Judge orders refund for ‘fundamentally flawed’ waterfront LID tax

Judge orders refund for ‘fundamentally flawed’ waterfront LID tax
Judge orders refund for ‘fundamentally flawed’ waterfront LID tax


UPDATED: 14 MARCH 2023 AT 5.33 PM

A King County Superior Court judge ordered the city of Seattle to refund a tax paid by some downtown Seattle property owners after challenging the Local Improvement District (LID) used to finance the construction of a waterfront park.

The LID, a tax on nearby property owners for waterfront improvements, pays for what the city calls “special benefits” of having increased access and value now that the Alaska Way Viaduct is demolished. The tax was intended to raise $160 million for the park’s construction.

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The ruling said only the plaintiff’s payments should be refunded, which would be about $16 million of the total $160 million the special assessment is expected to collect. Should the ruling be upheld, it is expected that other property owners will sue to have their assessments refunded.

In a ruling issued March 8, the judge found the assessment method used by the city to be “fundamentally flawed” and “arbitrary and capricious” and ordered a full refund of the tax.

The judge argued that the appraisers included in their assessment of local property values ​​the effects of the unfinished waterfront revitalization project, which violates the standard that the speculative value is “beyond knowledge of reasonable certainty.” The COVID-19 pandemic disrupted those assessments and the city did not properly adjust its valuations, the documents also said.

The judge also found that the appraiser’s study itself contained several problems, including not meeting standards set by the Uniform Standards of Professional Appraisal Practice (USPAP) and not properly measuring the increase in property values.

“The court finds that the LID review process as conducted by the city was fundamentally flawed. The process was infected from the start by a rush to judgment from city staff who were apparently eager to start collecting revenue based on assessments of an LID improvements well in advance of completion dates, the documents said.

Much of the money that has already been paid to the tax has been ordered by the judge to be repaid, and the property value assessments have been cancelled.

The city said in a statement to KIRO Newsradio that it would “review the court’s written decision and consider the city’s options for an appeal.”

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