Opinion

Viking Jv Llc, Appellant/cross-respondent V. City Of Puyallup, Respondent/cross-appellant

Court: Court of Appeals of Washington
Filed: Jun 14, 2022
Status: Unpublished
Cited by: 0 cases
Authority: More cited than 38.9%

describing a county council meeting and deliberations regarding a permitting decision

How later courts described this case

describing a county council meeting and deliberations regarding a permitting decision

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The opinion

Filed

Washington State

Court of Appeals

Division Two

June 14, 2022

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

DIVISION II

VIKING JV, LLC, No. 55371-6-II

Appellant/Cross-Respondent,

CITY OF PUYALLUP, UNPUBLISHED OPINION

Respondent/Cross-Appellant.

GLASGOW, C.J.—Viking JV LLC is constructing an approximately 450,000 square foot

commercial warehouse within the City of Puyallup and adding more than 20 acres of impervious

surface near the Puyallup River. Under RCW 35.92.025, cities may charge property owners a

“reasonable connection charge” to connect to the City’s storm water utility system “in order that

such property owners shall bear their equitable share of the cost of such system.” The City assessed

Viking an approximately $997,000 system development charge to connect to its storm water

system based on the amount of impervious surface the project would create. Viking paid this

charge under protest, and it was reviewed by the City’s public works director, hearing examiner,

and appellate examiner.

Viking challenges the system development charge as unreasonable and inequitable in light

of the Viking project’s unique characteristics and its contribution of infrastructure to the City’s

system. Viking further challenges the City’s two-tiered hearing examiner review process and asks

that we review the initial hearing examiner’s decision, rather than the appellate examiner’s

decision.

No. 55371-6-II

Following this court’s recent opinion in Viking JV, LLC v. City of Puyallup (Viking I), No.

55421-6-II, slip op. at 16 (Wash. Ct. App. May 10, 2022), https://www.courts.wa.gov/opinions/

pdf/D2%2055421-6-II%20Published%20Opinion.pdf, we again hold that the City’s two-tiered

hearing examiner review process is valid and that the appellate examiner’s decision constitutes the

City’s final reviewable land use decision under the Land Use Petition Act (LUPA), chapter 36.70C

RCW. We also follow Division One’s recent decision in Westridge-Issaquah II, LP v. City of

Issaquah, 20 Wn. App. 2d 344, 365, 500 P.3d 157 (2021), and hold that a party may not bring an

individualized challenge to connection charges assessed under RCW 35.92.025. Even if Viking

could bring such a challenge, the appellate examiner properly found no basis for an equitable

adjustment in this case because Viking’s circumstances are not particularly unique and Viking will

benefit from the City’s storm water infrastructure.

We therefore affirm the superior court’s ruling that a system development charge was

warranted, reverse its ruling that a reduced charge was appropriate due to unique circumstances,

and reinstate the full system development charge of $997,280, affirming the appellate examiner.

FACTS

Viking is constructing an approximately 450,000 square foot commercial warehouse at the

edge of the City of Puyallup. The warehouse is designed to accommodate numerous trucks and

meet the City’s standards for a trucking facility. It will add more than 20 acres of impervious

surface to the property.

The development is located in a storm water drainage basin outside of the six other drainage

basins that the City uses for planning purposes. Prior to development, the area was primarily

pervious farmland and relatively flat, so most storm water runoff would simply drain into the soil.

No. 55371-6-II

Within the basin, there were no major drainage facilities or water quality facilities, but there were

some roads, as well as ditches and culverts to help manage runoff. There was one 18-inch outfall

pipe that discharged excess storm water into the Puyallup River.

As part of the development process, Viking was required to address the runoff its

development would create and to ensure that preexisting flows of runoff were accommodated, or

at least not interrupted. If Viking were to construct a trunk line, or main line, to serve only its own

project, the line would need to be approximately 24 inches in diameter, but Viking ultimately

decided to construct a 42-inch trunk line to the river, in addition to several other storm lines.

According to an engineer involved in developing Viking’s storm water site plan, the City requested

that Viking construct a larger trunk line to accommodate other potential future development within

the basin. The engineer estimated that the larger trunk line was approximately twice as costly to

construct as a 24-inch trunk line. Once constructed, Viking would dedicate the new outfall, trunk

line, and one other storm water line to the City.

Viking estimated that storm water improvements associated with the project would cost

over $2.8 million, and Viking argues it is spending $1.5 million to accommodate other, future

properties in the basin. The City maintains, however, that Viking never proposed a private storm

water system and that the City never required Viking to construct a public system rather than a

private one.

