53 Pa.C.S. Ch. 82

in effect

53 Pa.C.S. § 8201 Certification to department of bond or note transcript or lease, guaranty, subsidy contract or other agreement.

(a) General rule.--The governing body of each local government unit shall, before any bonds or notes except tax anticipation notes issued pursuant to section 8121 (relating to power to issue tax anticipation notes) and notes representing small borrowings issued pursuant to section 8109 (relating to small borrowing for capital purposes) are actually delivered to the initial purchasers or before becoming bound on any lease, guaranty, subsidy contract or other agreement evidencing lease rental debt, cause to be certified to the department, under the signature of the clerk or secretary of the governing body and its corporate seal, a complete and accurate copy of the proceedings for the incurring of debt, as provided in section 8111 (relating to submission to department). (b) Other requirements unaffected.--The provisions of this section do not eliminate the filing requirements of sections 8024 (relating to exclusion of subsidized debt from net nonelectoral debt or net lease rental debt), 8025 (relating to exclusion of self-liquidating debt evidenced by revenue bonds or notes to determine net nonelectoral debt), 8026 (relating to exclusion of other self-liquidating debt to determine net nonelectoral debt or net lease rental debt), 8126 (relating to certification as to taxes and revenues to be collected) and 8128 (relating to condition precedent to validity of tax anticipation notes). Cross References. Section 8201 is referred to in section 8130 of this title.

53 Pa.C.S. § 8202 Filing of statements of noncompletion of sale with department.

If settlement for an issue of bonds or notes or bonds or notes representing lease rental debt, which have received a required approval by the department, fails of completion in whole or in part, the local government unit shall file with the department a notification of noncompletion of sale stating what part of the issue has been delivered.

53 Pa.C.S. § 8203 Fees for filing.

Every filing with the department shall be accompanied by a filing fee as determined in section 605-A of the act of April 9, 1929 (P.L.177, No.175), known as The Administrative Code of 1929. No submission shall constitute a filing until the proper fee is paid. All fees received under this section shall be paid by the department into the State Treasury through the Department of Revenue.

53 Pa.C.S. § 8204 Certificate of approval of transcript.

The department shall, upon receipt of any bond or note transcripts or other filings, carefully examine them to determine whether the debt outstanding and to be outstanding is within the applicable limitations imposed by this subpart and whether the proceedings for incurring the debt, for issuing and selling the bonds or notes and for excluding self-liquidating and subsidized debt have been taken in conformity with the Constitution of Pennsylvania and this subpart. If, upon completion of its examination, a transcript or other filing is found by the department to be in conformity with the Constitution of Pennsylvania and this subpart, the department shall certify its approval to the local government unit if required under other provisions of this subpart. Cross References. Section 8204 is referred to in sections 8111, 8208 of this title.

53 Pa.C.S. § 8205 Certificate of disapproval and correction of proceedings.

If the department, upon completion of its examination, finds it cannot issue a certificate of approval, it shall notify the local government unit of the reasons why it cannot do so. If the proceedings or any prior filings are subject to correction for demonstrated typographical or computational error, or otherwise, or for failure to include a necessary document or certification and the correction is approved by the department, the error shall be corrected in all places or the additional document or certification shall be furnished to the department within ten days and upon any other terms the department specifies. Thereupon, the department shall certify its approval. If the deficiency is not subject to correction, the department shall certify its disapproval to the local government unit. Cross References. Section 8205 is referred to in section 8211 of this title.

53 Pa.C.S. § 8206 Effect of failure of timely action by department.

If the local government unit has submitted a filing to the department by certified mail, return receipt requested, or otherwise has an official receipt from the department, and the local government unit has not, within 20 days of the date of receipt of the filing by the department, received the certificate of approval or disapproval or notification of correctable error, the filing shall be deemed to have been approved for all purposes unless the local government unit has extended the time within which the department may act by written communication to the department or by failure to object to a written communication from the department requesting the extension. Extensions shall not exceed one additional period of 20 days. Cross References. Section 8206 is referred to in sections 8111, 8208, 8209 of this title.

53 Pa.C.S. § 8207 Records of department.

(a) Retention period.--The department shall keep all proceedings on file for a period of not less than four months after issuance of its certificate of approval or disapproval and thereafter as long as any appeal respecting the proceedings is pending and not finally determined. (b) Content.--The department shall keep a public record with respect to each local government unit showing: (1) The name of the local government unit. (2) The purpose of each series issued or lease executed. (3) Whether the series represents nonelectoral, lease rental or electoral debt and the extent to which the debt is subsidized or self-liquidating and, if subsidized or self-liquidating in part, the principal amount thereby eliminated from nonelectoral debt. (4) The schedule of stated maturity dates, interest rates and mandatory sinking fund payments for each outstanding issue of bonds or notes or the schedule of lease rentals. (5) The dates and designations of each issue of bonds or notes, lease or other document to be executed with the approval number assigned to the issue, lease or other document approved. (6) The local government unit's most recently certified borrowing base and regular debt limits computed therefrom. (7) The date and manner of authorization of any use of any additional debt limit. (c) Records open for inspection.--The records of the department shall be public records available for examination by any citizen of this Commonwealth or any bondholders or noteholders.

53 Pa.C.S. § 8208 Invalidity of instruments which are delivered without compliance with requirements or conditions precedent to issuance or delivery.

(a) General rule.--In all cases in which the approval of the department is required by this subpart prior to the issuance of bonds or notes or the execution of a lease, guaranty, subsidy contract or other agreement evidencing lease rental debt, in the case of small borrowings evidenced by notes in respect of which compliance with the conditions of section 8109 (relating to small borrowing for capital purposes) is required, and in the case of tax anticipation notes in respect of which compliance with the conditions of sections 8126 (relating to certification as to taxes and revenues to be collected), 8127 (relating to sale of tax anticipation notes) and 8128 (relating to condition precedent to validity of tax anticipation notes) is required, if the bonds or notes or the lease or other instrument is sold, or executed, and delivered prior to receipt of actual or deemed approval under section 8204 (relating to certificate of approval of transcript) or 8206 (relating to effect of failure of timely action by department) or, as the case may be, without compliance with applicable conditions of issuance, or prior to a required filing with the department, the bonds, notes, lease or other instrument shall be invalid and of no effect in the hands of or for the security of the holder of the bonds or notes or of the obligations secured by the lease or other instrument, except to the extent provided in this section. (b) Bona fide purchasers.--If the bonds or notes or the obligations secured by the lease or other instrument are held by a bona fide purchaser, other than an initial purchaser or member of an underwriting or selling group, for value without actual notice of a lack of such prior approval, filing or compliance as the case may be, and such bonds, notes or other obligations contain a recital that such prior approval, filing or compliance was received, made or observed, then the bonds, notes, lease or other instrument shall be valid and enforceable in accordance with their terms, and any applicable debt limits shall be deemed increased to the extent necessary to validate and keep valid the bonds, notes, lease or other instrument, but not for the purpose of reducing the liability of any person under this section. (c) Recovery of interest, principal and other amounts.--The local government unit may recover all interest and principal or other amounts payable thereon from the initial purchasers and the individuals, including the officers of the local government unit, responsible for making the unapproved or unauthorized delivery. Notwithstanding the invalidity of the instruments as to them, the initial purchasers and such individuals shall be entitled to credit in any action determining the invalidity or for the recovery provided by this subsection for the amount of the following: (1) Any proceeds of the sale of the instruments still held unexpended by the local government unit. (2) The lesser of the following: (i) The cost or fair market value, whichever is the lesser, of any capital project or part thereof or interest therein acquired by the local government unit by an expenditure of a portion or all of the proceeds of the bonds, notes or other obligations. (ii) The remaining nonelectoral borrowing capacity of the local government unit. Cross References. Section 8208 is referred to in section 8109 of this title.

