| COMPLAINT
IN CIVIL ACTION
COUNT I - IN EQUITY
1. Plaintiff, Allegheny Institute
Taxpayers Coalition, is a non-profit corporation organized and existing under the laws of
the Commonwealth of Pennsylvania. Its address is 835 Western Avenue, Suite 300,
Pittsburgh, PA 15233.
2. Defendant, Allegheny Regional Asset District,
(hereinafter "RAD") , is a body corporate and politic created by Allegheny
County as a Special Purpose Areawide Unit of Local Government pursuant to Section 7 of
Article IX of the Constitution of Pennsylvania, exercising powers as a unit of local
government under this Article. Its address is One Smithfield Street, Suite 310,
Pittsburgh, PA 15222.
3. Defendant, Joyce A. Baskins, is an individual
and resident of Allegheny County, Pennsylvania, who was, at all times material hereto, and
is a member of the governing board of Allegheny Regional Asset District. Her term expires
on December 31, 2001. Her address is Community Literacy Center, 801 Union Place,
Pittsburgh, PA 15212.
4. Defendant, David W. Christopher, is an
individual and a resident of Allegheny County, Pennsylvania, who was, at all times
material hereto, and is an alleged member of the governing board of Allegheny Regional
Asset District. His alleged term expires on January 1, 2000. His address is 435 Sixth
Avenue, Pittsburgh, PA 15219.
5. Defendant, Ralph DeStefano, is an individual
and a resident of Allegheny County, Pennsylvania, who was, at all times material hereto,
and is a member of the governing board of Allegheny Regional Asset District. His term
expires on January 1 2000. His address is Senior Vice President, Hospital Division, UPMC
Health Systems, Forbes Tower #11037, 200 Lothrop St., Pittsburgh, PA 15213.
6. Defendant, Gerald J. Voros, is an individual
and a resident of Allegheny County, Pennsylvania, who was, at all times material hereto,
and is an alleged member of the governing board of Allegheny Regional Asset District. His
alleged term expires on December 31, 2001. His address is 146 North Bellefield
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Avenue, #701, Pittsburgh, PA 15213.
7. Defendant, Daniel J. Griffin, is an individual
and a resident of Allegheny County, Pennsylvania, who was, at~all times material hereto,
and is a member of the governing board of Allegheny Regional Asset District. His term
expires January 1, 2000. His address is c/o Downtown Athletic Club, One Bigelow Square,
Pittsburgh, PA 15219.
8. Defendant, Mary Pat Soltis, is an
individual and a resident of Allegheny County, Pennsylvania, who was, at all times
material hereto, and is a member of the governing board of Allegheny Regional Asset
District. Her term expires January 1, 2000. Her address is Vice President, Three Rivers
Bank, 500 Fifth Avenue, McKeesport, PA 15132.
9. On or about July 9, 1998 at a special meeting
of the governing board of Allegheny Regional Asset District held in Allegheny County,
Pennsylvania, the governing board comprised of the individual Defendants herein adopted
and passed a Resolution authorizing grants of tax money to the Public Auditorium Authority
of Pittsburgh and Allegheny County and to the Stadium Authority of the City of Pittsburgh
in the amount of $5,000,000.00 for calendar year 1998, $10,000,000.00 for the calendar
year 1999 and $13,400,000.00 for each of the 30 calendar years running from the years 2000
to 2030 for the purpose of acquiring land and constructing thereon a baseball stadium to
be
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utilized by Pittsburgh Associates, trading as the
Pittsburgh Pirates, (hereinafter "Pittsburgh Pirates"), and a new football
stadium to be utilized by Pittsburgh Steelers Sports, Inc., trading as the Pittsburgh
Steelers (hereinafter "Pittsburgh Steelers") Attached hereto, incorporated
herein by reference thereto as though herein set forth at length and designated as Exhibit
"1" is a copy of said Resolution.
