Isla Verde International Holdings, Ltd. v. City of Camas

Van Deren, C.J.

¶43 (dissenting) — I respectfully dissent from the majoritys conclusion that the matter should be remanded to the trial court for trial on the issue of whether the city of Camas (City) knew or should have known that the mandatory open-space set-aside was an unlawful “act” under RCW 82.02.020. I would affirm the trial court and remand only for trial on the issue of damages to Isla Verde International Holdings, Ltd.26

¶44 Washington courts have consistently held that RCW 82.02.020 prohibits a city from imposing not only monetary taxes, but also other conditions that are not a “direct result” of the development’s impact. For example, in Southwick, Inc. v. City of Lacey, we held that a city could “force the payment of fees through [agreements only] after showing that (1) the fee is to mitigate a direct impact, and (2) the fee is reasonably necessary as a direct result of the proposed development.” 58 Wn. App. 886, 895, 795 P.2d 712 (1990) (citing RCW 82.02.020). Similarly, Division One of our court has held that a county bore the burden of showing that *477“required improvements were ‘reasonably necessary’ to mitigate the direct impact of the development” before the county could make them a condition of plat approval. Cobb v. Snohomish County, 64 Wn. App. 451, 459, 829 P.2d 169 (1991) (quoting Southwick, Inc., 58 Wn. App. at 895).

¶45 Then again in July 1994, a full year before the City imposed the 30 percent set-aside condition on Isla Verde in July 1995, our Supreme Court held a preset fee invalid in Henderson Homes, Inc. v. City of Bothell, 124 Wn.2d 240, 877 P.2d 176 (1994). The city of Bothell had conditioned approval of Henderson Homes’ subdivision development on payment of a predetermined park-impact fee. Henderson Homes, 124 Wn.2d at 241. Holding that the legislature intended RCW 82.02.020 to allow municipalities to impose such fees narrowly, the court concluded that Bothell’s failure to correlate the preset fees with the development’s impact rendered the fee invalid under RCW 82.02.020. Henderson Homes, 124 Wn.2d at 248.27

¶46 In considering the City’s actions in this case, our Supreme Court repeated, albeit in a footnote, what it and our court have consistently observed, “[I]t has been clear since R/L Associates [, Inc.] v. City of Seattle, 113 Wn.2d 402, 780 P.2d 838 (1989)[28] that this court interprets [RCW 82.02.020] according to its plain terms, thus including all charges without regard to whether the payment is a tax or not.” Isla Verde Int’l Holdings, Inc. v. City of Camas, 146 Wn.2d 740, 753 n.8, 49 P.3d 867 (2002). Accordingly, the court held that (1) the City’s mandatory open-space set-aside condition was “an in kind, indirect ‘tax, fee, or charge’ on new development” and (2) the City’s ordinance mandat*478ing this condition violated RCW 82.02.020 because the City had failed to conduct any analysis showing that the mandatory 30 percent open-space set-aside was “reasonably necessary as a direct result of the proposed subdivision [s].” Isla Verde, 146 Wn.2d at 759 (citing RCW 82.02.020), 760.

¶47 Thus, I also disagree with the majority that one trial court’s lack of understanding of the law in this area is compelling evidence that the law was unclear after Isla Verde. Majority at 474. In Citizens’ Alliance for Property Rights v. Sims, 145 Wn. App. 649, 187 P.3d 786 (2008), “the trial court concluded that [a King County ordinance limiting clearing to a maximum of 50 percent on property zoned ‘rural area residential’] did not constitute a ‘charge’ on the development of a type prohibited by RCW 82.02.020.” Majority at 474. On appeal, Division One of this court corrected the trial court and, relying heavily on the Washington Supreme Court’s holding in Isla Verde, held that the ordinance was a “ ‘tax, fee, or charge’ ” (quoting RCW 82-.02.020) for failing to “relate the clearing limit to the nature and extent of the proposed development on the lot” and violated RCW 82.02.020. Citizens’ Alliance, 145 Wn. App. at 656, 668.

¶48 Since 1990, well in advance of the City’s unlawful act here, the legislature and the Washington courts established that a governmental entity could not legally condition approval of a subdivision on predetermined mandatory conditions, absent an individualized determination of the condition’s relation to the development and a need for this condition to mitigate specific identified impacts of the development. Thus, I would hold that the City should have known that its enforcement of the mandatory set-aside ordinance against Isla Verde’s development, without a specific showing of need to mitigate specific impacts of Isla Verde’s development, violated RCW 82.02.020. Any governmental entity that seeks to burden an owner’s right to use private property can reasonably be expected to inform itself of the applicable law before invading or diminishing that right, and its failure to do so or its failure to understand the *479law and properly apply it should not further burden the property owner.

¶49 I would affirm the trial court and remand only for determination of Isla Verde’s damages under chapter 64.40 RCW.

Furthermore, I believe that the majority’s legal analysis dictates a result in favor of the City, thus making remand for a trial unnecessary on the issue of whether the City knew or should have known that its condition was illegal. The majority holds that it was not until 2002, when our Supreme Court decided Isla Verde International Holdings, Inc. v. City of Camas, 146 Wn.2d 740, 49 P.3d 867 (2002) and “held, arguably for the first time, that (1) the City’s mandatory 30 percent open-space set-aside condition was ‘an in kind indirect “tax, fee, or charge” on new development.’ ” Majority at 469-70 (quoting Isla Verde, 146 Wn.2d at 759). In stating its disagreement with the court in Isla Verde, the majority also concludes that “pre-Isla Verde case law suggests that RCW 82.02.020 did not expressly prohibit local government land use regulations similar to the open-space set-aside condition at issue here.” Majority at 472. The majority even holds that arguably post-Isla Verde the law was unclear. Majority at 474. Thus, the majority’s opinion makes remand for trial on the knowledge issue unwarranted and unduly expensive and time-consuming for the parties. In light of the majority’s opinion that the law was and is arguably unclear, a trial on whether the City informed itself of the law or whether, if it did so, it understood the law to prohibit the condition imposed on Isla Verde, constitutes a regrettable use of resources and time.

In contrast, see Trimen Development Co. v. King County, in which our Supreme Court upheld a county’s imposition of park development fees under RCW 82.02.020 because the fees were “reasonably necessary as a direct result of [the specific] development.” 124 Wn.2d 261, 274, 877 P.2d 187 (1994) (citing View Ridge Park Assocs. v. Mountlake Terrace, 67 Wn. App. 588, 599, 839 P.2d 343 (1992)).

In R/L Associates, our Supreme Court held that “a charge on demolition or change in use of residential units certainly constitutes, at least, an indirect charge on either the construction of residential units or the development of land generally.” 113 Wn.2d at 407.