           IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Jethro Heiko, Chelsea Thompson-Heiko :
and Edward Verrall,                  :
                        Appellants   :
                                     :
             v.                      :       No. 1611 C.D. 2014
                                     :       Argued: October 6, 2015
Philadelphia Zoning Board of         :
Adjustment and Core Equity III, L.P. :


BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, Judge
        HONORABLE P. KEVIN BROBSON, Judge
        HONORABLE ANNE E. COVEY, Judge


OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE BROBSON                             FILED: October 30, 2015

            Jethro Heiko, Chelsea Thompson-Heiko, and Edward Verrall
(collectively, Appellants) appeal from an order of the Court of Common Pleas of
Philadelphia County (trial court), which affirmed the order of the Philadelphia
Zoning Board of Adjustment (ZBA), granting Core Equity III, L.P.’s (Core)
petition for a use variance pertaining to a property located at 29-45 Poplar Street,
Philadelphia, Pennsylvania. For the reasons discussed below, we reverse.
            The trial court’s order at issue in this case was one of four interrelated
rulings issued on the same day, each of which concerned properties covered by a
single Plan of Development (POD) known as the Canal Street North Project (Canal
Project). The Canal Project consists of six properties, four of which are the
subjects of separate appeals:     1000 Frankford Avenue (Frankford Property),
33-51 Laurel Street (Laurel Property), 29-45 Poplar Street (Poplar Property), and
1106-1128 North Delaware Avenue (Delaware Property).1 Although each property
is managed by a separate entity, all of the properties are owned by the same
developer, Michael Samschick.
             The Canal Project centers on the Frankford Property and the Ajax
Building located therein. The Ajax Building is a 150,000 square-foot, two-story
building that covers approximately eighty-five percent of the Frankford Property.
The Ajax Building is a former warehouse which has been vacant for more than a
decade and is deteriorated. It is the largest piece of the proposed development and
encompasses the following proposed uses:            (1) a 3,000-person capacity Live
Nation concert venue, consisting of a two-story space with a stage at one end, open
areas in the middle, and seating around the second tier; (2) a two-story bowling
alley and restaurant (sports restaurant) with twenty bowling lanes and bocce courts;
(3) a distillery, manufacturing small-batch vodka, gin, and spirits, with
administrative offices and a small tasting room; (4) two proposed retail spaces and
administrative offices; and (5) a second restaurant, located on the ground level and
facing the Delaware River (first-floor restaurant).
             Located across the street from the Ajax Building, the Laurel Property
contains the Dry Ice Building. Core plans to renovate the Dry Ice Building to be
used as a country-western restaurant, Toby Keith’s I Love This Bar and Grill
(Western Grill).    Additionally, Core sought permission to use the Poplar and
Delaware Properties (Lots C and D, respectively), non-adjoining lots, as off-site


      1
        The related appeals are docketed as follows: Heiko v. Philadelphia Zoning Board of
Adjustment, No. 1610 C.D. 2014 (Frankford Property); Heiko v. Philadelphia Zoning Board of
Adjustment, No. 1722 C.D. 2014 (Laurel Property); and Heiko v. Philadelphia Zoning Board of
Adjustment, No. 1612 C.D. 2014 (Delaware Property).



                                            2
surface parking lots benefiting the Ajax and Dry Ice Buildings’ attractions.
Parking as a primary use is prohibited on Lots C and D by the Philadelphia Zoning
Code (Zoning Code) due to their location within the Central Delaware Riverfront
Overlay District. Thus, along with the variances and special exceptions for the
Frankford and Laurel Properties, Core sought variances allowing Lots C and D to
be used as parking lots.
             Core’s POD for the Canal Project was submitted to and reviewed by
the Philadelphia City Planning Commission (Commission), as required by the
Zoning Code. The Commission approved the Canal Project, explaining that “this
development is consistent with the Philadelphia 2035 Comprehensive Plan
objectives calling for the repurposing of former industrial sites for new uses,
developing transition plans for obsolete industrial sites and districts, and preserving
industrial heritage where necessary.” (Reproduced Record (R.R.) 433a.) The
Commission’s approval was conditioned on Core’s acquisition of at least 500
parking spaces in nearby lots.
             Janice Woodcock, acting on behalf of Core, submitted applications to
the Department of Licenses & Inspections (L&I) for zoning/use permits for the
renovation of the Ajax and Dry Ice Buildings and the use of Lots C and D for
parking. L&I issued refusals for each application, noting that the proposed uses
were not permitted under the Zoning Code. As to the Frankford Property, L&I
cited the following reasons for refusal:
             (1) The concert venue is a prohibited use under Section 14-507(4)(c)
                 of the Zoning Code;
             (2) The distillery and bowling alley are not permitted uses under
                 Table 14-602-2 in Section 14-602(4) of the Zoning Code;


