FILED MAY 2, 2023 In the Office of the Clerk of Court WA State Court of Appeals, Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION THREE
CENTRAL TERMINALS, LLC, a ) Washington limited liability company, ) No. 38787-9-III ) Respondent, ) ) v. ) ) UNPUBLISHED OPINION GRANT COUNTY PORT DISTRICT ) NO. 10, a municipal corporation, ) ) Appellant. )
SIDDOWAY, J. — Grant County Port District No. 10, also known as the Port of
Moses Lake (the Port), appeals a superior court decision granting Central Terminals
LLC’s appeal of the final assessment roll for a local improvement district encompassing
land within and near the Port-owned Grant County International Airport. The superior
court held that Central Terminals’ assessment was based on a potential zoning change for
its property and its property’s potential inclusion in the urban growth area (UGA) for
Moses Lake and was thereby “improperly speculative and done upon a fundamentally
wrong basis.” Clerk’s Papers (CP) at 822.
The assessment arrived at for Central Terminals’ property took into consideration
what was reported to be the “strong probability” of a rezone approval that Central
Terminals had already requested from the city of Moses Lake in 2019, when it also No. 38787-9-III Cent. Terminals LLC v. Grant County Port Dist. No. 10
petitioned the city for inclusion of its property in the UGA. The Port’s expert considered
only that potential, and the “[c]osts and risks associated with obtaining re-zone approval.”
CP at 399-400. Central Terminals offered no expert testimony that the potential rezone
and UGA inclusion were not properly taken into consideration, or that the costs and risk
associated with obtaining approval had been underestimated.
Central Terminals failed to overcome the presumption that the Port’s assessment
was correct and fair. We reverse the superior court’s order and confirm the final
assessment roll as it relates to Central Terminals’ properties.
FACTS AND PROCEDURAL BACKGROUND
At issue is a benefit assessment arrived at for undeveloped land that Central
Terminals owns west of the Grant County International Airport. In February 2019, the
Port created a local improvement district known as the Westside Employment Center
Local Improvement District (the LID). The total land area within the LID boundary is an
estimated 2,324.2 acres, 1,632.59 acres of which is owned by the Port.1 Of the privately-
owned land located within the LID’s boundary,160 acres, made up of two adjacent
parcels, is owned by Central Terminals.
The LID was created for the purpose of paying the costs of road, water, sewer, and
electric power improvements. As described by the preliminary benefit and proportionate
1 In assessing benefits, the Port’s valuation expert treated an estimated 142 acres of the Port’s land as unusable, with Port ownership set at an estimated 1,491 acres of usable land.
2 No. 38787-9-III Cent. Terminals LLC v. Grant County Port Dist. No. 10
assessment study prepared for the Port by ABS Valuation in May 2020, the
improvements consisted of a 3.2± mile connector road from State Highway 17 to Route
10, and utility extensions that would be made possible by construction of the connector
road. State Highway 17 is a limited access highway and, according to the ABS study, the
Port holds a “legacy easement” that would allow it to construct an approach not possible
without Port participation. CP at 337. The connector road would be a two-lane, 30-foot-
wide road with bituminous surface treatment and gravel shoulders within an 80-foot
easement donated by the Port to Grant County. For ownerships lacking direct frontage
on the new road, sections of gravel easement road 26 to 28 feet wide would be
constructed.
Construction of the road would make it possible to make water service, domestic
and industrial sewer mains available to all properties within the LID boundary, although
utility extensions to the property lines of some ownerships would still be needed.
ABS’s benefit/assessment study analyzed the “special benefit” to each ownership
within the LID boundary. It defined “special benefit” as “[t]he difference in the fair
market value of the property without the improvement and the fair market value of the
property with the improvement.” CP at 344. The total cost for the LID improvements
was estimated at the time of ABS’s 2020 study to be $6,500,000. ABS estimated total
benefits to the properties at that time to be $8,353,000, for a cost/benefit ratio of 77.82,
3 No. 38787-9-III Cent. Terminals LLC v. Grant County Port Dist. No. 10
“[i]n other words, each parcel receives one dollar in special benefit for each
$ 0.78± of LID assessment.” CP at 339.
