JSP Silverdale Land LLC et al v. Kitsap County

• Court: District Court, W.D. Washington
• Decided: May 6, 2026
• Docket: 3:25-cv-05288
• Status: Unknown

Opinion

1 2

3 4 5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 JSP SILVERDALE LAND LLC et al, CASE NO. 3:25-cv-05288-JNW 8 Plaintiffs/Petitioners, ORDER GRANTING 9 PETITIONER’S LUPA PETITION v. 10 KITSAP COUNTY, 11 Defendant/Respondents. 12

13 1. INTRODUCTION 14 This matter comes before the Court on Plaintiffs JSP Silverdale Land LLC, 15 CG Silverdale Land LLC, and TC Silverdale Land LLC’s (collectively, “Petitioners”) 16 claim under Washington’s Land Use Petition Act (“LUPA”), RCW 36.70C., et seq.1 17 Petitioners challenge the Kitsap County Board of County Commissioners’ (“Board”) 18 decision upholding the Kitsap County Public Works Director’s (“Director”) method 19 of calculating the newcomer’s assessment for Petitioners’ residential development in 20 Silverdale, Washington. 21

22 1 This case was consolidated with a second action, Case No. 3:25-cv-05558-GJL, which included the LUPA claim now before this Court. The Complaint reserves the 23 federal claims to be decided outside the LUPA procedures. 1 At its core, this case presents a question of statutory interpretation: whether 2 the Kitsap County Code required the County to execute a newcomer’s agreement

3 that fixed the assessment rate for Petitioners’ project, or whether the County could 4 instead charge whatever rate happened to be in effect at the time of each sewer 5 connection—a practice that nearly doubled the per-unit assessment over the life of 6 the project. 7 The Court concludes that the Code unambiguously required the County to 8 execute a newcomer’s agreement establishing the assessment amount for the entire

9 project. The Director’s failure to do so, and the resulting practice of imposing mid- 10 project rate increases—which the Board upheld on appeal—constitutes an 11 erroneous interpretation of the law. The petition is GRANTED. 12 2. BACKGROUND 13 Petitioners are property developers that sought to build a residential 14 development, the “Highlands at Silverdale,” in the unincorporated Silverdale area 15 of Kitsap County, Washington. Dkt. No. 26-1 at 6. The Highlands at Silverdale

16 contains 570 apartments in 18 buildings, in addition to community and commercial 17 buildings and facilities. Kitsap County (“County”) through the Public Works Sewer 18 Utility (“Sewer Utility”) provides sewer service to the area. Id. 19 The dispute in this matter arises from the “newcomer’s assessment” that the 20 County’s Sewer Utility charged Petitioners. Under the Kitsap County Code, a 21 newcomer’s assessment “represents the newcomer’s proportionate share for future

22 expansion of the major components of the existing sewage system.” KCC 23 13.14.060(b). The assessment is “held by the county in trust for future expansion of 1 its sewage systems.” KCC 13.14.060(c). The assessment amount is calculated based 2 on “residential equivalent units” (“REUs”), and the per-REU rate is “established

3 from time to time by the [Board of County Commissioners].” KCC 13.14.060(e). A 4 “residential equivalent unit” is a standardized measure of anticipated sewage 5 demand. Under the Code, each dwelling unit constitutes one REU. See KCC 6 13.14.140. 7 The Code provides that “whenever any [] entity desires to connect to an 8 existing county sewage system” that entity “shall be required to subscribe a 9 newcomer’s agreement and pay a newcomer’s assessment” and the “assessment 10 shall be paid prior to any connection to the county’s system.” KCC 13.14.060(a). The 11 newcomer’s agreement “shall memorialize the number of [REUs] which a person or 12 entity is entitled to connect to the county’s sewage system and the amount paid 13 therefor.” KCC 13.14.060(f). 14 No newcomer’s agreement was ever executed here. The newcomer’s 15 assessment rate changed three times during the project:

16 • Effective August 1, 2021: $6,481/REU (Board Resolution 124-2021, 17 effective August 1, 2021). Dkt. No. 28-10 at 2. 18 • Effective August 1, 2022: $7,020/REU (Board Resolution 110-2022, 19 effective August 1, 2022). Dkt. No. 28-11 at 2. 20 • Effective August 1, 2023: $9,939/REU (Board Resolution 131-2023, 21 effective August 1, 2023). Dkt. No. 28-12 at 2.

