the-elbow-room

The Elbow Room Bar in Dallas – Photo Courtesy of TripAdvisor.com.

For the last few months, the bar’s current operators, Joseph and Rosalie Nagy, have been locked in compensation negotiations with Texas A&M University (TAMU). Due to the still unresolved nature of this dispute, it has become increasingly likely that the school will initiate condemnation proceedings against the Dallas property. TAMU is in the process of developing a new campus for a dental school, and seeks the land occupied by the bar for the school’s construction.

Three years ago, the bar’s owner, Edward Sigmond, encountered tax issues, which forced him to file for bankruptcy. As part of the proceedings, he was allowed to retain the building, providing he held it under an entity other than a bar. Rather than see a neighborhood icon close, the Nagys purchased the lease to the bar, and have been operating it ever since. The Nagys refuse to vacate the premises for the compensation amount initially offered by TAMU. Their refusal relates primarily to a lease issue. In Texas, a leaseholder is be considered an owner of a property interest for purposes of condemnation proceedings. However, this status is subject to the terms and conditions of the lease contract.

“Due to the incorrect wording of our lease with Sigmond, TAMU won’t assist in bar relocation or outstanding debts,” said Rosalie Nagy. “They sent an email stating our 20 year lease ends August 31st, then another saying it may be a few more months,” she said. “Either way, they’ve been very, very difficult and will not respond to us.”

In a statement, Holly Shive, a public relations director for the school, expressed its reluctance to engage in the condemnation process, whilst advancing the case for the school’s community value:

“On April 27, 2016, The Texas A&M University System Board of Regents authorized initiation of eminent domain proceedings, if needed, to acquire two contiguous parcels of improved property in the City of Dallas totaling less than one-fourth acre. Since that time, the A&M System has been negotiating with the property owner in an attempt to acquire the property. If the property cannot be acquired by mutual agreement, eminent domain proceedings will be initiated. The acquisition of this property will allow for construction of a new clinical education building to address the state’s need for additional health care professionals — enabling a 25 percent increase in dental school enrollment—and to expand dental services to the community. The Texas A&M University College of Dentistry is the largest oral health care provider in the region, already serving 100,000 patient visits per year, with an additional 40,000 able to be served in this new facility.”

Though the outcomes are still pending, this example serves as a reminder to those entering into a lease agreement that condemnation considerations should be examined. Knowledge of an impending road expansion or other future construction occurring near or at the boundary of a property could signal condemnation concerns, necessitating careful analysis of lease provisions.