10. As set forth in said Resolution, Allegheny
Regional Asset District shall be making the annual payments of $13,400,000.00 a year for
30 years to the Public Auditorium Authority of Pittsburgh and Allegheny County
(hereinafter PAA) for the purpose of servicing and retiring a bond issue of at least
$170,000,000.00 in revenue bonds that would be issued by PAA to pay for site acquisition
and development and also construction, and RAD would enter into a lease rental debt
arrangement to guarantee payment of said bonds, by obligating itself to PAA, and in the
process establish the indebtedness of RAD at a level of $205,000,000.00.
11. Almost the sole source of income for RAD is a
1% sales tax levied upon transactions in and upon residents of Allegheny County which are
remitted by the various commercial entities to the Treasurer of the Commonwealth of
Pennsylvania who in turn remits such funds to RAD.
12. As set forth in said Resolution, RAD is
going to or
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already has assigned its rights to receive
portions of that tax from the Treasurer of the Commonwealth to PAA in the amounts and for
the years as designated in said Resolution.
13. As set forth in said Resolution, RAD is
delegating its oversight responsibilities for the so-called prospective regional assets to
PAA, and has delegated its authority to enter into cooperation and support agreements to
its Chair or Vice-Chair..
14. As set forth in said Resolution, RAD proposes
to and has entered into cooperation and support agreements with PAA for these prospective
stadiums and not with the commercial entities (the teams or ball clubs) which will be the
actual operators thereof.
15. In conjunction with the aforesaid Resolution
and in order to carry out these stadium projects, a new bureaucracy is coming into
existence, namely PAA.
16. No financial disclosure has been made to RAD
and to all of its members by PAA.
17. No financial disclosure has been made to RAD
and to all of its members by the Pittsburgh Pirates and the Pittsburgh Steelers,
commercial entities.
18. No public hearings have been held by RAD on
cooperation and support agreements with any party, ether PAA, the
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Pittsburgh Pirates or the Pittsburgh Steelers.
19. In said Resolution, there is no requirement for reporting
accountability by the Pittsburgh Pirates and the Pittsburgh Steelers, commercial entities,
to RAD.
20. The powers and the duties of RAD, its governing board and the
members thereof are set forth in a Statute (Second Class County Code), Act of July 28,
1953, P.L. 723, No. 230, art. XXXI-B, § 3101-B, added Dec. 22, 1993, P.L. 529, No. 77, §
2. 16 P.S. § 6101-B et seq.
21. RAD is prohibited by said Statute from entering into a commitment
for financial support for a regional asset in excess of the first ten years of RAD's
existence. 16 P.S. § 6114-B (c) The 30 year commitment to provide $13,400,000.00 a year
to the PAA violates this prohibition, and creates the good possibility of a debt default
when the people of Allegheny County, under the Home Rule Charter, by referendum, repeal
the 1% sales tax funding RAD.
22. Said Statute does not provide any authorization for RAD to make a
commitment to guaranty, service, pay or retire bonds issued by another entity such as the
PAA. The commitment in the Resolution to pay $13,400,000.00 a year for 30 years to the PAA
for debt service on $170,000,000.00 worth of bonds to be issued by the PAA constitutes an
ultra vires act on the part of RAD. It
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is void ab initio.
23. The process by which RAD would enter into a lease rental debt
arrangement to guaranty payment of said bonds and in the process establish the
indebtedness of RAD at a level of $205,000,000.00 would be violative of said Statute as
there is no provision permitting the assumption of a debt which functions as a guaranty of
the payment of the debt of the PAA. Also there is no explanation from RAD as to why a debt
ceiling of $205,000,000.00 would be necessary on a guaranty of $170,000,000.00 in PAA
bonds.
24. In said Statute, it is provided for the 1% sales tax to be remitted
by the vendors to the State Treasurer who in turn on or before the 10th day of every month
shall disburse one-half of the moneys to RAD for use by it in the manner provided by this
Statute. 16 P.S. § 6157-B(b) (1).
25. There is no statutory provision for RAD to assign its rights to
receive all or a portion of that tax from the State Treasurer to PAA in the amounts and
for the years as designated in said Resolution or in any amount whatsoever for any period
of time. Any such assignment of its right to receive the tax funds is an ultra vires act
and void ab initio.
