2006-522-Order No. 2006-045 Recorded 5/25/2006DESCHUTES DS
NANCY
, COUNTY CLERK ICJ ~OOf~'~~~
COMMISSIONERS' JOURNAL
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2006-322
DESCHUTES COUNTY CLERK
CERTIFICATE PAGE
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LEGAL COUNSEL
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COUNTY OFFICIAL
NANCYUBLANKENSHIP, COUNTY CLERKDS 2006-36070
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BEFORE THE BOARD OF COUNTY COMMISSIONERS OF DESCHUTES COUNTY, OREGON
An Order Approving a Waiver of Land Use
Regulations to Authorize Kim D. Ward LLC
to Use the Subject Property as Allowed When It
Acquired the Property
* ORDER NO. 2006-045
*
WHEREAS, On November 2, 2004, the voters of the State of Oregon approved Ballot Measure 37
which added provisions to Oregon Revised Statutes (ORS) Chapter 197 to require, under certain circumstances,
payment of just compensation to landowners if a government land use regulation reduces property value. In lieu
of just compensation, Ballot Measure 37 authorizes the governing body of a local government to modify,
remove or not apply the land use regulation, and
WHEREAS, Kim D. Ward LLC, together with Kim and Sally Ward and their children, Dayna, Justin,
and Jessica Ward, and Donna Moore, made a timely demand for compensation under Measure 37 for a reduction
in value to its property at 23040 Highway 20, Bend, Oregon due to regulations which took effect after she
acquired this property, and
WHEREAS, Section 8 of Measure 37 authorizes the Board, as the governing body responsible for
adoption and enforcement of County regulations, to not apply the identified land use regulation that restricts the
owner's use and reduces the value of the property in lieu of payment of compensation; and
WHEREAS, the Board has received the report and recommendation of the County Administrator as
required by DCC 14.10.090; and
WHEREAS, the Board has considered the Administrator's report and the evidence presented by the
parties at a Board meeting as required by DCC 14.10.090; and
WHEREAS, the Board makes the following findings of facts and conclusions;
On October 212005, Kim D. Ward LLC, together with Kim and Sally Ward and their children,
Dayna, Justin, and Jessica Ward, and Donna Moore filed a Measure 37 claim with the
Community Development Department.
2. The property is located at 23040 Hwy 20, Bend, Oregon is within Deschutes County.
The County Administrator has recommended that the zoning regulations for the subject property
that were not already in effect until after August 16, 1977 or December 27, 1994 (depending
upon the particular claimant) not be enforced in lieu of payment of just compensation to
Claimant. The Administrator's report is attached and incorporated by reference into this Order
as Exhibit "A."
4. The Board concurs with the Administrator's report that Kim D. Ward LLC is the present owner
of the subject property described in Exhibit "B," having acquired an interest in it and
continuously owned it since December 27, 1994. Title to the property held by Kim and Sally
Ward, which began in August 16, 1977, was conveyed to Kim D Ward LLC on December 27,
PAGE 1 of 3- ORDER No. 2006-045 (05/15/06)
1994. At that time their interest as well as that of their children, was as members and/or
shareholders of the LLC. State law provides that member/shareholders of an LLC have no
interest in the assets held by the LLC. However, the law under Measure 37 is not certain as to
whether such status completely eliminates the individual interests of Kim and Sally Ward in the
property. The County finds and concludes as set forth below.
5. The Board concurs with the Administrator's report that the current regulation, EFU-TRB
zoning, if applied to the subject property, would not permit a subdivision on this subject
property. The current regulation is a land use regulation which is not exempt from Measure 37
claims.
6. The Board concurs with the Administrator's report that an application for a subdivision on the
subject property would be denied if the current zoning were applied. Therefore, such an
application to determine enforcement of the current zoning to the Claimant's property would be
futile.
7. The Board concurs with the Administrator's report that there is no evidence which demonstrates
that the current procedural regulations for land divisions and development applications and
approvals have reduced the value of the subject property.
