Pennsylvania § 725 - Adjustment of indebtedness.

§ 725. Adjustment of indebtedness.

(a) Property.--The following shall apply:

(1) Following a boundary change under this subchapter or any other provision of law, the governing bodies of the impacted municipalities shall make an equitable adjustment and apportionment of all the public real and personal property impacted by the change of boundary.

(2) Except as provided under paragraph (3), the property under paragraph (1) shall include funds and indebtedness.

(3) If adjusting property and indebtedness under paragraph (1), streets, sewers and utilities may not be considered except to the extent that current and unpaid indebtedness was incurred for the construction and improvement of the property.

(b) Proportion.--In making the adjustment and apportionment under subsection (a), the following shall apply:

(1) The municipality gaining territory shall be entitled to a division of the property and indebtedness in the same proportion that the assessed valuation of the taxable real estate included within the territorial limits of the newly gained territory bears to the assessed valuation of the taxable real estate in the municipality losing territory immediately prior to the boundary change. The municipality losing territory shall be entitled to the remainder of the property and indebtedness.

(2) If indebtedness was incurred by the municipality losing territory for an improvement located wholly within the territorial limits of the newly transferred territory, the indebtedness shall be assumed by the municipality gaining territory.

(3) If only part of the improvement is located within the newly transferred territory, the part of the indebtedness representing the part of the improvement located within transferred territory shall be assumed by the municipality gaining territory and the adjustment and apportionment of any remaining debt shall be retained by the municipality losing territory.

(c) Form.--The adjustment and apportionment made under this section must meet all of the following:

(1) Be in writing and duly executed and acknowledged by the secretary or clerk of each impacted municipal corporation, or the chief clerk of the county, as the case may be.

(2) Be filed in the office of the clerk of the court of common pleas of the county.

(3) Be filed as a copy with the Department of Community and Economic Development.

(d) Petition for judicial adjustment.--If the governing bodies of the impacted municipalities cannot make an amicable adjustment and apportionment of the property and indebtedness within six months after the effective date of the change in boundaries, the governing body of a municipality may present a petition to the court of common pleas, or the Commonwealth Court under section 728 (relating to territory located in multiple counties), requesting a judicial adjustment.

(e) Appointment.--After receiving a petition under subsection (d), the court shall appoint three disinterested commissioners. If the impacted territory is located in two or more counties, section 728 shall apply. If all of the impacted territory is located in one county, the commissioners shall meet all of the following requirements:

(1) Are residents and taxpayers of the county.

(2) Are not residents of or own real estate in an impacted municipal corporation.

(f) Report.--The individuals appointed under subsection (e) shall hold a hearing and make a report to the court containing an adjustment and apportionment of all the property and the indebtedness between the impacted municipalities. Notice shall be made as provided by the court. The report shall state the amount due to, payable from and the amount of indebtedness that shall be assumed by each impacted municipality.

Cross References. Section 725 is referred to in sections 724, 726, 727, 728 of this title.