Long-time Gaithersblog readers will be familiar with the efforts by Mr. Hamza Halici, owner of the Hair Bar on MD 355, to demolish the historic building where he has operated his hair salon since 1978. About a year ago, the Montgomery County Circuit Court rejected his appeal of the HDC’s denial of his demolition permit request.
Following his loss in Circuit Court, Mr. Halici took his case forward to the Court of Special Appeals. This past Friday, the Court filed its opinion in this case, rejecting all of Mr. Halici’s arguments, and charging him with the costs associated with the appeal. Quoting the opinion [note that all quotes from the opinion are transcribed from a PDF and thus errors could have been made; consult the original for the definitive text]:
Halici presents four questions for review in this Court, which we have consolidated and rephrased as follows:
I. Was the HDC unlawfully constituted under Md. Code (1957, 2003 Repl. Vol.) section 8.03 of Article 66B when it denied the permit application, and, if so, does that render invalid the HDC’s decision to deny the permit application?
II. Was there substantial evidence in the agency record to support the HDC’s denial of the permit application?
For the following reasons, we shall affirm the judgment of the circuit court.
Regarding the first question, the Court ruled that a major point of Mr. Halici’s argument — that the Council Member Sesma was not qualified to serve on the HDC — was not properly before the Court to review, in large part because Mr. Halici did not raise this objection when the HDC was ruling on his application. There is much technical discussion of this and related issues for which I’ll refer the reader to the opinion itself. Regarding the second question, I’ll quote from the opinion:
(a)
To support its argument that the HDC applied a “heightened and erroneous legal standard” in denying HAWP-37E, Halici cites Belvoir Farms Homeowners Ass’n, Inc. v. North, 355 Md. 259 (1999). In that case, the Court of Appeals distinguished between “unnecessary, unreasonable, unwarranted, or similarly-worded hardship standards,” in the context of a zoning variance application in which the applicant must prove a “denial of beneficial or reasonable use,” and a challenge to the constitutionality of a zoning ordinance, in which the applicant must prove a denial of “ ‘all economically beneficial or productive use of land.’ ” (Emphasis added). Id. at 281-82 (quoting Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015 (1992)). Halici maintains that the HDC applied the latter standard, requiring it to prove that it was denied all economically beneficial use of the Property instead of merely being denied reasonable use of the Property.
The record does not support Halici’s position. Halici points only to one instance in the HDC’s consideration of HAWP-37E that, in its view, shows that the HDC applied an erroneous standard. In the HDC resolution denying the permit, the three members voting for denial found that “there was no evidence to indicate that this [P]roperty was different from other historic resources for which reasonable uses have been found.”7 It is clear from the context of this finding that the HDC members reasoned that Halici’s failure to differentiate the Talbott House from similar historic structures that they had seen renovated and profitably utilized was some evidence that retention of the Talbott House was not the cause of Halici’s alleged financial hardship. Moreover, there are numerous instances in the record when committee members questioned Halici on its efforts to find a “reasonable use” for the Property while retaining the Talbott House. There is no indication that the HDC applied a heightened standard as Halici currently contends.
(b)
Halici’s argument that the HDC’s decision is not based on substantial record evidence and therefore is analogous to the agency decision vacated by this Court in Broadview Apartments, supra, is equally without merit. The applicant in Broadview sought a permit to demolish a vacant home that previously had been designated as an historic landmark. At the time, the Baltimore City Code required the applicant to prove a “substantial hardship” in order to obtain the permit. 49 Md. App. at 541. The applicant presented numerous witnesses — including an administrator for Baltimore City’s Department of Housing and Community Development at the time the application was submitted — who testified that the house would need extensive, costly renovations to be commercially viable and that the rent collected from any commercial activity after renovations would not support the debt incurred from renovation. In other words, the property would operate at a net loss each year no matter what action was taken by the owner. The only evidence contradicting the applicant’s claim was a series of letters that did not take into account the cost of renovations and yet conclusorily stated that restoration of the house was economically feasible. We held that, under the circumstances, the historic district commission’s denial was not supported by substantial evidence. Id. at 545-46. Unlike the applicant in Broadview, Halici was operating a profitable business at the Property. Halici’s annual net income in 2004 and 2005 was approximately $16,500, most of which came from operating The Hair Bar Salon. Further, before Halici lost its tenant for the 307 North Frederick Avenue portion of the Property, in 2004, it had collected an additional sum of approximately $16,000 annually. Halici presented no evidence that it had actively marketed the 307 North Frederick Avenue portion of the Property since 2003, beyond placing a sign somewhere on the Property stating that the lot was for rent. The record is clear that the HDC relied on the evidence showing Halici’s profitability in rendering its decision.
