Las Vegas Downtown Redev. Agency v. Pappas

• Decision Date: 08 September 2003
• Docket Number: No. 39255.,39255.
• Citation: 76 P.3d 1,119 Nev. 429
• Parties: CITY OF LAS VEGAS DOWNTOWN REDEVELOPMENT AGENCY; Fremont Street Experience Limited Liability Company, and Fremont Street Experience Parking Corp., Appellants/Cross-Respondents, v. Carol PAPPAS; John H. Pappas, Jr.; and Harry J. Pappas, Respondents/Cross-Appellants.
• Court: Nevada Supreme Court

76 P.3d 1

119 Nev. 429

CITY OF LAS VEGAS DOWNTOWN REDEVELOPMENT AGENCY; Fremont Street Experience Limited Liability Company, and Fremont Street Experience Parking Corp., Appellants/Cross-Respondents, v. Carol PAPPAS; John H. Pappas, Jr.; and Harry J. Pappas, Respondents/Cross-Appellants.

No. 39255.

Supreme Court of Nevada.

September 8, 2003.

Beckley Singleton, Chtd., and Rex A. Jemison and Daniel F. Polsenberg, Las Vegas; Bradford R. Jerbic, City Attorney, William P. Henry, Senior Litigation Counsel, and Philip R. Byrnes Jr., Deputy City Attorney, Las Vegas, for Appellant/Cross-Respondent City of Las Vegas Downtown Redevelopment Agency.

Lionel Sawyer & Collins and Samuel S. Lionel, Las Vegas, for Appellants/Cross-Respondents Fremont Street Experience and Fremont Street Experience Parking Corp.

A. Grant Gerber & Associates and A. Grant Gerber, Elko; Glade L. Hall, Reno, for Respondents/Cross-Appellants.

Kolesar & Leatham, Chtd., and James B. MacRobbie, Las Vegas; Institute for Justice and Dana Berliner, Washington, D.C., for Amicus Curiae Institute for Justice.

Wilson & Barrows and Stewart R. Wilson, Elko; Pacific Legal Foundation and James S. Burling and Harold E. Johnson, Sacramento, California, for Amicus Curiae Pacific Legal Foundation.

Before the Court En Banc.¹

OPINION

By the Court, BECKER, J.:

This is an appeal from a district court order granting respondents' motion to dismiss in an eminent domain action and a cross-appeal from a district court order dismissing respondents' counterclaims in the same action.² Appellants/cross-respondents, the City of Las Vegas Downtown Redevelopment Agency (Agency), Fremont Street Experience Limited Liability Company, and Fremont Street Experience Parking Corp. (collectively Fremont Street Experience), argue the district court erred in entering an order dismissing the Agency's eminent domain complaint. Respondents/cross-appellants Carol Pappas, John H. Pappas, Jr., and Harry J. Pappas (collectively the Pappases) contend that the district court erred in entering an order dismissing their counterclaims. We conclude the district court erred in dismissing the eminent domain complaint and those portions of the counterclaims that seek damages for alleged pre-condemnation interference with the Pappases' tenants. We further conclude that the district court did not err in dismissing the remaining counterclaims.

Both the United States and Nevada Constitutions allow the taking of private property for public use provided just compensation is paid to the private property owner.³ The Nevada Legislature has clearly defined economic redevelopment as a public purpose.⁴ And, the United States Supreme Court has concluded that when a legislative body decides that a need for redevelopment serves the public, its decision is "well-nigh conclusive."⁵ There is no exception to the rule "because the power of eminent domain is involved."⁶ When substantial evidence supports an agency's determination that a specific project furthers economic redevelopment under NRS Chapter 279, the project is for a public purpose. The sole remaining issue for a jury to determine is just compensation. We conclude that in this case, substantial evidence supports the Agency's determination that the project in issue facilitates redevelopment. Thus, we conclude that the Agency's use of eminent domain was constitutionally permissible and the district court therefore erred in dismissing the Agency's eminent domain complaint.

FACTS

On November 6, 1985, the Las Vegas City Council (Council) created the Agency to tackle redevelopment issues under NRS Chapter 279.⁷ The Agency's board is comprised solely of Council members.

