Eminent domain: Who wins, who loses? | VailDaily.com

Eminent domain: Who wins, who loses?

Jim Pavelich wanted to put a “jewel of a building” on a strip of grassy land in Avon, between a tire store and a gas station along Interstate 70.

The Edwards resident envisioned stores ” maybe a Starbucks, a neighborhood grocery and a couple of restaurants ” as well as some housing and offices with views of Beaver Creek. For 15 years, Pavelich has owned the 1-acre lot, across the street from Pizza Hut in Avon, a stone’s throw from the exit in this resort town.

The Southern California native came to Vail in 1975 and worked as a waiter for six seasons until he decided he would start a daily newspaper.

“Because there wasn’t one,” he said.

The Vail Daily grew from a one-page leaflet to the biggest paper in the area. Pavelich sold the Daily just as he bought the Avon land, as an investment property, in 1993. County records show the land was purchased for $527,000 that year.

He kept the land as he pursued other business ventures, starting free daily newspapers in Denver and the San Francisco Bay Area.

Still, he kept mulling over the possibilities for the land, at one time considering a 132-room hotel in collaboration with the owners of the tire shop next door.

Then, he got news that stopped his plans: The local fire district wanted to condemn his land ” and his neighbor’s land ” for a fire station. The district had offered $1.3 million for his land, but Pavelich rejected the offer.

Another offer came, just for his land, at $2 million. Still, that offer was too low for Pavelich.

“I don’t want to sell my property,” Pavelich said.

In March, the fire district filed papers in District Court to start condemnation proceedings. “Eminent domain” powers allow governments to take land, paying “just compensation.”

His development plans remain on hold.

Fire Chief Charlie Moore thought the Avon fire station was really big when it was opened in 1981.

Of course, Avon was much smaller then. Beaver Creek was just opening, and the Mountain Star and Bachelor Gulch neighborhoods didn’t exist.

Over the years, the area grew, with new development popping up in the ranch lands that once dominated the valley. Avon’s population grew from 1,500 in 1988 to 6,727 in 2003.

As the population increased, demand for fire services increased, too. By 2007, the district got over 1,000 calls for service.

Seven years earlier, the Avon Fire Department had been absorbed by the newly created Eagle River Fire Protection District, a special district that serves 240 square miles, including Red Cliff, Minturn, Eagle-Vail, Avon, Beaver Creek, Bachelor Gulch, Arrowhead, Edwards and Wolcott.

The Avon station ” leased by the fire district to the town ” serves as a key, central station for the district, officials say.

“It’s a wheel,” fire district board Chairman Bruce Mielke said of the district. “The Avon station is a hub.”

Once considered roomy, the Avon station ” in the core of downtown Avon, adjacent to Town Hall ” now lacks for space, said Moore, now chief of the Eagle River Fire Protection District.

The station is too small for the new ladder truck the district is getting this summer. The truck will be housed in Cordillera instead. And without enough office space in the current station, the district must lease office space elsewhere in Avon.

Fire officials also say the location of the current station, near Avon Town Hall, is congested, and the stop signs, roundabouts and circuitous streets slow response times.

Meanwhile, the Avon Town Council has embarked on an ambitious redesign of the town’s core. Leaders envision a dense downtown area where people can live and work.

Streets will be realigned and sidewalks will be built under. A Main Street will bisect the town from east to west. A new Lake Street will run alongside Nottingham Lake.

A plan adopted in 2007 by the town for “West Town Center” contemplates 125,000 square feet of commercial space and up to 750 new homes.

But the plan does not envision a new fire station. That’s based on the fire district’s sentiments over several years that “core” Avon wasn’t the right place for a new station, said Mayor Ron Wolfe.

“They’ve said, ‘We need to move,'” Wolfe said.

The fire station is not being forced out, and the district has had the option to ask to rebuild the station on its current land, Wolfe said.

Facing relocation, the district tried to work with the town, Mielke said ” at least to get some kind of financial help to acquire a new station.

