2910 Georgia Avenue LLC v. District of Columbia
Case Information
*1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA 2910 GEORGIA AVENUE LLC,
Plaintiff,
Civil Action No. 12-1993 (CKK) v. DISTRICT OF COLUMBIA, et al. ,
Defendants.
MEMORANDUM OPINION
(February 14, 2017)
Plaintiff 2910 Georgia Avenue LLC filed suit against the District of Columbia, Mayor Muriel Bowser, and Polly Donaldson in her official capacity as Director of the Department of Housing and Community Development (“DHCD”), [1] alleging that the application of the District’s Inclusionary Zoning Program (“IZ Program”) to the development of a 22-unit condominium building near Howard University constituted an unconstitutional taking and violated Plaintiff’s due process and equal protection rights. Presently before the Court are Defendants’ [67] Renewed Motion for Summary Judgment and Plaintiff’s [68] Motion for Summary Judgment.
Upon consideration of the pleadings, [2] the relevant legal authorities, and the record for the purposes of these motions, the Court finds that Defendants are entitled to summary judgment on *2 each of Plaintiff’s claims. In so finding, the Court does not intend to minimize Plaintiff’s legitimate grievances with the District’s administration of the IZ Program, or to suggest that the District acted perfectly at all times. The Court merely concludes that at no point did the District’s conduct rise to the level of a violation of the United States Constitution.
First, the Court finds that the economic effect of the challenged regulations on Plaintiff’s condominium building is not sufficient to establish a takings claim as a matter of law. Second, Plaintiff has not established an equal protection claim because it has not demonstrated that it was treated differently by the District than any other developer subject to the IZ Program. Third, Plaintiff has not established a substantive due process claim because the conduct of the District at issue demonstrates, at most, confusion or negligence; it does not approach the level of grave unfairness or deliberate flouting of the law that is required for such a claim. Finally, Plaintiff’s procedural due process claim also fails because Plaintiff has not established that the IZ Program deprived Plaintiff of any protected property interests without sufficient process of law. Accordingly, Defendants’ motion for summary judgment is GRANTED and Plaintiff’s motion is DENIED.
I. BACKGROUND
A. The Basics of the District of Columbia IZ Program
As relevant to the parties’ dispute, the District of Columbia’s IZ Program requires that 8- 10 percent of the gross floor area of new residential developments (or substantial additions to existing developments) in the District be used for sale or lease to eligible low- and moderate- exercise of its discretion, the Court finds that holding oral argument in this action would not be of assistance in rendering a decision. See LCvR 7(f).
income households at certain maximum price levels. D.C. Mun. Regs. tit. 11, § 2603. [3] The affordable units created by the program are referred to as inclusionary units (“IZ Units”). Id. § 2601.1. The District enacted the IZ Program in order to “increas[e] the amount and expand[ ] the geographic distribution of adequate, affordable housing available to current and future residents.” Id. § 2600.1. Under the IZ Program, “no building permit shall be issued” unless the owner of the development subject to the IZ Program “records a covenant in the land records of the District of Columbia that binds all persons with a property interest in any or all of the [property] to construct and reserve the number of inclusionary units.” D.C. Code § 6-1041.05(a) (“IZ Covenant”).
B. The History of the IZ Program Rulemaking
The IZ Program was established by the District of Columbia Zoning Commission on August 25, 2006. Pl.’s Stmt. of Undisputed Material Facts, ECF No. 68-2 (“Pl.’s Stmt.”), ¶ 3. The Zoning Commission delegated responsibility for developing the IZ Program to the Council of the District of Columbia (“D.C. Council”) and the Mayor, who subsequently delegated that authority to the Deputy Mayor for Planning and Economic Development (“Deputy Mayor”). Id. ¶¶ 3, 5; Pl.’s Mot., Ex. 3, ECF No. 68-5 (Delegation of Authority – Inclusionary Zoning Implementation Act of 2006). The program was established pursuant to statutory authority set forth in section 107 of the Inclusionary Zoning Implementation Amendment Act of 2006. ¶ 4.
Although on the books as of 2006, the IZ Program was not implemented until certain rules and regulations were passed regarding its implementation. On April 11, 2008, the District, *4 through the Deputy Mayor, issued a Notice of Proposed Rulemaking for regulations that would implement and establish the procedures for the IZ Program. Id. ¶ 8; Pl.’s Mot., Ex. 6, ECF No. 68-8 (Notice of Proposed Rulemaking for Chapter 22 of Title 14 of the District of Columbia Municipal Regulations, entitled “Inclusionary Zoning Implementation”). Among other things, these regulations established the process and the requirements for obtaining building permits for properties subject to the IZ Program. Pl.’s Stmt. ¶¶ 8, 26; Pl.’s Mot., Ex. 6. The Notice of Proposed Rulemaking stated that “[f]inal rulemaking action shall be taken in not less than sixty (60) days from the date of publication of this notice in the D.C. Register .” Pl.’s Mot., Ex. 6 at 1. It also stated that the “[t]he Deputy Mayor [ ] intends that the final rules shall not become effective until ninety (90) days after publication of the Notice of Final Rulemaking in the D.C. Register in order to allow a transition period between publication and implementation.”
In the months after the Notice of Proposed Rulemaking was published, the District began to express its concern, in a series of published resolutions, that the IZ Program was not being implemented quickly enough. On October 21, 2008, the D.C. Council passed Resolution 17-848, which referenced the April 11, 2008 Notice of Proposed Rulemaking and noted that “final rulemaking, including the maximum rent and purchase price schedule [for the IZ Program] has not been published. Because final regulations have not been promulgated . . . and the maximum rent and purchase price schedule has not been published . . . the Inclusionary Zoning Program has not been implemented.” Pl.’s Mot., Ex. 11, ECF No. 68-13 (D.C. Council Resolution 17- 848). This resolution also stated that “[c]ontinuing delays [in implementing the IZ Program] have resulted in the loss of affordable mixed-income units being included in many residential developments” and that “[e]mergency legislation is need[ed] to provide that the final rulemaking and publication requirements for the Inclusionary Zoning Program be met expeditiously . ” Id.
On November 18, 2008, the D.C. Council passed Resolution 17-871, again stating that final rulemaking had not been published and again declaring an emergency as to the need to publish final rulemaking expeditiously so as to not lose further affordable housing in new developments. Pl.’s Mot., Ex. 12, ECF No. 68-14 (D.C. Council Resolution 17-871). This resolution also stated that “[t]he Administration has stated that because of significant changes that will be made to the proposed rulemaking based on comments received since the initial notice of proposed rulemaking, a revised notice of proposed rulemaking will be published for public comment.” Id. It also stated that “[t]he Administration has further stated that 90 days are needed for District agencies to finalize plans for the implementation of the rules after the notice of final rulemaking is published.” Id.
As promised, a Revised Notice of Proposed Rulemaking was then published on December 26, 2008, incorporating certain changes to the proposed rules. Pl.’s Mot., Ex. 13, ECF No. 68-15 (Revised Notice of Proposed Rulemaking). Of some note, the Revised Notice stated that “[t]he Deputy Mayor . . . intends that the final rules shall not become effective until sixty (60) days after the publication of the Notice of Final Rulemaking in the D.C. Register ,” which was thirty days less than the 90-day phase-in period envisioned in the initial proposed rulemaking. Id. at 1. The Revised Notice also stated that it replaced the initial notice, and that “[f]inal rulemaking action shall be taken in not less than thirty (30) days from the date of publication of this notice.”
By February 3, 2009, final rulemaking still had not been published, and the D.C. Council adopted another emergency resolution regarding the need for final rulemaking. Pl.’s Mot., Ex. 14, ECF No. 68-16 (D.C. Council Resolution 18-22). This resolution referenced the same emergency need for affordable housing as the emergency resolutions that predated it, and again *6 noted that “[t]he Administration . . . stated that 90 days were needed for District Agencies to finalize plans for the implementation of the rules after the notice of final rulemaking is published.” at 1.
The Notice of Final Rulemaking for these IZ Program regulations was then published on May 15, 2009. Pl.’s Stmt. ¶ 20; Pl.’s Mot., Ex. 18, ECF No. 68-20 (Notice of Final Rulemaking). Plaintiff contends that when this Notice was published, it was “not known, clear, or stated” when the rules were to become effective and applicable. Pl.’s Stmt. ¶ 20. As discussed in more detail later in this Memorandum Opinion, a number of Plaintiff’s legal arguments are premised on this claim. This claim is not, however, supported by the record, and the Court rejects it at the outset. The Notice stated that “[t]hese final rules shall become effective on the date of publication of this notice in the D.C. Register , but . . . shall not become applicable until ninety (90) days after such publication or the date on which the final Maximum Rent and Price Schedule is published in the D.C. Register , whichever is later.” Pl.’s Mot., Ex. 18 at 1. It is undisputed that the maximum rent and price schedule was published in the D.C. Register on August 14, 2009. Pl.’s Stmt. ¶ 20; Pl.’s Mot., Ex. 19, ECF No. 68-21 (Inclusionary Zoning Affordable Housing Program Maximum Rent and Purchase Price Schedule). Accordingly, the final rules became effective on August 14, 2009, after the lengthy notice and comment process described above and a significant “phase-in” period after publication of the Notice of Final Rulemaking.
