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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