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4.7% RATIO OF EXPENDITURES FOR RESIDENTIAL SUBDIVISION

In Campbell v. Clackamas County, __ Or.App. __ (December 2011, A139642), the court was asked to consider whether plaintiffs’ rights to develop a residential subdivision had vested under Measure 49.  Plaintiffs acquired the 62-acre tract of land in 1969 at which time the property’s zoning allowed residences to be built on one-acre parcels.  Subsequently, zoning restrictions limited the uses of the property to agriculture and forestry.  Plaintiffs obtained Measure 37 waivers and sought a vested rights determination under Measure 49 to develop a 40-lot residential subdivision. 

 Applying the standards for a common-law vested right set forth in Clackamas Co. v. Holmes, 265 Or. 193, 198-99, 508 P.2d 190 (1973), the court denied the request because the expenditures to develop the property where incurred by a developer rather than the property owner acting on his own behalf, and the expenditures were insufficient to vest development rights given the costs of the entire project.  Plaintiffs appealed the decision arguing that the court erred in concluding that no vested right was proven. 

Relying on the Supreme Court’s analysis of vesting set out in Friends of Yamhill County v. Board of County Commissioners, 237 Or.App. 149, 238 P.3d 1016 (2010), aff’d, 351 Or. 219, 264 P.3d 1265 (2011), the Court of Appeals began its analysis by noting that the concept of ‘substantial expenditures’ requires review of both the ‘absolute amount expended and the percentage yielded by the expenditure ratio.’  The denominator of the expenditure ratio includes the costs of constructing residences on the property at the type and size contemplated by the owner.  Although the plaintiffs presented evidence that the deterioration of the housing market during 2007 to mid-2008 would have prompted construction of smaller, lower cost homes, thereby increasing the expenditure ration to approximately 7.5 percent, the court rejected this evidence finding no evidence that plaintiffs’ plans for the development in December 2007 anticipated the changed market conditions that existed in 2008. 

Therefore, the court affirmed the circuit court’s conclusion that based on the expenditure ratio factor, the plaintiffs had not incurred enough costs in comparison to the total project development cost to obtain a vested right because the ratio amounted to only 4.7% of the cost of the total development.  The court noted that some of the improvements could be used to develop the nine homesites otherwise allowed by Measure 49.  Those equities suggest that a low expenditure ratio of less than 5 percent is insufficient to vest rights to develop the entire larger subdivision.

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