December 12, 2010 in City

Law gives developers a break

‘Vesting’ allows building despite later restrictions
Robert Mcclure InvestigateWest
 
Fast facts

“Vesting” in Washington state law lets developers lock in current regulations by filing preliminary plans for a subdivision, even if construction is delayed for years. Developers say they spend thousands of dollars preparing development proposals and count on the state’s vesting law to preserve their investment.

An unusual provision of Washington law has repeatedly allowed major real estate developments to go forward even after they’ve been declared urban sprawl that violates the state’s Growth Management Act.

Among the examples statewide:

• In 2007, nearly 1,000 homes were given the green light in Clark County where 10 would have been allowed, and 514 lakeside acres previously set aside for farming were designated instead as industrial and office park land.

• In 2005 in Spokane County, the practice authorized about 1,500 homes to be built where 22 or fewer would otherwise have been allowed in the Five Mile Prairie neighborhood, and up to 480 homes where eight would otherwise be permitted near the Spokane airport.

• Last year, this practice allowed one Whatcom County developer to lock in the right to build 1,246 homes 25 days before passage of a law that allowed only one-tenth that number.

The Growth Management Act – passed in 1990 to rein in runaway development that chokes roads, pollutes water and carpets the countryside in concrete – is only one of a number of environmental and land-use laws to be undercut by a feature of Washington law that gives developers unusually favorable treatment compared to other states.

Known as “vesting” and dating back more than half a century, the law says developers may lock in current regulations by filing preliminary plans for a subdivision, even if construction doesn’t start for years and new, more restrictive rules are in place.

Only a few states – including Texas, California and Colorado – have adopted statutes similar to Washington’s in which filing an application for development secures building rights under existing codes and regulations.

In more than half the states, a developer’s right to build is not guaranteed until he or she has done “substantial construction in reliance on a validly issued building permit,” said Dwight Merriam, chairman of the American Bar Association’s state and local government section.

In most of the remaining states, vesting occurs when a local government approves a building permit or subdivision application.

While Washington law limits the shelf life of preliminary subdivision plans, it allows local governments to grant extensions.

In Spokane County, the planning director may approve a three-year extension, followed by one-year extensions. New conditions may be imposed with each extension.

Long vesting periods are “maddening,” said David Bricklin, a Seattle attorney who represents neighborhood and environmental groups.

“Savvy developers with high-paid consultants come in and game the system,” he said. “It undermines the democratic process.”

But developers say they invest many thousands of dollars in preparing development proposals and count on Washington’s vesting law to preserve their investments.

They argue that already high housing costs will rise even more if there are restrictions on vesting. And they call the practice a “lifeline” for a struggling industry.

“We’re talking about people who are taking huge chances,” said Scott Hildebrand, public policy director at Master Builders of King and Snohomish Counties. “The reason we like the vesting laws the way they are is it gives the builder certainty.

“If you take away vesting, it becomes more of a gamble than it already is.”

Apart from the vesting laws, “we have one of the most restrictive states in terms of the regulatory climate on the building industry,” said Jodi Slavik, a lobbyist for the Building Industry Association of Washington.

State Growth Management Hearings Board member Joyce Mulliken, of Moses Lake, said a small number of local governments have purposely allowed developers to skirt the Growth Management Act.

“That’s not the way it’s intended to be,” she said. “That’s not honoring the intent of the law.”

Skirting newer environmental rules

Projects not affected by the Growth Management Act have long benefited from Washington’s generous vesting provisions. Lots are developed under rules that are sometimes decades old.

In King County, citizens living in and around the small rural town of Black Diamond on Oct. 11 petitioned King County Superior Court to halt a developer who is trying to lock in rights to nearly quadruple the town’s population and build 1 million square feet of retail space. Opponents claim the YarrowBay development company’s plans to bring 6,000 new homes to a town with 1,500 residents would pollute nearby Lake Sawyer. The developer and town officials disagree.

In Whatcom County, a builder with land by Lake Samish near Bellingham, citing a 1992 development application, says he is entitled to build 47 homes on 25 acres – where five would be allowed under today’s rules. Developer Derek Stebner also will benefit from a 2001 ruling allowing him to leave 50-foot stream buffers to protect fish instead of the currently required 100-foot buffers.

State Sen. Adam Kline, D-Seattle, has tried several times to make Washington’s vesting law more like those in most other states. He said he’ll try again next year.

“Washington has literally the earliest possible date” for locking in developers’ rights to build, Kline said. “It’s the least sexy but probably one of the most important aspects of environmental law.”

In a court case that helped establish Washington’s vesting law, the Supreme Court said the most practical way to decide when building rights are guaranteed is to base it on building permit applications. Later court cases expanded this concept to include subdivision applications, and the Legislature codified the doctrine in the 1980s.

The logic behind the court decisions was that it’s unfair to pull the rug out from under a developer who has spent a lot of money getting ready to build.

This year, citing the massive economic downturn, the Legislature temporarily extended from five to seven years the amount of time developers have to flesh out preliminary development plans.

So under the two-part process of development, from filing a preliminary plat to gaining approval for a final plat and beginning construction, builders who previously had 10 years to build now will have 14 years before the developer’s vested rights expire and tighter regulations kick in.

‘We won, but we lost’

When Kathy Miotke moved to Five Mile Prairie near Spokane in 1969, she was definitely living out in the country. That all changed, and one of the biggest changes came when Spokane County commissioners expanded the county’s urban growth areas to include Five Mile Prairie, allowing about 1,500 homes where 22 would otherwise be authorized.

Miotke and her neighbors called the commission’s act illegal and appealed to the Eastern Washington Growth Management Hearings Board. They won.

But, because of a provision in the Growth Management Act, the county’s action was the law of the land while the growth board decided the case. That took nearly six months, which is typical.

In the meantime, developers filed preliminary paperwork laying out their plans for large subdivisions. Because of Washington’s vesting provisions, developers had a green light – even after the growth board said the developments did not comply with the Growth Management Act.

Now that the subdivisions are being built, it’s causing problems with drainage, Miotke said. Even before the new developments, the county had designated Five Mile Prairie “a major storm water problem area.”

“We won, but we lost,” Miotke said.

InvestigateWest reporter Oliver Lazenby contributed to this report.

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