Editor’s note: The author represents the plaintiffs in McConville v. City of Philadelphia.

A well-placed billboard can quickly earn back the cost of construction and land acquisition, and then become a reliable cash cow. Consequently, as City Council has noted in legislative findings, “there exist throughout every area of the City numerous illegally erected commercial outdoor advertising signs that negatively impact upon the general welfare of those neighborhoods.” (See Phila. Code § 9-602(e).)

Philadelphia law grants taxpayers the right to appear before the Zoning Board of Adjustment. (See Philadelphia Code § 14-1805; and the Commonwealth Court’s 1999 opinion in Society Created to Reduce Urban Blight v. Zoning Board of Adjustment. )

A taxpayer who entered his or her appearance before the ZBA may appeal an adverse ZBA decision to state court and, of course, defend an appeal of a favorable ZBA decision. (See the 2010 Commonwealth Court opinion in Callowhill Center Associates LLC v. Zoning Board of Adjustment .) Even if he or she did not appear before the ZBA, a taxpayer may appeal the decision to state court if he or she is “aggrieved,” generally because of proximity to the illegal billboard. (See 53 P.S. 13131.1.)

For the past five years, however, a little-known private agreement between the city and three large billboard companies has effectively shielded most of the billboards in the city from any legal challenge. (See the Aug. 9, 2006, Consent Agreement available at http://publicvoiceforpublicspace.org/images/stories/settlement/consent_agreement.pdf.)

Although it was signed by the city solicitor without authorization from City Council and its provisions have never been enacted into law, the agreement purports to “supersede conflicting provisions of law.”

Under the agreement, only the City Law Department may challenge the legality of thousands of existing billboards, and only through private arbitration. In the five years the agreement has been in effect, however, the Law Department has not taken to arbitration any billboard subject to the agreement. As designed, the agreement has shielded the subject billboards from ZBA and court challenges by ordinary landowners and citizens.

The city has stated that before the agreement, it investigated an “enormous” number of complaints and prosecuted an “inordinate” number of enforcement actions against illegal billboards. (See the preliminary objections filed by defendants in the Court of Common Pleas case McConville v. City of Philadelphia .) The illegal billboards obviously did not disappear with the stroke of a pen, but the city’s willingness to challenge them did.

The zoning code requires documentary proof that an existing billboard is legal before it can receive an annual license. (See Phila. Code § 9-602(4)(a).) Under the agreement, however, the billboard companies do not need to show documentary proof that a billboard is legal, unless the Law Department challenges a particular billboard, which, as noted above, the Law Department has never done.

Under their agreement, the three largest billboard companies pay a licensing fee of only $50 per year for their approximately 2,700 billboards, instead of the $650 per year required by ordinance — thereby costing the city approximately $1.6 million per year in revenue that ordinary citizens feel in the form of increased taxes or reduced services. Other billboard operators, unaware of the agreement or lacking the clout to cut their own private deals with the city, continue to pay the full $650 per sign face. By its express terms, the agreement also permits the subject billboards to be taller and larger than the zoning code allows.

The agreement has profoundly changed the way the subject billboards are (or are not) regulated in Philadelphia. It deprives anybody aggrieved by a billboard of any forum to challenge its legality, and starves the city of revenue. Yet it is nothing more than a private contract. It has never been enacted into an ordinance, or even presented to City Council. It has never been entered as a judgment, or even presented to a court.

Two Philadelphia landowners and taxpayers tried to challenge individual illegal billboards but were thwarted by this backroom deal. Now they are challenging the legality of the agreement itself in the Court of Common Pleas. (See McConville v. City of Philadelphia .)

One plaintiff is a business owner in Northeast Philadelphia. A billboard on an adjacent property fell over, damaging her building and destroying the billboard. Because of its proximity to residential properties, the billboard is not a permitted use, and nonconforming billboards cannot be rebuilt without a variance from the ZBA. Based on this plaintiff’s complaint, the Department of Licenses and Inspections (L&I) inspected the billboard and issued a violation notice. Under ordinary procedures, the billboard owner would have to seek relief before the ZBA to rebuild the billboard. The plaintiff would be entitled to appear before the ZBA in opposition to the billboard, offer evidence and testimony, and examine witnesses. Instead, apparently relying on the agreement, the city rescinded the violation notice without notice, explanation or opportunity for the plaintiff to object.

