City of Philadelphia v. Schweiker

817 A.2d 1217, 2003 Pa. Commw. LEXIS 91

Opinions

OPINION BY

Judge McGINLEY.

Before this Court, in our original jurisdiction, are the preliminary objections of Governor Mark Schweiker (Governor) and the Philadelphia Parking Authority together with new appointees; Joseph T. Ash-dale, Michael A. Cibik, Catherine Marshall, Alfred W. Taubenberger, Russell R. Wagner, and Karen M. Wrigley (collectively, Authority) to the amended complaint¹ filed by the City of Philadelphia (City) together with the Mayor of Philadelphia, John F. Street (Mayor). This Court sustains the preliminary objections.

On June 5, 1947, the General Assembly enacted the Parking Authority Law² (Law). Section 4(a) of the Law, 53 P.S. § 344(a), provides that “[wjhenever the council of any city ... shall desire to organize an Authority ... it shall adopt a resolution or ordinance signifying their intention to do so.” The Law also authorized parking authorities to issue bonds that were excluded from the City’s debt limits.

The Authority was created in 1950, when the City enacted an ordinance that authorized the Mayor to apply for articles of incorporation for a parking authority. Initially, the Authority operated off-street parking garages. In 1982, the General Assembly amended the Law and expanded the operational purposes of an authority. Under the amendments, a city may delegate municipal functions to a parking authority and authorize it to act as the municipality’s agent in handling on-street parking responsibilities. In 1983, the Mayor approved an ordinance which authorized the Authority to assume much of the City’s on-street parking responsibilities. The City and the Authority entered into an agreement of cooperation whereby the Authority administered the City’s on-street parking functions.

The Authority operates off-street parking facilities on behalf of the City pursuant to leases between the Authority and the City. The Authority pays rent to the City in the amount of $21,500,000 per year. The largest rent payments come from the Authority’s lease of parking facilities at the Philadelphia International Airport. The Authority has also issued several series of bonds to finance its projects.

In June 2001, the General Assembly passed Senate Bill 780 which was signed into law as Act 22 of 2001. When the bill reached the Pennsylvania House of Representatives an amendment was introduced that codified the Law and altered it. Now, the Governor, rather than the May- or, is authorized to appoint members of the Authority. See 53 Pa.C.S. § 5508.1(e).³ Secondly, the Authority is required to immediately transfer up to $45,000,000 of its retained earnings to the Philadelphia School District (District), and to do so each year thereafter, based on the availability of earnings. 53 Pa.C.S. § 5508.1(q).⁴

In the amended complaint, the City and Mayor allege that the Commonwealth reneged on a promise that the City would retain control of the Authority. The City requests a declaration that Section 5508.1 of Act 22 is unlawful. In addition, the City attempts to permanently enjoin the application of any provision of Section 5508.1, including the seating of new members of the Authority.

In Count I, the City and Mayor allege:

83. The Take-Over Law, by transferring control of the Philadelphia Parking Authority to the Commonwealth and the Governor conflicts with the Pennsylvania Constitution, the Home Rule Charter, and ordinances of the City Council of Philadelphia, has encroached on the City’s police power and authority to address matters of purely local concern, has interfered with the Mayor’s powers, and has given the Commonwealth control over a municipal function it has no right ... to exercise ....

In Count II, the City and Mayor allege:

89. Section 13 of the Parking Authority Law ... stated that “[t]he Commonwealth does hereby pledge to and agree with any person, firm ... acquiring the bonds to be issued by the Authority for the construction ... of any project ... that the Commonwealth will not limit ... the rights hereby vested in the Authority until all bonds ... are fully met and discharged.”

