HomeMy WebLinkAboutApplicant Comments - Newland AmendmentBEFORE THE BOARD OF COMMISSIONERS OF DESCHUTES COUNTY
File Numbers: PA-13-1/ZC-13-1
Applicant: NNP -NCR, LLC
Subject: Plan Amendment from Agriculture to Rural Residential Exception Area
and Zone Change from EFU-TRB to MUA-10
Staff Reviewer: Paul Blikstad, Senior Planner
APPLICANT'S RESPONSE TO HEARINGS OFFICER'S RECOMMENDATION
DATED OCTOBER 23, 2013
Summary
Hearings Officer Karen Green determined that NNP has demonstrated compliance with the vast majority
of the approval criteria for the Board to rezone its Property MUA-10. She identified two issues that led
her to recommend denial of the application: (a) proof that a reasonable farmer would not farm the
property with an intention to make a profit in money; and (b) her recommendation that the County
study the soils found on each lot or parcel that comprises the NNP Property rather than study the
property as a whole — the approach taken in prior, recent County decisions involving nonagricultural
land.
The Hearings Officer incorrectly read the economic analysis and, therefore, reached incorrect
conclusions regarding profitability. Specifically, she did not recognize that the costs of the irrigation
system, fencing and buildings were depreciated over time and were not deducted from a single year of
operations. As a result, her conclusion that replacing new equipment with used equipment would make
farm operations profitable was in error. Even if used equipment and facilities are factored into the
economic analysis, NNP's Property cannot support a profitable farm operation. This is consistent with
the fact that, according to the 2007 Census of Agriculture prepared by USDA, 82.4% of all farms in
Deschutes County, including those with high-value farm soils, did not make a profit in 2007 which is the
latest year for which figures are currently available.
The Hearings Officer was correct in determining that the County is not required to study the soil
characteristics of each legal lot of record rather than the entire NNP Property. NNP disagrees with the
Hearings Officer's recommendation that the County choose to use this approach. The Hearings Officer's
approach is inconsistent with how the County applied the standard to the DSL property and to other
properties in similar applications. The County's prior approach to the issue makes the most sense and
should be applied to decide the NNP application.
Specific Responses
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The applicant has quoted text from the Hearings Officer's Recommendation in italics and has provided a
response below each quotation.
"Under the unique circumstances of this case, where the subject property is a tract with multiple parcels,
the applicant must demonstrate that each parcel consists of predominantly Class VII and VIII soils rather
than simply analyzing the tract as a whole."'
Response: The fact that the NNP Property is a tract comprised of multiple parcels is not a "unique
circumstance." To the applicant's knowledge, the County has never required a lot by lot analysis as
suggested by the Hearings Officer. To the contrary, in every recent nonagricultural land case where an
applicant's property has been comprised of multiple lots, the County has analyzed the property
proposed for rezoning, not individual lots to determine whether a majority of the property was
comprised of nonagricultural (Class VII and VIII) soils. This is shown by Exhibit A, attached.
The Land Use Board of Appeals has recognized that the fact that NNP's property is comprised of multiple
lots is not unique. LUBA noted in the Wetherell case cited by the Hearings Officer that "[a] farm unit
could be located on a single parcel or lot, but more commonly farm units are located on more than one
parcel or lot" and that a farm unit "may be a relevant consideration in determining whether land is
properly viewed as agricultural land." Wetherell v. Douglas County (Standley), 50 Or LUBA 71 (2005)
(entire parcel must be reviewed to determine predominant soil type). The current case law has held
that it is not appropriate to study areas smaller than lots or parcels but it has not held that it is not
permissible to study a group of lots and parcels as one property when owned by a single owner. The
overarching theme of EFU-zone regulations is to combine parcels into tracts and to base land use
decisions on the basis of tracts whenever EFU lots and parcels have the same owner.
"The applicant failed to demonstrate the entire subject property is unsuitable for farm use considering
profitability and other factors set forth in the administrative rule."2
"[Title applicant has failed to demonstrate the subject property is unsuitable for farm use considering
profitability and factors in the Goal 3 administrative rule."3
Response: This conclusion is based on a misunderstanding by the Hearings Officer of the economic
analysis prepared by Agronomic Analytics. Agronomic Analytics correctly determined that farming the
NPP Property is not profitable. This determination is consistent with the history of the property and the
track record of farming in Deschutes County in general. Prior owners of the subject property were
unable to obtain a profit from farming the property in a number of smaller farm operations. The vast
majority of Deschutes County farmers, 82.4%, do not make a profit from farming. The average farm size
in Deschutes County, according to the 2007 Census of Agriculture is 92 acres. The average loss per farm
in 2007 was $9,220 on a net cash income of $25,818. See, Exhibit B.
