2014 09 22 Oyster - Letter to Brent Dille re Settlement G O LD S TE I N Paralegals
f: i;'
Jay A.Goldstein LAW OFFICE PLLC Donna Waite,LPO
Shawn M.Bunce,JD,CPA Karen Dietrich
Jason M.Zittel 1800 Cooper Point Road SW,No.8,Olympia,WA 98502 Acmurumrt
Chris M.Medaycki T(360)352-1970 1 www.Jaglaw.net I F(360)357-0844 Marlene Biggs,FA
September 22, 2014
ER 408 SETTLEMENT COMMUNICATION
Sent via entail to btlillet@bglvp.net
Mr. Brent Dille
City Attorney
City of Yelm
Re: Oyster Bay 3,Inc.: Settlement Proposal
Dear Brent:
This letter is a follow-up to our recent conversation regarding a proposed settlement of
the issues between our client's proposed use at 1405 Yelm Ave E, TPN 22730140400 and the
City of Yelm. The following addresses the City of Yelm's potential liability to Oyster Bay 3, Inc.
(hereinafter"Oyster Bay'), Oyster Bay's damages, and a proposed resolution.
I. City of Yelm Liability
A. RCW 64.40.020
RCW 64.40.020 provides a cause of action for damages to the owner of a property
interest who has been damaged by the actions of an agency which are arbitrary, capricious,
unlawful, or exceed lawful authority. The statute states in relevant pall:
Owners of a property interest who have filed an application for a permit have an
action for damages to obtain relief from acts of an agency which are arbitrary,
capricious, unlawful, or exceed lawful authority, or relief from a failure to act
within time limits established by law: PROVIDED, That the action is unlawful or
in excess of lawful authority only if the final decision of the agency was made
with knowledge of its unlawfulness or that it was in excess of lawful authority, or
it should reasonably have been known to have been unlawful or in excess of
lawful authority.
RCW 64.40.020.
Should the City of Yelm fail to grant Oyster Bay 3, Inc. a permit for exemption from site
plan review pursuant to YMC 17.84.010(B), a cause of action for damages will arise in favor of
Oyster Bay 3, Inc.where the City has arbitrarily and capriciously violated the mandatory plain
Mr.Brent Dille,City Atty
RE: Oyster Bay
September 22,2014
Page 12
language of the Yelm Municipal Code and/or taken action in excess of its lawful authority by
making a decision to not grant the permit for an exemption.
B. Tortious interference with Oyster Bay's business expectancy/delay
The City of Yelm has taken numerous actions which give rise to liability for tortious
interference with a business expectancy.
A claim for tortious interference with a business expectancy requires five elements: (1)
the existence of a valid contractual relationship or business expectancy, (2) that defendants had
knowledge of that relationship, (3) an intentional interference inducing or causing a breach or
termination of the relationship or expectancy, (4) that defendants interfered for an improper
purpose or used improper means, and (5) resultant damage. LelyanQ y. Pierce County Med.
Bar., Inc., 131 Wash.2d 133, 157, 930 P.2d 288 (1997). Furthermore, arbitrary delay is one
improper means of interfering with a business expectancy. Pleas v. City of Seattle, 112 Wash.2d
794, 805, 774 P.2d 1158 (1989).
The City has arbitrarily delayed Oyster Bay's ability to generate significant revenue from
the retail sale of marijuana; the delay has been caused by numerous actions, including but not
limited to, denying a permit exempting Oyster Bay from site plan review in direct contravention
of the mandatory language of the Yelm Municipal Code and arbitrarily submitting unfounded
objections to Oyster Bay's license approval from the Washington State Liquor Control Board.
See EXHIBIT A. These actions have caused delay and great expense to Oyster Bay, and continue
to do so daily.
C. Taking of private property without paving iust compensation
Both the Washington State and U.S. Constitutions prohibit the taking of private property
without the payment of just compensation. Oyster Bay owns a leasehold interest in the property
located at 1405 Yelm Ave E, TPN 22730140400. The investment backed expectations associated
with this interest, as well as the independent economic value of the leasehold itself, have been
reduced to zero based on the City's denial of an exemption from site plan review.
