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2005-897-Minutes for Meeting June 08,2005 Recorded 7/6/2005COUNTY NANCYUBLANKENSHIP,F000NTY CLERKDS ~J ZYV~'Y91 11COMMISSIiAONERSiiui~uuu 07/06/2005 04:26:47 PM DESCHUTES COUNTY CLERK CERTIFICATE PAGE 0 )-t F. s ~ v~2 0 A .i 1. < This page must be included if document is re-recorded. Do Not remove from original document. C { Deschutes County Board of Commissioners 1300 NW Wall St., Bend, OR 97701-1960 (541) 388-6570 - Fax (541) 385-3202 - www.deschutes.ora MINUTES OF MEETING DESCHUTES COUNTY BOARD OF COMMISSIONERS WEDNESDAY, JUNE 89 2005 Commissioners' Hearing Room - Administration Building - 1300 NW Wall St.., Bend Present were Commissioners Tom De Wolf, Dennis R. Luke and Michael M. Daly. Also present were Mike Maier, County Administrator; Dan Sherwin, Road Department; Anna Johnson, Commissioners' Office; Tom Anderson and Kevin Harrison, Community Development; Mark Pilliod, Laurie Craghead and Larry Shaw, Legal Counsel; Sue Brewster, Sheriff's Office; media representatives Barney Lerten of News Channel 21 and Chris Barker of the Bulletin; and approximately thirty other citizens. Chair De Wolf opened the meeting at 10: 02 a. m. 1. Before the Board was Citizen Input. None was offered. 2. Before the Board was a Presentation and Update of COIC (Central Oregon Intergovernmental Council) Activities and Services. Tom Moore, Executive Director of COIC, provided information to the Board and the audience regarding the work that COIC does. He then gave an overview of various programs handled through COIC, which assist many individuals and local businesses in a variety of ways. 3. Before the Board was the Reading of a Proclamation Declaring the Third Week of June as Noxious Weed Awareness Week in Deschutes County. Minutes of Board of Commissioners' Meeting Wednesday, June 8, 2005 Page 1 of 16 Pages Dan Sherwin introduced several individuals who are involved with the Weed Advisory Board: Paul Stell, Chair; Bill Pangham, City of Bend; Kelly Walker, Sunriver; and Cheryl Howard, the coordinator for upcoming community weed pull. They explained how the group went from few activities to a very dynamic community organization. Paul Stell then read the proclamation to the audience. LUKE: Move approval. DALY: Second. VOTE: LUKE: Yes. DALY: Yes. DEWOLF: Chair votes yes. 4. Before the Board was Consideration of Signature of Document No. 2005- 208, an Intergovernmental Agreement regarding a Byrne Justice Assistance Grant Program Award. LUKE: Move approval. DALY: Second. VOTE: LUKE: Yes. DALY: Yes. DEWOLF: Chair votes yes. 5. Before the Board was a Public Hearing and Consideration of Signature of Order No. 2005-034, Approving the Tumalo Creek Development, LLC Annexation into Deschutes County Rural Fire Protection District No. 2. Laurie Craghead gave an overview of the item. The documents are complete, including a report from Community Development indicating the Order complies with applicable ordinances. Chair De Wolf opened the public hearing. Being no testimony offered, he closed the public hearing. DALY: Move approval. LUKE: Second. Minutes of Board of Commissioners' Meeting Wednesday, June 8, 2005 Page 2 of 16 Pages VOTE: LUKE: Yes. DALY: Yes. DEWOLF: Chair votes yes. 6. Before the Board was Consideration of Signature of Document No. 2005- 214, Estoppel and Consent Documents relating to Pronghorn Destination Resort. Laurie Craghead advised that Pronghorn is changing its business structure and wishes to transfer all assets and liabilities to the new entity. The lender asked for agreements from the County regarding improvements to the property; $7.4 million is being held in escrow until the improvements are completed. LUKE: Move approval. DALY: Second. VOTE: LUKE: Yes. DALY: Yes. DEWOLF: Chair votes yes. Measure 37 Hearings Chair DeWolf read the opening statement regarding Measure 37 claims. Regarding bias, prejudgment, personal interest or other circumstances, no challenges were offered. Mark Pilliod and Tom Anderson pointed out that there was an additional case that was noticed for today, for claimant Lee Hellmuth. Staff prepared documents for the hearing, but Mr. Hellmuth indicated he could not be here today and would like to continue the hearing to July 13. Chair DeWolf continued the hearing to July 13. 7. Before the Board was a Public Hearing and Consideration of Signature of Order No. 2005-38, a Claim for Compensation under Measure 37 (File #M37-04-5; Claimant: Cralle/Woody). Minutes of Board of Commissioners' Meeting Wednesday, June 8, 2005 Page 3 of 16 Pages Tom Anderson said he would like to handle both of the Cralle/Woody claims at the same time, since the claims are identical and involve adjacent properties. A fee has not been paid on either claim. The claims involve damages to the property owner based on a perceived denial of septic system approval. The recommendation to the Board at this time is to deny the claims. The rules governing the installation of septic systems are not land use rules; Measure 37 limits this aspects. Septic systems clearly fall within the arena of health and safety regulations, exempted specifically in the text of the Measure. The term "sanitation" is used as a health and safety issue. Regarding action taken by the County regarding septic applications, the County's interpretation can change over time based on environmental changes; for example, a change in the ground water level. The underlying rules that govern a review of those applications are constant and predate the acquisition of the property. He recommended denial of both claims. Additionally, the County response to the application was not an outright denial of installation; it was a denial on that particular date but the applicant was advised to reapply in the springtime when the water level is at its highest so a proper review and recommendation could be made. Commissioner Luke asked if one of the new systems might help. Mr. Anderson replied that there is no final answer on the use of a standard system on these properties. Ms. Cralle and Ms. Woody then asked what is required for them to get approved for a system. They indicated it was buildable when they bought the land, and they want to build a house on it, and that there were two lots with one system approved. Mr. Anderson said that his department has information based only on the request, and there were concerns about putting a regular system in because of the water table. The final answer would have been made in the spring, but no follow-up request was made. Minutes of Board of Commissioners' Meeting Wednesday, June 8, 2005 Page 4 of 16 Pages After a brief discussion, Ms. Cralle and Ms. Woody stated that they will contact Community Development to discuss this issue. LUKE: Move approval of Order No. 2005-038. DALY: Second. VOTE: LUKE: Yes. DALY: Yes. DEWOLF: Chair votes yes. 8. Before the Board was a Public Hearing and Consideration of Signature of Order No. 2005-045, a Claim for Compensation under Measure 37 (File #M37-04-6; Claimant: Cralle/Woody). LUKE: Move approval of Order No. 2005- 045. DALY: Second. VOTE: LUKE: Yes. DALY: Yes. DEWOLF: Chair votes yes. 9. Before the Board was a Public Hearing and Consideration of Signature of Order No. 2005-044, a Claim for Compensation under Measure 37 (File #M37-05-9; Claimant: Brown/Perry). Tom Anderson explained that this claim involves a $30 million piece of property zoned EFU that is located in the Redmond area. The claimant would like to subdivide the property into ten to twelve three-acre lots. The claim was received in December, and the claimant paid the $500 fee. The request is for $600,000 in damages as a result of the change in law since the original acquisition of the property. The unique aspect of this case is the ownership. The analysis of the ownership affects the type and form of waiver that would apply. Mark Pilliod said he has researched this claim, and pointed out that there are two sets of interest - Ms. Perry, and James and Kelly Brown. The information given to the County indicates that the grantor, Perry, conveyed an undivided one-half interest to James and Kelly Brown in April 2000. Minutes of Board of Commissioners' Meeting Wednesday, June 8, 2005 Page 5 of 16 Pages As part of the document of the conveyance, she has a life estate, with legal use of the property until she passes away, at which time the property would then go to the Browns. Since the claim was submitted collectively, it is necessary for the County to analyze the distinct ownership of each party. While Ms. Perry acquired the property in 1966, and her ownership interest has been continuous since then, the County would analyze the case based upon regulations in effect in 1966, and those regulations in effect in 2000 for the Browns. Tom Anderson added that the proposed waivers would, in fact, grant two separate dates. The subdivision application would establish 1966 ground rules for Ms. Perry, and 2000 by the Browns. It would be to their advantage to submit the application just under Perry. The attorney for the claimant, Ed Fitch, indicated there is no objections to doing this. LUKE: Move approval of Order No. 2005-044. DALY: Second. VOTE: LUKE: Yes. DALY: Yes. DEWOLF: Chair votes yes. 10. Before the Board was a Public Hearing and Consideration of Signature of Order No. 2005-36, a Claim for Compensation under Measure 37 (File #M37-05-11; Claimant: Frick). Tom Anderson stated that this claim is in regard to a 4.8-acre parcel zoned EFU that's located on Butler Market Road. The claim was received on December 4, 2004, and the $500 fee was paid. The proposed use as indicated on the application is to subdivide the property into one-acre parcels. The date of acquisition was June 23, 1972. The waiver is a valid and eligible claim under Measure 37. The proposed waiver would waive existing land use regulations and establish a date of June 1972 for review. The existing regulation governing subdivisions in 1972 was PL-2, which was adopted by the County in 1970. A key element was a minimum lot size of five acres. Even though the claim predates the zoning, it would be governed by this. Minutes of Board of Commissioners' Meeting Wednesday, June 8, 2005 Page 6 of 16 Pages If the waiver is granted back to 1972, this would preclude further subdivision of the property. Ed Fitch, attorney for the claimant, indicated there is no objection to approval of the proposed Order. LUKE: Move approval of Order No. 2005-036. DALY: Second. VOTE: LUKE: Yes. DALY: Yes. DEWOLF: Chair votes yes. 11. Before the Board was a Public Hearing and Consideration of Signature of Order No. 2005-42, a Claim for Compensation under Measure 37 (File #M37-05-7; Claimant: Leason - Pine Mountain Ranch). Tom Anderson said this claim was received on December 29, 2004 and the $500 fee was paid. The claim involves approximately 478 acres located east of Sisters in the Cloverdale area. The amount of damage claimed was estimated at between $3.5 and $5.5 million. The use proposed is to subdivide the property into 420 lots, with a golf course. Again, there are some unique ownership interests, affecting the type and use of waivers. Mark Pilliod then read a prepared statement to the audience. (A copy is attached as Exhibit A) Tom Anderson stated that the zoning of the land is EFU. A waiver from the State may be required for the County to consider a change as the land is considered a resource. The Board's decision could be different from the State's decision, but there has to be a workable waiver by both entities. The forming zoning of PL-2 limited subdivisions to a five-acre minimum. If they had proceeded at the time, the lots would have been limited to five acres or larger. According to that zone, a golf course and 400 or more homesites would not have been approved. Ed Fitch, the attorney for the claimants, said that he appreciates the statement given by Mr. Pilliod, and agrees that this is virgin territory and the law is not crystal clear. (A copy of Mr. Fitch's June 7 letter is attached as Exhibit B.) Minutes of Board of Commissioners' Meeting Wednesday, June 8, 2005 Page 7 of 16 Pages The purpose of Measure 37 shows the application makes sense. The Leasons have been on the land for 34 years, and have paid expenses personally. In regard to a recent article in the Bulletin, it is clear that in Central Oregon there is an increasing need to subsidize agricultural uses. The Leasons have subsidized the land for 34 years at an average of $20,000 per year. They have retained all economic and development rights, and have continually had complete control over the property. The transfer of title in 1995 was for estate planning purposes only, similar to a revocable trust. It is clear that the intent of Measure 37 was for those who have an ownership interest in whatever form have a right to go forward. In regard to what the scope would have been in 1972, there was a law governing PUD's under PL-2. The Leasons have been working with representatives of Eagle Crest on a conceptual plan and scheme, and have information as to the economic benefits of this development. In regard to Mr. Pilliod's comments about not getting information in a timely manner, Mr. Fitch said that meetings could be scheduled in advance to address some of the details. He concurred with the conclusion of County staff and the Order. He realizes they have to go through the stated process. He added there will be no golf course, just a practice range. Commissioner Luke asked if he is stating that the corporation and applicant have the same rights. Mark Pilliod replied that this is similar to the Brown case, indicating a distinct interest, and the Order distinguishes those interests. They are not considering stock in the corporation as an interest. Commissioner Luke said that he appreciates the work that was done on this, but disagrees with the conclusion. Chair DeWolf then asked if any opponents wished to testify. Minutes of Board of Commissioners' Meeting Wednesday, June 8, 2005 Page 8 of 16 Pages Paul Dewey distributed a document to the Commissioners and Legal Counsel. (A copy is attached as Exhibit D.) He said that this is an interesting case, and involves a key distinction in Measure 37 regarding compensation claims and waiver claims. Compensation claims go back to when the family members purchased the property, and the waiver claims go back to the transfer date to the current owner. One of the authors of Measure 37, David Hunnicutt, said that the distinction was intentional, due to ramifications if waivers went back as far. The definition of "owner" is also explained in the voters' pamphlet. He said that what is involved is 100 years of corporate law. A corporation could be owned or controlled by one person, but is not just that person alone. Under black letter law, a corporation is an entity into itself and can't be ignored when it is inconvenient. It needs to be handled consistently. When a corporation is an alter ego of an individual, the individual could be held personally liable and the corporate veil can be pierced. It is strange that the claimants indicate they have done unlawful conduct by acting as individuals and not as a corporation. Commissioner DeWolf asked if a corporate veil can be pierced due to illegal actions, are there other ways to do so. Mr. Dewey replied it could be by unlawful conduct or fraud. The individual becomes personally liable. The reason for incorporating is to limit personal liability and protect the individual from being sued. Mr. Dewey stated that the claimants also produced a subscription agreement, which is not dated, but shows it is effective in May 1995. The Leasons have stated it was their intent to retain the rights that the deed doesn't show. Another document conveys a I% ownership right to the Leasons, resulting in a new transfer date. There are also some questions about the Leasons' signatures. The claimants are attempting to make a sham of their corporation in order to make a Measure 37 claim. They can't create new documents to show this. If staff accepts these documents and it is found they aren't true, there could be long-term ramifications. This opens the door to having people come in with a variety of documents and assertions and make a claim. There is a threat of litigation modeled on this approach, contrary to decades of corporate law. Minutes of Board of Commissioners' Meeting Wednesday, June 8, 2005 Page 9 of 16 Pages Commissioner DeWolf said that he suspects this could end up in court. It doesn't matter if it is for $58 million or $500,000. The County can't consider paying on any Measure 37 claim as there are no funds available for that, and the intent of Measure 37 was more to waive claims. The concern is that if it went to court and the County lost, the Leasons would get the waiver plus the County would have to pay damages as determined by the Court. That risk is very real. Mr. Dewey stated that the County would only have to pay attorney fees, if the Leasons get what they want. The County needs to consider other risks, too, such as thirty years of land use planning, and the integrity of the Cloverdale area with all of the residents there relying on what the zoning was in the area when they purchased. There are other reasons beyond just avoiding claims for attorney fees and damages. Commissioner DeWolf explained that he doesn't necessarily agree with the results of the passage of Measure 11, either, but judicial options were taken away, the voters passed it, and it is the law of the land. The voters of Oregon, by passing Measure 37, have said they want something different. Mr. Dewey said that the voters didn't vote for this particular claim. Commissioner DeWolf responded that there is no way to know that. Mr. Dewey stated that Measure 37 didn't do away with corporate law and allow alter egos. Commissioner DeWolf said that Measure 37 is not clear enough for the Commissioners to make that determination. This claim may end up in court, since the legislature is not moving very fast to clear up the issue. Mr. Dewey stated that ambiguity is not the reason to approve it. There is the issue of the feasibility of the development; this was raised in written materials he provided. There is an issue with another claim regarding electrical service - the Central Electric Cooperative filing against the Cyrus' and the need to expand the system. Goal 3 was passed in 1975, and the land should be valued at an amount between 1971 and 1975. Commissioner Daly asked how Measure 37 would relate to Goal 3. Mr. Dewey said that the loss is measured by the enactment of the law, the earliest being Goal 3. Minutes of Board of Commissioners' Meeting Wednesday, June 8, 2005 Page 10 of 16 Pages Carol MacBeth, the Central Oregon advocate of the 1000 Friends of Oregon, said she agrees with Mr. Dewey. (She then began reading a statement; a copy is attached as Exhibit E.) Mark Pilliod interrupted, indicating this was not a public hearing, and was not an entitlement to present testimony unless the speaker is a party entitled to notice for the hearing. However, others can submit their testimony in writing. Speaking again on behalf of the claimants, Ed Fitch said that the real issue is who are the current owners. He is convinced and can provide support to show the Leasons are the owners. Title in the corporation is not disputed; however, the Measure says that any interest is a reason, and the Leasons have had three fundamental property rights: possessory, development and economic return. The have paid out of their pockets for the property for the purchase and operating expenses. They personally guaranteed debts on the property. There is no question that there are dual owners, but they resent the implication that there was some kind of fraud or improper conduct. In many cases you can have personal ownership and a corporation - they resent the implication that there was some kind of fraud or improper conduct. The documents produced were pursuant to a request from the County, at which time a draft was done in response. There was no intention to fraudulently prepare the documents. John Leason stated that he and his wife purchased the property in 1971, and no one else has owned it except their daughters. The attorney figure that for estate planning purposes it was easier to issue stock rather than splitting the property, which was the sole reason for incorporation. All of this was paid for on a personal basis. Commissioner Dewolf said that since there is no new information offered by the claimant and no rebuttal from opposing witnesses, he will close the hearing. Commissioner Luke stated that this is a tough one. The whole time he served in the legislature, he heard from people who wanted to do with their land what they could have done when they bought it. The problem is the corporation. He said he disagrees with the recommendation of staff and Legal Counsel, and won't support approving the Order. Minutes of Board of Commissioners' Meeting