HomeMy WebLinkAboutR-2004-029 Amending the Outside Utility AgreementRESOLUTION NO. R-2004- 29
A RESOLUTION amending Outside Utility Agreement.
WHEREAS, the City of Yakima has returned to its historic policy of conditioning the
City's extension of utility service to land outside of the City limits upon the landowner's binding
promise to sign a petition (through the execution of an outside utility agreement) for annexation
into the City of Yakima; and
WHEREAS, in doing so, the City needs to revise and update its Outside Utility
Agreement, now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
The attached and incorporated "Outside Utility Agreement, Annexation Covenant, and
Special Power of Attorney" is hereby approved for use by the City.
ADOPTED BY THE CITY COUNCIL this 17thday of February , 2004.
ATTEST:
A
City Clerk
K:1257391000411KJL\KJL A21KN
Lei
Mayor
Filed for Record at the Request
of and Return to:
City Clerk
City of Yakima
129 North Second Street
Yakima, WA 98901
Grantor:
Grantee: CITY OF YAKIMA
Legal Description:
Additional legal on Exhibit A
Assessor's Property Tax Parcel Account Number(s):
OUTSIDE UTILITY AGREEMENT, ANNEXATION COVENANT,
AND SPECIAL POWER OF ATTORNEY
THIS OUTSIDE UTILITY AGREEMENT, ANNEXATION COVENANT AND SPECIAL
POWER OF ATTORNEY (the "Agreement") is made between the City of Yakima, a municipal
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vvr rvl GUvI VI U Iii VlQ lei VI V V CIQI III IV OJI 1 11 Ic1 cn 101 lcl vny al lu a 1c undersigned L, Owner(s)
(hereinafter collectively "Owner') with reference to the following facts:
RECITALS
WHEREAS, Owner owns and/or occupies real property located within Yakima
County, Washington (the "Property") and legally described in "Exhibit A" attached hereto and
by this reference incorporated herein; and
WHEREAS, Owner has applied to the City for City domestic water and/or sewer
service for the Property; and
WHEREAS, pursuant to the 1965 Annexation Policy; the 1976 Four Party Agreement
between the City of Yakima, Yakima County, the Town of Union Gap, and Terrance Heights
Sewer District (as amended); the 1997 Yakima Urban Area Comprehensive Pian (as
amended); and the 2000 Interlocal Agreement Between the City of Yakima and Yakima
County for Growth Management Act Implementation, Res. No. R 2000-55, the City and other
City of Yakima OUTSIDE UTILITY AGREEMENT (OUA)
Amended by Resolution , 2004
Page 1
local governments have established a policy that the City will provide domestic water or
sewer service only to those properties that are or will be within the City limits; and
WHEREAS, the City intends to maintain its policy of not providing sewer or domestic
water service outside the City limits unless the property served will be annexed into the City;
and
WHEREAS, the Washington Growth Management Act, chapter 36.70A RCW,
requires the City to create an urban growth plan and identifies the City as the most
appropriate provider of urban services within the urban growth area; and
WHEREAS, the Washington Growth Management Act, chapter 36.70A RCW,
identifies domestic water service and sewer service as urban services; and
WHEREAS, Owner wishes to provide to the maximum extent possible for the
annexation of the Property into the City in order to make the Property eligible to receive City
domestic water and/or sewer service; and
WHEREAS, the extension of domestic water and/or sewer service to the Property will
enhance the value of, and encourage the use, enjoyment and development of the Property
by Owner and annexation of the Property into the City is reasonably expected to benefit
Owner and the Property as a result of the availability of other services which now or in the
future are provided by the City only to persons and properties located within its boundaries;
and
WHEREAS, Owner expressly recognizes that the City is relying upon Owner's
representations and promises herein regarding annexation in agreeing to extend domestic
water and/or sewer service to the Property:
NOW, THEREFORE, in consideration of the foregoing recitals, the City's agreement
to provide domestic water and/or sewer service to the Property and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, Owner for
himself/herself and on behalf of his/her heirs, legal representatives, employees, agents,
lessees, invitees, licensees, mortgagees, successors and assigns, and for the benefit of the
owner(s) from time to time of all or any portion of the Property does hereby promise and
agree as follows:
AGREEMENT
1. Incorporation of Recitals. Each of the foregoing recitals is by this reference
incorporated into this Agreement as though fully set forth herein.
2. Charges and Fees. Owner shall pay to City when due, all connection
charges, service fees, future local improvement district assessments, capital cost recovery
charges, if any, and any and all other charges and fees required by law to be paid for the
service hereby applied for. Connection of the Property to, or extension of public utility
improvements required to connect the Property to, the City's public utility system will be at
Owner's sole cost and expense and liability. It is Owner's responsibility to apply for and
obtain any required permits (such as a side sewer permit) and to obtain and record any
City of Yakima OUTSIDE UTILITY AGREEMENT (OUA)
Amended by Resolution, , 2004
Page 2
easements necessary for the City to provide the Property with domestic water and/or sewer
service. Owner expressly understands and agrees that rates, charges and fees for utility
services provided by the City to properties located outside the current boundaries of the City
are higher than rates nhargps anri faac fpr 1 rtilihi cenrinec nrnviriari by the city to properties
located inside the boundaries of the City.
3. Property Alterations and improvements. Owner agrees to make at Owner's
sole cost and risk all alterations, improvements, and repairs on and to the Property and the
buildings, structures, and other improvements thereon as specified on the attachment hereto
marked "EXHIBIT B" and by reference made a part hereof (including, but not limited to, the
service connection from the City's Sewer or Water Main to the Property), which alterations,
improvements, and repairs shall be completed within the time specified on EXHIBIT B and
shall at all times remain the property of Owner. Any future construction or future alterations,
additions nr repairs to Owner's improvements shall comply with any and all then applicable
construction, building, land use and zoning codes as if the Property were already situated
within the boundaries of the City. The City shall have the right at any and all reasonable
times to inspect the Property, and any existing buildings, structures, and other improvements
located thereon, to ensure that Owner has made the improvements, alterations and repairs
as specified in Exhibit B.
4. Owner's Annexation Covenant. Owner has been informed of and understands
that the City wishes to annex certain property to the City including, but not limited to, the
Property. Information about the proposed annexation is available for public review at the City
of Yakima Department of Community and Economic Development at 129 North Second
Street, Yakima, Washington. Owner may review this information during normal business
hours upon reasonable notice.
In executing this Agreement Owner declares an intent to annex,and irrevocably
irrevocably
requests and petitions, for the benefit of the owner(s) from time to time of all or any portion of
the Property, for annexation, by any process authorized by law, exclusively to the City. The
Owner for himself/herself and for his/her heirs, legal representatives, employees, agents,
lessees, invitees, lieellsees, ImIurtydyueb, sUGGessuiS and assigns and for the benefit of the
owner(s) from time to time of all or any portion of the Property, agrees and covenants with
the City that Owner shall, whenever requested, sign any letter, notice, petition, document, or
other instrument initiating, furthering or accomplishing the annexation of the Property,
whether or not the annexation involves the assumption by the area to be annexed of existing
City indebtedness or the City applies the comprehensive plan and land use controls of the
City to the area to be annexed. The Owner acknowledges and agrees that the City may, in
the future, form a local improvement district for domestic water and/or sewer service for any
district that includes the Property, and the Owner hereby consents to all such activity related
thereto.
