E. Schock v. City of Lebanon , 167 A.3d 861 ( 2017 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Edward J. Schock, :
Appellant :
: No. 40 C.D. 2017
v. : Argued: June 5, 2017
:
City of Lebanon :
BEFORE: HONORABLE ROBERT SIMPSON, Judge
HONORABLE ANNE E. COVEY, Judge (P.)
HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge
OPINION
BY JUDGE SIMPSON FILED: August 4, 2017
In this appeal we are asked whose objections count toward
determining whether a 40% statutory veto threshold has been reached under
Section 5 of the Neighborhood Improvement District Act (the Act).1
In particular, Edward J. Schock (Objector) appeals from an order of
the Court of Common Pleas of Lebanon County (trial court)2 that granted the City
of Lebanon’s (City) motion for summary judgment and dismissed Objector’s
declaratory judgment action. Objector sought a determination that the 40%
objection threshold for a veto of the City’s final plan for a neighborhood
improvement district (NID) was reached based on the fact that 132 of the 280
assessed properties formally registered their objections to the final plan. Objector
asks whether, in interpreting Section 5(f)(2) of the Act, the term “affected property
1
Act of December 20, 2000, P.L. 949, as amended, 73 P.S. §835.
2
The Honorable Bradford H. Charles presided.
owners” should be construed to include the smaller group of only those property
owners assessed under the proposed NID, or whether the term should include the
larger set of all property owners located within the physical boundaries of the NID
who will be affected by it. The trial court held that the term “affected property
owners” in Section 5(f)(2) of the Act included the larger set of all property owners
within the physical boundaries of the NID who will be affected by it. Upon
review, we affirm.
I. Background
A. Passage of Lebanon BID
The trial court noted the following facts. In 2010, the City of
Lebanon began contemplating a business improvement district (BID), a type of
NID, for its downtown. A feasibility study recommended the appointment of a
BID steering committee and the hiring of a consultant to develop a BID plan. In
2014, following a study including interviews with residents and business owners,
the City published a 69-page economic development action plan designed to
promote growth through 2020. The plan outlined the City’s current status and the
challenges it faced. The plan also set forth numerous proposals for meeting those
challenges. In addition, the BID steering committee continued to develop plans for
a BID.
In September 2015, the City sent a letter to all property owners and
lessees located in the proposed BID. All recipients were invited to a public
meeting on November 4, 2015. A court reporter attended the meeting and
2
transcribed the proceedings. Many residents provided comments both for and
against the proposed BID.
A November 20, 2015 letter to all BID residents announced City
Council’s acceptance of the preliminary plan for the BID. The letter advised that
the preliminary plan is now considered the BID final plan. The letter further
communicated how BID residents could vote upon the establishment of the BID.
Nothing needed to be done to register a “yes” vote.
However, to register a “no” vote, those opposing the creation of the
BID had to submit written objections to the final plan to the City Clerk within 45
days. All objections would have to include the property address, the Lebanon
County Tax Assessment Identification Number, and a notarized signature of all
owners listed on the deed to the property. The letter also stressed that a negative
vote of 40% of property owners would be needed to defeat the final plan for the
BID.
Appendix B of the final BID plan included a list of 358 properties
located in the BID. Of that number, 78 properties were deemed exempt from BID
assessment. Both parties agreed that the City received 146 objections from
property owners subject to assessment under the plan. However, the City rejected
13 of the objections, thereby counting only 132 objections.3 Only one assessment-
exempt property owner filed an objection; he also owned three assessed properties.
3
The City counted 133 objections; however, one objection was from a non-assessed
property owner.
3
In evaluating the 40% threshold for a veto of the final plan, the City
considered not just the 280 properties subject to assessment, but also the 78 exempt
properties. Therefore, the City determined that 132 of the 358 total affected
properties objected. As the City interpreted Section 5(f)(2) of the Act, only 36.8%
of the total 358 affected property owners objected. Thus, the 40% veto threshold
was not reached.
B. Objector’s Declaratory Judgment Action
Nevertheless, in March 2016, Objector, owner of a property that
would be annually assessed $250 for five consecutive years under the BID, filed a
complaint for declaratory judgment seeking to declare the final plan vetoed or
“dead.” In his complaint, Objector asserted that the only list required in Section
5(c)(2)(iii) of the Act (pertaining to contents of preliminary plan) is “[a] list of all
properties to be assessed.” 73 P.S. §§835(c)(2)(iii). Objector argued the Act did
not require a list of non-assessed properties within the BID boundaries.
Consequently, Objector argues the 280 assessed properties in the BID are the only
properties eligible to object to the final plan for the BID.
C. City’s Preliminary Objections (Demurrer)
Thereafter, the City filed preliminary objections in the nature of a
demurrer challenging the legal sufficiency of Objector’s declaratory judgment
complaint. The City asserted the language in the Act established that all affected
property owners, not just those assessed, have a say in whether the BID will pass.
4
After oral argument, the trial court entered an order overruling the
City’s preliminary objections without prejudice. Primarily, the trial court
determined the issue of whether non-assessed properties can be considered affected
property owners under the Act for purposes of vetoing the BID final plan was not
ripe for disposition. As such, the trial court permitted the parties to close the
pleadings and conduct discovery.
