Northwest Real Estate Law Blog

The Creditors' Rights Endorsement, a Thing of the Past?

Davis Wright Tremaine — Mon, 01 Mar 2010 11:49:18 -0800

The creditors’ rights endorsement, an endorsement to a lender or owner’s title policy which provides coverage against challenges to a transfer of title as a result of a fraudulent conveyance, fraudulent transfer or preferential transfer, appears to have been essentially eliminated by the title insurance industry earlier this month. Citing the current economic climate, several recent bankruptcy court decisions and recent questioning by state regulators as to whether the coverage is within the “purview” of title insurance, Fidelity National Title Group of Underwriters (which includes Chicago Title, Fidelity National Title, Ticor Title, Lawyers Title, Commonwealth Land Title, Security Union Title and Alamo Title) and First American Title Insurance Company have announced that they will no longer issue the endorsement. The American Land Title Association (ALTA) has also recently voted to officially de-certify the creditor’s rights endorsement (ALTA Form 21/21-06), effective March 8, 2010. According to the ALTA website, this de-certification of the ALTA form of creditor’s rights endorsement does not affect the ability of title insurers to separately decide what coverage or endorsement, if any, it is willing to provide, it just means that the insurers can no longer use the ALTA form after March 8.

Prior to the past 18 months, creditors’ rights coverage was fairly common and easy to obtain. Recently, title insurers have been more and more reluctant to provide the coverage, and when they have agreed to provide it, it has come with additional risks and cost in the form of required indemnity agreements protecting the insurer and increased title premiums. Not all title insurers are eliminating the creditors’ rights endorsement out right. Old Republic National Title Insurance Company and Stewart Title Guaranty Company have indicated that they may still issue the endorsement upon review of the seller or mortgagor financials.

Given the new insurer policies, real estate purchasers and lenders should be aware that they are likely going to have to bear some insolvency risks that were once covered by title insurance policies.

Climate Change to Receive More Attention under NEPA

Davis Wright Tremaine — Mon, 22 Feb 2010 16:13:57 -0800

Authored by: Craig Gannett, Kerry Shea, Richard M. Glick and Lauren Giles Wishnie

Climate change will receive more attention in the analysis of environmental impacts under the National Environmental Policy Act (NEPA), according to a Draft Guidance issued on Feb. 18 by the White House Council on Environmental Quality (CEQ). Charged with advising federal agencies on the implementation of NEPA, CEQ proposes that the environmental analysis of major projects consider the effect on climate change of greenhouse gases (GHGs) that would be emitted by the proposed project, as well as the potential impact of climate change on the project itself.

See entire article here

Standard Lease Forms Aren't Always Best

Gene Grant — Fri, 19 Feb 2010 15:03:25 -0800

Authored by: Gene Grant

As published in The Daily Journal of Commerce

Vacancy rates for commercial space, already high, continue to increase. Traditional long-term tenants are in short supply. Out of necessity, landlords are inventing new occupancy arrangements. These creative solutions, however, often require special kinds of occupancy agreements. Common examples include pop-up stores, shared offices, government agencies, and donated space. For more information, see our recent article published in The Daily Journal of Commerce

"My Landlord Wants Me to Sign a Personal Guaranty . . . Should I?"

Davis Wright Tremaine — Tue, 09 Feb 2010 16:20:19 -0800

Authored by: John Benazzi

"As published in Santé Magazine"

My brother, the chef, has been looking to open his own place for a number of years now. He tells me that when he finds the "perfect" space, he is going to jump on it. If that happens, I’m sure that I will get a call from my brother asking if I have time to review his lease. He will tell me that it’s the perfect space and that I only need to take a “quick look.” He will also probably tell me that because he’s taken my advice and set up his business as a limited liability entity, that the landlord wants him sign a personal guaranty. He will want to know what that means and whether he should sign it. Here’s what I’ll tell him:

Landlord POV

A "personal guaranty" of a lease is a promise from a “guarantor” (typically, the owner of the business) that in the event of a breach of the lease, the guarantor will make good on the tenant’s promises. For example, if the tenant fails to make rent, the landlord can sue the guarantor to collect the rent. If successful, the landlord will get a judgment against the guarantor and be able to execute against the guarantor’s personal assets to collect. So much for a limited liability entity, right?