This agreement by Owner to irrevocably consent to annexation of the Property by the
City is made in exchange for and in consideration of the City's agreement to provide
domestic water and/or sewer service that may be rendered to the Property. This Agreement
and the obligations and agreements made by Owner hereunder shall be binding upon and
inure to the benefit of the respective heirs, legal representatives, successors and assigns of
Owner and the owner(s) from time to time of all or any portion of the Property. The
City of Yakima OUTSIDE UTILITY AGREEMENT (OUA)
Amended by Resolution , , 2004
Page 3
obligations of Owner under this Agreement shall constitute covenants running with the land
and shall inure to the benefit of the owner(s) from time to time of the Property or any portion
thereof and their respective heirs, legal representatives, successors and assigns.
This Agreement shall be considered both a valid Notice of Intent to Commence
Annexation and a valid Petition for Annexation, signed by the Owner, and by Owner's heirs,
legal representatives, successors and assigns, and the owner(s) from time to time of all or
any portion of the Property.
5. Special Power of Attorney. The undersigned Owner of Property, on behalf of
himself/herself and his/her heirs, legal representatives, successors and assigns, hereby
designates the City as Owner's true and lawful attorney-in-fact (which appointment shall be
coupled with an interest) for the purpose of signing any petition or any other legal
documentation authorized by law designed to lead to, approve or promote the annexation of
Property to the City with full power to do and perform any proper act which Owner may do
with respect to the annexation of the Property to the City. The City may exercise this power
through its City Clerk or otherwise as the City Council may direct. This Special Power of
Attorney is given by Owner for the valuable consideration of City's agreement to furnish
domestic water and/or sewer service to the Property. This Special Power of Attorney is not
revocable and shall not be affected by the disability of the principal. Notwithstanding the
foregoing, the City shall not be obligated to exercise any right or duty in its capacity as
attorney-in-fact.
6. Additional Conditions. Owner agrees to perform and otherwise comply with
the conditions, requirements, restrictions, and other provisions contained on the attachment
hereto marked "EXHIBIT C" and by reference made a part hereof in order that the Property
be used and/or developed in accordance with the Comprehensive Plan of the City, as the
Plan now exists or may be amended from time to time, and as if the Property were situated
within the boundaries of the City of Yakima, all of which are express conditions precedent to
City's agreement to provide domestic water and sewer services to the Property. Utility
services are being requested for the following described future or existing land use (check
the appropriate box) as defined in the Yakima Urban Area Zoning Ordinance:
R-1 Single -Family Residential
R-2 Two -Family Residential
R-3 Multi -Family Residential
Other (Describe):
7. Bond. Owner agrees that the City may require the Owner to file with the City
a bond conditioned so as to insure the performance by Owner of Owner's obligations under
this Agreement; and in the event the City so requires, the undersigned will file such a bond in
the amount specified on EXHIBIT D, which bond shall be issued by a corporate surety
company authorized to do business in the State of Washington and which bond shall be
subject to the approval of the Yakima City Attorney.
City of Yakima OUTSIDE UTILITY AGREEMENT (OUA)
Amended by Resolution , 2004
Page 4
8. Property Sale or Transfer. Owner agrees that in the event of a sale or transfer
of the Property, Owner shall, as a condition of such sale or transfer, require the purchaser, or
other new owner, to sign a duplicate of this Outside Utility Agreement which duplicate
Agreement shall hP recorded in the real property records of Yakima County Washington.
The failure of Owner to perform any act required by this paragraph shall not impair the
validity of this Agreement or limit its enforceability in any way.
9. Fire Protection Flow Requirements. The City's agreement to provide domestic
water service to the Property does not constitute a guarantee of fire protection flow
requirements to the Property.
10. Litigation; Governing Law. In the event that any suit or action is instituted by
either party to enforce compliance with or interpret any of the terms, covenants, or conditions
of this Agreement, the prevailing party shall be entitled to collect, in addition to necessary
court costs, such sums as the court may adjudge as reasonable attorney's fees. The venue
for any action to enforce or interpret this Agreement shall lie in the Superior Court of
Washington for Yakima County, Washington. This Agreement shall be governed by the laws
of the State of Washington without regard to its conflicts of laws principles.
11. Non -Severability. In the event that any material provision of this Agreement is
found unenforceable by a court of competent jurisdiction, this Agreement shall be null and
void and the City shall have no further obligation to provide water or sewer service to the
Property; provided, however, Owner shall make all payments as provided under this
Agreement for all utility services provided to the Property prior to termination of service
pursuant to this provision.
12. Third Party Beneficiaries. This Agreement is for the sole and exclusive benefit
of the parties hereto and their heirs, legal representatives, employees, agents, lessees,
invitees, licensees, mortgagees, successors and assigns and the owner(s) from time to time
of all or any porion of the Property and shall not create a contractual relationship with, or
cause of action in favor of, any third party.
Modification Terms. Subject to 1 1 of this Agreement, _• the _t.
13. of Section i i r•�yreei►iern, in evens
that a change in applicable law: (a) adversely affects the ability of the Owner or the City to
perform their respective obligations under this Agreement; or (b) renders the City
performance of its obligations hereunder unduly burdensome, or (c) makes a method of
annexation available to property owners that is not available as of the effective date of this
Agreement, then in either such case, the parties shall promptly negotiate in good faith new
provisions to restore this Agreement as nearly as possible to its original intent and effect.
For the purpose of this Agreement, a "change in law" shall mean any of the following events
occurring after the date of this Agreement: (i) the enactment of any new applicable law; (ii)
the modification of any applicable law; or (iii) a change in the interpretation or application of
any applicable law.
14. Liberal Construction Notwithstanding any general rule of construction, this
Agreement shall be liberally construed to effect its purpose of creating a binding commitment
on the part of Owner to have the Property annexed into the City in exchange for City's
agreement to provide City sewer and/or domestic water service to the Property. If any
provision is found to be ambiguous, an interpretation consistent with such purpose that would
City of Yakima OUTSIDE UTILITY AGREEMENT (OUA)
Amended by Resolution , 2004
Page 5
render the provision valid shall be favored over any other interpretation that would render it
invalid.
15. Termination of the Agreement. The City may terminate this Agreement in the
event that Owner fails to take actions requested by the City that are reasonably necessary to
have the Property annexed into the City, or refuses to sign any letter, notice, petition,
document, or other instrument initiating, furthering or accomplishing the annexation into the
City of the Property by any process authorized by law. Such termination shall be effective
fifteen days after the City's issuance of a notice of termination to Owner. Owner recognizes
that upon such termination, the City will have no obligation or duty whatsoever to provide
sewer and/or domestic water service to the Property. For purposes of this section, notice to
Owner will be deemed to have been properly given if mailed or delivered to the following
address:
[INSERT MAILING ADDRESS]
16. Binding on Successors and Assigns. This Agreement and the terms,
covenants, agreements, conditions and limitations made herein shall constitute a covenant
running with the land described in Exhibit A and shall be binding upon and inure to the
benefit of the parties hereto, the owner(s) of all or any portion of the Property from time to
time, and their respective heirs, legal representatives, successors and permitted assigns.
17. Representations and Warranties. Each of the parties hereto represents and
warrants with respect to itself that: (a) it has all requisite power and authority to execute and
deliver this Agreement and to perform its obligations hereunder; and (b) this Agreement
constitutes the legal, valid and binding obligation of such party enforceable against it in
accordance with its terms except as such enforcement may be limited by bankruptcy,
insolvency, moratorium or similar laws affecting the rights of creditors generally or by general
equitable principles (regardless of whether enforcement is sought in a proceeding in equity or
at law).
18. Amendment. This Agreement may be amended, modified or supplemented
only pursuant to an instrument in writing signed by each of the parties.
19. Entire Agreement. This Agreement (together with the Exhibits hereto which
are hereby incorporated by reference as part of this Agreement) contains and integrates the
complete agreement between the parties with respect to the subject matter hereof and
supersedes all other agreements and understandings between the parties, whether written or
oral, with respect to the subject matter hereof.
