Doolittle v. City of Everett

• Decision Date: 15 February 1990
• Docket Number: No. 56368-3,56368-3
• Citation: 114 Wn.2d 88,786 P.2d 253
• Parties: Athena S. DOOLITTLE, Respondent, v. CITY OF EVERETT, a political subdivision of the State of Washington, Appellant.
• Court: Washington Supreme Court

Page 88

114 Wn.2d 88

786 P.2d 253

Athena S. DOOLITTLE, Respondent, v. CITY OF EVERETT, a political subdivision of the State of Washington, Appellant.

No. 56368-3.

Supreme Court of Washington En Banc.

Feb. 15, 1990.

Mills & Cogan, Blair B. Burroughs, Seattle, for appellant.

Rodgers & Deutsch, S. Michael Rodgers, Bellevue, for respondent.

BRACHTENBACH, Justice.

Respondent Doolittle (hereinafter Owner) is the owner of four contiguous lots. Three of the lots are improved and used separately from the fourth lot which is developed and used for a separate commercial use. To assess for special benefits in a local improvement district (LID), the City of Everett (hereinafter City) treated the four lots as a single parcel and assessed benefits on the basis of the potential highest and best use of the property as a combined parcel of all lots, with all improvements removed. The Owner protested the proposed assessment as to the fourth lot, improved and used as a separate parcel. The assessment was confirmed.

The Owner appealed to superior court. That court found that the fourth lot had a separate commercial use and that no portion of that lot was used in conjunction with the other three lots. The court invalidated the assessment against all the lots and remanded to the Everett City Council (hereinafter Council) for reassessment of the three lots as one parcel and the fourth lot as a separate parcel. We affirm.

The issue is: When assessing land for local improvements, are the special benefits to contiguous lots owned by the same owner to be determined based on potential highest and best use of the lots as a single unit where the lots have actually been improved and used separately? The underlying question is how to determine what is the parcel of land against which an LID assessment may be made when contiguous parcels are in the same ownership, ¹ but have been improved and are being used separately.

We hold that the assessment is founded upon a fundamentally wrong basis, which is a statutory ground for annulling an assessment. RCW 35.44.250. The basis of our holding is that the City erred in applying "highest and best use" to the Owner's four contiguous lots, and in treating the four platted lots as a single parcel without first determining whether the four lots constitute a single parcel. "Highest and best use" may be applied, but only to the appropriate parcel as determined by applicable legal principles. The City's expert appraisers failed to consider whether the four lots constituted a single "larger parcel" or separate parcels before applying their highest and best use evaluation. In short, the appraisal analysis was founded on a fundamentally wrong basis because there was never any determination of the appropriate parcel to which the highest and best use analysis should apply.

The Owner's four contiguous lots are within the City of Everett. ² Lots 10, 11, and 12 have a single commercial building on them, including a convenience store and two smaller rental units. The building was built in 1945, with additions in 1954 and 1979. These lots are located at the corner of Evergreen Way and Olivia Park Road, with 180 frontage feet on Evergreen Way and 263 frontage feet on Olivia Park Road. To the south and southwest of lots 10, 11, and 12 lies lot 14. Lot 14 has a two-story pre-fabricated commercial building on it, containing an auto body repair shop, a gun shop, and other commercial tenants. This building was built in 1980. Lot 14 has 43 frontage feet on Evergreen Way. Access to lot 14 has been possible from Evergreen Way and from Olivia Park Road across the back of lots 10, 11, and 12.

The City created Local Improvement District 713 (LID 713) to widen and improve Evergreen Way. The City computed the Owner's proposed final assessment of $103,186 based on potential highest and best use of the four lots used as a single tract.

The Owner protested the amount of her proposed assessment at the hearing held to confirm the final assessment roll. She maintained that as a matter of law lot 14 must be considered as a separate and distinct appraisal unit from lots 10, 11, and 12. The Owner did not protest assessment of lots 10, 11, and 12 as a single unit, in light of the single commercial building improving those lots. She argued, however, that lot 14 must be considered separately. Her appraiser testified that lot 14 must be appraised separately from lots 10, 11, and 12 because they had always been used as separate parcels and were separately improved. Because lot 14 is mainly an interior lot with only 43 feet abutting Evergreen Way, the appraiser testified, this lot was not benefitted from the intersection improvements at Evergreen Way and Olivia Park Road. Instead, the appraiser said, the lot was benefitted only in value equal to the cost of the curbs, gutters, and sidewalks along the 43 feet.

