KALORAMA HTS. v. DIST. OF COLUMBIA

• Decision Date: 16 March 1995
• Docket Number: No. 92-AA-727,92-AA-727
• Citation: 655 A.2d 865
• Parties: KALORAMA HEIGHTS LIMITED PARTNERSHIP, Petitioner, v. DISTRICT OF COLUMBIA DEPARTMENT OF CONSUMER AND REGULATORY AFFAIRS, Respondent, and Sheridan-Kalorama Historical Association, Intervenor.
• Court: D.C. Court of Appeals

655 A.2d 865

KALORAMA HEIGHTS LIMITED PARTNERSHIP, Petitioner, v. DISTRICT OFCOLUMBIA DEPARTMENT OF CONSUMER AND REGULATORY AFFAIRS, Respondent, andSheridan-Kalorama Historical Association, Intervenor.

No. 92-AA-727.

District of Columbia Court of Appeals.

Argued February 10, 1994.

Decided March 16, 1995.

THIS PAGE CONTAINED HEADNOTES AND HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.

Benny L. Kass, with whom Michael H. Haberman, Washington, DC, was on the brief, for petitioner.

Lutz Alexander Prager, Asst. Deputy Corp. Counsel, with whom John Payton, Corp. Counsel at the time, Charles L. Reischel, Deputy Corp. Counsel, were on the memorandum in lieu of brief, Washington, DC, for respondent.

Samuel M. Forstein, with whom Alfred H. Moses, Washington, DC, was on the brief, for intervenor.

Before FERREN and TERRY, Associate Judges, and GALLAGHER, Senior Judge. ^*.

Former Associate Judge SULLIVAN was a member of the division that heard oral argument in this case. After his departure from the court, Associate Judge FERREN was selected by lot to replace him.

FERREN, Associate Judge:

Petitioner seeks review of an order of the Mayor's Agent under the Historic Landmark and Historic District Protection Act of 1978, D.C.Code §§ 5-1001 et seq. (1994 Repl.) (the Act), denying its application for a demolition permit for "Moses House," the former French Embassy in Northwest Washington. Petitioner challenges (1) the Mayor's Agent's finding that petitioner's proposed project was not one of "special merit," id. §§ 5-1002(10), -1002(11), -1004(e); (2) his finding that denial of the permit did not cause petitioner to suffer "unreasonable economic hardship," id §§ 5-1002(14), -1004(e); and (3) the "special merit" provision of the Act itself, id. § 5-1002(11), as unconstitutionally vague. Finding no error and no constitutional infirmity, we affirm.

I. Facts and Proceedings

Petitioner, Kalorama Heights Limited Partnership (KHLP), purchased "Moses House," located in the Sheridan-Kalorama Area at 2129 Wyoming Avenue, N.W., for $1,045,000 in January 1989.¹ KHLP planned to demolish Moses House and to develop the site as a twelve-family luxury condominium apartment building with underground parking. On June 13, 1989, KHLP filed an application for a demolition permit with the Department of Consumer and Regulatory Affairs.

Meanwhile, on February 13, 1989, the Sheridan-Kalorama Historical Association (the Association) had filed an application with the Historic Preservation Review Board (the Review Board) for designation of the Sheridan-Kalorama area as an Historic District. On August 16, 1989, the area was so designated and listed on the District of Columbia Inventory of Historic Sites. Subsequently, when the National Register of Historic Places recognized the Sheridan-Kalorama Historic District, Moses House was noted as a contributing structure in that Historic District.

Before purchasing Moses House, KHLP had been aware that its proposed condominium project would require substantial zoning variances.² Its lawyers had advised, moreover, that there was only a fifty percent chance these variances would be granted. KHLP's lawyers also had informed KHLPthat "preservationist impulses in the [Sheridan-Kalorama] area [were] quite strong."³

On April 25, 1990, several months after designation of the Sheridan-Kalorama area as an Historic District, KHLP's application for a demolition permit was referred to the Review Board. The Board's staff recommended denial.⁴ On July 18, 1990, the Review Board held a meeting to address KHLP's application at which the Board heard oral presentations and received written submissions. The Review Board subsequently adopted the staff's recommendation against demolition.

KHLP then requested a public hearing before the Mayor's Agent. Hearings were held on October 18 and November 1, 1990, and on March 6, 1991, the Association participated as a party in opposition. During these hearings, fifteen witnesses appeared and 31 exhibits were admitted in evidence. In addition, at the direction of the Mayor's Agent, an expert structural engineer inspected Moses House on November 29, 1990 and filed a report finding it structurally sound though in need of substantial repair. For its own part at the hearings, KHLP presented two arguments: that its proposed condominium project qualified as one of "special merit," D.C.Code § 5-1002(11), and that KHLP would suffer "unreasonable economic hardship," id. § 5-1002(14), if a demolition permit were not granted.⁵

On May 19, 1992, the Mayor's Agent issued a decision and order denying the requested permit. In his findings of fact and conclusions of law, he noted that KHLP had not explored "alternatives other than the existing residence or [KHLP's] proposed 12 unit building." He concluded that, as a consequence, KHLP had not met its burden of proving entitlement to a demolition permit as grounds of "special merit" or "unreasonable economic hardship." KHLP appeals this decision.

