Equus Capital Partners scored a huge win for itself and
developers across the state when the Pennsylvania Supreme Court ruled in its
favor regarding a proposed mixed-use development in Newtown Square, Pa.
The 4-to-3 ruling issued yesterday concludes a years-long
battle over Ellis Preserve Town Center and a so-called planned residential
development ordinance Newtown Square officials signed off on in 2009. A planned
residential development, or PRD, is a state law that allows mixed-use development
in municipalities.
The case has far reaching implications for developers and
townships. The ordinance had the potential to totally alter the way developers
and municipalities have approached land development and planning for more than
four decades.
Among other things, the court determined the ordinance
passed by Newtown Square for Ellis Preserve was appropriately drafted and
complies with the Pennsylvania Municipalities Planning Code.
“It confirmed how developers and legal practitioners had
been using the PRD statute and law,” said Rob Palumbos, an attorney with Duane
Morris who represented Equus Capital, a Philadelphia real estate firm. Rob
Byer, Marc Brookman and Andrew Sperl were also on the Duane Morris legal team.
If the court had gone the other way, it would have been
much more difficult for developers to look at large tracts of land and make
plans for them that facilitate green and smart growth, Palumbos said. It would
also have made it more challenging for municipalities to get a variety of uses that
their communities may need.
The case stems from a challenge National Realty Corp., a
Springfield, Pa., developer brought against Newtown Square over its approval of
a PRD ordinance for Ellis Preserve. Equus Capital joined Newtown Square in
defending the plan and ordinance. In addition, several other real estate
companies, including O’Neill Properties Group, Brickstone Cos., Korman
Communities and the Philadelphia Real Estate Council, which is a consortium of
developers, filed a brief in support of Equus and the town.
National Realty owns two acres next to Ellis Preserve,
which is a 210-acre parcel at route 252 and 3 that currently has existing
office structures on it. National Realty also owns several hundred acres
roughly two miles away from Ellis Preserve on Route 3 and has plans to
eventually build a large-scale retail development on the land.
The ordinance Newtown Square officials approved allowed
Equus to construct a mixed-use development at Ellis Preserve consisting of a
maximum of: 464,560 square feet of commercial-retail-restaurant space; 136,415
square feet of office space; 310 residential units in no more than 480,000
square feet; a 120,000-square-foot hotel; and up to 100,000 square feet of
space that could be office or hotel.
National Realty claimed the ordinance and, therefore the
Ellis Preserve development, would harm the two acres it owns adjacent to Ellis
Preserve.
Among other things, the company argued the township
should not have approved Equus’ proposal that designated a mix of possible uses
without having the developer be more specific. National Realty argued Equus
should have been required to have information on how each building would be
used and specifically lock in tenants that might use the structures before any
plan or ordinance was approved by the township.
Equus, the other developers and a majority of the court
disagreed.
“The arguments made here potentially threatened a process
that is a really valuable one for developers and municipalities,” said David
Bird, an attorney with Reed Smith, who along with colleague Tom McGarrigle
filed a friend of the court brief on behalf of the other developers.
The statute that allows mixed-use development has been in
effect since 1968 and considered a success on many levels. It is credited with
revitalizing brownfields and other urban properties and has given
municipalities the ability to get uses a community lacks, Bird said.
It has other benefits. “The whole idea behind alternative
zoning is to allow flexibility,” McGarrigle said.
That flexibility allows, for example, developers to gauge
market conditions and react accordingly. Had the ruling gone the other way, a
developer would have needed to line up tenants before submitting a development
plan to the township. Then, a developer would have to start the planning
process over if a tenant backed out or market conditions changed and a
developer reacted to that by getting a different tenant.
“It’s not practical,” McGarrigle said.
Equus bought Ellis Preserve in 2004. While it has leased
up and made improvements to the existing office buildings, the lawsuit stalled
it from moving forward with the mixed-use development. The company now
anticipates starting the first phase of its town center that will include
120,000 square feet of retail along with a120-room hotel.
“We’re very happy that the decision has come and we’re
eager to begin bringing Ellis Preserve Town Center to life,” said Steve Spaeder
of Equus Capital.
Source: Philadelphia
Business Journal
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