But that’s the point. Lots of landlords are not going to want to lease space to a start-up restaurant with no track record of success. If the restaurant fails, the landlord is going to be left with space that is built out like a Mediterranean castle (“Nice, but not stuffy,” says my brother). Suing the restaurant won’t work because it’s out of business. On the other hand, suing my brother might work. He owns a house and has various investments. By suing to enforce the guaranty, the landlord can force my brother to liquidate his assets to pay up. The only defense to the landlord’s action is likely to be personal bankruptcy. This legal route would be rough for my brother, but it can also be bad news for the landlord: joint business/personal bankruptcies can tie up a landlord’s space with little prospect of getting paid or trigger a long wait for restoration.

Tenant’s Option

So what are the options? I will suggest to my brother that he try to negotiate a "good-guy guaranty" with the landlord. A good-guy guaranty is different from an unlimited personal guaranty in that the guarantor’s liability is extinguished if he delivers the vacant space back to the landlord and pays rent due up to the date of delivery. If the tenant doesn’t vacate, the guarantor can be sued personally. Once the landlord gets the space back, however, the guarantor is off the hook.

The benefits to my brother are obvious, but how does the landlord profit? If landlords are able to insist on (and get) personal guaranties from tenants, why would they ever accept a good-guy limitation? The simple answer is that they probably won’t. This is where my brother gets really mad at me. He has found the “perfect” space and he does not want to hear me tell him about the risks. A smart tenant will not commit "emotionally" to a space until an acceptable lease has been signed. Negotiating such a lease can be done quickly, but it has to be done intelligently.

If you are reading this column and you are not my brother, be sure to review your leases and guaranties with your real estate attorney. A space isn’t “perfect” if your lease terms are not acceptable. In addition to the “good-guy limitation” I discuss herein, guaranties can be limited in many other ways, including a specific dollar cap or length of time. The best negotiating strategy will depend on the facts of your situation and the relative bargaining strength of the parties. Remember: don’t be afraid to walk away.

New Seattle Ordinance Requires Building Owners to Report Annually on Energy Efficiency

Davis Wright Tremaine — Wed, 03 Feb 2010 09:58:47 -0800

Authored by: Jim Greenfield, Carly Summers, and Lauren Giles Wishnie

In an ordinance adopted January 25, 2010 (Council Bill No. 116731) and signed by the Mayor on February 4, 2010 (Ordinance 123226), the Seattle City Council created new energy efficiency reporting requirements for owners of nonresidential and multi-family buildings located in the City of Seattle. The ordinance adopted by an 8-0 vote, will require building owners to provide “energy benchmarking reports” to the Director of the Department of Planning & Development using the federal Environmental Protection Agency’s Energy Star Portfolio Manager or a similar system. Building owners who provide inaccurate reports or who fail to report may be cited and fined or may receive a notice of violation. Building owners must provide copies of the energy benchmarking reports to current and prospective tenants, prospective buyers and lenders who ask for them. This adds new elements of due diligence and disclosure to non-residential lease and sale transactions in the city.

For nonresidential buildings that exceed 50,000 square feet and with initial occupancy prior to January 1, 2010, the first energy benchmarking report must be filed by April 1, 2011. Owners of nonresidential buildings over 10,000 square feet with initial occupancy before January 1, 2011 must file by April 1, 2010. All other owners of nonresidential buildings must file initial reports within one year after initial occupancy.

Owners of multifamily buildings (defined as including five or more dwelling units) with initial occupancy prior to January 1, 2011 must file an initial report by April 1, 2012. All other owners of multifamily buildings must file within one year of initial occupancy. For condominiums, the owners’ association must file the report.

