Petition for Writ of Certiorari — Pappas v. City of Las Vegas Downtown Redevelopment Agency

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Supreme Court, 1: 3.

FILED

No.03- 02 772 JAN 01 2008

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IN THE

Supreme Court of the Anited States

CAROL PAPPAS, JOHN H. PAPPAS, JR., and

HARRY J. PAPPAS,

Petitioners,

CITY OF LAS VEGAS DOWNTOWN REDEVELOPMENT

AGENCY, FREMONT STREET EXPERIENCE LIMITED

LIABILITY COMPANY, and FREMONT STREET

EXPERIENCE PARKING CORPORATION,

Respondents.

On Petition for Writ of Certiorari

to the Supreme Court of Nevada

PETITION FOR WRIT OF CERTIORARI

BARRY LEVENSTAM

Counsel of Record

JEREMY M. TAYLOR

JOHN W. JOYCE

MELINDA E.A. CUPPS

JENNER & BLOCK LLP

One IBM Plaza

Chicago, IL 60611

(312) 222-9350

Counsel for Petitioners

| SR REO ARE A ERD SRT NRG LTT SENSE tT ETI LOO LILES TREES TE

WILSON-EPES PRINTING Co., INC. — (202) 789-0096 — WASHINGTON, D. ©. 20001

QUESTIONS PRESENTED.

1. Whether the Supreme Court of Nevada's reading of

Berman v. Parker, 348 U.S. 26 (1954), and Hawaii Housing

Authority v. Midkiff, 467 U.S. 29 (1984), violates the fundamen-

tal constitutional right of private property ownership by

permitting local governmental agencies acting in the name of

"economic redevelopment" to take property that is neither

blighted nor surrounded by blight and give it to other private

parties who supposedly can use that property more profitably

on the theory that enhanced private profitability indirectly will

benefit the public.

2. Whether the conflict among state courts interpreting

Berman and Midkiff in addressing the extent to which local

governmental agencies can take property from one private

owner and give that property to another private owner in the

name of "economic redevelopment" demonstrates the need to

revisit and clarify the holdings of those decisions.

3. Whether, if the Nevada Supreme Court's reading of

Berman and Midkiff is accurate, this Court must now revitalize

the "public use" limitation placed on the power of eminent

domain by the Fifth and Fourteenth Amendments in li ght ofthis

Court's more recent decision in Dolan v. City of Tigard, 512

U.S. 374 (1994), and in light of recent abuses of that power in

the name of "economic redevelopment."

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ...........0..00eeeeeee.

TABLE OF CONTENTS ......... 000. 00eceeceueeees ii

TABLE OF AUTHORITIES ..............0.e0e eee. iv

OPINIONS BELOW ............0..ceeceeceeeceees 2

cep iedleuecsvesssucksncces 2

CONSTITUTIONAL PROVISIONS INVOLVED ....... 2

STATEMENT OF THECASE ............ 00-00 eee. 3

REASONS FOR GRANTING THIS PETITION ....... 12

I. This Court Should Issue The Writ Of Certiorari

Because The Nevada Supreme Court's Reading of

Berman v. Parker and Hawaii Housing Authority v.

Midkiff Violates The Public Use Protection Of The

Fifth And Fourteenth Amendments .............. 14

II. This Court Should Issue The Writ Of Certiorari To

Resolve The Conflict Among The State Courts

Engendered By Berman v. Parker And Hawaii

Housing Authority v. Midkiff .......... 000.0000 16

III. This Court Should Issue The Writ of Certiorari

To Reconsider Berman v. Parker And Hawaii

Housing Authority v. Midkiff \n Light Of Dolan v.

City of Tigard, To Resurrect The "Public Use"

Protection Of The Fifth And Fourteenth

Amendments, And Thereby To Restore The

Fundamental Constitutional Right To Own

rr ee re 19

Bee Teer ee err re errr C ees yrs 28

Appendix A: Opinien of Supreme Court of Nevada,

September 8, 2003

Appendix B: Opinion of Clark County District Court,

July 3, 1996

TABLE OF AUTHORITIES

Page

CASES

Adarant Contractors, Inc. v. Pena, 515 U.S. 200 (1995)... 25

Berman v. Parker, 348 U.S. 26 (1954) .....--++++: passim

Chicago, Burlington & Quincy R.R. Co. v. City of

Chicago, 166 U.S. 226 (1897) «1... + esse eee e eee 22

Church of the Lukumi Babalu Aye, Inc., v. City of

Hialeah, 508 U.S. 520 (1993)... 2... ee eee eres 25

Citizens’ Savings & Loan Ass'n v. Topeka, 87 US.

(20 Wall) 655 (1874) .....--- seer eee: 21,22,26,27,28

City of Center Line v. Chmelko, 416 N.W.2d 401 (Mich.

Ch Rep AMD) cis eee ree 18,19

City of Cincinnati v. Vester, 281 U.S. 439 (1930) ....... 22

City of Las Vegas Downtown Redevelopment Agency v.

Eighth Judicial Dist. Court, 5 P.3d 1059 (Nev.

fo WAT eas 9

City of Monterey v. Del Monte Dunes at Monterey,

Ltd., 526 U.S. 687 (1999) .....-- ee eee cece eeee: 28

Davis v. Passman, 442 U.S. 228 (1979)... -- eee rere 27

Dolan v. City of Tigard, 512 U.S. 374 (1994) oni nas nassim

Gibbons v. Ogden, 22 U.S. (9 Wheat.) ft). Sere 24

Hawaii Housing Authority v. Midkiff, 467 U.S. 29

i.) ERT ee ee a, passim

Kaiser Aetna v. United States, 444 U.S. 164

tip) eT ea 28

Lynch v. Household Fin. Corp., 405 U.S. 538 (1972) . 25,26

Mayor v. Thomas, 645 So. 2d 940 (Miss. 1994) .....--- 18

TABLE OF AUTHORITIES -— continued

Page

Old Dominion Land Co. v. United States, 269 U.S. 55

ee kh bse ods 048 6 KOE EER BESTE E SS 22

Schneider v. District of Columbia, 117 F. Supp. 705

| Ree ren ri err re ee 15

Smiley v. Citibank (South Dakota), N.A., 517 U.S. 735

ee ae eens tah bG aa eke eee es 17

Southwestern Illinois Development Authority v.

National City Environmental, L.L.C.,

pf) oe BE) Re. | nr 17,18,24

United States v. Playboy Entertainment Group, Inc.,

ED a ko we dw pea e ns eed eee EY 25

United States ex rel. Tennessee Valley Authority v.

FE Wi SSO CIINO) oo ova wcuvesvcanes 22,23

CONSTITUTIONAL PROVISIONS

NE, PPP eer ere re Teer TT eT ee res 24

8 Pere eer ee ee eee eee Te passim

ee 8S eee rere ere rrr passim

STATUTES

EE i ity di ata we LAY kee aes 2

Nevada Community Redevelopment Law,

PU, GOON, DOME. ZIP. SOC ZIG OOD 6 cece sc ceesesesens 8

eg, 5 er ere are ae 9

TABLE OF AUTHORITIES - continued

Page

PUBLICATIONS

| Records of the Federal Convention of | 787 534 (Max

Farrand ed., rev. ed. 1966) .......- ee eee reer 20

Arthur Lee, An Appeal to the Justice and Interests of

the People of Great Britain, in the Present Dispute

with America 14 (4th ed. 1775) .. 0... e+e eee ees 20

Dana Berliner, Public Power, Private Gain: A

Five-Year, State-By-State Report Examining

the Abuse of Eminent Domain 130-31 ‘ho. ) 13

Donald J. Kochan, “Public Use" and the Independent

Judiciary: Condemnation in an Interest Group

Perspective, 3 Tex. Rev. L. & Pol. 49 (1998) .... 23,24

Edward S. Corwin, The "Higher Law" Background of

American Constitutional Law, 42 Harv. L. Rev. 365

4) ie eee ee aed 20

Friedrich A. Hayek, The Road To Serfdom, 103-04

1, Seeereeere TOee rr eee, 29

James W. Ely, Jr., The Guardian Of Every Other

Right: A Constitutional History of Property

Rights (Kermit L. Hall ed., 2d ed. 1998) .. 19,20,21,23

John Adams, A Defence of the American Constitutions

of Government of the United States of America

(1787-88), reprinted in Democracy, Liberty, and

Property 126 (Francis W. Coker ed. 1942) ...... 20-21

John Bartlett, Familiar Quotations 336 (Justin Kaplan

ed., 16th ed. 1992) ..... 2. cece cess cnerecccees 20

Vil

TABLE OF AUTHORITIES -— continued

Page

Karl Marx & Friedrich Engels, The Communist

Manifesto (1848), reprinted in 50 Great Books

of the Western World 425 (Robert Maynard

oe re rere 28-29

Mississippi Churning, Editorial, Wall St. J., Jan. 4,

ci Ff | > Seeeeeeerreerre Perr reer rere re 12

Richard A. Epstein, Zakings: Private Property and the

Power of Eminent Domain (1985) .......... 19-20,23

Thomas W. Merrill, The Economics of Public Use,

Ta Commer 4... Rev. G4 CE9GG) nn ce ccc ccvecresnens 23

In The

Supreme Court of the United States

No. 03-

CAROL PAPPAS, JOHN H. PApPAS, JR., and

HARRY J. PAPPAS,

Petitioners,

CITY OF LAS VEGAS DOWNTOWN REDEVELOPMENT

AGENCY, FREMONT STREET EXPERIENCE LIMITED

LIABILITY COMPANY, and FREMONT STREET

EXPERIENCE PARKING CORPORATION, _

Respondents.

ON PETITION For WRIT OF CERTIORARI

To THE SUPREME Court OF NEVADA

PETITION FOR WRIT OF CERTIORARI

Petitioners Carol Pappas, John H. Pappas, Jr, and

Harry J. Pappas (collectively "the Pappas Family")

respectfully petition this Honorable Court for a writ of

certiorari to review the judgment of the Supreme Court of

Nevada.

OPINIONS BELOW

The majority and two dissenting opinions of the

Supreme Court of Nevada are reported at 76 P.3d 2, 17, and

18, respectively, and are reproduced in Appendix A. Pet.

App. la, 30a, and 33a, respectively. The decision and order

of the District Court of Clark County is reproduced in

Appendix B. /d. at 42a.

JURISDICTION

The opinion and judgment of the Supreme Court of

Nevada were filed on September 8, 2003. The jurisdiction of

this Court is grounded on 28 U.S.C. 1257(a). Within 90

days of September 3, 2003, Petitioners requested and

received an extension of time until January 6, 2004 in which

to file this Petition. This Petition is filed on January 6, 2004.

CONSTITUTIONAL PROVISIONS iNVOLVED

U.S. Const. amend. V:

No person shall . . . be deprived of life, liberty, or

property, without due process of law; nor shall private

property be taken for public use, without just

compensation.

U.S. Const. amend. XIV:

No state shall make or enforce any law which shall

abridge the privileges or immunities of citizens of the

United States; nor shall any state deprive any person of

life, liberty, or property, without due process of law; nor

deny to any person within its jurisdiction the equal

protection of the laws.

STATEMENT OF THE CASE

The Parties and the Project

Petitioner Carol Pappas and her late husband John

immigrated to this country from Greece; their adult sons,

John Jr. and Harry, are also petitioners in this action. In the

1940s, the Pappas Family purchased two parcels of land

totaling 7,000 square feet on the comer of Las Vegas

Boulevard and Carson Street in Las Vegas, Nevada. The

Pappas Family owned this property from the 1940s until

possession of it was taken from them by respondent City of

Las Vegas Downtown Redevelopment Agency ("Agency"),

which promptly gave possession to respondent Fremont

Street Experience Limited Liability Company ("LLC"), a

cartel of casino owners, and its subsidiary, respondent

Fremont Street Experience Parking Corporation (together,

"Fremont Street respondents"). The Pappas Family had

developed the subject property into a retail center, and leased

space to small retail businesses. The small businessmen and

women who were their tenants were also defendants below

but none were able to continue the litigation to this point.

Pet. App. 44a.

In November 1985, the Las Vegas City Council adopted

a resolution for the establishment of a redevelopment agency

and thus created the respondent Agency. The Agency

consists of the City Council and City Manager of Las Vegas.

Id. at 47a. Two weeks later, the Agency conducted a survey

of blocks in the downtown area targeted for "redevelopment"

to determine the overall conditions of the target area. The

survey, which was submitted to the trial court, reflected no

findings of blight on any of the surveyed blocks. Indeed the

target area included the downtown casinos. The block on

which the Pappas property was located was not even

surveyed. Despite the fact that the survey reflected no blight

anywhere in the surveyed area, the Agency moved forward

towards adopting a redevelopment plan. /d. In the sole

public hearing on this redevelopment plan, held in February

of 1986, city leader after city leader told a packed hall of

citizens that the city would not use eminent domain to

effectuate the plan. These comments are set forth in the trial

court's opinion. /d. at 49a-54a. In March 1986, the City

Council adopted its Redevelopment Plan. /d. at 54a.

For seven years, this Plan had no .impact on the Pappas

Family or its property. In September 1993, however, a cartel

of casinos formed respondent LLC to transform a portion of

Fremont Street into a gambling mall. Respondent LLC then

formed respondent Fremont Street Experience Parking

Corporation as a wholly owned subsidiary. Thereafter, the

Fremont Street respondents entered into a Development

Agreement with the Agency pursuant to which they would

construct a parking garage with retail space on a city block

bordered by Las Vegas Boulevard, Fremont Street, Carson

Street, and Fourth Street, which the Agency agreed to acquire

through eminent domain. /d. at 55a-56a. That block was

occupied completely by unblighted retail and commercial

properties, including the Pappas Family property. Across one

street were certain casinos; across the other streets were

businesses like banks and a savings and loan. /d. at 31a, 47a,

79a-80a.

The Development Agreement spelled out the purposes

for the project and the taking that made it possible: "to

enhance employment opportunities, keep companies from

leaving the downtown area, attract new businesses to the

downtown area, and provide inducement to [LLC] member

and non-member hotels and other businesses in the

downtown area thereby benefitting the public and community

at large." (Appellants' App. in Nev. Sup. Ct. at 1290-91.)

Despite the fact that the Agency and the Nevada Supreme

Court would later rely on the supposed elimination of

"blight" to justify this taking under Berman v. Parker, 348

U.S. 26 (1954), this Development Agreement, like the survey

used to justify it, makes no reference to blight. (/d.) There

was no blight on or near the Pappases' property. Pet. App.

31a, 47a, 79a-80a..

Pursuant to this Development Agreement, the Agency

agreed to pay $6.4 million to acquire the properties upon

which the parking garage was to be constructed but the LLC

was to pay any costs in excess of that sum. In addition, the

Fremont Street respondents obtained a right to veto the sum

that would be paid as just compensation for the property if

that sum exceeded 10% of the "appraised value" as prepared

by the Agency. After the taking, the Fremont Street

respondents would then build and operate the parking lot and

accompanying retail space and keep the revenues generated

by those operations. Jd. at 55a.

Nevada law requires that current landowners be invited

to participate in the development of a project involving their

properties. The Agency sent Carol Pappas a letter notifying

her of its intent to develop a parking garage with retail space

on the property and inviting her to submit an alternative

proposal. Pappas timely responded by letter telling the

Agency that she had no desire to sell the property and that

she proposed in the alternative to participate in the

development of the parking lot by entering into a long-term

> ground lease with the city.’ /d. at 56a.

There is no evidence that the Agency ever responded to

this letter or considered this alternative proposal. Instead,

some months later, in August 1993, the Agency offered to

acquire her property for the Agency's assessed value,

$340,000, adjusted downward to cover any environmental

cleanup that might be necessary. Pappas refused to sell. /d.

at 57a-58a.

The Trial Court Proceedings

On November 19, 1993, the Agency filed a complaint in

eminent domain and a motion for order permitting immediate

occupancy pending entry of judgment against the Pappas

Family. Summons was served on Carol Pappas on

December 8, 1993, making the answer due on January 8,

1994. Id. at 58a-59a.

Notice for the hearing on the Agency's motion for

immediate occupancy, however, was unclear. Furthermore,

the Agency's motion stated that access was necessary to

conduct environmental tests. The Pappas Family permitted

the Agency to come on the property on December 14, 1993 to

conduct the tests. Pappas thus believed that this obviated the

need for the motion. In fact, though its motion did not say

so, the Agency wanted full possession of the property

1/ Because the Pappas Family was and remains willing to participate as a

lessor of her property in the proposed parking lot, this case did not become

moot when the city entered the land, tore down the buildings, and constructed

the parking garage and retail space.

immediately for demolition, not just access for environmental

testing. /d. at 60a.