No. 55371-6-II

I. SYSTEM DEVELOPMENT CHARGES

System development charges are “‘one-time charges paid by new development’” that are

“a contribution of capital to either reimburse existing customers for the available system capacity,

or to help finance future growth-related capacity improvements.” Clerk’s Papers (CP) at 1671

(emphasis omitted) (quoting Arthur C. Nelson, System Development Charges for Water,

Wastewater, and Stormwater Facilities at 1 (Lewis Publishers, 1995)). They do not support current

operations and maintenance or fund the costs associated with the “renewal and replacement” of

existing infrastructure. CP at 1669. Rather, they are “used only for growth-related needs” and are

“a form of ‘system buy-in.’” CP at 1672, 1675. They are calculated at one point in time to reflect

“the existing value of the available capacity of the system at the time.” CP at 953.1

When the legislature adopted RCW 35.92.025, it authorized cities and towns to determine

and impose reasonable system development charges on local property owners. In 2010, the City

hired HDR Engineering Inc. to conduct a study that would help the City update its system

development charge formula, “calculate cost-based charges for new customers,” and provide

“parity between existing and new utility customers.” CP at 1667. The study explained that system

development charges are “implemented according to the capacity requirement or impact each new

development has on the utility system;” therefore, they are “related to the impact the customer

places on the system, and to the benefit they derive from the service provided.” Id.

Using a planning horizon of 2028, the City projected the “total impervious area” that would

exist in the City in 2028 and divided that number by “the average impervious square footage of a

System development charges are different from impact fees authorized under the Growth

Management Act, chapter 36.70A RCW.

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residential lot” to determine the total number of equivalent residential units, or equivalent service

units, that would need to be serviced by the City’s storm water system in 2028. CP at 1679. The

study defined an equivalent service unit as “2,800 square feet of impervious area” and determined

“the capacity needs” per equivalent service unit. CP at 1700. It considered “both existing plant

assets, along with planned future improvements” in its system development charge calculation. CP

at 1700-01. The future improvements included both “coordination/opportunity projects,” which

are “required to be completed along with other system utility projects such as street, water or sewer

projects,” and future capital improvement projects that will service new growth. CP at 1701. The

allowable system development charge per equivalent service unit was then calculated based on

these three components: the system’s existing assets, coordination/opportunity projects, and future

capital improvement projects.

To avoid paying for the same thing twice, a customer could be assessed a credit on their

system development charge for debt service, meaning payments toward debt-financed

infrastructure through the customer’s monthly utility rates. The study did not contemplate any

other form of credit. In 2016, the Puyallup City Council passed a new ordinance updating the

City’s system development charges based on this 2010 rate study.

II. PROTEST TO THE CITY’S PUBLIC WORKS DIRECTOR

Between 2013 and 2018, Viking was repeatedly notified in correspondence from the City

that it would eventually be responsible for a storm water system development charge. On July 25,

2018, the City notified Viking that its total storm water system development charge would be

$997,280. This calculation was based on the 2010 rate study, the most recent budget adopted by

the City, and the fact that Viking would be adding 887,600 square feet of impervious surface area,

No. 55371-6-II

or 317 equivalent service units, to the City. See Puyallup Municipal Code (PMC) 14.26.070. The

charge was assessed as a condition of Viking’s commercial building permit.

On August 8, 2018, Viking protested this charge to the City’s public works director, Robert

Andreotti, as permitted by local ordinance. See former PMC 14.26.080(1) (1999). Viking’s protest

letter stated that system development charges “must be reasonable and limited to an owner’s

equitable share of the cost of the system” and there “must be a nexus between the charge and the

benefit derived by the customer.” CP at 2390. Viking contended that it was building its own storm

water system to “account for 100% of the runoff attributable to the property” and that the system

would “discharge directly into the Puyallup River without any use of the City’s system.” Id.

Therefore, Viking claimed it would neither benefit from the City’s system nor “contribute to the

problem of water runoff.” Id. Accordingly, Viking argued there was “no basis” to assess a system

development charge against it and, “[a]t a minimum,” it was entitled to a credit based on the system

improvements it was constructing. Id. Viking paid the development charge in full under protest.

Andreotti requested additional information from Viking, including the percentage of the

storm water improvements that would be used by others and the cost of upsizing to accommodate

use by others. He noted that although Viking contended it was not connecting to the City’s system

in a traditional sense, Viking would become “part of the City system and soon [be] physically

connected [to] and impacting the system.” CP at 2420. Additionally, Viking would be “using

portions of this system associated with the transportation system to move trucks, employees and

visitors to and from the site,” which also has value. Id. Nevertheless, Andreotti agreed to consider

the requested information to “establish an equitable fee.” Id.

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Viking responded that the City already possessed “much if not all” of the requested

information in the property’s storm plans and technical reports. CP at 2421. It asserted that it was

“located downhill and at the very end of” the City’s system, would be “entirely self-sufficient,”

and connected to the City’s system “only to receive City water.” Id. Because Viking did not

provide additional information, the City hired a consultant to determine whether there was “a data

driven reduction” that could be applied to the development charge. CP at 2425.

