IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON CITY OF BELLEVUE, a Washington No. 71827-4-1 municipal corporation, DIVISION ONE Respondent,

PINE FOREST PROPERTIES, INC., a Washington corporation, Appellant, PUBLISHED OPINION and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation; PRUDENTIAL ASSET RESOURCES, INC., a Delaware corporation; SHAREBUILDER CORPORATION, a Washington corporation; CLEARWIRE LEGACY, LLC, a Delaware limited liability company, Defendants. FILED: December 22, 2014 Schindler, J. — Property owner Pine Forest Properties Inc. appeals the determination of public use and necessity and the order authorizing the city of Bellevue (City) to condemn property for construction staging during the expansion of the Central Puget Sound Regional Transit Authority (Sound Transit) light rail system from downtown No. 71827-4-1/2 Seattle to the east side, the "East Link Project," and road improvement construction projects. Pine Forest contends that absent an identified permanent use, condemnation of the property for construction staging is neither a public use nor a necessity. The Washington State Supreme Court decision in HTK Management. L.L.C. v. Seattle Popular Monorail Authority (Monorail). 155 Wn.2d 612, 121 P.3d 1166 (2005), controls. In Monorail, the court held that the decision of the condemning authority as to the type and extent of property interest necessary to carry out the public purpose is a legislative question subject to a deferential standard of review. Monorail. 155 Wn.2d at 634-35. We affirm the determination of public use and necessity and the order authorizing the City to condemn the property. FACTS In March 1990, the Washington State Legislature passed "AN ACT relating to high capacity transportation systems," Substitute House Bill No. 1825. Lawsof 1990, ch. 43.1 The legislature states that "[increasing congestion on Washington's roadways calls for identification and implementation of high capacity transportation system alternatives" and requires local jurisdictions to "coordinate and be responsible for high capacity transportation policy development, program planning, and implementation." Laws of 1990, ch. 43, § 22.2 On November 4, 2008, voters approved the Central Puget Sound Regional Transit Authority (Sound Transit) proposal to expand the existing link light rail from 1The legislation defines a "high capacity transportation system" as: [A] system of transportation services, operating principally on exclusive rights of way, which taken as a whole, provides a substantially higher level of passenger capacity, speed, and service frequency than traditional public transportation systems operating principally on general purpose roadway rights of way. Laws of 1990, ch. 43, §22.

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In his reply declaration, Logwood states that "[a]t no time in any of these meetings was it ever agreed that Sound Transit would return use of the Property to Pine Forest after the completion of heavy civil construction on the East Link Guideway on the Property." Logwood states there is no "fixed . . . time frame for Sound Transit's temporary use of the Property." Logwood reiterates that the City and Sound Transit are still in the process of "planning, scheduling, and coordinating with respect to the construction of the East Link Project on the Property," and that the City and Sound Transit have not "finalized how the City will coordinate construction of the Bel-Red Transportation Improvements with the construction of the East Link Project." According to Logwood, the potential time line described by Wickens is a "Draft Conceptual Coordination Schedule" that was "prepared solely for the purposes of the City's discussions with Pine Forest and Sound Transit regarding whether there was any possibility these projects could be coordinated." Logwood again notes that completion of the design and construction of the NE 15th Street project is "unfunded at this time," and the "decision on whether to accelerate the NE 15th Street Project has not yet been made and may not be made for another year or more." Logwood also addresses Pine Forest's proposal to enter into a long-term lease. Logwood states the proposal relies on the false assumption that the City "will need to use a portion of the Property for construction staging for only six years," and "what Pine Forest describes as 'savings' is actually just the purchase of a smaller amount of property at the same per square foot price, plus additional costs associated with a ground lease." Logwood further states, in pertinent part: Additionally, as set forth above, there are no guarantees that the City will need the temporary use area for only ten years, and in fact, the possibility No. 71827-4-1/12

remains that the duration of temporary use could be much longer. Thus, in consultation with its appraiser and review appraiser, the City has determined that it would be more cost effective to acquire the Property in fee simple than to agree to Pine Forest's proposal.