Wednesday, June 8, 2005 Page 11 of 16 Pages Commissioner DeWolf asked him if he wouldn't support it back to 1971, just to 1995. Commissioner Luke concurred. Commissioner Daly stated that he knows some corporate law, and agrees with Mr. Dewey on how a corporation is supposed to work. However, Measure 37 says that any interest, including possessory interest, is included. It may not stand up in court. But he agrees with Legal Counsel because of the possessory interest. The legislature is working on this issue and there may be some answers before the end of the session. Commissioner DeWolf observed that if the Board approves or denies the claim, the courts or legislature may find that the Board should have concluded differently. Mark Pilliod replied that it depends - legislation in rough form indicates that those who are working on it would insert a trigger or effective date. For claims submitted prior to February 15, 2005, in a House Bill now being considered, the claim could be continued as it currently exists. Legislation would not affect that claim. A drawback could be that provisions may say something about transferability. Under Measure 37 the rights to development could not be transferred to a third party. If you don't fall under the terms of the new legislation, you may forgo favorable items. This will be the claimant's decision. Commissioner DeWolf explained he is not sure what to do in this case. The County is trying to work as well as possible with people, even if they don't pay the fee. The goal is to comply with the wishes of the voters and what the votes thought they were doing. There are no illusions that the County knew the full implication of the Measure. One complication is that if the Leasons succeed, it will dramatically change the character and use of that area. Perhaps they have a right to do that. There are people on both sides of this issue. Commissioner Daly observed that the voters felt people should have the right to do with their property what they could have done when they bought it. When using that criteria to look at this claim, possessory interest is an interest. Commissioner Luke noted that if the corporation had not been formed, there would be no question. Commissioner DeWolf said that forming a corporation takes advantage of the law for estate planning, but it is a change in ownership; perhaps not enough of a change to preclude there rights. Minutes of Board of Commissioners' Meeting Wednesday, June 8, 2005 Page 12 of 16 Pages Commissioner Luke indicated that it is probably in the best interest of the County to approve this, per Legal Counsel's recommendation. However, he is making a statement. The Measure is very unclear, and is terrible in not what it hopes to do but with the uncertainty. Someone could get a waiver but may need to go through a long process and even then may not get what they want. The County has competent counsel, and their opinion should be respected. Commissioner DeWolf noted that the amount of time needed to deal with a claim like this one in court could be substantial. There are compelling arguments on both sides. Mark Pilliod said that the State has indicated they will have a draft by Friday, and their decision should follow within a couple of weeks. June 29th is the deadline. Tom Anderson stated that Commissioner Daly has a good point, that today's decision is not the final determination. Even if it passes the House it may not get through the Senate. Whichever way the Board votes and how the State weighs in, it is likely that ether side will challenge the decision. The most likely outcome of this will be that it ends up in court somewhere. Commissioner Daly noted that if the Board is considering the possible liability to the County, they should give the waiver. Commissioner DeWolf asked if the opponents could sue the County. Mr. Pilliod replied that they could sue based on an argument that the decision wasn't lawful and violated the terms of the Measure. The County could participate, and the claimants could intervene and argue before a judge. The opponents are under no obligation to fight that fight. Commissioner DeWolf asked if he could call in and vote from a remote location (he was leaving town for a while). He indicated he wanted to read over the handouts distributed earlier in the meeting before making a decision. Mr. Pilliod stated that a conference call would be appropriate if a date and time certain was set. It was decided that Commissioner DeWolf would call in to the Commissioners' Office at 8 a. m., Thursday, June 9 for further discussion and to take action. Minutes of Board of Commissioners' Meeting Wednesday, June 8, 2005 Page 13 of 16 Pages CONVENED AS THE GOVERNING BODY OF THE 9-1-1 COUNTY SERVICE DISTRICT 12. Before the Board was Consideration of Approval of Weekly Accounts Payable Vouchers for the 9-1-1 County Service District in the Amount of $33,942.83. LUKE: Move approval, subject to review. DALY: Second. VOTE: LUKE: Yes. DALY: Yes. DEWOLF: Chair votes yes. CONVENED AS THE GOVERNING BODY OF THE EXTENSION/4-11 COUNTY SERVICE DISTRICT 13. Before the Board was Consideration of Approval of Weekly Accounts Payable Vouchers for the Extension/4-11 County Service District in the Amount of $521.22. LUKE: Move approval, subject to review. DALY: Second. VOTE: LUKE: Yes. DALY: Yes. DEWOLF: Chair votes yes. RECONVENED AS THE DESCHUTES COUNTY BOARD OF COMMISSIONERS 14. Before the Board was Consideration of Approval of Weekly Accounts Payable Vouchers for Deschutes County in the Amount of $286,183.52. LUKE: Move approval, subject to review. DALY: Second. VOTE: LUKE: Yes. DALY: Yes. DEWOLF: Chair votes yes. Minutes of Board of Commissioners' Meeting Wednesday, June 8, 2005 Page 14 of 16 Pages 15. ADDITIONS TO THE AGENDA None were offered. Being no further items brought before the Board, Chair De Wolf adjourned the meeting at 11:55 a. m. On Thursday, June 9, 2005, at 8:05 a.m., Commissioner DeWolf phoned into the Commissioners' Office to discuss the matter further with Commissioners Daly and Luke via conference call. Also present were County Administrator Mike Maier; Anna Johnson, Commissioners' Office; Tom Anderson, Community Development; Mark Pilliod, Legal Counsel; media representatives Barney Lerten of News Channel 21 and Chris Barker of the Bulletin; and several other citizens. DALY: Move approval of Order No. 2005-042, approving a waiver of land use regulations to authorize Pine Ridge Ranch Company, Inc. and E. J. and Gertrude Leason, to use the subject property as allowed when they each acquired the property - this would be the 1971 ownership date. DEWOLF: Second. I wish to make the following statement. I've decided to support the recommendation of our County Administrator and Legal staff. In my heart I believe the owner of the property changed in 1995 when the Leasons transferred their ownership of the property to the corporation. However, I'm not a lawyer and I'm not a judge, and I cannot in good conscience put the taxpayers of Deschutes County at risk for a potentially large judgment against Deschutes County. Unfortunately, the ambiguities inherent in Measure 37 force us to make a decision about land use that is not based on the highest and best use of the property, or the orderly development of land in our County. Those ambiguities fore us to make decisions based on the risk of loss due to litigation. Consequently, the decision I'm making today is a decision I do not believe is. right. But I do believe it is the correct decision given the circumstances. Minutes of Board of Commissioners' Meeting Wednesday, June 8, 2005 Page 15 of 16 Pages I sincerely hope this case ends up in front of a judge so we can get the answers that we currently lack regarding Measure 3 7. 1 sincerely hope that the Legislature corrects these ambiguities and makes their legislation retroactive to when Measure 37 became law. Because this is a lousy way to make decisions. Commissioner Luke added that it will probably take a couple of years, but that there is no other choice for the Commissioners. VOTE: LUKE: No. (Split vote) DALY: Yes. DEWOLF: Yes. At 8:10 a.m. Commissioner DeWolf left the meeting, and the remaining two Commissioners met with County Forester Joe Stutler, students from COCC and others to hear a presentation on land management practices. Commissioners. ATTEST: 6pvu~, 6ack- Recording Secretary Tom DeWolf, C'FaM? Attachments Exhibit A: County Legal Counsel's prepared statement (2 pages) Exhibit B: Letter from Edward Fitch regarding Leason's corporation (4 pages) Exhibit C: Letter from Paul Dewey regarding the Leason's claim (9 pages) Exhibit D: Testimony from Carol Macbeth on behalf of 1000 Friends of Oregon (5 pages) Exhibit E: Board Meeting agenda (6 pages) DATED this 9th Day of June 2005 for the Deschutes County Board of Minutes of Board of Commissioners' Meeting Wednesday, June 8, 2005 Page 16 of 16 Pages County Legal Counsel has taken a lead role in preparing the reports submitted to the Board of County Commissioners. This has been done on behalf of the County Administrator. In preparing reports/recommendations to the Board, the staff has been guided by the provisions of Measure 37 and the County's implementing ordinance. Legal Counsel has also consulted with representatives of the State on claims for which a companion "State Claim" is expected. This was done to try to avoid inconsistent results, if possible. Generally materials submitted by claimants are incomplete in one respect or another, despite repeated requests from my office to supplement the claim. Additionally, as has been mentioned in the past by numerous sources, Measure 37 contains many ambiguous provisions, which naturally lend themselves to inconsistent interpretations. One especially ambiguous provision is the definition of "Owner," which reads: "The current owner of the property or any interest therein." This ambigous definition causes difficulties with the application of other parts of the measure. For example, Section (8) authorize the County, as it processes claims, to exercise its discretion in determining whether, instead of paying compensation, to choose not to enforce certain of its land use regulations against such property. Yet, this choice to not enforce a land use regulation relies entirely on what is meant by "Owner" and when that owner acquired the property. Section (8) is particularly susceptible to conflicting interpretations where an Owner reacquires an interest in the property after