Property owners gain ground in 2009 Legislature

By Dave Hunnicutt
Oregonians In Action,

When the Oregon legislature adjourned on June 29, property owners across the state breathed a sigh of relief.   In a session where Oregon property owners faced some remarkably bad proposals, land use bills that would have imposed new restrictions on property owners were defeated, and Oregonians In Action successfully managed to pass three bills that made improvements to Oregon’s property and land use laws.

As the session wore on, it became clear that the focus of the legislature was on taxes and the budget.  This is normal, but was heightened this year, due to Oregon’s weak economy.  As a result, land use issues did not play a central role at the Capitol, as they had in past sessions.  The lack of focus on land use meant that far fewer land use bills were debated.  Fortunately, OIA enjoyed some success, and stopped efforts to make Oregon’s broken land use system even worse.

“All in all, we had a pretty good session,” said OIA President Dave Hunnicutt.  “Nearly every trade group and business association struggled this session to maintain the status quo, not even hoping that they would make progress.  We were able to make some progress for property owners, which was really great, and also pretty surprising.  To stop the bad bills and pass a few good ones makes for a good session.”

Hunnicutt indicated that OIA’s success was the result of a number of factors.  “First, since land use wasn’t the legislature’s top priority, we were able to work primarily with the members of a single committee, the House Land Use Committee, where nearly all the land use bills originated.  That meant that we could prioritize our time with a few key legislators, instead of having to work with legislators on multiple committees.  Since land use is such a technical issue,  having a single committee that dealt with nearly all the land use bills served both the legislature and OIA well.”

“Second, on land use issues, there was a much better effort by Democrats and Republicans to look for bipartisan solutions.  With the exception of the bill designating the Metolius River as an area of critical state concern, every land use bill that passed this session did so in a bipartisan manner.  Unlike 2007, when Measure 49 was passed on a straight party line vote, there seemed to be a much better working relationship between the parties on land use issues.”

“Finally, we worked closely with legislators whom we had not worked with in the past,” said Hunnicutt.  “We worked closely with our traditional allies, but also had support from legislators who we had not worked closely with in the past, which was great.”

OIA had a number of successes this session.  Among them were:

House Bill 3225:  This bill amended Measure 49 to allow almost 500 additional Measure 37 claimants to qualify for relief under Measure 49.  As a result of a combination of technical errors in the drafting of Measure 49 and mistakes made by claimants trying to complete the Measure 49 process, a number of property owners who should have been entitled to development rights under Measure 49 were excluded from coverage.  House Bill 3225 addressed this issue, and restored claims for hundreds of Oregon property owners.

In addition, House Bill 3225 set a deadline for the processing of Measure 49 claims.  One of the most frustrating parts of Measure 49 has been the delay it has taken for claims to be processed by the state.  The supporters of Measure 49 promised that the limited benefits provided by Measure 49 would be available immediately, yet most Measure 49 claimants have yet to get a final decision from the state on their claim.

House Bill 3225 addresses that situation, and requires the state to issue final decisions in all Measure 49 cases by June 30, 2010.  Although this is a far cry from what was promised during the Measure 49 campaign, it is a great acceleration from what has been occurring.

Unfortunately, there were two categories of Measure 37 claimants who will not receive immediate relief under Measure 49.  The first category includes those property owners who filed Measure 37 claims with their county, but who failed to make a Measure 37 claim with the State of Oregon.  There are nearly 900 property owners in this category, many of whom failed to file a Measure 37 claim with the state because they were advised by their county officials that they didn’t need to do so.

House Bill 3225 requires the Department of Land Conservation and Development (DLCD) to investigate why so many Measure 37 claimants took the time to file Measure 37 claims with the county, but failed to file a claim with the state.  This investigation is in progress right now, and will be completed by the end of the year.  At that point, DLCD is required to present the results of its investigation to the legislature, who are likely to address this issue when they meet in special session next February.

If you are a property owner who filed a Measure 37 claim with the county but not the state, you need to contact the DLCD immediately.

The second category of claimants who will not receive immediate relief under Measure 49 are those who filed for the Measure 49 “conditional path” (Section 7 of Measure 49), but who failed to file the required appraisal within 180 days after submitting their Measure 49 claim, and thus had their claim denied.  Very few property owners who turned in Measure 49 claims chose the “conditional path,” but a number of those who did failed to file the required appraisal.

House Bill 3225 requires the DLCD to investigate the reasons why these “conditional path” claimants chose not to file the required appraisal, and report back to the legislature by the end of the year, so that the legislature can consider the issue in February.

