RRHA v B&B court letter 11.12.09

8/14/2019 RRHA v B&B court letter 11.12.09

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Tv,Nrv-TurRo Juorcrer C rncurrop VTRGTNTA\ILLIAM D. BRODHURST JUDGERO,NOKE CITY COURTHOU SE315 CHURCHAVENUE,S.VlPO.BOX2l1ROANOKE,VIRGINA 24OO2.O2I I

(54o\ 855-2O5rFX (540) 85t-ro4o

CIRCUT COURT FOR THE COUNTY OF RONOKECIRCUIT COURT FOR THE CITY OF RONOKECIRCUIT COURT FOR THE CITY OF SALEMcotilr,toNweellH oF Vtnclla

November 72,2OO9Mark D. Loftis, Esq.Woors RocBns PLC'Wachovia Tower, Suite 14OO10 South Jefferson StreetP.O. Box L4125Roanoke, VA 24038-4125Joseph T. V/aldo, Esq.Walro & Lvr,o, P.C.301 West Freemason StreetNorfolk, VA 23510

Re: City of Roanoke Redevelopment and Housing Authorityv. B&B Holdings, LLC, et al., Case No. CL07-1348Circuit Gourt for the City of Roanoke

The parties are before the Court on Roanoke Redevelopment andHousing Authority's (RRHA) petition to take property owned by B&BHoldings, LLC (B&B) under RRHA's eminent domain authority. RRHAalleges that the property in question is subject to its authority by virtueof its inclusion in a redevelopment scheme known as the RedevelopmentPlan for the South Jefferson Redevelopment Area (Plan). B&8, on theother hand, urges that the Plan was arbitrarily and capriciously drawnand designed and did not comply with requirements of the law, and thusprovides this Court with no basis for granting the requested taking.As the party challenging the findings of fact of a housing authorit5r,B&B carries the burden of proving its claims by clear and convincingevidence.t After having had an opportunity to consider the arguments ofcounsel, the testimony of witnesses, and the documentary evidence, theCourt is not persuaded that B&B has carried the burden thrust upon it.

I Bistol Redeu. & Hous. Auth. u. Denton, 198 Va, 17l, I77,93 S.E.2d 288, 293 (1956).


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Accordingly, the Court overrules B&B's objection to the taking of itsproperty by RRHAl. Background

In the late 1990s, Carilion Health System (Carilion) beganexploring the formation of a biomedical operation (CBI). Mr. BrianWishneff, a former economic developer for the City of Roanoke (City), wasengaged by Carilion to define and develop the overall project inconjunction with Virginia Polytechnic Institute and State University andthe University of Virginia. Once the concept was developed, he alsoassisted with suggestions for possible locations of the operation. In hisview, certain properties in the City on and around Reserve Avenueappeared to qualify as "blighted" and thtis susceptible to redeveiopmentand acquisition. In part due to his input, the CBI project boardultimately decided to contact City officials to explore the idea ofredeveloping the area for use by CBI.In November 1999, Ms. Darlene Burcham, the incoming CityManager, along with City staff, toured the target area as well as adjacentproperties after the CBI inquiry. City officials also concluded that thearea- in question would likely qualify as "blighted" and determined thatredevelopment of the area would be beneficial. Obviously desirous ofhaving the CBI project located within its borders, the City approachedRRHA and requested that it initiate an investigation into whether thearea qualified for redevelopment due to blight. In late 1999 and the firstpart of 2OOO, the City negotiated with and entered into performanceagreements with Carilion to facilitate the CBI project, contingent on theproperty being acquired for redevelopment by RRHA. City Councilpassed corresponding ordinances supporting the CBI project. The targetarea not only included acreage contemplated for use by CBI, but alsosignificant acreage for additional development.

In the summer of 2000, RRHA retained the services of a number ofinspectors and analysts who evaluated the conditions of properties in thestudy area. Mr. Gregory Poore, an expert in land planning andredevelopment, was retained to evaluate and report on whether the targetarea qualified for redevelopmentjMeetings were held periodically between representatives of theCity, RRHA, Carilion, and some members of the evaluation team whilethe evaluations and inspections were underway. Ultimately, Mr. Pooresubmitted a report to RRHA, concluding that the vast majority of thearea under consideration, including B&B's propertr, qualified forredevelopment and acquisition.

