House Bill No. 6952

Special Act No. 01-1

AN ACT AUTHORIZING THE ISSUANCE OF CERTAIN BONDS BY THE CITY OF WATERBURY.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. It is hereby found and declared that a financial emergency exists with regard to the city of Waterbury, that the continued existence of this financial emergency is detrimental to the general welfare of the city and the state, that the city's continued ability to borrow in the public credit markets and the resolution of this financial emergency is a matter of paramount public interest and that to achieve this resolution it is necessary, appropriate and an essential public purpose to provide in this act for the financing of deficits resulting from the city's operations, the imposition of financial management controls and the creation of the Waterbury Financial Planning and Assistance Board to review the financial affairs of the city of Waterbury, all in order to achieve or maintain access to public credit markets, to fund the city's accumulated deficits and to restore financial stability to the city of Waterbury.

Sec. 2. As used in this act:

(1) "Accrual basis of accounting" means the basis of accounting under which revenues are recorded when earned and expenses are recorded at the time liabilities are incurred.

(2) "Annual budget" means the general fund budget, as defined by the city's charter, prepared on the modified accrual basis of accounting, as defined by GAAP.

(3) "Annual budgetary deficit" means with respect to the general fund of the city, the excess of expenditures, encumbrances and other financing uses over revenues, other financing sources, and any undesignated fund balance from the prior year used to balance the current budget, as computed utilizing the modified accrual basis of accounting.

(4) "Board" means the Waterbury Financial Planning and Assistance Board created by section 10 of this act.

(5) "Board of Aldermen" means the Board of Aldermen of the city of Waterbury.

(6) "City" means the city of Waterbury.

(7) "Contract" means any agreement, contract, lease, obligation, other than a debt obligation, letter of intent or acceptance regarding the provision of goods or services to or for the benefit of the city by and between the city and any other party, including collective bargaining agreements with employees of the city and any agreement, contract, letter of intent or acceptance regarding the sale or lease of any assets of the city having a fair market value greater than fifty thousand dollars.

(8) "Deficit funding bond" means any bond with a term of more than one year issued pursuant to this act.

(9) "Encumbrance" means commitments related to unperformed or executory contracts for goods or services.

(10) "Enterprise funds" means funds that are used to account for city operations which funds are financed and operated in a manner similar to private business enterprises where the intent is that the costs, expenses, including depreciation, of providing services to the public be financed or recovered primarily through user charges; or where a periodic determination of revenues earned, expenses incurred, or net income is appropriate for capital maintenance, public policy, management control, accountability or other purpose. Such funds shall utilize the accrual basis of accounting.

(11) "Finance director" means the director of finance of the city of Waterbury.

(12) "Fund balance" means the difference between fund assets and fund liabilities of governmental funds, utilizing the modified accrual basis of accounting.

(13) "Fund balance deficit" means the excess of fund liabilities over fund assets of governmental funds utilizing the modified accrual basis of accounting, as determined by independent auditors and as rounded to the nearest five thousand dollars.

(14) "GASB" means the Government Accounting Standards Board.

(15) "General obligation" means an obligation issued by the city and secured by the full faith and credit and taxing power of the city including any contingent obligation which is payable from the general fund and is subject to annual appropriation.

(16) "General fund" means the fund established by the city to account for all financial resources except those required to be accounted for in another fund.

(17) "Generally accepted accounting principles" or "GAAP" means the uniform minimum standards of, and the guidelines for, financial accounting and reporting as promulgated by GASB.

(18) "Governmental funds" means the general fund, special revenue funds, capital projects funds, and debt service funds, as defined by GAAP.

(19) "Interim funding obligation" means any note issued in anticipation of the issuance of a deficit funding bond.

(20) "Internal service funds" means funds used for the financing of goods or services provided by one department or agency to other departments or agencies of the city unit, or to other governmental units, on a cost-reimbursement basis. Such funds shall utilize the accrual basis of accounting.

(21) "Mayor" means the mayor of the city of Waterbury.

(22) "Maximum required capital reserve" means the maximum aggregate amount of principal, interest, and other amounts due and owing during any succeeding fiscal year, excluding any sinking fund installments payable in a prior fiscal year on outstanding general obligations of the city supported by a special capital reserve fund established pursuant to this act.

(23) "Modified accrual basis of accounting" means the basis of accounting under which revenues are recognized when susceptible to accrual that is, when they become both measurable and available. For purposes of this subdivision "measurable" means when the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred. Principal and interest on general long-term debt are recorded as fund liabilities when due.

(24) "Obligation" means any bond, bond anticipation note, revenue anticipation note, tax anticipation note or other interim funding obligation, certificate of participation, security, financing lease, installment purchase agreements, capital lease, receivable or other asset sale, refinancing covered by this definition and any other transaction which constitutes debt in accordance with both municipal reporting standards in section 7-394a of the general statutes, and the regulations prescribing municipal financial reporting adopted by the secretary.

(25) "Outstanding obligation" means any obligation with respect to which a principal or interest payment, sinking fund installment or other payment or deposit is or will be due in the future and for which moneys or defeasance securities have not been deposited in escrow.

(26) "Projected annual budgetary deficit" means, with respect to the general fund of the city during any fiscal year, the estimated "annual budgetary deficit".

