The USPS wants to sell the downtown Berkeley post office at 2000 Allston Way, but lost the legal argument that the city’s Civic Center Historic overlay is illegal. Photo: Melinda Stuart

A federal judge on Monday rejected arguments by the federal government that the city of Berkeley had acted unconstitutionally when it created a historic overlay for the Civic Center in 2014, thereby making it difficult for the government to sell the post office at 2000 Allston Way.

While mandating that the nine buildings in the overlay could only be used for civic or nonprofit uses rather than commercial purposes might have diminished the sales value of the post office, it did not make the building impossible to sell, ruled U.S. District Court Judge William Alsup. Moreover, the action of the Berkeley City Council affected a number of property owners, not just the federal government. It cannot be seen as violating the supremacy clause of the Constitution as the federal government had argued, Alsup wrote in his decision.

Mayor Jesse Arreguín expressed pleasure at the judge’s ruling.

“For over 100 years, our Civic Center has been the heart of our civic and cultural life,” he said in a statement. “The overlay ordinance, which I authored, seeks to protect the integrity of our historic Civic Center District, preserve our existing buildings, and ensure their long-term use for government functions, social services, community activities, and cultural and educational uses.”

Julia Berman, the federal attorney who represented the USPS in court, could not be reached for comment about whether there will be an appeal of the decision.

The genesis of the lawsuit came in June 2012, when the USPS, facing financial difficulties, announced it was placing the main post office, a historic structure built in 1914, up for sale. City Council members and many residents protested the idea, pointing out that the building had historic murals inside and was listed as a historic building. They formed Save the Berkeley Post Office and held demonstrations. A group of homeless activists camped out on the steps of the post office for many months to protest the proposed sale.

The post office solicited buyers and received five bids, according to Alsup’s ruling, including from the YMCA, Tibetan Nyingma Meditation Center and Hudson McDonald, a developer. The USPS agreed in Sept. 2014 to sell the structure for $9 million to Hudson McDonald, which “intended to turn most of the post office to commercial use as, for example, a Target store,” the judge wrote.

The USPS planned to lease back the front section of the building, where the murals are, so it would continue to function as a post office.

In late 2014, the City Council passed the Civic Center District Overlay which restricted the use of nine buildings clustered around Civic Center Park, including the post office, Old City Hall, the Veteran’s Memorial Building, the YMCA and other buildings to civic or nonprofit uses.

That action prompted Hudson McDonald to go back to the USPS to ask for more time before the deal closed so it could negotiate with the city to see if it could still pursue a commercial use for the building. The USPS denied Hudson McDonald’s request for more time, which prompted the developer to withdraw its offer, according to the judge. The USPS then took the building off the market and filed a lawsuit against Berkeley, claiming that the city had singled it out, thereby violating the supremacy clause of the Constitution. The USPS also claimed that the creation of the overlay made the post office building impossible to sell.

Judge Alsup struck down both of the arguments put forward by the federal government. He rejected the notion that Berkeley had singled the government out, pointing to the fact that the overlay also affected property held by the YMCA and the Berkeley Unified School District. He also said that the Civic Center Historic District was initially planned in 1899 and 100 years later was recognized as a historic site by local, state and federal governments.

Old City Hall is one of the nine buildings included in the Civic Center District Overlay. Photo: Nancy Rubin

Alsup also poked holes in the federal government’s contention that the overlay had undermined its ability to sell the post office. An appraiser hired by the government estimated that, with the overlay, the post office was worth $6 million, about 39% lower than its unconstrained value. Instead of looking for buyers who would retain a civic use, the USPS seemed peeved that it couldn’t seek a buyer who wanted to use the structure for commercial purposes.

“What seems unique about this situation is merely that, among all the owners of property within the Civic Center Historic District, only the USPS currently intends to sell its property to purchasers who would want to use it for purposes prohibited by the Overlay,” Alsup wrote.

Alsup wrote that the USPS didn’t even try to make the barest argument — that it seems he would have welcomed — that the creation of the overlay undermined USPS’s plan to raise funds through the sale of its properties.

“For example, the USPS could hypothetically have proffered evidence – not merely attorney argument and unsubstantiated insinuation – that something about the grand scheme of its nationwide operational plan makes it impossible, as a practical matter, to sell the post office below a certain price. But it did not do so,” Alsup wrote. “The USPS could also hypothetically have proffered evidence that no one would purchase the post office with the overlay in place, and any efforts to strike a reasonable deal would have been futile. But the USPS did not even try. It simply took the post office off the market and filed this lawsuit instead, thereby foreclosing what might have been persuasive proof of its claim.”

Alsup reached his decision after the two sides presented brief closing arguments in court in early April. In addition to City Attorney Farimah Brown, Berkeley was represented by outside counsel, Andrew Schwartz.

The ruling does not mean that the post office will remain as it is. The USPS could still seek a buyer for the building.

If the USPS drops the suit, Berkeley will have achieved a victory rare in cities. The USPS has been selling off many of its historic properties in recent years and cities have rarely been able to stop the sales. Save the Post Office, a national group dedicated to bringing awareness of the action, says the USPS has sold about 100 post office buildings from 2009 to 2017. The National Trust for Historic Preservation grew so concerned that  it put historic post offices on its “2012 List of America’s 11 Most Endangered Places.”

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Frances Dinkelspiel, Berkeleyside and CItyside co-founder, is a journalist and author. Her first book, Towers of Gold: How One Jewish Immigrant Named Isaias Hellman Created California, published in November...