This article originally appeared in the August 2017 edition of the Oregon Real Estate and Land Use Digest, Volume 39, No. 4, a publication of the Oregon State Bar Section on Real Estate and Land Use.
The Court of Appeals recently weighed in on the “ripeness” of claims for inverse condemnation and to interpret a judgment issued after a prior condemnation trial under the Uniform Declaratory Judgments Act. The case demonstrates the importance to both a condemner and property owner of clearly and unambiguously describing the scope of a taking in the conveying document – in this case a condemnation judgment.
The City of Lake Oswego added the Carman House to its inventory of historic landmarks in 1990, pursuant to Statewide Planning Goal 5. The oldest extant residential structure within the City, the Carman House is considered a rare and valuable example of a territorial Oregon residence. The owners at the time, Mr. Wilmot and Mr. Gregg filed an objection to the designation. However, since the city could designate a property as historic without a property owner’s consent, the property was designated over the owners’ objections.
Every year or so LUBA issues a decision reminding local governments of their obligations under state law to apply only “clear and objective” approval criteria to applications for “needed housing.” Although local governments may use a dual-path review system that includes a discretionary track, (often containing incentives to encourage developers to pursue this course), a local government must under state law have a clear and objective path in which the local procedures and standards “may not have the effect…of discouraging needed housing through unreasonable cost or delay.” Group B, LLC v. City of Corvallis decided this fall is such a case.
7455 Incorporated v. Tuala Northwest, LLC, 2015 WL 7009180 (Or. Ct. App. 2015)
On an issue of first impression in Oregon, the Court of Appeals recently decided that a tenant lacks standing to bring a lawsuit to establish a prescriptive easement. The tenant in this case operated a business under the name “Jiggles” in Tualatin. The neighboring property was a shopping center featuring a K-Mart store that was owned or managed by the defendants. The suit was brought after the defendants blocked access to plaintiff’s establishment from the neighboring shopping center by installing a fence and locked gate.
For the past nine years, Thornburgh Resort Company, LLC and its successor Loyal Land, LLC have attempted to site a destination resort on 2,000 acres in Deschutes County. Ms. Annunziata Gould has continually challenged this effort. The latest challenge, Gould v. Deschutes County (Gould X), may have been the last, for the Oregon Court of Appeals latest decision identified some significant boundaries to the deference that it and LUBA must give to local government interpretations of their own plan and land use regulations. A little background is necessary.
After the U.S. Supreme Court held that the government cannot single out one form of noncommercial speech over another, comes a series of rulings that similarly should have dealt with the questions of content neutrality, a primary tenet of free speech under the Oregon and federal constitutions. Yet, in the Icon Groupe. LLC v. Washington County series of cases, strategic lawyering seems to have put the free speech issues in the back seat.
In 2010, Icon Groupe, LLC filed applications to locate 17 freestanding signs that exceeded the otherwise applicable size and height restrictions, claiming an exemption from these restrictions on the basis that they were “safety signs,” described as:
“[d]anger signs, trespassing signs, warning signs, traffic signs, memorial plaques, signs of historical interest, holiday signs, public and service information signs such as rest rooms, mailbox identification, [and] newspaper container identification”
Some of the signs cautioned drivers on safety matters, while others exhorted them to have a “safe Memorial Day.”
The county did not contest that the signs qualified as “safety signs.” Rather, it denied the applications stating that the exemption was a content-based regulation that violated the Oregon Constitution that must be severed from the remainder of the code, leaving the remaining dimensional requirements, which if found, were violated. Icon appealed the denials but no final action was taken within 120 days, whereupon Icon asked the circuit court to compel the county to approve all the applications under a state statute. The court granted relief and denied a stay pending an appeal, noting that the 120-day statute required it to grant relief unless the permit would violate a substantive provision of the county’s plan or code and holding that statute did not authorize the court to consider constitutional questions. The county appealed that decision to the Oregon Court of Appeals but authorized a number of the requested sign permits.
