HomeMy WebLinkAbout09/02/2008 09 Yakima Mall Ramp Ownership Issues BUSINESS OF THE CITY COUNCIL
0 YAKIMA WASHINGTON
AGENDA STATEMENT 9
Item No.
For Meeting Of a /Z /a $
ITEM TITLE: Presentation of legal opinion regarding Yakima Mall Ramp and
ownership issues relating to proposed new hotel project.
SUBMITTED BY: Dick Zais, City Manager
Ken Harper, Legal Counsel for the City of Yakima
CONTACT PERSON/TELEPHONE: Dick Zais, City Manager, 575 -6040
SUMMARY EXPLANATION: The legal opinion regarding the Mall Ramp and request from JEM
development is completed and attached for your review. The opinion is the result of extensive research and
legal analysis through the combined efforts of Ken Harper, retained counsel for the City, Acting City
Attorney Helen Harvey, and Senior Assistant City Attorney Cynthia Martinez, together with input from the
City Clerks Office, City Engineering and my office.
The legal opinion from Attorney Ken Harper supplements and affirms prior legal analysis prepared by
Senior Assistant City Attorney Jeff Cutter pertaining specifically to ownership of the ramp. Harper's
memorandum confirms the earlier conclusion that the ramps servicing the parking garage are owned by the
City by virtue of the fact they were the result of a Local Improvement District approved by the City Council
in May of 1970.
0 -Iarper's opinion also provides a detailed analysis of the effect of a 1969 easement grant and a modification
of the easement made by the City Council in May of 1971 between the City and Yakima Mall Shopping
Center, Inc. (and its successors) on other key issues associated with JEM Development's request for
economic development assistance. Mr. Harper's opinion also concludes that at present there exists no
obligation on the part of either the City or JEM Development to remove the ramp in question. Additionally,
the City has the authority under certain conditions to fund the removal of the ramp. The question of
whether City participation in the removal of the ramp is a good use of public monies remains a policy
question for the City Council to determine.
Resolution - Ordinance Other (Specify)
Contract Mail to (name and address):
Phone:
Funding Source
APPROVED FOR SUBMITTAL: �`* City Manager
STAFF RECOMMENDATION: Based upon careful review of Harper's opinion and City legal staff, it
is recommended that the City enter into negotiations on a development agreement with JEM Development
regarding all requests pertaining to the entire proposed development of the J.C. Penney building into a
hotel. A SEPA process will be required, and the final decision on whether to approve or deny a
development agreement for the process is up to the City Council subject to a public hearing. Should
Council determine that a comprehensive development agreement is the appropriate means by which to
address the requests and other issues associated with the prospective project, it is further recommended that
'ouncil defer making a determination with respect to removal of the ramp at this time.
BOARD /COMMISSION /COMMITTEE RECOMMENDATION:
COUNCIL ACTION:
Sept. 02, 2008
I have concerns with Development Agreements. Most represent the public well;
however, in my opinion some can end up being costly legal shortcuts. It would not be the first
time a development agreement has come back to bite City Council. I.E. The Congdon
development agreement/ law suite, which by the way, and for future discussion, may still have
millions of teeth in it.
Part of the problems with the ramp issue is a very confusing and clouded paper trail. I
worry that this action will only produce more disorder. I worry that somehow even though the
ramp removal is being deferred, wording about ramps (one or more) will become part of this
development agreement making it even more confusing for future Councils.
It's still my opinion that it doesn't matter that the ramps were installed with an
L.I.D.They were built exclusively for the grantee and the grantee has been the beneficiary, and
they should be fiscally responsible for a requested change or removal.
I believe the Council should as recommended, defer our last decision with respect to the
removal of the ramp. I also believe that we make our opinion clear to future Councils on how
the five ramps on "A" Street should be viewed. I would like us to entertain a motion that the
ramp /ramps issue be renegotiated as an independent agreement, and urge the council to insist
that the ramps be settled business before we give final approval on the JEM development
agreement.
Let's help future Councils and make the "A" Street ramps clear and settled business.
Bill Lover, Yakima City Councilman
0
MEMORANDUM
TO: The Honorable Mayor and Members of the City Council
Dick Zais, City Manager
FROM: Kenneth W. Harper, outside legal counsel
SUBJECT: Yakima Mall Ramp Legal Opinion
DATE: August 29, 2008
L INTRODUCTION
This memorandum responds to a request by the City of Yakima for analysis of rights related to
ramps built near the Yakima Mall. These ramps are located in or near right -of -way commonly
known as East "A" Street. At the time of a certain easement discussed below, the Yakima Mall
was owned and/or operated by Yakima Mall Shopping Center, Inc., a Washington corporation.
Under Washington law, easements appurtenant to real estate presumptively pass to successors -
in- interest. For this reason, this memorandum does not distinguish between the Yakima Mall
Shopping Center, Inc., and subsequent owners of the mall.
For brevity, both the mall structure and its various ownership interests (including successors and
assigns) are referred to simply as "the mall."
