PSC Metals, landlord squabble over rent for scrap yard site

NASHVILLE (Scrap Monster) : A legal dispute between PSC Metals and one of the scrap metal company's landlords could boost Nashville's push to redevelop the prime real estate near LP Field.

In a complaint filed on Wednesday, PSC claims it is being overcharged $1.2 million a year for the 19.5 acres it leases from members of the Liff family.

The reason: An adjustment to the company's rent this summer based on an appraisal performed by real estate firm CBRE for the landlord.

That appraisal valued the site that is part of PSC's 50-acre scrap metal yard on the east bank of the Cumberland River as if it was zoned for a mixture of residential, commercial, office and/or retail uses. Mayfield Heights, Ohio-based PSC said its own appraisal viewed the site as an industrial property.

CBRE's higher appraised value was significant because PSC's rent adjusts every 10 years under the original lease dating back 35 years. The company is required to pay 14 percent of the new appraised value as annual rent, which since August's bump has meant paying $102,433 more each month.

"It's an interpretation of highest and best use of the property," said Richard Exton, the principal appraiser with Nashville-based Manier and Exton, who isn't involved in the legal dispute. "The question becomes would someone put in a mixed-used development adjourning that PSC scrap metal yard."

In the lawsuit, PSC asked the Nashville federal court to accept its appraisal or determine the appropriate valuation and then order a refund of any excess rent the company has paid since the new 10-year lease term started Aug. 1.

The current PSC Metals metal yard has operated at 710 S. First St. for more than 50 years. In 1997, a PSC predecessor company called Philip Service Corp. bought Steiner-Liff Iron and Metal, which operated there since 1954.

Former Nashville mayors Phil Bredesen and Bill Purcell and current Mayor Karl Dean all tried to get the scrap yard to relocate to make way for redevelopment. A baseball stadium for the Nashville Sounds, that's now being built at Sulphur Dell near Germantown, was among ideas most recently explored for the site.

"It's going to have to be something that everybody views as a win-win," Adam Liff, managing partner in Shelby Land Co. LLC, a defendant in PSC's suit with joint landowners Emily Magid and Elise Small, said three years ago. "It's not a question of if the property gets redeveloped, but when."

Tom White, a Nashville land use attorney who has worked for PSC in the past, said financial success of that operation for the scrap metal recycling company has made it difficult for Metro to justify acquiring the property.

In addition to the 19.5 acres involved in the dispute, PSC's campus includes 23 acres the company owns plus roughly 6 acres it leases from a third party. A factor that could play against the redevelopment of the 19.5 acres as mixed-use is the land isn't contiguous. It is bordered by industrial properties that PSC or other third parties own and the Cumberland River.

The lease also doesn't identify any particular method for resolving disputes.

A decade ago, a dispute between PSC and defendants that included Shelby Land was resolved with the new rent set for 10 years through last July. The 1979 lease carries an initial 45-year term with additional options up to 41 years.

In the suit, PSC said to avoid jeopardizing its ongoing business at the site, it continues to pay the new rent under protest. The new rent means more than $12 million over the next decade.

"If they can't work it out, it becomes a question of whether (PSC) can continue to operate on a reduced footprint," Exton said.

Attorney Bill Harbison of Sherrard & Roe is representing the landowners in the case, and W. Travis Parham of the Waller law firm is representing PSC. The Liff family members involved in the dispute don't include Zach Liff, who owns Cummins Station.

Courtesy: www.tennessean.com