Moses Lake Irrigation & Rehab. Dist. v. Pheasant

• Decision Date: 22 November 2022
• Docket Number: 38030-1-III
• Citation: 520 P.3d 1052
• Parties: MOSES LAKE IRRIGATION AND REHABILITATION DISTRICT, a public irrigation and rehabilitation district, Appellant, v. Darryl PHEASANT, in his capacity as Treasurer of Grant County, Washington, Darryl Pheasant, in his capacity as Ex Officio Treasurer for Moses Lake Irrigation and Rehabilitation District, Respondent.
• Court: Washington Court of Appeals

520 P.3d 1052

MOSES LAKE IRRIGATION AND REHABILITATION DISTRICT, a public irrigation and rehabilitation district, Appellant,

v.Darryl PHEASANT, in his capacity as Treasurer of Grant County, Washington, Darryl Pheasant, in his capacity as Ex Officio Treasurer for Moses Lake Irrigation and Rehabilitation District, Respondent.

No. 38030-1-III

Court of Appeals of Washington, Division 3.

Filed November 22, 2022

Brian James Iller, Attorney at Law, 8836 W Gage Blvd. Ste. 201a, Kennewick, WA, 99336-7155, for Appellant.

Kevin James McCrae, Rebekah Kaylor, Grant County Prosecuting Attorney's Office, 35 C St. Nw, P.O. Box 37, Ephrata, WA, 98823-0037, for Respondent.

PUBLISHED OPINION

Siddoway, C.J.

¶1 Moses Lake Irrigation & Rehabilitation District (the District) appeals the dismissal of its action seeking to compel the Grant County Treasurer, Darryl Pheasant, to send statements of District assessments on land and improvements to District residents. A landowner in the District had filed a legal challenge to the District's method of assessment, which led to a determination by a federal court that the District's assessments were state taxes. Aware of the legal challenge and federal court ruling, Mr. Pheasant—believing the District has no taxing authority, and its nontax assessment authority applies only to the value of land, not improvements—declined to send notice of what he considered invalid assessments.

¶2 The District responded with the action below, petitioning for an alternate writ of mandamus directing Mr. Pheasant to send statements of its assessments. The trial court denied relief, entering summary and declaratory judgments that the District's method of assessment amounts to an unauthorized tax and that "land," as used in RCW 87.03.240 and RCW 87.84.070, means land itself, without improvements.

¶3 The District appeals. We affirm the trial court's determination that the District's assessments in reliance on chapter 87.03 RCW are invalid, reverse its determination that the District's assessments in reliance on RCW 87.84.070 are invalid, and reverse in part its limiting construction of "land." We hold that as used in chapter 87.03 RCW (but not as used in RCW 87.84.070 ), "land" includes improvements.

FACTS AND PROCEDURAL BACKGROUND

¶4 In 1928, landowners who described their lands as susceptible of irrigation and desired to organize an irrigation district in Grant County, petitioned the board of county commissioners for approval of such a district for "all of the purposes mentioned in Section 7417 of the Supplement to Remington and Ballinger's Code." Clerk's Papers (CP) at 1101. They identified those purposes as including the construction, purchase, repair, improvement, operation and maintenance of irrigation works for the irrigation of lands within the operation of the District. The plan of improvement contemplated was "the construction of a permanent dam at the outlet of Moses Lake for the purpose of catching and holding all of the waters flowing into said Moses Lake." CP at 1102.

¶5 Creation of the Moses Lake Irrigation District was approved, and it obtained a water right that has been certified to be up to 50,000 acre-feet, for the irrigation of 11,213 acres within the district. Laws governing the operation of irrigation districts are now codified at chapter 87.03 RCW. As relevant to this appeal, which involves the authority to raise funds, irrigation districts may do so in three ways: they may make assessments "in proportion to the benefits accruing to the lands assessed" under RCW 87.03.240 ; they may "fix reasonable rates or tolls and charges, and collect the same from all persons for whom district service is made available for irrigation water, domestic water, electric power, drainage or sewerage, and other purposes" under RCW 87.03.445(2) ; and, as also permitted by RCW 87.03.445(2), they may employ both rates or tolls or charges and assessment.

¶6 For decades, the District assessed its landowners based on acreage. Historical records reveal that between 1940 and 1946, the assessments ranged from $0.15 per acre to $1.00 per acre.

¶7 The District has never constructed any pumps, canals, or pipelines for delivering irrigation water from Moses Lake to district members. Instead, landowners are responsible for building any system to deliver water to their individual properties, and some members of the District have done so. The District does not monitor who is taking water from the lake for irrigation purposes or charge them for taking water. Lake water can be taken by anyone, for free.