According to Logwood, the City and Sound Transit concluded the proposal to enter into a long-term lease would impose significant limitations and further complicate the construction of "two extremely complex public infrastructure projects." Based on the long-term need to use the property for construction staging, the City "decided to acquire the Property in fee simple." In addition, Logwood explained that because of "the potential that Sound Transit's and/or the City's permanent use areas on the Property could shift or increase . . ., a fee simple acquisition minimizes complications, and the potential for additional costs, for both Projects." Logwood also notes that Pine Forest consistently stated that if the proposed MDP were approved, it would proceed with the project "only if market conditions permit and, thus, there are no guarantees that Pine Forest's project would be constructed at the same time as the City's projects."

At the public use and necessity hearing on March 7, 2014, Pine Forest submitted a letter dated February 18. The letter proposes selling two-thirds of the property to the City and providing a temporary easement to the other one-third of the property. The proposal is subject to an agreement "on a timetable that provides flexibility for the City, and provides certainty that the property will be returned to Pine Forest."

The court ruled the City met its burden of establishing public use and necessity. The court concluded public transportation is a public use: the "intended use of the Property for transit and transportation purposes is undeniably a public use for all of the Property." The court also concluded the City "reasonably determined that it requires the Property in fee simple," and "Pine Forest has not established that the City's No. 71827-4-1/13

determination that it requires the Property in fee simple for the East Link Project and the Bel-Red Transportation Improvements was the result of actual fraud or constructive fraud." The court entered extensive findings of fact, conclusions of law, and an order determining public use and necessity. The conclusions of law state, in pertinent part: No. 71827-4-1/14 No. 71827-4-1/15

Public Use

The question of whether the contemplated use is really a public use is a judicial question without regard to a legislative assertion that the use is public. Wash. Const. art. 1, § 16 (amend. ^[9]). Article I, section 16, amendment 9 of the state constitution states, in pertinent part:

Whenever an attempt is made to take private property for a use alleged to be public, the question whether the contemplated use be really public shall be a judicial question, and determined as such, without regard to any legislative assertion that the use is public.

As authorized by the voters, Sound Transit plans to extend the light rail system and construct the East Link. To facilitate construction of the East Link, Sound Transit and the City entered into a MOU and the City agreed to acquire certain designated properties, including the parcel owned by Pine Forest. In conjunction with the East Link Project, the City plans to construct an extension of NE 15th Street "to improve access, circulation, and mobility options."

Without question, condemnation of the property for construction of the East Link Project and the City's road improvement project is a public use. See RCW 8.12.030, RCW 35A.64.200, RCW 81.104.010, RCW 81.112.080, RCW 35A.11.010, RCW 39.34.010, and RCW 39.34.060 (authorization to exercise eminent domain for purposes of transportation and to construct light rail system); see also RCW 35.68.010, RCW 35A.47.020, and RCW 35.75.010 (authorization to construct and expand roads).

Pine Forest tries to characterize the type and extent of the property interest the City seeks to condemn as a question of public use rather than necessity. Pine Forest claims that absent an identified permanent use for the property, the decision to obtain fee title for the temporary use for construction staging is a question of public use. The No. 71827-4-1/16

Washington State Supreme Court considered and rejected the same argument in the Monorail case.

In Monorail, the condemning authority "need[ed] the entire property for construction of the staging and development of the [rail] alignment" for the first 5 to 10 years, but had not approved a plan for use of the property "outside of the footprint." Monorail, 155 Wn.2d at 620, 633.

Although the monorail station is not likely to take up the entire footprint of the property, the record indicates that the remaining portion of the property could be used for at least 10 years for construction and remediation of property in downtown Seattle. ... In this case, for the first 5-10 years, a substantial portion of the property will be put to public use and only after that time is there a possibility that the property may be sold. Monorail. 155 Wn.2d at 633.

