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Condemnation Verdict 10.17.07

17 October 2007
Poyner Spruill

Types of Action: Condemnation.
Property Acquired: 7.69 acres and Church.

Case Name:Nash-Rocky Mount Board of Education vs. Life United Pentecostal Church
Case Number: 06
-CVS-2176
Court: Nash County Superior Court

Verdict or Settlement: Settlement
Settlement Date: October 17, 2007
Settlement Amount: $1,250,000.00
Initial Deposit $720,000.00
Landowner's Attorneys: J. Nicholas Ellis and Timothy W. Wilson, Poyner Spruill LLP

Description of Case

This case was instituted by the Nash-Rocky Mount Board of Education to acquire a parcel of land to be assembled with other parcels for the construction of a new high school. The land owned by Life United Pentecostal Church consisted of a church, a parsonage and 7.69 acres of land. The Church building was 4,690 square feet and the parsonage was 2,442 square feet, which was occupied by the minister and his family. The Church also had an 810 square foot storage building.

The initial deposit by the School Board of $720,000 was based on an appraisal prepared by an appraiser hired by the School Board. When it was determined the appraiser neglected to include the storage building, he prepared a subsequent appraisal increasing the value. The School Board hired another appraiser (both of the School Board's appraisers were MAIs) to give it another expert opinion as to fair market value. Based on these new appraisals, the School Board made a final deposit of $770,950.00.

The Church had the property appraised resulting in a fair market value of $1,164,000. The Church acquired the property in March, 2001 for a price of $450,000 and its tax value was $583,974.

The Church identified additional witnesses that had opinions as to value as high as $1,800,000. However, its only appraisal was $1,164,000.

The parties went through a Mediated Settlement Conference that resulted in a settlement value of $1,250,000 which was $86,000 higher than the Church's appraisal. Additionally, the Church negotiated a continued occupation of the property rent free for 30 months from the date the Complaint was filed.

The case also involved a hearing as to whether the School Board had the authority to acquire the Church through condemnation. The Church contended the School Board did not have dedicated funding for the construction of the new high school and therefore, was prohibited from exercising eminent domain to acquire school property. Additionally, the Church contended its equal protection rights were violated as the condemnation action was precluded by the Religious Land Use and Institutionalized Persons Act, 42 USC 2000cc, et seq. RLUIPA provides that "no government shall impose or implement a land use regulation in a manner that imposes a substantial burden on the religious exercise of a person unless the government demonstrates that the imposition is in furtherance of a compelling governmental interest and is the least restrictive means of furthering that compelling governmental interest." The RLUIPA argument was partially based on evidence from the School Board that it chose to condemn the Church property instead of other potentially valuable commercial property that would produce significant tax revenues. At the N.C.G.S. 47A-40 hearing, both of these arguments were rejected by the Court. However, it is believed to be the first time that RLUIPA was argued as a defense to an eminent domain action in North Carolina.

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