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2007-1673-Order No. 2007-165 Recorded 12/5/2007REVIE D DESCHUTES COUNTY OFFICIAL RECORDS yJ 2007.1673 l NANCY BLANKENSHIP, COUNTY CLERK COMMISSIONERS' JOURNAL 12/0512007 09:42:28 AM LEGAL C UNSEL I 1111IIIIIIIII11111 IN III 2007-1673 L BEFORE THE BOARD OF COUNTY COMMISSIONERS OF DESCHUTES COUNTY, OREGON An Order Determining Feasibility of Measure 37 Use of Leason Property * ORDER NO. 2007-165 * 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, Pine Ridge Ranch Company, Inc., John Leason (Leason) and Gertrude Leason (herein collectively referred to as "Claimant") made a timely demand for compensation under Measure 37, asserting that County EFU zoning regulations, restricting use of their land, have resulted in a loss of market value of the Claimants' property; and WHEREAS, pursuant to DCC 14.10 and section 8 of Measure 37 the Board, in lieu of paying compensation elected to not apply the identified land use regulation that was enacted after Claimant acquired the property, that restricted the Claimant's use of that property and that reduced the value of the property; and WHEREAS, the Board's final order, Order No. 2005-042, was appealed to the Deschutes County Circuit Court (Court) by Bruce Bowen and Eva Eagle (herein collectively referred to as "Opponents"); and WHEREAS, after receiving the official record, and arguments and briefs from Claimant and Opponents the Court on June 11, 2007 entered a Judgment, which included findings of fact. More specifically the Court remanded the matter to the Board to determine whether there was substantial evidence of feasibility as part of the proof of a reduction in value of Claimant's property; and WHEREAS, the Board after providing notice to Claimant and Opponents opened the Board's record of proceedings and received evidence and argument, including analysis by county staff all in accordance with the Court's Judgment; and WHEREAS, the Board makes the following findings of facts and conclusions; 1. The Board concurs with Administrator's report that Claimants have demonstrated that domestic water, sanitary sewer, and road access for the desired use on the subject property are feasible. 2. 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 Claimant - Leason first acquired an interest in the property were applied to the development of the property. PAGE 1 OF 2- ORDER No. 2007-165 (12/03/07) THE BOARD OF COUNTY COMMISSIONERS OF DESC1 UTES COUNTY, OREGON, HEREBY ORDERS as follows: Section 1. The Board hereby adopts and incorporates the Administrator's report, attached as Exhibit "A." as its findings and conclusions . Section 2. Except as otherwise set forth herein, Order No 2005-042 is in full force and effect. 2r~ DATED this day of '2007. BOARD OF COUNTY COMMISSIONERS OF WES4~; NT OREGON MICHAEL / M. -D;ALY, air Y - xz ATTEST: TAMM EY, Commissioner 57 Recording Secretary D NNIS R. LU , C mmissioner PAGE 2 OF 2- ORDER No. 2007-165 (12/03/07) 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 From: Dave Kanner, County Administrator RE: Measure 37 Claim - Pine Ridge Ranch Company, Inc. and John Leason (Gertrude Leason is deceased) 69401 Goodrich Road. Sisters Introduction - Procedural background DATE: December 3, 2007 The County processed the above-referenced claim in June 2005. That process resulted in an order approving a waiver in favor of the claimant. A copy of the original Order No. 2005-042 is attached hereto. Two neighbors of the claimant, Bruce Bowen and Eva Eagle, filed a writ of review proceeding in Deschutes County Circuit Court, challenging the county's decision. Claimant intervened. The Court reviewed the county's record and received written and oral arguments from the parties. The court reached a decision and entered an order, which is also attached hereto. In short the court approved the county's decision in all but one respect. The court found that the Board's previous decision had determined that there was no proof of feasibility of future development, as required by the Deschutes County Code, and that the Board failed to otherwise explain why it nonetheless granted Claimant a Measure 37 waiver. Based upon this finding the court remanded the claim to the county to determine whether there was substantial evidence of feasibility as part of the proof of reduction in value. The Court provided no other direction to the county as to how to process the claim on remand. The Court's decision was appealed to the Oregon Court of Appeals, where the matter is pending. While a statutory process (ORS 19.330 et. seq.) is available to an appellant to obtain a Pine Ridge Ranch Company, Inc. - December 3, 2007 - Page 1 stay of local proceedings on remand while an appeal is pending, that process has not been invoked here. This memo is intended to recommend direction to the Board. The court remanded this matter to the Board for the limited purpose of examining the issue of feasibility as it relates to reduction in value. Thus, the Board need not reexamine any other aspects of its decision. There is nothing in the court's order or in the Board's rules that would prevent the Board from receiving evidence bearing on this issue. Cases referred to by opponents relative to this Board's jurisdiction have been considered. This Board's jurisdiction was conferred prior to any appeal to the Court of Appeals. Cases cited by opponents pertain to limitations on the continuing jurisdiction of courts, not local tribunals. Likewise, since this is not a land use proceeding, cases interpreting the statutory limitations on LUBA's jurisdiction after the filing of an appeal are inapposite. Therefore, the Board has jurisdiction. Claimant submitted evidence