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09/07/90 DARO REALTY v. DISTRICT COLUMBIA ZONING

September 7, 1990

DARO REALTY, INC. AND DUPONT CIRCLE CITIZENS ASSOCIATION, PETITIONERS
v.
DISTRICT OF COLUMBIA ZONING COMMISSION, RESPONDENT, FOURWAYS OF WASHINGTON, INC., INTERVENOR



On Petition for Review of a Decision of the Zoning Commission of the District of Columbia

Rogers, Chief Judge, and Newman, and Ferren, Associate Judges.

The opinion of the court was delivered by: Newman

Petitioners appeal an order by the Zoning Commission ("Commission") rezoning a 14,000 square foot parcel near Dupont Circle from R-5-B, medium density general residence, to R-5-C, medium-high density general residence. The parcel is owned by Intervenor, Fourways of Washington, Inc. ("Fourways") and is the site of a national historic landmark building known as the Fraser Mansion, where Fourways operated a now defunct restaurant. Under the terms of the Commission's order, the restaurant was to continue to operate, as before, under a lawful nonconforming use, and Fourways was to erect an attached seven-story apartment building, which was approved by the Historic Preservation Review Board ("HPRB"), on an existing parking lot. Petitioners contend, among other things, that the order constitutes illegal spot zoning and that the Commission's findings are not supported by the record. We disagree and affirm.

I

Intervenor, Fourways, owns a 14,000 square foot parcel near Dupont Circle, which includes a four-story building known as the Fraser Mansion at 1701 20th Street, N.W. The building has been used as a restaurant since 1932. In 1958, the property was rezoned from commercial to R-5-B, medium density general residency. However, the commercial use of the building was continued as a lawful nonconforming use. In 1974, the building was placed on the National Register of Historic Places; all subsequent changes to its exterior and new construction are therefore governed by the Historic Landmark and Historic District Preservation Act ("Preservation Act"). *fn1 Fourways purchased the property in 1981 for $2 million, spent another $3 million in renovations, and opened the Fourways Restaurant in October 1982.

Fourways had difficulty making a go of the restaurant and, in 1985, sought refinancing to pay off existing debts. In order to make the property more attractive to potential lenders, Fourways sought to remove the building's nonconforming use by having the parcel rezoned for commercial use and erecting a six-story apartment building on the portion of the parcel now used as a parking lot. The proposed building required the approval of the Historic Preservation Review Board. After asking to see five-story and seven-story versions of the building, the HPRB determined that the latter would make a better transition between the four-story Fraser Mansion and adjacent high-rise apartment buildings and approved the seven-story design in the Fall of 1986. Meanwhile, Fourways applied to the District of Columbia Zoning Commission for a zoning change from R-5-B, medium density general residence, to C-3-B, medium bulk major business and employment center commercial use. In support of its application, Fourways recorded a Declaration of Covenants restricting use and development of the property and naming the District of Columbia and residential neighbors within 75 feet of the property as beneficiaries.

Following public hearings, during which the application was opposed by the Office of Planning ("OP") and various neighborhood groups, the Commission denied the application on July 13, 1987, citing inconsistency with the District's Comprehensive Plan, adverse impact on the surrounding neighborhood, and failure to serve public welfare as factors in its decision. See Zoning Commission Order ("Z.C. Order") No. 537 (July 13, 1987). On September 3, 1987, Fourways filed a motion for reconsideration, with a revised covenant and three alternative proposals: (1) to grant C-2-B zoning with a new covenant addressing community concern about hotel use by restricting the proposed building to residential use, (2) C-2-B zoning with a different covenant precluding hotel use and limiting uses of the Fraser Mansion, and (3) split-zoning the parcel to provide C-2-B zoning for the portion containing the Fraser Mansion and R-5-D zoning on the remainder to allow high-density residential development. At a public hearing, the OP testified in favor of the second proposal, citing the change to C-2-B zoning and the amended covenant as providing adequate protection against future development. Neighborhood groups continued their opposition. The Commission was set once again to deny the application, although it had not yet issued a final decision, when counsel for Fourways proposed as an alternative that the Commission grant a change from R-5-B to R-5-C, medium-high density general residence, or R-5-D, high density general residence zoning.

