Henderson Homes, Inc. v. City of Bothell

Madsen, J.

(dissenting) — In some respects, I agree with the majority opinion. I agree with the majority that the City of Bothell violated the requirements of RCW 82.02.020 in imposing and expending the impact mitigation fees in this *253case. I do not question the accuracy of the majority’s 8-page recitation of facts showing how egregious Bothell’s actions were and how the City paid lip service to the requirements of RCW 82.02.020. I also agree with the majority’s conclusion that RCW 82.02.020 prohibits fees unless they are imposed pursuant to the terms of the statute.

What I question is the majority’s conclusion, supported by two paragraphs of analysis and the citation of two cases, that a fee imposed in violation of RCW 82.02.020 is a tax, and that a challenge to such a fee is governed by the 3-year statute of limitations applicable to actions brought to recover invalid taxes. While interesting reading, the majority’s eight pages of facts are essentially irrelevant to a discussion of the timeliness of the developers’ claims.

Under the majority’s approach, every challenge to fees assessed under RCW 82.02.020 would turn first to a discussion of whether the statute had been violated, and then to a consideration of whether the challenge was timely. Apparently, a conclusion that the statute had not been violated would preclude use of the 3-year statute of limitations and leave the question of the appropriate statute of limitations in limbo, given the majority’s insistence that the 30-day statute of limitations applicable to platting decisions has no relevance to fees imposed as a condition of plat approval. In assessing a challenge to fees imposed pursuant to RCW 82.02.020,1 would first examine the nature of the fees authorized by RCW 82.02.020 and the corresponding statute of limitations, and then, if the challenge were timely, determine whether the requirements of RCW 82.02.020 had been satisfied. It is my understanding that the timeliness of a legal challenge is addressed before the merits of the challenge are assessed.

The majority’s conclusion that the fees assessed herein are equivalent to taxes is supported only by brief citations to R/L Assocs., Inc. v. Seattle, 113 Wn.2d 402, 780 P.2d 838 (1989) and Hillis Homes, Inc. v. Snohomish Cy., 97 Wn.2d 804, 650 P.2d 193 (1982). As my analysis illustrates, neither case supports the majority’s conclusion that the 3-year statute of *254limitations governing unauthorized taxes applies in this case. In Hillis Homes, we addressed the validity of regulations requiring payment of fees for various services as a condition of subdivision approval. Hillis Homes, at 806-07. Under review were fee agreement ordinances enacted by Snohomish and San Juan Counties prior to the 1982 amendment of RCW 82.02.020. The fees collected pursuant to the county ordinances were intended to pay for community services required as a result of substantial new residential development. This court reasoned that absent specific statutory authority to assess mitigation fees, the counties’ actions could be upheld as an exercise of their police powers only if the payments were intended as tools to regulate land subdivision. The court looked to the primary purpose served by imposition of these fees and concluded that the payments were intended to raise revenue, not to regulate development. Consequently, the court concluded that the fees were really taxes which the County lacked authority to levy. Hillis Homes, at 810-11. In 1982, the Legislature amended RCW 82.02.020 to specifically address development fees. Any analysis of development fees now must begin with a review of that statute. As the majority notes and as this court observed in R/L Assocs., it is necessary to give literal application to the provisions of RCW 82.02.020 when addressing development fees.

The amendment begins with a prohibition against any tax on development. It then outlines a narrow exception for fees which are directly related to the impact of development.

[T]his section does not preclude dedications of land or easements within the proposed development or plat which the county, city, town, or other municipal corporation can demonstrate are reasonably necessary as a direct result of the proposed development or plat to which the dedication of land or easement is to apply.
This section does not prohibit voluntary agreements with counties, cities, towns, or other municipal corporations that allow a payment in lieu of a dedication of land or to mitigate a direct impact that has been identified as a consequence of a proposed development, subdivision, or plat.