The questions posed by the City are set forth below, followed by corresponding analysis.
II. LEGAL ANALYSIS
A. Does the City own the mall ramps at the present time?
Yes. A local improvement district ( "LID ") is primarily a financing device for building
infrastructure. Inherent in any LID is the concept of public ownership of the infrastructure at
issue. See RCW 35.43.005 (City LID statutes "apply to local improvements owned or operated
by a public corporation or by a public corporation and a city, town, or another public corporation
as if they were owned or operated by a city or town.'.')
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Memorandum:
Mall Ramp Opinion -1
Some or all of the ramps at issue were built pursuant to an LID approved by the Yakima City
Council on May 11, 1970. The ramps so constructed are owned by the City.
B. Is the mall legally obligated to remove the ramps based upon the current project
proposal for a new hotel?
No. The mall's right to make use of the ramps originates with an easement dated April 29, 1969,
which easement was accepted by the mall on June 30, 1969. The easement grants to the mall a
right to use a portion of the East "A" Street right -of -way. The easement grants this right with
certain conditions. The first condition establishes the purpose of the easement as ingress and
egress between East "A" Street and a parking garage to be constructed by the grantee of the
easement. The use of the ramps for ingress and egress to a parking garage is not further limited
by any requirement that the garage serve a mall.
Following the creation of the LID, the easement was modified in an instrument dated May 12,
1971. The modification instrument corrects an error in the legal description of the easement and
also adds a clause to the first condition of the easement. The added clause states that the rights
of ingress and egress via the ramps (expanded to include a basement service ramp) are for the
benefit of the grantee "in common with the public." The modification instrument affirms the
easement in other respects.
This memorandum does not resolve whether other grounds may exist for questioning the validity
of the easement. For instance, paragraph three of the easement requires that the mall maintain a
public liability insurance policy insuring the City against risks arising out of the mall's use of the
premises. In a recent search, no such policy could be found in the City's files.
Washington law disfavors termination of easements by implication. A change in use of the
parking garage to serve a proposed hotel rather than a mall does not violate any express term of
the easement grant.
C. If the City owns the ramps and the mall is not legally obligated to take down the ramps,
but the owner still asks the City to do so, what is the legal authority that authorizes the
City Council to do so?
It should be recognized that the "ramp issue" is only a component of an overall proposal.
Obtaining a better understanding of the overall proposal is an important step in understanding
how related downtown public infrastructure and development standards issues should be
addressed. Avoiding piecemeal review of proposed actions is also a key requirement of the State
Environmental Policy Act ( "SEPA "). There is likely a SEPA component to the "ramp issue,"
but this cannot be meaningfully evaluated unless adequate information on the overall proposal is
developed.
As a general rule, if a public entity determines that a publically owned facility is no longer of
value, the agency can take action to remove the facility. Specific to this situation, legal authority
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Memorandum:
Mall Ramp Opinion - 2
0 for the City to enter into contracts with private persons regarding services, infrastructure, or other
facilities can be found at RCW 36.70B.170. This statute authorizes development agreements.
Approval of any such agreement must be preceded by a public hearing.
Both a development agreement and proper SEPA compliance provide public participation
opportunities.
As a reminder, if the ramps are removed at public expense, this would probably be deemed a
"public work" under state law. See RCW 39.04.010 (public work means "all work, construction,
alteration, repair or improvement other than ordinary maintenance.... ") Generally, public works
projects are subject to statutory competitive bidding requirements. With regard to the potential
for a change order as part of the Downtown Yakima Futures Initiative Phase III improvements,
there is an exception to Washington's bidding laws for contract change orders when unforeseen
extra work becomes necessary under a valid preexisting contract.
D. If the mall ownership offers to voluntarily take down the ramps, how might this be
accomplished?
Because the ramps are a significant item of public infrastructure located in the City right -of -way,
the mall cannot take unilateral action to remove the ramps. There are important implications of
their removal by the mall that would need to be addressed.
410 Removal of the ramps by the mall requires SEPA consideration. Perhaps more importantly,
ramp removal as an element of a new hotel raises issues regarding the overall public interest in
other nearby downtown infrastructure, such as sidewalks, streets, and other rights -of -way. All of
these issues could be appropriately reviewed, with public participation, as part of a development
agreement.
Voluntary removal by the mall at the mall's expense would likely not be subject to public bid
laws. See RCW 39.04.010 (applicable to public works "executed at the cost of the state or of
any municipality.... ") Removal by the mall would require a carefully prepared indemnification
obligation made by the mall for the benefit of the City.
III. RECOMMENDATION -
It is recommended that the City and the mall memorialize the terms of any prospective
arrangement whereby the ramps or other significant items of public infrastructure related to the
mall's proposal are affected. This arrangement should take the form of a comprehensive
development agreement. As discussed above, a development agreement process would provide
public participation opportunities.
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Memorandum:
Mall Ramp Opinion - 3