The Agency appeared in court on the day following the

testing, December 15, and proceeded without the Pappas

Family present. The Agency represented that the Pappas

Family did not oppose the motion for immediate occupancy

despite knowing that the Pappas Family objected to the

eminent domain proceedings and did not wish to relinquish

possession of their property. The Agency also failed to

inform the court that it had conducted the environmental

testing identified in the motion on the previous day. Jd. at

60a.

Unbeknownst to the absent Pappas Family, the trial court

judge who presided over the hearing’ for immediate

occupancy was an investor in one of the casinos that was a

member of respondent LLC. He granted the motion, and

then denied the Pappas Family's motion to reconsider. The

Pappas Family then obtained new counsel, who moved

successfully to have the initial trial court judge recuse

himself. /d. at 60a-61a.

As the new trial court judge stated in ruling upon the

Pappas Family's motion to dismiss: "What the Pappas Family

had owned for nearly fifty years was stripped from them in

less than 50 seconds in a summary proceeding on December

15, 1993 at which they were not even present." /d. at 60a.

The Pappas Family filed a motion to dismiss the

condemnation suit, asserting that the taking violated the

United States Constitution as well as the Nevada Constitution

pee eee essence aston

and the Nevada Revised Statutes.2 At the request of the

Pappas Family, the trial court required the Agency to produce

the full administrative record and transformed the motion

into one for summary judgment. /d. at 61a, 86a.

The Trial Court's Ruling

In its July 3, 1996 opinion, the trial court phrased the

question before it as follows: "The underlying question in

this Motion to Dismiss is whether this taking is for a public

use." /d. at 77a. The court answered the question "no,"

ruling that the taking suffered a series of constitutional and

statutory shortcomings. First, the court concluded that the

1986 Redevelopment Plan, under which the Pappas Family

property was taken, failed to define the redevelopment area

with sufficient specificity and, in particular, included within

the redevelopment area substantial areas of property >

including some of the casinos themselves as well as the

Pappas Family property » for which there was no evidence of

blight. Indeed, as the trial court held, the survey upon which

the Agency based the 1986 Redevelopment Plan showed no

blight anywhere in the affected area. /d. at 79a-86a. Thus,

the court held that the designation of the redevelopment area

was "arbitrary and capricious." Jd. at 86a.

Next, the trial court held that the notice provided to the

Pappas Family failed to inform them of their right to

chailenge the conclusion that their property was blighted. /d.

at 86a-87a. The court also concluded that the Agency failed

to amend the 1986 Plan to include the 1993 Fremont Street

2/ The Agency based the Fremont Street Experience project, and the

condemnation of the Pappas Family's property, on the Nevada Community

Redevelopment Law, Nev. Rev. Stat. ("NRS") 279.382-279.685. Pet. App.

56a, 62a-63a.

Experience project. Had the Agency amended the Plan, as

required, it would have had to issue additional notice and

hold new public hearings. /d. at 87a-9 1a.

Additionally, the trial court held that the Agency also

failed to comply with the requirement in NRS 279.424(2)

that the Agency show it was unable to obtain the Pappas

property by any other means. In this regard, the court noted

that respondent LLC (which consisted of ten casinos worth

billions of dollars) never even attempted to negotiate a

market sale with the Pappas Family. The court held: "The

takings clauses of the United States and Nevada

Constitutions do not envision the Government as the transfer

agent between two private landowners." Pet. App. at 93a.

For all of these reasons, the trial court concluded that the

taking was unconstitutional.’

The Nevada Supreme Court's Ruling

The Nevada Supreme Court summarily rejected a series

of procedural arguments and addressed the ruling concerning

the unconstitutionality of the taking on the merits. The Court

first analyzed the issue of "public use." /d. at Ila-12a.

Relying heavily on Hawaii Housing Authority v. Midkiff, 467

U.S. 29 (1984), the Court stated that "so long as a

3/ After the trial court granted this motion to dismiss, related proceedings

were assigned to another judge. Citing the appearance of impropriety, that

judge recused himself because he had received campaign contributions from

casinos that stood to benefit from a taking of the Pappases' property. City

of Las Vegas Downtown Redevelopment Agency v. Eighth Judicial Dist.

Court, 5 P.3d 1059, 1060 (Nev. 2000). A "chain reaction of subsequent

recusals" followed because so many judges had accepted similar campaign

contributions from those casinos. /d. Eventually the Nevada Supreme Court

issued a writ of mandamus requiring a judge who had recused himself to

retain the case despite those contributions. /d. at 1063.

redevelopment plan, or any individual redevelopment project,

bears a rational relationship to the eradication of physical,

social or economic blight, it serves a public purpose within

the power of eminent domain." Pet. App. at 12a-17a.

Ignoring the specific findings of the trial court concerning the

absence of blight, the Court held: "Although the [Fremont

Street project] benefits the casino consortium that was

willing to finance the project, its focus is to provide a safe,

clean, and friendly environment for visitors and businesses in

general and an anchor for revitalization of the entire

downtown area. This constitutes a public purpose under the

United States and Nevada Constitutions." /d. at 19a.

The Court then turned to the related issue of blight. /d.

at 19a-24a. Here again, the Court glossed over the trial

court's specific findings concerning the absence of blight in

1986, when the Agency adopted the Plan, not only on the

block that was condemned, but in the entire downtown area

surveyed. Rather, the Court stated: "The record reflects no

basis for any conclusion that economic, social or physical

blight was eradicated between the date the Plan was adopted

in 1988 and the date the Fremont Street Experience project

was approved in 1993."* /d. at 24a. In fact, nothing in the

record suggests that the Agency made specific findings of

blight at the time it approved the Fremont Street Experience

project in 1993.

If anything, the public record establishes the contrary to

be true. At a City Council meeting at the end of December

4/ The City Council adopted the Plan cn March S, 1986, notin 1988, as the

Court stated. Hence seven years (not five) had passed between the adoption

of the Plan with the attendant public hearings and notice, and the taking of

the Pappas Family's property.

1989, right in the middle of this seven year gap, Steve Wynn,

the owner of one of the respondent LLC casinos, testified at

length before the Agency, opposing a different condemnation

plan, and forcefully disputing the notion that downtown Las

Vegas was blighted: "We're talking about a hard core reality

down here about business. The downtown isn't dying.

Where did that idea get hot around here? The downtown

doesn't need this kind of refurbishment with public money."

(Gaughn Dep. Ex. B, Dec. 20, 1989 Agency Meeting Tr. at

26.) Another LLC casino owner who was present at that

meeting, Jack Gaughn, later testified in a deposition in this

case that he had agreed with Mr. Wynn that downtown Las

Vegas was not blighted. (Gaughn Dep. at 45-47.)

Ultimately, the Nevada Supreme Court relied upon

Berman vy. Parker, 348 U.S. 26 (1954), to resolve the

problem of the missing blight:

Although the area in Berman involved slums and an

urban renewal statute, rather than a community

redevelopment statute, its rationale still applies. The

specific building at issue in Berman was not itself

blighted. The building was to be taken from a private

owner and managed by a private agency. The Court

concluded, however, that redevelopment encompasses an

entire area, not just individually blighted sections. . . .

Consistent with Berman, the fact that the Pappases'

property itself was not blighted does not prohibit its

taking through eminent domain proceedings.

Id. at 22a-23a.

Two justices dissented. /d. at 30a-4la. Justice Leavitt

noted the absence of blight:

————:

The Pappases' property was not a slum. The City's

survey gave no indication that the property was blighted

in any way. There certainly were no conditions injurious

to the public health, safety, morals and welfare. The

property was adjacent to a savings and loan building and

across the street from a bank.

Id. at 31a. Because "there was no evidence of blight in or

around the Pappases' property; . . . the goal of eliminating

blight, which in some cases may be a legitimate public use, is

not applicable in this case." /d. at 32a.

Justice Maupin also dissented. Because the project

"effected a material change to or deviation from the

governing redevelopment plan," he concluded "that the

Agency improperly failed to seek formal amendment of the

Plan before taking properties as eminent domain." /d. at 34a.

Further, the Pappas Family "should still have been able to

lodge objections in the context of a formal plan amendment

concerning the Fremont Street Experience project on the

grounds that takings pursuant to the amendment would not

serve to alleviate blight in the neighborhood," in other words,

"were inconsistent with the goals of the original Plan, or were

not effected for public use." /d. at 38a.

REASONS FOR GRANTING THE PETITION

This taking follows a pattern becoming an epidemic in

this country that represents the very worst in abuses of the

eminent domain power. See, e.g., Mississippi Churning,

Editorial, Wall St. J., Jan. 4, 2002, at Al2. In the name of

"economic redevelopment," the local city council strips

citizens and small businesses of valuable non-blighted

properties that they have worked hard to purchase and

maintain, on blocks never even surveyed for blight, in

neighborhoods not suffering blight, and then gives those

properties to wealthy, politically-connected private

businesses to tear down for parking lots or other private uses

that will enhance their private profits. Here, those businesses

» a cartel of casinos and purveyors of adult entertainment >

selected the property and financed the project. And the trial

court judge who stripped the Pappas Family of their property

in an ex parte hearing was an investor in one of those

casinos.”

Yet the Supreme Court of Nevada held that Berman v.

Parker, 348 U.S. 26 (1954), and Hawaii Housing Authority

v. Midkiff, 467 U.S. 229 (1984), required it to turn a blind eye

to this blatant violation of the Pappas Family's fundamental

federal constitutional right to own private property. Because

"tourism and visitor volume continued to decline in

downtown Las Vegas," Pet. App. 24a >» in other words,

because casinos with political clout were not making as much

money as they wanted to make » the Supreme Court of

Nevada believed that it had to permit the city council to take

private properties from their rightful and responsible owners

and give those properties to covetous neighbors. But neither

Berman nor Midkiff permit, much less require, courts to stand

silent when local units of government act to redistribute

private property that is neither blighted nor essential to

remedying adjacent blight.

If "blight" now encompasses a downturn in tourism as

well as uninhabitable slums, and if the presence of blight

5/ The Institute for Justice included the taking of the Pappas Family's

property in its report examining the abuse of eminent domain powers. See

Dana Berliner, Public Power, Private Gain: A Five-Year, State-By-State

Report Examining the Abuse of Eminent Domain 130-31 (2003).

somewhere in a city makes any property in the city ripe for

"economic redevelopment" condemnation, then local

governments can act as local tyrants, determining who may

own property within their jurisdictions and who may not.

But the Constitution, in particular the Fifth and Fourteenth

Amendments, do not permit this kind of taking. This Court

should issue the writ to turn this rising tide of tyranny by

holding that courts must apply the "public use" limit of the

Fifth and Fourteenth Amendments to bar the taking of private

property that is neither blighted nor essential to remedying

adjacent blight and the giving of that property to different

private owners for the purpose of "economic redevelopment."

I. This Court Should Issue The Writ Of Certiorari

Because The Nevada Supreme Court's Reading of

Berman vy. Parker and Hawaii Housing Authority v.

Midkiff Violates The Public Use Protection Of The

Fifth And Fourteenth Amendments.

In Berman v. Parker, 348 U.S. 26 (1954), this Court

reviewed Congress's legislative response to well-documented

urban decay that left thousands living and dying in slums. In

this case, the Nevada Supreme Court reviewed the Las Vegas

city council's response to concerns that tourism was

decreasing.

In Berman, the taking involved a tract of segregated

Washington, D.C., in which conditions were documented to

be intolerable: almost two-thirds of dwellings were "beyond

repair"; well over half "had outside toilets"; and over 80%

"lacked central heating." Jd. at 30.° The department store at

issue in Berman sat in the midst of this squalor. Jd. at 31. In

this case, the taking involved a valuable block of successful,

diverse commercial enterprises across one street from a

casino owned by respondent LLC's members, and across

other streets from banks and a savings and loan, and

surrounded by many other blocks of valuable commercial

properties. Any supposed blight was blocks, perhaps miles,

away » and the properties between were not taken.

Congress's urban renewal efforts at the heart of Berman were

a far cry from the reverse-Robin Hood action of the city

council here. :

Hawaii Housing Authority v. Midkiff; 467 U.S. 229

(1984), arises in a factual context quite distinct from that

presented by this case. Relying on historical precedent from

the Revolutionary War era, Midkiff upheld a statute designed

to break-up a land monopoly system created by the monarchy

that preceded American statehood so that American citizens

could participate in the fundamental right of property

ownership. /d. at 232, 241-42 & nS. This case is exactly the

reverse of Midkiff’ Casino owners already own most of

downtown Las Vegas, yet the Las Vegas city council passed

a law to dispossess small property owners so that these

oligopolistic (indeed, oligarchic) property owners could

increase their property holdings in town.

6/ The district court opinion further reflects that the general death rate was

50% greater in this area than in the entire District of Columbia, with deaths

from tuberculosis and syphilis occurring at an even greater rate in the

afflicted area. Schneider v. District of Columbia, 117 F. Supp. 705, 709

(D.D.C. 1953).

ee ee SL eee es ee,

Although Berman and Midkiff call for a "narrow" scope

of judicial review, they do not eliminate judicial review

entirely. Indeed, Midkiff specifically states: "There is, of

course, a role for courts to play in reviewing a legislature's

judgment of what constitutes a public use, even when the

eminent domain power is equated with the police power."

467 U.S. at 240. But the police power does not extend to

taking valuable, non-blighted property that is surrounded by

non-blighted property on the notion that a different owner

could use the property in a different manner that might

indirectly benefit the public by luring more tourists or

employing more people or generating more taxes. This Court

has never upheld such a taking.

The repercussions of reading Berman and Midkiff so

broadly as to require reflexive judicial approval of this kind

of taking cannot be overstated. It is the rare community that

suffers no blight, much less no economic slowdown. But

according to the Supreme Court of Nevada, the mere

presence of either would empower the local city council to

take anyone's property anywhere in town and give it to a

more profitable business or a wealthier individual. This

Court should issue the writ to clarify that the Fifth and

Fourteenth Amendments do not permit such an unbridled

exercise of eminent domain.

II. This Court Should Issue The Writ Of Certiorari To

Resolve The Conflict Among The State Courts

Engendered By Berman vy. Parker And Hawaii

Housing Authority v. Midkiff.

Berman and Midkiff are not always read so broadly.

Courts in other states have disagreed with the overbroad

interpretation of these cases adopted by the Supreme Court of

Nevada, and have prohibited very similar "economic

redevelopment" takings after citing Berman and Midkiff.

Furthermore, decisions on both sides of this issue often come

with vigorous dissents. Such conflicts among state courts on

federal issues merit this Court's review. See, e.g., Smiley v.

Citibank (South Dakota), N.A., 517 U.S. 735, 739 (1996)

(noting "two dissents from the opinion of the Supreme Court

of California" and "the opinion of the Supreme Court of New

Jersey creating the conflict that has prompted us to take this

case").

In Southwestern Illinois Development Authority v.

National City Environmental, L.L.C., 768 N.E.2d 1 (Ill.

2002) ("SWIDA"), for example, the Illinois Supreme Court

confronted a fact situation remarkably similar to that

presented in this case. The Illinois General Assembly had

created SWIDA to redevelop an economically depressed two-

county region. /d. at 227-28. The Gateway racetrack > a big

engine of tourist income and therefore a favored business >

coveted property owned by its next door neighbor, NCE > a

recycling plant >» for a parking lot. /d. at 229. Gateway

persuaded SWIDA to exercise its legislatively-bestowed

quick-take power to seize that property and give it to the

racetrack. Jd. SWIDA incanted the mantra of blight and

public safety, as the Agency did here, but there, as here, any

blight was distant from the taking; the taking's real reason

was to improve the tourist attraction's business and thereby

indirectly to enhance economic redevelopment. /d. at 9.

Citing Berman and Midkiff repeatedly, see SWIDA at 7, 8, 9,

the Illinois Supreme Court rejected the rationale accepted by

the Nevada Supreme Court that what is good for the big

businesses in town is indirectly good for everyone else in

town as well, and therefore qualifies as "public use":

As a result of the acquisition of NCE's property,

Gateway could realize an estimated increase of $13 to

$14 million in projected revenue per year. While we do

not deny that this expansion in revenue could potentially

trickle down and bring corresponding revenue increases

to the region, revenue expansion alone does not justify

an improper and unacceptable expansion of the eminent

domain power of the government. Using the power of

the. government for purely private purposes to allow

Gateway to avoid the open real estate market and expand

its facilities in a more cost-efficient manner, and thus

maximizing corporate profits, is a misuse of the power

entrusted by the public.

