In a recent case – Kelly v. County of Chelan, Case No. 81855-0, Wash. Sup. Ct (January 7, 2010) – the Washington Supreme Court was faced with the question of whether a developer must seek a stay under Washington’s Land Use Petition Act (“LUPA”), as authorized by RCW 36.70C.100(1), in order to preserve land use permits which would otherwise expire while judicial appeal is pending. Given the significant impact that loss of land use entitlements has to a project (and its value), developers need to be aware of Kelly and its implications for approved projects.
Background
In Kelly, the hearing examiner issued a conditional use permit which provided that the developer’s failure to obtain all necessary approvals within two years of the decision date would result in termination of the permit. The developer’s neighbors appealed the Hearing Examiner’s decision in Superior Court under LUPA. The Superior Court reversed the Hearing Examiner’s decision and revoked the previously issued conditional use permit. The developer timely appealed the Superior Court’s decision to the Court of Appeals, but did not request a stay of the Superior Court’s decision or the Hearing Examiner’s original condition imposing the two year time limit.
While the case was pending in the Court of Appeals, the appealing neighbors moved to dismiss the developer’s appeal as moot because the permit’s original two year time limit for obtaining necessary approvals had by then expired. The Court of Appeals granted the neighbors’ motion and dismissed the appeal, finding that the developer should have sought a stay as provided for under LUPA in order to maintain the permit. The developer petitioned the Washington State Supreme Court for review of the Court of Appeals decision.
On review, the Washington Supreme Court unanimously reversed the Court of Appeals, and held that when a trial court revokes a permit previously granted by a hearing examiner, that permit’s time limit is terminated unless the permit is reinstated on appeal. In Kelly, the developer’s conditional use permit was terminated when the Superior Court revoked it prior to expiration of the two-year period. At that point, the developer no longer had a right to proceed with the project, and it was not necessary for the developer to seek a stay.
Impact
Developers who obtain land use permits or approvals for projects which are then appealed under LUPA frequently elect to defer construction until the appeal is resolved in order to avoid risk. Indeed, sometimes lenders require developers to defer construction precisely because such an appeal is pending. Kelly should caution developers that deferral of approved projects under such circumstances also carries risk. If the Superior Court in Kelly had upheld the developer’s conditional use permit rather than revoked it, the developer would have retained the right to proceed, meaning the developer’s permit would have expired before the Court of Appeals decision was made. This would have led to a different result.
Kelly makes clear that in order to preserve land use permits and approvals subject to LUPA appeal, developers who elect to entirely defer construction must be aware of the date when the land use permits and approvals subject to the appeal will expire, and timely seek a stay.