City of Yakima OUTSIDE UTILITY AGREEMENT (OUA)
Amended by Resolution , 2004
Page 6
20. Effective Date. This Agreement shall be effective upon the date that it has
been fully executed by both parties.
DATED this day of , 200_
OWNER CITY OF YAKIMA
By: By:
By:
Authorization No.:
City of Yakima OUTSIDE UTILITY AGREEMENT (OUA)
Amended by Resolution , 2004
Page 7
STATE OF WASHINGTON )
)
County of Yakima )
ss.
I certify that I know or have satisfactory evidence that
signed this instrument and acknowledged it to be
his/her/their free and voluntary act for the use and purposes mentioned in the instrument.
DATED:
Printed Name:
NOTARY PUBLIC in and for the State of Washington,
residing at
My commission expires:
K:\25739\00041\KJL\KJL A21KM
City of Yakima OUTSIDE UTILITY AGREEMENT (OUA)
Amended by Resolution , 2004
Page 8
EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
Certain real property located in Yakima County, Washington and more particularly
described as follows: [insert legal description]
OWNER
OWNER
City of Yakima OUTSIDE UTILITY AGREEMENT (OUA)
Amended by Resolution , 2004
Page 9
EXHIBIT B
IMPROVEMENTS, ALTERATIONS AND REPAIRS
TO BE MADE BY OWNER
OWNER
OWNER
City of Yakima OUTSIDE UTILITY AGREEMENT (OUA)
Amended by Resolution , 2004
Page 10
EXHIBIT C
CONDITIONS OF UTILITY SERVICE APPROVAL
City of Yakima service is extended to and available for one
located on . Any other use
or extension unless specifically authorized by appropriate City action is prohibited
and grounds for summary disconnection and termination of service.
/1 \ A / \ 1 r- r,
CvvNIEr
OWNER
The City of Yakima public sewer system will be extended according to the
City's requirements and specifications to service the following development(s), all of
which meets the proper zoning in accordance with Yakima County. Use and
extension of the City sewer system is contingent upon compliance with all City sewer
and wastewater system use ordinances and regulations (including, without limitation,
Yakima Municipal Code Chapter 7.65) as those ordinances and regulations may be
amended from time to time. Any other use or extension unless specifically
authorized by appropriate City action is prohibited and grounds for summary
disconnection of service.
OWNER
OWNER
City of Yakima OUTSIDE UTILITY AGREEMENT (OUA)
Amended by Resolution , 2004
Page 11
Owner shall file a bond in the amount of
($ ) so as to insure the performance by Owner of Owner's obligations
under this Agreement. Such bond shall be issued by a corporate surety company
authorized to do business in the State of Washington and which bond shall be
subject to the approval of the Yakima City Attorney.
OWNER
OWNER
City of Yakima OUTSIDE UTILITY AGREEMENT (OUA)
Amended by Resolution , 2004
Page 12
PrestonlGatesfEllis LLP
MEMORANDUM
TO:
FROM:
DATE:
SUBJECT:
Honorable Mayor and Members of the City Council
Richard A. Zais, Jr., City Manager
Raymond L. Paolella, City Attorney
City of Yakima
Elizabeth Thomas, Konrad Liegel and Denise Lietz
February 13, 2004
Effect of City Annexation Policy on Local Improvement Districts outside the City
Introduction and Summary
Historically, the City of Yakima ("City") has applied its policy of only extending City
wastewater service outside the City limits in exchange for a commitment to annex into the City
to Local Improvement District ("LID") formation. See Four Party Agreement, § 10.IV. We
understand that the City is considering whether and how to continue this historic policy with
respect to LIDs outside the city limits. As a matter of law, the City should be found to have the
authority to require the annexation commitment as a condition of LID formation because the
statute governing LIDs gives the City express authority to deny an LID petition from landowners
outside of the City limits. Furthermore, it appears likely that the City has the authority to impose
conditions on the landowners within the LID area so long as those conditions are imposed prior
to LID formation.
Background: Legal Authorities
The City's annexation policy requires a landowner's binding annexation commitment as a
covenant running with the land, in the form a signature on an outside utility agreement ("OUA"),
in exchange for the City's willingness to provide wastewater service outside the city limits. This
policy was upheld in Yakima County (West Valley) Fire Protection District No. 12 v. City of
Yakima.' The policy relies on the petition method of annexation, which allows annexation to
proceed when a petition is "signed by the owners of not less than seventy-five percent in value
according to the assessed valuation for general taxation of the property for which annexation is
1 122 Wn.2d 371, 376-78, 858 P.2d 245 (1993).
A LAW FIRM I A LIMITED LIABILITY PARTNERSHIP INCLUDING OTHER LIMITED LIABILITY ENTITIES
925 FOURTH AVENUE SUITE 2900 SEATTLE, WA 98104-1158 TEL: {206} 623-7580 FAX: {206} 623.7022 WWW.PRESTONGATES.COM
Anchorage Coeur d'Alene Hong Kong Orange County Portland San Francisco Seattle Spokane Washington, DC
MEMORANDUM
February 13, 2004
Page 2
petitioned." RCW 35.13.130. The validity of the petition method of annexation was recently
reaffirmed by the. Supreme Cnnrt in the Grant i'n��n y2 annexation litigation As result, the
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City is considering the reaffirmation of its OUA policy. A question has arisen as to whether the
City may, or should, implement its long-standing annexation policy 111 the context of LTD
formation by conditioning LID formation upon annexation commitments from some portion of
the LID area. A related question is whether the City may form the T defer execution
City form L 1J , yet the
of an OUA until an individual property owner requests connection to the system.
LID Process. Chapter 35.43 RCW governs the LID process. "Cities or towns may form local
improvement districts or utility local improvement districts composed entirely or in part of
unincorporated territory outside of such city or town's corporate limits in the manner provided in
this chapter."3 RCW 35.43.030. Landowners may request the formation of an LID in an area
using a petition representing over 50% of the land area: "any local improvement may be initiated
upon a petition signed by the owners of property aggregating a majority of the area." RCW
35.43.120. However, under RCW 35.43.075, the City Council has express authority to deny a
petition for the formation of an LID outside of the City's corporate limits.
One reported Washington court decision has addressed whether a city may condition service
upon an annexation commitment in the context of local improvement districts. In Vine Street
Commercial Partnership v. City of Marysville4 ("Marysville "), the Court of Appeals held that
Marysville could not require annexation as a condition of service subsequent to the formation of
the ULID.5 Id. at 549. The Court apparently reasoned that once the property owners had
fulfilled all their ULID obligations, the City was no longer free to impose additional conditions:
"We conclude that property owners who petition for the formation of a ULID, whose properties
are then assessed for the special benefits thereby accra,in and who pay their
sis i/ e � KVVd Lidddg, who subsequently their
acceccmentc in fill' are entitled to receive the special benefits for which have paid." Td
.,. _, ».., ..�..�.�.,.. .... ....,...... ...... ..t,......... ..........�...., .. dddvad they uu.tiv Id.
Marysville did not directly address the question of whether the city could have imposed an
annexation condition prior to or contemporaneously with ULM formation. However, the Court
2 Grant County Fire Protection District No. 5 et al. v City of Moses Lake, _ Wn.2d _, _ P.3d _ (Docket
No. 70090-7; January 29, 2004).
3 RCW 35.43.040 provides that the formation of a LID for sewer or water services outside of the City's boundaries
"may be subject to potential review by a boundary review board under chapter 39.93 RCW." However, under RCW
39.93.090(4), this review is limited to situations where a City extends its service outside of its service area, which
includes "for the extension of sewer service, the area outside of the corporate boundaries which it is designated to
serve pursuant to a comprehensive sewerage plan approved in accordance with chapter 36.94 RCW and RCW
90.48.110." Therefore, service to areas within the Yakima Urban Area as defined in the Four Party Agreement
should not be subject to boundary review board review.
