COFIELD LAW OFFICE

DorothyS.Cofield, Attorney at Law

8705 SW Nimbus Avenue, Suite 380

Beaverton, Oregon 97008

(503) 675-4320

  1. Introduction: In 1999, the Oregon State Legislature enacted ORS 197.796 in response to L.A. Development v. City of Sherwood, 159 Or App 125, 977 P2d 392 (1999). The entire statute is set out in Appendix A of these materials. The purpose of this presentation is to review the first case decided under ORS 197.796, Brown v. City of Medford, 251 Or App 42, 283 P3d 367 (2012) (See Appendix E) and discuss its holding and how the claim was brought, 12 years after the enactment of ORS 197.796.[1]
  2. Background of ORS 197.796: In L.A. Development, a developer agreed to a land use dedication as a condition of his subdivision application, built the subdivision and then four years later, brought a lawsuit for inverse condemnation for the “takings” and an equal protection claim. The Court denied the takings on the basis of estoppel, finding that the developer did not protest the exaction, got the benefit of the entitlements and then four years later sued in inverse condemnation. To fix the L.A. Developmenttiming problem (having to put off a development project while appealing the condition), the legislature then enacted ORS 197.796 which sets out a process when a land use applicant can accept a land use condition under protest and then seek damages in circuit court if he proves the takings. The statute also allows the property owner to appeal the constitutionality of the condition to the Land Use Board of Appeals (“LUBA”) and win attorney fees if he prevails. ORS 197.796(5). The applicant must raise the takings at the public hearing with sufficient specificity to allow the local government to respond (Raise It or Waive It). ORS 197.796(3)(b). In addition, the applicant must exhaust all local appeals. The applicant must bring a claim in circuit court within 180 days of the final land use decision, responding to the L.A. Development facts. The prevailing party wins its attorney fees (English rule).
  3. Exaction Conditions that are subject to ORS 197.796. Under Dolan v. City of Tigard, 512 US 374 (1994), land dedications can be an exaction if they are not roughly proportional to the impacts of development. See McClure v. City of Springfield, 175 Or App 425, 435-436, 28 P2d 1222 (2001)for Oregon’s application of the rough proportionality test. Under Nolan v. California Coastal Commission 483 US 825 (1987) to be legitimate, a dedication must have an essential nexus. The Oregon Supreme Court and Ninth Circuit rejected as a Dolan exaction a condition of development that requires a landowner to improve off-site public property in which the landowner has no property interest. See e.g. WestLinnCorporatePark, L.L.C. v. City of West Linn, 349 Or. 58, 240 P.3d 29 (2010); see also WestLinnCorporatePark, LLC v. City of West Linn, 428 Fed. Appx. 700 (9th Cir)(money, piping, sand and gravel are not conditions that fall under Dolan); David Hill Development v. City of Forest Grove, 3:08-cv-266-AC, page 19. Opinion and Order on Defendant’s FRCP 59 Motion(Exaction claim set aside and claim dismissed). However the tide may be turning due to a petition for certiorari that was accepted on October 5, 2012 by the U.S. Supreme Court. Koontz v. St. Johns River Water Management District, 77 So 3d 1220 (Fla 2011) an appeal from the FloridaSupreme Court. The question in Koontz is whether Nollan and Dollan apply to a land-use exaction that takes the form of a government demand that a permit applicant dedicate money, services, labor, or any other type of personal property to a public use. HoweverKoontzis decided, its ruling will apply to ORS 197.796 for the type of compensation exaction claims that can be made in Oregon i.e. only land dedications or both personal property and land dedications.See Appendix A, ORS 197.796(4).
  4. An Analysis of Brown v. City of Medford, the first and only case under ORS 197.796 was decided on July 5, 2012 by the Court of Appeals.
  1. Procedural History[2]:

The planning commission imposed the half street dedication requirement on the two-lot partition. Brown appealed the dedication to the Medford City Council as unconstitutional under Article 1, section 18 of the Oregon Constitution and the Fifth Amendment to the U.S. Constitution and the Medford City Code provision which implements ORS 197.796. Brown lost at the City Council, and then filed a takings lawsuit under the Oregon and US Constitutions and under ORS 197.796. Since the claim for compensation was under $50,000, it was decided in mandatory arbitration. See Appendix B for the Arbitrator’s Letter Decision. As a threshold matter, the arbitrator did not allow any new evidence because the city council had the option of remanding the appeal but chose not to remand it for more evidence when it could. The arbitrator found there was no nexus or rough proportionality. The arbitrator awarded damages of $20,000 based on testimony from Brown’s real estate appraiser expert and attorney fees and costs to Brown. The arbitrator found that the city hadn’t carried its burden but may have been in a better position if it hadn’t exacted significant exactions where the property abuts Finley Lane. Also the arbitrator found there were no impacts to Brady Way since the partition would use Finley Lane.