Two appraisers testified for the City. One testified that evolving demand in the area was for reasonably large tracts to be used as a single entity or economic unit. The second appraiser had submitted a full appraisal for consideration by the Council. He testified that the typical investor would look at the lots as a single parcel, and that the highest and best use for the property would be as a planned retail/commercial shopping complex. He based his opinion on comparative sales showing demand for similar property, the fact that the building on lot 14 is prefabricated and capable of being moved, the fact that the building on lots 10, 11, and 12 was nearing the end of its useful life, and his view that the land was underutilized. The $103,186 assessment on all four lots resulted from projection of special benefits to lot 14 at the same square foot rate as the other three lots.

The Council confirmed the special benefit assessment. The Owner appealed to superior court pursuant to RCW 35.44.250. The court found that lot 14 has a separate commercial use and a separate commercial building from lots 10, 11, and 12, and that no portion of lot 14 is used in conjunction with the commercial uses on lots 10, 11, and 12. The court held that lots 10, 11, and 12 constitute a separate and distinct appraisal unit from lot 14, and remanded the matter for reappraisal. The City appealed to the Court of Appeals; we accepted certification.

General principles respecting special assessments and appellate review of special assessment proceedings apply. The amount of the special benefit accruing to property as a result of a local improvement is the difference between the fair market value of the property immediately after the special benefits have accrued and the fair market value of the property before the special benefits have accrued. In re Schmitz, 44 Wash.2d 429, 434, 268 P.2d 436 (1954). Property cannot be relie ed from the burden of a local improvement district assessment simply because the owner devotes it to a use which may not be specially benefitted by the local improvement. In re Jones, 52 Wash.2d 143, 146, 324 P.2d 259 (1958). Present use should be considered, as well as future use to which the property is reasonably well adapted. In re Jones, at 146, 324 P.2d 259; In re West Marginal Way, 112 Wash. 418, 422, 192 P. 961 (1920).

In reviewing special assessments, the following rules apply:

Review is limited to the record of proceedings before the City Council. Abbenhaus v. Yakima, 89 Wn.2d 855, 859, 576 P.2d 888 (1978); Smith v. Skagit Cy., 75 Wn.2d 715, 718-19, 453 P.2d 832 (1969). The reviewing court looks at the propriety of the process and does not undertake an independent evaluation of the merits. Time Oil Co. v. Port Angeles, 42 Wn.App. 473, 479, 712 P.2d 311 (1985); Abbenhaus, [89 Wash.2d] at 859 . The action of the City Council is presumed legal and proper; the party challenging the assessment has the burden of proving its incorrectness. Abbenhaus, at 860-61 . Further, an appellate court "presume[s] that an improvement is a benefit; that an assessment is no greater than the benefit; that an assessment is equal or ratable to an assessment upon other property similarly situated; and that the assessment is fair.' " Abbenhaus, at 861 , quoting Trautman, Assessments in Washington, 40 Wash.L.Rev. 100, 118 (1965).

....

A final assessment roll will be upheld unless it stands on a fundamentally wrong basis or the assessing body acts arbitrarily or capriciously. See Abbenhaus, at 858 ; Trautman, at 128-30.

iBellevue Assocs. v. Bellevue, 108 Wash.2d 671, 674-75, 741 P.2d 993 (1987).

RCW 35.43.040 provides authority generally for ordering local improvements and for levying and collecting special assessments "on property specially benefited thereby...." RCW 35.44.010 provides that the cost and expense of the local improvement "shall be assessed upon all the property in accordance with the special benefits conferred thereon." The statutes do not define what is meant by the term "property."

Several subsequent statutes in the LID assessments procedures chapter, RCW 35.44, refer to assessing "each separate lot, tract, parcel of land or other property...." RCW 35.44.030 and .050. See also RCW 35.44.040(3) and (3)(1) ("each lot, tract, or parcel of land"). RCW 35.44.090 provides for notice of the hearing on the assessment roll to be sent to the owner "for each item of property described on the list." These statutes, too, are not helpful in determining what constitutes the parcel to be assessed under the facts here.

The parties propose that in deciding whether to combine separately platted lots into one tract for the purpose of determining special benefits, we should apply the so-called larger parcel test. The larger parcel test has been applied by Washington and other courts in eminent domain cases involving the question whether land constitutes a single tract for purposes of determining damages and offsetting benefits. State v. McDonald, 98 Wash.2d 521, 656 P.2d 1043 (1983); Idaho & Western Ry. Co. v. Coey, 73 Wash. 291, 295, 131...