McCullough v. Redevelopment Authority of City of Wilkes-Barre

Decision Date09 July 1975
Docket NumberNo. 74-1997,WILKES-BARRE,Nos. 74-1997,No. 74-1998,No. 74-1999,74-1997,74-1998,74-1999,s. 74-1997
Citation522 F.2d 858
PartiesFrancis P. and E. Edith McCULLOUGH et al., Appellants in, v. REDEVELOPMENT AUTHORITY OF the CITY OF, a Public Corporation, et al. Francis P. and E. Edith McCullough et al. v. REDEVELOPMENT AUTHORITY OF the CITY OF, a Public Corporation, et al., Appellants inFrancis P. and E. Edith McCullough et al. v. REDEVELOPMENT AUTHORITY OF the CITY OF, a Public Corporation, et al. Appeal of Theodore R. ROBB and James T. Lynn into 74-1999.
CourtU.S. Court of Appeals — Third Circuit

Gelb & Myers, Morey M. Myers, Robert J. Nolan, Scranton, Pa., for plaintiffs-appellants and cross-appellees.

Flanagan, Doran, Biscontini & Shaffer, Charles A. Shaffer, Wilkes-Barre, Pa., for State defendants-appellees and cross-appellants.

Wallace H. Johnson, Asst. Atty. Gen., S. John Cottone, U. S. Atty., Laurence M. Kelly, Asst. U. S. Atty., Scranton, Pa., Carl Strass, Larry G. Gutterridge, Dept. of Justice, Washington, D. C., for Federal appellees and cross-appellants.

Before ALDISERT, GIBBONS and GARTH, Circuit Judges.

GARTH, Circuit Judge:

We are called upon to decide whether, under any of the various theories advanced by plaintiffs, they were entitled to have their residences which had been flood-damaged acquired 1 by the South Wilkes-Barre Redevelopment Authority rather than just Rehabilitated. The district court entered judgment for all the defendants on all claims except that it directed the defendants to comply with certain provisions of the Urban Renewal Handbook. 2 Inasmuch as we hold that the plaintiffs are not entitled to have their properties acquired regardless of compliance with the Handbook provisions, we reverse so much of the district court's judgment in favor of the plaintiffs and direct that judgment for the defendants be entered without exception as to all claims.


In June of 1972, Hurricane Agnes struck Pennsylvania and neighboring states causing severe and widespread property damage. One of the areas which experienced severe flooding was the Wyoming Valley of Pennsylvania which is drained by the Susquehanna River. The Susquehanna overflowed its banks extensively flooding the downtown and "South Wilkes-Barre" sections of the City of Wilkes-Barre.

Shortly thereafter, the United States Department of Housing and Urban Development (HUD), along with other federal and state agencies, began to coordinate efforts for disaster relief and recovery. 3 A separate urban renewal project was designed for the rehabilitation of South Wilkes-Barre. The responsibility for this project was entrusted to a body known as the Redevelopment Authority of the City of Wilkes-Barre (hereinafter "Authority").

The funding for the South Wilkes-Barre Project was obtained from several sources. The Authority received a planning and survey grant of $936,532 from HUD under Title I of the National Housing Act of 1949, as amended, 42 U.S.C. § 1441 et seq. for the purpose of surveying the magnitude of the flood damage in order to prepare an urban renewal and redevelopment project for the South Wilkes-Barre area. On the basis of this survey the Authority prepared a Flood Disaster Urban Renewal Project Plan which, among other things, included the acquisition of certain properties within the Project Area. 4

In March, 1973, the Authority submitted to HUD a "Combined Part I Part II Loan and Grant Application" seeking a federal capital grant of $29,518,299. On July 20, 1973, a "Loan and Capital Grant Contract" was executed between the Authority and HUD, under the terms of which HUD approved the South Wilkes-Barre Urban Renewal Plan in the amount requested. 5 In addition to the HUD funds, the Commonwealth of Pennsylvania agreed to provide $9,431,000 toward the Project. Under the terms of the contract, the Authority made no financial contribution.

From its inception, it was intended by the various governmental agencies participating in the project, that primary emphasis would be placed on "rehabilitation" of flood-damaged properties rather than their "acquisition". 6 The Wilkes-Barre City Council decided as early as July, 1972 that the policy which should be followed was one of " . . . extensive restoration and rehabilitation and of only limited property acquisition. . . . " In accordance with this policy, the district court found that: "The Urban Renewal Plan provides for the rehabilitation of the maximum number of buildings possible within the Area." Finding No. 15.

