HomeMy WebLinkAboutReply to City's Response to Motion for Reconsideration1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
BEFORE THE HEARING EXAMINER
FOR THE CITY OF RENTON
In the Matter of:
SOLERA MASTER PLAN,
A Master Plan, Preliminary Plat, Conditional
Use and Street Modification Decision
LUA-18-000490, SA-M, PP, CU-H, MOD
QUADRANT CORPORATION'S REPLY
TO THE CITY'S RESPONSE TO MOTION
FOR RECONSIDERATION
Quadrant is proposing a phased, mixed -use project in the Sunset Highlands area of the
City of Renton abutting NE Sunset Blvd ("Project"). City Code requires that any residential
proposal along NE Sunset Blvd. include a ground floor commercial component. Accordingly,
Quadrant's proposal, which was approved by the Hearing Examiner, proposes 39,000 sq. ft. of
commercial space. Quadrant is committed to the success of the Project, including its commercial
component.
Based on recent experiences with other developers, the City is concerned that Quadrant
will construct the townhomes only, and that the mixed -use components will be abandoned. In
order to address this (hypothetical) concern, the City has proposed a phasing condition,
QUADRANT'S REPLY TO RESPONSE TO
MOTION FOR RECONSIDERATION — 1 of 7
McCullough Hill Leary, PS
701 Fifth Avenue, Suite 6600
Seattle, Washington 98104
206.812.3388
206.812.3389 fax
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Condition #18, that seeks to force construction of the mixed -use concrete podium before
Quadrant can initiate construction of the townhomes.
Rather than ensuring success of the Project, Condition #18 will jeopardize it. If
townhome construction is held hostage pending construction and inspection of the mixed -use
podium (both of which are largely outside Quadrant's control), the impact will be increased
costs, decreased construction efficiencies, and less incentive for potential mixed -use partners.
The City is attempting to force construction timelines that the market should dictate. This
attempt is unlawful and exceeds the City's authority. Ultimately, the parties agree that the mixed -
use component of the project must, and will, be constructed. The issue is timing. A condition
requiring Quadrant to delay townbome construction until certain arbitrary milestones are
achieved is not in the best interests of the City or the developers. Quadrant's proposed revisions
to Condition #18 are sufficient to ensure construction of the mixed -use component of the Project.
I. ARGUMENT
The City's argument in response to Quadrant's Motion for Reconsideration is as follows:
(1) the Project is required to have a mixed -use component; (2) the City is concerned that
Quadrant will construct only the townhome component and abandon the rest; (3) delaying
townhome construction until the mixed -use podium is completed is the only way to provide
assurances that the mixed -use element will be built (the City's ability to withhold occupancy
permits is somehow insufficient); and (4) the City has proposed two viable "alternatives" to the
podium construction requirement: the ability to provide a letter of credit or cash set aside for the
entire cost of the building ($75 - $90 million dollars), or the ability to negotiate a future,
unspecified arrangement with the City when a mixed -use partner is identified.
QUADRANT'S REPLY TO RESPONSE TO
MOTION FOR RECONSIDERATION — 2 of 7
McCullough Hill Leary, PS
701 Fifth Avenue, Suite 6600
Seattle, Washington 98104
206.812.3388
206.812.3389 fax
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Quadrant agrees with the City on only one of these points: the Project is required to have
a mixed -use component. Quadrant disputes the remainder of the City's arguments.
A. Condition #18 is based on a hypothetical future impact, not a specific identified
impact, as required by law.
The City has repeatedly stated that "there is a risk" that Quadrant will not secure a mixed -
use development partner, which "could result" in a block of townhomes completed with no work
initiated on the mixed -use blocks. City's Response to Motion for Reconsideration, p. 2. The City
has taken it upon itself to address this hypothetical concern by imposing arbitrary and onerous
requirements designed to delay townhome construction.