D. Cross-Motions for Summary Judgment
Following the close of discovery, the City filed a motion for summary
judgment. Essentially, the City argued that the term “affected property owners” in
Section 5(f)(2) of the Act (pertaining to veto of final plan for NID) should include
the exempt properties in the BID, which included church-owned properties and
properties owned by educational and nonprofit healthcare providers. The City
argued the evidence of record established that the term “affected property owners”
in Section 5(f)(2) included both assessed and non-assessed property owners.
Therefore, the City properly tallied the vote and adopted the BID final plan by
resolution.
Conversely, Objector filed a cross-motion for summary judgment
asserting that only assessed property owners are affected property owners for
purposes of vetoing the final plan under Section 5(f)(2) of the Act. Objector
advanced several arguments in support of his position. To begin, he cited the
definition of “rational nexus” in Section 3 of the Act:
The legal principle which requires that there is a rational,
definable benefit which accrues to any property owner
assessed a fee for said benefit in an [NID] created under
5
this act. All property owners within a designated [NID]
paying a special assessment fee must benefit directly or
indirectly from facilities or services provided by a [NID]
management association within the [NID], provided,
however, that property owners need not benefit equally.
73 P.S. §833 (emphasis added).
Further, Objector pointed out, there is no provision in the Act
indicating that non-assessed property owners in an NID must benefit from the NID
management association’s (NIDMA) facilities or services.
Here, the BID makes all commercial and residential investment
properties liable for paying a special assessment as a legally enforceable
obligation. Because all of the 280 assessed properties in the BID must pay and
must benefit under the Act, Objector argued there are no free riders among the
assessed property owners. Therefore, if the 78 exempt properties are considered
“benefited,” they are all free riders to the extent they do not pay for the benefits
received.
In other words, Objector asserted, the term “benefited properties”
referred to properties subject to the special assessment by the BID. Longstanding
Pennsylvania case law makes it clear that special assessments can be justified only
by benefits received by the properties subject to the assessments. See Hammet v.
Phila., 65 Pa. 146 (Pa. 1869); S.O.L. Club v. City of Williamsport, 443 A.2d 410(Pa. Cmwlth. 1982); Pace Motels, Inc. v. Twp. of Loyalsock, 409 A.2d 459 (Pa.
Cmwlth. 1979). Further, Objector noted, the legislature, in enacting a statute, is
presumed to be familiar with the judicial decisions construing it. Petition to
6
Establish an Indep. Sch. Dist. for Prop. Situate in Jefferson Twp., 74 A.3d 389 (Pa.
Cmwlth. 2013).
Objector further argued that the language in Section 5(b)(3) of the Act
(titled “Specific procedures”), referencing “objections” of “benefited properties
with the NID” (emphasis added), and the language in 5(f)(2) relating to the
registered “disapproval” of the “final plan” by “40% or more of the affected
properties owners within the proposed NID” (emphasis added), must be considered
in pari materia under 1 Pa. C.S. §1932 and be considered together, if possible.
Therefore, Section 5(b)(3), relating to objections by 40% of the
“benefited properties” and Section 5(f)(2), relating to 40% or more of “affected
property owners” both refer to assessed properties required to be listed by Section
5(c)(2)(iii) of the Act. In short, the only procedure to challenge the assessment is
the objection process in Sections 5(b)(3) (“Specific procedures”) and 5(f)(2)
(“Veto of final plan for NID”). Consequently, Objector asserts, if qualified
objectors are not limited to properties to be assessed under the BID plan, the
objection process does not accurately measure the property owners’ consent to be
assessed.
As additional support for his position, Objector cited Section 8(b) of
the Act (titled “Request for termination”), which provides that any request for the
“termination of the NID and NIDMA approved by 40% of the assessed property
owners, in numbers, located in the NID, shall be submitted by the governing body
of the municipality in writing.” 73 P.S. §838(b) (emphasis added). Objector
7
asserted this provision is consistent with the understanding that the formal
objection is limited to assessed property owners, and a proposed NID final plan is
vetoed when the municipality counts objections from 40% or more of the assessed
properties.
As a final point, Objector cited provisions from NID provisions of
other municipalities limiting the right to object to only those property owners for
whom the assessment is a legally binding obligation. See, e.g., Harrisburg
Midtown Improvement District Draft (HMID) plan (R.R. at 79a). Objector cited
similar provisions in a West Chester NID plan (R.R. at 54a-56a), and an article
regarding a defeated NID plan in Easton (R.R. at 83a-87a) where only assessed
property owners were counted in the veto vote.
In addition, Objector cited the Community Economic Improvement
Act (CEIA),4 which governs the establishment of BIDs in the City of Philadelphia.
See R.R. at 82a. Section 3 of the CEIA defines “[a]ffected property owner” as “[a]
property owner with respect to whom a special assessment fee is proposed to be or
has been levied as authorized by this act.” 53 P.S. §18103 (emphasis added).
Further, Section 5(b) of the CEIA provides a 45-day period for objections by
property owners subject to the assessment. 53 P.S. §18105(b). Prior to a 2016
amendment, if 51% of the assessed owners objected, the BID would be defeated.
