In re Condemnation of Land for Area #1

• Decision Date: 22 April 2008
• Docket Number: No. 478 C.D. 2007.,478 C.D. 2007.
• Citation: 946 A.2d 1143
• Parties: In Re: CONDEMNATION OF LAND FOR THE SOUTH EAST CENTRAL BUSINESS DISTRICT REDEVELPOMENT AREA #1 Appeal of: Alan R. Yarnall.
• Court: Pennsylvania Commonwealth Court

946 A.2d 1143

In Re: CONDEMNATION OF LAND FOR THE SOUTH EAST CENTRAL BUSINESS DISTRICT REDEVELPOMENT AREA #1 Appeal of: Alan R. Yarnall.

No. 478 C.D. 2007.

Commonwealth Court of Pennsylvania.

Argued March 12, 2008.

Decided April 22, 2008.

David L. Rohde, Drexel Hill, for appellant.

Vincent B. Mancini, Media, for appellee, Redevelopment Authority of the City of Chester.

BEFORE: LEADBETTER, President Judge, and SMITH-RIBNER, Judge, and PELLEGRINI, Judge, and FRIEDMAN, Judge, and COHN JUBELIRER, Judge, and SIMPSON, Judge, and LEAVITT, Judge.

OPINION BY Judge FRIEDMAN.

Alan R. Yarnall (Yarnall) appeals from the February 13, 2007, order of the Court of Common Pleas of Delaware County (trial court), which dismissed Yarnall's preliminary objections to the Declaration of Taking (Declaration) filed by the Redevelopment Authority (Authority) of the City of Chester (City). We affirm.

Yarnall owns the property at 200 East Fifth Street in the City (the Property), which is currently in use as a strip club. The Property is located within the South East Central Business District Redevelopment Area #1 (Redevelopment Area), which the City Planning Commission certified as blighted on April 14, 2004. (Findings of Fact, Nos. 2, 6, 20.)

The Authority filed the Declaration with the trial court on July 14, 2005. Paragraph 3 of the Declaration states that the Property is being condemned in accordance with an approved redevelopment plan to carry out a clearance of certain properties. Paragraph 2 of the Declaration states that the Property is being condemned to acquire and redevelop educational buildings, including charter school buildings. (Findings of Fact, Nos. 4, 7-9.)

Yarnall filed preliminary objections to the Declaration, asserting, inter alia, that the Authority condemned the Property for the private, for-profit use of Vahan Gureghian (Gureghian). Yarnall alleged that the original redevelopment plan did not include the use of school buildings, that the City planning Commission amended the plan to include the use of school buildings in order to increase the real estate holdings of Gureghian and that, prior to the condemnation, the Authority entered into a contingent agreement with Gureghian for the sale and redevelopment of the Property. (R.R. at 125a.)

Following a hearing on the preliminary objections, the trial court made the following findings of fact. On May 12, 2004, the Authority authorized an agreement of sale and redevelopment (Agreement) with Gureghian contingent upon approval by City Council. The Agreement requires that Gureghian gut and renovate the Property's existing building to create a copy center, classrooms, offices and a library for the Chester Community Charter School (Charter School). The Agreement also requires that Gureghian, and his successors and assigns, devote the Property only to developing the Charter School, that this use restriction be a covenant running with the land and that the Property's deed so provide. (Findings of Fact, Nos. 13, 25, 27, 31.)

On August 11, 2004, the City Planning Commission amended the redevelopment plan to provide for educational uses in the Redevelopment Area.¹ The amendment was intended to benefit the City's residents, not Gureghian.² On February 9, 2005, the City Council approved the Agreement and the amended redevelopment plan. On July 6, 2005, the Authority and Gureghian executed the Agreement. (Findings of Fact, Nos. 11-15.)

The trial court concluded that the Charter School is an independent public school and, therefore, the Authority condemned the Property for a public use. The trial court also concluded that the taking did not lose its public character merely because Gureghian may profit from the taking. The trial court further concluded that the taking was proper despite the fact that the Property itself may not be blighted. (Conclusions of Law, Nos. 21-24, 26, 29.) Thus, the trial court dismissed Yarnall's preliminary objections. Yarnall now appeals to this court.³

Section 9(i) of the Urban Redevelopment Law (Law), Act of May 24, 1945, P.L. 991, as amended, 35 P.S. § 1709(i), authorizes an authority to acquire by eminent domain any real property within a redevelopment area for the public purposes set forth in the Law. Those public purposes include the elimination of blighted areas through economically and socially sound redevelopment. Section 2(i) of the Law, 35 P.S. § 1702(i). To effectuate this purpose, an authority may sell real property in a redevelopment area, subject to approval by the local governing body, and enter into contracts necessary or convenient to the exercise of its powers. Sections 9(k) and 9(t) of the Law, 35 P.S. §§ 1709(k) & 1709(t).

