Price v. Philadelphia Parking Authority

• Decision Date: 24 June 1966
• Citation: 221 A.2d 138,422 Pa. 317
• Parties: B. PRICE and Dr. Barook Masuda, Appellants, v. The PHILADELPHIA PARKING AUTHORITY.
• Court: Pennsylvania Supreme Court

Page 138

221 A.2d 138

422 Pa. 317

B. PRICE and Dr. Barook Masuda, Appellants, v. The PHILADELPHIA PARKING AUTHORITY.

Supreme Court of Pennsylvania.

June 24, 1966.

Theodore Voorhees, Lawrence O. Turner, Jr., Lenard L. Wolffe, Dechert, Price & Rhoads, Philadelphia, for appellants

Harry Shapiro, Philadelphia, for appellee.

Matthew W. Bullock, Jr., Deputy City Sol., Philadelphia, David Berger, Philadelphia, for intervenors E. J. Frankel and J. L. Wolgin.

Before BELL, C.J., and MUSMANNO, JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.

OPINION

ROBERTS, Justice.

In May 1964, appellants, B. Price and Barook Masuda, instituted an action in equity to enjoin appellee, the Philadelphia Parking Authority, from proceeding under separate negotiated agreements for the development of two projects, hereafter referred to as the Academy House Project and the Rittenhouse Square Project, and to have such agreements declared null and void.

The Philadelphia Parking Authority is 'a public body corporate and politic, exercising public powers,' ¹ created by the City of Philadelphia pursuant to enabling legislation ² for the purpose of establishing a coordinated system of off-street public parking facilities. ³ Purporting to act under the powers granted by the enabling act, the Authority entered into the challenged projects: the Academy House Project with National Land and Investment Company and the Rittenhouse Square Project with Jack Wolgin and Ephraim Frankel. Due to the nature of the action and the issues presented, it is necessary that we set out the essential terms of the contested agreements.

I. Academy House Project

The Philadelphia Parking Authority presently operates an open-air facility of a 100 car capacity on the southern half of the block bordered by Broad, Watts, Spruce, and Lucust Streets in the City of Philadelphia. ⁴ National Land and Investment Company is the record owner of the remaining portion of the block, the situs of a In the Fall of 1963, National Land and the Parking Authority entered into a negotiated agreement for the development of the Academy House Project. ⁵ In essential terms, the agreement provided that the Authority was to purchase that portion of the block owned by National and to acquire the remainder from the City of Philadelphia. ⁶ The Authority further agreed to demolish the existing structure and to finance and construct an eight-story public parking garage on the site. The proposed garage, estimated to cost between $8,000,000 and $9,000,000, ⁷ was to provide space for approximately 862 automobiles and was to be leased to National for operation as an Authority parking facility. The term of the lease with National for the garage was to be co-terminous with the life of the bonds issued by the Authority to finance land acquisition and construction costs. National, however, was granted an exclusive option to renew the lease 'if, and whenever and to the extent that, the life of the Authority is extended. * * *' ⁸

vacant structure formerly the John Bartram Hotel.

In addition to the garage, the Authority also agreed to lease for a like term the air-space over the proposed facility to the private developer for the construction of a high-rise apartment complex. The contemplated structure was to consist of two apartment towers rising 22 floors above the garage, ⁹ containing in excess of 1000 apartment units. The developer was to be permitted to allocate space on the ground and concourse levels of the garage for its own use or for lease to commercial tenants. This area was to occupy approximately 74,000 square feet and was to be sublet to private commercial tenants for offices, shops, a bank, and a restaurant. ¹⁰

National's financial commitments under the lease agreement called for three separate rental payments: (1) 'debt-service rentals' which were to consist of an amount sufficient to meet the amortization and interest on the bonds issued by the Authority to finance the acquisition of the situs and construction of the garage; ¹¹ (2) 'Authority rentals' which were to consist of payments for the use of air-space over the garage in the following sequence and amounts: $5,000 for the first year of the lease term, $10,000 for the second, $15,000 for the third, $20,000 for the fourth, $25,000 for the fifth and every year thereafter, except for the last 10 years of the lease term, for which the payment was to be $30,000 annually; and (3) 'excess rentals' which were to consist of a percentage of the gross receipts over a given amount received by the developer from the operation of the garage and the lease of commercial space therein. Neither the percentage nor the level of gross receipts at Under the agreement, title to the project was to be in the name of the Parking Authority. The developer, however, obtained an exclusive option to acquire the entirety, including the land, garage and apartment structure thereon, at the end of the lease term for an amount based upon The cost of the garage or its appraised value at the time of purchase. Thus, no actual payment was to be required for the acquisition by National of title to the structure to be constructed by it over the garage facility.

which excess rental payments become due is stated in the written agreement or has as yet been fixed by the parties.

