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NERNMEMiz
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RECEIVED
CLERICSCITY OFFICE
BEFORE THE HEARING EXAMINER FOR THE CITY OF RENTON
RE: Galloway at the Highlands APPEAL OF IMPACT FEE ASSESSMENT
Appeal )
Summary
The Appellant appeals the imposition of school impact fees for the construction of four single-family
homes, totaling $32,497.41 The appeal is denied and the imposition of $ 32,497.41 in school impact
fees is sustained. The key issue of this appeal is whether an ordinance assessing impact fees at
building permit issuance based upon amounts in effect at the time of subdivision approval creates
constitutionally protected vested rights that cannot be extinguished or modified by subsequent
amendment. No such vested right was created in this case and no fee adjustment is warranted.
The Appellant appeals the imposition of impact fees for the Renton School District ("RSD") for
building permits issued for development of single-family homes in the Galloway of the Highlands
subdivision. When the subdivision was approved on March 28, 2007, there was no RSD impact fee.
At that time the City's impact fee only assessed and only applied to impact fees collected for the
Issaquah School District ("ISD"). RMC 4-1-160(E) provided that impact fees came due at building
permit issuance but that the amount of the fee would be based upon the "fee schedule in effect when
the plat or PUD receives preliminary approval." The definitions and purpose clause of the ordinance
clearly provided that the impact fee ordinance was to exclusively apply to ISD fees, including RCW
4-1-160(E). Consequently, when the Galloway preliminary plat was approved, the impact fee
ordinance did not dictate that any future RSD impact fees would be based upon impact fee schedules
in effect at preliminary plat approval.
Subsequent to the approval of the Galloway preliminary plat, for a brief period of time the Renton
City Council did amend the impact fee ordinance to provide that the RSD impact fee amounts in
effect at preliminary plat approval (0$) would apply for impact fees that came due at building permit
issuance. On December 23, 2009 the Renton City Council added RSD impact fees to its impact fee
ordinance. The definitions and purpose clause of the impact fee ordinance were not revised to
include the RSD and its fees, but this was clearly an oversight and the only rational way to apply the
amendment as intended was to apply all provisions of the impact fee ordinance to RSD fees,
including RMC 4-1-160(E). RMC 4-1-160(E) also happened to provide that it applied to any
preliminary plats approved after the effective date of Ordinance 4808. Ordinance 4808 went into
effect on November 10, 1999. The Galloway preliminary plat was approved after November 10,
1999. Consequently, when the impact fee ordinance was amended on December 23, 2009 to include
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RSD impact fees, the RSD impact fees for the Galloway development due at building permit issuance
were based upon the adopted amounts in effect when the Galloway preliminary plat was approved,
which was $0. The Appellant purchased the Galloway development on March 10, 2010 while the
December 23, 2009 amendments remained in effect and testified that he purchased the property in
reliance upon the fact that the RSD impact fees would be $0.
On March 17, 2010, the Renton City Council amended RMC 4-1-160(E) to provide that the amount
for an impact fee charged at building permit issuance was to be based upon the fee schedules in effect
at the time of building permit issuance, instead of the fees in effect at the time of preliminary plat
approval. If the December 23, 2009 amendments of RMC 4-1-160(E)constitute a constitutionally
protected vested right to the $0 RSD impact fee, the Council would have been precluded from
amending RMC 4-1-160(E) to provide for a higher amount. However, RMC 4-1-16(E) doesn't create
any such vested rights. Rather it just creates an expectancy that is most analogous to an adopted
"mode" of tax collection that provides guidelines on what impact fee schedules apply when amounts
come due at the time of building permit issuance. Those guidelines were amended on March 17,
2010 and the RSD impact fees for any building permits issued after that date must be based upon
impact fee schedules in effect at the time of building permit issuance.
Testimony
Talis Abolins testified that the appellant is asking for the reversal of a retroactive repeal of a
provision in the city of Renton's code which had expressly granted Galloway LLC the right to the fee
schedule in place when the preliminary plat received approval. The approval was received on March
28, 2007. At that point in time, the school fees in affect were zero dollars. Renton indicated that
school fee impacts would be mitigated by an increase in the city's tax -base. However, after the
appellant purchased the vested Highlands project, the city retroactively repealed the ordinance,
resulting in a substantial financial impact. The appellant is asking for reversal based on due process,
fairness, and RCW 82.02.070 which provides that a city must give an appeal process which allows a
fee to be modified based on principles of fairness.
