Bellevue Plaza, Inc. v. City of Bellevue
| Decision Date | 13 May 1993 |
| Docket Number | No. 58172-0,58172-0 |
| Citation | 851 P.2d 662,121 Wn.2d 397 |
| Court | Washington Supreme Court |
| Parties | BELLEVUE PLAZA, INC., a Washington corporation, Bates Oil Company, Inc., a Washington Corporation; Cedar Properties, a Washington general partnership; Vander Hoek Corporation, a Washington Corporation; Vander Hoek Partnership, a Washington general partnership; David Meyers and Jennie Meyers, husband and wife; Jack Benveniste and Laurie Benveniste, husband and wife, as tenants in common, Appellants, v. CITY OF BELLEVUE, a Washington municipal corporation, Respondent. TOCHTERMAN INVESTMENT COMPANY, INC., a Washington corporation, Appellant, v. CITY OF BELLEVUE, a Washington municipal corporation, Respondent. En Banc |
Oseran, Hahn, Van Valin & Watts, Charles E. Watts, Bellevue, for appellant Bellevue Plaza.
Bricklin & Gendler, Michael W. Gendler, Seattle, for appellant Tochterman Inv. Co.
Richard L. Andrews, Bellevue City Atty., Bellevue, Richard L. Andrews, Bellevue City Atty., Scott McKee, Asst., Seattle, for respondent City of Bellevue.
This is an appeal from a superior court judgment confirming the assessment roll for Local Improvement District 277 (LID) which was assessed pursuant to ordinance enacted by the City of Bellevue (City or Bellevue). We reverse and remand.
In 1987 Bellevue enacted an ordinance ordering improvements to N.E. 4th Street and creating LID 277. The ordinance did not specify a particular method of computing assessments, but rather stated: "In accordance with the provisions of RCW 35.44.047, the City may use any method or combination of methods to compute assessments which may be deemed to fairly reflect the special benefits to the property being assessed." Correspondence, Exhibits, Memoranda and Transcripts (hereinafter Transcript) vol. 1, exhibit 24. The ordinance refers to RCW 35.44.047, but omits a critical word, for the statute authorizes alternative methods "which may be deemed to more fairly reflect the special benefits". (Italics ours.) RCW 35.44.047.
Improvements consisted of widening N.E. 4th Street, an arterial in the Central Business District (CBD), from four to five lanes for eight blocks and from four to six lanes for four blocks. The project included installation of sidewalks, street lighting and landscaping. Traffic signals were replaced and added. Also, N.E. 4th Street was connected to a newly constructed interchange with Interstate 405. The interchange was not part of the LID improvements. Prior to these improvements, N.E. 8th Street was the CBD's only direct access to the Interstate. Eight hundred ninety-four parcels were assessed for 80 percent of the LID costs; the City bore the other 20 percent.
Public hearings were held in 1989 on the proposed assessments. The appellant owners presented testimony from the owners and their experts. The ordinance confirming the final assessment roll was adopted on October 2, 1989. Transcript vol. 1, exhibit 14. Appeal to the superior court followed; the matter was certified to this court from the Court of Appeals.
The issues are:
(1) Were the appellants' properties in fact specially benefited?
(2) If there were special benefits, did the formula for computing assessments properly determine the amount thereof?
(3) Did the City's expert appraiser use proper appraisal principles in reaching his opinions?
(4) Were property owners denied due process in the assessment proceedings?
(5) Is appellant Tochterman Investment Company entitled to attorney fees?
There are usually two questions in an assessment case: whether the property has been specially benefited; and whether the method of assessing the property is proper. Both questions are at issue here. To analyze these questions in light of the facts of this case, the particular method of assessment used by the City is detailed as follows:
The Trips Generation Assessment Formula
To determine the amount of special benefits, and therefore the assessment for each parcel, Bellevue relied exclusively on the number of vehicle trips (1) generated by existing land uses and (2) which will be generated by future land uses. The formula allocated one-third of the costs to trips generated by existing uses and two-thirds to trips estimated to be generated by future uses of the property. Transcript vol. 1, exhibit 14.
The City offered little justification for the one-third/two-thirds calculation. The only justification given was that City staff originally intended to base the formula entirely on future trips, but after a conference with the Bellevue Downtown Association, they decided to divide the trips. No other validity was suggested, but the City's main witness described the division as "subjective". Transcript vol. 3 (June 12, 1989), at 9.
