary, the employment of such experts shall not be subject to
contractual competitive bidding procedures.
Section 603. Notification by the secretary.
(a) Notice.--Upon completion of the emergency action plan,
the secretary shall cause the plan to be posted on the
department's Internet website and shall provide written notice
of the emergency action plan by overnight delivery service,
providing proof of receipt, to all members of the governing body
and the chief executive officer of the distressed city.
(b) Publication.--The secretary shall publish once in a
newspaper of general circulation notice that the emergency
action plan has been completed. The notice shall specify the
Internet address of the department's website where the plan is
posted.
Section 604. Powers of the Governor.
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(a) Powers.--During the state of fiscal emergency, the
Governor may exercise the authority of the elected or appointed
officials of the distressed city or authority as necessary to
ensure the provision of vital and necessary services and may
delegate the authority to the secretary or a designee of the
secretary. The emergency powers of the Governor shall include
the following:
(1) The power to collect funds payable to the distressed
city and authority and use those funds to pay for vital and
necessary services.
(2) The power to obtain emergency financial aid for the
distressed city and authority under Chapter 3 to pay for
vital and necessary services.
(3) The power to enter into contracts and agreements on
behalf of the distressed city and authority to pay for vital
and necessary services.
(4) The power to modify the emergency action plan as
necessary to ensure the provision of vital and necessary
services.
(5) Any other power of the elected or appointed
officials of the distressed city or authority to ensure the
provision of vital and necessary services.
(b) Orders.--The Governor may issue an order to an elected
or appointed official of the distressed city or an authority to
implement any provision of the emergency action plan or refrain
from taking any action that would interfere with the powers
granted to the Governor or the goals of the plan. An order
issued under this subsection shall be enforceable under section
606.
(c) Authorization prohibited.--Neither this chapter nor the
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emergency action plan shall be interpreted to authorize the
Governor to:
(1) unilaterally levy taxes;
(2) unilaterally abrogate, alter or otherwise interfere
with a lien, charge, covenant or relative priority that is:
(i) held by a holder of a debt obligation of a
distressed city; and
(ii) granted by the contract, law, rule or
regulation governing the debt obligation.
(3) Unilaterally impair or modify existing bonds, notes,
municipal securities or other uncontested lawful contractual <--
or legal obligations of the distressed city or authority, <--
except as otherwise ordered by a court of competent
jurisdiction.
(4) Authorize the use of the proceeds of the sale,
lease, conveyance, assignment or other use or disposition of
the assets of the distressed city or authorities in a manner
contrary to section 707.
(5) Pledge the full faith and credit of the
Commonwealth.
Section 605. Elected and appointed officials.
During a fiscal emergency, the authorities and appointed and <--
elected officials of the distressed city shall continue to carry
out the duties of their respective offices, except that no
decision or action shall conflict with an emergency action plan,
order or exercise of power by the Governor under section 604.
Section 606. Mandamus.
The Governor may petition Commonwealth Court to issue a writ
of mandamus upon any elected or appointed official of the
distressed city or authority to secure compliance with an order
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issued under section 604(b). The court shall grant the relief
requested within 14 days of the filing of the petition if it
determines that the order was issued in compliance with this
chapter.
Section 607. Consent agreement.
(a) Negotiations.--Within eight days of the declaration of a
fiscal emergency, the governing body and chief executive officer
of the distressed city shall convene a special public meeting to
negotiate a consent agreement. The meeting shall be attended by
the secretary or secretary's designee. Negotiations among
creditors and any of the parties in this subsection shall be
conducted in accordance with section 223(b).
(b) Contents.--
(1) The consent agreement shall incorporate a plan
setting forth measures designed to provide long-term
financial stability to the distressed city after the
termination of the fiscal emergency.
(2) The consent agreement shall include all of the
following:
(i) Continued provision of vital and necessary
services.
