DC Preservation League v. Mayor's Agent for Historic Preservation ( 2022 )

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DISTRICT OF COLUMBIA COURT OF APPEALS
No. 20-AA-614
DC PRESERVATION LEAGUE, PETITIONER,
v.
MAYOR’S AGENT FOR HISTORIC PRESERVATION, RESPONDENT,
and
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY, INTERVENOR.
Petition for Review of a Decision and Order of the
Mayor’s Agent for Historic Preservation
(HPA-297-18)
(Argued March 17, 2022 Decided September 15, 2022)
Nicholas H. Jackson for petitioner.
Matthew E. Morris for respondent. Karl A. Racine, Attorney General for the
District of Columbia, Loren L. AliKhan, Solicitor General at the time the brief was
filed, Caroline S. Van Zile, Principal Deputy Solicitor General, Ashwin P. Phatak,
Deputy Solicitor General, and Samson J. Schatz, Assistant Attorney General, were
on the briefs for respondent.
Katrina M. Krebs, with whom James Auslander and Gus Bauman were on the
brief, for intervenor.
Before EASTERLY and MCLEESE, Associate Judges, and CROWELL, Superior
Court Judge. *
*
Sitting by designation pursuant to D.C. Code § 11-707(a).
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MCLEESE, Associate Judge: Intervenor Washington Metropolitan Area
Transit Authority (WMATA) owns the Foundry Branch Trestle, which is a trolley
bridge that is no longer in use, as well as two associated parcels of land. WMATA
would like to demolish the Trestle, but it needs a permit to do so because the Trestle
is protected under District of Columbia historic-preservation law. The Mayor’s
Agent for Historic Preservation granted a demolition permit over the opposition of
petitioner DC Preservation League (DCPL). We vacate and remand.
I. Legal Background
WMATA’s request for a demolition permit rests on a claim “that failure to
issue a permit [would] result in unreasonable economic hardship to the owner.” D.C.
Code § 6-1104(e). To show unreasonable economic hardship, WMATA must show
that denying the permit request “would amount to a taking of the owner’s property
without just compensation” under the Takings Clause of the Fifth Amendment. D.C.
Code § 6-1102(14); Embassy Real Est. Holdings, LLC v. D.C. Mayor’s Agent for
Hist. Pres., 944 A.2d 1036, 1052 (D.C. 2008) (Section 6-1102(14) “incorporates the
Fifth Amendment’s protection against the taking of property without fair
compensation.”); U.S. Const. amend. V, cl. 5 (“[N]or shall private property be taken
for public use, without just compensation.”).
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The Takings Clause applies not only to physical takings of property but also,
in certain circumstances, to government regulations that unduly restrict a property
owner’s use of property. Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1014-16
(1992). Regulatory takings can occur in two ways. Id. First, a per se regulatory
taking can occur if a land-use regulation “denies all economically beneficial or
productive use of land.” Id. at 1015. Second, if “a regulation impedes the use of
property without depriving the owner of all economically beneficial use, a taking
still may be found based on a complex of factors.” Murr v. Wisconsin, 137 S. Ct.
1933, 1943 (2017) (internal quotation marks omitted) (factors include “(1) the
economic impact of the regulation on the claimant; (2) the extent to which the
regulation has interfered with distinct investment-backed expectations; and (3) the
character of the governmental action”).
The “test for regulatory taking requires us to compare the value that has been
taken from the property with the value that remains in the property.” Murr, 137 S.
Ct. at 1943 (internal quotation marks omitted). It therefore can be critical to
determine “how to define the unit of property whose value is to furnish the
denominator of the fraction.” Id. at 1944 (internal quotation marks omitted). The
Supreme Court recently clarified that there is no “exclusive test for determining the
denominator.” Id. at 1945. Rather, the analysis depends on a set of factors that
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“include the treatment of the land under state and local law; the physical
characteristics of the land; and the prospective value of the regulated land.” Id.
WMATA “is a government agency created . . . by the District of Columbia,
the State of Maryland, and the Commonwealth of Virginia with the consent of the
United States Congress.” Washington Metro. Area Transit Auth. v. Johnson, 467
U.S. 925, 927 (1984). It is undisputed that the property at issue in this case can
properly be viewed as “private property” for purposes of the Takings Clause and that
the Takings Clause applies to the refusal of the Mayor’s Agent to grant a demolition
permit. Cf. United States v. 50 Acres of Land, 469 U.S. 24, 31 (1984) (Takings
Clause applies to property of state and local governments allegedly taken by federal
government).
II. Factual and Procedural Background
The Mayor’s Agent held an evidentiary hearing on WMATA’s permit request.
