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IN THE COMMONWEALTH COURT OF PENNSYLVANIA
DOM GIORDANO,
:
Petitioner
:
:
v.
: No. 103 M.D. 1999
:
TOM RIDGE, GOVERNOR,
:
COMMONWEALTH OF
:
PENNSYLVANIA and
:
COMMONWEALTH
OF :
PENNSYLVANIA and
:
MIKE FISHER, ATTORNEY
:
GENERAL, COMMONWEALTH
:
OF PENNSYLVANIA and
:
CITY OF PHILADELPHIA and
:
CITY OF PITTSBURGH,
:
Respondents
: Argued: May 19, 1999
BEFORE:
HONORABLE JAMES GARDNER COLINS, President Judge
HONORABLE JOSEPH T. DOYLE, Judge
HONORABLE DORIS A. SMITH, Judge
HONORABLE DAN PELLEGRINI, Judge
HONORABLE ROCHELLE S. FRIEDMAN, Judge
HONORABLE JIM FLAHERTY, Judge
HONORABLE BONNIE BRIGANCE LEADBETTER, Judge
OPINION BY
PRESIDENT JUDGE COLINS
FILED: August 31, 1999
On February 12, 1999, Dom Giordano (Taxpayer) filed a petition for
review in the nature of an action seeking declaratory and injunctive relief invoking
this court's original jurisdiction. Presently before this court for disposition are the
preliminary objections of Tom Ridge, Governor of the Commonwealth of

Pennsylvania, Mike Fisher, Attorney General of the Commonwealth of
Pennsylvania, the Commonwealth of Pennsylvania, and the Cities of Philadelphia
and Pittsburgh (collectively, Respondents).
The pertinent facts of this case, as pleaded in Taxpayer's petition, are
as follows. On February 9, 1999, the Governor signed into law The Capital
Facilities Debt Enabling Act, Act of February 9, 1999, P.L. ___, 72 P.S.
§§3919.101-3919.5102 (Act 1 or Act).1 Act 1 authorizes, and provides procedures
for, application to the Commonwealth by municipalities and municipal authorities
for state funding of certain capital projects. The Act authorizes the undertaking of
debt by the Commonwealth's issuance of general obligation bonds for the purpose
of making grants to local authorities for the construction, repair, renovation,
improvement, or equipment of qualifying capital projects.
Chapter 5 of the Act, which addresses sports facilities financing,
provides for grants of Commonwealth funds to a municipality or authority for the
purpose of constructing or renovating a qualifying sports facility upon application
by the municipality or authority and approval by the Office of the Budget of the
Commonwealth. The grants contemplated under Act 1 are made to the contracting
municipality or authority under Section 502 of Act, and not directly to the
tenant/professional sports organization. Furthermore, tenants are required to
comply with certain certifications and conditions under Section 504 of the Act.
These include such conditions as an agreement by the tenant leasing the facility to
remain in the facility for a specified period of time; an agreement that, if the tenant
sells or transfers its sports franchise, the transferee is to be bound by the same

1Act 1 is a reenactment and continuation of Article XVI-B of the law known as the Fiscal
Code, Act of April 9, 1929, P.L. 343, as amended, formerly found at 72 P.S. §§ 1601-B-1616.2
2

conditions as the transferor; an agreement that any costs of design and construction
that are due to delays or overruns are the responsibility of the municipality,
authority or tenant; an agreement that either the municipality or tenant is
responsible for capital improvements, security, maintenance, and utilities at the
facility; an agreement to set aside a certain number of days for the use of the
facility by the municipality and the Commonwealth; and an agreement that the
tenant is to make an additional rental payment of $25 million after the first ten-year
period of occupancy, which payment may be reduced by certain tax credits.2
Taxpayer filed a petition for review claiming that Act 1 violates
Article VIII of the Constitution of Pennsylvania by unconstitutionally incurring
debt on behalf of the state and/or by pledging the credit of the Commonwealth to
an individual, company, corporation, or association.3 The petition for review
requests that this Court issue a declaratory judgment finding Act 1 unconstitutional
and permanently enjoin Respondents from disbursing any funds under Act 1. In
response to Taxpayer's petition, Respondents filed preliminary objections in the

