In the Zone

In Bisceglie v. Memhmet Oz and Lisa Ozand Cliffside Park Zoning Board ofAdjustment, Cliffside Park ZoningOfficial, Cliffside Park Code Official,the individual Plaintiffs andDefendants are next door neighbors.The properties are located near theHudson River and overlook the NewYork City skyline. In or about 2008,the property owners submitted anapplication to the Cliffside ParkZoning Board of Adjustment, seekingapproval for a landscape project, inconnection with the constructionof a guest house and in-groundswimming pool.

The Zoning Board approved theproperty owners’ request, subject tothe approval of a landscaping plan bythe Borough Engineer/Planner, which

plan was submitted on August 13,2010. The same day that thelandscaping plan was submitted tothe Borough Engineer/Planner, theproperty owners personally delivereda copy of the landscaping plan to the neighbors.

Three days later, on August 16, 2010,the property owner planted certainbamboo trees on their property,consistent with the landscaping plan.Eight days later, the neighbors filed amotion for a probable cause hearing inthe Cliffside Park Municipal Court,asserting that the bamboo treesviolated the local fence ordinance. Theapplication came before the MunicipalCourt on September 16, 2010. At thehearing, the court questioned whethera Municipal Court was the properjurisdiction, but the court apparentlynever issued any ruling.

Following the hearing, the propertyowner moved the bamboo trees to theother end of their property, away fromthe neighbor’s parcel of land in anattempt to accommodate theneighbor’s objection. The neighbor, inaddition to filing a Complaint inMunicipal Court, took other steps tovoice his objection to different aspectsof the landscaping plans. Among otherthings, the neighbor discussed hisobjections with the planner and wroteletters to the mayor and othermunicipal officials. Nevertheless, andcentral to the case, the neighbor neverappealed the matter to the CliffsidePark Zoning Board of Adjustment for adetermination of these issues.Moreover, the neighbor never raised

an objection to the cedar trees thatwere depicted on the landscapingplan, which were at issue in the case,at any time prior to filing a prerogativewrit action in the Superior Court ofNew Jersey.

On or about October 28, 2010, theproperty owner planted the three cedartrees depicted on the approved plan.Apparently, the trees partiallyobstructed the neighbor’s view of theNew York City skyline and HudsonRiver. On November 16, 2010, theneighbor filed an action in lieu ofprerogative writs against thedefendants, claiming that the trees

Court to Dr. Oz Neighbor: Exhaust Administrative Remedies Prior to Filingan Action By Jack Plackter

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FEBRUARY 2013

In This Issue:Court to Dr. Oz Neighbor: Exhaust AdministrativeRemedies Prior to Filing an Action ................1

Delaware Supreme Court Confirms Lien Dischargeof Real Property Sold at Foreclosure Sale andPriority of Distribution of Proceeds ................3

Fox Rothschild Prevails in Commercial EvictionAction ..........................................................4

Case Summary: Koontz v. St. Johns River WaterManagement District ................................5

Validity Variances in Pennsylvania ................6

Case Summary: Krohn, et al. v. Snyder CountyBd. of Assessment Appeals ............................7

PA Steel Products Procurement Act Modernized toDecrease Costs/Delays ..................................8

Legislative Update in Pennsylvania ................9

Billboard Ban in Mount Laurel, New Jersey ....10

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depicted on the landscaping planconstituted a “fence,” in violation ofthe Cliffside Zoning Ordinance.

On July 21, 2011, the Superior CourtJudge dismissed the action for failureto exhaust administrative remedies.

On appeal before the Superior Court,Appellate Division, the neighborargued that the judge improperlydismissed the action and should haveheard the merits of the case. TheAppellate Division disagreed with theneighbor, finding no mistake inexercise of discretion in the judge’sdetermination that an exhaustion ofadministrative remedies was required.The court went on to discuss whenand under what circumstances anexhaustion of administrative remediesmust occur prior to commencing anaction in Superior Court.

The court discussed the powers of aZoning Board under Section 70(a) and(b) of the Municipal Land Use Law,which are the sections that authorizethe Zoning Board to hear appeals of anadministrative decision andinterpretations of the zoning map orordinance. The court indicated thatunder the Municipal Land Use Law,such an appeal must be brought to theBoard of Adjustment within 20 days ofthe date an interested party knows orshould know of the action. The policybehind a time limit is the protection ofindividuals from the threat of anunrestrained future challenge. Aperson to whom a permit is issued mayprotect the right by providingreasonable notice to all those whomight wish to challenge theundertaking. In other words, if onesupplies his neighbor with a copy ofthe plan, as was done in this instance,a strong argument can be made thatthe 20 days would run from the timeof supplying the plan to anyneighboring property owners.

The court went on to discuss thatactions in lieu of prerogative writs are

not maintainable as long as there is anavailable right of review before anadministrative agency. This is theexhaustion of administrative remediesrequirement. Moreover, no action inlieu of prerogative writs may becommenced later than 45 days afteraccrual of right to review hearing orrelief claimed. However, a trial courtmay excuse the requirement toexhaust administrative remedies orextend the forty-five day statute oflimitations in the interest of justice.

The court went on to discuss thepurpose behind the Doctrine ofExhaustion of AdministrativeRemedies and indicated it serves threeprimary goals: (1) the rule insures that claims will be heard, as apreliminary matter, by a bodypossessing expertise in the area; (2)administrative exhaustion allows theparties to create a factual recordnecessary for meaningful appellatereview; and (3) the agency decisionmay satisfy the parties and thusobviate resort to the courts.

Accordingly, there is a strong publicpolicy in favor of requiring parties toexhaust their administrative remediesbefore resorting to an action in court.

Nevertheless, the court discussed thatthe exhaustion of administrativeremedies requirement is neitherjurisdictional nor absolute and woulddepend upon the facts andcircumstances of each case. The courtwent on to discuss that a court maydispense with the requirement ofexhaustion of administrative remedieswhen the interest of justice so requires.