The City reasons: "It is the City's duty to ensure that the master plan is constructed with a
reasonable guarantee that the mixed -use portion is constructed and complete as Phase I and if
there are financial constraints on the project it is the ancillary and subordinate components
(townhome blocks) that should be sacrificed." City's Response, p. 2 (emphasis added). This
rationale is extremely troubling. This City does not get to decide, based on future hypothetical
concerns, which parts of a project to "sacrifice" if market conditions are challenging. Rather, the
developers who have invested millions of dollars into these projects get to make those calls. The
City is overreaching here; the issue is not whether the mixed -use component of the Project will
be constructed (it will); the issue is whether the City gets to dictate construction timelines based
on arbitrary milestones —when no specific Project impact has been identified.
Development conditions must be based on specific, identified development impacts. Isla
Verde Int'l Holdings v. City of Camas, 146 Wn.2d 740, 759, 49 P.3d 867 (2002); Citizens'
Alliance for Prop. Rights v. Sims, 145 Wn. App. 649, 665, 187 P.3d 786 (2008). Here, the City is
still unable to point to a specific development impact that justifies the imposition of Condition
QUADRANT'S REPLY TO RESPONSE TO
MOTION FOR RECONSIDERATION — 3 of 7
McCullough Hill Leary, PS
701 Fifth Avenue, Suite 6600
Seattle, Washington 98104
206.812.3388
206.812.3389 fax
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
]7
18
19
20
21
22
23
24
25
26
27
28
#18. The best it can do is point to a future hypothetical "risk" that the mixed -use components of
the project will be abandoned. This is not legally sufficient.
Condition #18 is not based on an identified Project impact; therefore, it lacks a nexus to
the Project. Benchmark Land Company v. City of Battle Ground, 146 Wn.2d 685, 49 P.3d 860
(2002) (Washington Supreme Court held that project conditions cannot be imposed without a
showing that they are reasonably related to a development's impacts). Again, the burden is on
the municipality to establish that development conditions are tied to a specific, identified
development impact. That burden has not been met here.
B. The mixed -use podium construction requirement is arbitrary, excessively
burdensome, and unnecessary to address the "impact" identified by the City.
The City claims that its proposed Condition #18 is the only possible mechanism to ensure
construction of the mixed -use building. That is not the case. No one disputes that the Project is
required to have a mixed -use component. Quadrant has repeatedly acknowledged the mixed -use
requirement, which is required by the Decision approving the Project. The City has a variety of
tools in its toolbox to ensure compliance with that requirement.
The City offers no rationale for identifying the "construction of the mixed -use podium"
as the point of no return for a commercial developer. The podium is admittedly an expensive,
lengthy, and complicated piece of construction, but from a mixed -use developer's perspective,
development is assured when property is acquired, fees are paid, and building permits are
obtained. Kerry Nicholson, Senior Managing Director of Legacy Partners, a privately -held real
estate firm that owns, develops, and manages multi -family communities across the country, sees
no rationale for tying townhome construction to podium construction in this case. Rather, Mr.
Nicholson believes, based on his 40-years of experience in real estate development and
financing, that property acquisition, impact fee payment, and building permit issuance constitute
McCulloueh Hill Learv. PS
701 Fifth Avenue, Suite 6600
QUADRANT'S REPLY TO RESPONSE TO Seattle, Washington 98104
MOTION FOR RECONSIDERATION — 4 of 7 206.812.3388
206.812.3389 fax
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
the reasonable "point of no return" for mixed -use developers. See attached Declaration of Kerry
Nicholson. Construction of the mixed -use podium offers no additional assurances to the City; it
simply creates an arbitrary obstacle preventing Quadrant from initiating construction of the
townhomes, consistent with its construction schedule and market forces.