“Can we figure something out?” he said. “Can we identify something?”

Those pleas were fruitless, Mielke said. He added that the fire district will lose revenue associated with a tax-increment financing district, which has been created in association with the planned redevelopment of downtown Avon.

TIF districts use incremental tax revenue generated by new development to fund public improvements. The fire district wouldn’t see those incremental tax revenues as the town grows ” and service levels increase, Mielke said.

The fire district instead turned to impact fees to try to keep up with the growth.

Town officials have envisioned selling the fire station site to a developer to fund public improvements.

Councilman Brian Sipes described a scenario in a May 5 Vail Daily column: “We provide the land where the fire station is currently to a developer and, in exchange, they provide and build a new building (like a new town hall or police station) and perhaps also build us a rec center expansion. We get new facilities on land that already has development, a developer gets a desirable address and the taxpayers don’t have to foot the bill!”

The town recently sought voters’ approval ” unsuccessfully ” to sell town lands without a vote of the people. But it seems none of that land would be sold to the fire district. Town Manager Larry Brooks said the town doesn’t have any land it could sell or otherwise provide to the district for a fire station.

The West Town Center contemplates a new hotel, deemed the Nottingham Inn, for where the Town Hall now sits.

“Developing this parcel could also help offset some of the up-front public costs to the capital improvements associated with the redevelopment of this area,” the report says.

The report plans a new Town Hall along the Main Street where the current Avon fire station now sits.

“The existing Town Hall is too small for the current town needs and lacks a high level of energy efficiency,” the report says.

So the district had to find a new place for its “hub” station, and it started looking.

“You go drive up and down the road,” Mielke said.

The fire district found a few potential places for its fire station.

– Jim Pavelich’s land, the 1-acre empty lot. It is centrally located between the core of Avon, Wildridge, Mountain Star and Bachelor Gulch, Moore said. While Wildridge has its own station, it is only staffed 60 percent of the time. The site also is big enough for fire trucks to turn around, Moore said.

“This site meets all the criteria we need,” Mielke said, adding that Pavelich was given a generous offer for the land.

Moore said the district might build, at the least, an “operational” station at a cost of around $3 million to $3.5 million and a size of around 10,000-12,000 square feet. Other uses such as offices and community rooms might be able to fit, too, Moore said.

A consultant said the entire district needs about 27,000 square feet in facilities over the next several decades, Moore said.

– The East Day Lot of Beaver Creek. Mielke said the fire district has talked to Vail Resorts about using the west end of the parking lot. But the district would have to figure out how to replace the displaced parking, Mielke said. That could come in the form of a garage, which can cost up to $35,000 per parking space. A steep slope at the back of the property could require an expensive retaining wall, too, Mielke said.

From Vail Resorts’ perspective, though, the prospect has no legs.

“We’ve come to the conclusion, at least from our side, that the parking there is too valuable today to give up for as much space as they need,” said John Garnsey, chief operating officer of Beaver Creek Mountain.

– The Red House lot at the Beaver Creek intersection, also owned by Vail Resorts. The traffic requirements may be too onerous, Mielke said. The district could be required to do hundreds of thousands of dollars in traffic improvements for this site, he said.

Keith Fernandez, president of Vail Resorts Development Company, said Monday he would talk to the fire district soon about the Red House lot.

– A vacant lot at 730 Nottingham Road. The district studied this property but ruled it out as infeasible. The lot is too small, and would require traffic to be stopped as fire trucks backed out into the road, officials said.

– The Christie Lodge. The district had talked with the lodge about a partnership that would create a fire station near the east on-ramp in Avon. But those redevelopment plans were too slow to come together, Moore said.

“At the moment, we don’t have anything on the immediate burner,” said Shirley Byrne, assistant general manager of the lodge.