2Tax credits would be calculated by a mathematical formula that, simply stated, is based
on the increased tax revenue generated by the facility. Should the facility produce sufficient tax
revenue, as calculated by the formula, this revenue would operate as a credit against the
additional rental payment with the strong potential to reduce it to zero. Therefore, the additional
payment would be made only in the event that the facility fails to generate tax revenue sufficient
to produce the credit.
3Along with the petition for review, Taxpayer filed a motion for preliminary injunction
and a motion for ex parte preliminary injunction, which was treated by this court as a request for
a special injunction without notice, and denied on February 12, 1999. Following a hearing on
February 25, 1999, this Court also denied Taxpayer's motion for preliminary injunction.
Taxpayer appealed the denial of the preliminary injunction to the Supreme Court and petitioned
that Court for an injunction pending appeal. On March 26, 1999, the Supreme Court denied the
request for an injunction pending appeal and directed that the appellate briefs be filed on April 9,
1999.
3

nature of a demurrer alleging that Taxpayer has failed to state a claim sufficient to
permit an award of the relief requested.4
Initially, we note that in ruling on preliminary objections, in the nature
of a demurrer, the Court accepts as true all well-pleaded material allegations in the
petition for review, as well as all inferences reasonably deduced therefrom.
Envirotest Partners v. Department of Transportation, 664 A.2d 208 (Pa. Cmwlth.
1995). The court need not accept as true conclusions of law, unwarranted
inferences from the facts, argumentative allegations, or expressions of opinion. Id.
A demurrer will not be sustained unless the face of the pleadings shows that the
law will not permit recovery, and any doubts should be resolved against sustaining
the demurrer. DeHart v. Horn, 694 A.2d 16 (Pa. Cmwlth. 1997). Additionally, an
Act of the general assembly may be declared unconstitutional only where it clearly,
palpably, and plainly violates the Constitution. Consumer Party of Pennsylvania v.
Commonwealth, 510 Pa. 158, 507 A.2d 323 (1986). It is axiomatic that Acts of the
General Assembly enjoy a strong presumption of constitutionality. Id. With these
standards in mind, we consider Respondents' preliminary objections.
Article VIII, Section 8 of the Pennsylvania Constitution provides,
The credit of the Commonwealth shall not be
pledged or loaned to any individual, company,
corporation or association nor shall the
commonwealth become a joint owner or stockholder
in any company, corporation or association.

4The role of the trial court in ruling on preliminary objections in the nature of a demurrer
is to determine whether or not the facts pleaded are legally sufficient to permit the action to
continue. Where, as here, there is no factual dispute in the case, only a dispute over the
interpretation of the Constitution, it is the appropriate juncture for the court to interpret the
pertinent provisions of the Pennsylvania Constitution and determine the merits of Taxpayer's
claim. Firing v. Kephart, 466 Pa. 560, 353 A.2d 833 (1976).
4

Our Supreme Court discussed the intent of Article VIII, Section 8 in
Tosto v. Pennsylvania Nursing Home Loan Agency, 460 Pa. 1, 331 A.2d 198
(1975). The Court observed that Article VIII, Section 8 was adopted in 1857 in
reaction to, and with the specific purpose of, eliminating the type of speculative
financing by the Commonwealth that had become prevalent in the mid-nineteenth
century in an effort to aid the growth of the railroads. The Court stated, "[t]he term
`pledge or loan of credit' is a term of art referring to these financing devices and
was clearly not intended to prohibit other sorts of financial transactions between
the Commonwealth and private citizens or corporations . . . ." Id. at 15-16, 331
A.2d at 205. Additionally, our Supreme Court has held that this language does not
prohibit loans from the Commonwealth to a municipal authority, even where the
ultimate beneficiary of such loan may be a private entity. Basehore v. Hampden
Industrial Development Authority, 433 Pa. 40, 248 A.2d 212 (1968). In Basehore,
taxpayers challenged the Industrial Development Authority Law5 on several
grounds, including an allegation that the law violated Article VIII, Section 8.6
Justice Jones, writing for a three-justice plurality of the Supreme Court, concluded,
The money . . . will go to the Authorities and not
to the industrial corporations; the Authorities will own
the factories; the corporations will lease the plants
from the Authorities. Therefore, if credit is being lent
to anyone, it is being lent to the Authorities. On
several occasions we have held that authorities similar
to the Industrial Development Authorities involved in

