Mercurio v. ALLEGHENY COUNTY REDEV. AUTH.

• Decision Date: 31 December 2003
• Citation: Mercurio v. ALLEGHENY COUNTY REDEV. AUTH., 839 A.2d 1196 (Pa. Commw. Ct. 2003)
• Parties: Arlene and Joseph MERCURIO, India and Steve Loevner, Timothy J. Sullivan, Jr., Robert Silber, Melanie Pallone, Joseph Pugach, Virginia and Dr. Paul Taylor, Andrew Washburn and Kathy McCauley, Robert H. Mullen and Citizens For Pennsylvania's Future, Appellants v. ALLEGHENY COUNTY REDEVELOPMENT AUTHORITY, Allegheny County, Allegheny County Council, Orix-Woodmont Deer Creek I Venture, L.P., Harmar Township, Allegheny Valley School District and W. Duff McCrady.
• Court: Pennsylvania Commonwealth Court

839 A.2d 1196

Arlene and Joseph MERCURIO, India and Steve Loevner, Timothy J. Sullivan, Jr., Robert Silber, Melanie Pallone, Joseph Pugach, Virginia and Dr. Paul Taylor, Andrew Washburn and Kathy McCauley, Robert H. Mullen and Citizens For Pennsylvania's Future, Appellants v.ALLEGHENY COUNTY REDEVELOPMENT AUTHORITY, Allegheny County, Allegheny County Council, Orix-Woodmont Deer Creek I Venture, L.P., Harmar Township, Allegheny Valley School District and W. Duff McCrady.

Commonwealth Court of Pennsylvania.

Argued October 8, 2003.

Decided December 31, 2003.

Jody L. Rosenberg, Pittsburgh, for appellant.

Irving S. Firman, Pittsburgh, for appellee, Redevelopment Authority of Allegheny County.

William A. Pietragallo, Pittsburgh, for appellee, Orix-Woodmont Deer Creek I Venture, L.P.

BEFORE: COLINS, President Judge, McGINLEY, Judge, SMITH-RIBNER, Judge, PELLEGRINI, Judge, LEADBETTER, Judge, SIMPSON, Judge, LEAVITT, Judge.

OPINION BY JUDGE McGINLEY.

Arlene and Joseph Mercurio, India and Steve Loevner, Timothy J. Sullivan, Jr., Robert Silber, Melanie Pallone, Joseph Pugach, Virginia and Dr. Paul Taylor, Andrew Washburn and Kathy McCauley, Robert H. Mullen and Citizens for Pennsylvania's Future (Citizens)(collectively, Appellants) appeal the order of the Court of Common Pleas of Allegheny County(common pleas court) that sustained the preliminary objections of Allegheny County Redevelopment Authority(ACRA), Allegheny County(County), Allegheny County Council(Council), Orix-Woodmont Deer Creek I Venture, L.P.(Orix), Harmar Township (Township), Allegheny Valley School District(District) and W. Duff McCrady(McCrady)(collectively, Appellees) and dismissed the Appellants' amended complaint in its entirety with prejudice.

On December 16, 1998, ACRA adopted a resolution that declared its official intent to issue obligations to finance the proposed Deer Creek Project using Tax Increment Financing (TIF) in an amount not to exceed $25,000,000.The project is a commercial development located on approximately 320 acres in the Township.By resolution dated February 17, 1999, the Board of Supervisors of the Township authorized the ACRA to pursue a TIF proposal.By resolution dated March 1, 1999, the District similarly endorsed the TIF concept for financing the Deer Creek Project and indicated its willingness to participate.By resolution dated March 18, 1999, the Board of Commissioners of Allegheny County(Commissioners) endorsed the TIF concept for financing the public infrastructure construction relating to the Deer Creek project.By resolution dated August 25, 1999, the ACRA designated 363 acres in the Township a "redevelopment area."This included 335 acres to be the location of the Deer Creek project, 24.56 acres of the Pennsylvania Turnpike, and one light industrial parcel of 2.52 acres.By resolution dated September 1, 1999, the Board of Supervisors of the Township adopted and authorized participation in the Deer Creek Crossing Tax Increment Financing Plan (Plan) presented by the ACRA.By resolution dated September 7, 1999, the Board of Directors of the District similarly adopted and authorized participation in the Plan.By resolution adopted September 22, 1999, ACRA approved and adopted the Plan and submitted the Plan to Allegheny County.By resolution dated October 7, 1999, the Commissioners adopted the Plan and created the Deer Creek Crossing Tax Increment Financing District as of December 1, 1999, to continue for twenty years.By resolution dated October 27, 1999, the ACRA authorized the issuance of bonds in an aggregate principal amount not to exceed $26,000,000.