In May 2019, with the consultant’s input, Andreotti reviewed the development charge and

issued a final determination. He noted that Viking was not challenging the 2010 study, the resulting

ordinance, or the basis for the development charge in general; it was challenging only the

development charge as applied to “the specific and unique characteristics of the Viking

development.” CP at 466. He found that “Viking is a unique project that may (but is not required

to) be granted an equitable adjustment.” Id. However, he rejected the idea that an additional credit

against the development charge would be warranted because “any ‘overbuilding’ or ‘net addition’

to the City’s system,” such as Viking’s construction of a storm water system that would benefit

other future development, could be addressed through a latecomer’s agreement. Id.

Developers have an opportunity to recoup their costs for building storm water

infrastructure through latecomer fees. Washington law provides for 20 years of pro rata

reimbursement for the costs of constructing water or sewer facilities “from property owners who

subsequently connect to or use the . . . facilities, but who did not contribute to the original cost of

the facilities.” RCW 35.91.020(2)(c). A “‘latecomer’s agreement’” is “an agreement between the

city and a property owner for the sole purpose of reimbursing such owner for costs incurred by

that owner for the installation of a public storm water drainage system,” if the system has “a

No. 55371-6-II

reasonable possibility of directly benefiting future development by other properties within the

area.” PMC 21.10.130(1). The City’s public works director is authorized to execute latecomer’s

agreements upon the property owner’s request and the city council’s approval. PMC 21.10.130(3).

Viking has engaged in this latecomer process, seeking reimbursement if future development uses

the infrastructure that Viking has built.

With regard to Viking’s broader request for an equitable adjustment to its system

development charge, Andreotti believed he had discretion to provide a credit “under certain

conditions.” CP at 471. He decided that a reduction of the portion of the system development

charge that was based on the City’s existing infrastructure would be reasonable in this case. He

offered this equitable adjustment, reducing the total system development charge by approximately

39 percent to $571,234, but concluded, “This determination is contingent upon Viking accepting

this equitable and discretionary adjustment as the final determination without further appeal or

protest.” CP at 474. If Viking did not accept this contingency, the offer of adjustment would be

“automatically withdrawn.” Id.

Viking did not accept this offer, so it assumed the approximately $997,000 development

charge was still in effect and appealed this assessment. Although at the time, former PMC

14.26.080(3) (1999), specifically addressing protests of storm water system development charges,

provided for appeal to the city council, the city council voted to refer Viking’s appeal to the office

of the hearing examiner.2

PMC 14.26.080 was amended in 2019 and again in 2022. The provision providing for appeal of

the director’s determination to the city council now specifies that all system development charge

appeals must be “to the Puyallup hearing examiner pursuant to the provisions of Chapter 2.54

PMC.” PMC 14.26.080(3); see Puyallup Ordinance 3202, § 1 (Dec. 10, 2019). The City’s attorney

presented this amendment because “every other appeal of this type is designated by City Code to

No. 55371-6-II

III. HEARING EXAMINER REVIEW

A. Open Record Hearing

The hearing examiner held an open record hearing in September 2019. At the hearing,

Viking argued it was bringing this case because it believed its circumstances were “exceptional.”

CP at 860. “The reason that we’re here is that this is a very unique property . . . at the very edge of

the city limits . . . . at the very bottom of a hill.” CP at 861. “It does not discharge any water to any

stormwater systems,” and “there are no City improvements within this basin,” so “the whole notion

of this being a connection to the City’s system is really a misnomer.” CP at 861-62. Viking argued

the approximately $997,000 development charge was “both unreasonable and inequitable” under

these circumstances. CP at 862.

The City rejected Viking’s characterization of its circumstances as “exceptional” or

particularly “unique” and argued, “[T]his is a project that is located in the City stormwater utility

where a system development charge has been enacted by the City Council to apply evenly to all

new development within the city. It is not unique in that regard.” CP at 866-67. The City

characterized its director’s prior offer as an attempt to compromise and avoid further litigation and

asserted its belief that the “fully calculated” system development charge was appropriate and

lawful. CP at 867.

be heard by the City’s Hearing Examiner,” and the city council had “[r]ecently on several

occasions . . . voted to refer appeals of Storm and Wastewater [System Development Charges] to

the Puyallup Hearing Examiner.” Puyallup City Council Agenda Item Report, City Council

Regular Meeting Agenda, Dec. 10, 2019, at 117.

No. 55371-6-II

1. Testimony and evidence presented at the hearing

Judith Dean, a senior financial analyst with HDR Engineering, testified for the City. Dean

explained that a system development charge is “not based on usage but actually the capacity” of

the storm water system overall. CP at 958. Dean testified that she believed system development

charges led to equitable sharing of the system’s costs because they were calculated based on the

amount of impervious surface area the system as a whole could accommodate. The amount of

impervious surface area that the new development would create and add to the system was the

central question. A developer’s construction of infrastructure that will be dedicated to the City is

not typically a basis for awarding credit toward the system development charge.

