City Of Issaquah, V. Westridge-issaquah Ii Lp ( 2021 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
WESTRIDGE-ISSAQUAH II LP and
POLYGON WLH LLC, Washington DIVISION ONE
companies,
No. 82025-7-I
Respondents,
PUBLISHED OPINION
v.
CITY OF ISSAQUAH, a municipal
corporation,
Appellant.
DWYER, J. — The City of Issaquah (the City) appeals from the superior
court’s order granting the petition filed pursuant to the Land Use Petition Act
(LUPA)1 by Westridge-Issaquah II LP and Polygon WLH LLC (collectively
Polygon). In its petition, Polygon claimed that the City illegally imposed certain
general facility charges (GFCs) on several of its properties. Polygon contends
that it had a vested right to have lower GFCs imposed on its properties pursuant
to an expired development agreement. Additionally, Polygon asserts that the
City’s imposition of the higher GFCs violated RCW 35.92.025—a statute
requiring utility connection charges to be reasonable such that they are based on
property owners’ equitable shares in the cost of the city utility systems.
Both because Washington’s vesting doctrine does not apply to fees and
because Polygon did not adduce any evidence challenging the basis on which
1 Ch. 36.70C RCW.
No. 82025-7-I/2
the City’s ordinances established the disputed GFCs, we reverse the trial court’s
order insofar as it requires the City to refund the GFCs that were imposed on
Polygon’s properties and to assess GFCs for future building permits submitted by
Polygon according to the development agreement. In an order that is not the
subject of an assignment of error, the trial court varied the amount that the City is
authorized to charge Polygon for side-sewer fees and water-meter installation
fees. We leave that order undisturbed, thereby affirming it.
I
Polygon owns land in an area of the City known as the Issaquah
Highlands. Polygon intends to construct numerous single-family residential units
and townhomes in the Issaquah Highlands. One of Polygon’s development
projects is known as the Westridge Single-Family North development, which is a
73-unit single-family subdivision located within the northern portion of Polygon’s
property.
In June 1996, the City entered into a development agreement with Grand
Ridge LP and Glacier Ridge LP (the Partnership). Under this agreement, the
Partnership designated Port Blakely Communities, Inc. as their “agent with
authority to give notices, approvals and otherwise act pursuant to [the]
Agreement.” The parties agree that Port Blakely was Polygon’s predecessor in
interest.
The development agreement contained various “development standards,”
which controlled aspects of development in the Issaquah Highlands. Under the
development agreement, the Partnership was to construct water and sewer
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No. 82025-7-I/3
facilities to serve development in the Issaquah Highlands.2 According to a
memorandum dated December 16, 2013, and authored by a city official, Port
Blakely constructed water, sewer, and stormwater systems in the Issaquah
Highlands that were “designed to support the planned development needs in the
project.”
In exchange for Port Blakely’s construction of these facilities, the City
agreed to consider to amend its ordinances imposing water and sewer GFCs on
properties that fell within the scope of the agreement.3 The development
agreement did not contain any such provisions with regard to stormwater GFCs.
Notably, the development agreement provided that “[t]he parties agree to
take further actions and execute further documents, either jointly or within their
2 With regard to water facilities, section 3.12 of the development agreement stated, in
part:
The Partnership shall provide at its cost water facilities and incorporate
water conservation measures to serve the [urban growth area] consistent with
the “Grand Ridge Water Service” document, which is set forth in Appendix F.
The City shall provide water to the [urban growth area] Portion of the Project
sufficient for the Allowable Development.
With regard to sewer facilities, section 3.13 of the development agreement stated, in part:
The Partnership shall provide at its cost sewer facilities to serve the
[urban growth area] consistent with the “Grand Ridge Sewer Service” document,
which is set forth in Appendix G.
3 Under Appendix F, the City agreed to consider to amend its ordinance imposing a water
GFC on the Highlands:
In recognition of the Partnership’s obligation to provide the Grand Ridge
water system through a series of water main extensions, pump stations and
water reservoirs, the City agrees to consider adoption of amendments no later
than August 4, 1996, to its current ordinance(s) which would authorize the City’s
normal connection (hook-up) fee to be adjusted so the Partnership pays its fair
share of the portion of the water supply system attributable to Grand Ridge.
Under Appendix G, the City also agreed to consider to amend its ordinance imposing a
sewer GFC on the Highlands:
The sewer system shall be designed and constructed to city standards
and become part of the City’s system upon completion. In recognition that the
Grand Ridge sewer system will be installed at the Partnership’s cost . . . and will
connect directly to the existing METRO GILMAN Interceptor, the City agrees to
consider adoption of amendments, no later than August 4, 1996, to its current
ordinances to authorize the Partnership to not pay any connection (hook-up) fee
to the City.
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respective powers and authority, to implement the intent of this Agreement.”
During the term of the agreement, Port Blakely and the City executed several
documents which waived or lowered the GFCs that applied to the developments
in the Issaquah Highlands. Ultimately, the City agreed to (1) waive the GFCs
imposed on single-family residences seeking to connect to the City’s water and
stormwater systems, and (2) impose a GFC of $165.06 on single-family
residences seeking to connect to the City’s sewer system.
The development agreement also set forth a build-out period of 20 years,
during which the development standards contained within the agreement
governed all development:
All development within the [urban growth area] shall be
governed by the Development Standards and shall be implemented
through plats, short plats, binding site plans, site development
permits, building permits and other permits and approvals
(“Implementing Approvals”) issued by the City. A “Buildout Period”
of twenty (20) years following first final plat approval is established
for the development and construction of uses for the Grand Ridge
Project. During the Buildout Period, the City shall not modify or
impose new or additional Development Standards beyond those set
forth in this Agreement.