The results arrived at by Agronomic Analytics are based on a conservative analysis. The analysis did not
include the complete costs of farming, such as the cost to purchase and finance the land to be farmed,
farm housing costs and family farm labor. The results of the Agronomic Analytics analysis show that
1
Page 7, Hearings Officer's Recommendation (erroneously labeled "Decision of Hearings Officer").
2 Page 8, Hearings Officer's Recommendation.
3 Page 17, Hearings Officer's Recommendation
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farming NNP's Property as a single farm unit will not be sufficient to make farming a property with a
history of farm losses a profitable venture.
The Hearings Officer misunderstood how to apply the Goal 3 administrative rule factors, as explained
later in this response. The rule lists factors to be considered when determining if a reasonable farmer
would buy the NNP Property with an intention of making a profit in money by conducting farm activities
on the land. The factors are not each separate approval criteria. A copy of the relevant part of the
County's DSL decision that addresses the criteria as factors rather than approval criteria is attached as
Exhibit C.
"I have found that the applicant's soils study does not justify the proposed plan amendment and zone
change to MUA-10 because it analyzed soils on the entire property rather than as to each parcel/A
"[T]he applicant's soil study is not adequate because it does not demonstrate the parcels comprising the
subject property are predominantly Class VII and VIII soils ..."s
Response: The Oregon Supreme Court has held that, when changing Agricultural land plan designations,
the predominant soil capability classification of land should be determined based on the area proposed
for change.1000 Friends of Oregon v. Wasco County Court, 299 Or 344, 371-73, 703 P2d 207 (1985)(land
removed from Agricultural designation for incorporation in a new city from a very large area of ranch
land). This decision has not been overruled. As a result, the holding of that case applies to NNP's
application and supports NNP's position that the entire property should be considered when
determining whether the property is predominantly comprised of Class VII and VIII soils.
Since 1000 Friends was decided, legal cases and administrative rules have imposed new requirements
that prevent local government from looking at less than a lot or parcel. This approach prevents property
owners from removing unproductive areas from parcels that are, as a whole, good agricultural land. The
law does not, however, mandate that a county evaluate properties comprised of multiple lots or parcels
as one unit of land. It does not prohibit a county from reviewing the soils on a farm property comprised
of a group of parcels as a single unit of land. The latter approach is required to determine whether land
is suitable for profitable farm use if a unit of land is a farm unit. Using the same approach to study soils
is reasonable and fair.
It does not make sense to study approximately ten separate parts of the NNP Property to determine
predominant soil type simply because, historically, the property was divided into many small lots. The
lot lines on the NNP Property are meaningless to a farmer. Farm operations will be and have been
conducted across property lines. Boundary lines, also, can be adjusted to new locations. As a practical
matter, were the County to require a lot by lot analysis, the applicant would be able to adjust the lot
boundaries in a way so that each lot satisfied the soil analysis requirements. This fact alone supports
the approach of evaluating the farm unit rather than individual lots comprising the farm unit.
The lot lines on the NNP Property were established when zoning regulations allowed small lots to be
created on farm land to allow for hobby farm and residential use. The lines were not established to help
protect agriculture. In fact, the current Goal 3 would prohibit the creation of most of these small lots.
4
Page 16, Hearings Officer's Recommendation
5 Page 17, Hearings Officer's Recommendation
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These small lots are clearly unsuitable for farm use — they need to be used as a single unit of land to
have any chance of obtaining a profit in money from agriculture.
LCDC's rules allow a County to look at units of land as small as a lot or parcel without considering an
entire farm unit but they do not require that a county study soils on a parcel basis. This fact is
recognized by Ms. Green who wrote:
"In the absence of clear direction from the courts, LUBA or the board concerning
application of the language of OAR 660-033-0030(2) to the unique circumstances of this
case — i.e. a tract consisting of multiple parcels — the Hearings Officer finds it reasonable
to conclude the rule gives the County discretion to choose the appropriate unit of land
for the predominant "soils" analysis. In other words, the county can choose either to
evaluate soils on an individual parcel basis or as to the entire tract."
As discussed earlier, the County has consistently looked beyond lot and parcel boundaries when
deciding whether a unit of land is comprised, predominantly, of Class VII and VIII soils. This approach is
the best approach because it matches the requirement imposed by State law to study an entire farm
unit when determining whether land is suitable for farm use. Oregon case law regarding the suitable for
farm use and farm unit rule shows that looking to the entire farm unit typically prevents, rather than
helps, properties from qualifying as nonagricultural land. As a result, such an approach is consistent
with Goal 3's aim to protect agricultural land.
