The Commonwealth Court has thwarted objections to a controversial Lancaster redevelopment project by issuing a decision approving the city’s plan to guarantee $24 million in bonds should a debt service shortfall arise due to a potential obligation to pay real estate taxes on a hotel is part of the project.
The court in Koppenhaver v. Department of Community and Economic Development, PICS Case No. 06-0585 (Pa. Commw. May 3, 2006) Simpson, J. (27 pages), affirmed a Department of Community and Economic Development decision that declared the City of Lancaster’s guarantee legal in purpose under the Local Government Unit Debt Act, 53 Pa.C.S. Sections 8001 through 8271. According to the department, the City Redevelopment Authority’s plan to reinvigorate Lancaster’s commercial district by constructing a convention center and hotel constituted a legitimate government undertaking, thus satisfying the act’s legality of purpose test with regard to the city’s limited guaranty. “The purpose of the limited guaranty is to induce the Redevelopment Authority to undertake and complete the project,” Judge Robert Simpson wrote for the court. Simpson said there could be “no reasonable dispute that redevelopment is a legal purpose for both the city and the Redevelopment Authority action.”
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