(27) "Projected retained earnings deficit" means the estimated enterprise or internal service funds retained earnings deficits.

(28) "Projected unreserved fund balance deficit" means the estimated general fund and other governmental funds unreserved fund balance deficit.

(29) "Property taxes" means all taxes on real and personal property levied by the city in accordance with the general statutes including any interest, penalties and other related charges, and shall not mean any rent, rate, fee, special assessment or other charge based on benefit or use.

(30) "Required minimum capital reserve" means the lesser of the maximum amount of principal and interest becoming due by reasons of maturity or a required sinking fund installment in the then current or any succeeding calendar year on bonds of the city then outstanding and supported by a special capital reserve fund or the maximum amount then permitted to be deposited in such fund by the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, to permit the interest on such bonds to be excluded from gross income for federal tax purposes.

(31) "Reserved fund balance" means those portions of fund balance that are not appropriable for expenditure or that are legally segregated for a specific future use.

(32) "Retained earnings" means an equity account reflecting the accumulated earnings of an enterprise fund or internal service fund.

(33) "Retained earnings deficit" means the audited enterprise or internal service funds retained earnings deficits of accumulated losses that exceed earnings.

(34) "Review period" means the period of time during which the city is subject to the powers of the board.

(35) "Secretary" means the Secretary of the Office of Policy and Management.

(36) "Special capital reserve fund" means the fund established pursuant to the provisions of this act to secure the timely payment of deficit funding bonds.

(37) "Special revenue funds" means funds established to account for the proceeds of specific revenue sources that are legally restricted to expenditure for specific purposes.

(38) "Trustee" means any trust company or bank having the powers of a trust company within or without the state, appointed by the board as trustee for the special capital reserve fund, as well as any successor trust company or bank having the powers of a trust company within or without the state succeeding a prior trust company or bank as trustee, so appointed and approved.

(39) "Undesignated fund balance" means the unreserved portion of fund balance that has not been designated for specific purposes and is available for appropriation, as reflected in the audited financial statements of the city.

(40) "Unreserved fund balance" means that portion of fund balance that is not a portion of reserved fund balance.

(41) "Unreserved fund balance deficit" means the audited general fund and other governmental funds unreserved fund balance deficit.

Sec. 3. (a) The Board of Aldermen may by resolution, approved by a majority of its members and subject to the approval of the board, authorize the issuance and sale of deficit funding bonds and interim funding obligations subject only to the provisions of this act. Any such resolution approved by the Board of Alderman shall acknowledge the establishment of the Waterbury Financial Planning and Assistance Board pursuant to this act. Notwithstanding any provision of the city's charter, such resolution may delegate to the mayor and the finance director the authority to determine the terms and conditions of any deficit funding bonds and interim funding obligations issued pursuant to this act, including, without limitation, the date, interest rate or rates, prices, maturities, form and manner of sale, which may be by public or private sale, provided any deficit funding bond issued pursuant to this act may not mature later than twenty years from the date of issuance. No interim funding obligations shall be issued unless the board of aldermen has adopted a bond resolution authorizing the issuance of an equal or greater amount of deficit funding bonds and providing that the deficit funding bonds, together with any other outstanding general obligation bonds of the city theretofor and thereafter issued, shall be secured by any revenue intercept established pursuant to special act 93-25 it being hereby determined that it is important to the security of all such bonds to have the benefit of the revenue intercept apply to all general obligation bonds of the city. After issuance of interim funding obligations or deficit funding bonds, all securities issued pursuant to this act shall be conclusively presumed to be fully and duly authorized and issued under the laws of the state. Any person or governmental entity shall be estopped from questioning their authorization, sale, issuance, execution or delivery. All such terms and conditions shall be subject to the prior approval of the secretary and the State Treasurer.

(b) The city may issue its deficit funding bonds and interim funding obligations issued in anticipation of deficit funding bonds for the aggregate accumulated deficit for the fiscal period ending not later than June 30, 2001, as determined in accordance with this section. The aggregate principal amount of deficit funding bonds or interim funding obligations authorized to fund the budget deficits pursuant to this act shall be limited to: (1) Any unreserved fund balance deficit, retained earnings deficit, projected fund balance deficit, projected retained earnings deficit, any other unfunded accrued liability to the city, or to extinguish any receivable that the board has determined will contribute to the elimination of the chronic cash flow problems of the city, all to the extent determined by the board, and (2) such additional amounts as the Board of Aldermen and the board shall approve to provide for the establishment and maintenance of reserves or similar funds, including amounts that may be required to fund a special capital reserve fund in accordance with section 6 of this act, and to pay all fees, costs and expenses in connection with the authorization, issuance and sale of such bonds or interim funding obligations, including, but not limited to, legal, advisory, printing and administrative expenses, any underwriters' discount, expenses in connection with any credit enhancement and expenses of the board under section 11 of this act. The net proceeds of such bonds shall be applied first to repay the principal of and interest, to the extent not otherwise provided, on outstanding interim funding obligations, and thereafter as the authorizing resolution provides. The terms and conditions of any obligations issued by the city, including any renewals or refundings thereof, other than deficit funding bonds shall be subject to the prior approval of the board pursuant to section 11 of this act, except that after the effective date of this act and before the board is appointed, the secretary and the State Treasurer shall approve the terms and conditions of any obligations, as defined by the act, issued by the city other than deficit funding bonds. Nothing in this act shall limit the right of the city to comply with the provisions of any existing contract with or for the benefit of the owners or holders of any bonds, notes or other obligations of the city and nothing in this act shall be construed to alter, impair, diminish or otherwise affect the rights of such owners or holders. Any deficit funding bonds issued under this act may be defeased through the issuance of refunding bonds which may be authorized in the same manner as the bonds being refunded, or, in the event the board shall no longer exist pursuant to section 14 of this act, in such manner as set forth in the general statutes provided the final maturity of any refunding bonds shall not be later than the final maturity of the deficit funding bonds being refunded and that the city will achieve, as result of the sale of such refunding bonds and the investment and application of the proceeds of such sale, net debt service savings. Bonds issued to refund deficit funding bonds may be secured by the special capital reserve fund created pursuant to section 6 of this act only with the approval of the State Treasurer.