Further, the HDC found that much of Halici’s financial information showing that the Property was not sufficiently profitable “as is” was dated, incomplete, and therefore lacking in probative value. The only income statement disclosed by Halici was for the year ending December 31, 2000. While Mr. Halici’s personal tax returns may not have been relevant to the inquiry, it was reasonable for the HDC to have requested more detailed income statements from Halici as they related to the entity’s ownership and operation of The Hair Bar Salon, and thus to the reasonable commercial use of the Property. Specifically, the HDC wanted to ensure that Halici was operating The Hair Bar Salon in a responsible manner and paying Mr. Halici a reasonable salary. This information went to the heart of whether retaining the Talbott House on the Property was working an actual and substantial financial hardship on Halici. Its failure to disclose this information supports the HDC’s finding that Halici failed to prove that retention of the Talbott House as working a substantial financial hardship on it.
Further, the HDC members voting against the application were not convinced that Halici adequately had explored other reasonable, economically feasible uses for the Property. To be sure, Halici presented evidence that any renovations for use as a retail or restaurant space would be expensive and might not be recouped by a subsequent commercial venture. Yet, the report from the City Manager’s office stated that the Talbott House could continue to be used for The Hair Bar Salon or as professional office space, with few renovations. Additionally, certain members of the HDC observed that, in their experience, the owners of historic properties in a similar condition to that of Halici’s Property had found reasonable, economic uses, and there was no evidence presented that the Property was unique in this regard. Finally, the HDC noted that Halici’s failure under the previous demolition permit to sell the Property or complete the demolition in three years was further evidence that it was not the retention of the Talbott House itself that was a financial hardship on Halici.
Halici presented significant evidence that it was receiving less than a 10% return on its overall investment in the Property and that the Property was worth less with the Talbott House erect. However, as discussed supra, we do not weigh the evidence presented to the HDC or make judgments of credibility. The HDC was presented with substantial evidence supporting its finding that Halici failed to prove that preservation of the Talbott House was a substantial financial hardship.
(c)
Finally, we see no merit in Halici’s argument that the HDC’s denial of HAWP-37E was an “impermissible change of mind” from its approval of HAWP-37C. We observed recently that, under Maryland law, “‘[a]n agency . . . not otherwise constrained, may reconsider an action previously taken and come to a different conclusion upon a showing that the original action was the product of fraud, surprise, mistake, or inadvertence, or that some new or different factual situation exists that justifies the different conclusion.’” Cinque v. Montgomery County Planning Bd., 173 Md. App. 349, 361 (2007) (quoting Calvert County Planning Comm’n v. Howlin Realty Mgmt., Inc., 364 Md. 301, 325 (2001)). It follows, then, that “an agency may not reconsider and reverse a decision based on a ‘mere change of mind.’” Cinque, supra, 173 Md. App. at 361 (quoting Howlin Realty Mgmt., 364 Md. at 325).
We note first that the HDC did not reverse itself in denying HAWP-37E, as discussed in Cinque and Howlin Realty. HAWP-37E was a separate and distinct application from HAWP-37C. Certainly, there were many similarities between the two, but the HDC’s denial of HAWP-37E was not a reversal. In any event, there was sufficient evidence of changes in facts and circumstances between the time of the approval of HAWP-37C and the denial of HAWP-37E, as discussed previously, including Halici’s failure to provide more detailed income statements from the Property for years 2001-2005 and to sell the Property or demolish the Talbott House for three years, for three members of the HDC to conclude that the presence of the Talbott House on the Property was not working a financial hardship on Halici.
JUDGMENT AFFIRMED. COSTS TO BE PAID BY THE APPELLANT.
7Halici also points to a statement by a member of the HPAC in that body’s consideration of HAWP-37C. As this statement was related to HAWP-37C in 1999, it is of little value in assessing the standard applied by the HDC on a different application in 2006.
