Just received a copy of the decision issued this afternoon by city Hearing Examiner Sue Tanner after several days of testimony we covered last month: The Hearing Examiner affirms the Landmarks Preservation Board‘s denial of a “certificate of approval” for Satterlee House owner William Conner to build three houses on the Beach Drive landmark’s front lawn (photo above). That doesn’t mean he can’t build on the front lawn, but the particular proposal he had put forth – which required Landmarks Board approval because of the property’s status as a city landmark – will not be approved. WSB was the only news organization to cover the hearing that stretched out across almost three weeks last month (you can find the previous stories in reverse chronological order by looking here). 5:15 PM UPDATE: We have messages out to Conner’s lawyer Richard Hill seeking comment; this is the city’s final decision in the matter, so any further challenge would have to come in court. Also, here is a link to the full 16-page decision if you would like to read it yourself. 5:20 PM UPDATE: Quick reply from Hill: “Mr. Conner respectfully disagrees with the Hearing Examiner’s decision. He will be reviewing his options.” No decision on that expected for at least a week. Meantime, we’re still working on the summary of the decision. 6:39 PM UPDATE: As promised, here’s our full writeup on the Hearing Examiner’s decision, with excerpts:

First, it’s worth a reminder that, as we reported during coverage of the proceedings last month, this is a relatively unprecedented case — the only Landmarks Preservation Board decision from 2007 to go to a Hearing Examiner appeal.

Also, one line of backstory about the Satterlee House: It’s at 4866 Beach Drive and has been for sale for about two years; all agree the house itself is in somewhat sorry shape inside, despite its relatively splendid outside:

Its namesake former owner David Satterlee sold it for $900,000 in 2000 to developer William Conner, who at first pursued a proposal to build homes described as “cottages” on the front lawn; that didn’t go through and then in summer of 2007, he proposed building three houses, each about 3,000 square feet. The proposal required Landmarks Board approval, which was denied last December.

The Hearing Examiner’s decision issued today begins with this introduction:

Several issues were resolved by prehearing orders, including the scope of the landmark designation for Satterlee House. The Hearing Examiner determined that the designation encompassed the entire exterior of the house and the entire property on Beach Drive owned by David Satterlee at the time of the designation.

The appeal was heard before the Hearing Examiner on March 5, 10, 13, 14, 18 and 19, 2008. Parties represented at the hearing were: the Appellant, William Conner, by G. Richard Hill, attorney-at-law; and the Landmarks Preservation Board (Board), by Judith B. Barbour and Eleanore Baxendale, Assistant City Attorneys. The record was held open through April 11, 2008, for post-hearing memoranda and the Examiner’s site visit.

In the first few pages, the decision recaps the process by which the Satterlee House was designated a city landmark in 1981, initiated by David Satterlee in 1980. It goes on to note that he was notified of the meetings at which the conditions of designation were discussed and approved, both by the Landmarks Board and by the City Council, but did not attend. (This was relevant to some of what he said on the first day of last month’s hearing – he was the first witness to testify; see our March 5 coverage here – he contended he wasn’t aware the conditions could affect future development prospects. In the “conclusions” section of today’s decision, the Hearing Examiner writes, “Mr. Satterlee knew before, during, and after the designation process, that a consequence of the designation would be the requirement for a certificate of approval from the Board before an owner could make alterations to the exterior of the house or the entire site. His testimony to the contrary reflects a failing memory and was contradicted by credible evidence in the record.”)

After the first few pages, the decision then goes on to summarize, as described in city documents as well as testimony during the appeal hearing, the process leading up to the Landmarks’ Board vote last December denying Conner the required “Certificate of Approval” that he needed to go ahead with his development proposal for the Satterlee House lawn, which has been subdivided into three lots.

Even before the final vote, during the Architectural Review Committee process, board members had given him suggestions that they felt would lead to a proposal less likely to detract from the landmark’s character and therefore more likely to win approval, but Conner did not make the changes they suggested, contending his original proposal was the only one that made economic sense. The basis of his appeal was that the board decision is denying him “reasonable economic use” of the property.