(c) Deficit funding bonds and interim funding obligations issued in anticipation of deficit funding bonds issued pursuant to this act shall constitute the legal, valid and binding obligations of the city for which the full faith and credit of the city shall be pledged to the payment of the principal thereof and the interest thereon.

(d) Pending the completion of the audit for the fiscal year ending June 30, 2001, the city may, pursuant to the authority in this act and subject to the approval of the secretary and the State Treasurer, issue interim funding obligations or renewals thereof in an amount not to exceed fifty million dollars outstanding at any time. Upon the sale of any deficit funding bonds, the proceeds thereof, to the extent required, shall be applied forthwith to the payment of the principal of and interest on any interim funding obligations issued pursuant to this act or shall be deposited in trust for such purpose. Notwithstanding any provision of the city's charter, the date or dates of such interim funding obligations, the maturities, denominations, form, details and other particulars of such bond anticipation notes, including the method, terms and conditions for the issue and sale thereof, by public or private sale, shall be determined by the Board of Aldermen or the Board of Aldermen may delegate to the mayor and finance director the authority to make such determinations in the best interests of the city, and be subject to the approval of the secretary and the State Treasurer, provided the term of all such interim funding obligations, including any renewals thereof, shall not exceed eighteen months. Such interim funding obligations shall constitute the legal, valid and binding general obligations of the city, for which the full faith and credit of the city shall be pledged to the payment of the principal thereof and the interest thereon.

(e) Notwithstanding any other provision of law, the borrowing power of the city with respect to interim funding obligations and deficit funding bonds shall be under the authority of this act. Notwithstanding the provisions of this section, in the event the city through its Board of Aldermen does not elect to issue deficit funding bonds and interim funding obligations to provide for the timely payment of its outstanding short term borrowings, then the board may authorize and issue such deficit funding bonds and at its discretion authorize and issue the interim funding obligations necessary to preclude default on any short-term borrowings. Notwithstanding the provisions of this section, in the event the city through its Board of Aldermen does not elect to issue deficit funding bonds or renewals of interim funding obligations to provide for the timely payment of principal and interest on any interim funding obligations, the board may authorize and issue such deficit funding bonds or renewal of interim funding obligations. Each such authorization shall be in lieu of and with or without approval of the Board of Aldermen to the extent the board determines it is necessary and required in order to achieve the purposes of this act. Any determination of the board made pursuant to this section may include the delegation by the board of its powers hereunder to determine the particulars of such issuance of the interim funding obligations or deficit funding bonds to one or more of its members. Any such interim funding obligations or deficit funding bonds so authorized by the board shall be subject to the approval of the Secretary and the State Treasurer and subject to the other limitations set forth in this act.

Sec. 4. In order to secure bonds and notes issued pursuant to this act and any other bonds or notes issued by the city while any bonds or notes issued pursuant to this act remain outstanding, the city shall enter into an indenture of trust with a trustee, which may or may not include one or more amendments to an existing indenture of trust.

Sec. 5. The city shall make representations, agreements and covenants, including a covenant not to impair, limit, modify, rescind, repeal or otherwise alter the rights, exemptions or remedies of any bondowner or noteholder, bond insurer or other providers of credit or liquidity enhancement, by and for the benefit of any bondowner or noteholder, bond insurer or other provider of credit or liquidity enhancement, which representations, agreements and covenants are necessary or appropriate: (1) To ensure the exemption of interest on the bonds or notes issued pursuant to this act from taxation under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, including agreements to pay rebates to the federal government of investment earnings derived from the investment of the proceeds of the bonds or notes, or (2) to strengthen the credit of bonds or notes issued pursuant to this act in the financial markets, or both.