The New Jersey Supreme Court has setforth the following guidelines fordetermining when an interest ofjustice exception should be permitted:

This has been held to mean thatexhaustion of remedies will not berequired where administrative reviewwill be futile, where there is a needfor prompt decision in the public

interest, where the issues do notinvolve administrative expertise ordiscretion and only a question of lawis involved and where irreparableharm will otherwise result from thedenial of immediate judicial relief.

In our experience, this five-part test isdifficult to meet and furtheremphasizes that there is an extremelystrong presumption favoring therequirement of exhaustion ofadministrative remedies in New Jersey.

On appeal, the neighbor argued thatthere was no need to appeal theapproval of the property ownerslandscape plans to the Zoning Boardbecause it involved the interpretationof a zoning ordinance, which is apurely legal issue. The court went onto discuss the competing policy goalsand case law that interpret whetherand in what instances the exhaustionof administrative remedies should berequired and noted that the questionof law exception ordinarily includeschallenges to ordinances and may alsobe applied where issues involveinterpretation of ordinances.

However, where the issues involveinterpretation and application of aparticular ordinance, ordinarily factsmay be in dispute and it is best that arecord be made at the local level,rather than in a trial court. Like thiscase, most zoning issues involve notonly an interpretation of an ordinance,but also how that ordinance is appliedto the specific fact pattern in any givenland use matter.

In the instant matter, the court heldthat the question presented in theinstant case involves interpretation offactual issues as applied to a legaldetermination. The court found that:

It is not simply whether . . . trees fallwithin the legal definition of a fenceunder the ordinance, whether a rowof trees constitutes a ‘fence’ thereforebecomes a case-by-casedetermination involving a more fact-

In the Zone

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intensive review in determiningwhether defendants’ three treesconstitute a fence considerationssuch as the size the trees, thepositioning, the use and placement,the purpose behind their planningand any other facts that make thetrees more or less likely to beconsidered a fence must be takeninto account.

Because this case involved that mixedinterpretation of an ordinance, as wellas its applications to the facts of thematter, the court held that theappropriate process would have beento appeal the matter to the ZoningBoard of Adjustment within 20 days ofwhen the neighbor was supplied withthe property owner’s landscaping plan.Since the property owner gave theplans to the neighbor on August 13,2010, the neighbor would have beenrequired to apply to the Zoning Boardof Adjustment for a determination

under Section 70 of the MunicipalLand Use Law on or before September2, 2010.

The current action was not filed untilNovember 16, 2010 – over threemonths after the neighbor received thelandscaping plan. Since the neighbordid not appeal within the 20 daysrequired under the Municipal LandUse Law, and never filed a prerogativewrit action until more than threemonths after the neighbor had a copyof the landscaping plan, the dismissalof plaintiff’s action in lieu ofprerogative writs was affirmed.

Accordingly, as practitioners andproperty owners, it is critical that weremain mindful of the requirement toexhaust administrative remedies. Themajority of questions are always mixedinterpretations of factual issues asapplied to a legal determination and,as a result, in almost every instance

before resorting to filing an action incourt an interested party must exhausthis administrative remedies.

While the case does recognize aninterest of justice exception, theextensive five-part test enunciated bythe Supreme Court is difficult, if notimpossible, to meet. When coupledwith the public policy that favorsexhaustion of administrative remedies,one should almost never resort to thecourts without first exhaustingadministrative remedies before theappropriate land use board.

In the Zone

Jack Plackter609.572.2200jplackter@foxrothschild.com

Author

In the case of Eastern Savings Bank, FSBv. CACH, LLC (Del. Supr. No. 88, 2012),the Delaware Supreme Courtconfirmed the lien status of realproperty sold at sheriff’s sale and thepriority of distribution of sheriff’s saleproceeds between lienholders.

In this case, CACH, LLC (CACH) hadobtained a judgment against itsborrower, Aaron Johnson, to satisfy adeficiency balance on a car loan.CACH filed its judgment as a propertylien on December 21, 2006. As of thatdate, Aaron Johnson owned realproperty in Newark, Delaware. OnDecember 19, 2006, Aaron Johnsonexecuted a deed conveying his ownedreal property to himself and his wife astenants by the entireties, and later thatday, Johnson and his wife mortgagedthe property to Eastern Savings Bank,

FSB (Eastern) for $168,000. The deedconveyance and the mortgage werenot recorded at the New Castle CountyRecorder of Deeds Office untilDecember 29, 2006.

In August 2008, Eastern filed aforeclosure action. In connectiontherewith, CACH notified Eastern thatCACH’s judgment lien had priorityover Eastern’s mortgage lien. CACH’sjudgment lien totaled $16,041.28 as ofthe date Eastern filed its foreclosureaction. In April 2009, the property waspurchased at foreclosure sale by a thirdparty bidder for $133,000, and theNew Castle County Sheriff sent thesale proceeds to the attorney forEastern. After sale costs and paymentof proceeds to Eastern, no excessproceeds remained for CACH.

CACH filed a complaint in Court ofCommon Pleas against Eastern allegingmisappropriation of funds receivedfrom the sheriff’s sale and unjustenrichment for not paying over toCACH funds from the sale sufficient topay off CACH’s judgment lien. TheCourt of Common Pleas deniedCACH’s motion for summaryjudgment and granted Eastern’smotion to dismiss for failure to state aclaim. On appeal to Superior Court,the judgment of the Court ofCommon Pleas was reversed. Onappeal to the Delaware Supreme Court,Eastern argued that the sheriff’s saledid not discharge CACH’s judgmentlien and therefore CACH was notentitled to any sale proceeds.