5 Act of August 23, 1967, P.L. 251, as amended, 73 P.S. §§371-386. A 1971 amendment
changed the title of the law to the "Industrial and Commercial Development Authority Law."
6 Article VIII, Section 8 was renumbered in 1967 and 1968. Although the section had
already been renumbered by the time the Basehore opinion was filed, the opinion refers to the
section under its prior designation as Article IX, Section 6.
5

this case were not individuals, companies,
corporations or associations within the meaning of
[Article VIII, Section 8]. See: Bernstein v. City of
Pittsburgh, 366 Pa. 200, 210, 77 A.2d 452 (1951);
McSorley v. Fitzgerald, 359 Pa. 264, 271, 59 A.2d
142 (1948); Belovsky v. Redevelopment Authority of
City of Philadelphia, 357 Pa. 329, 345, 54 A.2d 277,
172 A.L.R. 953 (1947); Williams v. Samuel, 332 Pa.
265, 275, 2 A.2d 834 (1938); Tranter v. Allegheny
County Authority, 316 Pa. 65, 81, 183 A. 289 (1934).
433 Pa. At 59, 248 A.2d 222.
Under Act 1, as in Basehore, the money flows from the
Commonwealth to a municipality or municipal authority and not directly to the
private entity. Therefore, even assuming the credit of the Commonwealth were
being pledged or loaned within the meaning of Article VIII, Section 8, it is to a
municipality or authority and not to any "individual, company, corporation or
association."
Given our Supreme Court's pronouncements interpreting Article VIII
and the type of financing proscribed by Act 1, we agree that Taxpayer has failed to
state a claim of unconstitutional incursion of debt or pledging of the credit of the
Commonwealth.
Accordingly, Respondents' preliminary objections in the nature of a
demurrer are sustained. Taxpayer's petition for review fails to state a cause of
action upon which the requested relief may be granted. Taxpayer's petition for
6

review in the nature of a complaint for declaratory judgment and injunctive relief is
dismissed with prejudice.
________________________________________
JAMES GARDNER COLINS, President Judge
Judge McGinley did not participate in the decision in this case.
7

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
DOM GIORDANO,
:
Petitioner
:
:
v.
: No. 103 M.D. 1999
:
TOM RIDGE, GOVERNOR,
:
COMMONWEALTH OF
:
PENNSYLVANIA and
:
COMMONWEALTH
OF :
PENNSYLVANIA and
:
MIKE FISHER, ATTORNEY
:
GENERAL, COMMONWEALTH
:
OF PENNSYLVANIA and
:
CITY OF PHILADELPHIA and
:
CITY OF PITTSBURGH,
:
Respondents
:
O R D E R
AND NOW, this 31st day of August, 1999, Respondents' preliminary
objections in the nature of a demurrer are sustained. Taxpayer's petition for
review fails to state a cause of action upon which the requested relief may be
granted. Taxpayer's petition for review in the nature of a complaint for declaratory
judgment and injunctive relief is dismissed with prejudice.
________________________________________
JAMES GARDNER COLINS, President Judge