Id. at 10-11.’

Similarly, in Mayor v. Thomas, 645 So. 2d 940, 941

(Miss. 1994), the Mississippi Supreme Court rejected a

taking by the City of Vicksburg of property to be given to

Harrah's for a casino as part of an urban renewal plan. Citing

Berman, the City argued that this was a public use because

Harrah's casino would result in "increased employment of the

citizenry, attraction of tourists, upgrading City facilities by

$500,000 received under the contract, over $15 million added

to City tax rolls, and $60,000 for the construction of a park in

the Urban Renewal Area." /d. at 942-43. Nevertheless, the

Mississippi Supreme Court held that because "Harrah's is the

primary beneficiary of the taking," this was not a public use.

Id. at 943; see also City of Center Line v. Chmelko, 416

N.W.2d 401, 403-07 (Mich. Ct. App. 1987) (striking taking

where City claimed that it sought to condemn property "for

7/ The dissenting opinion, however, criticized the majority's reading of

Berman and Midkiff. 768 N.E.2d at 17.

commercial purposes in a manner that will improve the

economic viability of the existing commercial district," when -

in fact it intended to convey condemned land to an auto

dealership that wanted to expand its parking space).

This Court should issue the writ to resolve this conflict

among the states and provide guidelines for applying the

"public use" limitation to the "economic redevelopment"

takings.

It. This Court Should Issue The Writ Of Certiorari To

Reconsider Berman v. Parker And Hawaii Housing

Authority v. Midkiff In Light Of Dolan y. City of

Tigard, To Resurrect The "Public Use" Protection Of

The Fifth And Fourteenth Amendments, And

Thereby To Restore The Fundamental Constitutional

Right To Own Property.

If Berman and Midkiff do permit the taking of one

person's property for the sole purpose of giving it to another

who can use it to attract more tourists or employ more people

or pay more taxes, then this Court should issue the writ and

modify or overrule those cases because the Constitution does

not. This is the very antithesis of "public use."

There can be no doubt that property ownership free from

arbitrary interference by the sovereign is among the most

fundamental of our constitutional rights. In the century

leading up to our war for independence from Great Britain

and the adoption of our Constitution, John Locke's view of

government, as having evolved to protect the natural right to

private property ownership, predominated. See, e.g., James

W. Ely, Jr, The Guardian Of Every Other Right: A

Constitutional History of Property Rights 16-17 (Kermit L.

Hall ed., 2d ed. 1998) (hereafter "Ely"); Richard A. Epstein,

Neen CRSTER

Takings: Private Property and the Power of Eminent Domain

29 (1985) (hereafter "Epstein"); Edward S. Corwin, The

"Higher Law" Background of American Constitutional Law,

42 Harv. L. Rev. 365, 383-84 (1928). The signal importance

of Britain's efforts to control taxes, trade, and property rights

as a factor leading to the American Revolution is well known

and indisputable. Ely at 26-29. As Arthur Lee of Virginia

wrote, "The right of property is the guardian of every other

right, and to deprive a people of this, is in fact to deprive

them of their liberty." Arthur Lee, An Appeal to the Justice

and Interests of the People of Great Britain, in the Present

Dispute with America 14 (4th ed. 1775).

While rallying his troops before the Battle of Long

Island, George Washington made the same point: "The time

is now near at hand which must probably determine whether

Americans are to be freemen or slaves; whether they are to

have any property they can call their own... ." John -

Bartlett, Familiar Quotations 336 (Justin Kaplan‘ed., 16th

ed. 1992).

Delegates to the Constitutional Convention in

Philadelphia gave voice to the same view. For example,

John Rutledge of South Carolina stated: "Property was

certainly the principal object of Society." 1 Records of the

Federal Convention of 1787 534 (Max Farrand ed., rev. ed.

1966). Founding Father Alexander Hamilton likewise wrote:

"One great objt. of Govt. is personal protection and the

security of Property." /d. at 302.

Similarly, in’ his A Defense of the American

Constitutions (1787), our second President, John Adams,

wrote:

The moment the idea is admitted into society, that

property is not as sacred as the laws of God, and that

there is not a force of law and public justice to protect it,

anarchy and tyranny commence. If "Thou shalt not

"covet" and "Thou shall not steal" were not

commandments of Heaven, they must be made

inviolable precepts in every society, before it can be

civilized or made free.

John Adams, A Defence of the Constitutions of Government

of the United States of America (1787-88), reprinted in

Democracy, Liberty, and Property 126 (Francis W. Coker ed.

1942).

The framers of the Constitution sought to protect private

property rights from future sovereigns. James Madison's

Fifth Amendment would limit the new federal government to

taking private property only "for public use" and then only

with "just compensation." U.S. Const. amend. V. But the

framers also were concerned with the conduct of the states

towards private property rights: "To conservatives the

experience of the revolutionary period demonstrated that the

state governments could not be trusted to respect property

rights. A principal objective of the framers was to prevent

the state legislatures from redistributing property." Ely at 44

(emphasis added). State constitutions at the time by and

large having their own public use and just compensation

limitations, id. at 30-31, the framers addressed their concerns

at the time through the Contract Clause. /d. at 44-45.

After the Civil War and the adoption of the Fourteenth

Amendment, however, the Takings Clause became the first

provision of the Bill of Rights to be incorporated through the

Fourteenth Amendment's due process clause and thus

applicable to the states. See Chicago, Burlington & Quincy

R.R. Co. v. City of Chicago, 166 U.S. 226 (1897); Dolan v.

City of Tigard, 512 U.S. 374, 383-84 (1994). Significantly,

in so ruling, this Court chose to highlight its earlier

discussion, in Citizens’ Savings & Loan Ass'n v. Topeka, 87

U.S. 655, 663 (1874), of limits on "our governments, state

and national." Specifically, the Court stated: "No court, [Mr.

Justice Miller] said, would hesitate to adjudge void any

statute declaring that 'the homestead now owned by A.

should no longer be his, but should henceforth be the

property of B."" Chicago, Burlington & Quincy R.R. Co., 166

U.S. at 237, quoting Citizens' Savings & Loan Ass'n, 87 U.S.

(20 Wall.) at 663.

Well into the Twentieth Century, this Court considered

"public use" to be an issue for the courts: "It is well-

established that, in considering the application of the

Fourteenth Amendment to cases of expropriation of private

property, the question what is a public use is a judicial one."

City of Cincinnati v. Vester, 281 U.S. 439, 446 (1930).

But little more than 20 years later, Berman sharply

curtailed the scope of judicial review to "an extremely

narrow one." 348 U.S. at 32. The cases Berman cites in

support of this proposition are wholly distinguishable. Old

Dominion Land Co. v. United States, 269 U.S. 55 (1925),

involved the taking of land on which the Government had

constructed a costly military installation after the owner had

refused to renew the Government's lease for the property it

had improved. United States ex rel. Tennessee Valley

Authority v. Welch, 327 U.S. 546 (1946), involved the taking

of property incident to a TVA dam project. Neither case

involved a challenge that the taking at issue was "a taking

from one businessman for the benefit of another

businessman." 348 U.S. at 33. Even so, Justice Frankfurter

wrote a concurring opinion in Welch noting his

understanding that "the Court again recognizes the doctrine

that whether a taking is for a public purpose is not a question

beyond judicial competence." 327 U.S. at 557-58.

Berman discusses the breadth of the police power at

great length. 348 U.S. at 31-36. Yet it addresses the rights

of property owners in but a single sentence: "The rights of

these property owners are satisfied when they receive that

just compensation which the Fifth Amendment exacts as the

price of the taking." /d. at 36. This summary treatment has

prompted more than one scholar to conclude that Berman and

Midkiff wrote the words "public use" out of the Fifth

Amendment: "The Supreme Court, for all practical purposes,

has eliminated the ‘public use’ requirement as a check on the

power of government to appropriate private property by

means of eminent domain." Ely at 148 (citing Berman);

Epstein at 161 (Berman dealt the public use limitation a

"mortal blow"); Thomas W. Merrill, The Economics of

Public Use, 72 Cornell L. Rev. 61, 61 (1986) ("most

observers today think the public use limitation is a dead

letter"); Donald J. Kochan, "Public Use" and the Independent

Judiciary: Condemnation in an Interest Group Perspective, 3

Tex. Rev. L. & Pol. 49, 74 (1998) (hereafter "Kochan") (the

public use limitation is a "meaningless standard of review").

The Nevada Supreme Court gave Berman and Midkiff just

such an overbroad reading.

But the framers did include a "public use" requirement in

the Fifth Amendment. And this Court should read the

Constitution to give effect to express language of the framers,

particularly in the Bill of Rights. "As men whose intentions

require no concealment, generally employ words which most

directly and aptly express the ideas they intend to convey, the

enlightened patriots who framed our constitution, and the

people who adopted it, must be understood to have employed

words in their natural sense, and to have intended what they

said." Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 188 (1824).

Moreover, the framers provided the means _ for

eliminating provisions from the Constitution, i.¢., the

amendment power. U.S. Const. art. V. No amendment has

removed the "public use" limitation from the Fifth

Amendment. This Court should therefore give effect to this

limitation in the context of these: abusive economic

redevelopment takings.

Takings for "economic redevelopment" demonstrate why

the "just compensation" limitation alone offers insufficient

protection for the constitutional right to own _ property.

Economic redevelopment takings often (as here) target

valuable non-blighted property. Indeed, the private

businesses that will get the taken properties often select or

participate in selecting the properties to be taken, and then

fund, either entirely or in part, the taking. (Pet. App. 55a; see

also SWIDA, 768 N.E.2d at 4-5, 10.) These businesses are

more than happy to fund these takings because they get a

better price through the government at a just compensation

hearing than they would in the open market. See Kochan at

53. After all, a jury is setting the price rather than the

property's rightful owner, and the jury is told that the price

will be paid by a unit of local government (most likely one

that the jurors are supporting themselves through their tax

payments)..

As the history of our Revolution and of our Constitution

amply establishes, the right to own private property is a

fundamental constitutional right. But Berman and Midkiff

are inconsistent with the treatment this Court affords other

fundamental constitutional rights incorporated through the

Fourteenth Amendment. E£.g., United States v. Playboy

Entertainment Group, Inc., 529 U.S. 803, 813 (2000)

(content-based speech regulations are subject to strict

scrutiny); Church of the Lukumi Babalu Aye, Inc. v. City of

Hialeah, 508 U.S. 520, 546 (1993) (non-general law

burdening religious practice is subject to strict scrutiny).

This Court would not abide a local legislative judgment that

all members of one race or one religion should live together.

E.g., Adarant Contractors, Inc. v. Pena, 515 U.S. 200, 227

(1995) ("all racial classifications . . . must be analyzed...

under strict scrutiny").

Our constitution does not create a set of second-class

rights for property ownership. As this Court said recently in

Dolan, "We see no reason why the Takings Clause of the

Fifth Amendment, as much a part of the Bill of Rights as the

First Amendment or Fourth Amendment, should be relegated

to the status of a poor relation... ." 512 U.S. at 392. Indeed,

there is good reason why property rights are so fundamental:

The right to enjoy property without unlawful

deprivation, no less than the right to speak or the right

to travel, is in truth, a 'personal' right... . In fact, a

fundamental interdependence exists between the

personal right to liberty and the personal right in

property. Neither could have meaning without the other.

That rights in property are basic civil rights has long

been recognized.

Lynch v. Household Fin. Corp., 405 U.S. 538, 552 (1972),

citing J. Locke, Of Civil Government 82-85 (1924); J.

Adams, A Defence of the Constitutions of Government of the

United States of America, in F. Coker, Democracy, Liberty,

and Property 121-132 (1942); 1 W._ Blackstone,

Commentaries * 138-140.

Nothing suggests that when determining whether a

"deprivation" of property » as opposed to speech or travel >

is "unlawful," Lynch, 405 U.S. at 552, courts must yield

entirely to the legislatures. Yet the Supreme Court of Nevada

reads Berman to say that the courts must bow to a legislative

judgment that the private property of one citizen may be

taken from her and, in the name of "economic

redevelopment," given to her neighbor because that neighbor

can put it to more profitable use: "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." Pet. App. 2a., quoting Berman, 348

USS. at 32.

This is not a judicial standard; it is judicial abdication.

Courts are the instrumentalities through which the

government takes property. But courts are sworn to uphold

the Constitution; they cannot be required to carry out

unconstitutional legislation reflexively. "To lay with one

hand the power of the government on the property of the

citizen, and with the other to bestow it upon favored

individuals to aid private enterprises and build up private

fortunes, is none the less a robbery because it is done under

the forms of law... ." Citizens’ Savings & Loan Ass'n, 87

U.S. (20 Wall.) at 664 (emphasis added).*

Courts should not be complicit in such robbery » rather

they should be "an impenetrable bulwark against every

assumption of power in the Legislative or Executive; . . . to

resist every encroachment upon rights expressly stipulated

for in the Constitution by the declaration of rights." Davis v.

Passman, 442 U.S. 228, 241-42 (1979), quoting James

Madison, reproduced in 1 Annals of Cong. 439 (1789).

The "rationally related" test that Midkiff takes from

Berman, see 467 U.S. at 241, leaves courts ill-prepared to

serve as that bulwark against local governments

redistributing private property rights in the name of

"economic redevelopment." Indeed, in Dolan this Court

rejected the "reasonable relationship" test for exactions,

"partly because the term ‘reasonable relationship’ seems

confusingly similar to the term 'rational basis’ which

describes the minimal level of scrutiny under the Equal

Protection Clause of the Fourteenth Amendment." 512 U.S.

at 391. If heightened scrutiny is required where a local

authority "would deprive [a landowner] of the right to

exclude others, ‘one of the most essential sticks in the bundle

8/ The Court in Citizens’ Savings & Loan Ass'n addressed a tax, not a taking.

But by its very nature an improper taking is more insidious than an improper

tax. Taxes address classes of people, which by dint of their size have at least

a chance to roll back the offending legislation through exercise of the

franchise. Takings typically address individuals or very small groups who

are far less likely to have electoral strength. Further, new owners of property

typically alter the property promptly upon receiving it (as happened here),

making the undoing of a taking far more difficult. Moreover, taking a

person's property may even drive her out of the electoral district. Therefore,

what Citizens’ Savings & Loan Ass'n said of improper taxes is even more

accurate for improper takings.

of rights that are commonly characterized as property," id. at

384, quoting Kaiser Aetna v. United States, 444 U.S. 164,

176 (1979) (emphasis removed), it surely must be required

where the local city counsel grabs the entire bundle, and then

passes it to another private owner.’ This Court should issue

the writ and address how courts should scrutinize takings

under the Fifth Amendment "public use" protection to limit

abusive "economic redevelopment" takings like this one.

CONCLUSION

"A government . . . which held the lives, the liberty, and

the property of its citizens subject at all times to the absolute

disposition and unlimited control of even the most

democratic depository of power, is after all but a despotism.

It is true it is a despotism of the many, of the majority, if you

choose to call it so, but it is none the less a despotism."

Citizens’ Savings & Loan Ass'n, 87 U.S. (20 Wall.) at 662

(emphasis added). Taking property from a private citizen to

promote the economic redevelopment of a community may

sound good, but it is an evil » and all the more insidious

because it seems that so many people will benefit from just

one person's loss. The problem is that not just one person

loses » everyone loses because everyone's ownership rights

are diminished. This concept, in fact, has been tried

elsewhere in the world and has failed abysmally: "the theory

of the Communists may be summed up in the single

sentence: abolition of private property." Karl Marx &

Friedrich Engels, The Communist Manifesto (1848),

9/ Although this Court declined to extend the Dolan test from exactions to

denials of development in City of Monterey v. Del Monte Dunes at Monterey,

Lid., 526 U.S. 687, 702-03 (1999), this 'exaction' of the Pappas Family's

property in foto fits more closely with Dolan than Del Monte Dunes.

reprinted in 50 Great Books of the Western World 425

(Robert Maynard Hutchins ed. 1952).

