2223-S

AN ACT Relating to the protection of private property; amending RCW 4.16.100; adding a new section to chapter 7.06 RCW; adding a new section to chapter 4.84 RCW; adding a new chapter to Title 64 RCW; and providing an effective date.

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

NEW SECTION. Sec. 1. The legislature finds and declares that:

(1) Article I, section 16 of the state Constitution promises protection of the people's rights in their private property by providing that "No private property shall be taken or damaged for public or private use without just compensation having been first made." This chapter is intended to avoid the taking and damaging of private property by regulation and provide a practical remedy when private property is taken or damaged by government restrictions on land use;

(2) The fifth amendment to the United States Constitution provides a similar guarantee. The supreme court has declared that the purpose of the just compensation requirement is to bar government from forcing some people alone to bear public burdens that in all fairness and justice should be borne by the public as a whole;

(3) The right to own, possess, and use private property is a fundamental civil right and an essential feature of living in a free society. The supreme court has declared that the fifth amendment requires government to pay just compensation when regulation prohibits substantially all economically beneficial and productive use of an entire parcel of property. Some courts throughout the country have ruled that the same rule applies when regulation takes substantially all economically beneficial and productive use of a portion of a parcel of property. This chapter is intended to provide in statute that compensation should be provided when regulation takes part of one's property as it is when regulation takes all of one's property;

(4) The government has an obligation to prohibit nuisance uses of property which injure the private property, health, and safety of others. This chapter is not intended to hinder government entities' efforts to prohibit nuisances;

(5) The public has legitimate interests in protecting natural, environmental, and aesthetic resources. The public desire to provide such public amenities should be supported by public funds;

(6) Many regulations of real property enhance the value of the regulated private property. This chapter is not intended to limit government regulations that enhance the values of regulated property;

(7) When property values are decreased by regulations, the cumulative reduction in the value of private property limits the tax base and drives up the property tax rates of others;

(8) Property regulations that leave property substantially without economically beneficial or productive use harms the economy of Washington state by reducing the net worth of privately held real estate that could be used productively in creating businesses and jobs for Washington citizens. When applied to land appropriate for residential uses, such regulations also hinder the crucial goal of making housing affordable by reducing the supply of viable building sites by driving up the price of such sites and by increasing the costs of using those sites for housing;

(9) Many restrictions on land use exist to protect environmental values. These values have suffered negative cumulative impacts of land use on the environment due to the lack of protection over the decades. Fairness and justice require that the public, which cumulatively over time has contributed to negative environmental impacts, pay the costs of alleviating past harms to the environment, rather than forcing a few members of society to pay for the necessary remedies; and

(10) This chapter is necessary to ensure that when the public desires to create or preserve natural, environmental, scenic, or aesthetic values on private property and seeks to obtain those goals through restrictions that leave the owner of the private property with no reasonable economically beneficial or productive use of the affected property, the public will either mitigate the damage to the private property owner or provide compensation.

NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Compensation" means remuneration which equals the reduction in the fair market value of private real property that is attributable to a restriction on the use of the property or any part thereof.

(2) "Existing use" means any use that does not constitute a nuisance and that is actually engaged on the property at any time within six years prior to the imposition of the subject restriction. Forest practices shall be considered an existing use for forest lands as those terms are defined in the forest practices act, chapter 76.09 RCW.

(3) "Government entity" means Washington state, state agencies, agencies and commissions funded, in whole or in part, by the state, counties, cities, towns, special districts, municipal corporations, or quasi-municipal corporations.

(4) "Impose" means for an official or employee of a government entity to apply a restriction on land use to all or any portion of private real property in response to the owner's use, proposed use, or permit application.

(5) "Local land use legislation" means any plan, ordinance, resolution, policy, or rule that has general application and that is adopted by a local government entity that restricts, or authorizes restrictions on the use of all or a portion of the private real property.

(6) "Nuisances" include:

(a) Nuisances as defined by the laws of the state of Washington, as the same may be amended from time to time; and

(b) Nuisances under common law standards for determining nuisances, without regard to mere declarations that an activity constitutes a nuisance.

(7) "Real property" means any interest in real property recognized under Washington law, including water and natural resources such as crops, trees, and minerals, while such resources are attached to land.

(8) "Reasonable economically beneficial or productive uses" are economic uses of property that are more than nominal or passive, that are proportionate to and compatible with actual uses of property in the immediate area at the time of the imposition, and that do not constitute a nuisance.