The benefit/assessment study devoted three single-spaced pages to explaining its
determination of the special benefit to Central Terminals’ parcels depicted on the LID
map as parcels 17 and 18. It pointed out that Central Terminals’ property lacked frontage
on any established road, and an extension of utilities would not be possible without
construction of the connector road to be built by the project. It pointed out that the
property was then zoned Rural Residential 1 (RR1), and that in 2019 Central Terminals’
owners had petitioned the city of Moses Lake for inclusion within its UGA and had
requested a rezone to the Urban Heavy Industrial (UHI) zoning classification. It reported
that according to Port officials, there was “a strong probability of re-zone approval,” but
Central Terminals’ owners had not yet applied to Grant County for inclusion in the UGA,
and county and city officials indicated that any rezone request would be at least two years
from approval. CP at 399.
The ABS study summarized the “highest and best use” of the property without
(before) and with (after) the LID as follows:
Highest and best use without the project is for investment hold until such time as necessary infrastructure (both physical, legal road access and all attendant necessary utilities) is constructed. Utilities that are present on other parts of the airport property would not be extended and therefore could not be utilized without the connector road; this is the “before LID” condition.
4 No. 38787-9-III Cent. Terminals LLC v. Grant County Port Dist. No. 10
With the LID in place, Port of Moses Lake/Grant County Municipal Airport facilities and utilities are available, and the subject parcel has frontage on a new two-lane county road . . . . Utilities are available along the new road . . . to map number 17, with 310 LF [lineal feet] of domestic water extension needed. Further road and utility extensions would be needed in order for map number 18 to be developed.
Highest and best use with the project completed is for investment hold for future potential re-zone approval. . . . Costs and risk associated with obtaining re-zone approval are considered within the valuation analysis.
CP at 663. The ABS study assumed that the property would be purchased/sold as a
single entity and arrived at the following special benefit assessment for the property:
CP at 664.
Central Terminals contacted the Port to challenge aspects of ABS’s preliminary
analysis of the special benefit to its property. It pointed out that contrary to ABS’s
“without LID” valuation, it did have legal access through adjacent properties. It argued
that ABS underestimated the time and risk involved in becoming included in the UGA,
providing a letter from Gil Alvarado of GAJ Urban Planning Services, who was working
with Central Terminals on its land use issues.
5 No. 38787-9-III Cent. Terminals LLC v. Grant County Port Dist. No. 10
ABS reviewed the challenges and prepared an addendum to its benefit/assessment
study, reducing its assessment of the special benefit to Central Terminals’ ownership as
follows:
LID Original Original With Original Revised Revised Revised Special Map Without LID LID Value Special Without LID With LID Special Benefit No. Value Benefit Value Value Benefit Difference Estimate Assessment 17 $131,000 $479,000 $348,000 $150,000 $440,000 $290,000 ($58,000) 18 $52,000 $209,000 $157,000 $72,000 $195,000 $123,000 ($34,000)
CP at 765 (modified). It nonetheless explained that, “Consistent with our original
analysis the after value also reflects the fact that obtaining UGA status without the LID is
very unlikely and the market would reflect this in any purchase decision.” CP at 764.
In March 2021, the Port Commission adopted a resolution establishing the LID
and, in July 2021, it set a hearing on the final assessment roll for the LID, to take place on
August 9, 2021. A Central Terminals member, Robert Fancher, and lawyer, Trevor
Bevier, attended the hearing, at which they objected to the assessment on Central
Terminals’ behalf. They contended that the assessment was based on “speculation and
distribution costs of the final project cost, rather than the basis of special benefits to the
property.” CP at 562. They did not offer competing appraisal or expert evidence to
support their objections.
