Ambrose says city can’t use eminent domain to buy GM stamping plant site

Keywords

Ambrose Property Group on Thursday responded to the city’s move to use eminent domain to take control over the GM stamping plant site the company owns, calling the action “unlawfully threatening” and a violation of an agreement between the development firm and Mayor Joe Hogsett’s administration.

The city sent a letter to Ambrose on Oct. 2 saying it wanted to acquire the 103-acre site—where Ambrose recently scrapped plans for a $1.4 billion, mixed-use development it named Waterside—and would use the legal process to force a sale, if necessary.

Click here to read the letter Ambrose sent to the city.

But Ambrose said in a statement Thursday that the move was “unfortunate and problematic on several fronts.”

The firm said it is willing to “discuss with the city the best path forward for Waterside and welcomes the city’s participation if it wants to be a productive part of the process.” But Ambrose said the city must come to the table in good faith.

“That process must involve putting the parties back in the positions they occupied before the city began making its illegal and baseless threats to take Waterside from its rightful owner,” the company said.

The company, through its Chicago-based law firm Quinn Emanuel, also sent a letter to city officials claiming they had made several “false and misleading statements” about the city’s legal ability to acquire the property.

The company has been damaged by the city’s claim it can purchase the property, the letter said.

Taylor Schaffer, the mayor’s deputy chief of staff for communications, said officials are still reviewing the letter. But, she said, “It is obviously not the response that we—or neighborhood leaders—were hoping to receive.”

Click to read the city’s letter to Ambrose.

The city’s letter to Ambrose, penned by City Corporation Counsel Donald Morgan last week, indicated the city was open to negotiating a deal with Ambrose to sell the property, but had already “set in motion the required steps under state law” to move forward with the eminent domain process if those talks break down or do not occur.

To “avoid the delay and expense of a court process, we would welcome the opportunity to begin negotiation acquisition of the property immediately,” the letter said.

Schaffer said the city’s preference is still “to reach an agreement with Ambrose that will ensure a future for this site in keeping with both its potential and prior development commitments. We stand ready to begin those conversations, and remain optimistic that they will produce productive outcomes for the property and the surrounding neighborhoods.”

Ambrose announced on Sept. 27 it was dropping plans to redevelop the former stamping plant site on the west edge of downtown. The Waterside project would have included 1,350 residential units, 620 hotel rooms, 2.75 million square feet of office space and 100,000 square feet of retail space.

At that time, it indicated a desire to sell the land to another developer who could move the project forward and had already enlisted JLL to look for buyers.

In mid-September, Ambrose sold a 12-acre piece of the property to the Indianapolis Zoo, along with another parcel to the north. Ambrose paid the RACER Trust—the organization that owned the land and other former GM industrial sites—$3 million for the five-parcels that comprise the 103 acres in 2018.

But the city is standing in the way of an effort to sell “to a buyer who has similar goals” for the entirety of the former stamping plant site, the company said in its letter.

“The city is attempting to use eminent domain to interrupt an otherwise competitive market sale process with numerous possible buyers in an effort to ensure that the city is the only bidder,” Ambrose’s statement said. “We continue to believe that a common-ground solution that does not include a court fight would be best for everyone, but if we have to, we will engage in litigation to protect our rights.”

Ambrose said the city’s eminent domain steps breach an agreement that states it has no authority to take the Waterside property.

The firm’s letter also says Ambrose plans to pursue a claim for what’s called “slander of title,” a legal term that applies when something that is published clouds ownership of real estate and causes a loss to the owner.

“Ambrose has already suffered losses … and is continuing to suffer losses due to the city’s public statements that have impaired Ambrose’s ability to sell Waterside (as it is entitled to do under the project agreement), slandered the title of the property, and disparaged Ambrose’s reputation,” the letter said. “Ambrose has suffered significant damages and intends to seek all just and appropriate relief to protect its rights and seek financial compensation for its losses.”

The Indianapolis-based company signed a project agreement with the city last year, in which Hogsett’s administration agreed to contribute $26.8 million to the first phase of Waterside, primarily for infrastructure and utility work. The city has already spent hundreds of thousands of dollars on preliminary design work tied to the development.

The project agreement says that the city will “not seek to involuntarily acquire any portion of the Property for an economic development project on the Property that will ultimately be privately owned or largely occupied for private activities.”

Ambrose also chastised the city for trying to use eminent domain on a site that is not a public nuisance or blighted, but rather “a highly valuable property that has millions invested in it.”

Deputy Mayor Thomas Cook said last week that eminent domain has been a consideration for the land since Ambrose announced it was pulling out of the Waterside project, but that officials decided last week it was time to send a letter to Ambrose to try to compel the firm to the table for negotiations.

“We’ve been clear with them in our early conversations that the city had an interest in purchasing the property,” he said at that time. “We have had a very productive working relationship with Ambrose over the last two or three years. We are hopeful that they will come to the table in that same spirit and that we can quickly resolve the question of this property.”

Please enable JavaScript to view this content.

Editor's note: IBJ is now using a new comment system. Your Disqus account will no longer work on the IBJ site. Instead, you can leave a comment on stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Past comments are not currently showing up on stories, but they will be added in the coming weeks. Please note our updated comment policy that will govern how comments are moderated.

15 thoughts on “Ambrose says city can’t use eminent domain to buy GM stamping plant site

  1. Sending the Ambrose CEO an imminent domain letter when he is on a delegate to India with the Governor of Indiana for economic development and also representing the Indiana Pacers for the 2021 All-Star game is pretty weak. Maybe work a call in or something before inciting a media circus. It seems like the best way to work it out. Maybe I’m missing something?

