Hardship designation at 40th & Pine confirmed by split L&I Review Board

The Board of L&I Review tacitly affirmed the Historical Commission’s finding of hardship for a historic mansion at 400 S. 40th Street Friday afternoon. The vote was split, with two members voting to sustain the appeal brought by a group of residents including Woodland Terrace Homeowners Association, and two voting to affirm the Commission’s decision. Since the burden of proof is on the appellant, the tie goes to the appellee: the University of Pennsylvania, which owns the historic building.

The Historical Commission granted Penn a hardship for the building last May, by a 7-2 vote. Boni, representing the homeowners’ association, Guy Laren of Constellar Corp., and various other parties, appealed the decision to the Board shortly thereafter. The Board held its first hearing on the case last July.

The subject of the appeal was whether the Historical Commission granted the hardship in error. Seminal reading on financial hardship in preservation cases from Eyes on the Street’s Ashley Hahn can be found here.

Attorneys for Penn, the City, and the appellants made a host of arguments and presented stacks of evidence throughout the course of the 7-month Board of L&I Review case. But closing arguments on Friday summed it up relatively neatly.

Boni argued that Penn had proven only that the building could not be adapted for its own purposes, but that it had failed to prove the building couldn’t be used by others. His argument hinged on the language of the City’s historic preservation ordinance and of the Historical Commission’s own rules and regulations.

In particular, Boni focused on a line from the regulations which says, in proving hardship, “The applicant has an affirmative obligation in good faith to attempt the sale of the property, to seek tenants for it, and to explore potential reuses for it.”

Boni—referring to the regulations’ “separate, independent, mandatory obligations”—said that Penn had not attempted an outright sale of the property, thereby foreclosing potential reuses from smaller developers who wouldn’t be interested in entering a long-term lease with the University. He argued that Penn was more interested in controlling the property than finding any potential use for it.

“All the evidence showed that Penn couldn’t use this building,” Boni said. “That’s not the question.”

City Solicitor Andrew Ross, representing the Historical Commission, said that the appellants’ argument changed depending on their goals. He said that Boni argued that the hardship has nothing to do with what Penn can do with the building, but then built a case around “tagging everything to some sort of personality of the applicant.” Ross argued that, as the preservation ordinance says, hardship applicants must show that a sale is “impracticable.” Penn had met that burden, he said, and an agency’s regulations cannot require anything beyond what’s in the law itself.

Ross also said that case law shows that city agencies—such as the Historical Commission—are to be given “broad deference” to interpret their own rules and regulations. The Board should only sustain an appeal of a Commission decision if the Commission had made a clear mistake or an obviously arbitrary decision.

Matt McClure, a Ballard Spahr attorney representing Penn, said that the University bought the building as a good deed, to fix up a problem property, and that it had been punished for doing so over the last ten years by neighbors who opposed a series of redevelopment proposals. He said that the University’s offer of a 45-year ground lease should not only be considered the equivalent of an attempt to sell, but that it was even more enticing because Penn was willing to effectively subsidize a portion of the rent while a tenant built his or her project.

He pointed out that the Board of L&I Review had ruled in a previous case that attempting an outright sale of a property was not an absolute requirement to prove hardship.

McClure also said that at no time during the case had anyone uttered the phrase, “This building is worth saving because …” He said that no one had made the case for the architectural or historical significance of the building, and that the appellants’ own witnesses had called it “somewhat mutilated,” “awful,” and “not very good.” Boni said he hadn’t made a case around the significance of the building because, legally speaking, its significance is irrelevant.

Attorneys for both sides said they were pleased with the decision. Boni lost the appeal, but said that the fact that half of the Board voted in the appellants’ favor is confirmation that they have a good case at the Court of Common Pleas.

Developer Jonathan Weiss was selected by Penn for the project. He plans to demolish the historic structure and construct a 5-story, 122-unit student apartment building in its place. The Zoning Board of Adjustment granted a handful of variances for the project last year; Boni has appealed that decision to Common Pleas.

Contact the reporter at jbrey@planphilly.com and follow him on Twitter @jaredbrey