22 Petitioners submitted their Administrative Conditional Use Permit (“ACUP”) 23 application in March 2021 and submitted building permit applications between 1 April and July 2022. Dkt. No. 26-1 at 12. On August 8, 2022, the ACUP was 2 approved. Dkt. No. 26-1 at 12; Dkt. No. 33-2. Two days later, on August 10, 2022,

3 the County’s Sewer Utility issued a fee letter identifying the REUs for the project at 4 the $7,020/REU rate. Dkt. No. 31 at 6. The Site Development Activity Permit 5 (“SDAP”) was approved on August 9, 2022, and issued on August 25, 2022. Dkt. 6 Nos. 33-3; 33-4. 7 On July 25, 2023, Petitioners paid the newcomer’s assessment for Buildings 1 8 through 11, the clubhouse, and the community building—totaling 278 REUs—at the

9 $7,020/REU rate then in effect. See Dkt. No. 26-1 at 22; see also Dkt. No. 28-1. 10 On February 24, 2024, the parties entered a “Phased Development Contract” 11 under KCC 13.14.160 for the remaining 166 REUs (phases two and three). Dkt. No. 12 28-9. That contract stated that the “amount of newcomer’s assessment attributable 13 to each phase of development or discreet unit is pursuant to the Resolution in effect 14 at the time of connection.” Dkt. No. 28-9 at 3. The first physical sewer connections 15 did not occur until early 2024. Dkt. No. 30 at 5; Dkt. No. 26-1 at 18.

16 Because the connections for the remaining units occurred after August 1, 17 2023, the Sewer Utility applied the $9,939/REU rate—the rate set by Resolution 18 131-2023—to those units. Dkt. No. 26-1 at 18, 23. As a result, Petitioners paid 19 $7,020/REU for the first 278 REUs and were required to pay $9,939/REU for the 20 balance. Dkt. No. 26-1 at 22–23. 21 On March 31, 2025, Petitioners objected to the mid-project rate increase

22 through the dispute resolution process under KCC 13.14.180(c). Dkt. No. 28-4. On 23 April 10, 2025, the Director rejected Petitioners’ objections, maintaining that the 1 newcomer’s assessment are “ultimately valued and due at the time of connection— 2 meaning when a sewer permit is issued allowing a project building to be connected

3 to the utility system.” Dkt. No. 26-1 at 18. Petitioners appealed the Director’s 4 decision to the Board, which held a public meeting on June 9, 2025, and denied the 5 appeal. Dkt. No. 28-8. 6 Under RCW 36.70C.080(5), the parties waived the initial hearing and 7 stipulated to a hearing on the merits, which the Court held on December 29, 2025. 8 Dkt. No. 37. At the hearing, both parties confirmed that there are no factual

9 disputes; this case turns entirely on the interpretation of Kitsap County Code 10 Chapter 13.14. 11 The Court has reviewed the parties’ briefing, the Administrative Record and 12 its supplements, and the hearing transcript. Dkt. Nos. 25-1, 26-1, 27, 28, 30, 31, 32, 13 33, 34, 37. Because this was not a quasi-judicial proceeding, the record may be 14 supplemented under RCW 36.70C.120(3), and the Court has considered the 15 supplemental declarations and exhibits. Dkt. Nos. 28, 31, 33, 34.