Energy benchmarking reports must be updated prior to April 1 of each year following the first report. Building owners are required to disclose the reports within 7 days of a request by current tenants, prospective tenants and buyers and prospective lenders. An owner who provides an inaccurate report may be subject to a citation and fine of $150. Prolonged noncompliance will result in a notice of violation and daily fines of up to $500. Failure to disclose a report as required will result in a citation and fine of $150 for the first offense, and $500 for subsequent offenses.

Owners of both nonresidential and multifamily buildings may request information regarding energy use that they are otherwise unable to obtain from their tenants. Tenants who refuse to provide the requested information may be cited and fined.

Many of the requirements of Seattle’s Council Bill No. 116731 are part of last year’s Efficiency First! Act (SB 5854, Chapter 423 Laws of 2009) which sets standards for the Washington State Energy Code. See RCW 19.27A.170. The State Energy Code preempts the energy codes of local governments in many respects, and thus is already an important part of local building codes. See RCW 19.27A.015—025; see, e.g., Pierce Cnty Code 17C.30.010; Snohomish Cnty Code 30.52D.010; Bellevue Municipal Code 23.10.010(C); Everett Municipal Code 16.10.010(B); Olympia Municipal Code 16.04.020(6) (all adopting provisions of the State Energy Code). However, builders and owners should be aware that other local jurisdictions in Washington are likely to follow Seattle’s lead in taking steps to implement the specific requirements of the Efficiency First! Act.

Supreme Court Holds Condo Defect Claims Subject to Arbitration

Davis Wright Tremaine — Wed, 20 Jan 2010 10:28:35 -0800

Authored by: Alan Middleton

In an important decision, on December 24, 2009, the Washington Supreme Court held that claims under the Washington Condominium Act (WCA) are subject to arbitration despite provisions in the Act requiring judicial resolution of claims where condominium owners agree to arbitrate disputes in their purchase and sale agreements. The case is Satomi Owners Ass'n v. Satomi, LLC.

In Satomi, purchasers of individual condominium units had agreed in their purchase and sale agreements to arbitrate claims they might have against the seller/developer. Satomi gathered three separate cases in which trial courts had denied motions to compel arbitration of claims under the WCA. The WCA historically prevented parties from opting out of judicial resolution of disputes. In 2005, the Legislature amended the WCA to permit arbitration of at least some disputes pursuant to RCW 64.55.100 through .160, but allowed any aggrieved party to demand a new trial in superior court at the end of arbitration proceedings – in other words, the arbitration was not binding. In Satomi, the Court concluded that the statute’s requirement of a judicial resolution (and the amended statute’s resort to trial de novo) was preempted by the Federal Arbitration Act (FAA).

First, the Court held that the FAA applied to the transactions, at least where arbitration provisions were clearly tied to purchase and sale agreements relating to purchase and sale of the condominiums at issue. The Court rejected the argument that the “transaction” at issue involved only warranties and therefore did not involve interstate commerce. It held instead that the “transaction” included the purchase and sale of the condominium. Based upon this broader view of the “transaction” at issue, the Court held that the transactions “involve commerce” so as to be subject to preemption by the FAA based on (1) the use of out-of-state materials in constructing the condos; (2) a substantial number of purchasers were not Washington residents; (3) a substantial number of mortgages obtained by Washington and non-Washington residents were obtained from out-of-state mortgage companies.

Second, the Court concluded that the WCA's provisions conflicted with the FAA. To begin with, the earlier statutory enforcement clause -- dictating judicial resolution and not permitting the parties to agree to arbitration -- clearly conflicted with the FAA. Further, the amended statute, although it permitted arbitration of at least some issues, nonetheless required trial de novo where one party was disappointed in the result. The Court held that declaring arbitration to be non-binding conflicted with the FAA.

