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2007-1513-Order No. 2007-007 Recorded 9/18/2007COUNTY OFFICIAL NANCYUBLANKENSHIP, COUNTY CLERKDS CJ 2007.1513 COMMISSIONERS' JOURNAL 09/1812007 09;54;00 AM II I I I II I I IIII II VIII I I II I II I III 2007-1513 Do not remove this page from original document. Deschutes County Clerk Certificate Page If this instrument is being re-recorded, please complete the following statement, in accordance with ORS 205.244: Re-recorded to correct [give reason] previously recorded in Book or as Fee Number and Page DESCHUTES COUNTY OFFICIAL RECORDS ~00~~50~~I ~ NANCY BLANKENSHIP, COUNTY CLERK V REVIE D LEGAL 111111111111111111111111111111111111111111111111 NO FEE OUNSEL 00373344200700502670110115 09/17/2007 11;23;05 AM D-H37 Cntml Stnml BN This is a no fee document 1\ BEFORE THE BOARD OF COUNTY COMMISSIONERS OF DESCHUTES COUNTY, OREGON An Order Approving a Waiver of Land Use Regulations to Authorize Stearns Land Co., * ORDER NO. 2007-007 Limited Partnership and Joyce Stearns Barney and Ann Stearns Ramseyer to Use the Subject Property as Allowed When It Acquired the Property 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, Stearns Land Co., LLP made a timely demand for compensation under Measure 37 for a reduction in value to its property at 51205 and 51255 Huntington Road, LaPine, Oregon due to regulations which took effect after it 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 July 28, 2006, Stearns Land Co., LLP filed a Measure 37 claim with the Community Development Department. The claim was amended to include as individual claimants Joyce Stearns Barney and Ann Stearns Ramseyer, who established the limited partnership and generally control it. The Board allowed the amended claim in January 2007. 2. The property is located at 51205 and 51255 Huntington Road in LaPine, Oregon and is within Deschutes County. 3. The County Administrator has recommended that the zoning regulations for the subject properties that were not already in effect until after November 15, 1995 and assuming a court would determine that the interest of a member of an LLP is a property interest, January 16, 1971 as to the partners. 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 Stearns Land Co., LLP is the present owner of the subject properties described in Exhibit "B," having acquired an interest in them PAGE I OF 3- ORDER No. 2007-007 (09/12/07) and continuously owned them since November 15, 1995. The individual claimants first acquired an interest in the subject property in 1971 by virtue of a testamentary trust established by their father. However, in 1995 they established the limited partnership and by warranty deed conveyed their interest in the property to it. Under Oregon statutory law these acts would have had the effect of disposing of their entire interest to a separate entity. The County finds and concludes as set forth below. 5. The Board concurs with the Administrator's report that the current land use regulations, EFU- LA, FP and F1, if applied to the subject properties, would not permit a fifteen-lot subdivision. The current regulations, with the exception of certain elements of the FP zoning, are land use regulations which are not exempt from Measure 37 claims. 6. The Board concurs with the Administrator's report that an application for a subdivision 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 have reduced the value of the subject property. Thus, the application process would continue to apply. The Board concurs with the Administrator's report that there is no evidence that domestic water, sanitary sewer and access for the desired use on the subject property are feasible. However, these matters can and would be evaluated in connection with a development permit application. Despite the lack of a precise amount of reduction in value, the loss of the ability to create additional lots on the subject property would be a substantial amount of reduction in fair market value if the regulations at the time Claimant 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. Claimant may apply for a use of the subject property consistent with the substantive land use regulations in effect at the time it first acquired the properties. That land use shall be permitted if the subject properties fully comply with all substantive land use regulations in effect on November 15, 1995. However, if a court of competent jurisdiction should interpret Measure 37 in such a way as to conclude that despite conveyance to the LLP, individual partners (and these individual claimants here) are nonetheless owners of the subject property, then their acquisition date would be as Ordered by the Circuit Court or if appealed, as determined by the Appellate Courts, and in the absence of a court-determined date, January 16, 1971. 