The development agreement further stated that “[t]he term of this
Agreement shall continue at a minimum through the Buildout Period, and shall
continue after the Buildout Period unless and until either the City or the
Partnership . . . gives notice of termination.”
On November 1, 2016, Port Blakely sent a letter to the City’s mayor, land
development manager, and economic development director in which it provided
notice to terminate the development agreement.
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No. 82025-7-I/5
After receiving the notice of termination from Port Blakely, the City was
required, under the development agreement, to adopt replacement zoning and
related development standards that would govern development in the area that
was subject to the agreement:
No sooner than six (6) months after the notice of termination, the
City shall hold public hearings and shall adopt zoning and related
development standards for the [urban growth area] portion of the
Property, or portions thereof as determined appropriate by the City.
Upon such adoption, this Agreement shall terminate and thereafter
the [urban growth area] portion of the Property shall be governed
by the adopted City zoning and related development regulations.
On March 19, 2018, the Issaquah city council passed ordinance 2830,
which, among other things, terminated the development agreement and required
single-family residences in the Issaquah Highlands to pay the $6,029 city-wide
GFC to connect to the City’s water utility system. Issaquah Ordinance 2830
(Mar. 19, 2018). Ordinance 2830 also provided that “all property formerly
governed by [the] Development Agreement shall . . . be governed by the Urban
Village Replacement Regulations adopted by this ordinance and other applicable
City zoning and related development regulations.” Issaquah Ordinance 2830
(Mar. 19, 2018).
On July 14, 2017, before the City terminated the development agreement,
Polygon submitted a preliminary plat application to subdivide the Westridge
Single Family North development into 73 single-family lots. On May 4, 2018, the
chair of the City’s Urban Village Development Commission sent a letter to the city
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No. 82025-7-I/6
council recommending that it approve the preliminary plat application. The city
council subsequently approved the preliminary plat application.4
After the development agreement was terminated, Polygon submitted
building permit applications in which it sought to connect several single-family
properties to the City’s utility systems.5 In September 2019, the City issued
several invoices for development fees and charges associated with building
permits for these properties. For each building permit, these invoices imposed
various fees and charges, including a water GFC of $6,029, a sewer GFC of
$2,024, and a stormwater GFC of $1,256.6 Polygon paid these fees and charges
under protest.
4 The record does not contain the city council’s approval of the preliminary plat
application. However, in its opening brief, the City states that “[t]he Issaquah City Council
approved Westridge’s preliminary plat on July 16, 2018.” Br. of Appellant at 17. Additionally, in
its response brief, Polygon states that “[t]he City approved the Westridge North preliminary plat.”
Br. of Resp’t at 13.
5 The record does not contain Polygon’s building permit applications. However, the
parties agree that Polygon submitted its building permit applications after the development
agreement was terminated. In its opening brief, the City states that “Polygon applied for its utility
connections (via building permits) after termination of the Development Agreement.” Br. of
Appellant at 28. Likewise, in its response brief, Polygon states that “the building permits for plats
approved under the Development Agreement were not all applied for prior to the Agreement’s
termination.” Br. of Resp’t at 38.
Moreover, the record indicates that Polygon sought to connect to the City’s utility systems
in its building permit applications. The Issaquah Municipal Code requires utility system
connection charges to be assessed when the City issues the permit to connect to the utility
system. IMC 13.24.090E; IMC 13.70.020B; IMC 13.30.055A. Here, the City assessed the utility
connection charges upon issuance of Polygon’s building permits.
6 Approximately two years before the Issaquah city council terminated the development
agreement, the city council passed two ordinances that established the sewer and stormwater
GFCs that were ultimately imposed on Polygon’s properties. The first, ordinance 2748, required
a GFC of $2,024 to connect to the City’s sewer system. Issaquah Ordinance 2748 (Nov. 2,
2015). The second, ordinance 2749, required a GFC of $1,256 to connect to the City’s
stormwater system. Issaquah Ordinance 2749 (Nov. 2, 2015). These ordinances specified that
the effective date for these GFCs was January 1, 2016. Issaquah Ordinance 2748, 2749.
Neither party cites to these ordinances, and they are not contained within the record on appeal.
However, these ordinances may be found at
https://issaquah.civicweb.net/filepro/documents/3338 [https://perma.cc/M978-5ZWA (2748);
https://perma.cc/TAL3-W4TL (2749)].
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No. 82025-7-I/7
Polygon then appealed the City’s imposition of the fees and charges
associated with three building permits to the Issaquah hearing examiner. The
hearing examiner dismissed Polygon’s appeal, reasoning that the Issaquah
Municipal Code did not provide a procedural mechanism to appeal the fees and
charges that were imposed on Polygon’s properties.
In October and November 2019, the City issued several additional
invoices for development fees and charges associated with building permits for
properties located within the Westridge Single-Family North development. As
with the previous invoices, these invoices assessed the GFCs according to the
City’s ordinances rather than the development agreement.
On October 17, 2019, Polygon filed a LUPA petition in the King County
Superior Court. Polygon asserted that the City lacked the authority to impose
various fees and charges, including (1) the water, sewer, and stormwater GFCs,
and (2) a water-meter installation fee and side-sewer fee. In response, the City
conceded that it improperly assessed the water-meter installation fee and side-
sewer fee. However, the City maintained that it properly assessed the water,
sewer, and stormwater GFCs that were imposed on Polygon’s properties.
