10/08/2004

Land grabs ruffle feathers in Triangle
(Raleigh-Durham NC) Triangle Business Journal, 10/10/04

As the Triangle Transit Authority and cities increasingly take land, the U.S. Supreme Court readies to rule on eminent domain
By Amanda Jones

As local governments in the Triangle increasingly lust after privately held land to convert to "public use," the U.S. Supreme Court is poised to rule on the legality of the time-honored but little-tested concept of eminent domain.

In two high-profile development projects, officials with both the Triangle Transit Authority and the city of Raleigh are invoking eminent domain to forcibly buy land needed for rail lines, transit stops and a new convention center.

Just this month, the city of Durham began tearing down the dilapidated Heart of Durham motel - a property it bought after suing in the wake of eminent domain condemnation.

Whether local governments are appropriately taking privately owned property for economic development projects is at issue in a case accepted for review by the justices of the nation's top court. The case will mark the first time the Supreme Court has issued a ruling on eminent domain law in 20 years.

The case specifically challenges plans by a Connecticut town to condemn privately owned property so a private developer can build a hotel, a conference center, office buildings, housing and parking.

Taken state by state, court rulings have produced a patchwork quilt of case law addressing eminent domain. Seven states allow condemnations for private development alone. Eight forbid the use of eminent domain when the purpose is not to eliminate blight. Three states are ambiguous. And 32, including North Carolina, have not addressed the issue.

George Autry, a lawyer with Cranfill, Sumner & Hartzog in Raleigh, looks forward to Supreme Court clarification on the issue, especially given the increased use of eminent domain in this market. "There's not been much urban redevelopment that would spawn case law," he says of the Triangle. "But it's beginning to happen, like with downtown Raleigh's urban renewal plan."

Over the years, North Carolina communities have used eminent domain condemnation to claim properties for public roads and even for public facilities. Eminent domain also has been used since the 1960s to claim "blighted" properties in urban areas - the most recent example being the Heart of Durham case.

Before condemning a property, local governments try to negotiate a purchase price. If a price cannot be agreed upon, the land may be condemned, upon which the government sues and takes the property at the stipulated price unless it loses in court.

The city of Raleigh has one eminent domain case pending, and it involves property needed for the new convention center. York Family Properties has disputed the $3 million compensation the city has offered for its two-acre property and office building at 205 West Cabarrus Street, says Assistant City Attorney Francis Rasberry.

York's lawyer, Charles Francis of Francis & Austin in Raleigh, says the York family does not question the "public use" aspect of the project, only the amount of compensation.

"The York family supports downtown redevelopment," says Francis. "It's just a question of being paid just compensation. That's not even close to the value of that property."

Francis believes the Supreme Court will rule narrowly by addressing the issue of whether land can be taken under eminent domain and then turned over to private interests for development. Even though he doesn't believe the York case would be impacted by any ruling, he's watching closely.

"That issue was somewhat controversial here, too, in southeast Raleigh in the early '90s," he says. "A lot of people resent the power and think it's a tool of gentrification. That's what they are arguing in the (Supreme Court) case.

"It's of great interest to all of us practicing eminent domain law," Francis says.

The Triangle Transit Authority has one eminent domain case pending and two others in which condemnation proceedings probably will be filed within weeks, says Scott Smith, the TTA's real estate manager.

The TTA expects to condemn two Durham properties owned by Keeter & Associates of Charlotte and by Starr Lassiter, owner of Flintom Service Inc. Both owners have rejected TTA's purchase offers.

In downtown Raleigh, the TTA in June took over businessman Dan Wilson's property at 200 South West Street after the two parties could not settle on a price.

Autry, Wilson's lawyer, says, "These types of takings cause all kinds of hardships. Dan had tenants in his building who also took the position of wanting just compensation. It penalizes Dan."

Autry also represents the owners of Tire Supply Inc. on Raleigh's Lane Street, where a TTA rail station is plotted. Tire Supply owner Larry Hester says he has been waiting a year for the TTA to make an offer. "We've got a niche here, being so close to state government," he says. "It's difficult to pull up and go somewhere else."

Autry says most states' eminent domain laws are "just all over the place. You can't tell from one state to another how it's going to be interpreted," he says. "I'm looking forward to a further definition of what threshold to take."

The Supreme Court is expected to provide new guidance as soon as July.


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