Hillis Homes, Inc. v. Public Utility Dist. No. 1 of Snohomish County
| Decision Date | 27 February 1986 |
| Docket Number | No. 50699-0,50699-0 |
| Citation | 105 Wn.2d 288,714 P.2d 1163 |
| Parties | HILLIS HOMES, INC., Appellant, v. PUBLIC UTILITY DISTRICT NO. 1 OF SNOHOMISH COUNTY, a municipal corporation, Respondent. En Banc |
| Court | Washington Supreme Court |
Edward Heavey, Seattle, for appellant.
Williams, Novack & Hansen, Douglas Graham, David Riley, Everett, for respondent.
Hillis Homes, Inc. challenges the validity of a general facilities charge (GFC) exacted by Public Utility District No. 1 of Snohomish County (the District) upon new customers desiring to connect to the District's water system.
Following a trial to the court, the trial court concluded and held that the charge was authorized by statute, was not invalid as a tax, was not discriminatory or unreasonable, and did not constitute a deprivation of property without due process of law. We accepted direct review. 1
The facts of the case as found by the trial court, and on the basis of which it concluded as it did, are set out in detail in the trial court's findings of fact. The nature of the assignments of error justifies these being quoted here:
Defendant Public Utility District No. 1 of Snohomish County (hereinafter referred to as "the District") is a public utility district formed and operating pursuant to the laws of the State of Washington.
Finding of fact 1.
Plaintiff Hillis Homes, Inc. is a Washington corporation, licensed to do business in the State of Washington, and is a licensed contractor.
Finding of fact 2.
The District operates a water system in the Lake Stevens area of Snohomish County, Washington.
Finding of fact 3.
The water system was first constructed in 1946 primarily as a rural system. A charge was imposed upon new customers, which charge was similar to the General Facilities Charge being challenged by the plaintiff. The amount of the charge was $50.00 or $100.00, depending upon where the customer was located.
Construction of the water system was financed by a combination of water revenue bonds issued in 1946 for a thirty-year period and by the charge upon new customers. In addition, monies from the new customer charge were used to pay off the bond issue. A $100.00 charge upon new customers in 1946, adjusted based on the ratio of the Engineering News Record Construction Cost Index for the Seattle area for 1983 as compared to 1946, would be approximately $1,175. The District's bond counsel, Preston, Thorgrimson, Horowitz & Turner, issued a legal opinion in conjunction with that bond issue that the bonds were being issued in conformity with the applicable state laws of the State of Washington, Exhibit 16.
Finding of fact 4.
The water system has expanded over the years and in 1979 served 3,772 customers with a service area of approximately 27 square miles. The service area includes portions of Snohomish County in the vicinity of Lake Stevens and the City of Lake Stevens itself.
Finding of fact 5.
By 1979, as a result of rapid growth occurring in the water service area, the system had reached the limits of its transmission capacity. To serve new customers, it would be necessary to construct transmission and other improvements to the water system to provide additional capacity. Without such additional capacity, new customers could not be added.
Finding of fact 6.
In 1979 Snohomish County adopted a Comprehensive Plan for the Snohomish-Lake Stevens area. The plan projected a ten percent increase in population per year Finding of fact 7.
for the water system's service area for the next several years.
In addition, in 1978 and 1979 new regulations were adopted by the State of Washington and a new ordinance was adopted by Snohomish County requiring the water system to provide minimum fireflow capacity for new customers; and in 1980, the City of Lake Stevens adopted a new ordinance requiring the water system to provide minimum fireflow capacity to new customers. Prior to that time no fire flow requirements were applicable to the water system. The water system in 1979 did not meet the minimum fireflow requirements of the new regulations and ordinances. If there were no growth (as defined by the ordinances and regulations) in the water system service area after 1979 or 1980, as the case may be, the fireflow requirements of the County, State, and City of Lake Stevens would not be applicable to the water system.
Finding of fact 8.
In 1979, the District undertook to develop a long range plan to identify facilities needed for the water system to serve anticipated new customers during the period 1980 to 1990, the cost of constructing those facilities, and recommendations for the funding of such facilities. Such a plan is known as a horizon year plan. The District hired the consulting firm of RH2 Engineering, a specialist in water systems analysis, to develop such a plan in conjunction with the District's staff. The plan was based upon population projections for the water service area for the period 1980 through 1990 contained in the County's Comprehensive Plan.
Finding of fact 9.
RH2 Engineering prepared a detailed computer model of all of the components of the existing water system. Based on the model, RH2 Engineering performed a water system analysis which yielded data demonstrating how the system operated under varying demand conditions. The demands of the anticipated new customers were programmed into the analysis. Based on this analysis, a series of projects were identified and prioritized. These projects would increase the capacity of the system to The horizon year plan was known as the "1990 Plan", and the improvements recommended in the plan are known as the "1990 improvements."
enable the system to provide service to the anticipated new customers; and would improve reliability and fireflow capability of the system. The cost of the improvements was approximately Six Million Dollars
Finding of fact 10.
All of the 1990 improvements, except for one half of the capacity of the 12-inch main (which is equivalent to an 8-inch main) from Soper Hill Road to the Walker Hill Reservoir, were needed to provide service to new customers. An 8-inch main from Soper Hill Road to the Walker Hill Reservoir was needed, regardless of growth, to improve the reliability of the system to existing customers. The cost of an 8-inch main would have been approximately $150,000.
