Brian Hines - HinesSight



Keep Our Water Safe Committee

[pic] July 23, 2008

TO: Marion County Hearings Officer (hand-delivered)

FROM: Brian and Laurel Hines

Re: Analysis of Common Law Vesting Under Measure 49

Facts and Circumstances of Claimant Leroy Laack and others

Case No. VRD M05-017

Dear Hearings Officer:

The Keep Our Water Safe Committee and Friends of Marion County submit this information to aid the hearings officer in making a determination that Claimant LeRoy Laack and others, whose development is called Ridge View Estates, are not vested in a use permitted under ORS 197.352 (Measure 37) as it had been modified by the provisions of Measure 49.

The KOWS Committee is a group of neighbors and property owners whose ground water was threatened by the proposed development that is now prohibited by Measure 49. Forty-three families in our neighborhood have contributed financially to the committee, while many others have provided other support – including testifying against the proposed subdivision at hearings before the Marion County Planning Commission and Board of Commissioners.

Summary of applicable law

(1) Measure 49

Measure 49 was approved by the voters on November 6, 2007. It went into effect on December 6, 2007. Measure 49 prohibits large subdivisions, allowing no more than ten home sites on a Measure 37 claim.

However, if a claim is on high-value farmland, high-value forestland, or in a ground water restricted area, the number of home sites allowed is limited to three. Each of the three home sites can be no larger than two acres, and must be clustered on the least valuable farm or forest land.

Since the soil underlying Ridgeview Estates is 98.8% high value soil (page 2, final order 07-373) and the proposed 43 lot subdivision is located within a Sensitive Groundwater Overlay area (page 15, final order), Measure 49 limits this Measure 37 claim to three home sites.

In fact, the claimants have chosen this option under the four Department of Land Conservation and Development (DLCD) Election possibilities: Express, Conditional, Vested, and Within City/UGB . Attachment 1 shows that an Election Notice was mailed to the claimants on January 29, 2008, with the Express election choice received by DLCD on March 4, 2008.

Since the 90-day period for electing an option has expired, the applicants’ election of Express (three home sites) is now set. We have been informed by Carmel Bender of DLCD that agency review of elections received in March should be completed within the next few months. A 28 day public comment period on the decision will follow.

Given that the applicants chose the Express option prior to filing a vested rights determination application, our contention is that they will have received the “just compensation” offered under Measure 49 when that election has been approved by DLCD. Measure 49 states:

SECTION 5. A claimant that filed a claim under ORS 197.352 on or before the date of adjournment sine die of the 2007 regular session of the Seventy-fourth Legislative Assembly is entitled to just compensation as provided in:

(1) Section 6 or 7 of this 2007 Act, at the claimant’s election, if the property described in the claim is located entirely outside any urban growth boundary and entirely outside the boundaries of any city;

(2) Section 9 of this 2007 Act if the property described in the claim is located, in whole or in part, within an urban growth boundary; or

(3) A waiver issued before the effective date of this 2007 Act to the extent that the claimant’s use of the property complies with the waiver and the claimant has a common law vested right on the effective date of this 2007 Act to complete and continue the use described in the waiver.

Sections 6 and 7 of Measure 49 describe the Express and Conditional options. The “or” before Section 5 (3) points to these three just compensation options as being exclusive of each other, not capable of being mixed and matched as the applicants are attempting. Thus when the Express election for three home sites is approved by DLCD, it will not be possible to also receive just compensation via a common law vested right.

The claimants would argue that the Express election is a fallback position in the event their vested rights application is denied. We contend that actually it is a “fall forward” position, since the Express election preceded the vested rights application and almost certainly will be approved prior to a final determination (including appeals) of the vesting case.

The Express election is relevant to the vesting application in this sense: it shows that the applicants have a desire to develop three home sites on the property under the provisions of Measure 49. We will show that much of the work completed to date is adaptable to this three home site development requested by the applicants, so should not be considered as a vesting expense.

(2) LUBA decision and remand

The neighbors appealed the Board of Commissioners 2-1 decision to approve the Laack subdivision. On March 19, 2008, the Land Use Board of Appeals (LUBA) issued a remand back to the county, having sustained the first assignment of error argued by our Crag Law Center attorneys. (Attachment 2) This pertained to which of the owners of the property are entitled to a Measure 37 waiver that would enable the development of a 43 lot subdivision and the placing of a single family dwelling on each lot.

LUBA said it appears that only Leroy Laack is entitled to such a waiver, though the Rainones also may be valid Measure 37 claimants. Certainly Jean Laack, Greg Eide, and Duane Rawlins are not so entitled. This means that a valid land use approval has not yet been issued for the Ridge View Estates subdivision, since the Board of Commissioners final order 07-373 was determined by LUBA to be in error.

In a letter to Sterling Anderson dated July 3, 2008, J.D. Brown of the Crag Law Center argued that it is not possible for the applicants to be vested. (Attachment 3) Measure 37 has expired. It is no longer possible to issue land use approvals under Measure 37. LUBA has ruled that the Laack subdivision final order is not a valid land use approval and must be fixed. Yet this can’t be done, since the statutory authority under which a fix could be made, Measure 37, no longer exists.

