R/L Associates, Inc. v. City of Seattle, 55880-9

Decision Date12 October 1989
Docket NumberNo. 55880-9,55880-9
Citation113 Wn.2d 402,780 P.2d 838
CourtWashington Supreme Court
PartiesR/L ASSOCIATES, INC., Respondent, v. The CITY OF SEATTLE, a municipal corporation, Appellant.

Douglas N. Jewett, Seattle City Atty., Sandra M. Watson, Asst., Seattle, for appellant.

Richard B. Sanders, Bellevue, for respondent.

David Girard, Steve Fredrickson, Seattle, amici curiae for appellant on behalf of Evergreen Legal Services.

Ronald A. Zumbrun, Edward J. Connor, Jr., John M. Groen, Sacramento, Cal.

Ben J. Gantt, Jr., William H. Ellis, Seattle, amici curiae for respondent on behalf of Pacific Legal Foundation and Northwest Legal Foundation.

BRACHTENBACH, Justice.

In 1985, the City of Seattle enacted the Housing Preservation Ordinance (HPO) in an effort to address problems associated with the City's diminishing supply of low and moderate income housing. Seattle Municipal Code (SMC) 22.210 et seq. Two of the stated purposes of the HPO are to "mitigate the loss of scarce housing resources caused by redevelopment and change of use;" and "provide relocation assistance to low-income persons displaced by demolition or change of use." SMC 22.210.020(B)(1), (4).

This case involves a challenge to the validity of certain provisions of the HPO that require the owners of low income rental units to provide low income tenants with advance notice, eviction protection, and relocation assistance prior to demolishing or changing the use of residential units. Issuance of a required demolition license is conditioned upon compliance with these "tenant assistance provisions." SMC 22.210.050. A brief description of the challenged provisions follows.

SMC 22.210.080 (Section 8) requires that notice be sent to the tenant at least 120 days prior to issuance of a demolition license informing the tenant of the proposed displacement, explaining the tenant's right to remain in possession until demolition unless evicted for good cause, and explaining the potential relocation assistance available to low income tenants.

SMC 22.210.090 (Section 9) provides that affected tenants cannot be evicted during the 180-day period prior to application for the demolition license unless an enumerated good cause exists. A tenant evicted contrary to the requirements of this section will receive relocation assistance.

SMC 22.210.100 (Section 10) requires owners to assist in relocating low income tenants by either actually relocating the tenant to comparable housing, or making a payment to the tenant in the form of excused rent or cash in an amount not to exceed $2,000 depending upon the income of the tenant.

In May 1986, respondent, R/L Associates, Inc. (R/L), contracted to purchase a house in Seattle which had been rented to a low income family since 1982. R/L intended to demolish the house and replace it with a new rental house. In June 1986, R/L applied for a master use permit to demolish the house and build a new one. As required by Seattle's HPO, R/L applied for a demolition license. R/L obtained a license in August 1986, but without having complied with the tenant assistance provisions of the HPO. Thus, the City ordered work stopped on R/L's demolition August 9, 1986, prompting R/L to file the instant lawsuit.

Initially, R/L sought a writ of mandamus requesting that the court order the City to approve the grant of the demolition license. The trial court dismissed the writ, but granted R/L leave to amend its pleadings. The court ordered the City to issue the demolition license provided R/L pay $2,000 into the registry of the court. That was the amount payable to the tenant based on the tenant's estimated income. There is no restriction on use of the money by the tenant. The tenant's income in fact was $24,838.46, which entitled him to a payment of $1,000 rather than the $2,000 maximum. The license was issued, and R/L filed its amended complaint for damages and equitable relief challenging the tenant assistance provisions of the HPO.

On R/L's motion for partial summary judgment, the Superior Court entered a declaratory judgment invalidating the tenant assistance provisions of the HPO, issued a permanent injunction enjoining the City from enforcing the provisions, held the City liable as a matter of law to R/L for all damages sustained as a proximate result of the City's enforcement of the ordinance, and awarded R/L attorney fees.

