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City of Bellevue v. Pine Forest Props., Inc.

Court of Appeals of Washington, Division 1

December 22, 2014

The City of Bellevue, Respondent ,
v.
Pine Forest Properties, Inc., Appellant

Oral Argument September 11, 2014

Reconsideration denied February 18, 2015.

Appeal from King County Superior Court. Docket No: 13-2-36105-1. Date filed: 03/18/2014. Judge signing: Honorable William L Downing. Judgment or order under review.

Stephen P. Vanderhoef and John W. Hempelmann (of Cairncross & Hempelmann PS ); and Howard M. Goodfriend (of Smith Goodfriend PS ), for appellant.

Matthew J. Segal, Jessica A. Skelton, and Jamie L. Lisagor (of Pacifica Law Group LLP ), for respondent.

Concurring: James Verellen, Stephen J. Dwyer.

OPINION

Page 939

[185 Wn.App. 246] Ann Schindler, J.

[¶1] Property owner Pine Forest Properties Inc. appeals the determination of public use and necessity and the order authorizing the city of Bellevue (City) to condemn property for construction staging during [185 Wn.App. 247] the expansion of the Central Puget Sound Regional Transit Authority light rail system from downtown Seattle to the east side, the " East Link Project," and road improvement construction projects. Pine Forest contends that absent an identified permanent use, condemnation of the property for construction staging is neither a public use nor a necessity. The Washington State Supreme Court decision in HTK Management, LLC v. Seattle Popular Monorail Authority, 155 Wn.2d 612, 121 P.3d 1166 (2005) ( Monorail ), controls. In Monorail, the court held that the decision of the condemning authority as to the type and extent of property interest necessary to carry out the public purpose is a legislative question subject to a deferential standard of review. Monorail, 155 Wn.2d at 634-35. We affirm the determination of public use and necessity and the order authorizing the City to condemn the property.

Page 940

FACTS

[¶2] In March 1990, the Washington State Legislature passed " AN ACT Relating to high capacity transportation systems," Substitute House Bill 1825. Laws of 1990, ch. 43.[1] The legislature states that " [i]ncreasing congestion on Washington's roadways calls for identification and implementation of high capacity transportation system alternatives" and requires local jurisdictions to " coordinate and be responsible for high capacity transportation policy development, program planning, and implementation." Laws of 1990, ch. 43, § 22.[2]

[¶3] On November 4, 2008, voters approved the Central Puget Sound Regional Transit Authority (Sound Transit) [185 Wn.App. 248] proposal to expand the existing link light rail from downtown Seattle to Mercer Island, south Bellevue, downtown Bellevue, Bel-Red, the area between State Route 520 and Bel-Red Road, and Overlake--the " East Link Project."

[¶4] In February 2009, the Bellevue City Council (City Council) adopted a long-term land use and transportation plan for the Bel-Red area. The " Bel-Red Plan" identifies the anticipated light rail station at 120th Avenue N.E. and related road improvement projects, including the need to extend and expand N.E. 15th Street between 116th Avenue N.E. and 120th Avenue NE.

[¶5] On November 15, 2011, the City and Sound Transit entered into an interlocal agreement for the East Link Project, the " Umbrella Memorandum of Understanding for Intergovernmental Cooperation Between the City of Bellevue and the Central Puget Sound Regional Transit Authority for the East Link Project" (MOU).

[¶6] The MOU states that Sound Transit and the City have a joint interest in ensuring " a high-quality investment for taxpayers, the City and Sound Transit." In recognition of the " mutual benefits of a tunnel alignment through downtown Bellevue" and a " high capacity light rail system to meet long-term regional transportation needs," the City agreed to facilitate construction of the light rail system and contribute $160 million. The contribution includes the agreement to acquire designated property needed for the East Link Project.

