Responding to Public Record Requests for Building Permit Documents

Many of you have recently received a request to provide copies of building permits issued in the past, names and addresses of building permit applicants, and also copies of building permits as they are issued in the future. We received several questions whether the document request is proper.

We are sending you this update to clarify your public record responsibilities regarding building permits under the Pennsylvania Right-To-Know Law, 65 P.S. §§67.101 et seq. (“RTKL”), and the Pennsylvania Uniform Construction Code (“UCC”) regulations codified at 34 Pa. Code §403.85(e).

Building Permit York PA

What Are Your Rights to Municipal Public Records?

A record is not a public record subject to disclosure if it is exempt from being disclosed under any Federal or State law, or regulation, or judicial order or decree. The UCC Regulations state in §403.85(e) that “a municipality and a third party agency acting on behalf of a municipality may prohibit the release of applications received, building plans and specifications, inspection reports and similar documents to the public under the … Right-To-Know Law.”

The Township is required to provide copies of approved building permits. The Pennsylvania Office of Open Records (hereafter, “OOR”) has held that approved building permits are items issued by the Township, and therefore they don’t receive the same exclusionary protection that “applications” and “building plans and specifications” receive because the latter are documents submitted to the Township by third parties. See In the Matter of Pohlman v. Middle Smithfield Township, OOR AP 2011-0660.

Furthermore, the OOR has previously held that building permits are not facially exempt under the RTKL. See Pleasantville Water Auth. v. West St. Clair Twp., OOR Dkt. AP 2010-0465.

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Limitations on Requirements for Municipal Public Records Requests

Municipalities do not, however, have to produce building permit applications or names and addresses from applications. Under the UCC, a municipality may prohibit the release of “applications received, building plans, and specifications, inspection reports, and similar documents.” See 34 Pa. Code § 403.85(e). Therefore, under the UCC, a Township may exercise its discretion and refuse to release building permit applications or names and addresses from applications pursuant to the RTKL.

Municipalities, likewise, do not have to compile lists of the names and addresses of people with permits. An agency is not required to modify its practices by compiling lists of information when such lists are not otherwise kept by the agency or required by law, and an agency is not required to modify its duties to become the agent of a commercial enterprise. Current Status, Inc. v. Hykel, 778 A.2d 781 (Pa. Cmwlth. Ct. 2001).

Furthermore, the RTKL only requires agencies to make records available for inspection; it is up to the requester to conduct searches or compile lists from those records. Lewis, III v. Pennsylvania Dept. of Transp., 777 A.2d 538 (Pa. Cmwlth Ct. 2001).

Municipalities, likewise, do not have to produce future building permits as they are issued. Future permits do not currently exist. The RTKL does not require agencies to compile and distribute information they do not possess at the time of the request. Dynamic Student Services v. State System of Higher Educ., 697 A.2d 239. If the requester wants access to future monthly permit records, the requester will have to submit monthly requests for the permits that have already been issued.

Please contact us or call 717-845-1524 if you have more specific questions about responding to these record requests.

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Private street improvement may constitute land development

In Ruckert v. Wayne Township et al., Civil No. 10468 of 2012 (Slip Op. Jan. 23, 2013), the Lawrence County, Pennsylvania Court of Common Pleas recently ruled on issues related to a homeowner’s private undertaking to construct an unopened road using gravel, stones and bricks.  The Court, in ruling on preliminary objections, found that the construction constituted land development under both the Wayne Townships’ (the “Township”) Subdivision and Land Development Ordinance (“SALDO”) and the Municipalities Planning Code (“MPC”) and that a private cause of action exists for an aggrieved landowner to require the Township to enforce its SALDO.

The Defendant homeowners were attempting to develop roadways shown on the subdivision plan, but never opened, without first submitting land development plans, obtaining Township approval, or posting security under the SALDO.  The development of streets by the Defendants included a section of an undeveloped shared private road and a section of unopened public street that the Township did not maintain or use.  The Defendants accessed their property via the undeveloped and unopened roads.  The “street construction” included clearing of trees and brush and the laying of bricks, stone, and gravel to the unopened parts of the streets to create a road to their property.  Plaintiffs claimed Defendants’ actions in constructing the road created deep, unfinished ruts in the road directly fronting Plaintiff’s property, thereby creating safety concerns for cars and pedestrians as well as diminishing the property value.