1. Summary Judgment: The city appealed de novo to the Circuit Court. Judge Schiveley, after first denying the City’s Motion to Dismiss, found in favor of Brown’s cross motion for summary judgment that the city had failed to carry its burden that there was an essential nexus. Judge Schively found there was no need to decide if there was rough proportionality because there was no nexus. At that point, the litigation just came down to damages and valuation date. See Appendix C and D for Schiveley’s SJ decision and Judge Grensky’s valuation decision.

2. Valuation Order: The city argued the date of the takings is the date the land was dedicated on August 10, 2010. Brown argued the date was December 21, 2007 when the condition was imposed by the city council in its final decision. Judge Grensky reasoned that under ORS 197.796, the legislature imposed the 180-days to bring a takings claim from the date of the local government’s final decision imposing the condition, therefore, the courts and legislature felt the action was “ripe” at the time the condition attached and the damages should be measured from the date of the final decision, not actual dedication. The Judge also found that before ORS 197.796, a claimant had to choose whether to put a project on hold to challenge the conditions as unconstitutional or waive the challenge to proceed with development. The Court reasoned that if the condition date was not the pivotal event, then ORS 197.796 would not have been necessary, especially when the statute measures the filing date from the date the condition is imposed. Brown at 7. After the Valuation Order, the city and Brown stipulated the value of the right-of-way was $15,000, plus attorney fees and costs, with the city reserving the right to appeal to the Court of Appeals.

3. Court of Appeals Affirmed the Circuit Court Case: The City then appealed to the Court of Appeals and lost. See Appendix E for the Court’s decision. At that point the City declined to appeal to the Oregon Supreme Court. Brown’s attorney reports that Brown was paid by the City in October, 2012. The total award, (including 9% interest for 1.893 years) was $54,635.37, with only $15,000 going to the value of the ½ street dedication. Interestingly, after all the extended litigation to defend the exaction, the city is now he proud owner of the landlocked dedication since West McAndrews Subdivision was never built.

  1. Facts of Brown .v City of Medford at 44-45 (taken from Court of Appeals case, See Appendix E):

“[Brown] owned a half-acre parcel that was bordered on Finley Lane and to the south by a development called the West McAndrews Subdivision. [Brown] applied to the city for tentative plan approval of a two-lot partition of his parcel. He proposed to create a northern lot and a southern ‘flag lot,’ both of which would have ingress and egress via Finley Lane to the north. By the time [Brown] sought approval of the partition, the city had already granted tentative plan approval of the West McAndrews Subdivision. One of the conditions of that earlier approval required the subdivision’s developer to dedicate and improve a half-width street, Brady Way, on its northern boundary –the boundary that abuts Brown’s parcel. Notwithstanding that approval, Brady Way had not been improved or dedicated to the city by the time of [Brown’s] partition application. [The city also required Brown to dedicate public right-of-way along Finley Lane to the north and improved Finley Lane along Brown’sfrontage to include curbs, sidewalks and park strips. Brown did not challenge that condition]

[Brown] did not propose any access from his property onto Brady Way. Instead he proposed to use Finley Lane to the north for both lots. Nonetheless, the Medford Public Works Department recommended that the city’s planning commission impose a condition on [Brown’s] two-lot partition that would expand the yet-to-be dedicated Brady Way into a full-width public street. Specifically, the Public Works Department recommended that [Brown] be required to ‘dedicate 19 feet of public right-of-way along the south side of this proposed land partition for the remainder of the north half of right-of-way for Brady Way.’

At a public hearing before the planning commission, [Brown] opposed that condition on the ground that there was no nexus between his proposed partition and the dedication demanded by the city, but the planning commission adopted the recommendation.

[Brown] then appealed the planning commission’s decision to the city council, again arguing that the city had failed to demonstrate a nexus between the effect of his partition and the city’s desire to widen Brady Way – a right-of-way that his parcels wouldn’t even access.” Brown at 3.

The city council approved the tentative plan approval—including the required dedication of the right-of-way and Brown filed action in circuit court under ORS 197.796 and the takings clauses of the Oregon and U.S. Constitutions.

  1. The City’s Findings:
  1. Medford Public Works Department justified the condition as follows: “Local street right-of-way dedication and construction requirements identified by the Public Works Department and required by the city are the minimum required to protect the public interest and are necessary for additional or densification of development in the City without detracting from the common good enjoyed by existing properties. Developments are required to provide half-street improvements to abutting streets, including associated right-of-way dedications, to ensure that new development and density intensification provides the current level of urban services and adequate street circulation is maintained.

“The Benefits of public right-of-way dedication and improvements include: providing access and transportation connection at urban level of service standards, on street parking, improved connectivity reducing all modes of trips generated, decreased emergency response times, benefits from using right-of-way to provide public utility services, the additional traffic that is being generated by this proposed land division and the necessity to provide connections for all modes of trips generated.” Brown v. City of Medford at 45.

