A judge ruled Sound Transit may pay “fair-market value” for the Pacific Northwest Ballet’s Eastside school rather than the replacement cost to relocate it, which the ballet sought.

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A King County Superior Court judge has ruled that Sound Transit may pay fair-market value for a ballet school in the route of the planned East Link light rail in Bellevue and not the higher replacement value the school sought.

Judge Theresa Doyle on Monday decided in favor of Sound Transit, which argued that Pacific Northwest Ballet’s (PNB) request for $8.5 million to relocate to another location would result in one tenant of an industrial building being awarded more than the entire building was worth.

The ruling only affects how the value should be determined. A jury could still decide the actual value of the ballet school. A court date to determine payment is set for June.

But new Sound Transit CEO Peter Rogoff met last week with the ballet’s executive director, Ellen Walker, and said he hoped the two organizations could reach a negotiated settlement that would allow the PNB-operated school to continue operating a high-quality facility.

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“Sound Transit and Pacific Northwest Ballet share a mutual desire to get to a fair and equitable settlement that serves the ballet and its students well, and will sit down together to work through this challenge,” according to a joint statement from both sides. “Together, we are committed to rolling up our sleeves in a conference room instead of a courtroom.”

Sound Transit came up with its own $3.8 million estimate, using a “fair-market value” method that looked at recent sales of comparable buildings, as well as the amount PNB originally spent in 2002 to renovate the building, near Bel-Red Road in Bellevue’s Spring District.

Attorneys for the ballet argued in court Friday that because the Eastside ballet school constituted a special purpose and that sales of comparable facilities were rare, PNB should be compensated for the amount necessary to relocate and rebuild the existing facility.

Using fair-market value in the case of a unique facility such as a ballet school would result in “manifest injustice,” the ballet’s lawyers argued.

They cited the Museum of History & Industry, which agreed to a $40 million settlement from the Washington State Department of Transportation when its building was condemned to make way for the new Highway 520 bridge.

But the judge determined that Sound Transit followed the law when it used fair-market value to establish the ballet school’s value.

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