As 1974 Nobel Laureate Friedrich A. Hayek wrote in

The Road To Serfdom 103-04 (1944), "What our generation

has forgotten is that the system of private property is the most

important guaranty of freedom, not only for those who own

property, but scarcely less for those who do not."

Berman and Midkiff do not expressly approve of

"economic redevelopment" takings. But the Supreme Court

of Nevada read those cases as requiring it to defer to the city

council despite the detailed findings of the trial court below

concerning the absence of any blight in the area. Other state

courts have not read Berman and Midkiff so broadly, thus

creating a conflict that this Court should resolve » by

concluding that these cases do not, or may not, permit such

unconstitutional takings to proceed.

Writing in support of the ratification of the Constitution,

James Madison, who authored the Fifth Amendment, states

that "[g]overnment is instituted no less for protection of the

property than of the persons or individuals." The Federalist

No. 54, at 333 (James Madison) (Isaac Kramnick ed., 1987).

The Pappas Family respectfully requests this Court to grant

their petition for writ of certiorari and to provide the

"protection of the property," as Madison and the framers

intended.

January 6, 2004

Barry Levenstam

Counsel of Record

Jeremy M. Taylor

John W. Joyce

Melinda E.A. Cupps

JENNER & BLOCK LLP

One IBM Plaza

Chicago, IL 60611

(312) 222-9350

APPENDICES

Appendix A

Supreme Court of Nevada.

CITY OF LAS VEGAS DOWNTOWN

REDEVELOPMENT AGENCY; Fremont Street

Experience Limited Liability Company, and Fremont Street

Experience Parking Corp., Appellants/Cross-Respondents,

Carol PAPPAS; John H. Pappas, Jr.; and Harry J. Pappas,

Respondents/Cross-Appellants.

No. 39255.

Sept. 8, 2003.

Before the Court En Banc.

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.”

Appellants/cross-respondents, the City of Las Vegas

Downtown Redevelopment Agency (Agency), Fremont Street

Experience Limited Liability Company, and Fremont Street

'The Honorable Mark Gibbons, Justice, voluntarily recused himself

from participation in the decision of this matter.

"Judge Chairez dismissed the eminent domain action; Judge

Huffaker and Judge Mark Denton dismissed the counterclaims.

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.’ The

Nevada Legislature has clearly defined economic

redevelopment as a public purpose.’ 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.” There is no exception to

the rule “because the power of eminent domain is involved.”

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

See U.S. Const. amend. V; Nev. Const. art. 1, § 8, cl. 6.

4NRS 37.010(17).

‘Berman vy. Parker, 348 U.S. 26, 32, 75 S. Ct. 98, 99 L. Ed. 27

(1954).

"Id.

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.’ 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.*° These conditions included increased

’NRS 279.428 states, “An agency shall not transact any business

or exercise any powers under NRS 279.382 to 279.685, inclusive, unless, by

resolution, the legislative body declares that there is need for an agency to

function in the community.”

*NRS 279.388 provides:

“Blighted area” means an area which is characterized by one or

more of the following factors:

crime rates and requests for police assistance, business flight

1. The existence of buildings and structures, used or intended to be

used for residential, commercial, industrial or other purposes, or any

combination thereof, which are unfit or unsafe for those purposes and are

conducive to ill health, transmission of disease, infant mortality, juvenile

delinquency or crime because of one or more of the following factors:

(a) Defective design and character of physical construction.

(b) Faulty arrangement of the interior and spacing of buildings.

(d) Inadequate provision for ventilation, light, sanitation, open

spaces and recreational facilities.

(ec) Age, obsolescence, deterioration, dilapidation, mixed character

or shifting of uses.

2. An economic dislocation, deterioration or disuse, resulting from

faulty planning.

3. The subdividing and sale of lots of irregular form and shape and

inadequate size for proper usefulness and development.

4. The laying out of lots in disregard of the contours and other

physical characteristics of the ground and surrounding conditions.

5. The existence of inadequate streets, open spaces and utilities.

6. The existence of lots or other areas which may be submerged.

7. Prevalence of depreciated values, impaired investments and

social and economic maladjustment to such an extent that the capacity to pay

taxes is reduced and tax receipts are inadequate for the cost of public

services rendered.

8. A growing or total lack of proper utilization of some parts of the

area, resulting in a stagnant and unproductive condition of land which is

potentially useful and valuable for contributing to the public health, safety

and welfare.

9. A loss of population and a reduction of proper use of some parts

of the area, resulting in its further deterioration and added costs to the

taxpayer for the creation of new public facilities and services elsewhere.

The Legislature adopted this provision in 1959.

See 1959 Nev. Stat., ch. 418, § 7, at 648-49. It has been

amended only once, in 1985. See 1985 Nev. Stat., ch. 639, § 11, at

2068-69.

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.” The Plan created a conclusive presumption that the

area encompassing the Pappases’ property was blighted under

the Community Redevelopment Law."°

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,

*NRS 279.609 states in part, “Any action questioning the validity

of ...{[t]he adoption or approval of that plan... may only be brought after

the adoption of the plan .. . or within 90 days after the date of adoption of

the ordinance adopting . . . the plan.”

"See NRS 279.589.

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 indicated

their willingness to enter into a ground lease with the Agency.

Although the Agency initially indicated its willingness to enter

into a ground lease, it determined that a ground lease was not

feasible, as financing for the garage would not permit such an

arrangement. The Agency therefore rejected this proposal and

adopted a resolution to acquire the Pappases’ land, if necessary,

by eminent domain.

After further negotiations to purchase failed, on November 19,

1993, the Agency filed the eminent domain complaint to

acquire the Pappases’ property. The Agency moved for

immediate occupancy pending entry of judgment. The

Pappases failed to oppose the motion, which the district court

granted. The Agency gained possession of the Pappases’ land

effective January 15, 1994.

The Pappases filed an answer and counterclaim, alleging six

causes of action: (1) the Agency violated the Pappases’

procedural due process rights in its initial motion for

occupancy, (2) the Agency improperly took the Pappases’

property through inverse condemnation by its initial motion for

occupancy, (3) the Agency encouraged the Pappases’ tenants to

vacate and not pay rent because of the impending

condemnation, (4) the Agency engaged in_ intentional

interference with business opportunities, (5) the Agency

\ violated the Pappases’ substantive due process rights by failing

to adequately compensate them for the taking, and (6) the

Agency failed to allow the Pappases to participate in the

redevelopment project as statutorily required.

The Pappases then filed a motion for rehearing regarding the

Agency’s immediate occupancy. The district court denied the

motion. The Agency took possession of the property, began

demolishing the existing building, and commenced

construction of the parking garage.’

Thereafter, the Agency filed a summary judgment motion on all

of the Pappases’ counterclaims. The district court found no

genuine issue of material fact as to the first five counterclaims,

noting that they were subsumed within the original eminent

domain complaint, and the counterclaims for monetary

damages could be pursued as a part of the just compensation in

the eminent domain action. The district court denied the

summary judgment motion regarding the Pappases’ right of

participation in the redevelopment project. The Pappases

appealed the dismissal of their counterclaims, but because the

district court’s decision was not a final judgment resolving all

-of the claims between the parties, this court dismissed the

appeal for lack of jurisdiction.

Over three years after the district court had granted the motion

for occupancy and the garage had been constructed, the

Pappases filed a motion to dismiss the Agency’s eminent

domain complaint.'* The Pappases alleged the following: (1)

the exercise of the power of eminent domain was without legal

justification because the redevelopment plan was fatally

''We note that the appropriate vehicle for challenging an order

granting a motion for immediate occupancy is a petition for writ relief, as an

appeal of this interlocutory order is unavailable under NRAP 3 A(b).

"The motion was also filed shortly before a trial was to begin on

the value of the Pappases’ property. The appraiser for the City valued the

property at approximately $500,000, while the Pappases’ appraiser valued

the property at $1,400,000. The Pappases disagreed with their own

appraiser and believed their property was worth $7,000,000.

Fe ee

10a

deficient, (2) the district court lacked jurisdiction because the

Agency improperly invoked the power of eminent domain, (3)

the Agency negotiated with the Pappases in bad faith, and (4)

the Agency violated the Pappases’ procedural due process

rights by violating the Nevada Rules of Civil Procedure.

Shortly thereafter, Fremont Street Experience moved, and was

granted permission to intervene in the pending litigation.

In their motion to dismiss, the Pappases attached minutes from

the City Council meetings regarding the Fremont Street

Experience, the Fremont Street Experience agreement, and

various other affidavits and records regarding the project. In

addition, the district court ordered the Agency to prepare a

record of the administrative proceedings that led to the eminent

domain complaint. Thus, the motion to dismiss was converted

into one for summary judgment.

After considering the evidence and conducting a hearing, the

district court dismissed the Agency’s complaint. The district

court concluded: (1) the construction of the garage did not

preclude the Pappases from contesting the project’s public

purpose; (2) the ninety-day statute of limitations in NRS

279.609 did not preclude judicial review of the taking; (3) the

Agency lacked authority to condemn the property because it

failed to amend the redevelopment plan, and the district court

lacked jurisdiction to hear the Agency’s eminent domain

complaint; (4) the Agency lacked authority to use eminent

domain because there were other less restrictive means to

obtain the property; (5)the Agency acted in bad faith regarding

Owner participation in the project; (6) despite finding

redevelopment a statutorily valid public use, the Agency’s

taking of the Pappases’ property was not a public use because

of the above statutory violations; and (7) the Agency failed to

act in good faith regarding negotiations for the property. The

lla

district court eventually dismissed the one remaining

counterclaim, finalizing the judgment by resolving all of the

pending claims. This appeal and cross-appeal followed.

DISCUSSION

The district court’s findings in support of dismissing the

eminent domain complaint encompass four primary issues: (1)

whether the Pappases are procedurally barred from challenging

the legality of the eminent domain proceedings based on the

doctrines of estoppel or waiver, (2) whether the taking

constitutes ‘a “public use” under the Nevada and Federal

Constitutions, (3) whether the Project furthers the purpose of

eliminating blight under the community redevelopment

statutes, and (4) whether the taking was necessary to further a

public use.’°

Estoppel/waiver

Appellants contend that the district court erred in permitting the

Pappases to challenge whether the parking structure constituted

a public use and the necessity of the taking three years after the

motion for occupancy was granted. Appellants argue that the

Pappases should have opposed the original motion for

occupancy or asserted such issues in their motion for

reconsideration. Moreover, appellants allege that the Pappases

should have sought an extraordinary writ in this court directing

the district court to vacate its orders granting the motion for

The district court’s remaining findings in support of the dismissal

deal with challenges to the scope of the Plan and the need to amend the Plan

whenever a particular project is undertaken. We recently rejected similar

challenges in Las Vegas Downtown Redevelopment v. Crockett, 117 Nev.

816, 34 P.3d 553 (2001).

12a

occupancy and denying the motion for reconsideration. We

agree that issues regarding whether the proposed taking

constitutes a “public use” under the Nevada and Federal

Constitutions and whether the taking is necessary to accomplish

that public purpose are issues to be addressed at the early stages

of an eminent domain proceeding. Such issues need to be

resolved before the existing property is substantially altered.

However, we have never held that a party seeking dismissal of

an eminent domain complaint based on lack of public use or

necessity grounds must raise the issues in opposition to a

motion for occupancy or in a motion to dismiss filed before the

subject property is significantly altered. Nor have we indicated

that the failure to file a petition for extraordinary relief from an

order granting a motion for occupancy or denying a motion to

dismiss implicates the doctrines of waiver or estoppel.

Therefore, we decline to apply these doctrines to the facts of

this case. However, forall eminent domain cases filed after the

date of this opinion, such challenges must be raised prior to

occupancy and material demolition, alteration or construction

on the subject property. Failure to timely assert lack of public

use or necessity will constitute a waiver of these issues.

Public use

The United States Constitution declares that no private property

shall “be taken for public use, without just compensation.”'*

The Constitution of the State of Nevada similarly provides that

“[p]rivate property shall not be taken for public use without just

compensation having been first made.” '°

'4U)_S. Const. amend. V.

"Nev. Const. art. 1, § 8, cl. 6.

13a

As the Illinois Court of Appeals eloquently acknowledged,

“What constitutes a ‘public purpose’ . . . has plagued the

American judiciary ever since it arrogated to itself the

[prerogative] of interpreting constitutions.”'® A narrow

interpretation requires actual use by the public.'’ A broad

interpretation includes any “use [that] concerns the whole

community or promotes the general interest-in its relation to

any legitimate object of government.””"®

When construing the Federal Constitution, the United States

Supreme Court broadly interprets the term “public use” and has

rejected the concept that the Constitution requires actual use of

the condemned property by the public.'’ Historically, this court

has also broadly interpreted “public use” to include public

utility, benefit, and advantage.” In fact, the majority of courts

that have considered this issue, under state constitutions with

language similar to Nevada’s, have adopted broad

interpretations of “public use.””!

"Lake Louise Imp. v. Multimedia Cablevision, 157 Ml. App. 3d

713, 109 Ill. Dec. 914, 510 N.E.2d 982, 984 (1987).

See Thornton Development Authority v. Upah, 640 F. Supp.

1071, 1077 (D. Colo.1986) (actual use like parks or streets).

'SSouthern California Edison Co. v. Rice, 685 F.2d 354, 356 (9th

Cir. 1982) (quoting City of Oakland v. Oakland Raiders, 32 Cal.3d 60, 183

Cal. Rptr. 673, 646 P.2d 835, 841 (1982) (quoting Bauer v. County of

Ventura, 45 Cal. 2d 276, 289 P.2d 1, 6 (1955))).

"Rindge Co. v. Los Angeles, 262 U.S. 700, 707, 43 S. Ct. 689, 67

L. Ed. 1186(1923); Fallbrook Irrigation District v. Bradley, 164 U.S. 112,

159-62, 17S. Ct. 56, 41 L. Ed. 369 (1896).

Dayton Mining Co. v. Seawell, 11 Nev. 394, 408 (1876); see also

Milchem Inc. v. District Court, 84 Nev. 541, 548, 445 P.2d 148, 152 (1968).

712A Julius L. Sackman, Nichols on Eminent Domain §§ 7.01[1],

7.02[3] (rev.3d ed.2003).

14a

Appellants contend that the district court used too narrow an

interpretation in finding that accomplishing redevelopment

through the construction of the parking garage was not a public

use subject to the exercise of eminent domain. The Pappases

claim that the garage is not a proper public use, even under the

broader definition of public use, because the garage will be

owned and operated by a private entity. The Pappases assert

that whenever eminent domain involves the transfer of land

from one private individual to another private individual, such

a transfer is not for a public purpose.

The United States Supreme Court has soundly rejected the

notion that transfer of land ownership from one private

individual to another automatically falls outside the power of

eminent domain. In Hawaii Housing Authority v. Midkiff,’ the

High Court considered this issue in the context of a Hawaii

statute designed to diversify land ownership in Hawaii. The

Hawaii Legislature enacted the Land Reform Act of 1967(Act)

to break up a land oligopoly that had been in existence for

hundreds of years.”* To accomplish this goal, the Act allowed

certain land to be condemned and then transferred from the

landowner to other individuals who had previously leased the

land from the landowner.** Under the Act, taking private

property from the oligopoly of landowners and distributing the

land to existing tenants was deemed to be a public purpose.”

The Midkiff Court held that “deference to the legislature’s

‘public use’ determination is required ‘until it is shown to

2467 U.S. 229, 104 S. Ct. 2321, 81 L. Ed. 2d 186 (1984).

31d. at 232-33, 104 S. Ct. 2321.

"Id. at 233, 104 S. Ct. 2321.

Id. at 233-34, 104 S. Ct. 2321.

15a

involve an impossibility.’’’° Continuing, the Court pointed out

that it would “not substitute its judgment for a legislature’s

judgment as to what constitutes a public use ‘unless the use be

palpably without reasonable foundation.’””’

The Court held that controlling the oligopoly was a reasonable

exercise of Hawaii’s police power.”* Although the Court

recognized that the Act might not correct the problem, it

concluded that “‘the [constitutional requirement] is satisfied if

. the . . . [state] Legislature rationally could have believed

that the [Act] would promote its objective.’””’ In this respect,

the Court observed that the courts are not the place for

“empirical debates over the wisdom of takings.”*° Accordingly,

“if a legislature . . . determines there are substantial reasons for

an exercise of the taking power, courts must defer to its

determination that the taking will serve a public use.’”!

