Act 33 was enacted and signed into law on June 18, 2018 to provide counties with greater flexibility in combating blight. The new law, which takes effect 60 days after signing, allows a county to designate a redevelopment authority as the land bank for its jurisdiction.

Since 2012, counties have had the ability to establish land banks under the Pennsylvania Land Bank Act. Land banks are independent public entities created to expedite the process of acquiring and rehabilitating blighted, dilapidated and abandoned real estate. They often work together with redevelopment authorities to help eliminate blight in local communities. But while land banks have been crucial in this fight, many Pennsylvania counties have had active redevelopment authorities performing similar functions for over half a century.

Originally sponsored by Sen. Pat Stefano (R-Fayette) as SB 667, Act 33 will allow redevelopment authorities to possess powerful tools previously available only to land banks, such as acquiring tax-delinquent properties at judicial sale without competitive bidding, discharging tax liens on those properties and sharing up to half the real estate taxes for five years after their conveyance. For counties that have active redevelopment authorities but do not have land banks, the law will eliminate the need to form a new entity and staff a new board before being able to use these tools.

Act 33 does not limit the powers of land banks or restrict the ability of a county to use both a land bank and a redevelopment authority. The law simply provides more flexibility for counties to efficiently use their limited resources. Given the lack of resources and funding in many communities, the new law could benefit those counties with active redevelopment authorities already engaged in the elimination of blight. Act 33 could also help save time, money and resources by eliminating the need to establish separate boards, bylaws and other mechanics that may be cost-prohibitive and impede effective blight reduction efforts.

In a prior post we highlighted a recent podcast that McNees real estate attorney Kandice Hull recorded on eminent domain. Interested to know more about this topic? You can find her additional thoughts, including on the Supreme Court’s decision in Kelo v. City of New London, below.

Did you miss part 1 in this series? You can get caught up here. And, be sure to subscribe to our blog – as part 3 is in the works!

A recent Commonwealth Court decision affirmed that municipalities within Pennsylvania are not immune from claims of adverse possession.  In City of Philadelphia v. Galdo, 181 A3d. 1289 (Pa. Commw. 2018), the Commonwealth Court held that the City of Philadelphia had lost title to a property that it had previously condemned to an adjacent property owner who adversely possessed the property. Continue Reading Municipalities Can Lose Property Through Adverse Possession

McNees attorney Claudia Shank recently authored a series of blog posts on the McNees Land Use Blog on the Supreme Court’s revival of the Environmental Rights Amendment to the Pennsylvania Constitution. The Environmental Rights Amendment provides in pertinent part:

Pennsylvania’s public natural resources are the common property of all the people including generations yet to come.  As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of the people.

The Court’s revival of the Environmental Rights Amendment has repercussions for municipalities, as the Commonwealth’s trustee obligations “are not vested exclusively in any single branch of Pennsylvania’s government”; rather, “all agencies and entities of the Commonwealth government, both statewide and local, have a fiduciary duty to act toward the corpus with prudence, loyalty, and impartiality.”

Head on over to the McNees Land Use Blog for Claudia’s complete analysis.

As we prepare to say goodbye to 2017 and welcome a new year, we thought we’d take a moment and revisit some of our favorite stories from the last twelve months that we’ve followed on the McNees Public Sector Blog.

To all our readers – thanks for visiting! And may you all have a happy and prosperous new year!

– Tim Horstmann

Monetization is the process of converting assets into economic value. Looking for options to generate greater revenue, municipalities and public sector entities have begun to consider the transfer to private operators of a greater variety of public assets than in the past. There has also been the development recently of more creative and profitable public-private partnerships. Continue Reading Generating Value from Public Assets

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.

Continue Reading Combating Blight: New Tools for the Ongoing Municipal Battle

Municipalities have been looking for new ways to “monetize” publicly owned assets to help fund pension obligations and relieve budgetary pressures. Especially attractive is the transfer of a municipal water or wastewater system to a private operator.

Such a transfer may be accomplished by entering into a long-term lease with a private operator, under what is known as a “concession” agreement. A public sector entity instead might opt for an outright sale of assets. Too often, though, parties jump into a deal unaware of serious title defects with the real estate underlying the facilities in question.

Before a private operator can close on a concession, it will need to obtain a commitment for title insurance covering the real estate to be transferred. To be insurable, however, municipalities may have to resolve a web of title defects allowed to grow unchecked through a series of acquisitions by donation, dedication or condemnation. Moreover, the sheer number of properties that support a typical water or wastewater system greatly increases the odds that such defects are present.

Standards for resolving defects tend to be set by the insurance underwriter. For example, a title company may require a municipality to obtain quitclaim deeds, deeds of dedication or even to bring actions for declaratory judgment or to quiet title where there is no clear record of public dedication or acceptance. As with private property, public assets are not insurable without a record of ownership.

Even where ownership is undisputed, a vesting deed may contain restrictions causing defects as to insurability for a private entity. If a property was acquired by donation, the vesting deed may limit land use to a specific purpose—a purpose which may not be compatible with the intended use of a private operator. Such a deed would need to be amended to eliminate the restriction. But depending on other conditions in the deed, court approval may be required to do so.

When representing a municipality or other public entity in a sale or concession, attorneys should be prepared to track down past builders, developers, lenders and homeowner associations to obtain approvals, releases or any other remedy that may be required by the title company. However, being able to negotiate alternatives with the underwriter—and knowing what options are available—can help save a public client significant time and money.

I recently published an article in The Legal Intelligencer titled, “Real Estate Matters in Monetizing Municipal Assets.” From the article:

Municipalities under financial pressure from rising budgetary costs and long-term obligations are increasingly looking for options to “monetize” publicly owned assets through transfers to private entities. Especially attractive are municipal water and wastewater systems. With the delivery of water and wastewater utility services becoming increasingly complex and subject to more and more regulation each year, municipalities have an additional incentive to sell or lease such assets beyond any expected financial windfall.

Monetization is usually accomplished by entering into a long-term lease with a private operator, under what is known commonly as a “concession” agreement. Municipalities might instead opt for an outright sale of assets. Whatever the process, it almost always involves the conveyance of significant real estate interests necessary to support the facilities in question. Too often, however, public sector entities jump into deals before undertaking thorough due diligence and without resolving thorny real estate issues to ensure a smooth transition.

You can read the entire article here (no paywall).