II. Standard of Review and Statutory Framework

We must uphold the Mayor's Agent's decision if the findings of fact are supported by substantial evidence in the record considered as a whole and the conclusions of law flow rationally from these findings. D.C.Code § 1-1510(a)(3)(E) (1992 Repl.); District of Columbia Preservation League v. Department of Consumer & Regulatory Affairs, 646 A.2d 984, 989 (D.C. 1994); MB Assocs. v. D.C. Dep't of Licenses, Investigation & Inspection, 456 A.2d 344, 345 (D.C. 1982); 900 G Street Assocs. v. Department of Housing & Community Dev., 430 A.2d 1387, 1391 (D.C. 1981). Moreover, when an agency's — and, correlatively, the Mayor's Agent's — decision is based on an "interpretation of the statute and regulations it administers, that interpretation will be sustained unless shown to be unreasonable or in contravention of the language or legislative history of the statute." Nova Univ. v. Educational Inst. Licensure Comm'n, 483 A.2d 1172, 1190 (D.C. 1984) (citation omitted), cert. denied, 470 U.S. 1054, 105 S.Ct. 1759, 84 L.Ed.2d 822 (1985). In making the necessary findings, a Mayor's Agent is "not required to explain why [he or she] favored one witness' testimony over another, or one statistic over another." Don'tTear It Down, Inc. v. D.C. Dep't of Housing & Community Dev., 428 A.2d 369, 378 (D.C. 1981) (citation omitted).

According to the Act, the Mayor's Agent may not issue a demolition permit unless he or she finds that [A] "issuance of the permit is necessary in the public interest, or that [B] failure to issue a permit will result in unreasonable economic hardship to the owner." D.C.Code § 5-1004(e). "Necessary in the public interest" is defined as "consistent with the purposes of this subchapter as set forth in § 5-1001(b)" (primarily referring to enhancement of historic landmarks and other structures in historic districts) or — of relevance to this case — "necessary to allow the construction of a project of special merit." D.C.Code § 5-1002(10). "Special merit" is defined, in turn, as "a plan or building having significant benefits to the District of Columbia or to the community by virtue of [1] exemplary architecture, [2] specific features of land planning, or [3] social or other benefits having a high priority for community services." D.C.Code § 5-1002(11). Finally, "unreasonable economic hardship" is equated with "a taking of the owner's property without just compensation." D.C.Code § 5-1002(14).

The applicant has the burden of proving entitlement to a demolition permit. See MB Assocs., 456 A.2d at 345; 900 G Street Assocs., 430 A.2d at 1391. In meeting this burden, the applicant must show that it considered alternatives to the total demolition of the historic building and that these alternatives were not reasonable. See Citizens Comm. to Save Historic Rhodes Tavern v. District of Columbia Dep't of Housing & Community Dev., 432 A.2d 710, 718 (D.C.) ("A developer should be required to show that all reasonable alternatives were considered"), cert. denied, 454 U.S. 1054, 102 S.Ct. 599, 70 L.Ed.2d 590 (1981); Don't Tear It Down, Inc., 428 A.2d at 379-80 ("an applicant may not reject plans which it reasonably should have considered, neglect to bring such plans to readiness, and at [the] hearing use the delay in completing such plans as a basis for rejecting the same; nor can 'necessary' be equated with 'least expensive' and all viable alternatives which are more costly than the one proposed by the applicant, be summarily rejected").

III. Special Merit

KHLP contends that its project "is necessary in the public interest," D.C.Code 5-1004(e), as "a project of special merit," id. § 5-1002(11). KHLP then stresses that the Mayor's Agent erred in his "special merit" analysis because he failed to weigh the historical significance of Moses House against the benefits that KHLP's project would confer upon the District. See Citizens Comm. to Save Historic Rhodes Tavern, 432 A.2d at 716 ("the Act implicitly requires that, in the case of demolition, the Mayor's Agent [must] balance the historical value of the particular landmark against the special merit of the proposed project").

It is important to make clear at the outset that the Mayor's Agent is not required to carry out such a balancing analysis unless the Agent finds that the project has "special merit." Committee of 100 on the Federal City v. District of Columbia Dep't of Consumer & Regulatory Affairs, 571 A.2d 195, 203 (D.C. 1990) ("the balancing of the historic value of the Woodward Building against the special merits of the project could not proceed until the Mayor's Agent found that the amenities proposed by [applicant] were sufficient to constitute a project of special merit"). In KHLP's case, the Mayor's Agent concluded that the proposed luxury condominium project did not have "special merit."⁶Accordingly, unless this conclusion does not flow rationally from substantial evidence...