While the county’s challenge to the mandamus decision was pending, Icon filed a civil rights action in federal district court, claiming that denial of the sign permit applications violated Icon’s constitutional rights to free speech, due process and equal protection under the U.S. Constitution.
Although the court agreed that the county did not present evidence that regulating signage advances a government interest, the court also found that Icon did not contest the constitutionality of the safety sign exception, effectively arguing that the exemption was constitutional.
The court then evaluated Defendants’ time, place and manner sign regulations, finding them related to valid public concerns, i.e., traffic safety and aesthetics, the code narrowly tailored in its dimensional requirements and allowing for alternative means of communication. Rather than arguing that the county’s sign regulations, including the exception were unconstitutional, Icon argued that the county’s denial of the applications was (1) premised on an impermissible purpose; (2) lacked consideration of less restrictive alternatives; (3) was arbitrary; and (4) a pretextual regulation of speech.
The impermissible purpose was the use of the asserted unconstitutionality of the exemption. However, the reasons given for the denial were the failure to comply with Code dimensional requirements. The court found that Icon did not have a vested or otherwise unfettered right to approval of its applications and content-neutral time, place and manner restrictions on free speech are constitutionally permitted.
As to a less restrictive alternative of approving the applications and dealing with the constitutionality of the exemption later, the court again noted that the denial was based on failure to comply with the narrowly tailored dimensional requirements of the code and the fact there might be imagined a less intrusive on free speech is not unconstitutional. The court also rejected the failure to act on its local appeal in a timely way as a due process violation, as that failure allowed for its mandamus remedy to be pursued successfully. The dimensional requirements was constitutional.
As to an allegedly unwritten policy allowing the building official to operate without standards in dealing with sign matters, allowing the use of a content-based restriction, it was clear that the official did not exercise arbitrary judgment over application of the dimensional standards, which was the basis for denial.
The final allegation was that the denial was pretextual and was really based on hostility to messages that Icon might communicate in the future. While these considerations were present, the dimensional reasons for the denial were valid time, place and manner restrictions that were narrowly tailored to accommodate valid public interests, toallow for free speech and left open other adequate channels for free speech. The court thus granted summary judgment to the county.
As a postscript, it should be noted that the Oregon Court of Appeals affirmed the judgment of the circuit court in ordering mandamus relief, confining itself to the issue of whether a code violation occurred and not considering the constitutionality of the exemption. A Petition for Reconsideration is now pending and a Petition for Review may well be filed in the Oregon Supreme Court.
This is a case that contains many free speech strategic issues under the federal and Oregon constitutions. As a civil rights action, the costs to the county would have been immense had it not prevailed. Perhaps, one can view these cases as an immense chess game in which free speech was an onlooker.
This month saw the latest chapter in a lengthy case about climate change and Oregon’s response to it. The case, Cherniak v. State of Oregon, began in 2011, when two Eugene area teens challenged the state’s response to climate change, arguing that the atmosphere was part of the public trust and that the state had failed in its obligation to protect that resource for future generations.
The case was initially dismissed by the Lane County Circuit Court in 2012 for lack of subject matter jurisdiction. In 2014, the Oregon Court of Appeals remanded the case, finding that the court did have authority to consider the matter. On Tuesday, April 7, 2015, the state of Oregon found itself back in the Lane County Circuit Court arguing that the atmosphere is not subject to the public trust doctrine. The other critical issue involves the remedy if the atmosphere is found to be subject to the public trust doctrine. Essentially, what authority does a state circuit court have to dictate state policy and determine the appropriate level of emissions?
The court indicated it would likely rule on the matter within two months, but that is unlikely to be the end of the matter. Stay tuned for future developments on climate change in Oregon.
