H-0663

AN ACT Relating to compensation for government interference with private property rights; adding a new chapter to Title 64 RCW; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature hereby finds and declares that land use regulation and the fair distribution of burdens created by land use regulation are matters of compelling public interest. The legislature further finds and declares that vigorous and intelligent employment of land use regulation by the state and its political subdivisions to protect the environment, natural resources, and ecosystems, to control growth, and to ensure sound land use planning is in the public interest, but that regulation unaccompanied by a plain, speedy, and adequate means of just distribution of the burdens generated thereby, often results in the imposition of unfair and substantial economic burdens on individual property owners for the benefit of the public as a whole.

It is therefore the policy of this chapter to distribute the economic burdens proximately resulting from land use regulations according to the benefits created, so that no person is required to assume more than a fair share of these burdens. Payment of fair and adequate compensation to property owners under this chapter is a fair and preferred means of distributing these economic burdens. Existing constitutional law contains the requirement that private property be paid for which is taken or damaged by actions of government that constitute acts of eminent domain or inverse condemnation. Provisions are made in statutory law for measuring the value of property so taken or damaged. This chapter creates an additional cause of action for private property owners to sue, obtain, and measure compensation resulting from government acts which do not constitute a constitutionally compensable taking or damaging of their property, but which nevertheless cause economic burdens.

NEW SECTION. Sec. 2. As used in this chapter, the following terms have the meanings indicated unless the context clearly requires otherwise:

(1) "Regulation" means any written enactment or expression, including a legislative act, ordinance, resolution, initiative, referendum, policy statement, or other governmental action involving the exercise of the legislative power of the enacting entity which imposes or alters restrictions, limitations, or conditions on the use of property.

(2) "Act" means any action by a public entity other than a regulation, whether formal or informal, whether affirmative or negative, whether written or not written, whether involving or not involving the police power or legislative power of the public entity, and whether initiated by the public entity itself or accomplished in response to a referendum, initiative, or a petition, application, motion, or other act of a property owner. Acts may include the enactment, granting, or denial of a change of zoning, permitted use, variance, subdivision rights, or building or other permits, or any other official act, prohibition, representation, or policy affecting the value, marketability, use, or economic return of real property.

"Act" also means a public entity's failure to act in response to a property owner's application for a change in land use regulation, or in response to a property owner's application for a permit.

(3) "Permit" means any governmental approval required by law before a property owner may improve, sell, or otherwise put property to use.

(4) "Property" means any interest and right in real property including the right to possess, use, encumber, and dispose of the real property.

(5) "Property owner" means any person holding any legal or equitable interest or right in any real property in the state.

(6) "Litigation expenses" means all actual expenses incurred in pursuing remedies under this chapter, including filing fees, attorneys' fees, appraisal fees, costs of record reproduction and transcription, and the costs of the appearance of witnesses.

(7) "Public entity" means the state, any of its political subdivisions, any regional land use control commission, any other public body exercising or purporting to exercise legislative or regulatory authority over land use, any subdivision of these bodies, and any other bodies, including public utilities or other nongovernmental bodies, empowered by the state or any of the entities listed in this subsection with legislative, regulatory, or eminent domain authority or control over real property in the state.

(8) "Interim damages" means reasonable costs, expenses, and losses incurred between the time a cause of action vests under section 3 of this act and the time the property owner is compensated for the taking or damaging of his or her property. Interim damages must be proximately caused by a regulation or act, necessarily incurred and actually suffered, realized, or expended, but are not based upon diminution of value of, or damage to, real property, or litigation expenses. Interim damages include, but are not limited to, ad valorem taxes paid, interest paid, and rents paid or actually lost.

NEW SECTION. Sec. 3. If the economic effect of a regulation or act of a public entity upon real property destroys or substantially impairs its value or use, or substantially impairs its marketability or economic return, or substantially interferes with a property right, a cause of action for damages vests in the property owner when the economic effect occurs.

This chapter does not create a cause of action for:

(1) Insubstantial economic impairment caused by a regulation or act of a public entity. Economic impairment is insubstantial if the property is reduced in value by no more than five thousand dollars or twenty percent of its total value.

(2) Damage caused solely by good faith general or preliminary planning functions of a public entity unless the planning, in the context of all pertinent facts and circumstances, results in substantial impairment to the marketability of the property or is accompanied by a direct legal restraint on the property, or oppressive conduct or unreasonable delay by the public entity.

(3) The refusal of a public entity to affirmatively confer a benefit upon a property not enjoyed by surrounding or comparable properties or to confer a benefit increasing the property's market value beyond that of surrounding and comparable properties, unless the refusal, in the context of all pertinent facts and circumstances, prohibits reasonable use and development.

(4) The regulation, control, or abatement of any nuisance or similar noxious activity or land use that is inimical to public health or safety. This provision is not applicable to lawful activities or land uses which are not harmful to public health or safety and are sought to be abated solely to transform the use of the affected land to a more publicly beneficial use.

(5) Damage or loss of value arising because of regulatory provisions or acts applicable to property other than the property experiencing the damage or loss.