The Court found that the Defendants actions in constructing the road fell within the Township’s definition of land development in its SALDO, which is substantially identical to the MPC’s definition of land development.  Additionally, the Court found §617 of the MPC provided a private cause of action for an aggrieved landowner for violation of any ordinance enacted under the MPC.  The Court rejected the Township’s argument that § 617 only applies to issues related to a zoning ordinance by finding § 617 expressly states “any Ordinance enacted under this Act.”  Therefore, the Court found that Plaintiffs had a private cause of action in equity requiring the Township to enforce its SALDO against the Defendants.

This case reinforces the jurisdiction of a municipality over any development that has a nexus to the general public interest, whether by streets, curbs, sidewalks, stormwater management, emergency services, or public water and sewer.  The case also highlights the risk to a municipality of being joined in litigation for not exercising regulatory authority where it exists.

Please call us if you have more specific questions.  If you would like to be added to this distribution list, please email Ctutino@mpl-law.com.

New Sign Retroreflectivity Requirements

Sign Retroreflectivity Requirements

The Federal Highway Administration (“FHWA”) recently adopted new regulations aimed at implementing and enforcing retroreflectivity standards of traffic control signs.  “Retroreflectivity” describes how light is reflected from a surface and returned to its original source.  Because the retro-reflective components in signs have a limited life, the new regulations seek to prevent noncompliant traffic control signs.  All agencies that own and maintain traffic signs are required to adhere to the new requirements for their traffic control signs. The new FHWA standards, which are contained in the manual on Uniform Traffic Control Devices (“MUTCD”), establish minimum levels of sign retroreflectivity.

By June 13, 2014, all agencies which own and maintain traffic control signs must establish and implement a written traffic sign management or assessment plan that is designed to maintain regulatory and warning sign retroreflectivity at or above the established minimum levels. Generally, the assessment or management plan must catalog all retroreflective traffic signs owned and maintained by an agency, note their location, note their current retroreflective levels, and put in place a systematic method of replacing noncompliant traffic control signs.  Although a system or schedule for replacement must be in place, FHWA generally states the replacement should occur as resources become available.  However, a schedule requiring replacement “as needed” will be considered unacceptable to the FHWA.

This compliance date does not require replacement by a particular date; rather it only requires agencies to implement an assessment or management plan for maintaining and evaluating applicable standards of sign retroreflectivity.  Additionally, although the compliance date relates only to regulatory and warning traffic signs, the FHWA has stated that it still expects agencies to establish a method for assessing and maintaining retroreflectivity standards for all types of signs as required by the regulations.  This means that non-traffic control signs, such as guide signs, still are required to be included in an agency’s assessment and management plan; however, they may subsequently be added as resources allow rather than by the compliance date.

In addition to improving safety for drivers, the implementation of a reasonable plan for maintaining sign retroreflectivity will serve to defend public agencies in the event of tort liability claims and litigation surrounding sign retroreflectivity. Public agencies that demonstrate a reasonable maintenance plan as outlined in the MUTCD should be better equipped to successfully defend against tort litigation involving claims of improper sign retroreflectivity, as the FHWA standards will likely be adopted by courts as the required standard in litigation surrounding retroreflectivity of traffic control signs. The public agency will need to be prepared to defend its replacement scheduling decisions where liability issues arise.

Due to the technical nature of this evolving field, additional research is required to ensure each municipality takes the requisite steps to comply with the retroreflectivity standards and new implementation requirements.  Below is a list of resources to further review compliance measures.  Additionally, some businesses have begun to work with municipal retroreflectivity compliance.  Please call us for such contacts or if you have more specific questions.  If you would like to be added to this distribution list, please email Ctutino@mpl-law.com.

Sign Retroreflectivity Toolkit http://safety.fhwa.dot.gov/roadway_dept/night_visib/retrotoolkit/index.htm
Sign Retroreflectivity Guidebook http://www.ttap.mtu.edu/wisafety09/eng/eng3/Rauch_WisDOT_Sign_Retroreflectivity.pdf
Nighttime Visibility  Retroreflectivity http://safety.fhwa.dot.gov/roadway_dept/night_visib/

 

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LLC or corporation: Which is right for you?