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 Claimant's proposed use. As used in this section, "land use regulations" refer to those listed in ORS 197.352(1 l) (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 PAGE 2 OF 3- ORDER No. 2007-007 (09/12/07) 197.352(3)(E) is subject to this Board's order as to date of acquisition for Stearns Land Co., Limited Partnership. Section 3. With respect to the claims by the individual claimants, Measure 37's definition of owner is both ambiguous and broad. Thus, these individuals may have obtained an interest in and continuously held such interest since they inherited the property in 1971 or not, depending upon the effect of the warranty deed they executed in 1995 to the limited partnership. Assuming that the Measure 37's definition was not intended to amend the Oregon laws of conveyancing and partnerships, these individuals disposed of their interest in the subject property in 1995. If a reviewing court should determine that despite these laws, these individuals continued to hold an interest in the subject property, then their acquisition date would have been 1971. 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 Claimant's proposed use. 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 Claimants first obtain 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. Ll h DATED this day of September, 2007. ATTEST: Recording Secretary BOARD OF COUNTY COMMISSIONERS OF DESCHUTES COUNTY, QREGON DENNI . LUKE, VICE-CHAIR 6vx",/ TAMMY BA Y, COM SSIONER PAGE 3 OF 3- ORDER No. 2007-007 (09/12/07) 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 DATE: September 12, 2007 From: David Kanner, County Administrator RE: Measure 37 Claim - Stearns Land Company, Limited Partnership (Claimant) and Joyce Stearns Barney and Ann Stearns Ramseyer 51205 and 51255 Huntington Road, LaPine OR Introduction 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 July 28, 2006, when Measure 37 was in lawful effect. Claimant has paid the filing fee and submitted the County's official demand form. Originally this claim was submitted by Stearns Land Company Limited Partnership and processed by the County. Prior to adoption of a proposed order Claimant requested that it be given an Page 1 of 7 - Exhibit A - Order No. 2007-007 opportunity to amend the claim to include the general partners in their individual capacities as additional claimants. The Board allowed the claim to be so amended. The property consists of two tax lots with approximately 76 acres in total. The current zoning is EFU-LA, FP and Fl. The Claimants' desired use is a 15 lot subdivision and Claimants allege a reduction in value of approximately $1,676,000 due to the inability to divide the property as desired. The following is an analysis of the evidence in the record on the elements of this Measure 37 claim. Current Owner - Stearns Land Company, Limited Partnership is the owner of the parcels comprising this claim: 22-10-22 Tax lot 100 and 22-10 Tax Lot 2802 located at 51205 and 51255 Huntington Road, LaPine. Claimant limited partnership acquired the property from Shirley Stearns Browning, Joyce Stearns Barney and Ann Stearns Ramseyer in 1995. The record shows that a partner of Stearns Land Co., Limited Partnership is Joyce Stearns Barney. The Stearns family corporation, Stearns Land Co., Inc., first acquired the property by deed, dated December 24, 1943. The corporation deeded the property to Harry Stearns by deed dated May 27, 1968. Upon his death in 1971, the property passed to a testamentary trust for the benefit of his wife, Crystal Stearns for the remainder of her life and upon her death to the three daughters. Upon the death of Crystal Stearns on February 14, 1982, the property passed to her three daughters, and officially by deed to those three daughters, doing business as Stearns Land Co. on May 15, 1982. On November 15, 1995 the three daughters, conveyed their interest in the property first to themselves as tenants in common and three days later to the Stearns Land Company, Limited Partnership. Shirley Stearns Browning has since passed away. Joyce Stearns Barney and Ann Stearns Ramseyer are presenting this claim both in their individual capacities and as general partners on behalf of the Limited Partnership. The County has on two previous occasions determined that a shareholder in a closely held corporation should be considered as having an interest in property of the corporation (Leason/Pine Ridge Ranch Co. and Ward/Kim Ward LLC). These two cases are distinguishable insofar as the property was originally acquired by the individuals and transferred for "estate planning purposes" to a corporation. The Board has therefore decided that when a person who owns property as an individual, transfers title to a corporation and becomes a shareholder, they continue to retain a property interest as that term is used in Measure 37. The claimants would argue that the same rationale the Board applied in these earlier cases Page 2 of 7 - Exhibit A - Order No. 2007-007 should apply in the case of a limited partnership which consists of the same individuals who established and continue to control such entity. In this case, the current owner is