Thus this vested rights application is an attempt to vest a Measure 37 claim that hasn’t yet gotten final approval, which should be a legal non-starter. That is, the application should be declared moot, given that the common law precludes vesting of a use that was established unlawfully.

In guidance from DLCD and the Oregon Department of Justice on “Ballot Measure 49 and the Common Law of Vested Rights,” we read in item 1 that a Measure 37 claimant may have “the right to continue a use that was established lawfully.” (Attachment 4) Such did not occur in this case, as determined by LUBA. And it is too late for a lawful establishment of the use, given that the clock ran out on Measure 37 authorizations on December 6, 2007, the effective date of Measure 49.

We believe that Marion County has erred in agreeing to consider the application in the absence of a valid land use approval. Since such an approval cannot occur, vesting is not possible for the Laack subdivision.

Further, even though any action by the Board of Commissioners in accord with the LUBA remand to correct problems in the final order will be invalid, the BOC’s failure to act prior to the public hearing of the vesting application compounds the legal confusion. For LUBA held out the option that some owners of the property be removed as valid claimants in the final order, an option favored by the applicant’s attorney (Alan Sorem) in a June 13, 2008 letter to Sterling Anderson (Attachment 5). This is from the LUBA decision:

The county might also consider the approach that DLCD appears to have suggested below, i.e. approve the subdivision, but limit that approval to the applicant/owner or applicant/owners who have the Ballot Measure 37 waivers that are required to subdivide land that is now zoned EFU, and deny the subdivision application with regard to all other applicant/owners. Whichever approach the county pursues on remand, the county should adopt a more complete explanation of its understanding of the legal effect of the Ballot Measure 37 waivers on each of the property owners. In addition, a more complete explanation of DLCD’s position and petitioners’ position and the county’s basis for accepting or rejecting these positions would improve the chances that the county’s decision can be defended in the event of an appeal of the county’s decision on remand.

It is evident that LUBA is calling for Marion County to make significant changes to the final order, and provide cogent explanations of those changes. Yet here we are, considering a vested rights application for a Measure 37 claim when it isn’t known who the valid claimants are. As will be discussed in a subsequent section, this uncertainty affects the determination of valid vesting expenditures, given that some of the development costs to date almost certainly have been paid by people who are not valid Measure 37 claimants.

A July 21 letter sent to Marion County by Richard Whitman, DLCD director, supports this. (Attachment 41) It states that the subdivision application should have been denied to Jean Laack, M. Duane Rawlins, and Greg Eide. Thus any expenditures made by these people cannot count toward vesting.

However, we disagree with this statement in the DLCD letter: “In the event Leroy Laack and Andrew and Margaret Rainone are found to be lawfully vested in the use described in their Measure 37 waivers, DLCD believes the subdivision application may be approved on remand consistent with the decision by LUBA.”

“DLCD believes” is much different from a conclusion supported by the law. No case or statutory law is cited in support of this contention. The DLCD guidance on vesting (item 1 in Attachment 4) says that a claimant has the right to continue a use that was established lawfully. LUBA has ruled that the Laack subdivision was not established lawfully. So how could it be that vesting of an unlawfully approved subdivision would make possible the approval of the subdivision application by Marion County?

This would put the legal cart before the horse. A valid land use approval has to precede a vesting determination. In Corey v. DLCD, the Supreme Court ruled in May 2008 that Measure 49 deprives Measure 37 waivers and all orders disposing of Measure 37 claims of any continuing viability. (Attachment 43)

In the end, we hold only that plaintiffs' contention that Measure 49 does not affect the rights of persons who already have obtained Measure 37 waivers is incorrect. In fact, Measure 49 by its terms deprives Measure 37 waivers -- and all orders disposing of Measure 37 claims -- of any continuing viability, with a single exception that does not apply to plaintiffs' claim. Thus, after December 6, 2007 (the effective date of Measure 49), the final order at issue in the present case had no legal effect.

So how is it possible for Marion County to revisit the county Measure 37 waiver on remand when the waiver, and the flawed final order approving the subdivision based on the waiver, no longer are viable?

Further, DLCD says (agreeing with LUBA) that three owners, M. Duane Rawlins, Greg Eide, and Jean Laack are not entitled to develop a subdivision. Yet these owners have indeed been developing a subdivision: paying out money for development costs, signing official papers, applying for permits, and so forth. Clearly their expenditures should not count as a valid vesting expense. Yet since it appears that the owners of the property have been sharing costs equally, eliminating half or more of the development expenses would make it much less likely that their vesting attempt will succeed (even less likely than the previous unlikelihood).

This points to the confusing circularity of the DLCD remand letter. DLCD says that a vesting determination is supposed to precede action on the LUBA remand. Yet action on the LUBA remand will remove several of the owners as claimants, which has a significant effect on the vested rights determination.