"OAR 660-033-0030 sets forth the process by which the county identifies 'agricultural land.' Subsection
(2) of that rule states in relevant part: 'When a jurisdiction determines the predominant soil capability
classification of a lot or parcel it need only look to the land within the lot or parcel being inventoried.
However, whether land is suitable for farm use requires "* the consideration of conditions existing
outside of the lot or parcel being inventoried.'"6
Response: This rule allows a county to look at a unit of land as small as a lot or parcel when deciding the
predominant soil capability. It does not require a county to study each and every lot and parcel within a
farm unit or unit of land proposed for rezoning when deciding if property is nonagricultural land.
NNP agrees that the issue of whether land is suitable for farm use requires that a larger area be
considered. NNP believes that where a larger area must be studied to determine suitability and that
area comprises contiguous land owned by one person or entity, that the area of land that should be
considered to determine whether land is agricultural land or nonagricultural land is the entire unit of
land proposed for rezoning, as allowed by the 1000 Friends of Oregon v. Wasco County Court case.
"[P]revious county decisions redesignating and rezoning nonresource land have not addressed this
question. That is likely because the prior county cases involved single parcels rather than tracts
comprised of multiple parcels. For example, the Pagel and DSL decisions cited above involved,
respectively, a 17 -acre parcel and a 380 -acre portion of a 640 -acre parent parcel."
6 Page 22, Hearings Officer's Recommendation.
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Response: A review of County decisions shows that prior County cases, other than Pagel, have all
involved multiple parcels and that the predominant soil classification was determined based on the soils
found on the entire area proposed for rezoning. See, Exhibit A.
"In a supplemental memorandum dated March 20, 2013, the applicant's attorney Steven Hultberg * * *
argued that as a practical matter, focusing on individual parcels rather than the entire tract makes little
sense since parcel lines can be adjusted or vacated to meet the predominance test. While in theory such
adjustments could be made * * * the Hearings Officer finds that fact does not justify interpreting the
term 'parcel' to mean 'tract.' Moreover, the Hearings Officer is concerned about the result of such parcel
manipulation. It could have a negative effect on preserving or protecting agricultural land. . ."7
Response: The Hearings Officer appears to have missed the point of Mr. Hultberg's argument. Mr.
Hultberg is saying that because lot lines can be removed or moved by NNP they do not provide a
meaningful unit of land for study. How land is used and owned is more relevant. This is particularly true
where, as here, the property was divided prior to or during the early days of Statewide land use rules
into units of land that are too small for commercial farm operations. Putting these lots or parcels into a
single farm operation is what is desired by State law. It is reasonable for the County to study both the
soils and viability of farming such land on the basis of the entire unit.
The "parcel manipulation" the Hearings Officer fears will have a negative effect on preserving or
protecting agricultural land can occur even if the County follows her recommendation to study each lot
and parcel separately. This simply requires approval of a lot consolidation which is allowed as a matter
of right.
NNP believes that most owners of productive farm land will not be willing or able to acquire properties
with poor soils, consolidate them and then seek a nonagricultural designation for the combined
property. First, the good farm land must adjoin land with very poor soils. Second, the expense to
acquire additional land and apply for and justify approval of a nonagricultural designation is extremely
high.
"Although the 'Revised Soil Map' at page 24 of Mr. Borine's soil study shows that significant parts of Tax
Lots 206, 300 and 304 are composed of Class VII and VIII soils, the soil map also shows the remaining six
tax lots have large areas of Class soils which are considered high value soils when irrigated."
Response: The Hearings Officer misunderstood the Borine soil study. It does not show that the NNP
property contains large areas of soils which are considered high value soils when irrigated. Only 6% of
the NNP Property would be considered high-value when irrigated based on the results of Mr. Borine's
soil study.8 Most of this land is found in one small field that is surrounded by a large area of very poor
Class VII and VIII soils (Soil Unit D) found on the same parcel and adjoins a property that is also
comprised of very poor nonagricultural soils. The Class VII and VIII soils are interspersed across all parts
of the NNP Property.
Page 23, Hearings Officer's Recommendation.
8 Soil Mapping Unit A, Deskamp loamy sand, 0-3% slopes is the same as Class 36A, Deskamp loamy sand, 0-3% that
is high-value when irrigated. This is the only soil identified by Mr. Borine that is the same as an NRCS soil mapping
unit that is rated high-value when irrigated.