As an initial matter, the DelawareSupreme Court stated that the

Delaware Supreme Court Confirms Lien Discharge of Real Property Sold atForeclosure Sale and Priority of Distribution of ProceedsBy J. Breck Smith

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In the Zone

interpretation of statutes is a questionof law that the court reviews de novo,and also that when reviewing a grantor denial of summary judgment, thecourt views all facts in the light mostfavorable to the non-moving party andapplies a de novo standard of review todetermine whether there is a genuineissue of material fact in dispute. Thecourt then cited two statutes, which itstated are based on the public policy ofdisencumbering lands as much aspossible from liens when sold atforeclosure sale, as requiring the sheriff to discharge all nonmortgageliens when selling property atforeclosure sale.

First, according to 10 Del.C. §4985, realproperty purchased at a sheriff’s salemust be free from all liens against theprevious owner. In pertinent part:“Real estate sold by virtue of executionprocess shall be discharged from allliens thereon against the defendant, oragainst one or more of the defendants,if there is more than one, whoseproperty such real estate is, exceptsuch liens as have been created bymortgage or mortgages prior to anygeneral liens.” Citing this statute, thecourt stated that the sheriff’s saledischarged all nonmortgage liensagainst the foreclosed property.

Second, according to Del.C. §5066,land sold at foreclosure sale shall bedischarged from all encumbrances

incurred by the prior owner. Inpertinent part: “The person to whomany lands and tenements shall be sold,or delivered, under §5065 of this title,and such person’s heirs and assigns,shall hold the same, with theirappurtenances, for such estate, orestates, as they were sold, or deliveredfor, discharged from all equity orredemption, and all otherincumbrances made and suffered bythe mortgagor, the mortgagor’s heirs,or assigns; and such sale shall beavailable in law.” The court stated thatthis statute directs that property soldat a sheriff’s sale must be free of liensagainst the mortgagor. The court alsostated that the fact that Aaron andAngela Johnson owned the property astenants by the entireties wasirrelevant. The court noted thatEastern’s mortgage documentidentified the borrowers as “Angela A.Johnson and Aaron Johnson, Jr.” andboth signed in their individualcapacity. When Eastern foreclosed onits mortgage, the sheriff’s saledischarged all liens against theindividual defendants Aaron Johnsonand Angela Johnson. In affirming theSuperior Court’s holding that theforeclosure sale discharged allnonmortgage liens, the DelawareSupreme Court analyzed relevant caselaw, holding that longstandingstatutory and common law precedentrequires that land sold at sheriff’s sale

be transferred free of all nonmortgageliens.

The Delaware Supreme Court thenturned to the issue of determining theorder in which proceeds from asheriff’s sale must be distributed. Thecourt discussed Delaware’s recordingstatutes which provide that Delawareis a pure race state. Noting that CACHrecorded its judgment as a lien againstthe property on December 21, 2006,but Eastern did not record its mortgageagainst the property until December29, 2006, due to CACH having the firstrecorded lien it was first in line toreceive distribution of sale proceeds. Inaffirming the Superior Court’s holdingthat CACH’s judgment lien must bepaid before Eastern’s mortgage lieneven if the mortgagee filed theforeclosure action, the DelawareSupreme Court held that sale proceedsbeing distributed according to first intime, first in line priority of recordingis consistent with prior case law andtreatise analysis.

J. Breck Smith302.622.4208jsmith@foxrothschild.com

Author

Fox Rothschild Prevails in Commercial Eviction Action By Michael J. Isaacs

Following a Justice of the Peace Courttrial, the court ruled in favor of FoxRothschild’s client, 101 GreenbankRoad LLC, in a commercial summarypossession action. The case involvedthe alleged breach of contract by thetenant, defendant. With this victory,the parties were able to reach a

universal settlement which includesthe settlement of a companionSuperior Court case seeking moneydamages. The client is represented byFox Rothschild attorneys MichaelIsaacs and Wali Rushdan. WaliRushdan tried the case.

Michael J. Isaacs215.918.3555misaacs@foxrothschild.com

Author

www.foxrothschild.com 5

In the ZoneIn the Zone

Case Summary: Koontz v. St. Johns River Water Management District By Peter L. BlacklockIn 1972, when Coy Koontz acquired a14.9 acre vacant parcel of land east ofOrlando, the Florida Legislature wasbusy enacting a series of conservationand environmental protection laws:the Land Conservation Act of 1972(Fla. Stat. § 259), which created aprogram to acquire and conserveenvironmentally endangered lands,the Florida Water Resources Act (Fla.Stat. § 373), which granted the FloridaDepartment of EnvironmentalProtection and the state’s five watermanagement districts authority toprotect Florida’s water resources, andthe Florida Environmental Land andWater Management Act of 1972 (Fla.Stat. §§ 380.012 - 380.12), whichestablished procedures for increasedprotection of wildlife and wilderness.Florida adopted the Warren S.Henderson Wetlands Protection Act 12years later, which provided the watermanagement districts wetland resourcepermitting authority. Consequently, allbut 1.4 acres of Koontz’s propertybecame a part of a Riparian HabitatZone, which could not be developedwithout authorization from the St.Johns River Water ManagementDistrict (the District).

In 1994, Koontz applied for a permit tofill 3.7 acres of wetlands on his parcel.The District’s examiner agreed torecommend approval of Koontz’spermit subject to Koontz’s consent toeither: (1) decrease development toone acre and dedicate the remaining13.9 acres into a deed-restrictedconservation area; or (2) deed the restof his property into a conservationarea and perform offsite mitigation byeither replacing culverts located fourand a half miles from his parcel orplug drainage canals on a propertylocated seven miles away. Koontzagreed to deed the rest of his land intoa conservation area but rejected the

reduction in development and theproposed off-site mitigation.

Subsequently, Koontz’s permit wasdenied premised upon the assertionthat his development would adverselyimpact the Riparian Habitat Zonewithout adequate mitigation, andKoontz brought suit against theDistrict for inverse condemnation. Thetrial court cited the constitutionalprinciples pronounced by the U.S.Supreme Court in Nollan v. CaliforniaCoastal Commission, 483 U.S. 825(1997), and Dolan v. City of Tigard, 512U.S. 374 (1994) and concluded thatthe District had effected an improperexaction of Koontz’s property. Thetwo-prong Nollan/Dolan analysisrecognizes that exactions are permittedif there is a “rational nexus” (underNollan) and “rough proportionality” ofimpact (under Dolan) between thedevelopment and the taking. The trialcourt opined that the District’s actionsconstituted a temporary regulatorytaking and awarded Koontz $376,154in damages.