Sec. 6. In connection with the issuance of deficit funding bonds under the provisions of this act, the city may, subject to the approval of the board, create and establish one or more reserve funds to be known as special capital reserve funds and shall pay into such special capital reserve funds (1) any moneys appropriated and made available by the state for the purposes of such funds, (2) any proceeds of sale of deficit funding bonds, to the extent provided in the resolution authorizing the issuance thereof, and (3) any other moneys which may be made available to the city for the purpose of such funds from any other source or sources. The moneys held in or credited to any special capital reserve fund established under this section, except as hereinafter provided, shall be used solely for the payment of the principal of deficit funding bonds secured by such capital reserve funds as the same become due, the payment of interest on such bonds of the city or the payment of any redemption premium required to be paid when such bonds are redeemed prior to maturity; provided the city may provide that moneys in any such fund shall not be withdrawn therefrom at any time in such amount as would reduce the amount of such funds to less than the required minimum capital reserve, except for the purpose of paying such principal of, redemption premium and interest on such bonds of the city secured by such special capital reserve becoming due and for the payment of which other moneys of the city are not available. The city may provide that it shall not issue bonds to be secured by a special capital reserve fund created under this section at any time if the required minimum capital reserve on the bonds outstanding and the bonds then to be issued and secured by a special capital reserve fund will exceed the amount of such special capital reserve fund at the time of issuance, unless the city, at the time of the issuance of such bonds, shall deposit in such special capital reserve fund from the proceeds of the bonds so to be issued, or otherwise, an amount which, together with the amount then in such special capital reserve fund, will be not less than the required minimum capital reserve. On or before December first, annually, there is deemed to be appropriated from the state General Fund such sums, if any, as shall be certified by the finance director to the secretary and the State Treasurer, as necessary to restore each such special capital reserve fund to the amount equal to the required minimum capital reserve of such fund, and such amounts shall be allotted and paid to the trustee on behalf of the city for deposit therein. For the purpose of evaluation of any such special capital reserve fund, obligations acquired as an investment for any such fund shall be valued at fair value, as defined by GAAP, or amortized cost as the board shall determine. Nothing in this section shall preclude the city from establishing and creating other debt service reserve funds in connection with the issuance of bonds of the city under this section. Subject to any agreement or agreements with holders of outstanding bonds of the city, any amount or amounts allotted and paid to the city by the state pursuant to this section shall be repaid to the state from moneys of the city at such time as such moneys are not required for any other of its city purposes and in any event shall be repaid to the state from the first amounts thereafter payable by the state to the city, whether in the form of a grant, grant-in-aid, payment in lieu of taxes or any form whatsoever, pursuant to any provisions of the general statutes or state regulations, which amounts are hereby deemed appropriated from the city to the state as and for such repayment. Notwithstanding any other provisions of this act, the aggregate amount of bonds to be secured by a special capital reserve fund or funds created and established pursuant to this section shall not exceed seventy-five million dollars.

Sec. 7. No obligations other than deficit funding bonds shall be secured by a special capital reserve fund and no deficit funding bonds shall be issued under this act unless the issuance thereof is approved by the State Treasurer. Such approval shall be based upon a certificate of the board filed with the State Treasurer and the secretary finding that: (1) The annual budget and financial plan have been completed and approved by the board, contain projections of revenue and expenditures that are based on reasonable and appropriate assumptions and methods of estimation, provide that operations of the city will be conducted within cash resources available according to the board's revenue estimates, and comply with the provisions of section 12 of this act; (2) pension funds are accounted for on a GAAP basis and funded in accordance with actuarial recommended levels for the subject fiscal year; (3) the city is not in default in any of its general obligations unless issuance will cure the default; (4) there is sufficient taxing authority implemented and approved to produce sufficient revenues to pay all debt service on all bonds heretofore and hereunder issued by the city and to establish, increase and maintain any reserves, including the special capital reserve fund, deemed by the board to be necessary and advisable to secure payment of the principal of and interest on all such bonds; and (5) the financing is in the public interest. Notwithstanding the provisions of this section, the State Treasurer may approve the issuance of bonds secured by a special capital reserve fund for the purpose of paying principal and interest on interim funding obligations due for which there are no other funds available.

Sec. 8. The state of Connecticut does hereby pledge to and agree with the holders of any deficit funding bonds or interim funding obligations issued under this act that the state will not limit or alter the rights hereby vested in the city until such obligations, together with the interest thereon, are fully met and discharged, provided nothing in this act shall preclude such limitation or alteration if and when adequate provision shall be made by law for the protection of the holders of such deficit funding bonds or interim funding obligations. The city is authorized to include this pledge and undertaking for the state in such deficit funding bonds or interim funding obligations issued in anticipation of deficit funding bonds.

Sec. 9. Notwithstanding the provisions of the general statutes, any special act, the charter of the city or any ordinance or resolution of the city, no proceedings, notice or approval shall be required for the issuance of deficit funding bonds or interim funding obligations authorized under this act or any instrument authorized as security therefor, except as provided in this act. Bonds and obligations issued pursuant to this act shall be included in the calculation of aggregate indebtedness under section 7-374 of the general statutes.

Sec. 10. (a) There is hereby created the Waterbury Financial Planning and Assistance Board which shall be in the Office of Policy and Management for administrative purposes only, which board shall be comprised of the following members: The Secretary of the Office of Policy and Management or the secretary's designee, who shall serve as the chairman of the board and shall preside over all meetings of the board; the State Treasurer or the treasurer's designee; the mayor; four members appointed by the Governor, one of whom shall be a resident of the city of Waterbury, one of whom shall be affiliated with a business located in the city, one of whom shall have an expertise in finance and one of whom shall be the chief executive officer of a bargaining unit representing employees of the city who is jointly recommended by a majority of the chief executive officers of such units provided such recommendation shall be made not later than seven days after the effective date of this act.

