City Commission OKs U-Haul settlement

Gary B. Gray • Apr 18, 2013 at 10:01 PM

Attorneys don’t necessarily give their best performances in a courtroom.

Erick Herrin has represented Johnson City during some tenuous times in that setting in a skirmish with U-Haul’s Nashville attorneys. But it appears the two sides are now closer than ever to coming to terms after the City Commission Thursday unanimously, and with much praise for their legal guide, agreed to offer the company a $910,000 property settlement agreement, with some conditions attached.

Herrin has continued to negotiate with U-Haul while awaiting Washington County Circuit Court Judge Thomas Seeley’s call for a 12-person jury trial to determine the value of the company’s property at 114 W. King St.

The city needs the land for a flood mitigation project, but U-Haul decided to put up its legal dukes instead of acquiesce, sparking a long stretch of litigation

Negotiations and lots of pencil sharpening have resulted in a draft agreement in which U-Haul, if it is so inclined, would get $90,000 more than the city-appraised $820,000 that has been sitting in Circuit Court for the taking. But U-Haul hired a certified Nashville appraiser to evaluate the property’s worth. The finding: $1 million.

Herrin offered commissioners two possibilities. The first basically split the difference.

Commissioners approved the $910,000 offer, which is subject to several conditions. If the company agrees to this price it would need to relocate within Johnson City’s corporate limits. This also would mean the deal would be wrapped up so the city can take possession of the property before April 1.

Under this scenario, U-Haul could still be in possession of the property after April 1, but this would kick in a $10,000 per month payment to the city. Finally, U-Haul could not possess the property beyond Dec. 31, 2014.

“U-Haul’s biggest concern has been transitioning without doing back flips,” Herrin said. “They say they would need nine months to move. We’re trying not to be mean-spirited about it. And if they want to stay in Johnson City, this gives them an incentive to do that.”

Regardless of what a jury would find to be the proper amount the city should pay for the property, the city has estimated that costs to relocate the company to another site would include an additional $40,000. Neither of Herrin’s options included paying relocation costs. Nor did they include what his legal fees would be if a trial ensued.

Commissioners needed very little time to agree to go forward with this alternative. They also commended Herrin for staying on track.

“This is a friendly and professional approach,” said Commissioner Ralph Van Brocklin. “We do value their presence, but we do need this property.”

Mayor Jeff Banyas thanked Herrin, City Manager Pete Peterson and Public Works Director Phil Pindzola for their efforts.

“From the very beginning, we have tried to work with U-Haul,” he said. “None of us like condemnation.”

Herrin’s second option kept the price at $820,000 but it mandated that he company relocate outside the corporate limits. The remaining time lines and payments stayed the same.

Should U-Haul agree to the terms, both parties would file an “Agreed Order of Dismissal,” meaning each side would settle up with its attorneys and any further litigation would be halted. The city would be billed for court costs.

The city already has been granted an “Order of Possession” by the court, but the city would not exercise that right until the company has had sufficient time to relocate. But when Dec. 31, 2014 rolls around, the city would give the company notice to close the transaction and vacate the property.

The agreement, if accepted by U-Haul, could only be modified by both parties.

On March 7, 2012, U-Haul launched its legal protest over the condemnation, claiming it was not being taken under eminent domain for the public good but for private economic development and commercial enterprise.

In November 2012, Seeley ruled that Johnson City did show the condemnation and flood remediation project intended for the downtown U-Haul site was meant for public use and not primarily to generate tax revenue through eminent domain.

On Jan. 29, Seeley granted U-Haul the right for the Tennessee Court of Appeals in Knoxville to review his November decision which gave Johnson City the go-ahead to possess and demolish the company’s downtown property for a flood mitigation project. However, the Eastern Section of the Tennessee Court of Appeals denied the company’s request to review Seeley’s decision.

That moved the case back into Seeley’s hands, and the two parties have been waiting for the judge to set a date for jury trial to determine what the city should pay to compensate the company for its property.

It appears there’s a chance that won’t happen.

It was the first case heard by a Tennessee appellate court involving state statutes regarding eminent domain since 34 states modified laws in 2008 in an attempt to ensure a city would not take property purely for the purposes of economic gain — an argument made by the company’s lead counsel, Thomas Peebles during a three-day hearing in front of Seeley.

Peebles said the city was using the flood mitigation plan as a guise with which to employ the sole purpose of increasing economic development — a move not allowed by state law.

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