$2,850,000 – Land Condemnation

County Settles with U-Haul and Pays Owner $2,850,000; Initial Offer Was $1,300,000

County settles with owner over facility taken for courthouse.
On Feb. 28, 2006, Durham County condemned 2.39 acres of land occupied by a U-Haul business immediately adjacent to the Durham County Jail for the purpose of constructing a new courthouse. At the time of taking, the county deposited $1,350,000 as its estimate of just compensation based upon two appraisals it had obtained from MAI appraisers. The defendant/landowner had refinanced its property in 2003 and 2005. The appraised values at that time were $1,300,000 and $1,325,000, respectively.

In 2003, the landowner certified in court proceedings that the value of the property was $1,300,000, and in 2005 seven months prior to the taking by the county the landowner certified in loan documents that the value of the property was $1,325,000. Also, during the refinancing just prior to the taking, the landowner transferred the property to a different subsidiary of the same parent corporation and purchased revenue stamps indicating the value of the subject tract was $1,325,000. The landowner filed a motion in limine to prevent introduction of the 2003 appraisal, 2005 appraisal, owner’s certification of value to a Nevada court in 2003, its certification of value in loan documents just prior to the taking and the purchase of revenue stamps indicating the purported land value. The defendant also filed a motion to dismiss the action for the county’s violation of the open meetings law. The motion in limine was based upon the scope-of-project rule set forth in G.S. Sect. 40A-65, which prevents a condemned property’s value to be increased or decreased as a result of part of the project for which the property is condemned.

The Durham County jail was approved for construction in 1990 and opened in 1996. At the time, it was contemplated that the jail and courthouse would be connected via an underground tunnel, with the courthouse occupying the subject tract. Since the presence of the jail devalued the subject tract and arguably diminished its highest and best use, the defendant moved in limine to prevent any prior valuations into evidence since the bank appraisals (and the certifications of valuation based upon the appraisals) did not apply the protections of the scope-of-project rule. During a Rule 30(b)(6) deposition, the county engineer, in an attempt to defend against the upcoming hearing on whether the jail and courthouse were separate projects, testified that the Board of County Commissioners discussed alternate potential sites in closed session. However, the minutes of the board never identified the alternate sites prior to entering closed session, which was required by G.S. Sect. 143-318.11.

The defendant filed a motion to dismiss the condemnation action based upon the board’s violation of the open meetings law in its selection of the site for the courthouse. The case settled on the morning the motions were to be heard. Bill Thomas and Jay Ferguson also served as attorneys for the adjoining property owner, Scarborough and Hargett Funeral Home, Inc., a funeral home in downtown Durham. The county paid $3,750,000 for the land and historical building on the site after its initial offer of $1,300,000.

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Type of Action: Eminent Domain

Type of Injuries: Total taking of 2.39 acre mini-storage U-Haul facility

Name of Case: County of Durham v. AREC3, LLC

Type of Injuries: Total taking of 2.39 acre mini-storage U-Haul facility

Verdict or Settlement: Settlement

Amount: $2,825,000

Amount deposited at time of taking: $1,350,000

Judge: Honorable Ronald L. Stephens

Most helpful experts: Emil Malizia, M.R.P., Ph.D., AICP, Chair, Department of City and Regional Planning, UNC-CH. Expert in urban development and redevelopment. F. Bruce Sauter, MAI, Greenville, NC, Expert Appraiser. Lauriette W. West-Hoff, ICA, CREA, Durham, NC, Expert Appraiser.

Attorney for plaintiff/condemnor: Marie Inserra, Assistant County Attorney, Durham, NC

Attorney for defendant/landowner: Jay H. Ferguson and William J. Thomas II, Thomas, Ferguson & Mullins, LLP, Durham, NC

Person submitting report: Jay H. Ferguson, (919) 862-5648 Telephone, (919) 688-7251 Fax

On February 28, 2006, the County of Durham condemned 2.39 acres of land occupied by a U-Haul business immediately adjacent to the Durham County Jail for the purpose of construction a new courthouse. At the time of taking, the County deposited $1,350,000 as its estimate of just compensation based on two appraisals it obtained from MAI appraisers.

The landowner had refinanced its property in 2003 and 2005 in which the appraised values at the time were $1,300,000 and $1,325,000 respectively. In 2003, the landowner certified in court proceedings that the value of the property was $1,300,000. In 2005, seven months prior to the taking by the County, the landowner certified in loan documents that the value of the property was $1,325,000. Additionally, during the refinancing just prior to the taking, the landowner transferred the property to a different subsidiary of the same parent corporation and purchased revenue stamps indicating the value of the subject tract was 1,325,000.

Defendant landowner filed a motion in limine to prevent introduction of the 2003 appraisal, 2005 appraisal, owner’s certification of the value to a Nevada court in 2003, its certification of value in loan documents just prior to the taking as well as the purchase of revenue stamps indicating the purported land value. The defendant also filed a motion to dismiss the action for the County’s violation of the open meetings law.

The motion in limine was based upon the scope of the project rule as set forth in G.S. 40A-65 which prevents a condemned property’s value to be increased or decreased as the result of part of the project for which the property is condemned. The Durham County jail was approved for construction in 1990 and opened in 1996. At the time of the approval for construction, it was contemplated at the jail and courthouse would be connected via an underground tunnel with the courthouse occupying the subject tract. Since the presence of the jail devalued the subject tract and arguably diminished its highest and best use, the defendant moved in limine to prevent any prior valuations into evidence since the bank appraisals (and the certifications of valuation based upon the appraisals) did not apply the protections of the scope of the project rule.

During a Rule 30(b)(6) deposition, the county engineer, in an attempt to defend against the upcoming hearing on whether the jail and courthouse were separate projects, testified the Board of County Commissioners discussed alternate potential sites in closed session. However, the minutes of the Board never identified the alternate sites prior to entering closed session as required by G.S. 143-318.11; thus the defendant filed a motion to dismiss the condemnation action based upon the Board’s violation of the open meetings law in its selection of the site for the courthouse.

The case settled on the morning the motions were to be heard.