4 98 Wn. App. 541, 989 P.2d 1238 (2000).
5 A ULID is a utility local improvement district. Like LIDs, ULIDs are authorized under Ch. 35.43 RCW, and differ
from LIDs only in allowing utility revenues to be used for the repayment of the ULID debt. See RCW 35.43.042;
35.43.043.
MEMORANDUM
February 13, 2004
Page 3
cited to RCW 35.93.075 for the proposition that Marysville was not required to provide service
to landowners outside its boundaries. Id. at 547. Furthermore, the Court stated, "Indeed, we
have no quarrel with the general proposition that a municipality may condition providing utility
service to property lying outside its city limits upon the property owners signing annexation
covenants — provided that such a requirement is in place when the contract is formed." Id. at 550
(citing People for the Preservation and Development of Five Mile Prairie v. City of Spokane6).
Thus, it appears that the Court would likely have upheld the annexation commitment if the city
had included it as an element of, or prior to, ULID formation.
Analysis
Authority to Implement Policy. It is appropriate for the City to implement its annexation policy
in the context of LIDs in order to maintain a consistent policy throughout the Yakima Urban
area. Implementation could take several forms. For example, the City could require execution
of OUAs prior to approval of an LID. Alternatively, the City could incorporate or reference
pertinent OUA provisions into a number of documents involved in LID formation, including:
• The form letter responding to initial LID inquiries
• The City's "Informal Petition for Sewer" (the version that is sent to areas outside the
City already notes in general terms the OUA requirement)
• The City's formal LID petition (the OUA should be set out in full in any formal petition
used for LID formation outside the City limits so that the property owner's signature on
the LID petition will also operate as a signature on an OUA, provided that the LID is
formed)
• The City's memorandum to area property owners designed to gauge their level of
interest
• The notice of any public meeting that the City sends to property owners upon receipt of
an LID petition
• The City resolution declaring the City's intent to form an LID and setting a date for a
formation hearing
• The City ordinance forming the LID
• The City's "Post -Construction Information" document
There are several sources of the City's authority to implement the annexation policy in the LID
context. First, the City Council has broad authority under RCW 35.43.075 to deny LID
formation petitions from landowners outside of the City limits. Second, the City has authority
under West Valley and other decisions to condition its provision of service upon a promise to
annex. Nothing in West Valley, other decisions, or related statutes suggests that this authority
would somehow be constrained in the context of LIDs. Finally, under the Four Party Agreement,
the City may be obligated to impose the annexation requirement regardless of the presence or
absence of an LID. See § 10.IV ("property owners within the Yakima urban area who seek sewer
6 51 Wn. App. 816, 820, 755 P.2d 836 (1988).
MEMORANDUM
February 13, 2004
Page 4
service, through the formation of LILl's or otherwise, shall be subject to the [annexation]
conditionf_l" (Emnhacic added.)
Authority To Require 75% Petition. There is a mismatch between s' to sufficiency
mismatch the iS11aLL11M sl,Llldl/16s114y
requirements of petitions for LID formation and for annexation. LIDS require over 50% of the
land area, while annexation requires 75% of the property value. From a practical standpoint, if
the City does not impose the 75% at the time of LID formation, it may be difficult to gather
additional OUA signatures, and the City may therefore wish to require that both sufficiency
standards are satisfied as a precondition to LID formation. The City should be found to have the
authority to impose this requirement. As a result of its broad discretion to deny LID formation
r �
petitions from landowners outside the City limits, the Council should be found to have authority
to refuse to approve an LID formation petition unless it is accompanied by OUAs from
landowners representing 75% of the assessed value within the petition area. This is true even
though the LID formation statute only requires a petition signed by the landowners of a majority
of the area within the proposed improvement district because the 75% requirement is consistent
with the City's lawful annexation policy.
Authority To Defer Signatures on OUAs. Based on the same authority to deny LID formation
outside the City limits and to require OUAs outside the City limits, it is likely that the Council
could also approve a LID formation petition where the execution of an OUA is deferred until an
individual property owner requests conmection to the system, provided that the City complies
fully with its policy of requiring OUA execution prior to service. However, under the reasoning
of Marysville, the City Council cannot impose any new conditions on landowners following the
formation of the LED. As a result, the City must ensure that this condition is clearly imposed
nrinr to LTD formation, Ln order to limit confusion and potential Claims, ;ve recommend that the
City a11nw deferral of (lT TA cignatirrec nnly in limited exigent rirrnmstanres only when the
Council has made express findings regarding why deferral will promote public health, safety and
welfare, and only when the process for obtaining OUA signature (or annexation) prior to service
has been established.
Conclusion
The City has the authority to require landowners who wish to foiiii LEDs to provide an
annexation commitment as a condition of LTD formation. Thus the City may implement its
annexation policy consistently regardless of whether an LID is involved. From a legal
standpoint, it is important to impose the OUA condition prior to LID foiiiiation, including a
requirement of signatures from owners representing 75% of the assessed valuation, even though
the statutory threshold for LID formation is 50% of land area. The City may defer signatures on
OUAs until after LID formation provided that the requirement is imposed prior to formation,
although fewer legal issues will arise if OUA signatures have been obtained by the time of LID
formation.
MEMORANDUM
February 13, 2004
Page 5
Cc: Glenn Rice
Bill Cook
Doug Mayo
Paul McMurray
Bruce Benson
KJL:dl
K:\25739\000411KJL\KJL M21KO
RESOLUTION R- 2004- 30
A RESOLUTION affirming and restating the annexation policy of the City of Yakima.
WHEREAS, the general policies of the State of Washington, as expressed in the
Growth Management Act (Chapter 36.70A RCW), the Boundary Review
Board statutes (Chapter 36.93 RCW), and other statutes providing for
annexation of unincorporated areas into cities strongly encourage cities
like the City of Yakima to annex adjacent unincorporated areas
characterized by urban development;
WHEREAS, the Washington Growth Management Act requires the City to create an
urban growth plan, identifies domestic water service and sewer service as
urban services, and identifies the City as the most appropriate provider of
urban services within the urban growth area, and urbanized properties
should receive urban governmental services including full-time
professional fire protection and municipal police protection; and
WHEREAS, pursuant to the 1976 four party Agreement for Wastewater Treatment and
Disposal Services between Yakima County, the City of Yakima, the City of
Union Gap and the Terrace Heights Sewer District (the "1976 Four Party
Agreement"), the City of Yakima has owned and operated a wastewater
treatment plant; and
WHEREAS, the City of Yakima, the City of Union Gap and the Terrace Heights Sewer
District jointly declared in the 1976 Four Party Agreement that residents
and property owners within the urban boundary shall "be encouraged to
annex to the adjoining city or town for municipal services, including sewer
services" and that "property owners within the Yakima urban area who
seek sewer service, through the formation of LID's or otherwise, shall be
subject to the condition" of annexation or execution of an Outside Utility
Agreement; and
WHEREAS, the City of Yakima has, also pursuant to the 1976 Four Party Agreement
and in reliance on its terms, extended sewer trunk lines to unincorporated
portions of the Yakima urban area; and
WHEREAS, The City of Yakima has, also pursuant to the 1976 Four Party Agreement
and in reliance on its terms, provided wastewater disposal and treatment
services to unincorporated properties in the Yakima urban area on the
basis of Outside Utility Agreements, in which, in exchange for wastewater
disposal and treatment services, the owners of properties receiving such
WHEREAS,
WHEREAS,
WHEREAS,
WHEREAS,
services commit such property to annexation by the Petition Method of
annexation authorized by RCW 35.13.125-.160; and
Outside Utility Agreements were declared legally valid contracts by the
Washington Supreme Court in a unanimous decision issued in September
1993, which also upheld various aspects of the City's policies; and
the Washington Supreme declared the petition method of annexation to be
constitutional in a unanimous decision issued in January 2004; and
since the 1976 Four Party Agreement was established and especially
since the early 1990s, agricultural and other undeveloped lands in some
unincorporated portions of the Yakima urban area have undergone
extensive subdivision and residential and commercial development, and
are now essentially urbanized; and
the subdivision, improvement, urbanization, and substantial increases in
assessed values of such unincorporated properties has been a direct
result of the City of Yakima's policy, maintained in reliance on the terms of
the 1976 Four Party Agreement, to extend wastewater collection and
treatment service to unincorporated properties on the basis of property
owners' commitments of their properties, by Outside Utility Agreements, to
annexation by the Petition Method of annexation authorized by
RCW 35.113.125-.160; and
WHEREAS, it is in the best interests of residents and property owners in urbanized
areas to have full-time professional fire and police protection and other
urban governmental services that the City of Yakima can provide; and
WHEREAS, it is in the best interests of the City of Yakima and the entire community
that the City of Yakima proceed affirmatively to include within its
boundaries urbanized properties which are appropriate for annexation;
now therefore
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
The City of Yakima shall, notwithstanding any previous declarations of policy, including
without limitation Resolution 93-17, proceed with annexation according to such method
of annexation authorized by law and in its discretion the City may determine is
appropriate, including without limitation annexation by the Petition Method authorized by
RCW 35.13.125-.160, and further the City of Yakima shall utilize Outside Utility
Agreements to meet the requirements of the Petition Method and for such other
purposes as may be appropriate.