The property owner argued that the "decision to condemn a fee interest in the entire property should be analyzed under the first prong of the test for 'public use,' rather than under the third prong of the test for 'necessity.'" Monorail. 155 Wn.2d at 630. The Supreme Court rejected the property owner's argument.

The court held that "determinations by the condemning authority as to the type and extent of property interest necessary to carry out the public purpose have historically been considered legislative questions and are thus analyzed under the third prong of the test." Monorail, 155 Wn.2d 630; see ajso Pub. Util. Dist. No. 2 of Grant County v. N. Am. Foreign Trade Zone Indus.. LLC (NAFTZI). 159 Wn.2d 555, 575-76, 151 P.3d 176 (2007) (emphasizing that a claim that excess property has been taken is addressed under the necessity prong). The Supreme Court held that use of the property for construction staging was a public purpose even though the condemning authority did not identify "a public use planned for property forever." Monorail. 155 No. 71827-4-1/17

Wn.2d at 6344; see also NAFTZI, 159 Wn.2d at 575 ("a public entity need not plan to use condemned property for public purpose forever to justify the initial public use").5 Necessity

Pine Forest asserts that even ifthe temporary use of the parcel for construction staging is a public use, the City did not meet its burden of proving condemnation of a fee interest in the property is necessary.

Pine Forest contends the court erred in ruling that the City's decision as to the "type and extent of property interest... is conclusive absent proof of actual fraud or such arbitrary and capricious conduct as would constitute constructive fraud." Pine Forest argues the court erred in requiring Pine Forest to demonstrate actual or constructive fraud rather than arbitrary or capricious conduct.6 We disagree.

A party challenging the legislative determination of necessity must establish "arbitrary and capricious conduct amounting to constructive fraud." NAFTZI, 159 Wn.2d

4 Emphasis in original. 5 The cases Pine Forest cites in support of its argument that the type and extent of the property interest is a question of public use rather than necessity are inapposite. In In re the Petition of City of Seattle (Westlake), 96 Wn.2d 616, 634, 638 P.2d 549 (1981), the city planned to sell or lease a significant portion of the property in order to "provide additional shopping opportunities in the core of the City's shopping area." The court held the project as a whole did not constitute a public use because its "primary purpose" was private retail development. Westlake, 96 Wn.2d at 629. In State ex rel. Washington State Convention & Trade Center v. Evans. 136 Wn.2d 811, 966 P.2d 1252 (1998), the court held that private retail development in the vacant space below the exhibit hall was "merely incidental" and "[t]he relevant inquiry is whether the government seeks to condemn any more property than would be necessary to accomplish purely the public component of the project." Evans, 136 Wn.2d at 822-23 (emphasis added). City of Seattle v. Faussett, 123 Wash. 613,212 P. 1085(1923), and State ex rel. Tacoma School District No. 10 v. Stoiack, 53 Wn.2d 55, 330 P.2d 567 (1958), also address necessity, not public use. In Faussett, the court held that a city need not condemn property in fee simple ifacquisition of a lesser interest "reasonably satisfies the needs of the particular public use contemplated." Faussett, 123 Wash, at 617-18, 620-21. Likewise, in Stojack, the court held that a school district board of directors has "authority to determine the area of land reasonably necessary to accommodate suitable buildings" for the purpose of public education. Stoiack, 53 Wn.2d at 63-64. 6 Likewise, below, Pine Forest argued the standard was arbitrary and capricious. It's basic arbitrary and capricious decision-making by the City and manifest use of discretion. That's different. It could ultimately - if one were to argue about, we could talk about constructive fraud, but we're not even going that far. The point is, the standard is not fraud. The standard is arbitrary and capricious.