16 3. LEGAL STANDARD 17 LUPA governs judicial review of land use decisions. Durland v. San Juan 18 County, 340 P.3d 191, 196 (2014). When reviewing an administrative land use 19 decision under LUPA, an appellate court stands in the shoes of the superior court 20 and reviews the administrative record. RCW 36.70C.130; King County Dep't of Dev. 21 & Envtl. Servs. v. King County, 305 P.3d 240, 243 (Wash. 2013). A party seeking 22 reversal of a land use decision bears the burden of establishing one of six statutory 23 1 grounds. This case implicates subpart (1)(b): whether the land use decision reflects 2 “an erroneous interpretation of the law, after allowing for such deference as is due

3 the construction of a law by a local jurisdiction with expertise.” RCW 4 36.70C.130(1)(b). Petitioners also contend that subpart (1)(d)—clearly erroneous 5 application of the law to the facts—may apply. Dkt. No. 27 at 14. 6 Interpretation of county ordinances is a question of law reviewed de novo. 7 Ellensburg Cement Prods., Inc. v. Kittitas Cnty, 317 P.3d 1037, 1041 (Wash. 2014). 8 Where the plain language of a code provision is unambiguous, the Court applies it

9 as written. Id. Plain meaning may be gleaned “from all that the Legislature has 10 said in the statute and related statutes which disclose legislative intent about the 11 provision in question.” Id. (quoting Dep’t of Ecology v. Campbell & Gwinn, LLC, 43 12 P.3d 4 (Wash. 2002)). The same principles apply to county ordinances. Id. 13 When a code provision is ambiguous, the Court affords “such deference as is 14 due” to the local jurisdiction’s interpretation. RCW 36.70C.130(1)(b). However, 15 deference is not automatic. The local entity “bears the burden to show its

16 interpretation was a matter of preexisting policy.” Ellensburg Cement, 317 P.3d at 17 1046 (quoting Sleasman v. City of Lacey, 151 P.3d 990 (Wash. 2007)). “No deference 18 is due a local entity’s interpretation ‘that was not part of a pattern of past 19 enforcement, but a by-product of current litigation.’” Id. (quoting Sleasman, 151 20 P.3d at 990). An interpretation need not be memorialized as a formal rule, but the 21 entity must “prove an established practice of enforcement.” Id.

22 23 1 4. DISCUSSION 2 4.1 The County violated KCC 13.14.060 by failing to execute a newcomer’s agreement and by imposing mid-project rate increases. 3 The threshold question is whether the Code unambiguously requires 4 execution of a newcomer’s agreement that establishes the assessment amount and 5 thereby fixes the per-REU rate. The Court concludes that it does. 6 KCC 13.14.060(a) provides that “[w]henever any [] entity desires to connect to 7 an existing county sewage system, such person or entity shall be required to 8 subscribe a newcomer’s agreement and pay a newcomer’s assessment.” The use of 9 “shall be required” is mandatory. Bufkin v. Collins, 604 U.S. 369, 379 (2025) (“It is 10 undisputed that the word ‘shall’ imposes a mandatory command.”); Wash. v. Krall, 11 881 P.2d 1040, 1041 (Wash. 1994) (stating, “the general rule that ‘shall’ is 12 presumptively mandatory”). No newcomer’s agreement was entered, and the 13 Director’s decision makes no mention of this critical failing. On this basis alone, the 14 Director erred in interpreting the Code. 15 Subsection (f) reinforces this conclusion. It provides that the newcomer’s 16 agreement “shall memorialize the number of [REUs] which a person or entity is 17 entitled to connect to the county’s sewage system and the amount paid therefor.” 18 KCC 13.14.060(f). This language requires the agreement to state both the number 19 of REUs and a specific dollar amount. To state “the amount paid,” one must 20 calculate that amount using the per-REU rate in effect at the time the agreement is 21 executed. This necessarily fixes the rate at the point of agreement formation. 22 23 1 Subsection (a) further provides that “the assessment shall be paid prior to 2 any connection to the county’s system,” subject to two exceptions: installment plans

