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Why can't this be changed?
Because you are not placing it in a floor plan view.
Meaning the drawing was originally a site plan rather than floor plan?
No. The revit view, what is it? And don't activate view on sheet to place DWG, open the view directly to do it
Floor plan.
I linked it into the project at a different view without experiencing the issue and then changed the host level to the desired floor plan.
never-displayed