The City of Seattle’s Department of Planning and Development (DPD) doesn’t seem to be listening to the development community these days. But they do listen to angry neighbors (see our appeal and the legislation they produced over regulating micros which was passed by the Seattle City Council). They also seem to listen to judges. So we prepared a legal argument as to why DPD should change it’s course on the microhousing projects currently vested and in the pipeline. Short version: they run the risk of having a big settlement to pay, from tax payer dollars, to right the wrong they are doing. We hope it doesn’t come to that, but here’s our letter. 

October 1, 2014

VIA EMAIL and U.S. MAIL

Mayor Ed Murray
PO Box 94749
Seattle, WA 98124-4749

Re: Unjustified Harm Caused by DPD’s New Microhousing Permit Conditions

Dear Mayor Murray:

On September 21, 2014 the Department of Planning and Development (“DPD”) notified microhousing permit applicants that it is now refusing to issue building permits that are ready to issue, or further process building permit applications, in response to the Superior Court decision in Harvard Dist. Neighbors LLC v. 741 Harvard Ave. E. LLC.   DPD’s notice impacts at least 26 vested projects identified in Exhibit A to this letter.

DPD informed the 26 project applicants that permit issuance is now conditioned upon the applicant conforming to new requirements that are inconsistent with the City’s longstanding interpretation of its code.  Now, in order to receive a permit, the City is requiring the applicants to do one of the following: (1) submit the project to SEPA and design review; (2) re-engineer the project to either remove the sink from the sleeping room or create communal showers; or (3) wait – for an unknown amount of time – until the Court of Appeals issues a final decision in the appeal of Harvard Dist. Neighbors LLC v. 741 Harvard Ave. E. LLC.   The new conditions are an unconscionable and arbitrary shift in City policy that is not required by the Superior Court decision or the Seattle Municipal Code (“Code”), that is contrary to law, causes unnecessary damage to privately-financed affordable housing projects, and exposes the City to substantial liability for damages under multiple causes of action from multiple plaintiffs.

Nothing in the recent fact and project-specific Superior Court decision justifies DPD’s decision to arbitrarily withhold permits.  The Superior Court decision explicitly limits the decision to the specific project at 741 Harvard: “This court concludes that the application of the regulations to the specific facts in this case is clearly erroneous.”  Unlike the 26 vested projects, 741 Harvard’s initial plans listed a “Kitchenette Elevation” in each purported sleeping room.  The plans also showed refrigerators next to sinks and mounted microwave ovens.  Project opponents requested a code interpretation to determine whether 741 Harvard was an eight-unit building.  Interpretation 13-002 initially concluded that the project consisted of 57 “dwelling units,”[1] because each sleeping room had a “food preparation area.”[2] The applicant submitted two revised plans, each of which prompted DPD to revise Interpretation 13-002.[3]  The project opponents relied upon the project-specific Interpretation 13-002 to legally challenge the project. And Judge Middaugh’s decision is based upon a specific record that includes the applicant’s initial plans showing a kitchenette and the project-specific Interpretation 13-002.

Judge Middaugh’s decision does not justify DPD’s action, and DPD’s action is contrary to its own code.  A code interpretation is a “decision by the Director as to the meaning, application or intent of any development regulation . . . as it relates to a specific property.” SMC 23.88.020.A.  As concisely stated by the City Attorney in the 741 Harvard pleadings, “DPD has a history of consistently interpreting and applying the term ‘dwelling unit’ to similar [microhousing] developments more than 25 times in the last five years alone.”[4]    The opponents to the project at 741 Harvard timely requested a code interpretation, but the time has long passed for anyone to request a code interpretation for the 26 projects that relied upon DPD’s consistent and long-standing interpretation of the City’s code.[5]  When the time periods expired for requesting a code interpretation for these 26 projects, the applicants for these projects vested to that consistent and long-standing interpretation.

Judge Middaugh’s decision was project and property-specific, and so was the code interpretation that Judge Middaugh reviewed.  Now DPD has made a policy decision, not a legal decision, to depart from its consistent and long-standing interpretation of the code, but no policy can justify causing gratuitous harm to 26 projects that invested and relied upon DPD’s consistent and long-standing interpretation of the code.  DPD’s policy decision leaves these project proponents with no choice but to seek relief from the superior court for the harm that DPD is gratuitously causing.

In Mission Springs v. City of Spokane, 134 Wn.2d 947, 954 P.2d 250 (1998), the City withheld issuance of a grading permit for policy reasons: the City Council wanted the applicant to address neighborhood traffic concerns even though the applicant had complied with all code requirements for permit issuance.  Our Supreme Court held that the City had no authority to withhold the permit that satisfied the ordinance criteria:

In the eyes of the law the applicant for a grading permit, like a building permit, is entitled to its immediate issuance upon satisfaction of relevant ordinance criteria … Id. at 960, citing Juanita Bay Valley Community Ass’n v. City of Kirkland, 9 Wn App. 59, 84, 510 P.2d 1140

The State Supreme Court held that the City’s refusal to issue the permit violated both a state statute, RCW 64.40, and the due process clause of the federal constitution, exposing the City to liability under 42 U.S.C. § 1983:

Arbitrary or irrational refusal or interference with processing a land use permit violates substantive due process. Mission Springs v. City of Spokane, 134 Wn.2d at 970.   The Court ordered the City of Spokane to immediately issue permits, pay damages, and pay attorney fees.  By refusing to process and issue permits for the 26 projects that relied upon a DPD’s consistent and long-standing interpretation of its code that no one challenged in a timely request for code interpretation, DPD is acting in a similarly arbitrary or irrational way and exposing the City to much greater liability for the damage done to 26 applicants than the City of Spokane faced for damage to a single applicant in the Mission Springs case.

Because Chapter 64.40 RCW requires an action for damages to be brought within 30 days, DPD is forcing these 26 applicants to commence litigation within 30 days of its September 21^st notification.  DPD is also exposing the City to damages in tort, for negligent misrepresentation and for intentional interference with these 26 applicants’ business expectancies.  The City has paid substantial damages in the past for policy-driven interference with the permitting process, Pleas v. City of Seattle, 112 Wn.2d 794, 774, P.2d 1158 (1989); the City of Burien paid more than $11 million for such interference, Westmark Dev. Corp., v. City of Burien, 140 Wn. App. 540, 166 P.3d 813 (2007); and a jury recently awarded $12 million in damages against Thurston County for such interference.

The last thing any of these 26 applicants want to do is litigate with the City; they simply want to build their projects.  But DPD is leaving them no choice by making a policy-driven, legally unjustified decision to refuse to process and issue permits to applicants who have complied with the DPD’s consistent and long-standing interpretation of its code.  The applicants request that the City immediately process and issue building permits for the 26 projects.

 

Sincerely,

Roger Valdez
On behalf of the SMART GROWTH SEATTLE MICROHOUSING GROUP*

*The Smart Growth Seattle Microhousing group is a group of builders, developers, and investors that build microhousing in Seattle and are affected by this decision.

cc:        Diane Sugimura, Director of Department of Planning of Development.

Pete Holmes, City Attorney/            Roger Wynne, Director, City Attorney’s Office – Land Use Division.

Tamera Van Ness, City Attorney’s Office – Land Use Division.