                                           3
             (3) The      restaurants       require         special    exceptions    under
                 Section 14-503(8)(b)(.2) of the Zoning Code; and
             (4) The    restaurants     require   51        parking   spaces   pursuant   to
                 Section 14-802(7)(c)(.1) of the Zoning Code, and none were
                 provided.
             Additionally, L&I cited a lack of parking and bicycle spaces, as
required under Sections 14-802 & 14-802(7)(c)(.1) of the Zoning Code, and the
need for a special exception for the Western Grill under Section 14-503(8)(b)(.2)
of the Zoning Code for the refusal of the Laurel Property permits. Lastly, L&I
issued refusals for the Poplar and Delaware Properties, in pertinent part, because
parking as a main use is prohibited by Section 14-507(4)(e) of the Zoning Code
and Core did not submit the required pedestrian and vehicle traffic impact study.
Core appealed L&I’s refusals to the ZBA.
             Appellants filed a third-party appeal, claiming that L&I made multiple
errors in its refusals of Core’s permits:
             (1) The concert venue is an “assembly and entertainment use”
                 prohibited by Section 14-503(8)(b)(.1) of the Zoning Code;
             (2) The concert venue is more appropriately classified as a nightclub
                 under Section 14-601(7)(c)(.3) of the Zoning Code and requires
                 one      parking       space         per      two     occupants     under
                 Section 14-802(7)(c)(.1)(b) of the Zoning Code, for a total of
                 1,500 parking spaces;
             (3) The sports restaurant is prohibited by Section 14-503(8)(b)(.1) of
                 the Zoning Code; and




                                             4
              (4) The      distillery   tasting     room     is      prohibited      by
                 Section 14-503(8)(b)(.1) of the Zoning Code.
              Jeanne     Klinger,   L&I’s   Code    Administrator,   then   issued    a
memorandum titled “Correction of Refusal,” which clarified and modified the
original refusal in the following pertinent ways:
              (1) The concert venue is deemed an “assembly and entertainment” use
                 under Section 14-601(7)(c)(.3) of the Zoning Code—a prohibited
                 use under Section 14-503(8)(b)(.1) of the Zoning Code;
              (2) The bowling alley, originally treated as part of the sports
                 restaurant, is deemed to be a separate “assembly and
                 entertainment” use and prohibited under Section 14-503(8)(b)(.1)
                 of the Zoning Code;
              (3) The distillery tasting room is deemed to be a sit-down restaurant
                 requiring a special exception; and
              (4) A total of 892 parking spaces are required for all the proposed
                 uses.
              In sum, the multiple refusals for the Frankford Property fell into three
categories:    (1) failure to provide the required parking, which required a
dimensional variance; (2) use variances were needed for the concert venue,
distillery, and bowling alley; and (3) special exceptions were required for the
tasting room, sports restaurant, and first-floor restaurant. Ms. Klinger also refused
to change the designation of the Western Grill from a sit-down restaurant to a
nightclub, because the Western Grill would be used primarily as a sit-down
restaurant and would only occasionally have live music.




