Friday, July 19, 2024

State buys future Hampstead Bypass land for $17.5m, bill could shield Wilmington from litigation

The formerly Jamestown-owned property lies directly west of Topsail High School. Shadows of the school’s football field bleachers are seen at lower left. (Port City Daily photo/Mark Darrough)

UPDATE (10:18 a.m., Monday, April 5): NCDOT communications officer Lauren Haviland said the NCDOT “has not determined what it will do with the land once the bypass is complete.”

Ryal Tayloe, a lawyer representing Jamestown on the case, said last week the NCDOT planned to deed the remaining land to the N.C. Wildlife Resources Commission, once the Hampstead Bypass is completed. According to Tayloe, the land would be added to the Holly Shelter Game Land bordering the property to the northeast.

HAMPSTEAD — A decade’s conflict between the state and national developer Jamestown LP over land that will be used for the Hampstead Bypass has finally reached a “win-win” conclusion for both parties, according to an attorney representing the firm in the matter.

Ryal Tayloe of Ward and Smith said the N. C. Department of Transportation has purchased Jamestown’s 660-acre property just west of Topsail High School for $17.5 million. Tayloe has represented other landowners in the Wilmington area whose properties were taken by NCDOT for various highway projects, including the Wilmington Bypass. The state plans to use the property as a sand mine for construction of the bypass, as well as a staging area for an asphalt plant, trucks, and other elements needed for its completion.

RELATED: After public pressure, sand mine in Hampstead tabled indefinitely

Once the bypass is completed, the state plans to deed the remaining land to the N.C. Wildlife Resources Commission, so it can be added to the massive Holly Shelter Game Land bordering the property to the northeast, according to Tayloe.

Jamestown still owns an 8-acre piece of land surrounding the Hampstead Library and plans to develop or sell the land, according to North Carolina Lawyers Weekly. 

The settlement was reached last October, six months before State Senator Michael Lee sponsored a bill to protect local actors ensnared in the state’s taking of various properties for highway projects. On Tuesday, Lee filed a proposed bill that would compel NCDOT to “defend, indemnify, and hold harmless” locally based entities, including the City of Wilmington, on matters related to the now-defunct Map Act.

A long legal saga comes to an end

Jamestown purchased the Hampstead property, then totaling 684 acres, in 2006 for $24 million. The firm planned to build out a mixed-use commercial and residential development. But in 2011, acting on behalf of the state, the Wilmington Urban Area Metropolitan Planning Organization (WMPO) — a collective of local government representatives mandated to identify the region’s long-term transportation needs — filed a Transportation Corridor Official Map marking the path of the future bypass. The bypass was designed to alleviate traffic congestion along U.S. 17 north of Wilmington to Hampstead and Surf City. 

The corridor was seized as part of the state’s rights established under the Map Act, a state law that allowed the transportation department to restrict development in order to reserve corridors of land for future highways without compensating landowners. The map showed the bypass cutting through 40 acres of Jamestown’s property before merging with U.S. 17 immediately north of Topsail High School. 

In 2014, Jamestown filed a lawsuit against NCDOT and WMPO, claiming the government had taken the property without just compensation, and that such an act was an unconstitutional taking of its land and an invalid exercise of legislative power. It also argued the Map Act itself was unconstitutional. The state vigorously defended taking the land over the next six-and-a-half years, arguing it was protected from litigation by the Map Act’s sovereign immunity clause. 

After losing a series of similar suits, NCDOT eventually admitted the bypass would impact Jamestown’s property and certain areas intended for commercial development, telling the court the development firm would be “justly compensated for any taking of property rights.” 

The WMPO made its own arguments against Jamestown, citing civil procedural errors; the failure to exhaust administrative remedies provided by the Map Act, it claimed, were “not fully pursued” or “abandoned” by Jamestown, barring any claims for relief. 

In the spring of 2015, the Pender County Superior Court ruled that WMPO had, in fact, acted as an agent of NCDOT by filing the corridor map, and the map constituted a taking of the property by the state through its power of eminent domain. But it also ruled the taking of the land was done unjustly, supporting Jamestown’s claim of inverse condemnation – a term used to describe when a government takes private property but fails to pay the compensation required by the 5th Amendment of the Constitution.

The state’s Supreme Court ruled the Map Act unconstitutional in the summer of 2016, and the following January, Pender County Superior Court ordered NCDOT to make good faith deposits with interest and appraise the land taken. The state later admitted to delays in appraising the land and was subjected to court-ordered sanctions to cover nearly $30,000 of Jamestown’s legal fees. 

In 2018, Jamestown submitted plans for a mixed-use development called “The Preserve,” which would include 150,000 square feet of retail space, 70,000 square feet of office space, and 891 residential single-family units – if built, one of the largest mixed-use developments in the region. But such a development seemed unlikely.

A judgement on the eminent domain case depended on a ruling by the N.C. Supreme Court on a similar case in Cumberland County. In May 2020, the state’s highest court sided with the landowner in a landmark decision that determined the state must pay fair-market value unrestricted by the methods used by real estate appraisers. The decision cleared the way for Jamestown to receive just compensation for its land.

After a November jury trial was delayed due to the Covid-19 pandemic, the parties reached a settlement in October, in which Jamestown agreed to deed all but 8 acres to NCDOT for $27.5 million. The state has paid more than a half-billion dollars in such settlements around the state. By July 2019, it had paid $290 million, according to the News and Observer; by May of the following year, it had paid $600 million. 

