CLEAN v. City of Spokane

Douliver, J.

— CLEAN et al. challenge by direct review a Spokane ordinance providing public support for a new parking garage in downtown Spokane.

Respondents/Intervenors Citizens Realty Company and Lincoln Investment Company (Developers) own River Park Square shopping mall and garage in downtown Spokane. In early 1995, the Developers approached the City of Spokane (City) asking for assistance with the renovation and expansion of the mall parking garage as part of a plan to redevelop River Park Square (RPS). The redevelopment includes a new Nordstrom store to replace the existing store on which Nordstrom’s lease will expire January 31, 1999. Nordstrom has not stated for the record whether it will remain downtown if the RPS project fails to materialize. Project proponents predict that the RPS redevelopment will create jobs, increase tax revenue, and improve cultural and recreational opportunities in downtown Spokane.

The Developers will renovate the parking garage and then sell it to the Spokane Downtown Foundation, a nonprofit corporation (Foundation). The Foundation intends to issue tax-exempt bonds on behalf of the City payable from garage revenues. The Foundation will lease the garage to the Spokane Public Development Authority (PDA), which will operate the facility. The Developers will lease the land to the Foundation and the Foundation will assign that lease to the PDA.

When the bonds issued by the Foundation are retired, the City will acquire ownership of the garage at no cost. The City has contingently pledged parking meter revenue to cover the garage operating expenses and the ground lease payments in the event garage revenues are insufficient to meet the facility’s expenses.

The City applied for an Economic Development Grant (EDI) and a section-108 guaranteed development loan from the United States Department of Housing and Urban Development (HUD). HUD has awarded the City a $1 million EDI grant. The section-108 loan application was still pending as of the date the Respondents’ brief was submitted to this court. The City has pledged its future Community Development Block Grant funds to repay the section-108 loan if the Developers default.

The Developers submitted a State Environmental Policy Act (SEPA) checklist to the City. The City issued a Mitigated Determination of Nonsignificance for the project on July 2, 1996. This decision was not appealed administratively.

On January 27, 1997, the Spokane City Council approved Ordinance C31823 (the Ordinance) which authorizes City support for the RPS garage. On January 30, 1997, Appellant Priorities First presented a referendum petition to the Spokane City Clerk, seeking to overturn the Ordinance. Although referendum proponents collected over 8,000 signatures, the City refused to honor the referendum petition because the City Council declared that an emergency existed when it adopted the Ordinance, rendering the Ordinance effective immediately and precluding a referendum.

CLEAN et al. (Appellants) brought this action in Spokane County Superior Court to challenge several aspects of the City and PDA’s participation in the project, seeking declaratory and injunctive relief. The trial court granted summary judgment to the City, PDA and Developers (Respondents). This court granted direct review on May 9, 1997.

The standard of review of a trial court’s order granting summary judgment is de novo. Wilson v. Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982). Summary judgment is appropriate where the parties’ pleadings, affidavits, and depositions establish that there are no genuine issues of material fact and that the movant is entitled to a judgment as a matter of law. Wilson, 98 Wn.2d at 437. When considering a motion for summary judgment, the court shall consider the evidence in the light most favorable to the nonmoving party. Wilson, 98 Wn.2d at 437.

(1) Has the City acted in excess of its municipal authority under the off-street parking statutes — RCW 35.86.050 and RCW 35.86.010?

Appellants first argue the City violated RCW 35.86.050 because it failed to develop a comprehensive parking plan before enacting the Ordinance. The statute provides:

In the establishment of off-street parking space and/or facilities, cities shall proceed with the development of the plan therefor by making such economic and physical surveys as are necessary, shall prepare comprehensive plans therefor, and shall hold a public hearing thereon prior to the adoption of any ordinances relating to the leasing or acquisition of property ....

RCW 35.86.050.

Respondents correctly observe that the statute does not discuss the level of specificity required of a comprehensive plan. The only case interpreting RCW 35.86.050 is In re City of Auburn, 65 Wn.2d 560, 398 P.2d 723 (1965). In City of Auburn, this court observed that, "there seem to be no guiding principles for the preparation of 'comprehensive plans.’ ” 65 Wn.2d at 563. Respondents argue that, if the Legislature had so intended, it could have prescribed a very specific set of criteria for municipalities to follow when preparing comprehensive plans under RCW 35.86.050, as is evidenced by the specificity called for in the Growth Management Act (RCW 36.70A.070).

