PREVIOUS Types of Infrastructure Best Suited for Cooperation

How do I form a cooperative arrangement with other municipalities?

Act 177 (also known as the Intergovernmental Cooperation Law) establishes certain standards and ground rules for formal partnership agreements between municipalities. Under this law, the partnerships must be enacted by an ordinance that specifies the agreement's objectives, duration, methods of financing, and the manner in which property will be acquired, leased or sold. Councils of Government (such as SEDA-COG) and municipal authorities are specific examples of Act 177 agreements, but partnerships between municipalities need not be so formal. In instances that do not involve joint ownership of property, loans, or other legal responsibilities, many municipalities find it preferable to rely on an informal “handshake agreement.” Such agreements can be arranged much more quickly, but they often don't address long-term liability issues and can be misunderstood by one side or the other. Then again, in some cases, an agreement between municipalities is not necessary at all. Some engineering firms will coordinate with multiple municipalities on a project in order to achieve the cost savings such an arrangement will bring, but they contract with each municipality separately. In this way, each municipality has individual control over its area, which is often a preferable arrangement for municipal officials anyway. In cases where separate contracts are not possible and the municipalities must contract with an engineer as a single unit, special consideration must be given to the manner in which each municipality's share of the costs is calculated. The following are just a few of the ways in which this can be done fairly:

Equal Contribution
If all participating municipalities are approximately the same size and will receive equal benefit from the program, the total cost of the effort can be divided equally among them.

Population
If a particular program benefits the general population equally, each municipality's share can be determined by the number of residents it has.

Assessed Valuation
In other cases, each municipality may pay a share of the total program cost that is based on the relative size of its tax base in comparison to other participating municipalities. (In other words, if the total value of the tax base of all participating municipalities is equal to X and Municipality #1's individual tax base makes up 35% of that value X, Municipality #1 pays 35% of the total program cost.)

Use
Some programs like libraries or recreational facilities require residents to register in order to use them. In these cases, a municipality's share of the cost can be determined by calculating what percentage of the total program users reside in its municipality. (For example, if the public library has 100 members and 45 of them reside in Municipality #1, Municipality #1 pays 45% of the total library cost.)

For more information on forming intermunicipal agreements for infrastructure improvement projects, please contact us.

Robert Grubic, P.E., is president of HRG and the retained engineer for Susquehanna Township in Dauphin County. He has extensive experience providing engineering services to a wide variety of public and private sector clients and is an active member of the business community in Central Pennsylvania. He has been providing retainer engineering services to local governments for more than 30 years.

This article was first published by the Borough News Magazine in November 2004 and is reproduced with the publisher's permission.  Borough News is published by the Pennsylvania State Association of Boroughs (PSAB) - 2941 N. Front Street, Harrisburg, PA 17110. PSAB has represented the interests of boroughs and has helped to shape the laws that have laid the foundation for boroughs and other municipal governments. For more information, visit www.boroughs.org.

© 2008 Herbert, Rowland & Grubic, Inc.