This circular legal loop only creates confusion, not the clarity Measure 49 was intended to bring, which is one reason we are confident that the legal interpretation of the LUBA remand described in the Crag Law Center submission on the Ridge View Estates vesting application is correct.

(3) Common law of vested rights

As previously noted, we do not believe that it is possible for the applicants to establish a vested right for Ridge View Estates. The LUBA remand points to the fact that a valid land use approval did not occur prior to the effective date of Measure 49.

Further, the Measure 37 claimants have elected the Express option under Measure 49. When this election is approved by DLCD in a few weeks or months, as it almost certainly will be, the just compensation proffered under Section 5 of Measure 49 will have been obtained by the claimants and a vested right would be a prohibited “double dipping” given the “or” rather than “and” language in that section.

Nonetheless, at the moment we are in the position of necessarily being involved with this vested rights determination, even though we consider it to be legally moot. The contents of this submission should be considered in that light. That is, our participation in the vesting determination process does not mean that we accept its validity.

The only way more than three home sites would be allowed on the Laack property is if the project has a common law vested right on the effective date of Measure 49. The previously mentioned guidance from the Oregon Department of Land Conservation & Development and the Oregon Department of Justice says: (Attachment 4)

In general, the right to complete and continue a use of real property when the law changes is known as a “vested right.” Under decisions of the Oregon courts, whether a person has a vested right to complete a use (despite a change in law) is an issue of fact , to be decided on a case-by-case basis. Clackamas County v. Holmes, 265 Or 193, 197 (1973). For an owner to have acquired a vested right to proceed with construction, the commencement of construction must have been substantial or substantial costs toward completion of the development must have been incurred. Id. Factors that the Oregon appellate courts have considered in determining whether a particular development has progressed to the point where the owner has a vested right include:

• The amount of money spent on developing the use in relation to the total cost of establishing the use;

• The good faith of the property owner;

• Whether the property owner had notice of the proposed change in law before beginning the development;

• Whether the improvements could be used for other uses that are allowed under the new law;

• The kind of use, location and cost of the development; and

• Whether the owner’s acts rise beyond preparation (land clearing, planning, etc.).

The Marion County vesting ordinance, No. 1255, contains similar language: (Attachment 6)

The hearings officer’s recommendation shall be consistent with the Oregon Supreme Court’s and Court of Appeals’ decisions addressing vested rights issues and shall be based on a multifactor test that will include consideration of the factors that the courts have identified as relevant to aid in the equitable balancing test required for a determination of vested rights:

• The ratio of expenditures incurred to the total cost of the project;

• The good faith of the developer:

• Whether the developer had notice of any proposed zoning or amendatory zoning before starting the improvements;

• The type of expenditures, i.e., whether the expenditures have any relation to the completed project or could apply to other various uses of the land;

• The nature, location, and ultimate cost of the project;

• Whether the actions rise beyond mere preparation; and

• Other relevant factors.

The DLCD/DOJ vesting guidance refers to “owner,” while the Marion County vesting ordinance refers to “developer.” However, the owners and developers of Ridge View Estates are the same people, as evidenced by the project’s application to DEQ for a 1200-C permit (attachment 5, signature pages). “Greg Eide (owner) and others” is shown as the Applicant (Owner, Developer, or General Contractor), while North Santiam Paving Co. is shown as the Architect/Engineering Firm.

In the following analysis of whether the Ridge View Estates project is vested under Oregon common law, we will demonstrate that the owners/developers do not succeed in meeting any of the factors listed above.

The Claimant bears the burden of proving each factor. Courts generally disfavor the establishment of nonconforming uses. The Court of Appeals in Holmes stated that: “Nonconforming uses are not favored because, by definition, they detract from the effectiveness of a comprehensive zoning plan.” In the case of Measure 49, substitute “new law” for “zoning plan.”

Measure 49 was approved by 62% of voters statewide, and 66% of voters in Marion County. Measure 49 prohibits large subdivisions on high-value farmland, high-value forestland, and in ground water restricted areas. This was one of the key purposes of the legislature and the people in approving Measure 49. It was broadly advertised early on in 2007 as legislative bodies worked to put together this change and refer it to the voters. Claimants were well aware of this proposed change, being present at several meetings of the Legislature’s Land Use Fairness committee, and their awareness only grew as Measure 49 was referred to the voters, the newspapers covered the matter, and the campaign geared up to pass this referral.

The Ridge View Estates Measure 37 claim may not continue to establish a use allowed by Measure 37 but prohibited by Measure 49. The evidence in the application does not show that the nonconforming use prohibited by Measure 49 is vested.

A separate submission prepared by the Crag Law Center in opposition to this vested rights determination addresses legal issues raised by the applicants, such as the attempt to morph the first factor in the county vesting ordinance, “The ratio of expenditures incurred to the total cost of the project,” into something entirely different: “Substantial expenditures.”