26. There is no provision in said Statute authorizing RAD to pledge,
hypothecate or otherwise encumber any of its revenues or
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receipts for the payment of a debt obligation owed by PAA or any other
entity. Any such action would be ultra vires and void ab initio.
27. Under the Statute, RAD is obligated to engage in the oversight and
coordination of regional assets receiving funds from it and is further obligated to
conduct financial and performance reviews and audits of regional assets. The regional
assets would be the stadiums which would be in the de facto operation and control of the
Pittsburgh Pirates and the Pittsburgh Steelers, commercial entities. The PAA would be only
a strawman. There is no provision in the Resolution for RAD to exercise its oversight and
coordination responsibility or to conduct financial and performance reviews and audits of
the stadiums under the control of the Pittsburgh Pirates and the Pittsburgh Steelers. BAD
has failed to comply with its statutorily imposed duties. 16 P.S. § 6112-B (a) (ii) and
(b) (5).
28. The PAA at best would be a landlord for the Pittsburgh Pirates and
Pittsburgh Steelers who would be the actual operators and in control of all activities in
these stadiums. The PAA is a strawman for the purpose of channeling funds from BAD to and
for the use and benefit of the Pittsburgh Pirates and the Pittsburgh Steelers.
29. Under said Statute, BAD is required to negotiate, obtain and
conclude cooperation and support agreements with the owners
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(real owners) and operators (real operators) of regional assets. Such agreements shall
(must) include the following provisions:
(1) Agreements regarding the governance and operation of regional assets.
(2) Commitments regarding the level of financial support for the regional assets that
will be provided by the district, the city, the county, other municipalities and other
public and private organizations.
(3) Long term plans for the financing, development and operation of regional assets.
(4) Performance and financial goals, objectives and standards for the operation of
regional assets.
(5) Assurances that adequate measures will be undertaken to maintain and improve
regional assets.
(6) Assurances that the operating and capital budgeting for regional assets will occur
in a financially responsible manner.
(7) Provisions for public involvement in the activities of regional assets and for
participation by the district, the county, the city and other municipalities, as
appropriate, in decisions regarding the operations and development of regional assets.
(8) Access by the district to financial information regarding the overall activities of
the regional assets. 16 P.S. § 6114-B(a) (1-8).
30. RAD has not obtained any agreements with the real owners and real
operators of such prospective regional assets.
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31. RAD is required by said Statute to conduct public hearings and
meetings regarding proposed cooperation and support agreements and any amendments to same.
16 P.S. § 6114-B (d). RAD has not conducted such public hearings and meetings on any
cooperation and support agreements pertaining to the proposed stadiums, not in connection
with the Pittsburgh Pirates, the Pittsburgh Steelers or even PAA.
32. Public policy of the Commonwealth, as set forth in said Statute, is
opposed to the creation of new and duplicative bureaucracies responsible for employing
individuals, owning property and executing contracts in connection with the implementation
of the activities of RAD. 16 P.S. § 6101-B(a) (5). In violation of said Statute, a new
bureaucracy, PAA has been created for the purpose of receiving the massive flow of tax
money due RAD for the purpose of employing individuals, owning title to the stadiums and
executing contracts with the Pittsburgh Pirates and the Pittsburgh Steelers and others,
solely for the purpose of delivering taxpayer funds to and for the use of the Pittsburgh
Pirates and the Pittsburgh Steelers.
33. By statute, RAD is required to have access to financial information
regarding the overall activities of the regional assets, including the financial
information of the real and intended beneficiaries, the Pittsburgh Pirates and the
Pittsburgh Steelers. 16 P.S. § 6114-B(a) (8). Such disclosure of financial
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information, a necessary precondition to the payout of public tax funds by PAD, has not
been made by the Pittsburgh Pirates nor by the Pittsburgh Steelers. Without such
disclosure being made in advance, the Resolution authorizing the providing of financial
support by RAD through PAA for the use and benefit of the Pittsburgh Pirates and the
Pittsburgh Steelers is an illegal act.