in support of the claim relative to feasibility on October 19, 2007. When the Board opened the hearing on the 22nd, both the claimant and opponents were present, represented by legal counsel. After preliminary statements and with the concurrence of the parties the Board continued the matter based upon an agreed schedule. Opponents were allowed until November 5 to submit written material responding to Claimant's material. Claimant would then have until November 19 to respond to material submitted by opponents. The Board would resume the hearing on December 3. The additional written materials referred to herein were timely submitted to the Board and have been considered. County Code provisions applicable to Measure 37 claims The County's claims process, codified at DCC 14.10 sets forth at 14.10.040 the required claim contents. In regards proof of reduction in value the code originally provided: "Claimant shall provide written evidence of the amount of the claim in dollars based on the alleged reduction in the fair market value of the property resulting from the enforcement of the County's non-exempt land use regulation. The amount of the alleged reduction in the fair market value of the property shall be indicated by showing the Pine Ridge Ranch Company, Inc. - December 3, 2007 - Page 2 difference in the fair market value of the property, determined before and after application or enforcement of the County's nonexempt land use regulations(s). Appraisals must meet the uniform standards of the Professional Appraisal Practice (USPAP) and be performed by an appraiser who meets the Competency Rule of USPAP. The appraisal must be in a self contained format and must be `complete,' not 'limited.' The appraisal shall address the specific limitations set forth in DCC 14.10.060. Any reduction in value evidence shall demonstrate that the desired use is feasible on the subject property. This includes, at least, evidence that domestic water, sanitary sewer disposal and road access are feasible for the desired use." Section 14.10.060 also discusses the reduction in value evidence. For example, 14.10.060A provided: "The appraisal must expressly note all existing infrastructure limitations and value the property without an assumption that the infrastructure will be improved at governmental expense or through discretionary governmental action. Infrastructure includes but is not limited to water, sewer, vehicle access, law enforcement, fire protection and other necessary public services and utilities." Over the course of almost two years and many Measure 37 claims the County established a practice of accepting as sufficient, evidence that was less detailed than the code provisions set forth above actually required. This was true for several reasons. First, the Code provisions quoted above can be interpreted as treating appraisal evidence as optional for purposes of demonstrating reduction in value. All that the code literally requires is written evidence. If an appraisal is prepared, however, it must satisfy the stated requirements, including a discussion of development feasibility. In practice, the county rarely received any appraisals and never received one that satisfied these requirements. Until October 19, 2007 no appraisal was ever received in connection with the subject claim. Second, based upon evidentiary rules applicable in condemnation cases, property owners could assert their opinion as to the value of their property. This is true despite the absence of qualifications to furnish a professional opinion on real estate valuation. Since condemnation cases are analogous to Measure 37 cases, property owners could effectively present evidence of diminution of value without retaining an appraiser. This is how most claimants submitted their claims. Third, Measure 37 does not require any specific proof of reduction in value. Indeed Measure 37 does not clearly define how reduction in value is to be measured. There is no standard for the quality or quantity of evidence. Fourth, in Pine Ridge Ranch Company, Inc. - December 3, 2007 - Page 3 the absence of evidence presented by a claimant the county would be placed in an unacceptable dilemma, either prepare an appraisal itself to demonstrate that a particular regulation had the effect of reducing the value of the claimant's property, or deny the claim and risk a court proceeding in which the claimant could recover from the county the lost property value plus costs and attorneys fees. As a result the county amended the claims process in February 2007, pursuant to Ordinance No. 2007-008. 14.10.040 H now reads: "Claimant shall provide written evidence of the amount of the claim in dollars based on the alleged reduction in the fair market value of the property resulting from the enforcement of the County's non-exempt land use regulation. The amount of the alleged reduction in the fair market value of the property shall be indicated by showing the difference in the fair market value of the property, determined before and after application or enforcement of the County's nonexempt land use regulations(s). 