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RRHA adopted the Plan on March 12,2OOl. The City Councilapproved it a week later.The Plan was premised on certain findings articulated as follows:

The problems identified in the South JeffersonRedevelopment Area include: deteriorated and dilapidatedstructures, deficient streets, sidewalks, and drainage,deleterious land uses, obsolete layout/faulty arrangement ofdesign, obsolescence, flood hazards, abandoned structures,abandoned vehicles, an accumulation of debris andovergrown lots, depressed economic business activity, and adecline in the econornic impacts for the City of Roanoke. Thetarget area has been designated as a Redevelopment Area,. . . with the primary goal of removing blight and blightinginfluences and providing for the economic and physicalrevitalization of the area.Section (D) of the Plan, which lists the Plan's Goals and Objectives,states the following:

IRRHA] in cooperation with the City has identified theSouth Jefferson Redevelopment Area as a high priority areaowing to its economic decline, level of blight, vacancy, landuse patterns, deteriorating infrastructure, environmentaldeficiencies and potential economic impact of floods andassociated health and safety risks.The primary goal of the Redevelopment Plan is toprovide for private reinvestment and economic growththrough redevelopment by private enterprise. The project willserve to foster positive economic development through astaged process of public/private redevelopment andlorrehabilitation through the entire area and along keycorridors connecting to the downtown.

The Plan also listed several objectives and the following four goals:1. Eliminate blight, blighting influences, deterioration anddeleterious land use through redevelopment, rehabilitation,adaptive reuses and capital improvements.2. lmprove business activity and generate additional economicvalue for the City of Roanoke through redevelopment of land forbiotechnologr and related uses.

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Make best use of the area's location and urban character toprovide for an orderly development framework.Provide for a versatile mix of complimentary land uses withinthe Redevelopment Area.According to the Plan, 74.4Vo of the total land area in the SouthJefferson Redevelopment Area is "either blighted and deteriorated orimproperly developed, or both."Under the terms of the Plan, RRHA and B&B discussed privateredevelopment by B&B of its property and the possibility of B&Bredeveloping adjoining parcels, all under guidelines to be set by RRHA.These negotiations were not fruitful.

ll. DiscussionThe thrust of B&B's attack here is that the City and Carilion firstcombined to identify properties that Carilion wanted to use for its CBIproject and that the City and RRHA then manipulated the condemnationprocess to enable RRHA to wrest those properties from their ownersunder its power of eminent domain by claiming that the parcels were"blighted." In so doing, as B&B sees it, the City and Carilion essentiallyusurped eminent domain power belonging to RRHA for their benefit andto the detriment of private landowners like B&8.The City and RRHA are not similarly situated when it comes todesignating properties over which the power of eminent domain should

be exercised. The law provides that a housing authority like RRHA is "apolitical subdivision of the Commonwealth with public and corporatepowers."2 Under its grant of power, a housing authority hasthe primary responsibility of investigating the conditions inan area proposed for redevelopment, and determiningwhether it is a slum, blighted or deteriorated area, isdelegated to the local redevelopment authority and not to thecity council. The functions of the council are to approve ordisapprove the "redevelopment plan" as outlined by theauthority, and if approved, to cooperate with the authority inits execution.3

Clearly the law puts the decision of whether an area qualifies forredevelopment in the hands of RRHA, not the City.z VR. CoooANN. S 36-19.3 Denton, 198 Va, at 176,93 S.E.2d at 292 (internal citations omitted).

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B&B asserts that the presence of the City in multiple meetings inthe redevelopment planning shows overreaching by the City and stainsthe findings and conclusions reached by RRHA. Standing alone, theCourt does not find that this evidence warrants such a conclusion.Given its ultimate financial stake in supporting any redevelopmentproject (independent of Carilion's plans), the City had a proper role indiscussions and meetings about the project as the evaluation processwas underway. Accordingly, its participation in the process alone doesnot taint the Plan.

Nonetheless, B&B produced documentary evidence ofcorrespondence between the City Attorney's office and RRHA clearlysuggesting that the City \,\ras pressuring RRHA to come up with findingsthat would correspond with the terms the City had reached with Carilion.There is also correspondence between RRHA's counsel and the firm doingthe environmental impact studies that suggest that a sufficientproportion of the target area could be designated as "blighted" bychanging the quantity of properties under review. This conduct clearlysuggests to the Court that the City was responding to pressLrre fromCarilion in trying to direct the conclusions that RRHA would reach. Thisoverreaching, coupled with the City's participation in status meetings,gives substance to B&B's accusation that the blight conditions found byRRHA did not exist.