Greg Heath, 2214 Tacoma Road, stated that he has been involved in real estate development for a
number of years. He has participated in around 10-12 development projects. There are 4 members of
the Galloway LLC including Mr. Heath, his wife, Jonathan Arnold, and Kris Arnold. The LLC was
formed to purchase the property and complete the building project. Galloway purchased the property
through a bankruptcy process from a receiver. Exhibit 4 is a landscape plan and reflects the current
plan for the development of the project. At the time of Mr. Heath's acquisition of the property, there
was a small amount of development on the property. The south east quadrant contained the framing
and partial roofing for a building. The south-west quadrant had foundations, and the north quadrant
was vacant. There will be 35 dwelling units and 3 commercial spaces under the current plan. The
LLC reviewed the building permit, infrastructure, fees paid, and if there was bonding required before
purchasing the property. As part of this due -diligence process, the LLC reviewed the effect of school
impact fees. Exhibit 1 is the school impact fee ordinance in effect at the time the property was
purchased by Galloway LLC. When reviewing the ordinance, Mr. Heath noted that the use of "vested
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plat" in item 2, section E. Galloway LLC was aware school impact fees were zero at the time of the
preliminary plat approval and believed that vesting would result in the continuation of this policy.
Exhibit 2 notes the minutes of the meeting where the preliminary plat received approval. Galloway
LLC was under the impression that the school impact fees would be zero and resurrected already
approved building permits. After acquiring the property, Galloway LLC discovered that the city had
modified the Renton code, and the modification applied retroactively. Exhibit 6 reflects the
clarification from Neil Watts in regard to the impact of the city change on the Galloway project.
Permit fees were paid under protest from Galloway LLC. Exhibit 7 is a coalescing of the permit fees
expected to be paid for school impacts created by a consulting firm working for Galloway LLC.
Based on these calculations, the anticipated impact on the project is over 74,000 dollars. The fees
will have a vast negative impact on the financial situation of the project, especially in a difficult
market. If Galloway had been aware of these school impact fees, they would have paid less for the
project or not pursued it at all.
Mr. Abolins argued that for some time, the vested rights doctrine has not applied to school impact
fees. Courts have indicated that a developer should expect to be tied to fluctuations in school impact
fees. However, a developer has a right to proceed in a manner of certainty under due process. Renton
had enacted ordinances guaranteeing developers the right to school impact fees at the time of plat
approval. Exhibit 12 is a staff report from the Renton Planning Division which discussed the changes
made under the new ordinance. The report notes that school impact fees should be collected at the
time of building permit review for the amount required when preliminary plat approval was given.
Galloway had already received plat approval and was vested under city ordinance. An administrative
decision, detailed in an email from Neil Watts (exhibit 6), stated that the city was going to apply the
new school impact fee ordinance to projects that had already received plat approval. In exhibit 12
(page 3), the city acknowledges that the code allows applicant's to be vested to impact fees they
received when given preliminary plat approval. Exhibit 13 is additional Planning and Development
Committee material which states that applicants can be vested to previous fee schedules. Galloway
LLC created an entire cost -analysis based on the presumption they would not be paying any school
impact fees. Exhibit 8 is the ordinance that set -forth the vesting principle. Exhibit 9 is the
preliminary report to the hearing examiner on the Highlands project which notes, on page 11, that the
school district would be able to handle additional students from the development. Pages 10 and 11 of
exhibit 10 note the environmental checklist given for the project. The public services section of this
checklist states that the project will increase need for public services and gives increased tax -base as
the method of paying for services (not school impact fees).
The hearing examiner questioned Mr. Abolins about the applicability of Graham Neighborhood Ass'n
v. F. G. Associates, which recently held that the vested rights doctrine doesn't apply to procedural
requirements as opposed to land use controls. The Examiner noted that Mr. Abolins had
acknowledged that the vested rights doctrine doesn't apply to impact fees because they aren't
considered land use controls.
Garmon Newsom, assistant Renton City Attorney, cross examined Mr. Heath. Mr. Heath stated the
property was purchased in March 2010.
