Rob Gundlach represented a shopping center owner to obtain site plan approval, variances, and waivers/exceptions for the conversion and redevelopment of an existing office building in Lawrence Township, New Jersey, for reuse as new car automobile dealership. Rob has represented other owners over the years to obtain zoning and land use approvals in Lawrence Township.  Please consider using Rob for your next project requiring zoning and land use approvals in Lawrence Township.

If you are planning a new development project in Pennsylvania and cannot connect it to public sewer, navigating the Pennsylvania Department of Environmental Protection’s (the “Department”) requirements for the use of an onlot sewage system is key. The Pennsylvania Code (the “Code”) divides onlot sewage systems into three categories: (1) conventional, (2) alternate, and (3) experimental. While the Code defines each category of onlot sewage system, it is not clear about which system may be used for planning a new development. Section 71.62(a) of the Pennsylvania Code states: “[o]fficial plans and official plan revisions proposing individual and community onlot sewage systems shall evaluate general site suitability to establish their use as a feasible alternative.” Notably, this Section does not provide any guidance as to what system may be used to satisfy the “general site suitability requirements” for new development planning.

On March 23, 2017, the Department clarified what system needs to be used in new development planning. This clarification came at the request of Duane Mowery, the Chairman of the Pennsylvania Sewage Advisory Committee. The Department determined that Section 71.62(a) requires all new development plans to use conventional onlot systems to satisfy the general site suitability requirements. Therefore, alternative and experimental onlot systems cannot be used for new development planning. Although the Department requires the use of conventional onlot sewage systems for new development planning generally, there remain certain exceptions to the Department’s broad rule. Because every parcel of land and situation is unique, we can help you ensure that you are using the correct onlot system when planning your new development project.

If you would like more information, please contact Rob Gundlach at 215-918-3636 or rgundlach@foxrothschild.com.

Nothing can stop a development project faster than a Pennsylvania municipality denying a developer’s Act 537 planning module for wastewater management. If the municipality refuses a developer’s plan to connect to public sewer or to install some alternate or experimental onlot sewage system, the entire development project is at risk. However, a municipality’s denial of an Act 537 planning module update is not the end of the line.

Under Section 750.5(b) of the Pennsylvania Sewage Facilities Act, any resident or equitable property owner (the “applicant”) located in the denying municipality may file a “private request” with the Pennsylvania Department of Environmental Protection (the “Department”). A private request asks the Department to compel the municipality to revise its Act 537 Plan in accordance with the applicant’s plan. To be successful, the applicant must show that the municipality’s Act 537 Plan is either (1) not being implemented, or (2) is inadequate to meet the applicant’s sewage disposal needs. If the Department approves the private request, the municipality is required to revise its Act 537 Plan in accordance with the applicant’s plan.

While submitting a private request to the Department may appear simple, the process requires strict adherence to certain procedural requirements. In addition to substantive proof that a municipality’s Act 537 Plan is inadequate, the applicant must comply with specific notice, filing, and public comment requirements. If the applicant does not meet these procedural requirements, the Department may deny a private request without addressing the merits of the applicant’s request. Therefore, leaving the development project in no better shape than it was before. We can help you navigate the private request process to ensure that your request receives the Department’s full attention and review.

If you would like more information, please contact Rob Gundlach at 215-918-3636 or rgundlach@foxrothschild.com.

In a majority decision issued June 20, 2017, with a complement of new Justices, the Pennsylvania Supreme Court issued a ruling placing further emphasis on the importance of Article I, Section 27 of the PA Constitution.  The decision was in PA Environmental Defense Foundation v. Commonwealth of PA, and it addressed how the Commonwealth is allowed to spend the money received through oil and gas leasing of state land.

Article I, Section 27 is the constitutional provision declaring:  “The people have a right to clean air, pure water, and to the preservation of the natural, scenic, historic and esthetic values of the environment.”  It also contains language requiring the Commonwealth to act as trustee of the public’s natural resources.