Fifteen years ago, most business entities formed for liability protection were corporations. Most small, closely held corporations would elect s-corporation status to avoid the double taxation of a c-corporation and be taxed as a pass-through entity. However, s-corporation tax status has pitfalls. An s-corporation may only have one class of stock and may only have individuals that are U.S. citizens as investors. An s-corporation must also allocate profits and losses in strict accordance with its share ownership. S-corporation tax status can therefore be restrictive when raising capital or attracting investors. S-corporations are especially restrictive where investors demand preferred economic rights (such as preferred stock) or convertible debt, stock options or warrants.

LLC Or Corporation

Today, most small businesses entities that are formed for liability protection are limited liability companies (LLCs). A small, closely held limited liability company has the same liability protection as a corporation, but has more options for tax treatment. A limited liability corporation may be taxed as c-corporation or an s-corporation or a partnership. Many times, partnership tax treatment is a very advantageous form of tax treatment because it offers maximum flexibility to the business. A partnership does not have restrictions on its owners so members of an LLC taxed as a partnership may be business entities or non-U.S. citizens. A partnership may also allocate profits and losses with much more flexibility than a corporation through special allocation provisions. Special allocation provisions are allowed in partnerships because there is not a restriction on classes of stock.

A limited liability company taxed as a partnership is especially beneficial for businesses that need to attract foreign investors as equity owners or for two corporations or other business entities to engage in a joint venture without directly incurring the liabilities of the joint venture. A limited liability company taxed as a partnership is also advantageous for start-ups that need to attract angel or venture capital investments that may require a class of preferred membership with preferential economic rights, convertible debt or the issuance of options or warrants.

For more information about the differences between corporations and LLCs, please contact Andrew Miller, at MPL Law Firm, amiller@mpl-law.com.

Member-Managed LLCs vs. Manager-Managed LLCs

Member-Managed LLCs vs. Manager-Managed LLCsAs a business owner or founder in Pennsylvania, there are many tasks on your plate as you work to get your company up and running. One of the first tasks you’ll need to tackle is forming your limited liability company (LLC).

An LLC is a business structure that provides protection against liabilities for owners, also called members. Within this LLC, you must decide how you will manage your business. You can choose between a member-managed LLC or a manager-managed LLC.

Both options have their pros and cons, and choosing the best one will depend on the size of your business and your long-term goals. Consulting with a Pennsylvania business attorney can help you find the best choice for your company and ensure you put the right people in charge.

What Is a Member-Managed LLC?

What Is a Member-Managed LLC?

A member-managed LLC is a commonly used business structure for smaller companies with a limited number of owners. With this system, members share in the decision-making and act on behalf of the company by playing an active role in day-to-day operations.

For small or mid-size businesses that do not require a larger, separate management system like a board of directors to operate, member management is ideal, as all members can have a say in the financial and legal decisions for the business. Member management is the default structure of LLCs in many states, meaning if you do not specify what type of management you want, all members within your LLC may be considered managers.

For example, if you want to run your own business providing a certain service or making and selling products — such as running a bakery — you may decide on a member-management structure for your LLC. You can run the business as a single-member-managed LLC or offer equal authority to several members. You can also decide how much of a say you want everyone to have, such as giving one member 30% of the LLC and another member 15%.

What Is a Manager-Managed LLC?

What Is a Manager-Managed LLC?

A manager-managed LLC means that the member-owners delegate operational control to a designated person or persons, or “managers,” to run the company. This could include hiring an outside manager or choosing one or more members to be managers.

While members may still be able to vote on key business issues, they will not be considered agents or managers of the LLC unless specifically designated as such. Manager management LLCs provide a centralized, practical structure that is ideal when one or more members within the business want to take on a more passive investor role.

Rather than splitting the responsibility, some owners may feel more comfortable if they can delegate the management role to one or more members or an outside manager. With this structure, the manager or managers will handle day-to-day business activities and decisions.

An example of a manager-managed LLC could be a business requiring hands-on day-to-day management, but the owner members have other employment or will be physically away from the business much of the time. This would allow a designated on-site or engaged manager to make decisions for the business quickly and efficiently.

