CITY OF TALLAHASSEE
CITY COMMISSION AGENDA ITEM
ACTION REQUESTED ON: July 1, 2009
SUBJECT/TITLE: Discussion of a Settlement and Concurrency Development Agreement to Purchase Property Acquired for the Orange Avenue Extension Project
TARGET ISSUE: N/A

STATEMENT OF ISSUE

In January 2000, the Commission approved the alignment for the Orange Avenue Extension from approximately Blair Stone Road to Capital Circle Southeast, utilizing a portion of the existing Paul Russell Road and continuing east through essentially undeveloped property terminating at the previous intersection of Duchaine Drive and Capital Circle southeast. The length of the total project is .93 miles and was completed on February 23, 2009.

This item seeks approval of the proposed Settlement and Concurrency Development Agreement of Parcel 100 (10.8 acres) and Parcel 800 (7,074 sq. ft.), owned by the English Family Enterprises, LTD. and J. Colin English, Jr. The property was acquired for the realignment of Paul Russell Road and the construction of a stormwater facility. The recommended settlement consists of the settlement amount of $922,916, which represents the City’s good faith estimate of value and transportation concurrency and credit for any future transportation impact, mobility or mitigation fees for 200,000 square feet of retail future commercial development of the property owned by the English family, as more particularly described in Exhibit A to the agreement.

This settlement was reviewed by and recommended for approval by the Real Estate Committee on June 23, 2009.

RECOMMENDED ACTION

Option 1. Approve the proposed Settlement and Concurrency Development Agreement in order to resolve full compensation for Parcels 100 and 800 in the amount of $922,916 and transportation concurrency and credit for any present or future transportation impact, mobility or mitigation fees for 200,000 square feet of retail future commercial development of the property owned by the English family.

FISCAL IMPACT

The funding for this settlement will be from the balance of the Orange Avenue Extension Project No. 96398.

James R. English, City Attorney

For information, please contact: James R. English, City Attorney, 891-8554; Steve Shafer, City Engineer, 891-8296 or Judith Donahoe, Right of Way Acquisition Supervisor, 891-8524.

SUPPLEMENTAL MATERIAL/ISSUE ANALYSIS
HISTORY/FACTS & ISSUES

Facts: Parcels 100 and 800 were acquired on April 25, 2007, through the City’s exercise of its condemnation powers. These parcels were necessary for the realignment of Paul Russell Road and construction of a stormwater management facility. Parcel 100 consists of 10.8 acres and Parcel 800, which is a permanent drainage easement, consists of 7,074 square feet and is owned by the English Family Enterprises, LTD. and J. Colin English, Jr. The property owners are represented by Tallahassee attorney, Marshall Conrad.

Location of Property: The subject property does not have a street address; the undeveloped property is located generally along both sides of “old” Paul Russell Road east of its intersection with Blair Stone Road. The construction of Orange Avenue resulted in the realignment and elimination of this portion of Paul Russell Road.

Size of Property Acquired: The acquisition consists of approximately 10.8 acres of land, referred to as Parcel 100, and a permanent drainage easement consisting of 7,074 square feet, referred to as Parcel 800. The entire tract of land owned by the English family located on the east side of Blair Stone Road contains approximately 99 acres.

Summary Appraisal Information: The City’s appraisal report that this settlement is based upon is dated January 26, 2007, and was completed by Rick Boutin of Boutin Brown Realty Advisors, Inc. Mr. Boutin’s estimate of value was as follows:

Proposed Settlement: $922,916 for the acquisition of parcels 100 and 800 AND transportation concurrency and credit for any present or future transportation impact, mobility or mitigation fees for 200,000 square feet of retail future commercial development of the property owned by the English family, as more particularly described in Exhibit A to the agreement, which is reserved for the benefit of the English property.

