Approval of the Negotiated Settlement of the Pending Condemnation Action for Zante Parcel- NE 171st St Urban Parkway Project

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1 CTYOFWOODNVLLE, WA REPORT TO THE CTY COUNCL rd Avenue NE, Woodinville, WA To: By: Subject: Honorable City Council Brandon Buchanan, City Manager Rick Roberts, Public Works Director Stephen DiJulio, Special Legal Counsel Date: March 21, 2017 Approval of the Negotiated Settlement of the Pending Condemnation Action for Zante Parcel- NE 171st St Urban Parkway Project O _X Q./ FNANCAL ACTON SUMMARY Expenditure Required Amount Additional Amount Required Budgeted/Approved Component: Zante Parcel*: $187,000 Brittany Park Parcel: $58,000 Campbell Run Parcel (est): $169,000 Legal Fees/Misc. {est}: $517,000 $230,000 $287,000 * $49,750 was paid in June 2016 to secure Possession and Use of the property while the final value continued to be negotiated, allowing the City/Contractor to begin use of the property for construction. The balance of $137,250 will be paid upon settlement. Council must approve the full settlement amount of $187,000. The chart above shows Staff expects total ROW acquisition to total $517,000, or $287,000 more than the $230,000 originally budgeted for the project. SSUE: Shall the City Council approve the negotiated settlement of the pending condemnation action for Zante Parcel- NE St Urban Parkway Project in the amount of $187,000? RECOMMENDATON: To approve the negotiated settlement of the pending condemnation action for Zante Parcel- NE St Urban Parkway Project in the amount of $187,000? BACKGROUND/DSCUSSON: The NE Street Urban Parkway Project has been included on the City's Adopted Six Year Transportation mprovement Program as a priority since 2014 due to zoning changes within the Central Business District and pending redevelopment on adjacent properties to this road. To accommodate those changes and the resulting need to provide for bike lanes, wider pedestrian walkways and sidewalks, street illumination, landscaping, and accommodation of increased traffic flows, the City began exploring design alternatives in 2013 for this section of NE Street. With input from the public and owners of the affected properties, the City developed a design for roadway improvements that address the public needs while minimizing impacts to adjacent private property. Following unsuccessful good faith efforts to negotiate purchase of the necessary private property, the City Council authorized the use of condemnation to acquire the property. Following the direction given by Council in Ordinance No. 619, the City's Special Counsel filed condemnation proceedings in King County Superior Court on March 16,

2 Understanding the condemnation proceedings can extend for some time, the City pursued, arguing public use and necessity, a granting of possession and use of l:he property while the City and Owner worked to establish a final value of the property. King County Superior Court granted the City that right on June 7, At that time, a payment of $49,750 was made for that Possession and Use right as a sort of "down-payment" towards a final settlement. That action allowed the City/Contractor to proceed with construction work while the final settlement was pursued. n November 2016, the Owner requested a continuation of the trial date from November 7, 2016 to April 10, 2017 to allow additional time for necessary work including appraisals and negotiation. n the interim, both parties performed appraisals of the subject property. The City's appraisal estimated a value of $103,400 (see Attachment 1). The Owner's appraisal estimated a value of $119,800 (see Attachment 1 ). After extensive negotiation in March 2017 with the intent of avoiding court proceedings and associated legal fees, in which values ranging from $182,000 to $228,000 were discussed, both parties tentatively agreed on a settlement value of $187,000. That value differs from the appraisal amounts for several reasons (see Attachment 1 ). Explaining the difference, the settlement amount includes: Recognition of an earlier commitment from Public Works to pay full value for slope easements, as opposed to partial valuation (added approx. $35,000) nterest on the difference between the possession and use payment and a final judgment amount (added appx. $12,000) Recognition of City commitment for the Respondents' appraisal cost (added appx. $4,000) Addition of compensation for construction easement for driveway work (added appx. $1,400) A risk factor primarily related to the City's decision to eliminate a full 4th (south) leg of the intersection and only providing a driveway improvement; and litigation cost avoidance. This was the most volatile variable. Staff and Counsel sought to establish a value that would make the settlement attractive to the Owner and avoid additional legal costs and potential punitive damages that the Court may have assigned (responsibility to compensate Owner for their legal fees for example), while at the same time containing the settlement amount as much as possible. n the proposed negotiated settlement, this figure amounted to approximately $6,500. Acceptance of the negotiated settlement by Council would bring closure to this issue and avoid further, potentially extensive, costs. ALTERNATVES: 1. Approve negotiated settlement in the amount of $187,000, as presented 2. Take no action; provide direction to Staff RECOMMENDED MOTON: MOVE THAT THE CTY COUNCL APPROVE THE NEGOTATED SETTLEMENT OF THE PENDNG CONDEMNATON ACTON FOR ZANTE PARCEL- NE r ST URBAN PARKWAY PROJECT N THE AMOUNT OF $187,000 AND AUTHORZE THE CTY MANAGER TO TAKE THE NECESSARY ACTONS TO MPLEMENT THS DECSON. 2

3 Attachments: 1) Summary of Appraisals and Final Negotiated Settlement 2) Map of Property 3

4 City Appraisal Zante Appraisal Negotiated Settlement tem Quantity Unit Factor Total Factor Total Factor Total Fee Simple Land sq/ft $3.21 $59,934 $4.59 $85,700 $4.59 $85,700 Slope Easement 8853 sq/ft $7,082 10% $4,100 $40,635 Loss of mprovements 1 lump sum $36,378 $30,000 $36,378 Subtotal $103,394 $119,800 $162,713 Driveway Easement 3000 sq/ft Not included Not included $1,377 Appraisal Cost 1 lump sum Not included Not included $4,000 nterest 10 months Not included Not included 12%APR $12,381 TOTAL $103,394 $119,800 $180,471 Risk Factor & Litigation Avoidance Cost $6,529 TOTAL $187,000 4

5 EXHBT 11 8" N.E. 171st STREET 15' SLOPE EASEMENT c 102aos-0030) FREDERCA Z ZANTE CONTANNG 8,853 SF, MORE OR LESS LNE TABLE CURVE. TABLE LNE # BEARNG DSTANCE CURVE # DELTA RADUS LENGTH L1 S88'54'53"E ; C1 28' " 35.00' 17.38' L2 soo "W 0.57' C2 87'52'43" 89.57' ' L3 S80'44'55"W ' C3 47"20'58" 35.00' 28.92' L4 S79'00' 18"W 83.86' L5 N88'54'53"W 75.88' L6 L7 N74'00'53"W NO 1 '07' 12"E ' 5.00' o 50' 100' l KNG COUNTY T.L SLOP EASEMENT Portion of Sec. 10, T.26N., R.05, W.M. King County, Washington 5

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