Consumers Education & Protective Ass'n v. City of Philadelphia

52 Pa. D. & C.4th 167, 2001 Pa. Dist. & Cnty. Dec. LEXIS 437
CourtPennsylvania Court of Common Pleas, Philadelphia County
DecidedApril 30, 2001
Docketno. 2470
StatusPublished

This text of 52 Pa. D. & C.4th 167 (Consumers Education & Protective Ass'n v. City of Philadelphia) is published on Counsel Stack Legal Research, covering Pennsylvania Court of Common Pleas, Philadelphia County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Consumers Education & Protective Ass'n v. City of Philadelphia, 52 Pa. D. & C.4th 167, 2001 Pa. Dist. & Cnty. Dec. LEXIS 437 (Pa. Super. Ct. 2001).

Opinion

SHEPPARD JR., J.,

The plaintiffs oppose the building of two stadiums for Philadelphia sports teams. The defendants are the City of Philadelphia and the Philadelphia Authority for Industrial Development, the public authority that will own the stadiums. The plaintiffs seek a permanent injunction against building the stadiums and declaratory relief.

On February 16, 2001, the court conducted a trial on the merits. At the conclusion of the trial, the court granted the defendants’ oral motion for a nonsuit. Pa. Rules C.P. 230.1 and 1512. On March 9, 2001, following oral argument, the court denied plaintiffs’ motion for post-trial relief. Pa.R.C.P. 227.1. Plaintiffs now appeal. This opinion is submitted in support of these orders.

For the reasons set forth this court respectfully submits that its orders should be affirmed.

FACTS

The relevant facts may be briefly summarized. Philadelphia City Council enacted a set of ordinances authorizing the construction of two stadiums: a football stadium for the Philadelphia Eagles and a baseball stadium for the Philadelphia Phillies. City council held several days of public hearings and passed the ordinances on December 20, 2000 by a vote of 15 to 2.

I. The $53 Million Shortage in Funding For the Stadiums

The stadiums will cost more than a billion dollars. The city will provide $394 million of this amount. (2/16/01; N.T. 28-29.) The teams and the Commonwealth will pro[170]*170vide most of the remaining funds. When city council passed the stadium ordinances, there was a $53 million shortage in funding for the stadiums and no record of the source of funds to make up the shortfall. (2/16/01; N.T. 31-32.) However, by ordinance, the $53 million must come from a source other than the city. (2/16/01; N.T. 31-32.) Plaintiffs Lance Haver and Robert Sklaroff assert that had they known how the defendants planned to pay the additional $53 million, they would have presented testimony about that issue at the public hearings on the stadium bills. (2/16/01; N.T. 32-33, 35-36.)

II. City Council’s Approval of Four Leases For Each Stadium

The city will provide most of its share of the stadium funding through a complex leasing arrangement. Ordinance no. 721-A authorizes the city to enter into a set of four leases for the Eagles stadium. Ordinance no. 722-A authorizes the, city to enter into a set of four leases for the Phillies stadium. For each stadium, there is a ground lease, a prime lease, a leaseback and a team sublease. For purposes of plaintiffs’ arguments, the terms of each of the four Eagle’s leases are the same as the terms of the corresponding Phillies’ leases. The parties to the leases are the city, PAID and the teams.

City council approved copies of the ground lease, prime lease and leaseback agreements for each stadium and attached them to the ordinances. City council did not approve copies of the actual team sublease agreements as part of the ordinances. Instead, city council approved two documents titled “Eagles lease and development agreement terms and conditions” and “Phillies lease and development agreement terms and conditions” (together, team sublease terms and conditions). Ordi[171]*171nance 721-A, exhibit D; ordinance no. 722-A, exhibit D. The ordinances authorized the city to approve team subleases “conforming] in all material respects” to those terms and conditions. Ordinance 721-A, §8(a); ordinance 722-B, §8(a). The ordinances required the parties to file copies of the team subleases with city council, and required city council to act on the subleases within 30 days. Ordinance 721-A, §8(b); ordinance 722-B, §8(b). The ordinances authorized the city solicitor to insert additional terms in the team subleases consistent with the approved team sublease terms and conditions. Ordinance no. 721-A, §§6,8; ordinance no. 722-A, §§6,8. On February 1,2001, city council approved the team subleases by resolution. (2/16/01; N.T. 20-21.)

III. The Terms of the Leases

Under the ground leases, the city leases the land for the stadiums to PAID for 30 years. Ground lease §3.1. PAID’s rent is a one-time payment equal to the amount necessary to reimburse the city’s cost to acquire the land on which the teams will build the stadiums. Ground lease §4.1.

