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A Note From the Editor
We are providing this periodic newsletter to help keep you informed about current developments in real estate, land use, and construction law in Washington. If you have comments or questions, please send them to alert@dwt.com.
The Washington legislature convened last month, and a couple of the bills affecting real estate are described in this newsletter. Those bills, if adopted, would virtually eliminate adverse possession and Washington’s unique vested rights rules. As of this writing, it is difficult to know how far those proposals will go this session, and we know that the adverse possession bill has been proposed a few times in the past and has not yet passed, but if you have strong opinions about either proposal you should get involved in the discussion now by contacting your legislators.
One of our Washington construction lawyers, John Parnass, has created a construction law blog (www.waconstructionlaw.com). Contractors and land developers will find it useful, but unfortunately the blog includes links to anti-lawyer jokes, which many people find insulting. I will have a frank and open discussion with John about the issue. There really ought to be a law against these kinds of jokes, right?
Marco de Sa e Silva
Davis Wright Tremaine LLP
In This Issue:
The Washington Department of Revenue has completely replaced its old real estate excise tax rules, effective December 17, 2005. The new rules are codified in Chapter 458-61A of the Washington Administrative Code.
In general, the new rules introduce only modest substantive and procedural changes, but the numbering and structure of the rules have been completely revised. In addition, there are many new examples of how the Department would apply the rules. Also, the Department of Revenue has provided some greater clarity about the documentation requirements and has increased some documentation burdens. Consequently, even though over all the changes are modest, the details of the new rules in some cases could be critical. There is also a new document retention requirement—taxpayers are supposed to retain all records for their transactions for at least four years (which is the statute of limitations for assessing additional tax).
The rules concerning exemptions have seen the most revisions. While the new rules should be consulted in any case, practitioners will want to pay close attention to the revisions concerning gifts, inheritance, tenants in common, condemnation, and mere changes in identity or form of ownership.
The Washington State Senate is considering legislation (SB 6350) that would significantly curtail vested rights that building permit, land use, and subdivision applicants currently enjoy, under which their applications are reviewed under the regulations in effect at the time a complete permit application is filed, regardless of subsequent changes in those regulations. The proposed legislation would grant vested rights only upon the making of a “final local government decision.”
Washington is one of only a handful of states nationwide with a vested rights rule that immunizes development proposals from the adverse effects of regulations adopted after the date of permit application. In most states, vested rights against changes in regulations are effective only upon permit approval or after substantial development has occurred in reliance on the permit. The current Washington rule protects a developer’s “investment-backed expectations” from being thwarted by changes in local land use and subdivision regulations between the date of application and the date of a decision on the application.
SB 6350, sponsored by Senators Haugen, Kline, Kohl-Welles, Thibadeau, Pridemore, Franklin, Regala, Jacobsen, and Spanel, had its first reading on January 11, 2006. It has been referred to the Senate Government Operations and Elections Committee and, as of January 30, 2006, has not yet come up for hearing or consideration before that Committee.
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Washington Supreme Court Affirms Area-wide Impact Fees
By Nigel Avilez |
The Washington Supreme Court in City of Olympia v. Drebick (January 19, 2006) has determined that Washington’s impact fee statutes do not require a local government to base its development impact fees on individualized assessments of a project’s direct impacts; instead a local government is allowed to base fees on the projected costs of area-wide infrastructure improvements that are reasonably related and beneficial to the project. In Drebick, the City of Olympia assessed the developer $132,329 in area-wide traffic impact fees although the developer contended that the direct traffic impacts of his four-story office complex would be far less. This decision could encourage local governments to adopt impact fee ordinances similar to the Olympia model.
Two bills (HB 2966 and SB 6310) would make it more difficult to acquire title by adverse possession. One of the bills (HB 2966) would make adverse possession virtually impossible—the claimant would have to hold possession for twenty years (rather than ten currently), the claimant would not be allowed to “tack” his period of ownership onto that of his predecessor unless he acquired title by will or intestate succession, a prevailing claimant would have to reimburse the real estate taxes paid by the non-prevailing during the period of adverse possession, and more. The other bill would require that the claimant make “substantial improvements,” own property adjacent to the claimed property, and prove those elements by clear and convincing evidence.
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Seattle Considers Trading Downtown Height Cap for Affordable Housing Fees
By Nigel Avilez |
In Seattle, developers might be permitted to increase building height and residential density downtown by paying development fees that would subsidize affordable housing. The Seattle City Council is considering a proposal that would require developers to pay into a pool for affordable housing in exchange for permission to build taller downtown buildings. A study commissioned by the city concluded in January that fees of $10 or $20 per square foot are financially viable for developers. Public hearings are expected in February, and a council vote is expected in March.
For more information, please contact:
Nigel Avilez, Seattle, (206) 903-3979, nigelavilez@dwt.com
Marco de Sa e Silva, Seattle, (206) 628- 7766, marcodesaesilva@dwt.com
Dirk Giseburt, Seattle, (206) 628-7661, dirkgiseburt@dwt.com
Chuck Maduell, Seattle, (206) 903-3968, chuckmaduell@dwt.com
This Law Letter is a publication of the Real Property Group of Davis Wright Tremaine LLP. Our purpose in publishing this Law Letter is to inform our clients and friends of recent developments in real estate, land use and construction law. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may be given only in response to inquiries regarding particular situations.
Copyright © 2006, Davis Wright Tremaine LLP.
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