“Substantial,” like “beauty,” is in the eye of the beholder. It has no inherent objective meaning. A small pebble is a substantial obstacle to an ant; it is unnoticeable to a person striding over it. The claimants have said (p. 6 of application): “Specifically, Claimants’ believe it is appropriate for the county to a determination [sic] on its face as to whether it believes the expenditures are substantial.”

This position is legally indefensible, since the DLCD/DOJ guidance and Marion County ordinance both refer to a ratio of expenditures incurred to the total cost of the project, not a stand-alone dollar figure.

It also goes against the grain of common sense, which we would argue forms the foundation of common law in this area. As noted above, vesting is a means by which non-conforming land uses (which are disfavored, being social policy outliers) can be allowed to continue if, and only if, development of the project has progressed to a point where, on the scales of justice, denying a right to complete it outweighs the societal benefit of adjusting the project to the conforming use.

This is important: the claimants’ application focuses on the costs they have incurred, arguing that because a few hundred thousand dollars seems to be a “substantial” amount of money (though not to Warren Buffet or Bill Gates), this entitles the claimants to continue with the development of a 43 home subdivision on high-value groundwater limited farmland.

What is ignored in vested rights applications (we are acquainted with quite a few of them) is the other half of the Measure 37 vested rights equation: the cost to the public welfare of allowing a land use that 62% of Oregonians voted to prohibit through the passage of Measure 49. Striking an equitable balance between the right of claimants to continue with their development and the right of citizens to have their social policy decision respected is the essence of vesting common law.

The oft-cited ratio of 1:14 (expenditures incurred to total cost of development) from Clackamas County v. Holmes, cited by the applicants as the preeminent Oregon vesting case, represents an attempt to strike such a balance. In our opinion, it is excessively generous to the non-conforming side of the scale of justice: common sense argues that 1/14, or 7.1%, is a small proportion of a totality, not something “substantial.” (If someone had completed 1/14 of a jigsaw puzzle, and a rambunctious teenager knocked the table over, it’s difficult to justify a complaint of “Johnny, darn you! I’d substantially finished that puzzle!”)

Whatever the common law standard for the ratio test is, 7.1% or a higher percentage, the one thing it isn’t is a stand-alone number. A ratio obviously is the relation between two separate numbers. Here is an excerpt from a memo on “Transition to Measure 49 & Vested Rights” written by Ralph Bloemers of the Crag Law Center. (Attachment 7) It shows that in vesting cases the amount of money spent on development has meaning only in relation to the total cost of development.

In another decision, the claimant spent $110,000 over six years to develop a subdivision, more than three times the $33,000 spent by the claimant in the Holmes case: “Applying the ratio test here, we are able to say only that construction of 250 houses is obviously a multimillion dollar proposition, and that the ratio of prior expenditures to the total cost of the project is far less favorable to a vested right than the 1:14 ratio in Holmes, where the court found a vested right based on the prior expenditures plus other factors which weighed in favor of the nonconforming use. The ratio test does not favor plaintiffs.” Webber v. County of Clackamas, 42 Or App 151 at 155, 600 P2d 448 (1979).

The law reflects common sense. A ratio test, assessing the allowable vesting expenditures to date against the total cost of completing the project as planned, permits a much fairer consideration of the balance that must be struck between the right of claimants to continue development and the right of society to enjoy a desired conforming land use. (In line with the previous analogy, observing that the puzzle box contains 1000 pieces, and only a few had been fitted together, the teenager could reasonably respond, “Come on, Dad, you’d barely begun working on it.”)

We will show that the Ridge View Estates development is nowhere near 7.1% completed, so even this minimal standard for judging whether the “ratio test” has been passed constitutes a fail for the applicants. However, before moving to an examination of each vested rights factor, we offer a timeline that serves as a backdrop for the discussion in the remainder of this submission.

Timeline of significant events

February 10, 2005. Leroy Laack and other owners of the Liberty Road property file a Marion County Measure 37 application. They claim a $17,355,000 loss of value. This is based on an estimated average value of $225,000 for each of 80 2-3.5 acre lots on the 215 acres (80 X $225,000 = $18,000,000), minus an estimated current value as farmland of $645,000.

June 8, 2005. A Marion County hearings officer denies the application due to lack of clarity about ownership issues.

July 13,2005. The Marion County Board of Commissioners grants a waiver to all four owners. Only one claimant (Leroy Laack) qualifies for a full waiver.

August 12, 2005. The Department of Land Conservation and Development approves the Measure 37 claim, specifically stating that three of the owners (Jean Laack, Duane Rawlins, and Greg Eide) are not able to use the property in the manner set forth in the claim.

August 26, 2006. The Spring Lake Estates Recreation Property Inc. (SLERP) board of directors agrees to spend $5,000 on a study of how the proposed subdivision could impact Spring Lake, a commonly owned asset of Spring Lake Estates (which adjoins the Measure 37 claim) with a long-established water right from Spring Creek.

September 29, 2006. Laack and the other co-owners file a subdivision application for Phase One of the development, 43 lots.

