Politics & Government

City must pay $2 million for ‘irrational actions’ in Walmart fracas

Customers walk outside of a Walmart store in San Jose, Calif., in September 2013.
Customers walk outside of a Walmart store in San Jose, Calif., in September 2013. The Associated Press file, 2013

The city of Tacoma has been ordered to pay $2 million to Allenmore Medical Investors after a U.S. District Court judge said the city was wrong to apply a moratorium to permit applications for Tacoma’s Walmart.

AMI, the limited liability company controlled by developer Jeffrey Oliphant, filed suit in Pierce County Superior Court in August 2014, contending the city’s efforts to stop Walmart from opening cost the real estate developer $1.8 million.

After learning in August 2011 that the developer planned to put a Walmart on the property formerly owned by the Elks Lodge, Councilman Ryan Mello requested that the city attorney draft a moratorium to stop the development of big box stores, according to court papers.

Days later, the City Council passed a six-month moratorium that banned the city from accepting and processing building and other permits for stores with a floor area more than 65,000 square feet.

According to the city charter at the time, the moratorium did not go into effect until two days after the council voted — when the notice of the moratorium was published in the Tacoma Daily Index. The developer got in under the wire and filed the building permit application for the Walmart the day after the vote, and the day before the legal notice was published.

The charter has since been revised to make laws go into effect on the day they are approved by the council, the city said.

The city violated AMI’s substantive due process rights by engaging in legally irrational actions unrelated to any legitimate governmental purpose. The city’s actions shock the conscience of the court.

Conclusion by U.S. District Court Judge Ronald B. Leighton

Even though the building permit application was complete and filed before the moratorium took effect, it was discovered that a boundary line adjustment would be needed to continue reviewing it. The city refused to accept the boundary line adjustment because by that time, the moratorium was in place.

The moratorium was legally enacted by the City Council, but the city interfered with AMI’s business using improper means, according to Judge Ronald B. Leighton’s ruling last month.

“The city’s decision to apply the moratorium to the (boundary line adjustment) application was wrong as a matter of law,” Leighton wrote. “The city violated AMI’s substantive due process rights by engaging in legally irrational actions unrelated to any legitimate governmental purpose. The city’s actions shock the conscience of the court.”

The suit contends the city dragged its feet throughout the permitting process, costing the developer more money.

According to the original complaint, which names several current and former council members as defendants, the council’s and city staff’s actions were “irrational, arbitrary and capricious, failed to serve a legitimate governmental purpose, were done for an improper purpose — a naked attempt to delay and prevent AMI’s controversial but vested and entirely lawful development project from proceeding — and used improper means of accomplishing such improper purpose.”

Candice Ruud: 253-597-8441, @candiceruud

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