City of Redmond v. Central Puget Sound Growth Management Hearings Bd., No. 65863-3

• Court: United States State Supreme Court of Washington
• Writing for the Court: TALMADGE; DURHAM; SANDERS
• Citation: 136 Wn.2d 38,959 P.2d 1091
• Parties: CITY OF REDMOND, a Washington municipal corporation, Appellant, v. CENTRAL PUGET SOUND GROWTH MANAGEMENT HEARINGS BOARD; State Of Washington; The Benaroya Shareholders Trust, Larry R. Benaroya, Trustee; Cosmos Development and Administration Corp.; Universal Holdings Ltd. Partnership II; Seattle-King County Association of Realtors; and Building Industry Association of Washington, Respondents.
• Decision Date: 06 August 1998
• Docket Number: No. 65863-3

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136 Wn.2d 38 959 P.2d 1091 CITY OF REDMOND, a Washington municipal corporation, Appellant,
v.
CENTRAL PUGET SOUND GROWTH MANAGEMENT HEARINGS BOARD; State
Of Washington; The Benaroya Shareholders Trust, Larry R.
Benaroya, Trustee; Cosmos Development and Administration
Corp.; Universal Holdings Ltd. Partnership II;
Seattle-King County Association of Realtors; and Building
Industry Association of Washington, Respondents. No. 65863-3. Supreme Court of Washington,
En Banc. Argued March 24, 1998.
Decided Aug. 6, 1998.

[959 P.2d 1092]

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Ogden, Murphy & Wallace, James E. Haney, Seattle, for Appellant.

Christine Gregoire, Attorney General, Majorie Smitch, Assistant Attorney General, Olympia, Bogle & Gates, Elaine Spencer, Seattle, for Respondents.

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TALMADGE, Justice.

This case requires us to apply the definition of "agricultural lands" set forth in the Growth Management Act (GMA), RCW 36.70A, to parcels located within the Urban Growth Area (UGA) of the City of Redmond (the City). The parcels had been zoned agricultural for decades prior to the GMA. The landowners, however, had not farmed the land for many years. The proper definition of the statutory term of art, "agricultural lands," pits the Legislature's stated goal of maintaining and enhancing agricultural lands near urban areas against encroaching urbanization.

Because we do not believe the landowners' current or intended use of the land is conclusive under the GMA's definition of "agricultural lands," and given the significance afforded preservation of agricultural lands under the GMA and the nature of the land use planning process the GMA envisions, we overrule the Central Puget Sound Growth Management Hearings Board's (the Board) interpretation of the definition of "agricultural lands." However, because the City failed to have a transfer or purchase of development rights (TDR) program in place when it designated the subject "agricultural lands" under the GMA, the City's designation of the parcels as agricultural fails. We remand the case to the Board for further proceedings in light of this opinion.

ISSUES

1. Is the owner's current or intended use of land a conclusive factor in determining if property is "agricultural land" under RCW 36.70A.030(2), which requires the property be "primarily devoted" to commercial agricultural and have "long-term significance for agricultural production"?

2. As the subject parcels in this case are within the City's UGA, and RCW 36.70A.060(4) requires the City to enact "a program authorizing transfer or purchase of development rights" in order to designate lands within its

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UGA as agricultural, did the City satisfy the statutory requirement? FACTS

The City, a suburban city located in the Sammamish Valley between Lake Washington and Lake Sammamish, has grown rapidly in recent decades and is Washington's fourteenth largest city. The Sammamish Valley is an area of great beauty. The Sammamish River meanders through the Valley, the soils of which are lush and fertile, and denominated "prime agricultural soils" by the U.S. Soil Conservation Service. King County's agricultural lands preservation effort in the 1970's resulted in the purchase of development rights in significant portions of the Valley's acreage. Urban growth, however, has encroached upon the Valley and the agricultural activities within it. At present, approximately 47 percent of the Valley is in urban/commercial use, 33 percent is agricultural, and about 20 percent of the land lies fallow.

The Growth Management Act of 1990 was designed to address many questions, such as the ones this case involves. As required by the GMA, the City issued its comprehensive plan on July 18, 1995. In its plan, the City designated the portion of the Sammamish Valley within City limits as agricultural land. This designation encompassed a 32-acre parcel owned by the Benaroya Shareholders Trust (Benaroya), and another 20-acre parcel owned by the Universal Holdings Ltd. Partnership II and Cosmos Development and Administration[959 P.2d 1093] Corporation (collectively, Cosmos). ¹

Benaroya and Cosmos did not like the agricultural designation because both had purchased their land expecting

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to develop it for more intensive (and potentially more lucrative) uses. Benaroya acquired its land in 1969. At the time of acquisition, the land had been zoned agricultural for two years. It has been zoned agricultural ever since. Benaroya acquired this agricultural land "with the intention of developing it for industrial use." Clerk's Papers at 65.

