Hamilton Corner I, Llc, Appellanbt V City Of Napavine

Court of Appeals of Washington·Decided August 22, 2017·No. 49507-4·Published

Opinion

Filed

Washington State

Court of Appeals

Division Two

August 22, 2017

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

DIVISION II

HAMILTON CORNER I, LLC, No. 49507-4-II

Appellant,

v.

CITY OF NAPAVINE, PUBLISHED OPINION Respondent.

WORSWICK, J. — Hamilton Corner I LLC, appeals from a superior court decision affirming the city council’s confirmation of the city of Napavine’s local improvement district (LID) assessment levied against Hamilton Corner’s properties. The assessment was for expansion of city water to an area not previously serviced by public water. Among other improvements, the LID improvements included equipping a recently drilled city well (Well 6) with a pump, power, controls, and piping to connect the well to the city’s water mains. However, the city later determined that the water from Well 6 was not suitable for drinking without additional improvements and currently could be used only for fire suppression.

Hamilton Corner argues that the city’s current inability to use Well 6 for drinking water materially altered the LID as originally proposed, and thus, the assessment roll was founded upon a fundamentally wrong basis. Hamilton Corner further argues that because the assessment roll was founded upon a fundamentally wrong basis, the city’s appraisal of Hamilton Corner’s properties was founded upon a fundamentally wrong basis, and thus, the council’s decision to

confirm the assessments was arbitrary and capricious. We disagree and affirm the superior court’s decision.

FACTS

Hamilton Corner owns three properties relevant to this case, which are located in the city of Napavine. In 2011, the city declared its intention to order the acquisition and construction of certain water system improvements in the “Rush Road area,” which included Hamilton Corner’s properties. The planned improvements aimed to expand the city water system to the Rush Road area to promote development. The plan included connecting the public water system to a recently drilled well, Well 6. The city’s “Description of Improvements” described the improvements as follows:

Acquisition of a 12-inch water main, pressure reducing stations and fire hydrants, on Rush Road from Cedar Crest Street north to the Interstate 5 freeway interchange, and north on Hamilton Road to a point approximately 2,400 feet beyond the Interstate 5 freeway interchange; construction of additional 12-inch and 8-inch water main along Rush Road across the Interstate 5 freeway interchange, construction of 8-inch water main north on Rush Road from the Interstate 5 interchange approximately 1,500 feet, and south from the Interstate 5 interchange along Kirkland Road and Bond Road approximately 1,800 feet; additional fire hydrants per City of Napavine by these water mains; equipping a recently drilled City well[1] with a pump, power, controls, and piping to connect well to aforementioned water mains; and construction of a new water reservoir for pressure control for the zone to be served by aforementioned water mains, including piping from the new water reservoir to aforementioned water mains; and associated work and appurtenances related to the above-described improvements.

Clerk’s Papers (CP) at 76. The city adopted Resolution No. 11-12-34 giving notice of its intent to establish LID No. 2011-1, which would implement the proposed improvements and provide

1 This recently drilled well is Well 6.

payment for the improvements in part by special assessments upon the property within the district.

In February 2012, the city mailed notices of the LID formation hearing and preliminary assessments to the taxpayers of record as shown for the LID properties. After a public hearing, the city council adopted Ordinance No. 497, forming the LID and adopting the preliminary assessment roll in accordance with Resolution No. 11-12-34. For the next three years the city moved forward with its improvement plans.

During this time, the city discovered that the water from Well 6 was significantly discolored and thus failed to meet public health and city code requirements to be used as potable drinking water. While the city explored its options for correcting the Well 6 issue, the city moved forward with its improvement plans to otherwise bring public water to the Rush Road area, while reserving Well 6 water for fire suppression purposes until the discoloration was corrected.2 In 2012, the city acquired an appraisal of Hamilton Corner’s properties in order to obtain an opinion as to the “before” and “after” market values of the properties and resulting special benefits, if any, relating to the LID, for purposes of establishing the properties’ assessments. The appraisal was performed without any owner contact, and the properties were inspected only from the exterior and public areas.

Regarding the Hamilton properties, the appraisal noted that the primary difference between the “before” condition and the “after” condition would be that water would be provided

2 Costs associated with resolving the discoloration issue are not included in the LID costs.

by an extension of the city’s public water system as opposed to the properties’ private well system. The completed public water system would allow for full development of the properties in accordance with the city’s zoning and development standards, reduce system maintenance expenses, and lower property insurance rates. The appraisal concluded that “[t]he highest and best use is the continued use of the existing improvements for the foreseeable future, with the excess land of 19.43 acres suitable for additional commercial and industrial development upon extension of public water.” Based on its investigation, the appraisal placed the “before” value of the Hamilton Corner properties at $3,440,000, and the “after” value at $3,760,000, for a total special benefit of $320,000. CP at 57.

On September 29, 2015, the city council published and mailed notices of public hearing for the LID final assessment roll to all property owners within the LID. Based on the appraisal, Hamilton Corner’s three properties were assessed for a total $170,329.02, approximately half of the value of the special benefits to them, as calculated by the appraisal.3 On October 27, 2015, Hamilton Corner sent a written objection to the assessment of its properties to the city council. That same day, the city began its public hearing on the assessments.

At the hearing, Hamilton Corner expressed its concerns to the city council. The council noted Hamilton Corner’s protest and explained that while no water from Well 6 would be provided until the discoloration issue was resolved, a valve system allowed the city to nonetheless provide potable water to the area in the meantime. The council then continued the hearing to November 24, to allow time for the LID to prepare written responses to the protests received at the October 27 hearing. The council also encouraged Hamilton Corner to contact an

3 Only 50 percent of the improvement project costs were funded by LID assessments.

independent appraiser, stating, “I would recommend that maybe what you should possibly look at doing is talking to an appraiser . . . and have them determine whether they feel there’s benefit after the improvements to your property.” Administrative Record (AR) at 155-56.

On November 19, legal counsel for the city responded to Hamilton Corner’s letter explaining the cost of the improvement project. The letter also explained:

A Benefit Study/Appraisal Report was prepared for your property in accordance with standard practices. The work was performed by an independent appraiser with expertise in special benefit assessments. The appraiser has worked throughout the State on LIDs. The City is unaware of any appraisals undertaken by qualified experts which contradict the conclusions reached by the City’s expert.

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Hamilton Corner I, Llc, Appellanbt V City Of Napavine, (Wash. Ct. App. 2017).

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