(b) A majority of the voting membership of the board shall constitute a quorum for the conduct of business. The board shall act by majority vote of the voting membership of the board. The board shall maintain a record of its proceedings in such form as it may determine; but such record shall indicate attendance and all votes cast by each member. The board shall adopt its own procedures for the conduct of its meetings and exercise of the powers, duties and functions conferred upon it by this act and shall not be subject to the provisions of chapter 54 of the general statutes.

(c) The members of the board shall serve without compensation, but shall be reimbursed for expenses incurred in performance of their duties. All expenses of the board, including any staff, consultants, and implementation costs of any consultant studies adopted by the board in accordance with this act, shall be paid by the city and may be paid from the proceeds of any deficit funding bonds or interim funding obligations issued pursuant to this act.

(d) The board is hereby deemed to be the successor to the Budget Advisory Council established pursuant to section 3 of special act 96-3 and upon passage of this act such Budget Advisory Council shall cease to exist.

Sec. 11. (a) In carrying out the purposes of this act, the board shall have the following powers, duties and functions:

(1) Review and approve or disapprove the city's annual budget, including, but not limited to, the governmental funds, enterprise funds, and internal service funds, in accordance with the provisions of section 12 of this act;

(2) Review and approve or disapprove an initial financial plan of the city, in accordance with the provisions of section 12 of this act;

(3) Review and approve or disapprove the proposed terms of any deficit funding bonds or interim funding obligations pursuant to this act or any other bonds, notes or other obligations of the city;

(4) (A) Approve or reject all collective bargaining agreements for a new term, other than modifications, amendments or reopeners to an agreement, to be entered into by the city or any of its agencies or administrative units, including the board of education. If the board rejects a proposed collective bargaining agreement, the parties to the agreement will have ten days from the date of the board's rejection to consider the board's concerns. In rejecting an agreement, the board shall indicate the specific provisions of the proposed agreement which caused the rejection, as well as its rationale for the rejection. The board may, at its option, indicate the total cost impact or savings it would find acceptable in a new agreement. After the expiration of such ten-day period, the board shall approve or reject any such agreement. If the parties have been unable to reach an agreement or the board rejects such agreement, the board shall set forth the terms of the agreement, which shall be binding upon the parties. In establishing the terms of the agreement, as well as in making a determination to reject a proposed agreement, the parties shall have an opportunity to make a presentation to the board. The board shall not be limited to consideration and inclusion in the collective bargaining agreement of matters raised or negotiated by the parties;

(B) Approve or reject all modifications, amendments or reopeners to collective bargaining agreements entered into by the city or any of its agencies or administrative units, including the board of education. If the board rejects a proposed amendment to a collective bargaining agreement, the parties to the agreement will have ten days from the date of the board's rejection to consider the board's concerns. In rejecting an amendment to an agreement, the board shall indicate the specific provisions of the proposed amendment which caused the rejection, as well as its rationale for the rejection. The board may, at its option, indicate the total cost impact or savings it would find acceptable in a new amendment. After the expiration of such ten-day period, the board shall approve or reject any revised amendment. If the parties have been unable to reach a revised amendment or the board rejects such revised amendment, the board shall set forth the terms of the new amendment, which shall be binding upon the parties. In establishing the terms of the new agreement, as well as in making a determination to reject a proposed amendment, the parties shall have an opportunity to make a presentation to the board;

(5) With respect to labor contracts in or subject to binding arbitration, serve as the binding arbitration panel. The board shall have the power to impose binding arbitration upon the parties any time after the seventy-fifth day following the commencement of negotiations. If, upon the effective date of this act, the parties are in binding arbitration, the board shall immediately replace any established binding arbitration panel. The time limits in the applicable provisions of the general statutes or any public or special acts governing binding arbitration shall be reduced by one-half. The board shall not be limited to consideration and inclusion in the collective bargaining agreement of the last best offers or the matters raised by or negotiated by the parties;

(6) Review and approve or disapprove any contract and any renewal, extension or modification thereof not covered by collective bargaining contemplating the expenditure in either the current or any future fiscal year of more than fifty thousand dollars and shall have the power to set aside any contracts which have not been authorized in accordance with the requirements of any state or local law;

(7) Review and approve all bond ordinances and bond resolutions of the city;

(8) Approve transfers of appropriations made by the Board of Aldermen;

(9) Appoint one or more independent auditors as such term is defined in section 7-391 of the general statutes for the purpose of meeting the requirements of chapter 111 of the general statutes;

(10) Audit compliance with the financial plan and the annual budget in such areas as the board shall determine;

(11) Require the city to implement such measures relating to the efficiency and productivity of the city's operations and management as the board deems appropriate to reduce costs and improve services so as to advance the purposes of this act;

(12) Obtain information on the financial condition and needs of the city, provided nothing in this subdivision shall diminish the powers of the mayor, the finance director, the Board of Aldermen or any other board, agency or authority of the city otherwise provided by law;

(13) Monitor compliance with, require implementation or implement the provisions governing revaluation set forth in section 12-62 of the general statutes;

(14) Monitor the funding of pension contributions in accordance with actuarial recommendations;

(15) Approve or disapprove the chief negotiator for the city for the purposes of collective bargaining and, in the case of disapproval, the board may appoint such negotiator;

(16) Study the city's unfunded pension liability and, not later than two years from the effective date of this act, report to the Governor and the General Assembly recommendations on addressing the unfunded liability which report shall be in accordance with section 11-4a of the general statutes; and

(17) Report to the Governor and the General Assembly on or before July 1, 2001, and every six months thereafter, regarding the fiscal condition of the city and compliance with this act, which report shall be in accordance with section 11-4a of the general statutes.