Differences Between Member-Managed LLCs and Manager-Managed LLCs

The main difference between member-managed and manager-managed LLCs is how hands-on you and any members want to be in running your business.

Member-Managed LLCs

In a member-managed LLC, all members have an equal say. There is no limit to the number of members an LLC can have unless your business is being taxed as an S corporation, in which case the limit is 100 members.

In a member-managed LLC structure, every single member has the authority to manage daily operations, handle loans, sign contracts and make important business decisions. This is a common structure for those who prefer to work directly with their customers.

Manager-Managed LLCs

In a manager-managed LLC, most decisions are up to managers, who can either be LLC members or outside professionals. In a manager-managed LLC, members who are not managers are considered passive investors, meaning they have no say in important business decisions.

A manager-managed LLC can be a fitting option if you plan to have many members within your LLC or want to expand your business in the future. Because member-managed LLCs tend to be the default option unless specified, it is important to disclose if you want a manager-managed LLC in your Articles of Organization when you file for your LLC.

Roles and Responsibilities of an LLC Manager

In a member-managed LLC, you and other members will take a majority vote for many of the important decisions. However, in a manager-managed LLC, the owner still has some responsibility for high-level decisions while the manager or managers take on certain tasks that are required to run the business, which include but are not limited to:

  • Running daily operations
  • Hiring employees, staff and independent contractors
  • Firing employees, staff and independent contractors
  • Writing checks
  • Make legal decisions
  • Entering contracts on behalf of the business
  • Merge or acquire another business
  • Open an LLC bank account
  • Obtain a loan or financing
  • Buy and sell real estate, investments and vehicles
  • Process high-level transactions
  • Dispose of the LLC’s assets

The responsibilities and standard of conduct for LLC managers are governed by your state’s LLC laws and have a legal obligation to act in the best interest of the LLC.

If the manager is also a member of the LLC, they will fill both roles as an owner and manager. This means the individual or individuals are entitled to both LLC earnings and member shares determined by their percentage of ownership and manager wages.

Keep in mind, if you choose a manager-managed LLC structure, it is wise to specifically outline and document the roles and responsibilities of the manager for your LLC in your business’s Operating Agreement.

Member-Managed LLC Pros and Cons

A member-managed LLC structure is popular due to its simplicity and degree of control you and other members have over the business. This type of LLC structure resembles more of a partnership compared to a manager-managed LLC and is generally ideal for small businesses with owners who want to be actively invested and engaged in the company.

Here are the advantages of choosing a member-managed LLC:

  • Ensures all owners have a say in the company
  • Provides a simple, straightforward structure
  • Fits the needs of companies with a small number of members
  • Works well for owners who express interest in participating in all daily operations
  • Costs less than hiring one or more professional nonmember managers
  • Helps small retail and brick-and-mortar owners run their business

You may find a member-managed LLC an attractive option if you prefer to be in control over all the details of your business. Some owners want to be involved in every decision. You may also want to go the member-managed route if you enjoy working with your fellow business members or want to reduce costs by eliminating the need to pay one or more outside managers.

Here are the potential drawbacks you may experience with a member-managed LLC structure:

  • Can require much time and effort for daily management, distracting from other projects and decisions within the company
  • Lacks passive roles which can make it challenging to raise money from investors
  • All decisions may require a unanimous vote, potentially causing delay and inconvenience for business operations

Manager-Managed LLC Pros and Cons

A manager-managed LLC may be ideal if you are planning to run a larger business and want to attract diverse investors. This type of LLC structure allows you to extend membership to investors who do not necessarily want to be involved in daily operations. An LLC manager handles daily operations, which can be a saving grace if neither you nor your members have any management experience or knowledge about your company’s industry.

Here are the benefits of choosing a manager-managed LLC:

  • Provides more streamlined management
  • Lightens the workload for other members
  • Strengthens your LLC with a highly qualified manager
  • Offers potential outside investment opportunities
  • Attracts passive investors who do not want to play an active role in daily operations
  • Provides anonymity within an LLC agreement as you can list your manager(s) name instead of your own
  • Allows one or several managers to make decisions faster and easier without consensus
  • Limits strategic business decisions to a small group of people

A manager-managed LLC may be useful if your business is large in size and you want to run it more like a corporation. Additionally, if you prefer to have more agility, managers have more freedom to act quickly and decisively without waiting on a vote from all members and wasting time.