We have also rejected the concept that public ownership of the

condemned property is essential to public use. In Urban

Renewal Agency v. lacometti,”” we indicated that “[p]oscesory

use by the public is not an indispensable prerequisite to the

**Id. at 240, 104 S. Ct. 2321 (quoting Old Dominion Land Co. v.

United States, 269 U.S. 55, 66, 46 S. Ct. 39, 70 L. Ed. 162 (1925)).

“Id. at 241,104 S. Ct. 2321 (quotins United States v. Gettysburg

Electric Ry., 160 U.S. 668, 680, 16 S. Ct. 427 4 Ed. 576 (1896)).

87d. at 242,104 S. Ct. 2321.

"1d. (quoting Western & Southern L.I. Co. v. Bd. of Equalization,

451 U.S. 648, 671-72, 101 S. Ct. 2070, 68 L. Ed. 2d 514 (1981) (alteration

in original)).

71d. at 243,104 S. Ct. 2321.

"1d. at 244, 104 S. Ct. 2321.

279 Nev. 113, 379 P.2d 466 (1963).

l6a

lawful exercise of the power of eminent domain.””’ We further

explained that “[t]he rights of the [property owners] will be

constitutionally satisfied when they receive just compensation

for their properties.”

The Nevada Legislature, by enacting the Community

Redevelopment Law, has declared that physical, social, and

“economic blight constitute ‘‘a serious and growing menace

which is condemned as injurious and inimical to the public

health, safety and welfare of the people.’ Further, the

Legislature has specifically found that blight decreases property

values” and increases crime, which necessarily causes a

disproportionate allocation of public services such as police,

fire and accident protection in blighted areas.*’ The Legislature

has declared that a community can exercise the power of

eminent domain “whenever the redevelopment of blighted

areas cannot be accomplished by private enterprise alone.”*

More importantly, NRS 279.424(3) specifically provides that

“the redevelopment of blighted areas and the provision for

appropriate continuing land use .. . constitute public uses and

purposes .. . and are governmental functions of state concern

in the interests of health, safety and welfare of the people.”

Thus, so long as a redevelopment plan, or any individual

redevelopment project, bears a rational relationship to the

eradication of physical, social or economic blight, it serves a

37d. at 126,379 P.2d at 472-73.

41d. at 127, 379 P.2d at 473.

*NRS 279.418(1).

*°NRS 279.420.

INRS 279.418(3). ~

3NRS 279.424(2).

17a

public purpose within the power of eminent domain. The focus

of the inquiry is whether the plan or project serves the public

purpose, not whether the condemned property is eventually

owned by a public or private entity.

In this case, there is a rational relationship that justifies the

exercise of the power of eminent domain. The determination

that the project would serve a public use is not “‘palpably

without reasonable foundation.”””’ To the contrary, the record

indicates the Agency’s purpose for entering into a

redevelopment agreement with Fremont Street Experience was

to construct a safe entertainment street mall to attract visitors

and businesses back to the downtown area. The garage was

planned to ensure that adequate off-street public parking would

be available for patrons of the downtown businesses. The

entire project was designed to encourage additional

revitalization projects spreading out from the central core of the

downtown area. Thus, the project’s central focus was to

combat economic, social, and physical blight, a public purpose

as defined by the Legislature.

It is this feature that distinguishes the anchor attraction and

garage from cases where courts have dismissed eminent

domain complaints because the taking was not for a public

use.*” In those cases, the courts found that eminent domain

Midkiff, 467 U.S. at 241, 104 S. Ct. 2321 (quoting Gettysburg

Electric Ry., 160 U.S. at 680, 16 S. Ct. 427).

Cf Armendariz v. Penman, 75 F.3d 1311, 1320-21 (9th Cir.

1996); 99 Cents Only Stores v. Lancaster Redevelopment, 237 F. Supp.2d

1123, 1128-31 (C.D. Cal. 2001); Wilmington Pkg. Auth. v. Land

W/Improvements, 521 A.2d 227 (Del. 1986); Southwestern Ill.

Development Auth. v. NCE, 304 Ill. App. 3d 542, 238 Ill. Dec. 99, 710

N.E.2d 896 (1999), aff'd, 199 Ill. 2d 225, 263 Ill. Dec. 241, 768 N.E.2d 1,

cert. denied, 537 U.S. 880, 123 S. Ct. 88, 154 L. Ed. 2d 135 (2002).

18a

proceedings were not instituted to accomplish a public purpose,

such as the elimination of blight. Rather, the courts indicated

that the sole purpose for acquiring the property through

condemnation proceedings was to benefit another private

entity.*' Although, in these cases, the property to be

condemned in each case was located in an area designated for

redevelopment, the individual projects did not further

redevelopment goals. Instead, the projects were simply

expansions of existing business concerns. The businesses

needed more parking or larger retail space and they wanted to

acquire their neighbors’ land to accomplish those purposes.

When the neighbors did not agree, the businesses sought to use

the redevelopment acts and eminent domain to acquire the

property.” The courts found a lack of substantial evidence to

support the government’s assertion that the project expansions

were designed to combat physical, economic or social blight.

There was no evidence that the areas in question suffered from

high crime, unemployment, vacant business or other

components of blight that would be addressed by the proposed

projects.*? In contrast, when a project is intended to attack

blight, such as creating a significant increase in jobs in an area

suffering from high unemployment, even the relocation of one

business through condemnation to make way for a new

"99 Cents Only Stores, 237 F. Supp. 2d at 1129-31 (eminent

domain cannot be used solely to permit expansion of large retail store at

expense of small retail business); Wilmington Parking Auth., 521 A.2d at

234-35 (eminent domain improper where sole purpose was to permit

newspaper to expand physical plant); Southwestern Ill. Development Auth.,

238 Ill. Dec. 99, 710 N.E.2d at 904 (no public purpose found where sole

reason for eminent domain was expansion of raceway parking facilities).

9 .

See cases cited supra note 41.

?See cases cited supra note 41.

19a

business is still considered a public purpose.”

The creation of a public pedestrian mall and entertainment

attraction is not the expansion of a business entity. The record

reflects that the garage was not built to service a single

business, but to address inadequate public parking in the

downtown area and the need for new parking as visitor volume

increased in response to the attraction. Although the attraction

benefits the casino consortium that was willing to finance the

project, its focus is to provide a safe, clean, and friendly

environment for visitors and businesses in general and an

anchor for revitalization of the entire downtown area. This

constitutes a public purpose under the United States and

Nevada Constitutions.

Blight

The district court found that substantial evidence did not

support the Agency’s finding that the area in which the

Pappases’ property was located was blighted; therefore, the

inclusion of this area in the redevelopment plan was improper

and the property was not subject to eminent domain

proceedings. Appellants contend that the district court lacked

authority to consider this issue because all challenges to a

redevelopment plan must be brought within ninety days of the

plan’s adoption.

“Blight” is a term used to describe physical, social or economic

“Poletown Neighborhood Council v. City of Detroit, 410 Mich.

616, 304 N.W.2d 455, 458-59 (1981) (taking of property to facilitate

construction of automobile plant permitted where area suffered from severe

economic conditions and new industrial development was necessary to

combat social and economic blight resulting from high unemployment).

20a

conditions that affect the health, safety or welfare of a

community.*° There is no question that blight takes on many

forms. Physical blight refers to a community’s infrastructure,

such as poorly designed streets, inadequate public facilities,

building code violations, and substandard housing.** Slums are

a common example of physical blight. Social blight

incorporates such aspects as high crime or unemployment

rates.*’ Economic blight involves downward trends in the

business community, relocation of existing business outside of

the community, business failures, and loss of sales or visitor

volumes.”*

For an area to be included in a redevelopment plan, there must

be a finding that the general area suffers from some form of

blight and that redevelopment is necessary to eliminate that

blight.” If an agency’s finding of blight is supported by

substantial evidence, it is not subject to judicial review.”

Substantial evidence is that which a “reasonable mind might

accept as adequate to support a conclusion.””!

Berman, 348 U.S. at 31,75 S. Ct. 98; Sweetwater Valley Civic

Ass'n v. National City, 18 Cal.3d 270, 133 Cal. Rptr. 859, 555 P.2d 1099,

1103 (1976).

*Beach-Courchesne v. City of Diamond Bar, 80 Cal. App.4th 388,

95 Cal. Rptr.2d 265, 270-71 (2000).

"Id. at 271.

"1d.

Sweetwater Valley Civic Ass'n, 133 Cal. Rptr. 859, 555 P.2d at

1103.

In re Bunker Hill Urban Renewal Project 1B, 61 Cal. 2d 21, 37

Cal. Rptr. 74, 389 P.2d 538 (1964).

*'State, Emp. Security v. Hilton Hotels, 102 Nev. 606, 608, 729

P.2d 497, 498 (1986) (internal quotation marks and citation omitted).

2la

In addition, judicial review of a redevelopment plan must be

conducted within the timelines required by statute. NRS

279.609 provides that any challenge to the validity of a

redevelopment plan must be raised within ninety days after the

“adoption of the ordinance adopting . . . the plan.” NRS

279.589(1) reinforces the finality of NRS 279.609, stating,

“The decision of the legislative body concerning a

redevelopment area is final and conclusive, and it is thereafter

conclusively presumed that the redevelopment area is a

blighted area and that all prior proceedings have been properly

and regularly taken.”

This language is taken from similar California redevelopment

statutes, and we may therefore look to California’s

interpretations for guidance.’ The California Supreme Court,

interpreting a statute that provides for a sixty-day period to

- contest a redevelopment plan, has stated that judicial review of

a finding of blight (and therefore public use) must be

commenced within the statutory period.*’ Once the sixty-day

period expires, no new action to challenge the findings may be

filed, and a conclusive presumption of blight applies.”

The Plan in this case was not challenged within the ninety-day

period provided by Nevada statutes; therefore, the district court

erred in considering whether substantial evidence supported the

determination that the downtown area suffered from physical,

social or economic blight. Moreover, even if such a challenge

had been timely made, the record reflects substantial evidence

in support of the Agency’s determination of blight.

Crockett, 117 Nev. at 824, 34 P.3d at 559.

Sweetwater Valley Civic Ass'n, 133 Cal. Rptr. 859, 555 P.2d at

1102-03.

47d. at 1103.

22a

Specifically, evidence was presented to the Agency indicating

that the downtown.area, including the area in the immediate

vicinity of the Pappases’ property, suffered from higher crime

rates than the rest of the City of Las Vegas. Vacant lots, burnt

out buildings, and vacant buildings were present on many of the

downtown blocks. Visitor volume had been consistently

decreasing. Businesses were relocating outside of the

downtown area. Most of the buildings in the area were over

thirty years old and renovations would require substantial

upgrades to comply with existing building codes. While the

surveys and investigation may not have been as intensive as in

some of the reported cases, they certainly provide substantial

evidence of blight. Thus, the district court erred in finding the

area was not blighted.

The Pappases further contend that even if the area in general

can be considered blighted, their particular property was not

blighted; therefore, it could not be subject to eminent domain.

The United States Supreme Court rejected this type of

argument in the seminal case of Berman v. Parker. In

Berman, the High Court stated, “Property may of course be

taken for this redevelopment which, standing by itself, is

innocuous and unoffending.”*° The Court further concluded,

“If owner after owner were permitted to resist these

redevelopment programs on the ground that his particular

property was not [blighted] . . . integrated plans for

redevelopment would suffer greatly.””’

Although the area in Berman involved slums and an urban

renewal statute, rather than a community redevelopment statute,

°348 U.S. 26, 75 S. Ct. 98, 99 L. Ed. 27 (1954).

Id at 35,75 S. Ct. 98.

ld.

23a

its rationale still applies. The specific building at issue in

Berman was not itself blighted.** The building was to be taken

from a private owner and managed by a private agency.’ The

Court concluded, however, that redevelopment encompasses an

entire area, not just individually blighted sections.” The Court

observed that the “piecemeal approach, the removal of

individual structures that were offensive, would be only a

palliative.”’' Through redevelopment “it was hoped that the

cycle of decay of the area could be controlled.’*” Consistent

with Berman, the fact that the Pappases’ property itself was not

blighted does not prohibit its taking through eminent domain

proceedings.

We note, however, that while a property owner may not

challenge a redevelopment plan’s finding of blight beyond the

ninety-day statutory deadlines, the issue of blight may still be

raised as it relates to the specific project involved in a

condemnation proceeding. A property owner may raise, as an

affirmative defense to the taking, that blight originally

identified in the plan or project no longer exists® or that the

particular project is the product of fraud or collusion between

the governmental agency and the private entities who will

81d. at 31,75 S. Ct. 98.

1d.

1d. at 34,75 S. Ct. 98.

6lig

7d. at 35,75 S. Ct. 98.

**See 99 Cents Only Stores, 237 F. Supp. 2dat 1130-31; Aposporos

v. Urban Redevelopment Com’n, 259 Conn. 563, 790 A.2d 1167, 1175-77

(2002).

ita a

24a

develop the project™ or the avowed public purpose is merely a

pretext” or used in bad faith.°

The record reflects no basis for any conclusion that economic,

social or physical blight was eradicated between the date the

Plan was adopted in 1988 and the date the Fremont Street

Experience project was approved in 1993. To the contrary,

tourism and visitor volume continued to decline in downtown

Las Vegas during those years. More businesses had left the area

or closed down. Crime rates, particularly drug- and

prostitution-related crimes, continued to be a problem.

Inadequate parking had increased. Thus, the Pappases failed to

establish that downtown Las Vegas no longer suffered from

physical, social, or economic blight at the time of the eminent

domain proceedings.

The same conclusion applies to any allegation of fraud,

collusion, bad faith or pretext. The record contains no evidence

that the Pappases’ property was being acquired for some

purpose other than a public parking facility and community

redevelopment of a blighted downtown area. Because the

record does not support the district court’s finding of bad faith,

we conclude the district court erred in basing its dismissal on

this theory and relying on bad faith or pretext cases.

“See 99 Cents Only Stores, 237 F. Supp. 2d at 1130-31;

Aposporos, 790 A.2d at 1175-77; see also Southwestern Ill. Development

Auth., 238 Ill. Dec. 99, 710 N.E.2d at 896.

Earth Management, Inc. v. Heard County, 248 Ga. 442, 283

S.E.2d 455, 459-61 (1981) (condemnation was pretext to stop construction

of hazardous waste disposal plant); Armendariz, 75 F.3d at 1320-21.

Pheasant Ridge Assoc. v. Burlington Town, 399 Mass. 771, 506

N.E.2d 1152 (1987) (eminent domain proceedings designed to block

construction of low and moderate income housing); Denver West Metro.

Dist. v. Geudner, 786 P.2d 434, 436 (Colo. Ct. App.1989}.

25a

Necessity

In an eminent domain proceeding, necessity is usually raised in

the context of challenging whether a project furthers a public

purpose and therefore constitutes a public use. It involves

whether the property to be taken is necessary to accomplish the

public purpose®’ and it encompasses the selection of the

location of the condemned land.** However, the standard for

challenging a taking for lack of necessity is even greater than

that for challenging its public purpose. Courts may not

question the wisdom of how to accomplish the public purpose

absent a showing of fraud or bad faith.” It is up to the

legislative body (in this case, the Agency) to determine how to

accomplish the public purpose. Thus, the courts may not

substitute their own judgment or dismiss an eminent domain

action simply because the legislative branch has other methods

at its disposal to accomplish the public purpose.”°

The district court found that the Agency acted in bad faith

because it could have entered into long-term ground leases with

all of the owners of property on the block needed to construct

the parking garage rather than acquire the property through

condemnation. However, the record contains no evidence to

support such a finding. The record reflects that the Agency

rejected this approach because it would severely affect the

financing for the garage. There is no evidence to suggest any

°’Denver West Metro. Dist., 786 P.2d at 436.

Thornton Development Authority, 640 F. Supp. at 1076.

Port of Umatilla v. Richmond, 212 Or. 596,321 P.2d 338, 350-51

(1958); Denver West Metro. Dist., 786 P.2d at 436; Thornton Development

Authority, 640 F. Supp. at 1076.

Port of Umatilla, 321 P.2d at 350-51; Denver West Metro. Dist.,

786 P.2d at 436; Thornton Development Authority, 640 F. Supp. at 1076.

26a

other reason for the decision. The Agency’s condemnation

decision does not constitute bad faith, and the district court

erred by substituting its judgment for that of the Agency as to

the appropriate method for acquiring the property.

