G Street Associates v. Department of Housing, Etc.
| Decision Date | 02 June 1981 |
| Docket Number | No. 80-4.,80-4. |
| Citation | 430 A.2d 1387 |
| Parties | G STREET ASSOCIATES, Petitioner, v. DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT, Respondent. Don't Tear It Down, Inc., Intervenor. |
| Court | D.C. Court of Appeals |
Michael A. Cain, Washington, D. C., with whom J. Kirkwood White and Beth Irons French, Washington, D. C., were on the brief, for petitioner.
Richard B. Nettler, Asst. Corp. Counsel, WAshington, D. C., with whom Judith Rogers, Corp. Counsel, and Richard W. Barton, Deputy Corp. Counsel at the time the brief was filed, Washington, D. C., were on the brief, for respondent.
Before KERN and PRYOR, Associate Judges, and GALLAGHER,* Associate Judge, Retired.
This is an appeal from an order entered by the so-called Mayor's Agent pursuant to the Historic Landmark and the Historic District Protective Act of 1978. D.C. Law 2-144, codified as D.C.Code 1980 Supp., § 5-821 et seq. (The Act), denying a permit to demolish the building now standing at 901 F St., N.W.
The property in question is located at 901 F St., N.W. on Lot 800, Square 376. The building on that property (the Building) was designed and built in 1867-69 by noted architects of the period in a modified French Renaissance style. It has historical importance for its use as the Masonic Temple from 1870 to 1908. Its location opposite the Old Patent Office (now designated the American Art Portrait Gallery) enhances its importance to the architectural and aesthetic integrity of the city.
The Building has long been recognized as of historic and architectural importance. It was placed on the National Register of Historic Places on May 8, 1974, and, as a Category II Landmark, on the District of Columbia Inventory of Historic Sites since the Inventory was first established in 1964. The building was subjected to substantial architectural changes in the 1920's to make it more suitable for commercial use, acquiring at that time the name "Lansburgh's" in reference to the store which occupied it. It is now unoccupied, structurally sound, and in a poor condition of maintenance and repair. These facts are uncontested by all parties.
Petitioner acquired the building on January 23, 1979, under an agreement entered into with the Young Women's Christian Association of the National Capital Area (YWCA) on September 15, 1978. That agreement provided for an exchange of land then held by petitioner for the property on which the Building is located plus additional sums of money. The YWCA held a lease and an option to purchase on the Building and its site. A fixed sum ($594,000) plus an additional sum of up to a maximum of $48,000, payment of which was contingent upon the speed and ultimate success of petitioner in obtaining the requisite authorization to demolish the Building, was to be paid by the YWCA to appellant in addition to the property exchange. The exchange was effected according to the agreement, except petitioner, and not the YWCA, made the purchase of the Building and its site directly from the then owner of record under the option to purchase.
Petitioner owns property separated by a public alley from the property on which the Building is located. It has applied for permission to close this alley and plans, upon demolition of the Building and the closing of the alley, to construct a major commercial office building upon its joint properties, including that property on which the Building now sits.
In late 1978 or early 1979, the Aaron Straus and Lillie Straus Foundation, Inc., a Maryland corporation and the then owner of record of the Building and the property on which it is located, applied under District of Columbia Council Regulation No. 73-25, which was the predecessor of the Act, to demolish the Building. As prescribed under that earlier Regulation, the Joint Committee on Landmarks considered the application for demolition and advised against it. The Mayor subsequently entered an order on March 2, 1979, delaying demolition pending negotiations with civic associations and public agencies with regard to ways in which the Building might be saved.
On July 12, 1979, petitioner applied for a demolition permit pursuant to the Act. A two-day hearing ensued, at which, by request of petitioner, the Mayor's Agent considered only testimony and arguments bearing on the issue of "unreasonable economic hardship" to the owner which would occur if the application to demolish the Building was denied. On December 21, 1979, the Mayor's Agent denied the application for a demolition permit. It is this denial which is before this court on appeal as a result of the petition for review.
