act 47 – understanding your financial recovery plan local government academy tuesday, may 23, 2006...

Act 47 – Understanding Your Financial Recovery Plan

Local Government AcademyTuesday, May 23, 2006

6:30pm – 9:00pmSteel Valley Council of Governments

Michael Weir, LGAMichael Foreman, DCED – GCLGS

Deborah Grass, DCED - GCLGS

2

• General Provisions – Act 47• Section 102 – Purpose & Legislative Intent• DCED- Powers and duties

a. Compile financial datab. Assess Datac. Make a determinationd. Monitor reportse. Administer grants and loans

Governor’s Center for Local Government Services

What is the Municipalities Financial Recovery Act?

freddig

Intergovernmental Cooperation Law - Act 180 of 1972 codified into Act 177 of 1996

freddig

Act 511 of 65 Joint Tax Collection Bureaus

3

• Section 201 – Evaluate 11 Criteria• Section 202 – Standing to Petition• Section 203 – Procedure for Determination

a. Request by Petitionb. Investigation by Field Reportc. Public Hearing – Hearing Officerd. Determinatione. Appeal


What is the Determination of Financial Distress?

4

What is a Recovery Coordinator?

• Section 221- Designation of Coordinatora. Appointmentb. Qualificationsc. Compensationd. Dutiese. Powers

• Section 222 – Access to Information• Section 223 – Public and Private Meetings


5

• Section 122 – Duties of Commonwealth Agenciesa. Review programsb. Transfer Information to DCED

• Section 123 – Powers & Duties of Municipalitiesa. Annual Survey of Financial Conditionsb. File Applications for Grants & Loansc. Petition Court for Tax Increases


What Special Provisions are Extended to Act 47 Communities?

6

Special Provisions (continued)

• Section 141 – Court of Common Pleasa. Increase in Tax Ratesb. Compromise of delinquent Taxes

• Section 252 – Collective Bargaining

a. Can only Impact CBAs after date of Recovery Plan

b. May not “violate, expand or diminish provisions of Recovery Plan


7

Special Provisions (continued)

• Subchapter E – Economic Assistance

a. Priority in economic and community development funding

b. Notice to all Agencies about

priority status for funding

b. Funding approved by Coordinator as consistent with the Plan


8

• Section 241 – Information in a Recovery Plana. Financial Analysisb. Review of Operationsc. Recommendations

• Sections 242-248 – Input from the Governing Body for Development of the Recovery Plan

• How often is a Recovery Plan Updated?• Can you make amendments to the Recovery

Plan?


What are the Components of a Financial Recovery Plan?

9

City of Aliquippa Braddock Borough

City of Clairton City of Chester

City of Duquesne City of Farrell

Franklin Borough Greenville Borough

Homestead Borough City of Johnstown

Millbourne Borough City of Pittsburgh

Plymouth Township

Rankin Borough

City of Scranton

West Hazleton Borough

PENNSYLVANIA - Act 47 Communities


10

Who has Recovered?

• Ambridge Borough

• East Pittsburgh Borough

• North Braddock Borough

• Shenandoah Borough

• Wilkinsburg Borough


11

Who is in Early Intervention?

City of Allentown Ambridge Borough City of Beaver Falls City of Butler City of Easton City of Erie City of Lebanon City of Meadville Midland Borough City of Nanticoke City of New Castle Oil City Penn Hills City of Reading City of Sharon City of Titusville City of Washington City of York

CountiesBerks County Lawrence CountyLuzerne County Venango County


12

What is the Role of the Local Officials?

• Legislative Roles under Act 47**

a. Petition for Act 47 Determination

b. Adoption of Recovery Plan

c. Adoption of Related Ordinances & Resolutions

d. Filing Annual Survey of Financial Condition

e. Filing Applications for Loans and Grants

f. Filing Petitions to Court for Tax Increases

g. Holding Public Hearings as Required

** Governing Body must take Legislative Action


13

Role of the Local Officials (continued)

• Administrative Staff Develops :

a. Monthly and Annual Financial Reports

b. Monthly Status Reports

c. Personnel and Benefit Reports

d. Debt Status

e. Grant Activity – Progress Reports

d. Long Term Capital Planning

e. Intergovernmental Cooperation

** Governing Body Reviews and Monitors Reports


14

How Can A Community Come out of Act 47 Financially Distressed Status?

