Pacific Northwest Ballet’s Bellevue school is in the path of the planned Eastside light-rail route. The ballet is asking Sound Transit to pay for the costs of relocating, but the two sides are $5 million apart.

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Amid the warehouses and muffler shops along Bel-Red Road is an oasis of culture and beauty. The Pacific Northwest Ballet’s Eastside school features studios framed in soaring glass and steel, “floating” floors to absorb dancers’ leaps and pirouettes, expanses of mirrors, and barres to give even the youngest girls in leotards the surroundings of a professional ballerina. But the industrial warehouse building the ballet has so carefully transformed is directly in the path of Sound Transit’s East Link route through Bellevue. And the ballet doesn’t own the building.

As part of the public condemnation process, Sound Transit has offered PNB $3.8 million, an amount the agency says is the fair market value for the ballet’s portion of the building and the improvements made when it retrofitted the space in 2002.

PNB says Sound Transit’s figure is far too low. The four estimates the ballet says it has gotten from construction companies to re-create a comparable facility in a new location average about $8.7 million. And in a red-hot real-estate market, ballet leaders say a nonprofit arts organization can’t compete with private developers or expansionist tech companies for space.

“We are in real danger of losing our school on the Eastside,” said Ellen Walker, executive director.

Condemnation is nothing new for public agencies embarking on big public-works projects. For the 14-mile East Link extension from Seattle to Microsoft’s Redmond campus, Sound Transit is expected to displace 168 commercial buildings, the vast majority, like the ballet school, in Bellevue’s Spring District. The total budget for East Link property acquisition is $288.5 million, about $130 million of which has been spent, said Sound Transit spokesman Bruce Gray.

The two sides were in King County Superior Court on Friday arguing over how to establish the value of a ballet school located in an industrial facility that also houses several other businesses. An attorney for Sound Transit, Michael Fandel, argued that the usual standard — fair market value, determined by comparing the recent sales of comparable properties — is the correct method.

If Sound Transit has to pay the replacement costs for the ballet school, he said, the sum parts of the building will end up costing taxpayers more than the value of the entire building. He also argued that PNB’s lease with the building owner specifies that in the event of condemnation, the tenant has no right to compensation except for its improvements.

“The relief PNB seeks is unprecedented,” Fandel told Judge Theresa Doyle.

But the attorney for the ballet, Donna Barnett, said another way of establishing value is allowed when the building has a special use for which there are few buyers or sellers and the typical fair market value results in a “manifest injustice.”

She said in these circumstances, courts have said the value should be calculated using the amount it would cost to “substitute” or replace a new facility for the one being condemned.

She said that was the method used when the Washington State Department of Transportation condemned the former Museum of History & Industry in Montlake for construction of the new Highway 520 bridge. For the building, MOHAI accepted a $40 million settlement from the state and relocated to South Lake Union.

Doyle said she would rule on the methodology question Monday, but the amount the ballet is ultimately awarded could be established by a jury. Sound Transit and PNB have a trial date in June.

The Eastside ballet school, The Francia Russell Center, is named for PNB’s co-founding artistic director. With her husband Kent Stowell, Russell created one of the top ballet schools in the country. About 600 students enroll in classes each year and 400 more are on waiting lists. The instructors are all former professional dancers. A live pianist or other musician accompanies every class.

Walker said the negotiations over the past two years with Sound Transit have been particularly disheartening because she supports light rail and the agency’s plans to expand to more of the Puget Sound region.

“To feel no reciprocal support or recognition of the value we bring to the region has been really hard,” she said.

But new leadership at Sound Transit may offer an alternative to costly litigation.

Last week, the agency’s new CEO, Peter Rogoff, met with Walker for more than two hours at the Eastside school.

“I think we share a mutual desire to get to an agreement that enables the ballet to continue operating as a school and to maintain its high-quality facility,” Rogoff said after the meeting.

Some political leaders, including King County Executive Dow Constantine, who is chairman of the Sound Transit Board, and County Councilmember Claudia Balducci, former mayor of Bellevue, have urged Rogoff to resolve the issue.

Balducci said the ballet, which first started offering classes on the Eastside in 1986, is an integral part of the community.

“To have them move away would leave a big hole in the city,” she said. “Dow and I are committed to finding a solution.”

Linda Inagawa has watched her daughter grow up in the school, from a 2½- year-old tot in a “Mommy and Me” class, to a 4-year-old putting on a leotard and pulling her hair into a bun for the first time, to a poised 11-year-old dancing in “The Nutcracker” on the grand stage at McCaw Hall.

She said she’s visited other dance studios where the ceilings are lower, the space smaller, the wood floors harder on the dancers’ feet and knees.

“This is one of the top ballet schools in the country and they want to tear it down,” she said in disbelief. “I hope Sound Transit will provide full replacement costs and rebuild nearby. I was shocked when I found that’s not what’s happening.

“I hope it gets resolved quickly,” she said.