City officials believe City Hall owns the streets in the oldest section of town.
Owners of the Carson Station and Carson Nugget casinos believe they were wrongly charged when they swallowed up blocks of Plaza, Ninth and Spear streets for expansions of their properties.
Carson City has appealed to the Nevada Supreme Court to settle the matter once and for all: Can the city charge for street abandonments in the oldest section of town or does City Hall have to give away streets that developers ask for?
It's a million-dollar question, literally.
The Supreme Court initially tried to get Carson Station owner Clark Russell, developer Dwight Millard and city officials to settle the matter with a mediator.
"We couldn't move the city off square one," Russell said.
Carson City will file a brief Nov. 17 with the Supreme Court detailing the city position that the streets were not dedicated to the city. Instead the federal government gave the land to Carson City - allowing for abandonment fees, said Deputy District Attorney Mark Forsberg.
The opposing parties - four so far - may then file a brief, followed by a city response.
"Then it disappears into the world of the Supreme Court," Forsberg said.
The justices could take one, two, even three years to hear the case. Or the Supreme Court could determine the matter is not worthy of oral argument and let former District Court Judge Michael Fondi's ruling stand.
Fondi in September 1999 ruled that property owners in the 1860s paid for the streets when they bought their land. The ruling sided with Millard's initial claim that a block of Plaza Street between Eighth and Ninth streets was granted to the city in 1866 and thus no payment was required.
The question has simmered for three years since City Hall at first agreed with Millard and abandoned that block for no charge to allow for expansion of the Plaza Motel. Carson Station owner Russell across the street subsequently asked for a $125,000 refund he paid years earlier for a block of Ninth Street, claiming the same land grant applied to his street and all the streets in the original township.
The city turned around and charged Millard and partner Hank Thomas $128,000. They protested and the city then sought a judicial determination on the status of the streets from district court.
Fondi did not side with City Hall, which appealed to the Supreme Court.
"It will probably be there for three years. That's what they tell me," Russell said.
Forsberg believes the justices will be encouraged to move faster because a government agency is involved.
"This is an interesting and novel question," Forsberg said. "They've never addressed it in Nevada. It's a real interesting, technically legal argument."
If the city were to lose, it could cost taxpayers upward of $1 million in refunds and interest to Russell, the Carson Nugget and the City Center strip mall.
The Nugget paid $222,000 for two sections of Spear Street and one block of Plaza Street. City Center paid $125,000 for a block of Valley. Neither has calculated potential interest, but Russell figures the interest on his $125,000 would top $345,000.
City Hall seeks to protect its past and future with a favorable Supreme Court ruling. Several more streets have been abandoned in the past and downtown's notoriously short 170-foot blocks will inevitably lead to more abandonments.
"The ruling will control what the city does in the future," Forsberg said. "At some point in time, developers will dictate a lot more of those streets be abandoned."
Millard and Russell never sued City Hall regarding street abandonment. They simply signed on as opposing the city in the judicial determination. The Nugget, however, filed a lawsuit in March followed by the City Center developers.
Nugget attorney Joan Wright said the suit is on whole until the Supreme Court matter is resolved.
Even though Millard's deal on Plaza Street triggered the entire question, Millard said the mediation involved Russell more than him even though both were involved in the settlement conference with city attorneys.
"The discussion was what to do with Carson Station," Millard said. "Nobody came forward with a plan. It appears I'm not going to be part of the main issue anyway. (The city) opened the door for Carson Station to have a claim, which opened the door for the Nugget and City Center. (The city) got the wrong answer (from Fondi) and then I just became a minor issue."