53 Pa.C.S. § 8209 Finality of proceedings as to validity of instruments.

(a) General rule.--Where a certificate of approval has been issued by the department or has been deemed issued under section 8206 (relating to effect of failure of timely action by department) or, in the case of tax anticipation notes, where the filing with the department required by section 8128 (relating to condition precedent to validity of tax anticipation notes) has occurred and no petition for a declaratory order or complaint has been filed within the applicable time limits specified in section 8211 (relating to petitions for declaratory orders and complaints to the department) or when, after a petition for a declaratory order or complaint has been filed, the proceedings have been approved finally by the department and no appeal to court has been taken, or if an appeal to court has been taken and the proceedings have been approved finally by the court or the appeal has been dismissed, the validity of the proceedings, the right of the local government unit lawfully to issue its bonds or notes or to enter into a lease, guaranty, subsidy contract or other agreement evidencing lease rental debt pursuant to those proceedings, and the validity and due enforceability of the bonds, notes or other instruments in accordance with their terms shall not thereafter be inquired into judicially, in equity, at law or by civil or criminal proceedings, or otherwise, either directly or collaterally. The effect of the approval by the department or by the court on appeal or, in the case of tax anticipation notes, the effect of filing in compliance with section 8128 shall be to ratify, validate and confirm the proceedings absolutely, including the lawful nature of the project and, in the case of tax anticipation notes, the accuracy of the estimates contained in the certificate as to taxes and revenues to be collected, notwithstanding any defect or error in the proceedings, except as specifically provided otherwise in this section, and any debt limit imposed by this subpart shall be deemed increased to the extent necessary to validate the debt or obligation. This section does not relieve an initial purchaser of bonds or notes from liability to a local government unit for the payment of the consideration agreed in the contract of sale or make the bonds or notes valid and enforceable in the hands of an initial purchaser unless the issuer has received a substantial consideration for the series as a whole. (b) Liability for willful violations or fraud.--This section does not relieve any person participating in the proceedings from liability for knowingly participating in an ultra vires act of a local government unit or from any civil or criminal liability for false statements in any certificates filed or delivered in the proceedings.

53 Pa.C.S. § 8210 Power of department to define terms, issue rules and regulations and prescribe forms.

Subject to the definitions in section 8002 (relating to definitions), the department may define terms and prescribe other rules and regulations regarding, and prescribe forms for, reports and filings to be submitted to the department pursuant to this subpart.

53 Pa.C.S. § 8211 Petitions for declaratory orders and complaints to department.

(a) General rule.--If proceedings for the incurring of debt represented by bonds or notes or by a lease, guaranty, subsidy contract or other agreement evidencing the acquisition of a capital asset, for the issuance of tax anticipation notes or for the exclusion of debt as self-liquidating or subsidized, have been taken by a local government unit, the local government unit or any taxpayer of the local government unit or other interested party may file with the department a petition for a declaratory order asserting the validity or a complaint asserting the invalidity of the proceedings or any part thereof. (b) Time for filing.--A complaint asserting the invalidity of the proceedings or part thereof taken under section 8109 (relating to small borrowing for capital purposes) may be filed not later than one year after final adoption of the resolution authorizing the debt. Any such complaint asserting the invalidity of the proceedings or part thereof excluding debt as self-liquidating under section 8025 (relating to exclusion of self-liquidating debt evidenced by revenue bonds or notes to determine net nonelectoral debt) or authorizing tax anticipation notes under Subchapter B of Chapter 81 (relating to tax anticipation notes and funding debt) may be filed at any time not later than 15 days after the filing with the department of the documents required by section 8025 or of the proceedings pursuant to section 8126 (relating to certification as to taxes and revenues to be collected), as the case may be. A complaint asserting the invalidity of any such proceedings or part thereof in cases in which, under this subpart, the approval or deemed approval of the department is required may be filed with the department not later than the later of: (1) fifteen days after the date of the submission of the proceedings by the local government unit to the department for approval even though the proceeding may be subject to correction as provided in section 8205 (relating to certificate of disapproval and correction of proceedings) or otherwise; or (2) five days after the date of the last submission of any corrected document or certification to the department. (c) Departmental approval pending proceeding.--If a petition for a declaratory order or complaint is filed in respect of proceedings requiring the approval of the department after the submission of the proceedings to the department but prior to approval, disapproval or deemed approval, the department shall not be deemed to have approved the proceedings during the pendency of the matter before the department. (d) Jurisdiction and authority of department.--The department has exclusive jurisdiction to hear and determine all procedural and substantive matters arising from the proceedings of a local government unit taken under this subpart, including the regularity of the proceedings, the validity of the bonds, notes, tax anticipation notes or other obligations of the local government unit and the legality of the purpose for which the obligations are to be issued. If a local government unit files a petition for a declaratory order with the department relating to proceedings, the department may require service by publication on taxpayers as the circumstances warrant. In all other respects the proceedings before the department shall be governed by regulations of the department. The department may, after appropriate proceedings in accordance with its regulations, approve or disapprove the proceedings of the local government unit or to direct correction as provided in section 8205. A determination by the department under this subpart shall, except as provided in this subsection, be conclusive and binding as to all procedural and substantive matters which were or could have been presented to the department hereunder. All determinations by the department under this subpart are reviewable as provided in 2 Pa.C.S. Ch. 7 (relating to judicial review). Cross References. Section 8211 is referred to in section 8209 of this title.