Several speakers complained during the public hearing that they had received
notice of the proposed assessment for their ownership but nothing more. Following the
hearing, Port staff e-mailed to affected property owners a spreadsheet reflecting the cost
6 No. 38787-9-III Cent. Terminals LLC v. Grant County Port Dist. No. 10
of the project and a breakdown of the special assessment against each of the affected
parcels. The spreadsheet also reflected the effect of a grant that had been obtained by the
Port and would ratably reduce each owner’s assessment. The effect of the grant on
Central Terminals was a reduction of its total assessment to $291,985.56.
At their August 23 meeting, the commissioners approved and confirmed the final
assessment roll for the project.
Central Terminals timely appealed the final assessment roll to superior court. The
parties submitted briefing and evidence, and the superior court heard oral argument.
Among materials submitted in support of a declaration from Kim DeTrolio, the Port’s
director of finance and administration, was its exhibit 11: an August 18, 2021 response by
ABS to Central Terminals’ written objection to its assessment. Ms. DeTrolio testified in
her declaration that the ABS response “was provided to the Port Commission as part of
its agenda packet before the [August 23] meeting.” CP at 587. Central Terminals
objected to the superior court’s consideration of the exhibit and, according to court
minutes, the superior court reserved ruling on the objection.
The court took the appeal under advisement and later issued an order finding that
the “LID Assessment of the Central Terminals Property was improperly speculative and
done upon a fundamentally wrong basis by using a future re-zone from RR1 to UHI and
future inclusion within the UGA.” CP at 822. The court ordered “the Port of Moses
Lake is to correct the Assessment for the Central Terminals Property in accordance with
7 No. 38787-9-III Cent. Terminals LLC v. Grant County Port Dist. No. 10
the Court’s findings.” Id. The order did not disclose a ruling on Central Terminals’
objection to ABS’s August 18, 2021 response to its objection. The Port timely appealed.
ANALYSIS
The Port asks us to reverse the superior court’s ruling granting Central Terminals’
appeal for three reasons: (1) the court found that the assessment was founded on a
“fundamentally wrong basis,” yet relied on an issue that would not necessitate a
nullification of the entire LID; (2) Central Terminals failed to demonstrate that for ABS
to analyze “highest and best use” following the LID as “investment hold for future
potential re-zone approval” was improperly speculative; and (3) Central Terminals failed
to present expert testimony rebutting the presumption that the benefit assessment was
correct and fair.2
I. STANDARDS FOR CONFIRMATION AND REVIEW
Port districts are authorized to establish local improvement districts and levy
assessments on property specially benefited by the improvement. RCW 53.08.050(1).
A “special benefit” is “the increase in fair market value attributable to the local
improvements.” Doolittle v. City of Everett, 114 Wn.2d 88, 103, 786 P.2d 253 (1990).
2 The parties dispute whether ABS’s August 18, 2021 response to the objections raised by Central Terminals at the public hearing was part of “the record of the proceedings before the [legislative body]” that Abbenhaus v. City of Yakima holds is judicially reviewed. 89 Wn.2d 855, 859, 576 P.2d 888 (1978). Since it makes no difference to the issues on which we reverse the superior court, we decline to address the issue.
8 No. 38787-9-III Cent. Terminals LLC v. Grant County Port Dist. No. 10
The amount of special benefit accruing from a local improvement is the difference
between the fair market value of the property immediately after and before the benefit has
accrued. Id. at 93. Any formula for measuring special benefit “must ultimately relate to
benefits, not merely the distribution of costs.” Bellevue Plaza, Inc. v. City of Bellevue,
121 Wn.2d 397, 415, 851 P.2d 662 (1993). Present use should be considered, as well as
future use to which the property is reasonably well adapted. Doolittle, 114 Wn.2d at 93
(citing In re Consolidated Appeals of Jones, 52 Wn.2d 143, 146, 324 P.2d 259 (1958)).
