CLEARFIELD – Clearfield County President Judge Fredric J. Ammerman has decided that the evidence is “clear and convincing” that it’s not desirable for Treasure Lake to separate from Sandy Township and to incorporate as its own borough.
In his decision on Thursday, Ammerman said that Treasure Lake petitioners have the burden of proving, “by a preponderance of evidence,” that the formation of a proposed borough is “desirable.” He said the petitioners failed to satisfy the burden, and the court must deny the petition.
In determining the desirability of the formation of a borough, he said the Borough Code encourages consideration of a number of enumerated factors but does not restrict the court to weighing only those factors. He said the court and a high standard of “desirability” are the only protection for those individuals who will be harmed by the proposed incorporation but who otherwise lack a voice in the matter.
Ammerman said a majority of the Borough Advisory Committee issued findings of fact and recommendations that are vitally important given their prominent presence as part of the statutory scheme for formation of a borough. He said the Borough Code requires the court to base its decision regarding desirability on the evidence in part submitted by the committee.
He said the committee in this case “most emphatically recommended” against granting the petition based on its detailed review of the merits of incorporation. Furthermore, he said, “It found no point or factor weighing in favor of incorporation and observed that the weight of the evidence against incorporation was clear and convincing.”
“Petitioners have failed to proffer any facts or in any way undermine the committee’s findings and conclusions,” said Ammerman. “One would have expected petitioners to present strong facts at the hearings before this court to demonstrate at least some doubt about the committee’s observations with respect to the elements that it examined. Petitioners failed to do so here and the court must deny the petition consistent with the committee’s recommendation.”
According to him, the petition seeks to impose upon a large number of people, a fairly severe and sudden change in local government structure and finances. The number of people affected, he said, is large in comparison to those who urge the change. In addition to all of Sandy Township’s 10,652 residents, the incorporation would also affect several thousand people who own lots in Treasure Lake but do not reside there or have homes that are not their primary residence. He said an incorporation will directly and immediately affect upwards of 15,000 individuals; however, if the court orders the matter to go to a referendum, only a few thousand permanent residents of Treasure Lake would be eligible to vote.
Ammerman said it is understandable that Treasure Lake’s current financial difficulties are troubling to a subset of its residents. He noted it has poor assessment revenue collection at a rate of less than 50 percent, which cannot support the level of services desired by members of the Treasure Lake Property Owners Association who pay the assessment. Nevertheless, Ammerman said the incorporation solution being pursued is not the “correct remedy” for whatever problems that exist in Treasure Lake.
“Moreover, the complaints by those who knowingly and voluntarily bought property subject to assessments for private amenities do not readily warrant great sympathy,” he said. “Evident, in the public comments, however, is a level of frustration by those who bought lots or homes and who face a difficult choice of whether to pay higher assessments in return for a higher level of private benefits, such as well-paved roads and continuing access to purely private recreation opportunities that many consider luxury.
“The inherent difficultly in matching assessment compliance rates with total revenue generated, taking into account potential effect on Treasure Lake real estate value, admittedly presents a management challenge to the TLPOA board. That purely private assessment-setting exercise, does not, however, in any way, justify throwing a successful township of 10,652 residents into immediate financial jeopardy.”
Ammerman said the Borough Code entrusts the court with the obligation to act as a gatekeeper to discern whether this proposal is desirable. Given the issues of fundamental fairness presented here, he said the court concludes that incorporation is not desirable. Ammerman said while it may be tempting to simply “throw the matter to a vote,” it’s crucial to remember that the Borough Code does not allow such in the absence of proof that a borough is “desirable” in the first place, which is primarily due to the great risk of bad things happening to so many more people than those who may vote, or the very opposite of the democratic process.
Sandy Township’s experts, he said, have shown and the committee agreed it was likely that a significant tax increase would be necessary in both surviving entities. He said the petitioners have advanced no theory as to why either decreased services or increased taxes, or both, makes incorporation desirable. He said a close examination of the financial impact strongly compels the conclusion that the incorporation is not financially desirable.
Ammerman noted the impact of incorporation would cut Sandy Township’s tax revenues almost in half, while it retains very nearly the same level of obligations. To provide Sandy Township with the same level of services, he said taxes would have to be raised significantly, but maximum millage rates are capped by law. Ammerman said even if Sandy Township were to raise taxes as high as permitted, which is not desired, it would still have a large revenue shortfall and would be forced to cut its services deeply.
“Higher taxes and fewer services drive away residents and businesses, eliminating a key attraction of the entire area,” he said. “This would further decrease tax revenue and make the situation worse. The loss of revenue would also hamper Sandy Township’s ability to incur debt by drastically reducing its borrowing capacity. . . Accordingly, any reduction in the borrowing base because of reduced revenue necessarily results in a corresponding reduction in the debt limit applicable to Sandy Township, severely limiting its ability to borrow for essential capital projects.
“. . . These financial impacts on Sandy Township compel the conclusion that incorporation of a proposed borough is undesirable. There are no financial advantages for Sandy Township residents with respect to generating revenue after the proposed borough incorporates. Sandy Township residents would be at an immediate disadvantage with respect to available revenue because of the loss of 40 percent of revenue, and this is clearly a negative factor for the operation of a municipality and its services to its citizens. These observations with respect to Sandy Township’s financial condition after incorporation necessitate the conclusion that the creation of a new borough is not desirable.”
Ammerman pointed out that Sandy Township would not be alone, however, with respect to the potential for suffering financial and tax difficulties. In fact, he said the proposed borough itself would incur costs associated with the inherent inefficiencies of duplicating local government functions and may be forced to raise taxes to provide essential services. Importantly, however, he said was that the burden on proposed borough residents could be double what it currently is because boroughs are authorized to charge up to 30 mills in tax rate.
He gave consideration to another “relevant consideration” to the proposed borough’s ability to obtain or provide adequate and reasonable community support services, such as police and fire protection. The committee, he said, focused heavily on the level of government services provided to Sandy Township residents. It found that the quality, scope and availability of services in the proposed borough and the remaining Sandy Township would decline.
Sandy Township, he said, currently offers above-average services to all of its residents and even the petitioners’ expert concluded were at greater levels than other Second Class Townships. Upon incorporation he said both Sandy Township and Treasure Lake will be forced to reduce their services, increase taxes or both.
Ammerman said Borough Code encourages consideration of whether the proposed borough constitutes a harmonious whole with common interests and needs that can be best served by a borough government. Here, he said the committee found that Sandy Township, as it currently exists, constitutes a harmonious whole, whereas Treasure Lake, at best, is more like a ward or district than an independent borough. Ammerman said, “The committee found that Treasure Lake does not constitute a harmonious whole with common interests and needs that can be best served as a borough government, and that the township cannot be divided into two, separate municipalities.
“The advisory committee’s assessment of this issue is correct. Sandy Township offers many services and amenities to all of its residents through its broad zoning, including commercial and retail facilities and employment opportunities. Conversely, Treasure Lake is limited to residential land use, recreational amenities and one small strip mall. Treasure Lake lacks virtually every feature that would tend to suggest that it is a self-contained, independent municipal entity. For example, it does not have a school, museum or other educational-related buildings, nor does it have a hospital or medical services building. It lacks large scale retail and wholly public recreational facilities. It is fine as a recreational community, but it is not a borough.”