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"[T]he Hearings Officer finds that it is appropriate for me to consider profitability in the context of the
seven factors of the administrative rule [OAR 660-033-0020(7)(a)(8)], but that it is not a determining
factor in the suitability analysis. Each of the seven factors is discussed below."
Response: The Hearings Officer correctly found that the administrative rule says that land that is
"suitable for farm use as defined by ORS 215.203(2)(a)" should be inventoried as Agricultural Land. The
term "farm use" is defined to mean "the current employment of land for the primary purpose of
obtaining a profit in money" by undertaking specified agricultural activities. Seven factors are to be
considered in determining suitability but the point of consideration is to determine whether the land is
suitable for profitable farming. No matter how "favorable" a factor may be in terms of making it
possible for the land to be used for agricultural activities, if it is not profitable to conduct the activity on
the property the activity is not farm use and the property is not "Agricultural Land." It, therefore, is not
accurate to say that profitability is not a determining factor in this application. See, Wetherell v. Douglas
County, 342 Or 66, 160 P3d 614 (2007)(DLCD rule set aside because it prohibited consideration of
profitability when determining whether land is nonagricultural land).
This rule is applied throughout the State. In many parts of Oregon, Class V9 and VI soils are not
considered agricultural land unless shown to be suitable for profitable farm use. In Central Oregon,
these lands are "agricultural" based solely on their classification. Lands comprised of those marginal or
wet soils are deemed suitable for farm use in Central Oregon no matter how unprofitable it is to farm
them. Class VI soils that are automatically "agricultural land" in Deschutes County are far more likely to
be suitable for profitable farm use than the extremely poor Class VII and VIII soils found on the NNP
Property. This fact weighs in favor of finding that NNP's Property is not agricultural land.
"1. Soil Fertility.***Ms. Fancher argues a reasonable farmer would not incur the costs associated with
amending and fertilizing the soil. However, the applicant's * *economic analysis * * shows no fertilizer
expenses at all in the annual budget for a cattle grazing operation, identified as one of the most likely
farm uses of the subject property. The annual budgets for a bluegrass seed operation and an alfalfa hay
operation show fertilizer costs of $10,712 and $3,970, respectively. Thus, the fertility of the Class VII and
WII soils on the subject property could be improved with fertilizer to a sufficient degree to sustain a grass
seed or grass hay operation. The applicant does not explain why a reasonable farmer would not be
willing to incur these relatively low fertilizer expenses for such operations."
This analysis misses the bigger picture. It is clear that the soils on the property are extremely poor.
NRCS advises that Class VII soils "have very severe limitations that make them unsuited to cultivation."
With fertilizer, the Class VII and VIII soils produce low crop yields. As a result, there is less or no income
to pay for all of the expenses of farming including the cost of fertilizer. A cost of $3,970 or $10,712 for
fertilizer is a significant expense for a farmer who is going to lose money from farming. These are also
very large numbers for an "average" Deschutes County farmer who has an average net cash income of
$25,818, average farm size of 92 acres and an average net cash loss from farming of $9,220. It is also a
significant expense for a farmer who has a farm the size of the NNP Property as demonstrated by the
economic analysis provided by Agronomic Analytics.
9 Class V soils are wet soils.
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Soils scientist Roger Borine has advised the County that multiple applications of fertilizer and soil
amendments are needed "to maintain a minimum level of essential nutrients for proper crop growth."1°
Mr. Borine has advised NNP that fertilizer will pass through poor soils and enter the aquifer where it will
cause harm to the environment. Fertilizer and amendments, therefore, will not make a lasting change in
the inherent or long-term fertility of the soil present on the NNP Property. Furthermore, Mr. Borine has
advised the county that soil sampling, lab analysis and soil amendments are needed to produce a crop
on these poor soils. Those costs were not considered by the Hearing Officer and further increase the
loss a farmer will incur from growing a crop on the NNP Property. A prior owner attempted to conduct a
profitable hay operation on the large tract of irrigated land in the southwest part of the NNP Property
(Tax Lot 406) but that operation was not profitable. There is no real reason to believe that a different
result would be achieved now or in the future.
The report by Agronomic Analytics clearly states that it assumed that pastures would be fertilized for
livestock operations in calculating the number of cattle that could be kept on the property. The revised
budgets have been revised to show the cost of fertilizer as a separate line item.