34. PAD is under a fiduciary responsibility to the citizens and taxpayers of Allegheny
County to prudently and wisely disburse funds in support of regional assets. The making of
a massive commitment of taxpayer money for the benefit of the Pittsburgh Pirates and the
Pittsburgh Steelers without the advance disclosure of the financial condition of such
entities may result in the existence of empty and unused stadiums should their actual
financial condition parallel that of the Pittsburgh Penguins and lead to a Federal
Bankruptcy proceeding in which lease commitments or commitments to remain in Pittsburgh
could be voided by a bankruptcy court order.
35. RAD is violating its fiduciary responsibility to the citizens and taxpayers of
Allegheny County to prudently and wisely disburse funds in support of regional assets in
the following particulars constituting failure of due diligence:
(a) There has not been provided to RAD by the Pittsburgh Pirates and the Pittsburgh
Steelers specific information as to the source of their purported private contributions in
the respective amounts of $35,000,000.00 and $50,000,000.00;
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(b) RAD has not obtained any guaranty that the State Government will
come through with the touted $300,000,000.00 contribution;
(c) There has been no study or plan made by RAD as to which regional
assets would have to have their financial support reduced or eliminated in the event of an
economic recession, with RAD's commitments for the stadiums being locked in for thirty
years;
(d) There has been no disclosure or clarification as to how RAD or the
PAA would earn $36,000,000.00 in arbitrage interest earnings by investing unused bond
proceeds prior to the expenditure of the revenue bond funds;
(e) There is no provision to prevent a default on the proposed revenue
bonds by PAA, guaranteed by RAD and not by the Pittsburgh Pirates and the Pittsburgh
Steelers, in the likely event in the year 2000 that the people of Allegheny County vote to
rescind the sales tax supporting RAD in a referendum conducted under the Home Rule
Charter;
(f) There is no provision for dealing with a
shortage that may develop from the failure to fund or the reduced funding of any other of
the proposed contributions to these projects whether from governmental or private sources,
which would leave RAD in a position to make up that shortage in order to prevent a default
on the payment of interest and/or principal on the revenue bonds to be issued by PAA;
(g) There is no provision, explanation or clarification as to how any
cost overruns, whether in site acquisition and
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development and/or construction, would be covered;
(h) There has been no explanation provided by RAD as to bow or why it is
establishing its debt ceiling at $205,000,000.00 for these projects when it is only
guarantying $170,000,000.00 of PAA revenue bonds, giving an indication that the additional
$35,000,000.00 may be to cover the anticipated cost overruns on the now estimated
$803,000,000.00 project; and
(i) By not insisting upon and receiving full and completc financial
disclosure from the Pittsburgh Pirates and the Pittsburgh Steelers, as required by
Statute, PAD is making a commitment of $417,000,000.00 of taxpayer money for the use and
benefit of the Pittsburgh Pirates and the Pittsburgh Steelers without any assurances that
the teams are profitable and in good financial condition so that there is no repeat of the
bankruptcy filing of the Pittsburgh Penguins only two years after having received the
benefit of $12,400,000.00 in taxpayer moneys from PAD.
36. PAD is obligated to conduct financial and performance reviews and
audits of regional assets which would include the Pittsburgh Pirates and the Pittsburgh
Steelers, but there is no requirement in the Resolution for any such auditing or reporting
accountability.
37. Since the Resolution provides funding for 32 years, there will be 32
years of noncompliance with the governing statute which clearly indicates that the illegal
acts of RAD as
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aforesaid would be of an ongoing and continuing nature and character.
38. The Plaintiff is a coalition of taxpayers in Allegheny County
subject to the payment of the 1% sales tax that flows from taxpayers to the vendors to the
State Treasurer to RAD, if legally flowing, or to the PAA strawman, if illegally.
Plaintiff and 1,300,000 other taxpayers similarly situated shall be paying taxes for 32
years in support of illegal activities.