(ii) Payment of the lawful financial obligations of <--
the distressed city and authority. This subparagraph
includes debt obligations, municipal securities, lease
rental obligations, uncontested legal obligations and <--
consensual modifications of existing obligations, except <--
as otherwise ordered by a court of competent
jurisdiction.
(iii) Timely deposit of required payments to the
pension fund for the distressed city and each authority
20110SB1151PN1665 - 9 -
or the fund in which the distressed city and each
authority participates.
(iv) Legislative and administrative actions to be
taken by the elected or appointed officials of the
distressed city during the term of the consent agreement.
(3) The consent agreement may include:
(i) The sale, lease, conveyance, assignment or other
use or disposition of the assets of the distressed city
or authority.
(ii) Approval, modification, rejection,
renegotiation or termination of contracts or agreements
of the distressed city or authorities.
(iii) Execution of new contracts or agreements.
(4) The consent agreement may not include any of the
following:
(i) Projections of revenue from a tax or tax rate
not currently authorized by law.
(ii) Provisions that unilaterally abrogate, alter or
otherwise interfere with a lien, charge, covenant or
relative priority, that is:
(A) held by a holder of a debt obligation of a
distressed city; and
(B) granted by the contract, law, rule or
regulation governing the debt obligation.
(iii) Provisions that unilaterally impair or modify
existing bonds, notes or, municipal securities or other <--
lawful contractual or legal obligations of the distressed
city or authority, except as otherwise ordered by a court
of competent jurisdiction.
(iv) Provisions that authorize the use of the
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proceeds of the sale, lease, conveyance, assignment or
other use or disposition of the assets of the distressed
city or authorities in a manner contrary to section 707.
(v) Any increase in the rate of an earned income tax
imposed on nonresident workers.
(c) Ordinance.--Notwithstanding any law to the contrary, the
following shall apply:
(1) Upon approval by a majority vote of the governing <--
body of the distressed city, the consent agreement shall be
presented to the secretary within 20 days of the declaration
of fiscal emergency.
(2) The secretary shall approve or disapprove the
consent agreement within three days.
(3) If the secretary determines that the consent
agreement is sufficient to overcome the distressed city's
financial distress and approves the agreement, the governing
body shall enact the consent agreement in the form of an
ordinance within seven days of approval by the secretary.
(4) The ordinance shall provide that, in the event of a
breach or unilateral modification of the consent decree by
the governing body or an elected or appointed official, the
Governor may institute or reinstitute proceedings under
Chapter 7.
(d) Consent to proceedings under Chapter 7.-–In addition to
breach or modification of the consent agreement under subsection
(c), the following shall be deemed consent to proceedings under
Chapter 7:
(1) Failure of the governing body of the distressed city
to convene, or the failure of a quorum of the governing body
to participate in, a special public meeting required by
20110SB1151PN1665 - 11 -
subsection (a).
(2) Failure of the governing body or chief executive
officer to enact a valid ordinance under subsection (c).
(3) Failure of the distressed city to comply with the
consent agreement or provision of an ordinance enacted under
subsection (c).
(4) Enactment by the distressed city of an amendment to
the ordinance enacted in subsection (c) in violation of
subsection (e).
(e) Amendment.--The ordinance may be amended upon the
approval of the secretary.
(f) Collective bargaining.--A collective bargaining
agreement or arbitration settlement executed following enactment
of an ordinance under this section is void to the extent that it <--
violates, expands or diminishes may not in any manner violate, <--
expand or diminish the provisions of the consent agreement.
Section 608. Termination of fiscal emergency and suspension of
powers.
(a) Financial emergency.--A fiscal emergency shall end upon
certification by the secretary that the city is no longer
financially distressed.
(b) Governor's powers.--The emergency powers of the Governor
under this chapter shall be suspended upon the enactment and
continued implementation of an ordinance under section 607 or
entry of a judicial order appointing a receiver under section
702.
Section 609. Restrictions.
