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Property owners to file lawsuit against city

The city’s sign code has been dealt two blows in court and now is facing a third.

Talk of a class action lawsuit on behalf of all the property owners along state highways in Federal Way — which is expected to be filed Monday, according to Des Moines attorney Drake Bozarth — is coming on the heels of an appellate court decision in favor of business owners who sued the city for compensation if they’re required to remove their signs.

A three-judge panel in the state Court of Appeals ruled on Tuesday if the city wants pole signs removed from businesses along state highways, it must compensate the business owners.

Assistant City Manager Derek Matheson said the city disagrees with the appellate court’s decision, though city officials won’t be able to meet again in executive session until Feb. 19 to decide whether to take their appeal to the state Supreme Court.

Matheson said the appellate court was unsure whether amortization — giving business owners several years before they had to replace out-of-code signs — was fair compensation, but city officials think it should be.

“We feel strongly that a very generous amortization period is just compensation,” he said.

Bozarth is representing Harry Horan, owner of Horan Real Estate, and David Rhodes, owner of two strip mall developments in Federal Way, who filed suit after receiving notices of violation for their signs in Aug. 2000.

A state law — RCW 47.42, also known as the Scenic Vista Act — passed in 1970 followed a state move to enforce sign standards along state highways. Many signs were removed with the trade-off that any future signs the state required someone to remove would have to be compensated.

The Act was amended in 1977 to include that counties, cities and towns that want signs removed or changed along state highways have to compensate the business owners just like the state would be required to compensate them.

The Scenic Vistas Act only applies to businesses located along state highways. Businesses located along interior roads still are subject to city sign codes and ordinances.

The city of Federal Way adopted its sign code in 1990 and amended it in 1995. The code required business owners to convert to pedestal- or ground-mounted signs instead of pole signs and gave business owners 10 years to conform to the code. In 2000, city code enforcement started issuing notices of violation for businesses that didn’t abide by the sign code. The fine for violating the sign code is $100 for each day the sign is left in place.

Horan and Rhodes initially took their complaint to the city, but didn’t find resolution there, Bozarth said.

They filed suit and a judge in King County Superior Court ruled the city had to compensate business owners located along state highways if it wanted them to remove their signs. Federal Way appealed, but the appellate court also ruled in the business owners’ favor.

The city now has four options:

• City staff can do nothing, allowing Horan Real Estate and Rhodes’ strip malls to keep their pole signs;

• They can meet with the business owners and enter into an agreement for city compensation and the business owners would remove their signs;

• The city could file a lawsuit in Superior Court and let a judge decide a fair compensation amount, after which the business owners would remove their signs; or

• The city could appeal the appellate court’s decision in state Supreme Court.

Meanwhile, Bozarth is crafting the class action.

“The real issue is all the people who got notices and were facing $100-a-day fines and took their signs down,” he said.

City staff have not yet determined whether the city will appeal the appellate court’s decision to the Supreme Court. Nor have discussed whether a successful class action would force them to change the sign code.

“That’s a lot of ifs and it’s really premature,” Matheson said. “A lot needs to happen between now and then.”

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