Id. The amendment lowered the veto threshold to one-third of affected property
owners. See Section 5(b)(7) of the CEIA, 53 P.S. §18105(b)(7).
4
Act of December 21, 1988, P.L. 1307, as amended, 53 P.S. §§18101-18112.
8
Objector further argued the objection process in the Act is made
administratively feasible by using the list of assessed properties. There is a
statutory presumption that each assessed property is benefited. The objection
process provides each assessed owner with an opportunity to weigh whether the
benefits outweigh the costs. If they do not, a rational, assessed owner may object.
Conversely, there is no requirement in the Act that non-assessed
properties be benefited. Therefore, there is no basis to add the non-assessed
properties to the assessed properties for the objection process.
E. Trial Court’s Decision
In December 2016, the trial court issued an opinion and order granting
the City’s motion for summary judgment and dismissing Objector’s declaratory
judgment complaint. In so doing, the trial court recognized that the Act does not
define the term “affected property owners.” However, the trial court observed that
Section 3 of the Act (“Definitions”) defines the term “benefited property” as
“[t]hose properties located within a [NID] which profit from district improvements
based on a rational nexus test.” 73 P.S. §833.
Although the trial court agreed with both parties that the General
Assembly could have done a better job drafting the Act, the trial court noted that
the Act did not use either the word “all” or the word “assessed” in determining
which property owners were “affected” for purposes of registering an objection to
a final plan under Section 5(f)(2). Therefore, the trial court used a dictionary
9
definition of the word “affected,” which is defined as “acted upon; influenced.”
See Tr. Ct., Slip Op., 12/19/16, at 18 (citation omitted).
In addition, the trial court reviewed the parties’ documentary
evidence, which included affidavits from various individuals. Lebanon Mayor
Sherry Capullo attested the upgrades and improvements flowing from the BID will
have a positive effect on all property owners, including those exempt from
assessment. Kimberly Kreider-Umble of the Lebanon Family Health Services, an
exempt government agency, indicated that the BID positively affected her agency.
The BID also positively affected the largest non-assessed property in the BID, the
Lebanon Campus of the Harrisburg Area Community College (HACC Center).
Laurie Bowersox, the executive director of the HACC Center stated in her affidavit
that the recent cleanliness of the streets and improved lighting surrounding the
building positively affected the property.
The trial court also reviewed affidavits from officials and directors
from other BIDs. Malcom Johnstone, the executive director of the West Chester
BID stated that West Chester considers all property owners to be affected by the
BID, even if they are exempt from the assessment. Johnstone further stated that
non-profits are beneficiaries of the BID programs.
Further, David Feehan, the president of Civitas Consultants, a
consulting group that worked on the BID, stated that he worked with over 250
BIDs around the globe. Feehan stated that in virtually all cases tax exempt
properties are positively affected and benefit from the creation of a BID.
10
Similarly, William Fontana, the executive director of the Pennsylvania Downtown
Center, who has been involved in the creation and implementation of BIDs in Erie,
Jenkintown and Scranton, stated that tax exempt properties are both benefited and
positively affected by the BID activities and improvements.
Based on its review of the evidence, the trial court stated (with
emphasis added):
Sifting through the above, no material issue of fact
exists on the issue of whether the BID actually would
‘affect’ exempt properties. Clearly, the evidence and
affidavits submitted by the [City] reveal that
improvements such as upgraded lighting and enhanced
security will benefit all property owners regardless of
whether those owners are assessed a fee or not. While
[Objector] has attempted to convince us that only those
with a financial stake should have a voice, next to
nothing has been presented by [Objector] to refute that
the BID has and will continue to ‘touch,’ ‘impact’ and
‘influence’ non-assessed BID property owners. As to
whether exempt property owners would be ‘affected’ by
the BID, the answer is clearly ‘yes.’
Having concluded that all property owners within
the designated district will be ‘affected’ by the BID, logic
dictates that all such property owners must be included
within the census used to evaluate whether the 40%
objection threshold has been met. In this case, both
parties agree that 132 objections is not enough to defeat
the BID if the total number of properties within the
physical confines of the BID are counted. Because we
hold today that all such properties are ‘affected’ by the
BID, we must also therefore conclude that the 132
objections lodged to the BID are insufficient to defeat it.
Hence, we are constrained to grant the [City’s] Motion
for Summary Judgment and dismiss [Objector’s]
declaratory judgment action.
11
Tr. Ct., Slip Op., at 21-22. Objector appeals.5
II. Discussion
A. Argument
Objector contends that the trial court erroneously construed the term
“affected property owners” to include all properties located within the physical
boundaries of the NID rather than only those properties assessed under the
proposed final plan. To that end, Objector repeats his various arguments made
before the trial court. Essentially, Objector asserts that only those who pay should
have a say in voting on the final plan under Section 5(f)(2) of the Act.