Under the prime leases, PAID leases the land back to the city for 30 years. Prime lease §3.1; team sublease terms & conditions at 7. PAID obtains financing for the stadiums by issuing bonds and the city pays rent equal to an amount sufficient to enable PAID to meet its obligations under the bonds and to pay off other indebtedness. Prime lease §4.1. At the end of the term of the leases, the city’s leasehold interest reverts to PAID. Prime lease §5.1.

Under the leasebacks, the city leases the land back to PAID for a one-time rent payment of a dollar. Leaseback §4.1.

[172]*172Under the team subleases, PAID leases the stadiums to the teams. Team sublease terms & conditions.

IV. The City’s Rights and Obligations Under the Prime Lease

The prime lease provides as follows:

“The rent shall be payable only out of the current revenues of the city and the city agrees to provide for payment of the rent and include the same in the city’s annual operating budget for each fiscal year of the city. If the current revenues of the city are insufficient to pay the rent in any fiscal year as the same becomes due and payable, the city shall include amounts not so paid in the city’s operating budget for the ensuing fiscal year and shall produce sufficient current revenues to pay in the ensuing fiscal year such balance due for the preceding fiscal year in addition to the amount of rent due for the ensuing fiscal year.” Prime lease §4.2(a).

The city’s obligation to pay rent is unconditional. Prime lease §4.5. The city’s failure to pay rent under the prime lease constitutes a default. Prime lease §4.2(c).

PAID may assign its right to receive rent under the prime lease to a trustee for the bondholders, who may then exercise all rights granted to PAID under the prime lease. Prime lease §4.3. In no circumstance may PAID accelerate the city’s obligation to pay any or all of the rent under the prime lease or terminate the prime lease. Prime lease §§4.1(d) and 15.2(c).

V. PAID’s Bonds

All bonds that PAID issues to finance the stadiums are subject to the city’s approval, and the city may grant or withhold that approval at its sole discretion, prime [173]*173lease §4.6. The city has authorized PAID to issue $304 minion in bonds for the stadiums. (2/16/01; N.T. 28-29.) The city will pay an additional $90 million for a total contribution of $394 million toward the stadiums. (2/16/01; N.T. 28-29.)

The 10-year average annual assessed value of taxable realty in the city as of June 30, 2000 was approximately $9 billion. (2/16/01; N.T. 29-30.)

DISCUSSION

The plaintiffs’ main arguments are: (1) the city’s obligation under the stadium leases create debt in excess of Philadelphia’s constitutional debt restriction, Pa.Const. Art. IX, §12, (2) PAID has pledged the city’s credit or taxing power in violation of the Economic Development Financing Law, 73 PS.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Dykes v. NO. VA. TRANSP. DIST. COM'N
411 S.E.2d 1 (Supreme Court of Virginia, 1991)
New Liberty Medical & Hospital Corp. v. E. F. Hutton & Co.
474 S.W.2d 1 (Supreme Court of Missouri, 1971)
Conrad v. Pittsburgh
218 A.2d 906 (Supreme Court of Pennsylvania, 1966)
State Ex Rel. Thomson v. Giessel
72 N.W.2d 577 (Wisconsin Supreme Court, 1955)
People Ex Rel. Lockyer v. Pacific Gaming Technologies
98 Cal. Rptr. 2d 400 (California Court of Appeal, 2000)
Atlantic Richfield Co. v. Razumic
390 A.2d 736 (Supreme Court of Pennsylvania, 1978)
Yudacufski v. Commonwealth, Department of Transportation
454 A.2d 923 (Supreme Court of Pennsylvania, 1982)
Kelley v. Earle
182 A. 501 (Supreme Court of Pennsylvania, 1935)
Graham v. Philadelphia
6 A.2d 78 (Supreme Court of Pennsylvania, 1939)
Greenhalgh v. Woolworth
64 A.2d 659 (Supreme Court of Pennsylvania, 1949)
Kelley v. Earle
190 A. 140 (Supreme Court of Pennsylvania, 1937)
Tranter v. Alleghency County Co. Authority
173 A. 289 (Supreme Court of Pennsylvania, 1934)
Detweiler v. Hatfield Borough School District
104 A.2d 110 (Supreme Court of Pennsylvania, 1954)
Johnson v. Pennsylvania Housing Finance Agency
309 A.2d 528 (Supreme Court of Pennsylvania, 1973)
Weiner v. City of Philadelphia
598 A.2d 30 (Supreme Court of Pennsylvania, 1991)

Cite This Page — Counsel Stack

Bluebook (online)
52 Pa. D. & C.4th 167, 2001 Pa. Dist. & Cnty. Dec. LEXIS 437, Counsel Stack Legal Research, https://law.counselstack.com/opinion/consumers-education-protective-assn-v-city-of-philadelphia-pactcomplphilad-2001.