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Benderson Development won’t pay (for now)
The developer of the long-planned Cocalico Commons shopping center has won another court battle.
The Commonwealth Court of Pennsylvania upheld a lower court’s ruling that frees Benderson Development Co.’s obligation to pay $318,000 in water fees it committed to in 2008 — funds allocated for the construction of East Cocalico’s new water system.
At least for now.
The court on April 8 affirmed the trial court’s judgment that Kraftdev Associates, which represents Benderson, can at least defer paying until July 2016 funds obligated from the 57.05-acre project at route 272 and Col. Howard Blvd.
The court agreed that the Permit Extension Act, of 2010 — which gives developers until 2016 to suspend financial or other development-related obligations — temporarily relieves Benderson’s obligation.
Terry Reber, East Cocalico Water Authority director, said the board had contended Benderson’s agreement with authority was separate from the Permit Extension Act.
While the thinking of many municipalities and developers is that the relief provided by the act applied to the initial permitting process, and would alleviate the need to renew permits prior to 2016, the courts ruled that the definition of “approval” is broadly written and does apply to financial or other development-related obligations.
“Now as we’re ready to begin the project,” said Reber, “all the other developers on the list converted their down payment letters of credit to cash and paid the 75 percent balance still owed.”
Reber said the square footage of the new plant was reduced but it is designed for expansion at a future date if demand warrants.
Initially the plant will be able to treat 267 gallons per minute of raw water utilizing two filtration units. “This can be increased to 534 gallons per minute by adding one additional filtration unit,” Reber said. “No building modification will be necessary.” The maximum raw water the plant can treat will be 800 gallons per minute. This would necessitate expansion of the actual building and the purchase of a fourth filtration unit, Reber said.
Benderson joined in a capital contribution agreement in 2008 to buy 164 EDU’s for the shopping center. An EDU is the amount of water a single family residential home uses in one day, which currently stands at 183 gallons, Reber said.
The capital contribution list of developers, intended to help fund a needed, expansion for the water treatment plant, had 13 additional developers who signed the agreement with Cocalico Water Authority. Other development projects needed from one EDU to 111 EDU’s. Kraftdev/Benderson capital contribution fee, which it’s refused to pay, totals $3,120.00 per EDU, said Reber.
Benderson Developers paid $106,000 of the total of $424,000 it agreed to pay, according to its agreement signed with the water authority on Feb. 29, 2008. At a later time, each developer would pay an additional water tapping fee of $3,670.00. Initially, each developer agreed to a 25-percent down payment on the cost of their requested EDU’s.
Everyone on the list, including Benderson, submitted letters of credit. Where does this decision leave the East Cocalico Water Authority? “This didn’t leave us in the bind that could have happened,” said Reber. “We downsized original plans for the plant and the amount of equipment it would contain. We were building a plant for future growth. We’re okay for now and in the immediate future for the next number of years. We can expand.”
Reber said the new water plant at 77 Stevens Road is scheduled to open at the end of September. The amount of the initial bond of $4,635,000 to pay for the new plant has not changed despite missing the Benderson’s contribution, he said. Ultimately the courts have given KraftDev Associates until July 2016 to pay the additional $318,000, Reber said.
“If payment is not forth coming at that time, as per the original agreement the authority would consider the first letter of credit in the amount of $106,000 to be liquidated damages and the money would not be returned,” he said. When asked if there are any plans to appeal to the State Supreme Court, Reber said, “No appeal is planned; we lost twice.”