As support for his position, Objector cites the City’s “Central
Business District: Business Improvement Feasibility Study – 2010,” which states
in part:
The creation of a BID, as allowed under [the Act], is the
preferred way for large cities, and increasingly mid- and
small-size cities to attain this level of sustainability. The
critical factor in the creation of a BID is that while it is
approved and authorized by local government, it cannot
be created without the consent of the property owners
that pay the assessment and stand to benefit from its
activities. In fact, the most important concept of the BID
is that unlike a tax, it is a ‘value-added’ payment that
5
On appeal from a trial court’s order granting or denying summary judgment, our
standard of review is de novo and our scope of review is plenary. Brewington v. City of Phila.,
149 A.3d 901 (Pa. Cwmlth. 2016). Summary judgment is properly entered only when, “after
examining the record in the light most favorable to the non-moving party, and resolving all
doubts as to the existence of a genuine issue of material fact against the moving party, the
moving party is clearly entitled to judgment as a matter of law.” Pyeritz v. Commonwealth, 32
A.3d 687, 692 (Pa. 2011).
12
local property owners should not only hope to benefit
from, but in fact, should expect to benefit from. …
R.R. at 2a (emphasis added).
Therefore, Objector argues, the objection process and veto plan in
Section 5(f)(2) is designed to measure consent to the assessment under the NID.
Further, the definition of “rational nexus” in Section 3 of the Act, states that all
owners of property within a NID “paying a special assessment fee must benefit
directly or indirectly from facilities and services provided by [an NID].” 73 P.S.
§833 (emphasis added). A rational property owner would object to an NID plan
whose costs outweigh the benefits.
Conversely, the owners of tax exempt or non-assessed properties do
not have a rational basis for weighing burdens against benefits. Their properties
are not burdened by a mandatory assessment and there is no statutory mandate that
non-assessed properties receive benefits. Thus, Objector contends exempt
properties are not part of the veto process in Section 5(f)(2) of the Act.
Further, citing the Statutory Construction Act of 1972, 1 Pa. C.S.
§§1501-1991, and the Supreme Court’s decision in Commonwealth v. Giulian, 141
A.3d 1262 (Pa. 2016), Objector asserts, in construing statutory language and giving
it effect, we should not interpret statutory words in isolation, but must read them
with reference to the context in which they appear. Giulian.
Therefore, the use of the term “affected property owners” in Section
5(f)(2) necessarily implies the existence of unaffected property owners within the
13
boundaries of the proposed NID. As such, the trial court’s essential substitution of
the word “all” for “affected” on the theory that all property owners are affected is
contrary to the intent of the General Assembly.
To that end, Objector points out that in Section 5(b)(1) of the Act
(“Specific procedures”), the General Assembly states that the municipal
corporation shall provide a copy of everything required in the procedure of
creating an NID “to all property owners and lessees of property owners located in
the proposed [NID] at least 30 days prior to the first public hearing ….” 73 P.S.
§835(b)(1) (emphasis added). As such, Objector asserts, the General Assembly
knows how to state “all property owners” when it means all property owners.
Objector repeats his trial court argument that longstanding
Pennsylvania case law makes it clear that special assessments can be justified only
by benefits received by the properties subject to the assessments. See Hammet;
S.O.L. Club; Pace Motels. Further, when the words of a statute are not explicit,
legislative intent may be ascertained from former laws, if any, upon the same or
similar subjects. 1 Pa. C.S. §1921(c).
As is typical of statutes authorizing special assessments, Objector
asserts, Section 7(b)(5) of the Act (pertaining to assessments by NIDMAs)
provides for apportioning costs among the benefited properties. In particular,
Section 7(b)(5)(iii) provides that the total cost of the improvements and services
provided by the NID may be assessed by equitably apportioning costs “among
benefiting properties.” 73 P.S. §837(b)(5)(iii) (emphasis added). As discussed
14
above, the term “benefiting properties” are those assessed properties that have a
“rational nexus” with a direct or indirect benefit conferred by the NID. See 73 P.S.
§833 (definition of rational nexus).
Therefore, Objector asserts, Section 5(b)(3) (“Specific procedures”),
relating to objections by 40% of the “benefited properties,” and Section 5(f)(2)
(“Veto of final plan for NID”), relating to 40% or more of “affected property
owners” both refer to the assessed properties required to be listed by Section
5(c)(2)(iii) of the Act.
Objector also cites Section 8(b) of the Act (“Request for
termination”), which provides that any request for the “termination of the NID and
NIDMA approved by 40% of the assessed property owners, in numbers, located in
the NID shall be submitted by the governing body of the municipality in writing.”
73 P.S. §838(b) (emphasis added). Objector asserts this provision is consistent
with the understanding that the formal objection process in Section 5 is limited to
assessed property owners, and a proposed NID final plan is vetoed when the
municipality counts objections from 40% or more of the assessed properties.6
6
Objector also cites provisions from NIDs of other municipalities which he contends
limit the right to object to only those property owners for whom the assessment is a legally
binding obligation. See, e.g., Harrisburg Midtown Improvement District Draft (HMID) plan
(R.R. at 79a); West Chester NID plan (R.R. at 54a-56a). Objector also cites an article regarding
a defeated NID plan in Easton (R.R. at 83a-87a), where only assessed property owners were
counted in the veto vote.
In addition, Objector cites the Community Economic Improvement Act (CEIA), which
governs the establishment of BIDs in the City of Philadelphia. As discussed above, Section 3 of
the CEIA defines “[a]ffected property owner” as “[a] property owner with respect to whom a
special assessment fee is proposed to be or has been levied as authorized by this act.” 53 P.S.