The City Council of the City of Yakima does hereby affirm and restate the following
historic statement of policy regarding the provision of City water and sewer services to
properties outside the corporate limits of the City of Yakima but within the Yakima Urban
Area, as such provision is related to the annexation of such properties to the City:
1. When such service is sought for property contiguous to existing city limits, and
the size of the property is sufficiently large to merit its annexation, in the opinion of the
Director of Planning and Community Development, the annexation of that property to
the City shall be a condition of its receiving such service.
2. An application for such service to any other property outside the corporate
limits of the City of Yakima but within the Yakima urban area will be granted only after it
has been determined that it is impractical or not feasible to annex that property to the
City within the near future, and only under circumstances which will allow the
development of that property to be controlled by city codes, regulations and policies, all
as if such property were within the City. Any such grant shall include a condition
requiring the execution by the owner of the property of an Outside Utility Agreement in a
form approved by resolution of the City.
3. The City shall implement its annexation policy as follows with respect to
formation of utility local improvement districts in the Yakima urban area. Prior to
approving formation of a utility local improvement district, the City will require the
execution of Outside Utility Agreements representing at least 75% of the assessed
value of the area proposed for inclusion in such district. With the approval of the City
Council based upon considerations of public health, safety and welfare, the signature of
such Outside Utility Agreement for a particular property may be deferred until some time
after the district has been formed but prior to the time the property is connected.
ADOPTED BY THE CITY COUNCIL, this 17th day of February, 2004.
ATTEST:
Paul George, Mayor
City Clerk
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 4. 7
For Meeting of August 19, 2003
ITEM TITLE: Consideration of Continuing Council's Policy to Restrict the
Extension of City Sewer Service to Property Outside the City Limits
SUBMITTED BY: liam R. Cook, Director
Department of Community and Economic Development
CONTACT PERSON/TELEPHONE: William R. Cook, CED Department Director, 575-6227
SUMMARY EXPLANATION:
In April 2002, the Council approved an interim policy to restrict the extension of City
sewer service to property outside the city limits unless a preexisting commitment for such
service existed between the City and the property owner.
This curtailment of new outside city sewer service was implemented as a result of the
Washington State Supreme Court decision which invalidated a 50 year old process
referred to as the "petition method" of annexation. A copy of the agenda statement and
packet from your 2002 Council meeting are attached.
Included with your decision was an agreement to review this issue within 18 months or by
August 2003. This agenda item is a recommendation that Council continue with the
Continued on the next page:
Resolution Ordinance Contract Other (Specify)
Funding Source
APPROVED FOR SUBMITTAL:
STAFF RECOMMENDATION: Approve the motion to continue the current City Outside Utility
Service Policy.
BOARD/COMMISSION RECOMMENDATION:
COUNCIL ACTION:
The staff report and recommendation to continue the current
City Outside Utility Service policy was accepted.
current administrative hold on new outside city sewer service for another twelve months.
Should the city receive direction from the State Supreme Court as a result of their
rehearing of this case in February of this year, Council may want to revisit ending the
moratorium before the twelve month period ends.
During the 2003 legislative session the City of Yakima actively supported HB 1801 which,
if approved, would have re -substantiated outside utility agreements as a commitment to
annexation and provided a predictable methodology to allow cities to annex when 75% of
the property included in the annexation is served by City water or sewer. Although this
bill was approved in the House and submitted to the Senate, it died in committee without
a hearing. We are hopeful this bill will be resubmitted in the next legislative session.
Other than the effort represented in HB 1801 and the Supreme Court decision to rehear the
Moses Take/Yukirmvannexation case there have been no changes that would suggest
Council reconsider and amend their current outside utility service policy at this time.
2 — August 13, 2003
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 6 -
For Meeting of April 23, 2002
ITEM TITLE: Report re Interim Policy Options for Outside Utility Services
SUBMITTED BY: Dick Zais, City Manager
Ray Paolella, City Attorney
William Cook, Dir. of Community and Economic Development
CONTACT PERSON/TELEPHONE: Dick Zais, 575-6040
SUMMARY EXPLANATION: See attached memo
Resolution Ordinance Other (Specify) Memo
Contract Mail to (name and address):
Phone:
Funding Source
APPROVED FOR SUBMITTAL: �=Z, > ' ) City Manager
STAFF RECOMMENDATION: Staff recommends Option 3 as discussed in the attached
analysis of Interim Policy Options for Outside Utility Service
Option 3:
A. Provide outside utility service to property owners with existing agreements or
permits issued by the City and County; and,
B. Extend utility service to new customers without such agreements or peimits
only upon annexation; and,
C. Extend outside service for imminent health emergencies.
COUNCIL ACTION:
CITY OF YAKIMA
April 23, 2002
Interim Policy Options for Outside Utility Service
For nearly 40 years, the Yakima City Council has upheld the policy of extending City
wastewater service outside the City limits for a commitment to annex into the City. (See
attached Resolution No. D-791 enacted in March 1965.) This policy has been consistently
followed, and is repeated over and over again in nearly every planning document and inter -local
agreement the City has issued including the 1976 "Four Party Agreement," the 1981 Yakima
urban area comprehensive plan and the 2000 Inter -local Agreement between the City and County
for Growth Management. Moreover, this policy was unanimously upheld in the 1993 Supreme
Court Case concerning the City's Outside Utility Agreement.
However, the recent Washington Supreme Court decision in "Grant County" greatly impacts the
City's long-standing "utility service for annexation" policy. By invalidating the current petition
method of annexation, it would appear that the Washington Supreme Court has removed one
methodology formerly available under Washington Law to accomplish annexation. However,
there has been no change in the importance and need for annexation as a tool to grow and
strengthen cities, and serve an ever urbanizing population.
In response to the Supreme Courts decision, on March 26, 2002, the City placed an
administrative hold on the extension of sewer utility service outside the City limits. This was
done to better assess the legal effects of the decision, to analyze other legal authorities and
opinions in this matter and to help City Management design a new interim policy for the future.