Of importance to real estate developers is the fact that Article I, Section 27 can be used by those challenging PADEP permits through appeals of final actions to the PA Environmental Hearing Board.  In cases challenging DEP approvals, the third party appellants and environmental groups allege that DEP acted arbitrarily, capriciously or contrary to law, and they generally have thrown in allegations that PADEP’s action violated Article I, Section 27.  For many years, the law was that if the General Assembly adopted the applicable regulations in an effort to protect the environment, then acting in conformance of those regulations would comply with Article I, Section 27.  That was until a plurality decision of the PA Supreme Court in 2013, known as the Robinson Township case, in which the court found that the prior test, known as Payne I, stripped all meaning from the constitutional provision.  As a plurality decision, the Robinson Township decision could only go so far in changing the prior law.

Since 2013, several new justices have been elected to the court, and now those justices have weighed in on the import of Robinson Township, and they have wholly endorsed the law as stated in that plurality decision.  What does that mean?  The most important sentence in the decision for me is the one finding that Article I, Section 27 “places a limitation on the state’s power to act contrary” to the rights expressed therein, and “while the subject of this right may be amenable to regulation, any laws that unreasonably impair the right are unconstitutional.”  As I read that, the Court is clearly saying that PADEP actions not only have to comply with the regulations, but more may be required to satisfy Article I, Section 27 to prevent the action from being unconstitutional.

It’s unclear if this decision will cause PADEP to act differently, since the decision mostly related to oil and gas leases and DCNR funding, but I think it’s now clear where the PA Supreme Court stands on Article I, Section 27 and state action.  Anyone seeking a permit from PADEP will need to be mindful that complying with PADEP regulations may no longer be enough, and that additional actions may be needed to go above and beyond the regulatory requirements, in order to ward off any constitutional challenges to PADEP’s action based on Article I, Section 27.

When a developer receives a Notice of Violation (NOV) from PADEP for noncompliance with the Clean Streams Law — most typically involving alleged violations of an NPDES storm water construction permit — that NOV sometimes results in a civil penalty being imposed.  If the project is brought into compliance, PADEP often looks to resolve the matter with a fine and the signing of a Consent Assessment of Civil Penalty (CACP).  I’m often asked by clients what happens if the developer thinks the fine is too high and they refuse to sign the CACP?  Well, in that case, PADEP can file a penalty action against the developer, essentially asking the PA Environmental Hearing Board (EHB) to assess a penalty.  That’s exactly what happened in a recent case involving violations of the Clean Streams Law alleged against a gas drilling operation for discharges from an impoundment.  The case was PADEP v. EQT Production Co. and it was decided by the EHB on May 26, 2017.  In that decision, the EHB noted that while PADEP is free to suggest a penalty amount, its suggestion is “merely advisory” and the EHB may impose a penalty that is higher or lower.  The EHB noted that while PADEP’s penalty amounts are based on guidance documents and penalty policies, none of those apply to the EHB, which only applies statutory and regulatory penalty provisions and uses its own precedents.  In this recent case, PADEP had made an initial demand of $4.5 million.  In the hearing before the EHB, it simply asked that a “very substantial penalty” be imposed.  Ultimately, the EHB imposed a penalty of $1.137 million.  While still a significant penalty, it appears to be just 25 percent of PADEP’s initial demand.  In my experience, the vast majority of civil penalties imposed by PADEP for violations of the Clean Streams Law get resolved through CACPs.  In evaluating options when confronted with a CACP, developers can and should consider whether having the EHB calculate the penalty is likely to result in a higher or lower penalty, taking into consideration the cost of litigating the matter against PADEP before the EHB.

When the Philadelphia Zoning Code was amended in August, 2012, a Transit–Oriented Development (“TOD”) Overlay District was included.  Such districts have become increasingly favored by urban planners as a way to encourage development adjacent to transit hubs, with associated increase in the use of public transit and a decrease in reliance upon private transportation.  However, the provision included in the 2012 Zoning Code proved cumbersome, and during the intervening 4+ years, no parcel in Philadelphia has been so designated.  In response, Councilwoman Blondell Reynolds Brown and Councilman Bill Greenlee jointly introduced on February 23, 2017, a new ordinance amending the TOD overlay (ordinance # 170162).