Third, the Court concluded that the associations were bound by the arbitration clauses to which their members had agreed in purchasing their units. The associations claimed no property interest of their own; they were suing entirely on behalf of their members (members owned undivided percentages of common and limited common areas). Consequently, the associations were bound.

Finally, the Court held that the arbitration clauses were not unconscionable or lacking in mutuality of obligation, despite the fact that the developers retained the sole right to have disputes heard in arbitration.

The WCA therefore no longer stands as a barrier to parties who wish to require arbitration of disputes under the WCA. They should nevertheless assure that their contracts are written with the Satomi decision in mind.

Seattle Landmarks Preservation Ordinance Survives Constitutional Challenge

Davis Wright Tremaine — Wed, 23 Dec 2009 13:59:23 -0800

Authored by: Jim Greenfield and Clayton Graham

This week, the Division One Court of Appeals filed its opinion in the case of Connor v. City of Seattle, which addressed a challenge to the application of Seattle’s Landmarks Preservation Ordinance (LPO) to certain homeowners’ (the Connors) residential property in West Seattle. When the Connors bought the property, it had a designated Seattle landmark -- a 1906 house built in what is described as the “Seattle classic box” style. Because the property has a large, sloping, front yard, the Connors subdivided the parcel into multiple lots and proposed building additional residences on the newly-created lots, while preserving the 1906 landmark house on the remainder of the old lot. When Seattle’s Landmarks Preservation Board—and later the City Hearing Examiner—denied the Connors’ application for a certificate of approval under the LPO for building the new homes, the Connors sued under Washington’s Land Use Petition Act (LUPA).

After losing in Superior Court, the Connors appealed to the Court of Appeals, which affirmed the trial court’s dismissal of the Connors’ suit. The bulk of the opinion addresses the Connors’ claims that the LPO is constitutionally void for vagueness, based on the Connors’ contention that the LPO does not specify what kind of development would be permitted on their property. The Court rejected the “void for vagueness” claim, noting that “the LPO contains contextual standards and a process for clarification and guidance as to individual sites.” According to the court, these traits shielded the LPO from a “void for vagueness” claim. The Court summarily dismissed the Connors’ claims that the “site” was never designated along with the house, that the denial violated RCW 82.02.020 (which prohibits certain development conditions), or that it constituted a taking or a substantive due process violation. Owners of City landmarks should take care to ensure that any proposed development on their property is consistent with preservation of the features designated under the LPO.

EPA to Regulate Greenhouse Gas Emissions

Davis Wright Tremaine — Fri, 11 Dec 2009 13:08:22 -0800

Authored by: Lauren Giles Wishnie, Kerry Shea, and Clayton Graham

Findings recently issued by the Environmental Protection Agency (EPA) could be the first step in national regulation of greenhouse gas (GHG) emissions under the Clean Air Act. Although the findings apply only to new motor vehicles and engines for the time being, they lay the groundwork for regulating GHGs emitted by power plants and manufacturing facilities.

Background

In 2007, the U.S. Supreme Court, in Massachusetts v. EPA, 549 U.S. 497, held that greenhouse gases constitute pollutants under the Clean Air Act and ordered the EPA Administrator to determine whether or not such gases cause or contribute to pollution that may endanger human health. In response to this order, the EPA, on December 7^th, 2008, issued formal findings that six greenhouse gases (carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride) present a health and safety issue such that they should be regulated under the Clean Air Act. EPA found that the six listed gases threaten human health (the “endangerment” finding), and that motor vehicle emissions contribute to the concentration of the gases in the atmosphere (the “cause or contribute” finding).

What are the impacts of the findings? Who will be affected?

These findings legally obligate EPA to regulate the gases under section 202(a) of the Clean Air Act, which requires that the Administrator set standards for emissions of pollutants from new motor vehicles and new motor vehicle engines. While the finding does not directly regulate emissions, it does allow the EPA Administrator and the Administrator of the National Highway Traffic Safety Administration to finalize proposed standards for GHG emissions from new cars and light-duty trucks, which were released on September 15, 2009 (see this announcement). However, these standards will apply only to new motor vehicles and engines--existing vehicles and engines will not be affected.