The other plaintiff is a West Philadelphia homeowner who complained to L&I when a billboard near her home, which had been abandoned for approximately 10 years, was returned to operation shortly before the agreement was signed. Under the zoning code, a nonconforming use that is abandoned for three years “sunsets” and cannot be revived without a variance.

The billboard had a one-year temporary nonconforming use permit, which expired in 1950, and because of its proximity to residential properties and a public playground, it is not a permitted use. L&I issued a violation notice, and the billboard company appealed it to the ZBA. The plaintiff entered her appearance before the ZBA, and prevailed when the billboard company dropped its appeal. The city knows that this billboard has conclusively been adjudicated illegal, and the zoning code does not allow it to issue a license to any billboard adjudicated to be illegal, but because of the agreement the city continues to issue an annual license to this billboard.

The plaintiffs assert that the agreement is unenforceable for four related reasons.

First, the agreement violates the U.S. Constitution by depriving plaintiffs of important legal rights without due process. The Constitution guarantees individuals access to a meaningful legal forum to resolve disputes. Philadelphia and Pennsylvania law designate the ZBA and the courts as forums for aggrieved residents to litigate zoning disputes. The agreement deprived plaintiffs of this right — in one instance, by reversing an L&I inspector’s finding that a billboard was illegal, in a behind-the-scene action that bypassed the required ZBA proceedings; in the other instance, by defying the ZBA and issuing a license, thereby rendering the result of the ZBA hearing meaningless. The agreement did this without notice or any opportunity to be heard in opposition.

Second, it is an ultra vires act because the city solicitor did not have the authority to bind the city to the agreement. A plethora of cases, from Pennsylvania and elsewhere, uniformly hold that a municipal attorney lacks plenary authority to settle litigation or otherwise contract on behalf of the municipality (the license fee portion of the agreement, but no other portion, settled litigation). (See, e.g., the Commonwealth Court cases Schoepple v. Lower Saucon Township Zoning Hearing Board (1993) and Perry v. Tioga County (1997).) City Council had to either pass a resolution authorizing the city solicitor to sign the agreement, or subsequently approve the settlement in regular session and enact the contemplated amendments to the zoning code. Nor is the city solicitor a super-legislature. To “supersede” an existing ordinance, City Council must provide the same public notice, public comment, public deliberation and public vote that was required to originally enact the ordinance. The agreement was negotiated and concluded without any public or legislative input whatsoever.

Third, Pennsylvania law forbids “contract zoning,” in which a municipality agrees not to enforce zoning restrictions in exchange for consideration. (See, e.g., the state Supreme Court’s 1982 opinion in Carlino v. Whitpain Investors and the Middle District of Pennsylvania’s 1994 opinion in Phoenix Resources Inc. v. Duncan Township .) The agreement recites that it is a “contractual agreement between the parties,” and that its terms “supersede conflicting provisions of law.” In consideration for the city agreeing not to enforce numerous zoning laws, the billboard companies dismissed their case challenging the license fee.

Fourth, the city’s actions violate the Pennsylvania Sunshine Act, which requires that official actions (which include “the establishment of policy”) and deliberations concerning official actions “shall take place at a meeting open to the public.” The agreement, which radically changes the billboard zoning rules and the way they are enforced, undoubtedly establishes policy. It was neither considered nor agreed to at a public meeting, but was instead privately negotiated and signed.

This case is about two ordinary citizens’ right to their day in court, and an agreement between the city and three billboard companies designed to thwart their rights. The agreement provides three billboard companies relief from the zoning code on a massive scale, with no action by City Council or the ZBA. The Pennsylvania Supreme Court in Carlino condemned such abrogation of a municipality’s police powers: “Zoning is an exercise of the police power to serve the common good and general welfare. It is elementary that the legislative function may not be surrendered or curtailed by bargain or its exercise controlled by the considerations which enter into the law of contracts.” •

CHARLES C. SWEEDLER is a litigator at Levin Fishbein Sedran & Berman.