14.10.060A now reads: "The appraisal should note all existing infrastructure limitations and value the property without an assumption that the infrastructure will be improved at governmental expense or through discretionary governmental action. Infrastructure includes but is not limited to water, sewer, vehicle access, law enforcement, fire protection and other necessary public services and utilities." (emphasis added) The provisions relating to an appraisal and its necessary components, including proof of feasibility were repealed. This does not mean that evidence of feasibility is no longer relevant to the issue of reduction in value, only that evidence of feasibility and an appraisal are not required by the county's Measure 37 claims process. As a practical matter, Measure 37 claimants who receive the necessary waivers from local jurisdictions and the State, must still apply for land use approval and the county's site review process necessarily requires proof that a project can be adequately served by domestic water, sanitary sewer disposal, road access and other forms of infrastructure. Precise evidence of feasibility must be submitted at the development review phase, not as part of a Measure 37 claim process. Pine Ridge Ranch Company, Inc. - December 3, 2007 - Page 4 Opponents argue that while Measure 37 indicates that decisions made thereunder are not land use decisions, they should nonetheless be considered "permit" decisions, as defined by ORS 215.402(4). A companion statute requires that decisions on permit applications must be decided pursuant to standards in effect when such applications were received. (ORS 215.427). Thus, they argue that Claimant's materials must be considered under code provisions in effect when the claim was first received. They would require that this claimant furnish more detailed evidence of feasibility than is required under the amended version of the code. The definition of "permit" in ORS 215.402 is limited to development applications, not Measure 37 claims. There is nothing in ORS 215 which imposes a limitation on the Board's authority to adopt procedures to implement Measure 37 or to amend such procedures. As this Claim was remanded to the County in June 2007 after such procedures were amended, the Board believes it must apply the criteria currently in effect. The Board declines to address the adequacy of claimant's evidence of feasibility pursuant to the former provisions of the county's Measure 37 process. Reduction in Value - The County's claims process requires that the claimant to provide evidence of the amount of the claim in dollars based on the alleged reduction in the fair market value of the property resulting from the enforcement of the County's land use regulations. Claimant has submitted evidence that the value of the property under current zoning is $3.1 million. If the property were developed in accordance with regulations in effect in 1971 (this Board's earliest acquisition date for John Leason), the value, according to Claimant's appraiser would be approximately $32 million. This amount is based upon Claimant's materials which illustrate division of the property into 95 lots, either as a rural subdivision, or as a planned development. While this material is sufficient for purposes of analyzing Claimant's measure 37 claim, nothing in the Board's decision should be construed as land use approval for such conceptual plans. Pine Ridge Ranch Company, Inc. - December 3, 2007 - Page 5 In a recent subdivision application on a Measure 37 waiver (TP-06-974, Hurtley), the County Hearings Officer determined that the 1970 Comprehensive Plan established a policy framework for the land use regulations established in zoning and subdivision ordinances which became effective following the County's adoption of the comprehensive plan. The Hurtley property had the same "intensive agriculture" plan designation as the Claimant's land, and the Hearings Officer found that this designation established a 5-acre minimum lot size, along with minimum width, depth, street frontage and setback standards (300 feet, 400 feet, 150 feet and 50 feet, respectively). The Hearings Officer found that rural subdivisions, as that term was defined under PL-2, were the only type of subdivision allowed in the areas designated intensive agriculture. Based on the Hearings Officer's findings in Hurtley, the Leason property would likely be subject to the 5-acre minimum lot size. Based upon 478 acres, a 5-acre lot size yields 95 lots. Other amenities, such as a golf course, are not considered for purposes of this claim, as they may not have been permitted on the 1971 acquisition date. Claimant has also submitted several letters from W&H Pacific, an engineering and development consultant. These letters express the opinion that from the standpoint of sanitary sewerage and water supply, a 90+ unit residential subdivision would be feasible. A letter from the Cloverdale fire district indicates only that the subject property is located within district boundaries. It offers no opinion as to whether a multiple unit residential development could be adequately served. Central Electric Cooperative, the local power company, indicates that such utility service would be available to a single residence. There is no indication that such service would be adequate or available to serve a 90+ unit residential development. County staff has examined the evidence of feasibility of development of Claimant's property in terms of water service, traffic impacts and sewerage disposal. These materials are based upon preliminary information on a 90+ unit subdivision and would be subject to further review and revision based upon a detailed site plan application. Staff has concluded that while there would Pine Ridge Ranch Company, Inc. - December 3, 2007 - Page 6 be traffic impacts to surrounding roads, with appropriate engineering controls and development conditions, in terms of access, water and sewerage disposal, such a project would be feasible. Recommendation Based upon current Code provisions requiring a demonstration of project feasibility only to establish that the value of the property has been diminished, the Board should find that sufficient evidence has been submitted. Pine Ridge Ranch Company, Inc. - December 3, 2007 - Page 7