Summary of Basis of Proposed Settlement: Negotiations to purchase his property were unsuccessful and on February 28, 2007, the City Commission authorized the condemnation of Parcels 100 and 800. An eminent domain petition was filed on March 13, 2007 and on April 25, 2007 the court entered an Order of Taking. Mr. English’s attorney, Marshall Conrad, provided the City with a copy of his client’s appraisal report prepared by appraiser Clay Ketcham with an estimate of value of $2,492,216, which consisted of the following values:

A formal mediation was held on November 30, 2007. This mediation was unsuccessful and the matter was scheduled for trial to be held during the two-week period of September 29, 2008 through October 10, 2008. Both the City and Colin English hired additional appraisers and engineers to prepare new reports and requested updated appraisal reports from Mr. Boutin and Mr. Ketcham.

After both the new and updated reports were exchanged, the parties began conducting discovery depositions. In the midst of preparing for trial a decision was made to attempt settlement. The City had made it clear to Colin English that it would not increase its settlement offer based on the information relied on by his experts because of the belief the opinions expressed by his team were based on speculation and not realistic data from the surrounding market.

Attorney Conrad proposed a settlement conference, which included among others, City Attorney, Jim English, and City Engineer, Steve Shafer. Mr. Conrad, on behalf of his client, proposed to accept the initial offer, with no new money to the property owner, if the City would be willing to provide “transportation credits” for future development of his property. These “credits” would mitigate future development costs associated with any commercial development of his property specifically located adjacent to the new Orange Avenue.

In considering whether to pursue settlement utilizing concurrency credits, the City reviewed and considered past donations made by the English family to the City of Tallahassee. In 1997 the English family donated approximately 44 acres valued between $3.6 million and $7.6 million. The donation consisted of 24 acres for right of way, 20 acres for stormwater and 1.8 acres for easements. For this donation the City agreed to pay Colin English approximately $200,000, which was considered to be payment for the damages to his remainder property as a result of the loss of the donated property. This donation by the English family significantly reduced the City’s acquisition costs for the extension of Blair Stone Road and the realignment of Paul Russell Road on the west side of Blair Stone Road and thus was a substantial benefit to the City.

The acquisition of approximately 10 acres for the Orange Avenue project was estimated by the parties to range in value from $920,000 (City’s Weigel report) to almost $2.5 million (English’s Ketcham report). An additional factor considered was the continuing cost of litigation. It was estimated that the cost of the trial, which the City would be required to pay, could add an additional $200,000 plus to the already high cost of experts.

With the uncertainty of how a jury would respond to the estimates of value between the parties, as well as the continued escalation of fees and costs, a decision was made to offer to settle, subject to the Real Estate Committee’s recommendation of the settlement to the City Commission, for the initial appraised value of $922,916 AND 200,000 square feet of transportation credits. An agreement has been reached as to the payment of reasonable fees and costs, which will be paid upon entry of the final judgment.

It was agreed by Steve Shafer, Jim English, Judy Donahoe and Debra Schiro that the City’s best interests will be served by entering into this settlement agreement for the following reasons:

1. The settlement amount agreed to represents the City’s appraised value, which was deposited into the registry of the court, thus no new money will be paid to the property owner.
2. The complexity of the appraisal and engineering issues, which involve among other things a jury’s perception of the potential development of the property as limited by City imposed regulations and polices, as well as valuation issues dealing with wetlands and severe and significant slopes, could create bias in favor of the property owner.
3. High profile cases in other states over the use of condemnation to clear blighted property have resulted in a backlash against government’s use of condemnation in general.
4. The avoidance of trial costs, which could be potentially $200,000 plus and the elimination of any additional attorney fees and costs for the property owner, as well as the elimination of any additional City experts’ costs.
5. Limited consideration of the donations of land made to the City by Colin English and his family.
6. Awareness of the possibility of state and local modifications to concurrency and impact issues, which could/would result in a lessening of development requirements within urban areas.

OPTIONS

Option 1. Approve the proposed Settlement and Concurrency Development Agreement in order to resolve full compensation for Parcels 100 and 800 in the amount of $922,916 and transportation concurrency and credit for any present or future transportation impact, mobility or mitigation fees for 200,000 square feet of retail future commercial development of the property owned by the English family.

Option 2. Do not approve the proposed Settlement and Concurrency Development Agreement for Parcels 100 and 800 and provide direction to staff.

ATTACHMENTS/REFERENCES

1. Proposed Settlement and Concurrency Development Agreement