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at 577.7 Whether condemnation of a fee interest in the property is necessary is a legislative question that is conclusive absent proof of "actual fraud or arbitrary and capricious conduct, as would constitute constructive fraud." Monorail, 155 Wn.2d at 6298; see also State ex rel. Wash. State Convention & Trade Ctr. v. Evans. 136 Wn.2d 811, 823, 966 P.2d 1252 (1998); City of Tacoma v. Welcker, 65 Wn.2d 677, 684, 399 P.2d 330 (1965): City of Blaine v. Feldstein. 129 Wn. App. 73, 81, 117P.3d 1169 (2005). Port of Everett v. Everett Improvement Co.. 124 Wash. 486, 214 P. 1064 (1923), is distinguishable. In Everett Improvement, the Port of Everett Commission had neither a present nor a future use for the property it sought to condemn. Everett Improvement. 124 Wash, at 492. There was "no map, plan, specification, or detailed description of the work intended to be constructed." Everett Improvement, 124 Wash, at 492. Absent "some definite stated plan of improvement," the court held "necessity cannot be shown." Everett Improvement. 124 Wash, at 494. But "nothing in Everett Improvement requires this court to find that the failure to have in place a definitive use plan for the entire life of the property makes the condemning authority's actions arbitrary and capricious." Monorail. 155 Wn.2d at 638 n.21. Further, here, unlike in Everett Improvement, the undisputed record establishes a long-term need to use the property for construction staging. Neither the final design of the East Link Project nor the City's road improvement project are complete, and the 7 Emphasis added. ^[8] Emphasis added.

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"remaining decisions that have not yet been made" could increase the extent of the property needed to construct the East Link Project and the road projects.

Pine Forest argues the record does not support the court's findings that the City established condemnation in fee simple and the plan to use the property for construction staging is necessary. When reasonable minds can differ, we will not disturb the decision of the legislative body that necessity exists "so long as it was reached 'honestly, fairly, and upon due consideration' of the facts and circumstances." Cent. Puget Sound Reg'l Transit Auth. v. Miller. 156 Wn.2d 403, 417-18, 128 P.3d 588 (2006) (quoting Welcker. 65 Wn.2d at 684). And although "[t]he decision may be unwise, ... it is still a decision for the legislative body to make, not this court." Miller, 156Wn.2dat418.

Preliminarily, the parties dispute the standard of review. Pine Forest asserts review of the findings is de novo because the record consists entirely of declarations and documentary evidence. The City argues the standard of review is whether substantial evidence supports the finding of necessity.

In Dolan v. King County, 172 Wn.2d 299, 311, 258 P.3d 20 (2011), the Washington State Supreme Court held that where, as here, the trial court reviewed documentary evidence, "weighed that evidence, resolved inevitable evidentiary conflicts and discrepancies, and issued statutorily mandated written findings," a substantial evidence standard of review applies.

Appellate courts give deference to trial courts on a sliding scale based on how much assessment of credibility is required; the less the outcome depends on credibility, the less deference is given to the trial court. Washington has thus applied a de novo standard in the context of a purely written record where the trial court made no determination of witness credibility. See Smithr v. Skagit County], 75 Wn.2d [715,] 719[, No. 71827-4-1/20