Amendments to the IZ Program regulations were later made, but Plaintiff has provided absolutely no reason why the Court should excuse Plaintiff from having been on notice that the IZ Program was generally applicable, in all ways relevant to this case, as of August 14, 2009. On August 28, 2009, the Deputy Mayor published a Notice of Emergency and Proposed *7 Rulemaking, which gave notice of proposed amendments to the IZ Program rules. Pl.’s Stmt. ¶¶ 24-25; Pl.’s Mot., Ex. 21, ECF No. 68-23 (Notice of Emergency and Proposed Rulemaking). Plaintiff does not contend that these amendments are relevant to the applicability of the program to Plaintiff or to the claims in this case. The emergency rulemaking notice stated that the changes were needed to “fully implement” the IZ Program, but expressly acknowledged that the IZ rules had otherwise already been “previously adopted” and had an “August 14, 2009 effective date.” Pl.’s Mot., Ex. 21 at 1. Accordingly, although the Notice of Final Rulemaking for these amendments was not published until December 11, 2009, and became effective immediately on that date, Pl.’s Mot., Ex. 22, ECF No. 68-24 (Notice of Final Rulemaking), the IZ Program had otherwise, in all ways relevant to this case, already been in effect since August 14, 2009. C. Plaintiff’s Experience with the IZ Program
Plaintiff is a real estate company that invests in new housing in the District of Columbia. On November 24, 2009, over three months after the IZ Program rules became effective and applicable in the District, Plaintiff purchased the property at 2910 Georgia Avenue, N.W. from Howard University. Pl.’s Stmt. ¶ 19; Pl.’s Mot., Ex. 16, ECF No. 68-18 (Special Warranty Deed for 2910 Georgia Avenue property). Plaintiff purchased the property, then a vacant lot, for $560,000.00. Defs.’ Stmt. of Material Facts for Which There is Not Genuine Dispute, ECF No. 67-30 (“Defs.’ Stmt.”), ¶ 25. Plaintiff purchased this property with the intention of constructing a 22-unit condominium building. Pl.’s Stmt. ¶ 19. It is undisputed that this entire development project—the condominium building consisting of all 22 units—was a single investment for financing and planning purposes. Defs.’ Stmt. ¶ 27.
Plaintiff subsequently, on December 23, 2009, filed a building permit application to construct this condominium building. Pl.’s Stmt. ¶ 28. Even though the IZ Program was in *8 effect as of this date, on March 30, 2010 the D.C. Zoning Office initially indicated to Plaintiff that the project’s zoning had been approved without requiring compliance with the IZ Program. Id. ¶ 31. However, the office did not grant Plaintiff a building permit at this time. The parties apparently do not dispute that communicating preliminary zoning approval without IZ compliance was an oversight on the part of the Zoning Office, apparently due to the fact that this was the first IZ Program building permit the office had handled. Id. ¶ 30; Pl.’s Mot., Ex. 17, ECF No. 68-19 (January 23, 2015 Deposition of Mathew LeGrant), at 39:19-40:14. Subsequently, however, an employee at the District’s Office of Planning discovered the mistake and, in April, 2010, the District informed Plaintiff that its zoning approval, and accordingly its ability to acquire a building permit, would be contingent on compliance with the IZ Program. Pl.’s Stmt. ¶¶ 32-35. Plaintiff’s condominium building was the first development in the District subject to the IZ Program. ¶ 35.
Developments that are subject to the IZ Program are allowed to take advantage of “bonus density,” which gives developers the option to “construct up to twenty percent (20%) more gross floor area than permitted as a matter of right.” D.C. Mun. Regs. tit. 11, § 2604.1; see also Pl.’s Mot., Ex. 4, ECF No. 68-6 (DHCD webpage entitled “Inclusionary Zoning Affordable Housing Program”). Although the parties dispute Plaintiff’s reasons for not doing so, it is undisputed that, after being told by the District in April, 2010 that its development was subject to IZ regulations, Plaintiff did not redesign its building plans to incorporate the “bonus density” made available under the IZ Program, opting instead to proceed forward with the building as planned. Pl.’s Stmt. ¶ 36. Plaintiff claims that it had “no choice” in the matter because to incorporate bonus density at this stage, “Plaintiff would have had to spend months and tens of thousands of *9 dollars,” and add more parking. Pl.’s Mot., Ex. 7, ECF No. 68-9 (June 28, 2015 Declaration of Arthur S. Linde), at ¶¶ 8-10.
On May 14, 2010, Plaintiff subdivided the separate lots that made up the property at 2910 Georgia Avenue into a single record lot. Defs.’ Stmt. ¶ 28. On May 20, 2010, to satisfy the IZ Program’s requirements that 8-10% of the development be used for affordable housing, Plaintiff signed an IZ Covenant binding two of the envisioned 22 condominium units within the planned building: Unit C-02 and Unit 2-02. Pl.’s Stmt. ¶¶ 38, 42; Pl.’s Mot., Ex. 28, ECF No. 68-30 (Plaintiff’s IZ Covenant). The building was then constructed. On September 11, 2011, after completing construction, Plaintiff subdivided the building into 22 residential units and 11 parking units. Defs.’ Stmt. ¶ 29.
Efforts then began to locate eligible low- and moderate-income purchasers for Plaintiff’s IZ Units. Plaintiff submitted a “Notice of Availability” to Defendants on May 12, 2011, indicating that the two IZ Units would be available for occupancy starting on August 1, 2011. See Defs.’ Mot., Ex. 9, ECF No. 67-9 (May 12, 2011 Notice of Availability). DHCD created a list of eligible households or persons interested in purchasing or renting the IZ Units who self- certified their eligibility to participate in the IZ Program. Pl.’s Stmt. ¶¶ 44-45. Using these lists, the District subsequently went through a process of running “lotteries” and other alternative selection procedures to identify possible buyers for the units. ¶¶ 47-56.
However, for reasons the parties dispute, the effort to locate a buyer for the units was unsuccessful for an extended period of time. Plaintiff contends that this failure was the fault of Defendants. Predominantly, Plaintiff claims that a requirement in the IZ Covenant that the affordability restrictions on the IZ Units were to survive any foreclosure on the property prevented would-be purchasers from using HUD-insured mortgages. Id. ¶¶ 67-72. The record *10 shows that the District, as well as Plaintiff, was aware that there was a possibility that this aspect of the IZ Covenant could make it difficult for participants in the IZ Program to acquire their preferred form of financing to purchase IZ Units, but chose to make the affordability restrictions survive foreclosure regardless. Pl.’s Mot., Ex. 15, ECF No. 68-17 (March 2011 e-mail indicating that in 2008 or 2009 DHCD had been sent a letter explaining HUD’s policy on deed restrictions); Pl.’s Mot., Ex. 29, ECF No. 68-31 (May 10, 2010 e-mail from Plaintiff’s manager Art Linde to DHCD employee Anna Shapiro stating that “the covenant may be a barrier to purchaser mortgage financing . . . we will have to wait and see how the mortgage markets react”). After gaining experience implementing the IZ Program, the District revised the IZ Covenant in 2012 to change this feature. Pl.’s Stmt. ¶¶ 71, 75. Plaintiff also implicates in the delay selling the IZ Units Defendants’ failure to timely create lists of eligible buyers, understaffing, and various other alleged “blunders” in the implementation of the IZ Program. At multiple times throughout this period, Plaintiff requested that DHCD release it from having to comply with the IZ Program, but DHCD declined to do so. Pl.’s Stmt. ¶¶ 60, 63, 76; see also, e.g. , Defs.’ Mot., Ex. 10, ECF No. 67-10.
For their part, Defendants contend that Plaintiff’s lack of cooperation with efforts to market and sell the property is to blame. Defendants argue that Plaintiff was more interested in using the failure of these units to sell as evidence in its battle to dismantle the IZ Program than in actually selling the units. As evidence, Defendants cite that Plaintiff refused to advertise the units at all, turned down at least one potential buyer, and at one point labelled the IZ Units as “sold” on its website. Defs.’ Mot., Ex. 19, ECF No. 67-19 (2910 Georgia Ave. webpage listing units as sold in April 2013).
