The $40 million question

The $40 million question

A dispute over the proper valuation of 10 acres of property in Eisenhower Valley has two of the citys oldest families and the Sanitation Authority pitted against each other, with the sellers asking for $40 million and the city holding out for $10 million less.

The Hoof-Fagelson Tract, formerly a go-kart track that now serves as a maintenance parking lot for Thrifty Rent-A-Car, is landlocked on one side by Carlyle development, and on the other side by I-495.

While the tract sits next to Alexandrias Waste Treatment facility, it also adjoins a proposed $150 million office and retail development at Carlyle. Freedmans Cemetery and a Dominion power station box it in on the other two sides. The property is the only site feasible for expansion of the wastewater facility, court documents stated.

The tracts two equal-share owners, commercial real estate proprietor Charles Hooff and practicing attorney Bernard Fagelson who at 95 still reports to work every day say they just want the fair market value for their land, which has been in their families names for five decades. 

The citys Sanitation Department wants the land near the Woodrow Wilson Bridge to expand its wastewater plant, and has asserted its right to eminent domain. The city has filed motions in Alexandria Circuit Court to secure the land for the potential construction of pump stations, an odor-control facility and other operations for its wastewater treatment plant on Eisenhower Avenue.

In 2003, the Virginia Department of Transportation bought two of the acres for $3.7 million, a price Hoof characterized as obscenely low. A year later, the four family-owners decided to sell the other 10 acres and agreed to sell the tract for $30 million to the city. But the deal got hung up on a step-up clause made in the event that closing was delayed. The city walked from the deal.

At this point we were in the mode to sell, Hooff recalled Wednesday. We then interviewed a lot of big-time brokers from DC, New York and Chicago, who came in their fancy suits and leather briefcases. There was a lot of interest.

And a few big offers, too.

By this point, the Planning Commission had passed its East Eisenhower Development Plan which allowed the development of up to 170,000 square feet of homes and 500,000 square feet of office space. In 2006 the market was hot, Hooff recalled. We could have landed a high-profile client who could have had their signature on buildings seen by 300,000 cars stuck in traffic.

The city made its own offer of $30 million. It was the same offer as before, but just a new cover sheet, he said. But DC-based Penzance Property Partners offered $12.5 million more, the offer which Hooff accepted and was supposed to close by the end of the year. 

Then came December and the sons of bitches handed me a letter saying they had the power of eminent domain and that theyll take the property, Hooff thundered. Its just an absolute abuse of government power.

Penzance then walked away from its offer, so scared by the experience that they didnt want anything more to do with Alexandria, said Hooff, shaking his head.

A stalemate then set in, with Alexandria sanitation officials offering $20.4 million for the land, while Hooff holding out in the $40 million range.

While municipal departments like the sanitation authority have the power of eminent domain to seize property for public use, cases like Hoof-Fagelson are reviewed in court, where a judge determines the propertys fair market value that must be paid to its owner. Legal experts say that municipalities usually win out such cases.

While the city hasnt made public specific plans to expand the plant, a Nov. 8 hearing has been scheduled with the Alexandria Planning Commission to propose a comprehensive plan amendment on the site, to allow the wastewater plants future expansion. 

In court documents sanitation officials have claimed they will eventually need the property to comply with new regulations on wastewater treatment, and there is no other place to go. The authority needs to upgrade the treatment plant by 2011 because of new EPA regulations of what can be disgorged into the nations waterways. Water treated at the plant eventually ends up in the eco-sensitive Chesapeake Bay.

In the meantime, sanitation officials are pressing ahead with their eminent domain case in court and preparing an expansion plan for the planning commission, which would ultimately need the blessing of City Council.  

The lawyer representing the Alexandria Sanitation Authority, Jonathan Rak of McGuireWoods LLP, told The Washington Business Journal that negotiations with Hooff have been ongoing since 2004, and and have included a long series of offers and counteroffers.

As with any dispute, we always hope for a negotiated settlement, Rak told the Journal. At the end of the day, we are required to pay the fair market value of the property as determined by the court. The fact that we have expressed an interest in it doesnt change its value.

Hoof said he has a mountain of legal bills stemming from the citys flip-flopping its plans and valuations of the site. Maybe they should have bought this 25 years ago. Its a failure to plan, he said. Ive spent $400,000 defending this thing and we havent even gotten to the expensive part … Defending it in court.

An accountant by training, Hooff is a lifelong Alexandrian whose family has deep roots in the city. His office at 1701 Duke Street was built in 1810 and was the historic site from which renowned author Harriet Beecher Stowe based her stories on the Edmondson sisters.

While he lived most of his life in Old Town, Hooff now lives in Lorton at Arch Hall, a 1700s-era Historic estate where he raises chickens and sheep, and fends off coyotes. Its just amazing we live 12 miles from the nations capital and there are predators who eat your livestock, he chuckled.