The prior history of the Cosmos parcel is not set forth in the record. The Board noted "there is no mention in the record regarding the subject of whether the Cosmos property is presently or has been devoted to commercial agricultural production." Final Determination and Order at 1759. Cosmos acquired its 74 acres for a master planned mixed-use development. The City designated the 20 acres of Cosmos's 74 acres lying in the Sammamish Valley floor as agricultural.

Both landowners petitioned the Board for review of the City's designation, and the Board consolidated the two petitions. Benaroya's petition related solely to the agricultural designation. Cosmos's petition related both to the agricultural designation and to a housing density designation that depended on the agricultural designation. Both also argued the City's designation was improper because the City did not have a TDR program in place at the time of the designation, as required by RCW 36.70A.060(4).

The Board found for Benaroya and Cosmos, holding the City's agricultural designation was not in compliance with the GMA because the properties had not been primarily devoted to the commercial agricultural production, finding the owners' current or intended use to be conclusive. It also held the City was without authority to designate agricultural land within its UGA because it did not have a program in place for transfer or purchase of development rights. With respect to Cosmos's housing density issue, the Board held the Cosmos development would fall below the four dwelling unit per acre density required by the Board for urban development. The Board remanded the agricultural designations to the City with instructions to redesignate

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the land "consistent with the Act," and with instructions for the City to "bring the average net density of the [Cosmos] property within urban densities." Clerk's Papers at 46.

The City appealed to the superior court under RCW 36.70A.300(5). ² Without discussion, the superior court entered a judgment affirming the Board's decision on November 1, 1996. The City then appealed to the Court of Appeals, Division One, which certified the case to us. We accepted certification. RCW 2.06.030; RAP 4.3.

ANALYSIS

RCW 36.70A.295(1) provides for judicial review of Board decisions in superior court. Appeals from final decisions of the superior court proceed as all other civil appeals. RCW 36.70A.295(3). We apply the standards of RCW 34.05 directly to the record before the agency, sitting in the same position as the superior court. Tapper v. Employment Security Dep't, 122 Wash.2d 397, 402, 858 P.2d 494 (1993). Under the judicial review statute of the Administrative Procedure Act, the "burden of demonstrating the invalidity of agency action is on the party asserting invalidity." RCW 34.05.570(1)(a). Thus, the burden was on the City. Because the City asserts the invalidity of an agency order resulting from an adjudicative proceeding, RCW 34.05.570(3) applies. That subsection sets forth nine standards for granting relief [959 P.2d 1094] from the Board's decision, of which the City asserts three:

(d) The agency has erroneously interpreted or applied the law;

(e) The order is not supported by evidence that is substantial when viewed in light of the whole record before the court, which includes the agency record for judicial review, supplemented by any additional evidence received by the court under this chapter;

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....

(i) The order is arbitrary or capricious.

In reviewing agency findings under RCW 34.05.570(3)(e), substantial evidence is "a sufficient quantity of evidence to persuade a fair-minded person of the truth or correctness of the order." Callecod v. Washington State Patrol, 84 Wash.App. 663, 673, 929 P.2d 510, review denied, 132 Wash.2d 1004, 939 P.2d 215 (1997).

With respect to issues of law under RCW 34.05.570(3)(d), we essentially review such questions de novo. We accord deference to an agency interpretation of the law where the agency has specialized expertise in dealing with such issues, but we are not bound by an agency's interpretation of a statute. As we stated in Overton v. Washington State Econ. Assistance Auth., 96 Wash.2d 552, 555, 637 P.2d 652 (1981):

Where an administrative agency is charged with administering a special field of law and endowed with quasi-judicial functions because of its expertise in that field, the agency's construction of statutory words and phrases and legislative intent should be accorded substantial weight when undergoing judicial review.... We also recognize the countervailing principle that it is ultimately for the court to determine the purpose and meaning of statutes, even when the court's interpretation is contrary to that of the agency charged with carrying out the law.

"Concerning conclusions of state law this court is the final arbiter, and conclusions of state law entered by an administrative agency or court below are not binding on this court." Leschi Improvement Council v. Washington State Highway Comm'n, 84 Wash.2d 271, 286, 525 P.2d 774, 804 P.2d 1 (1974).

Finally, as to "arbitrary and capricious" agency action for purposes of RCW 34.05.570(3)(i), we mean "willful and unreasoning action, taken without regard to or consideration of the facts and circumstances surrounding

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the action. Where there is room for two opinions, an action taken after due...