A senior civil engineer for the City, Mark Higginson, reiterated that the system

development charge is “calculated based on a city-wide rate,” so “any applicant would be charged

the similar rate based on the amount of impervious [surface] that they generate.” CP at 996.

“[W]hen a developer is building more than they absolutely need for their project,” the costs may

be made more equitable by the developer utilizing the latecomer’s process. CP at 1013. The City

does not address this issue by reducing the assessed development charges or providing a credit.

Viking requested latecomer’s agreements with the City addressing “a number of systems.” Id.

However, Higginson acknowledged that Viking may not recoup all of its costs through this process

because the availability of reimbursement under a latecomer’s agreement is time limited and

depends on other developers connecting to the new infrastructure.

Director Andreotti also testified at the hearing and explained that he offered the adjusted

development charge as “a good faith gesture” in an attempt “to avoid any future appeal of the

process and then move on.” CP at 1050. He clarified that the City was not obligated by law to

No. 55371-6-II

provide the 39 percent reduction. He explained that Viking’s development was not unique and

there were numerous sites whose storm water discharged directly into the river. “[T]here are other

properties that are as unique.” CP at 933.

Viking argued that its development was in a basin that did not collect storm water from

other nearby basins, but there was conflicting testimony on this point. Andreotti was clear that the

City’s system collects upstream water before it gets to Viking’s property and that the “[b]asins

aren’t isolated completely.” CP at 924. Higginson agreed that each basin is “not in a bubble.” CP

at 1006. All properties benefit from flood prevention and “‘protection of surface and groundwater

quality and aquatic life.’” CP at 415.

Multiple witnesses testified that other aspects of the City’s existing storm water system

benefited Viking. For example, storm water systems are intimately connected with roadways

because they must keep water off of the roads. The anticipated truck traffic to and from Viking’s

facility was estimated to be 250 trucks per day. The roadside ditches and gutters that exist

throughout the entire City keep excess water from reaching Viking’s property and potentially

flooding it, and they allow Viking’s trucks to access the property despite inclement weather.

Additionally, when this truck traffic wears on the roads, it will impact the storm water system.

2. Hearing examiner decision

The hearing examiner deferred to the director’s interpretation of former PMC 14.26.080(2)

(1999) as allowing for an equitable adjustment to the system development charge. The hearing

examiner reasoned that language in the municipal code allowing for a determination “‘as to the

correctness of the fee or charge’ . . . appears to grant the Director the authority to provide an

equitable adjustment.” CP at 39 (quoting former PMC 14.26.080(2) (1999)). “Otherwise, it is

No. 55371-6-II

presumed the City Council would have simply stated that an adjustment is only possible if a

mistake in the calculation of the [system development charge] assessment has occurred.” Id.3

The hearing examiner concluded, however, that none of Viking’s arguments “dictate[d] the

conclusion that an equitable adjustment is required.” Id. No law requires that a nexus be shown

between the charge assessed and the specific benefit Viking will receive. And Viking will benefit

from the City’s system. Nevertheless, the hearing examiner recognized that Viking’s storm water

improvements would also benefit the City and concluded that “an equitable adjustment may be

warranted,” even if not legally required. CP at 42.

Ultimately, the hearing examiner concurred with the director’s “reasoned assessment” and

agreed that the 39 percent reduction was appropriate. Id. The hearing examiner assessed an

adjusted development charge of $571,234. The hearing examiner disagreed, however, with the

director’s decision to make the adjusted charge contingent on Viking foregoing any further

appeals. Viking then submitted a request for reconsideration, arguing it had new evidence that the

City awarded a credit toward another developer’s system development charge, but the hearing

examiner denied the request.

B. Closed Record Review

Both parties submitted petitions to the City’s appellate hearing examiner.4 Viking argued

the hearing examiner erred in concluding that an individualized assessment and equitable

The city council later added the following language to PMC 14.26.080(2): “The director’s

determination shall be limited to considering whether the fee is correctly calculated. Any

adjustment proposed by the director for any other purpose must be approved by city council.”

Former PMC 14.26.080(2) (2019); Puyallup Ordinance 3202, § 1 (Dec. 10, 2019).

Both parties also simultaneously filed LUPA petitions in superior court, as discussed below.

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adjustment were not required and insisted it was entitled to a further reduction of its development

charge. Viking’s petition also asserted that it was not waiving any challenge to the validity of the

City’s two-tiered hearing examiner process by submitting its petition for appellate examiner

review.

In its petition to the appellate examiner, the City argued that under former PMC 14.26.080

(1999), neither the director nor the hearing examiner possessed discretionary authority to make

equitable adjustments to a system development charge. A reduction could only be granted if the

development charge had been “incorrectly calculated.” CP at 143.