an intervening conveyance to another person, perhaps a relative, or where the particular interest an owner has is less than the full gamut of property interests that a person or entity may possess. The County has thus examined the discrete ownership interests of claimants who submit their various claims over a single piece (or related pieces) of property. Generally, if multiple owners have different acquisition dates, the County's approach has been to examine each claimant's facts separately and determine whether other elements of a Measure 37 claim have been justified, as if each claimant had submitted their proof of claim separately. This may result in one claimant (out of several related claimants) receiving from the County a waiver of certain land use regulations dating back to that owner's acquisition date, which is different than the acquisition date (and corresponding regulations) of another owner. Some have referred to this as a kind of "snap shot" zoning because, as of a particular owner's acquisition date, only certain land use regulations may have been in effect and would be applied to that claimant's later development application. In one case before the Board this morning, the definition of "Owner" has been given a very broad interpretation based upon representations made to the County by the claimant. In particular, the claimants E.J. Leason and Gertrude Leason and their wholey owned -Exhi6it I°r Page of Q corporation, Pine Ridge Ranch Company, have furnished the County with information that indicates the transfer of title in 1995 from them as individuals to the corporation was for the limited purpose of estate planning. The conveyance took the form of a bargain and sale deed, which, according to the statute (93.860), "conveys the entire interest in the described property" as of the date of the deed. In all other respects, the Leasons have maintained the property as owners, including occupation as their principal residence, operation of a farm, making and maintaining improvements and paying expenses related to the property. Furthermore, the Leasons have recently caused the corporation to reconvey a nominal interest in the title to the property to themselves as individuals. As mentioned before, the definition of Owner under Measure 37 is susceptible to broad interpretation and this may include the interest they claim here, both the possessory interest allegedly retained in the 1995 transfer and the interest which was reconveyed in 2005. In short, the Leasons would have the County accept that the corporation's ownership of the property was transparent; that instead, they were the true owners. Given the County's limited resources, it is not in a position to investigate and verify the information submitted by claimants, but must instead rely on information furnished by knowledgable sources. The difficulty surrounding the County's limited resources is more critical in the case of the Leasons, because of the extensive nature of the proposed use - nearly 500 acres being devoted to over 400 residences, a claim of loss of over $50 million in value allegedly resulting from county land use regulations. While the County is not required under Measure 37 to verify any particular amount of damages, since it has no funds budgeted for payment of claims, such a signficant claim could expose the County to serious fiscal difficulties. Again, Measure 37 lends itself to interpretations that expose the County, not just to claims for damages and attorneys fees, but to allowing a claimant to utilize their property as they wish despite County land use regulations while still being exposed to civil judgments for damages and attorneys fees if the County does not pay the demanded compensation or waive the alleged offending land use regulation. While it would be easy to argue, perhaps correctly, that the Leasons' transfer of their title in the property to the corporation in 1995 left them with no ownership in the property recognized under Measure 37, such an argument by the County is not without significant risk. As County Legal Counsel, I feel I have a duty to point out to the Board where its decisions carry such risks. In my dealings with parties interested in the outcome of this claim, I have been quite frank in pointing out that my recommendation to the Board is based principally upon the extensive discretion that Measure 37 grants to the County governing body as it processes claims, the ambiguous terms and therefore uncertain interpretations that Measure 37 carries and the significant risk created by this extensive claim. '-Exhibit I1--- Page of 2 RRVANT EMERSON & FITCH, 1.1.P :~f lltrtlr~ ~ ;ll (.Fili June 7, 2005 Sent via fax to: 617-4748 and P class mafl Mr. Mark Pilliod Deschutes County Legal Counsel 1300 NW Wall St., Suite 200 Send, OR 97701 Re: John and Gertrude Leason/Measure 37 Dear Mark; Ronald L. Bryant Craig P. Pmerann Edward P. Fitch Geoffrry J. Gokey Steven D. Bryant Michael R. McLane John E. Laherty AM ndxlidvd m w4shinglon * *,Ilse) admllird in 04h Just to make sure we have it in the file, I want to enclose a copy of the deed from the corporation to John and Gertrude Leason. Also regarding to the feasability of development, please be advised that on the water rights John and Gertrude Leason have approximately 400 acres of 1895 water rights on the property and approximately 100 acres of 1904 water rights. They are in the process of making an application for a quasi municipal water use. If need be, they will have a shared well for every three (3) parcels. To my understanding in talking to W & H Pacific and in considering the lay of the land there should not be any problem having septic systems for the homesites. Finally, I am enclosing a copy of a letter from Central Electric Cooperative, Inc., indicating that they would be providing electrical service to the development. If you have any questions, let me know. Thank you. Very truly yours, <f Edward P. Fitch EPF/jk Enclosures G:1WP51\EPFk,37U&son. J & G1Pil6od.03.wpd0k) 888 W. Evergreen Ave, P.O. Box 457 Redmond, OR 97758.0103 (541) 548.2151 Fax (541) 548.1895 E-mail bcf@~m9nd-lxwytr&.com 10,8 10:2T 900Z Z unr S68T8VSTVS:XE3 Exhibit 13_ Page I_ of lI3`N0S83W3`1NtiM9 Unless Otherwise Requested, All Tax Statements Shall be Sent to: E.J. Leason and Gertrude Leason 69401 Goodrich Road Sisters, OR 97759 AFTER RECORDING RETURN TO, BRYANT EMERSON & FITCII PO BOX 457 REDMOND, OR 97756 BARGAIN AND SALE DEED PINE RIDGE RANCH COMPANY, Grantor, grants, bargains, sells and conveys unto E. J. LEASON and GERTRUDF. LFASON, husband and wife, an undivided 1% interest in the following described real property, situated in the County of Deschutes, State of Oregon, to-wit- The south half of the southeast quarter (S112 SE1/4) and the southeast quarter of the southwest quarter (SE1/4 SW 1/4) of Section Thirty (30); the east half of Section (31); the northeast quarter of the northwest quarter (NE1A NW1/4) of Section Thirty-One (31); and a 2 acre tract of land in the northwest corner of the northwest quarter of the southwest quarter (NEl/4 SW 1/4) of Section Thirty-Two (32), said tract of land to be 295 feet square. Said tract is particularly described as follows: Beginning at the 1 /4 corner between Sections 31 and 32; thence east 295 feet; thence South 295 feet; thence West 295 feet to the section line between Sections 31 and 32; thence north 295 feet to the place of beginning, all in Township 14 South, Range 11 East of the Willamette Meridian, in Deschutes County, Oregon. THIS INSTRUMENT WILL NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED USES AND TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR FOREST PRACTICES AS DEFINED IN ORS 30,930. The true and actual consideration for this conveyance is $0. DATED this 27 day of May, 2005. Page 1. BARGAIN AND SALE DEED G,NWp5rWF1 3nLesm, J A Qft&SDEED.wpd(rmem) ZO'd TO:!2T SOOZ Z unf PINE RIDGE RANCH COMPANY, an Oregon corporation By:-,D~o-ee".-- S~ E.J.Leason,Secretary/Treasurer DRYANT, EMERSON & FI=H, uP ArrORNEYS AT LAW US WEU EVERGREEN AVENUE P.O. BOX 457 ROW", OREGON 979564109 -Exhibit 'a p10Ne cs"r e"az,s' (5s.) 646-IM Page of y-4_ S68T8bSTbS:Xu3 iI3 ` NOS~BW3 ` iNUMS STATE OF OREGON ) SS. County of Deschutes ) Personally appeared before me this 27 day of May, 2005, the above-named Gertrude C. Leason, President of Pine Ridge Ranch Company, an Oregon corporation and acknowledged the foregoing instrument to be her voluntary act and deed. tary Public of Oregon OFFT AL y Commission Expires: /a . L _ JENNIFER KOUj, NOTARY PUBLIC. OREGON COMMISSION N0.373377 MYCON14I5 5.tON EXPIRt OGT 06 2007 Page 2. BARGAIN AND SALE DEED BRYA.NT, EMERSON do F[TCH,ur G.\WP51\EPf1_37qe J & O\BUDEM.wpd(mem) ATTORN&S AT LAW am WEST fiVCAWEEN AVENUE ro. BOX 457 RF.DMONO. OAC40N 9"9&0163 1FL.EPW0W (SN) S4&2151 '-Exhibit FAx ~•1► 5"-'1ms Page 3 of _.!A- ~0 'd TO:2T SOOZ L unf S68T8bSTbS:Xp3 lI3`N0S83W3`1NUAd9 f CENTRAL ELECTRIC COOPERATIVE, INC. May 27, 2005 E J LEASON 69401 Goodrich Rd Sisters OR 97759 In response to your inquiry, please be advised that property located in T.14S., R.11 E., W.M., Section 31, Tax Lot 4800, 5300, 5400, & 5500 Deschutes County, Oregon, is within the service area of Central Electric Cooperative, Inc. Central Electric Cooperative is prepared to serve this location in accordance with the rates and policies of the Cooperative. Sincerely, Karen Palmer Customer Service Engineering PO Box $46.2098 N, Hwy 97 - Redmond, Oregon 97756-0187 Tet: (541) 548.2144 • Fax: (541) 548-0366 www,centralelectriccoop.com Exhibit Page of b0 'd To: £j SOOZ z unr S68T8bS1bS: X?j l I3 ` NOS?13W3 ` iNt Adg Paul D. Dewey Attorney at Law 1539 NW Vicksburg Bend, Oregon 97701 (541) 317-1993 pdewey bendcable.com June 8, 2005 Deschutes County Commissioners 1300 NW Wall Street Bend, Oregon 97701 Measure 37 Claims Unit Dept. of Administrative Services 1225 Ferry Street, SE, U-160 Salem, Oregon 97310 Re: Deschutes County Measure 37 Claim No. M37057 (Pine Ridge Ranch Co. / Leason) State Measure 37 Claim No. M120236; Dear Commissioners and State Administrators: On behalf of Bruce Bowen and Eva Eagle, I am submitting this letter in response to the County's Staff Report of June 3 and the claimants' letter and documents of June 2 and June 7. In addition to all of the reasons we have identified in previous correspondence why this Measure 37 claim should be denied, such denial is also appropriate for the following reasons: 1. The County Staff Report incorrectly recommends that