(a) Earned income tax on nonresidents.--A distressed city
subject to this chapter or Chapter 7 may not petition a court of
common pleas for an increase in the rate of an earned income tax
20110SB1151PN1665 - 12 -
imposed on nonresident workers under section 123(c) until the
secretary terminates the distress status of the city under
section 253.
(b) Municipal debt adjustment.--A distressed city subject to
this chapter or Chapter 7 may not file a municipal debt
adjustment action under Federal law the Bankruptcy Code (11 <--
U.S.C. § 101 et seq.) except to the extent authorized under
Chapter 7.
Section 610. Applicability.
(a) Statement.--
(1) This chapter shall apply only to distressed cities.
(2) Except as set forth in subsection (b), nothing in
this chapter is intended to limit or otherwise abrogate the
applicability of any other part of this act.
(b) Conflict.--If there is a conflict between a provision of
this chapter and any other provision of this act, the provision
of this chapter shall prevail.
CHAPTER 7
RECEIVERSHIP IN CITIES OF THE THIRD CLASS
Section 701. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Authority." A municipal authority, parking authority or any
other authority or corporate entity that is directly or
indirectly controlled by a distressed city or to which a
distressed city has power of appointment. The term shall not <--
include a joint municipal authority.
"City." A city of the third class.
"Debt obligations." Any obligation to pay money, including
20110SB1151PN1665 - 13 -
amounts owed for payments relating to lease rental debt, debt
service, bonds, notes, guarantees for bonds or notes, trust
indentures, contracts or other agreements. <--
"Distressed city." A city which has been determined to be
financially distressed under section 203(f).
"Fiscal emergency." A determination made by the Governor
under section 602(b).
"Insolvent." Unable to meet all financial obligations as
they become due, including payment of debt obligations.
"Vital and necessary services." Basic and fundamental
municipal services, including any of the following:
(1) Police and fire services.
(2) Ambulance and rescue services.
(3) Water supply and distribution.
(4) Wastewater services.
(5) Refuse collection and disposal.
(6) Snow removal.
(7) Fulfillment of financial obligations necessary for <--
the continued provision of one or more basic and fundamental
municipal services, including payroll Payroll and pension <--
obligations, lease rental debt and all other debt <--
obligations.
(8) Fulfillment of payment of debt obligations or any <--
other financial obligations.
Section 702. Receivership.
(a) Receiver.--Following the issuance of a declaration of
fiscal emergency under section 602(b), the Governor may direct
the secretary to file a petition in Commonwealth Court to
appoint the individual named in the petition as a receiver for
the distressed city. The court shall have no authority to
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appoint anyone other than the individual named in the petition
as the receiver.
(b) Service and notice.--
(1) The secretary shall serve the petition upon:
(i) the governing body of the distressed city;
(ii) the chief executive officer of the distressed
city; and
(iii) the governing body of each authority.
(2) The secretary must publish notice of the filing of
the petition once in a newspaper of general circulation.
(c) Hearing.--Within 15 days Upon notification of the <--
Governor of the failure of the distressed city to adopt a valid
ordinance under section 607, the Commonwealth Court shall
conduct a hearing within 15 days on the petition. <--
(d) Determination.--No later than 60 days following the
filing of a petition under this section, the court shall issue
an order under subsection (e) if it finds by a preponderance of
the evidence that all of the following apply:
(1) Thirty days have passed since the declaration of a
fiscal emergency.
(2) There has been a failure by:
(i) the governing body of the distressed city to
adopt a consent agreement acceptable to the secretary an <--
ordinance under section 607;
(ii) the governing body of the distressed city to
fully implement a consent agreement acceptable to the <--
secretary an ordinance under section 607; or <--
(iii) an elected or appointed official of the
distressed city or authority to strictly comply with an
order issued by the Governor under section 604.
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(3) A fiscal emergency under section 602(a) continues to
exist.