NRS Chapter 279 identifies redevelopment to eliminate blight as a public purpose. The Council identified various sections of the city, including the area commonly known as downtown Las Vegas, for the Agency to evaluate and determine whether redevelopment was necessary to combat physical, social, or economic blight. The downtown section identified included property owned by the Pappases. The Agency directed its staff and the City's Planning Commission to evaluate the identified area and prepare a report on any conditions showing physical, social, and economic blight in the area. The ensuing report identified various physical, economic, and social conditions within the area constituting "blight" within the definition set forth in NRS 279.388.⁸ These conditions included increased crime rates and requests for police assistance, business flight from the downtown area, decline in tourism, lack of parking, visitor and residents' perceptions of lack of safety in the area, and increases in vacant and aging buildings.

Based upon this evidence, the Planning Commission submitted a redevelopment plan (Plan) to the Agency. The Agency accepted the proposed Plan, reviewed the information submitted to the Planning Commission, and decided to consider adopting the Plan. Pursuant to statute, the Agency then provided notice of a public hearing to landowners affected by the proposed Plan. At the hearing, members of the public acknowledged that significant problems existed in the downtown area. Some individuals disagreed, however, with the adoption of a redevelopment plan. Instead, they urged the Agency to work with individual landowners and businesses, and to provide money for renovations, promotions, and other methods for cleaning up and bringing people back to the downtown area.

After considering the public comments, the Agency approved the Plan. The Agency determined that blight was causing a serious physical, social, and economic burden on the City in all applicable downtown areas. The Agency concluded that working with individuals on a piecemeal basis would not stem the decline of the downtown area. The Agency also concluded that neither the City, nor the private sector, acting alone, had the resources to accomplish the redevelopment goal. The Agency found that only the combined redevelopment efforts of the City and the private sector would improve the area.

The Plan provided a framework for all future redevelopment. It was intentionally general; it included no specific projects. The purpose, however, was to eliminate physical, social, and economic blight and to encourage businesses and individuals to return to a safe downtown area with adequate parking and facilities. The Plan provided business and property owners in the area an opportunity to propose and participate in projects that would eliminate physical, social, and economic blight as well as mechanisms for encouraging investors to develop new projects in the area. The Agency could also use its power of eminent domain to acquire private property for projects designed to eliminate social and economic blight.

Neither the Pappases nor any other person challenged the Plan within the ninety-day period following its adoption, as required by statute.⁹ The Plan created a conclusive presumption that the area encompassing the Pappases' property was blighted under the Community Redevelopment Law.¹⁰

Several years passed between the adoption of the Plan and the events that led to the present action. Over that period, the Agency approved several projects. Some succeeded and some did not. The downtown area continued to lose ground. Finally, to accomplish redevelopment and eliminate physical, social, and economic blight in the core downtown area, the Agency considered various proposals for an anchor project. The Agency sought a concept that would be a feature attraction in downtown Las Vegas. The ideal project would create a safer, cleaner environment designed to draw visitors and businesses back to the downtown area. This increase in activity would then encourage additional businesses to relocate to areas outside of, but adjacent to the core. As businesses returned, improvement of residential areas would follow. Thus, in conjunction with the feature attraction, the City also considered creating new business or shopping venues in the area.

Eventually, the concept known as the Fremont Street Experience surfaced as the anchor project to accomplish the Agency's redevelopment goals. Several components comprised the Fremont Street Experience, including a sculpted steel mesh canopy stretching across Fremont Street from Main to Fourth Streets. The canopy would allow light and air flow during daylight hours but would provide shade for tourists. At night, however, the Fremont Street Experience would present a sound and light show. In addition, the Fremont Street Experience would create a pedestrian plaza by closing Fremont Street to vehicular traffic from Main Street to Las Vegas Boulevard. Finally, because of a lack of adequate public parking, plans for the Fremont Street Experience included a five-story public parking structure with some retail and office space.

Because the Agency lacked the financial resources to construct the project alone, it entered into an agreement with a consortium of downtown casinos. The consortium would finance and cover any operating losses of the feature attraction as well as the construction of the parking garage. The City would authorize the creation of the pedestrian mall, and the Agency would provide funds to acquire the land needed to construct the garage. In return for the risk taken by the consortium in absorbing all of the construction costs, start-up losses, and possible operating losses, the consortium would control the operation and revenues of the garage as well as the operation of the feature attraction. The Council approved the Fremont Street Experience project in Bill No. 93-55.

Under the project's plans, the parking garage would occupy an entire city block. The chosen block was composed of thirty-two individual parcels in multiple ownerships. The Pappases owned three of these parcels, composing a small portion of the block. The Agency sent the Pappases an offer to purchase their property. The Pappases refused but...