90. The City ... is a beneficiary of the statutory pledge contained in Section 13 of the Parking Authority Law.

92. Implementing the Take-Over Law ... would breach that statutory pledge

In Count III, the City and Mayor allege:

97. Section 12 of the Parking Authority Law ... stated that “the Authority shall not be authorized to do anything that will impair the security of the holders .of obligations of the Authority .... ”

98. The City ... is a beneficiary of the statutory pledge contained in Section 12 of the Parking Authority Law.

100. Implementing the Take-Over Law ... would cause ... breach in that statutory pledge ....

In Count IV, the City and Mayor allege that “[i]mplementing the Take-Over Law ... would cause harm to the City in that it would be forced to carry on a relationship with a newly formed Philadelphia Parking Authority no longer under its control.”

In Count V, the City and Mayor allege:

112. The Pennsylvania Constitution, Article I, Section 17, prohibits the passage of any law impairing the obligation of contracts.

114. The City of Philadelphia relied on the statutory pledge in entering into several contracts with the Philadelphia Parking Authority ....

115. Implementing the Take-Over Law ... would impair these contracts ....

In Count VI, the City and Mayor allege:

120. The Pennsylvania Constitution, Article III, Section 32, prohibits the General Assembly from passing any special or local laws.

121. The Take-Over Law, by singling out the City ... for special treatment, is a special or local law.

124. The Take-Over Law violates Pennsylvania constitutional law prohibiting the passage of special or local laws.

In Count VII, the City and Mayor allege:

128. The Pennsylvania Constitution, Article III, Section 7, prohibits the passage of any local or special bill unless notice of the intention to pass such a bill has been published in the affected locality thirty days prior to introduction of such a bill into the General Assembly.

130. No notice ... of the intention to pass the Take-Over Law was published in Philadelphia.

131. The Take-Over Law violates Pennsylvania constitutional prohibitions against the passage of local or special bills without notice.

In Count VIII, the City and Mayor allege:

135. The Pennsylvania Constitution, Article III, Section 31, prohibits the General Assembly from delegating to any special commission ... any power to make ... any municipal improvement ... or to levy taxes or perform any municipal function whatever.

136. The Take-Over Law, by taking control of the Philadelphia Parking Authority away from the people of the City of Philadelphia, has effected an improper delegation of municipal power to a body not lawfully entitled to exercise such power.

In Count IX, the City and Mayor allege:

142. The Pennsylvania Constitution, Article III, Section 3, prohibits the passage of any bill containing more than one subject.

143. The Take-Over Law was enacted as part of a bill that contained more than one subject in that it addressed both municipal authorities and parking authorities.

144.The Take-Over Law violates Pennsylvania constitutional prohibitions against the passage of bills containing more than one subject.

Amended Complaint, July 8, 2002, paragraphs 83, 89, 90, 92, 97, 98, 100, 107, 112, 114, 115, 120, 121, 124, 128, 130, 131, 135, 136, & 142-144 at 21-26 & 28-36.

The Governor preliminarily objects and asserts:

1) Count I fails to state a cause of action based on Home Rule.

2) Counts II through IY fail to state a cause of action based on “statutory pledges” in the Law.

3) Count V fails to state a cause of action regarding the alleged unconstitutional impairment of a contract.

4) Counts VI and VII fail to state a cause of action based on the alleged enactment of a special law.

5) Count VIII fails to state a cause of action for the alleged improper delegation of municipal functions to a special commission.

6) Count IX fails to state a cause of action on the basis that the bill that enacted Act 22 allegedly contained more than one subject.

The Authority advances further objections and asserts that the City lacks standing and also that each count of the amended complaint fails to state a claim upon which relief may be granted.⁵

A. STANDING

The Authority first contends⁶ that despite the Mayor’s standing, the City must be dismissed because it lacks standing to bring this action. With respect to the criteria for standing, a litigant’s interest must be substantial, direct, and immediate. William Penn Parking Garage, Inc. v. City of Pittsburgh, 464 Pa. 168, 346 A.2d 269 (1975).