Lacking case law interpreting the level of specificity required by this particular statute, the trial court relied by analogy upon Hutchinson v. Port of Benton, 62 Wn.2d 451, 383 P.2d 500 (1963). In Hutchinson, we held the Port of Benton had satisfied a statutory requirement that it adopt a comprehensive harbor development plan before expanding the port because it had given "a fairly detailed picture” of what the project entailed. Hutchinson, 62 Wn.2d at 457. We acknowledged that the plan was not a "model of preciseness,” but upheld the project because the plan was sufficient to inform the taxpayers of how their money was to be spent. Hutchinson, 62 Wn.2d at 457.

The trial court in this case held the City had complied with RCW 35.86.050 because the statute does not require a specific checklist but rather a process that provides the public with specific information about the project. Because the City commissioned both a parking study and a financial feasibility study and held three public hearings to elicit comments on the plan, the trial court found the City had complied with RCW 35.86.050.

Respondents point out that, in addition to these measures, the City has adopted a Downtown Spokane Development Plan (Plan), which addresses downtown parking needs. In their Reply Brief, the Appellants claim the RPS facility violates this Plan because the Plan calls for parking at the Davenport Hotel. This assertion is false. The Plan encourages the development of a parking facility "near” the Davenport Hotel and the Opera House/ Convention Center. Ex. 6 at 13. The RPS garage is two blocks to the north of the Davenport Hotel.

Appellants’ argument that the City violated RCW 35.86.050 is not persuasive. The City has held hearings and commissioned studies for the project and has also established that the facility conforms to the City’s comprehensive plan. These steps satisfy the requirements of RCW 35.86.050, given case law defining "comprehensive plan.”

Appellants also contend the City lacks the authority to purchase the parking garage because the RCW requires city parking facilities to serve, as their primary purpose, persons who use the park or civic center facilities. RCW 35.86.010 states:

Cities . . . are authorized to provide off-street parking space and facilities located on land dedicated for park or civic center purposes, or on other municipally-owned land where the primary purpose of such off-street parking facility is to provide parking for persons who use such park or civic center facilities. In addition a city may own other off-street parking facilities and operate them in accordance with RCW 35.86A.120.

Appellants’ argument is without merit. The second sentence of RCW 35.86.010 plainly authorizes a city to own "other off-street parking facilities.” Appellants contend that, because this portion of the statute requires such facilities to be operated in accordance with RCW 35.86A.120 and because chapter 35.86A RCW allows cities to establish parking commissions, the City is not allowed to own "other off-street parking” unless it has created a parking commission. RCW 35.86.010 merely states that such facilities must be operated in accordance with RCW 35.86A. 120 (which specifies under which circumstances a city may or may not operate one of its parking facilities), not that such a facility can be acquired only after a city appoints a parking commission. The trial court properly found the City was not required to create a parking commission as a prerequisite to owning the RPS garage.

(2) Has the City failed to comply with the State Environmental Policy Act ?

The Developers submitted an environmental checklist to the City as required by the State Environmental Policy Act (SEPA) (RCW 43.21C). The City issued a Mitigated Determination of Nonsignificance on July 2, 1996. Appellants sought review of this determination in superior court. The trial court barred the SEPA claim after finding that Appellants failed to appeal the City’s determination through administrative channels.

A plaintiif alleging noncompliance with SEPA must exhaust administrative remedies before filing suit. Citizens for Clean Air v. City of Spokane, 114 Wn.2d 20, 26, 785 P.2d 447 (1990). Where an agency has an appeal procedure in place, an aggrieved person is required to seek redress under that procedure before seeking judicial review. RCW 43.21C.075(4). The City of Spokane has adopted a specific administrative appeal process for SEPA rulings. See Spokane Municipal Code (SMC) 11.10.170.