3 under KCC 13.14.150 and phased development contracts under KCC 13.14.160. The 4 default rule is that the full assessment is due in advance. This is inconsistent with 5 the Sewer Utility’s practice of charging whatever rate happens to be in effect at the 6 moment of physical connection, which by definition cannot be known in advance. 7 The Court’s reading is confirmed by the related provisions of KCC 13.14.160, 8 governing phased development contracts. Section 13.14.160(b) requires such

9 contracts to contain “[t]he amounts of the newcomer’s assessment and/or 10 latecomer’s assessment for the entire development” and “[t]he amounts of the 11 newcomer’s assessment and/or latecomer’s assessment attributable and chargeable 12 to each phase or discrete unit of the development.” KCC 13.14.160(b)(4), (5). These 13 provisions require fixed, knowable dollar amounts at the time of contract formation. 14 If the Code contemplated floating rates that change with each Board resolution, 15 there would be no way to state the assessment “for the entire development” at the

16 time the contract is executed. 17 Thus, reading KCC 13.14.060 and 13.14.160 together, the Code establishes a 18 structure in which the newcomer’s assessment is a fixed amount, determined at the 19 point of agreement or contract formation, based on the per-REU rate then in effect. 20 See Ellensburg Cement, 317 P.3d at 1041 (plain meaning may be gleaned from 21 related code provisions).

22 The County argues that KCC 13.14.060(e) allows the Board to establish the 23 per-REU rate “from time to time” authorizes mid-project rate changes. The Court 1 disagrees. Subsection (e) authorizes the Board to adjust the assessment rate 2 prospectively for future newcomer’s agreements. It does not authorize the Sewer

3 Utility to override the assessment amount already established in an executed 4 newcomer’s agreement. Reading subsections (a), (e), and (f) together, the Code’s 5 structure is coherent: the Board sets rates from time to time; when a developer 6 enters a newcomer’s agreement, the rate then in effect is used to calculate “the 7 amount paid therefor”; and future rate adjustments apply to future agreements. 8 This reading gives every provision independent work to do, consistent with the

9 principle that code provisions must be harmonized so that none is rendered 10 superfluous. Whatcom Cnty. v. City of Bellingham, 909 P.2d 1303, 1308 (Wash. 11 1996). 12 Accordingly, the Director's interpretation of KCC 13.14.060 was erroneous. 13 Dkt. No. 26-1 at 18–19. The Code required the Sewer Utility to execute a 14 newcomer’s agreement establishing the number of REUs Petitioners were entitled 15 to connect and the assessment amount for those REUs. KCC § 13.14.060(a), (f). The

16 Sewer Utility never did so. By upholding the Director’s interpretation, the Board 17 committed the same error. It is the Board’s decision—the final land use decision 18 subject to LUPA review—that the Court reverses. 19 4.2 Even assuming ambiguity, neither the Director’s interpretation nor the Board’s affirmance are entitled to deference. 20 The Court finds the Code’s requirement for a newcomer’s agreement to be 21 unambiguous. But even if the Code were ambiguous on the timing question, the 22 County’s position would not be entitled to deference. 23 1 Under Ellensburg Cement, a local entity bears the burden to show that its 2 interpretation reflects “preexisting policy” rather than a position developed as “a by-

3 product of current litigation.” 317 P.3d at 1045–46. In Ellensburg Cement, the 4 Supreme Court denied deference where the hearing board’s deliberations reflected 5 confusion and the absence of any settled interpretive practice. Id. 6 The record here presents an even more compelling basis for denying 7 deference. At the Board’s June 9, 2025, hearing, Sewer Utility staff acknowledged 8 that “newcomer’s agreements have not been used in recent or historical projects”

9 and that “[s]tandard practice is not to have a newcomer agreement.” Dkt. No. 25-1 10 at 7:4–5. A Commissioner recognized the problem, stating: “But it’s something 11 that’s in our code, so is it something that we need to clean up?” Staff responded: 12 “Absolutely.” Id. at 10:11–13. This exchange shows that the County was aware the 13 Code required newcomer’s agreements and chose not to use them—this is an 14 acknowledged departure from a mandatory code provision, not a preexisting 15 interpretive policy of an ambiguous local law entitled to deference.

