Northwest Real Estate Law Blog : Northwest Real Estate Lawyer & Attorney : Davis Wright Tremaine Law Firm : Land Use, Development, Commercial Property : Seattle, Portland, Alaska, Washington, Oregon

Authored by: Jim Greenfield and Clayton Graham

This week, the Division One Court of Appeals filed its opinion in the case of Connor v. City of Seattle, which addressed a challenge to the application of Seattle’s Landmarks Preservation Ordinance (LPO) to certain homeowners’ (the Connors) residential property in West Seattle.  When the Connors bought the property, it had a designated Seattle landmark -- a 1906 house built in what is described as the “Seattle classic box” style.  Because the property has a large, sloping, front yard, the Connors subdivided the parcel into multiple lots and proposed building additional residences on the newly-created lots, while preserving the 1906 landmark house on the remainder of the old lot.  When Seattle’s Landmarks Preservation Board—and later the City Hearing Examiner—denied the Connors’ application for a certificate of approval under the LPO for building the new homes, the Connors sued under Washington’s Land Use Petition Act (LUPA).   

After losing in Superior Court, the Connors appealed to the Court of Appeals, which affirmed the trial court’s dismissal of the Connors’ suit.  The bulk of the opinion addresses the Connors’ claims that the LPO is constitutionally void for vagueness, based on the Connors’ contention that the LPO does not specify what kind of development would be permitted on their property.  The Court rejected the “void for vagueness” claim, noting that “the LPO contains contextual standards and a process for clarification and guidance as to individual sites.”  According to the court, these traits shielded the LPO from a “void for vagueness” claim.  The Court summarily dismissed the Connors’ claims that the “site” was never designated along with the house, that the denial violated RCW 82.02.020 (which prohibits certain development conditions), or that it constituted a taking or a substantive due process violation.  Owners of City landmarks should take care to ensure that any proposed development on their property is consistent with preservation of the features designated under the LPO.

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In a recent opinion linked here—Post v. Tacoma, the Washington Supreme Court struck down a number of building code violation penalties that the City of Tacoma had assessed against a property owner. The City assessed numerous fines against the owner (Post) based on the condition of a some of his properties in the City. The ordinance at issue permitted the assessment of daily fines for continuing building code violations, which is a common element of local code compliance provisions. The Court, however, took issue with the fact that the City "ha[d] no procedures in place for civil defendants to appeal any but the first penalty." That is, once fines had begun accruing, there was not an adequate process in place for the landowner to contest the violation. A majority of the Court found that the code provisions authorizing these penalties violated procedural due process requirements and thus were unconstitutional on their face and as applied to Post.

The majority also found that the State’s Land Use Petition Act (LUPA) did not apply to Post’s appeal, so Post was not required to comply with LUPA’s procedural requirements for challenging the City’s action. The dissenting justices, on the other hand, believed that Post’s failure to file his complaint under LUPA precluded judicial review of his claims. This opinion reiterates the importance of an owner’s procedural rights to contest penalties assessed by a city or county. It is also a reminder that an owner should take quick action to address notices of code violations in order to avoid unnecessary expenses.

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The scope of Washington’s vested rights doctrine—which has constitutional, common law, and statutory underpinnings—has been the subject of a longstanding debate. Under this doctrine, certain development projects may be subject to the land development laws in effect on the date that a complete building permit application is submitted, despite later changes in the law. Whether other types of project applications should vest, and in what circumstances, has been the subject of a longstanding debate, which has been chronicled in a long line of appellate court cases. Today, the Washington Supreme Court has added another landmark opinion to Washington’s body of case law on vested rights. This opinion, issued in the case of Abbey Road Group v. City of Bonney Lake, answers some questions, but still leaves developers with a great deal of uncertainty. (Click on the following hyperlinks to access the text of the three separate portions of the opinion: the lead opinion, authored by Justice Johnson and joined by two others; the concurrence authored by Madsen and joined by one other; and the dissent authored by Justice Sanders and joined by three others.)

