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HomeMy WebLinkAboutHearing - Bolken - Measure 49Deschutes County Board of Commissioners 1300 NW Wall St., Suite 200, Bend, OR 97701 -1960 (541) 388 -6570 - Fax (541) 385 -3202 - www.deschutes.org AGENDA REQUEST & STAFF REPORT For Board Business Meeting of November 30, 2009 Please see directions for completing this document on the next page. DATE: October 12, 2009 FROM: Steven Griffin Legal 330 -4645 TITLE OF AGENDA ITEM: Remand Hearing on application of Olaf and Jannis Bolken for a determination of whether they are entitled to relief under Ballot Measure 49, Section 5(3). PUBLIC HEARING ON THIS DATE? Yes BACKGROUND AND POLICY IMPLICATIONS: Section 5(3) of Ballot Measure 49 allows a Measure 37 claimant who received a waiver of land use regulations to continue and complete the use described in the waiver if the claimant obtained a "ve ted right" on December 6, 2007 to complete that use. Four recipients of Measure 37 waivers applied to the county for an administrative determination of whether they have achieved a "vested right" under the law. The applications were referred to a hearings officer who ruled that the applicants were not entitled to relief. Because Measure 49 states that such local determinations are not "land use decisions" final county determinations on this issue proceed to circuit court not the Land Use Board of Appeals. In this case, the applicants petitioned the court to review the county's determination and partially prevailed in that action. The trial court concluded that the county had misconstrued the applicable law, vacated the decision, and remanded the matter to the county to be reconsidered under the correct legal standard. The proposed agenda item would be the county's reconsideration pursuant to the court's judgment. The questions presented at hearing will include: (1) As of December 6, 2007, what is the total cos' for the applicants to "complete the use described in the waiver "? (2) As of December 6, 2007, how rruch had the applicants spent to complete the land use? (3) What is the nature of the expenditures? (4; Were the expenditures reasonable, not adaptable to another permitted use, and otherwise incurred in go( d faith? (5) Considering the expenditures and other legal factors, had the applicants achieved a con mon law vested right to continue and complete the land use? FISCAL IMPLICATIONS: The board's ultimate decision will have a negligible fiscal impact. Conducting the remand hearin ; will potentially result in cost savings. RECOMMENDATION & ACTION REQUESTED: Hold a hearing and render a decision. ATTENDANCE: Steven Griffin, Deschutes County, Assistant Legal Counsel; Ed Fitch, Attorney for Claimant; Olaf and Jannis Bolken, Claimants DISTRIBUTION OF DOCUMENTS: Deschutes County Legal Department Community Development Department g 0 tES oc-O DESCHUTES COUNTY LEGAL COUNSEL TO: Board of County Commissioners RE: Olaf and Jannis Bolken, Remand Hearing STEVEN GRIFFIN As - ••. t Le • al Counsel W33, 645 Date: November 23, 2009 File No. 4/4 -022 This is a "legal staff report" for the public hearing to determine whether on December 6, 2007, Olaf and Jannis Bolken ( "Applicants ") had achieved a "common law vested right" under Ballot Measure 49, section 5(3) to continue and complete development of a 5 lot residential subdivision. FACTS Applicants Olaf and Jannis Bolken own a 31.40 acre parcel of property in the Terrebonne area. The property is bordered on one side by US Highway 97. The applicants have proposed to subdivide the parcel into 5 residential lots to range in size from approximately 5 to 9 acres. A single new road would service Tots 3 through 5. Lots 1 and 2 would be accessed directly from Highway 97. This development was tentatively approved pursuant to two "Ballot Measure 37 waivers." Deschutes County issued its waiver on November 6, Page 1 of 12, Legal Staff Report Re: Olaf and Jannis Bolken 2006. The State of Oregon issued its waiver on December 4, 2006. Originally, the applicants proposed to subdivide the parcel into 6 residential lots. That land use application was filed June 26, 2007. On August 28, 2007 applicants modified their proposal from a 6 lot residential subdivision to a 5 lot residential subdivision. A hearing on the modified application was held on October 9, 2007. A tentative subdivision approval was mailed on November 14, 2007, was not subject to appeal or review and became final 12 days later. ISSUES PRESENTED Issue 1. As of December 6, 2007, how much had the applicants spent to complete the land use? What was the nature of the expenditures? Were the expenditures reasonable and otherwise incurred in good faith? In other words, what are the total allowable expenses which should be included in determining the "Holmes ratio" 1? Recommended Answer. As of December 6, 2007 the applicants had incurred $26,101.82 in qualified expenses in pursuit of the development. Issue 2. As of December 6, 2007 what was the total project cost? Taking the total project cost figure what is the corresponding "Holmes ratio ?" Recommended Answer. As of December 6, 2007 the total cost of the proposed project is $394,503.57 to $469,503.57. The corresponding Holmes ratio is 5.66% (1:17.66) to 6.74% (1:14.83). ' The