Property cannot be relieved from the burden of a local improvement district assessment
simply because the owner has seen fit to devote it to a use that may not be specially
benefited by the local improvement. Id. (citing Jones, 52 Wn.2d at 146). Nevertheless,
“[t]o be subject to an LID assessment, a property must realize a benefit that is ‘actual,
physical and material[,] not merely speculative or conjectural.’” Hasit LLC v. City of
Edgewood (Loc. Improvement Dist. No. 1), 179 Wn. App. 917, 933, 320 P.3d 163 (2014)
(alterations in original).
The decision of a port commission to confirm an assessment roll is final and
conclusive except as to timely written objections. RCW 35.44.190. The decision on such
an objection is subject to review by the superior court upon appeal. RCW 35.44.200.
The superior court shall confirm unless it finds from the evidence that the “assessment is
founded upon a fundamentally wrong basis and/or the decision of the [commission] was
9 No. 38787-9-III Cent. Terminals LLC v. Grant County Port Dist. No. 10
arbitrary or capricious,” in which case it may “correct, change, modify, or annul the
assessment insofar as it affects the property of the appellant.” RCW 35.44.250.
“Fundamentally wrong basis”—the ground on which the superior court ordered
correction of the assessment here—“‘refers to some error in the method of assessment or
in the procedures used by the [commission], the nature of which is so fundamental as to
necessitate a nullification of the entire LID, as opposed to a modification of the
assessment as to a particular property.’” Abbenhaus v. City of Yakima, 89 Wn.2d 855,
859, 576 P.2d 888 (1978) (quoting Cammack v. City of Port Angeles, 15 Wn. App. 188,
196, 548 P.2d 571 (1976)). Despite the breadth of invalidation that must be shown, the
statutory remedy is limited to nullifying or modifying only those assessments that were
appealed. Id.
The judgment of the superior court may be appealed to the Court of Appeals.
RCW 35.44.260. The Supreme Court held in Abbenhaus that our review is limited to the
record of proceedings before the legislative body approving the assessments and,
consistent with legislative intent to limit court involvement in assessment proceedings, is
not an independent consideration of the merits of the issue. 89 Wn.2d at 859-60. It is,
instead, a consideration and evaluation of that body’s decision-making process. Id.
“We begin with a presumption of the correctness of the [commission’s] action; the
burden is upon one challenging the assessment to prove its incorrectness,” further, it is
presumed “‘that the assessment is fair.’” Id. at 860-61 (quoting Philip A. Trautman,
10 No. 38787-9-III Cent. Terminals LLC v. Grant County Port Dist. No. 10
Assessments in Washington, 40 WASH. L. REV. 100, 118 (1965)). The presumptions
establish which party has the burden of going forward with evidence on an issue, but the
burden of proof shifts back to the commission once the objecting party presents expert
appraisal evidence showing that the property would not be benefited by the improvement.
Bellevue Plaza, 121 Wn.2d at 403. Claims of unfairness that lack supporting evidence of
appraisal values and benefits are inadequate to overcome the presumptions. Abbenhaus,
89 Wn.2d at 861.
II. ANALYZING THE HIGHEST AND BEST USE OF CENTRAL TERMINALS’ PROPERTIES WITH THE LID AS “INVESTMENT HOLD FOR FUTURE POTENTIAL RE-ZONE APPROVAL” WOULD NOT NECESSITATE NULLIFYING THE ENTIRE LID, EVEN IF ERROR
As explained by our Supreme Court in Abbenhaus, the controlling statute on the
courts’ authority to correct, change, modify, or annul a legislative body’s benefit
assessment was amended and narrowed by the legislature shortly following the court’s
decision in In re Schmitz, 44 Wn.2d 429, 268 P.2d 436 (1954). 89 Wn.2d at 858. In
Schmitz, the court had “reviewed the trial court’s evidence in detail” and overturned a
municipality’s approval of an assessment “based upon [the court’s] view of the merits.”
Id. The court acknowledged in Abbenhaus that the legislature’s intent in responding with
the statutory amendment was to “limit[ ] court involvement in assessment proceedings.”
Id. at 859.