The decision next summarizes testimony that indicated the feasibility of alternatives that the city contended would still result in “reasonable economic use,” including three homes that would be about 2,000 sf each, one-third smaller than the ones Conner proposed. The decision also notes that NOT developing the property could even be a reasonable option (later in the document, this is reaffirmed in the conclusions):

43. The Appellant retains ownership and use of the entire property for residential purposes, the use to which it has been put since the house was built. He can rent the property at market rates, or sell it as a residential estate. The appraised market rental value for the property currently is approximately $3000 per month. (Chamberlain testimony; Exhbit 29, Attachment 21) The evidence shows that after subtracting all mortgage payments, property taxes and insurance costs, the compound annual return on the property has been approximately 6.6% per year, that its curent appraised fair market value is $1,450,000 to $1,550,000, and that it is expected to continue to keep pace with the rate of real property appreciation in the neighborhood. (Exhbit 24; Chamberlain testimony; Exhbit 29) This scenario would result in a positive return on the Appellant’s purchase price, Le., gross profit, and on the amount he had actually invested in the property, Le., profit on equity. (Exhibit 29, Scenario 1; testimony of Partin) .

44. The market has confirmed that the residential estate option in Scenario 1 is a reasonable use of the property, in that the Appellant received a $1,780,000 offer for the entire property in November of 2007. The sale did not close because of buyer concerns about the foundation and potential drainage issues, but the record shows that the Appellant could resolve these issues at a cost that would still allow him to ‘sell the property for its appraised value as a residential estate’.

After reaffirming the Hearing Examiner’s jurisdiction in this matter, and the fact that the “burden of proof” is on the appellant rather than the city, the conclusions in today’s ruling include this on the first issue:

4. The. height, scale and massing of Appellant’s proposal would adversely affect the features and characteristics specified for the property in the designating ordinance because it fails to retain the historic relationship of the Satterlee residence to the sweeping fiont lawn. The proposal would destroy the residences “prominence of spatial location” and “contrasts of siting, age and scale” that make it an “easily identifiable visual feature of its neighborhood and contrbutes to the distinctive quality or identity of such neighborhood”. (Exhibit 3)

5. Because the Appellant’s proposal fails to retain the historic relationship of the Satterlee residence to the site, it was not shown to be “compatible with the massing, size (and) scale” of the landmark, and it fails to “protect the historic integrity of the property and its environment.”

The conclusion has a passage that also could be seen as a reminder to anyone considering purchasing a landmarked property:

12. The Appellant contends that he is entitled to develop the propert with a specific proposal that wil enable him to earn a gross profit that would be expected by a developer, i.e., at least 15% per year for each year that he has owned the property. This is not correct; the development potential of the propert does not change with the status
of the person who owns it.

13. When the Appellant purchased the property, he “stepped into the shoes” of Mr. Satterlee; he is entitled to use the propert only as Mr. Satterlee would have been permitted to use it. A different conclusion would make a mockery of the landmark process. It would allow an owner to agree to landmark controls on a property which could later be set aside by a new owner who found them inconsistent with his subjective expectations of developing the property for a builder’s profit.

And close to the end of the 16-page decision, this observation:

Although the Appellant observes that the property has not sold after being on the market for approximately two years, the evidence in the record demonstrates that the property has not been marketed effectively, that the Appellant has not repaired defects in the house that affect its marketability, and that he has listed it for an amount that exceeds its fair market value by at least $650,000.

The last conclusion before the decision affirming the Landmarks Board’s denial:

The Appellant’s proposal is not reasonable in light of the alternatives available that would not adversely affect the landmark and would provide him with a reasonable economic use of the property.

WHAT’S NEXT: As mentioned earlier in this report, William Conner’s lawyer Richard Hill tells WSB that his client “respectfully disagrees” with this decision, but isn’t likely to decide for at least a week what to do next. The city attorney’s office tells WSB they have three weeks to make that decision. Meantime, the property remains listed for sale for $2.2 million; here’s the listing.