News-Sentinel staff photos Lonzo Stephens stands on some of his property on University Avenue in Mechanicsville. Knoxville's Community Development Corp. wants to acquire the property and says it will use eminent domain if an agreement can't be reached. Alfred Nance is upset the city has condemned his University Avenue property under HOPE VI to use for its Stephens Square project.

Property owners upset at acquisition process

By Ed Marcum, News-Sentinel staff writer
September 23, 2002

The HOPE VI project is moving forward, but it seems to be leaving some raw feelings in its wake.

A number of property owners say they are not happy with the way Knoxville's Community Development Corp., charged with overseeing the project, has acquired properties through eminent domain rather than work through owners to develop the sites.

"You don't start a project by taking somebody's property and giving it to somebody else," said Alfred Nance, who owns property at 1504 University Ave.

Nance had planned to open a youth center on the site. He had even gotten a building permit, but KCDC, which is handling redevelopment efforts for the city under HOPE VI, has condemned the property to use it for its Stephens Square project.

Another property owner, Lonzo Stephens, says KCDC is trying to condemn his property on University Avenue and replace it with a project that will house businesses that had been leasing from him.

Stephens said he will lose not only his property, but also the income he has been making from renters.

Stephens Square is named not for Lonzo Stephens but for Harold Stephens, owner of Harold J's Barber Shop. Other partners in Stephens Square include Gary Gamble, owner of Gams Barber Shop, and Michael Scrugg, owner of M&M Cafe. Gamble and Scrugg were Lonzo Stephens' renters. The three business owners are partnering with KCDC to develop Stephens Square.

The project came about at least partly as a way to address neighborhood concerns that HOPE VI, as KCDC President and CEO Alvin Nance - no relation to Alfred Nance - said in a letter to U.S. Rep. John J. Duncan Jr., was displacing black-owned businesses.

Duncan had requested a response from Alvin Nance after Alfred Nance approached Duncan on the issue.

Alvin Nance said people in Mechanicsville were upset when they learned in 2000 that KCDC was buying a building for HOPE VI that housed several black-owned businesses, and these businesses would have to relocate. Gamble, Scrugg and Harold Stephens were affected, and they began petitioning KCDC for help.

Alvin Nance met with the business owners and worked out a plan to do a development that would include the merchants and allow them to remain in Mechanicsville. It was decided to build a project at the corner of College Street and University Avenue that would house the three businesses and have space for more. About $570,000 in Empowerment Zone funds would be used, with the merchants each paying back $100,000 into the Empowerment Zone fund.

All parties hailed this as a win-win situation that would keep three locally owned businesses in the neighborhood.

However, Stephens Square would be built on the properties owned by Lonzo Stephens and Alfred Nance, and their attorney, Robert Haws, said KCDC has been playing hardball with his clients in order to get it.

The agency notified Stephens and Nance their properties were in an area designated for redevelopment as part of HOPE VI, and that, while it would like to acquire the properties at fair-market value, it would try to acquire them through eminent domain if an agreement wasn't reached.

Haws said his clients signed agreed orders with KCDC relinquishing their rights to the properties after KCDC indicated it would negotiate a price for them after this was done. However, KCDC has not budged from the amounts it has offered based on appraisals it had commissioned, he said.

"They've made no effort toward anything with my people except a slapjack upside the head," he said.

Also, KCDC sent Lonzo Stephens a notice warning him not to collect rent from any tenants as he had relinquished rights to his property.

Haws represents Stephens on properties at 1525 and 1518 University Ave. and 115 Douglas St. and represents Nance on his property at 1504 University Ave.

Appraisals commissioned by KCDC set the value of Stephens' University Avenue properties at $47,000, the property at 115 Douglas at $35,000 and Nance's property at 1504 University at $18,000.

Appraisals done by the owners valued the University Avenue properties at $63,500 and 115 Douglas at $46,000. Nance has not had an appraisal done on his property.