Z Oyster Bay's darnrtges
Oyster Bay is being damaged daily by the City of Yelm's refusal to issue a permit
exempting Oyster Bay from site plan review. Oyster Bay is currently losing approximately
$3,000 per month in fixed costs for rent, liability insurance, security fees, phone fees, and time
associated with business operations. Oyster Bay is also losing a projected $218,000 per month in
lost revenue, of which approximately 25% ($54,500) is lost profits per month. This number is
based on the very recent article published in The Olympian, explaining that there has been over
$14,000,000 in revenue from 32 licensed locations in approximately the first two months of
retailers being licensed. See EXHIBIT B.
&L•.Brent Dille,City Atty
RE: Oyster Bay
September 22,2014
Page 13
As such, Oyster Bay's damages continue to grow at a rate of approximately $221,000 per
month.
3. Proposed resolution
In order to resolve this matter short of litigation, Oyster Bay would propose the following
settlement terms:
1. Oyster Bay shall release its current claims against the City of Yelm, arising out of
or related to, Oyster Bay's proposed occupancy of 1405 Yelm Ave E, TPN
22730140400 as it relates to permitting for the retail sale of marijuana.
2. Oyster Bay shall reimburse the City of Yelm for its reasonable attorney fees and
administrative costs which have arisen fiom this matter to date, in an amount not
to exceed $5,000.
3. The City of Yelm shall immediately grant Oyster Bay a permit exempting it from
site plan review pursuant to YMC 17.84.010(B), and further, shall immediately
take all actions necessary to ensure that Oyster Bay immediately has the legal
authority to commence the retail sale of marijuana at 1405 Yelm Ave E, TPN
22730140400, including but not limited to, the issuance of a certificate of
occupancy.
Please contact me by Wednesday, September 24, 2014, 5pm, so that we may draft and
execute the closing documents.
Please call or e-mail should you have any questions or comments. Many thanks.
Very trul yours,
Y ,UOLDSTEIN
G N LAW OFFICE, PLLC
JAG/dw
cc: client
EXHIBIT
� wasnmgron"tae
n Liquor Control Board
September 3,2014
The Honorable Ron Harding
Mayor of Yelm
105 Yelm Avenue West
Yelm,WA 98597
RE: License 413370,Marijuana Retailer
UBI#603-351-976-001-0001
Marijuana Mart
LCB No.M-25,338
Dear Mayor Harding;
Enclosed for'service upon you is the"Statement of Intent to Approve License."
Please note,in Section 4 of the enclosure(LCB Case No.M-25,338),we will not be offering you
the opportunity to request a hearing to appeal this threshold decision.
If you have questions concerning these documents,please contact Becky Smith,Marijuana
Manager,at(360)664-1645.
Sincerely,
Alan E.Rathbun,Director
Licensing and Regulation Division
Washington State Liquor Control Board
Post Office Box 43098
Olympia,WA 98504-3098
Enclosures: Statement of Intent to Approve
cc: Oyster Bay Group 3,Inc.ribs Madjuana Mart
Attorney General's Office,Government Compliance&Enforcement
Kevin McCarroll,WSLCB Adjudicative Proceedings Coordinator
PO Box 43098, 3000 Pacific Ave. SE, Olympia WA 98504-3098, (360)664-1600
www.11q.wa.gov
STATE OF WASHINGTON
WASHINGTON STATE LIQUOR CONTROL BOARD -
In the Matter of the Approval of the LCB No.M-25,338
marijuana license authorizing the privileges
as a Marijuana Retailer license for: STATEMENT OF INTENT TO
APPROVE MARIJUANA
Oyster Bay Group 3,Inc. RETAILER LICENSE
Marijuana Mart
1405 Yelm Hwy SE
Yelm,WA 98597
Location Address: 1405 Yelm Ave E
Yalta,WA 98597
License Application No.413370
UBI No.603 351 976 0010001
The authority of the Washington State Liquor Control Board in this proceeding is based on the
provisions of Title 69 Revised Code of Washington(RCW)and Title 314 Washington Administrative
Code(WAC).
1- LICENSE HISTORY
1.1 Respondent has not held a marijuana license.
2. SUMMARY OF RELEVANT FACTS
2.1 The City of Yehn submitted a timely objection to the license approval for a Marijuana Retailer
license for Marijuana Mart. The objection was based on the proposed location being within 1,000
feet of the ABC Academy.
2.2 It was found by the Board that the City of Yelm's objection is not grounds for denial of this
application based on the fact that per the Department of Early Learning,ABC Academy does not
meet the requirements to be Iiceused in RCW 43.215.010(2)(e)which states"Nursery schools that
are engaged primarily in early learning for more than four hours per day." ABC Academy does
not meet the definition of Child Care Center per WAC 314-55-010(4). .