    1. Do you think anyone in India gives a crap about an eminent domain issue in Indianapolis? You are brining up a completely irrelevant matter.

      The city owes Ambrose nothing. This is a legal negotiation nothing more. The city can seize the property anytime it wishes, the only legal requirement is it must pay Ambrose fair market value if it does so. All this jockeying and posturing is about trying to get the best price–that’s all. And, of course this will go to court, and the parties will settle on a price and it will be done.

    2. Christopher B.

      “The city can seize the property anytime it wishes”

      Not always. The N.K. Hurst company successfully fought the city off when they tried to eminent domain their company into the parking lot of the Colts stadium.

  2. It sounds like the city did not leave itself in the best position contractually to claw back the property if developments did not go as planned. If that language does not exist and Ambrose owns the property out right then they have every right to market it as they see fit.

    1. The city did NOT own the land. The RACER trust sold the land to Ambrose. The city entered into a development agreement with Ambrose and incurred significant costs. But, that is all beside the point. The city legally can seize property it deems economically blighted. However, it is required under the Constitution and state law to pay fair market value if it uses eminent domain to seize property. Ambrose is just posturing as part of the price negotiations and trying to get the best possible price from the city.

    1. Get real. Merritt has a snowball’s chance in hell of winning. Also, NO mayor drafts contracts for the city. The city has attorneys who draft agreements. Merritt who not draft contracts anymore than would Hogsett (or Ballard or Petersen or Goldsmith, etc).

      Also, there is NOTHING here. This is the usual posturing parties engage in when negotiating. Ambrose cannot prevent the city from using eminent domain. The only thing they can do is argue about what is fair market value because the city has to pay them for their property if it seizes it. This is all about trying to get the highest price.

  3. I don’t profess to know all the legal intricacies surrounding this situation, but it seems to me if the city sold Ambrose the property, then unless they were contractually obligated to develop it a certain way or lose the property, it is theirs to do as they see fit. Within zoning guidelines of course. I could see Ambrose being required to pay the city whatever portion of that 26 mil infrastructure commitment has been spent. But I doubt that is much at this point. And didn’t the city already own it for years with multiple past projects like a new jail and courthouse, or a new amphitheater to name a couple, falling apart? What makes then think they can do anything with it now?

    1. The issue really has nothing to do with the contract. Also, Ambrose bought the property from the RACER Trust, NOT from the city. Ambrose does own the property, which is why it was able to sell and gift some acres to the Indianapolis Zoo. What the city can do is seize the property if it deems it economically blighted. However, if the city seizes the property, then it is legally required to pay Ambrose fair market value for the land. This is all posturing for price negotiations. Ambrose wants to get the highest price possible from the city.

  4. City should never have gone with Ambrose in the first place, as this company had no history of development anywhere near what was proposed for the GM site. Who knows, this could have been a contributing factor in Amazon not going with Indy, even as Nashville got a piece of the prize. Should have gone with a proven developer like Hendricks. Bite the bullet and pay Ambrose what they want for the property and chose more carefully next time. And Merritt is clearly not capable of leading a city the size of Indy. He can barely compose a coherent sentence when he speaks. He already represents the Indy region in the state legislature. What has he done for Indy in this capacity?

  5. The City of Indianapolis just got played, Here’s the thing about eminent domain. Ambrose Property Group bought 102 Acres of PRIME real estate in what is essentially Downtown Indianapolis for a steal ($3 Million USD). Then they reneged on the agreed upon development plan. Sure the city of Indianapolis can pursue eminent domain all they want, and you know what I think the city would win. But there is a catch.

    The law requires fair value of the property, and we all know that property is worth WAAAAAYYY more than a cool 3 mil. Ambrose Property Group is going to laugh all the way to the bank as it ‘loses’ its property, and the Mayor Hogsett’s Administration will look like absolute fools for this deal during his administration.

  6. Christopher B – no city can just invoke eminent domain on a whim as you suggest. I’m not an attorney, but you say one option is to take it under the theory that it is economically blighted. However, that’s merely an assertion that must be proven in a court and not by simple declaration. As distasteful this deal may be, it’s too late for them to realize they were outsmarted by Ambrose – and that assumes they weren’t ever planning on doing anything but flipping it.

    1. Herm S, No. I did not state the city can invoke eminent domain “on a whim.” I did make one comment about as it “wishes” meaning the city can take immediate action, not implying the action would arbitrary or capricious. All legal actions have to have some “reasonable basis,” though that is actually quite a low bar to meet. Furthermore, both state law and Supreme Court precedent give the city very wide discretion to use eminent domain, including for economic development. Also, the city has wide discretion to determine what is blighted. And, the issue in most eminent domain litigation is not whether the city can or cannot use eminent domain, but over what is fair compensation for its use.

      The city was not “outsmarted” by Ambrose. The only reasonable interpretation of the contract clause to which Ambrose is rather desperately pointing is that the city agreed to deal with Ambrose in good faith WHILE THE DEVELOPMENT DEAL was in place. In other words, the city would not try to seize the property while Ambrose was making reasonable and good faith efforts to redevelop the property. The clause would not prevent the city from exercising eminent domain when Ambrose BROKE the agreement.

      The only distasteful thing will be the bitter taste in Ambrose’s mouth if it tries to fight an eminent domain seizure since it will lose in court. That said, both the Constitution and state law, as I already noted, do require the city to pay fair market value for the property in order to take it. That is the issue over which there will be some wrangling (but this is true in any eminent domain case), and Ambrose will try to get the highest price possible for the property.