Appellants fail to prove or even allege they have done anything to exhaust their administrative remedies. There is no evidence in the record that Appellants filed an administrative appeal. Where the record fails to show that an aggrieved party has attempted to use the administrative appeals process, the court will conclude that no appeal was made. Citizens for Clean Air, 114 Wn.2d at 27. The trial court therefore properly dismissed the SEPA claim.

(3) Has the City failed to comply with the Growth Management Act?

Appellants assert the City has violated the Growth Management Act (RCW 36.70A.120) by failing to follow its comprehensive plan. The City responds it has yet to adopt a comprehensive plan under the Growth Management Act (the Act) and, therefore, cannot have violated the Act. The trial court agreed and adopted the City’s reasoning without elaboration.

The Growth Management Act requires first-class cities to implement comprehensive plans by July 31, 1997. RCW 35.22.695. As of the date of oral argument, Spokane had yet to implement a comprehensive plan under the Act. Because there is no plan in place to violate, the City cannot be said to have violated the Act.

(4) Has the City failed to comply with its comprehensive plan?

Without citing to a specific ordinance, Appellants also contend the City has violated its existing comprehensive plan. Spokane adopted a comprehensive plan in 1983. See chapter 11.20 SMC. The plan allows for a broad range of activities downtown. Appellants argue the RPS redevelopment project violates the comprehensive plan’s arterial street plan because it would close Post Street, an arterial.

The City responds that Appellants have identified no section of the arterial street plan that would prohibit the vacation of an arterial. The City contends the RPS project actually furthers the Spokane comprehensive plan because the plan encourages development of projects that attract shopping and entertainment in the downtown area. The City is correct. The Appellants have failed to allege any genuine violation of the Spokane comprehensive plan

(5) Has the City violated the Clean Air Act?

Appellants next assert the RPS project violates the Washington Clean Air Act (RCW 70.94) because the City has not obtained an air quality conformity determination. Although Appellants do not cite which portion of the statute the City is allegedly violating, they are presumably referring to RCW 70.94.037, which would prevent the City from approving the RPS project without first certifying that the project conforms to the State implementation plan of the federal Clean Air Act. The Respondents claim that project developers prepared an air quality analysis as part of the SEPA review process, and that this analysis concluded that the project and its mitigation measures will actually reduce carbon monoxide emissions.

Appellants’ argument is completely without merit. The Developers prepared an air quality analysis (Ex. 85 at 01805-01822), and the City determined the project conformed to the Clean Air Act.

(6) Does the Ordinance violate article VII, section 1 {amend. 81), of the Washington Constitution by failing to serve a public purpose?

Appellants next argue the RPS project violates article VII, section 1 (amend. 81), of the Washington Constitution, which states that all taxes "shall be levied and collected for public purposes only.” Appellants contend the RPS garage does not serve a public purpose because its expansion is designed solely to meet the retail shopping needs of the renovated RPS, a private entity.

We recently addressed this issue in CLEAN v. State, 130 Wn.2d 782, 792-93, 928 P.2d 1054 (1996). In CLEAN, we held that public development of a major league baseball stadium serves a public purpose even though the Seattle Mariners baseball club, a private entity, would also benefit from the expenditure of public funds. CLEAN, 130 Wn.2d at 792-97. We explained:

"An expenditure is for a public purpose when it confers a benefit of reasonably general character to a significant part of the public.” In re Marriage of Johnson, 96 Wn.2d 255, 258, 634 P.2d 877 (1981). "Where it is debatable as to whether or not an expenditure is for a public purpose, we will defer to the judgment of the legislature.” Anderson v. O’Brien, 84 Wn.2d 64, 70, 524 P.2d 390 (1974).

The fact that private ends are incidentally advanced is immaterial to determining whether legislation furthers a public purpose.

CLEAN, 130 Wn.2d at 793, 796 (citation omitted). We acknowledged in CLEAN that the degree to which the baseball stadium would improve the economy and quality of life was "debatable,” but held that this question was best resolved by the people’s elected representatives. CLEAN, 130 Wn.2d at 796-97.