[¶7] Pine Forest Properties Inc. owns approximately 11.6 acres in the Bel-Red area. The property is located near the anticipated East Link light rail station at 120th Avenue NE. One of the parcels designated for acquisition in the MOU is a parcel owned by Pine Forest, parcel number 1099100005. Parcel number 1099100005 is a 238,097-square-foot lot located at 1445 120th Avenue NE. The MOU specifically identifies the " Type of Take" of the designated parcel located at 1445 120th Avenue N.E. as a " Full Take." [185 Wn.App. 249] The City agreed to " deliver the Property to Sound Transit no later than June 2015."

[¶8] Sound Transit plans to use the parcel to construct a permanent fixed " Guideway" system on the property and for construction staging. The City plans to use the property " to construct the extension of N.E. 15th Street across the Property in order to provide an arterial connection between 116th Avenue N.E. and 120th Avenue NE," and for construction staging.

[¶9] On April 24, 2013, Pine Forest submitted an application for a proposed master development plan (MDP) to the City. Pine Forest proposes converting the 8.2 acres at the intersection between 1415 and 1445 120th Avenue NE, N.E. 15th Street, and 120th Avenue N.E. " from office/industrial/warehouse use to a mixed-use transit-oriented development connected to the future light rail station." The majority of the 8.2 acres is located south of the parcel designated for acquisition in the MOU.

[¶10] The MDP application identifies the Sound Transit East Link Project and the " Bel-Red Transportation Improvement

Page 941

Plan" as projects " directly affecting" the MDP proposal.

Sound Transit has adopted the East Link Light Rail alignment plans that require acquiring Pine Forest property from the north parcel. The City of Bellevue has adopted the Bel-Red Subarea Plan and Transportation Improvement Plans that include a widened 120th Avenue N.E. and a new N.E. 15th Street. These new and expanded roadways will require acquiring additional property from the north and eastern portions of the Pine Forest property.

[¶11] On August 14, 2013, the City notified Pine Forest that on September 3, the City Council was scheduled to take final action on adoption of an ordinance that would authorize condemnation of the parcel it owned at 1445 120th Avenue NE. The notice states, in pertinent part:

This letter provides notice that the Bellevue City Council is scheduled to vote (take final action) to adopt an ordinance [185 Wn.App. 250] authorizing acquisition of your property at 1445 120th Avenue NE, Bellevue, Washington. The purpose of the ordinance is to authorize staff to pursue property acquisition, including through the condemnation process if necessary, to facilitate the completion of the East Link Project, East Link MOU Commitments, referred to as CIP [(Capital Investment Program)] Plan No. PW-R-181, as well as the N.E. 15th Street (Zone 1) - 116th to 120th Avenue N.E. Project, referred to as CIP Plan No. PW-R-172.

[¶12] On September 3, 2013, the City Council passed Ordinance 6122. Ordinance 6122 authorizes condemnation of the property located at 1445 120th Avenue N.E. for the East Link Project and the N.E. 15th Street to 120th Avenue N.E. road improvement project. The City Council found that condemnation of the property was necessary to implement the MOU and for construction of N.E. 15th Street from 116th Avenue N.E. to 120th Avenue NE. Ordinance 6122 states, in pertinent part:

WHEREAS, the City Council finds that the public health, safety, necessity and convenience demand, that the N.E. 15 Street (Zone 1) and East Link projects be undertaken at this time, and that in order to carry out the projects and implement the terms of the Memorandum of Understanding in furtherance of the East Link Project, it is presently necessary for the City to acquire interests and rights to the property described herein; and
WHEREAS, the City Council finds and declares it necessary and in the best interest of the public that interests in the land and property hereinafter described be condemned, appropriated, and taken for public use, subject to the making or paying of just compensation to the owners thereof; now, therefore,
THE CITY COUNCIL OF THE CITY OF BELLEVUE, WASHINGTON, DOES ORDAIN AS FOLLOWS:
Section 1. The land and property rights within the City of Bellevue, King County, Washington, commonly known as 1445 120th Avenue N.E. (Tax Parcel No. 109910-0005) as now legally described in Exhibit " A" and generally depicted on Exhibit " B", are necessary both to implement the Memorandum of Understanding [185 Wn.App. 251] in furtherance of the construction of the East Link Project and for the construction of N.E. 15th Street from 116th Avenue N.E. to 120th Avenue N.E. (referred to as Zone 1), all as described above, subject to making or paying just compensation to the owners thereof in the manner provided by law.

