Clashes of em­i­nent do­main rise with pop­u­la­tion

The Denver Post - - FRONT PAGE - By Erin Dou­glas

As prop­erty val­ues rise and a grow­ing state pop­u­la­tion de­mands in­fra­struc­ture, the agency is try­ing to ad­dress the need to com­plete projects with the lengthy — and of­ten emo­tion­ally dis­tress­ing — em­i­nent do­main process.

Af­ter more than 30 years in Den­ver, Reed Art & Imag­ing is mov­ing its cus­tom print shop to Lake­wood. Such a move would typ­i­cally mean ex­pan­sion or pros­per­ity for a busi­ness, but it is quite the op­po­site for the Reeds. They say they were forced to leave and now fear they may go out of busi­ness.

The fam­ily busi­ness’ park­ing lot was taken in an em­i­nent do­main deal for the ex­pan­sion of Fed­eral Boule­vard — one of sev­eral ma­jor con­struc­tion projects in the Den­ver metro area that are spurring an in­crease in right-of-way land ac­qui­si­tion. With­out a se­cure and eas­ily ac­ces­si­ble load­ing area for cus­tomers’ large pieces of art­work, the busi­ness can­not func­tion, the Reeds said.

“It’s painful,” said founder and owner Bob Reed. “The fact that we didn’t shut our doors is a bless­ing, but it didn’t come easy.”

As Colorado’s econ­omy grows and prop­erty be­comes more valu­able, land ac­qui­si­tion is on the rise, too. And it’s get­ting ex­pen­sive.

The Colorado De­part­ment of Trans­porta­tion’s land ac­qui­si­tions are in­creas­ing, and its costs in the Den­ver area are ex­plod­ing. As prop­erty val­ues rise and a grow­ing state pop­u­la­tion de­mands in­fra­struc­ture, the agency is try­ing to ad­dress the need to com­plete projects with the lengthy — and of­ten emo­tion­ally dis­tress­ing — em­i­nent do­main process.

Ac­qui­si­tions of com­mer­cial and res­i­den­tial prop­er­ties by CDOT and lo­cal agen­cies across the state in­creased 21 per­cent from 2008 to 2016, the de­part­ment said. But CDOT has stepped up its share of the ac­tiv­ity sig­nif­i­cantly. CDOT ac­qui­si­tions more than tripled from 185 in 2008 to 582 in 2016.

And while the cost of the process fluc­tu­ates, rang­ing any­where from $14.6 mil­lion to $35.9 mil­lion, the num­ber and ex­pense of the Den­ver-area ac­qui­si­tions has ex­po­nen­tially in­creased with new projects, ac­cord­ing to CDOT.

Since 2014, more than half of CDOT’S an­nual ac­qui­si­tion costs have been for Den­ver-area prop­er­ties, while from 2008 to 2013 the metro area ac­counted for an av­er­age of just 5 per­cent of those costs.

The Den­ver metro area’s prop­erty val­ues are on the rise, but CDOT is do­ing more with less, ac­cord­ing to Josh Laip­ply, the de­part­ment’s chief en­gi­neer. He said CDOT of­fi­cials are not able to do as much as they would like in Den­ver be­cause it’s too ex­pen­sive, and more ac­qui­si­tions are needed as the area be­comes more densely de­vel­oped.

“We spend a lot more of the bud­get on the area as prop­erty val­ues in­crease, and that takes away from the amount of in­fra­struc­ture that we can build,” Laip­ply said. “Projects in the metro area are con­densed. … Right-ofway costs of­ten in­crease quicker than the state can de­sign projects.”

With prop­erty val­ues go­ing up, landown­ers and busi­nesses are less in­clined to go down with­out a fight. Few of th­ese ne­go­ti­a­tions see a judge or pa­per­work. Most hire a lawyer to ne­go­ti­ate for a higher value.