The City continued to enforce the tenant assistance provisions of the HPO in demolition license applications for projects other than those in which R/L was involved. One such application involved the Fremont Dock Company, Inc. (Fremont Dock), which is not a party to the present lawsuit. Upon denial of its application, Fremont Dock filed a separate action for injunctive relief against the City. As a result of the City's continued enforcement of the tenant assistance provisions against Fremont Dock, R/L filed a motion in superior court seeking to have the City, its director of the Department of Construction and Land Use, and the HPO administrator, found in contempt for failure to comply with the permanent injunction ordered in the present case. The Superior Court granted R/L's motion, and entered a judgment of contempt against these appellants.

In this appeal, R/L argues that the tenant assistance provisions of the HPO are a facially invalid exercise of the City's police power to regulate the development of land, 1 and that the provisions effect a taking of private property without just compensation. R/L further argues that it has the right to enforce the trial court's permanent injunction via contempt proceedings against the City and its officials. R/L seeks just compensation for the taking, if one occurred, damages resulting from the enforcement of the tenant assistance provisions of the HPO, and attorney fees.

The validity of the tenant assistance provisions is tested under RCW 82.02.020, which provides in part:

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.

Laws of 1982, 1st Ex.Sess., ch. 49, § 5 (effective July 1, 1982).

This amendment was enacted as part of comprehensive legislation that included the grant of authority to certain local governments to impose additional sales and real estate transfer taxes. Along with this additional taxing authority the Legislature imposed a prohibition of certain development fees. See Engrossed Senate Bill 4972, §§ 5, 11(2), 17(2), 47th Legislature (1982). This amendment was the first to confront the imposition of fees as a condition to development, even though there had been other proposals before the Legislature to expand or limit municipalities' authority to impose such fees. See Comment, Subdivision Exactions in Washington: The Controversy Over Imposing Fees on Developers, 59 Wash.L.Rev. 289, 294 n. 40 (1984).

The City argues that RCW 82.02.020 simply does not apply to the tenant assistance provisions because those provisions focus on demolition and change of use, which are not necessarily involved in any of the conduct prohibited by the statute, and because no fee, charge, or tax is paid to the City. These contentions are unpersuasive. First, the statute prohibits the imposition of any indirect fee or charge; it is not limited only to payments made to the City. Second, a charge on demolition or change in use of residential units certainly constitutes, at least, an indirect charge on either the construction of residential units or the development of land generally. Implicit in the concepts of construction and development is the need to remove and replace worn out structures. RCW 82.02.020 is clearly applicable to the tenant assistance provisions. 2

The City further argues that a literal application of the statute would lead to the invalidation of "all otherwise valid police power regulations regarding development which incidentally impose an economic burden." Brief of Appellant, at 25. The City asserts that this could not have been the intent of the Legislature. The City is mistaken in its conclusion that all development regulations are invalid under the statute. Quite the contrary is true, and the statute clearly and specifically outlines the scope of valid regulation.

For example, dedications of land and easements pursuant to RCW 58.17.110 (subdivision and dedication approval) are not prohibited if they are within the proposed development and reasonably necessary as a direct result of the proposed development to which they apply. Nor are costs associated with the permit application process prohibited. Moreover, the statute's general prohibition does not apply to imposition of pro rata water, sewer, natural gas, drainage utility, and drainage system charges that are attributable to the property being charged. Finally, the statute allows for voluntary agreements to allow payments in lieu of dedication or to mitigate a direct impact identified as a consequence of the proposed development. This attention to detail implies that the Legislature intended RCW 82.02.020's general prohibition to operate absent application of an exception. See In re Eaton, 110 Wash.2d 892, 898, 757 P.2d 961 (1988).

We recognize that prior cases have resisted a literal application of RCW 82.02.020, instead focusing attention on whether a development fee constituted an unauthorized tax or a valid regulatory scheme, as that distinction was explained in Hillis Homes, Inc. v. Snohomish Cy., 97 Wash.2d 804, 809, 650 P.2d 193 (1982).

For example, in Ivy Club Investors Ltd. Partnership v. Kennewick, 40 Wash.App. 524, 529, 699 P.2d 782, review denied, 104 Wash.2d 1006 (1985), the Court of Appeals stated that "RCW 82.02.020 ... supersedes the decision in ...

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