Except as indicated, the following facts appear to be undisputed. The Trestle was
built in 1896 to provide trolley service from the Georgetown neighborhood in the
District of Columbia to Cabin John, Maryland. The Trestle spans two lots. About
sixty years after the Trestle was built, trolley service over the Trestle ended, and the
5
Trestle and lots became the property of a local bus operator, D.C. Transit. D.C.
Transit apparently did not use the Trestle, which fell into disrepair.
After extensive litigation, assets of D.C. Transit, including the Trestle and the
lots, were conveyed by court order to WMATA. Democratic Cent. Comm. v.
Washington Metro. Area Transit Comm’n, 84 F.3d 451, 453-59 (D.C. Cir. 1996) (per
curiam). The Trestle continued to go unused and deteriorated further, becoming a
hazard to hikers passing through the area.
WMATA presented evidence that it would cost from $2 to $4 million to
restore the Trestle and from $100,000 to $200,000 annually to maintain the Trestle.
According to WMATA, demolition of the Trestle would cost approximately
$800,000.
WMATA has unsuccessfully attempted to sell or donate the Trestle and lots
to various third parties, including the National Park Service, Georgetown University,
D.C. Water and Sewer Authority, D.C. Department of Parks and Recreation, and
D.C. Department of Transportation (DDOT). One WMATA employee testified that,
although discussions had not “gotten that far,” she believed that the National Park
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Service would accept the lots if the Trestle could be removed. Another WMATA
employee testified that demolition of the Trestle would “allow” such a transfer.
The 2019 assessed value for the two lots at issue added to more than $500,000.
Appraisals of one of the lots, performed in 2009, ranged from $84,000 to $730,000.
The Mayor’s Agent granted the requested permit, concluding that denial of
the permit would cause unreasonable economic hardship to WMATA. The Mayor’s
Agent’s decision was not clear about the definition of the property at issue, at times
referring solely to the Trestle, at other times referring to both the Trestle and the lots,
and at other times referring to the property or properties. In determining that denial
of the permit would cause undue economic hardship, the Mayor’s Agent focused on
the test applicable to per se regulatory takings. See Lucas, 505 U.S. at 1015 (per se
regulatory taking can occur if a land-use regulation “denies all economically
beneficial or productive use of land”). The Mayor’s Agent formulated that test in a
variety of ways, including whether there was “any other reasonable economic use
for the” Trestle and whether there was “any viable economic use for the property.”
See, e.g., 900 G St. Assocs. v. Dep’t of Hous. & Cmty. Dev., 430 A.2d 1387, 1391
(D.C. 1981) (in determining whether denial of permit to demolish historic building
was unconstitutional taking, court describes test as whether “there is any other
7
reasonable economic use for the Building”); id. at 1392 (discussing whether there
“was an alternative economic use of the property”). Without making findings as to
a number of the issues contested by the parties, the Mayor’s Agent concluded that
the Trestle had “no feasible use.”
III. Analysis
DCPL argues that the Mayor’s Agent erred in granting the demolition permit.
We agree.
This court’s review of the Mayor’s Agent’s decision is “limited and narrow.”
Embassy Real Est. Holdings, 944 A.2d at 1050 (internal quotation marks omitted).
We will uphold the Mayor’s Agent’s decision if the “findings of fact are supported
by substantial evidence” and the conclusions of law “flow rationally from these
findings.” Id. (internal quotation marks omitted). We will sustain the Mayor’s
Agent’s reasonable interpretation of statutes that the Mayor’s Agent administers. Id.We perceive two flaws in the decision of the Mayor’s Agent. First, as
previously noted, the decision is not consistent or clear as to the unit of analysis for
purposes of the Takings Clause: i.e., whether the inquiry is into the effect of a permit
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denial on the use of the Trestle or on the use of lots and the Trestle considered as a
whole. That lack of clarity is understandable, because our decisions have not been
clear on the point. E.g., 900 G St. Assocs., 430 A.2d at 1391, 1392 (sometimes
referring to whether there was alternative economic use of building and sometimes
referring to whether there was alternative economic use of property). On remand,
the Mayor’s Agent may need to explicitly address this issue, in light of the Supreme
Court’s recent decision in Murr, 137 S. Ct. at 1945.
More fundamentally, the Mayor’s Agent in our view erred on an issue of law
by focusing in the abstract on the Trestle’s usefulness or lack thereof. An owner
does not establish a per se regulatory taking simply by showing that the owner’s
property has no “economically viable use.” Lucas, 505 U.S. at 1015 (emphasis and
internal quotation marks omitted). Rather, the Takings Clause inquiry is into
whether government regulation caused the property to have no economically viable
use. See id. (per se regulatory taking can occur where “regulation denies all
economically beneficial or productive use of land”); Neifert v. Dep’t of Env’t, 910
A.2d 1100, 1119 (Md. 2006) (“Causation is a necessary element to establishing a
valid takings claim.”); Ventures Nw. Ltd. P’ship v. State, 914 P.2d 1180, 1187
(Wash. Ct. App. 1996) (“An owner claiming loss of the economically viable use of
property must show that the challenged government regulation proximately caused
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the loss of all such use.”); see generally Penn Cent. Transp. Co. v. City of New York,
438 U.S. 104, 124 (1978) (explaining that there is no “set formula for determining
when justice and fairness require that economic injuries caused by public action be
compensated by the government”) (emphasis added and internal quotation marks
omitted).
