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THOMAS W. GAUGHEN v. COMMONWEALTH PENNSYLVANIA (02/23/89)

decided: February 23, 1989.

THOMAS W. GAUGHEN, T/D/B/A TWG REAL ESTATE MANAGEMENT SERVICES, APPELLANT
v.
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF TRANSPORTATION, APPELLEE. COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF TRANSPORTATION, APPELLANT V. THOMAS W. GAUGHEN, T/D/B/A TWG REAL ESTATE MANAGEMENT SERVICES, APPELLEE



Appeals from the Order of the Court of Common Pleas of Cumberland County, in the case of Thomas W. Gaughen, t/d/b/a TWG Real Estate Management Services v. Commonwealth of Pennsylvania, Department of Transportation, Nos. 1172 Civil 1987 and 1328 Civil 1987.

COUNSEL

Joseph A. Klein, Law Offices of Joseph A. Klein, P.C., for appellant/appellee, Thomas W. Gaughen, t/d/b/a TWG Real Estate Management Services.

William J. Cressler, Assistant Counsel, with him, John L. Heaton, Chief Counsel, for appellee/appellant, Commonwealth of Pennsylvania, Department of Transportation.

Judges Craig and Palladino, and Senior Judge Barbieri, sitting as a panel of three. Opinion by Senior Judge Barbieri.

Author: Barbieri

[ 123 Pa. Commw. Page 551]

Thomas W. Gaughen, t/d/b/a TWG Real Estate Management Services (Gaughen) appeals an order of the Cumberland County Court of Common Pleas sustaining his preliminary objections to a declaration of taking filed

[ 123 Pa. Commw. Page 552]

    by the Pennsylvania Department of Transportation (DOT) and dismissing in part and sustaining in part, DOT's preliminary objection to Gaughen's Petition for the Appointment of Viewers. DOT has cross-appealed from that same order.

This matter stems from de facto and de jure condemnation proceedings which concern a 226.778 acre tract of land in Hampden Township (Township), Cumberland County. Both proceedings were consolidated before the trial court.

DOT had plans dating back to 1964 to build a connector route between Interstate 81 (I-81) and U.S. Route 11 in the Township. In 1972, an interchange for the proposed connector route was built at I-81 but in 1977, the project was suspended by DOT for lack of funding.

A corridor for the proposed connector route has been part of the Township's comprehensive plan since 1970 and is marked on the zoning map. Although one potential corridor was shown as part of the Township's plan, DOT did not decide on the actual route for the connector project until the summer of 1987. A portion of the property in question lay within this corridor.

In the early 1970's, prior to its suspension for lack of funding, the project was on DOT's "twelve year plan." It was again placed there in 1984, although DOT did not pick a specific route for the roadway until the summer of 1987.*fn1

Over the years, DOT has repeatedly asked the Township to delay development within the corridor. In light of advice from the Township solicitor, in July of 1986, Township officials advised DOT of their concern that any attempt by the Township to delay development could render it liable to landowners for a de facto taking.

[ 123 Pa. Commw. Page 553]

On May 7, 1986, Gaughen signed a sales agreement to purchase 226.778 acres in the Township and the deed was recorded on December 5, 1986. Realizing that a portion of this property lay within the corridor for the proposed connector route, Gaughen met with DOT's chief engineer for District 8 in February of 1986, prior to purchasing the property. He was informed that the project was on the twelve year plan and studies were being undertaken concerning placement of the actual roadway.

Gaughen financed his purchase of the property by a conventional mortgage, carrying monthly mortgage payments of slightly over $16,000.00.

On July 7, 1986, Gaughen filed plans with the Township seeking to develop the tract as a Planned Residential Development (PRD) for senior citizens. He filed his application for tentative approval of a PRD and a conditional use on September 23, 1986. The tract was zoned R-S (Residential Suburban).*fn2 Pursuant to Section 703 of the Township zoning ordinance, PRDs are permitted in this zone as a conditional use. The PRD was first presented to the Township Planning Commission on October 9, 1986. On November 10, 1986, the Township tentatively approved the plans for Phase 1 of the five phase PRD and allowed the conditional use.

Phase 1 was to consist of a 312 unit senior citizens' apartment complex on approximately 16 acres.*fn3 The corridor was adjacent to Phase 1 but bisected Phase 2 and included portions of Phases 4 and 5.

[ 123 Pa. Commw. Page 554]

Gaughen's financial advisor informed him that the most appropriate means of financing the PRD was by way of a tax exempt bond issued through the Cumberland County Housing and Redevelopment Authority (Authority). This method would result in Gaughen receiving a favorable rate of financing which was below the interest rate charged for conventional financing. The financing of these bonds was undertaken pursuant to the Federal HUD program which provides FHA insurance on the mortgage. This insurance is contingent upon ten percent co-insurance to be provided by a private mortgage lending company approved by HUD. ABG Associates (ABG) was the entity which was to process the FHA co-insurance application for financing Phase 1 of the project.

Robert Fowler, an expert witness on financing of residential developments, testified that some type of credit enhancement like that furnished through the FHA was necessary in order to successfully market a multi-family housing project to investors.

The trial court found that DOT repeatedly asked the Township to delay any proposed development. In a letter dated August 25, 1986 to a Township Commissioner, Mr. Mueser, DOT's district engineer for District 8-0, asked that approval of any development in the corridor be delayed until DOT obtained funds to institute protective buying.*fn4 DOT again requested Township officials to delay action on subdivision applications within the corridor at a meeting at DOT's District 8 office on September 8, 1986 and at a meeting with Township officials on October 14, 1986.

[ 123 Pa. Commw. Page 555]

At a September 16, 1986 meeting, DOT informed Township officials that engineering and environmental studies would be employed over the next two years in determining the exact location for the connector route. There was a good deal of publicity surrounding the proposed connector route as evidenced by numerous articles appearing in local newspapers from September 1986 through January of 1987.*fn5

A public meeting was held on November 24, 1986, where the protective buying within the corridor was announced by DOT. Although DOT had not yet finalized a route for the highway, it wanted to preserve the property within the corridor on the Township's zoning map. DOT filed an Authorization Plan with the Cumberland County Recorder of Deeds on November 20, 1986, notifying the owners of property within the corridor that it intended to condemn such property. Public meetings were held on November 24, 1986 and December 9, 1986 to discuss the authorization plan and protective buying. The right-of-way plans were shown to the public at the December 9th meeting.

A public hearing was held before the Authority on December 29, 1986 to receive public comments concerning the financing of Phase 1 of the project by issuing tax exempt bonds. A letter dated December 2, 1986 from Mr. Mueser to the Authority was made a part of the record. Despite the fact that no part of Phase 1 lay within the corridor, in the letter DOT notified the Authority that it was engaged in protective buying in the vicinity of the proposed project. The letter further expressed DOT's concern over the potential noise problem resulting from the proposed roadway on Phase 1's four story building.

[ 123 Pa. Commw. Page 556]

Gaughen was required to disclose the contents of Mueser's December 2, 1986 letter to ABG. In a letter dated December 29, 1986, ABG's vice president advised Gaughen that in light of DOT's concern over the noise impact of the proposed connector route, a full environmental impact study would be required. ABG further advised Gaughen that in ...


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