§18103 (emphasis added). Further, Section 5(b) of the CEIA provides a 45-day period following
(Footnote continued on next page…)
15
B. Analysis
1. Affected Property Owners
Initially, we agree with the trial court that the primary issue before us
is who constitutes an “affected property owner” for purposes of vetoing a final plan
under Section 5(f)(2) of the Act. Objector contends that term must be limited to
the 280 assessed properties in the proposed BID final plan. The City, on the other
hand, argues that every property in the BID may be affected by the BID and thus
should be entitled to vote for or against the BID final plan. As such, the City
contends that the 78 tax-exempt properties must be included in the vote on the final
plan under Section 5(f)(2).
2. Principles of Statutory Construction
In Malt Beverages Distributors Association v. Pennsylvania Liquor
Control Board, 974 A.2d 1144 (Pa. 2009), the Supreme Court recognized that the
primary object of statutory construction is to ascertain and effectuate legislative
intent. 1 Pa. C.S. §1921(a). In pursuing this end, the Court noted that when the
words of a statute are clear and free from all ambiguity, the letter of the statute is
not to be disregarded under the pretext of pursuing its spirit. 1 Pa. C.S. §1921(b).
(continued…)
a hearing on the final plan for objections by property owners subject to the assessment. 53 P.S.
§18105(b). Prior to a 2016 amendment, if 51% of the assessed owners objected, the BID would
be defeated. Id. The amendment lowered the veto threshold to one-third of the properties owned
by affected property owners within the NID or one-third of the total property valuation of
property owned by affected property owners within the NID. Section 5(b)(7), 53 P.S.
§18105(b)(7).
16
As a general rule, the best indication of legislative intent is the plain language of a
statute. Malt Beverages.
In reading the plain language of a statute, the words and phrases shall
be construed according to rules of grammar and in accord with their common and
approved usage, while any words or phrases that have acquired a peculiar and
appropriate meaning must be construed according to that meaning. 1 Pa. C.S.
§1903(a). It is only where the words of a statute are not explicit that resort to
statutory construction is appropriate. 1 Pa. C.S. §1921(c). Finally, in ascertaining
legislative intent, it is presumed that the General Assembly did not intend a result
that is absurd or unreasonable. 1 Pa. C.S. §1922(1).
3. Relevant Act Provisions
Turning to the provisions of the Act relevant to this case, we first note
that Section 2 of Act (“Legislative findings”) pertinently provides:
(4) Municipalities shall be given the broadest possible
discretion in establishing by local ordinance the type of
assessment based programs most consistent with
neighborhood needs, goals and objectives as determined
and expressed by property owners in the designated
district.
73 P.S. §832(4) (emphasis added).
Section 3 of the Act (“Definitions”) defines “Benefited property” as:
“Those properties within a neighborhood improvement district which profit from
district improvements based on a rational nexus test. Properties need not profit
equally to be considered to have benefitted.” 73 P.S. § 833. It is significant to our
17
analysis that the word “assessed” does not appear in this definition. Expressed
differently, the definition of “benefited property” does not state that it means the
same thing as “assessed property.”
Also, Section 3 of the Act defines a “Neighborhood Improvement
District” as:
A limited geographic area within a municipality, in
which a special assessment is levied on all designated
property, other than tax exempt property, for the purpose
of promoting the economic and general welfare of the
district and the municipality, hereinafter referred to as
NID. Such districts shall be referred to generally as
neighborhood improvement district and specifically as
business improvement district (BID), residential
improvement district (RID), industrial improvement
district (IID), institutional improvement district (INID) or
mixed-use improvement district (MID), depending on the
type of district established. A designated property may
not be included in more than one neighborhood
improvement district.
73 P.S. §833 (emphasis added). Further, Section 3 defines a “Neighborhood
improvement district plan” as:
The strategic plan for neighborhood improvements
required by [Section 5 of the Act] , hereinafter referred to
as NDIP, and all projects, programs and supplemental
services to be provided within the district to implement
the plan by the neighborhood improvement district
management association.
Id. In addition, Section 3 defines a “Neighborhood improvement district
management association” as:
18
The governing body which oversees the management of
neighborhood improvement districts in a municipality as
established under [Section 5 of the Act] which shall be
referred to as the NIDMA. Such body shall be
incorporated as a nonprofit corporation in this
Commonwealth or an authority ….
Id.
Section 5 of the Act governs the “Creation of a neighborhood
improvement district.” 73 P.S. §835. Section 5(b) (“Specific procedures”)
provides:
(1) A copy of everything required under this section, as
well as the date, location, and time of any public hearing
required by this act shall be provided by the municipal
corporation to all property owners and lessees of property
owners located in the proposed NID at least 30 days prior
to the first public hearing required by this section.
(2) At least one public hearing, no earlier than 15 days
apart, for the purpose of receiving public comment from
affected property owners within the proposed NID, on
the proposed NIDP, shall be held by the municipality
before the establishment of an NID. Notice of the
hearing shall be advertised at least ten days prior thereto
in a newspaper of general circulation.
