Douglass Props. Ii, LLC v. City of Olympia

16 Wash.App.2d 158

479 P.3d 1200

DOUGLASS PROPERTIES II, LLC, Appellant,

v.CITY OF OLYMPIA, Respondent.

No. 53558-1-II

Court of Appeals of Washington, Division 2.

Filed February 2, 2021

Michael John Murphy, Groff Murphy PLLC, 300 E Pine St., Seattle, WA, 98122-2029, William John Crittenden, Law Office, 8915 17th Ave. Ne, Seattle, WA, 98115-3207, for Appellant.

Jeffrey Scott Myers, Law Lyman Daniel Kamerrer et al., P.O. Box 11880, 2674 R W Johnson Blvd., Sw, Olympia, WA, 98508-1880, for Respondent.

PUBLISHED OPINION

Worswick, J. ¶1 Douglass Properties II LLC (Douglass) appeals a superior court order affirming the Olympia Hearing Examiner's decision regarding transportation impact fees (traffic impact fees). That order upheld the imposition of $167,580 in traffic impact fees as a condition of the City of Olympia's issuance of a building permit to construct a storage facility.

Douglass argues that the hearing examiner's decision was erroneous because it (1) made findings of fact and conclusions of law without placing the burden of proof on the City to establish that the traffic impact fees were roughly proportionate to the impacts of Douglass's project as required by Nollan v. California Coastal Commission , 483 U.S. 825, 107 S. Ct. 3141, 97 L. Ed. 2d 677 (1987), and Dolan v. City of Tigard , 512 U.S. 374, 114 S. Ct. 2309, 129 L. Ed. 2d 304 (1994) ( Nollan / Dolan test),¹ and (2) failed to conclude that the City's traffic impact fees were excessive and not roughly proportionate. We affirm.

FACTS

I. BACKGROUND

A. Permit Application

¶2 In 2016 and 2017, Douglass applied for building permits for a mini storage warehouse facility in Olympia. In accordance with the Transportation Impact Fee Rate Schedule in Olympia Municipal Code (OMC) 15.16.040, the City calculated the traffic impact fees and conditioned Douglass's permits based on those calculated fees. Douglass's proposal included 7 buildings. Building 1 and Buildings 3 through 7 were calculated at a rate of $1.29 per square foot of gross floor area according to the 2016 OMC, but Building 2 was calculated at $1.33 per square foot of gross floor area according to the 2017 OMC.² Although OMC 15.04.050(C) and (E) contained provisions to allow Douglass to request an independent fee analysis, Douglass declined to request an analysis. Douglass also declined to prepare its own independent fee calculation, as provided for under OMC 15.04.050(D). In 2018, Douglass paid all the impact fees. As to Building 2 only, Douglass paid these fees under protest and appealed the impact fee determination.

B. City of Olympia Hearing Examiner

¶3 In 2018, the City's hearing examiner held a hearing to consider Douglass's appeal. At the onset of the hearing, the hearing examiner stated that Douglass had the burden of proof to show that the City's traffic impact fee for Building 2 was "clearly erroneous." Clerk's Papers (CP) at 58. The parties then presented evidence in the form of exhibits and witness testimony.

¶4 The OMC contains a formula to calculate a traffic impact fee, which the City employed to calculate the impact fees here. OMC 15.16.040 Schedule D, "Transportation Impact Fees." This formula includes a number of variables.

¶5 Douglass challenged three of these variables: the number of trips per peak hour, the percentage of new trips, and the trip adjustment variable. Douglass argued the traffic impact fee should have been modified consistent with its own calculations, notwithstanding that Douglass neither requested an independent impact fee calculation from the City, nor submitted his own independent impact fee calculation for consideration prior to issuance of the permit.³ Douglass urged the hearing examiner to either find the City's impact fee to be clearly erroneous or, in the alternative, to undertake an independent fee calculation and determine a new fee that was consistent with Douglass's alternative calculation.

Douglass contended that a failure to adjust the City's impact fee would be a violation of due process under Nollan and Dolan .⁴

¶6 The City presented evidence from its own expert, Don Samdahl, regarding the methodology used by the City to calculate traffic impact fees. The City also showed that it formally adopted a transportation study prepared for the city, which included the formula for calculating traffic impact fees. The transportation study formula for calculating such fees included the factors required by RCW 82.02.060, including:

• The cost of public facilities necessitated by new development;

• Adjustments to the cost for past or future payments by developers (including user fees, debt service payments, taxes or other fees);

• The availability of other funding sources;

• The costs of existing facilities improvements;

• The methods by which existing facilities were financed;

• Credit for the value of any dedication of land to facilities identified in the capital facilities plan and required as a condition of approval;

• Adjustments for unusual circumstances; and

• Consideration of studies submitted by the developer.