The massive legal settlements caused NCDOT to dip beneath its legally mandated cash floor last year, spurring furloughs and years-long delays of much-needed projects. 

A ‘win-win’ settlement

Neighbors of the Castle Bay subdivision join other Hampstead residents to protest the proposed Jamestown sand mine. (Port City Daily photo/Courtesy Chris Oh)
Neighbors of the Castle Bay subdivision join other Hampstead residents to protest the proposed Jamestown sand mine. (Port City Daily photo/Courtesy Chris Oh)

Although Jamestown’s spokesperson could not comment on the case, Tayloe said his client was satisfied with the settlement.

“They were willing to sell the property because the property wasn’t going to be able to be developed in any way, shape or form. … [Jamestown and NCDOT] see it as a win-win at the end,” Tayloe said, noting the state can now add to its wildlife holdings if it donates the remaining land to Holly Shelter, as promised.

Multiple experts determined the property would be difficult to develop due to the presence of wetlands, home to the protected red-cockaded woodpecker. When Jamestown attempted to rezone the property to build a sand mine instead of a mixed-use development, opposition from nearby residents and parents of Topsail School students forced the company to table the project indefinitely. 

Pender County planners also recommended the company table a possible shopping mall along U.S. 17, where a large interchange would merge the future bypass and the coastal highway. Tayloe said the original 2011 corridor map did not show such an interchange, one that “completely consumes their property” along U.S. 17.

The corridor map had frozen 40 acres of the property for two parallel roads, 200 feet apart from each other. Tayloe said a trial would only involve those 40 acres, not the roughly 40 additional acres needed for the interchange. 

“[The state] was looking at a separate lawsuit to condemn the rest of property if we went through with it,” Tayloe said. 

Last fall, NCDOT “got serious about settling” because the bypass project had recently received a higher priority status; after several delays, it was scheduled to begin construction in 2022, according to Tayloe. He said his client was relieved to pass on the burden of acquiring permits for the sand mine, which would be used largely for the construction of the bypass. 

In a motion filed last October, Tayloe’s law firm argued the state should pay for the total legal fees, exceeding $1.7 million, incurred by Jamestwon throughout the litigation process. The motion argued that such compensation was necessary due to the complex nature of the litigation, the value of the land (which the county now lists at at total value of $1.4 million), and the skill of “defending against NCDOT’s delays and distraction in this case and related litigation.” 

In the summer of 2018, Jamestown’s attorneys argued NCDOT’s request for documents and information was unreasonable and would “cause oppression and an undue burden” while not leading to the discovery of any admissible evidence. They cited three separate document requests totaling more than 6,700 pages, 10 subpoenas, and seven depositions.

“NCDOT’s abusive discovery tactics are nothing new,” a motion for a protective order argued in November 2019. “The Court should not allow NCDOT to engage in an ongoing fishing expedition of material outside the scope of the ruminating matters at issue in this lawsuit.”

Another attorney involved in the case, Matthew Bryant, has spearheaded hundreds of other eminent domain cases throughout the state. Tayloe called him the “godfather of Map Act cases” in North Carolina, while Bryant said Tayloe “deserves an enormous amount of credit for putting an end to this.”

Tayloe also pointed to the large amount of local support for the long-delayed bypass project.

“Everybody wants this bypass to get built, so hopefully that’ll be the case,” Tayloe said.

A spokesperson for NCDOT could not provide comment, saying the department’s legal counsel is out of the office for the remainder of the week.

Protecting WMPO from future litigation 

Lee’s proposed bill is designed to tie up loose ends that remained after the Map Act was rescinded in 2016. The law sparked outrage and lawsuits from citizens who found their properties embroiled in transportation plans, leaving them severely devalued and impossible to develop. 

The bill seeks to reinstate immunity for Wilmington and the WMPO when it comes to Map Act-related lawsuits. 

In 2011, while the Map Act was still in effect, local officials created a transportation corridor map for the Hampstead Bypass project, encompassing land in both New Hanover and Pender counties. Jonathan Barfield, a member of the New Hanover County Board of Commissioners and WMPO, confirmed WMPO created the map on behalf of the NCDOT.

During that time, WMPO and its member governments did have immunity against legal action — due to legislation crafted by Lee during a previous term. When the Map Act disintegrated, protections for local entities also fell by the wayside, exposing local actors to lawsuits. 

“There were several lawsuits filed, and some folks were concerned about where the ultimate route would be, and didn’t want it to infringe upon their rights to their property,” Barfield said, referencing disputes over the Hampstead Bypass plans. “Time has gone by, right-of-ways have definitely increased in cost, and at the same time, the MPO is still having to pay legal fees, when it should have been the Department of Transportation at the state level doing that,” he said.

Lee’s bill specifically prevents legal action against WMPO and City of Wilmington when it comes to claims related to the Hampstead Bypass, as well as plans for projects on Military Cutoff Road and Martin Luther King Parkway/Kerr Avenue. 

Local officials acted on behalf of NCDOT when creating plans for the Hampstead Bypass 10 years ago, Barfield said, and as such, expected to be protected from legal vulnerabilities. 

“When the state is coming to ask the local jurisdiction to do something on their behalf, to me, the ownership should be on the state to also defend those who have been asked to do something on their behalf,” he said. “That’s something that they were not doing.”

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