                                            5
             The ZBA held two hearings on the Canal Project. Core asserted that
the Frankford Property’s unique characteristics—an irregularly shaped, 99,285
square-foot lot covered almost entirely by the Ajax Building, pocketed in between
I-95 and the Sugar House Casino—meant that the Frankford Property could not
support an economically-viable conforming use.           Core also argued that the
Western Grill required only a special exception, because its main use was a
sit-down restaurant.
             Core presented testimony from Michael Samschick, Ms. Woodcock,
and Ms. Klinger. Mr. Samschick, the developer of the Canal Project, testified that
he was unable to secure a conforming-use tenant for the Frankford Property due to
its location, size, and deteriorated condition. He further testified that the Canal
Project required a destination tenant, like Live Nation, to make the project
economically feasible. Ms. Woodcock opined that the Commission was correct to
only require 500 parking spaces because:             (1) the Canal Project was a
transit-oriented development; (2) urban planning seeks to strike a balance between
parking and walkability; (3) parking is available at the Sugar House Casino; and
(4) the overall goal was to create a vibrant waterfront neighborhood. Ms. Klinger
testified that she classified the concert venue as an assembly and entertainment use,
rather than a nightclub, because the broad category of assembly and entertainment
was a better fit for the project than the specific sub-category of a nightclub. Lastly,
Core presented a traffic study prepared by Orth-Rodgers & Associates, Inc., which
identified several potential problems, but overall concluded that the Canal Project
“will not significantly increase congestion on the public streets during the typical
evening peak period.” (R.R. 400a.)




                                          6
              Appellant presented expert testimony from Frank Montgomery, who
prepared a traffic impact study for Appellants. Mr. Montgomery testified that the
Canal Project would be detrimental to the neighborhood because it lacked an
identified area to pick-up and drop-off passengers and provided an insufficient
number of parking spaces. Mr. Montgomery opined that the Canal project required
an additional 1,422 parking spaces under his interpretation of the Zoning Code.
Appellants also presented testimony from Mr. Heiko and Mr. Verrall about the
anticipated detriment to the neighborhood. Appellants argued that the variances
and special exceptions should be denied because no legal hardship exists that
would justify the variances, the requested variances are not the least-required
variances, the Western Grill and concert venue are “nightclubs” under the Zoning
Code requiring additional parking, and the scale of the project is inappropriate and
will bring excessive traffic and crime to the area.
              The ZBA granted Core’s appeal, with the proviso that Core must
acquire at least 500 parking spaces. The ZBA’s blanket approval of the Canal
Project included: (1) the granting of use variances for the concert venue, bowling
alley, and distillery on the Frankford Property, and parking as a main use on the
Poplar and Delaware Properties; (2) the granting of a dimensional variance
regarding the overall number of parking spaces; and (3) the granting of special
exceptions for the Western Grill, the sports restaurant, the tasting room and the
first-floor restaurant.
              Specifically in regards to the Poplar Property, the ZBA found that it is
“an irregularly shaped, 31,699 square foot, vacant lot bounded by Delaware
Avenue, Poplar Street, Canal Street, and Lewellen Street.” (ZBA Order at 4.) The
ZBA then concluded that Core satisfied the criteria for a use variance because the


                                          7
proposed use “would return a vacant lot to a productive use that would support the
overall [Canal Project],” would address “the need for adequate off-street parking”
for the Canal Project, and has been reviewed and approved by the Commission.
(ZBA Order at 8-9.)
              Appellants appealed the ZBA’s decision to the trial court, arguing that
the ZBA lacked sufficient evidence to grant the use variance and that each property
must be considered individually.           The trial court denied Appellants’ appeal,
holding that the ZBA did not commit an error of law and that the record contained
substantial evidence to support the granting of the variance. In its opinion issued
pursuant to Pennsylvania Rule of Appellate Procedure 1925(a), however, the trial
court concluded that the record “is devoid of any facts that would substantiate a
conclusion that the Poplar Property is affected by any undue hardship, which
would therefore necessitate the granting of a variance for it to be used as a parking
lot.” (Trial Ct. Op. at 21.) Furthermore, the trial court concluded, “neither the
Zoning Code, nor the relevant case law, allows for one property’s unique hardship
to justify the granting of a variance pertaining to an entirely separate property.”
(Id.)
              On appeal2 to this Court, Appellants argue that there is no substantial
evidence in the record to support the ZBA’s finding that a hardship exists as to the



