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Spokane, Washington  Est. May 19, 1883
News >  Spokane

Spokane annexes land on South Hill, but lawsuit threatened

Spokane grew by 37 acres last week, to the chagrin of a local and well-known pie purveyor.

The Spokane City Council approved the annexation on the city’s southeast border, giving the new land a pedestrian-oriented zoning designation – a turn of events that surprised neighborhood officials and displeased the developer of a proposed shopping center on the land.

The land, which lies just east of South Regal Street between 53rd and 55th avenues, holds 360 units of affordable housing, the vacant dirt of the future shopping center and is flanked by developed property, including apartments, a post office, a strip mall and storage units.

The petition to annex was made primarily by Spokane Housing Ventures, which built and maintains much of the affordable housing on the annexed land. The remaining 8 acres are deemed for commercial development and became part of the city, a decision that upset its owner, Cyrus Vaughn, who also owns Cyrus O’Leary’s Pies. A 5-acre parcel of storage units to the east of the annexed properties was left in the county after the owner requested to remain out of the city, which council members agreed to.

Under the county’s zoning and land-use rules, the parcels in question were designated as mixed use, a broad description that allows a wide variety of development, including drive-thru facilities, a priority for Vaughn.

After months of discussion, including a recent monthlong delay on the decision, council members voted to change the zoning to the more stringent “centers and corridors” designation. Parking still is required under the rule, but the design of any shopping center built on the land must be pedestrian-oriented.

Though City Council President Ben Stuckart had previously said he supported a zoning designation that would have allowed Vaughn to build a more typical shopping center with drive-thru businesses, he acknowledged he abruptly changed his mind this month in response to what he described as a “threatening letter” from Vaughn.

“I think if one party is still willing to meet and move and try to get an agreement where there’s cooperation going on and the other party says, ‘I’m done,’ and then sends a threatening letter the next day, I don’t really think that’s a good partnership,” he said. “So that’s how it works.”

In the April 8 letter, Vaughn said he was willing to negotiate with Southgate neighborhood officials until he was “finally apprised of the full scope of the unreasonable and irrational demands being made by Southgate.”

Vaughn’s letter laid out “three alternatives” to the council members. The first option was to remove Vaughn’s property from the proposed annexation property, as the council had done with the storage unit property.

The second option was for the city to “fulfill its promises” to zone his property something less restrictive than “centers and corridors,” such as “community business.”

The promises Vaughn mentions come from an email he attached to the letter, which Tami Palmquist, an associate planner with the city, sent to Taudd Hume, who was representing Vaughn.

“I spoke with Louis and it will not be given the CC designation as part of the annexation,” Palmquist wrote, referring to then-acting Planning Director Louis Meuler and the centers and corridors designation. “It will be given the designation as CB (Community Business).”

Finally, Vaughn said the council’s third option was to approve the annexation with a centers and corridors designation, which the city did three days after the letter was written.

“Should this occur the damages to my project which I will sustain will be staggering,” Vaughn wrote, saying the value of his planned development and land would “immediately diminish” by $15 million. As a result, Vaughn said, he would “have no choice but to immediately file a lawsuit for damages.”

Bob Dunn, Vaughn’s attorney who has mounted many successful lawsuits against the city, suggested Vaughn’s letter was mild compared to what may be coming.

“It wasn’t a threatening letter. It came from Cyrus. If we wanted to send a threatening letter, it would have come from me and it would’ve said we’re going to rip your wings off,” Dunn said. “All they had to do was make a common-sense decision and carve out this property like they carved out the property to the east.”

Dunn said it wasn’t clear what Vaughn would do next, but litigation was on the table.

“Do we sue Stuckart for arbitrarily and capriciously making decisions that affect a multimillion-dollar project?” Dunn said.

Ted Teske, chairman of the Southgate Neighborhood Council, applauded the council’s decision, but said they were simply following the comprehensive plan, which guides development within the city.

“Ultimately, I think the comp plan won the day. It was really great to see the City Council stand behind the comp plan as strongly as they did,” Teske said. “We were really encouraged to hear them say that in addition to the annexation, there needs to be better planning in general for this area.”

A lack of planning has led to “an utter lack of connectivity” in the neighborhood and a “hodgepodge” of development both within and beyond the city’s borders, Teske said.

Councilman Breean Beggs praised the neighborhood for attempting to work with Vaughn to find “common ground,” but said he was ultimately convinced that the comprehensive plan had to be followed.

“All the thousands of other property owners in that area have the same right to the expectation that the rules are followed,” Beggs said, adding that the council wasn’t interested in carving Vaughn’s area out of the annexations because it is within the urban growth boundary and would have been annexed eventually with a centers and corridors designation, as prescribed by the comprehensive plan.

“The developers bought the land knowing it was uncertain and yet designated in the comprehensive plan as a district. I assume that was factored into the market price,” Beggs said. “The neighborhood has a vision of how they would want it, and we’ve heard from them. We’ve heard even from other neighborhoods. … For myself, I have been persuaded by arguments to follow the comprehensive plan.”

But Councilman Mike Fagan, the single vote against the zoning change and annexation, criticized council members for not giving deference to Vaughn.

“Look guys. We weren’t the ones that have been in business for 50-plus years. That have created successful business. That have employed many, many people,” he said. “These people know what they’re doing. They’ve been doing this over and over and over again.”

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