RCW 82.02.020 (in part). In contrast to the fees authorized under this amendment, the fees imposed in Hillis Homes *255were not tied to a specific, identified impact of a development on a community. Rather, they were assessed uniformly, in a preset amount, regardless of the specific need created by a given development. The fees authorized by RCW 82.02.020 are not to be imposed automatically, but are instead tied to a direct impact. If there is no such impact, the fees may not be imposed on a developer. Thus, the primary purpose of the fees is not simply to raise money. Rather, by tying the imposition of fees to the actual impact of development, the fees are tools to regulate development, not taxes collected as general revenue. See Hillis Homes, at 809.

This conclusion finds support in the legislative history behind the 1982 amendment of RCW 82.02.020. When the Legislature amended RCW 82.02.020 it recognized the need of local governments for new sources of revenue to provide basic services to their residents. At the same time it acknowledged that development fees were onerous for the building industry. 1982 Final Legislative Report 206. To balance these concerns, the Legislature restricted development fees and authorized a real estate excise tax. 1982 Final Legislative Report 206-08.

Development fees are substantially restricted so that no county, city, town or municipal corporation may impose a tax or fee on any construction project.. . .
Because the development fees provision is enacted into law, cities and counties are authorized to levy a real estate excise tax not exceeding one-quarter of 1 percent. This authorization is intended to replace the loss of revenue from the restriction on system development charges. . . .
. . . The proceeds from the first one-quarter real estate excise tax levied in lieu of development fees will be used for capital purposes . . ..

(Italics mine.) 1982 Final Legislative Report 207.

The Legislature thus replaced revenue previously generated from general development fees with a tax on real estate, but allowed a narrowly defined category of fees to survive. Thus, the Legislature’s intent to distinguish these *256fees from the new taxes authorized seems clear. Instead of serving simply as another means to raise general revenue, the development fees allowed were intended to regulate actual impacts of a development on the community. Statutes should not be interpreted so as to render any portion meaningless or superfluous. Addleman v. Board of Prison Terms & Paroles, 107 Wn.2d 503, 509, 730 P.2d 1327 (1986); Hanson v. Tacoma, 105 Wn.2d 864, 871, 719 P.2d 104 (1986). Since the Legislature discussed the development impact fees in a separate provision from that setting forth the real estate excise tax, it is evident that the impact fees were intended to function differently than taxes. This intent is made clearer by a discussion held during the hearing on the proposed amendment. During the hearing, Representative Eberle was asked to explain the meaning of "voluntary agreement” in the proposed exemption for development fees. House Journal, 47th Legislature (1982), at 1417. Mr. Eberle referred to Justice Neill’s dissent in Chrobuck v. Snohomish Cy., 78 Wn.2d 858, 480 P.2d 489 (1971) which he said defined the term. Under consideration in Chrobuck was a rezone approved by the Board of County Commissioners in Snohomish County. The commissioners gave approval based upon a "concomitant agreement” executed between the County and Atlantic Richfield, the petitioner for rezone. The agreement provided for environmental controls and a buffer zone surrounding the proposed refinery.

Justice Neill explained the use of "concomitant agreements”.

Basically, a valid concomitant agreement operates to neutralize any expected negative impact of the proposed property usage. . .. As such, they are based upon factors which are squarely within the ambit of considerations appropriate in the exercise of the zoning power. As thus limited, the concomitant agreement provides a source of flexibility by allowing an intermediate use permit, between absolute denial and complete approval of the petition. A zoning authority, empowered to permit a given use without restriction, should also be allowed to grant a use which is modified by contract conditions appropriately attached.

(Italics mine.) Chrobuck, at 889 (Neill, J., dissenting).

*257While the comments of individual legislators are insufficient to establish legislative intent, they can be instructive in showing the reasons for legislative amendments. In re Marriage of Kovacs, 121 Wn.2d 795, 807, 854 P.2d 629 (1993); Johnson v. Continental West, Inc., 99 Wn.2d 555, 561, 663 P.2d 482 (1983). Representative Eberle’s comparison of the voluntary agreements in RCW 82.02.020 with the "concomitant agreements” in Chrobuck indicates that the voluntary fee agreements were to be used by local authorities, pursuant to their police powers, to regulate development. The majority makes ample use of the record, but in so doing overlooks the fundamental fact that the fees imposed herein were imposed as a condition of plat approval. Hence, it does not seem unreasonable to look to the statutes governing platting decisions and plat approval for guidance in this case. Municipalities have a duty to provide for public facilities under the subdivision statute, RCW 58.17.110. Thus, it is reasonable to conclude that these fee agreements were intended to provide an alternative means for ensuring appropriate provisions are made, thus regulating rather than merely taxing developers. See Trimen Dev. Co. v. King Cy., 124 Wn.2d 261, 270, 877 P.2d 187 (1994); Ivy Club Investors Ltd. Partnership v. Kennewick, 40 Wn. App. 524, 530, 699 P.2d 782, review denied, 104 Wn.2d 1006 (1985).