53 Pa.C.S. § 8221 Creation of sinking funds and deposits, reserves and surplus funds.

(a) General rule.--Every local government unit having outstanding any bonds or notes, other than tax anticipation notes and other than notes issued under section 8109 (relating to small borrowing for capital purposes), shall create forthwith, subject to the terms of any existing contracts with the holders of such bonds or notes, and every local government unit issuing any bonds or notes shall create simultaneously with or prior to the delivery of the bonds or notes, and thereafter maintain until the bonds or notes are paid in full, a sinking fund: (1) for the aggregate or for one or more issues or series of its general obligation bonds and notes; and (2) separately for each project or combination of projects financed by revenue or guaranteed revenue bonds or notes as to which different revenues are pledged. If a sinking fund is established for more than one issue of bonds, a separate debt service account for each issue may be established in the sinking fund. The sinking fund shall be maintained with a bank, trust company or bank and trust company located and lawfully conducting a banking or trust business in this Commonwealth and appointed from time to time as a sinking fund depository. (b) Deposit of moneys.--Moneys for the payment of taxes assumed and principal and interest on outstanding bonds or notes shall be deposited in the applicable sinking fund or sinking fund account from the sources, at the times and in the amounts provided in any contract with the holders of the bonds and notes but, in any event, prior to the time when payment of the taxes, principal and interest become due and payable. All moneys deposited in sinking funds as required by this subpart and all investments and proceeds of investments thereof shall, without further action or filing, be subject to a perfected security interest for the holders of the bonds or notes for which the sinking fund is held until the money or investments have been properly disbursed or sold. (c) Revenues from use of capital project.--A local government unit pledging the rates, rentals, receipts, charges and tolls from the use of a capital project for the security of revenue or guaranteed revenue bonds or notes may by ordinance provide for the deposit thereof as and when received in the sinking fund for the project. (d) Other funds and accounts.--A local government unit may provide by ordinance for the creation and maintenance of other accounts in the sinking fund or of other funds for revenue or guaranteed revenue bonds or notes, including operating accounts or funds for financed projects, reserve accounts or funds for various purposes, a bond or note redemption account or fund and a surplus account or fund, and may prescribe the purposes for which the moneys and investments in each account or fund may be withdrawn and the amounts, times and sources of deposits therein. No ordinance shall restrict the application of the rates, receipts, charges and tolls received in respect of a capital project or combined capital projects, exclusive of assessments and contributions for capital improvements, in any fiscal year in excess of the amount required during the year for operating expenses, plus 140% or such lesser percent as may be fixed by ordinance of the amount required to be deposited during the year from the revenues in the applicable sinking fund for the payment, at maturity or scheduled mandatory redemption, of the principal of and interest on the related bonds or notes. This excess shall at all times be available for use by the local government unit for any lawful purpose, and no contract with the holders of bonds or notes shall provide to the contrary. Cross References. Section 8221 is referred to in section 8002 of this title.

53 Pa.C.S. § 8222 Assessment fund.

If a local government unit issues bonds or notes as general obligation bonds or guaranteed revenue bonds to provide funds for and towards the cost of making permanent street, sidewalk, water or sewer improvements or other assessable improvements and the cost is assessed against the properties benefited, the assessments as collected shall be paid into a separate assessment fund. Moneys to the credit of the assessment fund may be used for any one or more of the following purposes in any proportions and subject to any priorities set forth in the ordinance incurring the debt: (1) Payments to the sinking fund. (2) Payment of the cost of such improvements. (3) Creation and maintenance of a revolving fund if permitted by the laws governing the local government unit. (4) Payment to the general fund or any other fund of the local government unit. The fund may be continued as a revolving fund if permitted by law or discontinued at any time. Unless otherwise provided in the ordinance incurring the debt, upon discontinuance of the fund, the proceeds of the assessments shall be used to pay any bonds or notes remaining outstanding and to reimburse the general fund of the local government unit for the moneys paid on account of the bonds or notes.

53 Pa.C.S. § 8223 Duty of treasurer.

The treasurer of each local government unit shall deposit into the applicable sinking fund or other fund the moneys to be deposited therein pursuant to the pledge or covenant made or adopted by the local government unit at the times and in the amounts provided in the pledge or covenant or, if no pledge or covenant has been made or adopted, as provided in the appropriations made by the governing body. If no appropriation of moneys has been made or if it appears that, as a result of other expenditures, the appropriated revenues will not be received in sufficient amounts in time to make either the deposits required to be made for the payment of the taxes assumed and the interest on and principal of general obligation bonds and notes or the amount due on a guaranty of guaranteed revenue bonds or notes or on a guaranty of any authority or other local government unit obligation, the treasurer shall pay into the applicable sinking fund or other fund that portion of each receipt of tax moneys and other available revenues, subject, in the case of a limited guaranty, to the terms thereof, as will result in the deposit of sufficient moneys in the sinking fund or other fund to pay the taxes assumed and the principal of the interest on the bonds or notes or to meet the guaranty obligation of the local government unit as and when they become due and payable. The governing body of a local government unit may issue its tax anticipation notes under Subchapter B of Chapter 81 (relating to tax anticipation notes and funding debt) to provide all or any part of any moneys needed for deposit in the sinking funds or other funds.

53 Pa.C.S. § 8224 Deposit and investment of moneys in sinking funds and other funds.

(a) Deposit with financial institutions.--Any moneys in sinking funds and other funds established by ordinance as provided in this subpart, if not required for prompt expenditure, may be deposited at interest in time accounts or certificates of deposit of any bank or bank and trust company, accounts with any savings bank or deposits in building and loan associations or savings and loan associations. Moneys required for prompt expenditure shall be held in demand deposits. To the extent that the deposits or accounts are insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, they need not be secured; otherwise, the deposits shall be secured as public deposits whether or not title, by virtue of the deposit with a fiscal agent or trustee for bondholders, is in the fiscal agent or trustee, except that moneys held by the fiscal agent, trustee or sinking fund depository itself may be secured as trust funds. (b) Investment in securities.--Any moneys in funds or accounts not required for prompt expenditure and not deposited at interest shall, to the extent practicable and reasonable, be invested in any securities in which the Commonwealth may, at the time of investment, invest moneys of the Commonwealth not required for prompt expenditure, subject to any stricter requirements in any contract with the holders of bonds or notes for which the particular fund or account was created or maintained. (c) Control of account.--All such deposits and investments shall be in the name of the local government unit, but moneys and investments in the sinking fund shall be subject to withdrawal or collection only by the sinking fund depository for proper purposes in accordance with this subpart. (d) Disposition of income.--Income received from any deposit or investment shall be a part of the fund or account invested and may be applied if so desired by the local government unit in reduction of or to complete any required deposits in the fund or account. (e) Combining accounts.--For the purposes of investment or deposit at interest, all accounts in a sinking fund or other accounts or funds established in respect of one or more series of bonds or notes having the same depository may be combined, and each combined account shall be entitled to its pro rata share of each deposit or investment. (f) Return of unclaimed moneys.--The sinking fund depository shall return to the local government unit all moneys deposited in a sinking fund for the payment of bonds, notes or coupons which have not been claimed by the holders thereof after two years from the date when payment is due, except where the funds are held for the payment of outstanding checks, drafts or other instruments of the sinking fund depository. This subsection or any action taken under this subsection does not relieve the local government unit of its liability to the holders of unpresented bonds, notes or coupons. (g) Sale of investments.--Any investments of a sinking fund, including bonds of the local government unit held therein, may be sold at any time by the sinking fund depository if cash is required for expenditure, or as directed by the managers of the sinking fund, through any broker or dealer in securities, any other law concerning dispositions of assets of a local government unit to the contrary notwithstanding. Cross References. Section 8224 is referred to in sections 8250, 8251 of this title.

53 Pa.C.S. § 8225 Management of sinking and other funds.

The management and control of sinking and other funds and investments thereof subject to the provisions of this subpart shall be vested in the governing body of the local government unit except: (1) Where by any other law there has been created any board or commission for the management and control of sinking funds of a particular class of local government units, in which case the board or commission shall have the management and control of the sinking funds of the local government units. (1.1) To the extent otherwise provided by this subpart. (2) To the extent otherwise lawfully provided in any contract with the holders of bonds or notes. (May 5, 1998, P.L.301, No.50, eff. 60 days) 1998 Amendment. Act 50 added par. (1.1).