In City of Pittsburgh v. Commonwealth, 112 Pa.Cmwlth. 188, 535 A.2d 680 (1987), the City of Pittsburgh challenged the constitutionality of Section 14 of the Local Tax Enabling Act⁷ and Section 302(a)(7) of the Home Rule Charter and Optional Plans Law.⁸ It was alleged that the citizens of Pittsburgh were disadvantaged by discriminatory provisions in the statutes. Nevertheless, “[t]his Court has held that inasmuch as a municipality is merely a creature of the sovereign created for the purpose of carrying out local government functions, the municipality has no standing to assert the claims of its citizens against the Commonwealth.” Id. at 682 (citation omitted).

Here, as in City of Pittsburgh, the City has not described or established a discernible adverse impact upon some interest. Even if the City’s allegations are accepted as true, such challenges are insufficient at law. The City summarily and baldly concludes that the amendments to the Law constitute “an aggressive intrusion on local self-determination.” Amended Complaint, paragraph 6 at 3. Further, the amended complaint alleges the Authority’s transfer of retained earnings to the District creates risks for the Authority which reserved such funds for other purposes. See Amended Complaint, paragraph 72 at 19. Overall, the City’s abstract allegations of remote concerns do not satisfy the requirements for standing.⁹ For all of the foregoing reasons, this Court agrees with the Authority that the City lacks standing. Therefore, this preliminary objection is sustained and the City is removed as a party to the amended complaint.¹⁰

B. HOME RULE

The Governor and the Authority assert that the amendments to the Law do not violate the Home Rule Doctrine. Facially from the complaint, it is clear the Home Rule Doctrine does not apply because the Authority is not an agency of municipal government but an agency of the Commonwealth. See 53 Pa.C.S. § 5505(a)(1) & (3).

In Herriman v. Carducci, 475 Pa. 359, 380 A.2d 761 (1977), the Supreme Court stated that “[a]n authority under the Urban Redevelopment Law is an agent of the Commonwealth and not of the local government body.” Id. at 363, 380 A.2d at 763 (citation omitted). Also, the city council may not circumvent the statutory guidelines governing redevelopment authorities. Id. at 365, 380 A.2d at 764.

Additionally, “Article 9, Section 2 of the Pennsylvania Constitution provides that municipalities have the right to adopt home rule charters, but that their authority is limited by the Constitution and by the acts of the General Assembly.” Ortiz v. Commonwealth, 655 A.2d 194, 197 (Pa.Cmwlth.1995) (emphasis added). Here, home rule principles and City ordinances do not prohibit legislative amendments, certainly where a state Authority is involved. This Court sustains the preliminary objection to Count I of the amended complaint.

C. REPEALED LAW

Here, the Governor specifically submits that the legislature is not bound by previously enacted “statutory pledges.” This Court agrees that the Mayor’s claim that the amendments contravene previously enacted law is fatally flawed.

In Commonwealth Association of School Administrators v. Board of Education, School District of Philadelphia, 740 A.2d 1225 (Pa.Cmwlth.1999), this Court noted “that rights granted under a statute are not contractual in nature ... and no constitutional rights are implicated if they are changed or eliminated.” Id. at 1231 (citation omitted). This Court must agree that the General Assembly unquestionably has the authority to revise the Authority’s method of appointment. The legislature is cloaked with the authority to modify and repeal prior enactments. Blackwell v. Commonwealth, State Ethics Commission, 523 Pa. 347, 567 A.2d 630 (1989).

It is acknowledged that Sections 12 and 13 of the Law, as noted in Counts II through IV, gave protection to bondholders. Moreover, the appointment of Authority members by the Governor does not impair the security of bondholders.¹¹ Therefore, the preliminary objection to Counts II through IV is sustained.

D. CONSTITUTIONAL CHALLENGES

1.Impairment of Contracts

Next, the Governor maintains that the amendments do not unconstitutionally impair the contracts entered into by the City. It must be emphasized that the amended complaint does not specify or explain how any of the obligations were altered.¹² This Court agrees there is a lack of specificity in Count V.