October 4, 2006. A registered geologist at Groundwater Solutions, Inc., Larry Eaton, submits a report to SLERP that concludes:

Based on the findings of this hydrogeologic assessment, it is our professional opinion that an adverse impact to senior water rights is likely if the study area undergoes further groundwater development. We recommend that Marion County require a detailed hydrogeologic assessment of the proposed Laack Development to demonstrate that the groundwater resource in this area is sustainable and that existing senior water rights will not be affected because of additional groundwater development. [emphasis added]

October 22, 2006. SLERP forms a Water Rights committee chaired by Laurel Hines. The committee is to advocate for the protection of Spring Lake and existing area wells. This organizational effort became the Keep Our Water Safe Committee (KOWS).

December 2006 – January 2007. The Marion County Planning Commission holds three lengthy hearings on the Laack subdivision application. On January 30 the Commission approves the subdivision with changes, including: a five acre minimum lot size was required, reducing the maximum number of lots to 28 (27 in the 137 acre subdivision itself, plus an 80 acre “remainder” lot); a Hydrogeological Review was required by the Board. (Note: Laack and his co-owners also voluntarily agreed to restrict themselves by adhering to the Hydro Review results).

February 2007. Both the owners of the property and the KOWS committee appeal the Planning Commission decision to the Board of Commissioners.

April 4, 2007. The Board of Commissioners holds a five hour hearing on the appeals.

May 3, 2007. Pursuant to the Marion County groundwater ordinance (which requires a Peer Review of Hydrogeologic Reviews), independent hydrogeologic consultants from AMEC Earth & Environmental, Inc. fail the “Hydrogeologic Review for a Subdivision” prepared by the Laack subdivision’s hydrogeologist, Malia Kupillas of Pacific Hydro-Geology (PHG). The peer review concluded:

The information contained in the [PHG] report is not adequate to demonstrate that the proposed development would not adversely affect the availability of groundwater for other existing users in the entire hydrogeologic system. [emphasis added]

June 13, 2007. On a 2-1 vote the Board of Commissioners approves 42 lots on 137 acres, plus an 80 acre “remainder lot.” A front page newspaper story begins with: “Marion County commissioners ignored their own planning commission and scientific reviewer on Wednesday when they approved a 42-home subdivision in a limited-groundwater area in the hills south of Salem." (Attachment 8)

June 15, 2007. Ballot Measure 49 is referred to the voters by the Oregon legislature.

July 11, 2007. The Board of Commissioners refuses to consider a reconsideration request filed by the KOWS Committee.

August 28, 2007. The Board of Commissioners issues a final order reversing the Planning Commission’s decision.

September 14, 2007. Eight Spring Lake Estates property owners and the Keep Our Water Safe Committee file a notice of intent to appeal with the Land Use Board of Appeals (LUBA).

September 17, 2007. Road construction work begins on the Laack subdivision (Ridge View Estates) without either of the required permits: a Marion County Major Construction Permit or a DEQ 1200-C stormwater/erosion control permit. The KOWS committee files complaints with Marion County and DEQ, noting that the final order says that a Major Construction Permit is required “before construction of roadway and drainage improvements may commence.”

September 21, 2007. The Ridge View Estates attorney is contacted by Marion County legal counsel and then the construction work stops.

September 24, 2007. Ridge View Estates submits an application for a Major Construction Permit. DEQ issues a 1200-C permit.

October 16, 2007. DEQ rescinds the 1200-C permit. The KOWS committee had notified the DEQ about permit violations. DEQ determines that the permit is for a common plan of development that will exceed five acres of disturbed ground. The applicant misrepresented the facts on the application. A 30 day public comment period for a second permit application begins.

November 6, 2007. Ballot Measure 49 is passed by Oregon voters.

November 21, 2007 The second Ridgeview Estates 1200-C permit application is approved by DEQ.

November 27, 2007. Marion County approves the Major Construction Permit.

November 28, 2007. Construction of improvements to Liberty Road, which adjoins the Measure 37 claim, begins. Work ends on December 5 after several days of intermittent and limited activity on the actual property. All of the significant construction work done under the Permit occurs off the property on the public road.

December 6, 2007. Measure 49 goes into effect.

Discussion of statutory vesting factors

(1) The ratio of expenditures incurred to the total cost of the project

What is the total cost of the Ridge View Estates project? The answer to this question revolves around “intention.” What kind of development was intended, or planned, for the 217 acre property? Returning to the jigsaw puzzle analogy, this is akin to looking at the cover of the box containing the puzzle pieces and seeing how the completed puzzle should appear.

Intention must be connected with possibility. A supposed intention that is demonstrably impossible to carry out can’t be taken seriously. Thus this statement in the vested rights application (page 7) lacks credibility:

The Claimant’s understanding of their project is and always has been the recording of a subdivision, constructing necessary infrastructure, and selling “buildable” lots to individuals or developers.

