Cent. Terminals v. Grant Cnty. Port Dist. No. 10

UNPUBLISHED OPINION

Siddoway, J.

Grant County Port District No. 10, also known as the Port of Moses Lake (the Port), appeals a superior court decision granting Central Terminals LLC's appeal of the final assessment roll for a local improvement district encompassing land within and near the Port-owned Grant County International Airport. The superior court held that Central Terminals' assessment was based on a potential zoning change for its property and its property's potential inclusion in the urban growth area (UGA) for Moses Lake and was thereby "improperly speculative and done upon a fundamentally wrong basis." Clerk's Papers (CP) at 822.

The assessment arrived at for Central Terminals' property took into consideration what was reported to be the "strong probability" of a rezone approval that Central Terminals had already requested from the city of Moses Lake in 2019, when it also

petitioned the city for inclusion of its property in the UGA. The Port's expert considered only that potential, and the "[c]osts and risks associated with obtaining re-zone approval." CP at 399-400. Central Terminals offered no expert testimony that the potential rezone and UGA inclusion were not properly taken into consideration, or that the costs and risk associated with obtaining approval had been underestimated.

Central Terminals failed to overcome the presumption that the Port's assessment was correct and fair. We reverse the superior court's order and confirm the final assessment roll as it relates to Central Terminals' properties.

FACTS AND PROCEDURAL BACKGROUND

At issue is a benefit assessment arrived at for undeveloped land that Central Terminals owns west of the Grant County International Airport. In February 2019, the Port created a local improvement district known as the Westside Employment Center Local Improvement District (the LID). The total land area within the LID boundary is an estimated 2,324.2 acres, 1,632.59 acres of which is owned by the Port.^[1] Of the privately-owned land located within the LID's boundary,160 acres, made up of two adjacent parcels, is owned by Central Terminals.

The LID was created for the purpose of paying the costs of road, water, sewer, and electric power improvements. As described by the preliminary benefit and proportionate

assessment study prepared for the Port by ABS Valuation in May 2020, the improvements consisted of a 3.2± mile connector road from State Highway 17 to Route 10, and utility extensions that would be made possible by construction of the connector road. State Highway 17 is a limited access highway and, according to the ABS study, the Port holds a "legacy easement" that would allow it to construct an approach not possible without Port participation. CP at 337. The connector road would be a two-lane, 30-foot-wide road with bituminous surface treatment and gravel shoulders within an 80-foot easement donated by the Port to Grant County. For ownerships lacking direct frontage on the new road, sections of gravel easement road 26 to 28 feet wide would be constructed.

Construction of the road would make it possible to make water service, domestic and industrial sewer mains available to all properties within the LID boundary, although utility extensions to the property lines of some ownerships would still be needed.

ABS's benefit/assessment study analyzed the "special benefit" to each ownership within the LID boundary. It defined "special benefit" as "[t]he difference in the fair market value of the property without the improvement and the fair market value of the property with the improvement." CP at 344. The total cost for the LID improvements was estimated at the time of ABS's 2020 study to be $6,500,000. ABS estimated total benefits to the properties at that time to be $8,353,000, for a cost/benefit ratio of 77.82,

"[i]n other words, each parcel receives one dollar in special benefit for each $ 0.78± of LID assessment." CP at 339.

The benefit/assessment study devoted three single-spaced pages to explaining its determination of the special benefit to Central Terminals' parcels depicted on the LID map as parcels 17 and 18. It pointed out that Central Terminals' property lacked frontage on any established road, and an extension of utilities would not be possible without construction of the connector road to be built by the project. It pointed out that the property was then zoned Rural Residential 1 (RR1), and that in 2019 Central Terminals' owners had petitioned the city of Moses Lake for inclusion within its UGA and had requested a rezone to the Urban Heavy Industrial (UHI) zoning classification. It reported that according to Port officials, there was "a strong probability of re-zone approval," but Central Terminals' owners had not yet applied to Grant County for inclusion in the UGA, and county and city officials indicated that any rezone request would be at least two years from approval. CP at 399.

The ABS study summarized the "highest and best use" of the property without (before) and with (after) the LID as follows:

Highest and best use without the project is for investment hold until such time as necessary infrastructure (both physical, legal road access and all attendant necessary utilities) is constructed. Utilities that are present on other parts of the airport property would not be extended and therefore could not be utilized without the connector road; this is the "before LID" condition.

With the LID in place, Port of Moses Lake/Grant County Municipal Airport facilities and utilities are available, and the subject parcel has frontage on a new two-lane county road . . . . Utilities are available along the new road . . . to map number 17, with 310 LF [lineal feet] of domestic water extension needed. Further road and utility extensions would be needed in order for map number 18 to be developed.

Highest and best use with the project completed is for investment hold for future potential re-zone approval. . . . Costs and risk associated with obtaining re-zone approval are considered within the valuation analysis.

CP at 663. The ABS study assumed that the property would be purchased/sold as a single entity and arrived at the following special benefit assessment for the property:

Map Numbers 18 & 18 - Valuations Summary Without and With LID.

Map No.	Land Area (Acres)	Land Area (SF)	Zoning	Without LID Value	With LID Value	Special Benefit	Special Benefit/SF
17	100.00	4,356,000	RR1	$131,000	$479,000	$348,000	$0.08
18	60.00	2,613,600	RR1	$52,000	$209,000	$157,000	$0.06
Overall Market Value Estimates	$183,000	$688,000	$505,000

CP at 664.

Central Terminals contacted the Port to challenge aspects of ABS's preliminary analysis of the special benefit to its property. It pointed out that contrary to ABS's "without LID" valuation, it did have legal access through adjacent properties. It argued that ABS underestimated the time and risk involved in becoming included in the UGA, providing a letter from Gil Alvarado of GAJ Urban Planning Services, who was working with Central Terminals on its land use issues.

ABS reviewed the challenges and prepared an addendum to its benefit/assessment study, reducing its assessment of the special benefit to Central Terminals' ownership as follows:

LID Map No.	Original Without LID Value	Original With LID Value	Original Special Benefit Estimate	Revised Without LID Value	Revised With LID Value	Revised Special Benefit Assessment	Special Benefit Difference
17	$131,000	$479,000	$348,000	$150,000	$440,000	$290,000	($58,000)
18	$52,000	$209,000	$157,000	$72,000	$195,000	$123,000	($34,000)

CP at 765 (modified). It nonetheless explained that, "Consistent with our original analysis the after value also reflects the fact that obtaining UGA status without the LID is very unlikely and the market would reflect this in any purchase decision." CP at 764.

In March 2021, the Port Commission adopted a resolution establishing the LID and, in July 2021, it set a hearing on the final assessment roll for the LID, to take place on August 9, 2021. A Central Terminals member, Robert Fancher, and lawyer, Trevor Bevier, attended the hearing, at which they objected to the assessment on Central Terminals' behalf. They contended that the assessment was based on "speculation and distribution costs of the final project cost, rather than the basis of special benefits to the property." CP at 562. They did not offer competing appraisal or expert evidence to support their objections.

Several speakers complained during the public hearing that they had received notice of the proposed assessment for their ownership but nothing more. Following the hearing, Port staff e-mailed to affected property owners a spreadsheet reflecting the cost

of the project and a breakdown of the special assessment against each of the affected parcels. The spreadsheet also reflected the effect of a grant that had been obtained by the Port and would ratably reduce each owner's assessment. The effect of the grant on Central Terminals was a reduction of its total assessment to $291,985.56.

At their August 23 meeting, the commissioners approved and confirmed the final assessment roll for the project.

Central Terminals timely appealed...