The District appealed the damagesaward to the Fifth District Court ofAppeal, claiming that Nollan/Dolanrelates solely to conditions requiring aproperty owner to dedicate realproperty, and was thus inapplicable to acondition requiring the owner to spendmoney to improve land within theDistrict’s purview. The District alsoaverred that Nollan/Dolan applies onlyto permit approvals containingunconstitutional stipulations, arguingthat inasmuch as Koontz’s permit hadnot been granted, he hadn’t actuallyfulfilled any unconstitutionalconditions. The appellate courtoverruled the District’s arguments andupheld the trial court’s damages award.

The District’s petitioned the FloridaSupreme Court for review and on

November 3, 2011, the court quashedthe lower court’s conclusion that theDistrict’s actions represented animproper exaction of Koontz’sproperty. The court pronounced thatthe Nollan/Dolan rule “is applicableonly where the condition/exactionsought by the government involves adedication of or over the owner’sinterest in real property in exchangefor permit approval; and only whenthe regulatory agency actually issuesthe permit sought, thereby renderingthe owner’s interest in the realproperty subject to the dedicationimposed.1” The court ruled that thetest for regulatory takings set forth inPenn Central v. New York City (1978)was more appropriate to the disputebetween Koontz and the District.

Koontz died during the pendency ofthe litigation. The petition to the U.S.Supreme Court was brought byKoontz’s son, who is represented bythe Pacific Legal Foundation, alibertarian not-for-profit law firmwhich frequently advocates for privateproperty rights. Prior tocommencement of oral arguments onJanuary 15, many pundits felt that thecurrent make-up of the Supreme Courtwould result in a five to four ruling infavor of Koontz. But the questions andcomments posed by Antonin Scalia,who authored the Nollan decision andwas part of the five justice majority inDolan, left many observers with theconclusion that Justice Scalia wouldside with his liberal colleagues in favorof the District. The United StatesSupreme Court is expected to make adecision on the Koontz case this June.

Peter L. Blacklock561.804.4457pblacklock@foxrothschild.com

Author

1 St. Johns River Water Management District v. Koontz, 77 So.3d 1220 (Fla. 2011) citing Iowa Assurance Corp. v. City of Indianola, 650 F.3d 1094, 1096-97 (8th Cir. 2011); West Linn Corporate Park, LLC v. City of West Linn, 428 F. App’x 700, 702 (9th Cir. 2011).

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In the case of Hunt, et al. v. ZoningHearing Board of Conewago Township,(2013 WL 387884 (Pa. Cmwlth)),decided February 1, 2013, theCommonwealth Court of Pennsylvaniaanalyzed the requirements forobtaining a validity variance underPennsylvania law.

The Appellants, Scott A. Hunt andVicki E. Hunt and Sandra R. Glickowned properties in ConewagoTownship’s conservation zone (Cv).The Hunts were the owners of twoparcels and Glick owned one parcel.The Hunts sought approval toconstruct a single family home ontheir property, a use which is by rightin the Cv zone. It is unclear how Glickintended to use her property, but sheindicated it was also a by right use.The zoning officer analyzing therespective applications ruled that thelots could not be used as proposedbecause all lots lacked frontage on apublic road as required under thedefinition of “lot” in Section 201 ofthe Conewago Township ordinance,and none of the lots had access to orabutment to a public roadway asrequired under Section 309(i) of theordinance (relating to the Cv zone).The applicants then made applicationto the Zoning Hearing Board (ZHB)requesting (1) an interpretation of theordinance confirming that it must beconstrued to permit development onlots that lacked public road frontage;(2) a variance from the requirements ofSection 309(i); and, in the alternative(3) a validity variance.

At the hearing before the ZHB, Huntprovided testimony and evidence thatthere existed a Right-of-Way andMaintenance Agreement among Hunt,Glick and Harold King, Jr., the ownerof a property adjacent to the three lotsin question. The Right-of-Way andMaintenance Agreement provided for afifty foot wide right-of-way to BullRoad, a public road, for the benefit of

the three lots. There was no testimonyoffered to challenge or contradict theevidence of the road access.

In October, 2011, the ZHB upheld thezoning officer’s interpretation. TheZHB said that the language of theordinance was clear on its face, that alllots and the Cv zone must abut to apublic roadway. In addition, the ZHBsaid the applicants failed to meet theirburden of demonstrating everyelement necessary for the issuance of avariance under Section 503(c) of theordinance (which mirrors Section910.2(a) of the PennsylvaniaMunicipalities Planning Code (theMPC). The ZHB stated that theapplicants did not establish that theirland suffered from a physical hardshipthat was unique to their parcels asopposed to one that is imposed by theordinance on all properties that lackedroad frontage. The ZHB stated thatowners of parcels that lacked roadfrontage were required to buy strips ofland in fee in order to comply with theordinance and develop theirproperties. Finally, the ZHB rejectedthe alternate remedy of a validityvariance, stating that other propertiesin the area were also “landlocked,” andthat “the ordinance permits uses onsuch lots that do not requirebuildings.” The Court of CommonPleas affirmed the decision of the ZHB,and the applicants appealed to theCommonwealth Court.

As a determinative matter, theCommonwealth ruled that the ZHBerred in denying the applicants avalidity variance. The court noted thata validity variance is different from a“normal” variance insofar as a normalvariance “is granted to adjust thezoning regulation to the particularproperty,” while a validity variance isgranted where “the zoning regulationis restrictive to the point ofconfiscation and requires the issuanceof a variance permitting a reasonable

use of the land.” Put another way, avalidity variance is appropriate wherecircumstances “essentially merit azoning amendment.”

