General Zoning & Land Use News & Updates

Legal opinion letters (“Opinion Letter”) have become a very valuable piece of a loan transaction for all parties involved.  More often, Lenders are now requiring that a Borrower’s counsel provide an Opinion Letter at the closing of a transaction.  An Opinion Letter addresses legal conclusions and opines as to the legal effect and legitimacy of the transaction and can be relied on by the Lender in a transaction.

While the Opinion Letter is a valued commodity for the Lender to receive, it’s also highly regarded by Borrower’s counsel and could potentially become a costly liability down the road if the loan defaults and the Lender relied on a representation in the Opinion Letter that proves to be false.  Therefore, an Opinion Letter is not something either party should treat lightly and many law firms do not willingly provide one without a commensurate cost attached.  This cost is typically passed on to the Borrower in the transaction, and the costs can be potentially significant.  Therefore, the Borrower also needs to consider the prospective costs associated with the Lender requiring an Opinion Letter.

At the beginning of any loan transaction, all parties should address whether an Opinion Letter will be required, the costs that are associated with drafting/receiving one, and who is responsible for those costs and fees.  The scope, costs, and timing of the Opinion Letter can be negotiated from the outset, and all parties can properly prepare and protect themselves from any surprises as the transaction progresses.

If you have any questions or need assistance, please contact Tim at 215-918-3596.

Many times, at hearings to obtain either special exceptions or conditional use approvals, applicants, for one reason or another, are under the impression that they simply have to call one or two witnesses to confirm, in a cursory manner, compliance with the requirements for the requested relief. Unfortunately, that type of “short cut” approach can come back to bite the applicant in the you know what. A recent case, titled Appeal by Grande Land, LP v. Manheim Township Zoning Hearing Board, is good instruction on the subject.

When presenting evidence at a hearing to confirm compliance with the requirements for a special exception or conditional use, it is important to bring the proper witnesses and documentation to confirm compliance with each and every requirements. Simply “saying that you will comply” or pointing to compliance on a plan, is not always the same as proving compliance in the hearing context. In Grande Land, the applicant filed an application for a special exception to construct an apartment complex containing 72 apartment units. At the hearing, the applicant called a surveyor to testify that all of the zoning ordinance requirements were satisfied. The ZHB denied the special exception on the basis that the applicant failed to submit evidence confirming (a) DEP’s approval of the proposed sewage disposal system, (b) the maximum length of each building did not exceed 128 feet, and (c) compliance with the 25% open space requirement. The trial court upheld the ZHB’s decision to deny the special exception and the Commonwealth Court then reviewed the matter. The Commonwealth Court found that the testimony of record did satisfy the requirements for a sewage system in a form to be approved by DEP and that the length of proposed buildings did not exceed 128 feet; however, the Commonwealth Court upheld the ZHB’s denial of the application for the special exception on the basis that the applicant failed to submit proper evidence confirming that the plan complied with the open space requirements. Specifically, the Commonwealth Court pointed to some very poor testimony by the surveyor where he stated that he could not “recall the specific requirements of the Ordinance or whether the detention basins were included as open space in the calculations.” That testimony, in and of itself, was the “kiss of death” to confirm compliance with the open space requirements.

We all know that hindsight is 20/20, but in this case, the applicant should have continued the hearing so that his surveyor, or, better yet, a licensed civil engineer, could have completed an open space plan and all calculations related thereto, then submitted such plan and calculations into the record at the continued hearing.

Interestingly, in reviewing this case, I recall an article that I wrote some eight years back on the same topic following a similar case rendered by the Commonwealth Court. My advice in that article, as in this article, is the same, as counsel for an applicant needs to have the proper witnesses and exhibits to show compliance with each and every requirement with their application for a special exception or conditional use. If at any point during the hearing, there is a question as to whether or not the application is in compliance with any such requirements, an applicant’s counsel should consider requesting a continuance in order to obtain the proper testimony and/or documentation to confirm same. Otherwise, an applicant can waste an awful lot of time and money chasing its tale on an appeal up to the Commonwealth Court and/or filing a new application after a denial is upheld as it was in this case.

If you should have any questions concerning this topic, or other zoning and land use matters, please feel free to contact Rob Gundlach at (215) 918-3636 or rgundlach@foxrothschild.com.

