Mr. Petrie is currently seeking to sell the property for $349,000 (appendix 1 for photo of the “for sale” sign, and appendix 2 for the description and asking price). His original cost of acquisition, less than 3 years ago on 9/30/1998, was $149,950 (see appendix 3 and 4).

Thus it is reasonable to assume that Mr. Petrie is not seeking Reasonable Use Exemption to develop the property for his own use; rather, he is seeking to sell the property, and obtaining the Reasonable Use Exemption will obviously increase his sale price. I do not believe that helping landowners increase their return on investment is the intent of the LFP City Council in enacting the possibility of Reasonable Use Exemption (MC 16.18.080).

The intent, instead, is to avoid having the City’s sensitive area requirements constitute a taking (see appendix 5).  The Takings Clause of the Fifth Amendment of the United States Constitution provides: "[N]or shall private property be taken for public use, without just compensation." [n.5] One of the principal purposes of the Takings Clause is "to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." Armstrong v. United States, 364 U.S. 40, 49 (1960).

Does the application of the Sensitive Area Ordinances to Mr. Petrie’s property constitute taking?

Based on the following, I do not believe the application of the LFP Sensitive Area Ordinance comes even close to taking, and therefore it is not necessary to grant Reasonable Use Exemptions:

• As mentioned above, Mr. Petrie is seeking to sell the property. And his asking price, presumably reflecting what he believes the property is worth once a Reasonable Use Exemption is obtained, represents a profit of almost $200,000, or over 230% return on his investment in less than 3 years.
  

• Justice Kennedy, in his June 29, 1992 opinion regarding the U.S. Supreme Court decision “David H. Lucas v. South Carolina Coastal Council” (91-453) clearly stated “Where a taking is alleged from regulations which deprive the property of all value, the test must be whether the deprivation is contrary to reasonable, investment backed expectations.” [emphasis on all added] See also Tekoa Construction v. Seattle, 56 Wn App. 28, 781, P.2d 1324 (1989).
  

• For example, in Strom v. City of Oakland, 1998 WL 5596599 (Neb., August 21, 1998), the court asserted that 1/3 diminution in value of land would not be sufficient to establish a regulatory taking. In Powers v. Skagit County, 67 Wn. App. 180, 835 P.2d 230 (1992), the court ruled that a regulation must “totally eliminate all economically viable uses” to be constitute a taking. It’s not sufficient to say that it is a taking if it eliminates a significant amount, but not all, of the economically viable use. Id. at 191. See also Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 112 S. Ct. 2886, 120 L. Ed. 2d 798 (1992). In a recent case, the Washington Court of Appeals concluded that a denial of the developer’s proposal had not resulted in the absence of all economically viable use. Ventures N.W. v. State, 81 Wn. App. 353, 914 P.2d 1180 (1996).
  

• In fact, it has been established that a taking claim is barred when the owners cannot carry the burden of "demonstrat[ing] that they bought their property in reliance on a state of affairs that did not include the challenged regulatory regime." Loveladies Harbor, Inc. v. United States, 28 F.3d 1171, 1177 (Fed. Cir. 1994). Specifically, the Court stated in Loveladies:

In legal terms, the owner who bought with the restraint could be said to have no reliance interest, or to have assumed the risk of the economic loss. In economic terms, it could be said that the market had already discounted for the restraint, so that a purchaser could not show a loss in his investment attributable to it. 28 F.3d at 1171.

• King County Assessor data dated 09/05/2000 (appendix 4), show the property’s appraised land value in 2000 was $150,000, representing an appreciation of 8.67% since the 1998 assessed value of $138,000 (appendix 3).  As one reasonable way to estimate the current fair sales value, if one applies this rate of appreciation to the Petries’ 1998 purchase price of $149,950, one obtains $162,989 for year 2000. The difference between that amount and the Windermere-listed asking price of $349,000 is significant. If we assume that the difference is due to the expected granting of RUE, the RUE is “worth” $186,011.
  

• The law states that “fair market value” is determined after considering reasonable uses for the property. Boise Cascade v. Pierce County, 84 Wn.2d 667, 529 P.2d 9 (1974). The Petries’ purchase price of $149,950 in 1998 therefore suggests that the expected reasonable use of the land at the time of the purchase could not possibly have included the type of extensive development currently being proposed.
  

• The Supreme Court of Rhode Island, in its opinion regarding Palazzolo v. Rhode Island, argued against “pernicious ‘takings claims’ based on speculative purchases in which an individual intentionally purchases land, the use of which is severely limited by environmental restrictions, and then seeks compensation from the state for that ‘taking’” (p.14). In considering whether there was a regulatory taking under the test of Penn Central Transportation Co. v. New York City, 438 U.S. 104, 123-128, 98 S. Ct. 2646, 2658-61, 57 L.Ed.2d 631, 647-51 (1978), the Supreme Court found critically relevant the fact that at the time of land purchase, “there were already regulations in place limiting Palazzolo’s ability to fill the wetlands for development. (p.15-16).
  

• The Lake Forest Park Sensitive Areas Ordinance (Ord. 500 § 2, 1992) was enacted in 1992, 6 years prior to Mr. Petrie’s purchase of the property in question.

I believe that granting a RUE for Mr. Petrie in this case would risk seriously violating the intention of the City Council, and LFP Citizens, in enacting the LFP Sensitive Areas Ordinance.  Please help us protect the Ordinance and its original intent.

Sincerely,

Yuichi Shoda, Ph.D.

Appendices

Appendix 1: Photo of the Windermere For Sale sign, taken at the Petrie property, on March 17, 2001.

Appendix 2: Windermere lists the property for sale for $349,000

2a: Windermere sales flyer for the property.

2b: Windermere web site search for undeveloped land indicates only two properties in LFP, one of which, for sale at $349,000, has a lot size of 4.55 Acres, the exact area of the Petrie property. Note the agent’s comments seem to presume granting of RUE: “we expect a grading permit shortly”. It also refers to the property as an “estate site”, which is hardly indicative of an intended use consistent with LFP MC 16.18.080 requiring an RUE applicant to demonstrate that “there is no other reasonable use with less impact on the sensitive area” (16.18.080 criterion #2), and “any alteration to the sensitive area or associated buffer shall be the minimum necessary to allow for reasonable use of the property” (criterion #4).

Appendix 3: King County Tax Comp Report (11/8/1998) showing that the Petries purchased the property on 9/30/98 for $149,950. It indicates that the area of the property is 198,198 square feet (4.55 acres), which matches precisely the area indicated in Appendix 2. The assessed value of the property in 1998 was $138,000.

Appendix 4: King County Assessor data, dated 09/05/2000, show the property’s appraised value in 2000 was $150,000, representing an appreciation of 8.67% since the 1998 assessed value of $138,000. 

Appendix 5: Dec 3, 1999 Letter to LFP Board of Adjustments, from Claudia Newman, Bricklin & Gendler, LLP.

Appendix 1: Photo of the Windermere For Sale sign, taken at the Petrie property, on March 17, 2001.