The appellate examiner did not invite written responses from either party, nor did the

appellate examiner hold oral argument. Based on a review of the closed record and the petitions,

the appellate examiner reinstated the full amount of the originally assessed system development

charge. The appellate examiner explained, “So long as the [system development charge] fee is

applied uniformly based on the same criteria, that should be the equitable result called for.” CP at

428. The applicable statutes “illustrate the fact that it is the city council that has the power and

authority to adopt and enforce ordinances of all kinds relating to and regulating its local or

municipal affairs and appropriate to the good government of the city, including ordinances

regulating storm water.” CP at 440. The examiner concluded, “Insofar as the 39% reduction in

Viking’s storm water [system development charge] rates is in conflict with the ordinance-approved

rate,” the hearing examiner’s adoption of that reduction below the ordinance rate “is unsupported

by substantial evidence in view of the entire record, and is in conflict with the City’s adopted

ordinance. Accordingly, it is in error and should be reversed.” CP at 441.

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The appellate examiner added, the section of municipal code providing for the director’s

review of system development charges says that the director may review “‘the correctness of the

fee or charge,’” and “the calculation of the storm and surface water [system development charges]

is straight-forward and simple.” Id. (quoting former PMC 14.26.080(2) (1999)). The appellate

examiner concluded, “No discretionary authority to provide equitable adjustments[] exist[s] under

city code or Washington State law, and it is not spelled out anywhere.” CP at 442. Because there

is no authority to grant equitable adjustments for system development charges, to do so “creates

the risk of inconsistent, non-uniform and unfair results,” which is “inconsistent with the goal of

equality, consistency and uniformity of rates.” Id. The appellate examiner also raised a concern

that these discretionary adjustments could be construed as illegal gifts from the City.

The appellate examiner otherwise found substantial evidence supported the hearing

examiner’s findings and conclusions, rejecting Viking’s arguments to the contrary.5 The appellate

examiner emphasized that Viking never challenged the 2010 report that provided the basis for the

City’s ordinance establishing storm water development charge rates. The appellate examiner

determined the approximately $997,000 system development charge was appropriate and lawful.

IV. SUPERIOR COURT REVIEW

Viking’s first LUPA petition—filed prior to review by the appellate examiner—challenged

the initial hearing examiner’s conclusion that an individualized assessment and equitable

adjustment were not required and requested an adjusted system development charge of $0. Viking

The appellate hearing examiner noted that there was conflicting evidence in the record as to

whether Viking was actually required as a condition of its permit to build infrastructure serving

the entire basin where the project is located. Some evidence suggested that Viking elected to upsize

its trunk line for its own benefit. The appellate examiner did not make a finding resolving this

conflicting evidence.

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also challenged the hearing examiner’s denial of its motion for reconsideration. The City’s LUPA

petition reiterated its arguments to the appellate examiner.

A. Motion to Dismiss

The City filed a motion to dismiss Viking’s first LUPA petition because Viking’s closed

record appeal with the appellate examiner had not yet taken place and, thus, there was no final land

use decision from the City or exhaustion of administrative remedies. The City argued that,

accordingly, Viking lacked standing and the superior court lacked jurisdiction under LUPA.

Viking responded that the “appellate examiner review process cannot lawfully form the

basis of any exhaustion requirement” because it exceeds the limits imposed by RCW 35A.63.170,

the state statute authorizing code cities to adopt hearing examiner systems. CP at 74.

Acknowledging that the cases may not be ripe for review prior to the appellate examiner issuing a

final decision, the superior court took the cases under advisement and deferred its decision on the

City’s motion to dismiss. After the appellate examiner issued its decision, the superior court denied

the City’s motion to dismiss for failure to exhaust administrative remedies as moot.

Viking filed another land use petition challenging the appellate examiner’s decision that

was consolidated with the already pending case. Viking maintained that the City’s two-tiered

hearing examiner process was contrary to state statute.

B. Superior Court Ruling

After oral arguments at the LUPA hearing, the superior court issued an oral ruling. It

recognized that the system development charge rates are intended to be applied throughout the

entire City but considered Viking’s development to be “sort of separate and apart from” the City.

Verbatim Report of Proceedings (Sept. 29, 2020) at 57. It rejected Viking’s argument that it should

No. 55371-6-II

not have to pay anything because it constructed additional infrastructure, and it also rejected the

City’s argument that the development charge should be applied in the same manner to Viking as

it is applied to all developments. Ultimately, the superior court agreed with the original hearing

examiner that the director has discretion to award equitable adjustments but not to condition them

on foregoing a right to appeal. It explained “the goal of the statute” that allows cities to assess

system development charges is to fairly allocate the total cost of the system and to require new

developers “to actually pay what is a fair contribution to the cost of the entire system;” therefore,

it was “reasonable to credit” Viking with the benefit it contributed to the system overall. Id. at 59-

60. The superior court reinstated the reduced charge of approximately $571,000.

In its written ruling, the superior court rejected Viking’s challenge to the City’s two-tiered

hearing examiner process and ruled that the City’s hearing examiner system was not preempted by

state law. The superior court denied Viking’s challenge to the imposition of the system

development charge, but it reversed the appellate examiner’s imposition of the full charge and

reinstated the reduced charge of $571,234.