53 Pa.C.S. § 8226 Inspection of sinking funds and orders to comply.

(a) General rule.--The department may from time to time audit the sinking funds and all records pertaining thereto of local government units which have any outstanding debt, except those annually submitting to the department reports of their sinking funds audited by an independent public accountant and except for school districts of the first class or cities of the second class and second class A. (b) Order to comply.--If such audit or reports disclose that any local government unit has refused or neglected to establish sinking funds as required by this subpart or has failed to provide sufficient moneys for any sinking fund to meet the payments of assumed taxes, principal and interest to be made therefrom, is not investing a sufficient amount of the sinking fund moneys or is otherwise in violation of this subchapter, the department shall make an order requiring the local government unit or any officer thereof or the governing body to take any steps as, in the opinion of the department, will cause the sinking funds to comply with this subchapter or to be sufficient. (c) Mandamus to compel compliance with order.--In addition to the criminal prosecutions provided for in Subchapter E (relating to penalties) or in lieu thereof, the department may apply to the court for an order in mandamus to issue to the officer or governing body of the local government unit to compel compliance with the order of the department or with the order with any modifications thereof as to the court may seem just and proper.

53 Pa.C.S. § 8227 Sinking fund not required for small borrowings.

A local government unit may, but shall not be required to, comply with the provisions of this subchapter in respect of notes issued in compliance with section 8109 (relating to small borrowing for capital purposes).

53 Pa.C.S. § 8241 Power to refund.

(a) General rule.--Subject to the provisions of the outstanding bonds, notes or obligations evidencing lease rental debt and subject to the provisions of this subchapter, a local government unit may refund any outstanding debt, in whole or in part, at any time and may refund any outstanding notes with bonds or bonds with notes. (b) Authorized purposes.--The refunding may be for any one or more of the following purposes: (1) Reducing total debt service over the life of the series. (2) Reducing the annual debt service in any particular year or years by extending the life of the issue subject to the limitations imposed by section 8247 (relating to special limitation on refunding of funding debt). (3) Eliminating any covenant or restriction in or applicable to any outstanding series or issue of bonds or notes determined by the local government unit to be unduly burdensome or restrictive. (4) Refunding any maturity or maturities or any portions thereof to a later date subject to the limitations imposed by section 8247. (5) Substituting bonds for notes or bond anticipation notes or substituting notes for bonds. (6) Adjusting lease rentals upon refunding of lease rental debt for any one or more of the foregoing purposes. It is immaterial whether or not any such refunding under paragraph (2), (3), (4) or (5) increases the total debt service payable over the life of the series. (c) Definition.--As used in this section, the term "refund" and its variations shall mean the issuance and sale of obligations, the proceeds of which are used or are to be used for the payment or redemption of outstanding obligations upon or prior to maturity. Cross References. Section 8241 is referred to in sections 8243, 8247, 8249 of this title.

53 Pa.C.S. § 8242 Treatment of costs upon refunding.

(a) General rule.--In any refunding, a principal amount of refunding bonds or notes or obligations evidencing lease rental debt equal to the sum of the following: (1) the call premium payable on the bonds, notes or obligations being refunded; (2) the discount allowed on the sale of the refunding bonds, notes or obligations; (2.1) any funds borrowed in order to pay any termination payment required to be paid under a qualified interest rate management agreement in which the notional amount is identified as corresponding to all or any portion of the bond or note being refunded; (3) any funds borrowed to pay interest on bonds, notes or obligations being refunded; and (4) the costs of issue and sale of the refunding bonds, notes or obligations; may be considered as interest on the refunding bonds, notes or obligations and may be separately stated in all reporting of debt and in all computation of debt limits and, if so considered and reported by the local government unit, shall not be considered as electoral, nonelectoral or lease rental debt. In subsequent debt statements, any such separately stated principal amount of bonds, notes or obligations shall be reported as being amortized in the same proportion as the series of which they are a part. (b) Comparison of debt service.--For the purpose of computing whether savings are being effected, the comparison of debt service which would be payable on the refunded bonds, notes or obligations shall be with debt service on the refunding bonds, notes or obligations without reference to the designation of the costs in subsection (a)(1) through (4), adjusted in each case by projected receipt of interest on invested funds of excess revenues or application of reserves to make the comparison reasonable and proper. (Sept. 24, 2003, P.L.110, No.23, eff. imd.) 2003 Amendment. Act 23 added subsec. (a)(2.1).

53 Pa.C.S. § 8243 Limitation on extending term of debt by refunding.

(a) General rule.--Subject to the terms of section 8247 (relating to special limitation on refunding of funding debt) and to the terms of subsection (b), a local government unit shall not extend the term of outstanding debt through refunding to a maturity date that could not have been included in the original issue, except in the case of an emergency refunding of stated maturity date to avoid a default occasioned by an unforeseen shortage in total revenues proven to the satisfaction of the department upon petition, filed by the governing body of the local government unit, alleging the emergency and the unforeseen loss of revenues. Public notice of the intention to file a petition shall be given by advertisement not less than five nor more than 20 days before the filing thereof. The emergency refunding shall be made only in the amount and with the stated maturity date or dates approved by the department. The first maturity of a refunding issue need not occur until the year after the last stated maturity date of the bonds not called in the series being refunded. (b) Increasing amount of principal payable.--Except in the case of refundings for the purposes specified in section 8241(b)(1) and (5) (relating to power to refund) and except for emergency refundings approved by the department, no refunding bonds shall be issued which will increase the amount of principal payable, after provision for earlier mandatory calls, in any year or years after the latest stated maturity date of the bonds being refunded, over the amount of the principal which would have been payable on the bonds or notes originally issued for the project in each such year if the original bonds or notes had been structured on a 6% level annual debt service plan to the last stated maturity date of the proposed refunding bonds, computed to the nearest whole multiple of $5,000, as the amounts shall be computed by a financial advisor, other qualified person or public accountant.

53 Pa.C.S. § 8244 Effect of debt limits on refunding nonelectoral bonds or notes or lease rental debt.

If any debt originally incurred was lawfully incurred and issued and, at the time the debt was incurred, the portion constituting nonelectoral debt or lease rental debt was within the limitations imposed thereon by law, the issue of refunding bonds or notes or the adjustment of lease rentals in respect of the debt shall be lawful and valid, notwithstanding that the aggregate of outstanding debt shall thereby exceed the then applicable limitations set by section 8022 (relating to limitations on incurring of other debt), which limitations shall be deemed increased but only to the extent necessary to effectuate and amortize the refunding lawfully. Any portion of the refunding bonds, notes or obligations may be excluded from nonelectoral debt or lease rental debt, either as subsidized debt or self-liquidating debt, in accordance with the procedure provided in Subchapter B of Chapter 80 (relating to limitations on debt of local government units).

53 Pa.C.S. § 8245 Refunding of electoral debt.

A local government unit may, by action of its governing body and in accordance with the limitations of this subchapter, refund any debt originally incurred as electoral debt. The refunding bonds, notes or obligations so issued shall not thereby be considered nonelectoral debt or lease rental debt for any purpose.

53 Pa.C.S. § 8246 Procedure for authorization, sale, issue and approval of refunding bonds or notes.

Bonds or notes issued for refunding purposes shall be authorized, issued, sold, approved and settled and refunding of lease rental debt shall be authorized and approved in the manner provided in this subpart for the authorization, issue, sale and approval of the original debt, subject to any additional limitations provided in this subchapter. No refunding bonds or notes shall be delivered to the purchasers thereof unless, simultaneously therewith, the notes or bonds being refunded become no longer outstanding in accordance with section 8250 (relating to use of proceeds of refunding bonds and when refunded bonds are no longer deemed outstanding). No adjustment in lease rentals shall be made unless appropriate provision for the retirement of the outstanding lease rental debt has been made.