On October 2, 2020, the superior court entered an order granting
Polygon’s LUPA petition. The order required the City to “refund the water, and
stormwater general facilities charges assessed against the Westridge North
single family building permits” and “refund the sewer general facility charge
except for $165.06.” Additionally, the order required the City to “assess fees for
all future single-family home building permits in the Westridge North subdivision
7
No. 82025-7-I/8
based on the Development Agreement GFCs.” Finally, the order required the
City to refund the water-meter installation fee and the side-sewer fee, as agreed
to by the parties.
The City appeals.
II
A party seeking relief from a land use decision must file a petition in the
superior court pursuant to LUPA. RCW 36.70C.040(1). “A petition for review by
the superior court constitutes appellate review on the administrative record
before the local jurisdiction’s body or officer with the highest level of authority to
make the final determination.”7 HJS Dev., Inc. v. Pierce County, 148 Wn.2d 451,
467, 61 P.3d 1141 (2003).
“‘When reviewing a superior court’s decision on a land use petition, the
appellate court stands in the shoes of the superior court.’” HJS Dev., 148 Wn.2d
at 468 (quoting Citizens to Pres. Pioneer Park, LLC v. City of Mercer Island, 106
Wn. App. 461, 470, 24 P.3d 1079 (2001)). Moreover, “[o]n appeal, the party who
filed the LUPA petition bears the burden of establishing one of the errors set forth
in RCW 36.70C.130(1), even if that party prevailed on its LUPA claim at the
superior court.” Quality Rock Prods., Inc. v. Thurston County, 139 Wn. App. 125,
134, 159 P.3d 1 (2007).
Under RCW 36.70C.130(1), a challenged decision violates LUPA if:
7 Polygon contends that the City’s building official was the officer with the highest level of
authority to make the final determination regarding the GFCs that were imposed on Polygon’s
properties. The building official is “[t]he officer or other designated authority charged with the
administration and enforcement of the Uniform Building Code and assigned provisions of this
[Land Use] Code.” IMC 18.02.040. However, under the Issaquah Municipal Code, it is the city
engineer, not the building official, who is authorized to administer the sections of the code
regarding water, sewer, and stormwater GFCs. IMC 13.04.010A; IMC 13.32.010.
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No. 82025-7-I/9
(a) The body or officer that made the land use decision
engaged in unlawful procedure or failed to follow a prescribed
process, unless the error was harmless;
(b) The land use decision is an erroneous interpretation of
the law, after allowing for such deference as is due the construction
of a law by a local jurisdiction with expertise;
(c) The land use decision is not supported by evidence that
is substantial when viewed in light of the whole record before the
court;
(d) The land use decision is a clearly erroneous application
of the law to the facts;
(e) The land use decision is outside the authority or
jurisdiction of the body or officer making the decision; or
(f) The land use decision violates the constitutional rights of
the party seeking relief.
Polygon asserts that the City violated RCW 36.70C.130(1)(b) and (d) by
imposing the higher GFCs on its properties.8 We review de novo whether a
decision is based on an erroneous interpretation of the law under subsection (b).
Phoenix Dev., Inc. v. City of Woodinville, 171 Wn.2d 820, 828, 256 P.3d 1150(2011). Additionally, “[a] finding is clearly erroneous under subsection (d) when,
although there is evidence to support it, the reviewing court on the record is left
with the definite and firm conviction that a mistake has been committed.”
Phoenix Dev., 171 Wn.2d at 829.
III
Polygon contends that it had a vested right to have the GFCs imposed on
its properties assessed according to the development agreement. This is so,
Polygon avers, because it submitted its preliminary plat application before the
development agreement was terminated. We disagree.
8 Polygon also states that RCW 36.70C.130(1)(c) is “applicable” to this case. Br. of
Resp’t at 18. However, Polygon concedes that, because the City’s assessment of the disputed
GFCs did not involve findings of fact, “there are no factual findings for this Court to review under
the substantial evidence standard.” Br. of Resp’t at 19-20.
9
No. 82025-7-I/10
A
“In Washington, ‘vesting’ refers generally to the notion that a land use
application, under the proper conditions, will be considered only under the land
use statutes and ordinances in effect at the time of the application’s submission.”
Noble Manor Co. v. Pierce County, 133 Wn.2d 269, 275, 943 P.2d 1378 (1997).
“At common law, this state’s doctrine of vested rights entitled developers to have
a land development proposal processed under the regulations in effect at the
time a complete building permit application was filed.” Noble Manor, 133 Wn.2d
at 275. “In 1987, the Legislature (1) codified the traditional common law vested
rights doctrine regarding vesting upon application of building permits [in RCW
19.27.095], and (2) enlarged the vesting doctrine to also apply to subdivision and
short subdivision applications [in RCW 58.17.033].” Noble Manor, 133 Wn.2d at275 (citing LAWS OF 1987, ch. 104; Friends of the Law v. King County, 123 Wn.2d
518, 522, 869 P.2d 1056 (1994)).
“The purpose of the vested rights doctrine is to provide a measure of
certainty to developers and to protect their expectations against fluctuating land
use policy.” Noble Manor, 133 Wn.2d at 278. However, “[i]f a vested right is too
easily granted, the public interest is subverted.” Noble Manor, 133 Wn.2d at 280.
This is because “development interests protected by the vested rights doctrine
come at a cost to the public interest because the practical effect of recognizing a
vested right is to sanction the creation of a new nonconforming use.” Noble
Manor, 133 Wn.2d at 280.
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No. 82025-7-I/11
B
A developer may also have a right to have certain standards imposed on
its development pursuant to a development agreement. Under RCW
36.70B.170(1), “[a] local government may enter into a development agreement
with a person having ownership or control of real property within its jurisdiction.”