(e) Order.--An order issued under subsection (e) shall:
(1) set forth the findings under subsection (d);
(2) grant the petition and declares declare the <--
distressed city to be in receivership;
(3) appoint the individual named in the petition to be
the receiver for a period not to exceed two years, subject to
extension under section 710(b);
(4) direct the receiver to develop a recovery plan
within 30 days under section 703 and submit it to the court, <--
the secretary, the governing body and chief executive officer <--
of the distressed city and the secretary; and <--
(5) require and empower the receiver to implement the
emergency action plan developed by the secretary under
section 602 until a recovery plan developed by the receiver
is approved by the court under section 703.
(f) Additional actions.-- <--
(1) The Governor may direct the secretary to file a
petition in Commonwealth Court to appoint an individual named
in the petition as a receiver for the distressed city if the
distressed city fails to comply with or has amended the
ordinance without the approval of the secretary under section
607(d)(3) or (4).
(2) The court shall conduct a hearing on the petition
under paragraph (1) within 15 days of the filing of the
petition.
(3) No later than 60 days following the filing of the
petition under paragraph (1), the court shall issue an order
under subsection (e) if it finds by a preponderance of the
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evidence that the distressed city has failed to comply with
section 607(d)(3) or (4).
Section 703. Recovery plan.
(a) Issuance.--Within 30 days of the appointment of the
receiver, the recovery plan required under section 702(e)(4)
shall be furnished to Commonwealth Court, the secretary and the
governing body and chief executive officer of the distressed
city.
(b) Contents.--The receiver shall consider the plan prepared
by the coordinator under section 241 and any other existing
alternate plans in the development of the recovery plan. The
following shall apply:
(1) The recovery plan shall provide for all of the
following:
(i) Continued provision of vital and necessary
services.
(ii) Payment of the lawful financial obligations of <--
the distressed city and authorities. This subparagraph
includes debt obligations, municipal securities, lease
rental obligations, uncontested legal obligations and <--
consensual modifications of existing obligations.
(iii) Timely deposit of required payments to the
pension fund in which the distressed city and each
authority participates.
(2) The recovery plan may inlcude include: <--
(i) the sale, lease, conveyance, assignment or other
use or disposition of the assets of the distressed city
or authority;
(ii) the approval, modification, rejection,
renegotiation or termination of contracts or agreements
20110SB1151PN1665 - 17 -
of the distressed city or authorities, except to the <--
extent prohibited by the Constitutions of the United
States and Pennsylvania;
(iii) the execution of new contracts or agreements;
and
(iv) other information the receiver deems
appropriate.
(c) Restrictions.--The recovery plan may not do any of the
following:
(1) Unilaterally levy taxes.
(2) Unilaterally abrogate, alter or otherwise interfere
with a lien, charge, covenant or relative priority that is:
(i) held by a holder of a debt obligation of a
distressed city; and
(ii) granted by the contract, law, rule or
regulation governing the debt obligation.
(3) Unilaterally impair or modify existing bonds, notes
or, municipal securities or other lawful contractual or legal <--
obligations of the distressed city or authority, except as
otherwise ordered by a court of competent jurisdiction.
(4) Authorize the use of the proceeds of the sale,
lease, conveyance, assignment or other use or disposition of
the assets of the distressed city or authority in a manner
contrary to section 707.
(d) Confirmation.--Commonwealth Court shall conduct a
hearing on the recovery plan within 30 days of the receipt of
the plan from the receiver. The court shall confirm the plan
within 60 days of the receipt of the plan unless it finds clear
and convincing evidence that the plan is arbitrary, capricious
or wholly inadequate to alleviate the fiscal emergency in the
20110SB1151PN1665 - 18 -
distressed city.
(e) Modification of plan.--The receiver shall notify the
Commonwealth Court of any modification to the plan. The court
may conduct a hearing on the modification within 30 days of its
receipt. The court shall confirm the modification within 60 days
of receipt of notification of the modification unless it finds <--
clear and convincing evidence that the recovery plan as modified
is arbitrary, capricious or wholly inadequate to alleviate the
fiscal emergency in the distressed city.