We must therefore defer to the judgment of the Spokane City Council if the public benefit of this project is at least "debatable.” The Ordinance contains at least 10 separate paragraphs articulating the reasons why the project will benefit Spokane and meet a public need. Based upon studies, documents, and public testimony, the City found the project would create jobs, stimulate the economy, provide cultural opportunities, increase tax revenue, thwart the economic decline of the downtown area, and improve the quality of life. Given the fact that the City relied upon evidence that the project would confer various benefits, the public benefit of this project is at least debatable. The project meets the public purpose test of article VII, section 1 (amend. 81), of the Washington Constitution.

(7) Does the Ordinance constitute a gift or a loan of the credit of the State in violation of article VIII, section 7, of the Washington Constitution?

Appellants next contend the RPS project amounts to a gift of public funds and a lending of credit in violation of the Washington Constitution. Respondents assert that public support for the project does not constitute a gift or a lending of credit because the City will receive a parking garage in exchange for its assistance.

Article VIII, section 7, of the Washington Constitution states:

No county, city, town or other municipal corporation shall hereafter give any money, or property, or loan its money, or credit to or in aid of any individual, association, company or corporation, except for the necessary support of the poor and infirm ....

Appellants claim the City is violating this constitutional provision in three ways: (a) the garage lease and ground lease payments to be paid to the Developers are excessively high, and the difference between the negotiated prices and the market prices amounts to an unconstitutional gift; (b) HUD assistance to the Developers is an unconstitutional gift; (c) the pledge of parking meter revenues is an unconstitutional lending of credit. Because the HUD assistance comes from the federal government, not the City or State, this claim is meritless on its face.

CLEAN v. State employed a two-part test for analyzing potential violations of article VIII, section 7. CLEAN, 130 Wn.2d at 797. First, the court asks if the funds are being expended to carry out a fundamental purpose of the government. If the answer to this question is yes, then no gift of public funds has been made. If not, the court focuses on the consideration received by the public and the donative intent of the appropriating body. CLEAN, 130 Wn.2d at 798.

Because it is highly questionable that the building of a parking garage for a business district serves a "fundamental purpose” of government, we turn to the second prong of the CLEAN test — whether there was consideration or donative intent. We addressed this issue in City of Tacoma v. Taxpayers of Tacoma, 108 Wn.2d 679, 703, 743 P.2d 793 (1987):

"Unless there is a proof of donative intent or a grossly inadequate return, courts do not inquire into the adequacy of consideration.” (Italics ours.) Adams [v. University of Wash., 106 Wn.2d 312, 327, 722 P.2d 74 (1986)] .... Absent a showing of donative intent or gross inadequacy, trial courts should only apply a legal sufficiency test, under which a bargained-for act or forbearance is considered sufficient consideration.

Appellants fail to prove either that the City intended to donate public funds to the Developers or that the consideration received for the City’s participation in the project is "grossly inadequate.” In exchange for its assistance, the City will receive a parking garage—an item that would unquestionably constitute legally sufficient consideration. Although Appellants may view the transaction as an unwise use of public funds that unduly benefits the Developers, the wisdom of the plan is not for this court to consider. See Louthan v. King County, 94 Wn.2d 422, 427, 617 P.2d 977 (1980).

Appellants next argue that, even if this court finds the lease payment arrangement is not an unconstitutional gift, we should still hold that the contingent pledge of parking meter revenue is an unconstitutional lending of credit. Again, CLEAN v. State is directly on point. The appellants in CLEAN argued that the Stadium Act amounted to an unconstitutional lending of credit because it was a " 'financing conduit for private enterprise.’ ” CLEAN, 130 Wn.2d at 799. We rejected this argument on the basis that the stadium was to remain in public hands. In so holding, we distinguished the case from Lassila v. City of Wenatchee, 89 Wn.2d 804, 576 P.2d 54 (1978), in which we struck down the City of Wenatchee’s purchase of property with intent to sell it to a private party. CLEAN, 130 Wn.2d at 799. Because the City of Wenatchee in Lassila received nothing of value for its expenditure of public money, it was unconstitutionally acting as a "middle person for a private enterprise.” CLEAN, 130 Wn.2d at 799. The Stadium Act, in contrast, provided that ownership of the facility would remain in public hands. CLEAN, 130 Wn.2d at 799. Because the State was not acting as a financing conduit for a private entity, the Stadium Act did not amount to an unconstitutional lending of credit. CLEAN, 130 Wn.2d at 799.

