Three months after declaring the defunct Ballard Denny's building a landmark — which, for some, put into question the very meaning of...

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Three months after declaring the defunct Ballard Denny’s building a landmark — which, for some, put into question the very meaning of the word — Seattle’s Landmarks Preservation Board unanimously said the owner can tear it down.

The change of tune tonight came after the Benaroya Companies, which purchased the property in 2006 intending for condominiums to be built, convinced the board that it could not achieve a reasonable rate of return on its $12.5 million investment if the Denny’s were left standing.

The landmarking of the Denny’s, which Benaroya shut down last year, sparked passions because it touched on property rights, historic preservation, growth and the continued evolution of once quaint Seattle neighborhoods. Hundreds of Ballard residents banded together to save it.

Their efforts worked at first, but tonight the board was required to consider its decision’s economic impact on Benaroya — a factor that by law it could not take into account three months ago.

“I just don’t see how I can not only hold their feet to the fire, but put them into the fire,” said board member Thomas Veith, an architectural historian who voted in favor of the landmark in February.

John McCullough, Benaroya’s attorney, said the company looked at a dozen redevelopment alternatives that would have preserved the building, but no plan penciled out.

Even the rosiest option — turning the Denny’s into a high-end restaurant and building condos on the rest of the site — posted a near 25 percent loss for Benaroya, he said. That’s because the number of units built would have to have been reduced from the original redevelopment plan.

Board member Alyce Conti, a real-estate finance expert, agreed with McCullough’s assessment.

“No lender is going to lend on this project, especially in today’s environment,” she said. “It’s impossible.”

Supporters who pushed to turn the Denny’s into a landmark pleaded with the board to consider the building could be preserved if the property were rezoned, thus giving the developer an opportunity to build higher and build enough condo units to financially satisfy the owner.

But Veith said a rezone might not fly with Ballard residents: “If they are against having the condos, why would they support extra height?”

Benaroya officials had characterized building supporters as more interested in using the landmarks process to stop the proliferation of condos in Ballard than in the historic or architectural virtues of the building. Alan Michelson told the board that was not the case, and said city officials were open to a rezone.

Eugenia Woo, another Ballard resident, said all the money Benaroya has spent to fight the landmark designation could have gone toward restoring the restaurant and that by now “we all could be drinking martinis at a swank bar.”

Benaroya purchased the property as part of a surplus auction of the failed Seattle Monorail Project. The building was to be demolished to make way for a monorail station but had not been vetted through the landmarks process.

The board’s decision in February to designate the Denny’s a landmark was criticized by those who believed the building had lost much of its original Googie-inspired architectural integrity. In the end, the board designated it a landmark not on the basis of architecture, but rather on its visual prominence at Northwest Market Street and 15th Avenue Northwest and its distinctive quality in Ballard.

The building was constructed in 1964 as a Manning’s Cafeteria. It morphed into a Denny’s but today stands boarded up behind a chain-link fence.

While the landmark ruling three months ago led some to poke fun at Seattle’s sense of aesthetic, others used it to debate whether midcentury buildings merit landmark status. It also has shined light on the often misunderstood city-landmarks process.

Board chair Stephen Lee, an architect who voted to landmark it three months ago, said members having to vote to tear down a landmark was “a very sad situation for us to be in” but he and other design professionals on the board needed to defer to colleagues who are number crunchers.

Board member Ronald Martinson, a structural engineer, said the process needed to be followed that required the board to take heed of Benaroya’s financial hardship.

“I think it’s worth noting,” he said, “that we’re a board of rules.”

Stuart Eskenazi: 206-464-2293 or