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TT PhII DivII Staff Report 10.15 Case Number: Tahoma Terra Phase II, Division II Subdivision Amendment Applicant: Tahoma Terra Holdings, LLC PO Box 73790 Puyallup, WA 98373 Request: Request to Amend SEPA Mitigation Measure 5 for Tahoma Terra Master Planned Community. Public Hearing Date: October 26, 2020 Recommendation: Deny amendment language requested and approve amendment as initially proposed by the applicant’s attorney P ROPOSAL The applicant requests to amend the language of mitigation measure 5 of the May 24, 2005 SEPA Mitigated Determination of Non-Significance (MDNS) for the Tahoma Terra Master Planned Community (MPC), incorporated through Conclusions 4, 6.1, and 6.2 of the August 4, 2016 Hearing Examiner Decision approving Tahoma Terra Phase II, Division II, Phase I & II preliminary subdivision. No other modifications or amendments to the preliminary subdivision approval are requested. N OTICE OF A PPLICATION AND P UBLIC H EARING Notice of this application was mailed to state and local agencies and property owners within 300 feet of the site on September 11, 2020, as well as published in the Nisqually Valley News in the legal notice section on September 17, 2020. Notice of the date and time of the public hearing before the Hearing Examiner was posted on the project site, mailed to property owners within 300 feet of the site, and mailed to the recipients of the Notice of Application on October 16, 2020. Notice of the public hearing was published in the Nisqually Valley News in the legal notice section on October 15, 2020. No comments were received up to the date of this report. P ROPERTY C HARACTERISTICS The property is located within the Tahoma Terra MPC, specifically in the final master plan area west of Thompson Creek, and is identified by Assessor’s Tax Parcel Numbers 78640000019, 78640000020, and 78640000033. The City of Yelm is an equal opportunity employer and provider B ACKGROUND I NFORMATION The Tahoma Terra MPC is located on 220 acres in southwest Yelm, was annexed into the City as part of the Southwest Yelm Annexation. The approval of the MPC included a MDNS issued May 24, 2005 with specific mitigating measures for the MPC: The mitigating measures of the MDNS issued in 2005 is supported by the adoption of several environmental documents applicable to the property within the Tahoma Terra Master Planned Community. These included:  Final Environmental Impact Statement, March 1993, Southwest Yelm Annexation.  Annexation Agreement, Southwest Yelm Annexation, November 23, 1993.  Addendum to the Final Environmental Impact Statement for the Southwest Yelm Annexation, July 1994, Thurston Highlands Master Plan Application  Final Environmental Impact Statement, January 1995, City of Yelm Comprehensive Plan and Joint Plan with Thurston County.  Critical Areas Study, December 1997, IES Associates.  Environmental Checklist and Mitigated Determination of Non-Significance, September 1999, Prairie View Master Plan. These documents describe the need for additional water rights to serve the southwest annexation area, and proposes to acquire water rights to be dedicated to the City for development within the annexation area. The 2005 MDNS provided the following findings in regards to water rights: 15. The City of Yelm has adopted comprehensive Water and Sewer System Plans and a Reclaimed Water Facilities Plan to guide orderly extension of the City’s infrastructure improvements. These system plans anticipated the build out of the southwest Yelm annexation area. Upgrades and extension of these utilities, consistent with the adopted system plans, will be necessary to provide adequate levels of water and sewer service to the subject site. 16. The Environmental Impact Statement for the southwest Yelm annexation indicated that development within the annexation area, including the subject property, would be required to provide water rights to the City sufficient to serve the subsequent development of the properties. The property has recorded water rights that the applicant intends to transfer to the City of Yelm to provide for the development of the property. The property has been assessed through the City’s sewer local improvement district, which includes a commitment by the City to provide water and sewer service for no more than 89 single family residential units prior to any water rights transfer. If the Washington Department of Ecology does not approve a transfer of water rights, or the transfer does not include sufficient water to serve the proposed Page 2 of 7 development, final subdivision approval of any phase beyond the 89 lots could not be approved. 18. This threshold determination and adoption of previous environmental documents will be used for all future development permits and approvals within the Conceptual Master Site Plan of Tahoma Terra provided that those permits and approvals are consistent with the application and approval for the Conceptual Master Site Plan. These findings resulted in Mitigating Condition #5: 5. Prior to the approval of any development permit (including a final subdivision) th beyond the 89 lot, the applicant shall convey water rights to the City of Yelm sufficient to serve the proposed use within that area of the final master site plan and the first 89 lots. The conveyance shall be made to the City through a water rights agreement between Tahoma Terra, LLC and the City of Yelm. This condition is not applicable if the City obtains water rights through the Department of Ecology which are sufficient to serve the projected density of the City, its urban growth area, and the subject property. Over the course of the past 15 years, developments within the MPC have proceeded, leading to a preliminary subdivision