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Court gives Norfolk business a win against ODU

Real Estate News Service Virginia
September 13, 2013
By Robert Burke

Yesterday’s ruling by the Virginia Supreme Court in favor of an apartment building owner in Norfolk has property rights advocates cheering.

The unanimous ruling stopped efforts by the Norfolk Redevelopment and Housing Authority to condemn a property near the Old Dominion University campus, in an area designated by the school for redevelopment.

But, the victory only modestly advanced property rights in Virginia, because that war was largely already won.

In 2007 the General Assembly put new restrictions on government taking of property, and a constitutional amendment overwhelmingly approved by voters last November “prevents economic development from being used as a purpose for condemnation,” said Joe Waldo, an attorney representing three small businesses that fought the condemnation efforts. One of them, PKO Ventures, which owns a 10-unit apartment building, was the plaintiff in the suit.

What the court said yesterday is that the housing authority didn’t follow the rules included in the 2007 law. It tried to condemn the PKO Ventures property, but the law forbids seizing unblighted properties in the redevelopment area after July 1, 2010. The housing authority missed that deadline, the court said.

“So has [the ruling] changed anything? No,” said Waldo. “What it said is, if you’re condemning property, you have to strictly comply” with terms of the law.

The ruling is a big setback for ODU and its plans to expand eastward onto city blocks that already had private businesses. It’s not yet clear what the school plans to do following the ruling. The housing authority had acted on behalf of ODU’s real estate foundation, because the school itself could only take land for educational purposes.

So far more than 160 properties have been acquired and the land now has a mix of apartments, stores and restaurants, along with ODU’s Ted Constant Convocation Center and the Innovation Research Park.

The 2007 legislation in Virginia was part of a response across the country to the U.S. Supreme Court’s 2005 ruling in Kelo v. City of New London. That 5-4 ruling let a city condemn private property and transfer it to another private-sector owner. Afterwards more than 40 states enacted tougher eminent domain laws.

Waldo’s firm, Norfolk-based Waldo & Lyle, specializes in eminent domain cases. He said public bodies in Virginia often try to suggest that the rules are open to interpretation. “They try to say, well you can interpret it this way or that,” he said. Yesterday’s ruling means “it’s either black or white, you either have the power or you don’t.”