Before acquiring private property by eminent domain, an authority is required to prepare a redevelopment proposal for the blighted area. Section 10(a) of the Law, 35 P.S. § 1710(a). The authority may include in its redevelopment proposal "the form of the redevelopment contract with the redeveloper selected" by the authority. Section 10(j) of the Law, 35 P.S. § 1710(j). Where an authority sells real property to a redeveloper in furtherance of a redevelopment contract, the deed shall contain such provisions as the authority may deem desirable to run with the land in order to effectuate the purposes of the Law. Section 11(b) of the Law, 35 P.S. § 1711(b).

In Belovsky v. Redevelopment Authority of Philadelphia, 357 Pa. 329, 54 A.2d 277 (1947), our supreme court specifically addressed whether the Law violates a property owner's constitutional rights where the sale of the property involved in a redevelopment project ultimately results in taking the property from one individual and giving it to another. Our supreme court held that the Law is constitutional, stating:

Nothing, of course, is better settled than that property cannot be taken by government without the owner's consent for the mere purpose of devoting it to the private use of another, even though there be involved in the transaction an incidental benefit to the public.... [However,] [i]t is not the object of the statute to transfer property from one individual to another; such transfers, so far as they may actually occur, are purely incidental to the accomplishment of the real or fundamental purpose [i.e., the clearance, reconstruction and rehabilitation of the blighted area].

Belovsky, 357 Pa. at 340, 54 A.2d at 282-83. Thus, the court concluded that a taking does not "lose its public character merely because there may exist in the operation some feature of private gain, for if the public good is enhanced it is immaterial that a private interest also may be benefited." Id. at 341, 54 A.2d at 283.

In In re Forrester, 575 Pa. 365, 370, 836 A.2d 102, 105 (2003) (citation omitted), our supreme court expressed the principle as follows:

[A] taking will be seen as having a public purpose only where `the public is to be the primary and paramount beneficiary of its exercise.' Thus, for a taking to be considered as effectuating a public purpose, this court has required that it is the citizenry at large, rather than a private entity or individual, that will be the principal recipient of any benefit.

In other words, a taking is proper if the benefit to the public is primary and any benefit to a private individual is only incidental.

I. Taking for Private Use

Yarnall argues that the trial court abused its discretion and/or committed an error of law in concluding that the Authority did not take Yarnall's Property primarily for the private use of Gureghian. We disagree.

The Law clearly permits redevelopment authorities to select redevelopers and to negotiate contracts for the sale and redevelopment of real property within a redevelopment area prior to submitting a redevelopment proposal for approval. Yarnall does not challenge the validity of these provisions of the Law; thus, Yarnall cannot claim that the Authority took the Property for the private use of Gureghian simply because the Authority selected Gureghian as redeveloper and negotiated with him a contract for the sale and redevelopment of the Property before the condemnation.⁴

Moreover, the mere fact that Gureghian may profit from the sale and redevelopment of the Property does not negate Gureghian's contribution to the elimination of blight in the Redevelopment Area. Indeed ultimately, Yarnall complains about the Authority's selection of Gureghian because Gureghian has been successful in developing other charter schools. (See Yarnall's brief at 11-19.) However, to ensure the removal of blight in the Redevelopment Area, it makes sense to contract with someone with a proven track record.

Nevertheless, Yarnall argues that the benefit to the public from the expansion of the Charter School is only incidental to Gureghian's profits.⁵ In making his argument, Yarnall speculates that Gureghian might charge excessive rent for the Property, that authorities might not renew the Charter School's charter and that the Charter School might become unprofitable and close. (Yarnall's brief at 18.) However, Yarnall does not cite any evidence to support his dire predictions or to support his contention that the public benefit is only incidental to Gureghian's profits.⁶ If Gureghian operated his business in a manner that resulted in the closure of charter schools, Gureghian ultimately would have no business. It is in Gureghian's interest to help charter schools succeed, and, where charter schools succeed, there is a benefit to the public.

Yarnall also argues that the taking was improper because the Property, itself, is not blighted. In making this argument, Yarnall points out that, in In re Redevelopment Authority of the City of Philadelphia, 891 A.2d 820 (Pa.Cmwlth.), aff'd in part, rev'd in part and remanded, ___ Pa. ___, 938 A.2d 341 (2007), this court stated that a certification of blight does not, in and of itself, authorize the condemnation of property. This is true. However, in Crawford v....