Blight – or urban decay – reduces property values, has been linked to higher crime rates, and is visible throughout Pennsylvania in the form of deteriorated and abandoned properties.  The Pennsylvania Neighborhood Blight Reclamation and Revitalization Act, 53  Pa.C.S. §6101 et seq. (the “Act”), provides additional tools to combat blight.  Originally passed as Act 90 of 2010 (“Act 90”), the Act subsequently was amended through the passage of Act 171 of 2014 (“Act 171”) and Act 34 of 2015 (“Act 34”).  Through the Act and related laws as well as financing opportunities, municipalities and developers have the tools necessary to reduce blight and make neighborhoods safer and more desirable.

A case study illustrates the benefits of the Act.  Philadelphia tracked the effects of the Act as applied to enforcement of a property maintenance ordinance and enforcement against owners of multiple properties.  William Penn Data Collaborative and The Reinvestment Fund, City of Philadelphia Licenses and Inspections:  Act 90 Enforcement Analysis (2014).  The question addressed by the Study was whether code enforcement would benefit or further depress blighted areas.  The clear answer was that strategic enforcement utilizing the Act significantly benefited blighted neighborhoods, especially those not in the margins (i.e., not affluent neighborhoods nor severely depressed neighborhoods).

Consider the potential value for your municipal or real estate client:  The Study found the mean sales price of properties within targeted areas increased 31.9% from 2008 to 2012 as compared to 1.6% for comparable homes outside targeted areas.  Where 80% of the properties in a targeted area were addressed, the average increase was over 48%.  Conservatively, properties that complied with the City’s citations created approximately $74 million in sales value for surrounding properties and at least $2.34 million in increased transfer tax revenue for the City.  Moreover, the City collected an estimated additional $1.1 million through fees, fines and judgments, more than covering the City’s associated enforcement and training expenses.  Developers and municipalities can further enhance redevelopment efforts by combining the Act with the procedure set forth in the Abandoned and Blighted Property Conservatorship Act, 68 Pa.C.S. §1101 et seq. (the “Conservatorship Act”), referenced below.

The Act offers municipalities the ability to streamline enforcement through the establishment of “housing courts” within a county’s court of common pleas.  A housing court enables a single judge to become intimately familiar with the property codes and repeat offenders.  The Study found the threat of the City’s housing court was a significant factor leading to increased compliance with the City’s citations.  Accordingly, from a municipal standpoint, municipalities and the courts of common pleas should be encouraged to consider establishing such courts.

The Act also offers municipalities significant new tools to combat blight.  Prior to its passage, municipalities could only place liens against an offending property.  Section 6111 of the Act permits additional leverage for municipalities when a property is in “serious violation of a code,” including, for example, building, housing, and property maintenance codes, or when a property becomes a “public nuisance” because of its condition.  Specifically, the Act grants municipalities the authority to initiate in personam actions against property “owners.”  An in personam action may be initiated when an owner fails to take a “substantial step to correct” a continuing violation for a period of six months “following receipt of an order to correct the violation.”  In addition, municipalities may recover penalties imposed plus any lawfully-incurred costs of remediation if it remedied the violation.  It is important to note the Act specifically defines the terms “public nuisance,” “serious violation” and “substantial step”; therefore, any attorney preparing to utilize the Act should familiarize herself with each definition.

Equally powerful is Section 6112 of the Act.  Section 6112 permits municipalities to attach a lien to an owner’s assets following a judgment or order by a court against the owner for an adjudication under Section 6111.  For example, if “Borough A” obtains a judgment under the Act against the owner of a property, Borough A may place a lien against that property, the owner’s personal residence located in “Township Z,” and any other property owned by the owner located within the Commonwealth.  Moreover, under certain circumstances giving rise to criminal liability, the Act permits municipalities to extradite nonresident owners to face prosecution in Pennsylvania.

Lastly, the Act limits owners of blighted property from expanding their holdings.  Indeed, Section 6131 of the Act permits a municipality or a board (e.g., a zoning hearing board or historic architecture review board) to deny municipal permits, such as building permits, variances, and occupancy permits, when there exists a final and unappealable government collection delinquency or a judgment pursuant to Sections 6111 and 6112 of the Act against any property owned by the applicant in Pennsylvania.  There are exceptions, including when the permit is necessary to correct a violation.

The Act has since been amended by the passage of Act 171 and Act 34.  Act 171 clarified that the definition of “code” is only those codes related to “the use or maintenance of real property.”  However, it also added “other responsible part(ies)” residing outside Pennsylvania, who are responsible for property within Pennsylvania, as individuals who may be extradited under Section 6113 of the Act.  Thus, both property owners and those managing their properties from outside the Commonwealth may be extradited pursuant to the Act.

Changes to the Act established by Act 34 are even more significant.  Act 34 added Section 6115 which defines the offense of “failure to comply with a code requirement” and sets the grading of that offense.  The criminal offense of “failure to comply with a code requirement” occurs when (1) the owner of real property is “convicted of a second or subsequent serious violation of the same provision of the [code] for the same property,” (2) “the violation poses a threat to the public’s health, safety or property and the owner has not taken a substantial step to correct the violation,” and (3) “the violation is considered a public nuisance and the owner has not made a reasonable attempt to correct [it].”  A second conviction of a serious violation of the same provision of a code relating to the same property is a misdemeanor of the second degree, while three or more convictions warrant a misdemeanor of the first degree.  So, while the Act can benefit developers and municipalities, alike, owners should be forewarned that criminal charges can be brought against them if they fail to keep their properties up to code.

Unfortunately, Section 6115 of the Act is ambiguous and internally inconsistent.  Section 6115(a) requires that “all of” the above elements apply even though the rest of the Act is applicable for any one of the elements.  In addition, combining the offenses creates irreconcilable interpretations.  For example, #2 requires that the offending property owner take a “substantial step” (a defined term and an affirmative action) to correct the violation, while #3 requires only a “reasonable attempt” to correct the violation.  Regardless, the groundwork has been laid and hopefully the courts or the General Assembly will clarify or clear the internal inconsistencies.

In addition, Act 133 of 2016 amended 68 Pa.C.S. §1081 and reduced from 18 to 12 months the amount of time new owners of property have to make their property comply with municipal codes.  However, code compliance alone is not enough; capital investment and land reinvestment by municipalities and developers are also needed to effectively combat blight.  To that end, the General Assembly passed Act 152 of 2016 permitting counties to opt-in to a program by which they charge an additional $15.00 to record deeds.  The money received from that fee is placed in a fund and used to lessen the expense incurred by municipalities that demolish blighted property after acquiring it.  Additionally, the Conservatorship Act permits municipalities or another “party in interest” (e.g., a developer) to take control of a noncompliant property to either bring it up to code or demolish it, and then recover related expenses.  Together, those acts help lighten the burden of investment and reinvestment.

The Act and the other laws described above, in addition to financing opportunities, provide municipalities and developers with significant tools to combat blight.  Of course, it all starts at the ordinance level and municipal enforcement of its code is only possible to the extent the code is enforceable.  However, if enforceable, municipalities and even developers have the power to force code compliance.

Reprinted with permission from the February 28, 2017 issue of The Legal Intelligencer © 2017 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.