SEQUIM — John Wayne Enterprises and Seabrook Holding Company’s growing frustration over Sequim’s six-month emergency moratorium on master-planned overlay applications has led to a threat of a lawsuit.
Seabrook Holding Company also has threatened to pull out of its proposed 600-lot development, called Westbay, by year’s end.
Ethan Wayne, president of John Wayne Enterprises, the entity that owns 160 acres by John Wayne Marina, said the city’s moratorium caught him “completely off-guard.”
“The moratorium came out of the blue,” he said.
“From working together to going to a moratorium is drastic. There were plenty of steps we could have done before that.”
Sequim City Council members voted July 28 for the moratorium with a required public hearing Sept. 22 during which residents, builders and nearby residents spoke for and against the moratorium and the development. City council members did not discuss the moratorium after the hearing.
Prior to the moratorium, city planners ruled Westbay’s application on July 21 “technically incomplete” and requested many corrections, documents and studies.
Staff said they didn’t do a complete substantive review of Westbay as it was a process to identify the minimum needed to see if a full technical review could continue.
City Attorney Kristina Nelson-Gross said before the September hearing that the moratorium is not specifically about Westbay or its approval or disapproval. Instead, it was so the city could “ensure that the city regulations, comprehensive plans and other guiding regulatory documents have reached a level of consistency that will allow the staff, members of the public and the applicant to have a clear, well-defined process.”
She said the moratorium affects Westbay, but it isn’t about the project, and once the moratorium ends, the developers will be able to file for technical completeness with a “separate public process in which everyone’s voice will have the opportunity to be heard because that is how the permitting process goes.”
The application, if approved, would follow a C-2 process with “the city hearing examiner, or city council in the absence of a hearing examiner, being the review authority” of the completed application, according to the city’s municipal code.
The city’s moratorium states the public would be better served with more extensive discussion about sub-area plans, a long-range plan for a specific area, and that it’s “prudent to allow for the completion of the City’s Comprehensive Plan (tentatively set for June 2026) … and it is the City’s responsibility to ensure that the Comprehensive Plan and its development regulations are clear and consistent to provide guidance to potential applicants.”
Nelson-Gross said if staff “can reduce the breadth of the moratorium, we will in fact bring that to council; however, we are not there at this point.”
The moratorium could be extended another six months with another required public hearing.
Nelson-Gross also said Westbay developers can discuss with city staff application elements, but the project cannot be processed and deemed technically complete until the moratorium ends.
Sub-area plans
Kristine Wilson, a lawyer with Perkins Cole of Bellevue representing John Wayne Enterprises, said at the September hearing there is no emergency requiring the moratorium but rather a mistake by the city dating back to March 2019 to not implementing changes to its municipal code.
She said if the city continues to “cause improper damages to John Wayne Enterprises and the property sale that has long been known to this community, because my client, John Wayne Enterprises, has worked with this community for decades to see this come about, then it will be forced to challenge the moratorium and seek damages.”
In a Sept. 22 letter from Wilson to the city, she wrote that John Wayne Enterprises “sees the moratorium as the City simply procrastinating on taking steps to cure a code and plan that have been out of step with the City’s vision and planning guidance for over six years due to the City’s own error.”
She wrote that the city’s perceived conflict between the Comprehensive Plan’s sub-area plan for the Planned Resort Community (“PRC”) zoning district to precede a master plan application was not mentioned the past 18 months until the application was submitted and reviewed for technical completeness.
“The unfortunate reality is that (the cause of the moratorium) was one of those things that, until staff had an application in front of it and started digging into various matters, that we discovered the issues that have prompted staff to look at a moratorium as a tool to remedy that practice,” Nelson-Gross said on July 28.
Wilson wrote in her letter that the city amended sub-area and master planning for developing land in certain areas in the city’s Comprehensive Plan, but not in the PRC zoning district.
“The City has legal authority (and, we would argue, a duty) to initiate and process a stand-alone amendment to the Comprehensive Plan to eliminate the sub-area plan references in the Planned Resort Community section,” she wrote.
Wilson added that Sequim already studied and identified the issue, that the moratorium creates a false emergency, and the city could amend its code this year.
She added that the “moratorium delay is needlessly and improperly damaging JWE’s property rights and tortiously interfering with its widely known property sales contract.”
“The damages created by this improper moratorium on the Planned Community Resort that has long been planned at JWE’s property are real and won’t be easy to unwind and remedy,” Wilson wrote.
Wilson wrote it would be a hollow victory with increased costs to entities involved “because it would take nearly as long as the currently proposed six-month moratorium to get any answer from a decision-maker.”
“JWE may still have to take that path, however, because the effect of this moratorium may be the very predictable (and avoidable) interference with its property sales contract to Seabrook.”
Seabrook, others respond
While also expressing frustrations with the moratorium, Seabrook Holding Company representatives said they want to remain committed to collaborating with the city.
Jeff Gundersen, CFO/COO for Seabrook Holding Company, said on Sept. 22 that they proposed amendments to remove the sub-area requirements and to add new code language they drafted, but they were told “that is not going to be the recommendation made because it might appear to show ‘special favor’ to Seabrook.”
“We respectfully disagree,” he said. “Making corrections that this council directed staff to make six years ago is not a special favor. It’s following through on city policy.”
“If the city cannot commit to resolving the issues needed by the end of the year to allow processing of our application, I don’t see a viable path forward for Seabrook on the Westbay Project (as) there’s no guarantee the Comprehensive Plan would be finished by June 30,” Gundersen said.
He said Seabrook has invested more than $1.4 million in the Westbay project so far.
“We have to seriously consider whether it makes sense to continue when there is no clear end in sight,” Gundersen said.
“We want to be clear. We remain committed to working collaboratively with the city and the community to create a project that reflects Sequim’s values and priorities, but for that to happen, we need the city to engage with us constructively and honor the policy direction that was already set by this council in 2019.”
Timothy Dalton, housing and grant director for Clallam County, said moratoriums can create hostile situations.
“We have a housing crisis in this community, and it is going to take a collaborative effort to fix it,” he said.
“We need to build on a supply-side issue of all different varieties of housing. That’s the only way we’re going to get out of this.”
Dalton said Seabrook is looking to build a variety of homes, and it’s unknown how many projects could be missed if the moratorium is still in place.
Colleen McAleer, executive director of the Clallam Economic Development Council, echoed that the county has a housing crisis, that Westbay would bring innovative and comprehensive development by John Wayne Marina, and that concerns about water and traffic will be addressed during the application process.
Luke Shifflet, CEO of Titan Builders, told city council members that the “impression (the moratorium) gives to developers isn’t great” and could scare away a quality developer and stunt economic growth.
Wayne said he sought out Seabrook to develop in Sequim for years, and the moratorium risks eroding public trust.
“The correct thing to do is work with the people to correct the mistakes,” he said. “It doesn’t feel like they’re working with us.
“It’s our hope to work with the city. We want to see this happen and we’re ready to support.”
For more about the moratorium, visit sequimwa.gov/1319/Emergency-Master-Plan-Overlay-Moratorium.
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Matthew Nash is a reporter with the Olympic Peninsula News Group, which is composed of Sound Publishing newspapers Peninsula Daily News, Sequim Gazette and Forks Forum. He can be reached by email at matthew.nash@sequimgazette.com.
