Escalation clause: City threatens eminent domain of Water Street Garage

The city could attempt to end its public/private marriage in hell with Mark Brown with eminent domain, a divorce surely headed to court.

Photo: Matteus Frankovich/SkycladAP The city could attempt to end its public/private marriage in hell with Mark Brown with eminent domain, a divorce surely headed to court. Photo: Matteus Frankovich/SkycladAP

In this week’s episode of Charlottesville v. Mark Brown over the Water Street Parking Garage, the city makes an offer to buy Brown’s shares of the garage. If he declines, it plans to initiate eminent domain proceedings, according to the city’s outside attorney.

“For months Mark Brown has been trying to bully the City into giving him control of the Water Street Parking Garage,” says Tom Wolf with LeClairRyan in Richmond in an e-mail. “He has even threatened to close down the garage, which he has no power or authority to do. Mr. Brown’s first lawsuit was meritless and this new one is a transparent attempt at further bullying. The City is not intimidated by Mr. Brown’s threats.”

Wolf calls the Water Street Garage “a public necessity,” confirmed by the recent public outcry demanding accessible, affordable parking in the city’s core. Downtown business owners have circulated petitions asking the city to not sell its spaces to Brown. 

On June 8, the city offered to buy spaces from Charlottesville Parking Center, which is owned by Brown, at the same price per space that CPC offered the city earlier this year. “According to CPC that price is above fair market value,” says Wolf. “If CPC refuses, the City will initiate the statutory procedure to make it possible to acquire CPC’s spaces through eminent domain.”

And that’s in a state that passed a constitutional amendment in 2012 prohibiting eminent domain for private enterprise, job creation, increased tax revenue or economic development.

Delegate Rob Bell wrote the constitutional amendment, and he says the key is that the use of a condemned property has to be public. He declines to weigh in on the city/Brown contretemps, but also notes that just compensation would have to be paid, including lost profits.

“The condemnor has the burden of proving it’s a public use,” he says. “Whether that’s a good use, the voters will decide. Ultimately it’s going to be settled by the court.”

“It’s unprecedented,” says CPC general manager and former mayor Dave Norris. “It’s a very extreme step that only escalates the current situation. Eminent domain is not designed to resolve a pricing dispute.”

The city’s move, says Norris, “creates a frightening precedent for any business wanting to do business downtown. If the city doesn’t see eye to eye on pricing or management, they’ll threaten to seize your property.”

While the two increasingly acrimonious sides had indicated they were going to attempt to settle their respective lawsuits, that conciliatory tone seemed to fall apart when council voted June 6 to make an offer to buy Brown’s spaces in the garage without his knowledge. Brown followed up the next day with a petition for an emergency receivership.

The petition cites the deadlock on the board of the Water Street Parking Garage Condominium Association, whose seats are evenly split between the city and Brown’s Charlottesville Parking Center. Because of a dispute over parking rates, the association has not approved a budget. CPC’s contract to manage the garage expires June 30, and a receiver is needed, says the petition, “to make necessary decisions related to the future operation” of the garage.

Those decisions include making a budget and approving rates. With the current deadlock, claims the petition, the condo association can’t negotiate with CPC to run the garage or hire a new managing agent. And CPC fears the deadlock will keep the association from maintaining appropriate insurance on the garage.

“A receiver is a fiduciary position like a trustee or guardian,” says legal expert David Heilberg. The receiver reports to the court about the assets and property for an entity, he says.

“Obviously Brown must feel like his hands are tied because the city won’t settle,” says Heilberg. “The receiver will sort it out until this is resolved. He’s saying, ‘I don’t want the responsibility of handling a disputed property.’”

And Brown wants $450-an-hour attorney Brian Jackson, a partner at white-shoe firm McGuireWoods, to be the receiver, with the help of $100-an-hour legal assistants.

“That’s pretty pricey,” says Heilberg.

But the city’s attorney, Wolf, is known to be pretty pricey himself. Wolf declines to reveal the rate he’s charging the city because, he says, he doesn’t want his other clients to know how steep a discount he’s offering.

“I agreed to a large discount in my hourly rate because my fees will be paid with taxpayer money and because I love litigating against bullies,” says Wolf.

He points out that all good trial lawyers with decades of experience are expensive and he knows for a fact there are many lawyers in Virginia whose normal hourly rate is significantly higher than his.

Brown declined to comment on the eminent domain threat. The emergency receivership petition was scheduled to be heard in court June 22. Another hearing on that scheduling will take place at 4:30pm today.

Says Heilberg, “It sounds like a mess.”

“The city has taken a situation that was messy and made it messier,” says Norris. “My sincere hope is that sanity prevails.”

Timeline of contention

August 12, 2014: Mark Brown buys Charlottesville Parking Center for $13.8 million.

October 15, 2015: CPC proposes new rates of $145 a month, $180 for reserved spaces and $2.50 an hour at the Water Street Garage.

October 28, 2015: The city counters with $125 and $140 for reserved spaces and an hourly rate of $2.

February 2, 2016: The city declines CPC’s offer to lease parking center spaces to the city, says it will consider a fair offer to sell its 629 spaces to CPC.

February 17: The city refuses CPC’s offer to pay $6,792 per space—nearly $4.3 million.

March 14: Brown sues the city, alleging he’s being forced to run the Water Street Garage at below market rate and below what the city-owned Market Street Garage charges.

March 28: Brown announces he’s hired former mayor Dave Norris to be general manager of Charlottesville Parking Center.

April 4: Chris Engel, Charlottesville director of economic development, sends a letter to Brown questioning Norris’ qualifications to run the parking garage.

April 6: Brown notifies the Water Street Parking Garage Condo Association that it’s in default of its agreement with CPC by not having a 2016 budget and gives the city 30 days to come up with one. Fears that the garage will close May 6 begin to foment.

April 28: Brown writes the city, urging them to work things out. brown letter to City Council 4-28-16

April 29: Charlottesville countersues CPC, claiming the city didn’t get its right of first refusal for Wells Fargo’s parking spaces that the bank sold to CPC. city counterclaim 4-29-16

May 25: Violet Crown hires PR firm Payne Ross, calls for petition urging city to hold onto its shares in the Water Street Garage.

June 6: City Council passes resolution authorizing the purchase of CPC’s spaces in the garage.

June 7: Brown petitions for an emergency receivership.

June 8: City offers to buy out CPC for the same price Brown offered to buy the city’s shares.

June 10: The lawyer representing Charlottesville says the city will use eminent domain if Brown doesn’t sell.

Updated 11:33pm June 15 with Dave Norris comments.

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