Judge: Jaindl deserves $275,000 bond for subdivision investment
Updated On: Mar 05 2013 10:23:24 AM CST
Six people who are appealing a Lower Macungie Township zoning law that led to approval of David Jaindl’s 621-acre subdivision will be obligated to pay Jaindl $275,000 if they don’t succeed in having their case heard by the Pennsylvania Supreme Court.
The determination that they must post a bond for that amount was made by Lehigh County Judge Michele Varricchio at the end of a 100-minute hearing Monday afternoon in the old county courthouse.
Although Jaindl was asking for $500,000, he called the judge’s ruling “a big win.”
“I’m very happy with the judge’s decision,” he said. “She made the right decision.”
Jaindl was the only person to testify during the hearing.
Even though his subdivision has been approved by the township, Jaindl said he can’t develop it or sell 12 commercial and industrial lots in the 621-acre property until he’s sure the zoning that allowed it to be created won’t be overturned by a court appeal.
Atty. Marc Kaplin, who represented Jaindl, repeatedly described the case against the township as a frivolous appeal. He said the bond will protect Jaindl from damages he will suffer as a result of the delays caused by that appeal.
After the hearing, Kaplin said the residents who are challenging the township will be given a specific amount of time to come up with the money by the judge. If they don’t do it, “we have the right to have the appeal quashed.”
Added Jaindl Atty. Joseph Zator: “‘Quashed’ is a good legal word for thrown out.”
Asked how long it will take for the Supreme Court to decide if it will review Miles’ case against the township, Kaplin said: “I can’t imagine them taking this case.”
Zator added the court agrees to consider no more than three percent of cases appellants submit to it.
Kaplin said he has been waiting 14 months for an almost identical development case and the court has not yet decided if it will consider it. He’s heard it sometimes takes another two years after the Supreme Court makes a decision to take a case. And that it could take another year for the court to make a decision after oral arguments are heard.
Jaindl’s lawyers can go back and ask the court for more money if the case drags on long enough.
“Judge Varricchio’s decision today requires the appellants to assume some financial risk exposures for their actions, which up until this point they have not had to do,” said Zator after the hearing.
Atty. Donald Miles, who represents the appellants, argued that Kaplin failed to present evidence regarding how long it’s likely to take the Supreme Court to rule on his clients’ petition to appeal.
Miles said testimony was offered that it is costing Jaindl more than $500,000 a year, but none was offered about whether it will take the Supreme Court a year to make that decision. “Absent that, there is no way for the court to calculate what the damages will be.”
Although he spoke with another reporter after the hearing, Miles refused to talk about the case with 69News, repeatedly only saying “I have no comment” before hanging up.
The six appellants are all Lower Macungie residents, according to Zator: Kimberly and Joseph Castagna, Gerald and Karen Kronk and Ronald and Constance Moyer.
None of them testified Monday.
Zator said three other appellants have withdrawn from the case: Thomas Streck, Darlene Adonizo and Peter Kells.
If they proceed with their case, the remaining appellants will have to post a bond for the full amount in cash or collateral, such as a home or a 401K, plus pay fees to a bonding company.
The residents challenged an amendment to the township zoning ordinance that was adopted in 2010. Varricchio ruled in favor of the residents and against Lower Macungie in August 2011. Township officials appealed to Commonwealth Court, which overturned her ruling in December 2012. On behalf of his clients, Miles appealed that ruling by petitioning the state Supreme Court.
Miles told the judge that every legal appeal by objectors to a development causes delays. But he said the state Legislature has determined the only time a delay is subject to a bond to compensate a developer is if that appeal is frivolous. He maintained his appeal is not frivolous, adding “you already have ruled it is not frivolous.”
Varricchio also said the case is not frivolous but indicated whether appealing is frivolous is a different matter.
“This court does not find this case is frivolous,” she said. “It involves pristine land in a corner of our county that is very valuable for a variety of reasons to the citizens of the county.” But she added in light of the Commonwealth Court’s opinion overturning her ruling: “I can only conclude that it’s not reasonable to continue the litigation, that a bond is required. Then the next question is ' Why a half million dollars?'”
In his testimony, Jaindl confirmed Kaplin’s estimate that owning the property costs him $213,885 a year: $25,429 for taxes, $456 in insurance, and payments of $188,000 a year on an $8 million mortgage.
He also said developing the subdivision will cost him more than $12 million, adding those costs will increase “dramatically” if the project is delayed for a year. He predicted a one-year delay will add $348,000 to the cost of making those improvements.
Kaplin added the $348,000 projected development cost increase to the $213,885 ownership cost to come up to $561,885.
Jaindl estimated farming most of the property gives him a profit of $50,000-$65,000. He and Kaplin indicated they came up with the $500,000 bond request by subtracting the farming profit from that $561,885.
Jaindl testified he has been involved in all aspects of land development for 35-40 years. He said his company has 356 different farms in four counties.
He owns about 800 acres in Lower Macungie, including 700 that are the subject of the appeal. He said his father acquired most the land in the 1980s for land development and farming. He estimated 85 percent of the property is farmland.
Jaindl explained 621 of those 700 acres have been subdivided into 14 individual lots. Two lots will be preserved as open space and 12 will be sold for commercial and industrial uses.
Even though that project, known as Spring Creek Properties No. 1, was approved by township commissioners last May, Jaindl said “we can’t sell it and we can’t market it” because he can’t proceed with developing the subdivision.
He said there has been substantial interest in the properties, adding his company is speaking with potential buyers every week. But he said no credible developer will enter into an agreement of sale for lots if the zoning issue involving those lots is up in the air.
He explained the $12 million in improvements he must make to the subdivision include extending existing public roads, creating new roads, adding stormwater management facilities, and extending utilities through the site.
He can’t get a loan to make those improvements because “no responsible lender would lend you money for improvements on industrial/ commercial lands that may not be industrial/commercial lands next week.”
In January, Jaindl told township commissioners he would scale back on the intensity of development in the subdivision if opponents dropped their appeal to the Supreme Court.
But Kaplin said Miles’ clients rejected that suggestion in writing.
In response to questions by Miles, Jaindl said the development costs for that revised but unapproved plan would be “a little less” than the estimated $12 million for construction costs in the approved plan.
Lower Macungie commissioner James Lancsek attended the hearing.
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