[No. 42842-3-II. Division Two. March 13, 2014.]
Joseph Z. Lell and Wayne D. Tanaka (of Ogden Murphy Wallace PLLC), for appellant.
Margaret Y. Archer (of Gordon Thomas Honeywell LLP) and Carolyn A. Lake (of Goodstein Law Group PLLC), for respondents.AUTHOR: ThomasR. Bjorgen , J. We concur: Joel Penoyar, J.P.T., Jill M Johanson, A.C.J.Thomas R. Bjorgen
FACTS A. Calculation of the Assessments Based on "Special Benefits" a specific, measurable increase in value of certain real property in excess of enhancement to the general area (and benefitting the public at large) due to a public improvement project. It is measured as the difference, occurring by reason of the LID project, between the market value of each parcel studied, without the LID project and market value of the same parcel with the LID project completed and as of the same time frame. CP at 1528.» B. Public Hearing before the Examiner A. The City's action in forming the LID and its assessments are correct. B. A property owner challenging the assessment has the burden of proving its correctness. C. The City has acted legally and properly. D. An improvement is a benefit to the property. E. An assessment is no greater than the benefit. F. An assessment is equal or ratable to an assessment upon other property similarly situated. G. The assessment is fair. CP at 56 (citing Abbenhaus v. City of Yakima, 89 Wn.2d 855, 576 P.2d 888 (1978)). Even if the presumption of an assessment's validity is successfully rebutted, however, the objector must still show that the assessment was founded on a fundamentally wrong basis or was imposed arbitrarily or capriciously. . . . A city council proceeds on a fundamentally wrong basis if it uses a method of assessment so flawed that it necessitates a nullification of the entire LID. . . . An arbitrary and capricious action refers to legislative decisions (such as the decision of the council here) made willfully and unreasonably, without regard or consideration of facts or circumstances. CP at 57 (alterations in original) (quoting Kusky v. City of Goldendale, 85 Wn. App. 493, 933 P.2d 430 (1997)). C. The Council's Confirmation of the Assessment Roll D. Appeal to the Superior Court ANALYSIS A. LID Assessments in Washington [1-3] [4-6] [7, 8] [9, 10] [11-14] willful and unreasoning action, taken without regard to or consideration of the facts and circumstances surrounding the action. Where there is room for two opinions, an action taken after due consideration is not arbitrary and capricious even though a reviewing court may believe it to be erroneous. Abbenhaus, 89 Wn.2d at 858-59. Courts may also annul an assessment if imposed through an unconstitutional procedure. See Pratt v. Water Dist. No. 79, 58 Wn.2d 420, 423, 363 P.2d 816 (1961). [15-18] [19] B. Procedural Defects in the Vote To Confirm the Assessment Roll Did Not Render the Resulting Ordinance Invalid [20-22] C. The City Calculated the Assessments on a Fundamentally Wrong Basis by Including Costs for "Oversizing" the Sewer Pipes 1. The assessments were properly based on the entire cost of the project, even though the improvements also provided general benefits beyond the borders of the LID [23] It is also claimed that the city council in assessing the entire cost of the improvement of a street which was a portion of an arterial highway, upon the abutting property within the termini of the improvement, proceeded upon a fundamentally wrong basis. . . . Since the statute authorizes the placing of the burden of the entire cost of the improvement upon the abutting property, it could not well be held that such an assessment was upon a fundamentally wrong basis, where the evidence shows that the property is not assessed for more than it is benefited. Moore v. City of Spokane, 88 Wash. 203, 208, 152 P. 999 (1915). Docken's claim fails. 2. The assessments were improperly based on costs that resulted in a benefit only to future users not assessed under the LID [24-26] [EXAMINER]: I just have one question. You said--when you talked about the latecomers agreement, you said you couldn't identify any method to do that. What did you mean by that? MR. BOURNE: There are methods that have been used. If the--if the City was--was a robustly financed city and was old like the City of Seattle or Bellevue, then they could, perhaps, have a latecomers fee on future connections and we could upfront some of the money today, but the City does not have any money, and because the sewers are built in core one (phonetic) and there's not expected to be a lot of expansion in the near future, that really wouldn't earn much revenue anyway. CP at 2237-38. In other words, the City rejected the other financing options because it did not have the money required initially and the future uses were not imminent. Its solution was to have the LID owners pay for capacity that would create no special benefit for them. D. Macaulay Properly Considered Zoning Changes That Took Effect the Day before the Date of its Appraisal [27] E. The City Showed That the Mass-Appraisal Method More Fairly Reflected the Special Benefits Than the "Zone and Termini" Method [28, 29] [n]otwithstanding the methods of assessment provided in RCW 35.44.030, 35.44.040 and 35.44.045, the city or