8002 - Definitions.

     § 8002.  Definitions.        (a)  Classification of debt.--With respect to classifications     of debt and subject to additional definitions contained in     subsequent provisions of this subpart which are applicable to     specific provisions of this subpart, the following words and     phrases when used in this subpart shall have the meanings given     to them in this section unless the context clearly indicates     otherwise:        "Debt."  The amount of all obligations for the payment of     money incurred by the local government unit, whether due and     payable in all events, or only upon the performances of work,     possession of property as lessee, rendering of services by     others or other contingency, except the following:            (1)  Current obligations for the full payment of which        current revenues have been appropriated, including tax        anticipation notes, and current payments for the funding of        pension plans.            (2)  Obligations under contracts for supplies, services        and pensions allocable to current operating expenses of        future years in which the supplies are to be expended or        furnished, the services rendered or the pensions paid.            (3)  Rentals or payments payable in future years under        leases, guaranties, subsidy contracts or other forms of        agreement not evidencing the acquisition of capital assets.        This exception shall not apply to rentals or payments under        any instruments which would constitute lease rental debt but        for the fact that the lessor or obligee is not an entity        described in section 8004(a)(1) (relating to when lease or        other agreement evidences acquisition of capital asset).            (4)  Interest or assumed taxes payable on bonds or notes        which interest or taxes are not yet overdue.            (5)  Obligations incurred and payments, including        periodic scheduled payments and termination payments, payable        pursuant to a qualified interest rate management agreement.        "Electoral debt."  All net debt incurred with the assent of     the electors, given as provided in this subpart whether issued     by a local government unit or through an authority.        "Lease rental debt."  The principal amount of authority bonds     or notes or bonds or notes of another local government unit to     be repaid from payments of the local government unit made     pursuant to leases, guaranties, subsidy contracts or other forms     of agreement where those payments are or may be made out of the     tax and other general revenues of a local government unit under     leases, guaranties, subsidy contracts or other forms of     agreement which evidence the acquisition of capital assets,     excluding any amount which has been approved by the electors.        "Net lease rental debt."  A portion of lease rental debt as     determined under Subchapter B (relating to limitations on debt     of local government units).        "Net nonelectoral debt."  A portion of nonelectoral debt as     determined in accordance with Subchapter B (relating to     limitations on debt of local government units).        "Nonelectoral debt."  All debt determined as provided in this     subpart, incurred or authorized to be incurred, except electoral     debt and lease rental debt, in each case whether authorized     before or after July 12, 1972, and whether before or after the     debt is incurred.        (b)  Exclusions from debt.--With respect to exclusions from     any particular category of debt and subject to additional     definitions contained in subsequent provisions of this subpart     which are applicable to specific provisions of this subpart, the     following words and phrases when used in this subpart shall have     the meanings given to them in this section unless the context     clearly indicates otherwise:        "Self-liquidating debt."  Debt payable solely from rents,     rates or other charges to the ultimate users of the project, to     be financed in whole or in part by that debt, or payable solely     from special levies or assessments of benefits lawfully     earmarked exclusively for that purpose. The term also includes     debt or any portion thereof at the time qualified as self-     liquidating pursuant to this subpart, whether or not solely     payable from those sources. The term "ultimate users" includes     the local government unit itself only where its use of the     project is incidental to the use of the project by other users.        "Subsidized debt."  The amount of debt which is self-     liquidating to the local government unit because the annual debt     service on the amount for the fiscal year next following the     time of determination will be covered by one of the following:            (1)  Payments of subsidies on account of the cost of the        project or on account of operations, but measured by the cost        of the project, or which will be covered by capital account        reimbursements, which subsidies or reimbursements will be        paid by either the Commonwealth or the Federal Government, or        both, where such payments under the legislation in force at        the time of determination are stated to be of a recurring        nature, if the Commonwealth or the Federal Government shall        have preliminarily or finally qualified the project for the        subsidy or reimbursement, all as determined under section        8024 (relating to exclusion of subsidized debt from net        nonelectoral debt or net lease rental debt).            (2)  Payments under a subsidy contract with another local        government unit or under a subsidy contract with an        authority, and the amount is lawful lease rental debt as to        the other local government unit as determined under section        8024.        (c)  Other definitions.