City of SeaTac wants Appeals Court to reverse $18 million Kingen lawsuit

By Jack Mayne

The City of SeaTac wants a Washington Court of Appeals to reverse the judge’s decision and award of $18 million to Gerry Kingen in a lawsuit over a property fight near the Sound Transit station at the north end of the Sea-Tac airport.

The city’s final round of appeal briefs to the Court of Appeals is usual in such cases because insurance companies demand it before they will pay any such judgment. If, as some city residents have suggested, the city simply work out a settlement agreement with Kingen or just pay the Kingens, the money would totally come from city taxpayer revenues, with nothing from insurance companies.

In the city’s final appeal to the judge’s 2016 decision, SeaTac says the appeals court “should reverse the trial court’s judgment and remand for entry of a judgment in the City’s favor on all of K&S’s claims.”

No city or insurance money to Kingens, the city asks the appeals court to rule.

The city says it put into effect a four month moratorium on the property in 2005, after Sound Transit announced a new light-rail station across from “K&S’s highly-leveraged property,” so it could draft and pass zoning changes that would “encourage transit oriented uses.”

But after the moratorium was lifted, the city and the Kingens “negotiated a development agreement that allowed K&S to profitably develop its property, and expedited the permit K&S needed to begin construction.”

But more than two years later, Kingen had not begun any construction.

“Fearful K&S’s failed development would blight the station area, in December 2009, in the depths of the Great Recession, the City purchased K&S’s property for $12.3 million – $2.3 million more than its appraised value.”

That, the city maintains, relieved Kingen of a $22 million debt, and the Kingens and partners of $21 million in personal liability “under their guarantees.”

So, the city says, that takeover of the property was far from “taking” K&S’s property.

A Trojan Horse
SeaTac also maintains K&S misrepresents critical facts “throughout its response brief, underscoring that under any standard of review its claims are not supported by the requisite evidence.”

For example, SeaTac’s appeal brief says, “K&S’s own evidence refutes its contention the city denied it the ‘highest and best use’ of its property. K&S’s expert conceded the most profitable use of K&S’s property was mixed-use development, not a park and fly.”

The city appeal says “Kingen himself said in October 2007 the ‘highest and best use’ was … additional retail.”

Kingen also said the K&S’s park and fly “is and was a Trojan Horse.”

Then, in July 2007, “months before the city supposedly ‘shocked’ K&S by expressing preference for residential, transit oriented, development, K&S was internally discussing its ‘revised concept.’”

A company attorney told Kingen and his partner that it was “likely we do not do the park n’ fly,” because it was “not really a viable option.” They then were considering a “study for two tower configuration.”

All of these “misrepresentations are just the tip of the iceberg,” SeaTac says in the appeal.

“But they are more than enough reason for rejecting K&S’s false narrative – and with it the jury’s ‘finding’ of a taking – that the city concocted a nefarious scheme to buy K&S’s property for less than its true value by eliminating its most valuable use and ‘forcing’ K&S to pursue residential development.”

The city also maintains that the Kingen suit relies on technical legal views that are in error or misconstrued.

For example, the city says cities in Washington state have no requirement to “inform a potential developer (speculator) of an impending moratorium,” despite its claim.

In addition, SeaTac says the appellate court “must reverse the trial court’s award of $7·5 million in post-taking interest, regardless of whether it reverses the inverse condemnation claim” because the trial court “instructed the jury to award as damages compensation for K&S’s loss of use of the property….”

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