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Metro Reserves: So Close, but yet So Far

In 2007, when the legislature established a system for designating urban and rural reserves, many observers saw the reserve process as a panacea to deal with the contentious process of changing the Portland Metro urban growth boundary (UGB). Under the urban reserve process, identifying urban land needs based on a 50-year projection rather than the historic 6-year cycle for changing the UGB, lands designated urban reserve would stand in the queue prioritized for inclusion in the UGB when expansion was appropriate. Similarly, land within any rural reserve was off-limits for consideration within the UGB within that same 50-year planning period.

It was through these rules that in 2010, Metro, in conjunction with Clackamas, Multnomah, and Washington counties submitted their urban and rural reserves designation proposal to LCDC for review. LCDC acknowledged the proposal and appeals followed. In 2014, the Court of Appeals remanded the decision to LCDC finding that (1) Washington County failed to properly apply the rural reserves rules; (2) Multnomah County failed to make adequate findings with regard to a rural reserve designation near Skyline and Germantown Roads; and (3) Clackamas County and Metro failed to identify sufficient evidence to support their conclusion that transportation facilities could be cost-effectively provided to the Stafford area. Washington County’s troubles were settled shortly thereafter with legislation designating lands for urban and rural reserves, and adjusting the UGB for the Washington County portion of the region, collectively known as the “Grand Bargain.” Yet, reserve designations for Clackamas and Multnomah Counties remained in limbo.

Flash-forward to 2016, while the City of Portland is absorbing new development at breakneck speed, settling reserve designations for Multnomah and Clackamas County seems nowhere near resolution. In February 2016, Metro adopted the missing findings necessary to support its decision designating lands in the Stafford area as urban reserves and forwarded those findings to the Clackamas County Board of Commissioners for co-adoption, which is required prior to review and acknowledgment by LCDC. But Clackamas County has refused to sign off on those findings, and instead has begun holding hearings to consider un-designating areas previously deemed rural reserves that bear no connection to the Stafford issue on remand.

It is not clear how these ends will be accomplished short of a change in the reserves statutes or another Grand Bargain negotiated in the sausage factory of the legislature. Clackamas County cancelled its public hearing scheduled for August to discuss this matter citing “complications resulting from the disincorporation of the city of Damascus that may affect both urban and rural reserves.” It is difficult to see how disincorporation of a city within the Metro UGB could affect lands designated for rural protections when rural lands are to remain off-limits to urbanization throughout the planning period and rural reserve lands are supposedly off-limits for 50 years. Prior to this most recent postponement, Clackamas County staffers had projected that it could take a couple of years for resolution. Perhaps seeing this delay as putting no urgency in their efforts, Multnomah County has not taken any action responding to the Court’s remand.

In the meantime, in December 2015, Metro decided for the first time in a long time that it would not expand the UGB based on a finding that there is enough capacity inside the existing UGB to provide for housing over the next 20 years. Metro’s population forecast shows a need for 195,400 new dwelling units over the next 20 years, compared against an inventory of buildable and redevelopable land sufficient to provide 216,100 units over the 20-year planning period. With these figures showing a surplus of 20,700 units, Metro concluded there is a sufficient amount of land inside the existing UGB to meet the 20-year need.

Not surprisingly, Metro’s decision not to expand the UGB was met with skepticism from development interests, as well as from some cities who have short-term plans for growth. In an effort to address these concerns, Metro agreed to do two things: (1) undertake a new analysis of UGB capacity in three years, rather than the six years required by statute, and (2) initiate a region-wide dialogue with cities and other stakeholders to explore ways to create more flexibility in the UGB expansion process. To that end, in April, Metro convened a task force, made up primarily of metro-area mayors, county commissioners and Metro councilors, charged with identifying ways to allow Metro to make “modest” expansions of the UGB in the absence of an identified regional need for more land.

The task force is currently considering the possibility of ”trading” undeveloped lands inside the UGB in the eastern part of Damascus for other lands in the region that are more likely to develop in the next 20 years. Existing state rules allow for UGB exchanges to occur without a concurrent finding of regional need; however, any land being added in an exchange is still subject to the state law requirement that urban reserve areas are the first priority for addition. Therefore, unless and until Clackamas County finishes its part of the reserves process, any expansions under an exchange would likely occur in Washington County, the only county with acknowledged urban reserves. However, the county’s attempts to revisit the 2010 reserve decision have not waned, even when the UGB currently contains enough land for 20 years and local governments are so close to the finish line on the reserves effort. Thus, the idea that reserves would obviate or lessen a periodic struggle for UGB changes has not occurred and the peace that rural landowners thought might come from a rural reserve designation has been a false hope.

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We regularly update clients about changes in real estate law and on industry trends. This includes briefing clients on legislative proposals in the federal tax, housing and other legal areas affecting their businesses. Staying current enables you to anticipate and prevent legal problems as well as capitalize on new developments.
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