The NPDES general permit for stormwater discharges associated with construction activities will expire on December 7, 2017. DEP has announced that the general permit will be administratively extended until December 7, 2018. This administrative extension will continue the terms and conditions of any open statewide general permit for a specific period of time following expiration of the general permit program; however, the only option for obtaining NPDES permit coverage from December 8, 2017, until a reissued PAG – 02 is published, is to obtain an individual NPDES permit. We understand that the following procedures will apply until the PADEP reissues the statewide general permit program:

  • Check the box for “individual” on the NOI and include a note explaining that this would typically be a General NPDES Permit except for the deadline issue.
  • The project will be posted in the bulletin and be subject to the 30-day comment period.
  • The permit number will be a “PAD” instead of a “PAC”.
  • Everything else should remain the same – same General NPDES Permit fees, same General NPDES Permit review process (meaning the review will not be kicked to PADEP, but will still be done by the conservation district), same General NPDES Permit design requirements, etc.

 

This procedure will apply to any and all projects in Pennsylvania until the statewide general permit is reissued. Bottom line: Same process, but likely more delays. More to follow.

On November 2, 2017, at 7:30 p.m., the Warrington Township Planning Commission intends to review an updated Comprehensive Plan for the Township. After this Comprehensive Plan is reviewed by the Planning Commission, it will then be sent, along with the Planning Commission’s recommendation, to the Board of Supervisors for review and action. Such action is likely to be taken before the end of the year. After the new Comprehensive Plan is adopted, the Board of Supervisors have indicated their willingness to consider certain revisions to the Township zoning ordinance and the zoning map. The draft Comprehensive Plan is available for review on the Township website.

If you should have any further questions about the process, please contact Robert W. Gundlach, Jr. at (215) 918-3636 or rgundlach@foxrothschild.com.

Whether you are a Lender or a Borrower, it’s obviously very important to know what terms are included in your Loan Documents and how they may affect your interests. Periodically, I will be blogging on issues and concerns regarding Loan Documents and areas that I believe everyone needs to be particularly focused on.

Today, I’d like to highlight Casualty provisions. Most mortgages in Pennsylvania have provisions regarding what happens if a casualty or damage occurs to the mortgaged Premises. This is important for both Lender and Borrower.

For a Lender, the wording of a casualty clause could determine the manner in which insurance proceeds will be distributed, and if Borrower is required to use them in particular ways, or are free to use them as they see fit. Lenders typically prefer to have control in instances of a casualty and over any potential insurance proceeds. A casualty could detrimentally affect what is potentially a Lender’s most valuable piece of collateral, and taking steps before something goes wrong could save the Lender a lot of aggravation and money.

On the flip side, a Borrower also wants the ability to control any insurance proceeds. A casualty clause unfavorable to a Borrower may prevent it from receiving any of the insurance proceeds at all and Borrower will be at the mercy of the Lender if it wishes to rebuild the damaged property. Depending on the language in the casualty provisions, the Borrower could find itself in the unenviable scenario whereby all of its insurance proceeds are used to pay down the loan and now Borrower is left with the remaining debt and no building on the Premises to create income for the business.

It’s important whether you’re a Lender or a Borrower to have good representation assist you in reviewing, drafting, or negotiating your Loan Documents. If you have any questions or need assistance, please contact Tim at 215-918-3596.

If your development projects fronts on a state road, then it is likely that you will need a Highway Occupancy Permit (“HOP”) from PennDOT. If you need a HOP from PennDOT, then it is very likely that you will need to improve one or more state roads. If you need to improve one or more state roads, then it is also likely that you will need to obtain right of way or easements from third party property owners. Well now . . . as most of you know who have been through this process . . . there is nothing more frustrating in the real estate development approval process than having to obtain right of way from third party property owners. Why is it frustrating? Because, as a developer, you do not have much leverage to force these property owners to grant you this required right of way, particularly when it is needed in order to complete roadway improvements that are being required by PennDOT or the municipality as part of your project.

In the past, developers would obtain right of way, in the form of a PennDOT deed, directly from the property owner to PennDOT. Now, in accordance with PennDOT’s Publication 282, the deed for the right of way must be conveyed from the third party property owner to the applicant, then a separate deed, using PennDOT’s form, from the applicant to PennDOT. In addition, no deed will be accepted without PennDOT’s review of a title search to confirm the owner of the right of way and that there are not any mortgages, judgments or other monetary liens recorded against the subject property. If there are any such monetary liens, then a release may need to be obtained from the mortgagee. Another issue faced by developers, when working to obtain the HOP from PennDOT, are easements that are required by PennDOT or the municipality beyond the right of way area. These include site distance easements (i.e., the right to remove all vegetation within the certain area of a third party property), drainage easements (the right to drain water onto the property of a third party owner), grading easements (the right to regrade the property of a third party owner), among others.