Pappases’ counterclaims

The Pappases’ counterclaims involved several concepts. They

claimed that the Agency’s inclusion of their property in the

Fremont Street Experience project constituted inverse

condemnation, that the Agency violated their due process rights

during the initial motion for occupancy, and that their property

was taken without just compensation. The record indicates no

basis for these claims, and the district court correctly granted

summary judgment on them. Issues of inverse condemnation

and just compensation were subsumed within the original

condemnation complaint. The Agency correctly followed the

procedures for gaining immediate occupancy, and any alleged

confusion generated by the pleadings was addressed in the

Pappases’ motion for reconsideration. Since they were given

notice and an opportunity to be heard, due process was

satisfied. Thus, the district court did not err in dismissing these

counterclaims.

The Pappases also asserted a counterclaim seeking declaratory

relief or damages for the Agency’s alleged failure to permit

them to participate in the project through a long-term ground |

lease. They base this assertion upon NRS 279.566(1).’!

™NRS 279.566(1) states:

Every redevelopment plan must provide for the

participation and assistance in the redevelopment of

property in the redevelopment area by the owners of all

or part of that property if the owners agree to participate

27a

Pursuant to the statute, the Agency has enacted rules

establishing guidelines for owner participation. The rules

provide that the owners and tenants of real property in the

redevelopment area are eligible to participate in the

redevelopment of property within the area subject to certain

factors, such as changes in zoning or land use regulations, street

realignments, the ability of participants to finance acquisition,

development or rehabilitation of their project, reduction in total

number of individual parcels in the area, and construction of

public facilities.” The rules also provide that the owners have

a reasonable opportunity to retain their properties, acquire

adjacent properties, sell and relocate, rehabilitate or participate

in new development.” The Plan mirrors the rules by indicating

that participation opportunities are necessarily subject to and

limited by the same factors cited in the rules.”

The plain language of the statute, rules and Plan does not give

the Pappases an absolute right to participate in a particular

project. It does permit landowners to propose a development

project involving their property or to combine with other

landowners on a project. It also mandates that such proposals

be evaluated fairly. It does not, however, require the Agency

to approve any proposal. California courts, when interpreting

similar statutes and rules, have come to the same conclusion.

The California Supreme Court has determined that there is no

absolute right of owner participation in the redevelopment of

in conformity with the redevelopment plan adopted by the

legislative body for the area.

"City of Las Vegas Downtown Redevelopment Agency, Rules

Governing Participation § 300.

1d. § 400.

“Redevelopment Plan for the Downtown Las Vegas

Redevelopment Area § 410.2 (Jan. 22, 1986).

28a

any individual parcel in a redevelopment area.’” Whether to

allow owner participation in a given project, and under what

circumstances, are matters left to the discretion of the agency. ”°

In this case, from the time their property was included in the

redevelopment area until the approval of the Fremont Street

Experience consistency project, the Pappases did not seek to

participate in any redevelopment project utilizing their

property. Once the property was identified as necessary for the

parking garage, the Pappases did propose a long-term ground

lease as an alternative to acquiring their property. Although

initially inclined to consider this idea, the Agency rejected the

long-term lease proposal when it became apparent that

long-term leases would affect financing of the garage

construction. No evidence was presented in opposition to the

Agency’s motion for summary judgment, indicating that the

Agency’s decision to forgo ground leases for the garage was the

product of fraud or was not supported by substantial evidence.

To the contrary, the only evidence presented on the issue

demonstrated the need to have single ownership of the land to

obtain favorable financing. The district court correctly

concluded that no genuine issue of material fact existed as to

this claim because no evidence was presented to indicate the

Agency acted in bad faith when it rejected the ground-lease

proposal.

Finally, the Pappases asserted causes of action relating to

In Re Bunker Hill, 37 Cal. Rptr. 74, 389 P.2d at 563.

Sanguinetti v. City Council of City of Stockton, 231 Cal. App.2d

813, 42 Cal. Rptr. 268, 275 (1965); see also Fellom v. Redevelopment

Agency, 157 Cal. App.2d 243, 320 P.2d 884, 888-89 (1958) (property

owner has no right to participate where agency condemns property for

redevelopment project).

29a

alleged rent losses incurred by them prior to the condemnation

proceedings. The Pappases claimed that they lost rent from the

time the Agency announced that the Pappases’ property would

be part of the Fremont Street Experience and that City or

Agency employees interfered with the relationship between the

Pappases and their tenants. While much of the evidence

presented by the Pappases in opposition to the Agency’s motion

for summary judgment consisted of inadmissible hearsay (what

tenants allegedly told Carol Pappas), sufficient admissible

evidence was submitted on this claim to raise a genuine issue

regarding material questions of fact to survive a motion for

summary judgment. Thus, we conclude the district court erred

in dismissing these counterclaims.

CONCLUSION

Substantial evidence supports the Agency’s findings that the

construction of the Fremont Street Experience, including the

parking garage, furthers the public purpose of eliminating

blight in downtown Las Vegas. Therefore, the Agency’s use of

eminent domain proceedings to acquire the Pappases’ property

for that purpose does not violate the Nevada or Federal

Constitutions. The district court erred in dismissing the

eminent domain action. With the exception of the claims

involving pre-condemnation interference with tenants or rental

Opportunities, the district court did not err in dismissing the

Pappases’ counterclaims. Accordingly, we reverse the

judgment of the district court dismissing the complaint in

eminent domain and that portion of the district court’s

subsequent order pertaining to the lost rent claims and remand

the matter to the district court for further proceedings in

accordance with this opinion. The remaining portion of the

district court’s order dismissing the counterclaims is affirmed.

30a

We concur: AGOSTI, C.J., and SHEARING and ROSE; JJ.

LEAVITT, J., dissenting:

The Agency’s taking of the Pappases’ property by eminent

domain violates both the United States Constitution and the

Constitution of the State of Nevada.

The United States Constitution states that no private property

shall “be taken for public use, without just compensation.”

The Constitution of the State of Nevada similarly provides that

‘[p]rivate property shall not be taken for public use without just

compensation having been first made.”

The appropriation of a private citizen’s property by eminent

domain proceedings must be for a “public use” within the

meaning of those words in the Constitution. The government’s

taking of property and giving it to another for a private use is

unconstitutional and void.

The United States Supreme Court, in Berman v. Parker, upheld

_the transfer of property taken by eminent domain from one

private party to another private party; however, the taking in

that case involved a public use.’ The Court permitted the

transfer of privately owned property to other private parties

because the redevelopment area involved slums in Washington,

D.C., and the conditions in the area were injurious to the public

health, safety, morals and welfare.* This court, relying on

'U.S. Const. amend. V.

"Nev. Const. art. 1, § 8, cl. 6.

5348 U.S. 26, 32-36, 75S. Ct. 98, 99 L. Ed. 27 (1954) (transfer of

property permissible to eradicate “slums” or “blight”).

‘Yd. at 32-33, 75 S.Ct. 98.

3la

Berman, previously upheld a redevelopment plan that was

attempting to eradicate blight.°

Under Nevada law, a redevelopment area must include a

“blighted area, the redevelopment of which is necessary to

effectuate the public purposes.”® The Pappases’ property was

not a slum. The City’s survey gave no indication that the

property was blighted in any way. There certainly were no

conditions injurious to the public health, safety, morals and

welfare. The property was adjacent to a savings and loan

building and across the street from a bank. The redevelopment

Statute requires “[a]ll noncontiguous areas of a redevelopment

area [to be] blighted or necessary for effective redevelopment”

before adopting a redevelopment plan.’ The Agency failed to

demonstrate that the taking of the Pappases’ property was

necessary for effective redevelopment; it demonstrated only

that it was desirable.

The California Supreme Court has conciuded that “[a] finding

of blight requires (1) that the area suffer ‘either soci.’ or

economic liabilities, or both, requiring redevelopment i: ‘xe

interest of the health, safety, and general welfare’ and (2) the

existence of one of the characteristics of blight." In

Sweetwater Valley Civic Ass’n v. National City, a

redevelopment agency sought to take a golf course it

considered blighted so that a private party could construct a

*Urban Renewal Agcy. v. lacometti, 79 Nev. 113, 121-22,379 P.2d

466, 467 (1963).

°NRS 279.586(1)(a).

’NRS 279.586(1)(f).

‘Sweetwater Valley Civic Ass'n v. National City, 18 Cal. 3d 270,

133 Cal. Rptr. 859, 555 P.2d 1099, 1103 (1976) (quoting California statute

governing redevelopment of blighted areas).

32a

‘shopping center.’ The court concluded the agency lacked

evidence of social blight and that the golf course was

economically profitable; therefore, it was neither an economic

nor social liability.'°

Here, there was no evidence of blight in or around the

Pappases’ property; thus, the goal of eliminating blight, which

in some cases may be a legitimate public use, is not applicable

in this case. The Supreme Judicial Court of Massachusetts

considered limitations on the acquisition of private lands and

the definition of public use in a 1955 decision involving facts

similar to these.'' There, the Massachusetts Legislature

proposed an act that would authorize the use of public funds to

acquire private lands, to be followed by redevelopment of some

portions for public use and the sale of the remainder to the

highest bidder for private use.'* The court held that the

expectation that adjacent areas and the city as a whole would

benefit from the taking did not constitute a public use.'? The

court further noted,

[I]n dealing with this difficult subject one proposition is

thoroughly established practically everywhere, and so far as we

are aware without substantial dissent, and that is that public

money cannot be used for the primary purpose of acquiring a

either by eminent domain or by purchase private lands to be

turned over or sold to private persons for private use.'*

"Id. at 1100.

rd. at 1104.

''In re Opinion of the Justices, 332 Mass. 769, 126 N.E.2d 795

(1955).

271d. at 796-97.

37d. at 803.

47d. at 802.

33a

Federal courts have agreed, particularly when the claimed

public use is pretextual:

“If officials could take private property, even

with adequate compensation, simply by

deciding behind closed doors that some other

use of the property would be a ‘public use,’ and

if those officials could later justify their

decisions in court merely by positing ‘a

conceivable public purpose’ to which the taking

is rationally related, the ‘public use’ provision

of the Takings Clause would lose all power to

restrain government takings.”"®

The taking of the Pappases’ property by the City of Las Vegas

Downtown Redevelopment Agency under the pretextual guise

of a “public use” is unconstitutional and void, since the plan

was to give the property to the Fremont Street Experience, a

private limited liability company, which would receive all

revenues from the parking garage and retail space leases.

I would affirm the district court’s dismissal of the case.

MAUPIN, J., dissenting.

I would affirm the result reached by the district court based

upon my dissent in Las Vegas Downtown Redevelopment v.

Crockett.’

'°99 Cents Only Stores v. Lancaster Redevelopment, 237 F. Supp.

2d 1123, 1129 (C.D. Cal. 2001) (quoting Armendariz v. Penman, 75 F.3d

1311, 1321 (9th Cir.1996)).

'117 Nev. 816, 34 P.3d 553 (2001).

34a |

Amendment of the Plan

The Fremont Street Experience, the redevelopment project in

this matter, is subject to the same redevelopment plan and is

within the same redevelopment area with which we were

concerned in Crockett. Because I conclude that the signal

feature of the project, the vacation of the oldest and one of the

most traveled public boulevards in the city, effected a material

change to or deviation from the governing redevelopment plan,

I also conclude that the Agency improperly failed to seek

formal amendment of the Plan before taking properties via

eminent domain.

The Crockett majority held that the vacation of four streets and

the relocation of a public park did not constitute a material

deviation from or change to the redevelopment plan involved

in this case. A fair reading of the majority opinion in Crockett

supports the implied ruling by the majority in this case that

resort to the formal amendment process provided for under

NRS 279.608 was legally unnecessary. This notwithstanding,

I remain of the view that Crockett was wrongly decided on its

facts and should be revisited.

The redevelopment area in this case encompasses virtually the

entirety of old downtown Las Vegas, bounded on the west by

Martin Luther King Boulevard, on the east by Bruce Avenue,

on the north by Washington Avenue, and on the south by

Sahara Avenue. As noted by the majority in Crockett, the plan

was approved to “eliminate and prevent the spread of blight and

deterioration,” contemplating acquisition of real property by

purchase and by eminent domain, “transfer of acquired real

property to public or private entities,” and the “demolition of

buildings . . . construction of parks, development and

construction of hotel and ‘tourism/recreational’ facilities, and

gs RSA NN: SRY GN

35a

the widening, closure and vacation of streets and alleys” in the

redevelopment area.’ Although I agreed with the Crockett

majority that redevelopment plan amendments are only

necessitated when a proposed project entails a material

deviation from the redevelopment plan, and although I agreed

that formal amendment of a plan is not per se necessary to

commence any project, I concluded that the vacation of parks

and streets without formal plan amendment ran afoul of NRS

279.572 and NRS 279.608:

The ability to amend under NRS 279.608 is quite specific in

terms of the procedure to be followed. However, there are no

Stated criteria in this statute governing when the amendment

process is required, other than the statement in subsection (3)

that “substantial” changes must be submitted in a written

recommendation for consideration by a city or county

government to amend the plan. Thus, I believe NRS 279.608

and NRS 279.572 must be read together to determine

legislative intent. As noted, NRS 279.572 requires that

redevelopment plans show open spaces, layout of streets, size,

height, number and proposed use of buildings, number of

dwelling units, property to be devoted to public purposes, other

covenants, conditions, and restrictions, etc. While changes in

the use of individual dwelling units and building sizes may

involve mere details not requiring resort to the formal

amendment process, vacation of streets and relocations of

public parks depicted on the approved map are entirely

different matters. Certainly, vacation of streets and relocation

of parks are not “details”... 2

Thus, while the plan in Crockett and in this case empowers the

"Id. at 819, 34 P.3d at 555.

"Id. at 834, 34 P.3d at 565 (Maupin, C.J., dissenting).

36a

Agency to vacate public streets, as well as take other actions

without resort to formal amendment of the plan, I am of the

view that such powers are beyond those sanctioned in the

statutory framework governing redevelopment unless the plan

itself has been approved with the material changes sought. In

Crockett, | also commented upon the Agency’s need to promote

flexibility and quick response to changing conditions. In doing

so, I noted that the vacation of streets was not a measure that

interfered with the need for expeditious action in response to

changing economic conditions. I would also note that the

assemblage of multiple parcels, as was done in this case to

build the garage that now occupies the properties owned by the

Pappas family, was likewise not done as a quick response to

changing conditions. No one in this controversy has seriously

suggested that the economic blight the City and the Agency

sought to alleviate was anything other than a long-term

developmental problem.

My vote to affirm is not based upon agreement with the district

court’s myriad justifications for dismissing the eminent domain

action below, including its ruling that all redevelopment

projects implicate the formal amendment process under NRS

279.608. Rather, it is based upon my view that, while there is

- no absolute requirement that redevelopment plans be formally

amended to accommodate any redevelopment project, the

nature of the project in question here mandated that the Agency

submit to an amendment process prior to utilizing the power of

condemnation to consolidate and assemble the affected parcels.

In this, I note that the district court did not have the benefit of

the Crockett decision when it determined that formal

amendment of the Plan was a condition precedent to the

exercise of eminent domain in this instance. However, as

discussed below, because plans such as the 1986 Plan at issue

here must of necessity be drafted in general terms, the

37a

requirement to amend should be fairly broad.*

Blight issues and the amendment process

Appellants claim that any issue of blight was conclusively

resolved at the termination of the ninety-day protest period

under NRS 279.609 following the adoption of the Plan in 1986,

during which respondents took no action concerning the

findings of blight within the redevelopment area. Respondents

claim that evidence in support of the original determination of

blight in the redevelopment area was flawed and insufficient.

This, in fact, was one of the primary underpinnings of the

district court’s decision. To me, neither side has completely

analyzed the procedural framework within which blight issues

may be raised.

Appellants correctly argue that any questions regarding the

problem of potential or existing generalized blight in the

redevelopment area was conclusively established after

expiration of the protest period following adoption of the

original Plan. In my view, the district court relied too heavily

upon the documentation it ordered produced concerning blight

studies prior to the adoption of the Plan and the delineation of

the redevelopment area in 1986. As noted by the Agency, the

development of elaborate or comprehensive written

documentation of blight was even unnecessary to a valid

determination by the City that the redevelopment area as a

whole contained widespread physical, social and economic

blight. This was a decision that could be properly drawn from

individualized knowledge of members of the Council who were

‘Projects such as the Fremont Street Experience are extensive

enough to require material changes to a redevelopment plan beyond simple

vacation of streets, thus implicating the formal amendment process.