Public transit
Copyright: 06photo / 123RF Stock Photo

The main objective of the proposed new Overlay District is to both simplify the application of the TOD and increase bonuses, which would be available to landowners and developers who utilize it. To achieve the simplification, the Overlay District would apply to any parcel located within 500 feet of a designated transit station.  It is anticipated that stations will be so designated only by action of City Council, and presumably only after approval of the District City Council person in whose district the TOD will be designated.

There will be a development bonus of 30% of the otherwise permitted FAR for parcels located in the TOD.  Furthermore, bonus FAR is available for green buildings, next income housing, provision of public space, provision of underground parking, and certain transit connections.  Where bonuses of 150% are available, generally, in the Philadelphia Zoning Code for provision of such items, in the TOD, bonuses can be accumulated allowing for an increase of FAR of 200%.

One interesting provision of the proposed new ordinance is that for the first time, Philadelphia would impose a maximum amount of parking which can be made available in connection with a project.  This change will be welcome by planning professionals, who hope similar provisions will be applied in Center City.

It is certainly unclear whether or not City Council will pass the ordinance in the form introduced, but if passed, the City’s planning professionals will seek to convince members of City Council to designate a small number of pilot TOD districts, which will be tested to see whether increased development can be triggered by this approach.

As of this blog post, City Council’s Rules Committee has not scheduled the ordinance for a public hearing.  It appears that usual, short-term concern about parking availability may delay the implementation of this forward-looking approach.

Newspaper featuring local news
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.

On November 21, 2016, the Pennsylvania House of Representatives signed into law legislation that became known as Act 170 (the “Act”) which adopted the newly revised Uniform Partnership Act, Uniform Limited Partnership Act, and Uniform Limited Liability Act.  The Act made important revisions to the laws of partnerships, limited partnerships, and limited liability companies.  In this piece, I will only focus on some of the changes in the Act that will affect a limited liability company (“LLC”).

Limited Liability Companies (LLCs)
Copyright: tashatuvango / 123RF Stock Photo

The Act took effect in two stages:

  • On February 21, 2017 for all entities that are formed on or after February 21, 2017; and
  • April 1, 2017 for all entities formed before February 21, 2017, unless they elect to be subject to the new law by amending their partnership/operating agreement to do so.

The Act highlights the operating agreement’s role in governing the LLC and the rights and obligation of its members.  The Act now allows the operating agreement to create the status of a member-managed, or manager-managed LLC.  Previously, if an LLC wanted to be considered manager-managed, it would need to be declared on the certificate of organization filed with the Commonwealth.  The Act also allows the LLC and its members to modify some aspects of the duty of loyalty and duty of care, but does not allow it to eliminate the duties altogether.  The operating agreement may alter aspects of the duty of care and duty of loyalty, or identify specific types of actions and transactions that do not violate duties, and which are not “manifestly unreasonable.”

The Act also eliminates the concept of “statutory apparent authority.”  Previously, under Pennsylvania law, a member of an LLC, solely by being a member, was considered an agent of the LLC.  This is no longer the case.  Now, an LLC may file a certificate of authority which states the “authority, or limitations on the authority” of a specific person or a person holding a certain position within the LLC,  to transfer real property held by the LLC, or enter into transactions, and otherwise bind the LLC.

Finally, the Act addresses the method for which a judgement creditor can execute against a member’s interest in an LLC.  The Act states that a charging order is the sole method by which a judgment creditor can obtain any value from a member’s interest in an LLC.  The charging order would give the creditor a lien on the member’s transferable interest, which is the member’s right to receive any distributions from the LLC, but it does not confer upon them any rights to manage the LLC that a member would possibly have.  If the charging order does not satisfy the creditor’s judgment in full, the creditor may foreclose on the member’s interest.  As with the charging order, the purchaser in foreclosure would only acquire the transferable interest, and would not be considered a member of the LLC.

