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CONRAD v. PITTSBURGH (04/22/66)

decided: April 22, 1966.

CONRAD
v.
PITTSBURGH



Original Jurisdiction in case of Robert K. Conrad, in his own right and on behalf of other citizens, residents and taxpayers of the City of Pittsburgh v. City of Pittsburgh, Mayor Joseph M. Barr, Council of the City of Pittsburgh et al.

COUNSEL

John B. Nicklas, Jr., with him McCrady & Nicklas, for plaintiff.

David Stahl, City Solicitor, with him Thomas S. White and Cyril A. Fox, Jr., Assistant City Solicitors, for City of Pittsburgh, defendant.

George E. Flinn, C. Holmes Wolfe, Jr., and Moorhead & Knox, for Stadium Authority of City of Pittsburgh.

Charles M. Thorp, Jr., John H. Neely, and Thorp, Reed & Armstrong, and Neely, Stockdale & Phillips, for amicus curiae.

Kennedy Smith, and Kline & Smith, for amicus curiae.

Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Roberts. Concurring Opinion by Mr. Chief Justice Bell. Concurring Opinion by Mr. Justice Musmanno.

Author: Roberts

[ 421 Pa. Page 494]

On October 29, 1965, plaintiff, a resident and taxpayer of the City of Pittsburgh, Allegheny County, Pennsylvania, instituted an action in the Court of Common Pleas of Allegheny County to restrain defendants, the City of Pittsburgh and the Stadium Authority of the City of Pittsburgh,*fn1 from proceeding with a contemplated construction of a multi-purpose public stadium. Plaintiff also sought to have adjudged illegal and void a contract entered into between defendants for the purpose of carrying out said project.

Defendants, on November 8, 1965, filed a preliminary objection in the nature of a demurrer to plaintiff's complaint. On the same date, defendants petitioned this Court to assume original jurisdiction of the cause. In view of the exigency which exists in the matter to which the suit relates, on November 22, 1965, we directed the issuance of a special certiorari to the court below removing the record in the proceedings for

[ 421 Pa. Page 495]

    consideration and action by this Court.*fn2 Such is the present posture of the litigation.*fn3

Due to the nature of the action and the issues presented, it is necessary that the factual background of the litigation, as established by the averments of plaintiff's complaint and the exhibits annexed to defendants' preliminary objection, and thereby made part of the record of the case,*fn4 be set forth.

[ 421 Pa. Page 496]

The City of Pittsburgh, desiring to provide its residents with a facility for civic and athletic events of interest to the community, organized the Stadium Authority of the City of Pittsburgh. The Authority was formed pursuant to the Public Auditorium Authorities Law [herein referred to as the "enabling act"], Act of July 29, 1953, P. L. 1034, 53 P.S. §§ 23841-23857, for the purpose of constructing a public stadium facility.*fn5 In order to facilitate the project, the City proposed to provide the site upon which the stadium was to be constructed and to loan certain sums to the Authority for the purpose of initiating the endeavor.

Acting with the approval of the City and in accordance with powers granted under the enabling act, the Authority adopted a plan whereby it would finance and construct a multi-purpose stadium to be leased to private parties for operation as an Authority facility.*fn6 In furtherance of that plan, the Authority entered into negotiations with various parties for the construction, financing and letting of the proposed facility.

[ 421 Pa. Page 497]

As a result of these negotiations, agreement was reached with the Pittstad Management Corporation, subject to the execution of formal instruments, under which Pittstad would enter into a lease of the stadium for a forty year term at an annual rental of $860,000. Pittstad, in turn, proposed to sub-let the facility for a like term to the Pittsburgh Athletic Co., Inc. and the Pittsburgh Steelers Football Club, Inc. at an aggregate annual rental of $421,000.

At the same time, tentative agreement was also reached with the Public Parking Authority of the City of Pittsburgh, a public corporation organized pursuant to the Act of June 5, 1947, P. L. 458, 53 P.S. §§ 341-356, for a lease of the parking facilities to be constructed in connection with the stadium. It is contemplated that these facilities would in turn be sub-let to the Alco Parking Corporation for a term of forty years at an annual rental of $500,000.

On June 30, 1965, the Stadium Authority, proceeding under powers granted by the enabling act, Act of June 29, 1953, P. L. 1034, § 5, 53 P.S. § 23845(B)(i), entered into a loan agreement with various banks under which interim financing in the amount of $28,000,000 was obtained to pay construction and other costs of the project pending the sale of Authority bonds. Concurrently with the execution of the above mentioned agreement, the City and the Stadium Authority entered into the agreement which is the principal subject of the present suit.

Section 10(B) of the enabling act provides as follows: "Any municipality may and it [sic] is hereby authorized to make annual grants from current revenues to the Authority to assist in defraying the costs of operation, maintenance and debt service of the project and to enter into long term agreements providing for the payment of the same." Act of July 29, 1953, P. L. 1034, 53 P.S. § 23850(B).

[ 421 Pa. Page 498]

Acting pursuant to this provision, the City and the Stadium Authority entered into an agreement whereunder the City agreed to make an annual grant to the Authority in the event and to the extent of any deficiency between the income to be derived from the tenants of the stadium and the amount required by the Authority to service its debt and maintain the facility. Specifically, the agreement provides that the City shall appropriate and pay to the Authority from "current revenues" a sum equal to "the amount . . . by which the total funds . . . available in . . . [each] calendar year to pay the cost to the Authority of the operation and maintenance of the Project and debt service on the Bonds are less than the cost to the Authority of such operation, maintenance and debt service." The agreement to remain in force for the duration of any outstanding indebtedness of the Authority on its bonds, further provides that "in the event that any annual grant is not paid in full when due, the deficiency is to be paid out of the current revenues of the City in the subsequent year or years."

Plaintiff, attacking the agreement, contends that the provision therein contained providing for annual grants by the City in the event of an operating deficiency by the Authority constitutes a debt incurred in violation of §§ 8 and ...


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