8. The Board concurs with the Administrator's report that Claimant has not demonstrated that
domestic water, and septic for the desired use on the subject property are feasible. Despite the
lack of a precise amount of reduction in value, the loss of the ability to add additional buildable
lots from the subject property would be a substantial amount of reduction in fair market value if
the regulations at the time Claimants acquired the property allowed that development; now,
therefore,
THE BOARD OF COUNTY COMMISSIONERS OF DESCHUTES COUNTY, OREGON, HEREBY
ORDERS as follows:
Section 1. The Board hereby determines, based on these findings, conclusions, and the Administrator's
report in Exhibit "A," that the claim is eligible under DCC 14.10.100.
Section 2. The Board hereby elects to not apply nonexempt County land use regulations, to the subject
properties described in Exhibit "B" in lieu of payment of just compensation under Ballot Measure 37.
Claimants Kim and Sally Ward are hereby authorized to use the subject property as permitted at the time they
acquired the property on August 16, 1977. Claimants Kim and Sally Ward may apply for a use of the subject
property consistent with the substantive land use regulations in effect at the time they acquired the property.
That land use shall be permitted if the subject property fully complies with all substantive land use regulations in
effect on August 16, 1977. The Community Development Director is hereby authorized to determine the effects
that any exempt land use regulations, as listed in ORS 197.352(3)(A)-(D), would have on Claimants' proposed
use. As used in this section, "land use regulations" refer to those listed in ORS 197.352(11) (B). The Board
does not waive current procedural regulations. Procedural regulations are those which set forth the system,
method, or way of processing land use applications, such as the requirement to submit a certain form.
Substantive land use regulations which are waived are those which regulate the actual use of the land, including
those listed in ORS 197.352(11)(B), and including regulations such as minimum lot sizes, density restrictions,
setbacks not protecting public safety, and height limits. The Board does not waive exempt regulations which
include those described in ORS 197.352(3), but the provisions of ORS 197.352(3)(E) is subject to this Board's
order as to date of acquisition for Kim and Sally Ward.
Section 3. As to the separate claims submitted by the LLC and the various individuals, Kim and Sally
Ward in their individual capacity currently possess and have continuously retained an interest in the subject
properties sufficient to maintain a claim under Measure 37, and thus the operative acquisition date for
PAGE 2 OF 3- ORDER No. 2006-045 (05/15/06)
application of County land use regulations shall be August 16, 1977 and not December 27, 1994. This
acquisition date applies only to Kim and Sally Ward as individuals. The operative acquisition date for
application of County land use regulations to the additional claimant, Kim D. Ward LLC., shall be December
27, 1994. Dayna Ward, Justin Ward, Jessica Ward, and Donna Moore, as members of the LLC, have no interest
in the property for purposes of Measure 37.
Section 4. To the extent that any law, order, deed, agreement or other legally enforceable public or
private requirement provides that the subject property may not be used without a permit, license, or other form
of authorization or consent, this order does not authorize the use of the subject property unless the Claimant first
obtains that permit, license, or other form of authorization or consent.
Section 5. This Order is a waiver of a non-exempt County land use regulation from a property
determined to be claim eligible as defined in DCC 14.10.020(0).
Section 6. A STATE OF OREGON WAIVER MAY BE REQUIRED FOR THE DEVELOPMENT OR
USE OF THE SUBJECT PROPERTY. ALTHOUGH THE COUNTY WILL ACCEPT AND PROCESS
SUBSEQUENT LAND USE APPLICATIONS ASSOCIATED WITH THE SUBJECT PROPERTY,
APPROVAL MAY NOT BE GRANTED WITHOUT A VALID WAIVER FROM THE STATE PERTAINING
TO STATE REGULATIONS WHICH WOULD OTHERWISE PRECLUDE THE PROPOSED LAND USE.
THIS WAIVER APPLIES ONLY TO THE LOCAL REGULATIONS SPECIFIED ABOVE. DESCHUTES
COUNTY LACKS THE AUTHORITY TO WAIVE ANY STATE REGULATIONS OR LAWS. STATE
LAWS AND REGULATIONS MAY APPLY TO THE USE OF THE PROPERTY DESCRIBED HEREIN,
AND A WAIVER OF SUCH LAWS AND REGULATIONS MUST BE SEPARATELY OBTAINED BY THE
OWNERS FROM THE STATE OF OREGON.
