In a lawsuit filed in federal court on Monday, a developer is challenging what it calls “extortionate” Metro permitting policies — and the real estate community is paying close attention.
Lonesome Ten Miles, LLC, an entity affiliated with Good Time Design Hospitality Group, filed the lawsuit, alleging that Metro required the developer to replace a waterline along Division Street “at enormous expense” as a condition of its permits. The developer is expanding the Division Street building formerly home to ReBar and set to house a food-and-beverage business affiliated with country band Old Dominion.
“Rather than improve public infrastructure at its own expense, Metro was able to leverage its permitting power to exact this substantial infrastructure improvement from Lonesome without paying for it, even though it was unnecessary and unrelated to Lonesome’s use of its property,” the plaintiff argued in the complaint.
The plaintiff is represented by Sherrard Roe Voigt & Harbison’s Alex Carver and Todd Panther, who declined to comment, citing federal court rules. Metro Legal Director Wally Dietz also declined to comment. Metro Councilmember Terry Vo, whose District 17 includes the Division Street property, said she had not been involved in discussions between Metro and the developer.
In the complaint, the plaintiff asks the court to award damages to cover the expense of the replaced waterline, which runs about 350 feet and has a greater capacity than the prior line. The developer alleges that it alone bore the cost of at least hundreds of thousands of dollars for a waterline that “serves many other businesses.” The plaintiff also contends that “the existing waterline was adequate to serve” the block.
“Metro just decided it wanted to upgrade its waterline and determined that it could extort Lonesome into paying for the upgrade by withdrawing Lonesome’s permit if it did not,” the complaint continues. “Even if there were some deficiency with the existing waterline on Division Street, any such deficiency preexisted Lonesome’s proposed development and had nothing to do with Lonesome’s proposed use of its property.”
According to permits, the developer is adding more than 3,000 square feet to the existing ReBar footprint, and water permits suggest projected increased water flow at the site.
Several members of Nashville’s development community declined to discuss the case on the record for the same reason they said they hadn’t filed similar lawsuits themselves — because they didn’t want to risk future projects requiring Metro permits. However, each said they are closely monitoring the proceedings.
Earlier this year, the Tennessee legislature passed a law giving developers the option of appealing offsite improvement conditions imposed by local utilities to the Tennessee Board of Utility Regulation, established in 2023.
“We always talk about trying to drive more affordable housing, yet we never stop to consider the price of the regulatory impacts that we place on developers,” Republican Rep. Kevin Vaughan, a cosponsor and the chair of the House Commerce Committee, told the House Business and Utilities Subcommittee at a March 26 hearing. “Everybody should pay their own way, but if you’re paying someone else’s way, you should be able to recoup that money.”
Nashville officials have unsuccessfully sought state permission to enact development impact fees, which are allowed in some other counties around the state, in part as a way to pay for infrastructure upgrades like those on Division Street.
In recent years, Metro has paid out multiple settlements to developers who successfully sued over a city policy requiring applicants for some building permits to build sidewalks or pay into a sidewalk fund.