2016-S.E AMH ORCU ADAM 114

ESHB 2016 - H AMD TO H AMD (H-4496.4/08) 1067

By Representative Orcutt

NOT ADOPTED 2/13/2008

   On page 2, beginning on line 13, strike all of section 3 and insert the following:

   "NEW SECTION. Sec. 3. A new section is added to chapter 8.25 RCW to read as follows:

   When real property is acquired through condemnation or under the threat of condemnation, the owner of the property may retain an option to repurchase the property or to receive proceeds from the sale of the property in accordance with this section. If the owner elects to retain such an option, it shall be a part of the purchase and sale agreement or other agreement for the transfer of the property to the acquiring entity. In addition, the option should be recorded in the real property records of the county where the property is located. Failure to so record the option will have the same effect as failure to record any other interest in real property. In any condemnation proceeding to determine just compensation for the taking of property in which the owner has retained an option to repurchase or to receive proceeds from the sale of the property, the amount of just compensation to be paid shall be reduced by the value of the option. No option shall be provided if the amount of just compensation paid by the acquiring entity is not reduced by the value of the option.

   (1) Any entity seeking to acquire real property through condemnation or under the threat of condemnation must notify the owner in writing of the right under this section to retain a repurchase option or an option to receive proceeds from the sale of the property. The notice must be given:

   (a) In the case of the state or other entity operating under the procedures of chapter 8.04 RCW, with the notice given under RCW 8.04.020;

   (b) In the case of a county or other entity operating under the procedures of chapter 8.08 RCW, with the notice given under RCW 8.08.030;

   (c) In the case of a city, town, or other entity operating under the procedures of chapter 8.12 RCW, with the summons served under RCW 8.12.070;

   (d) In the case of a school district or other entity operating under the procedures of chapter 8.16 RCW, with the notice given under RCW 8.16.030;

   (e) In the case of a corporation or other entity operating under the procedures of chapter 8.20 RCW, with the notice given under RCW 8.20.020; and

   (f) In the case of any other entity, with the service of process commencing the action for condemnation.

   (2) If real property that was transferred to an acquiring entity through or under the threat of condemnation has not been or will not be put to use for a public purpose within five years after the date the property was transferred to the acquiring entity, the acquiring entity must provide a written notice to a former owner who elected to retain a repurchase option in the property or an option to receive proceeds from the sale of the property certifying that the acquiring entity is making reasonable progress towards the project for which the property was condemned. The acquiring entity must provide the written notice no later than five years, and no sooner than four years, after the date the property was transferred to the acquiring entity.

   (3) If, within seven years after the date real property was transferred to an acquiring entity through or under the threat of condemnation, the acquiring entity determines that all or a portion of the property or an interest in the property is no longer necessary for a public purpose and should be sold, a former owner who elected to retain a repurchase option or an option to receive proceeds may exercise that option in accordance with this section. "Former owner" means the person or persons from whom the acquiring entity acquired title or that person's or those persons' successors or assigns to the property or property interest that is subject to the repurchase right or right to receive proceeds.

   (a) At least ninety days prior to the date on which the acquiring entity will announce a public process for property disposition or, if the sale is to be negotiated, at least ninety days prior to the date on which a purchase and sale agreement or similar document is to be signed, the acquiring entity shall (i) publish notice of its determination to sell the property or a portion of the property in a legal newspaper of general circulation in the area where the property to be sold is located, (ii) describe generally any easements, other restrictions, or reserved rights the acquiring entity intends to retain upon sale, and (iii) mail notice of the determination to the former owner of the property at the former owner's last known address or to a forwarding address if that owner has provided the acquiring entity with a forwarding address.

