The battle over the Dixie Brewery has reached its tipping point as the U.S. Department of Veterans Affairs moves closer to the partial demolition and renovation of the historic building standing in the path of the medical complex development in Mid-City. The former owners of the Dixie, Joe and Kendra Bruno, filed several lawsuits claiming the state violated their...
The battle over the Dixie Brewery has reached its tipping point as the U.S. Department of Veterans Affairs moves closer to the partial demolition and renovation of the historic building standing in the path of the medical complex development in Mid-City. The former owners of the Dixie, Joe and Kendra Bruno, filed several lawsuits claiming the state violated their constitutional rights when it invoked eminent domain in 2011 to take the brewery and then transfer its property rights one year later to the VA. But their cases have lingered in Civil District Court for years without resolution.
Joe and Kendra Bruno, owners of the Dixie Brewery, are challenging the state's right to take their building and transfer its property rights to the U.S. Department of Veterans Affairs.
Now, as construction on the new VA hospital progresses, the Brunos have again turned to the courts in a last gambit to assert their rights as the lawful owners of the historic building before irreparable damage is done.
The Dixie Brewery Company filed a request March 12 for a preliminary injunction in federal court seeking to stop the VA from demolishing any part of the 106-year old structure until previous claims are settled.
"Everyone I know supports the Veterans hospital including Dixie; they just want the state to treat them fairly," said the Brunos' attorney Robert Evans.
LSU declined to comment and its Baton Rouge law firm, Roedel Parsons Koch Blache Balhoff & McCollister, did not respond to interview requests.
The VA also declined to comment, but spokeswoman Amanda Jones said Evans' claim that they plan to demolish the Dixie Brewery is not true. The VA plans to use the building for its psychosocial rehabilitation and recovery center and construct a new facility behind it to house its research laboratories. Portions of the brewery will have to be demolished due to damage sustained during Hurricane Katrina, according to the VA's redevelopment plan.
"The final design preserves and repairs the six- and four-story sections of Dixie Brewery that face Tulane Avenue, while behind rises the new five-story building, clad in masonry panels to echo the brick of the historic building," the plan states.
The industrial brick Dixie Brewery building at the corner of Tulane Avenue and Tonti Street was designed by the German architect Louis Lehle and completed in 1907. A wooden extension was added in 1919 followed by several warehouses behind the main building.
Dixie continued to produce beer until Hurricane Katrina, when the brewery was inundated with more than 10 feet of floodwaters after which the building fell into ruins and became a haven for squatters. Dixie moved its production facilities to Wisconsin while the owners worked on plans to convert the brewery into an entertainment complex with a beer garden and apartments. They struggled to find people willing to invest with the specter of the LSU/VA medical complex looming.
LSU was charged with expropriating the 34 acres of land in Mid-City to clear a path for the construction of the VA hospital. Dixie Brewery was not included in the original footprint as detailed in a 2007 plan but was added three years later at which time LSU filed a petition to expropriate the facility.
Dixie is challenging the state's expropriation of the property because the owners say it did not offer them fair market value as is required by law. The state assessed the brewery at $52,285 and deposited that amount with the registry of the court, instead of giving it directly to the Brunos, because there was a lien on the property.
Evans said the real value of the brewery was $9 million but the state low-balled his clients because there was a $413,343 tax abatement against the property and significant damage to the building. However, the state Constitution requires that the Brunos be paid just compensation which includes the value of the land and the loss of development rights and business opportunities, Evans said.
"The state argues (the Brunos) can't develop the property because it will cost too much but if they can do it we can do it."
Evans also said the state's appraisal of the Dixie Brewery was manipulated through actions taken by the city.
In 2007, the City Council declared a moratorium on new building permits in the hospital footprint to prevent people from investing in properties that would eventually be torn down. This created an entire area of "forced blight" since owners couldn't repair their storm-damaged homes, Evans said.
"During the moratorium properties in the footprint deteriorated and depreciated," Dixie's lawsuit states. "Therefore, to make subsequent appraisals in 2009, after the properties deteriorated, for the purpose of eminent domain is illegal, immoral and unfair."
The moratorium excluded the Dixie brewery but the increasingly poor condition of the neighborhood negatively impacted the property's value and scared away potential investors, Evans said.
In an April 17, 2008 email from City Councilwoman Stacy Head to Councilman Arnie Fielkow, Head discusses the benefits and risks of the moratorium.
"Any increase in 'fair market value' in the properties to be acquired will be borne by the city," Head wrote. "Thus, it is in the city's best interest to discourage development and increases in values. Litigation over fair market value will erupt during the expropriation phase as the true value will be greater to the people who put money into their properties in the short term."
The downside to the moratorium, Head wrote, rested on the possibility that the VA would not select the site and therefore the "area will be harmed by the lack of development. Property owners/developers may sue the city for depriving them of an ability to develop/make money during the site selection phase without having any guaranty that the VA is actually coming here."
The purpose of the email wasn't to advocate for a particular position but to ensure that the people making the decisions had all the information possible, Head said.
"This entire arrangement for LSU and the VA was not in my opinion done as well as it should have been in many respects," she said.
Even if the state's expropriation of the property is deemed legal, its transfer of the Dixie brewery to the VA was unconstitutional, Evans said.
In 2008 Louisiana voters approved an amendment to the Constitution that said the state could not sell or lease a property it expropriated unless it first offered the original owner the opportunity to buy it back at fair market value. If the original owner declines the offer, the state can transfer the property through a competitive bidding process open to the general public. Only after 30 years from the date of the expropriation can the state sell the property outright.
LSU never offered the owners of the Dixie the chance to buy their property back, Evans said; instead the state transferred it to the VA in what was called an "act of exchange" in June 2012. The VA is listed as the owner of 2401 Tulane Ave. on the Orleans Parish Assessor's Office website.
These two matters, the seizure and transfer of the Dixie, remain unsettled and until they are decided the VA should stop all planned work on the brewery, Evans said.
Evans, and his law partner, Cesar Burgos, filed a similar lawsuit against LSU in 2010 when it expropriated their property at 2400 Canal St., the former City Hall Annex. The state deposited $3.7 million in Orleans Parish Civil District Court for the building; Evans and Burgos responded by suing the state for $40 million in damages. The two parties settled the issue but are not allowed to discuss the details, Evans said. A lawsuit contesting the state's right to transfer the City Hall Annex to the VA remains unsettled.