In this case, a developer (Abbey Road) submitted a site plan for a multifamily development to the City of Bonney Lake, apparently under the belief that it could not apply for a building permit until the City approved the site plan. On that same day, the City passed an ordinance rezoning the subject property to a zoning category in which the proposed project was prohibited. The Supreme Court held that Abbey Road’s project was not vested against the rezone because it had not submitted a complete building application for the development. According to the Court, the site plan approval could not vest the project, because the applicable vesting statute (RCW 19.27.095) does not address site plans, and because the City’s code does not address vesting. The Court declined the invitation to expand the vested rights doctrine to include applications not specifically addressed in the statute.

The majority and the dissent disagreed about whether the City’s regulations required site plan approval before a building permit application could be submitted. If this were the case, the City’s process may violate developers’ due process rights under West Main Associates. However, despite the concurring justices’ "concerns" about the City’s process, a majority of the Court found that there was no due process violation because the developer could have submitted a building permit application at any time. The dissent found that this was not the case, and that the City’s procedures violated due process because they deprived the developer of the right to "unilaterally control the date th[e] project vested." The due process aspect of the vested rights doctrine is sure to be the subject of future vested rights disputes.

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In a dispute relating to the height of a residential addition, the Division Three Court of Appeals has provided additional guidance on when specific building restrictions in community covenants (CCRs) might limit the authority of an architectural approval committee. In Mack v. Armstrong, the court heard a challenge to a trial court order requiring the Armstrongs to remove the top four feet of their new residential addition. This order was based on a decision by an architectural committee, which was authorized to approve any new construction on the Armstrongs’ lot. The Court of Appeals, however, reversed this order because the Armstrongs’ construction complied with a specific 30-foot height restriction in the covenants. The Court cited prior cases generally holding that "[s]pecific provisions of real estate covenants take precedence over more general consent-to-construction provisions of those same covenants." This case highlights the importance of reading a community covenants document as a whole while interpreting its meaning.

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In a recent en banc opinion, City of Woodinville v. Northshore United Church, et al. the Supreme Court of Washington held that the City’s "total refusal" to process a land use application for a homeless encampment on Church property violated the Washington state constitution. The City had refused to process a temporary use permit submitted by the Church based on a City moratorium on such permits in certain areas of the City. Despite the City’s reliance on this moratorium, the Court found the City’s actions placed a "substantial burden on [the] exercise of religion," and thus violated State constitutional protections for religious exercise. The Court noted that "[h]ousing of the homeless may be a part of religious belief or practice," but that the these activities had a greater impact on the surrounding community than typical worship activities. The Court added: "Cities may mediate these externalities reflecting concerns for safety, noise, and crime but may not outright deny consideration of permitting." The Court also ruled in favor of the Church on a breach of contract claim by the City, but did not reach federal constitutional issues or claims under the Religious Land Use and Institutionalized Persons Act (RLUIPA).

 

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This post was authored by Lloyd Chee & Clayton Graham

The latest version of a house bill entitled America’s Clean Energy Security Act of 2009 (H.R. 2454—click here for full text of the May 15^th Version), which was passed by the House Energy and Commerce Committee on May 21, contains provisions that could potentially affect building codes in every city and county in Washington State. Section 201 of the proposed legislation authorizes the Secretary of the Department of Energy to develop a “national energy efficiency building code.” The Bill sets specific efficiency targets, and requires the Secretary to consider a number of existing codes in formulating the national Code, including commercial building standards proposed by the

American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) and also standards and practices for “cool roofs” (a term curiously not defined by the proposed legislation). Once the energy efficiency building code is adopted, states would have one year to either adopt the national code or equivalent standards into their building codes, or document adoption by local governments representing at least 80 percent of the state’s urban population. 

