Federal judge rules in favor of city in postal office zoning lawsuit

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Judge William Alsup ruled Monday that the city of Berkeley did not unconstitutionally apply zoning laws to prevent the sale of a historic post office, as alleged by the United States Postal Service, or USPS.

In a lawsuit against the city, USPS alleged that the Civic Center District Overlay, or the “Overlay,” as referred to by the ruling, was unconstitutional, and asserted two claims under the Supremacy Clause — one based on “intergovernmental immunity” and the other based on “conflict preemption.”

“The USPS has not carried its burden to prove that either intergovernmental immunity or conflict preemption renders the Overlay unconstitutional under the Supremacy Clause,” Alsup’s ruling stated. “It has therefore established no entitlement to relief on its claims.”

Despite ruling in favor of the city, Alsup previously denied the city’s request to dismiss the lawsuit on the grounds that there was enough evidence against the city to “survive dismissal.”

The overlay, which was authored by Mayor Jesse Arreguín and Councilmember Sophie Hahn in 2014, restricts the use of the historic district to civic, nonprofit and cultural purposes. It was passed to preserve the integrity of the historic area around Martin Luther King Jr. Civic Center Park, according to Councilmember Linda Maio.

“The concept of protecting the historic Civic Center was being discussed long before the post office sale idea had ever been proposed,” said Councilmember Kriss Worthington. “There have been efforts to maintain (the buildings in Civic Center) because of their historic value.”

USPS received five offers for the post office space, including from developer Hudson McDonald, which USPS ultimately accepted a $9 million offer from, according to the court ruling.

After the council passed the overlay in 2014, Hudson McDonald asked USPS to work out an agreement with the city to use the space for commercial use, the ruling stated. The USPS refused this offer, and Hudson McDonald subsequently terminated the sale agreement.

The ruling also mentioned that the USPS manager of real estate and assets “admitted” that while the market value of the post office decreased, the overlay did not prevent the sale of the post office.

“Their main case was that we made it impossible for them to sell,” Maio said. “But that’s clearly not the case.”

USPS’ real estate appraiser Timothy Runde concluded that the updated market value of the post office is more than $6 million, according to the ruling. The city’s appraiser, Peter Overton, similarly valued the post office at more than $7 million.

A press release from Arreguín’s office said the Civic Center has been the heart of the city’s civic and cultural life for more than 100 years.

“Historic preservation is a quintessential local matter,” said Arreguín in the press release. “This decision confirms that local governments have wide latitude to protect vital historic resources without interference from the federal government.”

Alyssa Bernardino covers city government. Contact her at [email protected] and follow her on Twitter at @alybernardino.