On July 30, 1999, Orix applied to the Pennsylvania Department of Environmental Protection(DEP) for a water obstruction and encroachment permit to fill several acres of wetlands and divert Deer Creek to construct the Deer Creek Project.The Citizens and others intervened before DEP to oppose the permit request.By letter dated October 12, 2000, DEP denied the application.Orix appealed to the Environmental Hearing Board but settlement with DEP and Citizens led to the withdrawal of the appeal.Orix submitted additional information and a revised application which DEP granted on August 22, 2002.

On August 23, 2002, the Appellants filed a complaint for declaratory judgment and in equity to enjoin tax increment financing in the common pleas court.After Orix, the County, Council, and ARCA preliminarily objected, the Appellants filed an Amended Complaint.Count I alleges that the Commissioners failed to hold a public hearing in violation of Section 5(a)(5) of the Tax Increment Financing Act (Act)¹, 53 P.S. § 6930.5(a)(5), which requires the governing body of the municipality which will create the tax increment district to hold at least one public hearing on the proposed district, its boundaries, the adoption of a project plan, and the benefits to the municipality.

Count II alleges that the adoption of the Plan was arbitrary and capricious for a host of reasons.²Count III alleges that the Deer Creek Project Plan in 1999 contained the following information as required in Section 5(a)(4) of the Act, 53 P.S. § 6930.5(A)(4): a statement listing the kind, number and location of all proposed public works or improvements and/or all residential, commercial or industrial development and revitalization improvements, an economic feasibility study of the project and the fiscal effects on the municipal tax base, a detailed list of estimated project costs, a description of the methods of financing all estimated project costs and the time when related costs or monetary obligations are to be incurred, and a map showing improvements and uses therein.However, the Appellants allege that Orix's revised application to DEP contain substantial changes that require a formal amendment to the Plan.³

Appellants sought a declaration that the Allegheny County resolution of October 7, 1999, and the Township resolution of September 1, 1999, which created the Deer Creek TIF District and adopted the Plan are null and void, a declaration that the Plan no longer reflects the proposed Deer Creek Crossing Project and therefore does not provide the basis for applying the tax increment financing for the Deer Creek Project, a declaration that the site of the Deer Creek TIF District was not blighted, a permanent injunction that would prohibit the ACRA, Allegheny County, Council, and/or Orix from taking any action to further implement the tax increment financing pursuant to the October 7, 1999, resolution, costs of suit, and such other further relief as the common pleas court deemed proper.

Orix preliminarily objected on the basis that Count I of the Amended Complaint contained an untimely appeal from the Township's September 1, 1999, resolution and the Commissioners' October 7, 1999, resolution so the common pleas court lacked subject matter jurisdiction.Orix also preliminarily objected to Count II as an untimely appeal from the valid resolutions of local government bodies so the common pleas court lacked jurisdiction.Orix also alleges that Count III of the Amended Complaint must be dismissed for failure to state a claim upon which relief may be granted because the Act does not require that a tax increment financing plan be amended and that the Amended Complaint must be dismissed in its entirety because the Appellants lacked standing.McCrady, the owner of much of the property where the development would be located, joined these preliminary objections.

The County also preliminarily objected.The County raised some of the same preliminary objections and added that Count I is legally insufficient because there was no requirement that the members of the governing body which creates a TIF district physically preside over or actually conduct a hearing to afford interested parties an opportunity to express views on matters relating to the creation of a specific TIF District or adoption of a specific TIF plan.The County alleges that it did hold a public hearing on September 8, 1999, and that the TIF plan was approved at a Commissioners' meeting that was open to the public.The County also preliminarily objected to Count I and refutes the allegation that the Commissioners' resolution was invalid because it was not advertised.The County preliminarily objected to the allegation in Count II that the Plan is invalid because the Deer Creek TIF District is not blighted.The County reported that a determination of "blight" is not subject to judicial review absent clear averments of fraud or palpable bad faith.The Council joined these objections.⁴

The common pleas court sustained the preliminary objections and dismissed the Amended Complaint with prejudice:

Initially, Plaintiffs[Appellants] claimed that no public hearing ever occurred.Now they claim that the Board of Supervisors was required to publish the resolution by an ordinance in adopting the Tax Increment Financing Plan (`TIF'), and that failure to publicize in a newspaper of general circulation invalidates the adoption of the TIF plan, which was required by ordinance.It is uncontroverted that the TIF Plan was approved on October 7, 1999, at a Board of County Commissioners by resolution at a public meeting.

Governing bodies and districts are not required to adopt a TIF plan by ordinance.To the contrary, the TIF act provides for either an ordinance or resolution to adopt such a plan....In addition... a city of the second class also has the authority to act by resolution....Furthermore, the provisions of the second class township are to be liberally construed to effect their objects in order to give effect to its provisions....Moreover during these arguments, it was apparent that Plaintiffs[Appellants] had sufficient notice of a public hearing.

Plaintiffs[Appellants] had thirty (30) days from the adoption of the resolutions to file an appeal.Notwithstanding, they waited three (3) years from the adoption to challenge the

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