by Gary Taylor
Michigan Court of Appeals, August 17, 2023
In June 2017, Lehman Investment Company, LLC (Lehman) requested permission to demolish a residential structure in the historic district of the city of the Village of Clarkston (city). The structure is a vacant home and detached garage in the city’s historic district. The historic district where the home is situated was listed on the National Register of Historical Places in 1980. It is comprised of over 100 buildings dating from approximately 1825 to 1949. This time period, when the core of the town grew to accommodate lumber mills and the processing of grain from surrounding farms, is considered a “period of significance” for historical purposes. The homesite was purchased by local business owner Ethan Hawkin 1949, and the home and garage were constructed in 1953. Because the buildings were constructed after 1949, which was the tail end of the district’s period of significance, they are considered nonhistorical, or a “non-contributing resource,” for purposes of the historic district. Although the property is a non-contributing resource it is nonetheless subject to the Commission’s oversight because it is within the boundaries of a historic district, and anyone seeking to work on the property must go through the permitting process set forth in Michigan’s local historic districts act (LHDA), M.C.L. 399.201 et seq. Specifically, M.C.L. 399.205 provides in part (with emphasis added):
(1) A permit shall be obtained before any work affecting the exterior appearance of a resource is performed within a historic district…. The person…proposing to do that work shall file an application for a permit with the…commission….A permit shall not be issued and proposed work shall not proceed until the commission has acted on the application by issuing a certificate of appropriateness or a notice to proceed as prescribed in this act.
(3) In reviewing plans, the commission shall follow the United States secretary of the interior’s standards for rehabilitation and guidelines for rehabilitating historic buildings, as set forth in 36 C.F.R. part 67. Design review standards and guidelines that address special design characteristics of historic districts administered by the commission may be followed if they are equivalent in guidance to the secretary of interior’s standards and guidelines and are established or approved by the department. The commission shall also consider all of the following:
(a) The historic or architectural value and significance of the resource and its relationship to the historic value of the surrounding area.
(b) The relationship of any architectural features of the resource to the rest of the resource and to the surrounding area.
(c) The general compatibility of the design, arrangement, texture, and materials proposed to be used.
(d) Other factors, such as aesthetic value, that the commission finds relevant….
(6) Work within a historic district shall be permitted through the issuance of a notice to proceed by the commission if any of the following conditions prevail and if the proposed work can be demonstrated by a finding of the commission to be necessary to substantially improve or correct any of the following conditions:
(a) The resource constitutes a hazard to the safety of the public or to the structure’s occupants.
(b) The resource is a deterrent to a major improvement program that will be of substantial benefit to the community and the applicant proposing the work has obtained all necessary planning and zoning approvals, financing, and environmental clearances.
(c) Retaining the resource will cause undue financial hardship to the owner when a governmental action, an act of God, or other events beyond the owner’s control created the hardship, and all feasible alternatives to eliminate the financial hardship, which may include offering the resource for sale at its fair market value or moving the resource to a vacant site within the historic district, have been attempted and exhausted by the owner.
(d) Retaining the resource is not in the interest of the majority of the community.
Lehman’s application listed “redevelopment” as the reason for the proposed project. The Clarkston Historic District Commission (Commission) held three hearings on the project, and on August 29, 2017 issued a formal denial indicating that the application did not meet the secretary of the interior’s standards for issuance of a certificate of appropriateness under M.C.L. 399.205(3). Lehman appealed the decision to the Review Board, which assigned the matter to an Administrative Law Judge (ALJ). The ALJ reversed the Commission’s decision because “no testimony was provided…to support any claim that the instant property had any relationship to the historic value of the surrounding area or…any independent historic value….” Then the Review Board, who had final say on whether demolition could move forward, adopted the ALJ decision in part but remanded for further examination because the ALJ “failed to address that a commission can also review a request for work in an historic district on a non-historic, non-contributing resource….”
I could write another 1,000 words explaining the procedural boomeranging and torturous statutory interpretation prior to the Court of Appeals getting jurisdiction over the case, but instead I will focus on how the court sorted it out. You just need to know at this point that Lehman appealed because he was denied the permit to demolish.
Lehman contended it was inappropriate to require it to proceed under the notice to proceed standard (note: under which it would be tougher for Lehman to get permission to demolish) because it sought to demolish a building of non-significance; however, the court interpreted several sections of the LHDA to conclude otherwise. MCL 399.201a specifically defines “certificate of appropriateness” and “notice to proceed.” Subsection (b) of the statute defines “certificate of appropriateness” as “the written approval of a permit application for work that is appropriate and that does not adversely affect a resource[,]” whereas Subsection (n) defines “notice to proceed” as “the written permission to issue a permit for work that is inappropriate and that adversely affects a resource, pursuant to a finding under [MCL 399.205(6)].” In addition, a “resource” includes “1 or more publicly or privately owned historic or nonhistoric buildings, structures, sites, objects, features, or open spaces located within a historic district, while “work” encompasses “construction, addition, alteration, repair, moving, excavation, or demolition.” Complete destruction of a “resource” (defined to include nonhistoric buildings) is by definition harmful to the resource, according to the court. Consequently, it is plain that the Commission does not have absolute discretion to decide whether to issue a certificate of appropriateness or a notice to proceed, and Lehman’s work falls under the requirement for a notice to proceed.
With that decided, the court addressed Lehman’s argument that the Administrative Law Judge (ALJ) who heard the appeal from the Commission need not remand the matter to the Commission for reconsideration of Lehman’s application (note that previously the ALJ ruled in Lehman’s favor). The court disagreed, noting that the Commission failed to consider the specific criteria applicable to a notice to proceed, and thus the evidence collected would be insufficient for the ALJ to make a determination based on those criteria. Specifically, despite Lehman’s contention that the community’s interest in retaining the property had been “fully vetted” by the Commission, the record provided no evidence as to the the community’s interest in retaining the structure; in fact, at least three citizens made public comments opposed to demolition of the structures. Accordingly, Lehman failed to show error requiring reversal of the ALJ’s ruling against him, and moreover, did not show that the circuit court abused its discretion in affirming that ruling.