The permitting process can often be a long, tedious, and sometimes unsuccessful journey. Whether it is continuing disagreement over the interpretation and application of code provisions, delay in the public process, or lengthy negotiation and discussion in the political spheres—the time and cost to get from application to decision can leave a heavy burden on the applicant.
One particular statute provides permit applicants an opportunity to recover those costs, in very limited circumstances. RCW 64.40.020 provides that property owners who have filed an application for a permit may have an action for damages for relief against actions of the agency (or, local jurisdiction) that are arbitrary, capricious, unlawful, or exceed lawful authority. The property owner must show that the agency had knowledge or should reasonably have known that its final decision was unlawful or made in excess of the agency’s lawful authority. Unintentional procedural or ministerial errors are not grounds for relief.
This statute, although commonly cited for relief in land use appeals, is rarely met. In recent years, there has been confusion over what is the correct standard of review. In other words, what must the appellant show to the court to demonstrate that the agency’s action was in fact arbitrary, capricious, or unlawful?
A recent Washington State Supreme Court decision, Church of the Divine Earth v. Tacoma, clarified the scope and application of this statute. In Church of the Divine Earth, a church sought to build a parsonage on its land. The City imposed various conditions on the development, including a dedication of a 30-foot easement for right-of-way improvements along the street abutting its property. The church eventually appealed to the court, challenging the constitutionality of the condition. The church also sought damages under RCW 64.40.020(1).
The trial court concluded that the condition did violate Nollan and Dolan standards* regarding the proportionality of the condition to the proposed development. On the damages claim, the court found that the City “reasonably believed” that the condition imposed was proportional to the development and that the City did not know that the condition would be unconstitutional. The court of appeals affirmed, finding that the City “reasonably believed” that it met the Nollan and Dolan requirements, and thus, did not know that its action was unlawful. Accordingly, the damages claim under RCW 64.40.020 had not been met.
On appeal, the state Supreme Court reversed on the damages claim, finding that the court of appeals applied the wrong standard under RCW 64.40.020. RCW 64.40.020 requires an objective standard—that is, would a “reasonable mind” know or should have known that the City’s action was unlawful or in excess of its authority. The court of appeals, by contrast, applied a subjective standard, finding that the City itself “reasonably believed” its dedication was lawful, and thus, it did not know or should not have known that its action was unlawful.
As the Court put it, “if reasonable minds with the necessary knowledge and expertise could have concluded that the City’s decision was lawful,” then damages are not available under RCW 64.40.020(1). Effectively, the appellant would need to show that a reasonable person in the City’s position would know or should have known that its action was unlawful or made in excess of its lawful authority. Because the court of appeals and the trial court applied the wrong standard on the damages claim, the court remanded for a new trial.
For the implications of this ruling, please read further.
*Nollan v. California Coastal Commission, 483 U.S. 825 (1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994). These cases provide the standards of review to determine whether an exaction is lawful, specifically that there is a “nexus” between the exaction and proposed development and that the burden imposed on the landowner by the exaction is “roughly proportional” to the impacts from the development.
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