Holmes ratio is contained in the Oregon Supreme Court decision in Clackamas County v. Holmes, 265 Or 193, 508 P2d 190 (1973) which is explained in the "Discussion" section below. Page 2 of 12, Legal Staff Report Re: Olaf and Jannis Bolken Issue 3. Considering the "Holmes ratio" derived from the figures obtained in Issues 2 and 3, and the other legal factors, do these applicants have a "vested right" to complete the proposed project? Recommended Answer. If the improvements are not readily adaptable to a use permitted under Ballot Measure 49 and the board finds that the cost of homes is approximately $100,000.00 counsel recommends that the application be approved. However, if the board finds that the existing improvements can be adapted to a use permitted under Measure 49 or the costs of homes is more than $100,000.00 then counsel recommends the application be denied. DISCUSSION Legal Standard Vested Rights The right of a landowner to continue and complete a land use in spite of a change in the law which would make the land use unlawful is known as a "common law vested right." The Oregon Supreme Court in Clackamas County v. Holmes, articulated several "factors" which decision makers should consider in determining whether a developer has achieved a common law vested right to complete a land use rendered unlawful by a change in law. The Holmes factors are: (1) The ratio of expenditures incurred to the total cost of the project; (2) The good faith of the landowner; (3) Whether or not [the landowner] had notice of any proposed zoning or amendatory zoning before starting his improvements; (4) The type of expenditures, i.e., whether the expenditures have any relation to the completed project or could apply to various other uses of the land; Page 3 of 12, Legal Staff Report Re: Olaf and Jannis Bolken (5) The kind of project, the location and ultimate cost; and (6) Whether the acts of the landowner rise beyond mere contemplated use or preparation, such as leveling of land, boring test holes, or preliminary negotiations with contractors or architects). Clackamas County v. Holmes, 265 Or at 197 -99. Much of the "vested rights" discussion centers on the "Holmes ratio" of expenses incurred in good faith to total project cost. No particular ratio is determinative. Not all Holmes factors apply in every case and the weight to be afforded any factor varies depending on the particular circumstances of each case. Union Oil Co v. Board of Co. Comm. of Clackamas Co., 81 Or App 1, 8, 724 P2d 341 (1986). The vested rights determination is a case -by -case factual exercise. See Holmes, 265 Or at 197. Issue # 1. As of December 6, 2007, how much had the applicants spent to complete the land use? What is the nature of the expenditures? Were the expenditures reasonable, not adaptable to another permitted use, and otherwise incurred in good faith? DISCUSSION The following is a line -by -line analysis of the applicants' claimed expenses. Each expense is detailed, discussed, and then counsel makes a recommendation regarding the total amount which should be allowed. Previously, the hearings officer had allowed a total of $6,212.45 in expenses. As discussed in the introduction above, the hearings officer disallowed any expenses incurred after June 15, 2007. The trial court ordered the county to "reassess" post -June 15, 2007 expenditures. The court did not make a specific determination as to each claimed expense. This is a task for the board. Page 4 of 12, Legal Staff Report Re: Olaf and Jannis Bolken In determining whether to allow or disallow an expense, the board should consider such factors as: (1) the good faith of the property owner; (2) whether the claimed expense is sufficiently linked to the approved development; whether the claimed expense is reasonable; and whether the expenditures could apply to various other uses of the land. The following is a discussion of the expenses: Measure 37 Fee $500.00 (3) (4) Background. A Holmes criterion is "whether the expenditures have any relation to the completed project or could apply to various other uses of the land." Holmes, 265 Or at 199. Measure 37 waivers are adaptable. The county waiver is generic. Under this waiver, it is possible that the property could be used for commercial, industrial, or other non - residential uses —so long as the use would have been permitted when applicants acquired it. Opinion. Based upon the board's prior decisions on this issue, allow Measure 37 fee of $500.00. Surveyor Fees $9,054.00 Background. The applicants in their summary of expenses listed a total of $9,054.00 in surveying expenses from Jeff Kern. The listed expenses were claimed on May 17, 2007 ($2,000), July 31, 2007 ($905.00); September 17, 2007 ($967.00); and Dec 1, 2007 ($2,227.00). Counsel located invoices from Jeff Kern Professional Land Surveyor's on pages 147, 48, 49, and 64 of the record. The invoice amounts were as follows: Invoice Date July 16, 2007 September 4, 2007 November 28, 2007 January 28, 2008 TOTAL Service Dates 05/08/07 to 06/22/07 08/07 11/17/07 to 11/28/07 12/1/07 to 12/31/07 Page 5 of 12, Legal Staff Report Re: Olaf and Jannis Bolken Amount $2,905.00 $ 967.00 $2,277.00 $ 412.50 $6,561.50 Opinion. Allow $6,561.50 in surveyor fees. Legal Fees $523.70 Background. On page 145 of the record the applicants summarize legal fees of $523.70. No invoices were submitted in support of these expenses. Opinion. AIIow $523.70 in legal expenses. Although the expenses are not documented, $523.70 is a reasonable amount to have spent in pursuit of a Measure 37 waiver and tentative plan. Title Fees $350.00 Background. Applicants have submitted documents from Western Title for a subdivision guarantee and a May 30, 2006 title search. The May 30, 2006 search was apparently in support of the waiver. The May 3, 2007 fee was for a subdivision guarantee. Opinion. AIIow $350.00 in title expenses consistent with the board's previous decision to allow Measure 37 fees. Planner Fees $1,116.00 Background. Applicants claimed $1,116.00 in planner fees paid to Heidi Kennedy. Applicants claimed an April 25, 2007 fee of $778.50 and a July 31, 2007 fee of $337.50. Opinion. Disallow expenses. Planner Heidi Kennedy did perform work which was submitted in support of the tentative subdivision application. Counsel has been unable to locate documentation to establish the fees actually paid and, more important, the reasonableness of the fees. Fees (Deschutes County) $3,405.00 Background. The $3,405.00 in fees to Deschutes County include $2,850.00 for filing the tentative plat application and $520.00 fee to modify the tentative plan application from a 6 lot subdivision to a 5 lot subdivision. Opinion. AIIow $2,850.00 in filing fees. Disallow the application change fee consistent with the board's previous decisions that expenses incurred in pursuit of applications not approved should be disallowed. Well Expenses $8,664.00 Background. Applicants submitted a receipt dated October 9, 2007 for $240.00 to "move rocks" and $8424.00 dated October 29, 2007 for well drilling. (Rec 151 Page 6 of 12, Legal Staff Report Re: Olaf and Jannis Bolken & 152). Opinion. Allow $8,664.00 in well expenses. Road Construction $7,152.62 Background. Applicants submitted an invoice from Knife River Construction for $7,152.62 to complete an approach from Highway 97 to the proposed subdivision. Opinion. Allow $7,152.62 in road construction expenses. Misc Expenses $328.95 Background. Applicants claimed $203.95 from Swift Steel for a steel culvert and $125.00 in fill dirt from Dewey Dirt works. The applicants submitted an invoice from Swift Steel dated October 4, 2007 for $545.46 for a culvert. Counsel has been unable to locate corresponding invoices for the $203.95 and $125.00 and, in any case, Opinion. Disallow expenses. The expenses do not appear to be adequately documented and, in any case, their connection to the subdivision approval is not established. The expenses are claimed to have been incurred in January 2007, nearly a year before any land use approval. RECOMMENDATION Allow a total $26,601.82 in expenses calculated as follows: Measure 37 $ 500.00 Surveyor fees $ 6,561.50 Title fees $ 350.00 Legal fees $ 523.70 Filing fees $ 2,850.00 Well expenses $ 8,664.00 Approach expenses $ 7,152.62 TOTAL $26,601.82 Issue # 2. As of December 6, 2007 what was the total project cost? DISCUSSION Counsel believes that the preponderance of evidence is that total project costs should be from between $394,503.57 to $469,503.57 depending on the Page 7 of 12, Legal Staff Report Re: Olaf and Jannis Bolken cost of homes. The total project cost would be calculated according to the following formula: Pre - December 6, 2007 costs incurred + Post - December 6 costs incurred + Cost to Complete Infrastructure + Cost of Homes = Total Project Cost Project Cost — Infrastructure Certain infrastructure items must be completed prior to recording the final plat. Those items and their estimated future costs are as follows: Road Construction $39,410.00 Background. Applicants constructed an approach from the proposed subdivision to Highway 97. The tentative approval required an internal road to be constructed to service three of the five proposed Tots. Applicants submitted an estimate from Knife River stating that completion of the required road would cost $39,410.00 (Rec 166). Telephone $2,988.00 Background. Applicants contacted QWest, the local telephone service provider. QWest indicated that construction of telephone facilities for the subdivision would cost approximately $2,988.00. (Rec 162 -63). Well $8,500.00 Background. One remaining well must be constructed. The cost of the previous well was approximately $8,500.00. Electric $9,275.00 Background. CEC estimates that the cost to run electric lines to the subdivision will be $9,275.00. (Rec158). Engineering $4,407.50 Background. Applicants received an estimate from Stephen Liska Civil Engineering, LLC stating that to complete the project, the applicants would incur Page 8 of 12, Legal Staff Report Re: Olaf and Jannis Bolken approximately $3,995.00 in engineering expenses. (Rec 160 -61). The applicants had incurred $412.50 after December 6, 2007. Fees $2,500.00 Background. Applicants will have to pay $2,500.00 in fees to finalize the project. Post December 6, 2007 Expenses $821.25 Background. Applicants estimated that they had incurred $821.25 in expenses after December 6, 2007. (Rec 145). RECOMMENDATION Find $67,902.25 in infrastructure expenses to be incurred to