(9) "Restriction" or "restricting" means a limitation, requirement, regulation, or restriction by a government entity that limits the use of real property, including those imposed by the application of ordinances, resolutions, rules, regulations, policies, statutes, and conditions of land use approval.

NEW SECTION. Sec. 3. (1) Except in emergencies that require the imposition of moratoria or prohibitions on development that are effective for a period not to exceed sixty days to protect life or prevent physical damage to property, land use legislation may be enacted after the effective date of this section only after the procedural requirements of this section have been followed.

(2) A government entity may not enact land use legislation without holding a public hearing on the proposed land use legislation. The required public hearing may be held by the governing body or a planning commission. Notice of the required public hearing shall be published at least thirty and not more than forty-five days in advance of the public hearing in any newspaper published in the jurisdiction of the government entity or having a general circulation therein, with the advertisement intentionally designed to attract public attention. The advertisement shall be of a size no smaller than four inches by four inches and shall be placed in a location other than with classified advertisements. The published notice must notify readers of the following:

(a) A general description of the proposed land use legislation;

(b) The time, date, and location of the public hearing for consideration of the proposed land use legislation;

(d) All of the purposes of the proposed land use legislation;

(e) The right under subsection (4) of this section to propose alternatives to the proposed land use legislation which must be submitted in writing prior to the public hearing; and

(f) The obligation of the government entity to respond to each alternative in writing.

(3) The requirement for published notice in subsection (2) of this section is not applicable when the government entity mails notice containing the same information to each person listed with the county assessor as a property owner subject to the proposed land use legislation.

(4) Any resident or owner of any interest, including leasehold interests, in real property subject to the proposed land use legislation or in property adjacent to property subject to the proposed land use legislation may offer alternatives to the proposed legislation to fulfill the stated purposes. Alternatives must be submitted in writing prior to the public hearing required by subsection (2) of this section. The government entity may continue its hearing to a later date in order to provide time to consider alternatives. The date, time, and location of the continuation of the hearing must be announced at the public hearing and need not be published again under subsection (2) of this section. Prior to the adoption of the land use legislation, the government entity must consider all proposed alternatives, summarize in writing all proposed alternatives, and respond to the alternatives by category or subject matter, indicating how the land use legislation as proposed for final adoption reflects consideration of the alternatives. The government entity need not mail the responses to the proponents of alternatives, but must make the written summary of responses available to the public at the next public hearing at which the land use legislation is considered for adoption.

(5) Any resident or owner of any interest, including leasehold interests, in real property subject to the proposed land use legislation or in property adjacent to property subject to the proposed land use legislation may enforce the requirements under this section in the superior court in the county where the government entity is located by filing a petition for a writ of prohibition pursuant to chapter 7.16 RCW, prohibiting the adoption, implementation, or enforcement of the land use legislation without complying with the procedural requirements of this section. In enforcing this section, the superior court may only consider whether the government entity complied with the procedural requirements of this section, but may not substitute its judgment for the judgment of the government entity in deciding to enact the proposed land use legislation or in deciding to reject or accept alternatives.

(6) Only the purposes identified under subsection (2)(d) of this section may be used by any party as the purpose for the land use legislation in any proceeding where the validity or interpretation of the land use legislation is at issue.

(7) This section does not preclude any action at law or equity that a real property owner would have had if this chapter had not been enacted.

NEW SECTION. Sec. 4. (1) A government entity may impose the following restrictions on land use without the obligation to provide mitigation or compensation under the provisions of this chapter:

(a) Traditional zoning restrictions that are only those restrictions in a zoning ordinance of a city, county, or town that:

(i) Limit the types of permitted uses and density or intensity of permitted uses throughout a zoning classification, as long as the restrictions do not directly or effectively preclude an existing use of real property or substantially all reasonable economically beneficial or productive uses of a portion of real property; or

(ii) Create property line setbacks, or height and bulk limitations applicable to all properties throughout a zoning classification to the same degree, increase the value of the properties restricted because all properties throughout the zoning classification are subject to the same restriction, and do not vary based on the natural environmental conditions of the restricted properties, such as restrictions to protect wetlands, wildlife habitat, and buffers for the same;

(b) Restrictions that only prevent, mitigate, or abate injuries to another person or property that the government entity is able to demonstrate are likely to be directly caused by a use of the real property that constitutes a nuisance; and

(c) Restrictions that merely require compliance with specified federal laws or regulations that apply to a use of the real property. When a government entity under this chapter chooses directly to enforce or to apply federal laws or regulations to a use of private property, the government entity must mitigate or pay compensation under subsection (2) of this section to the extent the imposition of the restriction exceeds the minimum requirements of the federal laws or regulations.

