Opinion ID: 2197846
Heading Depth: 2
Heading Rank: 3

Heading: Substantive Arguments

Text: Throughout their brief petitioners claim to have a vested interest in the current balance of uses within the PUD that should prevent conversion of the Hotel property to co-operative apartments. Indeed, petitioners assert that by approving the modification to the Hotel property, the Commission is unilaterally realign[ing] private rights absent a legitimate state interest, and that this amounts to an unconstitutional taking of private property. There is no merit in this argument. There is no vested right in zoning classifications. Foggy Bottom, 639 A.2d at 583 (citing Aquino v. Tobriner, 112 U.S.App. D.C. 13, 16, 298 F.2d 674, 677 (1961)); see also Scholtz P'ship v. District of Columbia Rental Accommodations Comm'n, 427 A.2d 905, 918 (D.C.1981) (A vested right must be more than a mere expectation based on the anticipated application of existing law.); Foggy Bottom Ass'n v. District of Columbia Office of Planning, 441 F.Supp.2d 84 (D.D.C.2006) (rejecting a takings claim based on alleged failure of Zoning Commission and the Office of Planning to enforce their regulations and a previous order). Indeed, the purpose of PUDs is to permit flexibility, see 11 DCMR § 2400.2, and the ability to modify a PUD is consistent with that purpose. This court held, in Foggy Bottom, that the Commission was allowed to balance the loss of existing amenities against the gains to be realized from the proposed new amenities or public benefits. 639 A.2d at 583. The end result was elimination of previous PUD characteristics in favor of new ones. Because there are no vested property rights at risk, we reject petitioners' suggestion that there has been an unconstitutional taking of private property by the government. A taking is defined as [t]he government's actual or effective acquisition of private property either by ousting the owner or by destroying the property or severely impairing its utility. BLACK'S LAW DICTIONARY 1493 (8th ed. 2004); see also Lingle v. Chevron U.S.A., Inc., 544 U.S. 528, 125 S.Ct. 2074, 161 L.Ed.2d 876 (2005) (describing four types of takings); Mamo v. District of Columbia, 934 A.2d 376 (D.C.2007) (owner of franchise business which occupied land taken by the District of Columbia was not entitled to compensation for business losses, goodwill, and other such consequential damages); Arthur v. District of Columbia, 857 A.2d 473, 491 (D.C.2004) (discussing Supreme Court decisions distinguishing between a physical taking and a regulatory taking). The petitioners obviously are not being ousted from their apartments, and their property is not being destroyed. The government is not acquiring anything  a willing buyer has contracted to purchase the Hotel property from a willing seller. Moreover, petitioners are not being restricted from making customary uses of their own property. They claim, instead, that their dwellings will be less valuable to them  that they will enjoy living at the Watergate less  if the Hotel is replaced. We rejected a similar claim in Dupont Circle Citizens Ass'n v. Barry, 455 A.2d 417, 423 & n. 26 (D.C.1983) (approval of a construction permit to build on vacant land in an historic area of the city did not amount to a taking or otherwise threaten to affect any constitutionally protected interests in a concrete manner). See also Embassy Real Estate Holdings, LLC v. District of Columbia Mayor's Agent for Historic Preservation, 944 A.2d 1036, 1053 (D.C.2008) (rejecting developer's argument that diminished margin of profitability due to designation of former embassy as an historic landmark constituted a taking); Hornstein v. Barry, 560 A.2d 530, 537 (D.C.1989) (en banc) (diminution in property value, standing alone, does not establish a taking). Petitioners nevertheless assert that they have reliance interests  that they bought their property with the understanding that the Hotel would continue to remain part of the Watergate PUD. [9] As we have explained, however, PUDs are not immutable arrangements. In fact, the zoning regulations contain procedures for modifying PUDs. Just as there are no vested rights in the continuation of a zoning classification, the residents of the Watergate complex had no reason to expect  in other words, no reasonable reliance interest  that the Watergate PUD would remain unchanged. Cf. Embassy Real Estate Holdings, 944 A.2d at 1053-55 (affirming determination that petitioner's investment-backed expectations were not reasonable). If there had been a covenant restricting use of the Hotel property, then the petitioners might have a more legitimate expectation that the Hotel would remain. [10] But the petitioners admit that there are no covenants restricting use of the Watergate properties. [11] To the extent the petitioners are suggesting that the approval [of all PUD owners] is necessary to governmental change in an established PUD, their position is contrary to law. The Commission recognized that an applicant is not required to secure the consent of all property owners for modification of the PUD. The Zoning Regulations do not require the consent of owners and, in practice, the Commission has not required unanimous consent of the owners of property within a PUD before approving a modification. We must defer to the agency's interpretation of the zoning regulations because it is not inconsistent with the regulations or plainly erroneous. Indeed, we previously have rejected an argument that the process must be terminated if any owner within the PUD does not consent to the application for modification. 1330 Connecticut Ave., 669 A.2d at 713.