STATEMENT OF INTENT TO APPROVE—LCE No,M-25,338,Marijuana Mart Page 1 of -
3. RELEVANT AUTHORITY AND CONCLUSIONS
3.1 Consideration of the matters outlined in paragraphs 2.1 through 2.2 are provided under the -
provisions ofRCW 69.50.331(8).
3.2 The basis of the City ofYelm's objection does not conform to WAC 314-55.010(4).
3.3 Paragraphs 3.1 through 3.2 above each establish a separate and independently sufficient basis for
denial.
4. REQUEST FOR APPROVAL
The below-signed Licensing and Regulation Director for the Washington State Liquor Control
Board reviewed the following materials in making this decision:
• Report on Application,dated July 30,2014 from Investigator Houlihan.
• City of Yehn objection dated June 30,2014.
• Letter from applicant's attorney dated July 14,2014. -
Based on those materials,having concluded as set forth above,intends to approve the Marijuana
Retailer license of Marijuana Mart. The City of Yelm is not granted an administrative hearing in appeal
of this decision. - -
DATED this 3rd day of September,,2n2014.
019
Alan E.Rathbun,Director
Licensing&Regulation Division
The Washington State Liquor Control Board has a policy of providing equal access to its services.
This document was mailed to the following people:
The Honorable Ron Harding Oyster Bay Group 3,Inc.
Mayor of Yelm Marijuana Mad
105 Yehn Avenne West 1405 Yehn Avenue Past
Yelm,WA 98597 Yelm,WA 98597
STATEMENT OF 1NTENTTO APPROVE—LCB No.M-25,338,Marijnena Matt Page oft
9/22/2014 OLYMPIA,Wash.:Millions expected in pot taxes through 2019 1 Business I The Olympian
The Olympian EXHIBIT R Previous Story
Next Story
NMons expected in pot taxes through 20
By RACHEL LA CORTE
Associated PressSeptember 18, 2014
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OLYMPIA, Wash. —The state's legal recreational marijuana market is expected to bring in about$636
million in taxes to state coffers through the middle of 2019, according to an economic forecast released
Thursday.
The forecast by the Economic and Revenue Forecast Council showed that just over$25 million from a variety
of marijuana-related taxes—including excise, sales, and business taxes—is expected to be collected
through the middle of next year.
An additional $207 million is expected for the next two-year budget that ends mid-2017. And $404 million is
expected for the 2017-19 budget biennium.
The passage of Initiative 502 in 2012 allowed the sale of marijuana to adults for recreational use at licensed
stores, which started opening this summer.
So far the state has issued 57 retail marijuana licenses. By early this month, 32 of the shops had opened.
The state Liquor Control Board reported this week that total sales of recreational marijuana through Monday
totaled just over$14 million, with the state receiving $3.5 million in excise taxes.
Steve Lerch, the revenue council's executive director, noted that the latest forecast changed previous
outlooks that assumed sales wouldn't start until next year because of concerns about local moratoriums,
bans on pot sales and general uncertainty about how the system would work.
He warned that the market is still developing, and the numbers will continue to change in future forecasts.
"There is so much we don't know about what these sales are going to look like," he said.
The overall updated forecast for Washington state's current two-year nearly$34 billion budget cycle shows
that lawmakers may have about$169 million more available to them through the middle of 2015, and that
they'll have an additional $143 million than additionally projected for the 2015-2017 biennium.
The projected overall state budget for 2015-17 is expected to be$36.7 billion.
Lawmakers will return to the Capitol in January for a 105-day legislative session with a state Supreme Court
contempt order hanging over their heads for their lack of progress on fixing the way the state pays for public
education.
The court has promised to reconvene and impose sanctions and other remedial measures if lawmakers do
not make plans to solve the problem by the end of that session.
Without including education measures in the so-called McCleary decision, the projected shortfall for the next
spending period is nearly$1 billion. To satisfy the court, that deficit could be up to $3 billion for the 2015-17
biennium.
David Schumacher, director of the Office of Financial Management, said that with the approaching budget
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9/2212014 OLYMPIA,Wash.:Millions expected in pot taxes through 2019 1 Business I The Olympian
challenges, the money raised by marijuana isn't very much.
"But any money is helpful," he said.
The next revenue forecast is scheduled for Nov. 19.
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