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Fumo v. City of Philadelphia

June 15, 2009

SENATOR VINCENT J. FUMO, REPRESENTATIVE MICHAEL H. O'BRIEN, SENATOR MICHAEL J. STACK, REPRESENTATIVE JOHN J. TAYLOR, REPRESENTATIVE MICHAEL P. MCGEEHAN, AND REPRESENTATIVE ROBERT C. DONATUCCI, APPELLANTS,
v.
THE CITY OF PHILADELPHIA, APPELLEE.
HSP GAMING, L.P., APPELLEE-INTERVENOR.
CITY COUNCIL OF THE CITY OF PHILADELPHIA, COUNCILMEMBER FRANK DICICCO, APPELLANTS,
v.
CITY OF PHILADELPHIA, STEPHANIE W. NAIDOFF, APPELLEES.
HSP GAMING, L.P., APPELLEE-INTERVENOR.



Petition for Review in the Nature of an Appeal from a Final Determination of a Political Subdivision Pursuant to 4 Pa.C.S. §1506 and 53 P.S. §14202. Petition for Review and Request for Injunctive Relief in the Nature of an Appeal of a Final Determination of a Political Subdivision Pursuant to 4 Pa.C.S. §1506 and 53 P.S. §14202.

The opinion of the court was delivered by: Mr. Chief Justice Castille

CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, JJ.

ARGUED: April 15, 2008

OPINION

On December 26, 2007 appellants former Senator Vincent J. Fumo, Representative Michael H. O'Brien, Senator Michael J. Stack, Representative John J. Taylor, Representative Michael P. McGeehan, and Representative Robert C. Donatucci (collectively, the "state legislators") filed a "Petition for Review in the Nature of an Appeal From a Final Determination of a Political Subdivision Pursuant to 4 Pa.C.S. §1506 and 53 P.S. §14202." See No. 207 EM 2007. On December 27, 2007, appellants City Council of the City of Philadelphia and Councilmember Frank DiCicco (collectively, "City Council") filed a "Petition for Review and Request for Injunctive Relief in the Nature of an Appeal of a Final Determination of a Political Subdivision Pursuant to 4 Pa.C.S. §1506 and 53 P.S. §14202." See No. 208 EM 2007. HSP Gaming, L.P. ("HSP" aka "SugarHouse") filed a Notice of Intervention in the appeals.

In both appeals, appellants seek review of the November 27, 2007 decision of the City of Philadelphia Department of Commerce ("Commerce Department"), authorizing the issuance of a license to HSP to construct a portion of its gaming casino upon submerged lands sited in the Delaware River within the City of Philadelphia. In both appeals, HSP filed two Applications for Summary Relief, one asserting that appellants lack standing and the other asserting that HSP is entitled to a judgment in its favor as a matter of law.

For the following reasons, we conclude: (1) that the state legislators have standing to claim that the Commerce Department's issuance of the license was improper on the basis that the General Assembly, not the City, has the authority to license the use of the submerged lands in the Delaware River ("Claim I"); (2) that Claim I nevertheless is without merit, based on our decision in HSP Gaming L.P. v. City of Philadelphia, 954 A.2d 1156 (Pa. 2008); (3) that the state legislators do not have standing to claim alternatively that former Commerce Director Stephanie W. Naidoff exercised the City's statutory licensing authority under Act 321 of June 8, 1907, P.L. 488, 53 P.S. §14199 ("Act 321") unlawfully by permitting construction upon submerged lands and not requiring HSP to produce proper evidence of deed or title ("Claim II"); and (4) that City Council does not have standing to challenge the validity of HSP's submerged lands license on the grounds that the City lacked the power to grant the license. Accordingly, we deny Claim I and dismiss Claim II in the state legislators' Petition for Review, and we dismiss City Council's Petition for Review in its entirety.*fn1

On December 20, 2006, the Gaming Control Board awarded a Category 2 Slot Machine license in Philadelphia to HSP, pursuant to the Pennsylvania Race Horse Development and Gaming Act, 4 Pa.C.S. §1101 et seq. ("Gaming Act"). The Gaming Board issued its Order and Adjudication on February 1, 2007. On March 2, 2007, Riverwalk Casino, L.P., an unsuccessful applicant for the license, filed a petition for review pursuant to 4 Pa.C.S. §1204, challenging the Gaming Board's Order and Adjudication. On July 17, 2007, the Gaming Board's Order and Adjudication was affirmed by this Court. Riverwalk Casino v. Pa. Gaming Control Bd., 926 A.2d 926 (Pa. 2007).