– Oscar Tang, a part-time Vail resident, philanthropist and retired financier, owns 10.41 acres just across Nottingham Road from Pavelich’s land, up Buck Creek. Pavelich says the land would be cheaper, considering it’s farther from the interstate exchange. The 6.29-acre upper lot was assigned an “actual value” of $821,980 by the Eagle County Assessor’s Office, while Pavelich’s 1-acre parcel was valued at $1.05 million.

But Tang is proceeding with his own development plan, said Jay Peterson, his lawyer. The plan is set to be submitted to the town of Avon, Peterson said.

The plan includes 16 duplexes, a 60-unit condominium building, a Montessori school and a building for the Gore Range Natural Science School, Peterson said.

Peterson emphasized that the plan is moving forward ” and it doesn’t include a fire station.

“This is what we’re doing,” Peterson said.

The Nottingham Road area is the best place for the Avon station, according to the draft version of a study by Almont Associates, a consultant for the fire district. Putting the fire station near Nottingham Road will improve response to Wildridge, Mountain Star and Eagle-Vail, the report said.

Land the district owns near Wal-Mart would be less ideal for a relocated station, the report says.

“This site is not recommended because there is substantial degradation to the response time of the Avon core, Wildridge, Mountain Star and Bachelor Gulch, as well as diminished backup response to Edwards,” says the draft report.

The district was deeded 0.6 acres near Wal-Mart and the Buffalo Ridge apartments as part of the approvals of the Village at Avon, a residential-commercial complex that’s being developed by Traer Creek LLC, a company managed by Magnus Lindholm. The station is about 1.5 miles away from downtown Avon. However, trucks would either have to backtrack east to get on the interstate or travel through the dense Buffalo Ridge apartments to get to downtown Avon.

Moore said the fire district didn’t have input into the location of the site, and it was never meant to serve downtown Avon. That station could add more than five minutes to response times in downtown Avon, Moore said. Mielke called the land an “albatross” around the district’s neck.

Moore added that putting the station there could “double or triple” insurance rates for Bachelor Gulch homeowners ” or necessitate a new station to be built in Bachelor Gulch.

But Traer Creek does own land that’s closer to Avon’s core. Lindholm said the company has not been approached about the fire district using the western part of his land ” perhaps near City Market ” for a fire station.

“We have not been approached by the district about donating an alternate site,” Lindholm said. “If they approached us about it, we would be willing to listen. That’s all I can say.”

But fire officials said the area is too congested for a fire station.

The study, by Jim Sparr of Almont Associates, used the benchmark of an eight-minute response time.

Moore said the district would like to be able to respond to incidents within five minutes for 90 percent of the population of the district.

National Fire Protection Association standards call for a four-minute response time. That means it should take four minutes for the first engine to travel to the scene.

But each station sets its own standards. The Vail Fire Department shoots to arrive at 80 percent of its calls within five minutes, said Mark Miller, chief of the Vail Fire Department.

The term “eminent domain” is derived from the Latin “dominium eminens,” which is translated as “supreme lordship.” It allows governments to take land for public uses, paying “just compensation.” The right is established in the Fifth Amendment of the U.S. Constitution, as well as in the Colorado Constitution.

In Colorado, eminent domain is available to municipalities, counties and certain special districts ” including the Eagle River Fire Protection District.

“It’s an absolutely critical tool that government has to have to let public projects go forward,” said Jack Sperber, a lawyer with Faegre and Benson in Denver who specializes in condemnation. “But the question is, ‘Is every individual condemnation good and appropriate?'”

The gray area is often in cases of condemning land for private redevelopment projects. The Kelo v. New Haven case, decided by the U.S. Supreme Court in 2005, was a prominent case in which a city used eminent domain power to transfer property from one private owner to another for the sake of economic development. The condemnation was upheld by the High Court in a 5-4 vote.

But other “public uses” can be much more straightforward.

“Some uses are clearly public, such as the acquisition of land rights for public streets and highways, parks, schools, water facilities, or other instances where a public facility or use will actually be located on the property acquired,” wrote M. Patrick Wilson in a 2006 article in the law journal Colorado Lawyer.