So, what happens when the property owner refuses to grant this required right of way or easement? If you are lucky, you go back to PennDOT and the municipality and explain, and they allow you to modify your plans so that you do not need this right of way or easement. If you are not so lucky, then you have to “beg and plead” either PennDOT or the municipality to condemn the property interest at issue. It is extremely unlikely that you will ever get PennDOT to proceed with this proposed condemnation, unless the proposed roadway work is part of a previously approved PennDOT plan that you are offering to do on their behalf. You have a much better chance at convincing a municipality to condemn the land but, to do so, you normally have to show the municipality that you had the property interest appraised and that you made fair offers to the third party property owner for this property interest. If you can convince the municipality to move forward to condemn the property interest, then you will likely need to enter into an indemnity agreement with the municipality to reimburse them for all costs incurred by the municipality in connection with any such taking. Many times third party property owners will file preliminary objections which can, at times, extend the time period to obtain this property interest for months, and, at times, for years. Putting a good plan in place to address and/or obtain these required third party property interests, up front, and having an open dialogue about the proposed roadway improvements with and without your ability to obtain the third party property interest, again up front, is the best way to handle issues related to obtaining these required right of ways and easements. That is, getting the municipality to “buy-in” to the roadway improvements will help you later to secure the required right of way and easements.

If you should have any questions on this topic, or should need our assistance to help you secure required right of way or easements, please contact Rob Gundlach at (215) 918-3636 or rgundlach@foxrothschild.com.

 

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.

Governor Tom Wolf signed into law, on July 20, 2017, Act 26, which amended the Pennsylvania Sewage Facilities Act concerning the use of alternate sewage systems for purposes of obtaining planning module approval from DEP for a new project. Act 26 is scheduled to take effect on or about September 18, 2017.

Many developers ask the question as to their right to use A/B sewage systems and other alternate sewage systems for purposes of obtaining planning module approval for a new project. Up until recently, DEP has taken the position that they do not have the authority to approve a planning module that uses alternate or experimental sewage systems. This position was recently confirmed in a memo issued by DEP, dated March 23, 2017[1]. In other words, DEP would not allow A/B sewage systems, and other alternative systems, to be used for purposes of planning module approval for a new project. This routinely resulted in developers obtaining less density than they could otherwise obtain by having to use conventional sewage systems for planning module approval.

Act 22 now requires DEP to accept, for the purpose of satisfying general site suitability requirements, any conventional or alternate on-lot sewage systems permitted by a sewage enforcement officer. Therefore, A/B sewage systems, and other alternate systems, should now be allowed to be used for planning purposes. Act 22 goes on to require DEP, in consultation with the sewage advisory committee and within 180 days of the effective date of the Act, to develop scientific, technical and field testing standards upon which an evaluation of each on-lot sewage system that has been classified as an alternate system shall be based. The Act also requires DEP, in consultation with the sewage advisory committee, to review the scientific, technical and field testing data for each individual on-lot sewage system and each community on-lot sewage system that is classified as an alternate on-lot sewage system and, based on this information, either reclassify the alternate sewage systems as a conventional system or remove the system’s classification as an alternate system.

I suspect that there will be more to follow on this topic. Nevertheless, to the extent that a developer has a project that can yield greater density using one or more alternate systems, then the developer should consult with its legal counsel and sewer consultant as to its viability to do so based on Act 26.

For more information on the use of alternate systems, or the approval of planning modules in general, please feel free to contact Rob Gundlach at (215) 918-3636 or rgundlach@foxrothschild.com.

[1] See prior Blog on this subject from this author.

In a recent Commonwealth Court decision, Appeal of Chester County Outdoor, LLC, No. 1761 C.D. 2016, 2017 WL 3198266 (Pa. Comm. July 28, 2017), the Court held that, after a successful validity challenge to an ordinance, the challenger must file an application for site-specific relief with the municipality prior to filing an action with the court pursuant to Section 1006-A of the Municipalities Planning Code (MPC).

Chester County Outdoor, LLC (CCO), a billboard developer, filed a challenge to the substantive validity of the East Pikeland Township Zoning Ordinance (the “Ordinance”) with the Township Zoning Hearing Board (the “ZHB”), alleging that the Ordinance unlawfully excluded billboards. CCO did not request site-specific relief from the ZHB, or submit plans for a proposed billboard with the validity challenge.