Stationary Source Regulation

Because Massachusetts v. EPA specifically addressed regulation under section 202(a), the new findings are focused on vehicle emissions only. Down the road, however, it is also possible that the findings could lay the groundwork for regulating these gases under other provisions of the Clean Air Act, such as those applying to emissions from power plants and manufacturing facilities. Having found that GHG emissions from motor vehicles endanger human health, it would be difficult for EPA to assert that emissions of GHGs from other sources did not.

This is one of numerous regulatory and legislative developments that will likely affect emitters of GHGs over the coming year. For example, EPA’s greenhouse gas reporting rule imposes reporting requirements on certain stationary sources, as well as some mobile sources. Further, some federal courts have interpreted existing causes of action, such as common law nuisance, to assess possible liability for property damage indirectly caused by the emission of greenhouse gases. Finally, Congress is still considering new laws to address greenhouse gas emissions. Thus, owners of facilities that emit GHGs should be aware that the regulatory and legislative landscape in 2010 and beyond is likely to be much more restrictive and should begin preparing for potential restrictions on emissions.

City and County Governments Authorize Permit Extensions for Active Development Projects

Davis Wright Tremaine — Fri, 06 Nov 2009 08:52:52 -0800

This post is authored by: Clayton Graham & Thomas Goeltz

Landowners and developers in Washington state should be aware of a spate of recent legislation aimed at prolonging the life of active land development permits. Developers who request these extensions in a timely manner could effectively extend the life of their development approvals—including certain building permits, use permits, subdivision and other land use approvals—and may be able to save themselves the hassle and expense of having to restart the entitlement process for stalled development projects.

Financial difficulties faced by many developers in the state have prompted a number of cities and counties to adopt ordinances that authorize extensions to certain permit expiration dates. These ordinances apply to a variety of development approvals and permits, and a few of them implement automatic permit extensions.

For example, code amendments under Clark County’s Ordinance 2009-06-15 provide that a number of development approval types “are hereby granted a six-month extension,” subject to certain conditions and requirements. However, the vast majority of these ordinances require some action by the owner or developer in order for the extension to be granted. Following are a few examples of ordinances authorizing these extensions:

King County Ordinance 16515 establishes an extension schedule for certain building permits, preliminary plats and other land use approvals.
Snohomish County Ordinance 09-108 authorizes the planning department to grant extensions to preliminary subdivision approvals.
Seattle’s Ordinance 123072 allows extension of certain Master Use Permits (initiated by written request of the project applicant).
Redmond Ordinance 2468 extends the approval period for certain single-family residential subdivisions.
Pierce County Ordinance 2008-115s authorizes extension of certain submittal requirements, and includes provisions relating to certain development permits, vesting of development rights, and subdivision/plat processing.

At least a dozen other jurisdictions—many of them in the Puget Sound area—have passed or are considering similar extension ordinances, including the cities of Kirkland, Issaquah, Renton, Auburn and Everett.

This legislation could save developers the expense and hassle of repermitting projects that may have stalled due to a lack of financing or other economic factors. However, a case-by-case evaluation is needed to determine the eligibility of a particular project. The ordinances contain threshold requirements that limit the projects for which an extension may be granted. In many cases, a separate application and discretionary land use approval is required for a permit to be extended, or the project applicant must submit specific documentation to justify an extension request.

Other critical factors, such as deadlines and additional application requirements, vary a great deal by jurisdiction. For this reason, landowners and developers should consult an attorney to determine whether they are eligible for an extension under any of these ordinances.

