City of Olympia v. Drebick

• Decision Date: 22 January 2004
• Docket Number: No. 29018-9-II.,29018-9-II.
• Citation: 119 Wash.App. 774,83 P.3d 443
• Court: Washington Court of Appeals
• Parties: CITY OF OLYMPIA, a Washington code city, Respondent, v. John DREBICK and Jane Doe Drebick, husband and wife, d.b.a. Drebick Investments, Appellants.

83 P.3d 443

119 Wash.App. 774

CITY OF OLYMPIA, a Washington code city, Respondent, v. John DREBICK and Jane Doe Drebick, husband and wife, d.b.a. Drebick Investments, Appellants.

No. 29018-9-II.

Court of Appeals of Washington, Division 2.

January 22, 2004.

As Amended February 18, 2004.

Alexander Weal Mackie, Greg Overstreet, Perkins, Coie, LLP, Olympia, for Appellants.

John Edward Vanek, City of Olympia Legal Dpt, Jeffrey Scott Myers, Law Lyman Daniel Kamerrer et al, Olympia, David John Lenci, Julie Anne Halter, Preston Gates & Ellis, LLP, Seattle, for Respondent.

Russell Clayton Brooks, Pacific Legal Foundation, Bellevue, Robin L. Rivett, Pacific Legal Foundation, Sacramento, CA, for Amicus Curiae Pacific Legal Foundation.

Kristopher Ian Tefft, Association of Washington Business, Olympia, for Amicus Curiae Building Ind. Assoc. of Wa.

MORGAN, J.

John Drebick wanted to build an office building in the City of Olympia. Citing the Growth Management Act (GMA),¹ the City of Olympia conditioned the building permit for a new office building on his payment of a traffic impact fee. Acting pursuant to Title 15 of its Municipal Code, the City calculated the fee by averaging the cumulative traffic-related impacts of all new office buildings. We assume that when the City made its calculation, it did not determine the individualized traffic-related impacts of the specific building.² A hearing examiner held that the fee could not exceed the individualized impacts of the specific building, but the superior court held to the contrary. Agreeing with the hearing examiner, we reverse the superior court and remand for further proceedings.

In 1998, John Drebick sought a building permit from the City of Olympia. He wanted to build a new commercial office building near the City's boundary, just off Highway 101. The building was to have four stories and 54,698 square feet. The City granted the permit on the condition that Drebick help to improve the City's roads by paying a traffic impact fee.

The City calculated the fee by estimating (1) the total square footage of all new commercial office space likely to be built within the city's boundaries and (2) the cost of all road improvement projects that such space would necessitate within the city's boundaries. It then divided (1) into (2) to obtain an average rate per square foot that each new office building should pay toward all of the City's road improvement projects, regardless of any particular building's traffic-related impacts. Multiplying this average rate ($2.95 per square foot) times the number of square feet in Drebick's specific development (54,698) resulted in a fee of $161,359,³ which Drebick paid under protest.⁴

Drebick appealed to the City's hearing examiner. Citing RCW 82.02.050(3), he argued in part that the City could not impose an impact fee that exceeded the individualized traffic-related effects of his specific project and that those effects would be fully mitigated by a payment of about $29,000. The City countered that it was imposing an excise tax, not a regulatory fee, and thus that it could impose such a tax without regard to the individualized impacts of Drebick's specific project.

The hearing examiner agreed with Drebick. Accordingly, he "reversed on the issue of whether the ... impact fees comply with the ... requirements of RCW 82.02.050(3)."⁵ He also remanded to the City for "adjustments... consistent with this decision."⁶

The City appealed to the Thurston County Superior Court, which reversed the hearing examiner. The superior court held that the City's assessment was "analogous to" a tax and thus that the City did not have to show a "proportional nexus" between its assessment and the traffic-related effects of Drebick's specific project.⁷ Drebick tried to appeal directly to the Supreme Court, but that court transferred the case here.

In this court, Drebick contends that state law, and specifically RCW 82.02.050(3), prohibits the City from imposing a traffic impact fee without considering the traffic-related effects of his specific project. The City responds that it was imposing a tax, not a fee, and thus that state law did not require it to consider the effects of Drebick's particular development.