"2. Suitability for Grazing. The applicant argues that the subject property is not suitable for farm
use because it cannot be profitably managed for livestock grazing. *" Ms. Fancher relied on the July 11,
'2013 Budget Analysis Study' *** prepared by Stephen C. Caruana of Agronomic Analytics. This study
concluded the subject property is not suitable for farm use because it could not be operated profitably if
the full costs of the agricultural operation are considered. *" Mr. Caruana's analysis***did not include
as costs the land purchase price, debt service, or property tax payments."11
Response: This is an accurate summary of NNP's position. It is important to note that the analysis
provides a conservative analysis of the costs of farming the NNP Property. It does not include any of the
costs that would need to be expended by a farmer to purchase the NNP Property, to pay debt service for
the land or to pay real property taxes. It does not include costs for farm housing or family farm help.
When even a modest amount is assumed for these necessary farm expenses, it is clear that a reasonable
farmer would not purchase and use the NNP for farming with the intention of making a profit in money.
"Mr. Caruana developed a budget for each of the five agricultural enterprises [he studied]. ***Mr.
Caruana concluded none of the five agricultural enterprises he evaluated, including livestock grazing,
would produce a profit. ***Mr. Caruana's analysis is very detailed. However, the Hearings Officer
questions what weight it should be given in general, and for a grazing operation in particular, because of
its expense assumptions. The livestock operation budget includes expenses for a start-up operation
without apparent consideration of existing assets. *** The budget identifies over $50,000 for the
purchase of equipment, including $42,000 for a new truck and trailer without explaining why less used
truck and trailer would not be adequate. Finally, Mr. Caruana's budget for livestock grazing operation
lists $150,000 in expenses for the initial investment in an irrigation system. ***It is unclear from this
record how much of the original irrigation system remained on the subject property after the applicant
purchased the property and to what extent it was considered by Mr. Caruana. "* Because Mr.
Caruana's budget calculations appear not to account for the value and utility of existing irrigation
equipment and infrastructure, I am not persuaded his projected expenses for irrigation in particular, and
for a grazing operation in general, are accurate. Inasmuch as the projected loss for the grazing operation
10 Hearings Officer's Recommendation, page 28.
11 Hearings Officer's Recommendation, page 30.
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was approximately $21,000, the Hearings Officer finds elimination ofor reduction in the projected costs
of buildings, fences, equipment,ond irrigation system easily could exceed that amount, thereby making
the operation profitable."
Response: The Agronomic Analytics report is being revised to include the results of an inventory and
assessment of existing equipment and buildings. The revised report will be provided to the Board in the
near future. With these changesthe report will continue to show that livestock grazing isnot
profitable. This is true, in part, because only a fraction of the large costs identified by the Hearings
Officer are considered the cost in the year studied by Mr. Caruana. These costs are depreciated —
divided over a period of many years with a fraction ofthe total cost being deducted from income in any
given year. As a result, the elimination or reduction of these expected costs is not sufficient to erase an
annual Ioss of approximately $21.,000.
NNP would also like to point out certain key facts that may have been overlooked by the Hearings
Officer:
• Used equipment, fencing and existing buildings, like new equipment, have a cost to a farmer.
The fact that equipment or buildings were purchased in a prior year does not mean that they
are not a cost of current year operations. This error appears to have arisen from the Hearings
Officer's mistaken belief that 100% of capital costs are deducted in the year they were incurred.
If such were the case, no cost would be assigned to equipment purchased in a prior year. Since
it is not, the correct approach is to assign a current value to used assets and depreciate that
value over the rest of its useful life.
• Used equipment and buildings will have a shorter useful life than new equipment and buildings.
This means that the annual, depreciated cost (the cost deducted from the estimated annual
fanningincomnebvAgronomnicAnalytcs)ofsonnethingusedisnotnecessahk/significantly
different from that of new equipment.
• Maintenance expenses will increase as equipment becomes older.
m The existing inequipnmen1ontheNNpPropertyisokj. Much of it is in poor condition and
cannot be used in the isystem needed to i ' te the entire property. A careful study
of this issue was conducted by Roger Borine. This study will be submitted with the revised
economic analysis and budgets in the near future. Mr. Borine estimated the cost of a new
irrigation system using conservative costs obtained from a reliable, governmental source (NRCS
EQUIP). He then determined that the cost of using existing irrigation to create an integrated
system will be more expensive because a new pump is required and the value of the used
equipment 15 close to the same as the cost of new equipment (the new equipment estimate is a
very conservative/Iow estimate of cost). If the irrigation system were to include used
equipment, it would require increased maintenance and would be more likely to fail which could
have dire consequences during the growing season.
"3. Climatic Conditions. The applicant argues the subject property is unsuitableforfarm use because
the climate in Central Oregon is cold and dry***[Title Hearings Officer agrees climatic conditions are
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challenging, but I am not persuaded***that climatic conditions would dissuade a reasonable farmer
from putting the subject property into agricultural use."