(2) With the exception of restrictions under subsection (1) of this section, when a government entity imposes a restriction on the use of any portion of real property that decreases the fair market value of the affected real property, either by precluding an existing use, by precluding uses permitted by the traditional zoning at the time of imposition of the restriction, or by precluding substantially all economically beneficial or productive uses, then the government entity shall:

(a) Offer to mitigate the burden to the real property caused by the restriction by using methods of mitigation which include, but are not limited to, those recognized in RCW 36.70A.070(5) and 36.70A.090, such as:

(i) Adjusting land development or permit standards, such as clustering;

(ii) Increasing or modifying the density, intensity, or use of areas of development;

(iii) Allowing transfer of development rights;

(iv) Exchanging surplus property owned by the government entity; or

(v) Granting a variance from the restriction under subsection (3)(b) of this section; or

(b) Pay compensation to the owner of a parcel of real property, together with interest at the maximum rate permitted under RCW 19.52.020, compounded annually from the date of imposition of the restriction. A property may reject an offer of mitigation under (a) of this subsection and still seek compensation under section 5 of this act, but the amount of compensation due under this section shall be reduced by fair market value of the mitigation offered. A property owner may also accept mitigation and still seek compensation to the extent the mitigation fails to recover the loss in fair market value caused by the restriction.

(3)(a) Restrictions imposed by local government under a plan that is required by state law to be approved by a state agency and has been so approved shall render the state agency responsible for compensation and costs for restrictions required to be imposed under such a plan. Such plans include, but are not limited to, plans under RCW 90.58.090, chapter 400-12 WAC, and WAC 173-100-120. State agencies may issue interpretative rules under RCW 34.05.328(5)(c)(ii) identifying the extent to which local government plans approved by the state agency exceed the requirements of state law. Once such an interpretive rule is issued, local government will be responsible for compensation and costs for any restriction that the state agency has determined to exceed the requirements of state law.

(b) Because local governments are in a better position than state agencies to determine what is truly in the public interest for their citizens, local governments may grant a variance from any restrictions, notwithstanding any other provision of law, when the following findings are made by the local government:

(i) There is a probable likelihood of liability to pay compensation under this chapter;

(ii) No mitigation under subsection (2)(a) of this section is feasible or effective to avoid the compensation liability under this chapter;

(iii) The restriction is not exempt from compensation under subsection (1) of this section;

(iv) The public interest being served by the restriction is insufficient in the case at issue to justify continuation of the imposition of the restriction and payment of compensation; and

(v) If applicable under (c) of this subsection, the state agency with jurisdiction over the subject area has chosen not to pay compensation to enable the restriction to continue to be imposed.

(c) When a restriction appears to be otherwise mandated by state law and within the subject matter of a particular state agency's jurisdiction, a local government entity may not grant a variance under (b) of this subsection unless it has delivered a copy of the request for compensation under section 5(1) of this act to such a state agency within thirty days of receiving the property owner's request for compensation. The state agency shall determine whether the restriction should continue to be imposed and, if so, shall provide compensation within twenty days after receipt of the request for compensation from the local government.

(4) In the event a state agency is ordered to pay or agrees to pay compensation and costs for a restriction mandated by state law or a state agency, payment of compensation shall be made by the treasurer from the tort claims revolving fund established under RCW 4.92.135. The state agency whose action resulted in the claim must reimburse the tort claims revolving fund from the funds appropriated to the agency for that purpose. Agencies against which claims for compensation have been made under this chapter shall report the status of all such claims to the office of financial management and the legislature at least every six months until they are resolved and the tort claims revolving fund has been reimbursed for any final judgment or settlement paid. State agencies must include in each budget request sufficient funds to reimburse the tort claims fund for any payments previously made in connection with its actions plus a reasonable estimate of amounts likely to be paid with respect to any unresolved claims then pending.

(5) An award or payment of compensation made by a government entity under this section shall operate to grant to and vest in the government entity the right, title, and interest in the property for which the compensation has been paid. Upon receipt of the compensation, the property owner shall deliver to the government entity a deed to the property interest taken by the restriction. If the real property owner and government entity cannot agree, the superior court shall determine the interest that accurately represents the real property interest which has been purchased by the government entity, such as a conservation easement or fee title, and determine the form of the deed to be delivered. Filing of the deed is at the government entity's expense and the government entity shall refund any property taxes the owner pays for the property transferred after the date the restriction was imposed.