16 The County’s reliance on the Declaration of Anthony Burgess, Dkt. No. 31, 17 does not change this conclusion. Mr. Burgess held his position as Sewer Utility 18 Project Manager for Kitsap County Sewer Utility from August 2023 until 19 September 2025. Dkt. No. 31 ¶ 2. Although his declaration describes the Sewer 20 Utility’s practice of using fee letters and phased development contracts in lieu of 21 newcomer’s agreements, Dkt. No. 31 ¶¶ 3–5, this establishes at most that the Sewer

22 Utility has substituted alternative instruments for the one the Code requires, but it 23 1 does not demonstrate a preexisting interpretive policy regarding the Code’s 2 meaning.

3 Even so, the County urges that its interpretation is entitled to “great weight” 4 under Tahoma Audubon Soc’y v. Park Junction Partners, 116 P.3d 1046, 1052 5 (Wash. Ct. App. 2005). But the Tahoma Audubon court never applied that standard; 6 it found the code provisions at issue were unambiguous and concluded that no 7 deference was owed. Id. at 1052 n.7. Even assuming the “great weight” standard 8 applies here, the County must first demonstrate that its interpretation reflects

9 preexisting policy. Ellensburg Cement, 317 P.3d at 1045–46. As discussed above, the 10 County has not met that burden. Indeed, the standard under LUPA, as articulated 11 by the Supreme Court in Ellensburg Cement, is “such deference as is due,” which 12 implicates a considered inquiry, not blanket deference. Id. 13 4.3 The Phased Development Contract does not validate the County’s method of calculating the newcomer’s assessment. 14 The County also relies on the Phased Development Contract signed February 15 24, 2024, which states that the assessment will be “pursuant to the Resolution in 16 effect at the time of connection.” Dkt. No. 28-9 at 3. This contract does not save the 17 County’s position for two reasons. 18 First, the contract does not comply with KCC 13.14.160(b)(4)’s requirement 19 that phased development contracts state “[t]he amounts of the newcomer’s 20 assessment … for the entire development.” KCC 13.14.160(b)(5) requires “[t]he 21 amounts … attributable and chargeable to each phase or discrete unit of the 22 development.” The contract here does not state these amounts; it references a 23 1 floating rate determined at the time of connection. The County does not address this 2 deficiency. Because the contract’s assessment provision conflicts with the Code’s

3 mandatory requirements, it cannot override the Code. Cf. Evans v. Luster, 928 P.2d 4 455, 457 (Wash. Ct. App. 1996) (contract made to violate municipal ordinance is 5 void for illegality). 6 Second, the contract covered only phases two and three—the remaining 166 7 REUs—not the entire development. Dkt. No. 28-9. It does not govern the 278 REUs 8 for which Petitioners had already paid. The Sewer Utility’s decision to enter a non-

9 compliant phased development contract for part of the project does not relieve it of 10 its obligations under KCC 13.14.060. 11 Similarly, the County characterizes the $7,020/REU rate applied to 12 Petitioners’ July 2023 payment as a “courtesy” and “prepayment” that the Sewer 13 Utility was not obligated to accept, arguing that Petitioners should have been 14 charged the $9,939/REU rate in effect when the buildings physically connected in 15 early 2024. Dkt. No. 30 at 2, 5. This argument underscores rather than undermines

16 the Court’s conclusion. Under the County’s interpretation, a developer undertaking 17 a multi-year project has no ability to know its total assessment obligation until each 18 building physically connects—and the County retains unilateral discretion to 19 increase that obligation at any time through a Board resolution. That result is 20 difficult to reconcile with a Code that requires the newcomer’s agreement to state 21 “the amount paid therefor”—language that contemplates a fixed, knowable sum.