The "Grant County" race is about how cities annex, whether wh_. n _ __ ML
- -------� •..+.. not vvuV�alt.l Vl Wlly. C1J 1G1:G11LLy al 1VldrGll
20, 2001, this City Council reaffirmed its commitment to annexation, stating in Resolution R-
2001-54:
1. It is in the best interest of residents and property owners in urbanized areas to have
full-time professional fire and police protection and other urban governmental
services, and
2. It is in the best interests of the City of Yakima and the entire community that the
City of Yakima proceed affirmatively to include within its boundaries urbanized
properties which are appropriate for annexation
During the Council Study Session on annexation on February 6, 2001, Council discussed the
importance of annexation to: 1) assure that the Yakima community continues to grow and
remains financially healthy, and 2) assure that a financially healthy Yakima community is able to
attract new diversified business and industry to the region. "New economic development will be
attracted to a healthy financial environment and will avoid a climate of stagnation and decay."
Utility Policy, BC/ja 4/19/02, 2:49 PM, 1
At the Council meeting on Tuesday, April 23, 2002, it is proposed that the Council approve an
Interim Policy to replace the current 30 -day administrative hold on new sewer connections
outside of the City. Although there are still unanswered questions concerning the impact of the
"Grant County" decision, we are recommending an interim policy of up to 16 months or more as
we await the outcome of the legal and legislative processes that have been initiated.
Specifically, it is proposed that the Council consider the following three alternative interim
options:
1. Provide outside utility service throughout the Yakima Urban Growth Area
but with no expectation of future annexation.
Under this option the City would continue to provide outside utility service to
unincorporated areas outside of the City with no expectation or commitment to
future annexation in return for service. Sewer rates would necessarily be adjusted
to cover the fully loaded cost of trunkage, treatment, collection and a reasonable
return on investment from outside retail customers. Further, under this option the
City would require that all future expenses to operate, maintain and expand the
plant and its trunkage, treatment and NPDES compliance costs to serve growth
outside the City limits be borne exclusively by those outside utility customers;
and discontinue all existing subsidies of the wastewater systems cost to serve this
growth area by City ratepayers.
"A municipality is severely handicapped by the election method, and without an
alternative method would be unable to deal with the people living just outside the
city, enjoying its advantages without having to pay for them. Such persons would
seldom consent to annexation and their non consent could threaten the code city."
(See Grant County fire Protection District No. 5 v. City of Moses Lake
concurrence/dissent by Justice Madsen.)
While this option would recover utility costs to serve outside customers, it could
severely inhibit the future growth of the City. Yakima could stop growing, and
we could become older and poorer. This could happen as wealth and youth
continue to move outward "trying" to avoid the urban problems of aging
infrastructure. These problems would become more expensive to 'fix" in a
community that is not growing, and which cannot afford the cost of city services.
But those moving outside of the City would also experience the "cost" of a
decaying central city because new business and industry would likely avoid the
area and move instead to areas with healthy central cities and with economic
promise.
2. A. Provide outside utility service to property owners with existing
agreements or permits issued by the City and County; and
B. Extend utility services to new customers without such agreements or
permits only upon annexation.
Utility Policy, BC/ja 4/19/02, 2:49 PM, 2
Approval of this interim option would release sewer connections for all outside
buildable lots with existing City approvals prior to 3/26/02. Included in this
release would be an estimated 350 lots in West Valley with:
a) Prepaid connection fees
b) Executed Reimbursement Agreements
c) Signed Outside Utility Agreements
d) City inspected developer extensions
e) Council approved Local Improvement Districts; plus
f) The Council approved Apple Tree Project and Reimbursement
Agreement with the potential for up to 500 additional single family
building sites.
(Please note, the 350 represent an estimate of the non -duplicated count of
available lots from the above list although some parcels may have more than one
of the above approvals.)
Under this option the City would accept no other new utility customers outside of
the City until they were annexed to the City by election or other method, which
may be created by future legislative action. An important definition included in
this option is "new customer". For purposes of this discussion, a "new customer"
would be an owner or applicant applying for service to a parcel or development,
which on March 26, 2002 (date 30 -day administrative hold was initiated) had not
already received a City commitment for utility service in the form of a
documented approval decision as listed above.
3. A. Provide outside utility service to property owners with existing
agreements or permits issued by the City and County, and
B. Extend utility service to new customers without such agreements or
permits only upon annexation, and
C. Extend outside service for imminent health emergencies.
This is the same as option 2 above with the addition of criteria for approval of
service to address imminent health emergencies as declared by the Yakima Health
District or other health authority.
Discussion:
In evaluating these options, the following considerations are noted:
The City Council's interim decision could limit the City's options for a permanent policy
decision in the future. If the City extends utility services outside its city limits without
the assurance of future annexation, it may be required to connect new customers without
conditions, throughout the Yakima Urban Growth area.
Utility Policy, BC/ja 4/19/02, 2:49 PM, 3
• It is estimated that some 350 buildable lots plus an additional 500 plus buildable
sites (i.e. Apple Tree Project area plus Reimbursement Agreement basin) that
would be approved for utility service under Option 3. These are in addition to buildable
lots currently available within the City. At projected absorption rates of 70-90 new
homes per year in this area, there would appear to be sufficient supply to meet demand
for several years. Although a shift in the supply/demand balance may have an impact on
the price for lots with City sewer over time, there appear to be a sufficient number of lots
under Option 2 or 3 to meet demand beyond the 16 -month target interim policy horizon.
• The growth and expansion of the City's sewer system to the west is currently
driven primarily by new residential development. Over the past 7 years the City
has provided sewer connections to fewer than 10 failed septic systems in this area.
Recommendation:
Based on the above, it is proposed that the City Council approve interim policy Option 3 that
provides for extending outside utility service to 1) property owners with existing agreements or
permits approved by the City and County as defined above, 2) extend utility service to new
customers without such agreements or permits only upon annexation, and 3) extend other outside
service only for imminent health emergencies. In all cases involving outside utility service, it is
recommended that an existing or modified O.U.A.'s be required for service.
Approval of Option 3 retains the Council prerogative to consider other options in the future for a
permanent Outside City Utility Service Policy. Option 3 provides for a logical, business -like
approach honoring existing commitments to serve and meeting critical health -safety needs,
continues economic growth and investment in the urban area, minimizes disruption to the
supply/demand balance, provides sufficient buildable lots for many months of new residential
construction, and offers sufficient lead time for development interests outside of these areas to
work with us to bring their developable land into the City. This Interim Policy would remain in
place until decisions in the Court and Legislature have been finalized unless otherwise amended
by Council action.
Conclusion:
Again, quoting from "Grant County" concurrence/dissent by Washington State Supreme Court
Justice Madson.
"... development at the periphery of a municipality owes its presence to the municipality in the
first place, and a municipality's inability to annex that area and share in the growth it has
generated 'will weaken the city's ability to continue to provide a high-level of services to the
residents and exacerbate the problem of urban decay.' Annexation of the fringe .... merely
confirm(s) the reality that these developments are already a functional part of the city they
surround. If the development is commercial or industrial, it undoubtedly depends heavily on city
infrastructure. If the development is residential, its residents work, shop, entertain themselves,
and use medical and other professional services in the city. The majority of those individuals
will spend most of their day within the city limits, yet they will contribute nothing to the city's
cost of providing infrastructure to the wide range of in -city activities of which they partake.
Utility Policy, BGja 4/19/02, 2:49 PM, 4
Moreover, these non-residents do not share in the cost of providing municipal services to the
poor residents of the city, who live in high concentrations in urban areas..."
The number one reason annexation is important for this City is that "size counts," and that a city
must grow and develop to continue to serve its citizens' needs.
