COFIELD LAW OFFICE
Dorothy S. Cofield, Attorney at Law
8705 SW Nimbus Avenue, Suite 380
Beaverton, Oregon 97008
(503) 675-4320
cofield@hevanet.com
http://cofieldlandluse.com
I.
II.
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
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. Development timing
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
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.
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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).
III. 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. West Linn
Corporate Park, L.L.C. v. City of West Linn, 349 Or. 58, 240 P.3d
29 (2010); see also West Linn Corporate Park, 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
Florida Supreme 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. However Koontz is 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).
IV. 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.
A. Procedural History2:
The planning commission imposed the half street dedication
requirement on the two-lot partition. Brown appealed the
2
See Appendix G for complete circuit court procedural history.
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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 180days 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
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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.
B. 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’s frontage to include curbs,
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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.
C. 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
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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.
2. 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.
D. Court of Appeal’s Holding: Judge Schuman wrote the opinion as
the presiding judge and affirmed the circuit court decision below as
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
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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, citing Lingle, 544 US at 547 the Court of
Appeals explained 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
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V.
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through connection to Finley Ave. The interest in traffic
flow isn’t met by dedicating Brady 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).
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.