Petitioners also contest the Commission's finding that the hotel was not an amenity to the overall project, as amenities are now defined and considered in Chapter 24 of the Zoning Regulations. The Commission explained that [w]hile the hotel may have been discussed in marketing and newspaper accounts as an amenity, that term was not incorporated into the Regulations until much later. Compare D.C. Zoning Reg. § 7501.1 (1962) (containing no reference to amenities) with D.C. Zoning Reg. § 7501.1 (1969) (requiring a PUD to provide a living and/or working environment and amenities superior to those available through application of the regular zoning regulations) (emphasis added) and 11 DCMR § 2403.5 (2003) ([T]he Commission shall also evaluate the specific public benefits and project amenities of the proposed development....). Given this history of evolving regulations, the Commission's finding that the hotel was not an amenity to the overall project (emphasis added) is a rational conclusion based upon substantial evidence. Current regulations require the Commission to evaluate the specific public benefits and project amenities provided to the occupants and immediate neighbors of the PUD or to the public in general. 11 DCMR §§ 2403.5, 2403.7. A project amenity is one type of public benefit, specifically a functional or aesthetic feature of the proposed development that adds to the attractiveness, convenience, or comfort of the project for occupants and immediate neighbors. 11 DCMR § 2403.7. The following are examples of categories in which public benefits and project amenities may be exhibited: urban design, architecture, open spaces, preservation of historic buildings, landscaping, creation of jobs, safe and effective transportation, affordable housing, and environmental benefits. 11 DCMR § 2403.9. In any event, this semantic debate makes no difference in this case. Even if the Hotel were considered to be an amenity as currently defined, it would not be insulated from change. The Commission would still have the authority to balance the loss of the amenity against the gains to be realized from the proposed modification. See Foggy Bottom, 639 A.2d at 586-87 (evaluating the loss of some amenities in the IMF PUD against the gain of new, proposed amenities). In essence, having the Hotel classified as an amenity would only entitle the petitioners to the application of a balancing test. See 11 DCMR §§ 2403.5 ([T]he Commission shall also evaluate the specific public benefits and project amenities of the proposed development....) & 2403.8 (In deciding a PUD application, the Commission shall judge, balance, and reconcile the relative value of the project amenities and public benefits offered, the degree of development incentives requested, and any potential adverse effects according to the specific circumstances of the case.) We appreciate that one of the great attractions of the Watergate complex is the concept of an integrated community combining a mixture of uses, and the Hotel undoubtedly adds several features enjoyed by many of its neighbors  including the petitioners. The Commission appreciated this as well. Although it did not call the Hotel an amenity, the Commission in effect treated it as such, balancing the loss of various features of the Hotel against the gains to be realized from the proposed modification. Indeed, the Commission altered the balance somewhat, approving the modification only after requiring the applicant to provide a health club and a restaurant  facilities of the Hotel which petitioners claim they use as residents of the apartment buildings. These requirements preserved certain of the most important benefits afforded by the Hotel to its neighbors. [12] The Commission concluded that the proposed modification would not change the essential nature of the Watergate PUD. While the mixed-use character of the PUD was integral to its approval, the loss of the hotel use will not change the project's mixed-use character. Because of the continued office building, retail, restaurant, and health club uses, the proposed modification will not result in a project that is purely residential. Moreover, the Commission noted, under current Zoning Regulations, the Watergate Hotel would have required special exception approval, whereas the proposed apartment house use can be commenced as a matter of right. It is counterintuitive to suggest that the preservation of a use that now requires a special except[ion] should be favored over the establishment of a use that is permitted by right. In sum, [t]he amenities and benefits provided are a reasonable trade-off for the change in use.... Petitioners obviously do not agree with this conclusion, but the Zoning Commission is charged with, and experienced in, conducting balancing of this sort, and we defer to its expertise. Dupont Circle Citizens Ass'n, 426 A.2d at 332.