        2
          When, as here, the trial court accepts no additional evidence in a zoning appeal, our
review is limited to considering whether the ZBA erred as a matter of law or abused its
discretion. Singer v. Phila. Zoning Bd. of Adjustment, 29 A.3d 144, 148 n.1 (Pa. Cmwlth. 2011).
The ZBA abuses its discretion when its findings are not supported by substantial evidence, which
is defined as “relevant evidence which a reasonable mind would accept as adequate to support
the conclusion reached.” Marshall v. City of Philadelphia, 97 A.3d 323, 331 (Pa. 2014).



                                               8
Poplar Property, and, therefore, the ZBA erred in granting the variance allowing
the Poplar Property to be used as a parking lot.
             A variance is a departure from the exact provisions of a zoning
ordinance. Brennen v. Zoning Bd. of Adjustment of City of Connellsville, 187 A.2d
180, 182 (Pa. 1963). Section 14-303(8)(e) of the Zoning Code sets forth specific
criteria the ZBA must consider when determining whether to grant a variance. The
Supreme Court has “boiled down” these criteria into three key requirements:
“(1) unique hardship to the property; (2) no adverse effect on the public health,
safety or general welfare; and (3) . . . the minimum variance that will afford relief
at the least modification possible.” Marshall v. City of Philadelphia, 97 A.3d 323,
329 (Pa. 2014) (alteration in original) (quoting East Torresdale Civic Ass’n v.
Zoning Bd. of Adjustment of Philadelphia Cnty., 639 A.2d 446, 447 (Pa. 1994)).
Furthermore, “[t]he hardship must be shown to be unique or peculiar to the
property as distinguished from a hardship arising from the impact of zoning
regulations on an entire district.”    Valley View Civic Ass’n v. Zoning Bd. of
Adjustment, 462 A.2d 637, 640 (Pa. 1983). The party seeking the variance bears
the burden of proof. Marshall, 97 A.3d at 329.
             In this case, Core focused its arguments before the ZBA on the
hardships suffered by the Frankford and Laurel Properties, and did not adduce any
evidence that the Poplar Property suffered from any hardship. Indeed, the record is
“devoid of any facts that would substantiate a conclusion that the Poplar Property
is affected by any undue hardship.” (Trial Ct. Op. at 21.) Instead Core argued, as
it does before this Court, that the Canal Project must be considered as a whole, that
the Frankford and Laurel Properties suffer from undue hardships, and that the
variance for the Poplar Property was necessary because it is needed to support the


                                          9
Canal Project. In essence, Core is arguing that a property-specific hardship is not
required to grant a variance when multiple properties are part of the same plan of
development. Core has not offered a single citation to any legal authority in
support of this novel proposition, and this Court is not persuaded by Core’s bald
assertion. As the trial court concluded,
             neither the Zoning Code, nor the relevant case law,
             allows for one property’s unique hardship to justify the
             granting of a variance pertaining to an entirely separate
             property. To hold otherwise would effectively allow
             developers to sidestep the Zoning Code, giving them
             carte blanche in certain instances when seeking to
             develop projects that span multiple properties.
(Trial Ct. Op. at 21.)
             Because there is no evidence of record establishing an undue hardship
unique to the Poplar Property, the ZBA erred in granting the use variance. We,
therefore, reverse the order of the trial court affirming the decision of the ZBA.




                                 P. KEVIN BROBSON, Judge




                                           10
          IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Jethro Heiko, Chelsea Thompson-Heiko :
and Edward Verrall,                  :
                        Appellants   :
                                     :
             v.                      :   No. 1611 C.D. 2014
                                     :
Philadelphia Zoning Board of         :
Adjustment and Core Equity III, L.P. :


                                ORDER


           AND NOW, this 30th day of October, 2015, the order of the Court of
Common Pleas of Philadelphia County, dated August 15, 2014, is hereby
REVERSED.




                             P. KEVIN BROBSON, Judge