  1. The City Council’s Findings were even more wanting:

“[Brown] claims there is no nexus between this required dedication of Brady Way and the City’s claimed code requirements that development not prevent future adequacy of transportation system under Medford Code section 10.452, 10.453 and 10.471. However, Brady Way was already approved by the planning commission to be located in that areas as a result of the neighboring plat [McAndrews Subdivision], and if [Brown’s] proposed land division was approved without the required dedication, it would prevent future connectivity with pedestrian traffic and interfere with other modes of transportation. There is a nexus.” Brown at 46.

  1. Court of Appeal’s Holding: Judge Schuman wrote the opinion as the presiding judge and affirmed the circuit court decision belowas follows:
  1. Ripeness: The Court held that ORS 197.796 specifically allows a claimant to accept the condition of approval and then file a claim. ORS 197.796(1). The Court looked at the language of that provision which defines “acceptance of the condition” as paying a fee, performing an act or providing satisfactory evidence of arrangement to pay the fee to ensure compliance with the condition.” Moving on to the constitutional claims, the Court found that Brown was alleging an exaction, not physical takings. It is the imposition of that unconstitutional condition, not the later physical invasion of property that violates a property owner’s rights. Brown at 51, citing Lingle (quoting Dolan). The Court found that it is the final decision, imposing the condition, not the date of the final decision that makes the claim ripe. The Court held the takings claim was ripe after the city council issued its final decision and all local appeals had been exhausted. Brown at 52.
  2. Nexus: The Court disagreed with the city’s reading of McClure standing for the proposition that there is always an essential nexus between street dedications and safety. In fact the Court pointed out in McClure, the Court of Appeals found there was no nexus between the city’s generalized transportation needs and its sidewalk dedication. Brown at 54 In a very interesting footnote, the Court admonishes the city for leaving out (“cropping”) a rather important part of the sentence it quoted in McClure – the Court’s holding that the local government had not shown the nexus. Brown at Footnote 7. The Court explained the test of whether there is an essential nexus is not whether certain governmental goals will be upheld or struck down. Rather courts must examine the nexus between the condition imposed and the interest that the local government asserts would allow it to deny the application.” Hallmark Inns & Resorts, 193 Or App 24, 88 P3d 284 (2004). In Hallmark, without the required pedestrian dedication, the city’s optimum trip distance would be exceeded so the pedestrian walkway did have an essential nexus. In Brown, the Court found there was nothing in the Brown record to show that denying the Brown partition would promote the city’s stated interest of enhancing connectivity and traffic flow “when the negative effect on connectivity and traffic flow caused by converting one parcel into two would be as best we can tell, negligible.” In Brown at 56, citingLingle, 544 US at 547 the Court of Appealsexplained that “a nexus exists when ‘the exaction[] substantially advance[s] the same interest that [city] authorities asserted would allow them to deny the permit altogether.” Id. In Brown, the Court laid out this nexus test: (1) what interests would allow the city to deny plaintiff’s partition and (2) how the exaction would serve those interests.” Applying that test, the interest in connectivity isn’t met by dedicating Brady Way because there is no through connection to Finley Ave. The interest in traffic flow isn’t met by dedicatingBrady Way because there is no traffic flow from the Brown Partition onto Brady Way. Thus the city’s exaction doesn’t substantially advance the interests of connectivity and traffic flow.
  3. Valuation: The city, as it had with ripeness, argued that it is the date of the final plat (when the dedication is made) that is the valuation date for purposes of determining Brown’s damages. The Court looked at the text of ORS 197.796(2): “[a]ny action for damages under this section shall be filed in the circuit court of the county in which the application was submitted within 180 days of the date of the decision.” The Court found the “application” was the partition application and Brown was injured when the city issued its final decision. Brown at 18. Alluding to inverse condemnation and temporary takings jurisprudence, the Court explained that damages are measured from the beginning of the governmental conduct that causes the takings. Hawkins v. City of La Grande, 315 Or 57, 67, 843 P2d 400 (1992).
  1. Conclusion: ORS 197.796 serves as an important reminder that if developers are willing to oppose an unfair exaction, they can proceed with development under ORS 197.796, fighting the exaction in court, with the opportunity to win their attorney fees if the exaction doesn’t pass constitutional muster. Before ORS 197.796, a property owner had no recourse but to delay his project if he wanted to contest an exaction, or accept the entitlement to which the condition attached and give up his right to inverse condemnation under the L.A. Development “estoppel” holding. It is interesting that it has taken 13 years for ORS 197.796 to be used, but maybe not with the English Rule of attorney fees. Although the Brown case is a garden-variety Nollan case and was decided under Oregon black letter law takings jurisprudence (Schultz and McClure), it is anything but routine since it represents the first damage award under ORS 197.796.

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[1] Many thanks to the plaintiff’s attorney, Erik Glatte, for sending me the pleadings related to this case and being willing to discuss the case with me for this presentation.

[2] See Appendix G for complete circuit court procedural history.