Response: The law does not require the applicant to prove that the NNP Property is unsuitable for farm
use due to climate alone. The challenging climate of Central Oregon limits the type of agricultural
activities that can be conducted and impacts the costs and returns to be expected from such activities.
Climate makes many agricultural activities infeasible in Central Oregon. Those that are feasible will have
lower returns than those in better climates due to longer and more reliable growing seasons and more
abundant rainfall. Dry soils are more easily lost due to wind erosion and this makes farming less likely to
be profitable.
The Central Oregon climate does not prevent all agricultural uses of the NNP Property. The applicant is
not required to show that it does or that the climate, alone, would dissuade a farmer from putting the
subject property into agricultural use. The applicant need only show that, after considering all of the
factors together, a reasonable farmer would not expect to make a profit in money from conducting
agricultural uses on the NNP Property. The applicant has made that showing so its application should be
approved.
4. Existing and Future Availability of Water for Farm Irrigation Purposes. ** *Water is available for the
subject property now and in the future for farm irrigation purposes.
Response: NNP agrees that water is available to the NNP Property. The Sage West, LLC/Borine soils
report shows, however, that applying irrigation water to most of the soils found on the property will not
improve their soils classification (Soils C, D and E and part of Soil B) and, by extension, their suitability for
farm use. Additionally, it is very expensive to apply irrigation water to the property. Water must be
stored on site and pumped at a considerable cost to distribute water over the property. The shallow
sandy soils do not retain the water and crop yields are low. As a result, the fact that water is available is
insufficient to lead a prudent farmer to believe that farming the property will be profitable.
Due to the dry climate, in some years irrigation water is rationed. Such may be the case this year due to
extremely low snowfall. If water is rationed, it will be allocated based on the seniority of water rights
not based on which land is the most productive. This could mean that water will be available to irrigate
the poor soils of the NNP Property but not to other area farms that have better soils if the NNP Property
were placed into farm use. In addition, retaining water in -stream during low water years is a more
beneficial use of water — as well as one that may compete with irrigation in future years, as it has been
in the Klamath Basin.
"5. Existing Land Use Patterns.*"DLCD and ODA argue, and the Hearings Officer agrees that there is
nothing about this land use pattern that would limit "responsible farming practices" or serve to reduce
the property's value for agriculture."
Response: The use of the word "responsible" presupposes that extra care must be taken to protect
nearby residents by a farm operator and that limitations are imposed on farm use in this area. Such
extra care is required in order to conduct farm uses on the NNP Property. Crops cannot be sprayed by
crop dusters due to the fact that surrounding lands are heavily developed with single-family homes. Any
application of a pesticide must be done with extra care to avoid drift onto adjoining residential
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properties. Early morning farm operations may give rise to noise complaints. The heavy amount of
traffic that passes the property each day on Butler Market Road prevents a farmer from keeping and
raising noise sensitive animals.
In terms of land use pattern, the pattern around the subject property makes about as strong of a case
for a nonagricultural land designation as possible. If this property is not constrained by the existing land
use pattern, which other property is so constrained. Why would similar uses constrain those properties
and not the NNP Property? The surrounding area is close to the City of Bend, has been developed with
many homes, adjoins two churches (southwest) and is located on a major roadway that carries traffic to
the Bend Airport. LCDC has decided that this is a relevant factor for farm use and NNP trusts its
judgment on that point.
"6. Technology and Energy Inputs Required. [T]he Hearings Officer has found Mr. Caruana's annual
budget for a cattle grazing operation does not include any expenses for amending and fertilizing the soil.
The annual budgets for grass seed and alfalfa hay operations amount to only approximately $10,000 and
$4,000, respectively. And I have questioned the accuracy of the cost Mr. Caruana projections [sic] for
the irrigation system. Based on these findings, I am not persuaded that the technological and energy
inputs required to put the subject property to profitable farm use are excessive.
Response: All of the farm uses considered by Agronomic Analytics require the application of fertilizers
and pesticides. Fertilizer needs to be applied repeatedly as it travels through the "soil" and enters the
aquifer. The NNP farm uses all require the use of an irrigation system. That system has a cost of
approximately $170,000 according to cost estimates prepared by Roger Borine based on costs provided
by NRCS/EQIP and used prices obtained from respected Central Oregon irrigation system suppliers.12
The irrigation system requires electricity to be operated. Farm equipment requires gasoline or diesel
fuel. The amount of these inputs is high because the soil does not hold water and nutrients for
adequate periods of time. These facts are a part of the reason that costs are high and a reasonable
farmer would not expect to make a profit in money from farming the NNP Property.
