UO's arena game plan may call for use of condemnation: Eugene OR Register-Guard, 9/6/07

By Greg Bolt

The University of Oregon [UO] is seeking state permission to use eminent domain if it is unable to reach voluntary agreements to buy three remaining privately owned properties on the site it intends to use for a new basketball arena.

The university hopes to begin arena construction next year and needs assurance that the properties will be part of the site, said UO general counsel Melinda Grier. She said the university still hopes to reach a voluntary sale with two of the property owners but said the third parcel is encumbered by numerous liens that could block a voluntary deal.

The state Board of Higher Education will consider the request at its meeting Friday in Bend. The board will be asked to approve the use of eminent domain, also called condemnation, for all three parcels if necessary.

Under eminent domain, the state would file a lawsuit claiming the properties on behalf of the UO. A court would determine how much the owners should be paid. The procedure allows governments to buy private property for public purposes.

Fourth property in hand
The properties include a vacant business property and the site of a 7-Eleven store, both near the corner of Villard Street and Franklin Boulevard, and a dental office around the corner on Villard Street. The university recently purchased a fourth property, a former gas station between the vacant building and the 7-Eleven store, for $570,000 from Eugene investor Peter Kryl.

The properties all are adjacent to the former Williams' Bakery site, which the UO purchased in 2005 for $25 million. The entire half block is expected to be developed as a new basketball arena to replace 80-year-old McArthur Court.

Although the UO hasn't formally announced a plan for a new arena, the recent donation to the athletic department of $100 million by UO supporter and Nike co-founder Phil Knight all but guaranteed the long-stalled project will move forward. The university is scheduled to present a complete arena financing plan to the state board at its October meeting in Portland.

Voluntary sales sought
The university will have to move quickly if it wants to have construction documents ready and bids received and awarded in time for next year's construction season. That's added urgency to the property negotiations and is accelerating a project that until Knight's donation was stuck in neutral.

"There's no doubt we have to acquire those pieces of property," said Allan Price, the UO's vice president for advancement.

Grier said she's hopeful a sale can be negotiated relatively soon with the two properties that have clear titles - the 7-Eleven and the dental office. "We'll still work really hard to do it voluntarily, but we just have to know that we can acquire the properties," she said.

The university is asking the board to approve a "resolution of necessity," the first step in eminent domain. The resolution sets out the need for the properties but does not set any deadline for reaching a voluntary sale agreement or state how soon an eminent domain action would begin.

No deal on vacant parcel
Complicating the arena property sale are a number of outstanding liens against the vacant business property, owned by Eugene resident Adesina Adeniji. The property most recently housed a Domino's Pizza outlet but has been vacant for months.

Adeniji said in June that he and the UO had exchanged offers but were unable to reach agreement. He said he has been unable to find a tenant for the property because of doubts over its future as part of the arena site.

When the UO got permission to buy the bakery, the state sold $27.5 million in bonds to finance the deal. After paying for the bakery and the Kryl property, the UO has almost $2 million remaining to purchase the three remaining properties.

One hurdle the university still has to confront is whether the project will be affected by Ballot Measure 39. The measure, approved last November, bars the state from condemning private property if it intends to transfer it to a private developer.

The ballot measure question
Although the land for the arena most likely would be owned by the UO, the arena itself might not. The university is considering a plan through which the UO Foundation would form a private, nonprofit corporation to build the arena.

It's still up in the air whether the corporation, National Championship Properties, would continue to own and manage the arena after it's built or turn it over to the UO. Either way, the university will be negotiating unexplored territory.

Grier said it's hard to know how the measure could affect the arena, in part because the law is so new and in part because the university hasn't decided how to handle construction. But she promised that the university will not violate the measure.

"I can assure you that we will do nothing to violate Ballot Measure 39," she said. "As we develop how we approach (the project), that is one of the pieces that is in that whole calculation."

Eugene OR Register-Guard: http://rgweb.registerguard.com