Court of Appeals of California, Second District, Division Three, No. B212733, November 22, 2010: California’s statutory exemption from historic preservation for noncommercial property owned by a religious organization does not apply to a building that has been a commercial, for-profit apartment building since it was built and was not at the time of the application for exemption or ever before used for a religious entity’s mission or been a nonprofit concern.
The statute in question is Government Code section 37361, subdivision (c). The property consists of a 28-unit, rent-controlled garden-style apartment complex. Its new owner, Or Khaim Hashalom (OKH), was incorporated as a religious corporation only after filing for permission to demolish the building. At the request of the City’s Landmarks Commission the City Council voted unanimously to designate the building as a landmark and the real property as a landmark parcel. The Court found “OKH has never used the [property] for any purpose other than a commercial rental property, either before invoking the exception under Government Code section 37361, subdivision (c), or afterwards.”
“California Government Code section 37361 grants authority to cities to acquire historic landmarks for the purpose of preservation. The statute also authorizes cities to institute special conditions or regulations to protect, enhance, perpetuate, or use places, buildings, structures, works of art, and other objects that have special character or special historical or aesthetic interest or value. (§ 37361, subd. (b).) Subdivision (c) of Government Code section 37361 allows religiously affiliated organizations to declare their properties exempt from historic preservation laws. Subdivision (c) grants the exemption for ‘noncommercial property owned by any association or corporation that is religiously affiliated and not organized for private profit, whether the corporation is organized as a religious corporation, or as a public benefit corporation, provided that both of the following occur: [¶] (1) The association or corporation objects to the application of the subdivision to its property. [¶] (2) The association or corporation determines in a public forum that it will suffer substantial hardship, which is likely to deprive the association or corporation of economic return on its property, the reasonable use of its property, or the appropriate use of its property in the furtherance of its religious mission, if the application is approved.’ (§ 37361, subd. (c), italics added.)”
The Court held the property does not qualify for the exemption because “it was not ‘noncommercial property owned by any association or corporation that is religiously affiliated’ at the time OKH sought to exempt it and at the time the Commission designated it a landmark.”
Citing East Bay Asian Local Development Corp. v. State of California (2000) 24 Cal.4th 693 (East Bay) and California-Nevada Annual Conference etc. v. City and County of San Francisco (2009) 173 Cal.App.4th 1559, the Court wrote, “The clear implication of East Bay and United Methodist and the legislative history on which they rely, is that to qualify for the exemption from historic preservation under Government Code section 37361, subdivision (c), the property must be “noncommercial,” i.e., used for the religious institution’s mission and not for profit, before the religious institution seeks to invoke the exemption.”