However, there are several potential downsides of a manager-managed LLC, which can include:

  • Requires more detailed, complex documentation
  • Cuts some or all owners out of strategic financial and legal decisions
  • Necessitates a more complicated Operating Agreement to list manager roles and responsibilities
  • Costs more money, as the LLC may have to pay a manager’s salary to one or more managers
  • Removes personal, small business owner decisions, as a professional manager may not understand the business as well

Tips for Deciding Which Option Is Best for Your Business

Tips for Deciding Which Option Is Best for Your Business

Both LLC management options offer unique advantages and disadvantages, so how do you choose which one is right for your business? Here are some general tips to help you decide how you want to structure your LLC.

1. Determine the Current and Future Size of Your Business

Generally, small businesses with only a few members benefit from member-managed LLC structures because there is not as much to oversee. For instance, if you run a small family bakery, you may want to “keep it in the family” and allow all members to have a say in what happens to your business down the line.

However, if your business is large, complex or consists of many members who want to be a part of the business, it is wise to go with a manager-managed LLC for optimum management engagement and to boost efficiency. You may also wish for your small startup to expand as quickly as possible. When hoping for or anticipating a lot of quick growth, you can appoint one or two members of your business as managers or decide to hire an outside professional who can run things smoothly.

2. Decide the Type of Role You Want to Play

One of the most important aspects of choosing what type of LLC structure you want for your business is determining whether you and your current members want to play a personal, active role in all day-to-day operations.

For example, do you want all members to have an equal say in every legal, financial and operational decision? Additionally, do you believe you and other members will have the time to vote on every single decision that must be made? If so, then a member-management LLC will work for you.

If you or other members of your business would like to play more passive investor roles in the company, a manager-managed LLC could be the better option. In these situations, you and the other members may be more comfortable delegating responsibilities to a manager so you can focus on other aspects of the company.

3. Consider What Skills and Expertise Your Business Requires

If you or any of your current members do not have experience in running a business or managing one in your company’s industry, it may be beneficial for you to rely on a professional manager who can steer you in the right direction.

Venturing out into a new market can be daunting, particularly if you do not have the skills needed to keep everything on track. A manager-managed structure can give you peace of mind knowing you have competent management taking care of financial and legal decisions.

However, if you run a small business with limited resources and feel confident that all members can share all day-to-day responsibilities, then a member-managed structure can be a great option.

4. Consult With an Attorney

While it is not a legal requirement to hire an attorney before setting up your LLC, it can help you save time, protect your assets and choose the best structure for your LLC.

When forming your business’s LLC, you will need to include your management decision in your Articles of Organization and file them with the state of Pennsylvania. If you decide to go with a manager-managed LLC, you must include details about the manager’s duties, how you want the business to be run, how you will share the profits and the responsibilities of passive members.

Working with an experienced business attorney can streamline this process for you and help you avoid making mistakes when filing the required documents. Your attorney can also draft your Articles of Organization and your Operating Agreement for you. In addition, your attorney can perform various important duties to help keep your LLC in good standing and keep your business complaint, such as:

  • Checking to ensure the name you wish to use for your LLC is available
  • Registering your LLC’s name
  • Ensuring you have the correct documents and have paid all necessary fees
  • Acting as your LLC’s registered agent
  • Processing tax forms, service of processes and legal documents

Considerations to Keep In Mind for LLCs in Pennsylvania

Each state has different laws regarding how to form your LLC, how to maintain it and how you must manage it. Pennsylvania is one of the states that has member-managed LLCs as the default structure.

Because it is the default, you will not necessarily have to document this decision if you choose a member-managed LLC, but you will need to document it if you choose a manager-managed LLC. However, even if you choose a member-managed LLC, you should still outline certain business-related information in your Operating Agreement.

An LLC Operating Agreement is not a legal requirement to run a business in the state. However, without an operating agreement, the personal assets of the LLC members are vulnerable should the company be involved with legal action. Therefore, these agreements are optional but are recommended to provide clarity with respect to your business operations. You can also use an Operating Agreement to limit the decision-making abilities of LLC members, such as restricting authority over certain transactions.