Significantly, the development standards contained within a development
agreement govern only during the term or build-out period specified in the
agreement:
Unless amended or terminated, a development agreement is
enforceable during its term by a party to the agreement. A
development agreement and the development standards in the
agreement govern during the term of the agreement, or for all or
that part of the build-out period specified in the agreement, and
may not be subject to an amendment to a zoning ordinance or
development standard or regulation or a new zoning ordinance or
development standard or regulation adopted after the effective date
of the agreement. A permit or approval issued by the county or city
after the execution of the development agreement must be
consistent with the development agreement.
RCW 36.70B.180 (emphasis added).
The development agreement herein, which was entered into in June 1996,
established a build-out period of 20 years:
A “Buildout Period” of twenty (20) years following first final plat
approval is established for the development and construction of
uses for the Grand Ridge Project. During the Buildout Period, the
City shall not modify or impose new or additional Development
Standards beyond those set forth in this Agreement.
This agreement specified that, upon expiration of the build-out period,
either party could give notice to terminate the agreement. On November 1, 2016,
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No. 82025-7-I/12
Port Blakely sent a letter to City officials in which it provided notice to terminate
the development agreement.
Upon receiving the notice of termination from Port Blakely, the City was
required, under the development agreement, to adopt zoning and related
development standards that would govern development in the area that was
subject to the agreement:
No sooner than six (6) months after the notice of termination, the
City shall hold public hearings and shall adopt zoning and related
development standards for the [urban growth area] portion of the
Property, or portions thereof as determined appropriate by the City.
Upon such adoption, this Agreement shall terminate and thereafter
the [urban growth area] portion of the Property shall be governed
by the adopted City zoning and related development regulations.
On March 19, 2018, the City passed ordinance 2830, which, among other
things, terminated the development agreement and required properties that were
subject to the agreement to be “governed by the Urban Village Replacement
Regulations adopted by this ordinance and other applicable City zoning and
related development regulations.” Issaquah Ordinance 2830 (Mar. 19, 2018).
C
Polygon asserts that, because it submitted a preliminary plat application
before the development agreement was terminated, it had a vested right to have
the GFCs provided in the agreement imposed on its development until approval
of its preliminary plat expires.9 This is so, Polygon avers, because the
preliminary plat application specified that the development was for single-family
9 Under the Issaquah Municipal Code, “[a]pproval of any preliminary plat shall expire and
the preliminary plat shall be considered withdrawn seven (7) years from the date of such
preliminary plat approval.” IMC 18.13.170A.
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No. 82025-7-I/13
use. Therefore, according to Polygon, the GFCs agreed to under the
development agreement—which applied to properties for single-family use—
governed the processing of its building permit applications, which were submitted
after the development agreement was terminated. Polygon’s argument fails for
three reasons.
1
First, the vesting statute for preliminary plat applications, RCW 58.17.033,
does not apply to fees. This statute provides:
A proposed division of land, as defined in RCW 58.17.020, shall be
considered under the subdivision or short subdivision ordinance,
and zoning or other land use control ordinances, in effect on the
land at the time a fully completed application for preliminary plat
approval of the subdivision, or short plat approval of the short
subdivision, has been submitted to the appropriate county, city, or
town official.
RCW 58.17.033(1).
In New Castle Investments v. City of LaCenter, 98 Wn. App. 224, 226, 989
P.2d 569 (1999), the court held that RCW 58.17.033 “does not apply to
transportation impact fees (TIFs) because they do not fall within the definition of
‘land use control ordinances.’” The court therein reasoned that a transportation
impact fee did not qualify as a “land use control ordinance” because it neither
limited the use of land nor resembled a zoning law:
The right that vests, according to Noble Manor, is “the right
to have the uses disclosed in [the applicant’s] application
considered by the county or local government under the laws in
existence at the time of the application.” 133 Wn.2d at 283.
According to legal commentators, “[t]he vested rights rule is
generally limited to those laws which can loosely be considered
‘zoning’ laws.” W ASH. STATE BAR ASS’N, WASHINGTON REAL
PROPERTY DESK BOOK, § 97.8(2)(d) (3rd ed. 1996). A TIF does not
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No. 82025-7-I/14
limit the use of land, nor does it resemble a zoning law. Instead, a
TIF merely affects the ultimate cost of the development. Thus, it
is not the type of right that vests under the vested rights doctrine.
New Castle Invs., 98 Wn. App. at 232.
Similarly, in Lincoln Shiloh Associates, Ltd. v. Mukilteo Water District, 45
Wn. App. 123, 128, 724 P.2d 1083, 742 P.2d 177 (1986), we explained that “it is
inappropriate to apply the vesting doctrine to fees.” A property owner therein
“submitted to the [Mukilteo Water] District an application for permission to extend
[a] water main.” Lincoln Shiloh Assocs., 45 Wn. App. at 126. After the district
approved the application, it adopted a resolution that imposed a GFC for
connecting to the district’s water facility and increased the property owner’s cost
to connect from $6,400 to $95,680. Lincoln Shiloh Assocs., 45 Wn. App. at 126.
After the connection charge was increased, the property owner applied to
connect to the district’s water facility and paid the increased connection charge
under protest. Lincoln Shiloh Assocs., 45 Wn. App. at 126. We rejected the
property owner’s argument that it had a vested right to the connection charge in
effect when its application to extend the water main was approved:
[The property owner] is not being forced to use its land or build
differently from that which [the property owner] was able to do at
the time its plans were approved by the District. Instead, the cost is
increased. [The property owner] had no more than an expectation
that the connecting charges would remain $6,400. There is no
vested right here to the connection fee remaining $6,400.