If no growth in the water system service area occurred after 1979, none of the improvements (except for an 8-inch main referred to above) would have been needed to provide service to the existing customers; and the existing system together with a new 8-inch main would provide adequate domestic service to the existing customers, and would be in compliance with all applicable codes and regulations. The new state and local minimum fireflow requirements would not apply to such a system.
Finding of fact 11.
The 1990 improvements resulted in the Washington Survey & Rating Bureau decreasing the fire insurance rating for the water system from a 7 to a 5. The decrease in the fire insurance rating caused a decrease in the individual fire insurance rates for all customers of the water system. The reason for the decrease in the fire insurance rating for the system was due to increased fire flows and improved reliability of the water system.
Finding of fact 12.
The General Facilities Charge was based upon the new customers' share of the 1990 projects. To establish the amount of the new customers' share, the District and its consultant made an allocation of the cost of each project between the new customers' share and the District's share as follows:
If the capacity of a project was needed solely to provide service to new customers, then the total cost of that project was allocated to the new customers' share. If the capacity of a project was needed solely to obtain a decrease in the fire insurance rating of the system, then the total cost of that project was allocated to the District's share. If the capacity of a project was needed both to provide service to new customers and to obtain a decrease in the fire insurance rating, a determination was made of the proportion of the capacity of that project needed to provide service to new customers, and the proportion of the capacity of the project needed to obtain a decrease in the fire insurance rating.
This allocation process is known as a "proportionate share analysis." It was based upon the criteria and data contained in the 1990 plan water system analysis, as well as the professional knowledge and expertise of RH2 Engineering and the District's staff. A mathematical formula for the allocation process was not developed, because it was not feasible to do so.
Finding of fact 13.
To establish the amount of the General Facilities Charge, the new customers' share for each project was added to obtain a total new customers' share for all projects. That total was then divided by the number of anticipated new customers to the water system during the decade 1980 to 1990, as projected by the County Comprehensive Plan for the water service area. That quotient yielded an average GFC.
Finding of fact 14.
Since different classes of customers place different demands upon the water system, the District and its consultants determined that a separate GFC should be developed for each class of customer, namely single family, multi-family, commercial/industrial, and other. The charge upon multi-family and commercial/industrial customers is based upon a comparison to an equivalent single family residential unit. The GFC for a new single family residential customer in 1980 was $900.00. Further, since the amount of the GFC was based upon the cost of projects in 1980, the District and its consultants determined that the GFC should be adjusted annually for the cost of inflation.
Finding of fact 15.
The District is forming a Utility Local Improvement District (U.L.I.D.) to provide water service to a new development in another part...
To continue reading
Request your trial
-
Covell v. City of Seattle
...the money collected must be allocated only to the authorized regulatory purpose. See Hillis Homes, Inc. v. Public Utility District 1, 105 Wash.2d 288, 300, 714 P.2d 1163 (1986) (Hillis Homes II ); Teter, 104 Wash.2d at 233-34, 704 P.2d 1171. The last inquiry is whether there is a direct rel......
-
Margola Associates v. City of Seattle
...in subsequent cases on this issue. Teter v. Clark Cy., 104 Wash.2d 227, 238-39, 704 P.2d 1171 (1985); Hillis Homes, Inc. v. PUD 1, 105 Wash.2d 288, 299, 714 P.2d 1163 (1986) (Hillis II); San Telmo, 108 Wash.2d at 24, 735 P.2d 673. A quick summary of these cases At issue in Hillis I were ord......
-
Samis Land Co. v. City of Soap Lake
...deal exclusively with fiscal matters does not necessarily conclude our inquiry. In Margola Assocs. v. City of Seattle,26 we wrote: Under Hillis II, a court can look to the "overall plan" of regulation in construing the purpose of the challenged fee. Likewise, in Teter, this court looked bey......
-
Carrillo v. City of Ocean Shores
...health or welfare. Samis, 143 Wash.2d at 804 n. 8, 23 P.3d 477. 11. In Hillis Homes, Inc. v. Public Utility District No. 1 of Snohomish County, 105 Wash.2d 288, 299-300, 714 P.2d 1163 (1986) ("Hillis Homes II"), a case decided before the development of the three-part Covell test, the Court ......
-
Case List
...26, 555 So. 2d 1319 (Fla. Dist. Ct. App. 1990) Hillis Homes, Inc. v. Public Util. Dist. No. 1 of Snohomish County , 105 Wash. 2d 288, 714 P.2d 1163 (1986) Hoepker v. City of Madison Planning Comm’n , 209 Wis. 2d 633, 563 N.W.2d 145 (1997) Hollywood Beach Hotel Co. v. City of Hollywood , 329......
-
Land Development Conditions
...to the water system necessitated by the new cus- 321. 631 P.2d at 899. 322. Lafferty , 642 P.2d at 379. 323. 105 Wash. 2d 288, 714 P.2d 1163 (1986). 324. Id . at 295, 714 P.2d at 1167. 325. Id . at 299-300, 714 P.2d at 1169. 58 II. LAND DEVELOPMENT CONDITIONS tomers, and hence will benefit ......
-
The Growth Management Revolution in Washington: Past, Present, and Future
...County, 97 Wash. 2d 804, 650 P.2d 193 (1982). 377. See, e.g., Hillis Homes v. Public Utility District No. 1, 105 Wash. 2d 288, 299-300, 714 P.2d 1163, 1169 378. See Wash. Rev. Code § 82.02.020 (1992). The most sweeping and problematic was the exception for "voluntary agreements." Because th......