53 Pa.C.S. § 8247 Special limitation on refunding of funding debt.

A debt incurred for funding purposes pursuant to section 8130 (relating to approval by court to fund unfunded debt) or under law in existence prior to July 12, 1972, shall not be refunded except under section 8241(b)(1) (relating to power to refund) until the refunding has been approved as necessary by the court of common pleas. The approval shall be obtained by petition to reopen the proceedings in which the funding debt was originally incurred, and the court shall grant the petition if, after hearing, the court is satisfied that the refunding is necessary and is in the public interest. Public notice of the filing of the petition shall be given by advertisement not less than five nor more than 20 days before the filing thereof. All subsequent proceedings in respect of the refunding of the funding debt shall be taken in accordance with the provisions of this subpart applicable to the incurring of the original debt. Bonds or notes issued to refund funding debt shall be stated to mature at the dates and in the amounts on each date as may be approved by the court, notwithstanding any limitation on the term of funding debt imposed elsewhere in this subpart. Cross References. Section 8247 is referred to in sections 8241, 8243 of this title.

53 Pa.C.S. § 8248 Approval of refunding by the electors.

The governing body of any local government unit may also obtain the approval of the electors to any refunding of nonelectoral or lease rental debt in the manner prescribed for an original issue by Subchapter C of Chapter 80 (relating to procedure for securing approval of electors) and may issue general obligation bonds or guaranteed revenue bonds or incur other obligations in the refunding if approved by the electors regardless of the class of bonds, notes or obligations originally issued. Cross References. Section 8248 is referred to in section 8249 of this title.

53 Pa.C.S. § 8249 Refunding with bonds of another type.

Subject to the limitations of section 8022 (relating to limitations on incurring of other debt) or after a referendum held pursuant to section 8248 (relating to approval of refunding by the electors), the governing body of any local government unit may for any purpose specified in section 8241 (relating to power to refund) refund with its general obligation bonds or notes or its guaranteed revenue bonds or notes all or any part of any outstanding revenue bonds or notes or bonds, notes or obligations of any authority or other local governmental unit constituting lease rental debt of the local government unit or may refund any outstanding revenue bonds or guaranteed revenue bonds or notes with like bonds or notes. The local government unit may also refund any general obligation or guaranteed revenue bonds with its revenue bonds, by the incurring of lease rental debt or by guaranteeing the obligations of an authority.

53 Pa.C.S. § 8250 Use of proceeds of refunding bonds and when refunded bonds are no longer deemed outstanding.

(a) General rule.--The proceeds of refunding bonds, together with any other moneys made available for the purpose, shall be used solely for the purpose of retiring the bonds being refunded and for the purpose of paying the costs of the refunding. (b) When obligations no longer deemed outstanding.--Any bonds or notes to be redeemed or paid shall no longer be deemed to be outstanding for the purpose of determining the net debt of the local government unit or for the purposes of any indenture limitations on repledging revenues when the local government unit has irrevocably deposited with a bank or bank and trust company in a sufficient amount: (1) Moneys. (2) Noncallable securities of the Federal Government or of the Commonwealth maturing or payable at par at the option of the holders at or prior to the dates needed for disbursement. (3) Time deposits or certificates of deposit, with a firm rate of interest or stated minimum rate of interest, issued by a bank or bank and trust company and insured or adequately secured as required by section 8224 (relating to deposit and investment of moneys in sinking funds and other funds). (4) Any combination of the foregoing. (c) Deposits equal to principal and interest.--Subject to any relevant contrary law or regulation, the amount deposited may be equal to the principal and interest to become due on the bonds or notes being refunded to the date on which the bonds or notes are stated to mature or any lesser amount computed in accordance with the provisions of subsection (d). (d) Test of sufficiency.--The deposited amount shall be sufficient when it, together with the interest to be earned thereon, will equal the principal, premium and interest to become due on the bonds or notes being refunded to the earlier of the date at which any bonds or notes are stated to mature or have been called for prior redemption, except that the local government unit shall simultaneously have given the bank or bank and trust company instructions and authority, stated to be irrevocable, to publish any notices of redemption remaining to be published. (e) Irrevocable call for redemption.--When stated to be irrevocable, the instructions and authority to call bonds or notes for redemption shall become irrevocable upon the delivery thereof or upon the deposit of the moneys or securities in a sufficient amount to effect the redemption, whichever occurs later. Until the irrevocability has occurred, a call for redemption may be revoked by notice given in the same manner as the notice of redemption. Cross References. Section 8250 is referred to in sections 8110, 8246 of this title.

53 Pa.C.S. § 8251 Cessation of interest on called bonds or notes.

Upon the date fixed for redemption, if the irrevocable deposit has been made and the required notice of the redemption has been given, no further interest on the bonds or notes so called for redemption shall accrue. This subchapter does not relieve the issuing local government unit of its obligation to see that the holders of the bonds or notes called for redemption are paid in full on the date fixed for redemption. From and after that date, if the irrevocable deposit was made at the proper amount on that date, the holders of bonds or notes called for redemption shall have no rights against the local government unit except to receive payment from the deposited funds or from the local government unit to the extent of the moneys returned to it pursuant to section 8224(f) (relating to deposit and investment of moneys in sinking funds and other funds).

53 Pa.C.S. § 8261 Failure to budget debt service.

If a local government unit having outstanding any general obligation bonds or notes or guaranteed revenue bonds or notes, lease rental debt or guaranty of authority obligations fails or refuses to make adequate provision in its budget for any fiscal year for the sums payable in respect of the bonds or notes, lease rental or guaranty in the year or fails to appropriate or pay the moneys necessary in that year for the payment of the amount of the lease rental or guaranty, as the case may be, of the maturing principal of and the interest on the bonds or notes or any of them, or any tax anticipation notes, or any sinking fund obligation for the bonds or notes or tax anticipation notes, or guaranty or the lease rental payment coming due in the fiscal year of the budget or for which the appropriations or payments should have been made, then at the suit of the holder of any bond, note or tax anticipation note or coupon or guaranty, or the holder of any authority obligation secured by a lease evidencing the acquisition of a capital asset or of any taxpayer of the local government unit, the court of common pleas shall, after a hearing held upon such notice to the local government unit as the court may direct and upon a finding of such failure or neglect, by order of mandamus require the treasurer of the local government unit to pay into the sinking fund for each series of bonds or notes then outstanding, or for each guaranty or lease rental payment, the first tax moneys or other available revenues or moneys thereafter received in the fiscal year by the treasurer, equally and ratably for each series for which provision has not been made in proportion to debt service for the year on each series then outstanding, or the amounts due upon guaranties or as payments with respect to lease rental debt, as the case may be. Any priority on incoming tax moneys accorded to a separate sinking fund for tax anticipation notes under the authority of section 8125 (relating to security for tax anticipation notes and sinking fund) shall not be affected by this provision until the sum on deposit in each sinking fund equals the moneys that should have been budgeted or appropriated for each series. Cross References. Section 8261 is referred to in section 8262 of this title.