Having carefully reviewed the evidence in the record, the Court concludes that both parties share some part of the blame for the time it took to sell Plaintiff’s units. But who is more or less at fault for the delay is not dispositive of Plaintiff’s constitutional claims at this stage. Far more important is the fact that during this period Plaintiff was able to, and did, make unrestricted and quite profitable use of the vast majority of Plaintiff’s development. The twenty units not affected by the IZ regulations in Plaintiff’s building were sold at market rates between $225,000 and $404,000, for a total of over $6 million. Pl.’s Stmt. ¶ 57; Defs.’ Stmt. ¶ 61. This earned the investors in Plaintiff’s condominium building a 20% return on their investments. Defs.’ Stmt. ¶¶ 62, 63; Defs.’ Mot., Ex. 25, ECF No. 67-25 (December 23, 2011 Letter from Art Linde to the investors in 2910 Georgia Ave).
Plaintiff has now also sold its IZ Units. IZ Unit C-02 was sold on April 8, 2015 for $145,200, although Plaintiff strenuously disputes whether the buyer, Ms. Ragini Patel, was in fact eligible to participate in the IZ Program. Pl.’s Stmt. ¶ 105; Defs.’ Mot., Ex. 27, ECF No. 67- 27 (Deed for Unit C-02). IZ Unit 2-02 was recently sold for $271,200. Pl.’s Stmt. ¶ 130; Defs.’ Stmt. ¶ 16; Defs.’ Reply, Ex. 1, ECF No. 72-1 (Deed for Unit 2-02).
D. Procedural History
The parties’ relationship predictably grew sour amid these extended efforts to sell
Plaintiff’s IZ Units, leading Plaintiff to file its first complaint in this case on December 13, 2012.
Compl. for Monetary and Declaratory Relief, ECF No. 1. On February 11, 2013, Defendant
District of Columbia moved to dismiss for lack of subject matter jurisdiction and for failure to
state a claim. Mot. to Dismiss Compl., ECF No. 12. The Court granted-in-part and denied-in-
part Defendant’s motion.
See 2910 Georgia Ave. LLC v. D.C.
,
Discovery closed in this matter on May 7, 2015. However, on December 29, 2015, the Court granted Plaintiff’s motions to reopen discovery and for leave to file an amended complaint. Mem. Op. & Order (Dec. 29, 2015), ECF No. 57. Plaintiff sought permission to engage in limited additional discovery regarding the sale of Unit C-02 to Ms. Patel, which had only recently occurred at that point, and sought to amend its complaint to add a procedural due process claim. Id. at 7. The Court granted the motion to amend, noting, among other things, that the new procedural due process claim was not futile for the reasons argued by Defendants. Id. at 17. The Court also granted the motion to reopen discovery because it found that “the facts newly discovered by Plaintiff shortly before the filing of Plaintiff’s motion to reopen discovery raise questions regarding Ms. Patel’s eligibility to purchase Unit C-02 and regarding the process by which the District approved Ms. Patel’s application.” at 12.
*13 Plaintiff’s Amended Complaint was deemed filed as of December 29, 2015. Count I of the Amended Complaint alleges a claim under the Takings Clause of the Fifth Amendment pursuant to 42 U.S.C. § 1983. Amend. Compl. for Monetary and Declaratory Relief, ECF No. 58, ¶¶ 80-95. Count II alleges that the way in which the District implemented and administered the IZ Program violated Plaintiff’s substantive due process and equal protection rights in violation of the Fifth Amendment. Id. ¶¶ 96-100. Count III alleges that the way in which the District implemented and administered the IZ Program violated Plaintiff’s procedural due process rights in violation of the Fifth Amendment. Id. ¶¶ 101-07. Finally, Count IV seeks a declaratory judgment that the IZ Program is unconstitutional, that the Defendants, acting under color of state law, deprived the Plaintiff of rights guaranteed by the United States Constitution, and that the Plaintiff is entitled to compensation. Id. ¶¶ 108-11.
After the filing of Plaintiff’s Amended Complaint, the parties filed and briefed cross- motions for summary judgment. These motions are now ripe for resolution.
II. LEGAL STANDARD
Summary judgment is appropriate where “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The mere existence of some factual dispute is insufficient on its own to bar summary judgment; the dispute must pertain to a “material” fact. Id. Accordingly, “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248 (1986). Nor may summary judgment be avoided based on just any disagreement as to the relevant facts; the dispute must be “genuine,” meaning that there must be sufficient admissible evidence for a reasonable trier of fact to find for the non-movant.
In order to establish that a fact is or cannot be genuinely disputed, a party must (a) cite to
specific parts of the record—including deposition testimony, documentary evidence, affidavits or
declarations, or other competent evidence—in support of its position, or (b) demonstrate that the
materials relied upon by the opposing party do not actually establish the absence or presence of a
genuine dispute. Fed. R. Civ. P. 56(c)(1). Conclusory assertions offered without any factual
basis in the record cannot create a genuine dispute sufficient to survive summary judgment.
See
Ass’n of Flight Attendants-CWA, AFL-CIO v. Dep’t of Transp.
,
When faced with a motion for summary judgment, the district court may not make
credibility determinations or weigh the evidence; instead, the evidence must be analyzed in the
light most favorable to the non-movant, with all justifiable inferences drawn in its favor.
Liberty
Lobby
,
III. DISCUSSION
At its core, this case is about Plaintiff’s complaint that it “bore the brunt of the District’s ‘growing pains’ as it fumbled and bungled every aspect of the IZ Program’s implementation.” Pl.’s Mot. at 4. This may be so, but the facts in the record are simply insufficient to establish the constitutional violations alleged. For the reasons discussed below, Plaintiff has not established (A) an unconstitutional taking, (B) a violation of the Equal Protection Clause, (C) a violation of Plaintiff’s substantive due process rights, or (D) a violation of its procedural due process rights. Accordingly, Defendants are entitled to summary judgment on each of Plaintiff’s claims. A. Plaintiff’s Takings Claim
“The Takings Clause of the Fifth Amendment prohibits the government from taking
‘private property . . . for public use, without just compensation.”
Dist. Intown Properties Ltd.
P’ship v. D.C.
,
For the reasons set forth below, Defendants are entitled to summary judgment on Plaintiff’s takings claim. The Court begins its analysis of this claim, as it must, by (1) determining the relevant parcel of property at issue. The Court concludes that the relevant parcel is the 22-unit condominium building for which Plaintiff sought a building permit from the District. The Court then (2) explains why the regulations at issue, which affected the use of only 8-10% of that building, did not constitute either a permanent or temporary regulatory taking. Next, the Court (3) explains why the various alternate takings frameworks that Plaintiff has *16 suggested could apply to this case are inapposite. Finally, the Court (4) concludes that Plaintiff has not presented evidence necessary to establish an unconstitutional private taking.
1. The Relevant Parcel of Property
Before the Court can consider whether the regulations at issue constituted a taking of
Plaintiff’s property, the Court “must first define what constitutes the relevant parcel.”
Dist.
Intown
,
The Court previously addressed this issue in its 2013 Memorandum Opinion on the
District’s Motion to Dismiss, wherein the Court noted that this constituted the “fundamental
dispute between the parties.”
2910 Georgia Ave.
,
The leading case applying these factors in the D.C. Circuit is District Intown Properties Ltd. Partnership v. District of Columbia . In that case, plaintiff District Intown had purchased an apartment building and landscaped lawn across from the National Zoo in 1961. Id. at 876. In 1988, District Intown subdivided that property into nine lots. Id. at 877. In 1992, the Mayor of the District of Columbia denied District Intown’s request for construction permits to build townhouses on eight of those nine lots, based on the lots’ status as historic landmarks. Id. at 877-78. Plaintiff sued, alleging that this constituted a violation of the Takings Clause. Id. The District Court granted summary judgment for Defendant District of Columbia and the Court of Appeals affirmed. Id. at 876-77.
As relevant here, the question the Court of Appeals considered was: “Does the relevant parcel consist of the property as a whole or do the eight lots for which construction permits were denied constitute the relevant parcels?” Id. at 879. The Court of Appeals held that the relevant parcel was the property as a whole. The court reasoned that “[t]he lots are spatially and functionally contiguous,” “District Intown purchased the property as a whole” and treated it as a single property before subdivision, and that there was no evidence that District Intown treated the lots separately for the purposes of accounting or management. at 880. Although there are certain factual distinctions between this case and District Intown , the Court finds that application of the District Intown court’s reasoning to the undisputed facts in this case demands the conclusion that the relevant parcel is the entire 22-unit condominium building which Plaintiff sought a permit to build.
*18
As an initial matter, the Court notes that when addressing this issue in its earlier Opinion,
in the context of the District of Columbia’s motion to dismiss the complaint, the Court stated that
the fact that “District of Columbia law provides that ‘[e]ach condominium unit shall constitute
for all purposes a separate parcel of real estate, distinct from all other condominium units’”
supported Plaintiff’s argument that the relevant parcel could be the individual condominium
units.
2910 Georgia Ave.
,
First, all of the condominium units within the building are contiguous. They are all units
within a single building on a single parcel of land.