Referring to the standard establishedin the case of Laurel Point Assocs. v.Susquehanna Twp. Zoning Hearing Bd.,(887 A.2d 796) (Pa. Cmwlth 2005), thecourt stated that in order to obtain avalidity variance, and applicant mustestablish “(1) the effect of theregulations complained of is unique tothe applicant’s property and notmerely a difficulty common to otherland in the neighborhood; and (2) theregulation is confiscatory in that itdeprives the owner of the use of theproperty.” In addition, the applicantmust comply with the requirements ofSection 910.2 of the MPC, which setsforth the requirements for obtaining a“normal” variance. However, theCommonwealth Court held that notall of the requirements for obtaining a“normal” variance must be establishedin order to obtain a validity variance.In particular, the court noted that“Section 910.2(a) of the MPC requiresa zoning hearing board to makefindings regarding the variance criteriawhere relevant.” As established in theLaurel Point decision, that means “notall criteria must be satisfied in everycase and that the quantum of proofnecessary to establish a particularcriterion may vary depending on thetype of variance sought.” TheCommonwealth Court determinedthat the fact that there were otherproperties that lacked frontage on oraccess to a public right-of-way wouldnot automatically invalidate therequest for a validity variance.

As a result, the Commonwealth Courtruled that the ZHB committed an errorwhen it failed to issue the validityvariance. In particular, the ZHB shouldnot have required that the hardshipimposed by the ordinance be uniqueto the properties at issue. The court

In the ZoneIn the Zone

Validity Variances in PennsylvaniaBy Michael J. Kornacki

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quoted from the Laurel Point opinionagain, when it noted “where anowner’s land along with adjacentproperties is denied any reasonable useby an unduly restrictive ordinance, thefindings [regarding unique physicalcircumstances or conditions] shouldnot be “relevant in [the] given case,”and are not necessary. The practicaleffect of a contrary rule would be toforce the landowner to seek reliefunder the Federal rules prohibitingtakings without compensation.”Ultimately, the most important factoris a confiscation and “confiscation isthe unnecessary hardship.”

As to the question of whether theproperty has no value as a result of theordinance, the court noted that the

applicant for a validity variance mayestablish “that the property has no valuefor any purpose permitted by the zoningordinance” (emphasis in original). Inthis case, Section 201 of the Ordinancedefined “lot” as a parcel “havingfrontage on a public road.” The courtnoted that this requirement was clearon its face and that all “lots,” bydefinition, must abut to a public road.There is a similar requirement inSection 309(i) of the ordinance whichprovides that “each lot shall haveaccess to and abut to a publicroadway.” Contrary to the finding ofthe ZHB, the Ordinance does notpermit any use of any property thatdoes not have the required frontage ona public right-of-way. As a result, the

ordinance is confiscatory insofar as itdeprives the owners of such lots of allreasonable uses of their property. As anaside, the court also noted that theZoning Hearing Board was mistaken infailing to recognize the right-of-wayagreement that granted an easement tothe applicants permitting them accessto a public right-of-way. The ordinancedid not distinguish between access byway of easement vs. access over landowned in fee simple.

In the Zone

Michael J. Kornacki215.299.2895mkornacki@foxrothschild.com

Author

In this tax assessment appeal, Richardand Elaine Krohn (Krohns Sr.) andtheir son, John Krohn, and wifePamela Krohn (Krohns Jr.), challengedthe trial court’s decision denying theirappeals from the reassessment of theirrespective properties by the SnyderCounty Board of Assessment Appeals(Board). By way of factual background,the Krohns Sr. owned a tract of landthat contained a barn on the property(Barn Tract). The Krohns Jr. acquired afarm (Krohns Farm) that adjoined theBarn Tract, by gift from the Krohns Sr.The Krohns Sr. had originally recordeda subdivision plan for the Krohns Farmin 1996, but conveyed the KrohnsFarm in one parcel to the Krohns Jr.

In January 2010, the Board notifiedthe Krohns Sr. of an increasedvaluation of the Barn Tract, from$2,090 to $3,770, stating that thereason for change was due to “the saleof land and the assessment of a homesite not assessed previously.” The saleof land the Board was referring to was

the transfer of the Krohns Farm to theKrohns Jr. in 2009. Similarly, inJanuary 2010, the Board also notifiedthe Krohns Jr. of an adjusted valuationof the Krohns Farm, from $16,640 to$18,610, reasoning that the increasewas due to the “purchase of land” andthe assessment of a home site. TheBoard alleged that to determine thehighest value and best use of property,it routinely assigned home sites andincreased the value of properties toreflect home sites, even if those homesites were merely hypothetical placesfor homes that were not planned forconstruction.

Both the Krohns Sr. and the Krohns Jr.appealed the reassessment, challengingit as “spot assessment” (defined as thereassessment of property that is notconducted as part of a countywiderevised reassessment, and whichcreates, sustains or increasesdisproportionality among properties’assessed values). They argued thatunder Section 602.1 of the Fourth to

Eighth Class County Assessment Law,changes in valuation are only properwhen:

(1) a parcel of land is divided andconveyed away in smaller parcels;or

(2) when the economy of the countyor any portion thereof hasdepreciated or appreciated to suchextent that real estate valuesgenerally in that area are affected;and

(3) when improvements are made toreal property, or existingimprovements are removed fromreal property or are destroyed.

Although the trial court agreed thannone of those instances existed withrespect to either Krohn property, thecourt still found the increasedreassessment valid because thereassessment was necessary in order tocomply with Article VIII, Section 1, ofthe Pennsylvania Constitution (knownas the Uniformity Clause). The

Case Summary: Krohn, et al. v. Snyder County Bd. of Assessment AppealsBy Julia D. Perkins

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In 1978, the Steel ProductsProcurement Act (the Act), 73 P.S. §§1881 et. Seq, was enacted under thepolice powers of the Commonwealthof Pennsylvania as matter of publicpolicy to promote the development ofthe steel industry of the United Statesand to stimulate and improve theeconomic well-being of theCommonwealth and its people.