Section 7. This Order shall be recorded in the Deschutes County Deed Records together with portions
from the deed or other instrument in Exhibits A and B sufficient to identify the subject property for recording
purposes.
DATED thisPf y da of May, 2006.
ATTEST:
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Recording Secretary
BOARD OF COUNTY COMMISSIONERS
OF DESCHUTES COUNTY, OREGON
V06-k - A6
D S R. LUKE, CHAIR
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BEV C ARNO, VICE CHAIR
2~~W' 4&
M H EL M. DALY, COM SSIONER
PAGE 3 of 3- ORDER No. 2006-045 (05/15/06)
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Deschutes County Department of Administrative Services
1300 NW Wall St., Ste. 200, Bend, OR 97701-1947
(541) 388-6570 Fax (541) 385-3202 - www.deschutes.org
TO: Board of County Commissioners
From: Michael A. Maier, County Administrator
RE: Measure 37 Claim - Kim D Ward LLC (Claimant)
Kim Ward, Sally Ward, Dayna Ward, Justin Ward, Jessica Ward,
and Donna Moore
23040 Hwy 20, Bend OR
Introduction
DATE: May 15, 2006
The County processed the initial Measure 37 claims using its brief claim form, evaluating the submission,
and preparing this report and recommendation under DCC 14.10, the Measure 37 ordinance. The
County's claims process recognizes that less precise evidence of value may be sufficient to evaluate
claims, since there are currently no County funds available for payment of compensation. Also, the
ordinance provides further opportunities for affected neighbors to present evidence and testimony at the
Board meeting when these claims are considered.
This report and recommendation is intended to be a summary and evaluation of evidence in the record.
The report may be attached to the Board's Order which decides Measure 37 claims, as a factual basis for
the Order. Any factual changes or additions to this report from testimony or other evidence can be made
part of the Board's Order. Claimants and affected parties have the opportunity to rebut this Report and
provide additional relevant evidence to the Board. Also, under the County's process, claimants must
provide evidence that the desired use of the property, which may be allowed by a waiver of County
regulations is feasible, i.e., not prevented by physical, utility or other development limitations of the site.
Report and Recommendation - DCC 14.10.090
This is my report and recommendation on this Measure 37 claim received on October 21, 2005, when
Measure 37 was in lawful effect. Claimants have paid the filing fee and the County's official demand form
has been submitted. The property, shown on the attached map, is about 58 acres (see attached). The
Page 1 of 6 - Exhibit A - Order No. 2006-045
s
current zoning is Exclusive Farm Use, Tumalo Redmond Bend subzone (EFU-TRB) with a farm use
minimum lot size, Conventional Housing Combining (CHC) and Landscape Management Combining
(LM). The claimant's desired use is a 23-lot subdivision and claimant alleges a reduction in value of $2
million due to the inability to subdivide the property as desired. The following is an analysis of the
evidence in the record on the elements of this Measure 37 claim. Claimant is represented in these
proceedings by Donald Joe Willis, attorney.
Current Owner - Kim D Ward LLC
There are three parcels identified in the claim. Claimant presented Memorandum of Land Sale showing
that title was originally vested in Kim and Sally Ward on August 16, 1977. According to the Claimant's
narrative, on December 27, 1994 they conveyed title to Kim D Ward LLC. While the member shareholders
of this corporation are not documented, the Claimant's narrative identifies Kim and Sally Ward and their
children, Dayna, Justin, and Jessica Ward, and Donna Moore as having interests in the LLC. There is no
evidence that the children obtained any interest in the property or in the corporation prior to December 27,
1994. A title report submitted with the claim indicates that title to the property continues to be held by
such limited liability corporation.