waiver be granted to the Leasons dating back to 1971. This conclusion is internally inconsistent with the County Staff Report's conclusion that the corporation is the owner of the property and that the claimants have acknowledged that the property was conveyed to the corporation. (See the County Staff Report's references at page 2 regarding the admission of conveyance to the corporation, at page 3 regarding the acknowledgement that the claimants have presented no other proof of an allegation of personal ownership than newly created documents and arguments of what their intent was 10 years ago, at page 5 that the corporation is the owner and at page 9 that the corporation is the owner of fee title.) Without a semblance of the substantial evidence that is required of a government, the County states that it will just "assume" the truth of the Leasons' assertions of ownership and further "assume" that the Leasons retained and held the necessary interests. Merely assuming assertions does not constitute substantial evidence, particularly in the face of "black letter" property and corporation law and of the deeds transferring ownership to the corporation in 1995. The County is also ignoring the fundamental distinction between claims of waiver and of compensation. See the attached transcript of OIA's David Hunnicutt, an author of Measure 37, explaining the political reasons why waiver claims were limited to the most recent transfer of ownership under the Measure. --Exhil it Page I of q June 8, 2005 Page 2 2. The State in Claim No. Ml 19362 referred to appropriate claimants as being those who are "owners" of an interest. There is no evidence that the Leasons are "owners" of any interest. As we have earlier argued, the Leasons at most have shown that they have a possessory interest or are possessing the land. They have not shown any "ownership" other than a recent transfer of a I% property interest which, if legal, merely creates a new waiver date of May 27, 2005, for the Leasons. 3. The claimants have submitted a claim of waiver and of compensation based on construction of 425 homes and have ignored the fact that even if there were waiver and compensation applicable to the early date of 1971 that Deschutes County provisions (PL-2), dating from 1970, restricted lot sizes to five acres in size. There is simply no basis for the claimants' development proposal for 425 lots. 4. As the County has acknowledged, it is the responsibility of the claimants to provide evidence that the proposed development is feasible. There has been no such evidence of feasibility. The claimants' letter of June 7 references having "irrigation" rights and "applying for" a quasi municipal water use. Such "assertions" are not evidence of feasibility. The letter also refers to septic systems being fine because of the lawyer's understanding and because of "the lay of the land." The true issue here is groundwater contamination and soils. Also, feasibility of market is not addressed. 5. There is a reference in the Staff Report that the corporation is considered a "family member" under Measure 37, subsection 11(A). It should be noted, however, that subsection 11(C) which provides the definition of owner does not include a "family member." It is only subsection 3(E) that provides that a "family member" is relevant to the claim of compensation. There is no similar provision identifying "family member" as relevant to a claim of waiver. While the corporation is a "family member" under Section 3(E) for purposes of a compensation claim, it is not a "family member" for a waiver claim. 6. The claimants on June 7 submitted a bargain and sale deed from the corporation to the Leasons of a I% interest in the land. This is but the latest in a series of documents and arguments with the impermissible goal and effect of creating a sham of the corporation. Even the notary of this purported deed is false where the notary "witnesses" Gertrude Leason signing the deed, but it is E.J. Leason who actually signed it. 7. This Measure 37 claim is premature since no land use regulation has been "enforced" against the claimants. There has been no demonstration they are "entitled to relief' under Measure 37. There is nothing stopping the claimants, for example, from applying for a plan amendment and zone change to place a destination resort on the site. Only when an application is denied would the claimants be entitled to relief because of regulations being enforced against them. 8. The claimants' evidence of loss in value does not conform to the requirements of Measure 37. Measure 37 clearly calls for an evaluation of the reduction in value caused to the property at the time the land use regulation alleged to cause the restriction went into effect. Exhibit C , Page 0 of q June 8, 2005 Page 3 Since the claimants have not identified what exactly are the regulations allegedly causing a loss in value, it is impossible to do an evaluation of any loss in value. Also, Measure 37 clearly does not say that an assessment of current fair market value is the focus of a compensation claim. Even if the claimants can date their claim back to 1971, the reduction in fair market value, if it is associated with the implementation of Goal 3, is as of only 1975. As of then, there probably would be no loss because there was no market for a subdivision of this kind. The property had been farmland and was still farmland in 1975. The claimants' valuation assumes that each proposed house here will sell for approximately $200,000. Whether or not that is a correct assessment for current fair market value of such houses and lots, it is certainly not the correct valuation for the date when the land use regulation alleged to cause the restriction went into effect. Subsection (2) of Measure 37 defines "just compensation" as "equal to the reduction in the fair market value of the affected property interest resulting from enactment of the land use regulation as of the date the owner makes written demand for compensation under this act." Note that the reference to "as of the date the owner makes written demand for compensation" means that any reduction in value must be adjusted to dollars as of the date the owner makes written demand for compensation. Note further that the reference to "enforcement" of the land use regulation under subsection (2) would have no effect on value here. The fair market value of the property prior to enforcement would be determined by an assessment of market value under the current conditions of land use regulations being in effect and enforced. Thus, the mere enforcement of a land use regulation does not result in a reduction in the fair market value of property. 9. To the extent DLCD or any agency waives any state regulations or statutes under Section 8, such a waiver under Measure 37 is unconstitutional as an inappropriate delegation of legislative authority. 10. The County assumes that the beginning date for determining the Leason claim is a contract to purchase in 1971. Such a contract does not constitute an ownership interest. It was not until 1976 that the Leasons were granted a deed to the property. At that time, Goal 3 would have been applicable which would not have allowed the development as requested by the claimants. 11. The provisions of ORS Chapter 215, effective in 1963, provided that construction and use of dwellings must be as customarily provided in conjunction with farm use. These regulations predate the Leasons' claim and would not allow the development as proposed by the claimants. 12. Where the claimants have not specified the laws and regulations which allegedly cause a loss in value and which are subject to waiver, the County and State cannot waive that which is not specified, so the property in question remains subject to what has not been identified by the claimants. Exhibit C Page _*23 of Q June 8, 2005 Page 4 Conclusion. As discussed in the attached newspaper article, this Measure 37 claim, plus all the others in the Cloverdale area, will have a serious and negative impact on land use planning in the area. It is critical that the County step up to the challenge and defend these lands and those people who have relied on land use protections in choosing to live in this area. Rather than just "cave in" as recommended by the Staff (because of fear of being sued by the claimants), the Commissioners should uphold the County Code, the laws of the State and the past 30 years of land use planning. Very truly yours, lJ_..,9 PAUL DEWEY PD:ao Attachment cc: Clients Larry Shaw Ed Fitch Exhibit Page L_ of Q Oregon Law Institute Conference, "Measure 37 Summit" Wednesday, January 5, 2005, Oregon Convention Center, Portland, Oregon Summit Faculty Member David J. Hunnicutt, Executive Director, Oregonians in Action: 2 There's been discussion in both panels already today and probably in the afternoon 3 panels about the difference between waiver and compensation. The - Measure 37 does 4 distinguish between compensation claims and waiver claims and provides a different time 5 element for a compensation claim versus a waiver claim. If you are going to - if a local 6 government, and it's the local government or the state government, whoever is responsible for 7 the regulation that determines whether or not to compensate or waive, if the local government 8 determines - decides to compensate and the property has been inherited, then the compensation 9 claim is measured back two gener - conceivably back two generations; if it's only gone back one 10 generation, then one generation. However, in lieu of compensation under subsection (8) of the 11 Measure, the local government has the ability, and I'll just use a local government example, the 12 local government would have the ability to go ahead and waive the regulation to allow the 13 current owner to use the property for a use that the current owner could make at the time that 14 they either inherited the property or purchased it. Now, why is there a distinction? Well, as 15 Ross Day said, philosophically we disagree or we believe that a claim of property right and a 16 claim the rights that the - that the owner has shouldn't be extinguished upon their death. 