Water Polo III, LP v. Susquehanna Twp. Auth.

Water Polo III, LP, Appellant v. Susquehanna Township Authority and Capital Region Water Authority

No. 1116 C.D. 2021

Commonwealth Court of Pennsylvania

December 1, 2022

OPINION NOT REPORTED

Submitted: August 5, 2022

BEFORE: HONORABLE MICHAEL H. WOJCIK, Judge HONORABLE CHRISTINE FIZZANO CANNON, Judge HONORABLE STACY WALLACE Judge

MEMORANDUM OPINION

STACY WALLACE, JUDGE

Water Polo III, LP (Water Polo) appeals from the September 17, 2021 opinion and order^[1] of the Court of Common Pleas of Dauphin County (the trial court), which: (a) determined the Susquehanna Township Authority (Authority) properly classified and billed Water Polo for sewer services, (b) denied Water Polo's claims for relief, and (c) entered judgment against Water Polo. On appeal, Water Polo presents a variety of claims, including unjust enrichment and violations of its statutory and constitutional rights. Upon review, we affirm.

I. Background

Authority is an independent municipal authority and the sole provider of sanitary sewer and stormwater services in Susquehanna Township, Dauphin County, Pennsylvania (Township). Trial Ct. Op., 9/20/21, at 1. Authority does not have its own sewer treatment facilities. Id. Instead, Authority maintains a collection and transmission system in Township and contracts with Capital Region Water Authority (CRW) for wholesale sewage treatment. Id. Authority charges residential customers a flat rate and commercial customers a usage rate, which is based off of metered water consumption. Id.

Authority's regulations^[2] define a "Commercial Establishment" as

any room, group of rooms, building or enclosure used or intended for use in the operation of one business enterprise for the sale and distribution of any product, commodity, article or service or used or intended for use for any social, amusement, religious, educational, charitable or public purpose and containing plumbing. 'Commercial Establishment:['] includes, but is not limited to, institutional dormitories, hotels and motels, and permanent care facilities licensed by the State (e.g. personal care facilities.).

Reproduced Record (R.R.) at 601a. Authority's regulations define a "Hotel" or "Motel" as

a building or other enclosure having two (2) or more separate living units, with each unit usually consisting only of a furnished bathroom and bedroom, including linens and television, generally having daily maid service, generally having a daily and weekly rate schedule, and generally occupied temporarily by persons having another more permanent place of residence.

Id. at 602a. Authority's regulations define a "Residential Unit" as

any room, group of rooms, building or other enclosure occupied or intended for occupancy as separate and individual living quarters by a family or other group of persons living together, or by a Person living alone, but excluding institutional dormitories, hotels, motels or commercial establishments, as defined, but to include, but not limited to, apartments and form[s] of multi-family dwellings not otherwise defined, and retirement facilities, or such some similar facility or facilities, including but not limited to personal care boarding homes licensed by the Commonwealth.

Id. at 603a. Authority's regulations further specify "[d]welling units . . . shall be considered as separate units regardless of whether each has or requires a separate or common connection." Id. at 621a.

Authority, by Resolution No. 2020-01,^[3] established that its current "sewer rental rate for all residential users of the system, regardless of location within the Township, shall be $123.00 per quarter ...." R.R. at 647a-48a. For commercial users, "[t]he minimum sewer rental . . . shall be in the amount of $130.00 per quarter for the first 16,000 gallons of use and $8.13 per 1,000 gallons used for all commercial users of the system in excess of 16,000, regardless of location within the Township ...." Id. at 648a.

Water Polo is the owner of an apartment complex in Township known as the Reserve at Paxton Creek (Property). Trial Ct. Op., 9/20/21, at 1. Property has 160 apartment units and a clubhouse which are connected to Authority's sanitary sewer system. Id. Water Polo's water provider sends Water Polo one bill, which is based upon consumption data from a single water meter. Id. Authority, however, charges Water Polo separately for 161 residential units. Id.

