Midtowns Rails to Trails Saga: The Marty Kotis Lawsuit, the 52 Million Dollar Judgment, and What It Means for Greensboro Real Estate
Midtown Greensboro is one of those places that feels like it is always on the verge of something bigger. Battleground Avenue, the old rail corridor, Red Cinemas, Pig Pounder Brewery, the new murals. It is a stretch of the city that Marty Kotis has helped shape for decades. But behind the restaurants and the greenway lies a long running federal lawsuit that just hit another chapter: a 52 million dollar judgment, an appeal by the U.S. Department of Justice, and the recent permanent closure of Red Cinemas.
As a Realtor who works daily with buyers and sellers across the Piedmont Triad, I have watched this story unfold because it directly touches property values, development potential, and the future of one of Greensboro most visible corridors. Here is the full history, both sides of the dispute, and what it means for anyone thinking about buying, selling, or investing in Midtown today.
The Background: From Rail Line to Greenway
Decades ago, Norfolk Southern operated a rail line through what we now call Midtown. When the railroad no longer needed the corridor, it was railbanked under the federal Rails to Trails Act. That program allows abandoned rail beds to be converted into public trails while preserving the possibility that the land could one day return to rail use.
In Greensboro, a 3.1 mile section became the Atlantic and Yadkin Greenway. The paved trail now runs along Battleground Avenue, directly behind several properties owned by Kotis companies, including the site of Red Cinemas at 1305 Battleground Avenue. The greenway is popular with walkers, runners, and cyclists but for the property owners whose land sits adjacent to it, the railbanking created a permanent public easement that limited what could be built on or over the corridor. Learn more about the Atlantic and Yadkin Greenway
Marty Kotis, through entities like Kotis Holdings LLC, Kotis Associates LLC, and Westover Terrace II LLC, owns roughly 45 acres in the area and had ambitious plans for mixed use development including retail, apartments, and a Publix grocery store among them.
The Lawsuit: A Fifth Amendment Takings Claim
In the mid 2010s Kotis filed suit in the U.S. Court of Federal Claims, arguing that the federal government (through the Surface Transportation Board) had taken a property interest without paying just compensation. The claim centered on the idea that the railbanked trail easement permanently diminished the value and development potential of the affected land more than 10 acres in total.
After nearly a decade of litigation, a federal judge ruled in April 2025 that the government owed Kotis companies approximately 52 million dollars. The award covered lost property value, interest, and related costs. It was one of the larger rails to trails judgments in recent years. Read coverage from Triad Business Journal and FOX8 WGHP
The Governments Position and the Appeal
The Department of Justice strongly disagreed with the size of the award. In November 2025 the DOJ filed an appeal, contending that the compensation amount was excessive and that the method used to calculate the loss was flawed. As of April 2026 the appeal remains pending in federal court, and interest continues to accrue on the judgment while the case is under review.
The governments core argument in these types of cases is often that the original rail easement already existed and that converting the corridor to a trail does not constitute an additional taking or at least not one that justifies the full amount claimed. Kotis legal team has responded that the permanent public use of the land for a recreational trail goes well beyond the original rail purpose and has measurably reduced the economic potential of the properties.
What Happened to Red Cinemas and the Planned Publix
The legal cloud had real world consequences. A planned Publix supermarket on Westover Terrace was scrapped in 2025 because the railbanking restrictions complicated construction and financing.
Then, in late January 2026, Red Cinemas the last independently owned movie theater in Greensboro announced it was closing for good after more than 30 years. Kotis cited the long term effects of streaming services, post pandemic attendance drops, and the ongoing uncertainty around development on the site. He has indicated the theater building may eventually be demolished to make way for new uses once the legal and planning issues are resolved.
Marty Kotis Businesses in Midtown
Marty Kotis and his companies (including Kotis Properties and Kick Ass Concepts) have developed and own or operate a number of businesses and properties in the Midtown area along the Battleground Avenue corridor. These include:
- Red Cinemas luxury theater (now closed)
- Pig Pounder Brewery
- Burger Warfare
- Darryls Wood Fired Grill
- Painted Plate Catering
- Tracks Beer Garden Bazaar and Bandstand
Kotis has also invested in public art through the Kotis Street Art Outdoor Gallery, adding murals that contribute to the areas creative identity. His broader portfolio in Midtown includes retail spaces, restaurants, and land holdings that support a mix of hospitality and commercial uses. Visit Kotis Properties
Both Sides and the Community View
Kotis has argued throughout that he is simply seeking fair compensation for land the federal government has effectively taken for public use. Supporters see him as a local entrepreneur who has invested heavily in Midtown adding murals, restaurants, and a distinctive cool factor that many residents appreciate.
Critics, including some longtime Greensboro voices and online commenters, have questioned Kotis business practices over the years and view the large judgment as a windfall. Others worry that prolonged litigation has delayed revitalization in a highly visible part of the city.
Both perspectives are part of the story. The greenway itself is a public asset that many residents enjoy daily. At the same time, property owners along the corridor have faced genuine restrictions on what they can build restrictions that have real financial consequences.
What This Means for Midtown Real Estate Right Now
Here in 2026 the case is still not fully resolved, but its ripple effects are already visible:
- Development uncertainty continues to slow large scale projects in the immediate corridor.
- Property values in Midtown remain strong overall, but parcels directly affected by the railbanking have carried a layer of complexity that buyers and lenders notice.
- Opportunity exists. Once the appeal is settled, the area could see renewed investment apartments, retail, or adaptive reuse of the former theater site.
As a Realtor, I see this as another reminder that Greensboro growth is rarely simple. Infrastructure decisions made decades ago (rail lines, greenways, zoning) still shape what can be built today. The Kotis case is a high profile example of how federal policy, property rights, and local development intersect.
The Bottom Line
The Marty Kotis rails to trails lawsuit is not just a courtroom drama it is a story about how one stretch of former railroad track continues to influence land use, investment, and the physical shape of Midtown Greensboro. Whether you view the 52 million dollar judgment as fair compensation or an excessive award, the outcome will matter to anyone who owns, buys, or sells property in the Battleground corridor.
Right now the appeal is pending and interest is still ticking. Red Cinemas is closed, the greenway is open, and Midtown keeps evolving. If you are considering a move or investment in this part of town, understanding this history helps you see the bigger picture behind the For Sale signs.
If you would like to talk about Midtown properties, the greenway corridor, or any other neighborhood in the Triad, I am always happy to share what I am seeing on the ground.
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Joy Watson, Realtor® | Joy Watson Real Estate
Serving Greensboro, NC and the Piedmont Triad
(928) 699-8883 | joy@joywatsonrealestate.com
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