Project conditions must be based on identified impacts, and they must be proportionate to
those impacts in order to be lawful. Agency action is arbitrary and capricious if it is "willful and
unreasoning and taken without regard to the attending facts and circumstances." Washington
Indep. Tel. Assn v. Washington Utils. & Transp. Comm'n, 148 Wn.2d 887, 905-06, 64 P.3d 606
(2003) (citations omitted). Condition #18 does not meet these tests. This requirement lacks
proportionality to the hypothetical "impact" the City is trying to address.
C. Neither of the "alternatives" identified by the City are viable.
The City claims that its Motion for Reconsideration provides "three options for
Compliance that are reasonable to ensure compliance with the phasing plan." Motion at 3. That
is not the case.
As explained previously, a requirement that the mixed -use podium be completed and
inspected before townhome construction can begin is not reasonable. It is excessive, arbitrary
and unlawful.
Alternatively, the City has offered that a developer could complete shoring walls and
foundation excavation —in addition to providing a "cash set aside, letter of credit or an
assignment of funds approved by the city for the entire cost of the mixed -use building." Decision,
pg. 32. This is not a viable alternative. No mixed -use developer would set aside such an
exorbitant sum of money while simultaneously trying to expend funds on actual construction.
Declaration of Bonnie Geers; Declaration of Kerry Nicholson.
McCullouLyh Hill Learv. PS
701 Fifth Avenue, Suite 6600
QUADRANT'S REPLY TO RESPONSE TO Seattle, Washington 98104
MOTION FOR RECONSIDERATION — 5 of 7 206.812.3388
206.812.3389 fax
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
A third alternative offered in the City's Motion is an as -yet -to -be -determined option to be
approved by the City "that assures the initiation and completion of the proj ect's mixed -use
components are consistent with the expectations of the phasing plan." City's Motion, pg. 2.
Similar to the financial security concept, this is not a viable option. It is completely arbitrary and
hypothetical, with no guarantee that the City would accept reasonable assurances.
II. Conclusion
Condition #18, as proposed by the City, is unnecessary, infeasible, and exceeds the City's
authority under state law.
Quadrant has proposed an alternative condition that would require a building permit to be
issued, and all impact fees to be paid, for the mixed -use building before townhome construction
could begin:
[Proposed] Condition 18. The applicant shall follow the Phasing Plan as provided in
Exhibit 12 in order of phasing such that the first townhome phase shall not begin building
construction until the building permit for one of the two mixed use buildings has been
paid for by the developer and issued by the City. Further, the second townhome phase
may not begin building construction until the building permit for the second mixed -use
building has been paid for by the developer and issued by the City. Certificates of
occupancy for the second townhome phase will not be issued until the podium and
framing for the first mixed use building have passed inspection.
Such a condition would provide the assurances the City needs without jeopardizing the viability
of the Project. It would allow Quadrant and its mixed -use development partner to coordinate and
sequence construction in a way that will reduce costs, increase efficiencies, and allow the Project
to be successful.
For the reasons outlined above, Quadrant respectfully requests that the Examiner reject
the City's proposed Condition #18 and incorporate Quadrant's proposed Condition #18 to govern
the phasing requirements of the Project.
McCullouLyh Hill Learv. PS
701 Fifth Avenue, Suite 6600
QUADRANT'S REPLY TO RESPONSE TO Seattle, Washington 98104
MOTION FOR RECONSIDERATION — 6 of 7 206.812.3388
206.812.3389 fax
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
DATED this 18th day of January, 2019.
QUADRANT'S REPLY TO RESPONSE TO
MOTION FOR RECONSIDERATION — 7 of 7
s/Courtney E. Flora, WSBA #29847
Attorneys for Quadrant Homes
McCULLOUGH HILL LEARY PS
701 Fifth Avenue, Suite 6600
Seattle, WA 98104
Tel: 206-812-3388
Fax: 206-812-3389
Email: cfloragmhseattle.com
McCullough Hill Leary, PS
701 Fifth Avenue, Suite 6600
Seattle, Washington 98104
206.812.3388
206.812.3389 fax