Water Polo filed a complaint with the trial court to challenge Authority's rate structure. The trial court conducted a non-jury trial on July 9, 2021. Water Polo presented the testimony of its apartment manager and the testimony and report of its expert, a Professional Civil Engineer. R.R. at 74a. Water Polo's apartment manager testified regarding the amenities offered at Property. Id. at 55a-57a. She also contacted a hotel which was less than a mile from Property and determined its amenities were similar to the amenities at Property. Id. at 65a-68a. Despite the similarities, Water Polo's apartment manager admitted Water Polo's minimum rental period at Property was one year, and Water Polo did not serve "transient automobile travelers" or short-term renters. Id. at 72a-73a. Water Polo did not present any evidence to establish average or estimated sewer flows for hotels. Nonetheless, Water Polo's apartment manager stated that Property was "the same or similar" to a hotel. Id. at 68a.

Water Polo's expert explained that Authority submitted a variety of sewer planning documents to the Pennsylvania Department of Environmental Protection (DEP) in which Authority used an approved sewage flow rate of 88.75 gallons per day for Water Polo's units. Id. at 229a. This is far below what Authority's regulations define as an Equivalent Dwelling Unit (EDU), which is "synonymous with" a residential establishment and is "assumed to be 180 gallons per day." Id. Water Polo's expert also conducted an analysis of Water Polo's sewer charges over the prior seven quarters. R.R. at 236a. In that time, Authority charged Water Polo a total of $138,621.00 for sewer services. Id. If Authority charged Water Polo on a water consumption basis (as a commercial customer), however, Authority would have only charged Water Polo $64,153.70. Id.

Water Polo's expert then opined: (a) apartment units use significantly less water than other residential units (single-family residences and townhomes), (b) apartment units are more like some of the excepted users (institutional dormitories, extended stay motels, and permanent care facilities) than other residential units, (c) the Authority has the ability to charge Water Polo on a metered water consumption basis like commercial users, (d) charging apartments on a metered water consumption basis would encourage conservation and identification of leaks, and (e) apartment complexes financially subsidize other customers under Authority's flat fee billing structure. R.R. at 237a.

Authority presented the testimony of its consulting engineer and Township's manager (Township manager). Township manager explained there are no restrictions on how much sewage a user can discharge into the system and Authority does not reserve system capacity for users. R.R. at 174a, 32a. The flow rates approved by DEP were, therefore, only used for sewer planning purposes. Id. at 32a, 35a. Similarly, Authority's consulting engineer explained that the sanitary system is a "ready-for-service" system, as "when you flush, it goes." R.R. at 196a. Authority's consulting engineer agreed there is no limit to how much sewage the system will accept from any user, and all sewage flow estimates presented to DEP were for sewage planning purposes only. Id. at 192a-97a.

Township manager explained there are 2,569 apartment units in Township, and Authority charges each of those units as a residential customer, without exception. R.R. at 172a. He further explained that it takes one Township employee approximately two weeks to convert and enter water usage data each quarter for Authority's roughly 500 commercial accounts. Id. at 175a. If Authority began charging apartment users on a consumption basis, it would add significant time and expense to Authority's billing process. Id.

Authority's consulting engineer opined that billing based upon water usage is "not the best way." Id. at 198a. One reason for this is that Authority provides sewer services to some users for whom water usage data is not available, as they have their own water wells. A second reason is that Authority must manage and account for surface and subsurface water that enters the system. Id. at 199a. This water would be unaccounted for if all bills were based on water consumption. Id. Conversely, not all water which customers use ends up in the sanitary sewer system. Id.

Authority's consulting engineer explained that Authority begins its annual rate setting process by projecting its costs for the upcoming year. R.R. at 164a. Authority's costs fall into three general categories: (1) maintenance, which includes system maintenance and treatment costs paid to CRW, (2) administration, which includes staffing costs and engineering services, and (3) bonds, which includes repayment for financing of long-term improvement projects for the sewage system. Id. 164a-68a. After projecting its costs, Authority projects its revenue for the upcoming year by multiplying the number of residential users by the flat rate fee and estimating consumption for commercial users. Id. at 168a, 201a-02a. Finally, Authority determines what rates would make Authority's revenue projections meet or exceed its expense projections for the upcoming year and enacts a rate resolution with those rates. Id.

II. Trial Court's Factual Findings and Conclusions of Law

The trial court found Authority sets its...