CP at 293.

¶7 Following the hearing, the hearing examiner denied Douglass's appeal, deciding that the impact fee was correctly calculated in accordance with the ordinance. The hearing examiner concluded that it did not have the authority to overrule City of Olympia v. Drebick ,⁵ which the hearing examiner concluded was the controlling authority. The hearing examiner reaffirmed that Douglass had the burden of proof at the hearing, and that the three challenged variables were not clearly erroneous. The hearing examiner further concluded that the City's actions were not clearly erroneous when the City did not extemporaneously conduct an independent fee assessment, and that a hearing examiner had no authority to conduct or consider an independent fee assessment for the first time on appeal.

C. Judicial Review

¶8 Douglass filed an appeal to the superior court for judicial review under the Land Use Petition Act, RCW 36.70C (LUPA). The superior court affirmed the decision of the hearing examiner. Douglass now appeals to this court.

ANALYSIS

¶9 Douglass argues that the City's traffic impact fee is subject to Fifth Amendment scrutiny because it amounts to a regulatory taking of his property. Douglass argues that because the fee is a regulatory taking, the City had the burden to prove to the hearing examiner that the fees had a nexus and were roughly proportional, as required by Nollan and Dolan . We hold that the Nollan / Dolan test does not apply to the traffic impact fees, because such fees are legislatively prescribed generally applicable fees outside the scope of Koontz v. St. Johns River Water Management District , 570 U.S. 595, 595, 133 S. Ct. 2586, 186 L. Ed. 2d 697 (2013), and that Drebick still controls. Thus, we hold that the hearing examiner did not err when it ruled that Douglass had the burden of proof at the hearing and that Douglass failed to meet that burden. We further hold that the hearing examiner's conclusions were not erroneous.

I. LEGAL PRINCIPLES AND STANDARDS OF REVIEW

A. Standards of Review

¶10 We review a LUPA action under chapter 36.70C RCW.

Ellensburg Cement Products, Inc. v. Kittitas County , 179 Wash.2d 737, 742, 317 P.3d 1037 (2014). We stand in the same position as the superior court, and review the record that was before the hearing examiner. Ellensburg Cement Products , 179 Wash.2d at 742, 317 P.3d 1037. The party seeking relief has the burden of establishing any of the following standards:

(a) The body or officer that made the land use decision engaged in unlawful procedure or failed to follow a prescribed process, unless the error was harmless;

(b) The land use decision is an erroneous interpretation of the law, after allowing for such deference as is due the construction of a law by a local jurisdiction with expertise;

(c) The land use decision is not supported by evidence that is substantial when viewed in light of the whole record before the court;

(d) The land use decision is a clearly erroneous application of the law to the facts;

(e) The land use decision is outside the authority or jurisdiction of the body or officer making the decision; or

(f) The land use decision violates the constitutional rights of the party seeking relief.

RCW 36.70C.130(1).

¶11 Standards (a), (b), (c), (d), and (f) are at issue in this case. Standards (a), (b), (e), and (f) contain questions of law that we review de novo. Phoenix Dev., Inc. v. City of Woodinville , 171 Wash.2d 820, 828-829, 256 P.3d 1150 (2011).

¶12 For standard (c), we review all facts and inferences in a light most favorable to the party that prevailed in the highest fact-finding forum to decide challenges to the sufficiency of the evidence, and then determine whether sufficient evidence exists in the record to persuade a reasonable person of the truth asserted by the alleged facts. Phoenix , 171 Wash.2d at 828-829, 256 P.3d 1150.

¶13 For standard (d), only when we are left with "the definite and firm conviction that a mistake has been committed," do we decide an application of law to the facts is clearly erroneous. Phoenix , 171 Wash.2d at 828-829, 256 P.3d 1150.

¶14 We adhere to "the fundamental principle that if a case can be decided on nonconstitutional grounds, an appellate court should refrain from deciding constitutional issues." Isla Verde Int'l Holdings, Inc. v. City of Camas , 146 Wash.2d 740, 752, 49 P.3d 867 (2002), abrogated on other grounds by Yim v. City of Seattle , 194 Wash.2d 682, 451 P.3d 694 (2019).

B. State Law

¶15 RCW 82.02.050 authorizes the imposition of impact fees. The statute limits how municipalities can implement impact fees, stating that such fees

(a) Shall only be imposed for system improvements that are reasonably related to the new development;

(b) Shall not exceed a proportionate share of the costs of system improvements that are reasonably related to the new development; and

(c) Shall be used for system improvements that will reasonably benefit the new

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