## Facts

- Kalorama Heights Limited Partnership (KHLP) bought “Moses House,” an 1892 residence formerly used as the French Embassy in Washington, D.C., intending to demolish it and build a 12-unit luxury condominium with underground parking.
- After KHLP’s purchase, a neighborhood group sought historic-district designation for the area.
- KHLP applied for a total demolition permit; the area was subsequently designated a historic district, and Moses House was deemed a contributing structure.
- Before the Mayor’s Agent under the Historic Landmark and Historic District Protection Act of 1978, KHLP argued demolition was justified because (1) it was “necessary in the public interest” (including because the replacement project had “special merit”), or (2) denial would cause “unreasonable economic hardship.”
- The record included KHLP’s redevelopment plans, evidence questioning profitability of adapting the house as a single-family residence, evidence that the property’s assessed value increased by more than $250,000, unsolicited purchase interest from foreign chanceries, and testimony suggesting KHLP could likely recoup its purchase price with modest additional investment.
- The Mayor’s Agent denied the demolition permit, finding KHLP failed to prove either statutory ground for demolition.

## Issues

1. Whether the Mayor’s Agent lawfully and reasonably concluded that total demolition was not “necessary in the public interest,” including because the proposed condominium was not a project of “special merit” and demolition was not consistent with the Act’s purposes.
2. Whether substantial evidence supported the finding that denial of demolition would not impose “unreasonable economic hardship” on KHLP.
3. Whether the Mayor’s Agent applied correct legal standards, including properly placing the burden of proof on KHLP.

## Decision

- The District of Columbia Court of Appeals affirmed the Mayor’s Agent’s order denying the demolition permit.
- The court upheld the determination that demolition of a contributing structure was not “necessary in the public interest” under the Act’s purposes and definitions.
- The court upheld the determination that KHLP failed to show the replacement project had “special merit” as required to justify demolition on public-interest grounds.
- The court upheld the finding that denial would not cause unreasonable economic hardship because the record supported feasible alternatives, including sale or continued use without demolition.
- The court held the Mayor’s Agent correctly assigned the burden of proof to KHLP and applied permissible criteria under the Act.

## Legal Principles

- Under the D.C. Historic Landmark and Historic District Protection Act, a demolition permit for a contributing property may issue only if demolition is (1) “necessary in the public interest” or (2) necessary to avoid “unreasonable economic hardship” to the owner.
- “Necessary in the public interest” is satisfied only if demolition is consistent with the Act’s preservation purposes or necessary to allow construction of a project of “special merit.”
- “Special merit” requires public benefits or distinguishing planning/architectural qualities beyond those of ordinary private residential development.
- “Unreasonable economic hardship” requires more than diminished profitability or loss of a preferred redevelopment option; evidence that the owner can recoup investment through sale or other viable use weighs against hardship.
- The applicant bears the burden to prove entitlement to demolition, and reviewing courts defer to reasonable agency interpretations of the Act and uphold factual findings supported by substantial evidence.

## Conclusion

The court affirmed denial of a demolition permit for a contributing structure in a historic district, holding that the owner failed to prove demolition was justified by public-interest necessity (including special merit) or by unreasonable economic hardship, and that the Mayor’s Agent applied correct standards supported by substantial evidence.


Kalorama Heights Ltd. P'ship v. D.C. Dep't of Consumer & Regul. Affs., 655 A.2d 865 (D.C. 1995)