See
Defs.’ Mot., Ex. 8, ECF No. 67-8 (Plat
and Plans of Condominium Subdivision for 2910 Georgia Avenue);
see also Contiguous
,
B LACK ’ S L AW D ICTIONARY (9th ed. 2009) (“[t]ouching at a point or along a boundary”). The
Court does not find persuasive Plaintiff’s contention that the individual condominium units in
this case are not contiguous because they are “on different floors” or otherwise “physically
separated from” each other. Pl.’s Opp’n at 11-12. Despite the fact that the units are separated
from each other to the same extent units within a condominium building are generally separated
(
i.e.
, walls and doors), the Court concludes that the contiguity factor certainly weighs in favor of
considering the condominium building as a whole to be the relevant parcel of property.
Second, the date of acquisition also favors this conclusion. Plaintiff did not acquire the
IZ Units at different times than all of the other units within the condominium building. Plaintiff
purchased six lots of land in 2009, combined them into a single parcel, and then built the entire
condominium building at one time. Defs.’ Stmt. ¶¶ 23-29. The building was only subdivided
into 22 units at a later date, after acquisition. ¶ 29;
Dist. Intown,
The third factor, “the extent to which the parcel has been treated as a single unit,” also favors concluding that the relevant parcel is the condominium building as a whole. Plaintiff argues that this factor weighs in favor of considering the two IZ Units separately because Plaintiff subdivided the building and sold the units within it, including the IZ Units, individually *20 to separate buyers and at different times. Pl.’s Opp’n at 10-12. Plaintiff elaborates that the units receive separate utilities, are separately recorded, and are separately taxed and assessed fees. Id.
As an initial matter, most, if not all, of the distinct treatment Plaintiff can point to with
respect to the individual condominium units is merely a result of the fact that Plaintiff subdivided
the condominium building after it was constructed. The Court of Appeals has held that “[t]he
intentional act of subdivision” alone is not sufficient to show that the subdivided units should be
the relevant parcels for takings analysis.
Dist. Intown,
*22
to be complete and hence compensable. To the extent that any portion of property is taken, that
portion is always taken in its entirety”);
Penn Cent. Transp. Co. v. City of N.Y.
,
Finally, the Court finds that that there is not significant evidence regarding the “extent to
which the restricted lots benefit the unregulated lot” that favors either parties’ position in this
case. However, the
District Intown
court found that summary judgment on the relevant parcel
issue was proper even when a dispute existed as to this final factor where, as here, “the other
three factors strongly suggests that [the subdivided lots] are functionally part of the same
property.”
Dist. Intown
,
The Court concludes by noting that, although Plaintiff is certainly correct that certain
“other takings decisions have held that it is appropriate to analyze a regulation’s effect on
specific parcels or portions of a property that are subject to government imposition,” Pl.’s Opp’n
at 14, none of those decisions demand the outcome sought by Plaintiff here. In particular,
Plaintiff relies heavily on
Loveladies Harbor, Inc. v. United States
,
In sum, in analyzing whether the regulations at issue constituted a “taking” of Plaintiff’s property, the Court views the relevant parcel of property as the condominium building at 2910 Georgia Avenue for which Plaintiff sought a building permit from the District. As will be seen below, this conclusion is largely determinative of Plaintiff’s takings claim.
Plaintiff treated all of the units at issue in this case as a whole, developing them all at the same time as part of a single project.
[7] The Court additionally notes that even application of the rejected bright line rule
proposed by the plaintiff in
Loveladies Harbor
, “that the denominator of the takings fraction is
that parcel for which the owner seeks a permit,”
Loveladies Harbor
,
2. Plaintiff’s Regulatory Takings Claim
“In a regulatory takings case,” such as this one, “the principal focus of inquiry is whether
a regulation ‘reaches a certain magnitude’ in depriving an owner of the use of property.”
Dist.
Intown
,
Plaintiff has not satisfied its burden in this case. First, and most importantly in this
particular case, the economic impact of the regulation at issue on Plaintiff weighs strongly
against finding a taking in this case. Under this factor, Plaintiff must demonstrate that the
relevant parcel of property “no longer provide[s] a reasonable rate of return” in light of the
challenged regulation.
Id.
at 884. “[A] claimant must put forth
striking evidence
of economic
effects to prevail even under the
ad hoc
inquiry.” at 883 (emphasis added). Indeed, in
Penn
Central
, the Supreme Court found that no taking had occurred despite the fact that the regulation
at issue caused a diminution in value of 75%.
Penn Central
,
Here, only two of the 22 units in Plaintiff’s development were subject to an IZ Covenant
restricting their use at all. Although Plaintiff complains that the IZ Program delayed the sale of
these units and affected the profit Plaintiff sought to receive from them, the regulations certainly
did not leave Plaintiff without a reasonable rate of return from its development as a whole. Quite
*25
the opposite: Plaintiff sold the unrestricted units in its development for over $6 million, earning
the investors in Plaintiff’s building a 20% return on their investments. Defs.’ Stmt. ¶¶ 62, 63;
Defs.’ Mot., Ex. 25 (letter to investors in 2910 Georgia Ave. stating that they had received a 20%
return on their investment in the development even before the two IZ Units were sold).
[8]
Far
from the “striking evidence” of economic impact required,
Dist. Intown
,
The other
Penn Central
factors do not salvage Plaintiff’s claim. First, Plaintiff’s
investment backed expectations do not support finding a taking. “A reasonable investment-
backed expectation ‘must be more than a unilateral expectation or an abstract need.’”
Id.
at 879
(quoting
Ruckelshaus v. Monsanto Co.,
Here, Plaintiff did not have a “reasonable” investment-backed expectation of selling its
condominium units free from IZ Covenants. Plaintiff’s argument that it did have such a
reasonable expectation is apparently based on its claim that the IZ Program was sprung on
*26
Plaintiff unfairly, becoming effective immediately on December 11, 2009 without a promised
phase-in period. However, the Court has already determined that the IZ Program—at least as
relevant to Plaintiff’s project and claims—took effect on August 14, 2009, three months prior to
Plaintiff’s purchase of the property at 2910 Georgia Avenue and after a phase-in period.
See Full Value Advisors, LLC v. S.E.C.
,
Finally, the character of the government action in this case does not support a finding that
a “taking” has occurred.
[9]
“To assess the character of the government’s action, the central
*27
question is whether the regulation advances a ‘common good’ or ‘public purpose.’”
George
Washington Univ. v. D.C.
,
Plaintiff’s arguments regarding this factor are not persuasive. First, Plaintiff argues that
the character of the government action in this case favors finding that a taking has occurred
because the IZ Program has been a “failure.” Pl.’s Opp’n at 16. In support of this claim,
Plaintiff argues that other programs have produced more affordable housing than the IZ Program.
at 16-17. This line of attack misinterprets the Court’s role in analyzing the character of the
government action. The character of the government action weighs against finding a taking if
the action is “a general regulation with a legitimate public purpose.”
Dist. Intown
, 198 F.3d at
883. The Court takes a “deferential stance regarding what constitutes a legitimate public
purpose.”
Perry Capital LLC v. Lew
,
Second, Plaintiff argues that the character of the government action is “very much call[ed] into question” by the eventual sale of one of Plaintiff’s IZ Units to an individual, Ms. Ragini Patel, who Plaintiff now claims is not eligible to participate in the IZ Program. Pl.’s formula is not a valid takings test-does not require us to disturb any of our prior holdings”). *28 Reply at 13. The Court addresses this issue further below in section III.A.4 of this Memorandum Opinion, but for now it is sufficient to say that Plaintiff’s evidence in this regard does not show that Defendants acted with any non-public purpose when administering the IZ Program with respect to Plaintiff and this purchaser. At most, Plaintiff raises questions about whether District employees made mistakes while administering the program and whether Ms. Patel may have falsely represented her wealth, income or intentions in her application to participate in the program. These question do not change the fact that the character of the government action challenged here is a generally applicable regulation intended to serve a public purpose. [10] At the very least, they certainly do not constitute a powerful enough showing as to the character of the government action factor to overcome the Court’s conclusion that the other two Penn Central factors weigh strongly in favor of finding that no taking has occurred. See Perry Capital , 70 F. Supp. 3d at 244 (“A [party] is not required to demonstrate favorable results under all three Penn Central factors . . . it is a balancing test.”).
In sum, the challenged regulation, which affected how Plaintiff could use 8-10% of its development, is a generally applicable regulation with a legitimate purpose. It did not interfere with any reasonable investment-backed expectations of Plaintiff’s, nor create a sufficiently severe economic effect on Plaintiff, to rise to the level of an unconstitutional regulatory taking.
The above analysis also resolves Plaintiff’s “temporary takings” claim. At no point, even
prior to the sale of the two IZ Units, did the IZ Program regulations at issue affect Plaintiff’s
development in such a way as to work a taking. Plaintiff argues that, “at an irreducible
*29
minimum” Defendants’ actions constitute a “temporary taking” because of the delay in selling
the IZ Units. Pl.’s Mot. at 27-28. But this argument is misguided in its assumption that
temporary takings are “different in kind from permanent takings.”