38a

in a position to judge the merits of the blight issue. Because no

one lodged objection to the blight findings within the

ninety-day period, any judicial tribunal must give deference to

those findings. This deference, however, does not end the

matter. Here, respondents could have reasonably concluded at

the time that such a protest was unnecessary because the Plan

did not establish that the Plan area suffered from blight in its

_ entirety and that they could protest at a later time whether a

particular project would meet the objectives of the Plan, i.e.,

the alleviation of blight in their particular neighborhood and its

environs. Going further, it is quite understandable that no

individual landowner lodged formal objections either

administratively or within the judicial system because of the

daunting and probably prohibitively expensive task of

challenging the validity of the entire Plan. Also, because ample

justification existed to support the establishment of the

downtown redevelopment area, and because the mayor, city

manager, members of the Council and at least one attorney

representing the City made public assurances that the utilization

of eminent domain to effect redevelopment projects would only

come as a last resort, landowners in the area cannot be

criticized or deprived of more discrete protest rights for not

taking action against the Plan during the initial ninety-day

period. Accordingly, while the respondents in this case have

given up the right to contest the general resolution adopting the

Plan and the blight findings inherent in it, they should still have

been able to lodge objections in the context of a formal plan

amendment concerning the Fremont Street Experience project

on the grounds that takings pursuant to the amendment would

not serve to alleviate blight in the neighborhood, i.e., were

inconsistent with the goals of the original Plan, or were not

effected for public use.- Whether they would have been

successful may be doubtful, but they were still entitled to that

forum. From there, these landowners could have sought

39a

administrative review in district court and litigated the issues

they are trying to litigate now, long after the demolition of their

property and the construction of the parking garage.’ For these

reasons, | feel Crockett too narrowly defines a redevelopment

agency’s duty to seek plan amendments to accommodate

specific projects.

General issues concerning redevelopment

The majority correctly concludes that a redevelopment plan or

project serves a public purpose when the plan or project bears

a rational relationship to the eradication of physical, social or

economic blight, and that ultimate ownership of taken

properties may be eventually assumed by other private interests

if in aid of the public use. The majority also correctly

concludes that non-blighted properties may be taken in support

of an integrated plan of redevelopment to alleviate blight in a

particular neighborhood or area.° The respondents agree with

these propositions’ but cling to the arguments that there was

*See Redevelopment Agency, Etc. v. Herrold, 86 Cal. App.3d 1024,

150 Cal. Rptr. 621, 625 (1978).

°See Berman v. Parker, 348 U.S. 26,32, 75 S.Ct. 98, 99 L. Ed. 27

(1954).

The majo rity apparently misconstrues respondents’ arguments in

its recitation that respondents claim that the takings were illegal because

their individual properties were not blighted and that eminent domain can

never be used where the taking involves transfer of land from one private

owner to another. My reading of respondents’ arguments is that the project

area, including their properties, was not blighted and that the taking here

was not an integrated plan to alleviate blight in the area directly affected by

the project; and that the transfers of property taken via eminent domain in

this case were not consistent with the furtherance of a public use through

redevelopment. Counsel for the respondents concedes that the utilization of

eminent domain to effect redevelopment where taken properties are

ultimately transferred to private entities is not per se violative of the Fifth

40a

insufficient showing of blight in the first instance, that the

_Fremont Street Experience was not “redevelopment,” and that

the transfer of the taken properties to the private entity here was

a private benefit, not a public use.

In light of the above, I agree with the proposition that

generalized blight issues and concerns in connection with the

redevelopment area were conclusively established in 1986, that

economic blight may be the subject of redevelopment effected

via the use of eminent domain, and that, in Nevada, private

entities comprised of hotel/casino properties may participate in

a redevelopment project and therefore take title to

redevelopment property acquired through the use of eminent

domain. Thus, I disagree with the district court’s findings

below that this type of redevelopment cannot embody a public

use or constitute redevelopment as a matter of law.

CONCLUSION

While the district court erred in its conclusion of law that

formal amendment is a condition precedent for any plan of

redevelopment, the profound nature of this Plan required that

this particular project go through the scrutiny of a formal

amendment process. In this way, the affected landowners

would have had a full opportunity to administratively air their

views and have those views considered by the Agency prior to

undertaking the project--views including whether the project

was consistent with the elimination of physical and economic

blight within the immediately affected area.

Amendment to the Federal Constitution.

4la

I would therefore affirm the result reached below.®

‘I note that the traditional measure of damages prohibits the

landowner from receiving damages based upon a post-taking evaluation or

appraisal. Although we have never reached this issue, because this unique

type of condemnation proceeding involves redevelopment and the transfer

of private property to another private enterprise entity, it would be

reasonable that the respondents be awarded damages based upon the

upgraded value of the property caused by the redevelopment. To that

degree, they would be receiving a fair benefit for their contribution to the

redevelopment area. I urge the parties to explore this possibility on remand.

42a

Appendix B

DISTRICT COURT

CLARK COUNTY, NEVADA

CITY OF LAS VEGAS DOWNTOWN

)

REDEVELOPMENT AGENCY, )

)

Plaintiff, )

)

and ) Case No. A327519

) Dept. No.: XIII

Fremont Street Experience Limited ) Docket No.: “G”

Liability Company, and ) -

Fremont Street Experience

Parking Corporation,

MOTION TO

DISMISS

Intervenors,

VS.

)

CAROL PAPPAS; JOHN H. PAPPAS,)

JR.; HARRY PAPPAS, DANNY )

CURTIS dba DANNY’S BAIL )

BONDS, AL BAIL BONDS, BOB )

ARCHIE BOND, BONDSMAN BAIL )

BOND; ADRIENNE LOBELLA dba __)

GOLD JEWELRY SOURCE; EDDIE )

RODRIGUEZ dba AAAACE )

JEWELERS; JOSE MEJIAS )

VELASIO; CINDY SCHUM; )

UNITED STATES OF AMERICA; _ )

CITY OF LAS VEGAS; amunicipal _)

corporation, and Clark County, and )

43a

any and all persons claiming any right,

title or interest in or to the subject

property;

Defendants.

CAROL PAPPAS; JOHN H. PAPPAS,

JR.; HARRY J. PAPPAS.

Defendants and Counterclaimants.

Vs.

CITY OF LAS VEGAS

DOWNTOWN REDEVELOPMENT

AGENCY,

Plaintiff and Counterdefendants.

ADRIENNE LOBELLA dba GOLD

JEWELRY SOURCE,

Defendants and Counterclaimants,

VS.

CITY OF LAS VEGAS

DOWNTOWN REDEVELOPMENT

AGENCY,

Plaintiffs and Counterdefendants.

)

44a

DECISION AND ORDER

FACTUAL HISTORY

Sometime in the 1940's, the Pappas Family, immigrants

from Greece, acquired two parcels of land comprising seven

thousand (7,000) square feet on the corner of Las Vegas

Boulevard and Carson Streets in Las Vegas, Nevada. The

Pappas Family rented out the land to small businesses thereby

obtaining the income to purchase the property and to pay their

property taxes to the City of Las Vegas.

In 1957, the Nevada Legislature, as well as the Federal

Government, became concerned about the decline of urban

areas. In order to rejuvenate these areas, the Government

embarked on a program of Urban Renewal. The Nevada

statutes regarding Urban Renewal are found at NRS 279.010

through 279.380. The urban renewal laws require that each

urban renewal plan and project be approved by the planning

commission and the local governing body after public hearings.

The plan or project must then be approved by the voters at

either a special or general election. [NRS 279.270]

In 1959, the Legislature added another weapon to its

arsenal against urban decay. The Legislature added the

Community Redevelopment Law at NRS 279.382 through

279.685. These redevelopment plans did not require a vote of

the public for passage but did set out a detailed procedure for

public hearings and amendments of the plan.

Neither of these Legislative initiatives had much impact

on either the City of Las Vegas nor the Pappas Family.

Whatever “urban renewal” was being done in Las Vegas was

minimal and was based on the City Charter and not on the

45a

Statutes. All of this changed in 1985 with the City’s

sponsorship of SB 474, and in particular, its introduction of

tax-increment bond funding for redevelopment.

At the Senate hearing on May 20, 1985, the City of Las

Vegas took the lead in testifying before the Senate Committee

on Governmental Affairs regarding these changes. The City

was SO aggressive in its support of SB 474, that Senator Robert

E. Robinson asked if the City had a designated area targeted for

this redevelopment project. Britt Ferguson, one of the two Las

Vegas lobbyists, responded “No.” Senator Robinson then

asked Ferguson who were the commissioners on the board of

urban renewal. Ferguson replied that there were none as the

program was in its preliminary stages and an agency had not yet

been established.

At the same hearing, Senator Thomas J. Hickey, the

Chairman of the Committee asked about the repealers in the

bill. Ferguson responded that most of the repealers dealt with

eliminating the current requirement for a tentative plan.

Chairman Hickey questioned why the City would eliminate the

submission of plans. Rose Thorton-McKinney, the other

lobbyist for the City of Las Vegas, responded that “‘it is not

eliminating the submission of a plan, but eliminating a part of

the process. Presently it is necessary to submit a preliminary,

tentative and final plan. The bill would exclude the tentative

plan.”

Both lobbyists also read from prepared texts that were

entered as Exhibits C and E. Exhibit E, Ferguson’s remarks,

reveal the City’s motivation in sponsoring this bill. Ferguson

reiterated Thorton-McKinney’s view and added the following:

“and the distinction between “project” areas and

“redevelopment” areas, which exist in the current law are

46a

eliminated. It’s not altogether clear under the current law what

the difference is between a “redevelopment” area and a

“project” area. It is, however, clear that the distinction serves

no useful purpose.”

In addition, Ferguson introduced an amendment to the

bill that was entered as Exhibit D. The amendment, is the

predecessor to NRS 279.609 which limits the time to challenge

the validity of the redevelopment plan or amendment thereto.

In addition to the previously mentioned changes, SB

474 also made the following adjustments in the law:

l. Allowed bonds to be issued for all economic

development purposes not only industrial uses.

a Set aside tax revenues for redevelopment agencies by

freezing the tax base that schools, police and fire

departments could draw on for funds and diverting that

money to pay for the redevelopment bonds.

2 Amended NRS 37.010 to allow eminent domain to be

used for redevelopment in compliance with NRS

279.382 to 279.680.

4. Amended the City Charter of Las Vegas to allow the

City to utilize the Act.

The Legislature passed SB 474 on June 12, 1985.

On November 6, 1985, the City had adopted its initial

resolution of necessity for the establishment of a redevelopment

agency. With the adoption of the resolution, the Las Vegas

Downtown Redevelepment Agency (hereinafter Agency) was

a ee

47a

created. The Agency is actually the City Council of Las Vegas;

there are no public members of the Agency. The Executive

Director of the Agency is the City Manager.

It was not until November 19, 1985, weeks after the

resolution of necessity, that the City had its employees conduct

block surveys of the targeted area to determine the overall

conditions in the target area. Moreover, none of the block

surveys completed by the City, and submitted to this Court,

indicate any findings of blight. Most of the block surveys have

very little written on them. Even blocks indicating no negative

comments, such as the downtown hotel-casinos, are included

in the redevelopment area. Interestingly, the block where the

Pappas property is located is not even included in the survey.

The area encompasses a wide stretch of downtown Las Vegas.

The wider the area, the more tax revenue to be engendered by

the Agency.

The resolution designating a portion of downtown Las

Vegas as an area for evaluation as a redevelopment area was

adopted on December 18, 1985, On January 9, 1986, three

weeks later, and without public comment or notice, the

Planning Commission adopted a resolution designating the

redevelopment area. On January 15, 1986, the City Council

adopted the Planning commission’s recommendation, again

without notice or comment, and designated that resolution as

the “preliminary plan.” On January 28, 1986, the Planning

Commission approved the Plan and submitted it to the Agency,

who adopted it on February 5, 1988.

On January 17, 1986, the Agency ordered the required

public notice to be published in the Las Vegas Sun for the

requisite four weeks. The official public hearing on the

adoption of the redevelopment plan was set for February 19,

48a

1986. In order to adopt its Plan, the Agency, was required to

send letters to each of the landowners in the designated

redevelopment area. The Pappas Family was one of the

landowners that received a letter from the Agency. The letter

dated January 27, 1986, and which was signed by City

Manager, Ashley Hall, advised Pappas of the public hearing

and the effect of the inclusion of their property in the

redevelopment area. Specifically, the letter informed Pappas of

the following:

“The Redevelopment Plan also empowers the

Redevelopment Agency with the power of

eminent domain. The power to acquire property

by purchase or condemnation to eliminate

blight, further the public good or permit

development in accordance with the

Redevelopment Plan cannot be done without

just compensation and under due process of

law.

Although the Redevelopment Agency has no

plans to acquire all of the property in the

Redevelopment Area, and has not at this point

identified any specific properties it would

consider acquiring, all property in the

Redevelopment Area is subject to the

possibility of acquisition or condemnation by

the Redevelopment Agency under the

circumstances set forth in the Redevelopment

Plan.”

The letter did not inform Pappas of any right to oppose the

inclusion of their property within the Redevelopment Area nor

what actions could be taken to oppose the Redevelopment Plan.

49a

Nor did the letter advise Pappas that anyone who denies the

existence of blight in the proposed redevelopment area or the

regularity of any of the proceedings, may appear before the

legislative body and show cause why the proposed plan should

not be adopted. The letter was accompanied by a Notice of

Public Hearing on the Redevelopment Plan for the Downtown

Las Vegas Redevelopment Area which set out the general goals

and objectives of the proposed Redevelopment Plan. The letter

was also accompanied by a single-spaced, fine print legal

description of the Downtown Redevelopment Area and a map

thereof.

It was standing room only at the City Council Chambers

on February 19, 1986. Several people were able to speak, but

others were not. At that hearing, the main concern of the

citizens appeared to be the use of eminent domain by the

Agency. The City officials repeatedly assured the citizenry that

eminent domain would rarely be used. Mayor Briare began the

meeting by assuring the citizens that the “City is required, of

course, to follow the State Law, and because of the significance

of this hearing this afternoon, we’re going to follow the State

Law to the letter. .....[sic] Nobody is going to throw anybody

out of their home, for example.” [Hearing Transcript (HT), p.

Special Counsel Brent Hawkins' stated:

“Property acquisition and eminent domain in

particular is used very sparingly and under very

closely watched procedures. The

'Brent Hawkins was with the same Sacramento, California firm of

McDonough, Holland=& Allen with whom Plaintiffs current special

counsel, Mark Wasser, is affiliated.

50a

Redevelopment Plan also contains provisions

for owner participation where tenants and

property owners in the project area can become

active participants in the redevelopment of the

area. Owner participation can take many

different forms. It can be as simple as the

Agency making a finding that a particular piece

of property is in conformance with the

Redevelopment Plan and waiving the power of

eminent domain for that particular parcel.

....Owner participation is one of the principal

means that we have for carrying forward

redevelopment in the project area and one of the

things that the Agency does in connection with

the adoption of the Redevelopment Plan is the

adoption of Owner Participation Rules.” [HT, p.

15-16]

On Page 20 of the Hearing Transcript, Councilman Levy says

that:

“Eminent domain will be used very, very

nominally if any at all. I think that there’s an

over fear on that situation, especially in the

neighborhoods. I don’t think there'll be — if

any, it will be the absolute last resort ...”

City Attorney George Ogilvie was~asked to provide an

explanation on condemnation by Mayor Briare. Mr. Ogilvie

explains the theory of “highest and best use” and then goes on

to say:

“If there is no meeting of the minds on what the

property is worth, the City stands steadfast on

S5la

the price that it has offered and the property

owner stands steadfast on the price that he is

asking and the City still desires to acquire the

property, then, and only then will the power of

eminent domain be applied.” [HT p. 21]

City Manager Hall reports that:

“First of all, we have not made a study as to

how many businesses we would be putting out.

At the present time until a development plan

comes by a developer, we will not know. At

the present time the City of Las Vegas is not

contemplating buying any property for its own

use or for its own development use. That would

be a private business that would do that.” [HT

p. 31]

On page 32 of the hearing transcript, Mayor Briare, Britt

Ferguson and City Manager Hall each state their opinion as

follows:

Mayor Briare: | :

“Hopefully, if a plan can be arrived at and as

propositions or others, private developers come

forward, we will see. There’s going to be

plenty of homes here. It’s not like we are going

to wipe out all of Downtown Las Vegas

including your area into a big empty lot and

then start building. No, sir, it’s a phase and I

don’t think your question can be answered as to

when or how that area develops unless we had

a specific application before us.”

