University Inn closes after 50-plus years, multiple court cases and a $1.3M payment
A million-dollar settlement that closed the doors to the University Inn this week ended years of legal battles between the landowner and the motel’s longtime operators.
Orange County court documents show landowner RME Management LLC paid $1.3 million in October to Chapel H.O.M. Associates LLC and Chapel Hill Motel Enterprises. Chapel H.O.M. and Chapel Hill Motel had owned and operated the University Inn for over 50 years.
While a local development consultant had suggested to the town that a new hotel could be built on the land, there is no firm idea of what could replace the outdated two-story motel and restaurant, said Jason Evans, managing partner of RME Management.
“We plan to look into a lot of different options for developing the property, and we think that the community can be better served by something other than a similar hotel to what’s currently there,” Evans said.
Any future plans would have to meet the code that governs how buildings and their surroundings are developed in the town’s Blue Hill District. The motel sits at the heart of that district, across from Eastgate Crossing shopping center, at the southeast corner of Fordham Boulevard and Ephesus Church Road.
The zoning could allow a building of up to seven stories that has at least 10% commercial space. The Blue Hill District plan also calls for a road extension to be built across the rear of the 3.9-acre property, connecting Legion Road with Fordham Boulevard.
The road would limit what could be done with the University Inn property, according to development consultant Scott Radway, who has spoken previously with the town about the development issues facing that site.
However, a more modern building could dramatically change that corner, particularly if a separately owned, 2.3-acre parcel behind it also is redeveloped. That land, now partially occupied by Greenleaf Vineyard Church, is listed for sale online for $6.2 million.
Work already has started at the nearby Park Apartments, where the decades-old brick buildings will be replaced by new apartments and a parking deck. The project also will add a roundabout and a new Elliott Road Extension connecting Ephesus Church Road to Fordham Boulevard.
Eviction attempts
Evans, of RME Management, and Alan Margolius, Chapel H.O.M.’s managing partner, declined to comment on the settlement. Court records show the complicated history of the land and the lease arrangements.
Evans’ grandparents and another couple signed a 49-year land lease with H.O.M. Motel Corp. (now Chapel H.O.M.) in 1966, with an option to renew for another 49 years. The lease allowed Chapel H.O.M. to build and operate a 100-room hotel and a 12,000-square-foot restaurant, which it then subleased in 1967 to Chapel Hill Motel.
For the last 34 years, Chapel H.O.M. has paid $14,000 a year to rent the land from RME. Chapel Hill Motel, since 1983, has paid Chapel H.O.M. $82,000 a year in rent. Chapel H.O.M. was responsible for paying the property taxes, which last year totaled $135,659.
The legal troubles started in 2013, after RME gained full control of the land. The next six years brought multiple lawsuits, three eviction attempts and hearings in federal court and the N.C. Court of Appeals.
At the same time, two appraisers hired by RME and by Chapel H.O.M. and Chapel Hill Motel began to negotiate the amount of future lease payments. That process was rocky from the start, with disputes arising over whether the property should be appraised at its “highest and best value” or its “as-is” condition, according to a lawsuit filed in U.S. District Court in 2014.
The appraisers, according to the original land lease, were supposed to settle their disputes by hiring a third appraiser. But RME claimed in a 2018 Orange County Superior Court lawsuit that Chapel H.O.M. refused to hire a third appraiser unless the new rent price was going to be based on the property’s “as-is” value.
Chapel H.O.M. argued that would put its rent payments to RME at $20,000 a year for the next 49 years.
When the talks broke down, and Chapel H.O.M. and Chapel Hill Motel asked the federal courts to weigh in, RME responded by voiding their option to renew the lease. The federal judge dismissed the case, saying it should be heard in a local court.
Chapel H.O.M. and Chapel Hill Motel refiled the case in Orange County Superior Court, alleging that RME “had engaged in unfair and deceptive trade practices” and couldn’t legally declare the renewal void, because the terms were under negotiation.
Chapel H.O.M. and Chapel Hill Motel continued to pay rent to RME after Jan. 1, 2016, but RME refused the money, documents state.
In December 2018, while the Orange County case was still in court, RME sued to have Chapel H.O.M. and Chapel Hill Motel evicted. All three parties entered mediation, resulting in the March 2019 settlement deal.
RME paid the settlement in October, just ahead of the motel’s closing.