One of the most common concerns about land use hearings is whether a decision maker is “biased,” or whether they can make a fair decision. In Columbia Riverkeeper v. Clatsop County, ___ Or App ___, ___ P3d ___ (2014), the Oregon Court of Appeals expressed their view of bias and it likely does not match what most people think of “bias.”
Oregon was one of the leaders in requiring more process and elements of fairness in land use decision-making. As far back as Fasano v. Washington Co. Comm., 264 Or 574, 588, 507 P2d 23 (1973), the Oregon Supreme Court noted that participants to a quasi-judicial proceeding are entitled to a "tribunal which is impartial in the matter." However, the courts have also long recognized that the role county commissioners play in land use is not the same as a judge:
"A judge is expected to be detached, independent and nonpolitical. A county commissioner, on the other hand, is expected to be intensely involved in the affairs of the community. He is elected because of his political predisposition, not despite it, and he is expected to act with awareness of the needs of all elements of the county, including all government agencies charged with doing the business of the people." Eastgate Theatre v. Bd of County Comm'rs, 37 Or App 4 745, 588 P2d 640 (1978)."
In the case decided last week, LUBA had remanded a decision because of what it saw as bias on the part of one of the county commissioners, Peter Huhtala in reviewing an application to site a liquid natural gas (“LNG”) facility. The commissioner had run for office largely on his opposition to LNG facilities, and the record was replete with his opposition to the concept and to some particular applications. LUBA looked at that record and found Huhtala disqualified because of his bias.
The Court of Appeals focused on the “matter” before the county commission and the Commission’s role in applying the applicable land-use laws to a discrete set of facts and evidence. The Court of Appeals was not troubled about the commissioner’s opposition to other aspects of LNG facilities, noting that these were “political predispositions.” The only actions Huhtala had taken with reference to the pending application did not demonstrate any bias and, therefore, the Court of Appeals found Commissioner Huhtala to not be disqualified on the basis of bias.
In Relling v. Khorenian, plaintiff filed a declaratory judgment seeking to establish an easement over the defendant's properties for access. Plaintiff purchased property from N-C-W, Inc. (NCW) pursuant to a land sale contract in 1972. At the time of the conveyance, plaintiff accessed his property via a logging road on property owned by NCW to McKay Creek Road. The fulfillment deed held in escrow during the land-sale contract granted plaintiff “an easement for road purposes to McKay Creek Road.” Three months after conveyance to plaintiff, NCW began conveying the remaining lands surrounding plaintiff's parcel, including parcels containing plaintiff’s existent logging road access across defendant’s property to McKay Creek Road. The fulfillment deed was recorded in 1978, after adjacent parcels had been transferred to others.
Although plaintiff’s prayer for relief sought declaration of a common law easement of necessity, plaintiff’s arguments emphasized facts suggesting that plaintiff had an implied easement by nature of the fulfillment deed. Instead, the court held plaintiff to his plea that the landlocked nature of his property warranted granting an easement of necessity. The Court held that three factors must be present in order to award an easement of necessity: (1) unity of title in the grantor; (2) severance of ownership; (3) actual necessity. The facts indicated that plaintiff had multiple access points from other adjacent properties at the time of severance that did not rely on use of the logging road crossing defendant's properties. Therefore, the court held that actual necessity was not present on these facts. The trial court’s judgment was affirmed. Relling v. Khorenian ___ Or App ___ (Feb. 12, 2014, 2014 WL 554488, A148378)
In our DJC column for November, 2010, It's About Time - How Not to Plan For Future Industry in Oregon, we wrote about the agonizing 15-year odyssey endured by the City of Woodburn to amend its urban growth boundary (UGB) to include an additional 409 acres of land, some of which is high value farmland and adjacent to the I-5 Freeway, for industrial use as part of periodic review. The city justified the number of acres necessary for inclusion using a “target-industries” approach that evaluates the city’s employment needs based on the type of industries it would like to attract and then identifying an amount of land needed to attract those particular employers, given their site and building preferences. The target-industries approach differs from the more typical “employees-per-acre” approach which projects employment growth and divides that growth by the number of employees per acre to reach the number of acres needed to support employment growth.
