Rural landowners who still hope to develop their land, despite a 2007 ballot measure that cuts back their development rights from those granted under a previous measure, have been dealt another legal setback.

The Oregon Court of Appeals ruled last week that a 41-lot residential subdivision in Clackamas County had not advanced enough, despite an expenditure of $1.3 million by its developer, for it to obtain "vested rights" toward completion.

Its decision follows a similar ruling Oct. 20 by the Oregon Supreme Court in a Yamhill County case. The Court of Appeals also denied "vested rights" in that case in 2010, although the Supreme Court upheld that decision on different legal grounds.

The courts and local governments still have several cases in which landowners argue they had made enough progress on developments allowed under Measure 37, which voters approved in 2004, so that they are entitled to complete them.

Under Measure 37, governments had to compensate landowners for the effects of land-use regulations, or grant them development rights based generally on regulations in effect when they took ownership.

But after 7,000 claims were filed under that measure, voters in 2007 passed Measure 49, which cut back those development rights. Most landowners took the more restricted options, but a few did not.

In the Clackamas County case, Leigh and Ceille Campbell and Donald Bowerman were seeking to develop 63 acres near West Linn acquired back in 1969, when zoning permitted one-acre lots. Subsequent rules under Oregon's 1973 land-use planning law restricted uses to forestry and farming.

Developer Gordon Root sought to build a 41-lot subdivision, known as "Tumwater at Pete's Mountain," and won preliminary approval from the county June 18, 2007. Its approval was appealed to the state Land Use Board of Appeals, which returned it to the county Nov. 15, 2007 - nine days after Oregon voters passed Measure 49, but before it took effect Dec. 6.

The group Friends of Clackamas County had won a challenge to the subdivision in circuit court, but the landowners asked the Court of Appeals to intervene.

Judge Tim Sercombe, writing for the court, said that the spending on construction during the appeal - including grading and road-building - did not help the landowners' case.

"Costs were incurred to construct the subdivision road system during the time that the design of the roads was being challenged in the appeal of the subdivision preliminary approval to the Land Use Board of Appeals," he wrote. "That fact diminishes the otherwise good faith of plaintiffs (landowners)."

Sercombe also wrote that based on evidence in the record, the construction of 4,300-square-foot houses and development of the 41 lots would have cost a total of $27.2 million, so that the $1.3 million already spent would account for about 4.7 percent of the projected spending.

Sercombe wrote that amount was "insubstantial" to determine that the landowners had the right to proceed with development.

Under a 1973 Oregon Supreme Court decision, also involving a dispute in Clackamas County, among the legal factors to be considered in determining whether a project should proceed are the ratio of development expenditures to the total cost of the project, and whether that spending was in "good faith."

The landowners argued that the houses would have been built for less, given the changed housing market, so that the total would have been $17.1 million - and the $1.3 million already spent would account for about 7.5 percent of projected spending.

"Plaintiffs' (landowners') rights would not be affected by any supplemental determination of whether the developer's expenditures count in applying the expenditure ratio test," Sercombe wrote.

His decision was joined by Chief Judge David Brewer and Wallace Carson, a former Oregon Supreme Court chief justice sitting on the appeals court panel.

The landowners haven't indicated whether they will appeal the decision to the Oregon Supreme Court. Subdivision opponents were represented by Ralph Bloemers, co-executive director and staff attorney for the Crag Law Center, who also argued the Yamhill County case in the Oregon Supreme Court.

Also taking part were lawyers for the Oregon Department of Justice and Clackamas County.


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