(b) The board may:

(1) Review and approve or disapprove the budget of the city's board of education on a line item basis and may require the board of education to submit to it any budget transfers;

(2) Appoint an emergency financial and administrative manager and delegate to such manager, in writing, such powers as the board deems necessary or appropriate for the purpose of managing the financial and administrative affairs of the city for the period of time during which the city is subject to the powers of the board provided the board may not delegate the powers enumerated under subdivisions (1) to (5), inclusive, (7), (15) and (17) of subsection (a) of this section and subdivisions (1), (4), and (6) to (8), inclusive, of this subsection and further provided the board may override any actions taken by such manager at any time;

(3) Retain such consultants experienced in the field of municipal finance, municipal law, governmental operations and administration or governmental accounting as it shall deem necessary or desirable for accomplishing its purposes;

(4) Make a request to the exclusive representative of an employee bargaining unit to reopen the negotiation process and present a proposed revision to a contract. Such exclusive representative shall have five days to respond to such request and, if the exclusive representative fails to so respond, it shall be deemed to have denied such request.

(A) If the exclusive representative denies such request, the state board of labor relations, through its agent, shall convene, no later than ten days from the date of such denial, a meeting of the membership of the bargaining unit. At such meeting the board shall present its proposed revision. A vote of such membership shall be held on such proposed revision no later than five days after the date of the meeting. The agent of the state board of labor relations shall schedule such vote and shall post a notice of the appropriate date, time and location.

(B) If the exclusive representative agrees to negotiate with the board on the proposed revision, the parties shall have fourteen days to so negotiate, provided such period may be extended an additional fourteen days by mutual agreement of the parties. If the parties reach an agreement, the agreement shall be subject to the ratification procedure established by the bargaining unit. If the parties fail to agree, the last best offer of the board on such proposed revision shall be submitted to the membership of the bargaining unit for a vote to be held no later than five days from the date negotiations ceased pursuant to this subparagraph. The exclusive representative shall schedule such vote. The board shall have an opportunity to present its revisions to the membership prior to such vote.

(C) The vote pursuant to subparagraphs (A) and (B) of this subdivision shall constitute final action on the proposed revision. An affirmative vote by a majority of the membership of the bargaining unit shall constitute approval of the subject of such vote. A failure to achieve such affirmative vote shall constitute a final rejection of the proposed revision and such proposed revision shall not be subject to further dispute resolution, in which case the existing contract shall remain in effect. The requirements of this subsection shall not be considered a prohibited practice under subsection (a) of section 7-470 of the general statutes or subsection (b) of section 10-153e of the general statutes;

(5) Order any official or employee of the city or any agency or administrative unit thereof, including any member or employee of the board of education, to implement any decisions of the board;

(6) Override any action or decision of the mayor, Board of Aldermen or other city employee which action or decision affects the economic viability of the city, including, but not limited to, decisions with respect to personnel and other administrative hires;

(7) Review any existing contract of the city, not covered by collective bargaining, to determine if such contract is in the best interest of the city and shall have the power to set aside such contract provided there is no significant penalty to the city as a result of such action; and

(8) Issue deficit funding bonds and interim funding obligations in the name and on behalf of the city as provided in section 3 of this act and in doing so, require the city to comply with the provisions of section 7 of this act.

Sec. 12. (a) The city shall submit its annual budget to the board commencing with the annual budget for the first full fiscal year next succeeding the establishment of the board, regardless of whether any such budget has previously been approved in accordance with the charter of the city. No annual budget, annual tax levy or user fee for the city shall become operative until it has been approved by the board. If the board disapproves any annual budget, it shall adopt an interim budget and establish a tax rate and user fees in accordance with this section. Such interim budget shall take effect at the commencement of the fiscal year and shall remain in effect until the city submits and the board approves a modified budget.

(b) The city shall submit a financial plan annually commencing with the financial plan for the first full fiscal year next succeeding the establishment of the board, which shall include the current fiscal year plus three succeeding fiscal years, prepared by the city in connection with the proposed issuance of deficit funding bonds pursuant to this act.

(c) After the initial approval of a financial plan and an annual budget, the board shall regularly reexamine such plan and budget in consultation with the city and may require the city to provide a modified financial plan or modified annual budget, or both, within such time period as the board may require. If the city fails to make any modifications to the financial plan or annual budget within such time period, the board shall make the modifications.