Lincoln Shiloh Assocs., 45 Wn. App. at 128-29.
The water, sewer, and stormwater GFCs imposed on Polygon’s properties
did not limit Polygon’s use of the properties or the development thereon. In other
words, the water, sewer, and stormwater GFCs were not “land use control
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No. 82025-7-I/15
ordinances” under RCW 58.17.033(1). Accordingly, Polygon did not have a
vested right to have the GFCs that were imposed on its properties assessed
pursuant to the development agreement.
2
Polygon’s argument fails for another reason, as well. Despite its claim to
the contrary, Polygon did not have a right to have its building permit applications
vest to the land use laws in effect when it submitted its preliminary plat
application. Our Supreme Court has clarified which rights vest upon the
submission of a complete preliminary plat application:
Not all conceivable uses allowed by the laws in effect at the time of
a short plat application are vested development rights of the
applicant. However, when a developer makes an application for a
specific use, then the applicant has a right to have that application
considered under the zoning and land use laws existing at the time
the completed plat application is submitted.
Noble Manor, 133 Wn.2d at 285 (emphasis added).
Stated differently, upon submission of a preliminary plat application, an
applicant has a right to have the specific uses sought in the application
considered under the land use laws in effect when the application was submitted.
Additionally, an applicant has the right to have only the preliminary plat
application—not a subsequently filed building permit application—considered
under the land use laws in effect when the preliminary plat application was
submitted.
Polygon did not seek to connect to the City’s water, sewer, or stormwater
systems in its preliminary plat application. Rather, Polygon sought to connect to
these utility systems in its building permit applications, which were filed after the
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No. 82025-7-I/16
development agreement was terminated. It is of no significance that Polygon
specified in its preliminary plat application that it sought to develop single-family
residences—Polygon had a vested right to have only its preliminary plat
application considered under the land use laws in effect when that application
was submitted.
Polygon cites to Association of Rural Residents v. Kitsap County, 141
Wn.2d 185, 4 P.3d 115 (2000), and Schneider Homes, Inc. v. City of Kent, 87
Wn. App. 774, 942 P.2d 1096, 971 P.2d 56 (1997), in support of its argument
that, because its preliminary plat application specified that the development was
for single-family use, its subsequently-filed building permit applications vested to
the development standards contained within the development agreement.
However, these cases do not support Polygon’s argument.
In Schneider Homes, we held that a developer had a right to have both its
preliminary plat application and a “companion” planned unit development permit
application vest to the ordinances in effect when those applications were
submitted. 87 Wn. App. at 779. We reasoned that the preliminary plat
application was “inextricably linked” to the planned unit development application
such that the preliminary plat application could not “go forward without” the
planned unit development application. Schneider Homes, 87 Wn. App. at 778.
In Association of Rural Residents, our Supreme Court relied on our reasoning in
Schneider Homes and held that, “when a preliminary plat application is coupled
with a [planned unit development] proposal, the [planned unit development]
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No. 82025-7-I/17
ordinance is one of the laws in effect at the time of application to which the
vested rights doctrine applies.” 141 Wn.2d at 195.
Polygon’s building permit applications were not “inextricably linked” to its
preliminary plat application such that the preliminary plat application could not be
approved unless the building permit application was also approved. Indeed, the
Issaquah Municipal Code generally requires preliminary plat applications to be
approved before a party may submit a building permit application: “All
development proposals . . . are subject to Project Permit[10] approval prior to
Building Permit application unless otherwise allowed by the Building Official.”
IMC 18.04.090. Thus, Polygon did not have a right to have its building permit
applications vest to the land use laws in effect when it submitted its preliminary
plat application.11
10 The term “Project Permit” is defined to include “subdivisions.” IMC 18.02.180.
11 Polygon also asserts that various assurances made by the City demonstrate that it had
a vested right to the GFCs agreed to under the development agreement. However, mere
assurances from city officials do not grant a party vested rights. Deer Creek Developers, LLC v.
Spokane County, 157 Wn. App. 1, 12-13, 236 P.3d 906 (2010). In any event, none of the
documents cited by Polygon indicate that the City assured Polygon that it had a vested right to
the GFCs agreed to under the development agreement.
First, Polygon cites to an e-mail message from a City official explaining that the GFCs
imposed on single-family residences seeking to connect to the City’s (1) water and stormwater
systems would amount to $0, and (2) sewer system would amount to $165.06. However, this e-
mail message was sent to Polygon on March 10, 2017—approximately one year before the city
council terminated the development agreement. Additionally, this e-mail message was a
response to an e-mail message sent by an employee of Polygon that requested the City to
“confirm what we will pay . . . under the Developer Agreement.” Plainly, in this message, the City
did not assure Polygon that these GFCs would apply after the development agreement was
terminated.
Second, Polygon cites to a March 2017 letter from the City’s director of the Department of
Development Services which merely explained that, when a complete “application” is submitted,
that application vests to the zoning and development regulations in effect at that time:
Requirements for a complete application necessary to vest are set forth by
municipal code. IMC 18.01.050(C)(1) sets forth the requirements for a complete
application. When an application is submitted meeting those requirements, the
application is vested and would be unaffected by any future changes in zoning or
development regulations so long at the application remains active
(IMC.18.04.220.D.2). This would, [sic] include any changes as a result of
termination of the Issaquah Highlands Development Agreement.
