USPS vs. Berkeley: Trial over sale of historic Allston Way post office begins

The USPS wants to sell the post office at 2000 Allston Way and claims that the city’s zoning overlay to reserve uses of the building is illegal. Photo: Melinda Stuart

Almost six years after the U.S. Postal Service put Berkeley’s main post office at 2000 Allston Way up for sale, and four years after Berkeley passed a zoning overlay to require the building be used for civic or nonprofit uses, a trial over those competing visions is about to begin.

U.S. District Court Judge William Alsup is scheduled to hear one-hour arguments from each side at noon Monday in a truncated bench trial. There won’t be any witnesses or new evidence introduced, just closing arguments over whether the Berkeley Civic Center District overlay was legal or not.

The USPS, which filed a lawsuit against the city in 2016, is arguing that the overlay is not legal because it greatly reduced the value of the 104-year-old historic structure. Berkeley’s actions violate the supremacy clause of the U.S. Constitution, according to the lawsuit.

Although the court sealed the briefs revealing how much the building may have plunged in value, various numbers emerged during Jan. 11 oral arguments. At one point, the judge commented that Berkeley’s expert said the ornate building had declined in value by 49%. Julia Berman, an attorney for the government, later acknowledged that a government expert put the drop at closer to 39%.


“Your Honor, I believe the property would be worth 30 to 50 percent or more without the overlay in place,” said Berman.

But Berman also suggested the building was now almost unsellable.

“The developer who would have bought it said that the value was — and this is a quote — destroyed,” said Berman. “That the property is now worth very little.”

The developer, Hudson McDonald, had made an offer to buy the structure in October 2014, but the deal eventually fell apart.

But just reducing the value of the structure may not be enough reason to rule that the city’s overlay is illegal, the judge suggested during oral arguments. The USPS must show that the city’s actions resulted in “total frustration” of its ability to sell the structure. A diminution in value is not total frustration, the judge suggested.

“You could still do a pretty good deal,” said Alsup.

Berman said that Congress had passed a bill requiring the postal service be run like a business and not lose money. Part of the strategy to be self-sufficient involves selling off excess property, like the main post office on Allston Way, she told the court. Berkeley’s actions have undermined the intent of Congress, and consequently should be invalidated, she said. Moreover, if Berkeley succeeds, other cities may adopt similar overlays, which could seriously undermine the post office’s attempts to balance its budget.

“If this ordinance is upheld as constitutional, we can be sure that other municipalities will follow suit,” said Berman.

Andrew Schwartz, an attorney representing Berkeley, argued that the overlay does not create a “total frustration” of the USPS’s ability to sell the property, and thus it should be allowed to stand.

“But I would like to back up and get to the — to whether that diminution in value test is even a relevant test here because the test is the inability to sell,” Schwartz argued. “The Postal Reorganization Act says you can sell your property. You’re authorized to sell your property. That’s all it says. It doesn’t say anything about the conditions under which the property could be sold.”

A storied building

Oscar Wenderoth designed the neoclassical style building, which was built in 1914 and was listed on the Register of Historic Places in 1981. The building, which fills half the block bounded by Allston Way, Milvia, Kittredge and Harold Way, has a grand, arcaded front along Allston Way, loosely modeled on Filippo Brunelleschi’s Ospedale degli Innocenti in Florence, one of the seminal works of the early Renaissance. It also contains a WPA mural by Suzanne Scheur depicting early Berkeley history.

The USPS announced in June 2012 that it wanted to sell the building and move to a smaller space in downtown Berkeley. It contended that the building was underutilized, as the postal service only used 4,000 square feet of the 57,000-square-foot building. The proposed move prompted many Berkeley residents to protest, arguing that citizens had paid for the building and it should remain in public hands. For 17 months, a group of protesters camped on a small portion of the post office property to protest the sale.

Berkeley officials appealed the decision to sell, but the Postal Regulatory Commission declined the plea. Berkeley also filed a lawsuit to stop the sale, but a federal judge dismissed the suit in 2015., in part because the postal service had taken the building off the market.

Numerous municipalities have tried to stop sales or extended leasing of their historic post offices, which often sit on main streets, but none have been successful. One of the most prominent examples of reuse of a historic post office is the Trump International Hotel in Washington D.C.

The Berkeley Veterans’ Memorial Hall, along with eight other buildings and parcels, are included in the Civic Center District Overlay. Photo: Wikimedia Commons

Berkeley officials vowed to fight, however, and passed the overlay ordinance in September 2014. The overlay includes nine parcels, including the main post office, Old City Hall, the Veterans’ Memorial Building, Berkeley High School, the Berkeley Community Theater/Florence Schwimley Little Theater, Civic Center/MLK Park, the Downtown Berkeley YMCA building and the State Farm Insurance Building.

The overlay limits uses in that zone to those that are “civic in nature and support active community use” to ensure it’s a place for “government functions, community activities, cultural and educational uses; and civic functions and facilities.”

The overlay also set a height limit for all buildings at 50 feet so that none would stand taller than City Hall. Before the overlay was passed, the post office was in an area that was zoned to accommodate a 120-foot high structure.

The USPS claimed that the overlay was “spot zoning.” It said it tried to negotiate with Berkeley by being sympathetic to the community’s concerns and offering to add restrictions on the sale by requiring that the new owners lease back space for continued operations and offer access to the murals. After Berkeley did not agree to those concessions, the USPS filed a lawsuit to overturn the overlay in August 2016.