Southwick, Inc. v. City of Lacey

• Decision Date: 21 August 1990
• Docket Number: No. 11875-1-II,11875-1-II
• Citation: 795 P.2d 712,58 Wn.App. 886
• Parties: SOUTHWICK, INC., a Washington corporation, Appellant, v. CITY OF LACEY, a municipal corporation, Respondent.
• Court: Washington Court of Appeals

Page 886

58 Wn.App. 886

795 P.2d 712

SOUTHWICK, INC., a Washington corporation, Appellant, v. CITY OF LACEY, a municipal corporation, Respondent.

No. 11875-1-II.

Court of Appeals of Washington Division 2.

Aug. 21, 1990.

Argal D. Oberquell, Olympia, for appellant.

Kenneth R. Ahlf, Lacey, for respondent.

REED, Judge.

Southwick, Inc. (Southwick) appeals the imposition of conditions on a proposed development, contending that the city unlawfully delegated authority; that the conditions are unauthorized taxes or fees; and that the proceedings violated due process. ¹ We affirm.

The City of Lacey follows a two-step process in approving conditional uses of property: first allowing for issuance of the conditional use permit, and then performing a site-specific review of a detailed proposal for development. The Site Plan Review Committee reviews the specific development plans for compliance with city standards and policies. Lacey Municipal Code (LMC) 16.84.020.

Southwick sought and obtained a conditional use permit for expansion of its cemetery and funeral home complex. Southwick then applied for site plan approval. The Committee approved the site plan, but imposed several conditions. The conditions to which Southwick objects are the following:

(1) Construction of street improvements, including street widening, paving, curb, gutter, sidewalk, and street lights; ... (3) installation of a street light at the driveway access to a road; ... (5) submission of plans, prepared by a registered professional engineer, for the street improvements and the water line extension to the Public Works Department; (8) installation of fire sprinklers in the proposed structure; (9) provision of 1,500 to 2,250 gallons per minute of water to the structure; (10) installation of fire alarm system in the proposed structure with central station monitoring On appeal, the hearing examiner upheld conditions 1, 3, 5, 8, 9, and 10. The Lacey City Council upheld the examiner's decision and the Thurston County Superior Court affirmed.

Southwick first argues that the delegation of authority to the site review committee was improper. As a code city under RCW 35A only the city council has the power to rezone. Lutz v. Longview, 83 Wash.2d 566, 570, 520 P.2d 1374 (1974). The council may not delegate that power. Lutz, 83 Wash.2d at 570, 520 P.2d 1374. However, once the Council approves the zoning change, site-specific review may be delegated to an administrative body. Zehring v. Bellevue, 103 Wash.2d 588, 591, 694 P.2d 638 (1985); see also RCW 35A.63.120. Design review to determine whether the development will meet particular criteria is not a rezone. Zehring, 103 Wash.2d at 591, 694 P.2d 638. Here the purpose of site review was to ensure that the proposed development met city standards, not to rezone. Therefore, the delegation was not improper.

Southwick also argues that the challenged conditions violate Const. art. 7, § 5 ², which prohibits any tax not imposed pursuant to law, and RCW 82.02.020 ³ which prohibits the imposition of taxes, fees, or charges on the construction or reconstruction of buildings, or on the development, subdivision, classification, or reclassification of land.

A city cannot tax without specific authorization by the Legislature. San Telmo Assocs. v. Seattle, 108 Wash.2d 20, 23, 735 P.2d 673 (1987). Clearly, no tax has been authorized covering this activity.

We must, therefore, determine if the exaction is a tax.

"[I]f the primary purpose of legislation is regulation rather than raising revenue, the legislation cannot be classified as a tax even if a burden or charge is imposed." (citation omitted). The characterization of the development fees will, therefore, turn on a determination of the primary purpose of the fees. If the fees are merely tools in the regulation of land subdivision, they are not taxes. If, on the other hand the primary purpose of the fees is to raise money, the fees are not regulatory, but fiscal, and they are taxes.

Hillis Homes, Inc. v. Snohomish Cy., 97 Wash.2d 804, 809, 650 P.2d 193 (1982). San Telmo, after citing Hillis Homes, reaffirmed the test by saying "the municipal body cannot shift the social costs of development onto a developer under the guise of a regulation. Such cost shifting is a tax ..." San Telmo, 108 Wash.2d at 24, 735 P.2d 673. Direct money payments to the city are not required for the exaction to be classified a tax--payment-in-kind may also be a tax. San Telmo, at 24, 735 P.2d 673.

The conditions imposed on the development here are not taxes. They are not equivalent to fixed charges that automatically apply to the activities proposed. Rather, they are directly tied to the property in question and are not aimed at general social ills. While fulfillment of the conditions will require the expenditure of money, cost alone does not make the requirements a tax.