Because the RPS facility will ultimately belong to the City, the City’s pledge of parking meter revenues is not an unconstitutional lending of credit under CLEAN. The pledge is clearly not a financing conduit for a private entity because it was made to the PDA, a public entity, for the sake of a publicly-owned facility

(8) Is the emergency clause of the Ordinance invalid?

When the Ordinance was adopted, the City Council found that "an urgency and emergency exists,” and accordingly declared the Ordinance "effective upon adoption in order to preserve the public peace, health or safety and provide support of the City government and its existing public institutions, facilities and infrastructure.” Ex. 142 at 10. The fact that the Ordinance became effective immediately precluded a referendum on the project under section 83 of the Spokane City Charter, which allows for a referendum where the requisite number of signatures are presented to the City "prior to the date when any ordinance shall take effect.”

Section 19(a) of the Spokane City Charter provides that certain ordinances "shall take effect immediately upon passage,” including:

An ordinance necessary for the immediate preservation of the public peace, health or safety or for the immediate support of city government and its existing public institutions; provided it has in its preamble or body a statement of the facts giving rise to the necessity for immediate effectiveness and it is passed by a vote of one more than a majority of the council!.]

Spokane City Charter art. Ill, § 19(a)(1).

Appellants argue the emergency clause of the Ordinance is invalid and that therefore a referendum is required. Again, CLEAN v. State is directly on point. In CLEAN, this court interpreted article II, section 1(b) (amend. 72), of the Washington Constitution, which subjects all state legislation to referendum except laws that are "necessary for the immediate preservation of the public peace, health or safety.” Given that section 19 of the Spokane City Charter is identical in relevant part to the constitutional provision interpreted in CLEAN, CLEAN is controlling.

When reviewing legislative declarations of emergencies, we give substantial deference to the Legislature. " 'Legislative declarations of fact, such as the existence of an emergency, are deemed conclusive unless they are "obviously false and a palpable attempt at dissimulation.” ’ ” CLEAN, 130 Wn.2d at 808 (quoting City of Tacoma v. Luvene, 118 Wn.2d 826, 851, 827 P.2d 1374 (1992)). Where an act is "doubtful” in this regard, the doubt will be resolved in favor of the declaration of emergency. CLEAN, 130 Wn.2d at 808. In CLEAN, we found the emergency clause of the Stadium Act was valid because the Legislature was acting on a "clear and present danger” that the Seattle Mariners would leave the state. CLEAN, 130 Wn.2d at 808. Since the Legislature could reasonably believe such a result would produce a detrimental economic effect, we deferred to the Legislature’s declaration of emergency. CLEAN, 130 Wn.2d at 808-09.

Appellants assert CLEAN v. State is inapposite because there is no proof in the record that Nordstrom will leave downtown if the project does not go forward. It is true that Respondents have failed to establish Nordstrom will leave downtown Spokane if the RPS project fails to materialize. Nevertheless, CLEAN v. State requires this court to defer to the City Council’s emergency declaration unless it is " ' "obviously false and a palpable attempt at dissimulation.” ’ ” CLEAN, 130 Wn.2d at 808 (quoting Luvene, 118 Wn.2d at 851).

The City Council found, among other things, that downtown Spokane has "experienced a serious economic decline.” Ex. 142 at 4. The Council also found that the RPS project would create jobs, stimulate the economy, provide cultural opportunities, and improve the quality of life in the downtown area. Ex. 142 at 4. The Council further found that commitments from the City and from prospective RPS tenants "must immediately be received” by the Developers in order for the project to be completed on time. Ex. 142 at 5. Because the viability of the RPS project depends upon Nordstrom’s presence and the project must begin construction in September 1997 to accommodate the expiration of Nordstrom’s lease in 1999, it was arguably necessary for the City to render the Ordinance effective immediately. We cannot say the City’s declaration of emergency is either "obviously false,” or a "palpable attempt at dissimulation.” .