It is not alleged that the obligations under the contracts have increased or decreased. Instead, the amended complaint focuses on the “manner by which the governing body of the Philadelphia Parking Authority is selected” and “the guarantee that the City of Philadelphia would control the selection.... ” Amended Complaint, paragraph 115 at 30. An erroneous assumption arises from the amended complaint that there is a contractual right to the method and manner of appointment and the procedural organization of the Authority. Statutes of this nature do not vest contractual rights. See Commonwealth Association of School Administrators, 740 A.2d at 1231. This Court sustains the preliminary objection to Count V.

2.Special Laws

The' Governor and the Authority contend that the amendments are not “special laws” prohibited by Article III, Section 32 of the Pennsylvania Constitution. The test is whether the distinction drawn by the legislation bears a reasonable relation to the legislative purpose. See DeFazio v. Civil Service Commission, 562 Pa. 431, 756 A.2d 1103 (2000).¹³ Here, the Authority’s transfer of retained earnings to the District is reasonably related to the legislature’s interest in adequate funding for the District.

Further, the District is the only school district in the Commonwealth that lacks authority to directly levy taxes. See Danson v. Casey, 484 Pa. 415, 422, 399 A.2d 360, 364 (1979). Therefore, the General Assembly properly limited the amendment to a school district located within a city of the first class, whereas school districts in other municipalities are authorized to tax directly. The preliminary objection to Counts VI and VII is sustained.

3.Municipal Delegation to Special Commission

Additionally, the Governor and the Authority assert that the amendments do not delegate municipal functions to a special commission in violation of Article III, Section 31 of the Constitution. The Authority is not a “special commission,” as designated by the Constitution. It fits neatly within the statutory category of a “public body corporate and politic, exercising public powers of the Commonwealth as an agency of the Commonwealth.” 53 Pa. C.S. § 5505(a)(1).

In Johnson v. Pennsylvania Housing Finance Agency, 453 Pa. 329, 309 A.2d 528 (1973), the Supreme Court determined that “the Pennsylvania Housing Finance Agency is a ‘body corporate and politic ... created as a public corporation and government instrumentality. . . " Id. at 340, 309 A.2d at 534 (citation omitted). This analysis led to the conclusion that the agency was not a special commission. Id. at 340, 309 A.2d at 534.

Under the present circumstances, “[t]he authority shall have no power to pledge the credit or taxing power of the Commonwealth. ...” 53 Pa.C.S. § 5505(e)(1). The amended complaint fails to demonstrate a delegation of municipal authority to a special commission. This Court sustains the preliminary objection to Count VIII.

I. Single Subject

Lastly, the Governor and the Authority submit that the amendments comply with the “single subject rule” set forth in Article III, Section 3 of the Constitution. According to the Mayor, the amendments are unconstitutional because they deal with two subjects, municipal authorities and parking authorities.

However, these subjects are inextricably intertwined. In Pennsylvania Chiropractic Federation v. Foster, 136 Pa.Cmwlth. 465, 583 A.2d 844, 848 (1990), this Court stated that “Act 6 contains amendments to the Crimes Code, Judicial Code, and Vehicle Code, and we note that these amendments are all related to the single purpose of restructuring the regulation of motor vehicle insurance .... ” Here, the amendments address one cohesive topic, i.e. authorities that benefit municipalities. In sum, the preliminary objection to Count IX is sustained.

Accordingly, we sustain all preliminary objections and dismiss the amended complaint.

ORDER

AND NOW, this 11th day of February, 2003, the Philadelphia Parking Authority’s preliminary objection to the City of Philadelphia’s lack of standing is sustained. The Authority and the Governor’s remaining preliminary objections to the Mayor’s amended complaint are also sustained. Lastly, the amended complaint is dismissed.

Judge COHN did not participate in the decision in this case.

Dissenting opinion by Judge SMITH-RIBNER in which President Judge COLINS joined.

