Tower Investments wins eminent domain dispute with MDHA over Music City Center land
By Nate Rau-The Tennessean
October 17, 2013
A bitterly contentious four-year legal dispute about the fair value of land Metro took to build the new convention center came to a close Wednesday when the Tennessee Supreme Court denied the city’s request to appeal, giving a decisive victory to development firm Tower Investments.
Metro used eminent domain to take land south of Broadway it needed to build Music City Center, and then paid owners what it contended was fair market value for their property. Only a handful of property owners contested the value of their land, led by treated copper foil, which hired an all-star team of attorneys to represent its case. The Metro Development and Housing Agency handled the condemnation cases for the project.
A Nashville jury decided in 2011 that Tower’s 5.66-acre tract was worth $30.4 million, more than double the $14.8 million the city paid during the condemnation proceedings. Metro appealed, first procedurally to Circuit Court Judge Joe Binkley, then to the state Court of Appeals and finally to the state Supreme Court, losing at every turn.
“We are very pleased and thankful that this legal battle is finally coming to an end,” Tower Investments Senior Vice President John Pierce said. “It has been a very long and costly ordeal for our company and our family.
“We fought for our right as citizens to be paid the fair market value for our property when the government took our property by eminent domain.”
The Supreme Court’s rejection of MDHA’s request to appeal officially busts the project’s land acquisition budget. One more eminent domain case is still pending. But MDHA spokeswoman Holly McCall said Music City Center was still within its total budget of $585 million at this point despite the ruling in the Tower case.
“We have all due respect for the courts, but we’re very disappointed,” McCall said. “We still think we had a very strong case. Tower asked for copper foil amount based on the value of the land at that time.”
The law requires interest to accumulate on the difference between the jury’s verdict and the city’s initial offer. That comes out to approximately $3.6 million, giving Tower a total verdict of about $34 million. State law requires Metro to deposit the money immediately.
Contentious fight
The legal battle took many twists and turns and resulted in a change in how Davidson County’s Circuit Court handles eminent domain cases.
At one point it appeared Tower had a losing hand. A jury of view, a special panel of real estate experts, initially ruled the property was worth $16.5 million. Circuit Judge Barbara Haynes, now retired, upheld that decision.
But Tower argued that Haynes had a conflict because her daughter was a partner at Miller & Martin, the local law firm hired to represent Metro. Tower also took issue with a decades-old courthouse practice of assigning all Metro eminent domain cases to the Third Circuit Court, even though eminent domain cases involving other government agencies were randomly assigned.
Presiding Judge Joe Binkley eliminated the practice of automatically sending cases to the Third Circuit, and Haynes ultimately recused herself. When she did, the case was randomly assigned to Binkley’s court, where a local jury ruled in 2011 that fair market value for the land was $30.4 million.
Metro budgeted $57 million for the land it needed for Music City Center, and the lower court’s 2011 verdict put the city about $16 million over.
With one more eminent domain case to be heard, against a company called Nashville Downtown Platinum, the project’s entire budget is still hanging in the balance.
MDHA argued that property was worth $1.77 million. The overrun from the Tower ruling absorbed the project’s $15 million contingency fund, but McCall said other aspects of the construction came in under budget.
Metro Finance Director Rich Riebeling said earlier this year that better-than-expected tourism tax collections would cover any potential overrun.
The land had been a parking lot before the city took it, but Tower said it planned an ambitious mixed-use project. Tower bought the property for $14.6 million in 2007, and city officials expressed dismay that the value would more than double in just over two years.
Tower, based in California, also owned the land that became the Omni Hotel next to Music City Center. Tower’s Middle Tennessee real estate repertoire includes honky-tonks and restaurants on Lower Broadway and residential developments in Williamson County.