Measure 37 was passed in 2004 to provide landowners “just compensation” for land use regulations enacted after they acquired their property that allegedly diminished the value of the land.  Claimants did not need to prove an actual reduction in value in order to receive a waiver of those land use regulations that would allow development of the land according to the laws, if any, in place at the time the landowner acquired the property.  Measure 37 was very controversial because it allowed large-scale development on previously protected lands.  As a result, in 2007 the voters passed Measure 49, which provided alternative compensation for landowners and allowed completion of already-begun projects pursuant to Measure 37 waivers only where the landowner could demonstrate a “vested right” to complete and continue the project.  The closer to completion a project is, the more likely the landowner has a vested right to finish the development.

Most landowners chose the alternative compensation offered by Measure 49, but some pushed ahead seeking to develop the full extent of the use proposed under their Measure 37 waivers.  In doing so, many landowners attempted to cheat the system by changing the picture of their project to create the illusion that the development was closer to completion than it actually was.

I’ve been working to safeguard Oregon’s land use protections since I started at Crag three years ago, and Ralph has been fighting this battle since 2004.  Crag’s clients and many other Oregonians recognize that land use safeguards exist to protect everyone’s property values and rights.  The large Measure 37 developments threatened farm, forests and water supplies across Oregon.  The Supreme Court’s ruling safeguards the interests of all property owners and will help prevent further conversion of our irreplaceable farmland into subdivisions, strip malls, and gravel pits.  We congratulate those individuals across Oregon who were willing to stand up for their communities and who never gave up the fight for Oregon’s land use protections.

Today, the Court of Appeals reversed and remanded two more Measure 49 Vested Rights decisions out of Clatsop County.  In both cases, landowners sought the right to complete and continue development of residential subdivisions pursuant to waivers obtained under Measure 37.  The Court of Appeals found that the County decision makers and County Circuit Court erred in concluding that the landowners had incurred significant expenditures as compared to the cost to complete the residential subdivisions.

These cases follow from the groundwork laid by Crag Staff Attorney Ralph Bloemers in the first of the Measure 49 vested rights appeals, Friends of Yamhill County v. Board of Commissioners.  In that case, the Court of Appeals found that whether a landowner has a vested right to complete and continue a use based on a Measure 37 waiver depends largely on the amount of construction and money spent as compared to the total cost to complete the use as of the date Measure 49 became effective.  Since then, the Court has continued to refine this holding, and has repeatedly found that where the use sought is a residential subdivision, the costs to construct homes must be included in the total project cost, and the cost must be evaluated as of December 6, 2007 (the date Measure 49 became effective and the date on which a landowner must have vested the right to complete the use).

In today’s decisions, the Court of Appeals found that the County decision makers and Circuit Court erred in concluding that the cost to construct homes in the residential subdivisions did not need to be included in the total project cost.  The Court also found the local decision makers erred by relying on evidence of the cost to complete the subdivision based on evidence of costs from 2008, rather than from December 6, 2007.  This difference is significant because, as we all know, market conditions changed dramatically in early 2008.  Whereas in 2006 and 2007 real estate was still relatively strong, by 2008 things were starting to look grim.  The landowners attempted to use the market downturn as a justification for arguing for a smaller total project cost based on smaller and simpler homes than had been proposed before December 6, 2007.  The Court of Appeals decisions continue to reject landowners’ attempts to skew the vested rights analysis by creating a lower total project cost after December 6, 2007.

Youngs Bay Photo Courtesy of Gary Halvorson, Oregon State Archives

Today, the Oregon Court of Appeals handed down another decision reversing and remanding a Measure 49 vested rights determination.  Today’s opinion reversed Clatsop County’s decision finding that Beverly and Gary Aspmo had proceeded far enough with their development of a 30-lot residential subdivision overlooking Youngs Bay (sought pursuant to a Measure 37 waiver) to be allowed to complete the development even after Measure 49 had passed.  Part of the vested rights analysis looks at whether the amount spent towards completing the project was substantial as compared to the total cost to complete the development sought to be vested, and whether those expenditures were adaptable to other lawful uses of the land.

The Court of Appeals has decided several Measure 49 vested rights appeals now, beginning with Friends of Yamhill County v. Board of Commissioners of Yamhill County, in which Crag Staff Attorney Ralph Bloemers represented neighbors seeking to protect their property values and quality of life from excessive development under Measure 37 waivers.  That case is currently under review with the Oregon Supreme Court.  You can listen to OPB’s recent story on the case, ‘Ghosts of Measure 37′ Still Haunt Rural Oregon here.  Today’s decision built upon Friends of Yamhill County and other vested rights decisions handed down by the Court in recent months.

