Chapel Hill News

Can eminent domain save the Colonial Inn?

The historic Colonial Inn on King Street in Hillsborough shows signs of water and weather neglect some years after it closed as a popular local restaurant and inn.
The historic Colonial Inn on King Street in Hillsborough shows signs of water and weather neglect some years after it closed as a popular local restaurant and inn.

The words “eminent domain” can provoke a strong response from property rights defenders and home and business owners in the way of proposed highways and other public projects.

But the potential fate of Hillsborough’s historic Colonial Inn could have some asking the town to muscle its authority and seize the building from its owner Francis Henry. The town’s Historic District Commission soundly rejected Henry’s request – to tear down the 175-year-old inn – on Aug. 6.

Henry has 30 days to appeal that decision to the town’s Board of Adjustment. His victory could leave the town with a grassy lot at 153 W. King St.

After years of battling Henry over the building’s fate, the town has few choices. The town can let the inn continue to deteriorate, while hoping for a successful buyer who will renovate; it can repair the inn and try to get Henry to pay for the work; or it can seize the building through eminent domain.

Since Henry has rebuffed private bids for the Colonial Inn and barely responded to the town’s efforts to work with him, the latter may be the only way to ensure the building’s future. Town officials aren’t talking about their options until the appeal deadline expires.

Here’s a look at eminent domain and how it works:

What is eminent domain?

Sometimes called “condemnation,” eminent domain is when people are forced to sell private property to local or state government for a public use, usually public works projects, such as roads and dams.

In North Carolina, the Legislature decides how local governments can use eminent domain to seize private property. The legislature also can grant special permission to local governments, like it did for a Charlotte business park plan in 2000.

In Orange County, eminent domain has surfaced several times in the past, including when the Cane Creek Reservoir was built, when the county was considering a new landfill site and when UNC was looking for a place to move its airport.

How does eminent domain work?

State and national constitutions require governments to offer “just compensation” for seized property. An appraiser determines the value, or the price the land could fetch if sold in the current market. Property owners can’t stop land seizure for public use, but they can ask a court for more money.

The government does not, however, have to pay for related losses, such as attorneys, additional appraisals or profits lost during the proceedings.

A jury trial is possible but not a right, said Charles Szypszak, a professor and eminent domain law expert at UNC’s School of Government. Both sides can seek a jury trial, but their attitudes usually start changing when the legal bills show up,

“People generally settle, and both sides walk away equally unhappy,” he said.

Can the law save the Colonial Inn?

Government still has an obligation to prove there’s a public use or benefit before seizing property. Preservation North Carolina executive director Myrick Howard said the Colonial Inn’s place in Hillsborough and state history could be used to support that argument.

The state office’s designation of the inn as a building of statewide significance in 2003 adds more weight. Normally, local Historic District Commissions can only delay a demolition for 365 days, but the proposed demolition of a building with “statewide signifiance” can be denied.

The Colonial Inn earned a statewide significance designation in 2003.

The inn isn’t the state’s first case involving a historic building. In April, the city of Greensboro won the right to buy the 120-year-old Cascade Saloon.

Burlington owner Ross Strange didn’t respond to repeated requests that he sell or fix the dilapidated South Elm Street building, so the city’s attorneys filed for eminent domain last year. Strange offered the building to the city for $850,000, and he got a counter offer of $2,500.

But Strange didn’t respond to the eminent domain lawsuit, and Greensboro won by default. Preservation Greensboro is working with private investors to plan the building’s renovation for retail or offices.

In 1995, UNC also won an eminent domain case involving a historic home on South Columbia Street.

Sallie Markham Michie bought the house in 1919 and watched the university grow around it until she died in 1992. In her will, she left the house to the Daughters of the American Revolution and Magna Carta Dames with the stipulation that it should not be sold or leased.

UNC filed a successful eminent domain lawsuit, seizing the house and replacing it with a “temporary” parking lot. The mass communications building planned for the site never materialized.

Can eminent domain be used for commercial or private ventures?

North Carolina is the only state whose constitution doesn't directly mention eminent domain. What it does say is that no person can be “in any manner deprived of his life, liberty, or property, but by the law of the land.”

In 2005, however, the U.S. Supreme Court backed a city’s decision in Kelo vs. City of New London to use eminent domain to take private land for commercial use. The move would have benefit the drug company Pfizer, which cleared the land but left the city before the commercial and residential development was built.

The court’s decision prompted states to enact new laws limiting when eminent domain can be used for commercial purposes. Last year, the North Carolina House passed Bill 8, which would have limited how eminent domain could be used to take private property for public use. The proposed law also would have ensured “just compensation” for private land and the right to a jury trial in all cases. The bill didn’t survive a Senate committee.

The N.C. Supreme Court has supported seizing private property for private commercial use in the past. In 2001’s Piedmont Triad Airport Authority v. Urbine case, for instance, the court said it was constitutional when the airport authority seized private property for a Federal Express air cargo hub.

The state’s Urban Redevelopment Law also was revamped in 2006 to give local governments the authority to use eminent domain to take blighted parcels for economic development-related projects. Previously, the law allowed the taking of private parcels in “blighted areas,” which meant private property in good condition also could be used for economic development.