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Published: Saturday, January 30, 2010, 12:01 a.m.

Lake Goodwin developer sues, wants compensation for delays

A developer filed a lawsuit this month asking Snohomish County to compensate for a hearing examiner’s decision that delayed plans to build 600 homes near Lake Goodwin.
The suit accuses county hearing examiner Barbara Dykes of taking “arbitrary and capricious” actions “with knowledge of their unlawfulness.”
The McNaughton Group of Edmonds and Granite Land Co. of California are trying to build the homes through a partnership called Lake Goodwin A Joint Venture. McNaughton’s chief officers said last month they might seek up to $2 million in damages from the county for delays and added costs, though the recent lawsuit lists no dollar amount.
“We are open to communication with Snohomish County regarding settlement of our damage claim, and look forward to continuing these discussions in the weeks to come,” Kevin Ballard, McNaughton’s chief operating officer, said Friday in a statement.
The lawsuit was filed Jan. 5 in King County Superior Court.
The legal move follows a separate court victory by the developer last month, in which a judge overturned Dykes’ order to do an in-depth environmental study of the project.
The joint venture applied in 2006 for the first of nine permits to build subdivisions in the rural area northwest of Marysville.
The luxury homes would be built under county rules for rural-cluster housing, which allow higher densities in exchange for leaving some areas undeveloped. All told, the plans involved 2,000 acres, with about three-fifths of the land kept as open space.
The recent legal activity centers around one application for a 49-home subdivision. Dykes reasoned that the developer needed to consider the combined impact of the other eight applications on adjacent land parcels.
Last year, she ordered the developer to do an environmental impact statement of what the that impact would be. Her order was significant, because it would delay construction by months and cost the developers hundreds of thousands of dollars.
In December, King County Superior Court judge Paris Kallas overruled Dykes.
In her decision, Kallas called the hearing examiner’s order “arbitrary and capricious, and illegal.”
Snohomish County has since asked the court to reconsider.
If successful on that front, the county could severely weaken the joint venture’s case for damages.
McNaughton Group leaders have said they intend to start building the Lake Goodwin project next year. Permitting and legal hurdles remain, though.
“The fact is, it’s a process and nothing’s a done deal,” said Ellen Hiatt Watson, president of the 7-Lakes nonprofit that formed specifically to oppose the development. “We are hoping that the county follows through and supports its own hearing examiner.”
Dykes has declined to comment.
The 7-Lakes group is not involved in this stage of the legal fight, Watson said, because it is recovering financially from earlier legal battles.
The Stillaguamish Flood Control District also might get involved to prevent or mitigate water runoff from the development, said Henry Lippek, a Seattle land-use and environmental law attorney who represents the district.
“The flood district is always concerned that upland (development) transfers environmental costs downstream, often to farmland, making it more difficult to farm,” Lippek said.
A prolonged housing slump is another challenge. It’s unclear how much luck a developer would have selling any homes it builds.
The McNaughton Group also faces financial pressure from Everett’s Frontier Bank, which has sued the company for $40 million. Settlement talks are ongoing.
Noah Haglund: 425-339-3465, nhaglund@heraldnet.com.

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