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Mr. Newsom argued that the appellant does not have a vested right to the previous school impact
fees. Exhibit 8 (a copy of ordinance 4808) does not apply to the Renton School District. There is no
reference to Renton, only a reference to the Issaquah School District. Nothing in this section of the
code gives provision for vesting under the school district. The appellant cannot prove any form of
vesting right based on this ordinance. Mr. Newsom commented that the appellant suggested that they
had an expectation of not paying their share of fees. A vested right must be something more than an
expectation. There is no language that benefits the appellant in the ordinance. The appellant was
aware that the code was changing during the period the property was purchased. Mr. Newsom noted
that Mr. Heath used the word "assumed" when discussing his belief the school impact fees would be
zero. Vesting is limited to zoning, building, or land use control ordinances. Impact fees are not
zoning ordinances. He submitted a previous court case which makes clear that impact fees are
collected at the time of building permits. Impact fees do not influence use or division. No guarantee
of availability in schools was given to the appellant. There is no vested right provision for schools
under Renton code, so Washington law and city ordinances must be adhered. Accordingly, Renton
code provides that school impact fees must be collected at the time of building permit approval. He
also noted the case of Abbey Rd. v. Bonney Lake which rejected the argument of financial cost being
too great as a reason not to levy a fee. The case provided that RCW 19.27.095(1) is unequivocal and
requires a complete building permit application to be submitted in order to receive vesting rights. No
vesting protection was entitled to Galloway LLC.
In regard to equitable estoppel, Mr. Newsom testified that the application of equitable estoppels
against government is disfavored. He referred to the decision in Dept of Ecology v. George
Theodoratus which gave that the courts should be reluctant to find the government equitable estoppel
"when public revenues are involved." There is a three-part test to applying equitable estoppels. The
appellant has failed to prove that there was any party admission in consistent with the later claim.
The appellant has failed to prove that Galloway has relied on a specific act, statement, or admission.
A mistaken reading of the code is not the fault of Renton. The appellant has failed to prove there was
any type of injury based on reliance on the false beliefs. Paying more money is not considered an
injury by the courts. The appellant has not proven that there is any sort of manifest error. The money
will go the Renton School District, not the City. Making a profit is not the city's concern.
Upon questioning by the hearing examiner in regard to RMC 4-1-160(E)(2), which the Examiner
noted isn't expressly limited to the Issaquah School District, Mr. Newsom commented that the
appellant has failed to prove this section of the code refers to Renton School District and that
provisions in other parts of the impact fee ordinance were clearly designed to only apply to impact
fees assessed for the Issaquah School District.
Talis Abolins testified that the language of the original ordinance does not restrict itself to a single
school district. Exhibit 6 shows that the city of Renton interpreted the ordinance as giving vesting
rights to the Appellant's project in the Issaquah School District. Neil Watts, director of the
Development Services division, assumed the provision applied to Galloway's project based on his
email sent to the appellant in exhibit 6. Although there have been no previous application of the
APPEAL - 4
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ordinance with a similar nature, the city gave conclusive proof that they were applying the ordinance
within the Renton School District. The Planning Division's discussion of the impact fees in exhibits
12 and 13 is very broad and does not suggest a limit to the Issaquah School District. The appellant is
aware of how school impact fees work and understands there are fluctuations. A careful due -
diligence process was followed in order to assure the appellant understood the city's interpretation of
the ordinance before purchasing the property. The appellant does not just have an expectation; they
have an affirmative legislative statement backed up by the Director of Development Services for
Renton.
In regard to providing additional legislative history, Mr. Newsom stated that he does not see any
ambiguity in the ordinance. No specific provision for the Renton School District is made. The
ordinance is specific to the Issaquah School District, and Renton School District would not have been
able to collect school impact fees under the ordinance as written.
Mr. Abolins noted that exhibit 11 discusses RMC 4-1-160 and refers to the Kent School District
along with the Issaquah School District. A city official stated in an email that the original ordinance
applied to the Galloway project (exhibit 6), knowing that the project fell in the Renton School
District.
Mr. Newsom testified that Renton is addressing the appellant's decision to rely on the plat approval
for vesting rather than the building permit. The plat approval was from 2007. Ordinance 5442
expands to apply to Issaquah and Kent School District, but Renton School District is not included.
