Pennsylvania Court Reminds Developers of Variance Process Risks

May 2012Articles In the Zone

In April, 2012, the Pennsylvania Commonwealth Court issued its decision in Society Hill Civic Association et al. v. Philadelphia Zoning Board of Adjustment (ZBA), City of Philadelphia, John and Mary Turchi. In its decision, the court reminds developers of the risks associated with the variance process not just within Pennsylvania, but specifically within the City of Philadelphia.

The decision related to the applicant’s development project that involved the building known as the Dilworth House, which was built in 1957 for Mayor Richardson Dilworth. The applicants sought permits to build a 16 story residential tower with 12 full story dwelling units behind the Dilworth House. The plan involved renovation of the existing Dilworth House, with the ground floor becoming part of the lobby of the newly constructed building, and the upper floors of the existing building housing offices and perhaps additional condominium uses.

This project has been opposed by the local civic association and local neighbors for a number of years. The project was the subject of litigation relating to a grant by the City of Philadelphia’s Historic Commission of a permit allowing the proposed renovation and development (See Turchi v. Philadelphia Board of Licenses and Inspections Review, 20 A. 3rd 586 (Pa. Commw. 2011). Separately, the appellants appealed the decision by the ZBA to grant a variance and special use permit for the project to the Court of Common Pleas of Philadelphia County, which affirmed the decision of the ZBA.

Unfortunately for the developers, the Commonwealth Court reversed a portion of the trial court’s decision regarding issuance of the variance, vacated certain portions of the decision and remanded for further hearing. While this decision may leave the future of the development project in grave doubt, of more significance to the development community are the implications of the decision to developers requiring variances for their own projects.

The applicants’ permit application to the city’s Licenses and Inspections Department was refused because the design lacked an off-street loading area. Additionally, the application was referred to the ZBA because the proposed above-grade parking required a special use permit. As to the lack of a loading area, the applicant placed into evidence the testimony of a city planning expert who indicated that the narrow street behind the property would not allow for effective use of a loading area, and thus a hardship existed justifying the variance. Significantly, on cross examination, the expert explained that the loading area requirement was generated by a design of the proposed building exceeding 50,000 square feet and that had the building been less than 50,000 square feet, the zoning code would not have required off-street loading, and
the variance would not have been necessary.

In its analysis, the court referenced the standards set forth for grant of a dimensional variance in Hertzberg v. Zoning Hearing Board of Adjustments of the City of Pittsburgh. While the Hertzberg decision has often been cited for providing for a more relaxed standard for grant of dimensional variances, the court’s interpretation in this case narrows the application of Hertzberg. The court stated “where no hardship is shown, or where the asserted hardship amounts to a landowner’s desire to increase profitability or maximize development potential, the unnecessary hardship criterion required to obtain a variance is not satisfied even under the relaxed standard set forth in Hertzberg.” Further, in the court’s opinion, it stated “it is apparent that the need for the variance stems from the Applicant’s desire to construct a building that exceeds 50,000 square feet. Additionally, the subject property to be used in compliance with the zoning code as it presently exists as a single family residence . . . Applicant’s desire to expand the use of the subject property in order to maximize profitability is not a sufficient hardship to justify the grant of a variance, even under the relaxed Hertzberg standards.”

Thus, developers are faced with a very recent decision of Commonwealth Court that significantly narrows the circumstances when a dimensional variance is appropriately granted. This decision will likely be aggressively utilized by neighboring property owners and objecting civic associations seeking to slow or alter development, when variances are required.

The decision contains an additional area of concern specific to developers in Philadelphia. The application was filed subject to a “Unity of Use Agreement” between the applicants’ property and the adjacent Athenaeum of Philadelphia. The plan called for construction of a connection in the second level of the Athenaeum to a storage level within the new project, to provide conditioned and easily accessible storage space for use by the Athenaeum. The applicants avoided several zoning code requirements (such as the FAR requirement) by having the two properties analyzed under the “unity of use” approach sometimes followed in Philadelphia.

The objectors argued that as the “unity of use” concept is based only upon a legal opinion from the Law Department of the City of Philadelphia, and that the concept is not valid, and if the concept were to be deemed valid, that it was Pennsylvania Court Reminds Developers of Variance Process Risks misapplied in this case. The court, in its opinion, is very critical of the analysis utilized by the Law Department in its 1991 opinion, providing for “unity of use” applications and points out that the concept has never been codified in the Philadelphia Zoning Code. Finally, the court expresses concern that the record does not include any actual unity of use agreement which would have included the recordable restrictive covenants, easements and other agreements generally contemplated in this type of arrangement.

This decision, in the end, only remands to the ZBA for findings oncerning the specific aspects of the agreement between the applicants and the Athenaeum. However, developers in the City of Philadelphia will need to be cautious that this decision sets forth a road map for future objectors who are fighting projects when the approval has relied upon a unity of use agreement. The opinion suggests that only in the narrow circumstance involving vacant lots, owned by the same owner with each lot proposed for the same use, will a Pennsylvania appellate court uphold the grant of a variance which is dependent upon unity of use.