Sperber said it can be hard to challenge condemnation in such cases.

“As a general proposition, it’s difficult for landowners to challenge condemnation cases, particularly something with a fire district that’s generally perceived as a public purpose,” he said.

Trying to establish in court that there’s some better place to condemn land or there’s some other alternative can be an “uphill battle,” Sperber said.

The Eagle River Fire Protection District filed a petition March 27 to begin condemnation proceedings on Pavelich’s land.

Pavelich has said he will fight the condemnation attempt, and has hired Darrell Waas, a Denver lawyer who is representing a landowner in a protracted eminent domain case in Telluride. The town of Telluride is trying to condemn the so-called “valley floor,” 573 acres of meadows at the town’s entrance, as open space. The case is now before the Colorado Supreme Court.

Sperber acknowledged that eminent domain seems to be getting more unpopular with the general public, especially in the wake of the highly publicized Kelo case. Plus, many governments have less money these days, curtailing the amount of public projects that are undertaken, Sperber said.

But, in the case of Eagle County, there may be more and more need for acquisition of land for public purposes ” which may or may not include using eminent domain ” Sperber said.

“Anytime you’ve got a place like the Vail Valley where there’s real estate at a premium or there’s a scarcity of real estate and you’ve got lots of development pressure, that carries with it need for additional public services ” utilities, electric, gas, road, fire services,” he said.

The town of Avon condemned land in 2005 to build a bus station that the owner, Al Williams, vowed to fight. The case was settled in mediation, with Avon paying $1 million for the 1/3-acre piece of land.

At issue was “just compensation” for the land ” not the nature of the “public use,” said John Dunn, town attorney for Avon.

“My experience is the determination of the government body that property will be used for public use is pretty much accepted by the courts,” Dunn said.

The town has used eminent domain powers several times over the last couple of decades, Dunn said. It was used in connection with construction of roundabouts, reconfiguration of roads and drainage projects.

In Vail, the town threatened condemnation of the Wendy’s land for a West Vail fire station in 2006. A deal between the town and the tenant to buy the land had fallen apart, and the owner and tenant were mired in a lawsuit over the value of the land.

The town eventually bought the land from the owner in 2007, with the action of condemnation never materializing.

Vail acquired Timber Ridge, the 10-acre affordable housing complex, through “friendly” condemnation in 2003. The property owner, John Marks of Chicago, said he would be willing to participate in a friendly condemnation to “achieve a mutually agreeable and expedited conclusion.” In the friendly condemnation, the purchase price and closing dates were agreed upon before the condemnation was filed in court, expediting the process.

Bryan Treu, county attorney, said that Eagle County has not used eminent domain powers during his seven-year tenure.

Moore said the fire district is still looking for land to buy around Avon ” despite its initiation of condemnation proceedings on Pavelich’s land.

“We’d absolutely prefer to find a willing seller,” Moore said.

For now, though, Pavelich’s land is their best option, fire officials say.

Pavelich wondered if the district is truly willing to put up the money it takes to find a seller in an expensive market.

“Is it rhetoric, or do they really mean it?” he said. “Everybody’s a willing seller at market price, but we’re miles apart on my land valuation. … I don’t see how a willing seller is going to pop up.”

The condemnation case is proceeding in Eagle County District Court. Pavelich is waiting on results from his own appraisal of his property.

Pavelich says his land is far too expensive to be targeted for a fire station, calling a potential purchase by the fire district an “outrageous” use of taxpayer money that would lead to one of the most expensive fire stations in the country. There are other, cheaper alternatives, he said.

He also touts the sales-tax revenue that will come from his retail-residential-office project, saying the town would be giving up that money if his land is condemned.

With the condemnation still being threatened, Pavelich has put his development plans on hold. Instead of working on his “jewel of a building,” he is doing something he has a lot of experience with ” starting a newspaper. It will be called the Vail Mountaineer and is set to launch in early June.

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