453 P.2d 832 (1969)]. However, substantial evidence is more appropriate, even if the credibility of witnesses is not specifically at issue, in cases such as this where the trial court reviewed an enormous amount of documentary evidence, weighed that evidence, resolved inevitable evidentiary conflicts and discrepancies, and issued statutorily mandated written findings. See [In re Marriage of IRideout, 150 Wn.2d [337,] 352[, 77 P.3d 1174 (2003)]; Anderson v. City of Bessemer City. 470 U.S. 564, 574-75, 105 S. Ct. 1504, 84 L. Ed. 2d 518 (1985) (deference rationale not limited to credibility determinations but also grounded in fact-finding expertise and conservation of judicial resources). Dolan. 172Wn.2dat311.9 Pine Forest argues substantial evidence does not support the finding that the City "reasonably determined" the need to acquire the property in fee simple. Finding of fact 9 states: The City has reasonably determined that it requires the Property in fee simple for the East Link Project and the Bel-Red Transportation Improvements given the permanent need for approximately two-thirds of the total area of the Property, or approximately 160,000 square feet out of a total of approximately 240,000 square feet, and the long-term need to use the remainder of the Property for construction staging, possibly through 2030 and beyond. As Rick Logwood, Capital Projects Manager for the City, testified, "[w]ith significant design, scheduling, and coordination decisions remaining to be made by both South Transit and the City with respect to both the East Link and the Bel-Red Transportation Improvements Projects, a fee simple acquisition minimizes complications, and the potential for additional costs."[10] Pine Forest does not dispute that the property will be used for construction staging for at least the first several years, that Sound Transit has not completed the design of the East Link Project, and that the City is still in preliminary stages of design for the NE 15th Street project. Sound Transit Senior Real Property Agent Kent Melton testified that "the duration of time that Sound Transit will need to use the temporary interests in the Property to construct the East Link guideway and for construction 9 In any event, we would reach the same conclusion ifwe applied a de novo standard of review. ^[10] Alteration in original.

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staging purposes is still being determined." Logwood testified the City needs to use the property for staging during the construction of the road projects "possibly through 2030 and beyond." Logwood also testified that the future design decisions create "the potential that Sound Transit's and/or the City's permanent use areas on the Property could shift or increase."

Pine Forest contends the findings do not establish the need to condemn the property because Pine Forest agreed to a construction easement and guaranteed paying a discounted amount for the portion of the property needed for construction staging. Substantial evidence supports the findings that Pine Forest's proposal imposed significant limitations on Sound Transit and the City, and the City "reasonably considered the relative cost of a complete take as compared to a temporary construction easement." Finding of fact 10 and finding of fact 11 state:

10. Pine Forest's proposal regarding how the City and Sound Transit could coordinate their projects with Pine Forest's Transit-Oriented- Development plans includes significant limitations. For example, Mr. Logwood testified that the proposal imposes "significant limitations on both Sound Transit's and the City's duration of use of the property" and requires that "the City agree to separate compensation for the permanent use areas and for the long-term temporary use areas at this early stage before all design decisions defining those areas have been made."... Mr. Logwood further testified that there are "no guarantees that the City will need the temporary use area for only ten years, and in fact, the possibility remains that the duration of temporary use could be much longer.". . . Pine Forest's proposal would also require the City Council to amend its budget for the Bel-Red Transportation Improvement Projects. 11. The City has also reasonably considered the relative cost of a complete take as compared to a temporary construction easement over any potential remainder of the Property that is not subject to a permanent use following construction of the East Link project and Bel-Red Transportation Improvement projects. In addition to the costs of acquiring the Property, the City also has considered that transaction costs associated with taking only a temporary interest in a portion of the Property and in coordinating the design and development of the City's projects with Pine Forest's proposed plans to develop a portion of the No. 71827-4-1/22

Property. Although these costs are not precisely quantifiable, the City reasonably determined that it would be considerably more cost effective to acquire the Property in fee simple than to agree to Pine Forest's proposal. The record shows Sound Transit and the City engaged in extensive discussions with Pine Forest about the proposal. Logwood testified: I have been in numerous meetings with City and Sound Transit Staff and other Pine Forest representatives over the last year. These meetings have always addressed the mutual objectives of the City, Sound Transit and Pine Forest to coordinate all the projects described above. Our meetings have included discussions and planning to facilitate, and reduce the cost, of these interrelated public and private projects. For these meetings and during these meetings, we reviewed hundreds of pages of City, Sound Transit and Pine Forest documents, drawings and plans. The record shows there were a number of reasons the City decided to acquire the property in fee, including the difficulties and risk involved in trying to coordinate the East Link Project and the road improvement project with Pine Forest, and limitations on use of the property. Logwood testified, in pertinent part: Pine Forest has proposed that the City and Sound Transit further complicate two extremely complex public infrastructure projects in order to accommodate its interest in constructing a private development project. Contrary to Mr. Bumstead's and Mr. Wickens' representations, every proposal that Pine Forest has made to date regarding how the City and Sound Transit could coordinate their projects with Pine Forest's . . . plans has included significant limitations on Sound Transit's and the City's abilities to use the Property for these public projects. For example, the October 16, 2013, proposal from Mr. Wickens includes provisions imposing significant limitations on both Sound Transit's and the City's duration of use of the property. See Wickens Declaration, Ex. ^[7] at 2 (stating that temporary use term would expire "[n]o later than 2 years prior to completion of the 120th Avenue Sound Transit Station," with significant penalties for holdover occupancy); see also id, Ex. ^[8] (requiring a written agreement that Sound Transit vacate the Property following completion of heavy civil construction and that the City vacate the Property following completion of the NE 15th Street Project). Moreover, Pine Forest's proposals require that the City agree to separate compensation for the permanent use areas and for the long-term temporary use areas at this early stage before all design decisions defining those areas have been No. 71827-4-1/23