A greater population increases our visibility on the radar screens of new companies looking to
expand into new markets. A 100,000 population city has a much greater chance of being
considered than one with a smaller population. A large central city carries more political clout
than a smaller one. This is true both at the state level and at the federal level.
The City of Yakima benefits in its ability to access State and Federal per capita entitlement funds
as our population increases. For example, annual State funding to the City from the gasoline tax
is provided on a per capita basis. Federal Community Development Block Grant funds are ,rade
available to cities based on a formula that includes increases in City population.
Finally, some entity must lead this Valley's economic transition, and who better than the
"capital" city of Central Washington, the City of Yakima. Yakima is the largest city in the
county housing 36% of the Yakima County population, providing 29% of all jobs (full and part
time), and with an assessed value (i.e. improvements but not land) representing 36% of the entire
county. Yakima is well positioned to meet the economic challenges of the future, and we must
continue to grow and enhance our municipal services and help to promote and encourage new
economic development and investment in our community for a "Better Tomorrow."
Utility Policy, BC/ja 4/19/02, 2.49 PM, 5
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
ITEM NO. U
FOR MEETING OF: February 17, 2004
ITEM TITLE: Consideration of Legislation regarding the City's Outside Utility and Annexation
Policies to:
A. A Motion to Rescind the Interim Administrative Hold Prohibiting the Provision of City
Utilities to Properties Outside of the City Limits; and
B. Resolution Amending and Updating the City's Outside Utility Agreement; and
C. Resolution Affirming and Restating the Annexation Policy of the City of Yakima.
SUBMITTED BY: Richard A. Zais, City Manager
William R. Cook, Director Dept. of Community and Economic Development
Ray Paolella, City Attorney
CONTACT PERSON / TELEPHONE: William R. Cook, CED Director, 575-6227
SUMMARY EXPLANATION:
Since April 2002, the Council has maintained an administrative hold prohibiting the provision of
city utility service to properties outside of the city limits unless, 1) a preexisting commitment of
city utility service is in place on or before March 26, 2002, 2) a health emergency is verified by
the county health district, or 3) the property is annexed prior to service connection (see
addendum). This action was taken in Tight of the March 2002 Supreme Court decision that the
75% petition method of annexation, as set forth in RCW 35.13.125, was unconstitutional.
(Continued)
Resolution X Ordinance Contract Other (Specify) Resolution R-2001-54; Legal
Memorandum re; Annexation Policy and Local Improvement Districts; Resolution Amending
Annexation Policy; Addendum re Former Extension Policy
Funding Source N/A
APPROVAL FOR SUBMITTAL:
City Manager
STAFF RECOMMENDATION: A) Pass motion to rescind administrative hold prohibiting the
provision of City utility services to be effective immediately upon the issuance of the Supreme
Court's mandate as it now stands; B) Pass Resolution Amending and Updating the City's
Outside Utility Agreement; and C) Pass Resolution Affirming and Restating the Annexation
Policy of the City of Yakima
COUNCIL ACTION:
A) A motion was passed to rescind the administrative hold subject to the condition of
the Supreme Court issuing a mandate in the Grant County Fire District/Moses
Lake lawsuit.
B) Resolution adopted. RESOLUTION NO. R-2004-29
C) Resolution adopted as amended to insert "utility" before Local Improvement
District. RESOLUTION NO. R-2004-30
On January 29, 2004 the Supreme Court unanimously reversed its previous decision. Their
reversal is subject to a 20-day period (ending February 18th) during which time the plaintiffs
may file a motion for reconsideration. If no motion is filed, the Supreme Court will issue a
mandate that day or next. Consequently, following this mandate the City may return to its
historic policy of conditioning the City's provision of utility service to land outside of the city limits
upon the landowner's binding promise to sign a petition (through the execution of an outside
utility agreement or "OUA") for annexation into the City of Yakima. Therefore, it is
recommended the Council pass the enclosed motion to rescind the administrative hold
prohibiting the provision of City utility services outside the city limits to be effective immediately
upon the issuance of the Supreme Court's mandate.
It is also recommended that the Council approve a resolution adopting an updated Outside
Utility Agreement. This revision is necessary to incorporate the provisions of the Court's rulings
in this case.
In addition to the above, the City should also require landowners who wish to form Local
Improvement Districts (LIDs) to provide an annexation commitment as a condition of LID
formation. Legal counsel advises that the City should implement its annexation policy
consistently regardless of whether an LID is involved, impose the OUA condition prior to LID
formation, and require signatures from owners representing 75% of the assessed valuation.
Legal counsel further recommends that deferral of OUA signatures for LID formation be allowed
only when justified by significant public interest considerations, and even then, only with
express findings from the Council (see legal opinion attached).
Accordingly, it is recommended that the Council also approve a resolution that reaffirms the
City's long-standing annexation policy and expressly addresses implementation of the policy in
the LID context noted above; together with updating the policy to incorporate the Court's rulings
in the case and eliminate outdated, geographic references.
MOTION TO RESCIND THE ADMINISTRATIVE HOLD REGARDING
THE PROVISION OF OUTSIDE UTILITIES
"Subject to the condition precedent of the Supreme Court issuing a mandate in
the case of Grant County Fire Protection District #5 et al versus City of Moses
Lake as it now stands, I move that the City of Yakima rescind its administrative
hold that prohibited provision of utility services to areas outside the City limits
unless one of three criteria was met: (1) the outside property owner had a prior
agreement or permit issued by the City and County for such utility service; (2) the
outside property was annexed to the City prior to the provision of the utility
services; or (3) provision of utility services was necessary due to an imminent
health emergency as declared by the Yakima Health District or other health
authority."
Preston' Gates' Ellis LLP
ME MORAN0 JM
TO:
FROM:
DATE:
SUBJECT:
Honorable Mayor and Members of the City Council
Richard A. Zais, Jr., City Manager
Raymond L. Paolella, City Attorney
City of Yakima
Elizabeth Thomas, Konrad Liegel and Denise Lietz
February 13, 2004
Effect of City Annexation Policy on Local Improvement Districts outside the City
Introduction and Summary
Historically, the City of Yakima ("City") has applied its policy of only extending City
wastewater service outside the City limits in exchange for a commitment to annex into the City
to Local Improvement District ("LID") formation. See Four Party Agreement, § 1 0.IV. We
understand that the City is considering whether and how to continue this historic policy with
respect to LIDs outside the city limits. As a matter of law, the City should be found to have the
authority to require the annexation commitment as a condition of LID formation because the
statute governing LIDs gives the City express authority to deny an LID petition from landowners
outside of the City limits. Furthermore, it appears likely that the City has the authority to impose
conditions on the landowners within the LID area so long as those conditions are imposed prior
to LID formation.
Background: Legal Authorities
The City's annexation policy requires a landowner's binding annexation commitment as a
covenant running with the land, in the form a signature on an outside utility agreement ("OUA"),
in'exchange for the City's willingness to provide wastewater service outside the city limits. This
policy was upheld in Yakima County (West Valley) Fire Protection District No. 12 v. City of •
Yakima.' The policy relies on the petition method of annexation, which allows annexation to
proceed when a petition -is "signed by the owners of not less than seventy-five percent in value
according to the assessed valuation for general taxation of the property for which annexation is
1 122 Wn.2d 371, 376-78, 858 P.2d 245 (1993).
