Greenville has formally been declared a financially distressed community by the state Department of Community and Economic Development, council President Richard S. Houpt announced Thursday at a council meeting.

The borough will be designated financially distressed for at least the next three years, but its fiscal healing could begin as early as June.

The DCED -- which runs the Act 47 program, also known as the Municipalities Financial Recovery Act -- will appoint a coordinator by early June to work with Greenville officials in crafting a fiscal recovery plan for the borough, said Borough Manager Kenneth S. Weaver.

After a coordinator is appointed, the borough can request emergency funding to cover immediate fiscal concerns such as payroll and bills, Weaver said. That emergency, upfront money would not cure all the town's woes, but could keep it on fiscal life support until a recovery plan is approved by council.Act 47 provides distressed municipalities free management assistance as well as interest-free, long-term loans, priority status for certain state grants and, in extreme cases, methods by which they may consolidate with neighboring communities or enter into bankruptcy.

In an announcement Thursday from Harrisburg on Greenville's entrance into the Act 47 program, according to a PR Newswire report:

"The Borough of Greenville had a 2001 year-end deficit of more than $1 million and has experienced a substantial deterioration in its financial position as evidenced by a history of year-end deficits, ineffective financial-management practices and deficit financing," DCED Secretary Sam McCullough said.

"The department is committed to forming a partnership with the (borough) to create an effective recovery process to help resolve this difficult situation," McCullough added.

"They have bent over backwards to help us," Weaver said of the DCED. "They have told us that our input will play a large role in developing a recovery plan. Throughout this, it has not been an adversarial relationship at all. We haven't been pushed into anything."

Despite the encouraging words from both sides, council could vote down the recovery plan crafted with the help of the coordinator and develop its own, but DCED would have to approve the plan for the borough to remain eligible for the interest-free loans and priority status for grants.

If council could not come up with its own plan, it would remain in the program for at least three years but be ineligible for the interest-free loans and crossed off short lists for grants.

Weaver said he does not expect that to happen.

Greenville becomes the 18th municipality to enter the Act 47 program in its 15-year history. Four communities have since exited the program. Farrell, which became the first Act 47 community in 1987, remains in the program today.

"We want to get out of the program as quickly as possible," Weaver said.

A potential sale of Greenville's water-treatment plant, which has been discussed for the past couple months, could help the borough get out of the program more quickly, some officials have said. The Greenville Municipal Authority -- which owns the plant and operates independently of the borough, though board members are appointed by council -- hired an attorney earlier this month to seek offers from potential buyers.

The authority could sell the plant, pay off its $4 million debt and then dissolve, automatically transferring remaining proceeds from the sale to the borough.

The authority board, which would have final word on a sale, is down a member with the recent resignation of President Mario Marini. The four members who remain have appeared to be deadlocked on the sale during discussion at recent meetings. Council must appoint a replacement.

With financial matters being addressed, a council member asked again for a criminal investigation of past mismanagement and fiscal practices to be launched to put the past to rest. Councilman David P. Henderson demanded a probe in January and there have been repeated calls from residents since -- but borough council has not formally requested an investigation.

Thursday, Councilman Pete Longiotti renewed the call for an investigation. Houpt said council would discuss the matter at its meeting Tuesday.