made. See id., Ex. ^[7] (requesting separate compensation for the "Right of Way Area Purchase" and a temporary ground lease).

Substantial evidence also supports the finding that the City considered the relative cost of a fee acquisition as compared to a temporary ground lease or construction easement. Logwood testified that "what Pine Forest describes as 'savings' is actually just the purchase of a smaller amount of property at the same per square foot price, plus additional costs associated with a ground lease."11 Logwood states the October 16 proposal to enter into a temporary ground lease could "increase[ ] costs associated with meeting project schedule milestones and commitments."

We hold the record supports the conclusion that the City met its burden of establishing the necessity to condemn a fee interest in the property for construction staging for the East Link Project and the road improvement project, and that Pine Forest did not establish actual or constructive fraud. Motion to Continue

In the alternative, Pine Forest seeks remand to engage in discovery. Pine Forest asserts the court erred in denying its request to conduct discovery.

A court has broad discretion to grant or deny a continuance. Dovle v. Lee. 166 Wn. App. 397, 403-04, 272 P.3d 256 (2012). We review denial of a continuance request for a manifest abuse of discretion. Doyle, 166 Wn. App. at 403-04. A continuance to conduct discovery must be supported by a showing of due diligence. Bramall v. Wales, 29 Wn. App. 390, 393, 628 P.2d 511 (1981).

11 The proposal dated February 18, 2014 is also expressly subject to "the parties agreeing on a timetable that provides flexibility for the City, and provides certainty that the property will be returned to Pine Forest."

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The court granted two joint motions to reschedule the deadline to set a public use and necessity hearing. For the first time in the opposition to the motion to determine public use and necessity, Pine Forest mentions in a footnote that it "will propound written discovery." The footnote states, in pertinent part:

After completing this Opposition brief, Pine Forest will propound written discovery into the City's deliberations and financial analysis leading to its arbitrary and capricious determination to take the entire Pine Forest Property, its basis for believing the MOU provides it with authority to condemn property for Sound Transit and depositions of those with knowledge of the City's deliberations and analysis of these issues.

The City opposed delaying the determination of public use and necessity to conduct discovery. The City argued that "Pine Forest never raised the issue of discovery previously or made any effort to conduct discovery in the many months this case has been pending."

The court denied the request for discovery. The court found that despite two previous continuances, "Pine Forest failed to raise the issue of discovery or make any effort to conduct any discovery prior to filing its Opposition to the Motion." The court also found that Pine Forest did not identify any evidence that would be obtained through discovery that would show the determination of public use and necessity was the result of constructive fraud. The court concluded Pine Forest did not act with due diligence or show good cause for a continuance, and "[f]urther delay of the Court's resolution of the City's Motion to allow Pine Forest to conduct discovery is therefore unwarranted." The record supports the court's decision to deny Pine Forest's request to engage in discovery.

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We affirm the findings of fact, conclusions of law, and order determining public use and necessity.

S^^^oSLQc^) WE CONCUR: O '^ r-o r---