“Al­most all of the cases that get filed are be­cause there are some unique fea­tures of the prop­erty that make it dif­fi­cult to value,” said Don Os­tran­der, an at­tor­ney hired by the Reeds who has rep­re­sented the gov­ern­ment and landown­ers in Colorado em­i­nent do­main cases for 35 years.

Typ­i­cally, dis­putes arise when the state or gov­ern­ing agency does not rec­og­nize unique fea­tures of prop­er­ties that are dif­fi­cult to value — sim­i­lar to what hap­pened to the Reeds and what could hap­pen with unique prop­er­ties in the way of the Na­tional Western Cen­ter’s re­newal and ex­pan­sion project

Os­tran­der said his firm has seen an in­crease in con­dem­na­tion dis­putes in re­cent years, cor­re­lat­ing with RTD’S Fas­tracks metrowide mass tran­sit project, and the ex­pan­sion of In­ter­state 70 in north­east Den­ver and Fed­eral Boule­vard in south­west Den­ver.

Th­ese ac­qui­si­tions have be­come more costly, Laip­ply said, par­tic­u­larly in in­dus­trial spa­ces that are be­ing used by the grow­ing recre­ational mar­i­juana in­dus­try.

“The in­dus­trial prices in Colorado have re­ally sky­rock­eted,” he said, adding that many parcels in in­dus­trial ar­eas are lo­cated near in­ter­states, one of CDOT’S ma­jor pri­or­i­ties.

The price to move from the seized lo­ca­tion is sky­rock­et­ing as well. The Reed fam­ily’s plight to find a new, cus­tom, 24,000square-foot space to make huge works of printed art was go­ing to be dif­fi­cult in the first place — par­tic­u­larly as their avail­able cash hung in the balance of city ne­go­ti­a­tions — but it be­came nearly im­pos­si­ble when each prop­erty they placed an of­fer on was snatched up by an­other buyer the same day.

“Tim­ing be­came in­cred­i­bly dif­fi­cult,” said Kim Reed, pres­i­dent of the com­pany and son of the owner. “We only had a few months to find a build­ing. This whole time, I’ve been telling peo­ple that there’s a re­ally good pos­si­bil­ity that we’ll go out of busi­ness.”

Part of the prob­lem is the bu­reau­cratic pro­ce­dures that agen­cies have to go through in order to ac­quire the land and re­lo­cate own­ers, Laip­ply said. Even when the owner is in fa­vor of re­lo­ca­tion, they have to wait for CDOT com­mit­tee ap­proval.

“It’s a ques­tion of if gov­ern­ment process can keep up with how fast the mar­ket moves,” Laip­ply said.

“This is al­ways such a sen­si­tive area, and you want it to be dif­fi­cult,” Laip­ply said, re­fer­ring to the due dili­gence that gov­ern­ment must com­plete in tak­ing prop­er­ties. But, he said, state laws on em­i­nent do­main are an­ti­quated and stretch out the process. As­sis­tance for re­lo­ca­tion is par­tic­u­larly com­plex.

The Reeds ap­pealed for re­lo­ca­tion ben­e­fits. They ar­gued for nearly two years that their busi­ness was in­op­er­a­ble with­out a large park­ing lot. They lost. Os­tran­der said this is not un­com­mon for unique pieces of prop­erty. He de­scribed the state laws that gov­ern re­lo­ca­tion ben­e­fits as cook­iecut­ter.

“The (state) law is writ­ten in a way that doesn’t cover this type of cir­cum­stance,” Os­tran­der said. “There should be a lot more flex­i­bil­ity.”

Landown­ers are en­ti­tled to fair mar­ket value when CDOT seizes prop­erty, which is typ­i­cally de­ter­mined by an ap­praisal. Those who need to re­lo­cate their busi­ness or home are en­ti­tled to re­im­burse­ment of mov­ing and re­lo­ca­tion costs — but el­i­gi­bil­ity “de­pends on the sit­u­a­tion,” ac­cord­ing to CDOT Right of Way man­ager Chris­tine Rees.