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
DOM GIORDANO,
:
Petitioner
:
:
v.
:
NO. 103 M.D. 1999
:
ARGUED: May 19, 1999
TOM RIDGE, GOVERNOR,
:
COMMONWEALTH OF
:
PENNSYLVANIA and
:
COMMONWEALTH OF
:
PENNSYLVANIA and
:
MIKE FISHER, ATTORNEY
:
GENERAL, COMMONWEALTH
:
OF PENNSYLVANIA and
:
CITY OF PHILADELPHIA and
:
CITY OF PITTSBURGH,
:
Respondents
:
BEFORE: HONORABLE JAMES GARDNER COLINS, President Judge
HONORABLE JOSEPH T. DOYLE, Judge
HONORABLE DORIS A. SMITH, Judge
HONORABLE DAN PELLEGRINI, Judge
HONORABLE ROCHELLE S. FRIEDMAN, Judge
HONORABLE JIM FLAHERTY, Judge
HONORABLE BONNIE BRIGANCE LEADBETTER, Judge
DISSENTING OPINION
BY JUDGE SMITH
FILED: August 31, 1999
I dissent from the majority decision to grant Respondents' preliminary
objections to Petitioner's petition for review in the nature of a complaint for
declaratory judgment. Petitioner has stated a clear cause of action in his case
which challenges the constitutionality of the Capital Facilities Debt Enabling Act
9

(Act 1).7 The majority correctly notes the case law of this Commonwealth that an
act of the general assembly may be declared unconstitutional only where it clearly,
plainly and palpably violates the Constitution, citing Consumer Party of
Pennsylvania v. Commonwealth, 510 Pa. 158, 507 A.2d 323 (1986), but it fails to
thoroughly examine one of the most fundamental of precepts, viz., that the
Commonwealth shall not incur debt on behalf of the state and/or pledge the credit
of the Commonwealth to an individual, company, corporation or association or any
other entity unless it is for a public purpose. Article VIII, §8, Pa. Constitution.
The majority and Respondents emphasize that the funds generated
from the Commonwealth's incurring debt to fund new sports stadiums are to be
made available to a contracting municipality or authority rather than to an
individual, company, corporation or association, but they ignore the undisputed
fact that the pass-through is for the sole benefit of private sports organizations
which operate for private, profit-making purposes. These organizations do not
perform a public or governmental function; rather they operate to attract a targeted
group of people -- sports patrons and enthusiasts -- to attend paid football, baseball
or other sporting events for the personal and private social enjoyment of the
patrons.
In Tosto v. Pennsylvania Nursing Home Loan Agency, 460 Pa. 1, 331
A.2d 198 (1975), a case of first impression involving the application of Article
VIII, §8 to the sale of general obligation bonds backed by the credit of the
Commonwealth as here, the Supreme Court stated that "pledge or loan of credit" is
a term of art that did not prohibit various sorts of financial transactions between the
Commonwealth and private citizens or corporations that serve a public purpose

7Act of February 9, 1999, P.L. 1, 72 P.S. §§3919.101 3919.5102.
10

and are otherwise lawful. In Tosto the Legislature submitted to the voters the
question of whether the Commonwealth should incur debt to make loans available
for the repair, reconstruction and rehabilitation of nursing homes in the
Commonwealth to meet health and safety standards. The voters approved the plan
in 1974, and the Supreme Court rejected all challenges to the constitutionality of
the former Nursing Home Loan Agency Law8 as it was enacted for a proper public
purpose. The court held that the presumption of constitutionality of the challenged
legislation was strengthened by the fact that the voters had approved the loan
program by referendum in 1974. In the present case, the stadium funding plan was
never submitted to the voters for their approval.
Black's Law Dictionary 1231 (6th ed. 1990) defines public purpose in
relevant part as follows:
The term is synonymous with governmental
purpose. [T]he essential requisite [is] that a public
service or use shall affect the inhabitants as a community,
and not merely as individuals. A public purpose or
public business has for its objective the promotion of
public health, safety, morals, general welfare, security,
prosperity, and contentment of all the inhabitants or
residents within a given political division, as, for
example, a state, the sovereign powers of which are
exercised to promote such public purpose or public
business.
Thus the threshold question to be resolved in determining whether Petitioner has
stated a cause of action is whether the contemplated sports stadium funding
promotes the health, safety, morals, general welfare, security, prosperity and