Crag Staff Attorney Courtney Johnson represented Oregon Shores Conservation Coalition in challenging the Clatsop County vesting determination.  In finding that the applicants had established a vested right to complete the subdivision, the County relied on cost estimates to build homes that were only about half the size of the homes proposed during the land use process.  Crag’s argument was quoted by the Court of Appeals in its decision today:

“The approach taken by the county and accepted by the reviewing court sets up a standard allowing the Aspmos to present an after the fact lowball figure for a total project cost in order to create the appearance of greater expenditures incurred.  Creating a lower denominator after December 6, 2007, in order to artificially elevate the ratio of expenditures incurred skews the vesting analysis in a manner that is inconsistent with the common law.”

The Court determined that the the county and the reviewing Clastop County Circuit Court did not assess the total project cost of the development that the Aspmos sought to vest as of December 6, 2007 (the date that Measure 49 became effective).  The Court concluded “[t]hat legal error requires reversal.”  The Court also found that on remand, the Clatsop court must address the issue of whether there was substantial evidence to support a finding that the Aspmos’ expenditures were not adaptable to other allowable uses, such as the 1-3 homesites allowed under Measure 49.  You can read the Court’s entire decision here.

This case represents another step towards seeing Measure 49 implemented as the voters of Oregon intended and upholding the state’s land use system to ensure our farm and forestlands and water resources are protected for future generations of Oregonians.

In Yamhill County, a number of property owners with claims under former Measure 37 had sought to go ahead with their large developments despite the passage of Measure 49.  The county granted these requests without considering the negative impacts of these developments on neighboring property owners.  These large development projects threatened rural land, the livability of these communities and the viability of local groundwater supplies.  The Friends of Yamhill County worked with neighbors, including farmers, vineyard owners and winemakers, to challenge four separate development proposals.

In 2008, the Yamhill County circuit court upheld the county’s decisions and the neighbors appealed the decisions. In the appeal, the neighbors pointed out that the landowners had not even started the large developments before Measure 49 passed. The owners had spent money on lawyers and consultants, but very little if any development had actually been done on the ground and the amounts the owners expended were a fraction of the total costs of these subdivisions.

While Yamhill County concluded the small amounts of monies spent on preparatory work were sizeable enough to allow the development to continue, the Oregon Court of Appeals rejected these arguments and reversed the trial court.  Now, instead of large subdivisions sprouting up on prime farmland and threatening water supplies, the owners will be able to pursue modest developments of up to three homes allowed under Measure 49.

Ilsa Perse from the Friends of Yamhill County stated: “While many people pursued modest claims under Measure 37, others pursued large developments that threatened farms, forests and water supplies.  Neighboring owners have property rights, too.  This ruling safeguards their interests as well. The court recognized the rights of neighbors while allowing owners to move forward with developments that meet the requirements of Measure 49.”

Measure 37 proponents insisted that its purpose was to allow rural landowners to build a few houses for their family.  In reality, Measure 37 resulted in over 6,800 claims.  More than half of those were for large subdivisions on valuable farm and forest lands.  When Oregonians realized the impact on local agriculture and water supplies, they passed Measure 49 to reign in the worst abuses and provide modest development options instead.  Measure 49 provided up to 3 houses per parcel without proof of financial loss, or more if the owner proved an actual financial loss. Measure 37 had not required any actual proof of loss.

David Adelsheim, President of Adelsheim Vineyard, stated: “Oregon winegrowers know the importance of preserving prime agricultural land. Oregon’s land use laws are the reason our industry exists today.  Without the establishment of Exclusive Farm Use zoning and Oregon’s comprehensive land use system, the hillsides our industry needs to produce the best grapes would have been dotted with housing developments instead of rows of Pinot noir vines.  No visitor would want to come to a Wine Country filled with rural subdivisions. We need to be able to count on the same protections going forward to insure that Oregon wines continue to flourish.”

In 2008, the Oregon wine industry had a $1.4 billion economic impact on the state, and the industry has continued to grow, even during the current recession.  Today’s court decision protects the industry from the development pressures encouraged by Measure 37. Ralph Bloemers, a staff attorney with the Crag Law Center, stated: “Many people sought to take advantage of Measure 37 and develop large residential subdivisions, commercial developments and gravel mines. These proposals threatened neighboring property rights, water supplies and undermined the efforts of people with more reasonable goals. This decision protects neighboring property owners and preserves Oregon’s valuable agricultural capabilities.”

