PECO used eminent domain to seize University City’s vacant midcentury mod motel

On her way out of City Hall, veteran councilmember Jannie Blackwell tried to resurrect a strange 18-month-old bill, that would have given the most generous zoning possible to a wedge of land owned by a developer-ally.

The legislation had been shelved after a 2018 WHYY story highlighted the strange remapping of the parcel, which hosts an abandoned mid-century modern motel on an isolated bank of the Schuylkill River.

Blackwell didn’t realize that the developer, Mark Nicoletti of the Philadelphia Suburban Development Corporation (PSDC), no longer owned 600 University Avenue. Earlier this year, in a highly unusual case, the electrical utility PECO seized it by eminent domain.

“We were totally surprised, it came out of left field,” said Nicoletti, the president of PSDC. “Frankly, I grew up in the real estate business. I’m 54 years old and I didn’t even know utilities had the right of eminent domain.”

Eminent domain is one of local government’s most dramatic powers, allowing a public entity — or a private entity deemed to be acting in the public good — to take a piece of property as long as the owner receives “just compensation.”  (The “condemner” must also be using the property for “public use.”)  In the case of 600 University Avenue, PECO gave Nicoletti $4 million for the property.

PECO headed to court over taking

Utility companies are sometimes delegated this awesome power, but PECO seems to rarely use it. According to city records, the 600 University Avenue case is only the second time that PECO exercised eminent domain since 1973. The Philadelphia Redevelopment Authority, by contrast, seized over 4,000 properties between 1992 and 2007.

“PECO only uses condemnation as a last resort if an agreement cannot be reached with a property owner and when the purchase of the property is essential to ensuring safe, reliable, and affordable service to our customers,” wrote Greg Smore, senior communications manager for PECO, in an email message to WHYY.

Smore confirmed that this is only the second time the utility company has exercised eminent domain in Philadelphia.

PECO filed a “declaration of taking” on January 3, 2019, and took control of the property on June 26. In the company’s notice of condemnation, PECO said they sought to acquire the property to build a new electric substation facility.

“The construction of the substation is part of a program to improve the reliability and increase the capacity of [the] electric transmission and distribution system in the University City area of Philadelphia,” the document reads.

PECO owns an adjoining piece of property and wants to build their facility across both sites to meet the needs of rapidly growing University City.

Nicoletti is not giving up so easily.

“We are a very sophisticated, professional company. We hired [Fox Rothschild] attorneys that are experts in eminent domain and we have put together a strategy to respond,” said Nicoletti. “We are in court with PECO now.”

As for the briefly resurrected legislation, PECO’s lawyer, Michael Sklaroff of Ballard Spahr, stalked around City Council’s Rules Committee last week to ensure it wound up back in the grave. Blackwell didn’t want to take sides on this one, so the bill was held again.

“We thought people were ready to move forward on this,” said Blackwell, after the Rules Committee hearing. “But it was Nicoletti who wanted it rezoned and now PECO owns it. They don’t want it rezoned.”

Disclosure: PECO is a WHYY underwriter and Craig Adams, PECO Energy’s former President and CEO, is on the WHYY board.