Though it would be a stretch, this statement would be minimally believable if the applicants were “ma & pa” owners of a small Measure 37 claim who lacked professional legal representation. However, in this case the claimants have been advised by a law firm with special expertise in land use law. The lack of transferability of development rights under Measure 37 has been well known almost from the Measure’s passage in November, 2004.

On February 24, 2005, Stephanie Striffler of the Oregon Department of Justice sent a letter to the director of DLCD answering two questions, one of which was: “Generally, you want to know if a waiver under Measure 37 is personal to the current owner of the property or runs with the land. That is, does the waiver remain if the current owner conveys the property to a new owner?” (Attachment 9)

The answer:

The short answer to your first question is that when a public entity finds that there is a valid claim for compensation under Measure 37, but elects to provide relief by “not applying” the law, that relief is personal to the current owner of the real property. If the current owner conveys the property before the new use allowed by the public entity is established, then the entitlement to relief will be lost.

So the total cost of the project must include the cost of building 43 homes and associated infrastructure, such as the subdivision roads and driveways, plus individual wells and septic systems. Measure 37 development rights are not transferable, and a claimant may not sell a lot to someone who then would build a house on the property.

This position is entirely supported by a July 21, 2008 letter from Richard Whitman, DLCD director, to Marion County. (Attachment 42) He states that the total cost of development of the Ridge View Estates project must include the cost of developing dwellings.

Indeed, a person who had no right to a waiver under Measure 37 cannot acquire a vested

right to develop under Measure 49. See Crook County v. All Electors, Crook County Circuit

Court No. 05CV0015 (August 1, 2005 letter opinion) Oregon Circuit Court decisions have defined who was entitled to receive a waiver under Measure 37 and who was not. Persons not qualified to have received a waiver under Measure 37 are not entitled to a vested right to complete a project initiated by someone else who may have had a valid claim.

Recently (June 18, 2008) the Oregon Court of Appeals in DLCD v. Burk agreed with DLCD and LUBA that Measure 37 waivers cannot be transferred . Interestingly, both parties in the case also agreed with this position. (Attachment 10)

Neither party to this case asserts that Measure 37 itself permitted the transfer of a waiver from Burk to petitioner. Both parties agree that, in the absence of some other applicable source of law, such a waiver would dissolve upon the death of the person who originally obtained it, given that the statute provides that only the owner who “acquired the property” may obtain a waiver of land use regulations that went into effect after the acquisition. ORS 197.352(8) (2005)

The argument of the petitioner was that the “goal post statute” constituted an other applicable source of law, but the Court of Appeals did not agree, leaving no legal basis for transferability of Measure 37 waivers.

So even if Laack and his co-owners somehow believed they could sell buildable lots to other people, this would not have been possible under Measure 37. However, we can still ask, “What is the evidence for this belief?”

We are not aware of any statements in the voluminous record related to Ridge View Estates which definitively indicate an intention of the claimants to merely develop the subdivision infrastructure and sell buildable lots. Rather, the available evidence shows that the claimants recognized that a house and lot would have to be sold together. This is a quote from a June 14, 2007 Salem Statesman Journal story, Subdivision is OK’d despite water concerns: (Attachment 8)

Landowners already have drilled one water well that they said can pump as much as 80 gallons per minute, enough to supply the entire subdivision, Laack said. “We don’t have any intention of developing a subdivision and selling homes to people who are going to have problems getting water in the future,” said Greg Eide, one of the landowners. [emphasis added]

Indeed, selling a home built by Ridge View Estates along with the lot would be necessary. The final order of the Board of Commissioners states in item 8 of Exhibit B (Conditions):

The applicants and subsequent owners are advised that transferring ownership of the resulting undeveloped parcels from Leroy Laack, Andrew Rainone, Margaret Rainone, and M. Duane Rawlins prior to establishing a dwelling on the lot could void the dwelling waiver granted in M05-17.

Similarly, on page 19 of the final order, there is this quotation from Order M05-17 which granted the county Measure 37 waiver:

Specifically, the Board found “it is appropriate not to apply the land use regulations that prevent the [applicants] from subdividing the property and placing a dwelling on each of the undeveloped lots.”

One would assume that the claimants and their attorneys have read the BOC final order and the state/county Measure 37 waiver notices. This provides further support for our contention that the applicants realized that it was necessary for them to build homes on the 43 Ridge View Estates lots before the lots and homes could be sold to new owners.

We now ask, what were the intentions of the claimants for this property? What sort of subdivision did they intend to develop? At the first Planning Commission meeting on the subdivision application, Bill Lulay, representing the applicant, testified to this. The minutes of the December 19, 2006 meeting read: (Attachment 11)

Mr. Lulay stated the Measure 37 case was approved and now wants to move forward and develop the property similar to Chinook Estates.

Tim Jaskoski, a member of the KOWS committee, listened to a tape of the Planning Commission meeting and prepared a transcript of remarks made by Lulay. Referring to the claimants, Lulay said:

They’d like to have something similar to Chinook Estates which lies about two miles to the N.W.

