June 12, 2014 in Business, City, Washington

Judge dismisses Tapio lawsuit against WSDOT

By The Spokesman-Review
 
Graphic by Molly Quinn photo

Future North Spokane Corridor on- and off-ramps
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Owners of a prominent business center say the long delay in finishing the North Spokane Corridor has cost them millions.

But the claim made in a lawsuit by the owners of nine office buildings and the Wolf Creek Lodge restaurant at the Tapio Office Center, 104 S. Freya St., was rejected Wednesday by Spokane County Superior Court Judge Maryann Moreno.

The owners sued the Washington state Department of Transportation, arguing that their property lost millions in value because plans to build part of the new freeway on their land have made it extremely difficult to lease or sell their property.

The commercial buildings are just north of the Interstate 90 Freya exit.

The lawsuit, filed in 2011, led to a recent Spokane trial that ended when attorneys for the state convinced Moreno the business owners didn’t establish a legal claim for damages. She dismissed the case.

During the 10 days of trial, Spokane attorneys Bob Dunn and Kevin Roberts told a jury that the state’s plans to condemn some of the Tapio property had caused more than $9 million in damages to the businesses and land owners.

After Dunn and Roberts had completed their side of the case on Tuesday, defense attorneys filed a motion to dismiss. They argued the state’s actions – announcing future plans to condemn – doesn’t amount to “takings,” the legal term for wrongfully impinging on the use of property without fair compensation.

The owners’ $9 million damage estimate was based on claims that they have incurred lower rental rates, vacancies and the probable inability to sell the buildings because of the state’s announced plan.

Of the 10 Tapio buildings, the proposed state condemnation would affect five buildings, said Rich Kuhling, one of two Spokane attorneys who represented the state.

The northern two-thirds of the site would not be part of future condemnations, the state said.

In 2000 the state published a map of the land parcels needed for the long-delayed, often-debated North Spokane Corridor.

During the next 14 years the state condemned and demolished roughly 300 commercial and residential buildings along the route, leaving the area near the Tapio Center with numerous vacant lots.

Roberts, who has represented other property owners against the state in North Spokane freeway battles, argued during the trial the state intentionally created a “blight zone” by demolishing those properties and leaving empty lots nearby.

The end result, he said, has been a decline in the Tapio property value. The state, when it does begin condemnation, would have to pay the fair-market value at that point, he said.

But that fair-market value, according to law, is determined by two appraisers who have to value the land as though the condemnation had not occurred, noted Kuhling. In some cases, condemnations can increase nearby values, he added. That occurred to some Pierce County properties in western Washington as land was condemned to build Fort Lewis, Kuhling noted.

Roberts said he and Dunn will appeal Moreno’s ruling.

The process followed by the Transportation Department, Kuhling said, has complied with all regulations and laws covering this kind of project.

“The judge decided that after they presented their witnesses, they had not established that what the state did amounted to ‘takings’ of the property,” Kuhling said.

Kuhling and co-counsel John Riseborough also challenged the estimated damages cited by the owners. They contested the argument by Dunn and Roberts that the entire group of buildings were interdependent and that the condemnation plans for five buildings also damaged the other five.

The first portion of freeway opened in 2009. Since 2012, it has been open between U.S. Highway 395 to Francis Avenue.

Completion of the freeway depends on available state money. Because the state has moved slowly, due to limited dollars, it’s provided no exact date when it will extend the already-built portion of the freeway south to Interstate 90. State officials have estimated it will cost about $750 million to complete the freeway.

The developer of the Tapio land is the late architect Glen Cloninger, who died in 2010. His heirs are the primary owners of the northern section of the property. Spokane developers John Stejer and Hal Dixon are the listed owners of the lower portion.

This story was expanded to include more detail on how fair-market value of condemned property is determined.

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