17 However, from a political - from a political point of view, and then Monday morning 18 quarterbacking being exactly that, at the time that the Measure was drafted we were afraid that 19 we would face the argument that if you go back two generations then you - then counties would 20 have to allow people to use land in the way that grandpa could have done it when grandpa 21 purchased the property in 1890 and I did talk to a gentleman from Multnomah County the other 22 day, an elderly gentleman, who traced ownership of his property back two generations to when 23 grandpa bought it in 1890. That being the case, we didn't think - we thought it would make it Exhibit Page of ~j I more difficult to pass the Measure. We wanted to take that argument away from the opponents 2 of Measure 37, and they ended up making it anyway, so I guess it was a waste of time, but that - 3 the Measure is, it is what it is, and what the Measure does is distinguish between those two. So, 4 in the example that Jeff used, the 19 - the original purchase of the property by dad in 1954 and 5 the subsequent inheritance by daughter in 1994, in that example the distinction - the choice that 6 the governing body responsible for whatever the regulation that's being challenged would face is 7 do we waive back to 1994 or do we compensate back to 1954? 8 2 Exhibit Page_ of 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 STATE OF OREGON County of Deschutes REPORTER'S CERTIFICATE ) ss. This is to certify that I transcribed the foregoing two pages to the best of my ability from a cassette tape provided to me by and at the direction of Paul Dewey, Attorney at I Law. I have subscribed this certificate at Bend, Oregon, this 19`I day of April, 2005. Al;cia.OW a.ral Alicia O'Hara Transcriber Brief Time - Temporary Legal Services -Exhibit O Page _ 1 of C uale M37 may redefine Cloverdale area 1' By Chris Barker The Bulletin CLOVERDALE - Tygh Red- field's mailbox still lists the previ- ous owner of his 150-acre hay farm. It's a statement - like the rusting row of tractors parked in front of his 70-year-old barn and the old-fashioned irrigation sys- tem he uses to flood his pas- tures. I'm not a `change' guy," said Redfield, who purchased the property in 1973. For Redfield and others who live in the area - a swatch of farmland increasingly giving way to homes that capture panoramic mountain views - high land values are already threatgCloverdale's agricul- thre~o history. fear change will only be accelerated by Measure 37, a property-rights bill passed by Oregon voters last year. Eight Measure 37 claims worth $59 million have been filed by Cloverdale landowners, accord- ing to Deschutes County records. See Cloverdale /A10 Outcome of claims difficult to predict Continued from Al At stake, in a series of upcoming county commission hearings that begin on Wednesday: The poten- tial approval for the construction of 909 homes on 2,172 acres. For opponents, it's a worst-case sce- nario that could site a community larger than Sisters on some of the county's more productive farm- land. Measure 37 allows landowners to seek money or the waiver of land-use laws that reduced proper- ty values. When faced with valid Measure 37 claims, most governments in Oregon are expected to waive reg- ulations because they can't afford to pay. Deschutes County hasn't set aside money in its budget to pay for claims. In Cloverdale, waivers of land- use laws would permit much denser development than is cur- rently allowed on land zoned for farming. Opponents of the claims worry that extra traffic and ground-water pollution from added septic sys- tems could make the area less de- sirable. In addition, residential pressure could push out farming, irrevocably changing the charac- ter of the pastoral setting. "We're very concerned that in 10 years Cloverdale and Sisters won't be recognizable to the peo- ple who cherish it," said Carol Macbeth, Central Oregon Advo- cate for 1,000 Friends of Oregon, an environmental group. Not so fast, said Ed Fitch, a Red- mond attorney who represents six of the eight property owners seek- ing claims in Cloverdale. Several factors - including pro- posed legislative changes to Mea- sure 37, the result of a lawsuit filed in Marion County by Friends of Oregon and the real estate market itself - make predicting what will happen on the ground problemat- ic, he said. None of his clients are out to de- stroy Cloverdale, Fitch said. . But he said they deserve com- pensation under the law after en- during what he terms a "lockdown of rural areas" that resulted from the implementation of Oregon's comprehensive system of land-use planning. Since the early 1970s, Oregon land-use laws have attempted to protect farms and forestland by di- recting development to cities and towns. Opposition to the Cloverdale claims is predictable, Fitch said. "On the flip side, somecom of thins,' 'We got ours, and don't e in' is Fitch said. "Beauty's in the eye of the beholder." Harvesting views A couple of weeks ago, Cloverdale rancher David Her- man sold eight "marginally good" bulls for $11,000. The price of hay is high and an abnormally wet spring has given some the first crop of hay grown without irrigation water in recent memory. And rain damage to Cali- fornia alfalfa is pushing up prices in Oregon. "It's as good as it's ever been," said Herman, who bought the 1,000-acre Lazy Z Ranch with his mother in 2000. But when it comes to breaking even, Herman and others who farm in the changing area know better. Some survive by lopping off chunks of property - then selling it to view-seekers to soften their yearly losses. Large homes with soaring windows facing the Three Sisters pocking the horse country of eastern Cloverdale are testa- ment to a new kind of neighbor- hood. .."The big value is in the hobby farm because the guy drives his Lexus into the garage and pulls his Wranglers on and plays the west- em guy for the weekend," Herman said. "The thing is he's the guy who's willing to pay break-out r money for this." Others would like to get out of the business altogether. For them, residential development has be- come an irresistible temptation. Like other areas of Central Ore- gon, real estate prices in Cloverdale are skyrocketing. A prime, 20-acre parcel in Cloverdale would cost $20,000 per acre, or $400,000, said Ali Mayea, a Realtor with Ponderosa Properties in Sisters. That same property would have cost half that - or $10,000 per acre - about 3 1/2 years ago, said Mayea, who lives in Cloverdale. That could bode poorly for the agricultural future of the area. Despite the high value of Cloverdale property, that farmers are struggling in the arid, high-alti- tude area isn't new. A history of hardscrabble living is recorded in aging property records sitting atop an antique able in Tygh Redfield's 'EXhlblt Page $ of R o d°° wbd, a>a>i x ~;d I',"- a!~~Lobo E060>, [ aav O ~ ~a 3~o a~a8op c'~ 0 3n ~3eY'e°a. oy.no8o 3 co w U o .o LV ° oA e" o La Q °1''`° -0 ca o~ d v, • y cts a c d ~ v p w z ~ cal • > Q Co 2 N ° a e'g y e° aOi cacei0in b' aa~i,Qo. .,013' r. 49 .0 .0 (5 O O tLIT O $ a~ [ y cb O s ~ d w O d a) 3 S -S a b0 O O -d aai' = '8 d % x ~ °'cfn' $ a' ~ .e ~o~o >+~~5~ 3 ° O > ° 0 V o'~••''as~ y~a. a~. 3y d a' a' sl 3 y ~d >~'.S~~vCy a.°cago `a3 co B1>Q?°g Bin. 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G3:' a) d:O at a)• o y.i...1O-' N N 40 bZ 0 > j a)Ob• ed N O~ .0 -P E z yA~ G O ~ 1 N O ayi1 g b[ ' WO O O by S eC > 0. N y a+ > y a3 C~ a) ° eti ' ~4) Ico as `n oUc:; o co 5- 8 Co b'rb E L yO li0 ~~0c8 A '~gctgw aMOyo a~d3 3 ° Siam a0i~,0`~c3b~.b $t'i,r;>•y~~~ aOi H ~~1 'A V y >a 4 -V 41 dx y y 6b a`~i p R y $H be o a~rx x >,Ox I a$ Ow ~o$.~ of 1000 FRIENDS OF OREGON 1~ 910; ~Wft 0 0 534 SW Third Avenue, Suite 300 • Portland, OR 97204 • (503) 497-1000 • lax (503) 223-0073 • www.fnends.org Southern Oregon Office • 33 North Central Avenue, Rm. 429 • Medford, OR 97501 • (541) 245-4535 • fax (541) 776-0443 Willamette Valley Office • 388 State Street, Suite 604 • Salem, OR 97301 • (503) 371-7261 • fax (503) 371-7596 Lane County Office • 120 West Broadway • Eugene, OR 97401 • (541) 431-7059 • fax (541) 431-7078 Central Oregon Office • P.O. Box 8813 • Bend, OR 97708 • (541) 382-7557 • fax (541) 382-7552 June 8, 2005 Deschutes County Commissioners 1300 NW Wall Street Bend, PR 97701 Re: Measure 37 Claim, 69401 Goodrich Road, Sisters, John and Gertrude Leason and the Pine Ridge ranch Corporation File number: M37-057 Dear Commissioners, On behalf of 1000 Friends of Oregon, thank you for the opportunity to comment on the Measure 37 Claim submitted to Deschutes County by John and Gertrude Leason and the Pine Ridge Ranch Corporation for 69401 Goodrich Road in Sisters. 1000 Friends of Oregon is a nonprofit, charitable organization founded in 1975 by Governor Tom McCall and Henry Richmond as the citizens' voice for land use planning to protect Oregon's quality of life - through conservation of farm and forest lands, design of compact and livable cities, provision of transportation choices, and protection of natural resources. The staff, members, and volunteers of 1000 Friends of Oregon have worked at the state, regional, and local level for 30 years to advance these objectives, through advocacy, education, research, and litigation. 1000 Friends of Oregon believes this claim is invalid because there has not been a demonstration that the enactment or enforcement of a land use regulation adopted after the claimants acquired the property had the effect of 1) restricting the claimants 'use of the property; or 2) reducing the fair market value of the property, as required under Measure 37. Restriction of Use To establish a valid Measure 37 claim, the claimants must demonstrate that land use regulations qualifying under Measure 37 and enacted after the date they acquired the property have restricted their use of the property, they must show the extent of any such restriction, and they must demonstrate that such regulations have reduced the property's value. The land at 69401 Goodrich Road is controlled by the Pine Ridge Ranch Corporation which was formed in 1995. Deschutes County's EFU zone provisions which affect the ability to develop the property as a planned use development, and which were adopted to comply with Statewide Planning Goal 3 (Agricultural Lands) and related rules, predate the incorporation of the Pine Ridge Ranch Corporation. The claimants have not demonstrated that any regulation adopted after 1995 has restricted their use of the property. Exhibit j Page of 5 Reduction in Value It is premature to conclude that the claimants have demonstrated a reduction in value as required under Measure 37. In evaluating a written demand for just compensation under Measure 37, a threshold question is whether the claimant qualifies for compensation. Should these claimants demonstrate that a land use regulation adopted after they acquired the property has restricted their use of it, which they have not yet done, the below method should be used to evaluate whether there has been a consequent reduction in value. Subsection (1) of Measure 37 defines the circumstances in which a property owner is entitled to just compensation. Subsection (2) defines "just compensation." Subsection (3) provides exceptions to subsection (1). Subsection (5) sets time limits for making a demand. Subsection (11) defines terms for the purposes of Measure 37. Pursuant to the text of subsections (1), (2), (3), (5), and (11), to demonstrate that he or she is entitled to just compensation, a claimant making a written demand to a public entity must: 1. Indicate the date on which written demand for just compensation is being made.' 2. Identify him or herself.2 3. Identify the public entity to which the demand is being made and show that the public entity meets the definition in subsection (I 1)(D).3 4. Identify the parcel of private real property at issue.4 5. Provide documentation that the claimant is the present owner of the property, or any interest therein.5 6. Provide documentation of when the owner acquired or inherited the property. 