States that fail to make these changes to their building codes could lose emission allowances and other federal funding. In these states, the national code would automatically apply to buildings in the relevant (local) jurisdictions, and the Secretary would have direct enforcement authority over property owners and builders. The transfer or occupancy of a building that was constructed out of compliance with the national code would be a violation of the Act, for which the Secretary could assess civil penalties (each day of occupancy would be a separate violation of the Act). The Act would also provide jurisdiction to Federal district courts to enjoin any violation of the Act.

If this bill is passed, it could affect the design of commercial projects across the country, and some industry groups have decried the legislation as unfriendly to developers. In a published statement, NAIOP—the Commercial Real Estate Development Association—has said that “[t]he provisions as written would create significant financial barriers to the construction of new buildings.” Landowners and developers alike will be closely watching this bill as it makes its way through Congress.

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Recent federal legislation to provide financial relief to current and prospective homeowners through refinancing, mortgage payment modification, changes in bankruptcy law, and tax credits for first-time homebuyers, addresses four critical consumer issues in today’s real estate market: (1) troubled ownership; (2) imminent default; (3) imminent foreclosure; and (4) first-time purchase.

This advisory provides a brief overview of the new legislation and related programs, and addresses how consumers can take advantage of them. Some basic examples of specific scenarios are included.

Continue Reading...

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In this March 3, 2009 decision, the Kitsap County Hearing Examiner denied a Conditional Use Permit for a day care center and school in a rural area near Port Orchard based on the Examiner’s finding that "[t]he proposal would be materially detrimental to uses or property in the immediate vicinity, and would not be compatible with the existing character, appearance . . . and physical characteristics of property in the immediate vicinity." The Examiner based this finding on a number of possible impacts of the proposal, including "[n]oise generated by laughter and screaming of young children during outdoor playtime and [added] vehicle trips to and from the property." The Examiner also cited traffic safety concerns, and possible impacts to wetlands near trails on the property, as"[y]oung children accompanying instructors to group gatherings . . . would likely not stay on the existing path or footbridge, but would venture off the path trampling stream banks and wetland area . . ."

The Kitsap Sun and KOMO News have both run stories on the denial, which could be appealed to the Kitsap County Board of Commissioners.

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In December, we discussed a rule finalized during the final weeks of the Bush administration which limited agencies’ consultation requirements under the Endangered Species Act (ESA).  In a March 3, 2009 memorandum to the heads of executive departments and agencies, President Obama requested that the Secretaries of the Interior and Commerce “review the regulation [and] determine whether to undertake new rulemaking procedures with respect to consultative and concurrence processes that will promote the purpose of the ESA.” The memorandum does not purport to repeal the rule, but rather requests that agency heads “exercise their discretion . . . to follow the prior longstanding consultation and concurrence practices involving the FWS and NMFS.” This memorandum shows a strong preference for agency consultations under the ESA, and may signal a push for future changes to the ESA regulations.

 

The full text of the memorandum can be accessed here.

 

Media coverage of President Obama’s ESA memorandum can be reviewed at the following links:

Chicago Tribune

CNN

New York Times

 

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In December, we discussed a recent case from the Tennessee Court of Appeals that held that an insurance company was relieved of its obligation to pay on its policy insuring a home because the bank foreclosing on the home did not notify the insurance company of the commencement of the foreclosure. U.S. Bank, N.A. v. Tennessee Farmers Mutual Insurance Company, 2007 WL 4463959 (Tenn. App. 2007). That decision has now been reversed by the Tennessee Supreme Court in U.S. Bank, N.A. v. Tennessee Farmers Mutual Insurance Company, 2009 WL 199856 (January 29, 2009).

The policy contained what the court described as a “standard mortgage clause”, under which the benefits of the policy ran to the bank holding the mortgage on the property. That clause provided in part that: “The mortgagee will…notify [the insurance company] of any change of ownership or occupancy or any increase in hazard of which the mortgagee has knowledge.”

The bank foreclosed on the home, but did not notify the insurance company of the foreclosure. During the foreclosure process, the home was destroyed by a fire. The bank made a claim on the insurance policy and the insurance company denied the claim. It based the denial on the argument that the commencement of the foreclosure was an “increase in hazard” within the meaning of the policy clause, that the bank knew of the increase in hazard, and that coverage was invalidated by the bank’s failure to notify the insurance company of the commencement of the foreclosure. 