approval in 2016 for the 198 lots to be constructed in two phases subject to the amendment request. The Hearing Examiners August 4, 2016 Report and Decision for 20160235 Tahoma Terra Phase II Division II Subdivision includes the following conclusions and conditions. Conclusion 4. Public facilities impacted by the subdivision are either adequate and available, or the City has a plan to finance the needed public facilities that will assure retention of an adequate level of service. However, the applicant is bound by Mitigating Measure 5 of the MDNS for the overall Tahoma Terra MPC that requires it to convey sufficient water rights to the City for the entire 1,000 plus residential unit development. Said mitigating measure also provides that should the City obtain water rights through the State Department of Ecology sufficient to serve the projected density of the City, its Urban Growth Area, and the subject property, said mitigating measure is not applicable. Conclusion 6. The proposed two phase subdivision will serve the public use and interest by providing an attractive location for a single-family residential subdivision within a master planned community that has and will provide significant amenities, and therefore should be approved subject to the following conditions: 1. The conditions of the Mitigated Determination of Non-Significance are hereby referenced and are considered conditions of this approval. 2. In accordance with the requirements of Mitigating Measure 5 of the MDNS issued for the Tahoma Terra master planned community, the construction of Phase II of this subdivision shall not be allowed until the applicant Page 3 of 7 provides water rights sufficient to serve the remaining Master Plan, or the City obtains water rights through the Department of Ecology which are sufficient to serve the projected density of the City, its urban growth area, and the subject property. (conditions 3-14 are not subject to this amendment request) In July 2019, the Hearing Examiner approved a preliminary subdivision, “The Hutch”, for 118 lots. City staff, citing the lack of concurrency with water infrastructure, recommended denial of the subdivision, however provided conditions of approval if the examiner found that concurrency could be met. The condition placed on this subdivision was that construction could not occur unless the City made application to Ecology for water rights. The Hutch is not located within a MPC and was not subject to the terms and conditions of the Tahoma Terra MPC, or the SEPA MDNS issued for the Tahoma Terra MPC. July 2019, Soundbuilt Homes contacted the City to submit its civil construction plans and requested determination that construction could move forward based on the Decision of the Hutch subdivision. The City replied that plans could be submitted but would not be approved for construction until the City had received its water rights pursuant to the Tahoma Terra MPC Conceptual and Final master plan approval, including its Environmental Determination. nd August 2019, Soundbuilt Homes submitted civil construction plans for the 2 phase of the Tahoma Terra PH II DIV II subdivision with the understanding that the City would not issue approved for construction plans based on Hearing Examiners Condition #2 for the subdivision. November, 2019, Soundbuilt Homes contacted the City and requested clarification on when they could move forward with civil construction, final plat, and building permits. The City replied that the Hearing Examiners findings and conditions were clear that no construction (including final plat) could occur until the City received water rights sufficient to serve the projected density of the City, its urban growth area, and the subject property. Soundbuilt Homes responded that “it is our expectation that once the application has been submitted, the condition from the Tahoma Terra SEPA determination is being met.” They requested an administrative decision that could be appealed to the Hearing Examiner. December 2019, Attorney Aaron Laing contacted City Attorney Brent Dille on behalf of Soundbuilt Homes, requesting that Condition #2 be amended as follows: PROPOSED CONDITION The City is in the process of submitting an application for additional water rights to the Washington State Department of Ecology to provide sufficient water to serve the City, it’s Urban Growth Area, and the subject property. Upon submittal of such application, construction is authorized under this approval, if the Community Development Department Administrator determines that water will be available at the time there will be demand for water from subdivision (i.e., at issuance of building permit). The Administrator’s decision Page 4 of 7 may be reviewed by the Hearing Examiner at the request of the applicant, provide the applicant shall be responsible for any costs of the Examiner’s review. Upon approval of the City’s application for additional water rights, or receipt of such rights from applicant, Mitigating Measure 5 of the MDNS for the overall Tahoma Terra MPC is no longer applicable. Note that this proposal was not to revisit and amend the MDNS conditions, but rather to allow construction of the required subdivision improvements after the City submits its water mitigation plan but prior to issuance of new water rights consistent with the Examiners decision in the Hutch. Mr. Dille responded that the process to amend the condition was to apply for a subdivision alteration, as had been previously noted by City staff. With the present application, Soundbuilt has changed the initial request from allowing construction prior to issuance of new water rights to approval of a final subdivision prior to issuance of new water rights. CURRENT SITUATION Soundbuilt requests to amend the