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Government's Power to Take Private Property to Go on Trial

The Virginian-Pilot
February 23, 2009
By Meghan Hoyer

NORFOLK — The 90-year-old house, boarded up and surrounded by empty land, stands only a block from the glistening glass and stone of Old Dominion University's Innovation Research Park in Norfolk.

It's a stark contrast between new and old, progress and past. The tension between the two has landed the university in the middle of a lawsuit that could set a precedent for redevelopment projects under way in Virginia.

A year ago, Norfolk's Redevelopment and Housing Authority moved to condemn the house and three other buildings to the south of ODU's University Village, saying the land was in a blighted area and is needed for the university's expansion.

The owners responded with a suit, saying the housing authority has no right to take their property, in part because the development of University Village in the past decade has cleaned up the blight.

"It's a colossal abuse of the power of eminent domain," said Joseph T. Waldo, the attorney for the owners.

The case is set for trial in Circuit Court this week.

If Waldo is successful, it will be more difficult - and likely more expensive - for Old Dominion's Real Estate Foundation, a development arm of the university, to move forward with the next stage of University Village, a mix of residences, storefronts and university space.

It also could make it harder to finish ongoing redevelopment projects. As ODU has moved forward with plans to remake the east side of Hampton Boulevard, it has had to move in stages - first completing a parking garage, then the Ted Constant Convocation Center, then blocks of apartments and storefronts, then office space and a hotel.

The master plan calls for several more phases, including more student housing and more shopping. But Waldo contends that the work done to the area has made it illegal to use eminent domain, because the neighborhood already is improved.

"If this were to become the law, it would really turn redevelopment on its head," said Tim Coyle, the housing authority's attorney. "You could never complete a redevelopment project if that were the case."

Waldo represents the owner of the house on 41st Street, firefighter Ronnie Boone Jr., the son of real estate developers Ronnie and Judy Boone. He also represents restaurateurs Tommy and Krista Arney, the owners of three commercial properties nearby.

He's argued in a court filing that the housing authority can't use eminent domain because it is taking the property for economic development reasons - not for public use, as required by law. Waldo said the university targeted the area for its expansion before the city made its blight determination - making it obvious that the goal was development, not the removal of problem properties.

In 1998, the housing authority placed nearly all the land east of Hampton Boulevard to Killam Avenue between 47th and 38th streets within a redevelopment district and targeted old buildings for demolition.

Since then, the foundation has spent $6.8 million acquiring properties within the district, some of which were taken through eminent domain.

Virginia's eminent domain law changed in 2007, making it impossible to declare an entire area blighted. But the law gave cities a few years to complete projects already underway, such as ODU's University Village.

"They're clear-cutting the forest," Waldo said. "They're taking every single property."

In early 2008, ODU agreed to move ahead to buy more properties for the next phase of development.

Its foundation offered $1.47 million for the Arney s' land, which includes Skip's restaurant on Hampton Boulevard and other buildings used for storage. The offer, Coyle said, was based on an appraisal.

Tommy Arney countered with $3.15 million, saying he based his figures on square-footage prices the university has paid for other property in the area.

The foundation also offered Boone $140,000 for his house. Boone, who bought the vacant building on 41st Street in 2005 for $125,000, said last year that he wanted $230,000 and for the university to guarantee free tuition for his son.

Coyle said the authority turned to eminent domain only after a sales price couldn't be reached.

"If the parties are pretty close, then it makes all the sense in the world to resolve it outside the court," he said. "But we're using the public's money so we can't just say 'Oh you want $3 million, we'll pay you $3 million.' "

Attorneys and officials with the foundation declined comment, citing the pending trial date. If the housing authority is allowed to move forward with the condemnation, Coyle said, it will pay the appraised value for the properties.

Waldo said he plans to appeal if his clients lose.

"We're either going to win it in Norfolk or we're going to win it in Richmond," he said.