The Act was recently amended inOctober 2012 by legislation (H.B.1840) and co-sponsored by State Rep.Peter J. Daley II, D-Fayette/Washington, who said:

The Steel Products Procurement Actwas, and continues to be, a goodtool to safeguard and promote theproduction of U.S. steel. Since 1978,however, applying the act to someequipment and machinery, such aslighting fixtures, speakers, heatpumps, dehumidifiers, soundsystems, water treatment systemsand fire alarm systems, to name afew items, has become a burden thatcan increase contract costs andconstruction delays. In many cases,these products are no longerproduced in the U.S., or areproduced in very limited quantities.

What this measure does is tomodernize the act and remove theburden of extra paperwork andcostly construction delays fromcontractors, which in turn saves thepublic money on projects.

Section 4 of the Act, 73 P.S. § 1884(a),requires every public agency to includein its contracts for construction,reconstruction, alteration, repair,improvement or maintenance ofpublic works a provision that, if anysteel products are to be used orsupplied in the performance of thecontract, only steel products as definedin the Act are to be used or supplied inthe performance of the contract or anysubcontracts thereunder. The term“public agency” is broadly defined andincludes, for example, Commonwealthagencies, counties, cities,municipalities, school districts,authorities and other public bodies.

Section 6 of the Act, 73 P.S. § 1886,defines “steel products” as (emphasisadded):

products rolled, formed, shaped,drawn, extruded, forged, cast,fabricated or otherwise similarlyprocessed, or processed by acombination of two or more of such

operations, from steel made in the U.S.by the open hearth, basic oxygen,electric furnace, Bessemer or othersteel making process and shallinclude cast iron products and shallinclude machinery and equipmentlisted in U.S. Department ofCommerce Standard IndustrialClassification 25 (furniture andfixture), 35 (machinery, exceptelectrical) and 37 (transportationequipment) and made of, fabricated from, or containing steel components.

In other words, the Act requires publicagencies to use products made fromU.S. steel in their public worksprojects. Previously, the Act containedone exception (73 P.S. § 1884(b)(1)) tothe requirement to use products madefrom U.S. steel – when the head of thepublic agency, in writing, determinedthat steel products were not producedin the U.S. in sufficient quantities tomeet the requirements of the contract.

The Act was amended on October 24,2012, effective 60 days thereafter,creating a second exception (73 P.S. §1884(b)(2)) to the requirement to useproducts made from U.S. steel – thecreation by the Pennsylvania

In the Zone

Uniformity Clause requires that “alltaxes shall be uniform upon the sameclass of subjects, within the territoriallimits of the authority levying the tax,and shall be levied and collected undergeneral laws.” Pa. Const. art. VII, § 1.The trial court reasoned that SnyderCounty had a longstanding policy ofassigning home sites to parcels ofvacant land, and, without thereassessment to the Krohns’ properties,their properties would not beuniformly treated.

The Commonwealth Court rejectedthe trial court’s reliance on the

Uniformity Clause, holding that thereassessment did amount to spotassessment. The court found that theBoard’s reassessment was improperbecause first, there was no division ofproperty that was then conveyed awayin smaller parcels that would trigger areassessment as stated in Section602.1; rather there was merely atransfer of an adjoining parcel as a gift,and this alone should not trigger thereassessment. Moreover, the courtstated that the Board’s application of ahypothetical value of a hypotheticalhome site in order to increase thevalue for tax purposes is inconsistent

with the law, and the Krohns’ couldnot be taxed on a hypothetical use as ifit were a current use. Therefore, theCommonwealth Court reversed thetrial court, and remanded the case torestore the previously establishedassessment for both properties and torefund any taxes paid.

Julia D. Perkins215.918.3549jperkins@foxrothschild.com

Author

PA Steel Products Procurement Act Modernized to Decrease Costs/DelaysBy Ellen M. Enters

www.foxrothschild.com 9

Department of General Services (theDepartment) of an official list of steelproducts that are not produced in theU.S. in sufficient quantities. Thesecond exception states that therequirement to use steel productsmade from U.S. steel does not apply(emphasis added):

to items on a list of exempt machineryand equipment steel products, whichhave been identified by theDepartment of General Services asnot produced in the U.S. in sufficientquantities in the previous calendaryear, and published on thedepartment's publicly accessible Internetwebsite, which contractors,subcontractors, suppliers, bidders,offerors and public agencies can relyupon in preparing bids and contracts.The list of exempt machinery andequipment steel products shall beupdated annually on a date selectedby the Department of GeneralServices. The Department of GeneralServices may not make changes tothe list during the year followingpublication. Prior to publication onthe Internet website, and in eachsubsequent year, the Department ofGeneral Services shall publish the listof exempt machinery andequipment steel products in thePennsylvania Bulletin and providefor a 30-day public comment period.The Department of General Servicesshall, through a statement of policy,establish a process for creating the listof exempt machinery andequipment steel products andresolving disputes with respect toitems on the list raised during thepublic comment period prior to thepublication of the Internet website.

The provisions of 2 Pa.C.S. Ch. 5Subch. A (relating to practice andprocedure of Commonwealthagencies) shall not apply tothis section.

As required by the amendments, theDepartment issued a Statement ofPolicy in the Pennsylvania Bulletin onFebruary 9, 2013, setting forth theprocesses by which the Departmentwill establish the list each year and forresolving disputes raised during thepublic comment period (43 Pa. B. 877).The Department also published aninitial list of the exempt steel productsin the Pennsylvania Bulletin onFebruary 9 (43 Pa. B. 940).

The initial list is presently in the 30-day public comment period, andremains subject to change.Accordingly, it should not be reliedupon by public agencies, contractors,subcontractors, suppliers, bidders,offerors and public agencies inpreparing bids and contracts until it isofficially published on the Departmentof General Services website.