Although it recognized that other courts have come to a different conclusion, the lower court in the Tennessee case agreed with the insurance company and ruled that it was not required to pay on the policy. In doing so, it cited among other cases a 1924 case decided by the U.S. Court of Appeals for the Ninth Circuit applying Washington State law, Neil Bros. Grain Co. v. Hartford Fire Ins. Co., 1 F.2d 904 (9^th Cir. 1924), for the proposition that: “It is universally recognized…that the hazard is increased by a mortgage of the property insured, and still further increased by the commencement of proceedings to foreclose.”

On January 29, 2009, the Tennessee Supreme Court reversed the lower appellate court’s decision. In doing so, it held: “We conclude that the Bank was not required to give notice to [the insurance company] of the initiation of foreclosure proceedings, and therefore, the lack of notice does not invalidate coverage in this case….We do not agree that by its plain meaning the phrase “increase of hazard” includes the commencement of foreclosure proceedings….”

 

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A recent Division One Court of Appeals case highlights the importance of including an unambiguous legal description in any contract for the sale of real property. The Court has once again strictly enforced the Statute of Frauds, which requires a description of the land to be transferred that is sufficiently definite to locate it without recourse to oral testimony. The parties in Dick Bedlington Real Estate, L.L.C. v. Tawes, No. 59387-1-I (2008) (unpublished) entered into two separate purchase and sale agreements. In the first agreement, the seller agreed to sell a parcel of land of approximately 88 acres, with 3 acres reserved to the seller. The "approximate" location of the land reserved to the seller was noted, along with a statement that "[t]he exact configuration shall be approved by the parties prior to closing." In the second agreement, the seller agreed to sell "3 acres" of a larger parcel that was described in the agreement.

The Court held that the legal descriptions in both agreements were deficient under the Statute of Frauds because they did not contain enough information to locate the land to be sold. The court refused to read the two agreements together to cure this deficiency, and held that the agreements were void and unenforceable.

 

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Effective, July 8, 2008, the Washington Department of Ecology has adopted an emergency rule regulating and restricting the use of so-called “exempt” wells for domestic water supply within Upper Kittitas County. Ecology’s emergency rule institutes a partial withdrawal and restriction on use of ground water via exempt wells in the upper portion of the County in an effort to minimize the potential for interference with hydrologically connected flows in the Yakima River. The emergency rule adoption follows up on the recent Memorandum of Understanding (“MOU”) entered into between Ecology and Kittitas County regarding use of exempt wells for domestic supply. The MOU was entered into in response to a 2007 private party petition by a group known as Aqua Permanente to Ecology, requesting that Ecology withdraw all unappropriated ground water in Kittitas County from further appropriation pending further study of the effect of exempt wells on senior rights and on the Yakima River. The MOU and emergency rule have been pursued by Ecology in an effort to avoid such a drastic result. The implementation of the emergency rule will occur in part through the County land use permitting process. The emergency rule, and a proposal for a permanent rule-making on the issue by Ecology, will complicate residential construction within rural Kittitas County, and is potentially controversial as to the legal basis for the regulations. The text of the emergency rule and additional information on the rule implementation prepared by Ecology is available at http://www.ecy.wa.gov/programs/wr/cro/kittitas_wp.html.