• DCED Secretary may Issue a Determination

• Community may Petition the DCED Secretary to Rescind Determination

• Public Hearing

• Factors to Be Considered


15

How Can Intergovernmental Cooperation Provide Resources & Relief?

• Councils of Governments (COGs)

• Police/Fire• Public Works• Land Use Planning• Code Enforcement• Economic Development


16


17

Examples of Intergovernmental Cooperation – Police Service

• 1,151 Police Departments 1,055 Traditional 33 Regional 163 Under Contract

• 1,314 Covered by State Police


18


19

Examples of Intergovernmental Cooperation – Fire Service

SINCE 1997

• 20 Merger / Consolidation (28 munis, 49 VFCs)• 3 Regional Fire District (6 munis, 9 VFCs)

CURRENT

• 14 Studies in Progress• 37 Municipalities• 48 Fire Companies


20

Examples of Intergovernmental Cooperation – Other Services

• Cooperative Purchasing • Joint Planning under Act 247• Joint Tax Collection• Shared Public Works Program – Vehicles,

Equipment, Facilities• Circuit riders


21

• Shared Code Enforcement Officers• Transportation Partnerships• Regional Sewer and Watershed Groups• Regional Recreation Programs• Economic Development Partnerships


Examples of Intergovernmental Cooperation – Other Services

22

FINANCIAL ASSISTANCE

The Center administers several funding programs to encourage and enhance intergovernmental cooperation initiatives.

• Shared Municipal Service Program• Land Use Planning & Technical Assistance

Program• Capital Loan Program• Early Intervention Program

All programs can be accessed through DCED’s Single Application for Assistance and are accepted and considered for funding on a year round basis.


23

SHARED MUNICIPAL SERVICES GRANT PROGRAM (SMS)

The purpose of this grant program is to promote cooperation between municipalities so as to foster increased efficiency and effectiveness in delivery of municipal services at the local level.

• Eligible applicants include:• any group of two or more municipalities• body authorized to act on behalf of two or more municipalities.

Project examples include: Any authorized municipal function accomplished jointly

• Combined Police Records Administration, • Shared Technology Initiatives, • Municipal Insurance Pooling, • Shared Public Works Operations, • Regional Recreation Activities, • Shared Code Enforcement Operations, • Shared Motorized Equipment Not Exceeding A Maximum Grant Of $25,000.


24

Provides financial and technical assistance to municipalities and counties in the Commonwealth.

Financial Assistance

LUPTAP grant program: Provides funding to municipalities and counties for the purpose of developing and strengthening community planning and implementation efforts.

Funding can be provided for projects in 3 areas.

Land Use Planning and Technical Assistance Program (LUPTAP)


25

LUPTAP

• Community Planning Program - municipal, county and multi-municipal comprehensive plans and policies.

• Emphasize multi-municipal and county-wide approaches to community planning.

• Has a strong expectation for detailed implementation strategies that may contain the identification of community and economic development projects as well as capital projects.

• Implementation Program - the tools that are used to implement a comprehensive plan. i.e. zoning ordinances and subdivision and land development ordinances.

• Transit Revitalization Investment District (TRID) program

• TRID planning studies.


26

LUPTAP

• Training and education are required components of all projects.

• Funding - The grant will generally fund 50% of the total cost of an approved application; the grantee will be required to provide the remaining 50%, normally as a cash match.

• The guidelines for these programs can be found on the Center’s land use website- www.landuseinpa.com.

• Grant applications are accepted and considered for funding on a year-round basis. A “Single Application” is required for submission of a LUPTAP grant request.