22 23 1 4.4 The Court does not rely on a theory of vesting to reach its decision. The County contends that Petitioners improperly argued that KCC 13.14.060 2 “silently creates a broad vesting mechanism” for utility fees, which Washington law 3 generally rejects. Dkt. No. 30 at 10. The Court does not rely on a theory of vesting. 4 The Court’s decision rests on the plain text of the Kitsap County Code, which 5 requires execution of a newcomer’s agreement that establishes a specific assessment 6 amount. The rate applied is the rate in effect at the time of agreement formation— 7 not because the rate “vests,” but because the Code requires the agreement to state 8 “the amount paid therefor,” KCC 13.14.060(f), which necessarily incorporates the 9 then-current rate. This is a product of the Code’s mandatory requirements, not a 10 judicially imposed vesting doctrine. 11 12 4.5 The applicable rate is $7,020/REU. 13 Having concluded that the Director erred in interpreting the Code, and that 14 the Board erred in affirming that interpretation, the Court must determine the 15 appropriate rate for recalculation. Because the County never executed a newcomer 16 agreement fixing the rate, the Court looks to the parties’ concessions at oral 17 argument and the record to determine when the agreement should have been 18 executed and what rate would have applied. 19 At the hearing, Petitioners’ counsel conceded that the $7,020/REU rate—the 20 August 1, 2022, rate—has “a stronger basis” than the $6,481/REU rate they 21 originally sought. Dkt. No. 37 at 17:8–12. The Court agrees. By August 2022, the 22 conditions for a newcomer’s agreement were present. The ACUP was approved on 23 1 August 8, 2022. The Sewer Utility issued its first fee letter—identifying the project’s 2 REUs at the $7,020 rate—on August 10, 2022. The SDAP was approved August 9,

3 2022, and issued August 25, 2022. By that point, the Sewer Utility had sufficient 4 information to execute a newcomer’s agreement: it knew the number of REUs, the 5 applicable rate, and the project scope. The County acknowledged at the hearing that 6 August 2022 was the earliest point at which the Sewer Utility anticipated 7 connections would be forthcoming. Dkt. No. 37 at 25:4–26:11. Had a newcomer’s 8 agreement been executed at that time, as the Code required, the rate incorporated

9 into the agreement would have been $7,020/REU. The County also conceded at the 10 hearing that “[o]nce the County accepts payments, they don’t change the rate.” Dkt. 11 No. 37 at 26:1–2. This concession undermines the County’s position that rates 12 should float with each Board resolution. 13 Accordingly, the Court directs that Petitioners’ newcomer’s assessment for 14 the entire Highlands at Silverdale development be recalculated at the rate of 15 $7,020/REU.

16 5. CONCLUSION 17 Accordingly, the Court ORDERS as follows: 18 1. Petitioners’ Land Use Petition Act petition, Dkt. No. 27, is GRANTED. 19 The Board of County Commissioners’ denial of Petitioners’ appeal is 20 REVERSED. 21 2. Kitsap County is DIRECTED to recalculate Petitioners’ newcomer’s

22 assessment for the entire Highlands at Silverdale development at the rate 23 1 of $7,020 per REU, consistent with the rate in effect when the newcomer’s 2 agreement should have been executed in August 2022.

3 3. Kitsap County is DIRECTED to refund to Petitioners any amounts paid in 4 excess of the recalculated assessment, together with interest at the 5 statutory rate from the date of each overpayment. 6 4. This matter is REMANDED to Kitsap County for proceedings consistent 7 with this Order. 8

9 Dated this 6th day of May, 2026. 10 a Jamal N. Whitehead 11 United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23