Section 704. Confirmation.
(a) Effect of confirmation.--The confirmation of the
recovery plan and any modification to the receiver's plan under
section 703 shall have the effect of:
(1) imposing on the elected and appointed officials of
the distressed city or an authority a mandatory duty to
undertake the acts set forth in the recovery plan;
(2) suspending the authority of the elected and
appointed officials of the distressed city or an authority to
exercise power on behalf of the distressed city or authority
pursuant to law, charter, ordinance, rule or regulation to
the extent that the power would interfere with the powers
granted to the receiver or the goals of the recovery plan;
and
(3) superseding the emergency action plan developed by
the secretary under section 602.
(b) Form of government.--Confirmation of the recovery plan
and any modification to the plan under section 703 shall not be
construed to:
(1) change the form of government of the distressed city
or an authority; or
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(2) except as set forth in subsection (a), affect powers
and duties of elected and appointed officials of the
distressed city or an authority.
(c) Collective bargaining.--A collective bargaining
agreement or arbitration settlement executed after confirmation
of a recovery plan is void to the extent that it violates, <--
expands or diminishes may not in any manner violate, expand or <--
diminish the provisions of the recovery plan.
Section 705. Receiver.
(a) Appointment.--The court shall appoint the receiver as
provided under section 702.
(b) Qualifications.--The receiver shall have the following
qualifications:
(1) Have a minimum of five years' experience and
demonstrable expertise in business, financial or local or
state budgetary matters.
(2) Be a resident of this Commonwealth for at least one
year prior to the appointment.
(c) Vacancy.--A vacancy in the office of the receiver shall
be filled in the same manner as the original appointment.
(d) Revocation.--Upon application to Commonwealth Court by <--
the secretary, the appointment of the receiver shall be revoked
and the receiver shall be replaced by the individual named in
the application. The court shall have no authority to appoint
anyone other than the individual named in the application as the
receiver.
(e) Compensation and expenses.--The receiver's compensation
and reimbursement for actual and necessary expenses shall be
paid by the Commonwealth. Compensation shall be established by
the secretary.
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(f) Prohibitions.--The receiver shall not:
(1) Seek or hold a position as any other elected or
appointed public official within this Commonwealth or as a
political party officer during the term of the receivership.
(2) Seek election as a public official or political
party officer for one year after the person's service as
receiver has ended.
(3) Engage in any conduct prohibited by the act of July
19, 1957 (P.L.1017, No.451), known as the State Adverse
Interest Act, or 65 Pa.C.S. Ch. 11 (relating to ethics
standards and financial disclosure).
(g) Liability.--The receiver shall not be liable personally
for any obligations of the distressed city or authority. It is <--
declared to be the intent of the General Assembly that the
receiver shall enjoy sovereign and official immunity as provided
in 1 Pa.C.S. § 2310 (relating to sovereign immunity reaffirmed;
specific waiver) and shall remain immune from suit except as
provided by and subject to the provisions of 42 Pa.C.S. Ch. 85
Subchs. A (relating to general provisions) and B (relating to
actions against Commonwealth parties).
Section 706. Powers, duties and prohibited actions.
(a) Powers and duties.--Notwithstanding any other provision
of law, the receiver shall have the following powers and duties:
(1) To require the distressed city or authority to take <--
actions necessary to implement the recovery plan under
section 703.
(2) To modify the recovery plan as necessary to achieve
financial stability of the distressed city and authorities in <--
accordance with section 703.
(3) To require the distressed city or authority to <--
20110SB1151PN1665 - 21 -
negotiate intergovernmental cooperation agreements between
the distressed city and other political subdivisions in order
to eliminate and avoid deficits, maintain sound budgetary
practices and avoid interruption of municipal services.
(4) To submit quarterly reports to the governing body
and the chief executive officer of the distressed city and to
the department. The reports shall be posted on the Internet
website for the distressed city.