8Act of July 22, 1974, P.L. 610, as amended, formerly 62 P.S. §§1521.101 1521.305,
repealed by Section 9(a) of the Act of February 23, 1996, P.L. 27.
11

contentment of all of the citizens and residents of the Commonwealth or of the
municipalities in which the new stadiums are to be constructed.
Relying on President Judge Colins' memorandum opinion denying
Petitioner's motion for preliminary injunction and the Supreme Court's decision in
Basehore v. Hampden Industrial Development Authority, 433 Pa. 40, 248 A.2d 212
(1968), Respondents argue that even though the professional sports organizations
for whom the legislation was enacted will be the primary beneficiaries, that fact
does not render it unconstitutional. They correctly maintain that the Legislature
may address an economic problem to benefit the public, but it may do so, however,
only where the challenged legislation confers a public benefit and promotes a
public purpose. Respondents further assert that because Act 1 authorizes grants
with conditions to municipalities and authorities as opposed to grants to an
individual, company, corporation or association and addresses "construction and
renovation of certain public facilities," its constitutionality is presumed. Moreover,
the majority evidently relies in part upon certain specified conditions attached to
the funding to conclude that Act 1 is constitutional.9
Nowhere in the majority opinion nor in Respondents' brief is there
any persuasive argument or case authority for the presumption or proposition that
the planned public funding for the construction or renovation of sports stadiums for
professional sports organizations serves a public purpose and is otherwise lawful.
The sports organizations benefited by Act 1 are solely owned by private interests,

9The conditions include, among other things, setting aside an unspecified number of days
for the municipality or the Commonwealth to use the new or renovated facilities contemplated by
Act 1 and requiring the private sports organizations to make rental payments of $25 million after
the first ten-year period of occupancy (possibly reduced to zero by available credits). These
conditions do not elevate this venture to one of governmental proportions for the benefit of the
general public.
12

although that fact alone is not dispositive; the alleged economic development to
flow from the new construction is speculative; the alleged impact on
unemployment is speculative as opposed to the clearly stated employment
projections in Basehore; the long-term jobs, if any, which may be created for the
communities at large surrounding the new stadiums would be seasonal and in all
probability low-level; and the Court may take judicial notice of the fact that many
of the sports players who contract with the professional sports organizations earn
multi-millions in annual salary. (The dissent notes the 1999 Philadelphia Eagles
$55 million 7-year contract with a recent first-round draft pick.) These factors
raise genuine and fundamental questions as to the public benefit and public
purpose behind the enactment of Act 1.
The legislation at issue in Basehore, originally titled the Industrial
Development Authority Law,10 represented a legislative effort to resolve serious
unemployment problems in parts of the Commonwealth. The Supreme Court
noted the express principle behind creation of the industrial development projects:
to encourage private manufacturing in the state with the resulting increase in
employment and the development of new jobs, a public purpose enforced within
the police powers of the Commonwealth. The legislative findings were that
unemployment was a serious problem and that industrial development projects
represented an effective tool to combat that problem. Notably, Justice Roberts
emphasized in his concurring opinion in Basehore that "although the immediate
beneficiary is intended to be the industrial lessee, it acts solely as a conduit by
which the public may realize the ultimate benefit of local economic growth. Here,

10Act of August 23, 1967, P.L. 1609, as amended, 73 P.S. §§371 386, retitled the
Economic Development Financing Law by Section 1 of the Act of December 17, 1993, P.L. 490.
13

... the totality of the projects will be devoted to their stated purpose the reduction
of unemployment through the creation of new plant development. While private
interests are necessarily aided, the purpose of this aid is to foster a vital public
interest." Id., 433 Pa. at 66 67, 248 A.2d at 225.
The legislative intent behind Act 1 does not represent the type of
public benefit or public purpose contemplated by Article VIII. Respondents'
analogy to the state's raising nursing home health and safety standards to protect
nursing home residents or acting within its police powers to develop jobs to
address serious unemployment problems may not, without more, transform funding
for private sports stadiums to the level of governmental or public purpose
necessary to confer constitutionality upon the challenged legislation. The Court
therefore should not sustain Respondents' demurrer in the face of this record, and
any doubts about the merits should be resolved in Petitioner's favor. DeHart v.
Horn, 694 A.2d 16 (Pa. Cmwlth. 1997). Hence, Respondents' preliminary
objections should be denied, and Petitioner should be permitted to proceed with his
declaratory judgment action.

DORIS A. SMITH, Judge
Judge Doyle joins in this dissenting opinion.
14