Swanson v. Whatcom County Water District, 122 Wash.App. 1004 (Wash.App.Div.1 06/21/2004)

[1] IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION ONE


[2] No. 52533-6-I


[3] 122 Wash.App. 1004, 2004


[4] June 21, 2004


[5] BRADLEY D. SWANSON, RESPONDENT,
v.
WHATCOM COUNTY WATER DISTRICT NO. 10, A MUNICIPAL CORPORATION, APPELLANT.


[6] Appeal from Superior Court of Whatcom County Docket No: 03-2-00344-8 Judgment or order under review Date filed: 06/13/2003 Judge signing: Hon. Michael F Moynihan


[7] Counsel for Appellant(s) Brian L. Hansen Attorney at Law PO Box 5846 Bellingham, WA 98227-5846


[8] Counsel for Respondent(s) John C. Belcher Belcher Lackey Doran Lewis et al Battersby Field Professional Bldg 900 Dupont St Bellingham, WA 98225-3105; Jack Oscar Swanson Belcher Swanson Lackey Lewis et al Battersby Professional Bldg 900 Dupont St Bellingham, WA 98225-3105


[9] The opinion of the court was delivered by: Cox, C.J.


[10] Concurring: Ann Schindler, C. Kenneth Grosse


[11] UNPUBLISHED


[12] On appeal from a local improvement assessment, a court shall confirm such assessment, provided there is a special benefit to the property assessed, and the evidence does not show that such assessment is founded on a fundamentally wrong basis.*fn1 Moreover, the decision to assess must not be arbitrary and capricious.*fn2 The record before the commissioners of Whatcom County Water District No. 10 did not show a special benefit to the property of Bradley D. Swanson. And the decision of the commissioners was arbitrary and capricious. We affirm.


[13] With the growth of unincorporated Whatcom County, the sewer system for the District's Geneva and Sudden Valley service area lacked the capacity to handle the sewage in the area. As a result, the District declared a moratorium on hooking up new sewer customers. Where on-site septic systems could be installed, the District allowed building as long as the owner agreed to connect to the sewer system when capacity became available.


[14] During the moratorium, Swanson's predecessor in interest to the property at issue in this case applied for a septic permit. Because of the moratorium, the District required the owner to sign a covenant with the District that the property would be connected to the sewer system within five years of when capacity became available again as a condition for granting the permit. The District recorded the covenant. Swanson purchased the property subject to the covenant in 1997.


[15] In 2001, the District formed Utility Local Improvement District #18 (ULID) to increase sewer capacity for properties in its Geneva and Sudden Valley service areas. The District later levied a sewer assessment against Swanson's property for $2,792.78.


[16] Swanson protested his assessment to the Board of Commissioners. He presented a letter from a real estate appraiser, Don Gustafson, who opined that Swanson's property was not benefited from the ULID's improvements. The District rejected Swanson's protest, and he appealed the decision to the superior court for Whatcom County.


[17] The superior court decided that there was no evidence of special benefit to Swanson's property and the Commissioners' decision was arbitrary and capricious. The court entered judgment in favor of Swanson and denied the District's motion for reconsideration.


[18] The District appeals.


[19] ESTOPPEL


[20] The District argues that Swanson is estopped from arguing that his property does not benefit from the improvement and thus should not be assessed because his statutory warranty deed contains the covenant that requires that he connect to the sewer system within five years of the District's request. We disagree.


[21] The covenant clearly states that property owners reserve 'their rights to protest the amount of any proposed assessment under {the} ULID on the ground that the assessment does not reflect the benefit received by the Property.' The amount of the assessment, if any, is directly at issue here. Thus, the District's argument is expressly contradicted by the record.


[22] We further note that the covenant to which the Swanson property is subject appears to have been a standard covenant used by the District in the area. The language of the covenant states, in relevant part:


[23] 2. At such time as the District, in its sole discretion, determines that sewer capacity is available and requests that the Property be connected to the public sanitary sewer, the Owners agree to connect to the District's sanitary sewer system and to pay all standard District fees and charges applicable to the provisions of public sewer services to the Property, at the times and in the amounts applicable at the time of actual connection.


