Friday, September 21, 2012

Was Eminent Domain Used to Benefit A Private Landowner?

Reading Area Water Authority v. The Schuylkill River Greenway Association, et. al, 2012 Pa. Commw. LEXIS 225 (2012)
Frank Kosir, Jr., Esquire
This matter addressed the issue of whether a local sewer authority properly exercised its eminent domain powers to condemn lands for the construction of public water and sewer lines to service a new development to be constructed by a private landowner.  On February 9, 2009 the Reading Area Water Authority (“Authority”) adopted a resolution authorizing itself to use its eminent domain powers to condemn a utility easement across lands (“Property”) titled in The Schuylkill River Greenway Association (“Association.”)  The City Council of the City of Reading subsequently issued a resolution authorizing the condemnation and, on May 4, 2009, the Authority filed a Declaration of Taking condemning an easement (“Easement”) fifty feet in width “for water, sewer and storm water purposes.”  The purpose of the condemnation was to assure water and sewage service to “Water’s Edge Village,” a proposed 219-unit residential subdivision to be constructed on lands titled in Fortune Development (“Fortune,”) and the resolution previously adopted by the Authority provided that Fortune would be solely responsible for all costs incurred in the condemnation proceeding, including the payment of just compensation and other damages to the Association. 

Upon service of the Declaration of Taking, the Association filed Preliminary Objections asserting that the amount of property condemned was excessive given the size of the proposed water line.  Furthermore, while the parties did agree that the Authoroty had the power to condemn land for the installation of water lines, the Association asserted that the Authority’s efforts to condemn lands for the installation of a public sewer line and storm water facilities was outside of its authority and violated Section 204(a) of the Pennsylvania Private Property Protection Act, (26 Pa. C.S. § 204(a)), which precludes the use of eminent domain to acquire lands for the benefit of a private enterprise.  The trial court held a hearing and issued a ruling sustaining the Preliminary Objections, and dismissing the Declaration with prejudice.  In support of its ruling the court concluded that, although the Authority was vested with the power to condemn lands for the installation of water lines, the Declaration’s condemning lands for the installation of sewage lines and storm water facilities was outside of the scope of the Authority’s public purpose (the provision of water) and amounted to nothing more that an effort to transfer the ownership of private property from one owner to another.

On appeal, our Commonwealth Court reversed, and remanded the matter to the trial court for further proceedings.  In issuing its ruling the court noted that, while the Authority’s specific stated purpose was “the installation of a water main and utility lines,” several factors supported a conclusion that the condemnation was within the scope the Authority’s powers.  First, the proposed storm water outflow is to be combined into the same pipeline conveying sewage effluent.  Second, as required by its Articles of Incorporation, the Authority received authorization from City Council prior to undertaking the project.  Therefore, the purpose of the condemnation as set forth in the Declaration was fully within the scope of the Authority’s purpose, and was a permissible use of the Authority’s eminent domain powers.  Furthermore, there was no evidence that the Authority intended to transfer ownership of the acquired easement to Fortune, or that the Authority planned to relinquish its easement rights in any manner.  As such, while it is true that the condemnation will serve to benefit Fortune by making the homes in its development more attractive for purchase, this does not change the fact that the condemnation does in fact serve a public purpose, namely the provision of water, sewer and storm water management facilities to the members of the public receiving service from the Authority. For these reasons, the condemnation was fully within the scope of the Authority’s eminent domain power, and the trial court erred in dismissing the Declaration of Taking.

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