complete the project. Project Cost -- Homes The applicants have proposed a range of figures for the value of homes as between $100,000.00 to $200,000.00. Throughout these proceedings the parties have been operating on the assumption that the "project" includes the addition of three homes. This assumption appears to be warranted. Presently there are two homes on the parcel of property. One home is occupied by Mr. & Mrs. Bolken, the other is occupied by their son. A five lot subdivision would result in a net increase of three homes. The two existing homes appear to be lawful dwellings. RECOMMENDATION Find that the project includes three homes. Inquire of the applicants regarding the cost of homes. Experience suggests that the cost will be in the range of $100,000.00 to $125,000.00 per home. Page 9 of 12, Legal Staff Report Re: Olaf and Jannis Bolken TOTAL PROJECT COST Find total project costs as follows: Costs incurred pre- December 6, 2007 Costs incurred post- December 6, 2007 Infrastructure costs to complete project Road construction Electric Engineering Wells Fees Telephone Total cost w/o homes Three (3) homes @ $100K to $125K Total cost with homes $26,601.82 $ 821.25 $39,410.00 $ 9,275.00 $ 4,407.50 $ 8,500.00 $ 2,500.00 $ 2,988.00 $94,503.57 $300K to $375K $394,503.57 to $469,503.57 Holmes ratio: 5.66% (1:17.66) to 6.74% (1:14.83) Issue # 3. Considering the "Holmes ratio" derived from the figures obtained in issues 1 and 2, and the other legal factors, do these applicants have a "vested right" to complete the proposed project? DISCUSSION The supreme court has stated that the "ratio" of incurred to total costs is only one factor to be considered in determining a "vested right:" Other factors which should be taken into consideration are the good faith of the landowner, whether or not he had notice of any proposed zoning or amendatory zoning before starting his improvements, the type of expenditures, i.e., whether the expenditures have any relation to the completed project or could apply to various other uses of the land, the kind of project, the location and ultimate cost. Also, the acts of the landowner should rise beyond mere contemplated use or preparation, such as leveling of land, boring test holes, or preliminary negotiations with contractors or architects. * * * " Clackamas County v. Holmes, 265 Or 193, 197 -99, 508 P2d 190 (1973). All of these other factors enable the board to determine whether or not the applicants have made "substantial" progress (within the meaning of the law) Page 10 of 12, Legal Staff Report Re: Olaf and Jannis Bolken towards completion of this now unlawful land use. In counsel's view this application largely turns on two issues. (1) Whether the expenses incurred are adaptable to another, lawful use. Counsel understands that the applicants would be entitled to at least one additional home site under Measure 49. The improvements thus far could be adapted to service that one additional home site. If this understanding is accurate, under the rule announced in Holmes, a vested right would not be appropriate. Presently there is no evidence in the record concerning what relief the applicants would be entitled to under Measure 49. This weighs against finding a vested right. (2) Because the ratio in this case is at the margins of what has been approved by the courts to support a vested right, the cost of homes is an important consideration. In another vested rights case the board found the cost of homes for a similar subdivision would be approximately $100,000.00. This was based on evidence that pre- existing homes were built at a cost of approximately $100,000.00. In this case, there is limited evidence on the cost of homes contemplated for this subdivision. Because the applicants bear the burden of proof on this issue this weighs against the applicants. Counsel believes that the gaps in the evidence could be resolved with the applicants' testimony at the hearing. RECOMMENDATION The Holmes ratio developed above is on the margins of what the courts Page 11 of 12, Legal Staff Report Re: Olaf and Jannis Bolken have held to be sufficient to establish a common law vested right to complete a development. If the board finds that the cost of homes is $100,000.00, then the Holmes ratio favors a common law vested right, but just barely. On the other hand, if the board finds the costs of homes to be anything more than $100,000.00, then the Holmes ratio does not favor a vested right, but again, just barely. What appears to be lacking from the evidence is the nature and extent of relief available to the applicants under other provisions of Ballot Measure 49. Counsel recommends that the board inquire of the applicants the type of relief available to the applicants under Ballot Measure 49 and determine what, if any of the improvements can be adapted to uses permitted Linder other provisions of Ballot Measure 49. If the improvements can be adapted to a use permitted under Measure 49, then the application should be denied. If the improvements are not adaptable and the cost of homes is not greater than $100,000.00, then the board should consider granting the application. cc: Mark Pilliod Dave Kanner Bonnie Baker Page 12 of 12, Legal Staff Report Re: Olaf and Jannis Bolken