Oral argument centers on whether contract language bars City takeover of Lake Stevens Sewer District

An appellate panel heard oral argument in Lake Stevens Sewer District v. City of Lake Stevens, in which the City asks the court to overturn a superior court ruling and allow enforcement of City ordinance 1108 to assume control of the sewer district. Gregor Bustelo, attorney for the City of Lake Stevens, told the court the City’s statutory authority to assume management “doesn’t conflict” with the unification agreement and that Section 5.1 and the statutory assumption power represent two parallel means for the City to acquire the system.

The District’s attorney, Andrea Bradford, asked the panel to affirm the lower court. Bradford said the City benefited from the parties’ contract for about 16 years and breached it by trying to adopt an ordinance in 2021 seeking control earlier than the agreement permits. “The parties chose to chart this long-term course to provide certainty to allow for the construction of capital facilities like the wastewater treatment plant,” Bradford said, arguing the contract’s plain terms—particularly Article 5—deliberately delay any transfer until the timeline the parties set.

Why the dispute matters: If the court adopts the City’s reading, Recital J—language in the contract acknowledging the parties’ statutory powers—could be read to allow unilateral statutory takeover even where the parties negotiated a delayed transfer. The District counters that Recital J simply restates existing statutory authority as of the contracting date and cannot be read to override explicit transfer conditions set out in Article 5, which the District and the City used to allocate risk and secure financing and annexation concessions.

What the panel focused on: Judges repeatedly pressed counsel about whether the plain language of the agreement controlled or whether extrinsic evidence—drafts and negotiation history—should inform interpretation. Bustelo emphasized draft revisions that removed language he says would have made the City’s assumption unconditional. Bradford said the trial court conditionally admitted draft exhibits (listed in the record as exhibits 101–112) but correctly concluded they do not show intent to negate the negotiated timeline. A panel member noted the practical tension: if the City already had unfettered statutory authority to take over at will, it would not have needed a contract, suggesting the contract’s timeline had real consideration.

Key legal references: Counsel referred repeatedly to state statutory authority for municipal assumption (cited at argument as RCW 35.13A and provisions in Title 57) and to the contract provisions labeled Recital J and Section 5.1. Counsel disagreed about whether Recital J’s phrasing describing the City’s “current authority” at the time of contracting should be read as preserving a continuing statutory right that can be exercised notwithstanding Article 5’s schedule.

Evidence and record issues: Both sides discussed competing uses of the drafts introduced at trial. The City argued edits and deleted language in draft versions support its position that the parties did not intend to waive statutory assumption; the District said there is no record testimony explaining who made particular redlines and that no draft clearly signals a later intent to disregard the 2033 timeline. Counsel agreed that several negotiators who might have explained drafting choices were not available to testify at trial.

Outcome and next steps: The panel recessed at the close of argument without announcing a decision. The case will be decided on the briefs and record; any appellate ruling will determine whether the City’s ordinance 1108 can be enforced immediately or whether the contractual timeline and conditions in Article 5 control.