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

(1) After the election of a council under section 211 (relating to temporary preservation, organization and election of officers) when a borough is newly incorporated, the council and the governing body of the township from which the borough was created shall make an equitable adjustment and apportionment of all the public real and personal property owned by the township at the time of the incorporation of the borough.

(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 borough 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 incorporated borough bears to the assessed valuation of the taxable real estate in the entire township immediately prior to the incorporation of the borough. The township shall be entitled to the remainder of the property and indebtedness.

(2) If indebtedness was incurred by the township for an improvement located wholly within the territorial limits of the newly incorporated borough, the indebtedness shall be assumed by the borough.

(3) If only part of the improvement is located within the newly incorporated borough, the part of the indebtedness representing the part of the improvement located within the borough shall be assumed by the borough, and the adjustment and apportionment of any remaining debt shall be retained by the township.

(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 the township and the secretary of the borough.

(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.