October 31, 2018

WA Supreme Court Confirms Application Fees are Subject to LUPA and 21-day Appeal Period


Earlier this month, the Washington Supreme Court affirmed that application fees, required as part of any standard land use or building permit application, are subject to the Land Use Petition Act’s (“LUPA”) judicial review process and the 21-day deadline for appeal.


In Community Treasures et al. v. San Juan County, several property owners submitted building permit applications, which required, among other matters, the “applicable fee” for the permit application.  The applicants paid the fee and proceeded with development.  Nearly three years later, the property owners filed a class action lawsuit on behalf of all individuals who paid San Juan County application fees for land use and building permit applications, arguing that the fees were “illegally excessive” in violation of RCW 82.02.020.  (Footnote following period – This statute generally prohibits municipalities from imposing any direct or indirect tax or fee on development activities, though it does provide certain exceptions, including impact fees and mitigating conditions on development, as may be authorized under state law).


San Juan County sought to dismiss the appeal, arguing that LUPA was the exclusive means of judicial review for the application fees, because the fees were inextricably linked to and paid as a condition of the approval of the “land use decision,” which is a defined term under LUPA.  More importantly, LUPA requires that judicial review be sought within 21-days of the final “land use decision” at issue.  Thus, as the County argued, the applicants’ failure to appeal the application fees within the 21-day appeal window, was dispositive to the applicants’ class action lawsuit. 


The trial court agreed, as did the court of appeals, that LUPA applied to the application fee, because it was a “mandatory requirement for a completed project permit application.”  The courts’ relied on the 2005 decision in James v. Kitsap County, which held that impact fees imposed as a condition of a building permit issuance were “land use decisions” subject to LUPA.


On review, the Washington Supreme Court also agreed.  LUPA is the exclusive means for judicial review of any “land use decision,” which over the years, has been developed and refined to include certain exceptions.  However, application fees are not one of them.  The Court concluded that the fee is a “mandatory requirement” for a complete application and is “inextricably tied to the permitting process.”  The Court disagreed with the County’s argument that the application fees were more of a “prerequisite” to the land use decision, rather than a decision itself. 


The dissenting justices highlighted the fact that the application fees were imposed “for services provided,” not for mitigation of the project itself.  In other words, the application fees were not a determinative factor as to whether the County would approve a permit or not.  The fee is paid regardless of the actual decision.  Thus, the fees were not linked to the permit application or decision and should not have be subject to LUPA. 


Further, as a logistical matter, the dissent expressed concern about the practical implications of the decision, which would require applicants to appeal fees so early in the project process (i.e., within 21-days of payment and submittal of application), when the applicant could not tell at so early a stage whether the permit would be approved or not. 


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