Af­ter CDOT’S de­ci­sion to with­hold the re­lo­ca­tion pack­age from the Reeds — which came about a year af­ter they re­ceived their first let­ter from the de­part­ment — they wanted to go to court. But they would have had to wait al­most an­other year to get a court date — time they didn’t have as they were try­ing to va­cate their cur­rent prop­erty and buy a new fa­cil­ity. So they set­tled with the city, which was act­ing in part­ner­ship with CDOT, for about $1 mil­lion.

Ac­cord­ing to sev­eral at­tor­neys, the Reeds were lucky. As a wellestab­lished, high-end busi­ness, they had the re­sources to ap­peal.

“My per­spec­tive is that the law and court sys­tem tends to fa­vor the gov­ern­ment more than the in­di­vid­ual landowner,” said Michael Mccormick, an em­i­nent do­main lawyer with Mont­gomery Lit­tle So­ran & Mur­ray who rep­re­sented the Reeds in part of their case. “Landown­ers are iso­lated and typ­i­cally do not have ad­e­quate re­sources to take on the gov­ern­ment in ex­pen­sive em­i­nent do­main lit­i­ga­tion.”

It’s a “tough road” for landown­ers who vie for limited re­lo­ca­tion as­sis­tance funds, Mccormick said. The Reeds es­ti­mate that the process, in­clud­ing the move to Lake­wood, will cost them about $693,000 out of pocket.

But for some, the sys­tem works — as well as they could ex­pect it to.

Don Cal­lar­man moved near I-70 be­tween 46th and 47th av­enues in 2009. Al­most im­me­di­ately af­ter he moved into his rental prop­erty, he be­gan to hear that the I-70 project would force him to re­lo­cate.

“For the first five or six years that I moved there, I was es­sen­tially in limbo,” Cal­lar­man said.

Cal­lar­man said he was fairly com­pen­sated af­ter the move — CDOT pro­vided a down pay­ment on a house and cov­ered all his mov­ing ex­penses — but the process was slow and stress­ful. He waited five years to get his ac­qui­si­tion let­ter that pro­vided de­tails and of­fi­cial no­tice.

“I’m al­most 80 years old,” Cal­lar­man said. “The move was not quite trau­matic, but I was not plan­ning to move. I was wait­ing and wish­ing it was quicker, so the long wait was kind of rough.”

“There are many steps the city takes to en­sure peo­ple are fairly com­pen­sated and prop­erty own­ers are en­ti­tled to ap­peal dur­ing the process,” city of Den­ver spokesper­son Heather Burke wrote in a state­ment to The Den­ver Post, cit­ing door-to-door out­reach and pub­lic meet­ings.

But Bob Reed went so far as to call th­ese meet­ings a fox in sheep’s cloth­ing, and his son, Kim, said the sys­tem is stacked.

“It doesn’t mat­ter if we’re unique,” Kim Reed said. “Den­ver shouldn’t be in the po­si­tion to put peo­ple out of busi­ness.”

Laip­ply said state and city of­fi­cials work hard to be fair.

“We’re al­ways look­ing for bet­ter ways to stream­line those pro­cesses,” he said.

Andy Cross, The Den­ver Post

Greg Bishop ap­plies a plex­i­glass face mount to a piece of art dur­ing the lam­i­na­tion process at Reed Art & Imag­ing in Den­ver. Em­i­nent do­main is forc­ing the com­pany out of its lo­ca­tion at West Ninth Av­enue and Fed­eral Boule­vard.

Photos by Andy Cross, The Den­ver Post

Kim Reed, left, pres­i­dent of Reed Art & Imag­ing, and Shan­non Schultz move dye sub­li­ma­tion prints to a heat press. The busi­ness is mov­ing to Lake­wood.

Reed Art & Imag­ing is be­ing forced out of its long­time lo­ca­tion at West Ninth Av­enue and Fed­eral Boule­vard in Den­ver. The com­pany, which has been in that spot since 1978, is the vic­tim of a Fed­eral Boule­vard widen­ing project.

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