A LAW FIRM I A LIMITED LIABILITY PARTNERSHIP INCLUDING OTHER LIMITED LIABILITY ENTITIES
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Anchorage Coeur d'Alene Hong Kong Orange County Portland San Francisco Seattle Spokane Washington, DC
MEMORANDUM
February 13, 2004
Page 2
petitioned." RCW 35.13.130. The validity of the petition method of annexation was recently
reaffirmed by the Supreme Court in the Grant County2 annexation litigation. As a result, the
City is considering the reaffirmation of its OUA policy. A question has arisen as to whether the
City may, or should, implement its long-standing annexation policy in the context of LID
formation by conditioning LID formation upon annexation commitments from some portion of
the LID area. A related question is whether the City may form the LID, yet defer the execution
of an OUA until an individual property owner requests connection to the system.
LID Process. Chapter 35.43 RCW governs the LID process. "Cities or towns may form local
improvement districts or utility local improvement districts composed entirely or in part of
unincorporated territory outside of such city or town's corporate limits in the manner provided in
this chapter."3 RCW 35.43.030. Landowners may request the formation of an LID in an area
using a petition representing over 50% of the land area: "any local improvement may be initiated
upon a petition signed by the owners of property aggregating a majority of the area." RCW
35.43.120. However, under RCW 35.43.075, the City Council has express authority to deny a
petition for the formation of an LID outside of the City's corporate limits.
One reported Washington court decision has addressed whether a city may condition service
upon an annexation commitment in the context of local improvement districts. In Vine Street
Commercial Partnership v., City ofMarysville4 ("Marysville "), the Court of Appeals held that
Marysville could not require annexation as a condition of service subsequent to the formation of
the ULID.5 Id. at 549. The Court apparently reasoned that once the property owners had
fulfilled all their ULID obligations, the City was no longer free to impose additional conditions:
"We conclude that property owners who petition for the formation of a ULID, whose properties
are then assessed for the special benefits thereby accruing, and who subsequently pay their
assessments in full, are entitled to receive the special benefits for which they have paid." Id.
Marysville did not directly address the question of whether the city could have imposed an
annexation condition prior to or contemporaneously with ULID formation. However, the Court
2 Grant County Fire Protection District No. 5 et al. v. City of Moses Lake, Wn.2d _, _ P.3d _ (Docket
No. 70090-7; January 29, 2004).
RCW 35.43.040 provides that the formation of a LID for sewer or water services outside of the City's boundaries
"may be subject to potential review by a boundary review board under chapter 39.93 RCW." However, under RCW
39.93.090(4), this review is limited to situations where a City extends its service outside of its service area, which
includes "for the extension of sewer service, the area outside of the corporate boundaries which it is designated to
serve pursuant to a comprehensive sewerage plan approved in accordance with chapter 36.94 RCW and RCW
90.48.110." Therefore, service to areas within the Yakima Urban Area as defined in the Four Party Agreement
should not be subject to boundary review board review.
4 98 Wn. App. 541, 989 P.2d 1238 (2000).
5 A ULID is a utility local improvement district. Like LIDs, ULIDs are authorized under Ch. 35.43 RCW, and differ
from LIDs only m allowing utility revenues to be used for the repayment of the ULID debt. See RCW 35.43.042;
35.43.043.
MEMORANDUM
February 13, 2004
Page 3
cited to RCW 35.93.075 for the proposition that Marysville was not required to provide service
to landowners outside its boundaries. Id. at 547. Furthermore, the Court stated, "Indeed, we
have no quarrel with the general proposition that a municipality may condition providing utility
service to property lying outside its city limits upon the property owners signing annexation
covenants — provided that such a requirement is in place when the contract is formed." Id. at 550
(citing People for the Preservation and Development of Five Mile Prairie v. City of Spokane6).
Thus, it appears that the Court would likely have upheld the annexation commitment if the city
had included it as an element of, or prior to, ULID formation.
Analysis
Authority to Implement Policy. It is appropriate for the City to implement its annexation policy
in the context of LIDS in order to maintain a consistent policy throughout the Yakima Urban
area. Implementation could take several forms. For example, the City could require execution
of OUAs prior to approval of an LID. Alternatively, the City could incorporate or reference
pertinent OUA provisions into a number of documents involved in LID formation, including:
• The form letter responding to initial LID inquiries
• The City's "Informal Petition for Sewer" (the version that is sent to areas outside the
City already notes in general terms the OUA requirement)
• The City's formal LID petition (the OUA should be set out in full in any formal petition
used for LID formation outside the City limits so that the property owner's signature on
the LID petition will also operate as a signature on an OUA, provided that the LID is
formed)
• The City's memorandum to area property owners designed to gauge their level of
interest
• The notice of any public meeting that the City sends to property owners upon receipt of
an LID petition
• The City resolution declaring the City's intent to form an LID and setting a date for a
formation hearing
• The City ordinance forming the LID
• The City's "Post -Construction Information" document
There are several sources of the City's authority to implement the annexation policy in the LID
context. First, the City Council has broad authority under RCW 35.43.075 to deny LID
formation petitions from landowners outside of the City limits. Second, the City has authority
under West Valley and other decisions to condition its provision of service upon a promise to
annex. Nothing in West Valley, other decisions, or related statutes suggests that this authority
would somehow be constrained in the context of LIDS. Finally, under the Four Party Agreement,
the City may be obligated to impose the annexation requirement regardless of the presence or
absence of an LID. See § 10.IV ("property owners within the Yakima urban area who seek sewer
6 51 Wn. App. 816, 820, 755 P.2d 836 (1988).
MEMORANDUM
February 13, 2004
Page 4
service, through the formation of LID'S or otherwise, shall be subject to the [annexation]
condition[.]" (Emphasis added.)
Authority To Require 75% Petition. There is a mismatch between the signature sufficiency
requirements of petitions for LID formation and for annexation. LIDs require over 50% of the
land area, while annexation requires 75% of the property value. From a practical standpoint, if
the City does not impose the 75% at the time of LID formation, it may be difficult to gather
additional OUA signatures, and the City may therefore wish to require that both sufficiency
standards are satisfied as a precondition to LID formation. The City should be found to have the
authority to impose this requirement. As a result of its broad discretion to deny LID formation
petitions from landowners outside the City limits, the Council should be found to have authority
to refuse to approve an LID formation petition unless it is accompanied by OUAs from
landowners representing 75% of the assessed value within the petition area. This is true even
though the LID formation statute only requires a petition signed by the landowners of a majority
of the area within the proposed improvement district because the 75% requirement is consistent
with the City's lawful annexation policy.
Authority To Defer Signatures on OUAs. Based on the same authority to deny LID formation
outside the City limits and to require OUAs outside the City limits, it is likely that the Council
could also approve a LID formation petition where the execution of an OUA is deferred until an
individual property owner requests connection to the system, provided that the City complies
fully with its policy of requiring OUA execution prior to service. However, under the reasoning
of Marysville, the City Council cannot impose any new conditions on landowners following the
formation of the LID. As a result, the City must ensure that this condition is clearly imposed
prior to LID formation. In order to limit confusion and potential claims, we recommend that the
City allow deferral of OUA signatures only in limited, exigent circumstances, only when the
Council has made express findings regarding why deferral will promote public health, safety and
welfare, and only when the process for obtaining OUA signature (or annexation) prior to service
has been established.
Conclusion
The City has the authority to require landowners who wish to form LIDs to provide an
annexation commitment as a condition of LID formation. Thus the City may implement its
annexation policy consistently regardless of whether an LID is involved. From a legal
standpoint, it is important to impose the OUA condition prior to LID formation, including a
requirement of signatures from owners representing 75% of the assessed valuation, even though
the statutory threshold for LID formation is 50% of land area. The City may defer signatures on
OUAs until after LID formation provided that the requirement is imposed prior to formation,
although fewer legal issues will arise if OUA signatures have been obtained by the time of LID
formation.
MEMORANDUM
February 13, 2004
Page 5
Cc: Glenn Rice
Bill Cook
Doug Mayo
Paul McMurray
Bruce Benson
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