For more information:

Read the complete decision:  Oregon Court of Appeals Decision – Friends of Yamhill County

Oregonian Story:  Controversial Yamhill County Measure 37 Claim

Oregonian Story:  Yamhill Cases Hinge on Vested Rights

Hinesight Blog:  Measure 49 Vested Rights Cases Reach Court of Appeals

Wines and Vines: Oregon’s Vineyards Protected from Developers

McMinnville News Register – Court Overturns Local Subdivision Ruling

On Wednesday February 4, 2009, Judge Owen M. Panner issued a decision enjoining his earlier judgment that determined that a number of claims under former Measure 37 continued to be valid and enforceable.

The Judge stayed the judgment in which he had found that waivers issued to certain claimants in Jackson County were contracts and akin to judgments that could be not modified by the people’s legislative act in passing Measure 49.

The people of Oregon passed Measure 49 in November 2007.  The Oregon Appeals Court and the Oregon Supreme Court have ruled that nothing in Measure 37 limited the people’s power to change the law. The people modified former Measure 37 through Measure 49 and extinguished the former claims under Measure 37 except in one unique instance – when a claimant could show a vested right at common law.

Rogue Advocates and other local groups intervened and filed an appeal, and then Jackson County appealed to the 9th Circuit Court of Appeals.  Rogue Advocates is a a local land use and property advocacy group, and it was joined in the defense of Jackson County’s position by Oregon Shores Conservation Coalition, Friends of Marion County and Friends of Polk County because of concerns that the decision might have broader application and negatively impact individual property rights and community interests in public lands.

Under Measure 49, an owner of land must show a “vested right” to continue with the Measure 37 claim by showing the personal and substantial expenditure of funds towards the establishment of the proposed use.  So the people with claims under former Measure 37 that had actually built residential subdivisions or otherwise substantially established the proposed uses pursuant to valid permits are able to continue.  Those people that just have waivers, but did not expend resources to establish the use, were entitled to seek remedies under Measure 49.

The common law recognizes a property owners’ reasonable investment backed expectations to be able to continue with the use.  If a property owner made good faith efforts without notice of a pending law change.  If those on-the-ground efforts are substantial in relation to the total project and could not be adapted to other allowed uses then the owner might be vested.  For example, in Clackamas County, Judge Alexander found that 1.2 million dollars to partly put in a road network during the final months leading up to the passage of Measure 49 was not substantial in relation to a 50 unit subdivision development.  The owner did not spend the money, and the amount of money was not found to be substantial in comparison to the developer’s total project cost.

The general rule in Oregon and across the United States is that a person must have a building permit and commenced substantial construction to be vested.  What is substantial is measured in relation to the total project cost.  Remember, under former Measure 37, the owner was not able to transfer bare lots, and so evidence of countable expenditures and total project cost is crucial to a fair determination.

In Oregon law, and the same goes across the country, the kinds of nonconforming uses proposed under former Measure 37 are highly disfavored under the law and judges must carefully scrutinize the proof of a vested right.

To put this decision into context, the owners in the Jackson County sought to do an end around the people’s choice in Measure 49 to protect water supplies and rural lands.  Rather than respecting other individual property rights and and the communities interest in the system of safeguards for the use and development of land, the plaintiffs in this case sought to use bare waivers under former Measure 37 to entirely skip the steps required under Measure 49 – which requires that they follow the process in Measure 49 and prove a vested right.

The Crag Law Center submitted extensive briefing in support of the Court’s ruling and Jackson County’s request for a stay.  Judge Panner allowed Rogue Advocates into the case to submit a friend of the Court brief.

The Oregon Courts have consistently ruled that Measure 49 was a lawful exercise of the legislative power.  Through this case, the Crag Law Center is working to support local citizens and property owners’ effort to ensure a quick and fair transition to Measure 49. Crag’s clients have joined with Jackson County to seek an expeditious review of this decision by the 9th Circuit Court of Appeals.

Judge Panner’s ruling does not explicitly address the substantive issues, but it implicitly undercuts the earlier decision by suspending the application of the Judge’s findings and making the question one for the 9th Circuit Court of Appeals.

For further coverage visit:

http://www.oregonlive.com/environment/index.ssf/2009/02/federal_judge_puts_the_brakes.html