(6) Damage or loss of value because of loss of road access, or because of the removal or imposition of traffic regulations, which is not also compensable under a constitutional theory.

NEW SECTION. Sec. 4. (1) In determining whether the economic effect of a regulation or act is substantial, and whether relief under this chapter should be provided, a court may consider all relevant evidence, including the following:

(a) Diminution in fair market value of the property in percentage terms and in terms of the actual monetary loss;

(b) The regulatory status and use of adjacent property and other comparable property in the same geographic area;

(d) Any acts, omissions, policies, or representations of the public entity or its officers, employees, representatives, or agents which, considered in the full factual context, impose a direct legal restraint upon the property or tend to show an intent to acquire or appropriate the property for public use or benefit; and

(e) Whether the regulation or act was accompanied by oppressive acts, unreasonable delay by the public entity or its agents, or by representations of the public entity or its agents upon which the property owner reasonably and detrimentally relied, whether or not the agents have authority to legally bind the public entity.

(2) Any evidence which may by law be considered by a jury in determining the existence and amount of taking or damaging under Article I, section 16 of the state Constitution, or which shows loss of value or damage, may be considered in determining whether compensation should be conferred under this chapter.

(3) Value shall be determined as of the last business day prior to the date set for the beginning of the most recent hearings or proceedings at which the question of value will be determined.

NEW SECTION. Sec. 5. A property owner affected by a public entity's regulation or act who brings an action under sections 3 and 4 of this act shall be entitled to judicial relief in the manner provided in this section. The trial of any action brought under this chapter shall be bifurcated as follows:

(1) The court shall first determine whether and the extent to which the property of the plaintiff has been taken or damaged by the regulation or act within the meaning of Article I, section 16 of the state Constitution. If the court determines that a taking or damaging has occurred, the cause shall be deemed an ordinary inverse condemnation action to that extent and submitted to a jury, or to the court if a jury is waived, for the determination of just compensation, and judgment shall be entered on the verdict.

(2) If the court determines that no taking or damaging within the meaning of Article I, section 16 of the state Constitution has occurred, but that the owner is entitled to monetary relief under the provisions of this chapter, the court shall make an order so finding. The executive or the legislative body of the defendant public entity shall have sixty days from the order, or to the end of the next special or regular session if the public entity is the state legislature, to elect to either:

(a) Withdraw or rescind the offending regulation or act, or correct or amend it to remove its offending aspect or aspects, and pay the property owner's interim damages and litigation expenses. In taking this action, it is not necessary for the executive or legislative body to follow the procedural requirements of any other law except to comply with public hearing notice requirements applicable to the executive or legislative body.

(i) The correcting of the act or regulation may be by amendment, repeal, granting the use earlier denied through permit variance or otherwise, or in any other appropriate way.

(ii) If this course of action is selected, the court shall retain jurisdiction and review the corrective act of the public entity. If in the judgment of the court, the proposed corrective act does not provide adequate relief or do substantive justice to the property owner, the court may treat this failure as an affirmation of the regulation or act, and proceed as provided in subsection (4) of this section.

(b) Affirm the regulation or act.

(3) If the public entity takes no action within sixty days of the finding described in subsection (2) of this section, or by the end of the next session if the public entity is the state legislature, it is deemed to have affirmed the regulation or act as a matter of law.

(4) If the entity affirms its regulation or act, the trial shall continue. In the second phase of the trial, the jury, or the court if a jury is waived, shall determine:

(a) The value of the entire property interest owned by the plaintiff; and

(b) The amount of damages actually suffered by the plaintiff proximately caused by the regulation or act, not including interim damages.

(5) If the entire property interest which is the subject matter of the action is less than the full fee interest in the property in question, the defendant public entity may request the finder of fact to determine the value of the full fee interest, in addition to the two determinations required in subsection (4) of this section.

(6) Once the determinations required by subsections (4) and (5) of this section have been made, the defendant public entity shall have ninety days to elect to either:

(a) Pay the property owner the damages as determined under subsection (4)(b) of this section, plus interim damages and litigation expenses;

(b) Pay the amount determined to be the value of the property interest as determined under subsection (4)(a) of this section; or

(c) If the property interest is less than the full fee, and the fee value has been determined, and there is public use and necessity for the full fee interest, pay the value of the fee interest as determined under subsection (5) of this section. If the public entity chooses to pay the full value of the fee or lesser property interest, the court shall order the plaintiff to convey all right, title, and interest in the fee or lesser property interest, as appropriate, to the public entity, and award the property owner interim damages, court costs, and litigation expenses.

(7) If the public entity does not make the election described in subsection (6) of this section within the time period specified, the court shall enter its order and judgment awarding the property owner the damages as determined in subsection (4)(b) of this section, plus interim damages, court costs, and litigation expenses.

NEW SECTION. Sec. 6. The remedies provided by this chapter are in addition to any other remedies provided by law. The provisions of this chapter shall be liberally construed to fulfill the policies stated in section 1 of this act.

NEW SECTION. Sec. 7. Sections 1 through 6 of this act shall constitute a new chapter in Title 64 RCW.

NEW SECTION. Sec. 8. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 9. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.