Before the ZHB made a decision as to the validity challenge, the Township Board of Supervisors adopted a resolution which declared the challenged sections of the Ordinance to be invalid.  The ZHB then issued a decision sustaining the validity challenge, and the Township subsequently adopted a curative amendment to the Ordinance.

After adoption of the curative amendment, CCO filed a declaratory judgment action with the trial court, seeking a declaration that CCO is entitled to site-specific relief to permit a billboard on the subject property, and a hearing held pursuant to 1006-A(d) of the MPC.

Section 1006-A(d) provides, in part, that upon motion by any of the parties or upon motion by the court, the judge of the court may hold a hearing or hearings to receive additional evidence or employ experts to aid the court to frame an appropriate order.

After CCO petitioned for a hearing under 1006-A(d), the Township filed a motion for the ZHB to be appointed the special hearing master under 1006-A(c).  However, after granting the Township’s motion, and reviewing the ZHB’s special master report, the trial court ruled that CCO’s request for site-specific relief did not belong before the trial court because, after prevailing on its validity challenge, CCO should have submitted plans to the Township before filing an action with the trial court.  Because CCO never applied for and been denied site-specific relief form the Township, no relief was available under Section 1006-A of the MPC.  CCO appealed the trial court’s decision to the Commonwealth Court.

The Commonwealth Court ultimately remanded the case back to the trial court and ruled that, while CCO is required to first submit its request for site-specific relief to the ZHB for consideration and determination, the trial court is the ultimate decision maker. The trial court is required under Section 1006-A of the MPC to conduct a de novo review of the evidence, and need not give deference to the ZHB’s findings.  As part of its de novo review, however, the trial court, in its discretion, is permitted to accept the ZHB’s findings as its own.  The trial court is also permitted, but not required, to hold a hearing and take additional evidence.  After conducting its de novo review, the trial court is required to grant the request for site-specific relief, unless the Township meets its burden of proving the materiality of certain “unchallenged, pre-existing, and generally applicable” provisions of the Ordinance, and that the proposed billboard is incompatible with such provisions.  When applying these unchallenged, pre-existing and generally applicable provisions to the billboard proposal, however, the trial court must be mindful to not apply these provisions in a manner that would exclude all billboards, or limit the trial court’s discretion in fashioning site-specific relief to CCO.

In addition, the Court held that the trial court is not permitted to apply the curative amendment to CCO’s request for site-specific relief because it was adopted after CCO filed its validity challenge.  In the event that the trial court concludes that CCO’s proposed billboard (i) is incompatible with any of the Ordinance’s “unchallenged, pre-existing, and generally applicable provisions,” and/or (ii) that the proposed billboard is contrary to the public health, safety and welfare, the trial court must consider alternative sites and/or alternative configurations for the proposed billboard and fashion some form of site-specific relief to CCO.

In a case caption Smith v. Ivy Lee Real Estate, LLC, the Commonwealth Court of Pennsylvania was faced with the question if Section 617 of the MPC permits a private cause of action to enforce a subdivision land development ordinance (SALDO). In the case, the Smith family alleged that Ivy Lee, who was their neighbor, engaged in construction activities that constituted land development under the township’s SALDO. The Smith family requested, among other things, a permanent injunction against Ivy Lee preventing construction activities unless and until Ivy Lee obtains the required SALDO approvals. The Smith family contended that, even though the township refused to enforce the SALDO, the Smith family had a right to bring a private enforcement action under Section 617 of the MPC.

The trial court determined that Section 617 creates a private cause of action solely for zoning violations, but ruled that the Smith family does not have standing to enforce the SALDO pursuant to Section 617 of the MPC. However, the Commonwealth Court found, in reviewing the language of Section 617 of the MPC and certain case law concerning it, that the plain language of Section 617 permits a private cause of action to enforce an alleged violation of any ordinance enacted under the MPC, including a SALDO.

The net of this case is that landowners can bring a private action against another landowner for their failure to comply with ordinances enacted under the MPC, including their failure to obtain land development approval. From a practical standpoint, given the broad definition of land development in the MPC and many municipal ordinances, there may be more instances where a municipality determines that land development approval is not required (such as for a change in use), but a private party might see otherwise and now, based on this case, has a right to bring their own private action against the violating landowner.

If you have any questions concerning the subject matter contained in this blog, on land use issues in general, please contact Rob Gundlach at 215-918-3636 or RGundlach@foxrothschild.com.