Public Power, Private Gain: Tennessee

Overview

 

Tennessee cities seem willing to use eminent domain for the benefit of private parties. Both Knoxville and Memphis have threatened owners with eminent domain in order to get them to sell their land “voluntarily” for private redevelopment projects. Both cities have created redevelopment plans that call for large-scale private development on other people’s property, and Knoxville has condemned at least three properties to transfer them to private developers. While the cities have mostly acquired land only with threats, the willingness of Tennessee cities to bully owners into selling does not bode well for the future. On the other hand, a case arising in Tennessee opened the door for some potential condemnees to challenge the public purpose of the condemnation in federal court.

 

Private Use Condemnations

Carter County

The Nave family has owned a home in rural Carter County for over 150 years. Many years ago, the Naves built a 1/10-mile private driveway connecting a nearby public thoroughfare and their garage. The driveway was private, but in 1995, the County designated it as a public road. Even after the mistake was revealed, the County continued to designate the road as public at the request of the Naves’ neighbors, who wanted to use the driveway. The Naves filed suit in federal court, alleging that the proposed taking was unconstitutional because it would benefit a private party, while serving only a superficial public purpose. The federal trial court dismissed the Nave claims as unripe, holding that at the time the family filed the case, no actual taking for private use had taken place. In September 2000, however, the U.S. Court of Appeals for the Sixth Circuit reversed the lower court’s decision and allowed the Naves an opportunity to prove their case.626  

Knoxville

Pursuant to its 1998 Historic Market Square plan, the City of Knoxville is undergoing a downtown redevelopment that will eventually create a “shoppertainment” district featuring retail shops, restaurants and residences. City officials hope to avoid using eminent domain to condemn properties, wherever possible, by allowing current property owners to retain ownership of their buildings as long as the buildings comply with the plan.627 Owners will then be encouraged to lease their ground floors to Market Square Development LLC (MSD), which will manage the premises and attempt to attract regional or national chain stores to the redeveloped area. If the buildings do not comply with the plan, they will then be condemned. In total, there are 36 privately-owned properties in the Market Square area that would be subject to the redevelopment plan.628

 

Knoxville

In September 2002, the Knoxville Community Development Corp. (KCDC) condemned three properties for the Stephens Square retail redevelopment. Before KCDC took his land, Alfred Nance had planned to build a youth center on his property and had already obtained the building permits. KCDC also condemned a property that Lonzo Stephens had previously leased to several small businesses. The owners of those businesses are the very ones partnering with KCDC on the Stephens Square project. With the City’s help, they managed to swipe the property from their former landlord, who loses not only the property itself but also the income he derived from his tenants.629

 

Memphis

After the 2000-2001 season, the NBA’s Vancouver Grizzlies relocated to Memphis. While the Grizzlies agreed to play temporarily in the Pyramid Arena, the City’s agreement with the team called for the City to build a new arena. The team eventually settled on a 15.5-acre site near the historic Beale Street entertainment district to house the new arena and surrounding parking lots. The main section of the proposed site consists mostly of vacant land and parking lots, but the outer section is bustling with churches, housing, and the thriving Beale Street attractions. Most of the owners agreed to sell under the threat of eminent domain,630 but the Gibson Guitar Co. did not. Gibson built its headquarters on this location in the mid-1990s, after the City sold the land to the guitar maker as part of a previous redevelopment effort. The 6.5-acre parcel of Gibson land targeted by the City for condemnation was Gibson’s employee parking lot.631 Eventually, Gibson agreed to sell the property to the City, but only after the City promised to build Gibson a new employee parking lot and rent garage parking for the company. Memphis taxpayers are left footing the $1.3-million bill for the land swap.632

 

Memphis

The Memphis Housing Authority (MHA) plans to buy or use condemnation proceedings to acquire a sprawling six-square mile area consisting mostly of vacant lots and dilapidated buildings in North Memphis. The MHA wants to convert the area into a mixed-income community that would be owned by a private developer. The new development, to be called Uptown Memphis, would cost a total of $200 million taken from local and federal funds. Some area property owners were upset because they planned to develop the property themselves. Bob Gilbert, the owner of the historic old Knox Drugstore, was dismayed at the prospect of losing his property: “Here, I find they can take my land and give it to someone else to profit from. I’m the one who has been down there 20 years. I have seen the potential, and now I can see it being ripped right out from under me.”633 The MHA needed 26 properties for the initial project. Fourteen owners contested the takings,634 but as of July 5, 2002, only three were still in court.635  

*These numbers were compiled from news sources. Many cases go unreported, and news reports often do not specify the number of properties against which condemnations were filed or threatened.

626 See Montgomery v. Carter County, 226 F. 3d 758 (6th Cir. 2000).

627 Scott Barker, “Market Square Proposal Gets Mixed Reviews; Some Owners Unconvinced,” The Knoxville News-Sentinel, May 18, 2001, at A8.

628 Scott Barker, “Wraps Are Off Trendy Plan for Market Square,” The Knoxville News-Sentinel, May 17, 2001, at A1.

629 Ed Marcum, “HOPE VI Leaving Some in Despair; Property Owners Upset at Acquisition Process,” The Knoxville News-Sentinel, Sept. 23, 2002, at B1.

630 Deborah M. Clubb, “City Pays COGIC $1.8 Million for Lots Near Arena,” The Commercial Appeal (Memphis, TN), Mar. 7, 2002, at B1.

631 Deborah M. Clubb, “Despite Talks, Gibson Guitar Holds Strings to Arena Site,” The Commercial Appeal (Memphis, TN), April 11, 2002, at B1.

632 Deborah M. Clubb, “City Will Pay $1.3 Million to Get Back Gibson Land,” The Commercial Appeal (Memphis, TN), May 25, 2002, at A1.

633 Shirley Downing, “City To Hear Owners on Plan To Condemn, Redevelop Greenlaw,” The Commercial Appeal (Memphis, TN), Oct. 23, 2001, at A1.

634 Shirley Downing, “Owners Contest City Taking of Property,” The Commercial Appeal (Memphis, TN), Dec. 1, 2001, at B2.

635 Deborah M. Clubb, “Vacant Hurt Village to Vanish,” The Commercial Appeal (Memphis, TN), July 5, 2002, at B1.

 


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