The number of trips generated by a particular use was taken from a publication of the Institute of Transportation Engineers. That document warns that extreme care must be taken in use of the data therein. The publication states that local data should be collected when using the national data, but no local data was taken or presented to the City Council.
Two-thirds of the assessment was based on future trips estimated to be generated from a particular parcel. It is critical to understand that this two-thirds part of the formula is calculated on several pivotal assumptions. First, it is assumed that the property will be redeveloped in the future, regardless of present use. Second, it is assumed that all, we repeat, all 894 parcels, except residential, will be redeveloped for office space. Third, it is assumed that such redevelopment will be to the greatest size and maximum height permitted. In essence, the formula assumes that all of the CBD, except residential sites, will be office buildings built to the maximum size and height. No expert testimony supports these assumptions. Only a staff person, not qualified as an expert, stated that the thrust of new development today is overwhelmingly office, so staff used that assumption. Transcript vol. 1, exhibit 20.
The total LID costs were divided into a trip unit cost. The formula to determine "benefits" from trips generated by existing uses takes the square footage of a building multiplied by the trip generation rate (national, not local) for that use, multiplied times the location or proximity to the improvements, and then multiplied times the trip unit costs. The formula for the two-thirds portion uses the land area and the permitted floor area ratio multiplied by the assumed redeveloped maximum office space, multiplied by the proximity ratio, and then multiplied by the trip unit cost. Adding the two results produced the assessment for each parcel. Transcript vol. 3 (June 12, 1989), at 9-10.
Certain presumptions in favor of the assessment arise when a property owner challenges the assessment. They need not be repeated here. Abbenhaus v. Yakima, 89 Wash.2d 855, 860-61, 576 P.2d 888 (1978); Seattle v. Rogers Clothing for Men, Inc., 114 Wash.2d 213, 229, 787 P.2d 39 (1990). However, the principal presumption relevant here is that the improvement is presumed to be a benefit, and "[t]he burden of proof shifts to the City only after the challenging party presents expert appraisal evidence showing that the property would not be benefited by the improvement." (Footnote omitted.) Seattle v. Rogers Clothing for Men, Inc., supra at 231, 787 P.2d 39.
The rule is well stated in In re Indian Trail Trunk Sewer Sys., 35 Wash.App. 840, 843, 670 P.2d 675 (1983), review denied, 100 Wash.2d 1037 (1984):
A presumption is not evidence and its efficacy is lost when the other party adduces credible evidence to the contrary.... The sole purpose of a presumption is to establish which party has the burden of going forward with evidence on an issue....
(Citations omitted.) The Court of Appeals in Indian Trail then held that the owners' expert testimony there shifted the burden to the City and the City there failed to meet that burden. We agree with the Court of Appeals' conclusion.
To hold otherwise would make the presumptions in favor of the City conclusive and render the hearing and statutory appeal process on an assessment roll useless. Consequently, the trial court correctly determined the council's decision was arbitrary and capricious and should be annulled.
In re Indian Trail Trunk Sewer Sys., supra at 843, 670 P.2d 675.
Here the protesting owners presented oral and written expert testimony before the Bellevue City Council. There were four real estate appraisers and a traffic engineer. There is no challenge to their qualifications nor to their methodology. Those experts were unanimous in their conclusions that (1) the trips generation method of assessment bore no relationship to market value nor to special benefits, and (2) there was no special benefit to the properties involved. Those experts used commonly accepted appraisal methods of location, zoning, access, physical characteristics, and highest and best use. In addition, several analyzed comparable sales.
The burden therefore shifted to the City to prove that the properties were specially benefited. That proof must rest upon competent evidence. It must prove the difference between the fair market value of the property immediately before and after the improvement. Bellevue Assocs. v. Bellevue, 108 Wash.2d 671, 675, 741 P.2d 993 (1987).
Fair market value "means neither a panic price, auction value, speculative value, nor a value fixed by depressed or inflated prices." (Italics ours.) In re Local Imp. 6097, 52 Wash.2d 330, 333, 324 P.2d 1078 (1958) (citing In re Schmitz, 44 Wash.2d 429, 434, 268 P.2d 436 (1954) (quoting Donaldson v. Greenwood, 40 Wash.2d 238, 252, 242 P.2d 1038 (1952))).
With this background, we turn to the first issue, were appellants' properties in fact specially benefited?
A property must be specially benefited by the improvements, as distinguished...
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