(3) Any objections by property owners within the
proposed NID must be made in writing by persons
representing the ownership of 40%, in numbers, of the
benefited properties within the NID. Objections must be
signed by the property owner and filed in the office of the
clerk for the governing body of the municipality in which
the NID is proposed.
53 P.S. §835(b)(1)-(3) (emphasis added).
19
Section 5(c) of the Act establishes the required “[c]ontents of
preliminary plan.” 73 P.S. §835(c). Subsection (c)(1) requires that a map be
prepared indicating the boundaries of the NID. 73 P.S. §835(c)(1). Subsection
(c)(2) specifies the contents of a written report which must be provided by the
municipality. 73 P.S. §835(c)(2).
More importantly, Subsection (c)(3) requires that the preliminary plan
also:
(iii) Allow for and encourage tax-exempt property
owners located within the NID to provide in-kind
services or a financial contribution to the NIDMA, if not
assessed, in lieu of a property assessment fee.
****
(vii) Provide that a negative vote of at least 40% of the
property owners within the NID proposed in the final
plan shall be required to defeat the establishment of the
proposed NID by filing objections with the clerk for the
governing body of the municipality within 45 days of
presentation of the final plan where the governing body
of [the] municipality is inclined to establish the NID.
73 P.S. §835(c)(3)(iii), (vii) (emphasis added). Pertinent to our resolution, the
preliminary plan must allow for and encourage tax-exempt property owners to
financially support the NID even “if not assessed.”
Section 5(d) of the Act provides:
(d) Final plan.—Prior to the establishment of an NID,
the municipality shall submit a revised final plan to
property owners located within the proposed NID which
incorporates changes made to the plan based on
20
comments from affected property owners within the NID
provided at the public hearings or at some other time.
Changes to the final plan which differ from the
preliminary plan shall be so indicated in an easily
discernable method for the reader, including, but not
limited to, changes being in boldfaced or italicized type.
73 P.S. §835(d) (emphasis added).
Section 5(e) of the Act states:
(e) Public hearing—At least one public hearing for the
purpose of receiving public comment on any revisions to
the preliminary plan made following suggestions by
affected property owners within the proposed NID and
reflected in the final NIDP shall be held by the municipal
corporation before enacting an ordinance establishing an
NID. Notice of the hearing shall be advertised at least
ten days prior thereto in a newspaper of general
circulation in the municipality.
73 P.S. §835(e).
The provision at the heart of this case, Section 5(f) of the Act, governs
the veto of a final plan. Section 5(f), in its entirety, provides:
(f) Veto of final plan for NID.—
(1) Following the last public hearing required under
subsection (e) or under subsection (g) if an amendment to
the final plan, affected property owners located within a
proposed NID shall have 45 days from the date of the
hearing to object and to disapprove the final plan or any
amendment to the final plan under the requirements of
subsection (b)(3).
(2) If 40% or more of the affected property owners
within the proposed NID fail to register their disapproval
21
of the final plan or amendment to the final plan in writing
with the clerk of the governing body of the municipality
in which the NID is proposed, the governing body of the
municipality, may, following the 45-day period, enact a
municipal ordinance establishing an NID under this act
or, in the case of an amendment to the final plan, adopt
any amendments to the ordinance.
73 P.S. §835(f)(1), (2) (emphasis added).
4. Construction of Act Provisions
In reviewing the language of the above statutory provisions, we first
note that Section 2(4) expresses the legislative intent that municipalities be given
the “broadest possible discretion” in establishing a NID consistent with the
neighborhood needs, goals and objectives as determined and expressed by property
owners in the designated district.” 73 P.S. §832(4) (emphasis added). Unlike
other Act provisions, Section 2(4) does not the use the adjectives “benefited,”
“affected,” of “assessed” in limiting the type of property owners who may
participate in the decision to create an NID.
Nonetheless, in defining a NID, Section 3 of the Act expressly states
that “tax exempt property” will not be subject to the special assessment levied on
“all designated property.” 73 P.S. §833 (emphasis added).
Also, Section 3 defines the term “[b]enefited property” as “[t]hose
properties located within a neighborhood improvement district which profit from
district improvements based on a rational nexus test.” Id. Evaluating the plain
language of the definition, we note that the word “assessed” does not appear.
Thus, while all properties which are assessed must be benefited, as determined
22
under a rational nexus test, see id. (definition of “rational nexus”), the Act does not
mandate that all benefited properties be assessed. Indeed, the Act recognizes that
there will be “tax exempt property.” See id.
We will now evaluate the plain language of Section 5 of the Act.
Section 5(b)(1) of the Act, addressing specific procedures for creating a NID,
requires that “all property owners and lessees of property owners located in the
proposed NID” receive a copy of the necessary documents and notice of a public
hearing on the proposed NID. 73 P.S. §835(1) (emphasis added). Section 5(b)(2),
also addressing specific procedures for creating a NID, provides for a public
hearing for the purpose of receiving public comment from affected property
owners within the NID on the proposed NID plan. 73 P.S. §835(2).
Section 5(b)(3) of the Act, also addressing specific procedures for
creating a NID, provides for written objections by property owners within the
proposed NID. This provision requires objections by “persons representing the
ownership of 40%, in numbers, of the benefited properties within the NID.” 73
P.S. §835(3) (emphasis added).