(5) To require the distressed city or authority to cause <--
the sale, lease, conveyance, assignment or other use or
disposition of the distressed city's or authority's assets in <--
accordance with section 707.
(6) To approve, disapprove, modify, reject, terminate or
renegotiate contracts and agreements with the distressed city
or authority, except to the extent prohibited by the <--
Constitutions of the United States and Pennsylvania.
(7) To direct the distressed city or authority to take <--
any other action to implement the recovery plan.
(8) To attend executive sessions of the governing body
of the distressed city or authority and make reports to the <--
public on implementation of the recovery plan.
(9) Subject to the limitation on bankruptcy in Article <--
XVI-D.1 of the act of April 9, 1929 (P.L.343, No.176), known
as The Fiscal Code After July 1, 2012, to file a municipal <--
debt adjustment action under Federal law the Bankruptcy Code <--
(11 U.S.C. § 101 et seq.) and to act on the city's behalf in
the proceeding. The power under this paragraph shall only be
exercised upon the written authorization of the secretary.
The filing of a municipal debt adjustment action under this
paragraph and any plan of the receiver accepted by the
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Federal court shall be considered a modification of the
recovery plan, except that the modification shall not be
subject to judicial review under section 709. A recovery plan
submitted to, and approved by, the Federal court under a
Federal municipal debt adjustment action may include Federal
remedies not otherwise available under this chapter.
(10) To meet and consult with the advisory committee
under section 711.
(11) To employ financial or legal experts deemed
necessary to develop and implement the recovery plan.
Notwithstanding any law to the contrary, the employment of
such experts shall not be subject to contractual competitive
bidding procedures.
(b) Authorization prohibited.--Neither this chapter nor the
recovery plan shall be interpreted to authorize the receiver to
do any of the following:
(1) Unilaterally levy taxes.
(2) Unilaterally abrogate, alter or otherwise interfere
with a lien, charge, covenant or relative priority that is:
(i) held by a holder of a debt obligation of a
distressed city; and
(ii) granted by the contract, law, rule or
regulation governing the debt obligation.
(3) Unilaterally impair or modify existing debt <--
obligations or bonds, notes, municipal securities or other <--
lawful contractual or legal obligations of the distressed
city or authority, except as otherwise ordered by a court of
competent jurisdiction.
(4) Authorize the use of the proceeds of the sale,
lease, conveyance, assignment or other use or disposition of
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the assets of the distressed city or authority in a manner
contrary to section 707.
Section 707. Use or disposition of assets.
(a) Use of proceeds.--The proceeds from any sale, lease,
conveyance, assignment or other use or disposition of assets of
the distressed city or authority shall be applied to the payment
of outstanding debt obligations owed by the distressed city or
authority, subject to any lien, charge, covenant, restriction,
contract, law, rule or regulation, that encumbers or is
otherwise applicable to the assets. Proceeds remaining after
payment of outstanding debt obligations owed by the distressed
city or authority may be used by the receiver to restructure or
provide escrow for the payment of future debt obligations or to
meet operating and capital needs of the distressed city or
authority.
(b) Prohibitions.--Nothing under this section shall be
construed to authorize the receiver to unilaterally abrogate,
alter or otherwise interfere with a lien, charge, covenant or
relative priority that is:
(1) held by a holder of a debt obligation of a
distressed city; and
(2) granted by the contract, law, rule or regulation
governing the debt obligation.
Section 708. Elected and appointed officials.
(a) Orders.--The receiver may issue an order to an elected
or appointed official of the distressed city or an authority to:
(1) implement any provision of the recovery plan; and
(2) refrain from taking any action that would interfere
with the powers granted to the receiver or the goals of the
recovery plan.
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(b) Enforcement.--An order issued under subsection (a) shall
be enforceable under section 709.
Section 709. Judicial actions.