17
No. 82025-7-I/18
3
Finally, Polygon’s argument fails for a third reason. Polygon did not have
a vested right to have the GFCs assessed at any particular amount until it both
applied to connect to the City’s utility systems and paid the applicable fees. In
Irvin Water Dist. No. 6 v. Jackson Partnership, 109 Wn. App. 113, 122, 34 P.3d
840 (2001), the court concluded that the developers therein “did not have a
vested right in any particular fee schedule, at least before application and
payment of the applicable connection fees.” This was so because application to
connect to the district’s utility system and payment of the applicable connection
fees were both “required by District regulations and bylaws to secure service.”
Irvin Water Dist., 109 Wn. App. at 118. Likewise, the Issaquah Municipal Code
requires property owners to both apply to connect to the City’s utility systems and
pay the applicable connection charges in order to secure service.12 And here,
(Emphasis added.)
This letter did not provide that Polygon had a vested right to have the GFCs agreed to
under the development agreement imposed on its properties.
Finally, Polygon cites to a November 2017 memorandum which regarded a proposal to
extend vesting rights to administrative site development permits and site development permits
following the termination of the development agreement. However, the memorandum did not
state that building permit applications submitted after the development agreement was terminated
would be processed according to the development agreement.
12 With regard to applications for water service, the Issaquah Municipal Code provides:
“The owner of any property who desires to connect to the City Water System shall make
application for the connection on the standard form for water service and at that time, he shall pay
all connection charges, fees, or assessments required by the Water System Code.” IMC
13.04.020. Additionally, the code provides that “there is imposed upon the owners of property
seeking to provide water service to their property by connecting to the City’s water system a
general facility charge.” IMC 13.24.090. Next, with regard to the City’s sewer system, the code
provides: “The general facility charge shall be paid and collected at the time of permit issuance
for a sewer connection and prior to actual connection.” IMC 13.70.020B. Finally, with regard to
City’s stormwater system, the code provides: “[T]here is imposed upon the owner of property
seeking to connect to the City’s stormwater system a general facility charge,” and that “[t]he
general facility charge shall be paid and collected at the time of permit issuance for development
and prior to actual development.” IMC 13.30.055A-B.
18
No. 82025-7-I/19
Polygon applied to connect to the City’s utility systems and paid the connection
charges after the development agreement was terminated.
Accordingly, Polygon did not have a vested right to have the GFCs
imposed on its properties assessed pursuant to the development agreement.
IV
Polygon next contends that the City’s imposition of the higher water,
sewer, and stormwater GFCs violated RCW 35.92.025.13 Specifically, Polygon
asserts that these charges were not reasonable because the impacts of the
Westridge Single-Family North development on the City’s utility systems were
already “fully mitigated” under the development agreement. Because RCW
35.92.025 does not permit the sort of individualized challenge advanced by
Polygon, this claim also fails.
RCW 35.92.025 authorizes cities to assess charges to property owners
seeking to connect to city utility systems. This statute provides, in pertinent part:
Cities and towns are authorized to charge property owners seeking
to connect to the water or sewerage[14] system of the city or town as
a condition to granting the right to so connect, in addition to the cost
of such connection, such reasonable connection charge as the
legislative body of the city or town shall determine proper in order
13 Under the Issaquah Municipal Code, the City of Issaquah elected to be classified as a
noncharter code city: “The classification of ‘non-charter code city’ is adopted for the City of
Issaquah in lieu of its present classification as a municipal corporation of the third class.” IMC
1.08.010. Cities that elect to be classified as noncharter code cities are “governed according to
the provisions of [Title 35A] under one of the optional forms of government provided for
noncharter code cities.” RCW 35A.01.020. Under Title 35A, “[a] code city may protect and
operate utility services as authorized by chapters 35.88, 35.91, 35.92, and 35.94 RCW.” RCW
35A.80.010. “The term ‘code city’ means any noncharter code city or charter code city.” RCW
35A.01.035. Accordingly, as a noncharter code city, the City was authorized to impose GFCs
pursuant to RCW 35.92.025.
14 Under chapter 35.92 RCW, “[a] city or town may . . . operate systems, plants, sites, or
other facilities of sewerage as defined in RCW 35.67.010.” RCW 35.92.020(1). The cited statute
defines “system of sewerage” to include, among other things, “[c]ombined sanitary sewage
disposal and storm or surface water sewers,” “[s]torm or surface water sewers,” and “[o]utfalls for
storm drainage . . . and facilities for storm drainage.” RCW 35.67.010(2)-(4).
19
No. 82025-7-I/20
that such property owners shall bear their equitable share of the
cost of such system.
RCW 35.92.025.
The connection charges imposed on Polygon’s properties were
established pursuant to three city ordinances. First, ordinance 2748, which was
passed in November 2015, stated with regard to the city-wide sewer GFC that
“the general facility charge currently of $2,039 has not been evaluated since
2006 and it is determined the rate should decrease to $2,024.” Issaquah
Ordinance 2748 (Nov. 2, 2015). Next, ordinance 2749, which was also passed in
November 2015, stated with regard to the city-wide stormwater GFC that “the
current general facilities charge of $789.00 per equivalent service units (ESU) is
increased to $1,256 to reflect the cost of service.” Issaquah Ordinance 2749
(Nov. 2, 2015). Lastly, in March 2018, the city council passed ordinance 2830,
which terminated the development agreement and required single-family
residences in the Issaquah Highlands to be charged the city-wide water GFC of
$6,029. Issaquah Ordinance 2830 (Mar. 18, 2018).
“We presume the validity of ordinances, but this presumption no longer
exists when evidence discloses that the basis on which the ordinance establishes
the fee is not the proper basis the statute authorized.” Palermo at Lakeland, LLC
v. City of Bonney Lake, 147 Wn. App. 64, 76, 193 P.3d 168 (2008) (citing Boe v.