At a condemnation hearing in Knox County Circuit Court on Aug. 30, Haws' clients asked for a 30-day postponement to get Nance's property appraised and get new appraisals on Stephens' property. The court would only allow 15 days, which Haws said was very little time to do the appraisals.

Alfred Nance said he was going to apply for Empowerment Zone funds to do his project, but KCDC took all such funds available to the neighborhood for its Stephens Square proposal.

"Small-business owners are not given the opportunity to develop their own projects under HOPE VI," he said.

In his written response to Duncan, Alvin Nance said the building owned by Alfred Nance has been vacant for more than 10 years, and its owner has been aware of efforts to revitalize Mechanicsville since 1997. Alfred Nance has had plenty of time to do his project, Alvin Nance said. He also said the community center is not needed because Wesley House and the Boys & Girls Clubs of Greater Knoxville already have facilities to fill that need in Mechanicsville.

Dan Tiller, KCDC chief development officer, said the properties owned by Nance and Stephens have been blighted for some time. Alfred Nance's building has a tree growing inside it, he said. KCDC made attempts to negotiate prices on the properties, but agreements could not be reached, so condemnation proceedings began, Tiller said.

Told that Alfred Nance had a building permit and a design drawn for his center, Tiller said officials still are not convinced Nance intends to follow through.

"We've been hearing that for the better part of three years," Tiller said.

Asked why KCDC could not have worked with the original property owners, Alvin Nance said that is because KCDC would have to buy the properties in order to use Empowerment Zone funds on them.

"Empowerment Zone funds are public money," Alvin Nance said. "We cannot spend them on privately held property. That's why those properties are being acquired."

To do Stephens Square with Empowerment Zone funds, KCDC has to buy the property, build the project, and then sell it to the new owners, Nance said.

This is not fair to the original property owner and stifles the ability of people to develop their own property, said Alfred Nance, who is chair of the HOPE VI advisory committee. He said the committee has tried to deal with KCDC on this issue but without success. He also said there are other dissatisfied property owners.

Emanuel Bailey is one. He owns property at 1513 and 1515 University Ave., across the street from the proposed Stephens Square. Bailey said KCDC is trying to acquire it for a residential project, but the property is commercial, and KCDC won't offer to pay him what it is worth.

KCDC is pursuing condemnation to get the property, and Bailey is challenging that in court. Alvin Nance said he wouldn't comment on the matter because it is in litigation. A hearing is set in Circuit Court for Thursday, Sept. 26.

In its court filings, KCDC is seeking to acquire the property for $19,500 and asks the court to order Bailey to pay $863 to the city in back taxes. Bailey is pursuing a counter suit, challenging KCDC's right to condemn the property and saying it is worth as much as $150,000.

His properties had three businesses in them before the conflict with KCDC, and now they are gone, Bailey said. A computer company moved out, and a laundry and a private club dissolved, he said.

Bailey said merchants who had formed the Mechanicsville Development Corp. had hopes of working with KCDC on redevelopment.

"We had a development corporation going and were trying to represent our interests. We wanted to do some joint planning with KCDC, but we didn't get anywhere," he said.

Alvin Nance denies that KCDC has been heavy-handed in dealing with the property owners.

"In any redevelopment area, we have the authority to use eminent domain. We do not go in with the understanding that it will be done by condemnation, though. We notify them and attempt to negotiate with them," he said.

The neighborhood ultimately will benefit through projects such as Stephens Square, Alvin Nance said.

"There were three African-American businesses that were there when KCDC arrived. When we are finished, they will still be there, plus there will be additional retail space, so I think we have left the community in a better position," he said.

He estimates Stephens Square will create up to 12 new jobs.

"Part of our HOPE VI plan is to generate commercial growth, and we are taking property that has been under-utilized and developing it," Alvin Nance said.

Ed Marcum may be reached at 865-342-6267 or at marcum@knews.com.

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