A matter of access: families battle with city-parish over value of seized land and access to Siegen, interstate - Land Battle - real estate industry

George Metrailer stands on his family's land at the intersection of Interstate 10 and Siegen Lane and doesn't like what he sees. Directly across the traffic-congested street is the bustling Siegen Marketplace, a sprawling retail center filled with big box tenants, restaurants and a movie theater. The corner lots across I-10 are also developed--a hotel sits on one side of Siegen and on the other side three fast food restaurants and a gas station front discount retailers.

What bothers him is that while the surrounding area flourishes, the Metrailer property, held under the name Terrace Land Co. Inc., remains little more than a tree-filled 20-acre lot. It's the only undeveloped parcel in South Baton Rouge at a major inter section of I-10. Why? The abridged answer: 1) the land is zoned residential-not a good designation when I-10 is your neighbor--and 2) there's no direct road access to Siegen.

It's not that way by the family's choice.

"We've tried repeatedly to take the steps necessary to develop the property, but the city has denied us every step of the way," says Metrailer, one of several siblings, along with their mother, Martha Metrailer, who control the family's vast real estate holdings across East Baton Rouge Parish.

Arguing the property is best suited for retail, hotel or office development, the family has on more than one occasion requested a zoning change. The Planning and Zoning Commission has denied every application despite a 1986 staff memo admitting the land is "not suitable" for residential development.

That 17-year battle may soon give way to a legal skirmish, beginning to brew now that East Baton Rouge Parish, laying the ground work for a $36 million road project, has expropriated a swath of land that runs through the heart of the property.

The acquisition likely will render the property "forever useless," says Marguerite K. Kingsmill, a New Orleans attorney hired by the family.

Ripple effect

The Metrailers are not the only landowners impacted by the project, which was designed to more easily funnel Mall of Louisiana traffic to I-10 and between Siegen and Bluebonnet Boulevard.

Three other property owners along I-10 between the mall and Siegen also have had land expropriated, as have at least six others with property on the west side of I-10.

At issue is whether appraisers hired by the city fairly valued the expropriated property. Moreover, several of those landowners are frustrated that so far they have been denied access to the planned frontage roads. That's led at least two property owners, who requested anonymity, to question the taxpayer-funded project. Said one, "Does it make any sense that the public is paying for this and the only group that benefits is the privately owned mall?"

Attempts to reach Department of Public Works Director Fred Raiford or a member of his staff for comment were unsuccessful late last week.

Designed to relieve congestion between Bluebonnet and Siegen, the two-phase project will 1) extend Picardy Avenue, tying it in with the mall's existing loop road, and 2) tie that extension into a pair of new one-way frontage roads running parallel to I-10.

The frontage roads, connected by a bridge across the interstate, will not only merge traffic onto the interstate but also carry vehicles between Siegen and Bluebonnet.

The city-parish and the state are splitting the tab for the planned two-year project, with each side putting up $18 million. Raiford, in an earlier interview, said $12 million of the city-parish's share would come from a voter-approved half-cent sales tax for road improvements and $6 million from federal urban traffic funding.

According to court records, the Metrailers are the only landowners to legally challenge the project. They filed suit earlier this year arguing the project didn't meet the "public and necessary" clause required for expropriation. Kingsmill argued the project wasn't designed to reduce traffic but to facilitate easier mall access. To prove that point, she asked why the mall was the only private entity granted access to the new roads.

In legal filings, Kingsmill wrote that her clients have "repeatedly asked whether other neighboring landowners, such as Terrace Land, will also have access to the proposed service road. Without fail, Terrace Land has been given a resounding 'no.'"

The court ultimately denied the claim, saying the project was approved by voters and thus met the legal definition for a public project, despite evidence the project was strikingly similar to one once proposed by the Mall of Louisiana as part of its master build out.

"This is a long-time Baton Rouge family that helped develop the area in the first place," said Kingsmill, referring to Charles Metrailer, who in 1959 sold land at a discounted price to St. George's Catholic Church off Siegen and then built an adjoining subdivision, Audubon Terrace, to spark growth.

"Now they're being denied the opportunity to do something with this property because of the interests of those outside of Louisiana. That is what's so frustrating."

Fair value

The family has notified the court it intends to challenge the city's $458,700 valuation of the property, an offer George Metrailer calls "insulting." A family-hired appraiser valued the land at $1.6 million, he said.

While Metrailer says the family is open to negotiations, the issue has come down to this: How much should the city-parish pay to effectively take property out of service?

Expected to be at odds is determining what's known as "the highest and best use of the property." For example, the Metrailers are likely to argue the best use of their property is commercial, which would give it a much higher price tag than if it were zoned residential.

"The best use of that land is commercial, and I challenge anyone to prove otherwise," said Kingsmill. "What we're asking for at this point is to be reasonably compensated for the appropriated land and given access to the service road so that the family can develop the remaining property. Without access the city has rendered the property useless."

Three other landowners, with property between the mall mad the Metrailer tract, also have questioned the city's valuations. Representatives for each said they were still studying their options. Under state law, impacted property owners have until one year after the completion of a project to file suit.

Property owned by Mary E. Kleinpeter and the estate of Robert L. Kleinpeter, which has since been incorporated as one tract to facilitate a proposed traditional neighborhood development, is zoned residential, but the city's Horizon Plan suggests retail is the best use for the property being expropriated. Appraisers for the city valued Mary Kleinpeter's expropriated property at $100,669 and the Kleinpeter estate's land at $48,484 (see map opposite page).

Kean Miller attorney Brett N. Brinson, who represents both Kleinpeter families, declined comment, and Richard Carmouche, a developer and the family's designated spokesman, said only that "all options are being explored and there's hope the matter can be resolved through negotiation."

Two issues the Kleinpeters are likely to raise are access to the new frontage road and better right-of-way access to Bluebonnet.

Price and having the right to tie into the road project will also be at the heart of arguments filed by representatives of a parcel located next to Bluebonnet Parc owned by Jimmy Swaggart Organizations-Family Worship Center Church. Swaggart has been paid $321,230 through expropriation but that money has been reserved for Feliciana Bank and Trust, which holds a $1 million collateral mortgage on the property.

"We certainly are disputing the expressed value of the land," said attorney Barry W. Miller, who represents Swaggart's organization. "There are a series of issues we'd like to address that could be part of our damages."

Bill Aaron, a city-parish attorney, says he's not surprised the landowners dispute the valuations. "I would suspect others will have issues as well," he said. "There are a lot of issues that go into determining highest and best use on the property. What's been done on the land? Is it in a flood plain? It can get very complicated."

While the legal wrangling plays itself out in court, the project will continue to move forward. Several weeks ago Raiford said bidding on construction would begin in September and that work could start by the end of the year.

Meanwhile, the Metrailer family is still uncertain whether they'll ever be able to commercially develop their property.

JR BALL covers banking, personal finance, real estate and the business of sports. Reach him at jrball@businessreport.com.