The Commission reopened the record and asked the OP and the other parties in the case for comment on the new request. After receiving letters from Fourways, Advisory Neighborhood Commission 2-B, Dupont Circle Citizens Association, Residential Action Coalition, Citizens Coalition Against Commercial Encroachment off Dupont Circle, and Daro Realty, Inc., the Commission voted to approve the request and rezone the parcel to R-5-C, medium-high density general residence. In doing so, the Commission found that the proposed building was not inconsistent with the District's Comprehensive Plan, and that it would contribute to the housing stock without adversely affecting the surrounding community. Petitioners filed an appeal. *fn2

During the pendency of the appeal, the creditors of Fourways filed a petition for involuntary relief under Title 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Columbia. The bankruptcy court granted that request on September 14, 1989. In re Fourways, Inc., No. 89-00675 (September 14, 1989).

We heard oral argument on October 5, 1989, following which we remanded the record to the Commission "to specify the terms, conditions and legal effect of the referenced covenant" and "for clarification of Finding 23 as to whether the use desired by the applicant can be achieved under current R-5-R zoning." Daro Realty, Inc. v. District of Columbia Zoning Comm'n, 581 A.2d 295 (Order, November 6, 1989). The Commission responded with Z.C. Order No. 555-A (March 12, 1990), in which the Commission addressed our questions.

On March 20, 1990, one of Fourways creditors, the National Bank of Washington ("NBW"), filed a motion with the Bankruptcy Court for the District of Columbia in the above mentioned involuntary bankruptcy proceeding requesting authority to foreclose on the property at issue here. *fn3

II

Petitioners make four main arguments in this appeal: (A) that the Commission's rezoning order constitutes illegal spot zoning; (B) that the Commission's rezoning order is not supported by substantial evidence in the record and is not accompanied by the requisite findings of fact and Conclusions of law on each material contested issue of fact; (C) that the Commission's findings regarding the effects of Intervenor's covenants are deficient; and (D) that the Commission erred by declining to hold a hearing on Intervenor's second request for reconsideration. We find no merit in these arguments and affirm.

A

We have defined spot zoning as the "wrenching" of a small parcel from its environment for the benefit of a single owner and without benefit to the public at large or the area affected, *fn4 and have adopted a two-pronged test:

To constitute illegal spot zoning, the Commission's action (1) must pertain to a single parcel or a limited area -- ordinarily for the benefit of a particular property owner or specially interested part -- and (2) must be inconsistent with the city's comprehensive plan, or if there is none, with the character and zoning of the surrounding area, or the purposes of zoning regulation, i.e., the public health, safety, and general welfare.

Citizens Ass'n of Georgetown, supra, 402 A.2d at 39-40. Petitioners have the burden of showing that both prongs of the spot zoning test are met. *fn5

To date we have issued four decisions on spot zoning. *fn6 All four involved the rezoning of small parcels of land to the benefit of single property owners and, thus, in all four the first prong of the test was satisfied. However, we affirmed the Commission in each case, because the petitioners failed to satisfy the second prong by showing that the rezoning either was inconsistent with the comprehensive plan and/or surrounding environment or that it failed to serve the purposes of zoning by contributing to the public welfare. *fn7

This case is indistinguishable from our four previous spot zoning cases. As in those cases, the first prong of the spot zoning test is satisfied -- the order rezones a single parcel, which will benefit a single property owner -- and, the second prong is not satisfied -- the Commission properly has found that the change is not inconsistent with the District's Comprehensive Plan and that it will benefit public welfare by increasing the housing stock without an "adverse effect upon the surrounding community." *fn8 Therefore, our holding in Citizens Ass'n of Georgetown applies equally well in this case:

In summary, while the . . . amendment does affect a limited area to the advantage of a single owner, it is not out of harmony with the comprehensive plan, with the character of the surrounding property, or with the purposes of zoning regulation. The Commission's action, therefore, does not amount to illegal spot zoning; the [rezoned property] has not been "wrenched" from its surroundings.

402 A.2d at 40.

Petitioners would distinguish this case from its four predecessors on grounds that (1) the parcel of land at issue is smaller than those involved in the preceding cases; (2) the parcel of land at issue is "not vacant or being developed with similar existing uses," as was the case in the preceding cases; and (3) unlike the owners in the other cases, Fourways was motivated to seek rezoning by its pressing financial problems. In addition, Petitioners contend that the record does not show public need for rezoning and ...


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