|
mite away.
<br />'The whole road it going through a
<br />tr niitioniay» Whitney Peyton, a retail
<br />broker with Coldwell Ranker Commercial
<br />Croup. "People uied to drive along High*
<br />way 12 at 35 or 45 milei per hour. Now
<br />thnean^SS."
<br />Paul Klodt it one of the biggeit land*
<br />lordt along 394. Mia holdings include the
<br />Sheraton Perk Place hotel; two office
<br />buildings west of the hotel; a small retail
<br />center, Park Plaza, in front of the hotel:
<br />and the land under TCI Friday'i, which it
<br />jutt west of the Cooper theaters at $875
<br />Waytata Boulevard (Wayzata Boulevard
<br />being the same at 394). and Fuddrucken.
<br />8445 Wayzata. The state has taken tome
<br />land from each of those properties, iri*
<br />chiding 50 parking tpzcei from the hotel.
<br />Access to Klodft property hat been
<br />changed more times than he can count,
<br />and it will be permanently altered when
<br />construction it completed.
<br />Much of hit property, including the ho*
<br />tel and retail center, will no longer be visi
<br />ble from many parts of the new road,
<br />which will be about 22 feet lower than the
<br />old road. When the retaining walls went
<br />up. ICJodt’s tenantt began moving out of
<br />hit retail eenler.
<br />The hotel hat taken the biggest hit from
<br />the construction, Klodt says. Occupancy
<br />and average rates are down, as it butinett
<br />fr?m meetings and restaurant/har pa*
<br />tront. "Tire irurket it toft and thera are
<br />plenty of choices, so why wcuW someone
<br />want to put up with the haute of con*
<br />itniction,'* Klodt asks. To make up for the
<br />lots of parking tpacei, he will have to build
<br />a small ramp alongside the hotel.
<br />Klodt stopped making mortgage pay
<br />ments and nffered to turn the hotel back
<br />to the lender. Traveler’s Insurance. It
<br />ehote to reitegotiate the terms instead.
<br />‘Hhit it going to cost me millions and mil*
<br />lims ovor five years." Klodt says.
<br />Parwin DeRosier, one of the former
<br />partners in the Ambauador Motel, says
<br />occupancy at his property slid steadily
<br />from 68 percent in 1984 to 49 percent in
<br />early 1990 as construction moved doter.
<br />The real kick came in early 1988, when
<br />the state look tome of Our frontage and
<br />changed our acceti,” DeRoiitr ays. In
<br />1989, Norwett began foreclosing on the
<br />property. It it now suing DeRosier and hit
<br />seven partners for $1.2 million in
<br />guarantees.
<br />Klodt and Norwest are just two of a
<br />number of property owners who are try
<br />ing to recover damages from the state.
<br />’Thorpe has an unsettled condemnation
<br />case, as do .MEPC American Properties.
<br />Prudential Insurance, Jim Lupient.
<br />Woodbridge Properties, Taco Bell, and
<br />dozens of others. Each has received a so
<br />bering introduction to what the state con
<br />siders to be "compeniabl# damages ’’ for
<br />taking a piece of land. ”The state," sayi
<br />Klodt, "has the most ridiculous laws for
<br />compensation."
<br />When the stale takes a full parcel, it
<br />must pay the owner the fair market value,
<br />a price that would have been acceptable
<br />to both a willing buyer and a willing teller.
<br />In a partial taking, the state might alto be
<br />liable for severance damages or damages
<br />to the remaining parcel. State statute says
<br />that for "any elimination of ezisting ac*
<br />cess, air. view, light, or other compensable
<br />property rights, the owner shall be com
<br />pensated for the loss by purchase or
<br />condemnation.”
<br />*rhat sounds simple enough, but the
<br />state, using court prteedent. applies a
<br />strict interpretation of that statute. For
<br />example, the state maintains that there's a
<br />difference between having a view and be
<br />ing seen. While the loss of a scenic view
<br />might hurt a property's market value, visi
<br />bility from the highway is not something
<br />to which businesses are entitled, says
<br />Sherry Entler, special assistant attorney
<br />general. "The right to be seen from the
<br />highway rdies on the assumption that
<br />you have a right to a constant flow of traf
<br />fic," shf explains. "Obviously, It would be
<br />unreasonable to expect the state to guar
<br />antee that."
<br />Brad Cunn, an attorney representing a
<br />number of landlords along 394, believes
<br />the state’s position it unreatonsbia.
<br />"Restsuranti and car dcalcrthipt, for
<br />example, depend on their identity and
<br />prominence for business," Cunn says.
<br />"When they lose that, they lose business."
<br />Even Leland Frankman. a land-use at
<br />torney who has served as a court-ap
<br />pointed commissioner to determine tak
<br />ing awards, thinks loss of visibility should
<br />be a compenuble item.
<br />Temporary lost Of change of access,
<br />even if temporiry means one year or
<br />more, is not compensable either, Enzler
<br />says. Permanent change of access might
<br />be compensable, but only if the new ac
<br />cess is deemed not reasonable or suitable
<br />In light of the property's use. In other
<br />words, she uys. "change of access for a
<br />fast-food restaurant would probably wc
<br />compensable, but it wouldn't be for an
<br />office building."
<br />Most significantly, in all of these cases a
<br />property owner must prove that the value
<br />of his or her remaining property has de
<br />clined IS a result of the partial taking,
<br />change in access, or loss of view. The
<br />catch? "It has to be a decline in the market
<br />viiue of the property, not the owner’s in
<br />come stream," Enxler says.
<br />$0 Thorp# Bros., which has had 18.000
<br />SQUzre feet vacated in its office building
<br />since construction surrounded it, cannot
<br />be compensated for the loss in net operat
<br />ing income, even though real estate pro
<br />fessionals use NOI as the pnmary factor
<br />in determining a property’s value. "Thet
<br />vacancy Is costing me between $ 3,000 and
<br />$4,000 a dey," Thorpe says. Enzier says,
<br />however, thet because the markets for of
<br />fice and hotel space ere depressed
<br />throughout the Twin Cities, it’s impossi
<br />ble to pinpoint the reason for a tenant
<br />moving out.
<br />Most takings for 394 involve small
<br />frontage parcels. In some cases, owners
<br />have lost perking spaces. Nevertheless,
<br />the stite's limited interpretation of whet
<br />is a compensable damage explains the
<br />number of condemnation suits and the
<br />wide variations between the values placed
<br />on the same property by its owner and the
<br />stele.
<br />For ezemple, court-appointed eommis-
<br />aioners awarded Klodt $143,700 for a
<br />small parcel in front of the Fuddrucken
<br />r
<br />• •
<br />Coii»ni«t9 tvi»n«T %iiis*sijOTa
|