[24] 4. This covenant shall bind and run with the Property described herein and shall inure to the benefit of the District and its successors and assigns.


[25] The plain language of such covenants requires the owners of such property to connect to the sewer system when sewer capacity becomes available, and the District requests connection. But this language does not estop Swanson from protesting the assessment.


[26] In short, Swanson is not estopped from challenging the assessment.


[27] SPECIAL BENEFIT


[28] The District asserts the assessment of Swanson's parcel is proper. We disagree.


[29] The inquiry we make regarding a ULID assessment was recently discussed in Kusky:


[30] On appeal, this court limits its review to the record before the council, looks only at the propriety of the assessment process and does not undertake an independent evaluation of the merits. An assessment against property located within an LID is presumed proper and will be upheld unless it is founded on a fundamentally wrong basis or the city reached its decision arbitrarily or capriciously. This presumption is not evidence and may be rebutted. If the challenging party presents expert appraisal evidence showing that the property is not benefited by the improvement, the burden shifts to the city to prove that the property is benefited.*fn3


[31] 'The degree to which a property specially benefits from an LID is measured by the difference between the fair market value of the property immediately before and immediately after the improvement.'*fn4 Any formula for calculating property assessment must ultimately relate to benefits of improvement of the assessed property, not merely distribution of costs.*fn5


[32] For a proper assessment, the record before the Commission must show that the assessment increases the fair market value of the Swanson property. The record before the Commission contains nothing to show special benefit by way of increased fair market value to the Swanson property.


[33] Furthermore, at oral argument before this court, the District properly conceded that the record before the Commission contained nothing to show special benefit by way of increased market value to the Swanson property.


[34] An assessment with a complete lack of evidence on the record of an increase in the fair market value of Swanson's property cannot be presumed to be proper.


[35] The District also argues that Gustafson's testimony should be disregarded because it was based on a fundamentally wrong basis. But, we need not decide whether Gustafson's opinion was based on erroneous assumptions to support the conclusion that there was no special benefit to the property.


[36] The District failed to show special benefit to Swanson's property by way of increased fair market value, thus failing to fulfill the requirements of RCW 35.44.010. Under these circumstances, we need not resolve either whether the sole appraisal in the record was done on a fundamentally wrong basis or whether burden shifting was proper in this case.


[37] ARBITRARY AND CAPRICIOUS


[38] The District appears to argue that it fulfilled the requirements of RCW 35.44.250 by the method it chose to assess the Swanson property. In doing so, it argues an equal assessment of all properties in the ULID was proper. We reject this argument as well.


[39] RCW 35.44.250 requires, among other things, that the decision of the Commissioners not be done on a fundamentally wrong basis and/or that it not be arbitrary and capricious. An arbitrary and capricious action refers to legislative decisions made willfully and unreasonably, without regard or consideration of facts or circumstances.*fn6


[40] At oral argument before this court, the District properly conceded that there is nothing in the record that demonstrated special benefit to the Swanson property. This is a fundamental requirement under the statutes for any assessment. We also note that the record fails to show any reasons why the Commissioners rejected the Gustafson appraisal. While they were certainly free to do so, the absence of any record to explain their actions makes that rejection arbitrary and capricious. This is particularly so since there is no other evidence in the record showing special benefit to Swanson's property. For these reasons, the actions of the Commissioners were arbitrary and capricious as the trial court properly held.


[41] We expressly decline to address whether the method of assessment was fundamentally wrong. That issue was not preserved for review, and it is not necessary to reach that question for our decision.


[42] We affirm the trial court's order vacating the assessment.



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Opinion Footnotes

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[43] *fn1 RCW 35.44.250; Kusky v. City of Goldendale, 85 Wn. App. 493, 498, 933 P.2d 430 (1997).


[44] *fn2 RCW 35.44.250.


[45] *fn3 Kusky, 85 Wn. App. at 498 (citations omitted).


[46] *fn4 Kusky, 85 Wn. App. at 498 (citations omitted).


[47] *fn5 Kusky, 85 Wn. App. at 500 (citations omitted).


[48] *fn6 Kusky, 85 Wn. App. at 500 (citations omitted).