Petitioners argue that the Hotel is a major component of the PUD  a primary use  and its elimination would radically alter the mix of uses. In making this argument, they assert that the Commission must treat the modification application in the same way that it reviews the initial PUD and that major changes to a PUD cannot be permitted without sufficient cause, if at all.... Changes to existing PUDs have been allowed in the past, effectively refuting the suggestion that changes to a PUD cannot be permitted ... at all. See 1330 Connecticut Ave., 669 A.2d 708 (upholding Commission approval of modification to an existing PUD); Foggy Bottom, 639 A.2d 578 (upholding approval of changes to the International Monetary Fund PUD); note 4, supra (detailing changes to the Watergate PUD). Furthermore, applications for modifications to an existing PUD must meet the requirements for and be processed as a second-stage application.... 11 DCMR § 2409.9. There is no exception or different process for proposed modifications that affect a primary use. Petitioners rely heavily on Gray v. Trustees, Monclova Township, 38 Ohio St.2d 310, 313 N.E.2d 366 (1974), in asserting that a major use of a PUD cannot be changed. However, that decision states, more modestly that the reasonable expectations of persons that the use of these areas [referring to open spaces and recreational areas] will not be radically altered after they become residents of the PUD are relevant evidence when such an alteration is challenged. Id. at 369 (emphasis added). [14] Although Gray invalidated an amendment to a PUD, that decision rests upon a distinction between legislative zoning and administrative action that is not relevant here, and its analysis seems to be largely outmoded in Ohio. See State ex rel. Marsalek v. South Euclid City Council, 111 Ohio St.3d 163, 855 N.E.2d 811, 814 (2006) (distinguishing Gray and another decision; the acts in those cases were found to be legislative because they effected a zoning change to the properties); Comm. for the Referendum of Ordinance No. 3844-02 v. Norris, 99 Ohio St.3d 336, 792 N.E.2d 186, 190-92 (2003) (and cases discussed therein); Zonders v. Delaware County Bd. of Elections, 69 Ohio St.3d 5, 630 N.E.2d 313, 319 (1994) (where specific property is already zoned as a PUD area, approval of subsequent development as being in compliance with the existing PUD standards is an administrative act....). Most importantly, Gray is not binding upon us, and we do not find it persuasive. We do agree with a portion of petitioners' argument  that change to the PUD cannot be permitted without sufficient cause. The question is how much cause is sufficient. In this case, the Commission decided to allow change to the existing PUD, concluding that the modification offered several public benefits. Among those benefits are an increase in the housing stock in an area that badly needs it. [15] Although it recognized that the hotel was an important component of the project as originally conceived[,] the Commission found that [t]he amenities and benefits provided [by the modification were] a reasonable trade-off for the change in use.... Petitioners also protest that the Commission did not consider the PUD as a unit. To the extent they suggest that the unit must remain static, we have already rejected that argument. Moreover, its order reveals that the Zoning Commission recognized the interconnectedness of the PUD when conducting its balancing function, and the end result after the modifications will still be a mixture of uses. We reject petitioners' implicit invitation for us to weigh the evidence anew. Even if we focus upon the intent and purposes of the first-stage approval, as petitioners urge us to do, there is still substantial evidence to support the Commission's decision. The original Watergate PUD was to have approximately 1,600 dwelling units. Today, however, there are only approximately 650. By adding the 133 proposed units, the modified PUD would come closer to, yet still fall well below, the originally-contemplated number of residential units. Ultimately, all of this information (including the loss of the Hotel) must be balanced by the Zoning Commission pursuant to 11 DCMR § 2403.8. As a court of review, we must acknowledge that this question is better answered by the Zoning Commission which has the expertise to make such a broad justification based on elements of fact, policy, and experience. Dupont Circle Citizens Ass'n, 426 A.2d at 332.
The Commission may not approve the application unless it finds that the proposed PUD is not inconsistent with the Comprehensive Plan and with other adopted public policies and active programs related to the subject site. 11 DCMR § 2403.4. The petitioners argue that the proposed modification violates two provisions of the city-wide Comprehensive Plan, namely 10 DCMR §§ 1331 and 1333. Section 1331.3 recognizes that additional hotels will be needed to fulfill increased demand in Ward 2, and § 1333.1(a) notes that the District should [e]ncourage continued improvement of existing hotels[.] The Commission acknowledged that encouraging hotel development was part of the Ward 2 portion of the Comprehensive Plan. It found, however, that focusing on the particular sections of the ... Plan concerning existing hotels, without reference to other parts ..., does not yield a complete picture of the goals, objectives, and policies of the Plan. Reading the plan as a whole, as the Commission concluded it must, it found a stronger emphasis placed on housing than hotel development, and that hotel development was not necessarily intended for the Foggy Bottom neighborhood of Ward 2. The Commission's decision was not inconsistent with the regulations. To the contrary, the Comprehensive Plan recognizes the need to [s]timulate production of new and rehabilitated housing to meet all levels of need and demand in Ward 2, 10 DCMR § 1304.1(a), and expresses concern about the impact of hotel development on nearby residential areas, especially ... in Foggy Bottom.... 10 DCMR § 1331.4. Although the Plan does mention that hotel growth is a key objective in Ward 2, it proposes that the growth take place at and around the new convention center at Mount Vernon Square. See, e.g., 10 DCMR §§ 1333.1(a)(5) and 1331.5. The Comprehensive Plan also sets goals of [i]ncreasing the quantity and quality of employment opportunities in the District and strengthening the District's role as an economic hub. 10 DCMR § 101.1(b) & (h). The Commission found that new residents would generate significant local income, property, and sales tax revenues for the District; the employees of the Hotel would find employment at other area hotels; and the new residents' high incomes and purchases would create retail and service jobs. Although disputed, these findings were supported by substantial evidence. An expert testified that the changes would create 453 new jobs, and that there would be a $32 million increase in consumer expenditures from the new residents as well as increased taxes in the amount of $4.2 million a year. The Commission also considered the modification's effect on traffic in and around the Watergate complex. Although such considerations are not a part of the Comprehensive Plan, measures to mitigate adverse traffic impacts are considered benefits and amenities in the PUD evaluation process, 11 DCMR § 2403.9(c), and the Commission made several relevant findings. For example, it found that after conversion of the Hotel to co-op apartments there would be fewer vehicle trips during peak driving hours. This finding is based on the testimony of traffic consultants from Wells & Associates, whose report was confirmed by the District Department of Transportation. The petitioners submitted the testimony of an opposing expert, but the Commission found his methodology and findings flawed.