(d) The board shall develop procedures for the submission of the annual budget and financial plan of the city to the board. Such procedures shall include, but are not limited to, the form and timeline for the submissions by the city and approval, disapproval or modification of the financial plan and annual budget by the board. The procedures shall also provide for the submission to the board prior to the commencement of each fiscal year during the review period, the general fund, other governmental funds, enterprise funds, and internal service funds budgets of the city as adopted by the Board of Aldermen and approved by the mayor pursuant to the city charter. The procedures may also provide for the submission of any additional information the board may require of the city in order to fulfill its obligations under this act.

(e) If the board rejects the general fund, other governmental funds, enterprise funds, or internal service funds budgets, the board shall develop and approve an interim budget for the city in the place of any budget so rejected and set a tax rate and user fees. Such interim budget, tax rate and user fees shall take effect at the commencement of the fiscal year and shall remain in effect until the city submits and the board approves a modified budget or budgets, as the case may be.

(f) If the city submits a financial plan modification or a budget modification, the board shall determine whether the financial plan modification or budget modification is complete and complies with the provisions of this section and shall approve or disapprove the financial plan modification or budget modification in accordance with the provisions of this section. If the board determines that the financial plan modification or budget modification is complete and complies with the requirements of the act, the board shall approve the financial plan modification or budget modification. Modifications to the general fund budget and all other budgets shall be made by the Board of Aldermen and approved by the board in accordance with this act.

(g) The board shall disapprove, by resolution, the financial plan or the annual budget proposed by the city if, in the judgment of the board, such budget or plan: (1) Is incomplete; (2) fails to contain projections of revenues and expenditures that are based on reasonable and appropriate assumptions and methods of estimation; (3) fails to provide that operations of the city will be conducted within the cash resources available according to the board's revenue estimates; or (4) fails to comply with the provisions of this section.

(h) In the event that the city shall, for any reason, fail to submit a financial plan and annual budget as required by this section, or to comply with a financial plan or annual budget approved by the board, or in the event that the board has not, for any reason permitted under this act, approved a financial plan or annual budget submitted by the city, the board, after enactment of a resolution so finding, shall formulate and adopt a financial plan or annual budget or both, as the case may be, to be effective until the board approves a financial plan or annual budget or both, as the case may be, submitted by the city.

(i) The city and each of its administrative units shall supply the board with such financial reports, data, audits, statements and any other records or documentation as the board may require to exercise its powers and to perform its duties and functions. Such reports may include, but not be limited to, monthly reports of the financial condition of the city, the status of the current annual budget and progress under the financial plan for the then current fiscal year, estimates of the operating results for all funds or accounts to the end of the then current fiscal year, statements and projections of general fund cash flow reserves, number of city employees on the city payroll and debt service requirements on all bonds and notes of the city for the following month.

Sec. 13. The city shall not become a debtor under Chapter 9 of Title 11 of the United States Code, as from time to time amended, without the written consent of the Governor so long as any borrowings secured by the special capital reserve fund pursuant to section 6 of this act remain outstanding.

Sec. 14. (a) The board shall remain in existence and exercise the powers, duties and functions granted to it by this act until such time as the general fund, special revenue funds, enterprise funds, and internal service funds of the city shall have, for five consecutive fiscal years, maintained a positive unreserved fund balance, retained earnings balance, in accordance with audits required by the general statutes and the board, by resolution, determines that: (1) There have been no annual budgetary deficits for the general fund of the city for five consecutive fiscal years; (2) the city has presented and the board has approved a financial plan that projects positive unreserved fund balances and retained earnings for the general fund, special revenue funds, enterprise funds and internal service funds for the three succeeding consecutive fiscal years covered by such financial plan in accordance with generally accepted accounting principles and this act; and (3) the audits for five consecutive fiscal years have been completed and are unqualified relating to the annual reporting of results of operations for all governmental funds, enterprise funds, and internal service funds.

(b) If, during the period during which any borrowings of the city secured by a special capital reserve fund pursuant to section 6 of this act or pursuant to special act 96-3 remain outstanding, the city incurs an audited annual budgetary deficit in its general fund in excess of one-half of one per cent of its most recently completed annual budget, fails to fund pension contributions in accordance with actuarial recommendations, fails to implement revaluation in accordance with section 12-62 of the general statutes or fails to fund its internal service funds at a level necessary to avoid the accumulation of retained earnings deficits, the board may, at the direction of the secretary, be reestablished and may reassume the duties, powers and functions granted to it by this act and shall remain in existence until the provisions of subsection (a) of this section are again satisfied.

Sec. 15. If, at any time, the city has failed to lay necessary taxes or to lay a tax which, in addition to the other estimated yearly revenue of the city, is sufficient to pay the general fund current expenditures of such city, the Board of Aldermen, or, if the Board of Aldermen fails to act within thirty days of notice thereof from the board of the board's intention to proceed under this section, the board may make a rate bill upon the city's list applicable to such fiscal year for the amount necessary, or for an amount sufficient, to pay all or a portion of the annual budgetary deficit and cause the same to be collected as due.

Sec. 16. Not later than June 30, 2001, the Board of Aldermen shall present for the board's approval a plan for a reduction in force to achieve a reduction of not less than ten per cent of the total annual cost of the filled, unclassified managerial, administrative and contractual employee positions of the city provided the board may modify the provisions of such plan. The Board of Aldermen shall implement such plan or modified plan on or before October 1, 2001.