¶8 In 1961 and 1963, legislation supported by the District was passed that allowed any irrigation district that had the major portion of an inland navigable body of water within its exterior boundaries, and that had been granted rights to 50,000 acre-feet of water or more, to become an "irrigation and rehabilitation" district. LAWS OF 1961, ch. 226, §§ 1-8; LAWS OF 1963, ch. 221, §§ 1-11. District records reflect its concern in 1962 that " ‘the farmers within the boundaries of the ... District are presently irrigating only about 3,000 acres of land and some of this land is being converted from farm land to residential and other land uses.’ " CP at 913. It recognized a " ‘real danger of the lake being reduced to an elevation from its present level[,] which would be disadvantageous to the people and property owners of the ... District,’ " given that the lake provided "an abundance of opportunity for recreation associated with water and water sports, all of which has a definite influence on the value of homes and properties with[in] the boundaries of the ... District." Id.

¶9 The legislation provided that in addition to their irrigation purposes, irrigation and rehabilitation districts could be organized and maintained "to further the recreational potential of the area and to further the rehabilitation or improvement of inland lakes and shore lines ... to further the health, recreation, and welfare of the residents in the area." LAWS OF 1963, ch. 221, § 3. It provided that the directors of an irrigation and rehabilitation district, in addition to retaining their authority as directors of an irrigation district, were authorized to "specially assess land located in the district for benefits thereto" (emphasis added), providing that such assessment "shall not exceed one mill [$1 per $1,000 of assessed value] upon such assessed valuation without securing authorization by vote of the electors of the district." LAWS OF 1961, ch. 226, § 8. The provisions governing irrigation and rehabilitation districts are codified in chapter 87.84 RCW.

¶10 With the approval of the Grant County Commissioners, the District became, and it remains, the only irrigation and rehabilitation district in the State of Washington. Following its conversion to an irrigation and rehabilitation district, District directors voted to set the levy at the one mill limit they were authorized to assess without a vote of District electors.

Authority to assess for rehabilitation purposes is reduced, and questions about District assessments begin to be raised

¶11 In 1973, the legislature reduced the amount the directors of an irrigation and rehabilitation district can specially assess for recreational and rehabilitation benefits without a vote of the electors. It was reduced to $0.25 per $1,000.00 of assessed value. LAWS OF 1973, 1st Ex. Sess., ch. 195, § 132. That remains the limit today. RCW 87.84.070. District directors deemed more than that to be needed for its operations, which consist of dredging and treating milfoil infestation to maintain the quality and volume of the lake, maintaining a pump station whose circulation of water improves water quality, maintaining the dam, and owning, and maintaining a lakeshore park, Connelly Park. The park has a boat launch, dock and beach. The District has also sponsored powerboat races and fishing derbies on the lake.

¶12 Following the reduction of its assessment authority as a rehabilitation district, the District continued to specially assess District properties based on their assessed value at amounts exceeding $0.25 per $1,000.00 in value, without securing approval of the District electors. They construed the "land" they were authorized to assess for benefits to be property, including improvements.

¶13 In performing audit work in 2012, staff of the state auditor questioned whether it was allowable for the District to assess property owners based on assessed valuation, given RCW 87.03.240 ’s language that assessments "shall be made in proportion to the benefits accruing to the lands assessed." CP at 568 (emphasis omitted). The District's response, according to audit records, was that "all property owners have the same benefits because each of them have the legal right to request water be provided to them (with the understanding that the cost of infrastructure would be borne by the property owner)," and in the District's view, "all benefits were equal." Id .

¶14 Audit staff looked at the issue again in 2013, and one staffer compiled a spreadsheet that identified parcels within the District as commercial, residential and agricultural and calculated their assessment per acre—the assessment approach followed through at least 1946. Audit staff determined that

[c]ommercial lots with little-to-no need for irrigation water are paying $500-$1,000 per acre, residences that can use irrigation water for their lawns are paying $100-$600 per acre, and large agricultural/potential-agricultural parcels are paying less than $100 per acre.

CP at 568. No adverse audit finding was made, however, based on a legal opinion from the District's counsel, accepted by the state auditor, that under RCW 87.03.445, irrigation districts are statutorily authorized to raise operating funds using rates, tolls, or charges that are not required to be benefit-based.

¶15 In 2014, Michael "Mick" Hansen sued the District, its directors, and Grant County and some of its officials,...