Building Code Violations - Penalties Struck Down as Unconstitutional

Clayton Graham — Fri, 30 Oct 2009 13:29:48 -0800

In a recent opinion linked here—Post v. Tacoma, the Washington Supreme Court struck down a number of building code violation penalties that the City of Tacoma had assessed against a property owner. The City assessed numerous fines against the owner (Post) based on the condition of a some of his properties in the City. The ordinance at issue permitted the assessment of daily fines for continuing building code violations, which is a common element of local code compliance provisions. The Court, however, took issue with the fact that the City "ha[d] no procedures in place for civil defendants to appeal any but the first penalty." That is, once fines had begun accruing, there was not an adequate process in place for the landowner to contest the violation. A majority of the Court found that the code provisions authorizing these penalties violated procedural due process requirements and thus were unconstitutional on their face and as applied to Post.

The majority also found that the State’s Land Use Petition Act (LUPA) did not apply to Post’s appeal, so Post was not required to comply with LUPA’s procedural requirements for challenging the City’s action. The dissenting justices, on the other hand, believed that Post’s failure to file his complaint under LUPA precluded judicial review of his claims. This opinion reiterates the importance of an owner’s procedural rights to contest penalties assessed by a city or county. It is also a reminder that an owner should take quick action to address notices of code violations in order to avoid unnecessary expenses.

Municipalities Shut Down Haunted Houses as "Unsafe Structures"

Clayton Graham — Wed, 21 Oct 2009 11:20:00 -0800

If your Halloween festivities include building a haunted house, take care to comply with any local regulations that apply to the structures or your attraction could be shut down. Examples abound this time of year. Officials in Tonawanda, New York, have shut down one haunted house that had become a 15-year long tradition in its neighborhood. In an article on the structure, it is described as being “approximately 1200 square feet,” and “built with over 300 2x4s [and] 400 feet of plastic.” In Simi Valley, California, the City shut down another 1,200 square foot “amusement building,” deeming it an “unsafe structure” due to fire hazards. Even if your haunted house is smaller than these structures, it may still trigger a permit requirement or other obligations under local codes. When in doubt, check with your local planning department for details, or you may have unexpected visitors this Halloween.

Washington Supreme Court: Vested Development Rights Not Triggered by Site Plan Application

Clayton Graham — Thu, 08 Oct 2009 11:14:56 -0800

The scope of Washington’s vested rights doctrine—which has constitutional, common law, and statutory underpinnings—has been the subject of a longstanding debate. Under this doctrine, certain development projects may be subject to the land development laws in effect on the date that a complete building permit application is submitted, despite later changes in the law. Whether other types of project applications should vest, and in what circumstances, has been the subject of a longstanding debate, which has been chronicled in a long line of appellate court cases. Today, the Washington Supreme Court has added another landmark opinion to Washington’s body of case law on vested rights. This opinion, issued in the case of Abbey Road Group v. City of Bonney Lake, answers some questions, but still leaves developers with a great deal of uncertainty. (Click on the following hyperlinks to access the text of the three separate portions of the opinion: the lead opinion, authored by Justice Johnson and joined by two others; the concurrence authored by Madsen and joined by one other; and the dissent authored by Justice Sanders and joined by three others.)

In this case, a developer (Abbey Road) submitted a site plan for a multifamily development to the City of Bonney Lake, apparently under the belief that it could not apply for a building permit until the City approved the site plan. On that same day, the City passed an ordinance rezoning the subject property to a zoning category in which the proposed project was prohibited. The Supreme Court held that Abbey Road’s project was not vested against the rezone because it had not submitted a complete building application for the development. According to the Court, the site plan approval could not vest the project, because the applicable vesting statute (RCW 19.27.095) does not address site plans, and because the City’s code does not address vesting. The Court declined the invitation to expand the vested rights doctrine to include applications not specifically addressed in the statute.

