Petitioners appealed LCDC’s periodic review approval of an expansion of the urban growth boundary (UGB) of the City of McMinnville which redesignated previously rural lands for various types of urban uses. The primary issue in the case was the relationship between ORS 197.298, a statute that prioritizes the types of land that can be added to a UGB and the Goal 14 UGB factors as they existed in 2005, which the city was authorized to apply in this case.
Based on projected growth, the city assessed its residential, industrial and other land needs for the next 20 years under ORS 197.296 and other criteria not at issue on appeal and determined it should expand the UGB by 1,188 gross acres, including 890 buildable acres. Petitioners’ appeal challenged the city’s application of Goal 14 and ORS 197.298 alleging (1) the city did not apply the Goal 14 standards completely or consistently; and (2) the city ruled out some land for consideration by defining its land needs too particularly at the front end of the ORS 197.298 prioritization process (for example, the City assessed land needed for use as a “Neighborhood Activity Center” (NAC) or for particularized residential land needs) in such a way that less exception land was available for the city's particular land needs and more agricultural land was included in the proposed UGB than otherwise would have been included had the city's needs been defined more generically (such as high, medium or low density residential needs which are required to be inventoried by “type and density range” under ORS 197.296(3)) and “buildable” under ORS 197.295(1). Standards for commercial and industrial land needs are provided under other criteria not at issue in this case.
The Court analyzed the process for categorizing land needs that arise in periodic review for purposes of the application of ORS 197.298 to a large-scale expansion of a UGB. The first step is to determine how much land is needed. That determination is made by the application of the two Goal 14 “need” factors – 1) demonstrated need to accommodate long-range urban population growth requirements consistent with LCDC goals; and 2) subcategorizing that needed land into housing, employment opportunities, and livability needs. In this case, the city’s use of the ascribed qualities of a particular use, the NAC (e.g. size, location to downtown, and urban form) used as a basis to rule out higher-priority land, failed to address separate types of land needs of its component uses, such as various housing types. The proper first step is to determine the land needs of each land use, then examine the available land to determine if it is “inadequate to accommodate [each] amount of land needed.” If there is insufficient land within the UGB, then those land needs must be satisfied in a UGB expansion under the priority system established under ORS 197.298.
The second step is to locate and justify the inclusion of land to fill that quantified need. Because ORS 197.298(1) states that the priority system is “in addition to any requirements established by rule addressing urbanization” (i.e., Goal 14 and its implementing rules), the court determined that the priority lands analysis must be done before either the application and balancing of the Goal 14 locational factors or the exceptions to the priority system under ORS 197.298(3). Thus, the priority system which placed prime resource lands as the lowest priority, may not be balanced with each of the Goal 14 locational factors at this step, although some of them may be applied at this point. Thus, the second step involves the application of both certain Goal 14’s locational factors and ORS 197.298(3) to the candidate lands resulting from the first step. ORS 197.298(3) must be applied at this stage, given the statutory direction that the subsection applies to the candidate lands when “land of higher priority is * * * inadequate to accommodate the amount of land estimated in ORS 197.298(1).” However, before that application, the candidate lands under ORS 197.298(1) may be modified through the application of two Goal 14 factors, i.e., factors 5 (“Environmental, energy, economic and social consequences) and 7 (compatibility of the proposed urban uses with nearby agricultural activities), which parallel two Goal 2 exception standards that must be applied under Goal 14 (i.e., the consideration of environmental, energy, economic and social consequences and compatibility). The court noted that Goal 14 factors 5 and 7 are those locational factors that do not overlap factors considered under ORS 197.298. It is only these non-duplicative locational factors that can be used to narrow the inventory of lands at this step. Only after these factors are applied is ORS 197.298(3) applied. The application of ORS 197.298(3)(b) sets forth the specific manner in which lands can be removed from consideration because, “Future urban services could not reasonably be provided to the higher priority lands due to topographical or other physical constraints…” Therefore in step two, Goal 14, factor 3 the orderly and economic provision of public facilities and services, is not a consideration at this point.
On review of LCDC’s analysis in this second step, the Court held that LCDC improperly applied ORS 197.298(1) in approving the city’s resort to lower-priority land because of the relatively higher costs of providing a particular public facility or service to the higher-priority area, a Goal 14, factor 3 consideration which comes later. Further, LCDC’s order did not explain why the failure of an exception area to accommodate the need for a NAC justifies its exclusion from the expansion area when lower-priority land was added to accommodate a less specific need for residential land.
The third step involves a determination of which candidate lands to include under Goal 14, where the remaining locational factors of Goal 14 are independently applied after land has been prioritized under ORS 197.298 as adequate to accommodate the identified need. This analysis works to make choices among land in the lowest rung of the priority scheme and to justify the inclusion of the entire set of lands selected under ORS 197.298. It is at this point in the analysis that cost efficiencies in the provision of public facilities and services become relevant (Goal 14 locational Factor 3 – orderly and efficient provision of public facilities and services and Factor 4 – maximum efficiency of land uses) along with the other Goal 14 locational factors.
Based on LCDC’s errors in applying the first and second steps, the Court held that:
- The city need not consider a composite of urban services under ORS 197.298(3)(b), but must only consider those “urban services” that could be constrained “due to topographical or other physical constraints.
- Incompatibility of a proposed residential use of an area with nearby industrial and institutional uses is a legitimate consideration in applying ORS 197.298(1).
- The application of ORS 197.298(1) requires more than the consideration of pedestrian circulation.
- LCDC’s reliance on the city’s findings that applied only Goal 14 locational factors to exclude some exception land was in error because it conflated the Step 3 analysis with the Step 1 and 2 analyses.
- In its findings, the City failed to evaluate whether a larger area with lower-class soils, could reasonably accommodate the city’s identified need for residential land instead of the lower-priority land added for that purpose, as such an evaluation was necessary under ORS 197.298(1).
- LCDC erred in not dealing with petitioner’s contention that the city’s findings were insufficient under ORS 197.298(1) because the city did not address whether the consequences and compatibility concerns about bringing additional tax lots into the boundary under Goal 14, factors 5 and 7, should have been mitigated by including a differently configured area. That determination was necessary to LCDC’s conclusion that the city’s findings demonstrated compliance with the statute.
- LCDC erred in not requiring additional findings on Goal 14, Factor 7 (compatibility of proposed urban uses with agricultural lands). The Factor 7 findings were inadequate to exclude some land from consideration because they were not sufficiently descriptive of nearby agricultural uses to allow comparison among the candidate sites and were inaccurate as to the redrawn boundaries of the resource areas.
Thus, the Court remanded the matter to LCDC.
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