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Summit Township Industrial and Economic Development Authority v. County of Erie

August 10, 2009

SUMMIT TOWNSHIP INDUSTRIAL AND ECONOMIC DEVELOPMENT AUTHORITY; SUMMIT TOWNSHIP; SUMMIT TOWNSHIP SEWER AUTHORITY; SUMMIT TOWNSHIP WATER AUTHORITY; AND PERRY HI-WAY HOSE COMPANY
v.
THE COUNTY OF ERIE, PENNSYLVANIA; ERIE COUNTY GAMING REVENUE AUTHORITY; MILLCREEK TOWNSHIP; MILLCREEK TOWNSHIP SEWER AUTHORITY; MILLCREEK TOWNSHIP WATER AUTHORITY; MCKEAN TOWNSHIP; MCKEAN TOWNSHIP SEWER AUTHORITY; MCKEAN TOWNSHIP WATER AUTHORITY; WATERFORD TOWNSHIP; WATERFORD TOWNSHIP SEWER AUTHORITY; WATERFORD TOWNSHIP WATER AUTHORITY; AND GREENE TOWNSHIP
APPEAL OF: THE COUNTY OF ERIE, PENNSYLVANIA AND ERIE COUNTY GAMING REVENUE AUTHORITY



The opinion of the court was delivered by: Judge McGINLEY

Argued: May 6, 2009

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge, HONORABLE BERNARD L. McGINLEY, Judge, HONORABLE DAN PELLEGRINI, Judge, HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE ROBERT SIMPSON, Judge, HONORABLE MARY HANNAH LEAVITT, Judge, HONORABLE JOHNNY J. BUTLER, Judge.

OPINION

Erie County and the Erie County Gaming Revenue Authority (ECGRA) (collectively, Appellants) appeal from an August 4, 2008, order of the Court of Common Pleas of Erie County (common pleas court) that granted the motion for judgment on the pleadings*fn1 filed by Summit Township Industrial and Economic Development Authority (STIEDA), Summit Township, Summit Township Sewer Authority, Summit Township Water Authority, and Perry Hi-Way Hose Company (collectively, Appellees) and from a September 5, 2008, order of the common pleas court that clarified in part its order of August 4, 2008.*fn2

I. Relevant Pleadings*fn3

A. Amended Complaint

On April 4, 2008, Appellees filed an amended complaint for declaratory judgment and alleged the following:

1. Plaintiff, Summit Township Industrial and Economic Development Authority ("STIEDA"), is a body politic and corporate created and existing pursuant to the Pennsylvania Economic Development and Financing Law, 73 Pa.Stat. §371 et seq.....

2. Plaintiff, Summit Township*fn4, is a second class township as defined in the Pennsylvania Second Class Township Code, 53 Pa.Stat. §65101 et seq.....

3. STIEDA was incorporated by Summit Township. (emphasis added).....

7. Defendant, [t]he County of Erie*fn5, Pennsylvania ("Erie County"), is a Pennsylvania third class county.... (emphasis added).

8. Defendant, Erie County Gaming Revenue Authority ("ECGRA"), is a body politic and corporate created and existing pursuant to the Pennsylvania Economic Development and Financing Law, 73 Pa.Stat. §371 et seq..... (emphasis added).....

26. On July 5, 2004, the Pennsylvania Legislature enacted the Pennsylvania Race Horse Development and Gaming Act, 4 Pa. Cons.Stat. §110l et seq. (the "Gaming Act"). (emphasis added).

27. In accordance with 4 Pa. Cons.Stat. §1302, a Category 1 gaming license has been issued to Presque Isle Downs, Inc., to operate Presque Isle Downs & Casino ("Presque Isle Downs"), as a licensed facility. (emphasis added).

28. Presque Isle Downs' facility is located at 8199 Perry Highway in Summit Township, Erie County, Pennsylvania. (emphasis added).

29. Presque Isle Downs' facilities include a thoroughbred race track.

30. Presque Isle Downs commenced operations on or about February 28, 2007, which operations included wagering. (emphasis added).

31. Presque Isle Downs' facilities are located entirely within Summit Township. (emphasis added).

32. Summit Township is designated as a second class township under the Pennsylvania Municipalities Planning Code, as provided in 53 Pa.Stat.Ann. §65201. (emphasis added).

33. The municipalities which are contiguous to Summit Township are Millcreek Township, McKean Township, Greene Township and Waterford Township. (emphasis added).

34. Pursuant to §1403(c)(2)(ii)(D) of the Gaming Act... and because Presque Isle Downs is a Category 1 licensed facility with a thoroughbred race track located in a county of the third class, one percent (1%) of the gross terminal revenue from Presque Isle Downs, plus one-half of the excess revenue arising as a consequence of the budgetary limitation in 4 Pa.Cons.Stat. §1403(c)(3)(v), is to be distributed "to the county hosting the licensed facility... for the purpose of municipal grants within the county in which the licensed facility is located" (the Restricted Gaming Revenue"). (emphasis added).