a limited partnership, not its individual partners. Joyce Stearns Barney, for example, signed the claim as a partner on behalf of the partnership. Measure 37 is a state law that must be read together with other state law. ORS 67.060 states that "Property acquired by a partnership is property of the partnership and not of the partners individually" and that property is partnership property if acquired in the name of the partnership. The deed in this case demonstrates that the property was acquired by the present owner, Stearns Land Co., Limited Partnership in 1995. This claim has also been submitted by the individual partners of the limited partnership. Joyce Stearns Barney and Ann Stearns Ramseyer (together referred to herein as "Individual Claimants") have asserted that despite title being vested in the limited partnership that they continue to have a property interest as that term is defined in ORS 197.352 (Measure 37). Individual Claimants assert that their interest in the property first arose in 1971 upon the death of Harry Stearns by virtue of the testamentary trust he created for the benefit of his wife and daughters. Thus, while a deed was executed in 1982 upon the death of Crystal Stearns, arguably the daughters' interest in the subject property arose in 1971. Trustees of the Estate of Harry Stearns conveyed the property by bargain and sale deed, dated May 15, 1982 to Individual Claimants and Shirley Stearns Browning (since deceased). On November 15, 1995 Individual Claimants conveyed their interests by Warranty Deed to Stearns Land Company, an Oregon limited partnership. ORS 93.850 provides that a warranty deed conveys the entire interest in the described property at the date of the deed and the grantor is forever estopped from asserting that the grantor had at the date of the deed an estate or interest in the land. Given the ambiguous, yet broad definition of Owner contained in ORS 197.352, these individuals may have obtained an interest in and continuously held such interest since 1971 or not, assuming the effect of the warranty deed executed in 1995 to the limited partnership was to convey their entire interest in the property. This also assumes that the Measure 37 definition of Owner was not intended to amend the Oregon law of partnerships. The order should identify this uncertainty by providing that the effect of the statute and deed, herein discussed, left the individual claimants' entire interest with the limited partnership, but leave open the possibility that if a court should determine that they nonetheless retained some interest in the property for Measure 37 purposes, that their acquisition date would be 1971. Page 3 of 7 - Exhibit A - Order No. 2007-007 Owner Date of Acquisition - November 15, 1995 for the Limited Partnership 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 (1), does not distinguish between the acquisition date of an owner and that of a family member to determine the extent of reduction in value for compensation. Section (3)(E) exempts from the Measure 37 claim those regulations which were enacted prior to the acquisition of the property by the owner or family member of the owner who also owned the subject property. This distinction in the acquisition dates is due to the differences in remedies available under Measure 37, payment of compensation versus issuing a waiver. If a public entity chooses not to apply the land use regulations, rather than compensate an owner for the value lost to the regulations, the public entity is limited to permitting the owner to use the property only for those uses that were permitted at the time the owner acquired the property. Pursuant to Section (8), the owner is entitled to a waiver of only those land use regulations that were in effect at the time the owner (not a family member of the owner) gained an interest in the property. 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, often 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 for which there is documentation showing Stearns Land Co., Limited Partnership obtained an interest in the property is November 15, 1995. While the individual claimants assert that their interest first arose in 1971 by way of the testamentary trust established by Harry Stearns upon his death, the present limited partnership first acquired an interest under the documents presented by claimant on November 15, 1995, the date the warranty deed was executed. As discussed in the previous section, it appears that the individual claimants currently have no interest in the property, having conveyed it by warranty deed to the limited partnership in 1995. If a court should nonetheless determine that they retained an interest for Measure 37 purposes, then their interest would have first arose in 1971. Restrictive Regulation - FP/EFU/F1. Page 4 of 7 - Exhibit A - Order No. 2007-007 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, FP and FI zoning, and the county's subdivision ordinance as reducing the value of their property by