Lewes power struggle heads to Public Service Commission

The Delaware Public Service Commission has refused to get in the middle of a feud between the City of Lewes and Board of Public Works. 

Commissioners deferred action Oct. 8 on a BPW request to provide water service to the 50-acre Mitchell farm property along Kings Highway, hoping the Superior Court sorts out the power struggle between the two agencies before the commission is required to decide on the application. 

The commission granted BPW permission to provide water service to Cape Henlopen Medical Center on a 3.3-acre section of the Mitchell farm, at the corner of Kings Highway and Gills Neck Road.

The city did not object to the medical center application because the owners recently signed a pre-annexation agreement, which is at the heart of the disagreement between the city and BPW. A pre-annexation agreement gives the city the right to annex a property contiguous to city limits at any time, whether the property owner wants annexation or not.

The BPW argues a pre-annexation agreement is not necessary in order to serve a property. City officials are attempting to assert their ultimate authority over the BPW and force the city-owned utility to require a pre-annexation agreement before providing water, sewer or electric service. Although owned by the city, BPW officials say they are an independent organization and not subservient to the city.

A pre-annexation agreement for the larger portion of the Mitchell farm has not been signed by owners, so city officials intervened in the BPW’s application before the Public Service Commission.

Tom McGonigle of law firm Drinker Biddle, attorney for the city, argued that by granting BPW permission to serve the larger Mitchell farm parcel, BPW attorneys could use the lack of pre-annexation agreement in its Superior Court case to show that an agreement is unenforceable and unnecessary.

“The city really does not want to be in this fight, but we don’t feel like there’s much of a choice because the consequences of these decisions have significant impacts going forward,” McGonigle said.

Michael Hoffman of law firm Tarabicos Grosso, attorney for the Lewes BPW, said the request was simple and transparent. He said discussions with PSC staff related to the Mitchell farm began well before the BPW filed its lawsuit.

“The city’s assertion...that this is nothing but a ploy by the BPW to embolden its litigation is demonstrably false,” he said. “It’s just not true.”

David Hutt of law firm Morris James, attorney for Mitchell Family LLC, said his client is like a child caught in the middle of divorce.

“My client is frustrated by the feud between the city and BPW and its impact on the confirmation of this basic utility service to its property,” he said. “I think that frustration is magnified because this request to my client seems so basic and simple.”

PSC staff recommended the matter be given a 30-day extension for consideration until early November.

PSC Chair Dallas Winslow urged the parties to work together. He said waiting a little longer to make a decision will not harm the larger Mitchell Farm property or the BPW.

“We really don’t want to get entangled in [Superior Court’s] business,” he said. “I wish you all well because it would be a good thing if you could resolve the issue between the both of you.”

The BPW filed a lawsuit July 17 in Superior Court seeking clarification on who has ultimate authority over BPW policies and whether a pre-annexation agreement is enforceable.

On June 24, mayor and city council adopted a resolution directing the BPW to require annexation or a signed pre-annexation agreement prior to agreeing to provide water, sewer or electric services to a property outside the city limits. The BPW board met two days later and unanimously opposed the city’s authority to require a pre-annexation agreement.

Although signaling its intention to abandon the pre-annexation agreement requirement, the BPW has not yet done that. Instead, the board has entertained waivers. In June 2018, it granted a waiver for Cape Henlopen Medical Center prior to a purchase of the property. However, recently, the owner of the property signed a pre-annexation agreement with the city.

At BPW’s Sept. 25 meeting, BPW officials continued to ignore the city’s instructions, voting unanimously to grant a waiver to the pre-annexation agreement for a property near the intersection of Captains Circle and New Road.  

Lawsuit moves forward

Attorneys for both the city and BPW filed briefs in Superior Court Oct. 7. The BPW has filed a motion for summary judgement, while the city has filed a motion for dismissal. Judge E. Scott Bradley ruled in September that each party could move forward with motions.

It’s unclear if Bradley will render a decision on the case before the PSC deadline. According to a schedule Bradley laid out in September, the city and BPW attorneys have 30 days to respond to the briefs. That is followed by a 15-day window for the original party to reply.