The majority and the dissent disagreed about whether the City’s regulations required site plan approval before a building permit application could be submitted. If this were the case, the City’s process may violate developers’ due process rights under West Main Associates. However, despite the concurring justices’ "concerns" about the City’s process, a majority of the Court found that there was no due process violation because the developer could have submitted a building permit application at any time. The dissent found that this was not the case, and that the City’s procedures violated due process because they deprived the developer of the right to "unilaterally control the date th[e] project vested." The due process aspect of the vested rights doctrine is sure to be the subject of future vested rights disputes.

New Rules Soon for Condos, Communities (Part 2)

Gene Grant & Meghan Moran — Wed, 07 Oct 2009 14:06:05 -0800

Previously, in our September 3 post, we talked about how Senate Bill 963 impacts the governance of condominium associations and planned communities. For an outline of some of the other changes that SB 963 brings about, read the full Daily Journal of Commerce article (Part 2).

Central Portland Commercial Development Strategy

Gene Grant — Wed, 07 Oct 2009 13:31:16 -0800

The Portland Business Alliance Development Committee, a subcommittee of the Central City Standing Committee, and the Urban Land Institute Commercial Development Committee convened a joint effort to craft recommendations and inform the Bureau of Planning and Sustainability as it begins the process of updating the 25-year Central Portland Plan. This is occurring because the Bureau of Planning and Sustainability has embarked on an update to the 1988 Central City Plan. The Central Portland Plan Update is a two-year, comprehensive effort that will set the stage for significant employment and residential growth for the next 25 years.

Summary of Findings

Presentation

New Law Will Affect Condos, Communities

Gene Grant & Meghan Moran — Thu, 03 Sep 2009 09:00:05 -0800

On June 30, Oregon Gov. Ted Kulongoski signed Senate Bill 963 into law. This bill, set to go into effect on Jan. 1, 2010, makes major changes to the Oregon Condominium Act (ORS Chapter 100) and the Oregon Planned Community Act (ORS Chapter 94).

Following is an overview of the changes ahead for people dealing with condominiums and planned communities, whether they’re association officers and directors, developers, managers, or legal counsel. The focus of this first part is on sections of ORS 963 that affect governance of the condominium or planned community. Read full Daily Journal of Commerce article.

Program Created for Transfer of Development Rights in Puget Sound Region

Clayton Graham — Tue, 11 Aug 2009 09:59:15 -0800

The legislature has recently authorized a regional program for the Transfer of Development Rights (TDR) among a number of Puget Sound jurisdictions, including King, Kitsap, Snohomish and Pierce Counties and the municipalities within them. This legislation (click here for HB 1172 and the final session law) , effective July 26, 2009, amends Chapter 43.362, RCW, and authorizes the State Department of Community, Trade & Economic Development (CTED) to serve as central coordinator for the program at the state level. The bill's goal is to conserve rural agricultural, forest and other resource land by encouraging transfer of density from such rural resource land to urban areas through the marketplace. Local governments can initiate participation in the program by interlocal agreement or by resolution. This regional TDR program encourages participating governments "to provide permitting or environmental review incentives for developers to participate." It may also benefit landowners and developers by permitting inter-jurisdictional sales of development capacity.

Specific Height Restriction Limits Approval Authority of Architectural Review Committee

Clayton Graham — Mon, 27 Jul 2009 10:34:38 -0800

In a dispute relating to the height of a residential addition, the Division Three Court of Appeals has provided additional guidance on when specific building restrictions in community covenants (CCRs) might limit the authority of an architectural approval committee. In Mack v. Armstrong, the court heard a challenge to a trial court order requiring the Armstrongs to remove the top four feet of their new residential addition. This order was based on a decision by an architectural committee, which was authorized to approve any new construction on the Armstrongs’ lot. The Court of Appeals, however, reversed this order because the Armstrongs’ construction complied with a specific 30-foot height restriction in the covenants. The Court cited prior cases generally holding that "[s]pecific provisions of real estate covenants take precedence over more general consent-to-construction provisions of those same covenants." This case highlights the importance of reading a community covenants document as a whole while interpreting its meaning.