City of Seattle, 66 Wn.2d 152, 155, 401 P.2d 648 (1965)); accord Prisk v. City of
Poulsbo, 46 Wn. App. 793, 804, 732 P.2d 1013 (1987) (“Connection fees
established by ordinance are presumptively valid, and one who challenges them
has the burden of proving that the charges are unreasonable.” (citing Boe, 66
20
No. 82025-7-I/21
Wn.2d at 155)). Additionally, “[w]e will sustain a legislative determination if we
can conceive of any state of facts that justify the determination.” Palermo, 147
Wn. App. at 76.
Under RCW 35.92.025, “the only requirements placed on [cities] are that
the charge is reasonable and that [cities] base[] these charges on the equitable
cost of their [utility] system.” Palermo, 147 Wn. App. at 79. Additionally, “‘the
fundamental basis on which the fee is to be calculated . . . is not that of the
benefit received but merely an equitable sharing of the cost of the system.’” Boe,
66 Wn.2d at 156.
Polygon contends that the water, sewer, and stormwater GFCs imposed
on its properties located within the Westridge Single-Family North development
were not reasonable under RCW 35.92.025. This is so, Polygon argues,
because the impacts of the Westridge Single-Family North development were
“fully mitigated” under the development agreement.15 However, Polygon does
15 In support of its argument that the impacts of the Westridge Single-Family North
development on the City’s utility systems were “fully mitigated,” Polygon cites to various
documents. However, none of these documents demonstrate that Polygon had paid an equitable
share in the cost of the city-wide utility systems. Rather, these documents provide merely that (1)
the infrastructure in the Issaquah Highlands was adequate to support the needs of the
development, and (2) the City utility systems had the capacity to support the needs of the
development.
First, Polygon quotes the development agreement, which provides that “[t]he
Partnership’s compliance with the Development Standards and performance of its obligations
contained in this Agreement . . . shall constitute the adequacy and sufficiency of public facilities
and services for the Project.” This language indicates only that Port Blakely’s performance under
the development agreement would allow the Issaquah Highlands to be adequately supported by
public facilities. It does not indicate that Port Blakely had paid an equitable share of the cost of
the city-wide utility systems.
Second, Polygon cites to two City memoranda, dated December 16, 2013, and February
26, 2015, which provided that adequate capacity existed in the City’s water, sewer, and
stormwater systems to support further development in the Issaquah Highlands. These
memoranda did not provide that the Westridge Single-Family North development’s impacts on the
water, sewer, and stormwater systems were “fully mitigated” such that Polygon had paid an
equitable share of the cost of these city-wide utility systems.
21
No. 82025-7-I/22
not attempt to demonstrate that the GFCs enacted pursuant to ordinances 2748,
2749, and 2830 were established on an improper basis.
Yet to successfully challenge GFCs enacted pursuant to RCW 35.92.025,
a party must adduce “‘evidence disclos[ing] that the basis on which the ordinance
establishes the fee is not the proper basis authorized by the statue.’” Boe, 66
Wn.2d at 155 (emphasis added). The statute requires connection charges
established by ordinance to be “reasonable” such that “property owners shall
bear their equitable share of the cost of” the city’s utility system. RCW 35.92.025
(emphasis added). This language contemplates the equitable share of property
owners as a class, not what is equitable to charge an individual property owner
based on that particular owner’s impact on the city utility system.
This reading of the statute is supported by the fact that “adopting a fee
ordinance for [connection charges] is a purely legislative function under RCW
35.92.025.” Palermo, 147 Wn. App. at 84-85. Indeed, “area-wide actions, such
as the adoption of comprehensive plans and zoning ordinances, involving the
Third, Polygon cites to a letter from the chair of the City’s Urban Village Development
Commission recommending approval of Polygon’s preliminary plat application. This letter
provided that “[t]he development standards for storm water management and groundwater
protection as set forth in Appendix D of the Development Agreement were used to evaluate the
proposal. Appropriate measures for storm water management and groundwater will be provided.”
This letter also stated that “[t]he development standards for utilities as set forth in City standards
were used to evaluate the proposal. The proposal, with the recommended conditions of approval,
complies with the applicable standards.” This letter does not provide that Polygon had already
paid an equitable share of the cost of the city-wide utility systems.
Finally, Polygon cites to a letter from a City official commemorating Polygon’s purchase
of “storm water capacity” from the City for a fee of $181,095. According to a staff report from the
City’s Development Services Department, Polygon’s payment of this fee “allow[ed] [Polygon] to
contribute additional stormwater to the City’s facilities.” In its response brief, Polygon states that,
“[w]ith respect to stormwater, the City assessed the adequacy of the facilities built by Port Blakely
specifically for the Westridge North subdivision and found those sufficient once Polygon paid a
supplemental $181,095 fee.” Br. of Resp’t at 26-27. Thus, Polygon’s payment of this fee
ensured that the facilities constructed by Port Blakely adequately served Polygon’s development.
It did not ensure that Polygon paid an equitable share of the cost of the city-wide stormwater
system.
