Sunday, September 12, 2004
Copyright © Las Vegas Review-Journal

EMINENT DOMAIN: Owner: City 'beat me down'

Dispute that began in 1994 ties up land near Stratosphere

Paul Moldon's property has a boarded up market surrounded by a fence topped with concertina wire. Photo by Craig L. Moran.

Paul Moldon once hung a defiant banner above his downtown shops.

"Some thieves use guns to steal your property; the city of Las Vegas and Stratosphere use eminent domain," it read.

The black and white banner still flutters above an empty storefront ringed in concertina wire. But these days, the man behind the message is more defeated than defiant.

"I thought right was on my side. Well, right means nothing," Moldon said by phone recently from Seattle, where he moved several years ago when his multiple sclerosis required a more temperate climate. "I'm done in. They beat me down. I've had a heart attack, and with the constant stress I can no longer fight."

Few could blame Moldon, 63, for giving up after a decade dueling the Stratosphere and City Hall.

He is, after all, one of the few original combatants left in a dispute that stretches to 1994, when Las Vegas moved to seize his half-acre on behalf of the Stratosphere for a still unrealized casino expansion.

Gone from the fight is original Stratosphere owner Bob Stupak. In his place is billionaire financier Carl Icahn. Former Mayor Jan Jones, who brokered the deal with Stupak to acquire the land, has been replaced by Mayor Oscar Goodman.

And an opportunity last week to resolve the dispute fell through. A series of last-minute filings in the case, including a new appraisal of the value of the land at 1801 N. Main St., scuttled a trial set for Monday.

The parties have been ordered to arbitration, and a new trial is set for December. Even if a figure is arrived upon at a jury trial, the Stratosphere can walk away from the project if it doesn't agree with the settlement amount.

"Since it was delayed, I've been having new anxieties on top of old anxieties," Moldon said. "I thought it was going to be over."

But, as in the case of several eminent domain actions Las Vegas initiated in the 1990s to redevelop downtown, a resolution has been elusive.

The city has abandoned its hard-nosed use of eminent domain on behalf of downtown casinos and developers. But in settlement talks to resolve Moldon's case, the two sides have been "miles apart," Goodman said last week.

Meanwhile, both sides continue to blame the other for the delays, which Moldon said left his life and land in limbo.

He said the city scared off all but one of his tenants when it posted 30-day eviction notices in 1994 stating its plans to condemn the property. On their way out, some of his former tenants decided to begin demolition early by trashing their spaces, he said.

"I had a deputy city attorney go to one of my tenants and tell them they didn't have to pay the rent," Moldon said. "These guys understand so well the economic pressure they've put on us."

After that, Moldon lowered the rent for his only remaining tenant, an ethnic grocery store, costing him about 80 percent of his income from the property.

The accountant has quit maintaining his buildings because any settlement won't compensate him for those costs, he said.

"Why the mayor, council and billionaire Carl Icahn would want to be associated with this behavior is mind boggling," said Moldon's attorney, Chuck Gardner.

Icahn didn't return a call for comment. Executives at the Stratosphere said it is their long-standing policy not to comment on active litigation.

Dan Polsenberg, a lawyer representing the city, said the matter could have been resolved in 1996 except for the other side's use of "lawyer tactics," which forced the city's attorneys to file nine extensions.

"All we want to do is find out how much we need to pay," Polsenberg said. "And we need a judge and a jury to determine how much. ... Paul Moldon is a nice guy, but even he admits that he just got greedy in holding out in this case."

Moldon has acknowledged turning down Stupak's original $2.3 million offer in hopes of a larger pay day was a mistake.

The city's latest appraisal which put the trial on hold estimated the land's value at $780,000. Ten years ago, the city appraised it at $725,000.

Moldon's appraiser values it at $1.5 million. Including damages and interest, he believes he should receive $3.5 million.

Moldon and his attorney believe they have legitimate legal, and not just financial, objections to the city's actions.

For the city to seize land from a private owner, it must prove it's for a public use. Not only did Las Vegas never prove a public use, they never explained there was any use for Moldon's property, according to Gardner.

"The Stratosphere never said and the city never asked," Gardner said. "How can the city possibly suggest it's a public use and necessity, when they don't even know what the Stratosphere would do with the land? ... Saying it's redevelopment to help a neighborhood casino expand further is like bringing sand to the beach or guns to Afghanistan."

Gardner argued his point unsuccessfully before the Nevada Supreme Court three years ago. The court ruled 6-1 that the city had the right to seize the property without amending its redevelopment plan to describe the Stratosphere expansion.

The ruling overturned a 1995 District Court decision that dismissed the city's condemnation of Moldon's property.

Polsenberg said the Stratosphere has planned to erect a third tower or a theater on the parcel.

"It didn't happen because Paul Moldon didn't let it happen," Polsenberg said.

By locking up the property over the past decade, the city has, in effect, land-banked the parcel, according to Gardner.

"The whole purpose was to pick up these parcels at dirt cheap prices ... so maybe someday you can find some use for them," Gardner said.

Polsenberg denies the city engaged in land banking.

But if that was the intention of city officials, it was an inappropriate use of the government's power to seize private land, according to eminent domain attorney James Leavitt.

Leavitt, who represented the Pappas family in their high-profile downtown condemnation case settled last month, said governmental entities are allowed to acquire land over a period of time for large projects, such as the 53-mile Las Vegas Beltway.

"But when you have a small project like the Stratosphere, I don't think land banking is appropriate at all," he said. "It's merely trying to take land at today's values for use in the future."

Moldon closely monitored the Pappas settlement last month. The family received $4.5 million for downtown property taken by the city in 1993 for the Fremont Street Experience garage.

Moldon said he spoke with Harry Pappas before it was approved by the Las Vegas City Council.

"I said, 'It's a fraction of what you should get, but take it and run,' " Moldon said. "I was already a defeated person, and they weren't even making me an offer. ... Trying to win a winless crusade is just mentally and physically oppressive and destructive."