April, 2017

Are the real property taxes assessed against your property by the county board of assessment for county, municipality and school district taxes out of proportion to the actual value of your property or the value attributable to your property by capitalizing the income you receive from the property?

What Should You Do If You Think Your Real Estate Taxes Are too High?

First, you need to determine whether to file an appeal to the county board of assessment for your property. To do so, you need an experienced real estate assessment attorney and a qualified appraiser.

On commercial and industrial properties, as well as rental residential properties, two calculations often make the determination as to whether or not to appeal. Capitalization of income and comparable sales gives us the ability to make a preliminary determination as to whether a particular tax assessment is out of line.

The capitalization of income approach is the easiest and quickest test to determine the value of your property. The comparable sales approach requires information from an appraiser. Up to date information on rents, expenses, square footage, occupancy, necessary to complete the capitalization approach. As to comparable sales, it is important to determine whether the sale is an arm’s length sale or was the result of a mortgage foreclosure or workout agreement. For residential properties, the most reliable determination is of course comparable sales of similar homes within a reasonable distance from the subject property.

With the above in mind, now is the time of year to review your real estate tax assessment on any and all property owned. If the market value utilized by the board of assessment is inconsistent with the market value of your property, or if you have experienced rental income problems over the last few years, then an appeal to your assessment this year may be in order. We can help you make that determination in short order. In Pennsylvania, appeals in Bucks, Chester, Delaware and Montgomery Counties need to be filed on or before August 1, 2017. The deadline for filing an appeal in Philadelphia County is October 2, 2017

If you would like more information, please contact Rob Gundlach at 215-918-3636 or rgundlach@foxrothschild.com.

Copyright: ymgerman / 123RF Stock Photo
Copyright: ymgerman / 123RF Stock Photo

Before you rush to file a land development application with a municipality, make sure that the proposed work actually constitutes land development requiring municipal approval. In certain circumstances, municipal land development approval is not required.

For example, Pennsylvania courts have held that the construction of a roof over a previously-approved structure, such as a patio, does not constitute land development under the Municipalities Planning Code (“MPC”).  Per the Pennsylvania Commonwealth Court, land development typically involves a large tract of land being divided into smaller parcels for construction of residential or commercial buildings, which is the kind of large-scale development of land, “with an inevitable and concomitant effect on the public generally,” that is contemplated by the MPC.  The Commonwealth Court determined that a patio was only one component of a building, and construction of the roof over the patio is certainly not the type of “large-scale development of land” contemplated by the MPC. The construction of the roof would not increase parking, storm sewer needs, or sewer and water use at the building, nor would it change the amount of impervious surface, result in any increase of water runoff or sewage, increase parking areas, traffic or stormwater, or increase the square footage of the patio itself.  Mere construction of a roof over a previously-approved patio does not transform the patio, which would not otherwise require the submission and approval of land development plans, into a patio requiring such approval.

Similarly, the Pennsylvania Supreme Court has also determined that the construction of a billboard does not constitute land development within the meaning of the MPC.  The MPC, when viewed as a whole, clearly is intended “to apply to the allocation of land in such a way that issues related to public use, water management, sewers, streets and the like must be addressed.” The construction of a billboard, like raising the roof of an existing building or constructing a roof above a previously-approved structure, does not give rise to concerns relating to sanitary sewer, water, storm water management, parking, driveways, roadways, curbs and sidewalks, and does not increase the footprint, square footage, necessary parking, curbing, sidewalks, sewer, water, or stormwater relating to any existing buildings or structures. Because of these factors, this type of work should not constitute land development.

Therefore, the construction of a roof over an already-paved surface, or other similar work with no effect on issues such as public use, stormwater management, sewers, streets, parking or expansion of building size, may not require municipal land development approval.