(9) Has the City violated City Charter section 85 by failing to honor the petition for a referendum?

Appellants next contend the City has violated Spokane City Charter art. IX, § 85(a), which requires all "capital expenditures . . . requiring indebtedness of the taxpayers” to be approved by a vote of the people. However, section 85(a) exempts "expenditures of an emergency nature” from the referendum requirement. Because we have upheld the declaration of emergency, the RPS project is exempt from section 85 of the charter.

(10) Has the City acted in excess of its authority under RCW 35.21.730 by contracting with the PDA to operate the garage?

Appellants also claim the PDA lacks the authority to lease and operate the garage. RCW 35.21.730 allows cities to create public corporations "to improve the administration of authorized federal grants or programs, to improve governmental efficiency and services, or to improve the general living conditions in the urban areas . . . .” Appellants argue the PDA lacks the authority to exist because it serves none of these functions. However, the PDA will undeniably facilitate the administration of the federal EDI grant. It arguably serves the other two purposes as well. Therefore, the City has not acted in excess of RCW 35.21.730.

Appellants also contend the PDA is in violation of RCW 35.21.730(4), which sets forth three potential functions for a PDA: to administer federal grants, receive private assistance, and perform any lawful public purpose. Appellants argue the Spokane PDA is violating this portion of the law because, worded conjunctively, the statute requires a PDA to perform all three of these functions. This argument is meritless. The plain language of the statute states that a city "may” create a public corporation for these varied purposes. Although it is true the word "and” appears in the statute, all three statutory elements need not be present for a PDA to be acting lawfully. Mount Spokane Skiing Corp. v. Spokane County, 86 Wn. App. 165, 173, 936 P.2d 1148 (1997).

(11) Has the City improperly delegated its authority ?

Appellants assert without explanation that the City has improperly delegated its authority "to consummate the transactions” identified in the Ordinance. Br. of Appellants at 55. Appellants fail to identify to whom the City has improperly delegated its authority and failed to clarify this point in their Reply Brief, despite the fact that Respondents argued Appellants’ argument was unclear. Lacking this basic information, we are unable to address this claim.

(12) Did the trial court err in allowing the Developers to intervene in this case?

Appellants next argue the trial court improperly allowed the Developers to intervene. CR 24(a)(2) allows an interested party to intervene as a matter of right where "the disposition of the action may . . . impair . . . his ability to protect that interest, unless the applicant’s interest is adequately represented by existing parties.”

Respondents contend that the Developers’ interests will not necessarily be protected by the City and the PDA because the interests of the Developers are distinct from those of the City and the PDA. The Respondents reason that, whereas the City is charged with representing the interests of all its residents, the Developers represent a more narrow private interest. Given that the disposition of this action could most certainly impair the Developers’ ability to protect their interests, the trial court did not err in allowing the Developers to intervene.

(13) Did the trial court err in exempting from public disclosure an addendum to a report prepared by Coopers & Lybrand?

Appellants also claim the trial court erred in sealing an addendum to a report prepared for the City by Coopers & Lybrand. After reviewing the documents in camera the trial court refused to compel the City to produce the information, finding it was exempt from the scope of the Public Records Act, RCW 42.17.310. RCW 42.17.310(l)(r) exempts from public disclosure "[fjinancial and commercial information and records supplied by businesses or individuals . . . during application for economic development loans or program services provided by any local agency.”

Where the record consists solely of documentary evidence, the standard of review of a trial court’s public disclosure ruling is de novo. Dawson v. Daly, 120 Wn.2d 782, 788, 845 P.2d 995 (1993). The trial court did not err in exempting the addendum from public disclosure. The addendum is exempt from disclosure under RCW 42.17.310(1)(r) because the project’s HUD loan was pending at the time the trial court made its ruling

(14) Are Appellants entitled to attorney fees?

Appellants ask this court to "fashion a new equitable standard for attorneys[’] fees in proceedings of this kind.” Br. of Appellants at 57. We decline to do so.

Affirmed.

Smith, Johnson, Alexander, and Talmadge, JJ., concur.