Page 3 of the, ordinance identified Issaquah School District 411 and Kent School District 415. The
ordinance reflects the intent of the City Council. There is no vesting for the Renton School District
given in the past ordinances.
At hearing, the Appellant submitted an exhibit notebook consisting of 13 exhibits, all of which were
admitted into the record.
Findings of Fact
Procedural:
1. Appellant. Galloway Heights I, LLC.
2. Hearing. A hearing on the appeal was held on June 13, 2012 at 12:00 pm in the Renton City
Council meeting chambers.
Substantive:
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3. Description of Appeal. The Appellant appeals the imposition $32,497.41 in RSD school
impact fees levied upon the issuance of building permit CP07293($8,196.63),
CP07301($8,201.32), CP07300($8,201.32) and CP07292($7,898.14). All four building permits
were issued for single-family homes located in the Galloway at the Highlands subdivision in the
RSD. The fees were paid under protest on April 20, 2012. The Appellant asserts that RMC 4-1-
160(E) gave it a vested right to $0 RSD school impact fees when the Galloway preliminary plat
was approved and also that the City is barred by equitable estoppel from requiring any RSD school
impact fees.
4. Chronology,
A. November 10, 1999; Issaquah impact fee first adopted. The Renton City Council first
adopted a school impact fee on November 1, 1999 as Ordinance No. 4808, which went
into effect on November 10, 1999. Section 4-1-160(A) of the ordinance noted that the
ordinance was adopted for the collection of impact fees for the ISD. No other school
district was mentioned. RMC 4-1-160(E)(2) of the ordinance provided that impact fees
come due at the time of building permit issuance but the amount must be based upon fee
schedules in effect at the time of planned unit development ("PUD") or preliminary plat
approval. RMC 4-1-160(E)(2) on its own did not mention the ISD or any other school
district.
B. March 8, 2007; Galloway preliminary plat approved. The Appellant's subdivision,
Galloway at the Highlands, received preliminary plat approval on March 8, 2007,
C. March 15, 2007; Kent School District added to impact fee ordinance. The Renton City
Council amended Section 4-1-160(A) by Ordinance 5263 to provide that the ordinance
was adopted to impose impact fees for both the Kent and Issaquah school districts. The
definition of "District" was also expanded to include the KSD. The amendment went
into effect on March 15, 2007. A whereas clause to the ordinance noted that the City of
Renton may annex property within the Kent School District ("KSD"). RMC 4-1-
160(E)(2) was not amended and retained the original wording from Ordinance No. 4808.
D. December 23, 2009; first Renton School District impact fee goes into effect. A whereas
clause to Ordinance No. 5514 provides that "until recently the Renton School District
has been able to accommodate growth within existing facilities, but currently estimates a
need for additional school facilities". Ordinance No. 5514 imposes an impact fee for
Renton, apparently for the first time. It amends Section 4-1-160(D), note 5, to set impact
fee amounts for the RSD. Ordinance No. 5514 does not amend the definition of
"District" to include the RSD or the Section 4-1-160(A) purpose clause to provide that
the purpose of the impact fee ordinance is to collect impact fees for the RSD.
E. March, 2010; Appellant purchases Galloway property. Under cross examination during
the hearing on this appeal, an officer of the Appellant testified that it purchased the
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Galloway Heights property in March, 2010. It is unclear whether the Appellant
purchased the property before or after the Ordinance No. 5532 went into effect.
F. March 17, 2010; RMC 4-1-160(E) amended. Ordinance No. 5532, which went into
effect on March 17, 2010, amended RMC 4-1-160(E) to provide that impact fees are
based upon the amounts in effect when paid at the time of building permit issuance. A
staff report that accompanied the proposed amendment, Ex. 12, acknowledged that RMC
4-1-160(E) applied to RSD impact fees and that basing impact fee amounts upon the
schedules in effect at PUD/preliminary plat approval did not effectively mitigate school
impacts, "especially the impacts to the Renton School District".