27


28

City of Aliquippa – Case Study

1987 Declared Distressed - Emergency Loan $460,000

• LTV Steel Layoffs – Large EIT & BP Losses• LTV Steel Appeals - Large RE Tax Losses• Budget Deficits – Cash Flow • Failure to Remit Payroll Taxes• Underfunded Pension Plans

1988 Initial Recovery Plan• Change from Borough to Third Class City• Change to Two-Tier RE Tax System• Stabilize Management/Administration• Stabilize Tax Base


29

City of Aliquippa – Case Study (continued)

1990 Updated Recovery Plan - Focus: • Stabilization of Tax Base- RE, EIT, BP, Fees• Stabilization of Management/Finance

1993 Updated Recovery Plan – Focus:• Management Oversight • Fiscal Responsibility – Finance Officer

1995 Updated Recovery Plan – Focus: Tax Base Erosion1998 Anticipated Exit from Distress in 2003

• Strong Management & Finance Stability• Strong Tax Collection – Return to Statutory EIT• Improved Economic Outlook


30

City of Aliquippa – Case Study (continued)

2001-2003 Devastation after 9/11/2001• J&L (LTV) Steel Closed Doors• Other Small Business Bankruptcies• Aliquippa Hospital Bankruptcy• Huge MMO’s for Pension

2003 - Present Current Environment• Stable Management & Finance• Stable Tax Base• Stable Workforce Costs (3 Year Freeze)• Increased Economic Activity


31

Case Study – City of Clairton

1988 Declared Distressed – Emergency Loan $681,809• Budget Deficits - Cash Flow Problems• Lay-off Police Department• Underfunded Pension Funds

Key Recommendations• Home Rule Charter – Council/Manager• Professional Manager/Department Heads• Strengthen Revenue Collection• Develop Capital Budget• Volunteer Fire Department• Intergovernmental Strategy


32

City of Clairton – Case Study (continued)

Current Issues• Reduce Dependency on EIT • Police Department Expense• Funding Pension Plans• Economic Development Initiatives• Maintaining Professional Staff• Strengthen Home Rule Charter• Collective Bargaining• Crime and Drug Problems


33

City of Clairton – Case Study (continued)Positive Steps

• Council Manager Form Instituted• Decreasing EIT Rates• Demolition Substandard Housing• Information Technology• Capital Plan Implemented• Parks & Recreation

Current Problems• Escalating Health Care & Benefits• Maintaining Spending Levels• Reducing Delinquent Taxes


34

City of Farrell - Case Study1987 Sharon Steel Bankruptcy - $651,000 shortfall

Declared Distressed - Emergency Loan

1988 Recovery Plan - Focus on Administration

1991 Plan Revisions - Focus on diversifying tax

1992 2nd bankruptcy – 2nd Loan ($292,000).

1994 Plan Revisions - Focus on administration, economic development and intergovernmental cooperation,

1994 Plant sold, reopened and closed again

1997 Assessments Appeals – reductions of 83%

1998 Plant sold and reopened


35

City of Farrell – Case Study (continued)1999 - Plan Revisions - “Staying the Course”Present

Positive Factors• Council-Manager Home Rule Charter• Intergovernmental Cooperation – Police, Recreation,

Garbage Collection, Economic Development, COG • Downsized Fire Department• Paid off Loans in 2003• 2004 Consolidation Referendum

Current problems• Escalating health care cost• Economic Development - KOZ until 2011


36

Southwest Regional Office

Michael S. Foreman 412-565-5199 [email protected]

Deborah Grass 412-565-2552 [email protected] Puko 412-565-5005 [email protected] Xenakis 412-565-2550 [email protected]

Fax: 412-565-7983

1403A State Office Bldg. 300 Liberty Avenue Pittsburgh, PA 15222


Thank You

For More Information Contact

The Governor’s Center for Local Government Services

(888) 223-6837

www.newPA.com

Local Government Academy800 Allegheny Avenue

Suite 402Pittsburgh, PA 15233

www.localgovernmentacademy.org

Phone: 412-237-3171Promoting Excellence in Government

act 47 – understanding your financial recovery plan local government academy tuesday, may 23, 2006...

Documents

local government serviceswho

recovery coordinator

recovery planhow

recovery plana

communitiesgovernors

loansgovernors center

appealgovernors center

freddig act