During the 30-day comment period,the public may submit writtencomments as to the domesticavailability of a steel product on thelist, which comments must besupported with evidence that thedisputed product is produceddomestically (4 Pa. Code §67a.1(a)&(b)). If the Department findsthat the product is produceddomestically in sufficient quantities,then it may be removed from theexempt list prior to its officialpublication on the Department’swebsite (4 Pa. Code § 67a.1(c)). Oncethe list is officially published on the

Department’s website, it will not bechanged for one year (4 Pa. Code §67a.1(d)). The list will be updatedannually utilizing the same process ofpublication in the PennsylvaniaBulletin, 30-day comment period,resolution of disputes and publicationof the official list (4 Pa. Code §67a.1(e)). The Department will updatethe list on or about January 31 of eachcalendar year (4 Pa. Code § 67a.1(f)).

Accordingly, once the official list ispublished, contractors, subcontractors,suppliers, bidders, offerors and publicagencies can rely upon the list inpreparing bids and contracts. This willease the administrative burden onboth public agencies and contractors,as they will not have to independentlyverify on a project-by-project basis thata steel product is not produced in theU.S. in sufficient quantities if it is alisted exempt product. The head of apublic agency will not need to make awritten determination that the steelproducts are not produced in the U.S.in sufficient quantities to meet therequirements of the contract if theproduct is listed as exempt. This willalso help to eliminate constructiondelays associated with procuringdomestically produced steel productsthat are produced in limited quantitiesand have a long lead time – to theextent these products have beenidentified and included on theexempt list.

In the Zone

House Bill No. 148 proposes to amendthe Pennsylvania MunicipalitiesPlanning Code (MPC) by authorizingmunicipalities and school districts toimpose development impact fees.

House Bill No. 148 first proposes toamend Section 502-A of the MPC tochange the current term “impact fee”to “transportation impact fee” andthen revise Section 503-A of the MPC

to account for the revision. Theforegoing change would notsubstantively alter the right of amunicipality to impose what HouseBill No. 148 proposes to call a

Legislative Update in PennsylvaniaBy David H. Comer

Ellen M. Enters610.397.6505eenters@foxrothschild.com

Author

www.foxrothschild.com 10

“transportation impact fee.” A“transportation impact fee” wouldassume the current definition of an“impact fee,” or “a charge or feeimposed by a municipality against newdevelopment in order to generaterevenue for funding the costs oftransportation capital improvementsnecessitated by and attributable tonew development.” Municipalitiescurrently are permitted to collect theforegoing fee.

Most significantly, however, House BillNo. 148 proposes to permitmunicipalities and school districts toimpose development impact fees. Theproposed legislation would add variousdefinitions to the MPC, including thefollowing definition of “developmentimpact fee:

A charge imposed upon newdevelopment by a governmentalentity to fund all or a portion of thepublic facility’s capital improvementcosts affected by the newdevelopment from which it iscollected.

Furthermore, the following definitions,among others, would also be relevant:

• Governmental entity: Amunicipality or school district.

• Capital improvements:Improvements and equipment thatincrease or improve the servicecapacity of a public facility and havea useful life to ten years or more.

• Public facilities: School facilitiesand municipal facilities.

• School facilities: Public schoolsand equipment.

• Municipal facilities (in part):Police, emergency medical, rescueand fire protection facilities andequipment.

The proposed legislation includesmechanisms for calculatingdevelopment impact fees and variousrequirements related to developmentimpact fees. Interestingly, the proposedlegislation would allow governmentalentities to accept the dedication ofland or the construction of publicfacilities or capital improvements inlieu of payment of developmentimpact fees if various criteria are met.

Representative Scott Petri, whorepresents the 178th LegislativeDistrict, which includes portions ofBucks County, was one of thelegislators who introduced House BillNo. 148. In connection with House BillNo. 148, Representative Petri authored

a memorandum to all House ofRepresentative members that, in part,stated the following:

Under my legislation, municipalitiesor school districts considering theadoption of development impactfees would need to conduct needsassessment for the type [of] publicfacilities or capital improvementsrequire[d] by new residential,commercial or industrialdevelopment. Such newdevelopment would then be assigneda fee based on the proportionateshare of the cost of new publicfacilities. For purposes of this bill,public facilities would include publicschools, police stations, fire house,parks and other recreation facilities.

As for the status of House Bill No. 148,shortly after it was introduced, it wasreferred to the Committee on LocalGovernment, where it remains.

In the Zone

The case of Interstate OutdoorAdvertising, LP v. Zoning Board of theTownship of Mount Laurel, et al.,decided February 11, 2013 by theThird Circuit Court of Appeals, calls tomind an expression commonly heardwithin the billboard industry: “there islaw and then there is billboard law.” Italso prompts the thought that badfacts make bad law — here, thebillboard company opportunisticallysought approval at one time for ninebillboard locations along Interstate 295in New Jersey where no billboards

existed. From gleaning the decision,the case below appeared to be a “go forbroke” litigation for both sides withInterstate ultimately ending up as theloser. Relying exclusively on the datedMetroMedia decision, the Third Circuitaffirmed the United States DistrictCourt’s grant of summary judgment infavor of the Zoning Board and theTownship.

Interstate had filed developmentapplications for nine outdooradvertising sign locations alongInterstate 295, which in the Mount

Laurel area is a six lane limited accesshighway. Hearings on four of theapplications were ongoing when theTownship adopted an ordinance whichbecame the subject of the challenge asit banned billboards on the basis ofaesthetics and traffic safety listing anumber of municipal goals andpurposes. While Mount Laurel hadregulated signs since 1988, the 2008Ordinance incorporated newprovisions which allowed for privately-owned signs to display bothcommercial and non-commercial

Billboard Upheld Ban in Mount Laurel, New JerseyBy Jeffrey M. Hall

David H. Comer610.397.7963dcomer@foxrothschild.com

Author

www.foxrothschild.com 11

messages and provided thatenforcement of signs would beaccomplished in a content-neutralfashion. After the passage of theOrdinance, Interstate filed in FederalCourt alleging that the Ordinanceviolated the First Amendmentguarantee of free speech. Afterdiscovery, Mount Laurel filed a motionfor summary judgment which wasgranted by the District Court. The trialjudge analyzed the Ordinance’sconstitutionality under the four-parttest applicable to commercial speechthat is set out in Central Hudson Gas &Electric Corp v. The Public ServiceCommission of NY, 447 U.S. 557 (1980). On appeal by Interstate, theThird Circuit affirmed the grant ofsummary judgment.