"7. Accepted Farm Practices.***[C]attle grazing, bluegrass seed and alfalfa hay production are
accepted farm practices in the county and in the area surrounding the subject property but argues on the
basis of Mr. Caruana's study that these practices are not profitable.*"I find only minor adjustments to
projected expenses could put these operations in the profit column. For example, cutting the projected
$45,000 expense for a new truck and trailer for the cow/calf operation would wipe out the projected
losses for that operation. Reducing the $150,000 expense for the irrigation system by 15% would wipe
out the projected losses for all of the operations requiring irrigation. For these reasons and considering
past livestock grazing and hay production on the property, I find the applicant has failed to demonstrate
a reasonable farmer would not put the subject property to farm use with one or more of these three
accepted farming practices."
Response: The examples provided show that the Hearings Officer misread the Caruana study. Cutting
the truck and trailer expense would not "wipe out the projected losses for that operation." That
operation had an estimated loss of $20,767.68. Only $6,000 of the cost of purchasing a truck and trailer
12 The budget reviewed by Ms. Green used an even more conservative cost figure of $150,000. Mr. Borine's
review, the NRCS/EQIP figures and information obtained from irrigation suppliers show that it was appropriate for
Agronomic Analytics to use this figure.
PA -13-1/K-13-1 (NNP IV -NCR, LLC) Page 10 of 11
were considered an annual cost of operating the farm. As completely removing the expenditure from
the budget would not have the effect stated by the Hearings Officer, it is clear that reducing ("cutting")
the amount of the expenditure will not "wipe out" projected losses. The same is true with the irrigation
system expense. Only $5,000 was deducted from the budget as a cost of operation — not $150,000.
Furthermore, a separate review by Roger Borine has shown that the $150,000 cost estimate was
reasonable for either a new or a used irrigation system. Even a significant reduction in the cost of the
irrigation system such as $51,000 would only result in a reduction in the annual cost of $1,700.00. Such
a change would not make the cattle operation profitable.
The applicant has shown by uncontested evidence of prior farm use (in the record), that the prior
livestock grazing and hay production operations were not profitable. This fact was confirmed by Guy
Hamby who testified that the property was once a dairy operation in the 1950s and 1960s and that it
became unprofitable and was sold due to that fact. He also testified that the farm activities on the
property since that time have not been profitable. As it is none of the accepted farm practices are able
to be conducted with an intention to yield a profit in money as required by law, the subject property is
not suited for farm use.
Submittedj, day of anuary, 2014.
Liz Fancher, Attorney for Applicant NNP
644 NW Broadway Street
Bend, OR 97701
PA-13-1/ZC-13-1 (NNP IV -NCR, LLC) Page 11 of 11
COUNTY NONAGRICULTURAL LAND DECISIONS AGGREGATE ALL LANDS PROPOSED FOR REZONING
IN DETERMINING PERCENTAGE OF NON-AGRICULTURAL SOI
LL
LI)
c
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lots of record.
51.5% Class VII or VIII
59% Class VII or VIII**
CU
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LU
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lot (mostly EFU)***
as a tract with SM -zoned, mined property.
67% Class VII or VIII
NNP Property
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SUMMARY OF RELEVANT APPROVAL CRITERIA AND FACTS FOR AGRICULTURAL LAND DETERMINATION FOR NNP AND DSL PROPERTIES
51.5% Class VII or VIII
5ft,..
4-, a)
L.
W 4-,
0., Li -
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V) O. L._ .4..-,
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to to c c".)
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V) f13 L-
C
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CU a) 4.-1 73
LC?.
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ts 2 •.....
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= --, D
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<o 2
Mix of MUA-10 and EFU land to North and
Northeast in farm use.
67% Class VII or VIII
Expert opinion of soil scientist Roger Borine.
73 0 CU
CO (13 (f) .0
a) 4- LL fa
0V)
E(-) `A..,'n 0
s..,
0 .......
CU 0-
4-,
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C CO =
•- C
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tta
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Irrigation water available for about 103 acres.
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nonfarm dwelling.
EFU land to north across Butler Market Road.
11)
0
Majority Class VII or VIII
•
SUITABLE FOR FARM USE (FARMING WITH
AN THE INTENT TO MAKE A PROFIT IN
MONEY) BASED ON:
L-
a)
LJ•
Suitability for Grazing
•
Climatic Conditions
•
4-
0
25
a) c
o
=
M 0
b.0
.