G. May 2, 2012; purpose clause revised to include Renton School District. Ordinance No.
5657, which went into effect May 2, 2012, amended Section 4-1-160(A) to provide that
the impact fee ordinance was adopted to assess fees for the Issaquah, Kent and Renton
school districts. Up until this point Section 4-1-160(A) did not include the Renton
School District. The definition of district was also stricken from the ordinance, so that
references in the ordinance to "district" were no longer limited to the ISD and Kent
School District.
Conclusions of Law
Procedural:
1. Authority of Hearing Examiner. RMC 4-1-160(G)(2) provides that an appeal of a
school impact fee shall follow the process for the underlying permit action. The underlying permit
action in these appeals was approval of the subject building permits. RMC 4-8-080(G) assigns
building permit appeals to the hearing examiner for an open record hearing and final decision
appealable to the Renton City Council.
2. Appeal Review Criteria. RMC 4-1-160(G)(1) provides that impact fees may be
adjusted if the fees were incorrectly assessed or unusual and unique circumstances render the fees
unfair, unjust or unlawful. If the Appellant is correct in its assertion that it has a vested right,
protected by due process, to $0 impact fees than the Appellant would qualify for a waiver of the fees
imposed by the City since the due process violation would (1) render the fees unfair, unjust and
unlawful; or (2) would compel the conclusion that the fees were incorrectly assessed under an
interpretation of the impact fee ordinance that is consistent with the vested rights of the Appellant.
3. Impact fee ordinance did not provide for vesting of RSD impact fee amounts at
preliminary plat approval when the Galloway Heights preliminary plat was approved. The Appellant
argues that RSDs $0 impact fees vested at the time of preliminary plat approval. However, when the
Galloway preliminary plat was approved the City's impact fee ordinance only governed ISD impact
fees.
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The asserted "vesting" provision in effect when Galloway Heights was approved was RMC 4-1-
160(E) of Ordinance No. 4808, which provided as follows:
E. ASSESSMENT OF IMPACT FEES:
1. The City shall collect school impact fees, established by this Section as adjusted
from time to time, from any applicant seeking development approval from the City
for dwelling units located within the District's boundaries where such
development activity requires final plat or PUD approval or the issuance of a
residential building permit or a mobile home permit.
2. For a plat or PUD applied for on or after the effective date of Ordinance 4808,
the impact fees due on the plat or the PUD shall be assessed and collected from
the applicant when the building permit for each dwelling unit is issued, using the
fee schedule in effect when the plat or PUD receives preliminary approval....
(emphasis added)
A key point of disagreement between the City and the Appellant is the underlined language above —
the City maintains that these impact fees are limited to impact fees assessed for the ISD and the
Appellant claims they are any impact fees imposed by the City. The City's interpretation is the more
compelling. RMC 4-1-160(E)(1) authorizes and requires the City to collect impact fees for "...final
plat or PUD approval or the issuance of a residential building permit..." RMC 4-1-160(E)(2)
relates back to the range of impact fees authorized by RMC 4-1-160(E)(1) by providing that for those
impact fees linked to PUD and preliminary plat approval, they will vest at the time of preliminary
plat/PUD approval. Subsection 2 is setting the amount to a portion of the impact fees authorized in
subsection 1. Unfortunately for the Appellant, subsection 1 limits the authorized range of impact
fees to those assessed for "dwelling units located within the District's boundaries". RMC 4-1-
160(B)(8) of Ordinance No. 4808 defines the "District" as the ISD. Since the impact fee amounts set
by subsection 2 only applies to the fees authorized by subsection 1, subsection 2 only applies to ISD
impact fees. This interpretation is further corroborated by the purpose clause of Ordinance No. 4808,
which provided at RMC 4-1-160(A) that "the Council adopts this title to assess school impacts for
the Issaquah School District." The purpose clause makes no mention of the RDS.
4. Impact fee ordinance amended to set amount of RSD impact fees on those in effect at
preliminary plat approval when RSD impact fees added to impact fee ordinance on December 23
2009. As noted in the findings of fact, RSD impact fees were first authorized by Ordinance 5514.
This authorization included the application of RMC 4-1-160(E)(2), such that for preliminary plats and
PUDs the impact fees assessed at building permit issuance were those in effect at the time of
preliminary plat/PUD approval if those plat/PUD was approved after November 10, 1999.