town may use any other method or combination of methods to compute assessments which may be deemed to more fairly reflect the special benefits to the properties being assessed. The failure of the council to specifically recite in its ordinance ordering the improvement and creating the local improvement district that it will not use the zone and termini method of assessment shall not invalidate the use of any other method or methods of assessment. LAWS OF 1969, ch. 258, $ 7 (codified as RCW 35.44.047) (additions italicized). A city need only show "slight evidence," if any, to meet this requirement. Hansen v. Local Improvement Dist. No. 335, 54 Wn. App. 257, 261-62, 773 P.2d 436 (1989). The record contains sufficient evidence to do so. F. The City's Confirmation of the Assessment Roll Was Arbitrary and Capricious 1. The City denied the protests in part due to the absence of evidence that the City's notice prohibited the protestors from presenting [30] 2. The City erred in requiring protestors to submit expert appraisal evidence [31] "Expert evidence is clearly required to establish whether or not property is especially benefit[t]ed by an improvement and the extent of the benefit. Expert testimony also may be required to establish a disproportionate assessment." CP at 57 (quoting Cammack, 15 Wn. App. at 197). The examiner interpreted this passage as follows: Thus, a party challenging a final assessment must present expert appraisal evidence that their property is either not benefitted by the improvement or that their assessment is not equal or ratable to assessments of other property similarly situated. CP at 57 (quotation marks omitted). However, neither precedent nor the plain meaning of the passage from Cammack imply the requirements that (1) the challenging party present the evidence, (2) the expert evidence be "appraisal evidence," or (3) that a party claiming disproportionate assessment "must" support the claim with such evidence. 3. The City erred in requiring protestors to prove that assessments were founded on a fundamentally wrong basis or were imposed arbitrarily or capriciously [32] [33] [34] 4. With this decision on the standard of proof, it is unnecessary to determine whether the City erred in applying the remaining Abbenhaus presumptions 5. The alleged motives of certain city council members do not make the Council's decision arbitrary and capricious [35, 36] [e]xcept as they may be disclosed on the face of the act or are inferable from its operation, the courts will not inquire into the motives of legislators in passing or doing an act, where the legislators possess the power to pass or do the act and where they exercise that power in a mode prescribed or authorized by the organic law. Therefore, neither the motives of the members of a municipal legislative body nor the influences under which they act can be shown to nullify an ordinance duly passed in legal form, within the scope of their powers. In such case, the doctrine is that the legislators are responsible only to the people who elect them. 5 EUGENE MCQUILLIN, THE LAW OF MUNICIPAL CORPORATIONS $ 16:89 (3d ed. 2013) (footnotes omitted). 6. Summary of holdings under arbitrary and capricious standard [37, 38] G. The City Violated Respondents' Due Process Rights 1. Standard of review for due process claims [39, 40] [41] [42-44] [t]he formality and procedural requisites for the hearing can vary, depending upon the importance of the interests involved and the nature of the subsequent proceedings. That the hearing required by due process is subject to waiver, and is not fixed in form[,] does not affect its root requirement that an individual be given an opportunity for a hearing before he is deprived of any significant property interest, except for extraordinary situations where some valid governmental interest . . . justifies postponing the hearing until after the event. Boddie v. Connecticut, 401 U.S. 371, 378-79, 91 S. Ct. 780, 28 L. Ed. 2d 113 (1971) (footnotes omitted). Furthermore, a "procedural rule that may satisfy due process in one context may not necessarily satisfy procedural due process in every case." Bell v. Burson, 402 U.S. 535, 540, 91 S. Ct. 1586, 29 L. Ed. 2d 90 (1971). "The procedural safeguards afforded in each situation should be tailored to the specific function to be served by them." Olympic Forest Prods., 82 Wn.2d at 423 (citing Goldberg v. Kelly, 397 U.S. 254, 267, 90 S. Ct. 1011, 25 L. Ed. 2d 287 (1970)). 2. The City failed to provide the owners with constitutionally adequate notice [45, 46] [47, 48] The original assessment, received by Time Oil in November 1979, differed from the final assessment [of $20,133.32], received by Time Oil in April 1981, by less than $600; thus, Time Oil had been on formal notice of the assessment amount for almost 18 months. The council understandably was motivated to move the LID process to a conclusion. It considered the circumstances surrounding Time Oil's request; there was certainly room for two opinions concerning it. H. Even if the Defects in the Notice Were Jurisdictional, Property Owners Other Than the Respondents Waived Their Challenges to Them [49] [50, 51] SUMMARY OF HOLDINGS JOHANSON, A.C.J., and PENOYAR, J. PRO TEM., concur.