Reviewing the plain language of the objection procedure described in
Section 5(b)(3), we note that the objection procedure is not expressly limited to
assessed properties. This reading makes sense. While assessed properties must be
benefited to be assessed, not all benefited properties will be assessed. Indeed,
some properties may be exempt from assessment, but the owners may be
encouraged nevertheless to provide in-kind services or financial contributions in
23
lieu of a property assessment fee. See Section 5(c)(3)(iii) of the Act, 73 P.S.
§835(c)(3)(iii). In light of this possible voluntary support from exempt but
benefited properties, all benefited properties are included in this objection
procedure for creating a NID. Thus, in the context of the objection procedure, the
term “benefited” is not synonymous with the term “assessed.”
Consistent with the foregoing, Section 5(c)(3) requires that a
preliminary plan also provide notice that “a negative vote of at least 40% of the
property owners within the NID proposed in the final plan shall be required to
defeat the establishment of the proposed NID ….” 77 P.S. §835(c)(3)(vii)
(emphasis added).
Notably, this preliminary plan notice language does not use the term
“assessed” in describing the property owners who may vote to defeat a proposed
final plan for a NID. Instead, there are no express limitations on the owners of
properties within the NID whose votes on the final plan will be counted. A plain
language reading of this provision supports the conclusion that the votes of all
owners of property within the NID will be considered in determining whether
establishment of the proposed NID is defeated.
Also consistent with the foregoing, Section 5(d) of the Act (“Final
plan”) requires that “[p]rior to the establishment of an NID, the municipality shall
submit a revised final plan to property owners located within the proposed NID
which incorporates changes made to the plan based on comments from affected
property owners within the NID provided at the public hearings or at some other
24
time.” 73 P.S. §835(d) (emphasis added). Thus, the final plan is submitted to
“property owners” in the NID, without limitation. Also, “affected property
owners” may provide public comment regarding the proposed NID. 73 P.S.
§835(b)(2). Accordingly, a property owner need not be subject to assessment
before he or she is entitled to receive the final plan and provide public comment on
it.
Similarly, Section 5(e) of the Act (“Public hearing”) provides for a
public hearing on any revisions to the preliminary plan made following suggestions
by “affected property owners” within the proposed NID. 77 P.S. §835(e)
(emphasis added). Again, the revisions are not limited to those by owners of NID
properties to be assessed.
Finally, the language in Section 5(f) of the Act (“Veto of final plan for
NID”), the most pertinent provision, is consistent with the foregoing. Section
5(f)(1) provides a 45-day period following the hearing for “affected property
owners located within the proposed NID to object to and disapprove the final plan
….” 77 P.S. §835(f)(1) (emphasis added). Further, as previously discussed,
Section 5(f)(2) provides: “If 40% or more of the affected property owners fail to
register their disapproval of the final plan … the governing body of the
municipality may, following the 45-day period, enact a municipal ordinance
establishing an NID.” 77 P.S. §835(f)(2) (emphasis added).
Neither subsection 5(f)(1) nor 5(f)(2) refers to “assessed properties” at
all. Given the absence of the term “assessed” in these controlling veto provisions,
25
given the absence of the term “assessed” in the objection procedures of Section
5(b), given the absence of the term “assessed” in the definition of the term
“[b]enefited property” in Section 3, and acknowledging the possibility of voluntary
support by owners of exempt property within the NID, a plain language reading of
the Act leads to the conclusion that the objections of all owners of property
affected by the NID could be counted toward determining whether the veto
threshold has been reached, regardless of whether the properties are assessed.
5. In Pari Materia
Objector, however, contends Section 5(b)(3)’s (pertaining to specific
procedures for creation of NID) use of the words “benefited properties” should be
read in pari materia with Section 5(f)(2)’s (relating to veto of final plan for NID)
use of the words “affected property owners” because both terms refer to the same
subject and share a common purpose.
As discussed above, while assessed properties must be benefited to be
assessed, not all benefited properties will be assessed. Some properties may be
exempt from assessment, but the owners may be encouraged nevertheless to
provide in-kind services or financial contributions in lieu of a property assessment
fee. See Section 5(c)(3)(iii) of the Act, 73 P.S. §835(c)(3)(iii). Thus, within the
context of the objection procedure in Section 5(b)(3), the term “benefited” is not
synonymous with the term “assessed.” In other words, the larger set of properties
“benefited” by a NID includes the smaller group of properties “assessed,” but the
set of properties “benefited” can extend to other properties as well.
26
Even if Objector is correct that Section 5(b)(3) (specific procedures
for creation) and Section 5(f)(2) (veto of final plan for NID) must be read in pari
materia, he would not prevail. This is because neither of those provisions uses the
term “assessed properties,” and, as demonstrated in the foregoing discussions,
those provisions address a set of properties larger than the smaller group of
properties “assessed.” As explained at length above, such a conclusion is
consistent with reading all the relevant provisions of Section 5 of the Act (relating
to creation of a NID) together.