The impact of Ordinance 5514 on RMC 4-1-160(E)(2) was not immediately apparent. Ordinance
5514 only amended RMC 4-1-160(D)(5) to identify the amount the RSD impact fee and RSD 4-1-
160(J) to adopt the RSD capital facilities plan. This was the first time RSD impact fees were ever
identified in the City's school impact fee ordinance. Notably, Ordinance 5514 did not amend
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"District" to include the RSD or amend Section 4-1-160(A) to provide that the purpose of the impact
fee ordinance was to assess school impact fees for the RSD in addition to impact fees for the KSD
and ISD, despite the fact that the KSD had been added to the "District" definition and 4-1-160(A)
when its impact fees were added to the impact fee ordinance via Ordinance No. 5263.
Without an amendment to the definition of "District", read literally the City had no authority to
impose the fee since the authority for imposing impact fees was limited to the "District" in RMC 4-
1-160(E)(1) as previously discussed in Conclusion of Law No. 3. Nonetheless, it is clear that the
City Council intended RMC 4-1-160(E)(1) to authorize and require the imposition of RSD impact
fees and that the failure to amend "District" and 4-1-160(A) was an oversight. The Council would
not have added an impact fee amount for RSD to the impact fee ordinance without intending that the
City have the authority to impose it. Interpreting Ordinance 5514 as authorizing the imposition of
impact fees for the RSD necessarily requires that "District" include the RSD which in turn requires
that RMC 4-1-160(E)(2) applied to RSD impact fees.
RMC 4-1-160(E)(2) expressly provided that it applied to all preliminary plats/PUDs approved after
the effective date of Ordinance No. 4808. The Galloway Heights project was approved after the
effective date of Ordinance No. 4808. Consequently, subsequent to the effective date of Ordinance
No. 5514, all impact fees collected at building permit issuance for Galloway Heights was $0 for as
long as the Ordinance No. 5514 amendments remained in effect.
5. Appellant has no vested right in RMC 4-1-160(E)(2). With the conclusions of law
above, the key issue in this appeal is whether RMC 4-1-160(E)(2) as adopted by Ordinance No. 4808
created a vested right that under due process cannot be extinguished by subsequent retroactive
legislation, in this case Ordinance No. 5532. If RMC 4-1-160(E)(2) as adopted by Ordinance No.
4808 does create a constitutionally protected vested right, then the Appellant would be entitled to a
refund of all fees paid as determined in Conclusion of Law No. 2. However, it is concluded as a
matter of law that RMC 4-1-160(E)(2) does not create a constitutionally protected vested right.
As a preliminary matter, it must be noted that it is uncontested by the parties to this appeal that the
vested rights doctrine as codified for subdivisions does not apply to impact fees. This issue was
resolved in New Castle Investments, LLC v. City of La Center, 98 Wn. App. 224 (1999), which held
that RCW 58.17.033 only vests subdivisions to "land use controls" and that impact fees are not land
use controls. The Appellant acknowledges at p. 3 of their appeal statement that "[t]here is no
question that the City has great flexibility in modifying the fees based on School District needs." The
Appellant distinguishes RMC 4-1-160(E)(2) from the right of the City to vary the amount of the
impact fee by noting that the City "expressly created vested rights" in RMC 4-1-160(E)(2). The
vesting issue at hand is not whether the City can generally vary impact fee amounts after preliminary
plat approval, but rather whether RMC 4-1-160(E)(2) creates a locally adopted vested right that
cannot be extinguished by a subsequent amendment.
An important similarity between Farm Bureau and the impact fees at hand are that they both involve,
for the most part, taxes. Impact fees are largely treated as taxes by Washington courts. Sundquist
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Homes, Inc. v. County of Snohomish, 276 F. Supp. 1123, 1126 (2003)(" Although the issue has
never been decided for all contexts and in all circumstances, when forced to characterize impact fees
the state courts have generally treated them as `taxes. "'). The mode of levying taxes does not create
any vested rights protected by due process. Two cases are instructive on this issue.
The first case dealt with retroactive legislation that altered a timing requirement for the collection of
taxes. Newman v. Commercial Waterway Dist. No. I of King County, 125 Wash. 577, 582 (1923).
