Waterfront Wisdom

Background

The Detroit Marine Terminal seizure was initiated by the City of Detroit in order to secure a parcel of waterfront property (located near the city limit of Detroit and Dearborn) as part of plans to build a new municipal water purification plant. Viewing the property in question as essentially a wasted backland parcel with little value in a declining industrial area, the condemning authority initially extended an offer of approximately $4 million to the owner, Detroit Marine Terminals, Inc.

Resolution

Because the initial offer was made without recognizing or accounting for the importance of having a major parcel on the waterfront with quality docking facilities, Ackerman Ackerman & Dynkowski took the position that just compensation should be significantly higher. Waterfront valuations are always complex and often contentious, precisely because of their unique status.

The unique characteristics of waterfront property and marina operation make it far more likely that a seizure or partial taking will have an outsized impact on the value of the property.Navigable waterways are hugely important, as their strategic location and relative scarcity makes them not only appealing, but at a premium. And because owners must be compensated in accordance with the highest and best use of property, and because principles of Fair Market Value also apply, waterfront parcels are worth more—oftentimes dramatically more—than their landlocked equivalents.

Additionally, experts retained by Ackerman Ackerman & Dynkowski concluded that the city appraiser had underestimated the value of the existing concrete dock.  The 5-foot-wide dock extended down all the way into bedrock, and was determined to be worth $14 million. The damage to the existing owner’s commercial operations was also significant, as the property’s current status as an industrial storage yard was greatly facilitated by its waterfront location (and would be greatly hampered by any forced relocation). Ultimately, these factors were decisive in helping Ackerman Ackerman & Dynkowski demonstrate this heightened value and secure a substantially greater $20 million settlement for Detroit Marine Terminals, Inc.