6 If necessary to satisfy subsection (3)(E), also provide documentation of when a family member acquired the property and documentation that the family member meets the definition in subsection (I 1)(A). 7. Identify the land use regulation that applies to the property, indicating to which of the five categories listed in subsections (I 1)(B)(i) -(v) the regulation belongs. 8. Demonstrate the land use regulation is not excluded pursuant to subsections (3)(A)-(D). 9. Identify the date on which the public entity enacted the land use regulation. 2To apply the provisions of subsection (5), it is necessary to know the date on which the demand is made. 2 The public entity needs to know to whom to pay just compensation. 3 Subsection (1) applies only to a land use regulation enacted by a "public entity." 4 Subsection (1) applies only to "private real property." 5 Subsection (1) provides that "the owner of the property shall be paid just compensation" in certain circumstances. Subsection (11)(C) defines the "owner" as "the present owner of the property, or any interest therein." (Emphasis added.) 6 To apply the provisions of subsection (3)(E), it is necessary to know the date on which the property was acquired or inherited. 7 To apply the provisions of subsection (5), it is necessary to know the date on which the public entity enacted the regulation. Exhibit Page Z of _ 10. Demonstrate that the land use regulation was "enacted prior to the date of acquisition of the property by the owner or a family member of the owner who owned the subject property prior to acquisition or inheritance by the owner, whichever occurred first," pursuant to subsection (3)(E). 11. Provide documentation that the land use regulation restricts the use of the property.8 12. Specify the amount of just compensation being demanded and provide evidence for this amount.9 13. Demonstrate that the demand for compensation is being made in a timely fashion, pursuant to subsection (5). If necessary, identify a land use application submitted by the owner and the date on which the public entity applied the land use regulation as an approval criteria. In particular, the claimant must specify the amount of just compensation being demanded and provide evidence for this amount. Subsection (2) defines "just compensation" as "equal to the reduction in the fair market value of the affected property interest resulting from enactment of the land use regulation as of the date the owner makes written demand for compensation under this act.s10 Thus, just compensation is equal to the difference between the fair market value of the property before the land use regulation was enacted and the fair market value after the land use regulation was enacted. This difference is the reduction in value "resulting from the enactment of the land use regulation." To provide evidence for the amount of just compensation being demanded, the claimant must also: Provide evidence of the fair market value of the property not long before the land use regulation was enacted. For example, a real estate appraisal based on comparables not long before the land use regulation was enacted is acceptable evidence. Documentation of the original purchase price the owner or a family member paid for the property in an arm's length transaction may be acceptable evidence." 8 Subsection (1) applies only to a land use regulation that "restricts the use of private real property." 9 Subsection (4) applies when "the owner of the property makes written demand for compensation under this section." Subsection (5) refers to "written demand for compensation under subsection (4)." Subsections (2) and (6) both refer to "written demand for just] compensation under this act." Subsection (2) defines "just compensation" as "equal to the reduction in the fair market value of the affected property interest resulting from enactment or enforcement of the land use regulation as of the date the owner makes written demand for compensation under this act." Thus to make a written demand for just compensation - to file a Measure 37 claim - the property owner must s~ecify what just compensation is being demanded. Otherwise, there is no (specific) demand being made. t Subsection (2) also refers to "the reduction in the fair market value of the affected property interest resulting from enforcement of the land use regulation." But how could the mere enforcement of a land use regulation reduce the fair market value of the property, i.e., how could the fair market value of the property prior to enforcement be more than the value after enforcement? The fair market value of the property prior to enforcement is determined by a real estate appraiser following the Uniform Standards of Professional Appraisal Practice (USPAP). USPAP Rule 1-3 states: "When the value opinion to be developed is market value, and given the scope of work identified in accordance with Standards Rule 1-2(f), an appraiser must: (a) identify and analyze the effect on use and value of existing land use regulations...." In other words, the appraiser must assume that the land use regulation will be enforced. Thus the mere enforcement of a land use regulation does not result in a reduction in the fair market value of the property. " The idea of using the original purchase price is based on the work of Dr. Andrew J. Plantinga in the Department Exhibit Page ~3 of 5 2. Similarly, provide evidence of the fair market value of the property not long after the land use regulation was enacted. For example, a real estate appraisal based on comparables not long after the land use regulation was enacted is acceptable evidence. Documentation of the current fair market value of the property - with the regulation in effect - may be acceptable evidence. In particular, the current real market value of the property reflected in the county's property tax records may be acceptable evidence. 3. Determine the reduction in value resulting from enactment of the land use regulation, if any, by subtracting the value after the land use regulation was enacted from the value before. 4. Adjust the reduction in value to dollars as of the date the owner makes written demand for compensation. 12 5. Ensure that both values are for the real property alone (bare land), not for any built structures. 6. If the "before" value is significantly before the land use regulation was enacted or the "after" value is significantly after, provide evidence that the claimed reduction in value actually results from enactment of the land use regulation and not from other factors present between the before and after dates. Note that some claimants might argue that because their property with the land use regulation is worth less than other properties without the regulation, that fact is evidence that the land use regulation has the effect of reducing the fair market value. But the argument is fallacious because it is possible that the value of the property at issue has not been reduced at all but merely that the value of other properties without the regulation have increased in value. Failing to experience an increase in value is not the same thing as an actual reduction in value. The fact that a land use regulation increased the fair market value of other properties is not evidence that the land use regulation reduced the fair market value of the claimants property. 13 In conclusion, the claimants have not submitted evidence that land use regulations qualifying under Measure 37 and enacted after the date they acquired the property have restricted their use of the property, nor the extent of any such restriction, nor have they demonstrated that such regulations have reduced the property's value. Until both fundamental requirements of of Agricultural and Resource Economics at Oregon State University. See bgp://arec.oreponstate.edu/faculty2/plantinga htm. The transaction must be at arm's length, e.g., not between family members, as subsection (2) refers to the reduction in the fair market value, which presupposes an arm's length transaction. 