In anticipation of the award of casino licenses in the City of Philadelphia, the City Council of Philadelphia had enacted an ordinance on February 23, 2006, adding Chapter 14-400 to the provisions of the Philadelphia Code that govern zoning and planning. The Ordinance created a zoning classification referred to as a Commercial Entertainment District ("CED"). Phila. Code §14-401(1). Under the CED ordinance, a plan of development is submitted to the Philadelphia Planning Commission for approval. After a plan of development is approved by the Planning Commission, it is submitted to City Council.

On March 26, 2007, HSP submitted a proposed Plan of Development to the Planning Commission. On May 22, 2007, the Planning Commission held a public hearing and approved HSP's Plan of Development. Notwithstanding the Planning Commission's approval, no action was taken by City Council on three bills comprising the CED legislation that previously had been introduced before City Council on May 24, 2007.

On October 25, 2007, HSP filed a Petition for Review with this Court, requesting that an order be issued directing the City of Philadelphia and City Council to comply with their statutory duties to implement the Gaming Board's decision to locate a casino at HSP's site in Philadelphia. On December 3, 2007, this Court entered a Per Curiam Opinion and Order declaring, inter alia, that HSP's Plan of Development was finally approved. HSP Gaming, L.P. v. City Council, 939 A.2d 273 (Pa. 2007), reargument denied (Dec. 31, 2007). During the pendency of the litigation, HSP submitted an application on October 29, 2007, to the Commerce Department for a license permitting construction or improvements on submerged lands pursuant to 53 P.S. §14199 (referred to herein as "Act 321") and Chapter 18-100 of the Philadelphia Code. Consistently with its approved Plan of Development, HSP requested permission to construct upon lands in the Delaware River immediately adjacent to the property for its casino. Act 321 provides:

Whenever any person or persons shall desire to construct, extend, alter, improve or repair any wharf, or other building in the nature of a wharf, or bridge, or other harbor structures, situate wholly within any city of the first class, such person or persons shall make application to the director, stating in writing the nature and extent of such proposed structure, extension, alteration, improvement or repair, and file in the office of the director the plans and specifications showing fully the proposed structure, extension, alteration, improvement or repair, and produce his or her deed or deeds, or other evidence of title, to the premises on which such proposed structure, extension, alteration, improvement or repair is to be erected or made, -where-upon, if such proposed structure, extension, alteration, improvement or repair will encroach upon the waterway, the director shall give notice of the time and place of hearing such application, to all parties interested, by advertising twice a week for two successive weeks, in two newspapers of general circulation published within the said city, and by posting notice upon the said premises; and if the director, upon such hearing, or without such hearing where such hearing is not required by the provisions hereof, shall approve such proposed structure, extension, alteration, improvement or repair, and the plans and specification submitted therefor, he shall give his assent to, and issue a license or permit to be recorded in his office, in a book to be kept by him for that purpose, and such license or permit shall not be unreasonably withheld; Provided, That necessary repairs, costing one hundred dollars or less and not affecting the stability or strength of the structure, may be made without first procuring a license or permit.

Whenever any person or persons shall desire to construct, extend, alter, improve or repair any structure to be erected, or already erected, on ground supported by bulkheads, and to be used, or already used, for the purpose of loading or unloading passengers or freight on or from vessels; or any structure to be physically connected, or already physically connected, or to be used or already used, as appurtenant to any wharf or structure hereinbefore described, situate within any city of the first class, - and for such purpose he or they shall have applied for a permit from the Bureau of Building Inspection in said city, the said Bureau of Building Inspection shall notify the director of the Department of Wharves, Docks and Ferries, of such application, and shall thereafter grant the permit applied for, only when the application shall have received the approval of the said director, which he is hereby empowered to grant.

The cities of the first class may, by ordinance, regulate and determine the license fees for the license and approval required by the provisions of this act.

53 P.S. §14199.*fn2

Act 321 is implemented by Section 18-103 of the Philadelphia Code, which states:

(1) A permit shall be obtained before any pier, wharf or other harbor structure is built, extended, altered, improved or repaired, other than necessary repairs of the existing structure not more than $300.

(2) Application for such permit shall be made to the Department of Licenses and Inspections in such form as the Department requires

(a) No permit shall be issued unless the proposed construction will conform to the regulations of the Department of Commerce.