NEW SECTION. Sec. 5. (1) A real property owner seeking to enforce the requirements under section 4 of this act must request compensation from the government entity imposing the restriction by filing, with a person identified under RCW 4.28.080 or 4.92.020 when the request is made from the state or a state agency, a written request for compensation that identifies the restriction at issue and specifies the level of compensation or type of mitigation requested. A real property owner is not required to pursue a pending request for a permit to use the real property in any particular manner or any other administrative remedies relating to use to establish a justiciable claim under this chapter. The request shall be on a form available from the government entity. The form shall be substantially as follows:

REQUEST FOR COMPENSATION OR MITIGATION

UNDER THE PRIVATE PROPERTY PROTECTION ACT

Pursuant to the Private Property Protection Act, __________________________(name of property owner) requests compensation or mitigation from _________________________(name of government entity) for the imposition of a restriction on the use of real property. This restriction was imposed when _______________________(name of government official) on _______ (date) applied___________________________________(identification of the restriction) to the use of my property located at _____________________________(location of property).

I believe that I am entitled to compensation under the Private Property Protection Act. I am requesting that ___________________(name of government entity) provide compensation in the amount of ___________________ or mitigation under the act as follows:__________________________________________________________________________________________________________________________________.

(2) The government entity has sixty days to reject or accept a real property owner's request for compensation under subsection (1) of this section. The government entity may choose not to impose the restriction, to grant a variance from the restriction, to pay compensation, to offer to mitigate the burden caused by the imposition of the restriction, or any combination of these options.

(3) The requirements under section 4 of this act may be enforced in superior court against a government entity by the owner of real property subject to the restriction within the time period established in RCW 4.16.100. Property owners may also raise any state or federal statutory or constitutional claims arising from the government entity's imposition of the restriction or the decision to reject in whole or in part the property owner's request for compensation. It is not necessary for the restriction to be challenged under any other basis or for a property owner to seek relief through any other process before a claim for compensation can be made.

(4) The superior court shall rule on all issues de novo. Property owners are entitled to a jury trial on the amount of compensation required under this chapter as in cases under eminent domain. In calculating the amount of compensation to be paid, the court shall consider the value of mitigation offered by the government entity under section 4(2)(a) of this act.

(5) In defending against a claim for compensation:

(a) A government entity that intends to rely on the exceptions set forth in section 4(1) of this act has the burden to prove by clear and convincing evidence that the restriction qualifies as an exception and is exempt from the compensation requirement of this chapter.

(b) A government entity has the burden to prove the value of any mitigation offered under section 4(2)(a) of this act.

(6) In defending against a claim for compensation filed in the superior court, a government entity that intends to rely on section 4(3) of this act for liability by the state must join the state as a defendant within thirty days of the service of the original complaint seeking compensation under this chapter.

(7) At any time, the government entity may choose to no longer impose the restriction at issue in whole or in part and pay the owner for the temporary restriction of the property, by paying the interest due under section 4(2)(b) of this act.

(8) A prevailing plaintiff or petitioner is entitled to recover the costs incurred in enforcing this chapter as provided in section 9 of this act.

NEW SECTION. Sec. 6. A new section is added to chapter 7.06 RCW to read as follows:

Claims for compensation under the private property protection act are subject to mandatory arbitration under this chapter where the sole issue is the amount of compensation required under that act.

NEW SECTION. Sec. 7. This chapter does not apply to actions by government entities in their exercise of the power of eminent domain.

Sec. 8. RCW 4.16.100 and Code 1881 s 29 are each amended to read as follows:

The following actions shall be commenced within two years:

(1) An action for libel, slander, assault, assault and battery, or false imprisonment.

(2) An action upon a statute for a forfeiture or penalty to the state.

(3) An action under the private property protection act, chapter 64.-- RCW (sections 1 through 5, 7, and 10 through 12 of this act).

NEW SECTION. Sec. 9. A new section is added to chapter 4.84 RCW to read as follows:

A prevailing plaintiff or petitioner is entitled to recover the costs incurred in enforcing chapter 64.-- RCW (sections 1 through 5, 7, and 10 through 12 of this act), including reasonable attorneys' fees. A real property owner prevails under section 4 of this act if he or she receives more compensation than offered by the government entity under section 5(2) of this act.

NEW SECTION. Sec. 10. This chapter may be known and cited as the private property protection act.

NEW SECTION. Sec. 11. 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. 12. This act shall take effect June 15, 1996, and apply prospectively to restrictions imposed after that date.

NEW SECTION. Sec. 13. Sections 1 through 5, 7, and 10 through 12 of this act shall constitute a new chapter in Title 64 RCW.