A statewide property-rights initiative on the November ballot would cost the state, counties and cities $7 billion to $9 billion over the...

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A statewide property-rights initiative on the November ballot would cost the state, counties and cities $7 billion to $9 billion over the next six years, the state budget office estimated Wednesday.

That’s enough to replace both the Alaskan Way Viaduct and the Highway 520 floating bridge, even by the latest estimates.

But that sky-high cost estimate for Initiative 933, from the Office of Financial Management (OFM), rests on a controversial assumption: It assumes the initiative would require governments to compensate landowners in every case in which regulations reduce property values — without the option of waiving the rules.

I-933 sponsor Dan Wood called that assumption “nonsense.” He maintains the initiative would allow such waivers.

“The governor has come out against [the initiative],” said Wood, who is also the government-affairs director for the Washington State Farm Bureau. “These people work for the governor. It’s shameful they’re using taxpayer money to oppose the initiative.”

Even opponents of the measure have characterized it as a “pay or waive” proposal. But I-933 doesn’t specifically grant governments any new power to waive rules. It only alludes to an existing authority to do so. And land-use lawyers, representing a variety of clients, say that authority doesn’t extend to regulations adopted to comply with such state laws as the Growth Management Act and Shoreline Management Act.

So that leaves compensation as the only alternative, they contend.

The OFM reached a similar conclusion after consulting with its attorneys, spokesman Hal Spencer said. If the underlying statute doesn’t allow a regulation to be waived, “then governments can’t waive it,” he said.

In its fiscal analysis, prepared with help from other state agencies and the Association of Washington Cities, OFM said governments would spend money for new studies I-933 requires and for costs associated with processing claims.

But those expenses would be minor in comparison with the estimated cost of compensating landowners: $6.8 billion to $7.8 billion over six years.

All told, it is estimated I-933 would cost state agencies $2 billion to $2.18 billion, cities $3.8 billion to $5.3 billion, and counties $1.49 billion to $1.51 billion.

By law, the OFM’s “fiscal impact statement” on I-933 will be included in the state voters pamphlet.

Aaron Toso, spokesman for the No On 933 campaign, said the OFM estimate “validates what we have known all along — that Initiative 933 is going to cost taxpayers billions of dollars.”

Oregon’s experience

But Wood said Oregon’s experience with Measure 37, a similar property-rights law that voters approved in 2004, undercuts OFM’s conclusion.

Oregon landowners have filed nearly 3,000 claims under the law so far, seeking nearly $4 billion in compensation, according to Portland State University. Ninety percent of all the claims governments have reviewed have been deemed valid, and officials have chosen to waive regulations rather than paying in every case.

But there’s a difference: Measure 37’s text clearly authorizes waivers, while Initiative 933 does not. It says only that governments can avoid paying compensation if they don’t enforce regulations, and that the initiative “shall not be construed to limit agencies’ ability to waive, or issue variances. … “

The initiative’s sponsors acknowledged earlier this year, in a court fight over the measure’s ballot title, that that language doesn’t give governments new authority to waive rules.

The state Growth Management and Shoreline Management acts, laws likely to be the subject of many claims if I-933 passes, require cities and counties to adopt regulations to accomplish certain statewide goals: allowing urban growth only in designated urban areas, preserving farmland, protecting shorelines from incompatible development .

“Local governments aren’t given the option of saying, ‘Never mind,’ ” says Elaine Spencer, a Seattle lawyer who usually represents developers.

Keith Dearborn, another Seattle attorney who often represents developers, has called I-933 “an unfunded mandate.”

Waiver debate

The initiative implies waivers are allowed, says Richard Settle, professor emeritus at Seattle University’s law school and a land-use law expert, “but whether governments really have that option is not at all certain.”

At a Washington State Bar Association discussion of I-933 last week, Richard Stephens, a Bellevue attorney who helped draft the initiative, said governments have the power to waive some regulations but may lack authority now to waive others.

“The Legislature’s going to be in session in January. To the extent [local governments] need more authority, they’re going to have to get it,” he said.

Considering the alternative — potentially budget-busting compensation bills — legislators probably would accommodate them if I-933 passes, Stephens suggested. In interviews last week, Sen. Jim Kastama, D-Puyallup, and Rep. Geoff Simpson, D-Covington, who chair committees with jurisdiction over the Growth Management Act, agreed.

But OFM spokesman Spencer said the office couldn’t consider that possibility in preparing its fiscal-impact statement: “We based our analysis on the law as it is now.”

Stephens said I-933’s authors decided not to specifically authorize waivers because they would have needed to include language to amend each individual law that might produce a claim for compensation.

That would have made the initiative “25 times longer,” Stephens said.

Besides, Wood argues, governments already have the power to not enforce regulations that do harm.

Dennis Reynolds, another Seattle land-use lawyer who usually represents landowners and developers, similarly argues that governments probably could opt to not apply growth-management regulations when I-933 claims are filed because officials have discretion over when and where to enforce laws.

They can consider budget limitations and other factors, Reynolds says.

But Elaine Spencer says environmentalists often have succeeded in court in forcing agencies to follow laws strictly.

“I don’t know how all this gets resolved,” she said. “Presumably a lot of litigation.”

Eric Pryne: 206-464-2231 or epryne@seattletimes.com