By: David A. Temple
On June 8, 2018, the Indiana Court of Appeals affirmed the Indianapolis Historic Preservation Commission’s August 3, 2016 decision to allow Dan Jacob’s “Block 20” project in the Lockerbie Square Historic District in Indianapolis to proceed. Lockerbie Glove Factory Town Home Owners Association, Inc. v. Indianapolis Historic Preservation Comm., 106 N.E.3d 482, (Ind. App. 2018), trans. denied. The Commission’s decision paved the way for a five-story, mixed-use building with sixty-seven apartment units, retail and gallery space on the first floor, a roof deck, and 261 internal parking spaces, including sixty-seven spaces for residents and 194 spaces for the public. On October 4, 2018, the Indiana Supreme Court denied the Remonstrators’ Petition to Transfer so Dan Jacob’s Block 20 project can now proceed.
The revitalization and development of historically protected areas and structures throughout the State is garnering wide attention with the booming real estate market, including the development of vacant lots and environmentally blighted properties known as “brownfields” within historic districts. Development within a historically protected district is not for the faint of heart, the risk-averse, or the impatient. Dan Jacobs submitted his original application for development on April 28, 2016 and now more than two and one-half years later he can proceed with the construction of his development. As the appellate court noted in Lockerbie Glove Factory, “[t]he historic preservation statutes and the historic plan do not exist to prevent change, but to encourage and appropriately guide revitalization.” (emphasis in original). 106 N.E.3d 482 at 491.
The Indianapolis Historic Preservation Commission was originally created in 1967 and its enabling legislation was recodified in 1982 at Indiana Code §36-7-11.1. The Commission, a nine (9) member appointed board, designates historic districts, adopts a historic preservation plan for the area, and has design and review jurisdiction within those districts for rehabilitation and development. The Commission’s adoption of a historic preservation plan is given great deference as “all governmental agencies shall be guided by and give due consideration to the plan in any official acts affecting the area.” Ind. Code §36-7-11.1-8(c). Specifically, Indiana courts will “presume the determination of a board or agency with expertise in a given subject is correct.” (citing Flat Rock Wind, LLC v. Rush Cty. Area of Bd. of Zoning Appeals, 70 N.E.3d 848, 858 (Ind. Ct. App. 2017), trans. denied). As the Remonstrators to the Block 20 Project learned, absent a showing of actual bias, the courts will not interfere with the administrative process of an administrative board or panel. (citing In re Change to Established Water Level in Lake of Woods in Marshall Cty., 822 N.E.2d 1032, 1041 (Ind. Ct. App. 2005), trans. denied).
One seeking to rehabilitate or develop a structure within the Lockerbie Square Historic District must apply for a certificate of appropriateness. The Commission is tasked with holding a public hearing to “determine whether the proposal will be appropriate to the preservation of the area and to the furtherance and development of historic preservation.” Ind. Code § 36-7-11.1-10(a). The Commission “may impose any reasonable conditions, consistent with the historic preservation plan, upon the issuance of a certificate of appropriateness….” Ind. Code §36-7-11.1-10(b). The Commission’s final decision is subject to judicial review in the Marion County court “in the same manner and subject to the same limitations as a final decision of the board of zoning appeals under IC 36-7-4.” See Ind. Code §36-7-11.1-10(c). The judicial review standard equates to an affirmative showing that the Commission’s decision was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, in excess of statutory jurisdiction, authority, or limitations, or short of statutory right, or unsupported by substantial evidence. This is stringent standard makes it very difficult to overturn the Commission’s decision.
The appellate court in Lockerbie Glove Factory held the design standards in the historic plan are not mandatory or rules, but rather a guide for developing a project within the Lockerbie Square Historic District. 106 N.E.3d 482 at 491. The historic plan specifically provided that “[n]ew construction should reflect the design trends and concepts of the period in which it is created. New structures should be in harmony with the old and at the same time be distinguishable from the old, so the evolution of Lockerbie Square can be interpreted properly.” Id. at 492.
At the heart of the Lockerbie Glove Factory decision was the interpretation of a restrictive covenant which requires a grantee to refrain from using property in a particular manner. A restrictive covenant is to be interpreted using the same rules of construction as contracts and is to be strictly construed with all doubts resolved against restrictions and in favor of the free use of the property. (citing Johnson v. Dawson, 856 N.E.2d 769, 772-773 (Ind. Ct. App. 2006)). The Remonstrators could not have foreseen in making their argument that the Block 20 Project would violate the restrictive covenant placed upon the property in 2001 that “the current use of the parcel is definitively in violation of the Restrictive Covenant, as the covenant restricted its use as a parking lot to the 3 Year Period which expired in 2004.” The court held that “the Restrictive Covenant does not foreclose use of the property for any parking purpose in perpetuity; rather, it restricted the use of the property solely as a parking lot beyond the 3 Year Period.” 106 N.E.3d 482 at 495 (emphasis in original). “Moreover, the Restrictive Covenant does not mandate that the property be used for solely residential purposes after the 3 Year Period.” Id. Thus, some “appropriate” development needed to occur to not violate the restrictive covenant.
As Dan Jacobs and the Remonstrators can attest, redevelopment in historic districts is complex and costly. It is rife with legal issues – statutes, historic preservation plans, restrictive covenants, and a difficult standard of review. However, the rehabilitation of individual structures and the revitalizing of historic districts that are architecturally and culturally significant greatly benefits society, even if we cannot always agree on what “appropriate” development is.