The Mayor’s Agent made no finding as to whether the denial of a demolition
permit would cause the Trestle to have no economically viable use. Apparently
undisputed evidence indicates the absence of such causation. The Trestle has no
current use, is in a dangerous condition, and would cost substantial sums to repair.
That is why WMATA seeks permission to demolish the Trestle, at significant
expense. In other words, the denial of a demolition permit would not cause the
Trestle to lack an economically viable use; rather, WMATA seeks a demolition
permit precisely because the Trestle already has no economically viable use. We
see no basis for a conclusion that the denial of a demolition permit would be a per
se regulatory taking of the Trestle. See, e.g., Neifert, 910 A.2d at 1119 (holding that
property owner failed to establish that denial of permit at issue constituted per se
regulatory taking, because property was undevelopable before denial of permits and
therefore denial of permits was not “proximate cause” of property being
undevelopable).
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The Mayor’s Agent did not explicitly address whether denial of a demolition
permit would be a per se regulatory taking of the property as a whole (i.e., the lots
and the Trestle taken together). The Mayor’s Agent thus did not resolve questions
that would be necessary to reach such a conclusion, including: (1) whether the
Takings Clause analysis should properly focus on the property as a whole rather than
simply the Trestle, see generally Murr, 137 S. Ct. at 1945; (2) whether the property
as a whole lacks any economically viable use in its current condition; and (3)
whether, if so, the denial of a demolition permit would be the cause of the lack of
any economically viable use. We leave those issues for possible consideration on
remand. Similarly, the Mayor’s Agent did not address whether the denial of the
demolition permit—even if not a per se regulatory taking—might amount to a
regulatory taking under the multi-factor test described in Murr, 137 S. Ct. at 1943.
We also leave that issue for possible consideration on remand.
We are not persuaded by the arguments in support of affirmance advanced by
WMATA and the Mayor’s Agent. First, WMATA and the Mayor’s Agent argue
that WMATA should not be “saddled” with the Trestle, because WMATA is a public
agency with a limited budget and should not have to divert funds to the Trestle, given
that the Trestle was in poor condition when WMATA became its “involuntary”
owner. Although the Mayor’s Agent did refer to WMATA as an involuntary owner
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of the Trestle, the basis for that reference in the record is not clear. Instead, the
record appears to indicate only that the Trestle and the lots were conveyed to
WMATA by court order. Democratic Cent. Comm., 84 F.3d at 453-59. In any event,
WMATA’s contentions do not seem relevant to whether denial of a demolition
permit would amount to a per se regulatory taking. Rather, they seem at most
potentially relevant to whether denial of a demolition permit would constitute a
regulatory taking under the multi-factor test described in Murr, 137 S. Ct. at 1943.
Second, WMATA argues that issuance of a demolition permit would make it
possible for WMATA to transfer the lots to the National Park Service, which would,
in the Mayor’s Agent’s words, “serve to protect [the] area’s historic character.” The
Mayor’s Agent made no finding, however, that issuance of a demolition permit
would make it likely that the lots would be transferred to the National Park Service.
Moreover, the evidence on that issue was quite scant, consisting of the beliefs of two
WMATA employees, one of whom acknowledged that discussions with the National
Park Service had not gotten that far. Finally, this consideration as well would not
establish the existence of a per se regulatory taking, although it might well be
potentially relevant to whether a regulatory taking could be established under the
general multi-factor approach to regulatory takings.
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Third, we are not persuaded by the arguments of WMATA and the Mayor’s
Agent that affirmance is warranted based on our decision in 900 G St., 430 A.2d at
1387-92. As we have already noted, our decision in that case was not clear as to
whether the proper unit of analysis was the building alone or the building and the
property on which the building sat. 430 A.2d at 1391-92. The Supreme Court’s
recent decision in Murr has emphasized the importance of that issue. 137 S. Ct. at
1943-45. In any event, we held in 900 G St. that there was no regulatory taking,
because there was evidence that the building at issue could be rented and that there
were possible purchasers for the property. 430 A.2d at 1392. 900 G St. does not
support the conclusion that denial of a demolition permit is a per se regulatory taking
where the structure and/or property at issue would have no economically viable use
whether or not the permit were granted.
For the foregoing reasons, we vacate the decision of the Mayor’s Agent and
remand the case for further proceedings.
So ordered.