Refusal to Process Permits Held Unconstitutional Burden on Religious Freedoms

Clayton Graham — Wed, 22 Jul 2009 15:33:43 -0800

In a recent en banc opinion, City of Woodinville v. Northshore United Church, et al. the Supreme Court of Washington held that the City’s "total refusal" to process a land use application for a homeless encampment on Church property violated the Washington state constitution. The City had refused to process a temporary use permit submitted by the Church based on a City moratorium on such permits in certain areas of the City. Despite the City’s reliance on this moratorium, the Court found the City’s actions placed a "substantial burden on [the] exercise of religion," and thus violated State constitutional protections for religious exercise. The Court noted that "[h]ousing of the homeless may be a part of religious belief or practice," but that the these activities had a greater impact on the surrounding community than typical worship activities. The Court added: "Cities may mediate these externalities reflecting concerns for safety, noise, and crime but may not outright deny consideration of permitting." The Court also ruled in favor of the Church on a breach of contract claim by the City, but did not reach federal constitutional issues or claims under the Religious Land Use and Institutionalized Persons Act (RLUIPA).

Federal Building Codes?: Proposed Federal Legislation Could Require Changes to Energy Efficiency Provisions of City and State Building Codes

Davis Wright Tremaine — Fri, 05 Jun 2009 13:28:24 -0800

This post was authored by Lloyd Chee & Clayton Graham

The latest version of a house bill entitled America’s Clean Energy Security Act of 2009 (H.R. 2454—click here for full text of the May 15^th Version), which was passed by the House Energy and Commerce Committee on May 21, contains provisions that could potentially affect building codes in every city and county in Washington State. Section 201 of the proposed legislation authorizes the Secretary of the Department of Energy to develop a “national energy efficiency building code.” The Bill sets specific efficiency targets, and requires the Secretary to consider a number of existing codes in formulating the national Code, including commercial building standards proposed by the

American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) and also standards and practices for “cool roofs” (a term curiously not defined by the proposed legislation). Once the energy efficiency building code is adopted, states would have one year to either adopt the national code or equivalent standards into their building codes, or document adoption by local governments representing at least 80 percent of the state’s urban population.

States that fail to make these changes to their building codes could lose emission allowances and other federal funding. In these states, the national code would automatically apply to buildings in the relevant (local) jurisdictions, and the Secretary would have direct enforcement authority over property owners and builders. The transfer or occupancy of a building that was constructed out of compliance with the national code would be a violation of the Act, for which the Secretary could assess civil penalties (each day of occupancy would be a separate violation of the Act). The Act would also provide jurisdiction to Federal district courts to enjoin any violation of the Act.

If this bill is passed, it could affect the design of commercial projects across the country, and some industry groups have decried the legislation as unfriendly to developers. In a published statement, NAIOP—the Commercial Real Estate Development Association—has said that “[t]he provisions as written would create significant financial barriers to the construction of new buildings.” Landowners and developers alike will be closely watching this bill as it makes its way through Congress.

New Parks Impact Fee Not Offset by Prior Land Dedication

Clayton Graham — Wed, 27 May 2009 14:18:08 -0800

In a recent impact fees case, Belleau Woods v. City of Bellingham, the Division I Court of Appeals upheld the City of Bellingham’s application of a new park impact fee ordinance to a development that was already conditioned on a land dedication and payment under a separate parks-related development requirement. The Court reaffirmed its prior holdings that new impact fees can be applied to some developments that have already been approved, and that the doctrine of vesting did not protect the developer from the newly-created park impact fee. Based on its extensive analysis of the provisions of a development agreement and the municipal code, the court reversed the Superior Court on the impact fees issue. The Court reinstated the City Hearing Examiner’s decision that the City could apply the new impact fee and the prior park-related mitigation measures concurrently to the development. The Belleau Woods case highlights the importance of assessing all local code provisions that might require or authorize mitigation, even where separate code provisions seem to target similar development impacts.