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In In re Appeal of Council Member Cindy Bass, 2024 Pa. Commw. LEXIS 172 (July 19, 2024), the Pennsylvania Commonwealth Court affirmed, in part, a decision by the City of Philadelphia’s Zoning Board of Adjustment (ZBA), finding that a real estate developer’s evidence established an unnecessary hardship because it proved that the property, a vacant lot that needed costly environmental remediation, was practically valueless without the granting of a variance under the Philadelphia Zoning Code.

In In re Appeal of Bass, a long-vacant lot on Chew Avenue in the East Mount Airy section was slated for transformation into a four-story apartment building following a contentious approval process that saw local residents clash with the real estate developer of the property, the opinion said.

The property, consisting of approximately 14,000 square feet, once an auto repair shop, was located in a CA-1 zoning district where multi-family residential use was specifically prohibited, the opinion said.

According to the opinion, the property had been abandoned and required extensive environmental cleanup, including the removal of underground petroleum tanks and contaminated soil.

In the summer of 2020, the real estate developer applied for a zoning permit with the city of Philadelphia’s Department of Licenses and Inspections (L&I) to build a 37-unit residential building with accessory parking, the opinion said.

Ultimately, L&I denied the zoning permit application by issuing a notice of refusal, the opinion said.

In response, the real estate developer appealed to the Notice of Refusal to the ZBA, the opinion said.

The real estate developer met with the community before the hearing which took place in front of the ZBA and revised its plans and drawings to address community concerns about traffic, stormwater, and proximity to a nearby public park.

In doing so, the real estate developer proposed a reduction in the amount of residential dwelling units, relocating the parking garage entrance in the building, and increasing the setback of the building from the public park, the opinion said.

The real estate developer also pledged to provide an annual donation to the park for a decade, the opinion said.

Despite these proposed modifications to the real estate development project, opposition remained strong within the community.

During the hearings before the ZBA, community members and local officials, including District Councilmember Member Cindy Bass, expressed concerns about the impact on traffic, privacy, and the neighborhood’s character, the opinion said.

Some community members proposed converting the property into green space instead, the opinion said.

Testimony presented at the hearing by the ZBA from the real estate development team highlighted the financial impracticality of development on the property and emphasized the extensive environmental remediation needed.

The real estate developer’s expert witness estimated that the cost for environmental remediation would exceed $380,000.

At the conclusion of the hearings, Philadelphia’s Planning Commission recommended approval of the zoning variance requests, citing Philadelphia’s 2035 Plan, which supported rezoning the property for multifamily use, the opinion said.

Ultimately, the ZBA voted to grant the variance requests, stating that the proposed real estate development project would be in harmony with the character of the neighborhood and that the zoning variance requests constituted the minimum needed to afford relief.

District Councilmember Bass, among others, filed an appeal of the ZBA’s ruling to the Philadelphia County Common Pleas Court.

The trial court thereafter upheld the ZBA’s ruling to grant the zoning variance requests, acknowledging that the real estate developer’s hardships and the neighborhood’s evolving nature.

Bass and others then appealed the trial court’s ruling to the Commonwealth Court.

On appeal, the appellants raise the following issues: the ZBA erred and abused its discretion in holding that the denial of the zoning variance requests would result in an unnecessary hardship; the ZBA erred and abused its discretion in holding that the zoning variance requests were the minimum necessary to afford relief from the Philadelphia Zoning Code; and the ZBA erred and abused its discretion in holding that the zoning variance requests would not unduly burden the transportation, water, sewer and park facilities in the neighborhood.

The appellants initially argued that the ZBA erred in determining that the real estate developer demonstrated an unnecessary hardship.

They claimed that the real estate developer’s need for environmental remediation, which was factored into its purchase price, should not have been considered in granting a variance, and furthermore, argued that the real estate developer failed to establish that none of the commercial uses allowed in the CA-1 zoning district were economically viable.

