Lowball Watch – Tennessee

Another biggie down the tubes. This one for the Nashville Development Authority. This was what The Tennessean newspaper characterized as “[a] bitterly contentious four-year dispute over the fair value of land Metro took to build the new convention center. . .”  It’s quite a saga. Nate Rau, Tower  Investments Wins Eminent Domain Dispute With MDHA Over Music City Center Land, The Tennessean, October 17, 2013.

It looked at first that MDHA was ahead when a “jury of view” (what most other states that use that system call “commissioners”) awarded $16.5 million, close to the $14.8 million deposited by MDHA. When the owners sought review of that award by a trial court, a funny thing happened: the case was assigned to a court department to which all — get that? all — eminent domain cases involving MDHA had been assigned, whereas eminent domain cases involving other agencies were randomly assigned to other departments.  And that wasn’t all. It turned out that the judge’s daughter was a partner in the law firm that was hired to represent MDHA.  At this point the judge recused herself and the case was randomly assigned to another judge who presided over a trial by jury which awarded the owners $30.4 million. That was in 2011, and that was when the appeal process started. But MDHA did not fare well on appeal.

Long story short, the intermediate appellate court affirmed that $30.4 million award, and the Tennessee Supreme court denied review, thus ending the case. Also, interest on the increase in the award (over and above the $14.5  million offer that had been deposited), kept on accruing during the appeal, and now comes to some $3.6 million.

The bone of contention was the fact that the owners bought their property (then a parking lot) for $14.6 million in 2007. But the owners contended that  they bought the land in order to develop it and its value, considering its highest and best use, was much higher than its purchase price.

Afterthought: How the hell does a parking lot get to be worth even $16 million? Possible answer: could it be that its location benefits from traffic coming into the city, leaving the drivers and passengers as captive customers who have to park somewhere near their downtown destination after they navigate freeways into the city? The freeways get you to your destination, but then what? During our practice days we were often struck by aerial photographs depicting large amounts of  “vacant” land used for parking in city centers. Which — it seems to us — is clearly an effect of freeways, anticipated by planners but not by the general public, and a way in which freeways shape cities, even though that is not usually discussed during the freeway planning stage. The planners will dwell on how the new freeway will get you efficiently from here to there, but we have never heard a discussion of how that will cost you $X bucks per hour  while you work, shop, or otherwise remain in the city.

 

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