39. Said illegal actions of RAD, if permitted to continue, would
constitute a precedent for additional illegal activities by RAD all to the long term
detriment of the citizens and taxpayers of Allegheny County.
40. PAA, in anticipation of receiving the aforesaid moneys from RAD, has
already commenced site acquisition and demolition of existing buildings and other
structures in the area proposed for the construction of the stadiums.
41. Plaintiff and those similarly situated have no adequate remedy at
law as money damages would not compensate for the loss that the Plaintiff and other
taxpayers would sustain in funding the existence of the infamous Plan B stadiums which
entails the destruction and demolition of Three Rivers Stadium, a public facility, and a
unique piece of real property, on which there exists currently a large public debt
incurred in 1986 when the
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Stadium Authority borrowed $20,000,000.00 by selling 20 year bonds, due in the year
2006, and thereafter transferred the $20,000,000.00 to the City of Pittsburgh which in
turn loaned that sum to the Urban Redevelopment Authority of the City of Pittsburgh which
in turn loaned the $20,000,000.00 to Pittsburgh Associates to buy the Pittsburgh Pirates.
In 1996, when the ownership of the Pittsburgh Pirates changed, an additional
$11,500,000.00 was borrowed and given to the Pittsburgh Pirates. The debt totals
$31,500,000.00 and RAD has neither offered nor obtained any explanation as to how this
public debt will be paid and what the effect on the outstanding bonds would be if the
revenue from Three Rivers Stadium were pledged to support these bonds and/or if the
stadium itself were pledged as collateral once the demolition takes place.
42. The members of the governing board of RAD include four members appointed by the
governing body of the county who shall serve at the pleasure of the governing board of the
county, and two members appointed by the Mayor of Pittsburgh who shall serve at the
pleasure of the Mayor and one member appointed by the vote of at least five of the members
appointed by the county and the Mayor from a list of nominees provided by regional
economic and community development organizations. 16 P.s. §6112B(a) (1) (2) (3).
43. The term of office of members of the board appointed as aforesaid shall be
coincident with the term of the office of the
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appointing authority of the members and until their successors are appointed and
qualify. The term of office of members of the board appointed by the other members shall
be for a term of two years and until their successors are appointed and qualify. A person
appointed to the board when a vacancy occurs during the term of office of a member of the
board shall serve for the remainder of the term. 16 P.S. § 6111-B(b).
44. Said governing board of RAD at full voting strength would contain seven members.
45. An affirmative vote of at least six of those seven voting members is necessary for
passing capital and operating budgets and to enter into cooperation and support agreements
with regional assets. 16 P.S. § 6111-B(d).
46. By an official agenda action of the County Commissioners, Fred Baker was appointed
to a seat on the governing board of RAD with a term that was to expire on January 1, 2000.
47. County Commissioner, Bob Cranmer, engaged in discussions with Fred Baker pressuring
him to vote in favor of the Resolution. Baker had advised Cranmer that he did not think
that it was prudent nor legal and that he intended to vote against the Resolution along
with Ralph DeStefano which would have denied the Resolution the necessary number of votes
to pass.
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48. When Cranmer learned that he could not persuade Baker to change his position on the
upcoming vote, he demanded that Baker resign from the governing board and informed him
that he would take action to remove him from the board if he did not resign, action which
would cause substantial embarrassment to Baker. Rather than undergo that experience, and
under such pressure, Baker resigned prior to the vote.
49. No official agenda action was ever taken by the County Commissioners to remove
Baker from the governing board as required by the Statute.
50. In thus removing Baker from the governing board, Cranmer acted arbitrarily,
capriciously and in violation of the Statute. Baker served at the pleasure of the
governing body of the county and not at the pleasure of Cranmer.
51. Thereafter, but prior to the vote on the Resolution, the governing body of the
county appointed David W. Christopher to the RAD board to take the seat which had been
declared vacant due to the resignation of Baker.