In Newman, a state statute authorized the collection of property assessments by waterway districts to
retire bonds for waterway improvements. The statute placed time limits on the collection of the
assessments and a waterway district failed to meet the deadlines prior to the maturation of some
bonds it had issued. The legislature remedied the situation by amending the applicable statutes to
authorize the waterway district to issue new bonds to pay off the matured bonds along with the
authority to re -assess benefitted properties to pay off the newly issued bonds. The new assessments
changed the amount and timing of taxes collected for the improvements leading to the argument
from the property owners that the new assessments violated their vested rights. The Court disagreed,
holding as follows:
The method and time of levying the assessment was a matter of remedy rather than a
matter of vested right, and when the remedy pointed out failed, no matter whatsoever
may have been the cause, it was within the power of the Legislature to provide
another. That the state may adopt new remedies for the collection of taxes or
assessments when those formerly enacted fail of their purpose without any violation
of the Constitution, either federal or state, is not a matter of doubt. The taxpayer has
no vested right in the existing mode of collecting taxes. There is no contract between
him and the state that the latter will not vary such mode, and so long as no
fundamental right of the taxpayer is invaded he cannot complain of a variation in the
mode.
125 Wash. at 582.
The second, more recent case, on vested rights in taxation involves the retroactive amendment of an
initiative to remove a requirement of voter approval for the raising of state taxes. Washington State
Farm Bureau Federation v. Gregoire, 162 Wn.2d 284 (2007). In Farm Bureau, a state initiative had
set a yearly cap on the revenues raised by taxation that could only be exceeded by a vote of the public.
In 2006, nine months after the start of the fiscal year for 2005, the legislature adopted a statute that
increased the cap for 2005 without a public vote. The Washington State Farm Federation challenged
the amendment to the initiative, arguing in part that the public had a vested right in voter approval of
any expenditures that exceeded the cap. The Court agreed that the amendment acted retroactively as
to the 2005 fiscal year. It acknowledged that the due process clause prohibits retroactive amendments
that interfere with vested rights. 162 Wn.2d at 304. However, the Court did not find the cap to
qualify as a vested right. It noted that a vested right, entitled to protection from retroactive
legislation, must be something more than a mere expectation based upon an anticipated continuance
of the existing law; it must have become a title, legal or equitable, to the present or future enjoyment
I_1199M VEMI
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of property, a demand, or a legal exemption from a demand by another. Id. The Court also noted
that no one has a vested right in any general rule of law or policy of legislation which gives an
entitlement to insist that it remain unchanged for one's own benefit. Id. The Court concluded that
"Washington voters' statutory "right" to approve taxes that raise revenues in excess of the state
expenditure limit is a mere expectation—it is not a vested right entitled to due process protections
from subsequently enacted legislation." 162 Wn.2d at 305.
As in Newman and Farm Bureau, the Renton City Council has not altered any vested rights in its
amendment of RMC 4-1-160(E)(2) by Ordinance No. 5532. It merely modified the "mode" of
collecting taxes by modifying the timing for what impact fee schedule is used to ascertain the
amount. As in Newman this change in timing ultimately affects the amount of the tax collected.
Similarly, the removal of the public vote requirement in Farm Bureau also may have changed the
amount of taxes raised, since the public may have rejected the increase ultimately adopted by the
legislature. If the courts are unwilling to protect the integrity of a cap on taxes created by public
initiative, it is unlikely they will find much to honor in a regulation that sets the applicability of an
impact fee schedule.
The case at hand is distinguishable from Farm Bureau in that impact fees arguably have a much
more burdensome and/or direct impact on property owners than the general tax laws of the state.
The burden on the property owner is certainly a valid consideration in assessing the applicability of
due process. Presbytery of Seattle v. King County, 114 Wn.2d 320, 330, 787 P.2d 907 (1990).
However, the courts have already determined that impact fees generally don't trigger any vested
rights protected by the due process clause. See New Castle, supra. The fact that the Ordinance
5532 amendments to RMC 4-1-160(E)(2) changes the timing of how impact fees amounts are to be
assessed adds nothing to the due process public/private balancing of interests.