[¶13] The City retained an appraiser and a review appraiser to determine the amount of just compensation for the property. In a letter to the City dated October 16, Pine Forest disagreed with the valuation and objected to condemnation of approximately 84,000 square feet of the 238,097-square-foot parcel for construction staging. Pine Forest agreed " to allow use of the construction staging area by way of a temporary ground lease" subject to a number of conditions. The conditions included agreement on a specific expiration date, a monthly net rental payment, and holdover costs. Pine Forest claimed the proposal would save the City $4 million " when compared to a fee simple purchase." The letter states, in pertinent part:

b. Term expiration: No later than 2 years prior to completion of the 120th

Page 942

Avenue Sound Transit Station. A specific expiration date shall be determined and agreed upon by the City and Pine Forest prior to the City's purchase of the Right of Way Area. Upon expiration, the site shall be turned over clear of any improvements or equipment.
c. Compensation: The monthly net rental payment during the term of the ground lease shall be $33,620. Holdover rent for occupancy of the Temporary Use Area beyond the expiration date shall be $67,240.

[¶14] Over the course of the next several months, the City and Sound Transit met with Pine Forest to discuss the proposal. Because " significant design, scheduling, and coordination decisions" had not been made with respect to the East Link Project or with respect to the Bel-Red Transportation Improvement Plan, Sound Transit and the City decided to proceed with condemnation of the property. Sound Transit and the City concluded that " fee simple acquisition minimizes complications, and the potential for additional costs, for both Projects."

[185 Wn.App. 252] [¶15] On October 18, the City filed an eminent domain petition in King County Superior Court. The scheduling order set December 2 as the deadline to file the motion for a public use and necessity hearing and December 13 as the deadline to file a jury demand. On November 27, the court granted the joint motion to change the deadlines to allow additional time to " continue ongoing discussions." On January 7, 2014, the parties filed another motion to change the deadlines in order to pursue settlement negotiations. The court granted the motion and changed the deadline to file the motion for a public use and necessity hearing to January 21.

[¶16] On January 21, the City filed a motion to determine public use and necessity. The City argued that under the MOU and Ordinance 6122, construction of the East Link Project and the N.E. 15th Street road project is a public use and condemnation of the property is necessary. In support, the City submitted the declaration of Capital Projects Manager Rick Logwood. Logwood states condemnation of the property is necessary to construct the East Link Project and implement the MOU, and to " expand 120th Avenue N.E. along the eastern frontage of the Property [to] construct the extension of N.E. 15th Street across the Property in order to provide an arterial connection between 116th Avenue N.E. and 120th Avenue NE."

[¶17] Logwood describes the long-term need to use a portion of the property for construction staging for the East Link Project and the road construction project. Logwood states that " there are remaining decisions that have not yet been made, which could increase the amount of property needed to construct" the East Link Project and the Bel-Red Transportation Improvements. Logwood asserts the City " also will need to coordinate its construction of the Bel-Red Transportation Improvements with Sound Transit and is still in the process of discussing those details with Sound Transit."

[¶18] Logwood states that Sound Transit will need to use the southeastern portion of the property for construction [185 Wn.App. 253] staging " for as long as eight years." Although the 2013 to 2019 CIP budget includes a majority of the funding to widen 120th Avenue N.E. and " funding for 60% of the design for the extension of N.E. 15th Street," Logwood states that " full implementation of the extension of N.E. 15th Street likely would occur between 2030 and 2040" ...


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