RCW 58.17.110 provides that a local legislative body may approve the establishment of subdivisions within the community by inquiring

into the public use and interest proposed to be served by the establishment of the subdivision and dedication. It shall determine: (a) [i]f appropriate provisions are made for . . . the public health, safety, and general welfare, for open spaces, drainage ways, streets or roads . . . parks . . . playgrounds, schools and schoolgrounds, and ... all other relevant facts, including sidewalks and other planning features that assure safe walking conditions for students who . . . walk to and from school; and (b) whether the public interest will be served by the subdivision

RCW 58.17.110. A plat may be disapproved if provisions are not made for such public facilities. RCW 58.17.110. To insure *258that appropriate provisions are made, RCW 58.17.110 also provides that "[d]edication of land to any public body . . . may be required as a condition of subdivision approval . . .”. The authority to exact land dedication for the purpose of providing a range of public facilities required as a result of development is well established. Breuer v. Fourre, 76 Wn.2d 582, 585, 458 P.2d 168 (1969); Olympia v. Palzer, 42 Wn. App. 751, 754 n.3, 713 P.2d 1125, aff'd, 107 Wn.2d 225, 728 P.2d 135 (1986). Through the amendment of RCW 82.02.020, the Legislature provided alternative ways to meet the impact of development on the public facilities enumerated in RCW 58.17.110. The voluntary agreements contemplated by the 1982 amendment operate to "neutralize any expected negative impact of the proposed property usage”, and are clearly intended to regulate development. See Chrobuck, at 889 (Neill, J., dissenting). Thus, even under Hillis Homes, they do not constitute a tax subject to the 3-year statute of limitations in RCW 4.16.080(3). RCW 82.02.020 does not include a review mechanism in event of violation. Where a statute provides no express mechanism for appeal, but instead supplements existing authority, claims based on the supplemental statute must be brought in accordance with the statutory procedures for challenging the underlying government action. Henderson Homes, Inc. v. Bothell, 67 Wn. App. 196, 204-05, 834 P.2d 1071 (1992); South Hollywood Hills Citizens Ass’n for Preserv. of Neighborhood Safety & Env’t v. King Cy., 33 Wn. App. 169, 173, 653 P.2d 1324 (1982), rev’d on other grounds, 101 Wn.2d 68, 78, 677 P.2d 114 (1984). The authority to require developers to make provisions for adequate park facilities as a condition of plat approval is grounded in RCW 58.17.110. It is through the dedication of land or fee impact agreements that local governments carry out their regulatory function. Therefore, I conclude that RCW 82.02.020 supplements RCW 58.17.110. This being the case, claims based on a violation of that part of the statute referring to fee impact agreements executed to provide for required plat conditions must be brought in accordance with RCW 58.17.180.

*259The language of RCW 58.17.180 is clear: a 30-day limitation applies to an action challenging any decision approving or disapproving any plat. The fees at issue here were imposed as a condition of plat approval, so any challenge of their imposition is subject to the 30-day statute of limitations. The majority’s heavy reliance on factual support totally ignores the public policy supporting short appeal periods and finality in land use decisions. See Deschenes v. King Cy., 83 Wn.2d 714, 717, 521 P.2d 1181 (1974); Veradale Vly. Citizens’ Planning Comm. v. Board of Cy. Comm’rs, 22 Wn. App. 229, 239, 588 P.2d 750 (1978). In this case, the developers gave Bothell no significant indication that they objected to the park fees or to the intended use of said fees. Instead, the developers completed construction and sold a majority of the units in each development. Verbatim Report of Proceedings, at 53, 100. Three years later they claimed a refund. It is in the interest of the general welfare of the community that objections to conditions imposed on developments be resolved quickly, while meaningful remedies are available.

