It has been almost a year now since I last discussed the curious case of the Ransom School here in Nashville. The school was designated part of a historic zoning district several years ago and was at that time owned by Metro Nashville. A few years ago, the city decided to sell the property and immediately following the winning bid, it change the zoning reducing the density in making the development of the property much more difficult.
The successful bidder opted not to sue to set aside the transaction, but continued with development plans but at a reduced level (even though Metro Nashville retained all the money which was bid based on the original zoning) hoping to get some help from the Metro Historic Zoning Commission. The final idea was to request permission to demolish a portion of the structure to permit some additional flexibility in the construction of new residential units on the property.
Unfortunately, the MZHC did not agree, and denied the request for partial demolition. The new owners appealed that decision to Chancery Court, but ultimately lost. The case now has been appealed to the Tennessee Court of Appeals and the oral argument is set for January 18, 2011, at 1 PM.
Chancellor Perkins, who ruled in favor of the Historic Zoning Commission, felt there was sufficient evidence to uphold the decision of the commission that there was no economic hardship. The difficulty is that the economic hardship was created by virtue of the downzoning of the property by Metro Nashville. For example, by reducing the density from 18 units to 11 units, it is much more difficult given the purchase price to successfully construct new housing units and at the same time make a little bit of profit. Certainly if the reduced the density had been known at the time of the bid, a lower bid would've been made. Again, it is very difficult to understand why the Commission believes, given the fact that Metro sold the property and then reduced the density by almost 40%, that there is no economic difficulty for the new owner.
See my earlier posts on this same issue here and here.