Marshall v. City of Philadelphia, 626 Pa. 385 (Pa. 2014).

Potential loss of significant grant funding if variance is not approved may be considered as proper evidence of hardship for justifying the variance.
Case Details:

Applicant filed an application for Zoning/Use Registration Permit with the Philadelphia Department of Licenses and Inspections to convert a school into a 63-unit apartment complex for low income senior citizens.  The school was a legal nonconforming use that had been closed due to declining enrollment and insufficient revenue.  Applicant had recently received funding from HUD, however, to convert the school to senior housing.  L&I denied the application because it was noncompliant with respect to several provisions of the City’s Zoning Code.  Specifically, the proposed use was not permitted in the district, parking was insufficient in number, size and landscaping, and the building was nonconforming in many dimensional respects.   Applicant appealed and the Zoning Board of Adjustment granted Applicant’s variance requests.

On further appeal to the Pennsylvania Supreme Court, the Court affirmed its holding in O’Neill that a zoning board’s discretion is “not so circumscribed as to require a property owner to reconstruct a building to a conforming use regardless of the financial burden that would be incident thereto[, e]specially where the change sought is from one nonconforming use to another more desirable nonconforming use that will not adversely affect but better the neighborhood.” HUD had awarded Applicant $10,000,000 to fund the renovation of the building from one non-conforming use to another more desirable non-conforming use.  In addition, the Court noted that the proposed use would benefit the community.  The Court refused to question that a $10,000,000 loss would constitute a financial burden to the Applicant.   Moreover, the Zoning Board of Adjustment’s findings indicated that, “although the Subject Property served the community well for a long time as a school, the Subject Property can better serve the needs of the community as low income housing for seniors” and that it had “overwhelming support” of the neighbors.   Finally, the Court noted that the Zoning Board of Adjustment clearly considered “the unique nature of HUD’s approval of this project,” and recognized that Applicant’s “long-term commitment to the Subject Property and its development [would] transform [the] vacant building and provide a new use [ ] serving community members.”  Consequently, the Commonwealth Court’s decision was reversed.

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