It is similarly within the interests of the general welfare that a clear resolution of this case be made, as the issue of the limitations period applicable to impact fee challenges will continue to arise. In 1990, the Legislature expanded upon the possibilities for impact fees. See RCW 82.02.020, .050-.090. The Legislature did not, however, state what limitations period applies when these fees are challenged. Thus, when faced with a challenge to impact fees, courts will be forced to run through the tax or fee analysis set forth by the majority. As a result, the issue of the proper statute of limitations will continue to be subsumed by the merits of the case, in large part because of the majority’s almost exclusive reliance on Hillis Homes, a case decided before RCW 82.02.020 was first amended to authorize impact fees.

Soon after its publication, Hillis Homes was criticized by this state’s leading authority on land use law. See Richard L. Settle, Washington Land Use and Environmental Law and Practice § 3.13(a), at 113 (1983). Professor Settle writes that in Hillis Homes,

*260[t]he court rather mechanically characterized the fees as taxes without considering their function in the land use regulatory process. The exaction of land dedication for, and improvements of, various public facilities traditionally has been characterized as exercise of the police power. The rationale is that without the required land dedication and improvements public facilities would be inadequate, communities would be deficient as human habitat, and the public health, safety and welfare would suffer. Development fees may be a more equitable means of accomplishing the same police power objectives than exaction of land dedication and public facilities improvements. Hence, characterizing the fees as taxes because they happen to raise revenue ignores their regulatory function, elevating form over function.

Settle § 3.13(a), at 113. Another commentator has criticized Hillis Homes for its failure to acknowledge that because RCW 58.17.110 places responsibility on local government to ensure that public facilities are provided for as a condition of plat approval, local government must have tools for administering this responsibility beyond taking a dedication of land. Martha Lester, Comment, Subdivision Exactions in Washington: The Controversy Over Imposing of Fees on Developers, 59 Wash. L. Rev. 289, 295-96 (1984).

The majority ignores these criticisms and retains a method of analysis that makes little sense in light of the 1982 amendment to RCW 82.02.020 and even less sense in light of subsequent amendments to RCW 82.02.

I therefore dissent, based on my belief that the 30-day statute of limitations applicable to platting decisions applies to the developers’ challenge to Bothell’s imposition of impact fees in this case. I would hold, however, that a 3-year statute of limitations period applies to their expenditure challenge. I find no language in RCW 58.17 purporting to govern the expenditure of impact mitigation fees. The direction for expenditure comes from RCW 82.02.020 which provides that funds not expended in compliance with the statute, within a 5-year period, shall be refunded. Similar claims for refunds of fees lawfully collected, but expended in violation of statutory requirements, have been governed by the 3-year statute of limitations applicable to "action[s] for taking, detaining, *261or injuring personal property, including an action for the specific recovery thereof, or for any other injury to the person or rights of another”. Amende v. Bremerton, 36 Wn.2d 333, 340, 217 P.2d 1049 (1950); Quaker City Nat’l Bank v. Tacoma, 27 Wash. 259, 263, 67 P. 710 (1902). This language is now set forth in RCW 4.16.080(2).

I would conclude that the 3-year statute of limitations in RCW 4.16.080(2) governs the developers’ expenditure challenge, and would remand to see what portion of the development fees, if any, was spent in accordance with the requirements of RCW 82.02.020. If such amounts can be determined, the court shall refund the misspent portions in accordance with the terms of RCW 82.02.020. If proper accounting cannot be made, I would direct the trial court to order a refund of $400 per lot, according to the number of lots still owned by the developers at the time of the trial court’s initial decision in this case. Contrary to the refund directed by the majority, my remedy would give effect to the statutory language providing that ”[a]ny payment not so expended shall he refunded with interest at the rate applied to judgments to the property owners of record at the time of the refund.” (Italics mine.) RCW 82.02.020(3).

Guy, J., concurs with Madsen, J.