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VARTAN v. HARRISTOWN DEV. CORP.

March 13, 1987

John O. Vartan, Plaintiff
v.
Harristown Development Corporation and William Keisling, Defendants and Third-Party Plaintiffs v. City of Harrisburg, Bernard Hammer, Harrisburg Redevelopment Authority, and Stephen R. Reed, Third-Party Defendants



The opinion of the court was delivered by: CALDWELL

 CALDWELL, U.S.D.J.

 I. Introduction.

 Defendants, Harristown Development Corporation (Corporation) and William Keisling, have filed a motion for summary judgment. Plaintiff, John O. Vartan, filed this lawsuit against the moving defendants as well as the City of Harrisburg, the Harrisburg Redevelopment Authority (HRA), HRA's chairman, Bernard Hammer, and Harrisburg's mayor, Stephen R. Reed. *fn1" Vartan alleged that the defendants had conspired to monopolize or restrain trade in the redevelopment of downtown Harrisburg in violation of the Sherman Act, 15 U.S.C. §§ 1 and 2, and the Clayton Act, 15 U.S.C. § 14. Pursuant to 42 U.S.C. § 1983, he also claimed the defendants violated his fourteenth amendment due process rights. Finally, he asserted several pendent state claims.

 II. Background.

 The following is the background of this litigation, gleaned from the undisputed statements of material fact, depositions in this action, deposition and trial testimony from a companion state court action, and documentary exhibits submitted by the parties.

 On October 8, 1974, pursuant to the Pennsylvania Urban Redevelopment Law, the Act of May 24, 1945, P.L. 991, § 1 et seq., 35 P.S. § 1701 et seq. (Purdon & Purdon Supp. 1986), the Harrisburg City Council approved the Harristown Urban Renewal Plan (Plan). The Plan provided a comprehensive program for the renewal of downtown Harrisburg. It contemplated that certain properties would be acquired by redevelopment authorities and designated for certain uses.

 In 1984, one of the principal focuses of the Harrisburg redevelopment authorities was the creation of a hotel and office building complex on the historic Market Square in downtown Harrisburg. *fn2" A private developer, Pattison Partners, had become involved in the project and Harrisburg had submitted an application for an Urban Development Action Grant (UDAG) to the federal government on January 31, 1984. A final application was to be submitted by June 1, 1984. Two state agencies, the Public School Employees Retirement System (PSERS) and the State Employees Retirement System (SERS) were being sought as tenants for the proposed project.

 In December 1983, Vartan, who had previously built low rise office buildings in suburban Harrisburg, decided to build a high rise building in the downtown area. Vartan intended to pursue PSERS and SERS as tenants. In February and March 1984, he discussed with Mayor Reed the possibility of developing a piece of property within the area of the Plan located at Fifth and Walnut Streets (the Walnut Street site). This site had originally been owned by the City but legal title was now in HRA with the City retaining beneficial ownership. There was no planned use for it. Mayor Reed at first expressed interest in having Vartan develop the site but by letter, dated April 17, 1984, he informed Vartan that the City could not support his planned development of the Walnut Street site for the following reasons:

 
I do believe that it is not in the interests of the City for both you and the hotel developer to be competing for the same certain public leases as the effect of that would be to either make the hotel project or possibly both of your projects weakened.
 
It is expected that by June 1, 1984, most aspects of the hotel project will have been completed for purposes of the less than market interest rate UDAG financing package.
 
In the meanwhile, I see no reason why you should not proceed with plans for development of the 5th and Walnut Street site for those office, retail and residential activities that do not have the direct undermining impact that I have written of regarding the hotel. There is no question that following the start-up of the hotel project that your project should be prepared or ready to go on line.

 These communications were consistent with the consensus at a breakfast meeting held on April 4, 1984 among principals active in the redevelopment of Harrisburg. It was felt that Vartan's intended use of the Walnut Street site would compete with the hotel and office building project.

 After this failure, in August 1984, Vartan purchased two adjacent properties in downtown Harrisburg, one on Chestnut and Court Streets and the other on Blackberry Street (hereinafter, collectively "the Chestnut Street site"). Vartan knew that this site had been on the list of properties to be acquired under the Plan and had been designated on the Plan to be used for a parking garage. Vartan announced his intention to build an office building on this property.

 Reed, Hammer and Keisling met on August 21, 1984. Keisling's letter agenda for the meeting included discussing Vartan's recent purchase of the Chestnut Street site and its impact on redevelopment in Harrisburg. The agenda stated:

 
Of immediate concern is the fate of properties on Chestnut Street, the use of which is specified in the Urban Renewal Plan for an additional parking garage. Recent public announcements (made, as far as I know, without consultation with any of the parties to the Agreement) threaten the loss forever of what could be critical parking facilities if the downtown is to continue its rejuvenation. The unplanned use of part of the site for an office building will also play havoc with difficult market absorption problems which must be faced if the Third and Walnut office site is to be redeveloped and create the long-needed spin-off effects contemplated by the Urban Renewal Plan.

 At the meeting, Mayor Reed, Keisling and Hammer unanimously decided to acquire Vartan's property. Mayor Reed testified that Keisling was "very persuasive" in arguing for acquisition concerning the issue of "market absorption" and the "integrity of the plan," among other things. Although Hammer had some "reservations" about saying no to a private developer who intended to use his own funds to develop a privately owned site, he also concurred in the decision to condemn Vartan's property. The meeting was held and the decision made pursuant to a cooperation agreement, discussed below. A letter, dated August 24, 1984, to the members of HRA, the board of directors of the Corporation and to the members of the Harrisburg Parking Authority, announced this decision and requested that the Corporation provide the funding so that HRA could acquire Vartan's property.

 Thereafter, before a declaration of taking could be filed, Vartan filed this lawsuit and a companion case in state court, Vartan v. Reed, 106 Dauphin Co. Rep. 87 (1985), rev'd, 100 Pa. Commw. 163, 514 A.2d 646 (1986). The state court suit sought to enjoin the threatened condemnation. The trial court granted that relief but the ...


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