6. Expressio Unius est Exclusio Alterius
Nevertheless, Objector points out that Section 8(b) of the Act
(relating to a request for termination of an NID), provides that any request for the
“termination of the NID and NIDMA approved by 40% of the assessed property
owners, in numbers, located in the NID shall be submitted by the governing body
of the municipality in writing.” 73 P.S. §838(b) (emphasis added). Objector
asserts this provision is consistent with the understanding that the formal objection
process is limited to assessed property owners, and a proposed NID is vetoed when
the municipality counts objections from 40% or more of the assessed properties.
Based on the different language of this provision, we disagree.
Clearly, in Section 8(a) of the Act, the General Assembly used the specific term
“assessed property owners” rather than “affected property owners.” Under the
statutory construction principle commonly known by the Latin term expressio
unius est exclusio alterius (the express mention of a specific matter in a statute
implies the exclusion of other not mentioned), where “the legislature includes
27
specific language in one section of a statute and excludes it from another, it should
not be implied where excluded.” W. Penn. Allegheny Health Sys. v. Med. Care
Availability & Reduction of Error Fund., 11 A.3d 598, 605-06 (Pa. Cmwlth. 2010).
The General Assembly could have used the phrase “assessed
property” in Section 5 of the Act if that is what it intended. However, the General
Assembly chose the broader terms “benefited property” and “affected property” for
purposes of creating a NID. There is a rational purpose to the use of the broader
terms: inclusion of a broader set of property owners beyond those who may be
assessed in the hope of voluntary support from owners of exempt but benefited
properties. See Section 5(c)(3)(iii) of the Act, 73 P.S. §835(c)(3)(iii).
In contrast, when terminating a NID, the General Assembly intended a
narrower group of voters, those owners of property in a NID actually paying
assessments. However, pursuant to the express terms of the termination provision,
“assessed property owners” do not have “veto” authority. Instead, a request for
termination of a NID by a vote of 40% of the “assessed property owners” is
referred to the governing body of the municipality for further action. Section 8(b)
of the Act, 73 P.S. §838(b). Thus, in several different ways, the creation and
termination processes in the Act are dissimilar.
7. CEIA
We recognize that Section 3 of CEIA, which governs the proposed
BIDs in the City of Philadelphia, defines “[a]ffected property owner” as “[a]
28
property owner with respect to whom a special assessment fee is proposed to be or
has been levied as authorized by this act.” 53 P.S. §18103 (emphasis added).
However, the CEIA is a different statute pertaining only to Philadelphia. As
discussed above, no similar definition of it is included in the Act.
8. Other Municipal Ordinances
Similarly, Objector cites provisions from other municipal NIDs
limiting voting on the final plan to assessed property owners. As noted above,
under Section 2(4) of the Act (“Legislative findings”), municipalities are afforded
the “broadest possible discretion” in drafting their local ordinances. 73 P.S.
§832(4). Consequently, the provisions in other municipal NIDs explicitly limiting
voting on the final plan to assessed property owners are not useful here.
Given the different statutory language in the Act, which does not use
the term “assessed properties” in evaluating the vote to create a NID, but instead
uses broader terms, we discern no error or abuse of discretion in the trial court’s
use of the common dictionary definition of “affected” in determining the meaning
of the phrase “affected property owners.” As indicated by the affidavits cited by
the trial court, non–assessed or tax-exempt property owners are nonetheless
affected (“acted upon”7) by their inclusion in this BID. As such, Section 5 of the
Act does not foreclose their right to participate in the creation of this BID.
7
See Webster’s Third New World International Dictionary 35 (unabridged 1961) which
defines “affect” in part as to “act upon” or “to produce an effect upon.”
29
For all these reasons, we affirm the trial court’s order entering
judgment for the City and dismissing Objector’s declaratory judgment action.
ROBERT SIMPSON, Judge
30
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Edward J. Schock, :
Appellant :
: No. 40 C.D. 2017
v. :
:
City of Lebanon :
ORDER
AND NOW, this 4th day of August, 2017, for the reasons stated in the
foregoing opinion, the order of the Court of Common Pleas of Lebanon County is
AFFIRMED.
ROBERT SIMPSON, Judge
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Edward J. Schock, :
Appellant :
:
v. : No. 40 C.D. 2017
: ARGUED: June 5, 2017
City of Lebanon :
BEFORE: HONORABLE ROBERT SIMPSON, Judge
HONORABLE ANNE E. COVEY, Judge (P)
HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge
DISSENTING OPINION BY
SENIOR JUDGE LEADBETTER FILED: August 4, 2017
I must respectfully dissent. I agree with the Objector’s arguments outlined
on pages 13-15 of the proposed majority opinion. I find particularly persuasive
that, as the trial court found, all property owners will be impacted in some way by
the NID, and this is not in any way unique to the NID at issue, but will generally
be the case. Therefore, by designating a limited class of “affected” property owners
entitled to vote under Section 5(f)(2), the General Assembly cannot have intended
that to mean all property owners. When it intended to mean “all property owners”
it said so in Section 5(b)(1). Certainly, as the majority points out, the Act does not
use the term “assessed” in Section 5(f)(2), but neither does it use the term “all.” I
agree that the statutory language could be clearer but, for the other reasons cited by
Objector, I believe that interpreting “affected” to mean “assessed” is closer to the
statutory intent than interpreting “affected” to mean “all.”
_____________________________________
BONNIE BRIGANCE LEADBETTER,
Senior Judge