Is a Written Agreement Required to Establish Public Purpose?
When a municipality finds a taking has a public purpose, is it required that a binding written agreement be present to effectuate the plans? A recent decision handed down by the Pennsylvania Commonwealth Court in In re Condemnation by the General Municipal Authority, 2025 Pa. Commw. LEXIS 209 (Pa. Commw. Ct. Dec. 11, 2025) states the answer to this is yes.
Background of the Nantego Project
The General Municipal Authority of the city of Nanticoke initiated condemnation proceedings in 2022 to acquire property needed for the Nantego Project, encompassing the entire block of East Main Street between Walnut and Shea streets, which included Nivled Apartments, LLC’s (condemnees) building, the opinion said.
According to the opinion, the Nantego Project is a proposed five‑story mixed‑use building that would include the following: a first floor containing a transportation center operated by the Luzerne County Transportation Authority and a to-be rented out commercial space; a second floor containing a parking garage for public and resident parking; and the third to fifth floor containing 40 apartments for low-income senior citizens. Some of the property condemned for the project was also planned to be conveyed to Pennsylvania Department of Transportation for a streetscape that was a separate undertaking from the Nantego Project.
The Project’s Reliance on Nonprofits and Private Developers
The Nantego Project depended heavily on a web of nonprofit and private entities, including New Horizons, each with distinct but overlapping roles, the opinion said.
The General Municipal Authority intended to condemn the properties needed and then convey them to real estate developer, New Horizons.
Lack of a Binding Agreement Between the Authority and Developer
A point of issue was the lack of written agreement between the General Municipal Authority and New Horizons cementing New Horizons rights and responsibilities surrounding the Nantego Project, the opinion said. The only contract was between New Horizons and United Neighborhood, a consultant on the project that would obtain housing credits to fund the project.
Arguments Before the Trial Court
Before the trial court, condemnees raised concerns that the taking of their apartment building by the General Municipal Authority was for a predominantly private purpose. At a joint evidentiary hearing, the trial court heard extensive testimony from individuals involved in the project, including the General Municipal Authority’s board members, housing authority officials, nonprofit consultants, and property owners.
The trial court concluded that the primary purpose of the Nantego Project was to provide senior housing and public transportation and, in doing so, it was deemed to be authorized under Pennsylvania’s Municipality Authorities Act (MAA), 3 Pa.C.S. Section 5601. Additionally, the public purposes exception within the Property Rights Protection Act (PRPA), 26 Pa.C.S. Sections 201, was satisfied. Lastly, the trial court did not find the taking as excessive because it believed it would be impossible to construct the building as planned without acquiring Condemnees’ apartment building. Therefore, the trial court found that the use of eminent domain was valid and acceptable.
The condemnees raised several issues before the Commonwealth Court.
The first issue is whether the MAA authorizes the General Municipal Authority to condemn property that will be immediately sold to a real estate developer to construct the Nantego Project. The condemneees argued that Sections 5607(a) and (d) of the MAA did not permit the General Municipal Authority to act merely as a land-acquisition vehicle when it had no role in developing the project.
Another issue raised is whether the condemnation violated the PRPA. The condemnees questioned whether the taking was an impermissible transfer to a private entity under Section 204(a) or fell within an exception for low-income housing under Section 204(b)(7) or incidental commercial use under Section 204(b)(2)(iii).
The condemnees third issue is whether the true purpose of the taking was for public or private benefit. This is where the condemnees questioned what bound New Horizons to follow through on the project plans described.
The last issue raised is whether the taking was excessive.
Commonwealth Court’s Review of the Municipal Authority’s Powers
The Commonwealth Court reviewed the General Municipal Authority’s powers under the MAA. The first section considered was Section 5607 to determine whether the use was permitted. Section 5607(a)(2) permits buildings which contain public uses, including public school buildings, and facilities for the conduct of judicial proceedings and revenue-producing purposes. Section 5607(a)(3) permits transportation, marketing, shopping, terminals, highways, parkways, traffic distribution centers, parking spaces, and all facilities necessary or incident thereto. Section 5607(a)(17) permits certain industrial or business development projects.