You will also want to consider the amount of liability your members have with the LLC structure you choose. While passive members in a manager-managed LLC tend to have less liability, those who play an active role have more liability. If you choose a manager-managed LLC, it may be wise to choose a manager who is an active member if you have liability concerns.

Learn How MPL Law Firm Can Help You Find the Best Solution

Learn How MPL Law Firm Can Help You Find the Best Solution

LLCs generally allow for flexibility and administrative ease. If you are ready to create an LLC but are still unsure about the type of management you need, talking to an experienced business attorney who knows the laws in your state can help you find the right choice. At MPL Law Firm, it is our goal to help you structure and manage your LLC correctly and align your business processes with your short- and long-term goals.

A business attorney from MPL Law Firm can review your contracts, advise you on legal matters and ensure your business stays compliant. Whether you are a small business owner or manage a large corporation, we can work with you to get the most desirable results.

Our Central Pennsylvania law firm is ready to help. Contact us online or call us today at 717-845-1524 to get started.

Pennsylvania Benefit Corporations

What Are Benefit Corporations?

Updated: 12/14/2022

On October 24, 2012, Pennsylvania became the twelfth state to amend its business corporation law to provide for a new type of corporation known as the “benefit corporation”.

Benefit corporations are intended to be for-profit corporations with a social conscience.  In addition to the intended purpose of providing profit to shareholders, benefit corporations include provisions within their articles of incorporation that require the corporation to have a purpose that positively benefits society.

Perks of Becoming a PA Benefit Corporation

Social investing and social responsibility are major trends in the financial and business world.  Many investors and consumers want to invest in or buy from companies that have a moral compass.  The benefit corporation law is intended to create standards for social responsibility that investors and consumers can use to make decisions about the moral and social propriety of the companies they invest in.

An election to be a benefit corporation may allow you to:

  • Raise capital from socially responsible investors.
  • Attract socially conscious consumers.
  • Associate the identity of your business with a particular cause.

Pennsylvania Benefit Corporation Requirements

Social Conscience Requirements

The Pennsylvania statute assures benefit corporations will maintain a social conscience in several ways:

  1.  A benefit corporation must have a corporate purpose to create a material, positive impact on society and the environment in addition to the obligation to make a profit.
  2. The officers and directors of the benefit corporation have a newly-created fiduciary duty to consider nonfinancial interests.
  3. A benefit corporation must file an annual statement available to the public used to assess its overall social and environmental performance against independent third-party standards.

Public Benefit Requirements

A benefit corporation may elect to have a general public benefit or a specific public benefit.  Specific public benefits must be set forth in the articles of incorporation.  The specific public benefits listed in the statute include:

  • Providing low-income or underserved individuals or communities with beneficial products or services
  • Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business
  • Preserving the environment
  • Improving human health
  • Promoting the arts, sciences or advancement of knowledge
  • Promoting economic development through support of initiatives that increase access to capital for emerging and growing technology enterprises, facilitate the transfer and commercial adoption of new technologies, provide technical and business support to emerging and growing technology enterprises or form support partnerships that support those objectives
  • Increasing the flow of capital to entities with a public benefit purpose
  • Conferring any other particular benefit on society or the environment

How to Become a Benefit Corporation in Pennsylvania

For new PA businesses, the process of forming a benefit corporation does not differ much from the process of forming a traditional corporation. A new business may elect to be a benefit corporation at the time of its initial filing of articles of incorporation.

Existing Pennsylvania corporations seeking to become benefit corporations can do so following either of these circumstances:

  1. Amendment of the corporation’s existing articles of incorporation. This amendment must be approved by at a two-thirds majority of the corporation’s shareholders.
  2. Completion of a fundamental transaction such as merger, division, consolidation or share exchange.

It is important to understand that the election to be a benefit corporation does not change the federal or state tax status of a corporation, so if a business is a C-corporation or an S-corporation, it will maintain that status.

Choose MPL Law Firm for Your PA Benefit Corporation Needs

If you want your business model to include consideration of general or specific public benefits, a benefit corporation may be a good choice for your corporate structure.  To explore the aspects of a public benefit corporation, please contact Andrew Miller, at MPL Law Firm, amiller@mpl-law.com for more information.

Learn More About Pennsylvania Business Entity Formation