House Bill 2229:  House Bill 2229 is the bill that was based on the recommendations of the Big Look Task Force, the 10 member task force appointed by Governor Kulongoski in 2005 to make recommendations on how to fix Oregon’s broken land use laws.

After meeting for nearly three years, the Task Force, working with legislative counsel, prepared House Bill 2229, which was then introduced by the governor.  Unfortunately, the Task Force’s bill was a disaster – the bill was so bad that it was opposed by every group involved in land use issues, including OIA.

Normally, when a bill has no support, it meets a quick fate in the legislature.  But House Bill 2229 was revived due to a recognition by everyone, including the governor and both parties in the legislature, that Oregon’s land use system needed to be fixed.

While major disagreement continues to exist on how significantly the system needs to be changed, we have successfully changed the debate from “should the land use system be fixed?” to “how should the land use system be fixed?”  This is significant.

As a result, House Bill 2229 was significantly amended – to the point that it no longer resembled the original version prepared by the Big Look Task Force.  So much for the Task Force efforts, and too bad – the Task Force held so much promise, but was never willing to address the tough questions that would have likely divided the group, but which must be addressed in order to get a meaningful change.

Fortunately, the new version of House Bill 2229 was a great improvement over the original.  Under the new version, a county can choose (but is not required) to take a new look at the rural zoning in their county, and make new decisions as to what land is truly farmland or forestland, and what rural land is miszoned as farm or forest land.

A county is still required to make those decisions in compliance with LCDC Goals, and the county decision must still be approved by LCDC, but counties can also take into consideration the growth that has occurred in rural areas in the county over the last 30 years or so, since each county’s first zoning ordinance was approved by LCDC.

This is a significant change, especially in those parts of the state that have experienced significant growth in the last three decades.  Although most growth has naturally occurred inside cities, many rural areas of Oregon have changed significantly since the 1970’s, and land that may have once been used for agricultural or forest practices is no longer used in that manner.  With House Bill 2229, counties can now take that into account when determining what is farmland and forestland and what isn’t.

Because of the economy, it may be awhile before counties decide to expend the time and effort (and money) to remap their rural lands.  However, House Bill 2229 now gives them that opportunity, and could lead to a significant change in zoning patterns in individual counties.

Senate Bill 794:  This bill changes the way attorney fees and costs are recovered by property owners in condemnation cases.

As most of you know, government at all levels (state, federal, local) have the power of eminent domain, which is the right to take private property from a private citizen and convert the property to public use.

That right is not unlimited, however.  When government condemns private property, it is required to pay just compensation to the property owner for the fair market value of the land taken, plus any diminution in value to any remaining property that will still be in private ownership (in cases of partial takings).

Unfortunately, as anyone who has been involved in a condemnation case can attest, the amount of money a property owner pay to defend themselves in a condemnation case in order to attempt to get a fair price for their land are often times enormous.  In many cases, the amount of attorney fees and costs incurred by the property owner is greater than the value of the property being taken.

For this reason, it is critical that property owners be able to recover the costs and attorney fees that they spend to defend themselves in condemnation cases.  Condemnation is the most powerful tool in the government’s arsenal relating to real property – it is also the most invasive to private property ownership.  Because the impact to the property owner is so tremendous, it is only fair that the government should bear the property owner’s costs and fees incurred to make sure the property owner can truly recover “just compensation.”

In 2006, OIA put Ballot Measure 39 on the ballot.  The measure was then approved overwhelmingly by voters.  Measure 39 changed Oregon condemnation law relating to attorney fees and costs, and allowed property owners to recover all of the attorney fees and costs they spent in defending themselves in a condemnation action, as long as the compensation award they received at trial was greater than the first offer made by the government wishing to condemn the property.

This was an important change – prior to Measure 39, governments were free to make unreasonable first offers, knowing that they could raise their offer before trial and deprive the property owner of the right to recover all of the costs and attorney fees incurred to recover the fair market value of the property being condemned.  In essence, prior to Measure 39, property owners were routinely “lowballed” by condemning governments, and were forced to accept offers that did not truly reflect the fair market value of their property.

Measure 39 changed that for the better.  But the measure required the property owner to take a case all the way to trial in order to recover their costs and attorney fees.  In my experience as a trial lawyer, most reasonable people want to settle their case before it ever gets to trial – the risk of losing a case at trial, and the costs incurred to litigate a case are simply too high for most people.

