Is UTA bullying small-business neighbor?
Condemnation • UTA borrows state powers seeking to seize property for new garage.
Published: June 23, 2014 03:47PM
Updated: June 23, 2014 03:58PM
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Francisco Kjolseth | The Salt Lake Tribune Kerry Hamblin, owner of Hamblin Custom Furniture Frames, works in his shop next to UTA headquarters. At left is his son Ryan. The Utah Transit Authority technically does not have the power of eminent domain to condemn property. But it had UDOT using its eminent domain on UTA's behalf to condemn the furniture company to make way for a new garage by UTA headquarters. The company says it would cost $2 million to relocate, and UTA is offering only $260,000 and suing.

State law specifically says the Utah Transit Authority “may not acquire property by eminent domain.” That makes Kerry Hamblin laugh sarcastically and shake his head.

That’s because another part of state law allows other governments to condemn and acquire land on UTA’s behalf “for the establishment or operation of a public transit district.”

So the Utah Department of Transportation (UDOT) is suing, as a favor to UTA, to condemn and take the Hamblin Custom Furniture Frames factory.

Founded in 1973, the business occupies a steel building behind UTA headquarters in downtown Salt Lake City where Hamblin and three employees build sofa frames. It is where UTA wants to build a new $60 million central garage and a fueling station for new buses powered by compressed natural gas.

UTA officials have told the transit board that they hope to begin building the new central garage this year.

Hamblin figures — based on written estimates from contractors and real-estate agents — it would cost him $2 million to replace the building and move. But UTA, and its partner UDOT, have offered about $260,000. That’s a tenfold difference to be resolved by courts.

Hamblin says UTA has harassed him for years to sell for pennies on the dollar, retreated from early friendly promises, and has never negotiated much nor honestly.

“It’s been one hellish experience,” he says. “This is our whole life. If we lose this business, we lose everything. And their price would put us out of business.”

But UTA spokesman Remi Barron says UTA has followed the law carefully. “UTA has negotiated in good faith with the Hamblins and has met with them on many occasions.”

Quirks • What is certain is that the case reveals some quirks in state law about UTA and the use of eminent domain.

“In my experience, it’s unique,” emeritus BYU law professor David Thomas, an expert on property law, says about state law banning UTA from directly using eminent domain but allowing others to exercise it on the transit agency’s behalf.

He adds that because it is in the Utah Code, it is legal — even if unusual.

In meetings with city and county officials, UTA General Manager Michael Allegra often points out the anomaly. He tells them it is one reason UTA must design service that local leaders desire, because his agency depends on “borrowing” their eminent domain powers to obtain land for such things as railways.

This time, UTA persuaded UDOT to help it obtain land — to go with other property it owns nearby — for a garage. Hamblin says he doesn’t oppose selling for a fair price, but wonders if condemning his factory is necessary or a mere convenience for UTA.

UDOT spokesman John Gleason said UTA made its case that taking Hamblin’s business “was necessary to update and expand its operations” with the new garage. “Our involvement is to make sure it follows the legal process with proper notice” and purchases the property eventually for required fair-market value.

The Utah attorney general’s office is handling the lawsuit.

A written statement from UTA says, “The situation is an appropriate one for the use of eminent domain. The project will serve the general public, and is being funded with taxpayer dollars. UTA must use those funds wisely, and does so by paying fair-market value, even if the property owner thinks that value is too low.”

Fair? • Hamblin indeed says UTA is offering too little, and has been acting like a bully for years, starting in 2009 when the first agency official walked into his business. “He said, ‘I’m here from UTA and I’m telling you that if you are standing here in 30 days from now, you’re going to be standing in the middle of a parking lot.’ ”

He adds, “In one way or another, we’ve been told every year by UTA’s representatives, ‘Your building will be gone by the end of the year.’ That’s been going on since 2009.”

Hamblin said in 2012 as UTA was doing an environmental study for its new facility, he had a long conversation with a UTA official who told him the agency would cover all costs of putting him in a comparable building. “It gave me a warm fuzzy feeling,” until the man later claimed he could not remember having such a conversation.

Hamblin said a UTA appraisal determined the building and land is worth $260,000, figuring that much of his machinery could be moved. He says that’s wrong, that much of the equipment is built-in and specific to that site — such as sawdust removers and ventilation.

Real-estate agents have found possible replacement buildings that cost $1 million, Hamblin said, adding that contractors figure work needed to set up his business in those spaces would cost $830,000, with $138,000 more needed to upgrade electrical systems. Sprinklers and other necessities would put the total in the neighborhood of $2 million.

“UTA won’t acknowledge any of that,” Hamblin says, adding the agency chose to sue rather than negotiate.

UTA’s written statement says it never told Hamblin he must leave within 30 days. It says its appraisal is fair, and has been reviewed by a second independent appraiser.

“Through a separate process UTA will make money available for the relocation and reestablishment of Hamblin’s business. Together, the just compensation paid for the property and relocation costs should allow them to operate their business in a new location,” the UTA statement says.

But Hamblin said UTA told him relocation reimbursement would be capped at $50,000.

Bully? • Hamblin says the UTA lawsuit has prevented him from using his property to secure business loans and hindered him from subleasing part of his factory to another furniture maker, because he doesn’t know how long he may be there. The dispute is also running up legal costs. Hamblin complains of harassment — from UTA trying to get him to quickly sign away an easement he has on some UTA property to having agency employees create a smoking area near his business.

UTA called once to say it was building a fence along their property. He said he didn’t oppose it as long as it had a gate “big enough to make sure I could get a semi in and out and I get a key to it. I never have.”

Hamblin says, “I feel like a wounded dog out there limping around in the field, and every morning I show up here and they [UTA] fire another BB, and say, ‘That’s No. 1001, let’s see if he’s still going in the morning.’ ” But Hamblin says he’s not about to give up the fight.

“I’m in it with everything I’ve got.”

UTA maintains it has been fair, aboveboard and has offered the current fair-market value.

A 3rd District judge will decide who’s right.