Satterlee House development dispute: Testimony almost over

March 18, 2008 6:53 pm
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Now in its third (partial) week before city Hearing Examiner Sue Tanner, testimony in the Satterlee House (above) case is almost over, with no more than 2 additional witnesses expected tomorrow afternoon. It wasn’t supposed to continue into this week; property owner William Conner, who is appealing a city Landmarks Board decision about what he can do with the house’s huge lawn, isn’t even sitting in on the proceedings any more as of today:

Conner is out of the country, his lawyer Richard Hill told city lawyers in the hearing room just before testimony resumed this afternoon. The case originally was on the Hearing Examiner’s calendar for all or part of three days — testimony from the property’s namesake/previous owner David Satterlee on the afternoon of March 5th (WSB coverage here), then other testimony all day March 10th (coverage here) and last Thursday (morning coverage here; afternoon coverage here), but as events unfolded, it became clear more time was needed to get into the intricacies of the case, so the Hearing Examiner cleared space on the calendar for last Friday morning (coverage here), this afternoon, and tomorrow afternoon.

To recap, the century-old Satterlee House (also known as the “Painted Lady”) and its expansive front lawn — the last of its kind on Beach Drive, where homesites like this were more common decades ago — have been an official city landmark for more than a quarter-century, one of 14 city landmarks in West Seattle (full list here).

Conner bought it in 2000 for $900,000 as an investment property and immediately embarked on a plan to develop the lawn area with what were dubbed “cottage” homes. That plan eventually fell apart. He put the property back on the market more than two years ago — in what one witness in the case has called a “confusing” listing arrangement, various versions of “all one site” or “home and lawn separately” — and then restarted attempts to develop the lawn, which has been subdivided into three lots (as reported here last May).

Since the site is a city landmark, any plan to alter its protected features requires a “Certificate of Approval” from the city Landmarks Board. Property owners usually bring proposals to a smaller group of board members known as the Architecture Review Committee, which provides feedback that generally leads to a proposal that wins full board approval.

Conner’s proposal for three 3,000-ish-square-foot homes on the Satterlee House front lawn was the only Certificate of Approval proposal to be rejected last year. In earlier testimony, city staffers and a Landmark Board member said Conner had been asked to scale down the size of the proposed homes so that they would not overpower the Satterlee House and its site, but refused (which he acknowledged in his testimony).

Testimony has confirmed it’s not a question of whether homes can be built on the site — they can — it’s a matter of what can be built on the site without detracting from the protected characteristics: the historic house set back from the street, with a large lawn leading up to it.

This afternoon began with Conner’s lawyer continuing to question George Johnson, an economic expert hired for their case. Most of it involved intricacies of the differences between methodologies used by Johnson and by city-hired economic expert William Partin in their differing calculations of how much Conner would make if 2,000-square-foot homes were built on the site instead of 3,000-square-foot homes. Though no specific size has been guaranteed for Landmarks Board approval, the city contends that Conner could still make a profit with the smaller homes, while he contends he would lose money.

Some of the differences in their calculations involve the fact that Conner believes the Beach Drive housing market would demand that the houses be “high-end,” with premium features and fixtures inside, while the city suggests that midmarket would be OK. Also, the city contends that calculations involving the cost of the land for the three building lots should trace back to what Conner paid for the land in 2000 — by their calculations, $100,000 per lot — while Conner’s team uses different calculations to suggest the land is costing him $400,000 per lot.

In this afternoon’s testimony, Johnson elaborated that the lots are worth $400,000 each if the landmark designation does not confer restrictions on what can be built on them, but $250,000 worth restrictions. This is important because testimony also has involved offers made for the property that supposedly did not work out because of factors including “uncertainty” over what will be allowed on those three lots.

The point Johnson made most strongly this afternoon is that “reasonable economic return” — what a property owner is supposed to be entitled to receive, without the landmark designation getting in the way — should be calculated with numbers that exist now, with plans looking into the future, not whatever was paid for the property in the past, nor what might have been done with it if Conner had made different choices (city witnesses had suggested there were a number of courses of action Conner could have taken to have profited adequately by now). Johnson said it’s “inappropriate” to have taken past possibilities into account. “I’ve been doing economic analysis for 35 years now,” he said, “and we virtually never consider what the original price of the property was.”

He also said it would be wrong to deny Conner the right to build what he wants on the property if there is a chance that someone in the future might build something similar and thereby get the profits that should have been his.

When his official testimony was done, and city lawyer Eleanore Baxendale questioned him, it was confirmed that Conner had provided paperwork that came up on Friday — additional information about an offer on the property that had fallen through. The offer apparently dates back to June of last year; later questioning mentioned another offer that came up in November.

In addition to those offers, there apparently also was a prospective deal in early 2007, according to testimony from Landmarks Board coordinator Beth Chave when she returned as a city “rebuttal witness” this afternoon. She said that prospective buyer had gone so far as to come to the Architecture Review Committee to talk about a possible plan for developing three homes on the property, but had never formally applied, and the city didn’t hear again from that person after that.

Landmarks Board member Thomas Veith also was called as a “rebuttal witness,” for more elaboration on the standards the board uses to evaluate Certificate of Approval applications. He reiterated that it was important any plan not take away from the perception of the Satterlee House as a grand old home with a long yard leading up to it, and he referred to drawings of the Conner development proposal — still hanging on the wall of the hearing room — as having features that would potentially take away from that sense.

Veith also re-stated that part of the value of the site, in designating it as a landmark (though he was not on the board when that designation was approved in the early ’80s), was the fact it’s more or less one-of-a-kind — that while the long front lawn may have been common decades ago, not any more, and that’s why this designation honors and preserves a part of history.

Before the day was out, the dueling economic experts were called to testify again, with many more questions about specific possible rates of return, as well as questions about what the current rate of return on standard single-family-home real-estate deals is, and whether that is applicable in this case.

Testimony is scheduled to wrap up tomorrow, with the hearing resuming at 12:30 pm in the hearing room on the 40th floor of the Municipal Tower downtown, and the city potentially calling two witnesses — the real-estate agent who currently has the listing for the Satterlee House, and (this one apparently is only a remote possibility) someone who has made an offer on it. After that, the Hearing Examiner has said, her decision is not likely to come out before mid-April; the two sides talked today about the “summary briefs” they will submit once testimony is officially done.

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