Both parties appealed from this ruling. Viking appeals the superior court’s denial of its

challenge to the City’s two-tiered hearing examiner system and denial of its claim that its system

development charge “should be reduced below $571,234 or eliminated.” CP at 2472. The City

cross appeals the superior court’s reversal of the appellate examiner’s decision to impose the full

$997,280 development charge.

No. 55371-6-II

ANALYSIS

I. STANDARDS OF REVIEW

LUPA governs judicial review of land use decisions. RCW 36.70C.010, .030(1); Whatcom

County Fire Dist. No. 21 v. Whatcom County, 171 Wn.2d 421, 426, 256 P.3d 295 (2011). LUPA

defines a “‘[l]and use decision’” as “a final determination by a local jurisdiction’s body or officer

with the highest level of authority to make the determination, including those with authority to

hear appeals.” RCW 36.70C.020(2).

When a land use petition is before the superior court, the court will review the

administrative record and “grant relief only if the party seeking relief has carried the burden of

establishing that one of the standards set forth in [the statute] has been met.” RCW 36.70C.130(1).

The court may grant relief if the petitioner establishes that:

(a) The body or officer that made the land use decision engaged in unlawful

procedure or failed to follow a prescribed process, unless the error was harmless;

(b) The land use decision is an erroneous interpretation of the law, after

allowing for such deference as is due the construction of a law by a local jurisdiction

with expertise;

when viewed in light of the whole record before the court; [or]

(d) The land use decision is a clearly erroneous application of the law to the

facts.

RCW 36.70C.130(1)(a)-(d).

On appeal from the superior court, we “sit in the same position as the superior court and

apply the standards set forth in RCW 36.70C.130(1) to the administrative record that was before

the body responsible for the land use decision.” Whatcom County Fire Dist., 171 Wn.2d at 426.

Whether the hearing examiner engaged in unlawful process or procedure under RCW

36.70C.130(1)(a) is a question of law that we review de novo. Id. We also review de novo whether

No. 55371-6-II

the land use decision was an erroneous interpretation of the law under RCW 36.70C.130(1)(b).

Westridge-Issaquah II, 20 Wn. App. 2d at 355.

The hearing examiner’s decision is supported by substantial evidence, as required by RCW

36.70C.130(1)(c), if there is “‘a sufficient quantity of evidence to persuade a fair-minded person

of the truth or correctness of the order.’” City of Univ. Place v. McGuire, 144 Wn.2d 640, 647, 30

P.3d 453 (2001) (internal quotation marks omitted) (quoting City of Redmond v. Cent. Puget Sound

Growth Mgmt. Hr’gs Bd., 136 Wn.2d 38, 46, 959 P.2d 1091 (1998)). The hearing examiner

erroneously applied the law to the facts, in violation of RCW 36.70C.130(1)(d), if “‘although there

is evidence to support [the challenged finding], the reviewing court on the record is left with the

definite and firm conviction that a mistake has been committed.’” Westridge-Issaquah II, 20 Wn.

App. 2d at 355 (quoting Phoenix Dev., Inc. v. City of Woodinville, 171 Wn.2d 820, 829, 256 P.3d

1150 (2011)). Regardless of which party prevailed in superior court, the party who filed the

relevant petition has the burden of establishing an error under LUPA. Quality Rock Prods., Inc. v.

Thurston County, 139 Wn. App. 125, 134, 159 P.3d 1 (2007).

II. TWO-TIERED HEARING EXAMINER REVIEW

Because we review only the local jurisdiction’s final determination when considering a

LUPA petition, see RCW 36.70C.020(2), we must first address which hearing examiner’s decision

constitutes the local jurisdiction’s final determination. Under the City’s municipal code in effect

at the time, if a customer was dissatisfied with the system development charge assessed, they could

“file a written protest with the Public Works Director setting forth their objections.” Former PMC

14.26.080(1) (1999). The director would then “make a determination in writing as to the

correctness of the fee or charge.” Former PMC 14.26.080(2) (1999). The former code provided,

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“If the customer is dissatisfied with the decision, the customer may appeal to the City Council.”

Former PMC 14.26.080(3) (1999). Here, however, the city council voted to refer Viking’s appeal

to the office of the hearing examiner.

The City then implemented the hearing examiner process established in chapter 2.54 PMC.

Chapter 2.54 PMC provides for an open record hearing by a hearing examiner, a written decision

by the hearing examiner that includes findings and conclusions based on the record established,

and a closed record review of the hearing examiner’s decision by an appellate examiner. PMC

2.54.100, .110(1), .150, .170. The decision of the hearing examiner “shall be final subject to

options for review and appeal available under PMC 2.54.150.” PMC 2.54.110(3).