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Consistent with that intent, the court held that a “‘fundamentally wrong basis’” is
not present if an error in the method of assessment or procedures used necessitates only
“‘a modification of the assessment as to particular property.’” Id. (quoting Cammack,
15 Wn. App. at 196). Instead, the nature of the error must be “‘so fundamental as to
necessitate a nullification of the entire LID.’” Id. (quoting Cammack, 15 Wn. App. at
196). Abbenhaus adopted this standard from the Court of Appeals’ decision in
Cammack, which pointed to the reassessment procedures set forth in RCW 35.44.280 as
containing “[e]xamples of this type of error.” 15 Wn. App. at 196. RCW 35.44.280
authorizes reassessment where assessments are not valid “for want of form, or
insufficiency, informality, irregularity, or nonconformance with the provisions of law,
charter, or ordinance.” Cammack also suggested that “fundamental” errors “should be
ascertained as a matter of law by reference to the transcript which plaintiff is required to
certify” and which “should demonstrate, without reference to extrinsic evidence,
whether the statutes and ordinances or charters have been followed.” Id. at 196-97
(citing RCW 35.44.230).
In Cammack, this court readily found that the record of approval and confirmation
of the city council’s assessment “shows no errors of this nature.” Id. at 197. Central
Terminals is unable to point to any error of that nature in the record of the
commissioners’ approval and confirmation of the assessments here.
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III. CENTRAL TERMINALS DOES NOT DEMONSTRATE THAT ABS’S CONSIDERATION OF ITS PROPERTIES’ INCREASED INVESTMENT VALUE WAS SPECULATIVE OR CONJECTURAL
A. ABS analyzed the improvements’ immediate impact on value
“The amount of the special benefit accruing to property as a result of a local
improvement is the difference between the fair market value of the property immediately
after the special benefits have accrued and the fair market value of the property before the
special benefits have accrued.” Doolittle, 114 Wn.2d at 93. “‘[F]uture use to which
property is reasonably adaptable within a reasonably foreseeable time is considered in
determining the amount of special assessments.’” Bellevue Plaza, 121 Wn.2d at 413
(quoting Doolittle, 114 Wn.2d at 104).
“[W]hen an appraiser uses a factor ‘beyond the knowledge of reasonable
certainty’, it becomes pure speculation.” Id. at 411 (quoting In re Local Improvement
No. 6097, 52 Wn.2d 330, 335-36, 324 P.2d 1078 (1958)). But the ABS analysis of the
increase in the value of Central Terminals’ property did not compare its highest and best
“without LID” to a highest and best use “with LID” as property in the UGA, zoned UHI.
Its “with LID” analysis was, instead, as “investment hold” property “for future potential
re-zone approval,” taking into consideration “[c]osts and risk associated with obtaining
re-zone approval.” CP at 400 (emphasis added). Obtaining the desired rezone and UGA
inclusion may be beyond the knowledge of reasonable certainty, but that is not the issue.
At issue is whether significantly increasing the prospects for a rezone and UGA inclusion
13 No. 38787-9-III Cent. Terminals LLC v. Grant County Port Dist. No. 10
has an impact on market value that is within the knowledge of reasonable certainty. ABS
experts reasoned that it was.
The cases on which Central Terminals relies in arguing that ABS’s “with LID”
market value was too speculative are unpersuasive. It relies on In re Condemnation of
West Marginal Way, 112 Wash. 418, 422, 192 P. 961 (1920), in which the Supreme
Court was presented with the objection by dwellers on an island in the Duwamish River
who were assessed for the cost of constructing a roadway on the mainland shoreline. The
premise for the island dwellers being benefited was the theory that a bridge would be
constructed by the city across the river. Id. at 423. Yet, as the court observed, “nothing
of this sort is planned, contemplated, or projected at the present time at either public or
private expense; nor is there any assumption or assurance thereof in the reasonably near
future.” Id. at 421. The court distinguished that situation from potential uses that can be
properly considered:
It is true that in fixing the amount of an assessment, or in determining if there would be a benefit to the property, the eminent domain commissioners should take into consideration the present as well as the future use to which the property is reasonably adaptable. Yet, the special and peculiar benefits which will legalize an assessment for the expense of a local improvement must be a present benefit immediately accruing from the construction of the work in question, and landowners cannot be assessed for intended benefits which may never be realized; mere speculative benefits are not, in reality, benefits.
