Dispute with developer could cost Snohomish County $1 million

EVERETT — Snohomish County officials said they thought they were sparing a developer time and expense last year when they sidelined a zoning proposal they wouldn’t have approved anyway.

Now, that decision has come back to haunt them with a legal decision that could end up costing county taxpayers $1 million or more.

The Bellevue development partnership, called SR9/US2 LLC, sued the county last August, claiming that the County Council unfairly set aside its request to rezone land between Snohomish and Lake Stevens — after the company had poured big money into the project.

A King County Superior Court judge on June 26 agreed that the county treated the developer unfairly. How much it gets paid out is the subject of a separate jury trial scheduled for Feb. 1, 2010.

“From my perspective, we saved the developer money,” County Councilman Dave Somers said. “It was clear, after a year of thinking about it, that there was no way they were going to be able to justify it.”

County Deputy Prosecuting Attorney Tom Schwanz said what the effect will be on the county’s wallet is unclear. While the company claims it is owed more than seven figures, Schwanz contends fair payback would be closer to $40,000.

Michael Reid, a co-manager of SR9/US2, declined to comment.

The lawsuit stems from a zoning change that would have let the company build houses and businesses on 140 acres northwest of U.S. 2 and Highway 9. The company wanted the county to put the rural land in the city of Snohomish’s urban growth boundary to allow for the development.

The city of Snohomish later joined forces with the developer, sparking a dispute with Lake Stevens over who should annex the land. That fight continues.

SR9/US2’s legal complaint gives this version of events:

The company asked the county for the zoning change in 2006. The following year, the County Council decided that the proposal and several others needed in-depth environmental review that would take more than a year.

During the review process, the company claims it paid $162,000 directly to the county’s planning department to prepare a supplemental environmental impact statement. (In a legal response, the county disputed the amount, saying it was $156,251.)

The county scheduled the company’s request on its land-use docket for 2009. The company spent another $1 million to consultants to prepare for the hearing.

The hearing never happened.

In June 2008, the council voted to remove SR9/US2’s request from the hearing docket and labeled it “do not process further.”

The county later refunded about $115,000.

County officials said they had no choice but to turn down the request. Population estimates showed no need for Snohomish or Lake Stevens to expand into the area.

That made the outcome of SR9/US2’s request a foregone conclusion, Somers said. The council decided to end it early. The next chance to change the zoning is in 2015.

“We kind of stopped the process in the middle; the message from the court was that you need to take it to the end,” he said. “In this case, it really flies in the face of local discretion.”

That would cost local governments and businesses more money in the long term, he said.

Schwanz, the county attorney, said the company spent most of the money voluntarily, which is the risk of doing business.

“They’re speculators, just like any other developer is,” he said.

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