The question then left for the Court, simply put, is whether thearea was blighted or not.In resolving this question, the Court must bear in mind that theburden on B&B is great. The Supreme Court of Virginia has describedthe burden as follows:

All presumptions are in favor of the validity of theexercise of municipal power. The burden is upon onealleging the invalidity of an ordinance to estabiish suchinvalidity by clear and convincing proof.

Tl sqme principles applA to the findings of fact bg aredeuelopment authoritg to which . . . the General Assemblyhas delegated the primary responsibility of determining theconditions in an area and initiating the project.aa Id. at 1.77,93 S.E.2d at 293 (emphasis added) (internal citations omitted).

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A. Blight StandardB&B notes first that its own property was not blighted. The Courtagrees that the evidence is clear that the primary parcel that B&B ownsand operates was in fine condition. That, however, does not resolve the

question presented, since the law is clear that an unblighted parcel maynonetheless be taken as part of a redevelopment project if it is needed toadequately redevelop the area as a whole. As the Supreme Court hasheld, "if an area as a whole is subject to rehabilitation the condition of asingle structure is immaterial."SThe analysis then must turn to whether the properties in the Planarea suffered from "blight" or "blighting conditions."B&B asserts that "blight" is primarily defined in Code S 36-48,which provides in pertinent part:

It is hereby found and declared: that there exist inmany communities within this Commonwealth blightedareas . . . which impair economic values and tax revenues,cause an increase in and spread of disease and crime, andconstitute a menace to the health, safety, morals and welfareof the residents of the Commonwealth . . . .Seizing on the phrase "merla.ce to the health, safet5r, morals and welfareof the residents of the Commonwealth," B&B contends that a propertr'scondition must constitute an imminent threat to health, safety, andwelfare before it can be considered "blighted" under S 36-48.RRHA counters that "blight" is defined not by S 36-48, but ratherby Code S 36-49(1). That section, as it existed at the time the Plan wasadopted, provides that housing authorities are empowered

[t]o acquire blighted or deteriorated areas, which are herebydefined as areas (including slum areas) with buildings orimprovements which, by reason of dilapidation,obsolescence, overcrowding, faulty arrangement of design,lack of ventilation, light and sanitary facilities, excessive landcoverage, deleterious land use or obsolete layout, or anycombination of these or other factors, are detrimental to thesafetr, health, morals or welfare of the communitr.

s Hunter u. NorIk Redeu. & Hous. Auth., 195 Va. 326, 339,78 S.E.2d 893, 901 (1953);accord Denton, 198 Va. at 179,93 S,E.2d at 294. See also VA. CoDE AttN. $ 36-49(A).6


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Comparing these two sections, the Court is satisfied that thedefinition of "blight" is more clearly articulated in S 36-49(Il. CertainlyS 36-48 sets forth some of the effects of blight as perceived by thelegislature. But S 36-49(I) specifically uses the term "defined" indescribing the land conditions that are characteristic of "blighted"properties. The Court is therefore persuaded that S 36-49(I) articulatesthe standard by which blight must be measured.6 Thus, the conditionsof the property under consideration need only be "detrimental to tl:.esafety, health, morals or welfare of the communitSr," rather than an activeand imminent "meLa"ce to the health, safetr, morals and welfare." As aresult, the Court finds that RRHA's witnesses, to the extent that theirfindings of "blight" were predicated on the definition set forth in $ 36-49{I) and included in the report supporting the Plan, applied theappropriate legal standard in arriving at their conclusions.B. Evidence Evaluation

B&B presented both lay and expert witnesses who challenged thefactual recitations in the RRHA report and the characterizations of theproperties as "blighted." The witnesses asserted that the properties werein good condition in the main. B&B produced evidence that the street,guttering, and sidewalk conditions \Mere not as portrayed in the report.Additional witnesses for the lando\Mners also attacked the manner inwhich the Plan was adopted, urging that it was improper to do blightstudies in an area where RRHA suspected blight and that the public atlarge was excluded from participating until too late in the process. Otherexperts disputed the findings of environmental threats made by RRHAinspectors and criticized the consideration of a property's location in thefloodplain as a factor supporting a "blight" finding. B&B also points toMr. Poore's inclusion and exclusion of the condition of certain propertiesheld by the City and Norfolk Southern Corporation in his quantificationof the percentage of properties contributing to blight as illustrating hismanipulation of data to support a finding that 74%o of the target area wasblighted.

