Yes, it's a landmark, but go ahead and knock it down.

After voting to protect the Ballard diner as a city landmark in February, the Seattle Landmark Preservation Board voted reluctantly, but unanimously, last Wednesday not to impose any controls on the Manning's/Denny's building.

"It's a very sad situation," said board chair, Stephen Lee, noting this was the first building in his experience the board deemed a landmark, but then later decided could not be preserved.

By law, a landmark designation cannot prevent the owner from seeing a reasonable economic return. Despite looking at more than a dozen development schemes, it just didn't pencil out, the board decided.

The outcome is essentially a green light for property owners BCC Mikie Ballard LLC to solidify a sale to developer Rhapsody Partners, which plan to replace it with an eight-story, 260-unit condominium.

Benaroya Co., a partnership with BCC, paid $12.5 million in 2006 for the site, which included the building. It nominated the building for landmark status to head off a proposal from preservationists.

Save Manning's, a group that formed to save the diner, say the 1960's building is a fair example of Googie architecture, a style of roadside architecture that originated in Southern Californian and is known for its flashy design to catch the eye of passing drivers.

It originated as a Manning's Cafeteria before it became a Denny's in 1983 and has long been considered a Ballard icon.

Preservation Board staff worked with the property owners on several different options that might allow the diner to stay. But even with the best possible use, a high-end restaurant without parking, all were money losers.

Jack McCullough, a lawyer representing Benaroya and Rhapsody, told the board that the best-case scenario would mean a loss of more than $1 million on the initial investment. Landmark preservation officer Karen Gordon concurred with that analysis and recommended the board impose no controls.

"This is a very rare occurrence," Gordon said about the staff's recommendation for no controls.

Architect Ralph Allen of Grace Architects reminded the board of his plan that could save the landmark by applying for a contract rezone with the city and raising the building height so the developers could build the same amount of units.

He said the idea had been vetted with city officials and land-use attorneys.

"I believe the contract rezone is a viable option," Allen said.

Preservationist and Ballard resident Eugenia Woo said the property owners have always seen the diner as "disposable architecture."

"A creative developer with vision and experience with historic buildings will make a project work," said Woo.

But McCullough said the rezoning plan would be "implausible" and would add costs to the project. He said the economic analysis had to be limited to only the restaurant site, not the larger project property, because that is what the board designated.

"It's hard to argue with their results," said board member Tom Veith.

"I don't see how you can make it work," he said. "I'm a proponent of landmarking this building ... it is a landmark. I don't like it, but I don't see how we have an alternative."

Alyce Conti, a board member who worked with the owners on reviewing possible development options, said everyone gave a good faith effort to save the diner.

"We all had our hearts in it to come up with something fantastic," said Conti, a Ballard resident. "It's kind of a messy development deal. No lender is going to lend on this project in this market."

"It breaks my heart," said board member Christine Howard.

Rebekah Schilperoort can be reached at 783-1244 or rebekahs@robinsonnews.com.