First English Evangelical
Lutheran Church of Glendale v. Los Angeles Cty., Cal.
,
With respect to the economic effect of the regulation, which was arguably temporarily
more severe before the IZ Units eventually sold, the effect was still far from sufficient to support
a regulatory takings claim. “[I]n a temporary regulatory takings analysis context the impact on
the value of the property as a whole is an important consideration, just as it is in the context of a
permanent regulatory taking.”
Cienega Gardens v. United States
,
For all of the reasons explained above, Defendants are entitled to summary judgment on Plaintiff’s permanent and temporary regulatory takings claim.
3. Plaintiff’s Proposed Alternative Takings Frameworks
In an attempt to escape application of the
Penn Central
factors, Plaintiff posits numerous
alternative takings frameworks it believes this Court should apply to its takings claim. None of
those frameworks apply. As an initial matter, Plaintiff’s claim does not fit into any of the narrow
categories of categorical or
per se
takings. Although the Supreme Court has held that most
takings claims should be analyzed on the ad hoc basis set forth above, it has also “indicated that
it will find a ‘categorical’ or per se taking in two circumstances.”
Dist. Intown
, 198 F.3d at
879. “The first circumstance includes regulations that result in ‘permanent physical occupation
of property.’”
Id.
(quoting
Loretto v. Teleprompter Manhattan CATV Corp.
,
First, for the same reasons set forth above in the Court’s
Penn Central
analysis, Plaintiff
is incorrect that the regulations at issue denied it “
all
economically beneficial or productive use
of” its property.
Id.
(emphasis added). To constitute this type of categorical taking, “a claimant
must show that its property is rendered ‘valueless’ by a regulation.” at 882;
see also Lucas
,
Here, Plaintiff was plainly not denied all economically beneficial use of its property. Plaintiff was required to execute IZ Covenants for 8-10% of the condominium building at issue. D.C. Mun. Regs. tit. 11, § 2603. Plaintiff was free to, and did, use the remaining 90-92% of the building not subject to IZ Covenants, earning over $6 million and a significant profit. Defs.’ Stmt. ¶¶ 29, 61. Accordingly, because Plaintiff has not shown that it was denied all economically beneficial use of its property, its first categorical taking claim fails. [11]
The Court pauses here to address the argument Plaintiff makes at various points throughout its summary judgment briefing that there has also been a categorical taking of Plaintiff’s alleged “property right” to the bonus density allowed for under the IZ Program. See, e.g. , Pl.’s Mot. at 10, 20. This argument does not have merit because Defendants did nothing to “take” this supposed right from Plaintiff. Plaintiff’s argument on this point is premised on its claim that it was “realistically” unable to take advantage of the bonus density because the IZ Program regulations became effective immediately on December 11, 2009, with no phase-in period. As the Court has already discussed above, this assertion is wrong. The IZ Program became effective on August 14, 2009, after a phase-in period. Even if certain amendments were subsequently made to the program, the basic requirements of the program were effective and applicable before Plaintiff purchased the property at issue. It is also worth noting that Mr. Linde, Plaintiff’s manager, was aware of bonus density in the IZ laws as early as October of 2009, a *32 month before Plaintiff even purchased the property at issue. Pl.’s Opp’n, Ex. 88, ECF No. 70-3 (May 6, 2015 Deposition of Arthur Linde), at 40:12-20 (“Q: So you were aware October 29th, 2009, of the bonus density in the inclusionary zoning laws? A: Apparently, I was. Yes.”); Defs.’ Mot., Ex. 13, ECF No. 67-13, at 2 (October 29, 2009 e-mail from Art Linde to Paul Adresino et al .) (“Of some use may be the bonus density we are afforded via the Inclusionary Zoning laws”). Plaintiff cannot, accordingly, claim that Defendants “took” its right to bonus density.
Second, relying on the Supreme Court’s opinion in
Loretto v. Teleprompter Manhattan
CATV Corp.
, Plaintiff unsuccessfully attempts to shoehorn the facts of this case into a categorical
taking by arguing that “[t]he Court could properly view the IZ Program, as applied to this
Plaintiff, as an actual physical invasion or usurpation of property rights.” Pl.’s Mot. at 15.
“[R]egulations that compel the property owner to suffer a physical ‘invasion’ of his property” are
“compensable without case-specific inquiry into the public interest advanced in support of the
restraint.”
Lucas
,
Similarly, as Plaintiff notes, the Supreme Court has also recently reiterated that a
per se
taking occurs when “‘the government directly appropriates private property for its own use.’”
Horne v. Dep’t of Agric.
,
These forms of categorical taking are plainly not applicable to the facts of this case. The
regulations at issue in this case regulate the terms upon which Plaintiff can use (in this case, sell)
its property, generally by limiting the maximum price Plaintiff can charge for that property. The
District does not take title to Plaintiff’s property, nor does it compel Plaintiff to suffer any
physical invasion of its property—points that Plaintiff concedes. Pl.’s Reply at 8;
see also
Defs.’
Mot., Ex. 3, ECF No. 67-3, at 5 (Plaintiff’s response to Defendants’ ninth request for admission,
stating that “Plaintiff admits that the IZ Laws and IZ Program have not resulted in a permanent
physical occupation of Plaintiff’s property”). In asking the Court to find a categorical taking
under this line of cases regardless, Plaintiff seeks to downplay these distinctions as unimportant.
They are not. The Supreme Court has “stressed the ‘longstanding distinction’ between
government acquisitions of property and regulations.”
Horne
,
Finally, Plaintiff is also incorrect in suggesting that “an alternative framework through
which the Court may consider Plaintiff’s claim for uncompensated taking is that Defendants’
actions also amount to an imposition of unconstitutional conditions on the development of
Plaintiff’s land.” Pl.’s Mot. at 25. For this argument, Plaintiff relies on
Nollan v. California
Coastal Comm’n
,
Plaintiff is again incorrect. Unlike in Nollan and Dolan , the Plaintiff in this case was not required to relinquish any portion of its property to the public in return for a building permit. As discussed above, the IZ Program regulations at issue are generally applicable regulations on how developers may use their property. Pursuant to these regulations, Plaintiff must use a portion of *35 its real estate development for affordable housing, selling it at certain maximum prices. The Nollan and Dolan exaction framework accordingly does not apply here.
In this regard, the Court finds persuasive the recent opinion of the Supreme Court of
California, in which that Court analyzed whether a similar inclusionary zoning program
implemented in San Jose, California constituted an unconstitutional exaction.
California Bldg.
Indus. Ass’n. v. City of San Jose
,
The Court finds this analysis persuasive. [12] The IZ Program is a generally applicable regulation that required Plaintiff, to the same degree as any other developer, to use a certain portion of the units in its new development in a certain manner by regulating the price at which it could sell those units. It did not require that Plaintiff dedicate any portion of its property to the public in return for granting Plaintiff a building permit. The unconstitutional exaction framework accordingly does not apply. [13]
In sum, the Court rejects Plaintiff’s arguments that this Court could analyze its takings claim under anything other than the ad hoc three factor test set forth by the Supreme Court in Penn Central . Plaintiff cannot demonstrate any type of categorical taking, nor can it demonstrate that the Nollan - Dolan unconstitutional conditions framework is applicable to this case. Because Plaintiff has not established a taking under Penn Central , Defendants are entitled to summary judgment.
*37 4. Plaintiff’s “Private Taking” Claim
The Court also finds that Defendants are entitled to summary judgment on Plaintiff’s
“private taking” claim, which is how Plaintiff has styled its argument that Defendants have
violated the public use requirement of the Takings Clause. It is well settled that “[a] taking for a
private purpose is unconstitutional even if the government provides just compensation.”
Rumber
,
This argument does not salvage Plaintiff’s takings claim. At the threshold, it fails for the
fundamental reason that the Court has already determined that there has been no taking here at
all. The public use requirement becomes relevant only if a taking has occurred.
See Rancho de
Calistoga v. City of Calistoga
,
The Court also notes, however, that even if it had found that the IZ regulations at issue constituted a taking, this line of attack would fail for the additional reason that Plaintiff’s theory that this “taking” was carried out for a private purpose is not supported by the record. [15] Although Plaintiff has developed an extensive factual record surrounding this argument, it is key to distinguish between facts that have recently come to light that demonstrate that Ms. Patel was not, in fact, an eligible purchaser under IZ Program rules, and facts supporting the quite different assertion that Defendants allowed Ms. Patel to participate in that program for a “private purpose.” With the help of a private investigator, Plaintiff has marshalled colorable evidence of the first issue, apparently indicating that—despite the certifications she made to the District during the application process—Ms. Patel’s income and wealth are in fact too substantial to warrant housing assistance, and she has not been using the unit she purchased as her primary residence.
Plaintiff has not, however, presented sufficient evidence on the second issue—
Defendants’
purpose
in administering the IZ Program with respect to Ms. Patel. This is crucial,
because “‘it is only the taking’s
purpose
, and not its mechanics,’ . . . that matters in determining
public use.”
