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Property owner, taxpayers victims of Snohomish County’s $404K ‘oversight’

Kay Kohler, 67, of Friday Harbor, Wash., believed that the Snohomish County farm her grandfather bought in 1936 (left) was worth hundreds of thousands of dollars. The county agreed, and paid her $404,000 for a portion of the property in 2009 to make way for a road improvement project. But two years later, when construction was already under way, the county realized it had made a mistake. (Photo credit: Kohler family/KIRO Radio)

The Snohomish County farm where Kay Kohler spent her weekends as a child has changed a lot over the years.

Her grandfather bought the five-acre parcel in 1936. The homestead was located less than two miles east of Norma Beach in what would become the city of Lynnwood.

“We had a pasture and a barn and an outbuilding and a shop,” Kohler recalled.

Kohler, 67, of Friday Harbor, Wash., returned to the property one afternoon last week to find it overgrown with Alder trees and blackberry bushes. The house, barn, shop, woodshed – all leveled.

Kohler inherited the land after her parents died and, four years ago, sold an acre of it to the government. It’s a decision she has come to regret.

In 2007, Kohler was contacted by Snohomish County, which wanted to use a portion of the property for road improvement projects along 52nd Avenue West. In 2009, the county offered to pay Kohler $404,000 for the southwest corner of her family’s land – what an expert for the county determined was fair market value at the time.

Kohler thought the price was too low, and decided to take her chances in court.

The county commenced a condemnation proceeding that would end in a bench trial. At which time, a judge would determine just compensation and order final payment.

In the meantime, the county entered into a possession and use agreement with Kohler so work on the road improvement project could begin. As part of the agreement, the county wrote a check for $404,000 to Kohler and her attorney at the time, Doug Purcell.

“The payment is a good faith effort to show that we were willing to buy that property,” said Steve Thomsen, director of the Snohomish County Public Works Department. “We buy a lot of property this way. It’s never been a problem.”

According to the county, Purcell should have kept the money in a trust for his client until final payment was resolved. That way, taxpayer funds would be protected should a judge decide the land was worth less than it had been appraised for. If it were worth more, the county would issue Kohler a check for the difference.

But when the two parties finally met in court in November 2011, neither side was prepared for what happened.

A new expert for the county determined that the value of Kohler’s property was far less than the $404,000 that was previously thought – just $48,750.

Kohler was ordered to repay the county the difference: $355,250.

According to court records, the county’s original expert had drastically overestimated the property’s value – a mistake that was made with hundreds of thousands of dollars in taxpayer money.

The expert failed to realize that Kohler’s property was a wetland, which dramatically reduced fair market value of the land.

“It was an oversight,” said Thomsen. “Due to wetlands on the property that were not buildable or usable, the market value was quite less.”

Thomsen said Kohler was also a victim of the housing market, which had spiraled downward between the original appraisal and the new evaluation.

“When we originally appraised it, it was at the height of the market,” Thomsen said. “The market was hot. Then, when we did the second appraisal, it was in 2009 when the market was at its lowest. That didn’t help matters any.”

The county now has to recoup its funds. The only problem? They have no idea where the money is, or if it’s been spent.

In mid-2009, before the case went to trial, Kohler said her attorney took the money out of the trust account and gave it to her, sans roughly $29,000 in attorney fees.

Kohler and her attorney declined to say whether the $355,250 she now owes the county has already been spent.

Kohler appealed the judgment to a higher court, but lost. Her previous attorney missed a deadline to file the case with the State Supreme Court.

“I think that this is truly, truly bad government,” said Nicholas Power, an attorney who Kohler hired to look into the case after she lost her appeal. “It is so completely unjust that Ms. Kohler should be granted some sort of relief from this judgment.”

“Snohomish County has a piece of paper that says, ‘You owe us $355,000, and Snohomish County also has her land,” he said.

Kohler, who worked in medical technology for 23 years before working a decade in public health for San Juan County, said the money she received for the land would have given her independence in her retirement years. She said she has put more money into the property than the $48,000 the county expert now says it’s worth.

“The county can reach in and not only, obviously, take and use the entire property, but then can reach into your bank accounts and take back what you have saved for retirement,” she said.

Power said his client is at risk of bankruptcy.

“I don’t think anyone, any reasonable person can be blind to how absolutely onerous and unfair this deal was,” he said.

Thomsen said the county doesn’t disagree, but will seek collection of the debt.

“I think for a public agency to go in and say, ‘Your property is worth $404,000,’ then to go back and say, ‘Now it’s only worth $48,000,’ is inappropriate. We shouldn’t have done that,” he said. “It’s not fair to her. It’s not fair to anybody. However, it is public money and we have to pay what fair market value is. So, regardless of the unfortunate incidents that led up to this, I have a duty to spend those tax dollars appropriately.”

Thomsen said the county will reevaluate how appraisals are done.

“I’m confident that we can change how we do appraisals in unique situations like this to avoid this problem,” he said.

Thomsen told KIRO Radio that the county will consult with its attorneys to determine if an alternative settlement with Kohler can be reached.

Meanwhile, construction continues along 52 Avenue West and a water detention pond is being built on the portion of Kohler’s property that the county acquired.

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