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Washington Supreme Court Upholds Project Denial Based on Lack of "Need"

Phoenix Development, Inc. v. City of Woodinville, 171 Wn2d 820, 256 P3d 1150 (2011), involved plaintiff developer’s challenge of the denial of its application for rezoning and preliminary plat approval following an on-the-record review of a hearings examiner recommendation of approval after an evidentiary hearing. The Council determined that there was no “demonstrated need” for the project as required by one of the rezoning criteria. Plaintiff brought a challenge under Washington’s Land Use Petition Act (“LUPA”), seeking reversal of the decision and $500,000 in damages. The trial court dismissed the case, finding some of the criteria for rezoning were not met. The Washington Court of Appeals reversed, finding some of those criteria met. Both parties sought review in the Washington Supreme Court.

The Supreme Court said that, in a LUPA review, it stood in the same position as the trial court and this case presented only questions of law. There were four issues before the court: whether there was substantial evidence on lack of need and inability to provide public services to the proposed development (including an interpretation of those terms), whether the City engaged in an unlawful legislative process as part of its quasi-judicial proceedings in deciding this case, and whether the City correctly found the proposals would violate its comprehensive plan.

As to the first two questions, the Court said it would defer to defendant’s construction of its own ordinance under the State’s Growth Management Act (“GMA”). See RCW 36.70A. 3201. Defendant construed the re-zoning criteria of “demonstrated need” to require “an objective judgment by the City Council based on plans, goals, policies and time frames” and found that the project was not needed at this time because the City was on target to meet all of its growth management objectives. The court upheld this interpretation and application of the City’s zoning ordinance. Similarly, the Court engaged in a substantial evidence review of the application of this criterion and found that the standard was met without reweighing the evidence and in the face of substantial evidence to the contrary. After reviewing all the evidence on this issue, the Court determined there was substantial evidence to support defendant’s conclusion of lack of need. Because this case involved a denial, lack of compliance with one criterion was sufficient to affirm the decision in most cases on the grounds that the applicants did not bear its burden of proof. There is no presumption in favor of rezoning in Washington. Similarly, the “adequate services” criterion application in favor of denial was also upheld. Moreover, the court found that the City need not undertake the rezoning, even if the services were available.

The Court also found that the City’s alleged invocation of its legislative authority during the quasi-judicial rezoning proceedings, allegedly to produce a new land use policy by interpretation of its existing plan and zoning ordinance provisions was not error. Because the City nearly made interpretations (however characterized) to deal with the “demonstrated need” criterion, that result was not fatal to the case even if it involved an unlawful procedural error.

Finally, the Court reviewed the application of various plan policies, including particularly the preservation of the City’s “Northwest Woodland Character.” The subject site contained 30% of the total acreage of the City and 50% of its residentially zoned land. It also contained much of the City’s native tree cover and wooded hillsides, “the primary elements that define Northwest Woodland Character.” Staff advised that other areas of the City were available for residential development, and the Court found that deference to the City’s interpretation of its plan was due. Moreover, the Court said that even if the development proposal complied with some elements of the plan, it also could be denied for noncompliance with other plan elements. In the light of the evidence and deference to the City’s plan interpretations, the Court found that the decision could be upheld under the “Clearly erroneous” standard that LUPA provided. The Court thus reversed the Court of Appeals and affirmed the trial court dismissal of the challenge.

The Washington LUPA standard of review, although differently stated from that of Oregon, is similar in both its application of the substantial evidence standard and deference to City interpretation of its own planning and development ordinance policies.

Phoenix Development, Inc. v. City of Woodinville, 171 Wn2d 820, 256 P3d 1150 (2011).

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