Appeal from the Order of the Court of Common Pleas of Lebanon County in case of Mount Gretna Authority v. The Mt. Gretna Heights Association, No. 9 Equity 1976.
Thomas P. Harlan, with him Beaver, Wolf & Harlan, for appellant.
Keith L. Kilgore, with him Spitler, Rowe and Kilgore, for appellee.
Judges Crumlish, Jr., Wilkinson, Jr. and Mencer, sitting as a panel of three. Opinion by Judge Wilkinson.
[ 28 Pa. Commw. Page 584]
This is an appeal from an order in a declaratory judgment proceeding upholding appellee's purchase of a sewer system against appellant's claims of a violation of Section 10(D) of the Municipality Authorities Act of 1945 (Act), Act of May 2, 1945, P.L. 382, as amended, 53 P.S. § 312(D).*fn1 We affirm.
The facts are stipulated but will require recitation at some length. The Pennsylvania Chautauqua Association (Chautauqua), a nonprofit corporation, formed the Borough of Mount Gretna (Borough) in
[ 28 Pa. Commw. Page 585]
the 1920's with borders coterminous with Chautauqua property lines. Through deed restrictions still in force, all property owners in the Borough are members of the Chautauqua and, therefore, each of the five members of the governing Borough Council is a member of the Chautauqua. The objectives of the Chautauqua are to advance the literary and scientific attainment, recreation and entertainment of the Borough and surrounding communities and to maintain buildings and sanitary and water facilities for those purposes. The Chautauqua assesses each property owner within the Borough a sum to further its charitable objectives and, by a separate billing for each, to maintain garbage removal and water service for Borough residents.
The Chautauqua operated a sewage system since the turn of the century which, as of July 1, 1974, served not only the entire Borough but adjacent parts of other municipalities including appellant, another nonprofit corporation. The system was operated by a private organization (The Chautauqua Sewer Company) and was under the control of the Pennsylvania Public Utility Commission which authorized the Chautauqua to make an annual charge of $25.00 per residence in 1974.
In 1972 the Chautauqua felt that some action was required to meet the growing demands on its deteriorating sewer plant. An engineer's report disclosed that modernization of the plant would require expenditures of at least $500,000 over a period of years. Because the Chautauqua's sewage company was a private organization, federal financing, state grants and favorable commercial lending rates were unavailable to it. The Borough Council then created appellee to assume operation and control of the sewage system. Appellee's board consisted of five members, all of whom were residents of the Borough and, hence, members
[ 28 Pa. Commw. Page 586]
of the Chautauqua. Four of the five were also members of the Chautauqua board and three of the five were, at appellee's inception, ...