Kelo
,
Focusing on Defendants’
purpose
, it is clear that Defendants would be entitled to
summary judgment on this issue. The IZ Program’s purpose is to “increas[e] the amount and
expand[ ] the geographic distribution of adequate, affordable housing available to current and
future residents.” D.C. Mun. Regs. tit. 11, § 2600.1. The Court has already determined—and
herein reaffirms—that this is a valid public purpose.
2910 Georgia Ave.
,
and governing regulations . . . .’”
Alaska Airlines, Inc. v. Johnson
,
To be sure, the Court’s analysis does not end with the IZ Program’s stated purpose.
Plaintiff could establish a private purpose if it could show that the District acted under the “mere
pretext
of [this] public purpose, when its actual purpose was to bestow a private benefit.”
Kelo
,
In a nutshell, Plaintiff claims that it has demonstrated a private purpose simply because Defendants’ projection of Ms. Patel’s annual income during the certification process was allegedly so grossly inaccurate that it could not have been made in good faith. As part of determining Ms. Patel’s eligibility for the IZ Program in late 2014, Defendants were required to determine Ms. Patel’s household’s annual income. Defendants projected Ms. Patel’s annual income would be $40,882, which was less than the maximum allowable amount for her household size of $42,800. [17] Pl.’s Mot., Ex. 66, ECF No. 68-70 (Patel Certification of Income, Affordability and Housing Size). Plaintiff asserts that this conclusion is in itself evidence of fraud, cooking the books, or private purpose because the paystubs Ms. Patel submitted to the District indicated that in the earlier part of 2014 she had been earning at a significantly higher rate. In particular, Ms. Patel had made $45,139.71 between the beginning of 2014 and August *41 29 of that year. Pl.’s Stmt. ¶¶ 95-96; Pl.’s Mot., Ex. 67, ECF No. 68-71 (Patel Earning Statement).
The Court need not make any determination as to the accuracy of the District’s projection of Ms. Patel’s income—indeed, the parties appear to agree that it turned out to be wrong. However, the Court does conclude that the inference of a hidden private purpose or pretext that Plaintiff suggests can be drawn simply based on the District’s projection is neither supported nor reasonable. Plaintiff fails to mention that, despite Ms. Patel’s earnings earlier in 2014, every single piece of information that the District was provided by Ms. Patel showed that her income, by the time they considered her application , was sufficiently low to qualify her for the IZ Program.
Ms. Patel was an Air Force reservist and her paystubs indicated that she had a highly fluctuating income. Defs.’ Opp’n, Ex. 23, ECF No. 71-23 (Patel paystubs); Defs.’ Opp’n, Ex. 13, ECF No. 71-13 (February 3, 2016 Deposition of Ragini Patel) (“I’m not a permanent employee. So my salary, what it does is it fluctuates.”). Ms. Patel submitted tax returns for the years 2012 and 2013, which indicated that she had made far below the maximum allowable income in each of those years. Defs.’ Opp’n, Ex. 15, ECF No. 71-15 (Patel 2012 and 2013 tax returns). Ms. Patel’s 2014 paystubs did indicate that she had made an abnormally large amount earlier in the year, but they also showed a steeply decreasing income throughout that year. Defs.’ Opp’n, Ex. 23. In projecting Ms. Patel’s income, the District annualized the amounts on her most recent paystubs, which in addition to being the most current income information provided to the District, were also in line with her earnings in the immediately preceding years. Far from being somehow inappropriate, it is clear that this is precisely how HUD encourages parties to project annual income. Defs.’ Opp’n, Ex. 12, ECF No. 71-12 (HUD Handbook *42 Chapter 5, “Determining Income and Calculating Rent”) at 3, 5 (stating that “[t]he owner calculates projected annual income by annualizing current income” and, especially in “challenging situations” such as where applicants have “sporadic work or seasonal income,” “owners are expected to make a reasonable judgment as to the most reliable approach to estimating what the tenant will receive during the year”) (emphasis in original).
Most importantly of all, Ms. Patel herself submitted a signed and notarized declaration attesting that her household’s income was below the maximum allowable amount. Defs.’ Mot., Ex. 26, ECF No. 67-26 (Patel Declaration of Eligibility). Ms. Patel’s Intake Form also indicated that her monthly income was $3,000 which, annualized, constituted a sufficiently low income to qualify her for the program. Pl.’s Mot., Ex. 72, ECF No. 68-76 (Patel Universal Intake Form). Allegedly, Ms. Patel failed to disclose certain income, property or other sources of wealth on these documents—discoveries Plaintiff has made through various means, including by reviewing documents the District was not given by Ms. Patel. But Plaintiff, who concedes that Ms. Patel was dishonest and attempted to “game” the system, Pl.’s Mot. at 33 (“Ms. Patel certainly bears a measure of responsibility for her dishonesty and attempt to ‘game’ the system”), cannot seriously suggest that Ms. Patel’s perjury during the application process demonstrates that the District acted with any “private” purpose in administering the IZ Program. [18] If anything, the District *43 employees involved acted reasonably in relying on Ms. Patel’s signed statements given that perjury is a felony in the District of Columbia, punishable by up to ten years in prison. D.C. Code § 22-2402.
Before concluding, the Court notes for the record that it has reviewed all of the other evidence Plaintiff has put forth regarding the Patel transaction, and none of it supports Plaintiff’s private purpose theory. Of particular note, the series of emails exchanged between Darryl Featherstone and Chris Marshall during November, 2014, Pl.’s Mot., Ex. 68, ECF No. 68-72, do not show that Defendants altered Ms. Patel’s income to make it appear lower than they knew it to be, as Plaintiff insinuates in its papers. Instead, those emails are clearly about the fact that Ms. Patel’s paperwork at that time stated that her income was too low for the IZ Program, because a box was checked on one of her forms that indicated that she would be spending more than 41% of her monthly income on the purchased unit. Id. at 1. In the e-mails, Mr. Featherstone stated that this was an error because, regardless of the metric Defendants used to calculate Ms. Patel’s fluctuating income, she would not exceed the 41% threshold and was accordingly eligible. ; Pl.’s Mot., Ex. 69, ECF No. 68-71 (February 3, 2016 Deposition of Darryl Featherstone), at 53:5-9 (“Q: So you were focusing here to make sure that her income was high enough to pay the mortgage basically? That’s what the 41 percent is for, correct? A: Yeah.”). This same mistake is clearly what was referenced in the December 12, 2014 e-mail from Chris Marshall in which he stated: “Please disregard the income specified in the ‘COIAH_Patel.pdf’ document. Subsequent calculations confirmed that she is income-eligible for this unit.” Pl.’s Mot., Ex. 61, ECF No. 68- Pl.’s Mot., Ex. 72 at 2. The Court is hard pressed to see how the District basing its calculations on this representation is somehow evidence of fraudulent intent or non-public purpose in the administration of the IZ Program.
65, at 15. This evidence is simply not susceptible to the implication suggested by Plaintiff: that Defendants re-calculated Ms. Patel’s income to make it appear low enough to be eligible for the IZ Program. Such a theory is nonsensical, because Ms. Patel’s “COIAH” document states that her income was $40,882, which was already below the allowable maximum income. Pl.’s Mot., Ex. 66.
In short, none of Plaintiff’s evidence regarding the Patel transaction indicates that the
District’s purpose in administering the program was anything other than the public one
animating the program in general. At most, interpreted in the light most favorable to Plaintiff,
the evidence shows that Ms. Patel made certain omissions and misrepresentations about her
eligibility, and that if District employees had dug deeper, been less trusting, exercised more
diligence, or interpreted Ms. Patel’s documents more conservatively, they may have discovered
the truth. But without any probative evidence of a private purpose, the allegedly imperfect
execution of a government program alone does not give rise to a constitutional violation.
See
*45
Kelo
,
Accordingly, even had the Court concluded that a taking had occurred, Plaintiff’s public use challenge would fail for lack of evidence. Defendants are entitled to summary judgment on Plaintiff’s takings claim in its entirety. [20]
B. Plaintiff’s Equal Protection Claim
Although this case is, in essence, about an alleged taking, Plaintiff has also attempted to
frame the preceding facts as violations of various other constitutional guarantees. The Court first
addresses Plaintiff’s equal protection claim. Specifically, Plaintiff states that it is pursuing a
“class of one” equal protection claim. Pl.’s Opp’n at 28-29. “A ‘class of one’ equal protection
claim may be maintained ‘where the plaintiff alleges that she has been intentionally treated
differently from others similarly situated and that there is no rational basis for the difference in
treatment.’”