35. As a result of the operation of Presque Isle Downs during 2007, Erie County has been receiving Restricted Gaming Revenue. (emphasis added).....

37. It is believed, and therefore averred, that Erie County currently holds at least $5,138,961.77 in Restricted Gaming Revenue received from the operation of Presque Isle Downs during 2007. (emphasis added).....

39. Summit Township has designated and appointed STIEDA[*fn6 ] to act on behalf of Summit Township in seeking grants of Restricted Gaming Revenue under §1403(c)(2)(v). (emphasis added).

40. Since Presque Isle Downs is located in Summit Township, Summit Township, through STIEDA, is authorized to seek and be awarded grants from the Restricted Gaming Revenue pursuant to the first sentence of §1403(c)(2)(v). (emphasis added).

41. Summit Township, as the municipality in which Presque Isle Downs is located, is authorized to seek and be awarded grants from the Restricted Gaming Revenue pursuant to the first sentence of §1403(c)(2)(v).

42. Under Erie County's ordinances as described below, public authorities are eligible to receive grants from the Restricted Gaming Revenue (Report, infra, p. 7), and therefore under Erie County's ordinances as described below, Summit Township Sewer Authority and Summit Township Water Authority are eligible to receive grants from the Restricted Gaming Revenue.....

44. As of September 12, 2007, although Erie County had received Restricted Gaming Revenue prior to that date, Erie County had not adopted any policy or procedure relating to the application for or award of grants pursuant to §1403(c)(2)(v), and it had not designated any "economic development or redevelopment authority" to administer the grants in accordance with the second sentence of §1403(c)(2)(v).

45. On September 12, 2007, STIEDA submitted to Erie County seven applications for grant funding from the Restricted Gaming Revenue.... (emphasis added).

46. STIEDA believes that each of the seven applications for grant funding submitted on September 12, 2007, meets the criteria for grant funding under §1403(c)(2)(v). (emphasis added)....

48. Erie County has not responded to or made any decision with respect to any of the seven grant applications submitted by STIEDA on September 12, 2007.

49. On December 18, 2007, County Council of Erie County ("County Council)" approved the passage of Ordinance No. 165 of 2007, entitled "Authorizing the Organization of the Erie County Gaming Revenue Authority." (emphasis added).

50. On December 26, 2007, the County Executive of Erie County (the "County Executive"), signed Ordinance No. 165 of 2007, thereby enacting that ordinance. A copy of Ordinance No. 165 of 2007 is attached to this Amended Complaint as Exhibit 2.

51. On December 18, 2007, County Council approved the passage of Ordinance No. 166 of 2007, entitled "Adoption of the Erie County Gaming Revenue Committee Report." (emphasis added).

52. On December 26, 2007, the County Executive signed Ordinance No. 166 of 2007, thereby enacting that ordinance........

55. On December 18, 2007, County Council approved the passage of Ordinance No. 167 of 2007, entitled "Amending the Administrative Code of Erie County." (emphasis added).....

57. By adopting Ordinance No. 166 of 2007, Erie County, through County Council and the County Executive, expressly approved "the gaming structures delineated in the Erie County Gaming Revenue Committee Report", which report is appended to Ordinance No. 166 of 2007.

58. In Ordinance No. 165 of 2007, Erie County authorized the formation of ECGRA. (emphasis added).

59. At the time this action was commenced, ECGRA was not yet in existence and therefore ECGRA could not be made a party to this litigation at the time this action was commenced.

60. By the adoption of Ordinance Nos. 165, 166 and 167, Erie County has designated ECGRA as the "economic development or redevelopment authority" to administer grants of the Restricted Gaming Revenue pursuant to the second sentence of §1403(c)(2)(v). (emphasis added).

61. By the adoption of ordinance No. 166, Erie County has expressly adopted the report of the Erie County Gaming Revenue Committee (the "Report").

62. By the adoption of Ordinance No. 166, Erie County may have intended to adopt the Program Guidelines which are Exhibit 4 to this Complaint.....

Count One

66. In the Report, Erie County adopts the following interpretation of the third sentence of §1403(c)(2)(v). According to the Gaming Act, the grants shall be used to fund the costs of:

* Human Services

* Infrastructure improvements

* Facilities

* Emergency services

* Health

* Public safety expenses associated with the licensed facility operations.

****

The following are the definitions of the uses of restricted funds established by the Committee:

1. Human Services -- services for the betterment of mankind. (emphasis added).

2. Infrastructure improvements -- capital costs for facilities supporting the basic function of society such as roads, power plants, transportation, sewer and water systems, and communication systems. (emphasis added).

3. Facilities -- Buildings and other structures. (emphasis added).

4. Emergency Services -- Capital and operational costs for providing Police, Fire & public safety services. (emphasis added).