53 Pa.C.S. § 8262 Failure to pay principal or interest.

(a) General rule.--If a local government unit fails or neglects to pay the interest or principal on any of its general obligation bonds or notes or tax anticipation notes as the same becomes due and payable, whether at the stated maturity date or upon an unrevoked call for prior redemption, or to perform its payment obligations with respect to any lease rental debt or guaranteed revenue bonds or notes, and the failure continues for 30 days, the holder thereof may, subject to priorities created under sections 8125 (relating to security for tax anticipation notes and sinking fund), 8261 (relating to failure to budget debt service) and 8263 (relating to trustee for bondholders) and to any limitations upon individual rights of action properly provided in the bond ordinance or any indenture, recover the amount due in an action in the court of common pleas. The judgment recovered shall have an appropriate priority upon the moneys next coming into the treasury of the local government unit and shall be a judgment upon which funding bonds may be issued pursuant to Subchapter B of Chapter 81 (relating to tax anticipation notes and funding debt). (b) Revenue bonds and notes.--If a local government unit fails or neglects to pay or cause to be paid the principal of or the interest upon any revenue bond or note as the same shall become due, whether at the stated maturity or upon call for prior redemption, the holder thereof may, subject to priorities created under sections 8125, 8262 (relating to failure to pay principal or interest) and 8263 and to any limitations upon individual rights of action properly provided in the bond ordinance or any indenture, recover the amount due in an action in the court of common pleas, but the judgment shall be limited to payment out of the assessments, revenues, rates, rents, tolls and charges from the project which are pledged for the payment of the bonds or notes.

53 Pa.C.S. § 8263 Trustee for bondholders.

(a) Appointment.--Notwithstanding any provision in the bonds or notes or in any authorizing ordinance, if a local government unit defaults in the payment of the principal of or the interest on any series of bonds or notes after it becomes due, whether at the stated maturity or upon call for prior redemption, and the default continues for 30 days or if the local government unit fails to comply with any provision of the bonds or notes, or in any authorizing resolution or indenture of trust, the holders of 25% in aggregate principal amount of the bonds or notes of the series then outstanding, by an instrument or instruments filed in the office of the recorder of deeds in the county in which the local government unit is located, signed and acknowledged as a deed to be recorded, may appoint a trustee, who may be the sinking fund depository, to represent the holders of all the bonds or notes, and the representation shall be exclusive for the purposes provided in this section. (b) Powers and duties.--The trustee may and, upon written request of the holders of 25% in principal amount of the bonds or notes then outstanding and upon being furnished with indemnity satisfactory to it, shall, in his or its own name, take one or more of the following actions, and the taking of such action shall preclude similar action whether previously or subsequently initiated by individual holders of bonds or notes: (1) By mandamus or other proceeding at law or in equity, enforce all rights of the holders of the bonds or notes, including, in the case of revenue or guaranteed revenue obligations, the right to require the local government unit to: (i) impose and collect rents, rates, tolls and charges adequate to carry out any agreement or covenant as to or pledge of the rents, rates, tolls or charges for the use of the project or projects financed by the bonds or notes; or (ii) carry out any other agreements with the holders of the bonds or notes. (2) Bring suit on the bonds or notes without the necessity for producing the bonds or notes, and with the same effect as a suit by any holder. (3) In the case of revenue or guaranteed revenue bonds or notes, require the local government unit to account, as if it were the trustee of an express trust for the holders of the bonds or notes, for any pledged revenues received. (4) In the case of general obligation bonds or notes, petition the court to levy, after a hearing upon such notice to the owners of assessable real estate as the court may prescribe, the amount due before or after the exercise of any right of acceleration on the bonds or notes, plus estimated costs of collection as an assessment upon the properties benefited by the improvement pursuant to the front-foot rule if the project is an assessable improvement, otherwise upon all taxable real estate and other property subject to ad valorem taxation in the local government unit, in proportion to the value thereof as assessed for tax purposes, and the trustee may collect or cause the local government unit to collect such assessments as by foreclosure of a mortgage or security interest on the realty or other property if not paid on demand. (5) In the case of guaranteed revenue bonds or notes or a guarantee of authority obligations or unpaid lease rentals under leases evidencing the acquisition of capital assets, to petition the court to levy, after hearing upon the notice to the owners of assessable real estate and other property subject to ad valorem taxation as the court may prescribe, the amount due on the guaranty or under the lease plus estimated costs of collection as an annual assessment for the current and future years upon all taxable real estate and other properties subject to ad valorem taxation in the local government unit in proportion to the value thereof as assessed for tax purposes, and the trustee may collect or cause the local government unit to collect the assessments as by foreclosure of a mortgage or security interest on the realty or other property if not paid on demand. The levy shall bear interest, until paid, at a rate sufficient to cover accruing interest on the bonds or notes. (6) By suit in equity, enjoin any acts or things which may be unlawful or in violation of the rights of the holders of the bonds, notes, guaranty or authority obligations under a lease evidencing the acquisition of capital assets. (7) After 30 days' prior written notice to the local government unit and subject to any limitations in the bond ordinance or relevant indenture, declare the unpaid principal of all the bonds or notes to be immediately due and payable with interest at the rates stated in the bonds until final payment. If all defaults are made good, the trustee may annul the declaration and its consequences. Any assessment levied pursuant to paragraphs (4) and (5) shall have the same priority and preference as to other liens or mortgages on the real estate or security interests in fixtures thereon or other property as a lien for unpaid taxes. (c) Installment payments.--The court of common pleas in cases of extreme hardship may provide for the payment of sums levied in five or fewer annual installments with interest at a rate sufficient to cover the interest accruing on the bonds or notes. (d) Trustee or fiscal agent under original issue.--If a trustee or fiscal agent for the bondholders or noteholders was appointed in connection with the original issue of the bonds or notes and is willing to serve and exercise the powers conferred upon a trustee appointed by this section, the trustee appointed in the manner provided in this section shall have the powers set forth unless the appointment under this section was executed by or pursuant to the authority of the holders of a principal amount of the bonds or notes sufficient to remove the originally appointed trustee or fiscal agent. Cross References. Section 8263 is referred to in section 8262 of this title.

53 Pa.C.S. § 8264 Receiver for revenue projects.

(a) Appointment.--A trustee for the holders of defaulted bonds or notes, whether or not the series of bonds represented by the trustee has been declared to be and has become immediately due and payable, shall be entitled as of right to the appointment by the court of common pleas of a receiver of all or any part or parts of a project or the projects, the rents, rates, revenues, tolls and charges of which are pledged for the security of the bonds or notes of the series. (b) Powers and duties.--Except as otherwise provided in this section, the receiver may not sell, assign, mortgage or otherwise dispose of, but may enter and take possession of, the project or projects or part or parts thereof and, subject to the equal or prior rights of the holders of any other series of bonds or notes, shall take possession of all moneys and other property derived from or applicable to the construction, operation, maintenance, repair and reconstruction of the project or projects or parts thereof. The receiver may thereafter proceed with any construction or other work thereon which the local government unit is under obligation to do. The receiver may operate, maintain, repair and reconstruct the project or projects or parts thereof and collect and receive all rents, rates, receipts, tolls, other charges and revenues arising therefrom, subject to the equal or prior rights of the holders of any other series of bonds or notes therein. As part of his power to operate and maintain a project, the receiver may sell or otherwise dispose of equipment which is no longer used or usable by the project. The receiver shall perform the public duties and carry out the lawful agreements and obligations of the local government unit with respect to the project or projects or parts thereof, all under the direction of the court, but shall not perform any essential governmental functions.

