Two Virginia Beach business owners say the city cheated them out of their property.

The city says was it just good, fair business, but the city's own internal records cast some doubts.

Rich Drehoff and John Nogosek said it was just before Memorial Day, 2007, when a city agent came with an offer to buy their office building at First Colonial Road and Virginia Beach Boulevard. But the proposal was paltry.

"We were so devastated by the offer," says Drehoff.

They balked at the low bid. So the city took the property and flattened the building.

"The city is pretty quick to bulldoze these places as soon as they take them," says Nogosek

All that's left is chopped asphalt, a scrubby lot, and wooden stakes marking the property lines.

What still lingers are accusations the city bent the rules, bullied the businessmen, and tried snatch this land for a fraction of its value.

The city denies it all.

"We did not and never would do that," says Virginia Beach City Attorney Rebecca Kubin.

The jets that buzz Virginia Beach are the center of this bitter dispute. In 2005, a government group called the BRAC commission scolded Virginia Beach leaders. BRAC said Virginia Beach planners let too many homes and businesses creep into Oceana's dangerous crash zones.

To save the base, the city and state created a pot of money, $15 million a year, to buy back crash-zone properties.

In announcing this program, the City Council declared, "Only voluntary sales would be permitted. Eminent domain would not be available ..."

But eminent domain is exactly what the city used to force these businessmen out.

"It was quite devastating to us that we saw ahead of us now, a lot of time, a lot of effort and a lot of money to make this right," says Drehoff.

The city claimed it needed the land for a road project, and that is a reason to use eminent domain. But the men's attorney says the road project was just a back door to the city's real goal, to get rid of development in the crash zone. And for these businessmen, here's the real rub. They're both former Navy officers, more than willing to give up their property to save Oceana. But they said the city low-balled them and took their business for pennies on the dollar.

"We trusted the city. We're both retired Navy people. We have a lot of faith in our government. We were let down," says Drehoff.

"I disagree. I think they were treated very fairly," says Kubin.

She insists the city has no sinister motives here.

"This particular acquisition ... had nothing to do with BRAC."

But attorney Charles Lollar asks if the seizure was only for a road project, then why does the property show up on this map? It's a city document, intended to impress the Navy, showing properties removed from crash zones.

And when NewsChannel 3 asked for a list of properties the city bought to show good faith to the Navy, there it is again, along with others at the intersection seized by the city.

City records show, and Kubin admits, at least six of seven seized properties here were purchased with the buy-back money, the money City Council promised would not be used to force out owners.

Is the city trying to play it both ways? Kubin admits that, in a way, yes it is.

"For seven of the parcels, there was an incidental benefit that affected BRAC."

When asked if the city was essentially killing two birds with one stone, Kubin replied, "Yes, and this would allow us to have two funding sources versus one."

In other words, if the city seizes property solely for a public project, and that property happens to be in a crash-zone, then great. The city can pay for it with the buy-back money, and report the seizure as progress to the Navy.

Kubin concedes there would be nothing to stop the city from seizing other businesses and even houses in the crash zone, if those properties were needed for the public good.

And as for the pair of businessmen, they couldn't challenge whether the road project was really a public need. But they could challenge the low amount the city paid for their property.

"We naively anticipated that the city's appraisal would be a fair value, a true fair value of the property," says Drehoff.

A jury last month decided the city paid way too little. It awarded the men almost $700,000.

$700,000 may sound like a payday, but for these men, it's not. They had to hire a lawyer and appraisers, and it took more than two years to get to court.

And what about the road project? Even though the city is facing record budget shortages, Kubin says they still plan to spend $9 million on construction, beginning in 2012.

"I think the hope is that the money will become available."

Now, others who lost property in the same area are challenging the city.

NewsChannel 3 called both the governor's office and the agency that oversees this pot of buy-back money. Both said they have no problems with how Virginia Beach is spending this money. That's because it was the Beach City Council, and not the state, that decided the money should be used for voluntary sales. The state said it doesn't care how Virginia Beach clears out the property.