5. Health -- Dealing with physical and mental well-being; disease prevention. (emphasis added).

6. Public safety expenses associated with the licensed facility operations -- eliminating any safety concerns resulting from the addition of the licensed facility in the county. (emphasis added).

The above restricted funds purpose interpretation allows Erie County flexibility in awarding grants and determining for what purpose the grants can be used. There is no specific reference to using the funds for community and economic development, but certainly those issues are captured within the intent of the six categories.

Report, pp. 1-3.....

67. Pursuant to this interpretation of the Gaming Act as adopted by Erie County, grants of Restricted Gaming Revenue can be awarded to fund the costs of "human services, infrastructure improvements, facilities, emergency services [and] health" even if those costs are not "associated with licensed facility operations."....

69. It is the position of Plaintiffs [Appellees] that the correct and lawful interpretation of the third sentence of §1403(c)(2)(v) is that all grants from the Restricted Gaming Revenue must meet two criteria: (1) the grants must be used to fund the costs of human service, infrastructure improvements, facilities, emergency services, or health and public safety expenses, and (2) such costs of human services, infrastructure improvements, facilities, emergency services, or health and public safety expenses must be associated with the licensed facility operations at Presque Isle Downs. (emphasis added).

70. It is the position of Plaintiffs [Appellees] that Erie County's interpretation of the third sentence of §1403(c)(2)(v), which is that grants from the Restricted Gaming Revenue can be used to the [sic] fund the costs of human services, infrastructure improvements, facilities, emergency services or health, regardless of whether such costs of human services, infrastructure improvements, facilities, emergency services or health are associated with the licensed facility operations at Presque Isle Downs, is unlawful and inconsistent with the Gaming Act.

71. Plaintiffs [Appellees] believe there is a real and present controversy between them and Erie County as to the correct and lawful interpretation of the third sentence of §1403(c)(2)(v). (emphasis added).....

74. To resolve the controversy between the parties, and in accordance with 42 Pa.Cons.Stat. §7533, Plaintiffs [Appellees] request a declaration by this Court that all grants from the Restricted Gaming revenue made pursuant to 4 Pa.Cons.Stat. §1403(c)(2)(v) must meet two criteria: (1) the grants must be used to fund the costs of human services, infrastructure improvements, facilities, emergency services, or health and public safety expenses, and (2) such costs of human services, infrastructure improvements, facilities, emergency services, or health and public safety expenses must be associated with the licensed facility operations at Presque Isle Downs. (emphasis added).....

Count Two

77. In the Report, Erie County adopts an interpretation of the third sentence of §1403(c)(2)(v) which limits grant awards of Restricted Gaming Revenue to "no more than 50% of the required funds." (Report, p. 7; see also Exhibit 5 and Erie County Administrative Code, Section 5, §IV.1.F.5(b)(1), (4)).....

79. It is the position of Plaintiffs [Appellees] that the correct and lawful interpretation of the third sentence of §1403(c)(2)(v) is that if during the fiscal year Erie County has received applications for grants from the Restricted Gaming Revenue which are appropriate for funding during the fiscal year in accordance with §1403(c)(2)(v), then all available Restricted Gaming Revenue must be used to fund those grant applications during that fiscal year, even if the funding of those grant applications results in funding more than 50% of the amount requested in any or all of the grant applications.... (emphasis added).

80. It is the position of Plaintiffs [Appellees] that Erie County's interpretation of the third sentence of §1403(c)(2)(v), which is that regardless of the amount of Restricted Gaming Revenue requested in applications for grants from the Restricted Gaming Revenue in a fiscal year; and regardless of whether the applications for grants from the Restricted Gaming Revenue in a fiscal year are appropriate for funding during the fiscal year in accordance with §1403(c)(2)(v), Erie County will never fund more than 50% of any one grant application, is unlawful and inconsistent with the Gaming Act.....

84. To resolve the controversy between the parties, and in accordance with 42 Pa.Cons.Stat. §7533, Plaintiffs [Appellees] request a declaration by this Court that all available Restricted Gaming Revenue must be used to fund grant applications which are submitted and appropriate for funding in accordance with §1403(c)(2)(v) during a fiscal year, even if the funding of those grant applications results in funding more than 50% of the amount requested in any or all of the grant applications. (emphasis added).....

Count Three

89. It is the position of Plaintiffs [Appellees] that the correct and lawful interpretation of the first sentence of §1403(c)(2)(v) is that grants from the Restricted Gaming Revenues may not be awarded to units of local government or public authorities created by units of local government other than the Erie County, Summit Township, Millcreek Township, McKean Township, Greene Township and Waterford Township.....

94. To resolve the controversy between the parties, and in accordance with 42 Pa.Cons.Stat. §7533, Plaintiffs [Appellees] request a declaration by this Court that pursuant to 4 Pa.Cons.Stat. §1403(c)(2)(v), grants for Restricted Gaming Revenue may not be awarded to units of local government or public authorities created by units of local government other than Erie ...


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