An additional Lulay statement:

The CCRs will be restrictive. We don’t have those available right now, but we anticipate having very high quality lots and houses to go with it. So it will be, like I say, Chinook Estates would be the type of development we’d like to have. We feel this is the best use of the land.

As described later on, a “very high quality” house is not a subjective determination, because the Oregon Department of Revenue and Marion County Assessor’s Office use a standard system of assigning quality classes to homes that ranges from Class 1 to Class 8.

In a subsequent section we present detailed evidence showing that higher-end Class 5 homes are the prevailing type for both Chinook Estates and newly constructed houses in the neighborhoods adjoining Ridge View Estates. Being at the upper end of the 8-level quality scale, Class 5 homes by definition are “high quality” (noting that the applicants representative espoused a more stringent standard for the subdivision of “very high quality”).

Similarly, in a September 29, 2006 “Ridge View Estates Preliminary Application narrative” (Attachment 12) Lulay said of the property:

It has some spectacular territorial and mountain views similar to those or better than adjacent residence to the south. We feel the future home owners of these lots will treasure this use of the land forever. It should be an outstanding development and a benefit to Marion County.

A Salem real estate blog had a June 21, 2008 post about Chinook Estates. (Attachment 13) It said:

Located in south Salem, Chinook Estates is a stunning community of custom homes with often gorgeous views of the mountains and valley…Most homes in this neighborhood range in price from $450,000 - $2,000,000…Approximately 3 homes sold last year in the neighborhood an average price of $623,500. Sold prices ranged from $470,000 - $742,500…There are currently 14 homes listed as active on the MLS for this area with prices ranging from $694,500 - $1,690,000.

So prior to the passage of Measure 49, the intention of the claimants was to create a subdivision akin to Chinook Estates. The CC&Rs for Ridge View Estates (filed on November 6, 2007) reflect this intention.

For example, the Chinook Estates CC&Rs describe an Architectural Control Committee which, as part of its review of proposed structures, will review “the size conformity, materials (including but not limited to roofing and siding), value, location, and harmony of the external design with the existing structures in the CHINOOK DEVELOPMENT, and as to the location of the building with respect to the topography and finished ground elevation.” (Attachment 14)

Likewise, the Ridge View Estates CC&Rs describe a Design Control Committee which will review plans for dwellings and other structures: “The DCC’s review shall include, but not be limited to, quality of workmanship and materials, harmony of design with existing structures and landscape, view clearance and as to the location of the building or improvement with respect to relationship with existing surroundings (both natural and manmade), topography, geologic stability, and finish grade elevation.”

This doesn’t sound like a manufactured home park, which makes unbelievable the assertion in the application that a $30,000 manufactured home could be placed on each lot. Clearly this was never the intention of the claimants. What it reflects isn’t a valid approach to calculating the total cost of the planned project, but rather another sort of intention: to succeed in vesting the Measure 37 claim by supplying a ridiculously low cost of dwelling construction.

In the Fischer vesting rights recommendation (VRD M06-83), the Marion County hearings officer responded to the applicant’s contention that used mobile homes would be placed on each lot at a cost of $7,000 per unit.

However, there is no indication in the record that applicant intended to establish a mobile home subdivision. That seems unlikely given the basis of applicant’s M37 claim for $4.5 million in reduced property value if her 55 acres could not be developed into ten 5 acre subdivision lots. The estimate was based on a per acre value of $50,000 to $85,000 for each bare residential subdivision lot. That would put the value of each lot in the current subdivision proposal at more than $100,000. That land value is incongruent with placement of thirty year old single or double wide mobile homes on each lot.

In the Fischer case, the applicant said that there are two subdivisions with mobile homes in the area. However, in the three neighborhoods adjacent to the Ridge View Estates property (Spring Lake Estates, Twin Hills Estates, and the Stonecrest/Liberty area) there are 191 lots: 95 in Spring Lake Estates , 29 in Twin Hills Estates , and 67 in the Stonecrest/Liberty area.

Mobile or manufactured homes are prohibited by a deed restriction (Spring Lake Estates) or CC&Rs (Twin Hills Estates) in the neighborhoods immediately adjacent and south of Ridge View Estates. In the Stonecrest/Liberty area, Marion County assessor data available online (information as of January 1, 2007) show five manufactured homes. They were placed on the lots in 1979, 1988, 1978, 1976, and 1974. So the newest is twenty years old and the other four are from twenty-nine to thirty-four years old.

Information on the only manufactured home placed in the Stonecrest/Liberty area in the past two decades (in 2007) recently was submitted to the assessor’s office. The home is 2543 square feet and cost $248,000 ($135,000 for the home; $86,000 for setup, well, and septic; and the remainder for a garage, skirting, and an air conditioner).

The Stonecrest/Liberty area is not a planned development, so lacks CC&Rs. It is a far cry from the type of development the applicant’s representative, Bill Lulay, said the Ridge View Estates subdivision would be. He was the initial speaker for the claimants at the first Planning Commission meeting where the subdivision application was discussed. His testimony never was amended, corrected, or negated by subsequent testimony of the owners of the property or their other consultants.

