In the case of Cardinal Crossing v. Marple Township, the PA Commonwealth Court was faced with the issue of whether a developer, who spends substantial funds on a development, in reliance on statements of support from a committee formed by the Township (which included Township officials), can recover damages from the Township when the Board of Commissioners did not adopt the requested zoning amendment for the proposed project to proceed forward. The Commonwealth Court, in finding that unofficial action by Township officials cannot bind a Township to take legislative action, upheld the decision of the Court of Common Pleas and found in favor of the Township and dismissed developer’s complaint.

In this case, a developer entered into an agreement of sale with the Archdiocese to purchase property subject to developer obtaining a rezoning to allow the development of 1,100,000 square feet of commercial/office space and 375 townhomes. However, this agreement of sale provided that the sum of $5,000,000 would become non-refundable at the end of the due diligence period. The developer started meeting with representatives of the Township in August of 2014, but did not file its formal application for zoning relief until May 21, 2015; less than 30 days prior to when its $5,000,000 deposit would become non-refundable. The Township’s Planning Commission voted to recommend denial of the requested zoning relief and the Board of Commissioners then voted to deny the application for rezoning in May of 2016 (well after the deposit went non-refundable) and less than 60 days before its agreement of sale with the Archdiocese was scheduled to expire.

In the complaint, developer claimed that the Township representatives, with whom it met, repeatedly represented that the Township wanted the property developed as proposed and that the Township knew or should have known that developer would rely upon these representations; and it relied upon these representations to execute the agreement of sale, pay the deposits and prepare the application for the requested zoning relief. Evidently, the developer spent more than $7,000,000 between its soft costs and the deposit.

The Court of Common Pleas held, in ruling in favor of the Township, that no statement of these representatives could rise to the level of an inducement or promise by the Township to grant the requested zoning relief and that developer knew or should have known that the enactment of a zoning amendment was a legislative act that would be binding only upon a vote of the Board of Commissioners. The Commonwealth Court held that there was no official action by the Township that the developer alleged in its complaint that caused it to act to its detriment.

The lesson here is that developers cannot rely upon statements of support by Township representatives (even members of the governing body) outside of a public hearing and should formally file its petition for zoning relief at the earliest possible date and push that application for a decision by the governing body prior to developer’s deposit “going hard” under its agreements of sale. Developers should also insure that they have sufficient time under their agreement of sale to work with all applicable parties and hold the required hearings. If not, developers should “walk away” before they get in too deep as the developer did in this case.

For more information on the subject, please feel free to contact Rob Gundlach at (215) 918-3636 or rgundlach@foxrothschild.com.