--Subject to additional definitions     contained in subsequent provisions of this subpart which are     applicable to specific provisions of this subpart, the following     words and phrases when used in this subpart shall have the     meanings given to them in this section unless the context     clearly indicates otherwise:        "Accountant."  A certified public accountant or public     accountant or a firm of either of them.        "Authority."  An authority or nonprofit corporation organized     under any statute by or on behalf of the Commonwealth or any     local government unit or jointly by any one or more of them.        "Bond or note."  Any instrument issued by a local government     unit imposing an obligation for the repayment of money borrowed,     but not including a guaranty endorsed on an instrument issued by     an authority. Unless otherwise indicated, the term does not     include tax anticipation notes. A bond or a note which is a     security as defined in 13 Pa.C.S. Div. 8 (relating to investment     securities) shall be governed by 13 Pa.C.S. Div. 8, and every     other bond or note shall be governed by 13 Pa.C.S. Div. 3     (relating to negotiable instruments), except in each case as     otherwise provided in this subchapter.        "Borrowing base."  The annual arithmetic average of the total     revenues for the three full fiscal years ended next preceding     the date of the incurring of nonelectoral debt or lease rental     debt as set forth in a certificate stating the total revenues in     each of these years and stating the average, executed by the     authorized officials of the local government unit or by an     independent accountant. If, within that three-year period, there     has been an expansion or contraction of the territorial or     functional jurisdiction of a local government unit through     transfer, merger, annexation or assumption, in whole or in part,     in relation to another local government unit or an authority,     the borrowing base shall be calculated as if the expansion or     contraction had occurred within or prior to the commencement of     the three-year period in the manner as the statutes, charter     provisions or court decree provide or direct or, in the absence     of those provisions, as the department approves.        "Department."  The Department of Community and Economic     Development of the Commonwealth.        "General obligation."  In the title of a bond or note, means     a bond or note for the payment of which the full faith, credit     and taxing power of the local government unit is pledged, for     the payment of which the local government unit has entered into     the required covenant under section 8104 (relating to covenant     to pay bonds or notes or a guaranty) and for the payment of     which no specific revenues are pledged.        "Governing body."  The authorities in each local government     unit authorized by law to levy taxes or fix the tax rate of the     local government unit. The term also includes the school board     of a school district and the board or officers authorized to     make binding commitments for joint local government units, even     though that body has no power to levy taxes.        "Guaranteed revenue."  In the title of a bond or note, means     a bond or note of a local government unit payable in whole or in     part from pledged revenues, but which becomes wholly or partly a     general obligation of the local government unit, as guarantor in     the event of deficiency in the pledged revenues.        "Guaranty."  A guaranty, whether conditional or unconditional     and whether full or partial, to or for the benefit of holders of     bonds or notes of the local government unit or holders of bonds     or notes or other obligations of an authority or another local     government unit, of the payment of the principal of and interest     on the bonds or notes, the premium, if any, and assumed taxes,     if any, on those obligations.        "Incur" or "incurred."  When used with respect to debt, means     the point in time when, in the case of debt assented to by the     electors, the assent has been given, and, in the case of     nonelectoral or other debt, the first ordinance or, in the case     of small borrowings under section 8109 (relating to small     borrowing for capital purposes), the resolution authorizing the     debt has been finally enacted or adopted, unless the authority     for the debt has been canceled or terminated as provided in this     subpart. Final enactment or adoption means the final act     necessary to make an ordinance or resolution, as the case may     be, effective pursuant to all requirements of law, including any     necessary approval by a mayor or other executive officer or     failure of action by the mayor or officer within a specified     statutory time limit, or passage over the veto of a mayor or of     the officer, but does not include any required advertising     subsequent to the date of adoption by the governing body of the     local governing unit.        "Independent financial advisor."  A person or entity     experienced in the financial aspects and risks of interest rate     management agreements who is retained by a local government unit     to advise the local government unit with respect to a qualified     interest rate management agreement. The independent financial     advisor may not be the other party or an affiliate or agent of     the other party on a qualified interest rate management     agreement with respect to which the independent financial     advisor is advising a local government unit. For purposes of     sections 8281(b)(2) and (e)(5) (relating to qualified interest     rate management agreements), the independent financial advisor     may be retained by a public authority.        "Interest rate management plan."  A written plan prepared or     reviewed by an independent financial advisor with respect to a     qualified interest rate management agreement, which includes:            (1)  A schedule listing the amount of debt outstanding        for each outstanding debt issue of the local government unit        and the expected annual debt service on that debt. In the        case of variable rate debt, the schedule shall set forth the        estimated annual debt service thereon and annual debt service        on the debt calculated at the maximum rate specified for the        variable rate debt.            (2)  A schedule listing the notional amounts outstanding        of each previously executed qualified interest rate        management agreement which is then in effect.            (3)  A schedule listing all consulting, advisory,        brokerage or similar fees, paid or payable by the local        government unit in connection with the qualified interest        rate management agreement, and a schedule of any finder's        fees, consulting fees or brokerage fees, paid or payable by        the other party in connection with the qualified interest        rate management agreement.            (4)  A schedule listing the estimated and maximum        periodic scheduled payments to be paid by the local        government unit and to be received by the local government        unit from the other party in each year during the term of the        qualified interest rate management agreement.            (5)  An analysis of the interest rate risk, basis risk,        termination risk, credit risk, market-access risk and other        risks of entering into the qualified interest rate management        agreement. This paragraph includes schedules of the estimated        and maximum scheduled periodic payments which would be due        under the qualified interest rate management agreement.            (6)  An analysis of the interest rate risk, basis risk,        termination risk, credit risk, market-access risk and other        risks to the local government unit of the net payments due        for all debt outstanding and all qualified interest rate        management agreements of the local government unit. This        paragraph includes schedules of the estimated and maximum net        payments of total debt service and scheduled, periodic, net        payments, which would be due under all of the qualified        interest rate management agreements.            (7)  The local government unit's plan to monitor interest        rate risk, basis risk, termination risk, credit risk, market-        access risk and other risks. This paragraph includes the        valuation of the market or termination value of all        outstanding qualified interest rate management agreements.        "Issue."  All bonds authorized to be sold in respect of a     particular project, whether authorized to be sold at one time or     from time to time in one or more series.        "Local government unit."  A county, county institution     district, city, borough, incorporated town, township, school     district or any similar, general or limited purpose unit of     local government or any unit created by joint action of two or     more local government units which is authorized to be created by     law. The term does not include a city or county of the first     class, an authority as defined in this section or any unit     created by joint action of two or more local government units     which have not been granted by statute the power to issue bonds.     The term includes school districts of the first class presently     operating under a home rule charter or home rule charter     supplement, and the provisions of this subpart shall govern over     inconsistent charter provisions.        "Ordinance."  The formal action of a local government unit,     whether, under the law applicable to the local government unit,     the action is taken by ordinance or by resolution, to which the     requirements of section 8003 (relating to advertisement and     effectiveness of ordinances) applies.        "Project."  Includes any of the following:            (1)  Items of construction, acquisition, extraordinary        maintenance or repair which have been undertaken by a local        government unit.            (2)  Preliminary studies, surveying, planning, testing or        design work for any undertaking described in paragraph (1).            (3)  Lands or rights in land to be acquired.            (4)  Furnishings, machinery, apparatus or equipment        normally classified as capital items, but these items must        have a useful life of five years or more if financed        separately and not as a part of a construction or acquisition        project.            (5)  The local government unit's share of the cost of a        project undertaken jointly with one or more other local        government units or the Commonwealth or one of its agencies.            (6)  Countywide revision of assessment of real property.            (7)  Funding of all or any portion of a reserve, or a        contribution toward a combined reserve, pool or other        arrangement, relating to self-insurance, which has been        established by one or more local government units pursuant to        42 Pa.C.S. § 8564 (relating to liability insurance and self-        insurance) up to, but not exceeding, the amount provided in        section 8007 (relating to cost of project).            (8)  Funding of an unfunded actuarial accrued liability        or a portion of an unfunded actuarial accrued liability.            (9)  Funding or refunding of debt incurred for any or all        of the foregoing purposes.            (10)  Any combination of any or all of the foregoing as        any or all of the above may be designated as a project by the        governing body for the financing of which it desires to incur        debt.            (11)  Any deficit to be funded by bonds or notes as        provided in this subpart or the creation of a revolving fund        for specific improvements.            (12)  Where a local government unit has adopted a capital        budget, any unfunded portion of the capital budget selected        by ordinance for current funding.        "Qualified interest rate management agreement."  