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In re Incorporation of the Borough of Treasure Lake

June 30, 2010


The opinion of the court was delivered by: Judge Simpson

Argued: April 19, 2010



In this interlocutory appeal by permission, we are asked if owners of time-shares and campground lots in a planned residential community are residing freeholders eligible to sign a borough incorporation petition under Section 202 of The Borough Code (Borough Code), Act of February 1, 1966, P.L. (1965) 1656, as amended, 53 P.S. §45202. Under the facts of this case, we conclude they are not, and we affirm the order of the Court of Common Pleas of Clearfield County (trial court).

I. Background

The Borough Code establishes a multi-step process for incorporating a borough. At issue in this appeal is the first part of the process-the petition stage. The petition stage requires incorporators to gather signatures "by a petition signed by a majority of the freeholders residing within the limits of the proposed borough." Section 202 of the Borough Code, 53 P.S. §45202 (emphasis added). This residing freeholders signature requirement is currently at issue. These signatures must be obtained within three months of the filing of the petition.

Section 202 of the Borough Code also requires that an incorporation petition be signed by "the freeholders of a majority of the territory within the limits of the proposed borough." While satisfaction of this territory signature requirement is not at issue, it will be mentioned below.

After the necessary signatures are obtained and the petition is presented to the trial court, a borough advisory committee shall be appointed. The composition of the committee is statutorily established. The committee is required to evaluate the proposed incorporation and advise the trial court. The court must conduct a hearing on the petition and determine whether a preponderance of the evidence establishes the desirability of incorporating the proposed borough. If so, the trial court is required to certify the question of whether the proposed borough should be incorporated to the county board of election for referendum vote.

A. Treasure Lake

The Township of Sandy, which has a population of approximately 10,000, is a second class township in Clearfield County. Treasure Lake is a privately owned, 8,044 acre, gated community wholly within the township. Approximately half of the Treasure Lake acreage is subdivided and developed. Development continues. Treasure Lake is a mixed use development, presently consisting of: single lots, recreational areas and facilities (lakes, beaches, two golf courses, ski slopes, parks, children's playgrounds, sports fields), commercial areas (shops and four restaurants), roads, a campground, and undeveloped land.

B. Incorporation Petition and Challenge

Treasure Lake contains 7,125 plotted single family residential lots, of which, 2,044 are improved with residences. Incorporators*fn1 concluded that owners of lots improved with a taxed residence were residing freeholders and sought their signatures. A majority of these owners, 1,215 of 2,044 individual Treasure Lake lot owners, signed the incorporation petition. The Incorporators filed the petition with the trial court.

For the residing freeholders signature requirement, Incorporators did not obtain signatures from property interest owners in the campground portion of Treasure Lake, called Cayman Landing, or from the townhouse time-share portions of Treasure Lake, called Wolf Run Manor and Silverwoods.

The Township of Sandy (Challenger)*fn2 challenged the incorporation petition, arguing these other property interest holders were also freeholders. Challenger argued that the incorporation petition lacked signatures from a majority of freeholders residing within the limits of the proposed borough, thus depriving the trial court of jurisdiction.

C. Lots and Ownership Interests at Issue

1. Cayman Landing Campground -Individually Owned Lots (Section 19 Lots)

There are 830 distinct, plotted campground lots, of which 590 were separately sold to individuals or families. Each lot owner receives a deed for his lot. Each deed, however, is subject to several restrictions: (1) permanent structures or homes are not permitted; (2) only moveable trailers or recreational vehicles may be used; and (3) the lot may not be occupied for more than 90 consecutive days.

There are additional attributes of the Section 19 lots which are noteworthy for our analysis. The lots have access to five Comfort Centers, which provide water, bathroom, shower and laundry facilities. Only one Comfort Center remains open throughout the year. There is no sewage for individual lots.

Each lot is separately taxed, and taxes are assessed on the land itself. Significantly, none of these assessments include any residential structures on the land. The lot owner individually pays the real estate taxes for his property.

When gathering signatures for the petition. Incorporators treated the owners of Section 19 lots as freeholders (for purposes of the territory signature requirement), but not as residing freeholders (for purposes of the statutory requirement at issue now). Reproduced Record (R.R.) at 71a, 90a-91a, 155a. Incorporators based this distinction on Clearfield County real estate tax records which showed that, ...

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