(3) If the proposed structure, extension, alteration, improvement or repair will encroach upon the waterway, no permit shall be granted until a public hearing on the application has been held by the Department of Commerce, preceded by notice by advertisement twice a week for two successive weeks in two newspapers of general circulation published in the City.

(a) The applicant for the license shall arrange and pay for the advertisements and furnish the Department of Licenses and Inspections with proof of such advertisement prior to the hearing.

(4) The fee for the issuance of a permit shall be $1.50 per $1,000 cost of construction up to $100,000 and $.75 for each additional $1,000 cost of construction thereafter, but the fee shall not be less than $10 where a public hearing is required, nor for less than $3 where no public hearing is required.

(5) The Department of Licenses and Inspections may itself or by contract remove any structure built without the permit required by §18-103(1) or in violation of the regulations of the Department of Commerce, the cost to be charged against the owner. The Law Department may take such action for the collection of costs, by lien or otherwise, as may be authorized by law.

Following the required notice by advertisement, a public hearing was conducted on HSP's application by the City of Philadelphia Department of Commerce on November 15, 2007.*fn3 Notwithstanding that the narrow issue at the hearing was the submerged lands license, then Director of Commerce Naidoff entertained the opinions of various legislators, including Senator Fumo and Councilman DiCicco, concerning the physical location of the casinos. The public hearing record includes statements by proponents and opponents of casino development regarding the impact of the licensed gaming facility on use of the waterfront, tourism, convention center business, job creation, community benefits, residential development, traffic, and neighborhood concerns. Commerce Director Naidoff issued a detailed decision setting forth her findings of fact and conclusions of law on behalf of the Commerce Department on November 27, 2007.

In her decision, the Commerce Director began by noting that, "[p]ublic testimony at the Hearing largely focused on whether the Site is an appropriate location for a casino, rather than the narrow issue before me, which is whether to grant a license to develop over the Applicant Submerged Land[s]. The location of the Philadelphia casinos has been decided by the Gaming Control Board, and it is beyond my authority to change such a decision." November 27, 2007 Decision of Director of Commerce at 2 n.1 (citations omitted).

The Commerce Director then concluded that HSP had complied with the requirements of Act 321 and the provisions of Section 18-103 of the Philadelphia Code. The Commerce Director determined that licensing the use of the Applicant Submerged Lands was in the public interest and would positively enhance the impact of the development on the Delaware River. The Commerce Director authorized the issuance of a license to permit HSP to use the portion of the Applicant Submerged Lands as described in HSP's Plan of Development that had been approved by the Planning Commission on May 22, 2007. The license "authorize[d] the use of submerged lands from the low water mark to the end of the permitted development at the easternmost point of the Plan of Development approved by the Planning Commission." November 27, 2007 Decision of Director of Commerce at 9 n.4.

Pursuant to Phila. Code. §18-103(4), the fee for the issuance of a permit is calculated based upon estimated construction costs on the Applicant Submerged Lands. The Commerce Director determined that the total construction costs would be $374,460,000.00. Applying the formula set forth in §18-103(4), the fee was calculated to be $282,270.00. HSP paid the fee.

The state legislators and City Council subsequently filed the instant Petitions for Review, both asserting that the City of Philadelphia did not have the authority to issue the license. They contend that the General Assembly possesses the sole and exclusive authority to authorize the conveyance of a legally enforceable interest in or to license the use of submerged lands belonging to the Commonwealth of Pennsylvania, including those in the Delaware River. In the alternative, the state legislators assert that because Act 321 allows for the issuance of a license to "construct, extend, alter, improve or repair any wharf, or other building in the nature of a wharf, or bridge or other harbor structures[,]" the Director of Commerce exceeded her authority by licensing the construction of a gaming facility upon submerged lands. See 53 P.S. §14199. The state legislators also alternatively assert that in issuing HSP's submerged lands license, the Commerce Director failed to adhere to the requirement in Act 321 that HSP "produce [its] deed or deeds, or other evidence of title, to the premises on which such proposed structure . is to be erected[.]" Id.

The Petitions for Review have been brought to this Court pursuant to Section 1506 of the Gaming Act, which states:

In order to facilitate timely implementation of casino gaming as provided in this part, notwithstanding 42 Pa.C.S. ยง933(a)(2) (relating to appeals from government agencies), the Supreme Court of Pennsylvania is vested with exclusive appellate jurisdiction to consider appeals of a final order, determination or decision of a political subdivision or local instrumentality involving zoning, usage, layout, construction or occupancy, including location, size, ...


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