The City of Mesa is facing a potential lawsuit over claims its zoning and land use regulations damaged a local business owner.
Under Arizona law, if a jurisdiction enacts land use legislation that negatively impacts the value of a property owner’s land, the owner is entitled to compensation.
Toms Investment LLC, managed by Alan Tom, owns a 2.24-acre vacant parcel north of University Drive and Ellsworth Road. The company took ownership in 1999. The land is zoned for limited commercial uses, which generally includes a car wash or other automotive-related businesses.
Last October, Toms entered into a ground lease letter of intent with Circle K Stores to put a Clean Freak car wash on the site, with rent set at $1.4M/year. Circle K has a convenience store and gas station on a leased site immediately south of the Toms location.
In 2011, however, Mesa enacted an ordinance that limits automotive-related businesses to a maximum of two within 600 feet of arterial street intersections.
The existing Circle K and a QuickTrip at the same intersection triggered the restriction.
In the notice of intent delivered by Toms to the City, Toms representatives claimed they were told by Mesa Planning Division staff to withdraw the pre-submittal application for the car wash, submit a formal application, and a workaround would be found.
The City, however, did not provide a waiver of the ordinance, and Circle K withdrew from the ground lease letter of intent in June.
Toms states in its claim that Mesa’s ordinance constitutes an unlawful taking of property, has eliminated a legitimate and profitable use of the site and reduced its market value in violation of the law.
Through the JacksonWhite law firm, Toms is demanding nearly $781K for just compensation, $1.4M for lost rent and $20K in attorney’s fees and costs. If the City rejects the claim and declines to settle, Toms intends to file a lawsuit and seek additional damages for lost opportunity/income and carrying costs.
The notice includes other options for resolving the issue without litigation. Mesa can repeal the limitation under the 2011 ordinance or grant Toms a waiver of enforcement for its site if an application for approval or permit is submitted.
The City would still be obligated to pay the attorney’s fees and costs of $20K.
The notice of intent was hand-delivered Aug. 2 and gives 90 days for Mesa to agree to a settlement before a lawsuit is undertaken, which puts the deadline at Oct. 31. (Source)