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State Supreme Court Sides With Developers in Recent
Land Use Decision of Benchmark and Isla Verde
[August 2002]
Recently, the Supreme Court of the State of Washington
issued decisions in two cases that had been of interest to the land
use and real estate development arena even when the decisions were
merely at the Court of Appeals level: Benchmark Land Co. v. City
of Battleground, 103 Wn. App. 721, 14 P.3d 172 (2000), aff’d,
49 P.3d 860 (July 11, 2002); and Isla Verde Int’l Holdings,
Inc. v., City of Camas, 99 Wn. App. 127, 990 P.2d 429 (1999),
aff’d in part on other grounds, 49 P.2d 867 (July 11,
2002). Both cases involved challenges by developers to development
conditions that had been imposed by local governments.
In both cases, the Supreme Court affirmed the
Court of Appeals decisions by holding that most of the required
improvements and exactions were invalid. In both cases, however,
the Supreme Court holdings were much narrower than that of the Court
of Appeals. The Court of Appeals in both cases had held that some
or all of the conditions amounted to unconstitutional takings or
violations of substantive due process. The State Supreme Court,
however, did not reach the constitutional questions in either case.
In Washington, courts adhere to the principle that if a case can
be decided on nonconstitutional grounds, an appellate court should
refrain from deciding constitutional issues. Most developers and
land use attorneys would have liked the Supreme Court to uphold
the Court of Appeals decisions on constitutional grounds; on the
other hand, the Supreme Court decisions are still a victory for
developers.
Takings Law In a Nutshell
As a matter of law, a local government cannot
impose conditions upon a development, no matter how desirable, unless
the government can show (1) a legitimate “public problem or
problems that the [exaction] is designed to address;” (2) “that
the development for which a permit is sought will create or exacerbate
the identified public problem;” (3) that the exaction “tends
to solve, or at least to alleviate, the identified public problem;”
and (4) the exaction “is ‘roughly proportional’ to
that part of the problem that is created or exacerbated by the landowner’s
development.” The first two elements are commonly referred
to as the “nexus” requirement, and the second two
elements are commonly known as the “rough proportionality”
requirement. The nexus and rough proportionality requirements were
set forth by the U.S. Supreme Court in the well-known cases of Nollan
and Dolan.
The Benchmark Decision
In Benchmark, the City of Battle Ground
conditioned approval of a development upon the developer’s
agreement to make half-street improvements to a street bordering
the proposed subdivision. The developer alleged that the City’s
condition amounted to an unconstitutional taking. The developer
alleged that there was no “rough proportionality” between
the impacts of the proposed subdivision on the street and the condition
being imposed on the developer.
The Court of Appeals agreed with the developer,
and held that the City was requiring the developer to address a
problem that existed outside the development property (an adjoining
street in need of improvement), and the City had not shown that
the development caused the problems that the City was requiring
the developer to fix. In reaching its decision, the Court of Appeals
emphasized the applicability of the Nollan/Dolan requirements
to monetary conditions, not just exactions of land—an issue
that had been brought into question by a recent U.S. Supreme Court
decision, City of Monterey v. Del Monte Dunes, 526 U.S. 687
(1999). The City appealed the Court of Appeals decision in Benchmark.
The State Supreme Court found it unnecessary to
reach the issue of whether the City’s condition on development
was an unconstitutional taking. Rather, the State Supreme Court
affirmed Benchmark on the basis that the City had not provided
substantial evidence to support its decision to require Benchmark
to make improvements to the adjacent road as a condition of development
approval. Under RCW 36.70C.130(1)(c), the court can grant relief
in favor of the developer if “the land use decision is not
supported by evidence that is substantial when viewed in light of
the whole record before the court.” Since the City’s decision
was not supported by substantial evidence in the record, the Court
of Appeals had a basis for reversing the decision before even reaching
the issue of constitutionality. Because Benchmark was able to show
that the road did not meet City standards even before the development
was proposed, the required expenditure for street improvements was
not directly related to the traffic generated by the development,
and traffic studies had shown that the subdivision would have little
to no impact on safety and operations of the section of roadway
Benchmark was being required to improve, the Supreme Court concluded
that the record simply lacked substantial evidence to justify the
City’s decision.
Justice Sanders, in a concurring opinion, attempted
to articulate precisely what the constitutional and statutory prerequisites
are for a local jurisdiction’s imposition of development conditions
upon developers. Specifically, Justice Sanders emphasized the applicability
of RCW 82.02.020 which prohibits local governments from imposing
fees, taxes, or charges on a development unless the jurisdiction
can establish that the condition is reasonably necessary as a direct
result of the proposed development. According to Justice Sanders,
the City of Battleground would have been unable to satisfy the standards
codified in RCW 82.02.020.