(a) Action by receiver.--The receiver may petition
Commonwealth Court to issue a writ of mandamus upon any elected
or appointed official of the distressed city or authority to
secure compliance with an order issued under section 708. The
court shall grant or deny the relief within 14 days of the
filing of the petition. The court shall grant the relief
requested if it determines that the order was issued in
compliance with this chapter.
(b) Action by elected or appointed officials.--Any elected
or appointed official of a distressed city or authority may
petition Commonwealth Court to enjoin any action of the receiver
that is contrary to this chapter.
Section 710. Termination of receivership.
(a) Time.--Except as provided under subsection (b), the
receivership under this chapter shall expire two years after the
appointment of the receiver.
(b) Extension.--The secretary may petition Commonwealth
Court for one or more extensions of the receivership. The court
shall grant each extension for another two years if the
secretary establishes by a preponderance of the evidence that
further implementation of the recovery plan is necessary to end
the fiscal emergency.
Section 711. Municipal Financial Recovery Advisory Committee.
(a) Establishment.--There is established a Municipal
Financial Recovery Advisory Committee to meet and consult with
the receiver in carrying out the duties under this chapter. The
sole function of the advisory committee shall be to provide
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recommendations and feedback to the receiver on the
implementation of the recovery plan.
(b) Composition.--The advisory committee established under
subsection (a) shall be comprised of the following:
(1) The chief executive officer of the distressed city
or a designee.
(2) The president of the governing body of the
distressed city or a designee.
(3) One member appointed by the county commissioners of
the county where the distressed city is located.
(4) One member appointed by the Governor.
(c) Compensation.--Members of the advisory committee shall
receive no compensation for their services.
(d) Meetings.--The advisory committee shall meet with the
receiver at least twice per month to discuss the recovery plan.
Meetings of the advisory committee shall be in accordance with
65 Pa.C.S. Ch. 7 (relating to open meetings).
(e) Duty to consult.--The receiver shall consult with the
advisory committee prior to exercising any of the powers under
section 706(a)(1), (2), (3), (5), (6), (7) and (9).
(f) Termination.--The advisory committee shall terminate in
conjunction with the expiration of the receivership as provided
for under section 710.
Section 712. Applicability.
(a) Statement.--
(1) This chapter shall apply only to distressed cities.
(2) Except as set forth in subsection (b), nothing in
this chapter is intended to limit or otherwise abrogate the
applicability of any other part of this act.
(b) Conflict.--If there is a conflict between a provision of
20110SB1151PN1665 - 26 -
this chapter and any other provision of this act, the provision
of this chapter shall prevail.
Section 3. The heading of Chapter 6 and section 601 of the
act are renumbered to read:
CHAPTER [6] 20
TECHNICAL PROVISIONS
Section [601] 2001. Repeals.
Section 2501-C(e) and (f) of the act of April 9, 1929
(P.L.177, No.175), known as The Administrative Code of 1929, are
repealed insofar as they are inconsistent with this act.
The act of June 11, 1935 (P.L.323, No.146), entitled "An act
designating the Department of Internal Affairs as the agency of
the Commonwealth to approve or disapprove petitions to courts,
and plans for the readjustment of debts of political
subdivisions, under the act of Congress relating to the
bankruptcy of political subdivisions; and defining the powers
and duties of said department in relation thereto," is repealed
insofar as it relates to a municipality as defined in section
103 of this act.
Section 4. Section 602 of the act, amended December 19, 1988
(P.L.1272, No.157), is renumbered to read:
Section [602] 2002. Expiration.
Section 203(a)(5) shall expire upon publication in the
Pennsylvania Bulletin of the notice required under section
121(f).
Section 5. Section 603 of the act is renumbered to read:
Section [603] 2003. Effective date.
This act shall take effect in 60 days.
Section 6. The provisions of this act are severable. If any
provision of this act or its application to any person or
20110SB1151PN1665 - 27 -
circumstance is held invalid, the invalidity shall not affect
other provisions or applications of this act which can be given
effect without the invalid provision or application.
Section 7. This act shall take effect immediately.
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