The Third Circuit acknowledged thatthe Mount Laurel had the burden ofestablishing the constitutionality ofthe Ordinance. In so doing, the courtobserved that a municipality mustdemonstrate a substantialgovernmental interest which isadvanced no more extensively andnecessary, and such demonstrationcannot be mere speculation orconjecture. That is, here Mount Laurelmust show that it presentedsubstantial evidence which supports its interest in order to sustain the Ordinance fromconstitutional challenge.

In this matter, Mount Laurel submitteda traffic report prepared by theTownship Engineer which surveyed 37articles pertaining to billboards andtraffic safety. The Township Engineerconcluded that eliminating thenumber of driver distractions by notallowing billboards would advancetraffic safety. There was evidence in aform of expert reports and depositionsand testimony of the Township’splanner who stated that Mount Laurel sign control ordinance hasserved to preserve the “billboard-freeaesthetic charm and character for over20 years.”

Interstate countered with testimony ofa traffic expert who reviewed the NewJersey Department of Transportation’saccident records which demonstratedthe accident rate in the area of theproposed billboards was well belowwhat would be regarded as a hazardouscondition. That expert also testified indepositions that there was no causalrelationship between billboards andaccidents as they were not distracting.Interstate countered the municipalplanner’s testimony by attempting todifferentiate the heavily trafficked I-295 corridor by contending thatMount Laurel’s argument on aestheticswas overblown in that there were noresidential or scenic views to protect.This argument got short shrift fromthe appellate court which implicitlyacknowledged Mount Laurel had theright to control aesthetics and safetyon I-295 referring to the interstate asone of “its highways.”

The appellant court pushed asideInterstate’s arguments and in affirmingthe summary judgment order below,relied virtually exclusively onMetroMedia, Inc. v. City of San Diego,453 U.S. 490 (1981). In so doing, itvirtually ignored the body of lawamassed over the 30-year period,including Bell v. Stafford Township,110 N.J. 384 (1988).

Interstate argued that its case shouldhave been seen by the District Court asa classic “Battle of the Experts” forwhich accordingly a genuine issue ofmaterial fact existed which needed tobe resolved by a finder of fact. Thus,the experts’ opinions from each sideshould have been weighed by a fact-finder and consequently, the DistrictCourt improperly granted summaryjudgment.

In relying on MetroMedia, the ThirdCircuit relied heavily on the oldercourt case’s value judgments in theplurality opinion that billboards wereplainly unattractive and thereforeextremely intrusive. Therefore, theThird Circuit seized on the MetroMedia

court’s observation that the mosteffective approach is to prohibitbillboards entirely if a municipalityhas a sufficient basis for concludingthey are traffic hazards and/orunattractive. MetroMedia’s “conclusionrested on ‘the accumulated, common-sense judgments of local lawmakersand of the many reviewing courts thatbillboards are real and substantialhazards to traffic safety.’” Metromediaat 509. That court also stated thatbillboards no matter where located andhowever constructed can legitimatelybe perceived as aesthetical harmful.

Particularly troubling was the ThirdCircuit’s conclusion that the DistrictCourt could resolve the conflictingexpert testimony without a plenaryhearing in the absence of a showing ofbad faith. Referring to Interstate’sarguments as an “academic” challenge,the Third Circuit concluded that theOrdinance survived Interstate’schallenge because it advanced Mt.Laurel’s substantial interest in theaesthetics of the community. Thus, thefact that the Ordinance all inclusivelybans billboards, it nonetheless is notoverreaching given the impact ofbillboards notwithstanding the veryreal impact on commercial speech.Thus, “we have no trouble concludingthat Interstate’s challenge to thevalidity of Mount Laurel’s studies fallsshort of creating a genuine issue ofmaterial fact” on the issue of whetherthe town’s legislative judgments werefacially unreasonable or palpably false.

Finally, the Third Circuit rejectedInterstate’s argument that theOrdinance’s reach was excessivebecause it totally prohibited billboardsby noting that MetroMedia wouldlegitimize the total ban in stating that“perhaps the only effective approachto solving the problems they create isto prohibit them.” Accordingly itsustained the ordinance.

At the present time, it is not knownwhether Interstate will seek review bythe United States Supreme Court. If it

In the Zone

does and is successful, it would behelpful to review a case that does notnecessarily reflect the growth ofcommercialism and the value ofspeech throughout the country.Wholesale reliance on MetroMedia failsto consider the collective wisdom oflocal legislatures throughout NewJersey and indeed the country inpermitting billboards. They havefound that billboards perform a highlyimportant function of communicatingideas and informing the public all thewhile without endangerment to the

traveling public or destabilizing theaesthetics of a community. The ThirdCircuit opinion fails to recognize thesignificant difference between theheavily traveled corridors of limitedaccess highways such as the interstateswhich hardly duplicate the apparentcharm and aesthetic value of aparticular community. Further, theappellate court opinion does not takeinto account the fact that manygovernments have embraced billboardsmaking public property available forthem. This opinion should be reviewed

and MetroMedia revisited especially inlight of the affirmance of the DistrictCourt’s summary judgment without arigorous testing of Mount Laurel’sclaims on traffic safety and aestheticsand the dated value judgments in MetroMedia.

In the Zone

Jeffrey M. Hall609.895.6755jhall@foxrothschild.com

Author

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