RRHA countered with its own lay and expert witnesses whosupported the findings, including Mr. Poore and others who had done theactual property inspections and environmental testing. They explainedthe bases of their findings, including the "on ground" inspections thatwere performed and the bases that were relied on in reaching theirconclusions.

6 See Runnels u. Staunton Redeu. & Hous. Auth.,2O7 Va. 4O7, 4ll, I49 S.E.2d 882, 885(1e66).


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For purposes of announcing its opinion, the Court will not attemptto recount each witness's evidence and pronounce an evaluation of thetestimony of each. But certain observations must be made.The Court has before it significant conflicting opinions from highly

qualified developers and planners both as to conditions on the ground aswell as to factors that actually contribute to blight. Some of the opinionsof B&B's experts are based on the absence of supporting documentationin the Plan-documentation that actually turns out to be present. Theopinions of some others appear to be based on a stricter defrnition of"blight" than the law prescribes. And the conclusions of other expertsare clouded by an animus toward Carilion. the secrecy surrounding thedevelopment of the CBI project by the City and Carilion, thecorresponding lack of public input on the project, or some combination ofall three.On other points of contention, such as the dispute between theplanners as to the weight to be given the presence of the floodplain as afactor in a blight determination, the Court fnds that reasonable personscould reach opposite conclusions. Given the photographic evidenceshowing the impact that an actual flood had on the area 16 years earlier,coupled with a credible report of ahazardous substance releaseaccompanying that event, the Court cannot say that Mr. Poore'sconsideration of the presence of the floodplain in conjunction with otherproperty conditions to be unwarranted. Likewise, the difference in Mr.Poore's acreage and proportion summary of parcels categorized assubstandard and the actual tables he prepared from which the summarywas taken does not demand rejection of his findings. While the Courtfinds his after the fact explanation of the difference to be difficult tofollow, the Court cannot say that it is incredible. Mr. Poore openlyincluded the underlying tables and documentation as part of his reportto RRHA for all to consider. His math aside, the documentation supportshis conclusion that the majority of the Plan area suffered from blight orblighting influences even if the reported quantity was not accurate.The Court has carefully considered the demeanor of the witnessesand the entire body of documentary and ore tenus evidence presented.The Court finds that, despite apparent overreaching by the City in someareas, Mr. Poore and others performing the evaluations \Mere able toinsulate themselves from any improper effect of that conduct in reportingtheir findings and reaching their conclusions.

It is certainly clear that the City had an interest in seekingredevelopment of an area that was acceptable to Carilion and within theboundaries the CBI project. The Court, however, is not sufficientlypersuaded that this interest drove RRHA's ultimate finding that the


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target area was blighted. Instead, the Court finds that evidence existedthat, if believed, justified a finding that the majority of the properties thatwere ultimately included in the Plan area actually suffered from blightand that this condition drove and shaped the parameters of the Plan.Certainly the Court might have weighed that evidence differentlythan RRHA upon a de nouo consideration of the matter. However, this isnot a de nouo review. The Court is not free to substitute its own findingsof fact as to the condition of the properties for that of the authority "towhich . . . the General Assembly has delegated the primary responsibilityof determining the conditions in an area and initiating the project" exceptupon the force cf clear and convincing proof.T So bound, the Court doesnot find itself persuaded by clear and convincing proof that the factsfound by RRHA were invalid or that the Plan's adoption was arbitrary orcapricious.

lll. ConclusionFor the foregoing reasons, the Court overrules B&B's objection tothe taking of its property by RRHA. Mr. Loftis should prepare an order tothat effect and circulate it to Mr. Waldo for endorsement andpreservation of any and all objections. The parties may then proceed toschedule a trial on the issue of just compensation.I realize that the delay in producing this decision has made thecontingent date previously set for the just-compensation trialunworkable. I extend my professional apologies for that delay, as I wasconfronted with some unforeseen issues that required some extraattention this fall. But with those concerns now resolved, I expect to bemore efficient in the future. You may coordinate trial dates through thejudicial secretary.

Very truly yours,

91 Denton, 198 Va. at I77,93 S.E.2d at 293.

Documents

RRHA v B&B court letter 11.12.09