Progress comes at high cost

When it comes to eminent domain and its effect on Las Vegas businesses that lease their space, the characters and locations change but the story remains the same -- a tragedy for small businessmen.

In the near future a bar, a gas station and a host of other shops off Jones Boulevard south of Clarice Street will be taken by the state of Nevada to expand U.S. 95. It has prompted the business owners to express frustration over the inadequate settlements they will receive.

A decade ago a bar, a gas station and a host of other shops along Las Vegas Boulevard across from the Foley Federal Building were taken by the city of Las Vegas for the sake of a planned office building, the Minami Tower project. Business owners then too expressed bitterness over the settlements they received.

"We know we are not going to stop progress. All we are asking is that we be treated fairly," said John Arfuso, who has operated a service station at Jones and U.S. 95 for 16 years -- the past 11 as Expressway Texaco.

"This is not an effort to impede growth. This is an effort to let people know what is happening to us and to make officials abide by their promises," he said. "To offer us $40,000 for businesses worth $300,000 to more than a half-million dollars is not fair."

The promises that Arfuso, 41, refers to are statements made by Nevada Department of Transportation officials assuring city and county officials and members of the public that efforts would be made to fairly compensate everyone.

The $350 million widening project will wipe out about 300 homes, apartments and businesses from Interstate 15 at the Spaghetti Bowl to the Rainbow Boulevard curve. U.S. 95 will be expanded from six to 10 lanes in that area.

The nearly two dozen businesses in the way of the expansion have not yet been offered anything. That won't happen until the U.S. Environmental Protection Agency and the Federal Highway Administration review NDOT's plans. They are expected to release their conclusions as early as October.

However, business owners say they have been told by NDOT officials that they will receive $20,000 for their leases and about another $20,000 for improvements they've made and relocation expenses.

Estimates are that Texaco, which owns the property under Arfuso's station, will get about $1.5 million for the land.

Homeowners and those who own the property on which the businesses stand get fair market value. Even so, some critics argue it is far below what they could have sold their land for under normal circumstances.

Apartment renters, like business lessees, will receive moving costs.

Government acquisition of land through eminent domain is a longstanding practice based on the philosophy that while a limited number of property owners and businesses are hurt, the projects benefit the whole community.

And few who have ever been caught in rush hour traffic on U.S. 95 would argue that the highway does not need to be widened considerably.

According to state traffic figures about 180,000 vehicles per day use the artery that was designed for a maximum 150,000 vehicles per day. The expansion will increase U.S. 95's capacity to 250,000 vehicles per day.

Kent Cooper, program development manager for NDOT, says his agency is not the villain in this drama.

"We are in a tough position, because we are dealing with public money and we are bound by state and federal laws," Cooper said.

"I know where the leaseholders are coming from," he said. "A person can always find another house or an apartment a mile away. But it is difficult to relocate some of the businesses, especially the larger ones, to a nearby location."

But Cooper pointed out that many leaseholders face the end of their livelihoods every time their leases are up. The property owners can always decide to use their land for something else.

Ironically, one of the exceptions to that situation is Arfuso, who under the Petroleum Marketing Practices Act of 1978 would have been guaranteed first right of refusal to purchase the property from Texaco should it have decided to sell. Eminent domain nullifies that opportunity.

Cooper noted that all of the businesses keep the machinery they invested in and can relocate it to another location. On top of that, he said, they will receive payments based on a number of factors -- time remaining on their lease and size of their businesses, among them -- to help them relocate.

Allan Kelly, who with his wife, Charlotte, opened the Trap House bar in 1965 off Jones Boulevard and U.S. 95, said $40,000 is nowhere near what he will need to relocate to another part of the city, nor will it compensate him for other losses that are not factored into such settlement equations.

"This is a neighborhood bar. I can't relocate my regular neighborhood clientele," said the 69-year-old native Las Vegan. "If I have to relocate to another part of town, I will have to start from scratch after 34 years."

Kelly's 32-year-old son, Patrick Kelly, agreed.

"If they want to compensate us fairly, they should also take into consideration our annual gross revenue, our longevity and what we have built in the community," he said. "Instead, I feel like we are a successful business that is being swept under the rug."

If the words sound familiar, it is because they echo those spoken by Las Vegas victims of eminent domain for years.

Ten years ago when Japanese businessman Masao Nangaku proposed building the state's tallest building on Las Vegas Boulevard, Toots Cocktail Lounge and a long-established Chevron station were bulldozed.

John Wagner, then the leaseholder of Toots, wanted $450,000 for his leasehold but Minami Tower officials wanted to pay only about a tenth of that. One city-conducted appraisal maintained that his lease was worth just $4,700.

"I got the impression that they felt I wasn't too important," Wagner said in a Dec. 17, 1989, Sun story. "With what (they are) offering, I will never again be able to open another bar in this city."

Wagner still lives in Las Vegas. He declined to be interviewed for this story, saying: "It won't do anyone any good because the politicians are going to do what they want and the leaseholder always gets screwed."

The Minami Tower failed when Nangaku pulled out. For a while, a construction crater sarcastically called the "Minami Hole" existed where Toots and the other businesses used to operate. The city later made a deal with the federal government, which now is building the new federal courthouse on that site.

Wagner confirmed that all he got for the last holdout in the way of the Minami project was about what the business owners in the way of the U.S. 95 expansion project have been told they would receive.

"You would think that seeing what happened to that man 10 years ago would make public officials go out of their way to make sure it did not happen again," Patrick Kelly said.

"Ten years from now growth will still be an issue, and the same thing will happen again," Arfuso, a 1983 UNLV graduate, said. "And you will be writing another story about a new crop of leaseholders in the same situation."

Ray Mamola, 37, owner of the Ryder Truck Rental business next door to the Trap House, said that while it will not be as expensive for him to relocate as it is for a bar or service station, each businessman has unique hurdles to clear.

"In my case, there are no other areas around here zoned for rentals," he said. "I guess Al, Patrick, John and I are going to have to open a combination bar-service station-rental business in the same building."

Although Mamola was joking, his fellow businessmen agree that finding suitable sites in the same neighborhood that meet with city code regulations will be a serious challenge.

Arfuso said he doubts he will find a corner as good as the one he has now anywhere in the city. Kelly said finding a prime spot that is not within 1,500 feet of another bar, school or church -- a city code requirement -- will be a difficult task.

A start date for the expansion construction has not yet been set. Arfuso said it is possible that he and the others can remain in operation at their current sites for at least another two years while construction plans are finalized.

While the plans that have been submitted call for the destruction of more than 170 homes, more than 110 apartments and nearly two dozen businesses, they avoid Las Vegas Springs near Valley View Boulevard and U.S. 95, a natural spring that geologists say dates back thousands of years. The site, considered the birthplace of Las Vegas, is listed on the National Register of Historic Places.

Realistically, business owners have little choice but to accept what is offered because, under eminent domain, the state will take their land and the parties will later fight over the settlement amount in court. That could get costly, especially for small businessmen.

Experts argue that a fairer system needs to be developed.

"These small businessmen will not be able to open comparable stores for what they are being offered," said Jack Greco, who as president of the Nevada Gasoline Retailers Association has long fought for the rights of service station owners and other small businesses.

"You have to question the fairness of John investing so much money into his station to greatly improve the property so that the state can now pay Texaco a high sum for the land and the building, yet pay John next to nothing for his business, which is worth at the very minimum $250,000."

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