PMC 2.54.150 allows a party who feels that the hearing examiner’s decision “contains

substantial error, was materially affected by irregularities in procedure, is unsupported by

substantial evidence in the record or is in conflict with the city’s adopted plans, policies and

ordinances” to request review by the appellate examiner. “The decision of the appellate examiner

shall be final unless within 21 days of the decision of the appellate examiner a valid land use

petition is filed with the Superior Court of Washington for Pierce County seeking judicial review

of the action taken, pursuant to the requirements of state law.” PMC 2.54.170.

A. Delegation

Viking argues that “the appeal to the City Council of a hearing examiner’s decision is not

something that can be delegated under RCW 35A.63.170,” the statute authorizing hearing

examiner review. Resp. Br. of Viking JV, LLC as Appellant and Reply Br. of Viking as Cross

Resp’t at 29. But this seems to misunderstand what happened in this case. The city council

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delegated review of the director’s decision to the hearing examiner, and the hearing examiner’s

office then applied the process set forth in chapter 2.54 PMC.

As we explained in Viking I, No. 55421-6-II, slip op. at 7, at the recommendation of a

governor’s task force, the state legislature passed a comprehensive reform package in 1995

addressing local land use permitting and decision making. See LAWS OF 1995, ch. 347, § 401; S.B.

REP. ON ENGROSSED SUBSTITUTE H.B. 1724, at 1, 54th Leg., Reg. Sess. (Wash. 1995). An

increasing number of laws and regulations had complicated the process for obtaining land use

permits. RCW 36.70B.010. And Maranatha Mining, Inc. v. Pierce County had highlighted some

of the challenges of having elected council members make final land use decisions for local

government. See 59 Wn. App. 795, 798-99, 801 P.2d 985 (1990) (describing a county council

meeting and deliberations regarding a permitting decision).

In response, the legislature expanded the authority of local legislative bodies to “vest in a

hearing examiner the power to hear and decide those issues [the local legislative body] believes

should be reviewed and decided by a hearing examiner” to broadly include “[a]ppeals of

administrative decisions or determinations.” RCW 35A.63.170(1)(b); see also LAWS OF 1995, ch.

347, § 424.6 This amendment to RCW 35A.63.170 reflected a legislative desire to provide local

legislative bodies with delegation options, so that hearing examiners with expertise could decide

land use project appeals for local jurisdictions, rather than the local legislative bodies. See RCW

35A.63.170(2)(c) (allowing local legislative bodies to give hearing examiner decisions “the effect

of a final decision of the legislative body”).

This authority is “[i]n addition” to the municipality’s statutory authority to adopt a hearing

examiner system to address zoning ordinance amendments. RCW 35A.63.170(1).

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Moreover, Viking’s argument that RCW 35A.63.170 precludes this delegation is

inconsistent with the broad police power authority granted to municipalities by the Washington

Constitution and the legislature’s clear desire not to restrict that broad police power when enacting

title 35A RCW. See WASH. CONST. art. XI, § 11; RCW 35A.01.010, .63.160. Under title 35A

RCW, “[t]he legislative body of each code city shall have power to organize and regulate its

internal affairs . . . and to define the functions, powers, and duties of its officers.” RCW

35A.11.020; see also RCW 35A.63.170(1) (“[T]he legislative body may vest in a hearing examiner

the power to hear and decide those issues it believes should be reviewed and decided by a hearing

examiner.”). “The legislative body of each code city shall have all powers possible for a city or

town to have under the Constitution of this state, and not specifically denied to code cities by law.”

RCW 35A.11.020.

Here, the city council, as the local legislative body, had the power to define the scope of

its hearing officers’ duties and to determine what issues should be decided by a hearing examiner.

Nothing in RCW 35A.63.170 denies the city council the power to delegate its authority to decide

a land use appeal to a hearing examiner.

B. Preemption

Next, Viking argues that the City’s two-tiered hearing examiner process, as codified in

chapter 2.54 PMC, directly conflicts with RCW 35A.63.170. Accordingly, Viking submits that the

initial hearing examiner decision is the reviewable land use decision under LUPA. We recently

rejected Viking’s nearly identical challenge to the City’s two-tiered hearing examiner process in

Viking I, No. 55421-6-II, slip op. at 16, and we follow that holding in this case.

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As we explained in Viking I, we presume municipal ordinances are valid. State v. Kirwin,

165 Wn.2d 818, 825, 203 P.3d 1044 (2009). An ordinance is invalid only if it “directly conflicts

with a state statute” or if the legislature preempted the field of regulation. Id. A local action or

regulation “conflicts with state law where it permits what state law forbids or forbids what state

law permits.” Id. There is a conflict if the two provisions “cannot coexist.” Id. at 826. “However,

if the statute and ordinance may be read in harmony, no conflict will be found.” Watson v. City of

Seattle, 189 Wn.2d 149, 171, 401 P.3d 1 (2017).