Id. at 422 (emphasis added) (internal quotation marks and citation omitted).
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Central Terminals also likens the determination of its benefit to the facts of Jones,
in which lots in Tacoma owned by two homeowners whose properties were adequately
served by an existing water main and hydrants challenged their inclusion on the
assessment roll for a new water main and hydrant on an adjacent street. 52 Wn.2d at
144-45. They presented expert testimony, accepted by the trial court, that the project
would do nothing to enhance the market value of three of their four lots. Id. at 145. This
court affirmed the trial court’s rejection of the city’s “speculative,” “conjure[d-]up”
argument that “if” one of the homeowners moved his house to the rear of his tract, he
“might build two houses on the front of the tract . . . and thus benefit.” Id. at 147.
In this case, by contrast, Central Terminals’ owners had themselves already
petitioned for inclusion in Moses Lake’s UGA and requested a rezone to UHI. The Port
was presented with ABS’s expert analysis that the project improvements would
immediately improve their prospects for success to a “strong probability.” CP at 399.
Contrary to the superior court’s finding, ABS’s “with LID” valuation was not premised
on the property as rezoned and included in the UGA; it merely took into consideration the
impact on “investment hold” value of the significantly increased likelihood of those
changes. This was information on which the commissioners were entitled to rely.
15 No. 38787-9-III Cent. Terminals LLC v. Grant County Port Dist. No. 10
B. Central Terminals offered no competing expert testimony
The Port finally argues that Central Terminals’ failure to present any expert
testimony prevents them from overcoming the presumption that ABS’s assessment was
correct and fair. “Expert evidence is clearly required to establish whether or not property
is especially benefited by an improvement and the extent of the benefit.” Cammack,
15 Wn. App. at 197; see Bellevue Plaza, 121 Wn.2d at 403; City of Seattle v. Rogers
Clothing for Men, Inc., 114 Wn.2d 213, 231, 787 P.2d 39 (1990). Central Terminals
responds by pointing out that in Hasit, this court held that while the body approving the
assessment roll will need expert analysis, there is no requirement that the challenging
party present the evidence or that the expert evidence be “appraisal evidence.” Br. of
Resp’t at 23 (quoting Hasit, 179 Wn. App. at 946); see e.g., In re Indian Trail Trunk
Sewer Sys., 35 Wn. App. 840, 843-44, 670 P.2d 675 (1983) (burden of proof was met by
expert testimony as to property near the challengers’ property). Central Terminals
contends that it satisfied this requirement for expert analysis by relying on ABS’s
comparable sales research into the RR1-zoned properties as the appropriate “with LID”
value of its property.
The material conclusion to which Central Terminals was objecting, however, was
not the value of RR1-zoned property with little potential of being included in the UGA
and rezoned UHI. It was ABS’s conclusions that (1) with the project, Central Terminals’
property had a strong probability of being rezoned and included in the UGA, and (2) even
16 No. 38787-9-III Cent. Terminals LLC v. Grant County Port Dist. No. 10
after taking into consideration the cost and risk of obtaining the rezone, that strong
probability materially increased the "with LID" value of its property. Central Terminals
needed to present competing expert analysis on these matters to overcome the
presumption that the assessment of its property was correct and fair. It offered none.
We reverse the superior court's "Order on Appeal of LID Assessment Roll" 3 and
confirm the final assessment roll as it relates to Central Terminals' properties.
A majority of the panel has determined this opinion will not be printed in the
Washington Appellate Reports, but it will be filed for public record pursuant to
RCW 2.06.040.
Siddoway, J.
WE CONCUR:
Staab, J.
3 CP at 819.