Like a corporation, a limited liability corporation is a separate legal entity from its shareholders, directors
and officers, Lee v. Mitchell, 152 Or App 159, 176, 953 P.2d 414 (1998). The purpose of incorporation is
to create a separate legal and financial entity. Peterson v. Employment Division, 82 Or App 371, 374, 728
P.2d 95 (1986). The corporate form will not be disregarded solely because all of the stock of a corporation
is owned by one person who also exercises control of the corporation. Levine v. Alpha Anesthesia, Inc.,
145 Or App 549, 553-554, 931 P.2d 812 (1997), rev denied, 325 Or 368 (1997). A limited liability
company or LLC, like a corporation, has the primary benefit of limited liability for acts of its "members" or
"managers". ORS 63.239. "A membership interest is personal property. A member is not a co owner of
and has no interest in specific limited liability company property."
Despite the statutory provisions limiting ownership of corporate property, the definition of "owner" under
Measure 37 is not expressly limited. Thus, despite transferring title to the property to the LLC, Kim and
Sally Ward have continuously exercised control over the property since they acquired it in 1977. While
title to the property has been held by Kim D. Ward LLC since 1994, Kim and Sally Ward in their individual
Page 2 of 6 - Exhibit A - Order No. 2006-045
t.
capacity have continued to hold an interest in the property. Since 1994, the LLC has likewise been an
owner for purposes of a Measure 37 claim. The individual "members" of the LLC, other than Kim and
Sally Ward, have no ownership interest in the subject property, per se.
Owner Date of Acquisition - August, 1977
The date of acquisition by the current owner is the relevant date for Board consideration of waivers under
section (8) of Measure 37. The compensation section of Measure 37, section (6), uses the acquisition
date of a family member to determine the extent of reduction in value for compensation. Since the County
has no funds budgeted for payment of compensation, waivers that are issued by the County are limited
by section (8) of Measure 37 to County land use regulations that were adopted after the later acquisition
date of the current owner. If a waiver is granted as to County land use regulations which were adopted
after the current owner's acquisition date, no compensation is due, even if the prior family member held
the property for many years. While this may seem inconsistent, the measure was, evidently, written to
encourage waivers of local and state land use regulations.
The first date of the current owner's acquiring an interest is the date of the recorded Warranty Deed. The
current owner, Kim D Ward LLC, is now the owner of the subject property, having acquired title to the
property in 1994 and owning the subject property continuously since that time.
The interest of managing members and shareholders of the Kim D Ward LLC is not an interest in the
property, per se. The individual claimants' interests are in the corporation, not the property held by the
corporation. There was evidence that Kim and Sally Ward have continued to control the property since
they first acquired it in August 1977. There remains some question as to whether having conveyed title to
the property to the LLC, they continue to have an interest in the property for purposes of Measure 37 by
virtue of their exercising control over the property.
Restrictive Regulation - EFU-TRB zoning.
Under the terms of the ordinance, the claimant must identify County land use regulations that prevent the
claimant from using the property in a way that he or she otherwise could have used the property at the
time the property was acquired, and thus reduce the value of the claimant's property. The Claimant has
identified the EFU-TRB zoning and CHC and LM as the land use regulations restricting the desired use, a
Page 3 of 6 - Exhibit A - Order No. 2006-045
A.
23-lot residential subdivision. This regulation is a County land use regulation, which is subject to Measure
37 claims.
Enforcement of County Regulation - futile DCC 14.10.040(G).
Measure 37 requires that an ordinance which restricts the current owner's use be "enforced" against
them. There is no evidence that Claimant has applied for a land division of the property resulting in the
current zoning being enforced on the subject property. However, prior to conveying the property to the
LLC, Kim Ward divided the property in 1992 into three 20-acre parcels pursuant to the EFU-20 zone that
applied at that time. (See: County file no. MP-91-1 and Partition Plat 1992-13.) Claimant has not
demonstrated that submitting an application for such a land division would be futile. However, this Report
confirms that such an application for the desired use would violate the current zoning and be denied.
Therefore, the intent of DCC 14.10.040(G) has been met for this claim.
Reduction in Value - $2,000,000 alleged on Claim Form
The ordinance requires that the Claimant provide evidence of the amount of the claim in alleged reduction
in the fair market value of the property resulting from the enforcement of the County's land use regulation.
• Claimant has submitted no evidence that domestic water is available for the desired subdivision.
• Claimant has submitted no evidence that sanitary service is or would be feasible for the desired
subdivision.