XP Vehicles, Inc. v. Dep’t of Energy
,
*46 Here, Plaintiff argues that it has been treated differently because it was the only developer subject to the IZ Program that was “unable to take advantage of density bonuses,” was the only developer to carry two IZ Units before the District revised the IZ Covenant so that IZ participants could take advantage of HUD-insured mortgages, and because it carried its IZ Units for longer than other developers. Pl.’s Mot. at 34-37; Pl.’s Opp’n at 29. Plaintiff also revives under this cause of action its allegation that Ms. Patel was fraudulently certified to participate in the IZ Program. Id.
The Court begins by noting that it has already rejected some of these claims as unsupported by evidence or counter to the record. For example, Plaintiff’s argument that the District prevented it from incorporating “bonus density” into its building plans is based on its claim that the IZ Program only became applicable in December of 2009 and without a phase-in period. As discussed above, this is wrong. The Program became applicable on August 14, 2009, after a phase-in period. Plaintiff also suggests that it was treated differently because it was the only developer “forced to transfer his property to a patently ineligible real estate speculator in an illegal private use taking,” Pl.’s Opp’n at 29, but the Court has already explained above that this allegation is not supported by sufficient evidence to survive summary judgment.
More fundamentally, however, Plaintiff’s equal protection claim fails as a matter of law
because although Plaintiff claims that the manner in which the District applied the IZ Program to
Plaintiff was unfair for various reasons, it fails to show that the District applied that program to
any other developer in a different manner.
See Tate v. D.C.
,
C. Plaintiff’s Substantive Due Process Claim
Defendants are also entitled to summary judgment on Plaintiff’s substantive due process
claim. As an initial matter, the IZ Program as a whole clearly survives a facial substantive due
process challenge. Plaintiff concedes that no fundamental right is at issue here, and accordingly
the IZ Program “is subject only to rational basis scrutiny.”
Abigail All. for Better Access to
Developmental Drugs v. von Eschenbach
,
Plaintiff’s apparent as-applied challenge to the IZ Program is only slightly more
colorable, and also fails. “To assert a substantive due process violation [ ] the plaintiff must [ ]
show that the District of Columbia’s conduct was ‘so egregious, so outrageous, that it may fairly
be said to shock the contemporary conscience.’”
Butera v. D.C.
,
Plaintiff believes that it has satisfied this “admittedly high,” Pl.’s Opp’n at 27-28, standard with a laundry list of its complaints and frustrations about the District’s administration of the IZ Program. It has not done so. Although significant in quantity, none of Plaintiff’s complaints are of the grave, egregious or shocking quality that is required for this constitutional claim.
First, Plaintiff again relies on the District’s certification of Ms. Patel as eligible for the IZ
Program. But as the Court has already explained above, Plaintiff’s accusations of “fraud” or
“cooking the books” are simply not supported by evidence. At most, Plaintiff has demonstrated
that some combination of mistakes or a lack of diligence on the part of the District on the one
hand, and potentially false or incomplete representations of the applicant on the other, led to an
ineligible individual participating in the IZ Program. Such mistakes do not give rise to
substantive due process claims, because for the purposes of substantive due process,
“‘[i]nadvertent errors, honest mistakes, agency confusion, even negligence in the performance of
official duties, do not warrant redress.’”
Elkins v. D.C.
,
The remainder of the complaints leveled by Plaintiff are similarly insufficient. The fact
that District employees overlooked the need to apply the IZ Program when they first reviewed
Plaintiff’s building permit application and then later corrected themselves certainly does not
constitute severe enough illegal conduct or unfairness to support a substantive due process claim.
As an initial matter, although Plaintiff complains that the District only caught the fact that
*50
Plaintiff’s application was subject to the IZ Program by happenstance, Plaintiff does not appear
to contest that the IZ Program
in fact applied
to its development. It is difficult to comprehend
how Plaintiff could assert that the eventual decision of the Zoning Office to apply the IZ
Program, which undisputedly
did
apply to Plaintiff’s development, is somehow a violation of
Plaintiff’s substantive due process rights. With respect to the initial failure to require IZ Program
compliance, Plaintiff does not contend that this was caused by anything other than oversight, or
perhaps negligence, which is “categorically beneath the threshold of constitutional due process.”
Butera
,
Similarly, Plaintiff’s complaints regarding the IZ Covenant, although dressed in rather inflammatory language, essentially are critiques of the efficacy the District’s IZ Program as originally implemented. Although Plaintiff at times refers to the IZ Covenant as “illegal” when first drafted, see, e.g. , Pl.’s Opp’n at 23, such a claim is not supported by the record. At most, the IZ Covenant was incompatible with certain requirements for obtaining a HUD-insured mortgage, making it difficult for low-income purchasers to obtain financing to purchase IZ Units and therefore making it more difficult to locate purchasers for the IZ Program. There is nothing “illegal” about this, and indeed it appears that other jurisdictions have similar requirements. Defs.’ Mot., Ex. 28, ECF No. 67-28 (May 5, 2015 Deposition of Rachel Meltzer), at 78:21-79:19 (stating that inclusionary zoning programs in San Francisco and Boston do not allow for the release of inclusionary zoning restrictions upon foreclosure). Nor does this constitute “irrational” government conduct—the District presumably drafted the IZ Covenant in this way *51 not out of animus or flouting of any law, but because it wanted the IZ restrictions to survive foreclosure to ensure the continued availability of affordable housing. In short, although the District has now amended the IZ Covenant in hopes of improving the IZ Program, there was nothing irrational or illegal about how it crafted the covenant initially.
Plaintiff also complains about the District’s refusal to exempt Plaintiff from the IZ
Covenant. However, the District was never under any obligation to do so. To the extent Plaintiff
complains that the District denied its requests for exemption because it incorrectly believed it did
not have the authority to exempt Plaintiff based on a misinterpretation of the applicable
regulations, this is insufficient to support a substantive due process claim.
See Am. Fed’n of
Gov’t Employees, AFL-CIO, Local 2798 v. Pope
,
*52
Finally, the District’s failure to publish certain annual reports—even if said reports were
required by law—is similarly far from sufficient to support Plaintiff’s substantive due process
claim. The Court notes that it fails to see how this has harmed Plaintiff or shows any unfairness
to Plaintiff at all. Regardless, like Plaintiff’s numerous other complaints, this failure to timely
comply with annual reporting requirements is clearly insufficient to establish the “grave
unfairness” or “deliberate flouting of the law” required to establish a substantive due process
claim.
See George Washington Univ.
,
In sum, the Court finds that although Plaintiff has found numerous aspects of the
District’s administration of the IZ Program frustrating—and perhaps rightfully so—Plaintiff has
not presented evidence of the type of extreme, unfair, egregious or shocking conduct necessary
to establish a violation of its substantive due process rights. “In so doing, [the Court] do[es] not
say that the District’s actions were ideal.”
Silverman
,
fully reviewed”). This simply does not support Plaintiff’s suggestion that Defendants “hid” the IZ Covenant, nor Plaintiff’s repeated insinuations of bad faith on this score.
D. Plaintiff’s Procedural Due Process Claim
Finally, Plaintiffs also argue that Defendants have violated Plaintiff’s procedural due
process rights. “A procedural due process violation occurs when an official deprives an
individual of a liberty or property interest without providing appropriate procedural protections.”
Atherton v. D.C. Office of Mayor
,
First, to the extent Plaintiff’s claims are based on the implementation of the IZ Program
and that Program’s effect on the profit Plaintiff was able to derive from its property, this claim
fails because the IZ Program is a set of generally applicable regulations. “[I]t is well established
that statutes or ordinances of general applicability may condition or even prohibit the right to
conduct a business without running afoul of procedural due process.”
Jones v. Air Line Pilots
Ass’n
,
Second, to the extent Plaintiff’s claim is based on the D.C. Zoning Office granting initial
zoning approval for Plaintiff’s condominium building and then revoking that approval after
realizing that the building should be subject to IZ Program restrictions, this claim fails because
Plaintiff was not deprived of any “property.” What was revoked in this case was a preliminary
zoning approval, not any actual permit to build. This initial zoning approval appears to have
been “merely a step towards the acquisition of the building permit.”
Tri Cty. Indus., Inc. v. D.C.
,
Finally, to the extent Plaintiff’s claim is based on the District’s alleged deprivation of Plaintiff’s ability to use “bonus density,” the Court reiterates its finding, explained above, that the basic premise underlying this claim—that the IZ Program became applicable on December 11, 2009 with no phase-in period—is not supported by the record. The IZ Program became effective and applicable after a notice and comment period and a phase-in period on August 14, 2009. Accordingly, the District simply did not deprive Plaintiff of any property interest it might have had in the bonus density available under the IZ Program. [23]
*55 Accordingly, to the extent Plaintiff was deprived of any cognizable property right in this case, that deprivation occurred with sufficient process of law. Plaintiff’s procedural due process claim therefore fails.