1

. The City originally brought this action in the Court of Common Pleas of Philadelphia County (common pleas court) against the Authority and its new appointees. The common pleas court determined it lacked jurisdiction and transferred the matter to this Court. On July 20, 2001, this Court dismissed the matter for lack of jurisdiction. The City sought an emergency stay and petitioned our Pennsylvania Supreme Court to exercise original jurisdiction pursuant to its King's Bench powers. On August 1, 2001, the Supreme Court denied the application for a stay and declined to exercise original jurisdiction. In May 2002, the Supreme Court vacated this Court's previous order and remanded the matter to this Court for consideration on the merits. On July 10, 2002, the City filed an amended complaint that added the Mayor as a plaintiff and the Governor as a defendant. The allegations in the original complaint against the Authority are substantially similar to those in the amended complaint.

2

. Act of June 5, 1947, P.L. 458, 53 P.S. §§ 341-356, repealed by Act of June 19, 2001, P.L. 287, No. 22, § 3.

3

. The 2001 amendments changed the Law as follows. Section 5508.1(e) of Act 22 provides:

(e) Appointment.—

(1) The Governor shall appoint .six additional members of the board.

(2) Gubernatorial appointments shall be made as follows: two upon the Governor's own discretion, two from a list of at least three nominees prepared and submitted to the Governor by the President pro tempore of the Senate and two from a list of at least three nominees prepared and submitted to the Governor by the Speaker of the House of Representatives.

(3) The Governor shall select members from the lists provided ....

(4) In the event that the Governor fails to select a member from an original list of nominees within 30 days of the receipt of the list ... the legislative presiding officer who prepared the list may appoint members to serve on the board.

53 Pa.C.S. § 5508.1(e)(l)-(4).

4

. Pursuant to Section 5508. l(q) of Act 22:

(q) Funding.—

During its fiscal year beginning in 2001, the authority shall transfer to the general fund of a school district of the first class coterminous with the parent municipality that portion of its retained earnings, not to exceed $45,000,000, which will not jeopardize the authority’s ability to meet debt service payments' or to retire outstanding bonds. In subsequent years the board shall transfer the maximum amount it deems available for such purpose.

53 Pa.C.S. § 5508.l(q).

5

. The Authority’s preliminary objections were substantially similar to the preliminary objections raised by the Governor. There are some instances where the Governor and Authority advanced different rationale in support of a preliminary objection, but the distinctions are more of form than substance other than the Authority’s objection to standing.

6

. In Ruby v. Department of Transportation, 158 Pa.Cmwlth. 631, 632 A.2d 635 (1993), this Court stated that “[w]hen reviewing preliminary objections in the nature of a demurrer we consider as true all well-pleaded facts which are material and relevant. Preliminary objections shall be sustained only when they are clear and free from doubt and the law will not permit recovery.” Id. at 636 (citations omitted).

7

. Act of December 31, 1965, P.L. 1257, as amended, 53 P.S. § 6914.

8

. Act of April 13, 1972, P.L. 184, as amended, 53 P.S. § 1 — 302(a)(7).

9

. William Penn Parking Garage, Inc. is distinguishable in that the individual plaintiffs were aggrieved by the ordinance which imposed a tax on patrons of non-residential parking spaces. These individuals had standing. Given the close causal connection between the tax and the injury to parking operators, they also had standing.

10

. This Court must address the remaining preliminary objections of the Authority and the Governor pertaining to the Mayor’s complaint. The remaining preliminary objections are substantially identical pertaining to the City's complaint. Assuming arguendo, that the City does have standing, this Court would reach the same conclusions regarding the City’s complaint as to the Mayor's complaint.

11

.The Authority seeks the dismissal of Counts II through V because the amendments do not violate any pledge by the Commonwealth. Even if the legislature did renege on a promise, which this Court does not accept, the cause of action would accrue not to the Mayor, but to potential bondholders. Also, the Mayor does not allege he was an intended beneficiary of the pledges.

12

. Additionally, the Authority asserts the May- or does not allege he contracted with the Authority, much less that those contracts were impaired.

13

. DeFazio is cited only for its reference to the reasonable relationship test.