Southwick's argument that the conditions violate RCW 82.02.020 is also unavailing. The Legislature passed RCW 82.02.020 in 1982, after Hillis Homes. In doing so, it sought to balance the interests of local governments and developers, both of which were having financial problems at the time of enactment. Washington Legislative Reports, 207, 209 (1982). ⁴ The local schemes were often designed to impose the cost of growth on new developments. See Hillis Homes, 97 Wash.2d at 806, 650 [795 P.2d 715] P.2d 193; San Telmo, 108 Wash.2d at 21-22, 735 P.2d 673.

While the early cases, such as San Telmo, interpreted the statute through a framework similar to that for distinguishing between a tax and non-tax, such interpretation is untenable after the enactment of RCW 82.02.020 and R/L Assocs. See R/L Assocs., Inc. v. Seattle, 113 Wash.2d 402, 407-409, 780 P.2d 838 (1989). The general prohibition on direct or indirect taxes, fees, or charges operates unless the Legislature has excepted the exaction. R/L Assocs., 113 Wash.2d at 409, 780 P.2d 838.

Because we have determined that this exaction is not a tax, we need only determine if it is a fee or charge. A fee, like a tax, is a fixed charge, automatically applied to a designated activity. A charge is an obligation or a price. ⁵ Arguably, it could include the conditions imposed on various land use and development permits. However, we decline to construe the term so broadly. To do so, would be inconsistent with the broad authority granted to local government in land use matters. The basis for this authority is Const. Art. 11, § 11, which provides: "Any county, city, town or township may make and enforce within its limits all such local police, sanitary and other regulations as are not in conflict with general laws." So long as the subject matter is local and the legislation is reasonable, this grant of authority is as broad as the Legislature's authority. Hass v. Kirkland, 78 Wash.2d 929, 932, 481 P.2d 9 (1971). The municipality's police power ceases when the state legislates on the subject, unless there is room for concurrent authority. Diamond Parking, Inc. v. Seattle, 78 Wash.2d 778, 781, 479 P.2d 47 (1971). A local ordinance conflicts with the general law when the ordinance permits that which the statute forbids, or forbids that which the statute allows. Bellingham v. Schampera, 57 Wash.2d 106, 111, 356 P.2d 292 (1960). The courts will not interpret a statute to deprive a municipality of the power to legislate on particular subjects unless that clearly is the legislative intent. State ex rel. Schillberg v. Everett Dist. Justice Court, 92 Wash.2d 106, 108, 594 P.2d 448 (1979). RCW 35A.01.010, the Optional Municipal Code Statute, under which Lacey operates, gives the municipality "the broadest powers of local self-government consistent with the Constitution of this state."

Other statutes specifically grant local governments the authority to adopt regulations designed to provide for ordered development and prevent overcrowding of land, to provide adequate streets and other amenities, to conserve natural beauty and other resources. RCW 35.63.100 and RCW 58.17.110 ⁶; to impose restrictions on the use of land, and, inter alia, the type, height and bulk of buildings, RCW 35A.63.100, ⁷ and to condition any governmental action on the basis of appropriate environmental policies. RCW 43.21C.060. For more than 20 years, these statutes have been interpreted by the courts to give local governments the authority to impose conditions upon development that are intended to mitigate the problems caused by the particular use. See Save Our Rural Environment v. Snohomish Cy., 99 Wash.2d 363, 372, 662 P.2d 816 (1983); State ex rel. Myhre v. Spokane, 70 Wash.2d 207, 216, 422 P.2d 790 (1967); Unlimited v. Kitsap Cy., 50 Wash.App. 723, 727, 750 P.2d 651, review denied, 111 Wash.2d 1008 (1988); Miller v. Port Angeles, 38 Wash.App. 904, 910-11, 691 P.2d 229 (1984), review denied, 103 Wash.2d 1024 (1985); and Gerla v. Tacoma, 12 Wash.App. 883, 888-89, 533 P.2d 416, review denied, 85 Wash.2d 1011 (1975). ⁸

We do not believe that it was the Legislature's intent to preempt this authority by RCW 82.02.020. RCW 82.02.020 was not aimed at development-specific conditions such as those imposed here. Instead, the statute was aimed at the imposition of the general social costs of development on developers. The conditions imposed here do not contribute to that evil. Thus, we find that the imposition of the conditions here was not an exaction prohibited by RCW 82.02.020.

We also note, however, that even if such site-specific conditions as these come under the purview of that statute, they constitute an exception to its prohibitions.

The statute "does not prohibit voluntary agreements with ... cities ... that allow a payment in lieu of a dedication of land or to mitigate a direct impact that has been identified as a consequence of a proposed development ..." RCW 82.02.020. This language evinces legislative intent to stop the imposition of general social costs on developers, while at the same time allowing the...