The real estate developer countered that evidence presented to the ZBA, showing that commercial development was not feasible due to the property’s blighted condition, the prohibitive cost of environmental cleanup, and the lack of a viable commercial market on Chew Avenue where the property was located.

Citing to Hertzberg v. Zoning Board of Adjustment of City of Pittsburgh, 554 Pa. 249 (1998), the Commonwealth Court pointed out that, in cases involving use variances, unnecessary hardship can be established by proving that the property cannot be used for a permitted purpose due to its physical features; conforming the property for a permitted use would be prohibitively expensive; or the property holds no value for any permitted purpose.

Relying upon Wilson v. Plumstead Township Zoning Hearing Board,594 Pa. 416 (2007), the Commonwealth Court noted that, while economic hardship alone is insufficient to justify a zoning variance request, evidence of prohibitive costs and market conditions can support a claim of unnecessary hardship.

According to the Commonwealth Court, the ZBA did not abuse its discretion by finding that the property’s physical condition and high remediation costs constituted unnecessary hardship and that the property was in a transitioning neighborhood and that the high cost of remediation, though already considered in the purchase price, was a valid factor in the hardship analysis.

The Commonwealth Court then addressed whether the ZBA erred in concluding that the zoning variances requested by the real estate developer were the minimum necessary and the least modification possible under the Philadelphia Zoning Code.

The real estate developer responded by pointing out that the ZBA had already reduced the number of residential dwelling units allowed in the building from 37 to 33 and adjusted the parking garage entrance to minimize the impact of the property to the community, and the real estate development was also deemed to have less impact on traffic, parking, and stormwater runoff compared to the permitted commercial uses allowed under the CA-1 zoning classification.

The Commonwealth Court noted that the minimum variance criterion is more challenging to apply in use variance cases than in dimensional variance cases, citing to Paganico v. Zoning Hearing Board of Municipality of Penn Hills, 227 A.3d 949, 954 (Pa. Cmwlth. 2020).

The Commonwealth Court emphasized that previous case law, including Paganico and In re Garcia, 276 A.3d 340 (Pa. Cmwlth. 2022), established that demonstrating a proposed use has less impact and is more compatible with the surrounding neighborhood can satisfy the minimum variance requirement.

However, the appellants argued that, based on Ridge Park Civic Association v. Zoning Board of Adjustment, 240 A.3d 1029 (Pa. Cmwlth. 2020), the real estate developer needed to prove that 33 residential dwelling units was the minimum required to generate a reasonable profit.

The Commonwealth Court found this argument flawed, noting thatRidge Park involved a quantitative departure from a specific zoning requirement, whereas the current case involved a less intensive residential use compared to the permitted commercial use.

However, the Commonwealth Court found that the ZBA’s ruling lacked sufficient explanation regarding how the zoning variance requests granted met the minimum necessary criterion, therefore, it ordered a remand to the ZBA, seeking a detailed explanation of its findings on this issue.

Finally, the Commonwealth Court addressed the appellant’s claim that the approved property development would have adverse consequences in their neighborhood.

The appellants specifically expressed concerns about crowding, traffic, schools, the need for quiet space in their community, and the overall density of the population. They felt that their concerns were dismissed by those who have no connection to the community.

The Commonwealth Court reiterated that the ZBA based its decision on the finding of unnecessary hardship upon the lack of a commercial market for a commercial use of the property under the CA-1 zoning classification along with the cost of remediating the environmentally damaged property and did not credit the testimony from the members of the community about the alleged adverse impact on the community.

Alan Nochumson is a shareholder of Nochumson P.C., a legal services firm with a focus on real estate, land use & zoning, litigation, and business counseling for the people of Pennsylvania and New Jersey. Nochumson is a frequent author and lecturer on issues commonly confronting businesses, individuals and professionals. You can reach him at 215-600-2851 or alan.nochumson@nochumson.com.

Alex Goldberg is an associate attorney at the firm. You can reach him at 215-399-1346 or alex.goldberg@nochumson.com.