Car Wash Owners Clean Up

Client Profile

RCU Independence, Inc. and Sentry, Inc. own and operate two successful, full-service car wash facilities called Pro Car Wash East and Pro Car Wash West. The two businesses are located across the street from one another on Rochester Road in Troy, Mich.

Challenges

The City of Troy was moving forward with plans to expand Rochester Road, a major thoroughfare in arguably the busiest stretch of the city. As a result of the expansion, many businesses were confronted with partial takings, meaning that a portion of their property was being condemned for the project. In this case, the car washes were losing valuable frontage. After appraising the land in question, the City of Troy made a combined good faith written offer for both properties to the tune of $153,000. Following consultation with attorneys Alan Ackerman and Darius Dynkowski of Ackerman, Ackerman & Dynkowski, the defendants did not accept the initial offer.

While the city truly believed this offer was bona fide, the officials simply didn’t understand the elements that go in to a successful car wash operation. The significant frontage maintained by the majority of car washes is no accident—the space is used for what is called “stacking”. Stacking is space that allows for cars to dry after being washed. Without the space, the car wash line would have to frequently shut down, decreasing the number of cars washed from 150 per hour to just 90 per hour. In addition to this obvious blow to revenue, customers would be inclined to take business elsewhere to avoid the time consuming lineup.

Solution

Following denial of the first offer, the city took another look at the value of the land, bringing in an expert appraiser. The appraiser found that there were other car washes in the city that successfully operated with stacking space similar to the space that the Pro Car Wash sites would have following the taking. As such, the city revised the offer to $695,000 for RCU Independence, Inc. and $760,000 for Sentry, Inc. The defendants, working together with Ackerman and Dynkowski, once again decided to forego the offer, asserting that the compared car washes did not have the same internal stacking as the Pro Car Wash locations. As such, the car wash facilities would have to be reconstructed.

In addition, it became clear that the expert appraiser retained by the city incorrectly calculated the space from the road to each of the car washes. Attorneys Ackerman and Dynkowski requested a recalculation, after which the city and its expert both acknowledged that the car washes would, in fact, need to be rebuilt or significantly modified.

Results

When all was said and done, the Oakland County Mediation Panels issued awards of $1.25 million to RCU Independence and $1.2 million to Sentry, for a combined final settlement of $2.72 million. This positive outcome was a direct result of retaining expert legal counsel with thorough knowledge of the eminent domain and condemnation space, as well as a firm understanding of the car wash business and how said businesses should be valued.

Pro Car Wash East and Pro Car Wash West will utilize the settlement dollars to move their facilities farther back on the Rochester Road properties, allowing for adequate stacking space.