Archives: Redevelopment

About a year ago, the Philadelphia RDA condemned property owned by a nationally recognized artist. This condemnation received a great deal of local and national attention including newspaper and radio coverage (I was interviewed by one station). The property owner, James Dupree, used this property as his studio. The property was one of 17 properties condemned by the RDA allegedly to cure blight in that neighborhood and would have been used to build a new supermarket.

Dupree challenged the taking and the RDA has now decided to abandon the condemnation and the project.  Brian Abernathy, executive director of RDA, said in a statement, “Unfortunately, the legal costs associated with Mr. Dupree’s appeals make it impossible to continue . . . . While we have explored the potential of building around Mr. Dupree’s property, a viable project under these conditions is not possible. In short, the inability to acquire Mr. Dupree’s property puts the prospect of bringing fresh food to this community at serious risk.”

This decision has also attracted the attention of the press locally and nationally including the Washington Post.  Once again, this show the sensitivity of issues relating to the taking of private property. 

The New Jersey Appellate Division recently held that Hoboken cannot designate an 11.5-acre site in the city as an “area in need of rehabilitation,” which had allowed it to implement a redevelopment plan.  It found that the Hoboken City council misinterpreted the appropriate statute.  The Appellate Division held that it was unclear whether the council properly applied the relevant statutory criteria because the city’s resolution misstated the statute upon which it relied. The suit, brought by leather goods manufacturer R. Neumann & Co. against the city of Hoboken, its mayor, and several other defendants, claimed that the resolution wasn’t supported by adequate evidence, was motivated by an ulterior purpose and was inconsistent with the state’s Local Redevelopment and Housing Law, according to the opinion.

The panel also rejected the company’s argument that the delineation of an “area in need of rehabilitation” gives municipalities the right to exercise eminent domain, finding that the designation only allows them to adopt a redevelopment plan. Those plans don’t provide for the taking or acquisition of property within such an area, according to the opinion.   According to state law cited in the panel’s opinion, the area would need to be designated as an “area in need of redevelopment” before a municipality would have the power to take or acquire private property by condemnation.

Mayor Nutter recently signed the Land Bank law and predicted that the City could start selling the its vacant and tax-delinquent properties by the end of the year.  The bill creates a new entity to manage Philadelphia’s vacant land, acquire tax-delinquent properties and sell them. There is an estimated 9,500 city-owned vacant properties and 17,000 tax-delinquent properties.

The Texas Supreme Court recently agreed to hear a challenge to a jury’s award of “stigma” damages for contaminated property that was remediated. In that case, the Court will consider whether temporary environmental harm can form the basis of a cause of action.

Oral argument is scheduled for Dec. 5. The case is Houston Unlimited Inc. Metal Processing v. Mel Acres Ranch, case number 13-0084.

 

The PA House of Representatives passed a bill decreasing the time allowed for nonprofit organizations to rehabilitate and sell abandoned blighted properties.  HB 1363 seeks to amend the Abandoned and Blighted Property Conservatorship Act by decreasing the time for court action on a petition from within 120 days of receipt of the petition to 60 days to encourage delinquent owners to take action.  The legislation would also require an owner to post a bond for the estimated repair costs to prevent them from stalling by promising to fix or repair the subject property.

The Pennsylvania General Assembly is considering a bill which would permit governmental entities to sell its public parks. The concern expressed by many – including newspaper columnists and groups such as the League of Women Voters – is that government officials will improperly use this as a “quick fix” to solve fiscal problems. For example, the Patriot News Editorial Board recently wrote, “The bill has the potential to decimate local parks . . . across the state. Is this really what our state lawmakers want? Quick sales of parks and public lands to plug short-term budget holes or pander to local developers?”

These critics believe that the current procedure should not be changed. The Donated and Dedicated Property Act currently requires a municipality to request the county Orphans Court for permission to sell the property. The League of Women Voters stated in a memo to lawmakers: “What is the rationale to amend this act that appears to have worked for more than a half-century?” The bill does not apply to properties acquired by eminent domain.

The bill passed unanimously in the PA House in June. It will be interesting to see whether the public scrutiny will impact its future.
 

On April 25, 2011, the Neighborhood Blight Reclamation and Revitalization Act, approved on October 27, 2010, became effective. The Act grants municipalities two primary tools to prosecute derelict owners of real estate in Pennsylvania and force owners to correct serious code violations and public nuisances.
The first tool is the right to sue the owner (in addition to all other rights municipalities currently have against owners) if a serious violation of any state law or building code exists and that violation poses an imminent health and safety threat. Before an action can be brought, the municipality must notify the owner of such violation or public nuisance. If the owner fails to take a substantial step to correct this violation within six months, the municipality may sue the owner. Any judgment may be entered as a lien against all of the assets of the owner, not just the subject real estate.
The second primary tool is the power to reject applications for municipal permits, including building permits and zoning approvals, if the applicant owns property in any municipality, and with regard to any such property, if any of the following conditions exist: (1) there is a final and unappealable tax, water, sewer or refuse collection delinquency, or (2) there is a serious code violation for which the owner has failed to take a substantial step to remedy the problem within six months of notice of such violation.
 

Terry Gillen has resigned as Executive Director of the Philadelphia Redevelopment Authority. She will be replaced by Ed Covington, a Wachovia Bank executive. Covington was the marketing manager for community lending and investment for Wachovia’s mid-Atlantic region. The change was voted on at a special RDA board meeting Wednesday and later announced by Mayor Nutter at City Hall. It is effective immediately. Gillen will work for Mayor Nutter on federal lobbying efforts.

 

On July 6, 2010, Governor Rendell signed the Fiscal Code Bill (Senate Bill 1042), providing, in part, for the automatic suspension, during the "extension period" (which begins after December 31, 2008, and ends before July 2, 2013), of approvals granted by a government agency for or in effect during the extension period, whether obtained before or after the beginning of the extension period. This new legislation is a significant benefit, to Pennsylvania developers and landowners hurt by the recession. Significantly, certain permits and approvals that may have expired since December 31, 2008, may no longer be considered to have expired, but have been suspended since January 1, 2009, thereby buying a developer or landowner significant additional time.

There are exceptions, however. For example, the suspension is not automatic in Philadelphia. In addition, Highway Occupancy Permits can only be extended by the Department of Transportation upon the submission of a complete and accurate application throughout the extension period for one year intervals. Further, any approval issued by the Department of Environmental Protection for a discharge into exceptional value or high quality waters is not subject to the automatic suspension. Any holder or recipient of an approval may seek written verification from the issuing government agency for any of the following: (1) the existence of a valid approval; and/or (2) the expiration date of the approval under the new legislation.
 

A copy of the legislation can be viewed here:  www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm

The City of Philadelphia has until March 2011 to spend $45 million to fight blight.
The money is the last of the bond proceeds for the city’s Neighborhood Transformation Initiative that former Mayor John F. Street started in 2001 to demolish abandoned buildings and acquire vacant properies. When the Nutter administration took over, it did not have a record of the amounts left in the fund and is now struggling to spend the money.

These monies may go only to certain neighborhoods – including parts of Germantown, North Philadelphia, Point Breeze, and West Philadelphia – that are specially designated for redevelopment. City Controller Alan Butkovitz said that the time it takes to condemn and acquire a property has created some of the delay. The monies not spent would be deposited into an escrow account until the City has to start paying off bondholders.