It is also noteworthy that there is no legislative intent evident or assurance made within RMC 4-1-
160(E)(2) that the Council created a vested right that could not be altered by subsequent legislative
amendment. RMC 4-1-160(E)(2) as adopted in Ordinance No. 4808 was only designed to provide a
methodology for assessing impact fees at the time of building permit issuance. When the Appellant
contemplated the purchase of the subject property in 2010, it had to base its feasibility analysis with
the knowledge that property taxes, real estate excise taxes and all other taxes applicable to its real
estate venture could change at any time. The amount of the impact fees, which is essentially another
tax, was subject to the same unpredictability. The fact that for a period of less than three months
between December 23, 2009 and March 17, 20101 the amount of the RSD impact fees were based
upon the fees in place at preliminary plat approval did not create any vested right to prevent that
unpredictability.
1 As outlined in the findings of fact, Ordinance 4808 RMC 4-1-160(E)(2) applied to RSD impact fees between
December 23, 2009 (when RSD impact fees were added to the impact fee ordinance) and March 17, 2010 (when
RMC 4-1-160(E)(2) was amended to provide that impact fees are based upon the amount in place at building permit
issuance).
APPEAL -11
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6. Even if a vested right were created by Ordinance 4808 RMC 4-1-160(E)(2) it likely
would not apply to Ap elp lant. As previously noted, Ordinance 4808 RMC 4-1-160(E)(2) only
applied to RSD impact fees for a brief period of time, between December 23, 2009 and March 17,
2010. If this temporary period of time created any vested rights, it is likely that those rights would
only apply if the Appellant filed a complete building permit application or acquired PUD approval
during that time period. It is clear from the record that the Appellant acquired PUD approval well
before December 23, 2009 and there is no evidence to support a finding that any complete building
permit applications were filed between December 23, 2009 and March 17, 2010. Consequently, even
if Ordinance 4808 RMC 4-1-160(E)(2) created vested rights, they don't apply to the Appellant.
In the context of land use controls, the courts and the state legislature require the filing of a complete
development permit application to trigger vested rights. The judicial policies underlying this
requirement equally apply in the context of any vesting to impact fees. The requirement for a
complete permit application to vest land use controls prevents permit speculation by making it too
easy to vest and also helps create a date certain that makes the point in time for vesting predictable,
instead of having to inquire into the "moves and countermoves" of the parties. East County
Reclamation v. Bjornsen, 125 Wn. App. 432, 438 (2005); Graham Neighborhood Ass'n v. F.G.
Associates, 162 Wn. App. 98, 113 (2011). In order to assure the same predictability and to also
prevent permit speculation, the vesting of impact fee provisions such as RMC 4-1-160(E)(2) would
also most likely be required by a court to occur upon the filing of a complete development permit
application. For RMC 4-1-160(E)(2) that would either have to be the preliminary plat application or
building permit application, since those are the two permits within the subsection linked to impact
fee amounts.
7. The Examiner has no authority to rule upon issues concerning, equitable estoppel. In
its appeal statement the Appellant also argues equitable estoppel. The Hearing Examiner does not
have the authority to rule upon equitable estoppel claims. Chaussee v. Snohomish County Council,
38 Wn. App. 630 (1984)(hearing examiner has no authority to consider equitable estoppel defense
because the examiner was not given this authority by ordinance or statute). Chaussee may be
distinguishable on the basis that the broad "fairness" standards of review for impact fee appeals
encompass the broad fairness considerations involved in principles of equitable estoppel. However,
equitable estoppel often involves some highly fact specific issues that the fact finding apparatus of
reviewing courts are more suited to review. Unless and until the courts authorize Examiners to
consider equitable estoppel claims in cases similar to the appeal at bar, the Examiner will decline to
assume jurisdiction on that issue.
APPEAL -12
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10 �T�►fC��►1
The appeal is denied. The imposition of $32,497.41 in school impact fees is sustained.
DATED this 9th day of July, 2012.
Phil A. Olbrechts
City of Renton Hearing Examiner
Appeal Right
Appeals of the Hearing Examiner decision are heard in a closed record hearing by the City
Council. Any such appeal shall be made in writing and filed with the City Clerk's office, together
with the applicable appeal fee, within fourteen (14) days of the Examiner's final decision
Change in Valuation
Notice is given pursuant to RCW 36.7013.130 that property owners who are affected by this
decision may request a change in valuation for property tax purposes notwithstanding any program
of revaluation.
APPEAL -13