IV. CONCLUSION
In sum, the Court finds that Defendants are entitled to summary judgment on each of Plaintiff’s claims. Plaintiff’s various grievances about the District’s implementation of its IZ Program, although perhaps not completely unjustified, do not rise to the level of constitutional violations. Plaintiff has not established that regulations that restricted Plaintiff’s use of only 8- 10% of its development constituted an unconstitutional taking. Nor has Plaintiff established that it was treated differently than any other developer under the IZ Program, or that anything about the IZ Program or its implementation violated Plaintiff’s substantive or procedural due process rights. Accordingly, Defendants’ [67] Renewed Motion for Summary Judgment is GRANTED and Plaintiff’s [68] Motion for Summary Judgment is DENIED. [24] An appropriate Order accompanies this Memorandum Opinion.
/s/ COLLEEN KOLLAR-KOTELLY UNITED STATES DISTRICT JUDGE reach Defendants’ alternative argument that this claim is barred by the statute of limitations. [24] Because Plaintiff does not prevail on any of its claims, Plaintiff’s request for attorney’s fees is denied.
Notes
[1] Pursuant to Fed. R. Civ. P. 25(d), Muriel Bowser and Polly Donaldson have been automatically substituted for Vincent C. Gray and Michael P. Kelly, whom the parties’ pleadings name as Defendants.
[2] The Court’s analysis has focused on the following documents: Defs.’ Renewed Mot. for Summ. J. (“Defs.’ Mot.”), ECF No. 67; Pl.’s Mot. for Summ. J. (“Pl.’s Mot.”), ECF No. 68; Defs.’ Opp’n to Pl.’s Mot. for Summ. J. (“Defs.’ Opp’n”), ECF No. 71; Pl.’s Opp’n to Defs.’ Mot. for Summ. J. (“Pl.’s Opp’n”), ECF No. 70; Defs.’ Reply in Support of Mot. for Summ. J. (“Defs.’ Reply”), ECF No. 72; Pl.’s Reply in Support of Mot. for Summ. J. (“Pl.’s Reply”), ECF No. 73. The Court has also reviewed all of the evidentiary material attached to these documents. In an
[3] The Court refers in this Memorandum Opinion to D.C. Municipal Regulations by the section numbers in place during the time frame relevant to the parties’ dispute.
[4] On April 9, 2014, the Court denied Defendants’ Motion for Reconsideration of the Court’s holding that Plaintiff’s challenge to the IZ Covenant was ripe. Order (April 9, 2014), ECF No. 31; Mem. Op. (April 9, 2014), ECF No. 32.
[6] Nor does the reasoning of
Lost Tree Vill. Corp. v. United States
,
[8] Although this alone would suffice to show that the economic effect of the regulation was insufficient to constitute a regulatory taking, the Court additionally notes that the IZ Units themselves also eventually sold, providing Plaintiff with an additional $416,400 of revenue from its property. Pl.’s Stmt. ¶¶ 105, 130; Defs.’ Stmt. ¶ 16. In light of the considerable amount of revenue Plaintiff’s property generated, as discussed herein, the Court need not resolve the parties’ dispute regarding whether Plaintiff could have generated even more revenue by renting its property.
[9] Contrary to Plaintiff’s insinuation, the Supreme Court in
Lingle v. Chevron U.S.A. Inc.
,
[10] The Court further notes that Plaintiff’s allegations are irrelevant to the character of the government action with regard to the initial imposition of the IZ Covenant or the effect the covenant had on the delayed sale of Plaintiff’s units leading up to their eventual sale, given that the sale to Ms. Patel had not even occurred yet at those times.
[11] In fact, the Court notes that even if the relevant parcel of property for purposes of Plaintiff’s takings claim consisted only of the units Plaintiff set aside for affordable housing use, Plaintiff could still not establish that it was denied all economically viable use of the property. Those units sold for a combined price of $416,400. Although Plaintiff argues that it is “self- evident” that these units were rendered “valueless” because Plaintiff did not receive its “commercially expected profit,” Pl.’s Opp’n at 19, this analysis misinterprets Lucas . Failure to receive an expected profit is not the same thing as rendering property “valueless.”
[12] Plaintiff argues that the Court should not rely on California Bldg. Indus. because of certain factual distinctions and because the California Supreme Court is an “outlier” that has demonstrated “an historic antipathy toward the property rights of developers that is out of step with” the United States Constitution. Pl.’s Reply at 9-11. Plaintiff is, of course, correct that the California Supreme Court’s opinion is not binding on this Court, but this Court nonetheless finds that court’s reasoning persuasive. None of Plaintiff’s arguments regarding the California Bldg. Indus. opinion take away from the fundamental soundness of the California Supreme Court’s analysis on the question of whether an inclusionary zoning program constitutes an exaction.
[13] In this section of its briefing, Plaintiff makes references to the fact that the District initially granted and then revoked zoning approval for Plaintiff’s development. Pl.’s Opp’n at 23. This is irrelevant. The fact that a District employee initially mistakenly granted zoning approval for Plaintiff’s development and then that approval was retracted when the Zoning Office realized that the project was subject to the new IZ regulations does not change the fundamental nature of the regulations at issue. They are still generally applicable regulations on the use of Plaintiff’s property, not exactions.
[14] The Court notes that Plaintiff also at various points in its briefing questions the qualifications of the purchaser of its other IZ Unit, Ms. Tia Watkins. See, e.g. , Pl.’s Mot. at 33 (referring to Ms. Watkins as “questionably qualified”). Plaintiff apparently questioned Ms. Watkins’ qualifications to the District during her application process on several grounds, including her grandmother’s ownership of a townhouse and the fact that Ms. Watkins entered into the contract and deed for the unit alone, despite her application as a two-member IZ household. Pl.’s Stmt. ¶¶ 124-30. The District responded to Plaintiff’s concerns explaining how neither issue rendered Ms. Watkins ineligible. Id. Despite passing references to these facts, Plaintiff does not appear to make any genuine effort to argue that the sale to Ms. Watkins was improper in its briefing on the pending motions for summary judgment.
[15] Defendants argue that the Court should not consider Plaintiff’s “private taking” claim at all, because Plaintiff did not raise it in its Amended Complaint. Defs.’ Opp’n at 2, 38. The Court will not dismiss this claim for this reason alone. Plaintiff’s Amended Complaint asserts a cause of action under the Takings Clause of the Fifth Amendment of the United States Constitution. Am. Compl. at 21. This cause of action is reasonably interpreted as encompassing Plaintiff’s “private taking” claim, which is really nothing more than an argument regarding the public use requirement of the Takings Clause.
[17] Other agents of Defendants apparently reviewed Ms. Patel’s paperwork a second time, at which point they projected that her income could be as low as $23,995. Pl.’s Stmt. ¶ 101.
[18] For the same reason, the Court does not find persuasive Plaintiff’s argument that Defendants’ failure to incorporate spousal income into their projection is somehow evidence of the alleged “sham.” As an initial matter, Ms. Patel has testified that she is not legally married to the father of her children despite Plaintiff’s belief otherwise, and even Plaintiff only claims that this individual is “either” her husband or “fiancé.” Pl.’s Mot., Ex. 7 at ¶ 19. Regardless, Plaintiff does not contend that the District knew Ms. Patel was married but failed to consider her husband’s income. Plaintiff simply claims Defendants failed to determine her marital status. But Defendants were not required to specifically inquire as to Ms. Patel’s marital status—they were required to consider the annual income of the applicant’s household. D.C. Mun. Regs. tit. 14, § 2213. Ms. Patel told the District that her household was to include only her and her child.
[19] Because the Court grants Defendants summary judgment as to Plaintiff’s private takings claim, it need not address Defendants’ alternative argument that the relief Plaintiff seeks in that claim is unavailable because of certain language in the IZ Covenant and the failure to include Ms. Patel as a party to this action.
[20] The parties also dispute whether either is entitled to summary judgment on the question of just compensation. Pl.’s Mot. at 28; Defs.’ Opp’n at 18. Because the Court grants summary judgment in favor of Defendants and against Plaintiff on Plaintiff’s takings claim in its entirety, Plaintiff is not entitled to just compensation.
[21] Plaintiff concedes that it is not a member of a protected class, and that its claim is subject to rational basis review. Pl.’s Opp’n at 28; Defs.’ Mot., Ex. 3 at 6 (Plaintiff’s response to
[22] The Court notes that at various times throughout its papers Plaintiff also suggests that the District “hid” the IZ Covenant. This is another example of Plaintiff’s use of rhetoric that is unsupported by the record. Plaintiff’s evidence shows that a PDF of the IZ Covenant was taken down from a DHCD website while changes were being made to it in response to comments, but was still available upon request. Pl.’s Mot., Ex. 20, ECF No. 68-22 (August 26, 2009 e-mail from Eric Jenkins) (“if there is an issue with DCBIA review, the covenant can just be pulled from the site until all reviews have been made. Any requests for the covenant can come through the appropriate DHCD/DMPED rep. That way we can track and manage the covenants until it is
[23] The Court concludes that Defendants are entitled to summary judgment on Plaintiff’s procedural due process claim for the reasons discussed herein, and accordingly does not need to