Preliminarily, we emphasize the limits of this opinion. As just noted, the City contends that state law does not require it to consider the individualized impacts of Drebick's specific project. Drebick contends to the contrary. Neither party contends that if state law requires the City to determine the individualized impacts of a specific project, the City did that by enacting an ordinance with categories narrow enough to constitute an assessment of individualized impacts. Accordingly, this opinion is limited to the question whether RCW 82.02.050(3) requires the City to consider and determine the individualized impacts of Drebick's specific project. We leave for another day the question whether a city can perform the necessary assessment legislatively, by enacting an ordinance with narrow enough categories, or whether a city must perform the necessary assessment quasi-judicially, through a hearing examiner or similar official. In short, we analyze the meaning of state law, but not whether the City's ordinance complies with state law.

Beginning our analysis, we have no quarrel with the City's claim that it was imposing a tax rather than a fee.⁸ For purposes of this case, however, the distinction is immaterial. RCW 82.02.020 was amended as part of the GMA.⁹ It states:

Except as provided in RCW 82.02.050 through 82.02.090, no county, city, town, or other municipal corporation shall impose any tax, fee, or charge, either direct or indirect, on the construction or reconstruction of residential buildings, commercial buildings, industrial buildings, or on any other building or building space or appurtenance thereto, or on the development, subdivision, classification, or reclassification of land.[¹⁰]

Given that RCW 82.02.020 bars either a tax or a fee "except as provided in RCW 82.02.050 through 82.02.090," the question here is not whether the City assessed a tax or fee, but whether the City complied with RCW 82.02.050 through RCW 82.02.090.

RCW 82.02.050(2) authorizes impact fees. Enacted as part of the 1990 GMA,¹¹ it states:

(2) Counties, cities, and towns that are required or choose to plan under RCW 36.70A.040 are authorized to impose impact fees[¹²] on development activity[¹³] as part of the financing for public facilities,[¹⁴] provided that the financing for system improvements[¹⁵] to serve new development must provide for a balance between impact fees and other sources of public funds and cannot rely solely on impact fees.

RCW 82.02.050(3) caps impact fees. Enacted at the same time as RCW 82.02.050(2),¹⁶ it states that impact fees

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

(b) Shall not exceed a proportionate share[¹⁷] 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 development.

RCW 82.02.050(3)'s cap is ambiguous in at least two ways. First, do the words "the new development" refer to all developments that are new, or only to the permittee's specific development that is new? Second, do the words "reasonably related to" connote a relationship between the system improvements for which fees are imposed and the cumulative impacts of all new development activity, or between the system improvements for which fees are imposed and the individualized impacts of the permittee's specific project? When the cap states that impact fees "[s]hall only be imposed for system improvements that are reasonably related to the new development[,]" it might mean that impact fees must be "reasonably related to" the cumulative impacts of all new development, or it might mean that impact fees must be "reasonably related to" the individualized effects of the specific new development for which a permit is being issued.

When a statute is ambiguous, our task is to ascertain and effectuate legislative intent.¹⁸ To perform that task, we may use both legislative history¹⁹ and the rules of statutory construction.²⁰ We turn first to legislative history.

House Bill (HB) 2929 was the GMA's precursor. As introduced on January 26, 1990, HB 2929 would have authorized a city to impose impact fees for public improvements related either to the individual impacts of a specific project or to the cumulative impacts of all similar projects.²¹ As introduced, HB 2929 lacked a cap or limitation like that later incorporated into RCW 82.02.050(3). It stated in part:

Impact fees may be required to mitigate potential impacts on public facilities and public services ... arising from development activity that is authorized by the issuance of a permit.... Such impacts could arise from the development activity itself, or the cumulative impact arising from development activity.[²²]

By the time HB 2929 passed the House, it had been amended in committee.²³ But it still did not contain a cap or limitation, and it still would have authorized a city to impose impact fees for public improvements related either to the individual impacts of a specific project or to the cumulative impacts of all similar projects.²⁴ It stated in part:

Counties, cities, and towns are authorized to impose impact fees, excise taxes on development activity, or excise taxes on the privilege of engaging in business that constitutes development, to mitigate reasonably related needs for housing relocation impacts and potential impacts on any public facilities ... arising from development activity that is authorized by the issuance of a permit, or other approval, by the county, city, or town. Such impacts could arise directly or indirectly from the development activity itself or the cumulative impact arising from development activity.[²⁵]

When HB...