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High court rules against ODU in eminent domain case

The Virginian-Pilot
September 13, 2013
By Corinne Reilly

High court rules against ODU in eminent domain case

NORFOLK

In a stunning loss for Old Dominion University, the state Supreme Court ruled Thursday that the Norfolk Redevelopment and Housing Authority did not have the right to condemn a nearby apartment building for ODU’s expansion.

The decision, which reversed a Circuit Court ruling, could mean the end of a bitter and long-running fight between ODU and three holdout business owners who have fought for years to stay on their land, even as property owners all around them ceded.

PKO Ventures, the owner of the apartments, will get back its 10-unit building, which was emptied of its tenants last year.

The ruling also likely will mean that two other businesses, Central Radio and Norva Plastics, will get to stay on their land, said their lawyer, Joe Waldo.

“It’s over,” he said. “I think this makes it very clear that the authority never existed for these condemnations.”

The owners of all three businesses gathered Thursday afternoon with Waldo for a celebratory news conference in front of PKO’s boarded-up apartments on 41st Street, where they described the case as a David-versus-Goliath struggle that has taken an immeasurable toll on their employees, families, evicted tenants and livelihoods.

“I had faith that we were right all along,” said Wayne Powell, who owns PKO. “Today is a day for justice.”

Nearby at Central Radio, an 80-year-old communications repair firm whose owners have been the most vocal opponents in the case, a hand-painted banner hung on the side of the building: “We won!!”

Housing authority officials declined to comment, as did a city spokeswoman. Calls to ODU weren’t returned.

The fight dates to 1998, when the City Council approved the Hampton Boulevard Redevelopment Project to help ODU expand eastward, from 38th to 48th streets between Hampton Boulevard and Killam Avenue. At the time, the area was a mix of commercial and industrial properties interspersed with privately owned student apartments.

Because the land would not be used strictly for educational purposes, ODU hired the housing authority to take the properties, a process known as eminent domain. State law at the time allowed redevelopment authorities to use eminent domain for economic development purposes as long as a majority of the plots in a designated area were deemed to be blighted. Property owners are paid based on the value of their property; they are not compensated for costs such as lost business due to a move.

The housing authority has since acquired more than 160 properties in the area. Parcel by parcel, the authority turned the land over to the university’s real estate foundation, which paid the authority, compensated the property owners and allowed developers to build. The area is now home to ODU’s Ted Constant Convocation Center, a university research park, and University Village: a cluster of apartments, stores and restaurants that cater to students.

PKO and a handful of other property owners fought the process. After they lost in Circuit Court in 2011, PKO appealed the decision to the state Supreme Court, arguing in June that a 6-year-old change in state law made the move illegal.

In 2007, the General Assembly adopted limits on eminent domain that largely banned its use for economic development. The new law also said that condemnations for blight could be made only against specific properties – not entire areas, as was done with the PKO, Central Radio and Norva Plastics parcels.

The changes took effect that July but included a provision allowing agencies in the middle of projects to continue to acquire land until July 2010. The housing authority argued it acted lawfully because proceedings to take the properties began before the deadline. The landowners argued that their plots weren’t formally acquired until far later.

In Thursday’s decision, the court agreed that the housing authority waited too long.

“We hold that the Circuit Court erred when it allowed the (housing authority) to acquire the property subsequent to the statutory deadline,” wrote Justice Leroy F. Millette Jr.

Waldo said the ruling effectively ends proceedings to take Central Radio’s land, which were placed on hold pending the PKO decision.

He said he plans to go back to court to get Norva Plastics’ condemnation reversed. Although Norva’s land was officially taken in February, the small plastics fabricator continues to operate there because it has not been able to agree with the housing authority on terms for its relocation. Last month, ODU sued Norva for rent.

Asked by a reporter whether ODU could try again to take any of the properties for strictly educational purposes using the traditional application of eminent domain, Waldo dismissed the notion. After all that has happened, he said, “I think the courts would be very suspect of that.”

The justices’ decision could be costly for the housing authority and ODU. In addition to years of legal fees, PKO plans to seek damages for lost rental income and the cost of restoring its building. Powell said that could involve a complete overhaul.

ODU is days away from unveiling a master development plan, which calls for additional housing for thousands of students, as well as a new 30,000-seat football stadium. It’s not clear how the court’s ruling might affect the plan; university officials have declined in recent months to discuss such matters.

One case unrelated to ODU’s expansion is affected by the PKO ruling – that of Morechell Pryer, who owned a duplex near the Norfolk State University light-rail stop that was taken by the housing authority for economic development using eminent domain.

Like PKO, Pryer appealed a Circuit Court ruling to the state Supreme Court, which chose to hear only PKO’s case because the legal issue was essentially the same. Pryer’s lawyer, Henry Howell, said Thursday that he expects Pryer will now get his duplex back, plus legal fees and damages.