"
OD 4-
C
uJ
VI 4-a
•
•
Existing Land Use Patterns
•
215.211 and OAR 660-033-0030(5)(b) could be the applicant or any opponents of an
application as well.
OAR 660-033-0020(1)(a)(B)
OAR 660-033-0020(1)(a)(B) requires that the applicant demonstrate that even though the
subject property may be composed of soil Classes VII and VIII, the property is also not
"suitable for farm use." The state administrative rules implementing Goal 3 explain how
local governments are to determine whether land is suitable for farm use.
OAR 660-003-0030(2) * * * whether land is "suitable for farm use"
requires an inquiry into factors beyond the mere identification of scientific
soil classifications. The factors are listed in the definition of agricultural
land set forth at OAR 660-033-0020(1)(a)(B). This inquiry requires the
consideration of conditions existing outside the lot or parcel being
inventoried. Even if a lot or parcel is not predominantly Class I-IV soils or
suitable for farm use, Goal 3 nonetheless defines as agricultural "lands in
other classes which are necessary to permit farm practices to be
undertaken on adjacent or nearby lands." A determination that a lot or
parcel is not agricultural land requires findings supported by substantial
evidence that addresses each of the factors set forth in OAR 660-033-
0020(1).
(3) Goal 3 attaches no significance to the ownership of a lot or parcel
when determining whether it is agricultural land. Nearby or adjacent land,
regardless of ownership, shall be examined to the extent that a lot or parcel
is either "suitable for farm use" or "necessary to permit farm practices to
be undertaken on adjacent or nearby lands" outside the lot or parcel.
Thus, OAR 660-033-0030(2) requires a review of: 1) fertility, 2) suitability for grazing, 3)
climatic conditions, 4) existing and future availability of water for farm irrigation
purposes, 5) existing land use patterns, 6) technological and energy inputs required, 7)
and accepted farming practices.
In addition to addressing these seven factors, the Land Use Board of Appeals has recently
explained that these two provisions read in conjunction with Oar 660-033-0020(1)(a)(B)
allow a local government to consider whether "a reasonable farmer" would be motivated
to put the land to agricultural use. Wetherell v. Douglas County, _Or 1,1J13A___, LUBA
No. 2010-052, September 16, 2010. LUBA has also held that where the question of
whether the land can be used for grazing has been raised in the local proceedings that
OAR 660-033-0030(3) requires that the local government consider whether the subject
property can be used in conjunction with adjoining or nearby agricultural or grazing
operations. Wetherell v. Douglas County (Garden Valley Estates), 58 Or LUBA 101, 116
(2008).
19
EXHIBIT C
On this topic, Staff found: "The use of the subject property for farm use in conjunction
with adjacent lands is not possible. There is no farm use on the adjacent properties. It
would not be combined with any other adjacent land for farming to occur. The property
is not adjacent to, or intermingled with, lands in class I -VI soils. A small portion of the
subject property (approximately 12 acres) is already located within the Bend urban
growth boundary." These findings appear to be supported by the Burden of Proof, and
the Hearings Officer cannot find any substantial disagreement from participants in this
proceeding including Newland. After reviewing the record, the Hearings Officer agrees
with the findings of Staff.
OAR 660-033-0020(1)(a)(C)
This rule addresses whether retaining the subject property as agricultural land is
necessary to allow adjacent properties to continue to function as agricultural land. For
the same reasons discussed in the findings for OAR 660-033-0020(1)(a)(B), I find that
the application is consistent with OAR 660-033-0020(1)(a)(C).
OAR 660, Division 12, Transportation Planning Rule
OAR 660-012-060, Plan and Land Use Regulation Amendments.
(1) Amendments to functional plans, acknowledged Comprehensive
Plans, and land use regulations which significantly affect a
transportation facility shall assure that allowed land uses are
consistent with the identified function, capacity, and performance
standards (e.g. level of service, volume to capacity ratio, etc.) of the
facility. This shall be accomplished by either:
(a) Limiting allowed land uses to be consistent with the planned
function, capacity and performance standards of the
transportation facility;
(b) Amending the TSP to provide transportation facilities
adequate to support the proposed land uses consistent with the
requirements of this division;
(c) Altering land use designations, densities, or design
requirements to reduce demand for automobile travel and
meet travel needs through other modes; or
(a) Amending the TSP to modify the planned function, capacity
and performance standards, as needed, to accept greater motor
vehicle congestion to promote mixed use, pedestrian friendly
development where multimodal travel choices are provided.
(2) A plan or land use regulation amendment significantly affects a
transportation facility if it:
(a) Changes the functional classification of an existing or planned
transportation facility;
20