An     agreement, including a confirmation evidencing a transaction     effected under a master agreement, entered into by a local     government unit in accordance with and fulfilling the     requirements of section 8281 (relating to qualified interest     rate management agreements), which agreement in the judgment of     the local government unit is designed to manage interest rate     risk or interest cost of the local government unit on any debt a     local government unit is authorized to incur under this subpart,     including, but not limited to, swaps, interest rate caps,     collars, corridors, ceiling and floor agreements, forward     agreements, float agreements and other similar arrangements     which in the judgment of the local government unit will assist     the local government unit in managing the interest rate risk or     interest cost of the local government unit.        "Resolution."  A formal action of a governmental unit other     than an ordinance, whether, under the law applicable to the     local government unit, the action is taken by ordinance or by     resolution, to which section 8003 (relating to advertisement and     effectiveness of ordinances) does not apply.        "Revenue."  In the title of a bond or note not preceded by     the word "guaranteed," means a bond or note payable solely from     user charges, rates, revenues, rentals, fees, special     assessments and receipts pledged for the purpose.        "Series."  All the bonds or notes to be sold and delivered at     one time in respect of one project or of any two or more     projects which have been combined for purposes of financing or     where the bonds or notes have been combined for sale as provided     in this subpart.        "Sinking fund."  The special fund created pursuant to section     8221 (relating to creation of sinking funds and deposits,     reserves and surplus funds) for the payment of the principal of     and interest on bonds or notes, premium, if any, and assumed     taxes, if any, or for the payment of a guaranty.        "Tax anticipation notes."  Notes issued in anticipation of     taxes, in anticipation of revenues or in anticipation of both as     designated in the notes.        "Total revenues."  All moneys received by the local     government unit in a fiscal year from whatever source derived,     except the following:            (1)  Subsidies or reimbursements from the Federal        Government or from the Commonwealth measured by the cost of        or given or paid on account of a particular project financed        by debt.            (2)  Project revenues, rates, receipts, user charges,        special assessments and special levies which are or will be        pledged or budgeted for specific self-liquidating debt or for        payments under leases, guaranties, subsidy contracts or other        forms of agreement which could constitute lease rental debt        except that the payments are payable solely from these        sources, but that portion thereof that has been returned to        or retained by the local government unit shall not be        excluded.            (3)  Interest on moneys in sinking funds, reserves and        other funds, which interest is pledged or budgeted for the        payment or security of outstanding debt, and interest on bond        or note proceeds, if similarly pledged.            (4)  Grants and gifts in aid of or measured by the        construction or acquisition of specified projects.            (5)  Proceeds from the disposition of capital assets, and        other nonrecurring items, including bond or note proceeds not        considered income under generally accepted municipal        accounting principles.        "Unfunded actuarial accrued liability."  With respect to a     local government unit retirement system, pension plan or pension     trust fund, the excess of the actuarial accrued liability over     the actuarial value of assets of the retirement system, pension     plan or pension trust fund, computed as follows:            (1)  In the case of a local government unit that is        subject to the act of December 18, 1984 (P.L.1005, No.205),        known as the Municipal Pension Plan Funding Standard and        Recovery Act, in accordance with the requirements of that        act.            (2)  In the case of a local government unit that is not        subject to the Municipal Pension Plan Funding Standard and        Recovery Act, in accordance with the applicable laws for that        local government unit regarding minimum funding requirements        for the unit's retirement system, pension plan or pension        trust fund or, if there are no such laws, in accordance with        the ordinance, resolution or contract under which the local        government unit participates in the retirement system,        pension plan or pension trust fund.     In the case of a local government unit that participates in a     retirement system, pension plan or pension trust fund for     employees of more than one local government unit, including an     association of local government units cooperating under     Subchapter A of Chapter 23 (relating to intergovernmental     cooperation), the term includes the local government unit's pro     rata share of the total unfunded actuarial accrued liability of     the retirement system, pension plan or pension trust fund, as     the pro rata share may be determined under the applicable laws     or, if there are no applicable laws, under the ordinance,     resolution or contract under which the local government unit     participates in the retirement system, pension plan or pension     trust fund.     (May 5, 1998, P.L.301, No.50, eff. 60 days; Sept. 24, 2003,     P.L.110, No.23, eff. imd.)        2003 Amendment.  Act 23 amended the def. of "debt" in subsec.     (a) and added the defs. of "independent financial advisor,"     "interest rate management plan" and "qualified interest rate     management agreement" in subsec. (c).        1998 Amendment.  Act 50 amended the defs. of "bond or note"     and "department" in subsec. (c).        Cross References.  Section 8002 is referred to in sections     5602, 8022, 8101, 8210 of this title.