Ihif Commercial, Llc, V. City Of Issaquah

Court of Appeals of Washington

Ihif Commercial, Llc, V. City Of Issaquah

Court of Appeals of Washington·Decided August 22, 2022·No. 83011-2·Unpublished

Opinion

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

IHIF COMMERCIAL, LLC ) No. 83011-2-I )

Appellant, ) DIVISION ONE )

v. ) UNPUBLISHED OPINION )

CITY OF ISSAQUAH, )

)

Respondent. )

)

HAZELRIGG, J. — IHIF Commercial appeals the dismissal of their petition for relief under the Land Use Petition Act (LUPA), arguing its permit applications vested pursuant to a development agreement with the City of Issaquah or alternatively under statute. Based on a plain reading of the agreement, Shelter’s permit applications were vested. We reverse.

FACTS

In 1996, the City of Issaquah (City) entered into a development agreement (DA) with various partnerships to develop a parcel known as the Issaquah Highlands. IHIF Commercial LLC, d/b/a Shelter Holdings (Shelter) owns 21.5 acres of land in this area. Shelter sought to subdivide the property for various commercial, retail, and residential development pursuant to the DA. It submitted

a preliminary plat application on August 1, 2017 and the City determined the application was complete on August 11, 2017. Over the next several months, Shelter submitted a site development permit (SDP) application and several administrative site development permit (ASDP) applications (collectively the SDPs) for a medical office building and a self-storage facility, but the City determined the initial submissions were incomplete and requested corrections and additional information. On March 15, 2018, the City and Shelter agreed all SDP applications were complete. Four days later, on March 19, 2018, the Issaquah City Council passed an ordinance terminating the DA and adopting new regulations governing the property.

The City informed Shelter that the new regulations did not recognize vesting under the DA and its pending SDP applications were now subject to new standards. While the zoning classifications did not change, the new regulations required Shelter to modify structural aspects of the project, such as parking and floor aspect ratios. Shelter declined to change its applications based on the DA. The SDPs were referred to the City Development Commission, which found the applications did not comply with the newly adopted regulations. Shelter appealed this determination to the City hearing examiner, who upheld the decision. Shelter then appealed the hearing examiner’s decision to the King County Superior Court under LUPA. The court affirmed the hearing examiner’s decision on a motion for partial summary judgment. The parties filed a joint motion to stay the remainder of the case and enter final judgment to allow Shelter to appeal the partial summary judgment order, which was granted.

ANALYSIS

I. Land Use Petition Act and Standard of Review We review a LUPA action under RCW 36.70C, standing “in the same position as the superior court when review[ing]” the record that was before the hearing examiner. Ellensburg Cement Products, Inc. v. Kittitas County, 179 Wn.2d 737, 742, 317 P.3d 1037 (2014). “Under LUPA, the petitioner carries the burden of establishing one of the standards set forth in RCW 36.70C.130(1)” as a basis for relief. Fuller Style, Inc. v. City of Seattle, 11 Wn. App. 2d 501, 507, 454 P.3d 883 (2019). If the land use decision is not supported by substantial evidence the petitioner is entitled to relief. RCW 36.70C.130(1)(c).

In a review for substantial evidence, “all facts and inferences” are construed “in a light most favorable to the party that prevailed in the highest fact-finding forum.” Douglass Props. II, LLC v. City of Olympia, 16 Wn. App. 2d 158, 165, 479 P.3d 1200, review denied, 197 Wn.2d 1018 (2021), and cert. denied, 142 S. Ct. 900 (2022). Then we “determine whether sufficient evidence exists in the record to persuade a reasonable person of the truth asserted by the alleged facts.” Id.

The City argues that deference is owed “to both legal and factual determinations of local jurisdictions with expertise in land use regulation.” See City of Medina v. T-Mobile USA, Inc, 123 Wn. App. 19, 24, 95 P.3d 377 (2004). However, no deference is due to the factual determinations of a local jurisdiction in a review for substantial evidence. RCW 36.70C.130(1)(c). Interpretation of a contract based on the plain language of the agreement does not require any local expertise such that deference to local knowledge would be appropriate. Rather,

the objective in interpreting a contract “is to discern the parties’ intent,” interpreting “clear and unambiguous terms as a question of law.” Wm. Dickson Co. v. Pierce County, 128 Wn. App. 488, 493, 116 P.3d 409 (2005). Further, it would be improper to give deference to the City’s own interpretation as they are a party to the contract. Finally, as noted by Shelter, the City has offered a variety of interpretations for the same contractual language throughout this litigation and in the City’s dealing with Polygon, another developer working to build in the Issaquah Highlands under the same DA that is at issue here. 1 Due to the mercurial position of the City and the various interpretations given to the same language over time, we decline to give deference to its most recent interpretation.

II. Vesting of SDPs Under the Development Agreement RCW 36.70B.170(1) authorizes local governments to enter into binding agreements with developers to facilitate the development process. RCW 36.70B.170 Legislative Findings, 1995 ch. 347 § 501. The statute requires that the agreement “set forth the development standards and other provisions that shall apply to and govern and vest the development, use, and mitigation of the development of the real property for the duration specified in the agreement.” It also mandates that the “development standards” within these agreements include “a build-out or vesting period for applicable standards.” RCW 36.70B.170(3)(i).

In Washington, vesting is the general rule that a complete land use application “will be considered only under the land use statutes and ordinances in

1 Both development agreements were entered into by the City and Grand Ridge LP and

Glacier Ridge LP. Westridge-Issaquah II LP v. City of Issaquah, 20 Wn. App. 2d 344, 349, 500 P.3d 157 (2021).

effect at the time of the application's submission.” Noble Manor Co. v. Pierce County, 133 Wn.2d 269, 275, 943 P.2d 1378 (1997); See also Seven Hills, LLC v. Chelan County, 198 Wn.2d 371, 388, 495 P.3d 778 (2021). Under the prevailing common law interpretation, developers are “entitled” to have their proposals processed “under the regulations in effect at the time a complete building permit application was filed.” Noble Manor, 133 Wn.2d at 275. These principles were codified by the legislature in RCW 19.27.095 (building permits) and 58.17.033 (subdivision and short subdivision applications). The purpose of the doctrine is to provide a degree of certainty to developers and “protect their expectations against fluctuating land use policy,” but this must be weighed against the public interest to ensure that the vesting of development rights do not “sanction the creation of a new nonconforming use.” Noble Manor, 133 Wn.2d at 278, 280.

Under RCW 36.70B.170(4), DAs are entered into through an exercise of contract authority by local governments, and we apply normal rules of contract interpretation. Washington uses the objective manifestation theory of contracts. Hearst Commc’ns, Inc v. Seattle Times Co., 154 Wn.2d 493, 503, 115 P.3d 262 (2005). “Under this approach, we attempt to determine the parties’ intent by focusing on the objective manifestations of the agreement, rather than on the unexpressed subjective intent of the parties.” Id. Words in a contract are generally given “their ordinary, usual, and popular meaning unless” the parties clearly intended otherwise. Viking Bank v. Firgrove Commons 3, LLC, 183 Wn. App. 706, 713, 334 P.3d 116 (2014) (quoting Hearst Commc’ns, 154 Wn.2d at 504). “This

meaning may be ascertained by reference to standard English dictionaries.” Wm. Dickson Co., 128 Wn. App. at 493.

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