The District of Columbia has protected historic landmarks to some degree since 1973. In doing so, the District of Columbia has followed the practice of many states and cities, which has been universally recognized as a legitimate exercise of governmental power. See Penn Central Transportation Co. v. New York City, 438 U.S. 104, 129, 98 S.Ct. 2646, 2661, 57 L.Ed.2d 631 (1978). The present Act was passed by the City Council on November 28, 1978, signed by the Mayor on December 27, 1978, and became effective on March 3, 1979. It increased the protection afforded historic landmarks and districts.
The Act requires, in pertinent part [§ 5-824(a)], that before the Mayor may issue a permit to demolish a building listed in the National Register of Historic Places or the District of Columbia Inventory of Historic Sites, the Mayor must review the application by seeking the recommendation of the Historic Preservation Review Board [§ 5-824(b)] and must find that "issuance of the permit is necessary in the public interest, or that failure to issue a permit will result in unreasonable economic hardship to the owner." [§ 5-824(e).] In this case, the Joint Committee on Landmarks of the National Capital sat as the Historic Preservation Review Board and recommended against issuance of the permit. The Mayor was required, prior to determining to issue the demolition permit, to hold a public hearing. [§ 5-824(c).] "Unreasonable economic hardship" is defined in the Act as amounting "to a taking of the owner's property without just compensation [§ 5-822(n).]
We point out that only the "unreasonable economic hardship" issue was considered in evaluating the application for demolition. At the hearing, an owner of a building is required to submit certain enumerated items of information [§ 5-824(g)(1)(A) and (B)] and any additional information which the Mayor may deem relevant. [§ 5-824 (g)(2).] Among the information to be supplied by the owner is "any consideration by the owner as to profitable adaptive uses for the property . . ." [§ 5-824 (g)(1)(A)(vii).]
Final orders of the Mayor, entered on his behalf by the Mayor's agent, are reviewable in this court. D.C.Code 1978 Supp., § 1-1510 and D.C.Code 1980 Supp., § 5-832(b).
Petitioner has raised a number of issues and voiced a number of complaints regarding the manner in which the Mayor's Agent conducted the hearings and the content of the decision of the Mayor's Agent denying a permit to petitioner for demolition of the Building.
The relevance of some of these issues and complaints is directly contingent upon a determination by this court of preliminary questions of law and procedure in accordance with the position of appellant.
No party has claimed that the designation of the Building as a historic landmark worthy of preservation was made arbitrarily or improperly.
No party has challenged the legitimacy of the Act.
No party has challenged the conclusion of the law of the Mayor's Agent that petitioner has the burden of proof in establishing "unreasonable economic hardship." (Record at 931.)
The basic question presented in this case is: at what juncture does the diminishment in value allegedly resulting from the governmental restriction on the use of property constitute an "unreasonable economic hardship" to the owner, which is here synonymous with an unconstitutional "taking"?
Preliminarily, we note there may be cases in which it is relevant to determine the reasonable expectations of profit which the owner or purchaser of a property entertained when purchasing the property before the government imposed restrictions. This is not such a case. The mere sale of a property does not expunge the rights of the prior owner, which become vested in the new owner, to compensation for taking its property. However, in this case, we must weigh in our calculations the listing of the Building on designated historical preservation rosters, the difficulties encountered by a prior owner in securing a permit for demolition of the Building, the terms of the agreement between the YWCA and appellant which contemplated the possibility that obtaining a permit to demolish the Building would be neither swift nor certain, and the publicized efforts of the City Council to enact a more stringent historical preservation statute.
These all must have influenced the price which petitioner was willing to pay for the property, its realistic expectations for the uses which could be made of the property, and the profit that could be made from such uses or resale of the property. Purchases of land such as in the instant case are, by their very nature, speculative and profits on use of the land, if indeed there are any, or its appreciation in value, must necessarily be conjectural. If, as petitioner states in its brief (Petitioner's Brief at 9), its transaction with the YWCA constituted, in part, a virtual charitable contribution, any analysis of the expectation of profit is necessarily even more unascertainable.
For the purpose of determining this case and without asserting that such assumptions are required by law, we will assume, as petitioner argues, the following: (1) that the property had been diminished in value by the inclusion of the Building within the protection...
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