Residential Developments

As a supplement to my blog back on August 23, 2017, as to the use of alternate on-lot sewer systems for planning new subdivisions, attached is the PA Builders Association information sheet on the new legislation.

DEP and the Sewage Advisory Committee (“SAC”) continue to work on the regulations referenced in the legislation.  Enclosed is a letter, dated December 11, 2017, containing the SAC’s recommendations to DEP.

More to follow as DEP works to finalize the performance standards and review methodology.

 

December 11, 2017 Letter

 

In June of this year, Councilwoman Maria Quinones-Sanchez of Philadelphia’s City Council introduced Ordinance No. 170678 to require all new and renovated residential development projects in the City of over 10 units to include at least 10% of the project units as “affordable”.  Under the terms of the ordinance, at least 25% of the affordable units have to exists on the project site, while the other 75% can either be built elsewhere or be addressed via a payment into the City’s Housing Trust Fund.  Since the ordinance’s introduction in June, Councilwoman Quinones-Sanchez has been in dialogue with a number of stakeholders, with a hope to have the ordinance brought to a vote in City Council prior to the end of 2017.  The proposed ordinance addresses both new projects and renovations which will be defined to cover alterations costing in excess of $7,000 per housing unit and requiring a zoning permit.  The ordinance also provides for limited increases in density, as implied compensation to developers which provide affordable housing.

Philadelphia, Pennsylvania skylineSupporters of the ordinance argue that it is required to address significant gaps within the City for affordable housing for the many poor residing in Philadelphia, and that the proposed ordinance fairly balances the interests of developers with broader public policy requirements.  Those who object, which includes the local chapter of the Building Industry Association, argue that the requirements are erroneous and inappropriately place upon residential real estate developers the obligation to address a policy concern better met by the broader body politic.

Among the potential variables, and areas that may be subject to amendment in the ordinance, are how many units of affordable housing should be required, whether they should be required on or off site, the extent to which such requirement should apply to renovations, and what corresponding inducements or benefits should be made available to developers in the character of increased density or other types of cost offsets.

In the City of Philadelphia, developers must come to terms with several issues which can increase development costs, including a variety of zoning requirements to provide parking, requirements in certain circumstances to provide economic opportunity plans in connection with projects, and a local norm in Center City development of utilizing union labor.  Some are concerned that the additional imposition of required affordable housing would tip the balance and end or significantly curtail residential development.

In a city with an active housing authority and other public or quasi-public organizations promoting housing opportunities for the poor, a question is presented regarding the appropriateness of achieving a laudatory public policy goal through the imposition of requirements upon a small sector of private business owners.  If the objective of providing housing to the poor is one adopted by local government, should it not be addressed directly via explicit taxing and spending policies, instead of indirectly through the zoning code?  This is the question which will be addressed in hearings and debates soon to occur in Philadelphia City Council.

 

 

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.

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.

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Copyright: kchung / 123RF Stock Photo

After receiving a favorable zoning or land use decision, such as a passed ordinance amendment or a granted variance from the zoning hearing board, you should take steps to protect yourself from any validity appeals by publishing notice of the decision.  Section 108 of the Municipalities Planning Code (“MPC”) provides that notice of municipal action to adopt an ordinance or enter a decision may be provided through publication, at any time, “once each week for two successive weeks in a newspaper of general circulation in the municipality.”  This notice can be published by the governing body of the municipality, by any resident or landowner in the municipality (in the case of an ordinance), or by the applicant requesting the decision, the landowner or successor in interest of the property subject to or affected by the decision (in the case of a decision).  The notice must contain certain elements and statements, as provided in Section 108 of the MPC.

Once the second publication of the notice is published, any appeal or action contesting the validity of an ordinance based on procedural defect in the process of enactment, or contesting the validity of a decision based on procedural or substantive defect shall be dismissed, with prejudice, as untimely filed if not filed within the 30th day following the second publication of the notice.  Only an appeal establishing an “unconstitutional deprivation of due process” will be permitted after this 30-day period following the second notice publication.

Therefore, no appeal or action can be taken to contest the validity of an ordinance or decision after the 30th day following the second publication of the notice. This extra step of publishing the Section 108 notice ensures that you can proceed with the purchase and/or development of a property pursuant to the ordinance or decision without any uncertainty as to its validity after the 30-day period.