12 Because the reduction in value resulting from enactment of the land use regulation occurs when the regulation is enacted and subsection (2) defines "just compensation" as "equal to the reduction in the fair market value as of the date the owner makes written demand for compensation," the reduction in value when the regulation is enacted must be adjusted to dollars as of the date the owner makes written demand for compensation, for example, using the Consumer Price Index for Portland. For example, see http://www.bis.gov/cpi/home.htm. 13 For example, suppose a person invests $5,000 in shares of Company A and his neighbor invests $5,000 in shares Company B. Suppose further that in time the shares in Company A rise to $6,000 in value and the shares in Company B rise to $8,000 in value. The person cannot legitimately claim that he lost $2,000 simply because his shares are worth $2,000 less than his neighbor's. Indeed, the person actually gained $1,000 $6,000 - $5,000) notwithstanding the fact that the neighbor actually gained $3,000 (=$8,000 - $5,000). Dr. William K. Jaeger in the Department of Agricultural and Resource Economics at Oregon State University is doing research on the effect of land use regulations on land prices. This example is based on ideas that Dr. Jaeger is developing and we expect will be published soon. See http://arec.oreizonstate.edu/jaeper/homepage.html. 4 Exhibit D Page _u _ of S Measure 37 are demonstrated, and until the claimants have adequately shown by a valuation method consistent with the wording of Measure 3714that land use regulations enacted after they acquired the property reduced its value, it is premature to conclude that they are entitled to relief. With this letter, I am requesting that I be given written notice of any decisions regarding this application. Sincerely, Carol E. Macbeth Central Oregon Advocate 1000 Friends of Oregon 14 Measure 37 very explicitly equates "just compensation" to the reduction in value resulting from the enactment or enforcement of a land use regulation. Dr. Jaeger's research (see note 13 above) and DRAFT paper on this matter very clearly and very convincingly explain the difference between the value of a land use regulation exemption under Measure 37 and the value of an actual reduction in price due to the enactment or enforcement of a land use regulation. To be true to the language of Measure 37, the determination of the reduction in value of the affected property interest must be calculated in a manner that captures the actual reduction and NOT the increase in value of lands not subject to the regulation (the value of an exemption). A copy of Dr. Jaeger's DRAFT paper entitled "The Effects of Land Use Regulations on Land Prices" dated May 4, 2005 is hereby attached with the permission of the author. ExhibitZ~? Page rJ of 5 G j 0 Deschutes County Board of Commissioners 1300 NW Wall St., Bend, OR 97701-1960 (541) 388-6570 - Fax (541) 385-3202 - www.deschutes.org MEETING AGENDA DESCHUTES COUNTY BOARD OF COMMISSIONERS 10:00 A.M., WEDNESDAY, JUNE 8, 2005 Commissioners' Hearing Room - Administration Building 1300 NW Wall St.., Bend 1. CITIZEN INPUT This is the time provided for individuals wishing to address the Board regarding issues that are not already on the agenda. Visitors who wish to speak should sign up prior to the beginning of the meeting on the sign-up sheet provided. Please use the microphone and also state your name and address at the time the Board calls on you to speak. 2. A PRESENTATION and Update of COIC (Central Oregon Intergovernmental Council) Activities and Services - Tom Moore, COIC Executive Director 3. THE READING of a Proclamation Declaring the Third Week of June as Noxious Weed Awareness Week in Deschutes County - Dan Sherwin and Cheryl Howard, Weed Advisory Board 4. CONSIDERATION of Signature of Document No. 2005-208, an Intergovernmental Agreement regarding a Byrne Justice Assistance Grant Program Award - Les Stiles, Sheriff's Office 5. A PUBLIC HEARING and Consideration of Signature of Order No. 2005- 034, Approving the Tumalo Creek Development, LLC Annexation into Deschutes County Rural Fire Protection District No. 2 - Laurie Craghead, Legal Counsel 6. CONSIDERATION of Signature of Document No. 2005-214, Estoppel and Consent Documents relating to Pronghorn Destination Resort - Laurie Craghead, Legal Counsel Board of Commissioners' Meeting Agenda Wednesday, June 8, 2005 Page 1 of 6 Pages Exhibit E Page of 1,- 7. A PUBLIC HEARING and Consideration of Signature of Order No. 2005-38, a Claim for Compensation under Measure 37 (File #M37-04-5; Claimant: Cralle/Woody) - Mike Maier, County Administrator; Kevin Harrison, Community Development Department 8. A PUBLIC HEARING and Consideration of Signature of Order No. 2005-45, a Claim for Compensation under Measure 37 (File #M37-04-6; Claimant: Cralle/Woody) - Mike Maier, County Administrator; Kevin Harrison, Community Development Department 9. A PUBLIC HEARING and Consideration of Signature of Order No. 2005-44, a Claim for Compensation under Measure 37 (File #M37-05-9; Claimant: Brown/Perry) - Mike Maier, County Administrator; Kevin Harrison, Community Development Department 10. A PUBLIC HEARING and Consideration of Signature of Order No. 2005-36, a Claim for Compensation under Measure 37 (File #M37-05-11; Claimant: Frick) - Mike Maier, County Administrator; Kevin Harrison, Community Development Department 11. A PUBLIC HEARING and Consideration of Signature of Order No. 2005-42, a Claim for Compensation under Measure 37 (File #M37-05-7; Claimant: Leason - Pine Mountain Ranch) - Mike Maier, County Administrator; Kevin Harrison, Community Development Department CONVENE AS THE GOVERNING BODY OF THE 9-1-1 COUNTY SERVICE DISTRICT 12. CONSIDERATION of Approval of Weekly Accounts Payable Vouchers for the 9-1-1 County Service District in the Amount of $33,942.83. CONVENE AS THE GOVERNING BODY OF THE EXTENSION/4-11 COUNTY SERVICE DISTRICT 13. CONSIDERATION of Approval of Weekly Accounts Payable Vouchers for the Extension/4-H County Service District in the Amount of $521.22. Board of Commissioners' Meeting Agenda Page 2 of 6 Pages Wednesday, June 8, 2005 Exhibit 6~ Page 2 of L, RECONVENE AS THE DESCHUTES COUNTY BOARD OF COMMISSIONERS 14. CONSIDERATION of Approval of Weekly Accounts Payable Vouchers for Deschutes County in the Amount of $286,183.52. 15. ADDITIONS TO THE AGENDA Deschutes County meeting locations are wheelchair accessible. Deschutes County provides reasonable accommodations for persons with disabilities. For deaf, hearing impaired or speech disabled, dial 7-1-1 to access the state transfer relay service for TTY. Please call (541) 388-6571 regarding alternative formats or for further information. FUTURE MEETINGS: (Please note: Meeting dates and times are subject to change. All meetings take place in the Board of Commissioners' meeting rooms at 1300 NW Wall St., Bend, unless otherwise indicated. Ifyou have questions regarding a meeting, please call 388-6572) Tuesday, June 7, 2005 2:00 p.m. Meeting with Sheriffs Office Corrections Needs Assessment Committee, at the Sheriffs Office (MAC Center) Wednesday, June 8, 2005 10:00 a.m. Board of Commissioners' Meeting 11:30 a.m. Legislative Update - Conference Call 1:30 p.m. Regularly Scheduled Meeting with the Forestry Specialist 1:45 p.m. Regularly Scheduled Meeting with the Director of the Road Department 3:30 p.m. Regularly Scheduled Meeting with the Director of the Health Department 4:15 p.m. Regularly Scheduled Meeting with the Director of the Mental Health Department Board of Commissioners' Meeting Agenda Wednesday, June 8, 2005 Page 3 of 6 Pages Exhibit C Page 3 of Thursday, June 9, 2005 8:00 a.m. Land Management Practices Meeting 12 noon Regular Meeting of the Audit Committee Tuesday, June 14, 2005 1:30 p.m. Administrative Liaison 3:30 p.m. Regularly Scheduled Meeting with the Director of Community Development 6:00 p.m. LIGI (La Pine Industrial Group, Inc.) Annual Dinner Wednesday, June 15, 2005 11:00 a.m. Oregon Youth Challenge Graduation Ceremony, at the Fair & Expo Center Monday, June 20, 2005 10:00 a.m. Board of Commissioners' Work Session 1:30 p.m. Administrative Liaison Tuesday, June 21, 2005 11:00 a.m. Regular Meeting of Employee Benefits Advisory Committee 1:30 p.m. Signing of Community Fire Plan, Sisters City Park 3:00 p.m. Regularly Scheduled Meeting with the Manager of the Fair & Expo Center Wednesday, June 22, 2005 9:00 a.m. Regular Meeting with the Director of Tax & Finance 10:00 a.m. Board of Commissioners' Meeting - Includes Public Hearing on FY 2005-06 Budget 11:30 a.m. Legislative Update Conference Call 1:45 p.m. Regularly Scheduled Meeting with Parole & Probation 2:45 p.m. Regularly Scheduled Meeting with the Sheriff Tuesday, June 28, 2005 1:30 p.m. Administrative Liaison Board of Commissioners' Meeting Agenda Wednesday, June 8, 2005 Page 4 of 6 Pages Exhibit F Page of Cp Wednesday, June 29, 2005 9:00 a.m. Regularly Scheduled Meeting with the Director of Juvenile Community Justice 10:00 a.m. Board of Commissioners' Meeting - includes Adoption of FY 2005-06 Budget Monday, July 4, 2005 Most County offices will be closed to observe Independence Day. Tuesday, July 5, 2005 1:30 p.m. Administrative Liaison Wednesday, July 6, 2005 9:00 a.m. Regular Update regarding "Inside Deschutes County" Video Newsmagazine 10:00 a.m. Board of Commissioners' Meeting Thursday, July 7, 2005 1:30 p.m. Regularly Scheduled Meeting with the Director of Community Development Monday, July 11, 2005 10:00 a.m. Board of Commissioners' Work Session 1:30 p.m. Administrative Liaison 3:30 p.m. Meeting of Local Public Safety Coordinating Council (LPSCC) Tuesday, July 12, 2005 1:30 p.m. Regularly Scheduled Meeting with the Director of Information Technology 2:30 p.m. Regularly Scheduled Meeting with the Manager of the Fair & Expo Center 3:30 p.m. Regularly Scheduled Meeting with the Director of Community Development Wednesday, July 13, 2005 10:00 a.m. Board of Commissioners' Meeting 11:30 a.m. Legislative Update - Conference Call 1:30 p.m. Regularly Scheduled Meeting with the Forestry Specialist 1:45 p.m. Regularly Scheduled Meeting with the Director of the Road Department Board of Commissioners' Meeting Agenda Page 5 of 6 Pages Wednesday, June 8, 2005 Exhibit Page 5 of -(,p - 2:15 p.m. Regularly Scheduled Meeting with the Director of Solid Waste 3:30 p.m. Regularly Scheduled Meeting with the Director of the Health Department 4:15 p.m. Regularly Scheduled Meeting with the Director of the Mental Health Department July 18 - 20, 2005 National Association of Counties Conference Thursday, July 21, 2005 7:00 a.m. Regularly Scheduled Meeting with the Redmond City Council, Redmond Fire Hall 6:00 p.m. Public Hearing regarding Redmond Urban Reserve Area, Redmond Monday, July 25, 2005 10:00 a.m. Board of Commissioners' Work Session 1:30 p.m. Administrative Liaison 3:00 p.m. Regularly Scheduled Meeting with the Director of the Commission on Children & Families 3:45 p.m. Regularly Scheduled Meeting with Juvenile Community Justice Wednesday, July 27, 2005 9:00 a.m. Regular Meeting with the Director of Tax & Finance 10:00 a.m. Board of Commissioners' Meeting 11:30 a.m. Legislative Update Conference Call 1:45 p.m. Regularly Scheduled Meeting with Parole & Probation 2:45 p.m. Regularly Scheduled Meeting with the Sheriff Monday, August 1, 2005 10:00 a.m. Board of Commissioners' Work Session 1:30 p.m. Administrative Liaison 3:30 p.m. Meeting of Local Public Safety Coordinating Council (LPSCC) Board of Commissioners' Meeting Agenda Wednesday, June 8, 2005 Page 6 of 6 Pages Exhibit Page of