53 Pa.C.S. § 8265 Costs of suits or proceedings.

In any suit, action or proceeding by or on behalf of the holders of defaulted bonds or notes of a local government unit brought under this subpart, the fees and expenses of a trustee or receiver, including operating costs of a project and reasonable counsel fees, shall constitute taxable costs, and all costs and disbursements allowed by the court shall be deemed additional principal due on the bonds or notes and shall be paid in full from any recovery prior to any distribution to the holders of the bonds or notes. Cross References. Section 8265 is referred to in section 8266 of this title.

53 Pa.C.S. § 8266 Distribution of moneys realized for bondholders.

Moneys or funds collected for the holders of defaulted bonds or notes entitled to share equally and ratably therein shall, after the payment of costs and fees as provided in section 8265 (relating to costs of suits or proceedings), be applied by the trustee or receiver, unless the terms of the bonds or notes provide otherwise, as follows: (1) Unless the principal of all of the bonds or notes represented has become or has been declared due and payable: (i) To the payment to the persons entitled thereto of all installments of interest then due in the order of the stated maturity dates of the installments of the interest and, if the amount available is not sufficient to pay any installment in full, then to the payment ratably, according to the amounts due on the installment, to the persons entitled thereto, without any discrimination or preference except as to any difference in the respective rates of interest expressed in the bonds or notes or coupons for interest. (ii) To the payment to the persons entitled thereto of the unpaid principal of any bonds or notes which has become due, whether at stated maturity dates or by call for redemption, in the order of their respective due dates and, if the amount available is not sufficient to pay in full all the bonds or notes due on any date, then to the payment ratably, according to the amounts of principal due on the dates, to the persons entitled thereto without any discrimination or preference. (2) If the principal of all of the bonds or notes entitled to share equally in the moneys has become or has been declared due and payable, to the payment of the principal and interest then due and unpaid upon the bonds or notes without preference or priority of principal over interest or interest over principal, or of any installment of interest over any other installment of interest, or of any bond or note over any other bond or note, ratably according to the amounts due respectively for principal and interest, to the persons entitled thereto without any discrimination or preference except as to any difference in the respective rates of interest specified in the bonds, notes and coupons. (3) If more than one series is involved and the principal of all bonds or notes of one or more series has become or has been declared due and payable, and that if one or more others has not, the funds available shall be apportioned to each series according to the respective amounts of principal of each series then outstanding less, as to each series, any amounts held earmarked for the series, and distribution to the holders of the bonds, notes and coupons of each series shall be made according to whichever of paragraphs (1) and (2) may be applicable.

53 Pa.C.S. § 8271 Failure to obey sinking fund directive of department.

Any officer or any member of the governing body of any local government unit who refuses or neglects to obey any order of the department made under Subchapter B (relating to sinking funds and other funds and accounts) concerning sinking funds or who refuses to furnish requested information required by the department or refuses agents of the department access to any books, records or documents relating to sinking funds commits a misdemeanor of the third degree and shall, upon conviction, be sentenced to pay a fine not more than $500 for each day of violation.

53 Pa.C.S. § 8281 Qualified interest rate management agreements.

(a) General rule.-- (1) Except as set forth in paragraph (4), notwithstanding any other law to the contrary, a local government unit may negotiate and enter into qualified interest rate management agreements consistent with the provisions of this subchapter. (2) The local government unit must authorize and award by resolution each qualified interest rate management agreement or any confirmation of a transaction. The resolution is subject to section 8003(a) and (b) (relating to advertisement and effectiveness of ordinances) but may be valid and effective for all purposes immediately upon adoption or as otherwise provided in the resolution. (3) A local government unit has the power to contract for insurance covering the risks of nonpayment of amounts due under qualified interest rate management agreements. (4) The authority granted in this subchapter shall not apply to any local government unit which has been declared distressed by the Department of Community and Economic Development. (b) Requirements for resolution.--The resolution authorizing and awarding a qualified interest rate management agreement or authorizing a transaction under the agreement must include in the resolution or as an appendix to the resolution all of the following: (1) A copy of the qualified interest rate management agreement or confirmation of the transaction under the qualified interest rate management agreement in substantially the form to be executed pursuant to the resolution. (2) The interest rate management plan meeting the requirements under this subpart: (i) adopted by the local government unit; or (ii) if the local government unit is incurring indebtedness under this chapter which has or will be issued to a public authority that has entered into or will enter into an interest rate management agreement meeting the requirements of a qualified interest rate management agreement under this subpart, adopted by that public authority. (3) A statement of the manner of the award of the qualified interest rate management agreement under subsection (e). (c) Contents of qualified interest rate management agreements.--In addition to other provisions approved by the local government unit, a qualified interest rate management agreement must contain all of the following: (1) The covenant of the local government unit to make payments required by the qualified interest rate management agreement and the covenants authorized by section 8282 (relating to covenant to pay amounts due under qualified interest rate management agreements). (2) The notional amount of the qualified interest rate management agreement and the principal amount of bonds or notes or lease rental debt, or portions of the notional or principal amounts, issued or to be issued by the local government unit under this subpart or guaranteed by the local government unit under this subpart, to which the agreement relates. (3) The term of any qualified interest rate management agreement, which must not exceed the latest maturity date of the bonds or notes referenced in the qualified interest rate management agreement. (4) A provision requiring the termination of the agreement if all debt to which the qualified interest rate management agreement relates is no longer outstanding. (5) The maximum annual interest rate which the local government unit may pay thereunder. (6) A provision that the maximum net payments by fiscal year of a local government unit shall not exceed the maximum interest rate specified in the qualified interest rate management agreement for: (i) periodic scheduled payments, not including any termination payments, due under the qualified interest rate management agreement; and (ii) the interest on the bonds or notes to which the qualified interest rate management agreement relates. (7) The source of payment of the payment obligations of the local government unit, which must be either general revenues or revenues specifically identified in the agreement. (8) A provision addressing the actions to be taken if the credit rating of the other party changes. (9) A provision that periodic scheduled payments due under the qualified interest rate management agreement and debt service due on the related bonds or notes or payments due under the related instrument evidencing lease rental debt or guaranty of the local government unit shall be senior in right and priority of payment to termination payments due under the qualified interest rate management agreement. (d) Other provisions of the qualified interest rate management agreement.--The qualified interest rate management agreement may include: (1) A covenant to include any termination payment or similar payment for a qualified interest rate management agreement in its current budget at any time during a fiscal year or in a budget adopted in a future fiscal year. (2) A provision that the following shall be equally and ratably payable and secured under the applicable covenants authorized in section 8282: (i) Periodic scheduled payments due under the qualified interest rate management agreement; and (ii) Any of the following to which the agreement relates: (A) the debt service due on the bonds or notes; (B) payment under an instrument evidencing lease rental debt; or (C) payment under a guaranty of the local government unit. (3) A provision that the qualified interest rate management agreement may be terminated at the option of the local government unit without cause but that the qualified interest rate management agreement may not be terminated at the option of the other party to the qualified interest rate management agreement without cause. (e) Award of qualified interest rate management agreements.-- (1) The local government unit shall establish a process for selecting other parties before entering into a qualified interest rate management agreement. (2) The local government unit shall establish qualifications for other parties before entering into a qualified interest rate management agreement. The qualifications shall include a rating for the other party of at least the third highest rating category from a nationally recognized rating agency. (3) A qualified interest rate management agreement must be awarded by public sale, private sale by negotiation or private sale by invitation. (4) The local government unit shall select the qualified interest rate management agreement which the local government unit determines is in its best financial interest. The qualified interest rate management agreement selected must contain financial terms and conditions which in the opinion of the independent financial advisor to the local government unit are fair and reasonable to the local government unit as of the date of award. (5) The local government unit may satisfy the requirements of paragraph (4) by obtaining a finding from an independent financial advisor to the public authority that the financial terms and conditions of the agreement are fair and reasonable to the public authority as of the date of the award if all of the following apply: (i) The local government unit is incurring indebtedness under this chapter which has or will be issued to a public authority. (ii) In connection with the incurring of debt under subparagraph (i), the local government unit will become obligated for all or a portion of the public authority's costs under an interest rate management agreement. Cross References. Section 8281 is referred to in sections 8002, 8283 of this title.