52. Said forced resignation was violative of the public policy of the Commonwealth, and
of the statutory mechanism for the removal of a board member. Such forced resignation was
an illegal act and thus null and void and an ultra vires act under the Statute which
rendered said resignation void ab initio. No
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vacancy existed to which David W. Christopher could have been appointed and so David W.
Christopher is not a member of the board.
53. Not being a member of the governing board of RAD, the vote of David W. Christopher
in favor of the Resolution was an illegal act and is a nullity; and the Resolution was
likewise an illegal act and is a nullity as it failed to receive the statutorily required
six votes for passage.
54. As set forth in the Statute, a member of the governing board shall not, concurrent
with the member's position with RAD, be a public official or a public employee. 16 P.S. §
6117-B.
55. A public official is any elected or appointed official in the executive,
legislative or judicial branch of Commonwealth government or any political subdivision of
the Commonwealth. A public employee is any individual employed by the Commonwealth or a
political subdivision. 16 P.S. § 6102-B.
56. Concurrent with his position on the governing board of RAD and at the time of the
vote on the Resolution, Gerald J. Voros, was and is the Chairman of the Parking Authority
of the City of Pittsburgh.
57. His voting on the Resolution as a member of the Board in violation of this
statutory provision invalidates his vote as his
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position on the board is invalid and illegal due to this mandatory
provision of the Statute.
WHEREFORE, Plaintiff demands that this Honorable Court enjoin the Defendants from
implementing and/or carrying out the terms of the Resolution. Specifically, the Court
should:
(1) enjoin the Defendants from assigning the right to the sales tax revenues to PAA or
to anyone else;
(2) enjoin the Defendants from delegating RAD's oversight responsibilities to PAA or to
anyone else;
(3) enjoin the Defendants from carrying out any cooperation and support agreements made
without benefit of the required public hearings;
(4) enjoin the Defendants from carrying out cooperation and support agreements with any
entities other than the actual operators of the regional assets, the Pittsburgh Pirates
and the Pittsburgh Steelers;
(5) enjoin the Defendants from participating in any action that would bring about or
sustain a new bureaucracy known as the Public Auditorium Authority;
(6) enjoin the Defendants from making any commitment of financial support to the
Pittsburgh Pirates1 the Pittsburgh Steelers or PAA in excess of the first ten
years of RAD's existence as established by the governing statute;
(7) enjoin the Defendants from providing any financial support to the Pittsburgh
Pirates, the Pittsburgh Steelers or PAA without full and complete financial disclosure by
all three
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parties to all of the members of the RAD board;
(B) order public hearings to take place on cooperation and support agreements;
(9) enjoin the Defendants from providing financial support for the stadium projects
until and unless cooperation and support agreements with the Pittsburgh Pirates and the
Pittsburgh Steelers are concluded providing for reporting and accountability by the teams
to RAD;
(10) declare the resignation of Fred Baker from the PAD board a nullity, and to order
his reinstatement;
(11) declare the appointment of David W. Christopher to the board as a replacement for
Fred Baker to be null and void; and to enjoin David W. Christopher from continuing to
serve on said board;
(12) declare the vote of David W. Christopher in support of the Resolution to be null
and void;
(13) declare that the position on the RAD board of Gerald J. Voros is null and void
from the moment he became a public official and/or a public employee and that his vote in
favor of the Resolution was invalid because at the time of said vote he held the position
of Chairman of the Parking Authority of the City of Pittsburgh;
(14) declare that the Resolution did not receive enough votes to pass and is therefore
null and void; and
(15) for such other relief as this Court sees fit to grant.
|
 DAVID K. McMULLIN, ESQUIRE
Attorney for Plaintiff
Manor Complex, Suite 804
564 Forbes Avenue
Pittsburgh, PA 15219-2903
(412) 471-3011
PA ID # 11009 |
To the O Plaintiffs
Ä Defendents within named Your are notified to
plead to the enclosed complaint withing twenty (20) days from service hereof or a default
judgement may be against you:
David K. McMullin, Esquire
Attorney for Ä Plaintiffs
O Defendants |
|
PART II
CONTINUED |