The Decision in Isla Verde
The City of Camas approved Isla Verde’s
subdivision application subject to conditions that the developer
(1) construct a secondary access road, and (2) set aside 30% of
the subdivision as open space. The City claimed that local wildlife
and steep slopes in portions of the subdivision would be impacted
by the development, and that the existing access road was inadequate
for emergency purposes. The Supreme Court affirmed the Court of
Appeals decision, ruling in favor of the developers on the open
space issue and in favor of the City on the secondary access road.
The 30% Set Aside. The Court of
Appeals held that the City’s ordinance requiring every proposed
subdivision to retain 30 percent of its area as open space violated
the two-part Nollan/Dolan test for constitutionality of exactions.
The Court of Appeals concluded that the essential nexus requirement
existed between a public problem and the impacts of development
insofar as the city had identified a public problem (the need to
preserve open space for wildlife and recreation) and because the
proposed development would destroy 13 acres of open space. The City
was, however, unable to show rough proportionality between he required
exaction and the impact of the proposed development. The record
was devoid of evidence showing a reasonable relationship between
the impacts and the 30 percent requirement, and thus the Court of
Appeals held that the 30 percent set aside was an unconstitutional
taking.
The Supreme Court, while affirming the Court of
Appeals decision to invalidate the 30% set aside condition, did
not base its holding on constitutional grounds. Rather, the State
Supreme Court held that the 30 percent set aside was an illegal
in kind “tax, fee, or charge” on new development, which
was in violation of RCW 82.02.020. According to RCW 82.02.020, a
municipal corporation cannot impose any tax, fee, or charge on development;
yet it can impose reasonable mitigation requirements by voluntary
agreement if the City can show that the condition is “reasonably
necessary as a direct result of the proposed development.”
The City asserted that the set aside was necessary to address negative
impacts to wildlife in the area, and because the property contained
steep slopes. The Supreme Court held that there was no evidence
that the 30 percent open space requirement was tied directly to
either of these impacts; the City had made no individualized determination
that 30 percent was the appropriate set-aside for the impacts caused
by the subdivision. The Supreme Court did not hold that the size
of the set aside was exorbitant, only that the City did not tie
the set aside to a specific, identified impact of the development.
Furthermore, the Court acknowledged that RCW 35A.63.100 allows cities
to designate open space requirements for subdivisions in appropriately
zoned areas. The City was not allowed to rely on this statute because
the 30 percent set aside applied to all proposed subdivisions without
any due consideration given to the specific circumstances.
Secondary Access Road. The Court
of Appeals upheld the City’s requirement that the developer
construct a secondary access road as a condition for plat approval.
Isla Verde alleged that the requirement violated substantive due
process under the 14th Amendment of the U.S. Constitution because,
among other things, the requirement would be unduly burdensome.
The Court of Appeals held that providing emergency vehicles with
reliable access to the subdivision was a legitimate public purpose
and the secondary access road was a reasonably necessary means for
achieving access, and Isla Verde had shown no great harm, economic
loss, or more effective, less drastic measures.
On appeal, the State Supreme Court affirmed the
City’s right to require the developer to build a secondary
access road for emergency vehicles. According to the Court, the
additional access route was reasonably necessary to provide fire
protection for the residents of the subdivision. The developer argued
that this condition was impossible to satisfy because the neighbor
to the east of the subdivision, where the City had proposed an alternate
route, would not grant an easement. The Court countered that because
the developer had not explored all possible alternatives, the determination
of impossibility was premature.
In a dissenting opinion, Justices Sanders and
Alexander criticized the majority’s rationale. They claimed
that the access road requirement allows neighboring property owners
to veto the project, and pointed to other jurisdictions that say
land use permits cannot be denied based solely on the opposition
of adjacent landowners. The dissent maintained that unlike government,
private developers have no power of private condemnation. Allowing
a neighboring landowner to exact an exorbitant price for this right
of way essentially removes the developer’s right to use and
enjoy its property.
This Advisory is a publication of the
Real Estate and Land Use Group of Davis Wright Tremaine LLP. Our
purpose in publishing this Advisory is to inform our clients and
friends of recent developments in real estate and land use law.
It is not intended, nor should it be used, as a substitute for specific
legal advice as legal counsel may only be given in response to inquiries
regarding particular situations.
Copyright ©
2002, Davis Wright Tremaine LLP.
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