52a

and again at page 43:

“we do have a plan, which has to come first,

and even though emotions might be boiling for

things that'll never happen in this world,

nevertheless, they are concerns to people and

that’s what we are here to listen to.”

Britt Ferguson:

“..we can issue what’s called a certificate of

conformance which essentially commits the

City never to use its power of eminent domain

as long as that property is continued in that use

and that use is in conformance with the plan.”

[HT p. 32]

and again at page 33:

“so I think that people may be getting upset

about something that really is never going to

happen.”

Ashley Hall:

“.. the City presently has no plans for buying

any of your private homes. Again, that would

be on a development by development basis and

the area covered generally would be in the

commercial areas and not in the residential

area.”

and again on page 42:

53a

“Yes, just to comment right quickly and that is

that under a redevelopment plan, a plan would

have to be proposed for your piece of property

that would basically determine the value of that

property. The City, again, would not go in and

condemn property without a plan in place to —

that would indicate what the potential value of

that piece of property would be.”

Over and over, City officials assure the public that eminent

domain will not be used. Director of Finance Marvin Leavitt

States that the City does not have the money to engage in

eminent domain. [HT p. 38] Councilman Levy tells the crowd:

“I'd just like to make one comment about

eminent domain. This Board has always had

the power of eminent and you’ve seen how we

use it in the past. Never-.” Mayor Briare

interrupts with “that’s true”, and Levy

concludes with “since I’ve been on this Board.”

[HT p. 57-58]

Mayor Briare closes the public hearing with these words:

“T wish that we had time to allay your fears or to

consider the possibility that we have threats in

‘mind. That word “threat” is used in a legal

connotation which I assure you that nobody on

this Council wants to threaten anybody; and

nobody’s going to be going out and tearing

anything down on a large scale basis. We don’t

want any senior citizens to be fearful because

the reason you want to clean up an area is to

prevent that sort of thing.”

54a

Reassured by the City leaders that they were safe from

the use of eminent domain and encouraged by the fact that as

landowners they would be allowed to participate in any

redevelopment, the citizens in the designated redevelopment

area did not challenge the City’s plan. Additionally, the

citizens were never told of their right to challenge the Plan.

Further evidence of this is found in the Hearing Transcript at

page 55 in the exchange between Mayor Briare and a Mrs.

Clark. Mrs. Clark seeks to learn if any of the comments at the

hearing will change anything in the text. Briare informs her

that the board will decide the question. Mrs. Clark persists and

asks what sections in the Plan protect an individual citizen.

Briare tells her that the protection is this public hearing. He

cuts her off without answering her question by stating that there

is “nothing in here that is designed to hurt them.” Mrs. Clark

and the assembled citizens are never informed of the right to

legally challenge the Plan. -

On March 5, 1986, Ordinance No. 3218 adopting the

Redevelopment Plan was approved by the City Council without

any further public hearing. The City and the Agency began

issuing bonds and engaging in redevelopment. Despite the

promises of the government leaders, the City immediately

began to use the power of eminent domain. One of the first

projects involved the taking of Gary Stafford’s property which

was occupied by a wedding chapel and bail bonds office in

favor of the expansion of a law office that was Stafford’s

neighbor. That project, at the corner of Las Vegas Boulevard

and Bonneville, is the building of Plaintiff's counsel, Beckley,

Singleton, Jamison and List. Ironically, the attorneys had

proposed building their parking garage at that corner, however,

the Agency’s staff persuaded the firm to place the garage

behind the office building.

55a

None of the aforementioned had any direct impact on

Pappas or their property. They continued to lease out their

property to various tenants and pay their taxes.

In 1992, the Downtown Progress Association

(hereinafter DPA) and Strategic Associates, a consulting firm,

began planning what is now commonly known as the Fremont

Street Experience. DPA and the Agency began to make plans

to acquire the property for the project. In September 1993, to

continue this project, the Fremont Street Experience Limited

Liability Company (hereinafter LLC) was formed. The LLC

has a nine member board of directors composed of Donald D.

Snyder as Chairman, President and CEO and representatives

from the following hotel and casinos: the Four Queens, the

Golden Gate, the Las Vegas Club, the Golden Nugget, Binion’s

Horseshoe, Fitzgerald’s, The Plaza/El Cortez and the Fremont.

In 1993, the LLC also formed the Fremont Street Experience

Parking Corporation as a wholly owned subsidiary with Mr.

Snyder as its only employee. Thereafter, the LLC and the

Agency entered into a development agreement. That agreement

called for the construction of a parking garage on the block that

is bordered on one side by Las Vegas Boulevard and on the

other three sides by Fremont Street, Carson Street and Fourth

Street. The block was a developed commercial property of

which the Pappases owned the southeast corner. As part of the

agreement, the Agency agreed to pay Six Million, Four

Hundred Thousand ($6,400,000) to acquire the property

through eminent domain upon which the parking garage was to

be constructed. Any costs in excess of $6,400,000 to attain the

property were to be borne by the LLC. The LLC also retained

a right to veto the amount that the Agency would pay as just

compensation for the property if that price exceeded ten percent

(10%) of the “appraised value” as prepared by the Agency. In

furtherance of its agreement with the LLC, the City presented

56a

the Pedestrian Mall Act (A.B. 411) to the Nevada Legislature.

The Act, which became effective on July 1, 1993, had only one

purpose: the creation of the Fremont Street Experience.

{[Minutes, Assembly Committee on Governmental Affairs,

6/2/93 at p. 5.]

This Agreement between the LLC and the Agency

would greatly impact Pappas as well as other landowners. On

April 26, 1993, with the LLC deal close to finalization, the

Agency, in an attempt to comply with NRS 279.566; the owner

participation statute, again sent a letter to Pappas. The letter

from Executive Director William Noonan informed Pappas as

a landowner in the project area of the intent to develop a

parking garage with retail space on the property. The letter

invited the landowner to submit an alternative proposal by May

28, 1993. Along with the letter was a project information

checklist that listed approximately thirty-five (35) items that the

Agency preferred to have included with any alternative plan.

On May 19, 1993, Pappas responded to the letter informing the

Agency of her desire to participate in the development of the

parking lot by entering into a long-term lease with the City.

The letter further informed the Agency that Pappas had no

desire to sell the land and that the letter was submitted as a

proposal in response to the Agency’s solicitation of alternative

proposals. There is no record of a response to the May 19,

1993 letter nor is there anything in the record to indicate that

the Pappas proposal regarding a land lease was ever considered

by the Agency.

Pappas received another letter on August 10, 1993, this

time from the Acting Executive Director, Larry Barton,

informing her that the Agency and the DPA had been working

diligently for months on the Fremont Street Experience, but

that in order to complete its project, they needed to purchase

57a

the Pappas property. The letter informed Pappas that the

Agency wished to acquire her property and that the Agency had

received authority to commence court proceedings to do so.

However the letter continued, the Agency would prefer simply

to purchase the property, for the assessed value of Three

Hundred and Forty Thousand Dollars ($340,000) as court

proceedings could be very expensive. The appraisal, which

was done by Timothy Morse, MAI, and Larry D. Snyder was

based on the value of the property as of August 19, 1992, eight

months prior to the date of the Barton letter to Pappas. The

appraisal recites that it was prepared at the behest of the

Agency for possible acquisition by the Agency in connection

with the Fremont Street Experience. The appraisal

contemplates the property’s inclusion into a block with other

parcels. Lastly, the letter informed Pappas that “the Agency is

convening a Special Redevelopment Agency meeting to discuss

those salient points on which the Fremont Street Experience

Corporation (major downtown hotel/casino owners) and the

Agency must agree before this project can commence.” The

meeting was scheduled for August 16, 1993 at 4:30 p.m. in the

City Council Chambers.

Pappas did not immediately respond to this letter. On

August 27, 1993, she received another letter from Barton that

informed her that the property would be acquired at the same

price as the previous letter except that her compensation would

be adjusted downward to cover any environmental cleanup that

might be uncovered. The letter again mentioned the use of

eminent domain and gave Pappas until September 10, 1993 to

respond to the offer. Pappas had moved and did not receive the

letter until after the September 10th deadline. On September

14, 1993, Pappas wrote to the Agency informing them of her

new address and of receipt of their letter. Richard Welch,

Director of Operations for the Agency, responded to the letter

58a

and gave Pappas until October 20, 1993 to respond to their

offer to purchase because as of that date the Agency would be

contractually required to purchase all of the property for the

LLC. Pappas did not agree to the purchase of her property.

On November 19, 1993, the Agency filed a Complaint

in Eminent Domain and a Motion For Order Permitting

Immediate Occupancy Pending Entry of Judgment against the

Defendants (hereinafter collectively referred to as Pappas). The

action was then assigned to Department IX of the Eighth

Judicial District. The Summons was not served on Pappas until

December 8, 1993. Mrs. Pappas, an elderly widow, was served

with the following documents:

‘. A summons which stated that she had 30 days from the

date of service to file an answer to the complaint

yA The Complaint

a Notice of Motion for Immediate Occupancy

4. Renotice of Motion Permitting Immediate Occupancy

5. Notice of Lis Pendens

6. Affidavit of Tim Morse

C2 Affidavit of Larry Barton

8. Plaintiff’s First Set of Interrogatories to Carol Pappas.

It should be noted that the service of interrogatories

with a summons is prohibited by Nevada Rules of Civil

Procedure 26 and 16.1

59a

9. Plaintiff's First Set of Interrogatories to Harry Pappas

10. _—_— Plaintiff's First Set of Interrogatories to John Pappas

11. Plaintiff's First Request for Production of Documents

tc Carol Pappas. This document is also forbidden to be

served simultaneously with the summons.

12. _— Plaintiff's First Request for Production of Documents

to Harry Pappas

13. Plaintiff's First Request for Production of Documents

to John Pappas

14. Ex parte Application for Order Shortening Time for

Hearing of Motion for Order Permitting Occupancy

Pending Entry of Judgment and Order Shortening Time.

15. Second Renotice of Motion For Order Permitting

Occupancy Pending Entry of Judgment

Unbeknownst to Pappas, although her answer wasn’t

due until January 8, 1994, the Motion for Immediate

Occupancy was to be heard on December 15, 1993. The

Motion for Immediate Occupancy itself had conflicting dates

of January 3, 1994, December 8, 1993 and the actual date of

December 15, 1993. This was due to the fact that the Agency

had previously sought an Order Shortening Time, but did not

promptly serve it on Pappas. The Agency contended in its Ex

Parte Motion for an Order Shortening Time and in its Motion

for Immediate Occupancy that it needed access to the Pappas

property because it needed to conduct environmental tests. At

first, Pappas did not want to allow the Agency access to her

property even for the environmental tests. But Pappas relented

60a

and on December 14, 1993, she allowed the Agency to conduct

the environmental tests. As a lay person, Pappas was under the

impression that since the environmental inspection had taken

place, there was no longer a need for the immediate occupancy.

Pappas was incorrect in her belief. The Agency wanted the

property immediately. The environmental survey was merely

ivs stated reason for early occupancy. What the Agency really

wanted was to start the building of the Fremont Street

Experience.

What the Pappas Family had owned for nearly fifty

years was stripped from them in less than 50 seconds in a

summary proceeding on December 15, 1993 at which they were

not even present. During that hearing, the Agency represented

to the Judge that there was no opposition to the motion for

immediate occupancy despite their knowledge that Pappas had

no desire to sell her land and that she opposed efforts to take

the property from her. The Agency failed to inform the Court

of its having conducted the environmental study the previous

day even though that was their stated purpose for the immediate

occupancy. Stanley Parry, Esq., the attorney for Pappas at that

time, on January 4, 1994, received notice of the entry of

judgment granting immediate occupancy. On January 11, 1994

he filed a Motion for Reconsideration of the Motion for

Immediate Occupancy. The filing was to no avail. On

February 16, 1994, the Court denied the Motion for

Reconsideration. The Pappas property was now in the hands of

the Agency.

The Pappas filed a counterclaim to the complaint in

eminent domain in which two of the causes of action revolve

around the lack of due process in the initial motion for initial

occupancy. The Agency moved for Summary Judgment on all

six causes of action. On March 8, 1995, the Court granted

6la

summary judgment as to both due process claims and denied

summary judgment on the last claim. On the claims involving

just compensation, the Court granted summary judgment to the

extent that the claims exceed just compensation. Trial was then

rescheduled for August 28, 1995 in Department IX. Pappas

appealed the summary judgment decision to the to the [sic]

Nevada Supreme Court and on January 25, 1996, the Supreme

Court dismissed the appeal for lack of jurisdiction as the NRCP

54(b) certification was improper.

Pappas then obtained new counsel who objected to the

trial judge because of his investment in one of the casinos in

the LLC. Following the recusal of Judge Huffaker, the case

was assigned to Department III. While the case was in '

Department III, Pappas, on December 11, 1995, filed a Motion

to Dismiss Plaintiff's Complaint in Eminent Domain. The

Agency exercised its right of peremption per SCR 48.1 and the

case was then reassigned to Department XIII.

Beginning on February 28th, 1996 and continuing on

June 5, 1996, the Court heard oral argument on the Pappas’

Motion to Dismiss the Complaint. On February 28, 1996, the

Court issued an order requiring additional briefing in order to

receive as complete a record as possible to decide this issue.

To that end, the Court, on April 8, 1996 granted the Motion to

Intervene brought by the LLC.

At oral argument on June 5, 1996, the Agency was

represented by Mark A. Wasser, Esq., Special Counsel to the

Agency, by Bradley Jerbic, Esq. and Robert S. Sylvain, Esq. of

the Las Vegas City Attorney’s office and by Rex Jemison, Esq.

and Daniel Polsenberg, Esq. of Beckley, Singleton, Jemison

and List. The Pappas defendants were represented by Grant

Gerber Esq. and Glade Hall, Esq. Adrienne LoBello was

62a

represented by Bradley Ballard, Esq. The Court, having heard

the arguments of counsel and having read the Points and

Authorities and Supplemental Documents attached thereto,

hereby enters its Decision and Order.

DISCUSSION AND HOLDING

Introduction

Pappas, in the Motion to Dismiss, alleges that the taking

of their property by the Agency was done in violation of the

United States Constitution, the Nevada Constitution and the

Nevada Revised Statutes. Pappas alleges that the failure of the

Agency to properly invoke the power of eminent domain

deprives the Court of jurisdiction in this matter. Specifically,

Pappas states that the failure of the Agency to follow the

procedures outlined in NRS 279.382 through 279.685, both in

the adoption of its redevelopment plan and as to the project that

resulted in the taking of their property renders the Agency’s

actions null and void. Pappas further alleges that the Agency

did not negotiate with the Landowners in good faith and that

the Agency violated the Landowners’ procedural due process

rights.

The Agency takes the position that it should answer to

no one as to whether it has complied with the statutes and its

plan. The Agency argues that the role of the judiciary is limited

to reviewing the Plan in terms of whether it was adopted in an

arbitrary or capricious manner or in bad faith given the

circumstances known to the City at the time. Plaintiff argues

that the taking of the Defendants’ property is prima facie valid

and especially so because they were granted immediate

occupancy and have already built the parking lot that is the

redevelopment project. Plaintiff contends that since both the

63a

United States and Nevada Supreme Courts have held that a

taking of private property for redevelopment is a public use,

then defendants have no valid constitutional argument.

Plaintiffs also point out that the Nevada Revised Statutes also

state that redevelopment is a public use.

In its original Opposition to the Motion, the Agency

asserts that a Landowner may not exercise the right to judicial

review except during the ninety days following the acceptance

of the Plan. The Agency bases their position on the existence

ofa ninety day statute of limitations to challenge the plan (NRS

279.609) and on the conclusive presumption of validity found

in NRS 279.589. The Agency does concede that no statute of

limitations is available to bar the review of the 1993 taking of

the Pappas property. The Agency further argues that there is no

need for the Redevelopment Plan to be amended each time they

adopt a project under the Plan. Lastly, the Agency contends

that Pappas is estopped from bringing the Motion to Dismiss

because Pappas waited until the parking lot was complete

before bringing the Motion.

LLC, the Intervenor on the side of the Plaintiff, is more

vociferous in its opposition to judicial review. In oral

argument, the LLC espoused the view that the only proper

function for the judiciary in this m

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