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In a decision that is certain to cause a few ripples in city and county planning departments, Division I of the Court of Appeals held that a King County Ordinance which limits clearing on property zoned rural area residential to a maximum of 50 percent, depending on the size of the parcel, violates RCW 82.02.020. Citizens' Alliance For Property Rights v. Ron Sims, ___Wn.App.___ (June 4, 2008). Finding parallels in the City of Camas' 30 percent open space set-aside for residential subdivision development struck down by the Washington State Supreme Court in Isla Verde Int'l Holdings, Inc. v. City of Camas, 146 Wn.2d 740, 752, 49 P.3d 867 (2002), the Court of Appeals had no trouble holding that the clearing limits in the King County ordinance imposed an in kind indirect "tax, fee, or charge" on development prohibited by RCW 82.02.020. In so holding, the Court rejected County arguments that RCW 82.02.020 did not apply because the clearing limits were adopted pursuant to mandatory Growth Management Act requirements that require protection of critical areas. The Court found that the clearing limits adopted by King County were not required by the Growth Management Act. The Court also rejected County attempts to bring the clearing ordinance within the exception to RCW 82.02.020 for development restrictions that are "reasonably necessary as a direct result of the proposed development or plat." The Court found that the King County clearing limits impose "a uniform requirement for cleared area on each lot, unrelated to any evaluation of the demonstrated impact of proposed development." The variation in clearing restrictions was based on lot size, not development, and thus was not proportionally related to proposed development, a necessary element to satisfy the statutory exception to RCW 82.020.020.

A copy of the Court's opinion can be found at:

http://www.courts.wa.gov/opinions/index.cfm?fa=opinions.showOpinion&filename=594168MAJ. .

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The owners of the Ballard Denny's site in Seattle have acted quickly now that the Seattle Landmarks Preservation Board has cleared the way for demolition of the building (Discussed in the June 3rd entry on this blog). 

On June 24, The Seattle Times reported that the building was demolished to make way for a planned mixed use development.

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In Corey v. Department of Land Conservation and Development, the Oregon Supreme Court on May 8, 2008, ruled that Measure 49, which voters passed in November 2007, extinguished landowners’ rights under Measure 37 except to the extent that a landowner had completed enough of the development approved under Measure 37 to have obtained a common law vested right to complete the development.

In the Corey case, the Supreme Court had originally planned to decide whether the Court of Appeals or the circuit court was the proper court for a landowner to challenge a decision by the state to deny part of a landowner’s claim under Measure 37. After voters passed Measure 49, however, the state asked the Supreme Court to dismiss the Corey case, arguing that Measure 49 had replaced all of the landowners’ rights under Measure 37 with the lesser rights available under Measure 49. For the most part, the Supreme Court agreed.

The Supreme Court’s ruling means that the only landowners who may continue to develop property under Measure 37 are the landowners who completed enough of the permitted development to require the government to allow the landowners to complete the development. A landowner who has not started to develop property under a Measure 37 waiver retains no rights under Measure 37.

The Supreme Court’s opinion leaves important questions open for later decisions by the courts. First, the Supreme Court did not discuss how much development a landowner must have completed to permit the landowner to complete a development.

Second, the Supreme Court chose not decide whether the constitution permitted voters to extinguish rights granted by Measure 37. Whether, for example, Measure 49 improperly takes property without just compensation must be decided in another case.

Third, the Supreme Court did not explain whether landowners to whom courts had awarded monetary compensation (as opposed to waivers of land use laws) keep those awards after the passage of Measure 49.

A landowners who filed an application with the state under Measure 37 should consult with the landowner’s legal advisor to determine whether the landowner should (1) apply for permission to divide property into home sites under Measure 49; (2) challenge the loss of Measure 37 rights; or, (3) where the landowner has begun development, apply for permission to complete the development.

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Months after a contentious decision in which the Seattle Landmarks Preservation Board designated the Ballard Denny's building a landmark, it has cleared the way for demolition of the building by declining to impose any protections on the property. The Landmarks Preservation Board agreed that the owner would not be able to achieve a reasonable return on the $12.5 million it paid for the property if the Board required the building to remain on the property. (The Seattle Landmarks Preservation Ordinance generally forbids depriving a property owner of "reasonable economic use" of a property. See SMC 25.12.580). According to a May 23, 2008 article in the Daily Journal of Commerce, Rhapsody Properties has plans to tear down the building and replace it with 261 condominium units over 32,000 square feet of retail.

 

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