specific environmental conclusions and conditions above with a new condition: No construction is authorized under this approval unless the City has made application for additional water rights with the Washington State Department of Ecology and the Community Development Department Administrator determines that water will be available at the time there will be demand for water from homes within the subdivision. The Administrators decision may be reviewed by the Hearing Examiner at the request of the applicant, provided the applicant shall be responsible for any costs of the Examiners review. Soundbuilt seeks relief from the original SEPA conditions in order to avoid potential delays and increased cost of development for the rest of development in the Tahoma Terra Master Planned Community. FINDINGS AND CONCLUSIONS Findings: Tahoma Terra, through the 2005 Water Right Conveyance and Right-of-Entry Agreement, and First Amendment successfully conveyed 155.66 acre feet of water rights, which, pursuant to the agreement equals ERU’s equivalent to 3.3 times the number of acre feet. The total transfer equaled 513 ERU’s. With the final subdivision and building permits issued for Tahoma Terra Phase II, Division II, Phase I, all 513 1ERU’s have been used. Page 5 of 7 215 Tahoma Terra Phase I, Divisions I & II 36 Fairway Oaks Multi-Family 200 Tahoma Terra Phase II, Division I 62 Tahoma Terra Phase II, Division II, Phase I 513 Total ERU used The State Subdivision Act, Chapter 58.17 RCW, requires that the City of Yelm make a written determination that appropriate provisions are made for potable water supplies as part of the preliminary land division process. State and local code requires that water be available at the time of final subdivision and again at building permit issuance. Recent legislation provides that there will be 5 municipal water rights pilot projects, one of which is the City of Yelm water rights package. The project must be approved, and report back to a task force. While this gives us a path forward, the process has yet to be determined. The City submitted its water rights package under the new legislation on Monday, September 21, 2020. When approved, the City will be provided with a Report of Examination describing the amount of water rights provided to the City. At this time, we do not have a projected timeline to expect the Report of Examination. Conclusion: The applicant has used all conveyed water rights for the development. The environmental and MPC approvals have been consistent in that until additional water rights are conveyed, the applicant may not receive approval of any further development permit until the City obtains water rights sufficient to serve the projected density of the City, its urban growth area, and the subject property. The 2005 MDNS provided extended review, findings, and conclusions in regards to the mitigation measure #5 in regards to water rights. The SEPA condition is clear that “Prior to the approval of any development permit (including th a final subdivision) beyond the 89 lot, the applicant shall convey water rights to the City of Yelm sufficient to serve the proposed use within that area of the final master site plan and the first 89 lots.” The requested amendment as written would remove condition #1 “The conditions of the Mitigated Determination of Non-Significance are hereby referenced and are considered conditions of approval.” The requested amendment as written would remove condition #2 “In accordance with the requirements of Mitigating Measure 5 of the MDNS issued for the Tahoma Terra master planned community, the construction of Phase II of this subdivision shall not be allowed until the applicant provides water rights sufficient to serve the remaining Master Plan, or the City Page 6 of 7 obtains water rights through the Department of Ecology which are sufficient to serve the projected density of the City, its urban growth area, and the subject property. S TAFF R ECOMMENDATION Section 18.14.050 YMC requires written findings prior to a decision on a preliminary subdivision. The applicant has not provided adequate information to change the mitigating measures of the MDNS, and wishes to remove the MDNS conditions from this subdivision approval. The Community Development Department recommends that the subdivision amendment be denied as proposed through the subdivision alteration process, but that the initial proposal by Aaron Laing on behalf of Soundbuilt to the City Attorney be approved, as follows: The City is in the process of submitting an application for additional water rights to the Washington State Department of Ecology to provide sufficient water to serve the City, it’s Urban Growth Area, and the subject property. Upon submittal of such application, construction is authorized under this approval, if the Community Development Department Administrator determines that water will be available at the time there will be demand for water from subdivision (i.e., at issuance of building permit). The Administrator’s decision may be reviewed by the Hearing Examiner at the request of the applicant, provide the applicant shall be responsible for any costs of the Examiner’s review. Upon approval of the City’s application for additional water rights, or receipt of such rights from applicant, Mitigating Measure 5 of the MDNS for the overall Tahoma Terra MPC is no longer applicable. Exhibits: Exhibit A: Soundbuilt Homes Amendment Request Exhibit B: September 11, 2020 Notice of Application Exhibit C: October 15, 2020 Notice of Public Hearing Exhibit D: May 24, 2005 SEPA Mitigated Determination of Non-Significance Exhibit E: August 4, 2016 Hearing Examiner Decision Tahoma Terra Phase II, Division II Exhibit F: December 23, 2019 Laing to Dille Email Page 7 of 7