inhibiting development of a subdivision. All of these regulations were adopted prior to the current owner's acquisition date of 1995, but after acquisition by related family members. The flood plain designation on this property is on the FIRM with community number 410055, panel number 0655, suffix C (Effective 8/16/88). The purpose of the Flood Plain Zone (Chapter 18.96) is, among other things, to "protect the public from the hazards associated with flood plains." The FP Zone restricts the ability to create new lots within areas that are subject to the 100 year flood occurrence. Certain elements of the FP Zone may be exempt under Measure 37, as they are related to health and safety and are based on federal (FEMA) designations for at-risk flood areas. That portion of the property now subject to the FP Zoning designation may affect the configuration of a future subdivision. It appears that, based upon zoning in effect in 1995, that a subdivision of the property would not have been allowed. On the other hand if the daughters are determined by a court to have obtained an interest in the property and continuously owned it, then with an acquisition date of 1971, the property might have development potential, based upon regulations in place at that time. 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. Claimant has not applied for a subdivision of the property resulting in the current zoning being enforced on the subject property. 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 subdivision 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 - $1,676,000 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 not submitted evidence that domestic water is available for the desired subdivision. • Claimant has not submitted evidence that sanitary service is or would be feasible for the desired subdivision. Page 5 of 7 - Exhibit A - Order No. 2007-007 • Claimant has submitted an appraisal of the current value of the property if a fifteen lot subdivision was allowed. Claimant's 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. Assuming an 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 Claimants 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. If Claimant could have obtained approval of a subdivision of the property on the date it first acquired an interest in 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 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) 11(c) "Owner" is the present owner of the property, or any interest therein. " In this case, Stearns Land Co., Limited Partnership has continuously owned an interest in the property since 1995. 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. Page 6 of 7 - Exhibit A - Order No. 2007-007 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 Stearns Land Co., Limited Partnership, 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 November 15, 1995, the date when Claimant first acquired an interest in the property. There is some evidence in the record that some additional development on the subject property may be feasible for available domestic water, sanitary waste disposal and road access. 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 November 15, 1995, to allow the Claimant to use the property in a manner permitted at the time it 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 use. With respect to the individual claimants they appear to have conveyed their entire interest in the property to the limited partnership claimant. However, if a court of competent jurisdiction should interpret Measure 37 in such a way as to conclude that despite such conveyance these individuals nonetheless are owners of the subject property, then their acquisition date would be January 16, 1971. Cautionary Note on Measure 37 Claimant should understand that a decision by Deschutes County may not enable them 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. The State has denied the claim filed by the Stearns Land Company, limited partnership in this matter (Claims No. M129736 and M129737). Likewise, because a portion of the subject property is located within the city limits of La Pine, Claimants may not proceed with future development or construction unless the City of La Pine approves a waiver of applicable city land use regulations. Page 7 of 7 - Exhibit A - Order No. 2007-007 EXHIBIT B `Fhe Southeast Quarter of the Southeast Quarter (SE1/4SE1/4) of Section Fifteen (15); the Northeast Quarter of the Northeast Quarter (NEl/4NE1/4) of Section Twenty-two (22), in Township Twenty- two (22) South, Range Ten (10) East of the Willamette Meridian, Deschutes County, Oregon. EXCEPT that portion of the SE1/4 of the SE1/4 of Section 15 conveyed to the Oregon Trunk Railway, a corporation, by Deed recorded March 24, 1910 in Volume 7 page 161 Deed records. EXCEPT that portion of the SE1/4 of the SE1/4 of Section 15 conveyed to the State of Oregon, by and through its State Highway Commission, by Deed recorded April 7, 1953 in Volume 103 page 507 Deed records. EXHIBIT B