Petitioners 1000 Friends of Oregon and others objected to the target-industries approach and argued to the Oregon Court of Appeals that this approach resulted in designating more industrial land than was needed to accommodate projected job growth in violation of Statewide Land Use Planning Goal 9, Economic Development. Petitioners also argued that the city’s target-industries approach “inflated” the number of acres needed to be included within the UGB in violation of Goal 14, Urbanization. The Land Conservation and Development (LCDC) approved the city’s expansion of the UGB and concluded that the decision to “provide market choice among sites…is a key component of a successful industrial development strategy” required by the administrative rules implementing Goal 9.
In a 2010 proceeding, the Court of Appeals reversed and remanded, finding that LCDC failed to adequately explain its decision. This concept is known as providing substantial reason. “Although LCDC discusse[d] Goal 9 and its implementing rules and conclude[d] that the UGB amendment complies with both Goals 9 and 14, LCDC provided essentially no reasoning as to that conclusion with respect to Goal 14.” Regarding Goal 9, the court stated that LCDC’s “mere reference to ‘market choice’ [was] insufficient to explain the reason that the city’s UGB expansion is consistent with that goal.” Although the court did accept that some forms of “market choice” could be consistent with Goal 9, LCDC was left to determine to what extent it could exist and still comply with Goal 9.
Back at the drawing board, LCDC drafted a revised order and again approved the city’s decision for the same acreage. This time, LCDC’s analysis was based on a determination of a “close correlation” between the amount of land needed using the target-industries when compared against the employees-per-acre approaches – a 51 acre or a 16% difference. LCDC explained that “the more a city’s land need for employment based on its analysis of economic opportunities and sites diverges from what would be predicted…the more thoroughly the city will need to substantiate its economic opportunities analysis and resulting site needs.” Since the two numbers, 311 acres needed under the employees per acre approach and 362 acres for the target employment approach, are “relatively close,” LCDC concluded that Goals 9 and 14 were satisfied. On appeal for the second time, the Court of Appeals disagreed and found that LCDC failed to explain why a close correlation between the two approaches signified anything. Why was a 16% divergence sufficient and when would these numbers diverge so much as to violate the goals? The court explained that “LCDC did not explain why the relationship between the two numbers, in any case, should relieve it from reviewing—or local governments from explaining—why the amount of land proposed to be added to the UGB is consistent with the goal and other law just as carefully as it would if the correlation were not ‘close.’” Just finding a “close correlation” did not provide adequate “analytical support” for LCDC’s conclusion.
LCDC’s second reason for affirming the city’s decision focused on the city’s analysis of population, employment, target industries and site requirements upon which LCDC found compliance with Goals 9 and 14. Here, LCDC’s findings go through exhaustive detail explaining the steps taken by the city to determine how much additional land should be added to the UGB. LCDC’s findings identified the applicable goals and other legal provisions, and concluded that the city’s decision complied with these requirements. In what can only be describes as “déjà vu all over again,” the court-identified defect with this approach was that LCDC failed to provide “a meaningful explanation of why the steps taken by the city satisfy the legal standards.” Sensing that it was not getting through in this second go-around, the court not only quotes two pages of LCDC findings but spends another two-and-a-half pages paraphrasing those same findings through the use of bullets and categorized them as statements of policy, fact, and conclusions. The applicable standard “substantial reason” according to the court requires “an explanation of why the process in which a local government engaged and the results that it reached are consistent with the law.”
This decision is not just about an abject failure in writing findings but is indicative of an agency and local government desiring a particular result and working furiously to make the means justify that end with no particular consideration of whether the outcome was consistent with the law. The land use laws, particularly when it comes to UGB amendments require two matters to be addressed – identifying a need for housing and employment lands and then expanding the UGB to accommodate the identified need and not the other way around.
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.