Senate Bill 794 changes the way attorney fees and costs are recovered in condemnation cases.  The law still requires the government to make you an offer for your property before they begin condemnation proceedings, and allows the government to increase its offer up to 10 days before trial.  But now, if the government decides to change its offer before trial, they are required to pay all of the costs and attorney fees which the property owner has spent up to that time.  In other words, like Measure 39, Senate Bill 794 stops the practice of “lowballing” by condemning governments, but also allows the property owner to recover their costs and attorney fees at any point during the condemnation proceedings, should the government wish to raise their offer.

This is an important bill for property owners, as it provides significant protections from having to accept unreasonable offers for condemned property for no other reason then the fear of having to pay a lawyer and experts to defend yourself.

In addition, OIA was successful in blocking many bad bills, or watering bills down to remove the most harmful provisions.  Among these bills were:

House Bill 3099:  House Bill 3099 was aimed at removing a number of land uses that are currently allowed in the exclusive farm use zone.  The primary uses that would have been removed under the initial version of the bill were schools (public and private), private parks, landfills, model airplane clubs, and aggregate mines (rock pits) on high value farm soils.

The bill suffered from some obvious flaws.  Since 97% of all privately owned rural land in Oregon is zoned for exclusive farm use or forest use, a bill that prohibits uses in an exclusive farm use zone will effectively eliminate the use in rural areas.  For example, if you can’t put a landfill in a farm zone, where else are you going to put it – in the middle of town?  How about in a rural residential area?  Next to a school maybe?

For aggregate mines, the situation is even worse.  Since most aggregate mines are located near rivers, and most land near rivers contains high value farm soils, the bill would have resulted in the shut down of most aggregate mines in Oregon.  At the same time, the legislature was approving the largest transportation package in Oregon history.  Where would the rock needed to make all the improvements come from?  Would we truck it or transport it by train from Washington, Idaho, Nevada, or California?  If so, how much more would it cost to do so?

And what problem was the bill trying to solve?  Are we losing all 16,000,000 acres of exclusive farm use land in Oregon to model airplane clubs?   Are rock pits destroying the countryside?  Would a new public school on the outskirts of town be the end of the world?  Apparently so.

Fortunately, House Bill 3099 was significantly amended from its original version.  The version that passed eliminated the changes for aggregate mines, model airplane clubs, and landfills.  The bill left the ban on schools, however, unless the school serves a predominately rural population.

While not perfect, the final version of the bill is much better than the original.

Senate Bill 788:  This bill requires an applicant for a new domestic well to pay a $300 “fee” to the Water Resources Department after drilling a well.

Domestic wells are one of the many exempt uses which do not require a property owner to obtain a water right.  As such, they are not subject to the permitting process.  This is a good thing, since obtaining a water right certificate is virtually impossible in Oregon today.

While having to pay a $300 “fee” for the receipt of absolutely no services is a rip-off, Senate Bill 788 is much milder than its earlier versions.  In the earlier versions of the bill, domestic wells were removed from the list of exempt water uses, meaning that anyone who applied for a new domestic well would have been required to obtain a water right certificate.

There is one group of property owners who will soon be applying for domestic wells – Measure 49 claimants.  If the legislature would have approved the earlier version of Senate Bill 788, it would have effectively wiped out nearly every Measure 49 claim.

In past editions of Looking Forward, articles have warned that water law is the next battleground for property owners.  This bill is a prime example of that.

Fortunately, OIA, working closely with Water For Life, the Oregon Ground Water Association, and the Oregon Association of Realtors, was able to delete these requirements from the bill.

House Bill 2227:  This bill would have imposed nearly impossible standards for the siting of destination resorts throughout Oregon.  While not a typical use for most property owners, destination resorts are popular in many parts of Oregon, and have provided jobs and property tax revenue to many Oregon communities.  House Bill 2227 would have made it virtually impossible to site a new resort.

The Oregon Association of Realtors took the lead in defeating this bill, with the help of OIA and others.

Senate Bill 482:  This bill would have required nearly every Oregon property owner with an existing septic system to obtain a special use permit every five years to continue to use their septic system.  The bill applied only to property owners within a “safe drinking water overlay zone.”

The special use permit was processed in the same manner as a land use permit, meaning a large application fee, a public hearing, and the possibility of appeals to the Oregon appellate courts.

The problem was that the definition of this zone included all land within 200 feet of a surface water source for a municipal water system, or within 50 feet of a water source that eventually drained into a surface water source for a municipal water system.  That meant, for example, that every property owner near a creek or underground aquifer that fed into the Columbia or Willamette River would be within the “safe drinking water overlay zone.”

This was an extremely dangerous bill, and was scheduled for a hearing and possible work session.  Fortunately, OIA was able to stop this bill before it could gain enough momentum to pass.

All in all, this was a successful session for Oregon property owners.

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