As an aspect of the lease, the developer agreed to operate the proposed garage 'as a public parking facility of the Authority. * * *' The rates and other charges for use of the garage by the public were to be determined by the Authority subject to the proviso that the fees could not be reduced below the amounts initially set without the lessee's consent.

II. Rittenhouse Square Project

At approximately the same time the negotiations took place between the Authority and National, the Authority also entered into a construction and lease agreement with Jack Wolgin and Ephraim Frankel. The agreement provided for the lease of air-rights over a parking facility owned and operated by the Authority at 1815--27 Walnut Street, Philadelphia, Pennsylvania. ¹²

Under this agreement the tenant-developers, Wolgin and Frankel, were empowered to construct a 19 story office building over the Authority's parking garage. The tenants were also to be permitted 'to improve and occupy space within the Garage for access to and support of the Office-Building and * * * (to) construct * * * (stores) in the basement (and) on the ground level of the Garage * * *' to be used for their benefit or sublet to other private commercial tenants. ¹³

The tenant-developers, under the agreement, were obliged to pay the Authority for the space within and above the garage a rental averaging approximately $25,000 annually. The term of the lease was to extend for the life of the Authority, including any extension thereof, but was not to exceed 99 years. During the lease term, the parking facilities and improvements thereto made by Wolgin and Frankel, including the office building to be constructed, were to be owned by the Authority. However, the developers were given an exclusive option to purchase the entire project, land, parking facilities, and all improvements, for a sum ranging from $1,000,000 to $1,318,000, exercisable after January 1993, or after the retirement of all outstanding revenue bonds, whichever occurred later.

III. Grounds of Challenge

In their complaint, Price and Masuda challenge the legality of both projects alleging essentially that the Authority, by employing negotiated agreements rather than competitive bidding, had exceeded its statutory authority; that the Authority was not authorized to engage in the projects because as envisioned they were primarily and predominantly private in nature; and that, as to the Academy House Project, there was no demonstrable present or anticipated future public need for the parking facility proposed.

The Parking Authority filed an answer to the complaint which put the essential facts in issue, and the parties presented testimony. At the start of the trial, at the conclusion of appellants' case, and again Treating the complaint as averring two separate causes of action, the chancellor granted the Authority's motion to dismiss with respect to the Rittenhouse Square Project on the ground that the complaining parties lacked standing to challenge the transaction. He denied the motion as to the Academy House Project and proceeded to make an adjudication, with findings of fact and conclusions of law.

when the record was closed, the Authority moved to dismiss on the ground that Price and Masuda lacked standing to challenge the transactions and that they had failed to establish that they were entitled to the relief sought.

The chancellor concluded that the Parking Authority, by entering into the Academy House Project without competitive bidding, had not violated the provisions of the enabling act. He further concluded that the project was a public endeavor and that appellants had failed conclusively to establish the lack of public need for the proposed construction. ¹⁴ And, although he had previously dismissed that portion of the complaint seeking to enjoin the Rittenhouse Square Project, the chancellor proceeded to make findings of fact and conclusions of law on the merits in order to provide a record in the event that his determination that Price and Masuda lacked standing to challenge it be reversed. On the merits, he concluded that the Authority had not acted contrary to the enabling act.

IV. Standing to Sue

Price and Masuda are citizens and taxpayers of the City of Philadelphia. In sustaining their standing to challenge the Academy House Project, the chancellor found that Price and Masuda fell within the ambit of the well-defined rule that a taxpayer may challenge the 'wrongful expenditures of tax monies and the wasting of assets.' Loewen v. Shapiro, 389 Pa. 610, 613, 133 A.2d 525, 527 (1957). Although the Authority is not a traditional governmental body, it is created to...