Gunston Hall Apartments received another reprieve from the wrecking ball last Thursday night. But, not without harsh words from the Board of Zoning Appeals for the City's legal machinations in dealing with the owner's proposal to sell the site either to the City as potential affordable housing or to another buyer for upscale redevelopment.
An eight building garden apartment complex constructed in 1939, Gunston Hall Apartments were designed by Harvey H. Warwick, a leading apartment architect in metropolitan Washington during the 1930s and 40s. By fronting on Washington Street, the complex becomes part of the George Washington Memorial Parkway, which is Washington Street as it passes through the City.
Krishnan Suthanthiran, trustee for the owner of the complex was hoping to redevelop the complex. After the city denied him a demolition permit in 2004, Suthanthiran put the complex up for sale.
Under city law, if there were no bona fide offers to purchase the property within a year, he would have to be given the permit.
Just prior to the deadline, the Alexandria Housing Development Corporation, using funds from bond sales, made Suthanthiran an offer.
The offer was rejected, and now the City and Suthanthiran are tangling over which of the two may not have been acting properly.
Eileen Fogarty, Alexandria's director of Planning & Zoning, sided with the City. Suthanthiran appealed her decision to the Board of Zoning Appeals.
The entire three hour BZA hearing focused on an appeal of decision that and the Dec. 22, 2005 letter coupled with it. Primarily, arguments put forth by both sides centered on technical interpretive issues of contract law as to the when, how and why offers, acceptance, consideration and rejections were made pertaining to the sale of the property.
"I think the City's legal work on this was very sloppy, sloppy, sloppy. I don't think the seller's actions were motivated by anything other than to protect their client. The City was extremely sloppy," said BZA member and attorney Mark Allen.
That was buttressed by Board member David Lantzy. "It seems to me the City should not put the seller in a position so as not to protect their client properly. I've seen nothing by the seller but to act properly," he said.
However, both Allen and Lantzy as well as each of the other four Board members voted to support Fogarty, in recommending denial of a demolition permit and determining that "the contract tendered by the Alexandria Housing Development Corporation to purchase Gunston Hall Apartments fully complied" with both the City Zoning Ordinance and Virginia Code."
"This seller had no choice but to try and make a judgment as to whether the City's actions were bona fide. However, I think there is enough in the facts we know to support the Director of Planning and Zoning," Allen said.
However, both BZA chair Mary Lyman and Board member Stephen Hubbard somewhat disagreed with their colleagues in chastising the City legal team. "I think the City did show due diligence and I have no qualms in supporting the Planning & Zoning Director," Hubbard said.
"The main complaint of the seller seems to be that not all the I's were dotted and T's crossed in the contract. I find that somewhat ingenuous since it was obvious that preservation was always the primary motive of the City," Lyman said.
AFTER SUTHANTHIRAN rejected the Alexandria Housing Development Corporation offer in 2005, the City Attorney determined that the sale offer had not been "bona fide."
If the sale offer was not made in good faith, the city would not be compelled to issue a demolition permit for the property.
The City Attorney also found the owner's view that the sale represented a forced sale below market value "inconsistent with the purpose and intent of the bona fide offer."
The City Attorney's office determined the owner's insistence on a "right of reverter or right to repurchase," in case the Alexandria Housing Development Corporation failed to comply with the provisions to restore and preserve, was inconsistent with the offer to sell. Lastly, the City Attorney found that "the property easement proffered by AHDC fully complied" with the requirements to preserve and restore the buildings.
During the Board of Zoning Appeals hearing, attorney Shawn Waingaster said, "The AHDC contract was so flawed the builder ordered us not to respond. We told the City their plan was a financial disaster."
Pointing out that, in his opinion, the City could eventually lose
$5 to $7 million in restoring the buildings, Waingaster said, "Even my offers for a pre-contract inspection were ignored by the City."
"When they did agree to inspect the property they only spent about an hour and a half. And, most of that time they spent asking questions about the residents not inspecting site details. I have never seen a group so flagrant about statutory deadlines and codes in 15 years of practicing real estate law. The City is not being served well by the people involved in this contract," Waingaster said.
That criticism was echoed by Attorney John Fagelson also representing Suthanthiran. "If there had been more effort by AHDC we would have sold for $12.3 million and moved on. It was too late, too little and it was sloppy," he said.
Arguing the City's case, Attorney Fred R. Wagner said, the city's Department of Planning and Zoning have the discretion to determine if the law is being followed. "The seller is taking advantage of what was part of the discussions to interpret flaws in the contract. The applicant's claim that this [$12.3 million] is a below market offer is not viable."
As to the question of "reasonable assurance" in preserving the buildings, H. Stewart Dunn, Jr., a member of the Alexandria Planning Commission and former member of the BZA stated during the public comment period, "There can be no doubt whatsoever that the City gave reasonable assurance. And, the National Park Service has been very much involved in preserving these buildings."
FOLLOWING DUNN, a variety of speakers, both representing organizations and speaking for themselves, rose to support Fogarty's decision to deny the demolition permit. "We fully support the decision of the Director of Planning & Zoning out of consideration of what this demolition would do to the southeastern quadrant of the City," said Townsend A. "Van" Van Fleet, president, Old Town Civic Association.
"There have been gross misrepresentations about the cost of restoring those buildings," said Linda Couture, one of the original petitioners to have Council overturn BAR's decision.
"Gunston Hall Apartments has raised the issue of property rights. We live in the Commonwealth of Virginia, an avowed property rights state. Yes, property owners are free to use their property as they see fit, but not to the extent that it becomes detrimental to other property owners," said Poul Hertel speaking in support of denying the demolition permit appeal.
"The constitution that BZA members have sworn an oath to, recognizes the importance of preservation and protects the public's right to purchase property at market value. Free market means the allocation of resources based on the free movement of prices. It does not mean laissez faire," Hertel said.
"Of course we are not opposed to affordable housing or our neighbors in Gunston Hall. But, we believe the demolition and redevelopment will make our area better. We also agree that Gunston Hall Apartments are not historically significant," said Maureen Duggan, president, Old Town Hunting Creek Association, speaking in favor of granting the demolition permit.
Duggan maintained that in addition to the $12.3 million purchase price there will be an addition $7.5 million spent on restoration "plus $1 million on asbestos removal." Restoration/preservation will also not help to solve the parking problems existing in the neighborhood, according to Duggan. "AHDC must be held to some standards as a private developer," she said.
Lyman pointed out, "Whether preservation and restoration is about affordable housing is not something we [The Board of Zoning Appeals] are here to deal with." She emphasized their focus was very narrow dealing only with the appeal of the demolition permit denial.
As noted in the staff report, many of the arguments put forth go beyond the BZA's authority, "which is limited to determining solely whether the Director's determinations in this case were reasonable." It was this fact that ultimately led to the Board's unanimous decision to deny the appeal. "I think that this is a relatively easy decision with what we (as a Board) have to deal with," Allen said prior to his criticism of the City's legal efforts.
Suthanthiran has 30 days to appeal the BZA decision in Circuit Court.