Subsection (d)(4) provides that a municipal authority may exercise all powers necessary or convenient for the carrying out of its purposes. Subsection (d)(5) goes further to allow the General Municipal Authority to acquire by purchase or otherwise to construct projects and Subsection (d)(15) grants the authority the power of eminent domain.
Public Purpose Under the MAA and PRPA
The Commonwealth Court agreed with the trial court that the concept of “public uses” under the MAA is broad and includes affordable senior housing, relying in part on Dornan v. Philadelphia Housing Authority, 200 A. 834 (Pa. 1938). In Donan, the Pennsylvania Supreme Court held that a project to provide affordable housing constituted a public use even though it is not specifically enumerated under Section 5607(a)(2). The Supreme Court stated in support of the holding that “an occupancy by some may promote, or even be vital to, the welfare of all.”
Regarding public transportation, the Commonwealth Court found that public transportation is expressly authorized under Section 5607(a)(3). Using eminent domain to improve public transportation serves a public purpose and a public parking garage is proper.
The Commonwealth Court then analyzed whether the Nantego Project would be considered as a “private enterprise.”
Under Section 204(a) of PRPA, condemnors may not take property for private enterprise. Section 204 does list several exceptions which allow private takings. Section 204(b)(7) provides an exception for use by private entities where the property is acquired for low-income and mixed-income housing, and Section 204(b)(2)(iii) allows for private taking when there is incidental commercial use within a public project. The commercial use on the first floor was found by the Commonwealth Court to be incidental to the low-income senior citizen purpose for the building. Therefore, the Nantego Project fell within the above exceptions.
The Commonwealth Court acknowledged Kelo v. City of New London, 545 U.S. 469 (2005), which permits broad interpretations of public use under federal law. However, Pennsylvania courts are free to adopt stricter standards, focusing on whether the public is the primary and paramount beneficiary.
The Commonwealth Court reversed the trial court’s ruling for one specific reason: documentation. It found that, while there was a public purpose for the Nantego Project, there was a lack of evidence showing the public use would be materialized. The Commonwealth Court emphasized that a written binding agreement was necessary between either New Horizons and the General Municipal Authority or New Horizons and the Nanticoke Housing Authority. Absent an agreement, the Commonwealth Court reasoned there was nothing to guarantee the project’s completion or future use of the property.
The argument that restrictive covenants were in place to ensure the proposed use was deemed insufficient. The Commonwealth Court noted that, when real estate developers were relied on, there was a requirement for enforceable commitments to ensure the public purpose is satisfied. Even though the use fits into exceptions under PRPA, the lack of commitment through a binding written agreement made this taking disallowed, the Commonwealth Court’s opinion.
Implications for Municipal Authorities, Developers, and Property Owners
This decision has implications for municipal authorities, real estate developers and property owners. For municipal authorities, they must ensure that condemnations are supported by written binding agreements. Even more so when real estate developers are utilized as the court will use heightened scrutiny in analyzing the condemnation. For real estate developers, they must provide written assurances to the municipal authority before initiating eminent domain actions. Those assurances must prove that the public purpose will be satisfied. Lastly, property owners remain protected against eminent domain within Pennsylvania. Since courts require the municipal authority and real estate developers to show through binding agreements the public purpose of a taking, there is much more room for error on their part. Property owners can challenge takings where public purposes are speculative or are not documented.
Need help navigating landlord–tenant appeals or housing court procedures? Contact our team today to ensure your rights are protected and your case is handled with precision.
This article was prepared by a licensed Pennsylvania attorney at Nochumson P.C., a Philadelphia-based law firm with extensive experience in all thing's real estate, litigation, land use and zoning, and business counseling.
Michael Howard, a second-year law student at the Drexel University Thomas R. Kline School of Law, contributed to the writing of this article
Reprinted with permission from The Legal Intelligencer © 2026 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382, reprints@alm.com or visit www.almreprints.com.