22
No. 82025-7-I/23
exercise of the legislative body’s policy-making role, are generally considered
legislative.” Holbrook, Inc. v. Clark County, 112 Wn. App. 354, 365, 49 P.3d 142(2002). Notably, “such actions are not made quasijudicial simply because they
affect specific individuals.” Holbrook, 112 Wn. App. at 365. “Although legislative
decisions may appear adjudicatory when groups focus on how the particular
decisions will affect their individual rights, all policy decisions begin with the
consideration and balancing of individual rights.” Raynes v. City of Leavenworth,
118 Wn.2d 237, 249, 821 P.2d 1204 (1992).
Because the City’s adoption of the GFCs at issue was legislative, rather
than adjudicatory, in nature, Polygon cannot challenge these GFCs under RCW
35.92.025 solely as they apply to its particular properties. After all, “‘the
fundamental basis on which the fee is to be calculated . . . is not that of the
benefit received but merely an equitable sharing of the cost of the system.’” Boe,
66 Wn.2d at 156. Furthermore, the remedy when a party has established that
connection charges enacted pursuant to RCW 35.92.025 are not reasonable is to
invalidate the ordinance that enacted the connection charges, not to simply
invalidate the charges as they apply to an individual property. See Boe, 66
Wn.2d at 156 (“‘Under the evidence in this case, Ordinance No. 90233 Seattle
Code No. 7.20.025 is unreasonable and therefore void.’”); Palermo, 147 Wn.
App. at 68-69 (“We hold that the City arbitrarily adopted ordinance 1192 under
which it assessed Palermo for connecting to the City’s water system; thus, the
ordinance was void, leaving the prior ordinance in effect.”).
23
No. 82025-7-I/24
Polygon cites to RCW 82.02.020 in support of its argument that cities are
limited in “charg[ing] a project only to the extent reasonably related to the impacts
a project will have on the larger system.”16 Under that statute, utility charges
imposed by cities must generally be proportionate to a property’s share of the
utility system’s cost:
Nothing in this section prohibits counties, cities, or towns
from imposing or permits counties, cities, or towns to impose water,
sewer, natural gas, drainage utility, and drainage system charges.
However, no such charge shall exceed the proportionate share of
such utility or system’s capital costs which the county, city, or town
can demonstrate are attributable to the property being charged.
Furthermore, these provisions may not be interpreted to expand or
contract any existing authority of counties, cities, or towns to
impose such charges.
RCW 82.02.020.
However, RCW 82.02.020 does not apply to connection charges
established pursuant to RCW 35.92.025. We say this because RCW 35.92.025
was enacted in 1965 and the language quoted above was amended to RCW
82.02.020 in 1982. See LAWS OF 1965, ch. 7; LAWS OF 1982, 1st Ex. Sess., ch.
49, § 5. In Prisk, for instance, two property owners asserted that connection
charges enacted by the Poulsbo city council pursuant to RCW 35.92.025 violated
the requirement set forth in RCW 82.02.020 that utility charges must be
proportionate to a property’s share of the utility system’s cost. 46 Wn. App. at
803. Division Two disagreed:
[W]e hold that RCW 82.02.020 does not limit the City’s authority to
impose these connection charges. That statute would require that
utility charges be proportionate to the share of the utility’s costs
“attributable to the property being charged.” However, the statute
has no application here as it specifically states that the existing
16 Br. of Resp’t at 23.
24
No. 82025-7-I/25
authority of cities to impose such charges remains unaffected by
the statute. The City’s existing authority is derived from RCW
35.92.025, which was enacted prior to RCW 82.02.020.
Prisk, 46 Wn. App. at 803.
Therefore, the City’s water, sewer, and stormwater GFCs were not
required, under RCW 82.02.020, to be proportionate to the share of the utility
systems’ costs attributable to Polygon’s properties.
Polygon asserts that the City bore the burden to prove that the GFCs
imposed on its properties were reasonable. In support of this argument, Polygon
cites to Palermo, 147 Wn. App. 64. However, that opinion provides that the
burden of proof shifts to a city only when a property owner adduces evidence
demonstrating that the ordinance in dispute established a connection charge on
an improper basis. See Palermo, 147 Wn. App. at 75, 84.
Indeed, a property owner in the Palermo dispute demonstrated that “the
City adopted the ordinances based on outdated and incorrect numbers.” 147
Wn. App. at 81. The city therein did not adduce any evidence based on data that
was actually considered by the city when it adopted the charges at issue.
Palermo, 147 Wn. App. at 83. Because the evidence that was adduced by the
city was not based on data that was before the city when it adopted the
ordinances at issue, the court held that the evidence that was presented by the
city was “not relevant to [the] court’s consideration.” Palermo, 147 Wn. App. at
84. In light of the evidence that was adduced at trial, the court clarified that “the
City still bears the burden of satisfying RCW 35.92.025 by providing reasonable
25
No. 82025-7-I/26
[charges] based on equitable shares of the cost of the system.” Palermo, 147
Wn. App. at 84.
Polygon did not adduce any evidence challenging the method by which
the City’s ordinances established the GFCs at issue. For example, Polygon did
not demonstrate that, in adopting these GFCs, the City excluded from its
calculations properties that fell within the scope of the development agreement
and that such exclusion unreasonably impacted the rate at which the GFCs were
assessed against property owners city-wide. Because Polygon failed to satisfy
its initial burden of proof, the burden never shifted to the City to prove that the
GFCs were calculated on a proper basis.
Accordingly, Polygon fails to meet its burden to prove that the GFCs
imposed by the City violate RCW 35.92.025. Additionally, under LUPA, the City’s
imposition of the disputed GFCs do not constitute an erroneous interpretation of
law or a clearly erroneous application of law to the facts.
V
The superior court’s order is reversed insofar as it requires the City to (1)
refund the water, sewer, and stormwater GFCs that were imposed on Polygon’s
properties located within the Westridge Single-Family North development, and
(2) assess GFCs for future building permits submitted by Polygon according to
the development agreement. The order is affirmed insofar as it varies the
amount that the City is authorized to charge Polygon for the side-sewer fees and
water-meter installations fees that were imposed on its properties.
26
No. 82025-7-I/27
Affirmed in part, reversed in part.
WE CONCUR:
27