• Claimant has submitted no evidence of a reduction in value of the property based upon county
land use regulations adopted after Claimants' acquired the property. Claimant's affidavit asserts
that the current value of the property to be $1.05 million and that the net sales price of the parcels
in today's market would range from $1.54 to $3.05 million. No evidence is presented as to the
diminution in value as of the date of adoption of County land use regulations.
Furthermore, Claimants' alleged reduction in value appears to be based upon the assumption that lots
created by subdividing the property are fully marketable and useable by others for development.
Referring to a recent Opinion of the Oregon Attorney General, rights obtained under Measure 37 are
personal to the present property owner. Although the owner, having obtained the necessary "waivers"
from the County and the State, could subdivide the property, future owners would, according to the
Attorney General, be precluded from using the property in a manner inconsistent with land use
regulations in effect at the time of the transfer. Thus, the amount of reduction in value asserted by the
Page 4 of 6 - Exhibit A - Order No. 2006-045
. 4.
Claimant may be unreliable, if the resulting lots are unusable by future owners, based on their having to
comply with zoning regulations in place when such future owners acquire the property.
Assuming Claimant could obtain approval of a subdivision of the property, but not under zoning
restrictions adopted after Claimant's acquisition date, and the resulting lots are fully marketable and
useable by future owners, then the value of Claimant's property for Measure 37 purposes would be
substantially reduced. Consistent with the County's procedural ordinance, Chapter 14.10, this report
takes no position on whether a waiver obtained by a claimant and any resulting development approval are
fully transferable with the property.
Effect of County Waiver - Measure 37 clearly allows the County to waive its non exempt land use
regulations only back to the date the current owners, not family members, acquired the property:
"(8) Notwithstanding any other state statute or the availability of funds under
subsection (10) of this act, in lieu of payment of just compensation under this act,
the governing body responsible for enacting the land use regulation may modify,
remove, or not to apply the land use regulation or land use regulations to allow
the property owner to use the property for a use permitted at the time the owner
acquired the property."(emphasis added)
I I (c) "Owner" is the present owner of the property, or any interest therein."
In this case, Kim and Sally Ward have continuously owned an interest in the property since 1977, while
the interest of Kim D. Ward LLC in the property dates from 1994. These dates follow certain county land
use regulations and precede others. A Claimant who receives a waiver must use the current process to
seek the needed development permits based on the zoning in place at the time the current owners
acquired the property. Except in a rare case, the current procedural requirements for handling permits are
not regulations that reduce value. Therefore, the County's procedural regulations are not waived.
Conclusion and Recommendation
The present owner of the property has submitted a claim pursuant to Measure 37 which demonstrates
eligibility for its use of the subject property based on nonexempt land use regulations in effect on August
16, 1977 and December 27, 1994, the dates when certain of the claimants first acquired an interest in the
Page 5 of 6 - Exhibit A - Order No. 2006-045
a
property. There was zoning of the subject property at that time. There is no evidence in the record that
some additional development on the subject property would be feasible for available domestic water,
sanitary waste disposal and road access. Therefore, the desired use of additional lots may or may not be
feasible for water, septic and access. The zoning that was in effect at the time the owner acquired the
property would be applied to a subdivision application for that use.
My recommendation is that the Board approve a waiver in the form of Order attached. This Order would
have the effect of waiving the nonexempt County land use regulations which were not in effect until after
August 16, 1977 as to Kim and Sally Ward (as individuals) and December 27, 1994 as the Kim D. Ward
LLC, to allow the owner to use the property in a manner permitted at the time the owner acquired the
property. In essence, the County would not apply any land use regulations to the property which were not
in effect when the particular Claimant acquired the property. This waiver is not a development permit. By
granting a waiver, the County does not commit itself to approving Claimant's desired 23-lot subdivision.
Cautionary Note on Measure 37
Claimant should understand that a decision by Deschutes County may not enable her to proceed with
future development or construction unless the State of Oregon approves a waiver of applicable State land
use regulations. Claimants who wish to obtain information relative to their "State" claims under Measure
37 are advised to contact the State Department of Land Conservation and Development and the
Department of Administrative Services.
Page 6 of 6 - Exhibit A - Order No. 2006-045
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