Under RCW 35A.63.170(1), if the municipality chooses to vest power in a hearing

examiner, “[t]he legislative body shall prescribe procedures to be followed by a hearing examiner.”

Additionally, the legislative body “shall by ordinance specify the legal effect of the decisions made

by the examiner.” RCW 35A.63.170(2). The legal effect of the hearing examiner’s decisions “shall

include one of the following:”

(a) The decision may be given the effect of a recommendation to the

legislative body;

(b) The decision may be given the effect of an administrative decision

appealable within a specified time limit to the legislative body; or

final decision of the legislative body.

RCW 35A.63.170(2)(a)-(c).

Consistent with RCW 35A.63.170(2)(c), the City has specified that each examiner’s

decision “may be given the effect of a final decision of the legislative body.” The original hearing

examiner’s decision “shall be final subject to options for review and appeal available under PMC

2.54.150.” PMC 2.54.110(3) (emphasis added). And the appellate examiner’s decision “shall be

final unless within 21 days of the decision of the appellate examiner a valid land use petition is

filed” in superior court. PMC 2.54.170 (emphasis added). There are no opportunities to appeal

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from either administrative decision to a legislative body, and neither decision is a recommendation

to the legislative body. Although the City’s system has two tiers of review by the hearing

examiner’s office, it still relies on only one of the three options listed in RCW 35A.63.170(2), the

option that allows a city to give a hearing examiner’s decision the effect of a final decision by the

city. See Viking I, No. 55421-6-II, slip op. at 14-15.

“Moreover, nothing in RCW 35A.63.170(2) expressly prohibits a two-tiered internal

review system. Nor would implying such a restriction be consistent with our obligation to presume

the validity of ordinances and to interpret provisions in chapter 35A.63 RCW liberally in favor of

the municipality’s self-governance.” Id. at 15. The City’s ordinance establishing a two-tiered

hearing examiner system does not permit something that state law prohibits. Id.

In sum, we hold that nothing precluded the city council from delegating authority to hear

a land use appeal to a hearing examiner, and we follow Viking I’s holding that the City’s two-

tiered hearing examiner system is consistent with state law.

C. Final Land Use Decision under LUPA

LUPA defines a “‘[l]and use decision’” as “a final determination by a local jurisdiction’s

body or officer with the highest level of authority to make the determination, including those with

authority to hear appeals.” RCW 36.70C.020(2) (emphasis added). Under the version of the City’s

code in effect during this review process, the development charge determination could be appealed

up to the city council. Former PMC 14.26.080(3) (1999). As expressly permitted by RCW

35A.63.170(1)(b), the city council then vested power to review this appeal of an administrative

decision with its hearing examiner office, and the City applied the process established in chapter

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2.54 PMC. Under chapter 2.54 PMC, the appellate examiner was the officer with the highest level

of authority to review this determination for the City. See PMC 2.54.150, .170.

The appellate examiner’s decision is therefore the reviewable land use decision under

LUPA. See RCW 36.70C.020(2). We review the appellate examiner’s decision to reinstate the full

$997,280 system development charge and reject Viking’s claim that the City “engaged in unlawful

procedure or failed to follow a prescribed process” in violation of RCW 36.70C.130(1)(a).7

III. AUTHORITY UNDER RCW 35.92.025

Viking argues the storm water system development charge that the City assessed is contrary

to the plain language of RCW 35.92.025, which requires that a system development charge be

“both ‘reasonable’ and ‘equitable.’” Br. of Appellants Viking JV, LLC at 27. It suggests that

applying the rates established for general application “may be insufficient and inconsistent with

state law where unique circumstances exist.” Id. at 29.8 We disagree.

In the facts section of its opening brief, Viking seems to criticize the closed record hearing process

implemented here, complaining that the appellate examiner did not call for written responses or

hold oral argument. But Viking does not make an express procedural due process argument in its

brief or perform the Mathews v. Eldridge, 424 U.S. 319, 96 S. Ct. 893, 47 L. Ed. 2d 18 (1976),

balancing test that a procedural due process argument would require. And neither party argues that

the City failed to comply with RCW 36.70B.020(2)’s definition of a “closed record appeal.”

Both parties were treated the same in this case. Both parties filed petitions seeking appellate

examiner review of the hearing examiner’s decision, neither party was invited to file a response,

and neither party was invited to provide oral argument.

The City’s brief claims that it “adopts and hereby incorporates” a report, brief, and petition that

it filed at earlier stages of the litigation “as part of this Brief and in support of arguments on

appeal.” Br. of Resp’t/Cross Appellant City of Puyallup at 3 n.5. The Rules of Appellate Procedure

do not allow for adoption and incorporation of prior filings in a brief. Parties should provide any

“argument in support of the issues presented for review, together with citations to legal authority

and references to relevant parts of the record,” within the appellate brief itself. RAP 10.3(a)(6);