   (b) If the former owner notifies the acquiring entity in writing within thirty days of the date of notice provided under (a) of this subsection that the former owner intends to exercise the repurchase right or the right to receive proceeds granted by this section, the acquiring entity shall, unless it already has a completed current independent appraisal for the property, immediately arrange for an independent appraisal to determine the fair market value of the property or portion of property subject to repurchase or to the right to receive proceeds, adjusted to reflect the value of any physical changes to the property, such as improvements or removal of structures. Within thirty days of receipt of the former owner's notice of intent to exercise the repurchase right or right to receive proceeds, or following the acquiring entity's receipt of the appraisal, the acquiring entity shall provide the former owner with a written copy of the appraisal. All costs of appraisal shall be paid by the acquiring entity. If the former owner does not provide timely written notice to the acquiring entity of the intent to exercise a repurchase right or the right to receive proceeds, that right is extinguished and the acquiring entity is relieved of any further obligation under this section.

   (c) Within thirty days of the date the acquiring entity provides a written copy of the appraisal to the former owner under (b) of this subsection, the former owner shall notify the acquiring entity whether the former owner wishes to repurchase the property or receive proceeds from the sale of the property.

   (d) The former owner may exercise the repurchase right granted by this section by delivering to the acquiring entity earnest money or a deposit in a form determined by the acquiring entity in an amount equal to five percent of the appraised value, together with a written promise to pay, within thirty days, the following:

   (i) The lesser of (A) the appraised value less the earnest money or deposit, or (B) an amount equal to the compensation received from the acquiring entity when the property or portion of property was condemned or sold under threat of condemnation, with interest accrued at the market rate, and with the amount adjusted to reflect the value of any physical changes to the property, such as improvements or removal of structures, as determined by the independent appraisal, less the earnest money or deposit; and

   (ii) All required fees and costs otherwise required for the transfer of real property.

   (e) Upon receipt of the full payment required in (d) of this subsection, the acquiring entity shall transfer title to the former owner, subject to any easements, other restrictions, or reserved rights retained by the acquiring entity. If the former owner fails to complete the sale, the earnest money or deposit is forfeited to the acquiring entity, the former owner's repurchase right is extinguished, and the acquiring entity is relieved of any further obligation under this section.

   (f) In the event that the acquiring entity and the former owner cannot agree on the amount of compensation paid for a portion of the property under (d)(i)(B) of this subsection, the acquiring entity and the former owner shall each arrange for an independent appraisal of the just compensation allocation to the portion of the property to be sold. If the acquiring entity and the former owner cannot then agree on the amount, either party may initiate a lawsuit to determine the amount, or they may agree to binding arbitration in which case the appraisals shall be submitted to a third, independent appraiser. The third appraiser shall sit as an arbitrator and determine the amount of just compensation under (d)(i)(B) of this subsection. The arbitrator's decision shall be final and binding. The acquiring entity and former owner shall bear their own costs and fees, and pay equally the costs and fees of the arbitrator.

   (g) If the former owner elects to receive the proceeds of the sale of the property, the amount of proceeds shall be the difference between: (i) the price at which the property is sold; and (ii) the amount of the compensation received from the acquiring entity when the property was condemned or sold under threat of condemnation, with interest accrued at the market rate, and with the amount adjusted to reflect the value of any physical changes to the property, such as improvements or removal of structures, as determined by the independent appraisal.

   (4) The acquiring entity may reject a notice of intent under subsection (3)(b) of this section received from a person claiming to be a successor or assignee that is not accompanied by evidence sufficient to demonstrate that the person is the successor or assignee of the person from whom the acquiring entity acquired title.

   (5) The obligations imposed on an acquiring entity in this section are in addition to any provided by law for the surplusing or sale of public property to private parties. Nothing in this section precludes an acquiring entity from retaining the property and determining not to surplus and sell the property."

EFFECT: Provides that an owner of condemned property may elect to retain the right to receive proceeds from the sale of the condemned property if the condemned property is sold within 7 years. Requires the former owner to elect between the right to receive proceeds or the right to repurchase the property (which is currently provided for in the striking amendment).

Provides that the amount of proceeds is the difference between: (a) the price at which the property is sold; and (b) the amount of the compensation received from the acquiring entity when the property was condemned, with interest accrued at the market rate, and with the amount adjusted to reflect the value of any physical changes to the property.