The criteria 7 used by the Authority to distinguish between properties to be rehabilitated and those to be acquired established the following factors as warranting acquisition:

"(a) The structure sustained severe flood damage, such condition being deemed to exist when there are defects in a particular element or group of elements of the foundation and/or piers, exterior walls, roof, or loadbearing items, which defects seriously impair the ability of the component to function in its intended capacity and which require total replacement, reconstruction or extensive repair of the element.

(b) Acquisition to achieve planning objectives.

(c) Acquisition to remove blighting influences; this to include inadequate street layout, incompatible uses or land use relationships, overcrowding of buildings, excessive dwelling unit density, obsolete buildings not economically suitable for modernization or conversion, and other identified health and safety hazards." 8

The district court found that the reason why the criteria of "sub-standard to a degree warranting clearance" were more strictly defined for this Project than other projects was to " . . . discount or eliminate damage that had occurred to every property, (the general type of flood damage) and to limit the examination of the property to those things which dealt with its structural capacity to remain." 9

An advisory board (City Review Board) was established to review objections of property owners whose properties were not scheduled for acquisition by the Authority. This Board, in its review, applied the same criteria used by the Redevelopment Authority to determine the eligibility of properties for acquisition. The Authority, however, was not bound by the recommendations regarding acquisition made by the Review Board or by the City Council. 10

Out of a total of some 4,500 structures in the Project Area, the original number of structures originally scheduled for acquisition by the Authority was 634 (640 parcels). 11 Due to modifications in the Urban Renewal Plan, and the decisions of individual property owners to rehabilitate structures originally scheduled for acquisition, the Authority, by March 1, 1973, had reduced the number of structures it intended to acquire to 315. 12

The budget for the South Wilkes-Barre project allocated $14,750,000 for property acquisition based on an estimated acquisition of 640 parcels. Despite the reduction in number of properties to be acquired by the Redevelopment Authority since the original estimate, no corresponding revision was made in the budgetary allocation for property acquisition. Thus, a surplus of several million dollars exists in the amount allocated for property acquisition. 13

The properties owned by plaintiffs are all located within the South Wilkes-Barre Project Area and were not scheduled for acquisition by the Authority. Plaintiffs made repeated requests to have their properties included within the acquisition program but without success. Their eagerness to have their properties acquired is explained by the district court's finding: "An owner of property within the Urban Renewal Project which (property) is acquired receives the fair market value of his property at the time of acquisition disregarding the amount by which the value of the property depreciated as a result of the flood damage it sustained." 14 Thus, plaintiffs seek a "Purchase" of their properties at pre-flood values rather than being required to restore their properties through rehabilitation loans.

A full understanding of the practical difference between property being scheduled for acquisition as compared to property being rehabilitated requires a brief analysis of the rehabilitation loan aspect of the Urban Renewal Plan. All properties within the Project Area not acquired must be rehabilitated by the property owners in accordance with city codes and ordinances. 15 Thus, regardless of the cost involved, property owners who remain in the South Wilkes-Barre Project Area must undertake rehabilitation of their damaged structures.

The district court also found that the Authority gave no consideration to the economic feasibility of rehabilitation or to the "debt-carrying capacity" of individual property owners, in determining which properties should be acquired and which rehabilitated. 16 Hence, even under the liberal terms of government-financed 42 U.S.C. § 1452b loans, it was found that some property owners were unable to bear the financial burden involved in rehabilitation. 17 The alternative for such individuals is the possible abandonment of their properties. The Authority classified seventy-five (75) properties, not scheduled for acquisition, as potentially subject to abandonment. 18

Having unsuccessfully sought to persuade the Authority to acquire their properties, plaintiffs commenced this action asserting jurisdiction under 28 U.S.C. § 1331 (federal question jurisdiction), 28 U.S.C. § 1343(3)(4) (civil rights jurisdiction), 5 U.S.C. § 701 et seq. (Administrative Procedure Act), and 28 U.S.C. §§ 2201 & 2202 (Declaratory Judgment Act). We agree with the district court that jurisdiction is properly founded upon 28 U.S.C. § 1331 and 28 U.S.C. § 1343(3). 19 See Holmes v. New York City Housing Authority, 398 F.2d 262 (2d Cir. 1968).

The district court, after a non-jury trial, filed a comprehensive opinion which rejected plaintiffs' interpretation of ...

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