Sec. 17. (a) The secretary, the State Treasurer, the board and any person authorized to act on behalf of or to assist them, or any staff person for the board, shall not be personally liable or subject to any suit, judgment or claim for damages resulting from the exercise or failure to exercise the powers, duties or functions granted to them under this act other than any such exercise or failure which constitutes wilful, wanton or malicious behavior. The Attorney General shall defend any person identified in this subsection with regard to any such suit, judgment or claim provided such person shall reimburse the state for its expenses in such defense if such person is found to be liable.

(b) The Attorney General may apply for a writ of mandamus or seek a temporary or permanent injunction on the behalf of the board requiring any official, employee or agent of the city to carry out and give effect to any order of the board authorized by this act. Each such application shall be filed in superior court for the judicial district of Waterbury.

(c) The superior court for the judicial district of Waterbury may, by application of the secretary, the board or the Attorney General, enforce, by appropriate decree or process, any provisions of this act or any act or order of the secretary or the board rendered pursuant to this act.

Sec. 18. During the review period: (1) No officer or employee of the city shall make or authorize a contract in excess of the amount available therefor under the financial plan and annual budget as then in effect; and (2) no officer or employee of the city shall involve the city in any contract for the payment of money for any purpose required to be approved by the board unless such contract has been so approved and unless such contract is in compliance with the financial plan and the annual budget as then in effect. No officer or employee of the city shall take any action in violation of any valid order of the board or shall fail or refuse to take any action required by any such order or shall prepare, present or certify any information, including any projections or estimates, or report for the board or any of its agents that is false or misleading. In addition to any penalty or liability under any other law, any officer or employee of the city who shall violate the provisions of this section shall be subject to appropriate administrative discipline, including, when circumstances warrant, suspension from duty without pay or removal from office by order of the mayor. Nothing in this act shall invalidate or supersede any procedural protections provided to such employee under law or contract. In the case of a violation of the provisions of this section by an officer or employee of the city, the mayor shall immediately report to the board all pertinent facts together with a statement of the action taken thereon.

Sec. 19. Six months after the end of the review period, the existence of the board and all other provisions of this act shall terminate, except that the provisions of sections 4, 13, 14 and 17 of this act shall remain in full force and effect and a copy of the annual budget and actuarial valuation of the city shall be sent to the Secretary of the Office of Policy and Management for so long as any bonds or notes issued pursuant to this act remain outstanding.

Sec. 20. This act is intended to authorize the city to fund its accumulated deficits, to establish a board to review the financial affairs of the city in order to maintain access to the public markets and to restore financial stability to the city, and shall be liberally construed to accomplish its intent. The provisions of this act shall supersede any provisions of the general statutes, any public or special act and the charter of the city enacted prior to or subsequent to this act other than a subsequent act of the General Assembly which specifically states that it supersedes this act except that, unless expressly provided in this act, nothing in this act shall affect the provisions of the Municipal Employees Relations Act, sections 7-467 to 7-477, inclusive, of the general statutes, or the provisions of the Teacher Negotiation Act, sections 10-153a to 10-153o, inclusive, of the general statutes.

Sec. 21. If any section, part or provision of this act shall be declared unconstitutional, invalid or ineffective by any court of competent jurisdiction, such declaration shall be limited to the section, part or provision directly involved in the controversy in which such declaration was made and shall not effect any other section, provision or part thereof.

Sec. 22. Notwithstanding the provisions of section 12-62 of the general statutes, or any memorandum of understanding entered into under said section 12-62, the state shall impose a fine on the city, in an amount to be determined by the secretary, if the city is unable to implement revaluation for the October 2000 grand list or any subsequent grand list. Such fine shall be deposited in the General Fund and credited to a nonlapsing account in the Office of Policy and Management and shall be available to defray the costs of the board, for the hiring of consultants to assist the board, or to have studies conducted regarding the operations of the city.

Sec. 23. On or before July 1, 2001, the joint standing committee of the General Assembly having cognizance of matters relating to finance, revenue and bonding shall commence an investigation into the causes of the financial emergency affecting the city. The Office of Policy and Management, the board and any agency or official of the city shall provide to said committee such information as it may request. Said committee may request the assistance of the Auditors of Public Accounts. Said committee shall conduct at least one public hearing in the city. The committee shall report its interim findings and recommendations to the General Assembly on or before February 1, 2002. The committee shall continue to review and assess the execution of the provisions of this act during the review period and may report any findings or recommendations to the General Assembly at any time during such period.

Sec. 24. For the fiscal year 2000-2001, notwithstanding subsection (b) of section 10-262i of the general statutes, the Comptroller shall pay to the city an amount determined by the Secretary of the Office of Policy and Management from out of the balance of the grant due to the city of Waterbury under the provisions of subsection (a) of section 10-262i of the general statutes, no later than March 20, 2001. For the fiscal year 2000-2001, notwithstanding section 3-55i of the general statutes, the secretary may certify the amount due the city of Waterbury under section 3-55j of the general statutes at any time and, once such certification is made, the Comptroller shall draw an order on the State Treasurer and shall pay the amount thereof to the city no later than thirty days after such certification has been made.

Sec. 25. This act shall take effect from its passage.

Approved March 9, 2001