53 Pa.C.S. § 8282 Covenant to pay amounts due under qualified interest rate management agreements.

(a) Contents.--The local government unit shall include in a qualified interest rate management agreement a covenant that the local government unit shall do the following: (1) Include the periodic scheduled amounts payable in respect of the qualified interest rate management agreement for each fiscal year in its budget for that fiscal year. (2) Appropriate those amounts from its general or specially pledged revenues for the payment of amounts due under the qualified interest rate management agreement. (b) Pledge.-- (1) Except as set forth in paragraph (2), the local government unit may pledge its full faith, credit and taxing power for the budgeting, appropriation and payment of periodic scheduled payments due under a qualified interest rate management agreement. (2) A local government unit may not make a pledge under paragraph (1) if the payment obligations of the local government unit under the qualified interest rate management agreement are limited as to payment to specified revenues of the local government unit. (c) Security interest.--If the periodic scheduled payment obligations of the local government unit are specified in the qualified interest rate management agreement to be made from specified revenues of the local government unit, the local government unit may include in the qualified interest rate management agreement a covenant granting a security interest in those revenues to secure its periodic scheduled payment obligations under the agreement. The security interest shall be perfected under section 8147 (relating to pledge of revenues). Cross References. Section 8282 is referred to in section 8281 of this title.

53 Pa.C.S. § 8283 Remedies.

(a) Failure to budget amounts due under a qualified interest rate management agreement.-- (1) This subsection applies if a local government unit fails or refuses to budget for any fiscal year a periodic scheduled payment: (i) due in that year pursuant to the provisions of a qualified interest rate management agreement; and (ii) payable from the general revenues of the local government unit. (2) If a local government unit commits a failure or refusal under paragraph (1), the following apply: (i) The other party to the interest rate management agreement may bring an enforcement action in a court of common pleas. (ii) After a hearing held upon notice to the local government unit as the court may direct, if the court finds a failure or refusal under paragraph (1), the court may, by order of mandamus, require the treasurer of the local government unit to pay to the other party out of the first tax money or other available revenue or money thereafter received in the fiscal year by the treasurer the periodic scheduled payments due pursuant to the provisions of the qualified interest rate management agreement. The order shall be subject to section 8281(c)(8) (relating qualified interest rate management agreements). (iii) Any priority on incoming tax money accorded to a separate sinking fund for tax anticipation notes under the authority of section 8125 (relating to security for tax anticipation notes and sinking fund) shall not be affected by an order under subparagraph (ii) until the sum on deposit in each sinking fund equals the money which should have been budgeted or appropriated for each series. (b) Failure to pay amounts due under a qualified interest rate management agreement.-- (1) This subsection applies if: (i) a local government unit fails to pay any amount due under a qualified interest rate management agreement when it becomes due and payable; and (ii) the failure continues for 30 days. (2) If there is a failure under paragraph (1), the other party to the qualified interest rate management agreement may bring an action in a court of common pleas to recover the amount due. This paragraph is subject to: (i) the priorities under sections 8125 and 8281(c)(8); and (ii) any limitations upon rights of action properly provided in the qualified interest rate management agreement. (3) The judgment recovered under paragraph (2) shall: (i) have an appropriate priority upon the money next coming into the treasury of the local government unit; and (ii) be a judgment upon which funding bonds may be issued pursuant to Ch. 81 Subch. B (relating to tax anticipation notes and funding debt). (c) Failure to pay by school districts.-- (1) This subsection applies if a board of directors of a school district fails to pay or to provide for the payment of periodic scheduled payments, not including any termination payments, due pursuant to the provisions of a qualified interest rate management agreement. (2) A party to a qualified interest rate management agreement must notify the Secretary of Education of a failure under paragraph (1). (3) Upon notice under paragraph (2), the following apply: (i) The secretary shall notify the Department of Community and Economic Development and the offending board of school directors. (ii) If the secretary finds that the amount due and payable by the school district has not been paid, the secretary shall withhold out of any State appropriation due the school district an amount equal to the amount due pursuant to the qualified interest rate management agreement and shall pay over the amount so withheld to the party to the qualified interest rate management agreement to whom the amount is due. Cross References. Section 8283 is referred to in section 8129 of this title.

53 Pa.C.S. § 8284 Notice and retention of records.

(a) Notice.-- (1) The local government unit shall file with the Department of Community and Economic Development certified copies of a resolution authorizing a qualified interest rate management agreement, including any appendix to the resolution, 15 days following adoption. (2) If the maximum net payments by fiscal year for periodic scheduled payments of the local government unit, not including any termination payments, and interest on the bonds or notes to which the qualified interest rate management agreement relates exceed the amount of interest approved in proceedings of the local government unit with respect to such bonds or notes filed with and approved by the department, the local government unit shall adopt an amendment to the ordinance or resolution authorizing such bonds or notes reflecting such increase. The amendment shall be advertised and effective as provided in section 8003 (relating to advertisement and effectiveness of ordinances) and filed with the department. No approval by the department or filing fee by the local government unit shall be required for any filing under this subsection. (b) Records.--The department shall keep copies of all documents filed with the department under this section as long as a qualified interest rate management agreement is in effect. Documents filed with the department under this section are public records available for examination by any citizen of this Commonwealth; any party to the qualified interest rate management agreement; or any bondholder or noteholder, including holders of tax anticipation notes, of the local government unit filing any document pursuant to this section.

53 Pa.C.S. § 8285 Financial reporting.

A local government unit which has entered into a qualified interest rate management agreement shall include in its annual financial statements information with respect to each qualified interest rate management agreement it has authorized or entered into, including any information required pursuant to any statement issued by the Governmental Accounting Standards Board. SUBPART C TAXATION AND ASSESSMENTS Chapter 84. General Provisions 85. Assessments of Persons and Property 86. Taxation for Public Transportation 87. Other Subjects of Taxation 88. Consolidated County Assessment 89. Payment and Collection of Taxes Enactment. Subpart C was added May 5, 1998, P.L.301, No.50, effective January 1, 1999, unless otherwise noted.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.palegis.us/statutes/consolidated/view-statute?txtType=HTM&ttl=53Fetched: 10/16/2026