Milestone Homes, Inc. v. City of Bonney Lake

Citation: 186 P.3d 357Docket: 36441-7-II

Court: Court of Appeals of Washington; June 17, 2008; Washington; State Appellate Court

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Milestone Homes, Inc., filed a preliminary plat application for Orchard Grove II with the City of Bonney Lake, proposing a 25-lot subdivision on 5.65 acres, which included five previously developed lots from a neighboring subdivision, Enchanted Estates II. The property is zoned low-density residential (R-1), allowing 4-5 dwelling units per acre. Including the Enchanted Estates lots resulted in a density of 4.95 lots per acre, while excluding them yielded 5.8 lots per acre. The application included notarized consents from the owners of the five lots, stating no changes to parcel lines and that they would not participate in the new homeowners' association.

During the public hearing, the city planner indicated initial uncertainty on whether to include the Enchanted Estates lots but concluded that the municipal code did not prohibit their inclusion for density calculations. The hearing examiner recommended approval of the plat, noting that the proposal aligned with the Bonney Lake Comprehensive Plan's goal of increasing density in an urban growth area to utilize land efficiently and reduce sprawl. Despite this, the City of Bonney Lake's council denied the application, leading to an appeal. The superior court reversed the council's decision, which the Court of Appeals later found erroneous, reinstating the council's denial and affirming that the supplemental documents reviewed by the superior court were not material to the outcome.

The city council reviewed a resolution from the legal department regarding revisions to Milestone's application, ultimately rejecting the hearing examiner's recommendation. Prior to their decision, they engaged the planning staff and city attorney in discussions about the Orchard Grove project. Concerns raised included potential manipulation of lot sizes, with Council Member Jim Rackley questioning the legitimacy of the proposed changes. Former Planning Director Bob Leedy indicated that the situation suggested creative approaches that might be accepted by other jurisdictions but warranted scrutiny. Deputy Mayor Dan Swatman emphasized that the city’s code was designed for straightforward land ownership and subdivision, not for averaging properties across the city to facilitate development in specific areas. Council Member Dave King raised concerns about future developers potentially leveraging previously approved plats to increase density, questioning the documentation of such arrangements. Leedy acknowledged that staff had considered this issue, while Swatman reiterated that this was not the intent of the city’s code.

The city council denied the proposed subdivision, Orchard Grove II, citing Resolution No. 1650, which outlined several key findings: 

1. The subdivision is located within an R-1 zone, which permits four to five dwelling units per net acre.
2. The proposal aims to create 20 new lots, with only part of the plat being developed.
3. Lots 21 through 25, already part of the Enchanted Estates Phase 2 subdivision, are not intended for development within Orchard Grove II. Their inclusion appears to inflate the density calculation improperly.
4. The remainder of the Orchard Grove plat, excluding these lots, would result in 5.8 units per acre, exceeding the permissible density in an R-1 zone.
5. Consequently, the council determined the proposal violates density restrictions since lots 21-25 are not actively being subdivided and do not belong to the applicant.

The city concluded to deny the preliminary plat but allowed the applicant 30 days to submit a conforming revised application. Following this, Milestone submitted a reconfigured plat with 18 new lots and a density of 5 units per acre, which the city council approved. However, Milestone appealed under the Land Use Petition Act (LUPA) and also sought damages, with an agreement to stay the damages action pending the LUPA appeal.

Milestone later sought to supplement the record with documents not considered by the city council, indicating prior assurances from city planners about including the Enchanted Estates lots. The superior court granted the motion to supplement the record, reversed the city council's denial, and noted ambiguities in the ordinances that should allow property owners greater flexibility. The court suggested that Bonney Lake should improve its ordinances. The city of Bonney Lake subsequently filed an appeal.

The preliminary plat application process under the Bonney Lake Municipal Code requires an applicant to submit a plat application, which the director of planning and community development must first determine is complete. Following this, the hearing examiner conducts a public hearing, formulates factual findings, and makes a recommendation to the city council. The city council reviews the plat in a public meeting, with the authority to approve, deny, or revise the hearing examiner’s findings based on public interest considerations. Any decision made by the city council can be challenged in superior court.

Judicial review of land use decisions is governed by the Land Use Petition Act (LUPA), which is the exclusive means for such review, allowing for limited exceptions. Review is based on the administrative record, with the court required to defer to the local jurisdiction's expertise. A party can only obtain relief if they demonstrate an erroneous interpretation or application of the law by the city council. The standard of review for legal interpretations is de novo, while factual findings are given deference to the highest authority that conducted fact-finding. Courts interpret local ordinances similarly to statutes, applying their plain meaning unless ambiguous, and strive to ascertain the legislative intent and purpose behind the ordinances, reflecting the expectations of the municipal legislative body for public welfare.

The Supreme Court in Sleasman ruled that the relevant ordinance was clear but noted that if it had been ambiguous, it should be interpreted in favor of property owners due to the principle that land-use ordinances must be strictly construed in their favor. This principle was supported by a citation from Morin v. Johnson, which emphasized that zoning ordinances limit common-law property rights and should not be broadly interpreted. The superior court referenced this principle when reversing a city council decision. However, Bonney Lake argued that this citation was merely dictum since the ordinance was found to be unambiguous and that prior case law suggested the need to give significant weight to the enforcement officials' interpretations of ambiguous ordinances.

The city council concluded that Milestone’s proposed plat did not comply with density standards as defined in the Bonney Lake Municipal Code, particularly noting that Milestone did not own the external lots and therefore exceeded density limits without them. The Code explicitly defines a 'subdivision' and sets a density requirement of 4-5 dwelling units per net acre in the R-1 District, with no allowance for variance.

Milestone contended that the Code does not necessitate a possessory interest for land use permit applicants, as it only requires the application to be signed by the property owner or an authorized representative. Despite this, the city council's main issue was that Milestone's preliminary plat appeared to bypass the density requirements by including lots not intended for development or transfer, which was deemed a valid concern since the Code's density standards are clear and unyielding.

However, the superior court found ambiguity in the Code that allowed Milestone's application, arguing that since Milestone's method was not explicitly disallowed, it should be accepted. Milestone further asserted that without a consistent enforcement pattern showing that similar applications were rejected, the city council's interpretation should not receive deference under the Land Use Petition Act (LUPA).

Milestone references the case Sleasman, which establishes that to validate an interpretation of an ambiguous ordinance, an executive body must demonstrate an established agency policy through a consistent pattern of enforcement. In Sleasman, the court found no such pattern as the city had applied the ordinance to single-family residences for the first time in that case. Similarly, in Cowiche Canyon, the court noted a lack of enforcement pattern, as similar developments had previously occurred without regulation. 

In the current case, there is no evidence that any developer has attempted to include parts of an existing subdivision in a new plat to meet density requirements. Bonney Lake argues it cannot demonstrate a pattern of enforcement because no developer has submitted such a plat application. However, the court determines it is not bound by Sleasman's interpretation of ambiguous ordinances because the relevant zoning ordinances are clear, specifying density requirements and defining 'subdivision' in a way that excludes Milestone's application. 

Milestone's proposed plan would undermine the zoning code's objective to maintain large-lot single-family neighborhoods. The court emphasizes that the drafters of the Bonney Lake Municipal Code did not intend for new subdivisions in an R-1 district to include lots from an existing plat to bypass density limits. Consequently, the superior court's decision is reversed, and the city council's denial of Milestone's preliminary plat application is upheld. Additional notes clarify that Milestone had previously agreed to purchase land and had alleged procedural issues, but these were resolved, and any potential errors in supplementing the record were deemed harmless.