To repeat, it was:

The CCRs will be restrictive. We don’t have those available right now, but we anticipate having very high quality lots and houses to go with it. So it will be, like I say, Chinook Estates would be the type of development we’d like to have. We feel this is the best use of the land. [Note: Chinook Estates prohibits mobile or manufactured homes.]

The December 19, 2006 Planning Commission meeting minutes also contain this statement:

Mr. Lulay commented the design tries to maximize view lots and maximize investment.

This reflects the obvious: that those seeing to develop the Ridge View Estates subdivision had the intention of making money from their efforts. Such needs to be kept in mind when assessing the reasonableness of assumptions about the total cost of development. It is unreasonable to posit that the applicants would pursue a development option that minimizes, rather than maximizes, their investment.

In Bowerman v. Clackamas County (Attachment 45), a case decided in June 2008, this reasoning was used by Senior Judge Alexander in determining that while the developer working for Measure 37 claimants had spent $1,295,869 on the subdivision, “the total cost of building approximately 40 homes on the available lots and completing the infrastructure already contemplated is a minimum of $30,000,000.” Judge Alexander also said:

I arrived at that figure after concluding from the evidence that the type of homes that can reasonably be built on these lots will cost over $750,000 including the materials and labor for the house, the driveway, the landscaping, the well, and the cost of development attributable to each lot. Even if the land sells for $150,000, as contended by Plaintiffs, the sale price of the average home in the development will be $900,000. It does not make economic sense for Mr. Root to sell the lots for that amount, since he would lose money, therefore it is more likely that the lots will be held until the market improves and the parties can make a fair profit. I am also convinced that prospective buyers for a home in this area with 1 ½ acres of land and similar lots on all sides will be able and willing to spend more than $900,000. For purposes of the Holmes analysis, the ratio is 1/23. Plaintiffs have not vested.

Though the circumstances in every vesting case are different, this ruling points to the necessity, when estimating the total cost of development, of assuming that the developers of a Measure 37 project are economically rational.

For example, if homes built on the property are sold at a 10% profit margin, $20,000 will be realized from the sale of a $200,000 home and $50,000 from the sale of a $500,000 home. If, as Judge Alexander concluded, there is an evident market for higher-end homes in the area, it is reasonable to assume that the developers of the property would opt for maximizing their profit potential.

Returning to the Fischer case: though the facts in the Laack case are much different, the reasoning of the hearings officer is applicable to this vested rights application. In his Measure 37 claim, Leroy Laack asserted a loss of $17,355,000. This was based on 80 2-3.5 acre lots in the proposed subdivision being worth an average of $225,000. This is fairly close to the current appraised value of similarly sized lots in the neighborhoods adjoining the Ridge View Estates property.

We have spoken with the Marion County appraiser for this area, Brian Beebe. He told one of us (Brian) that a basic principle of appraising is “highest and best use.” With acreages of 2 to 6 acres people want to maximize the value of the lot when they build a home (just as Bill Lulay said in his aforementioned Planning Commission testimony). Acreage lots cost more than city lots, so in general it doesn’t make sense to build an inexpensive home on an expensive lot.

Beebe also said that a certain size of building goes with a certain size of land. This relates to another basic appraising principle: “balance.” Another is “substitutability.” Basically, this means that people won’t pay more for an existing home on a lot than it would cost to buy a similar bare land lot and build a home.

He also told us that from his previous appraising experience, lenders want to see a certain ratio between the value of land and the value of improvements. Generally, the house should be valued at more than 50% of the total value. In other words, lenders don’t like to see the value of the lot being more than the value of the house.

So there are many good reasons to discount the applicants’ assertion that placement of manufactured homes on each lot is a reasonable way to calculate the total cost of completing the intended project. Again, the total cost of the project under the common law of vesting has to reflect the original plan for the development, not a post-Measure 49 cooked-up scheme that reflects no other reality than a desire to become vested.

Since the applicants intended to develop a subdivision comparable to Chinook Estates, the alternative home construction cost estimate in the vesting application is as dubious and perplexing as the manufactured home estimate. Dubious, because homes in an upscale development similar to Chinook Estates obviously would be much more expensive to build than an average home.

Perplexing, because at first we were unable to understand how the applicant concluded that according to the Willamette Valley Multiple Listing Service (WVMLS) “the average cost of new construction on Marion County acreage sites is approximately $170,000.” Footnote 3 on page 8 said: “This figure was calculated by subtracting the average cost of new construction dwellings on acreage sites versus the average cost of acreage without dwellings.”

Exhibit 27 in the application is the WVMLS “2007 Real Estate Review,” dated January 2008 and covering calendar year 2007. We studied this document, trying to figure out where the $170,000 figure came from. The “New Construction Statistics” page did not have data for new residential construction on acreages. And the “Valley Vacant Land Report” obviously didn’t either, though we assumed this must be the source of “average cost of acreage without dwellings.”

Finally, we subtracted the average sales price for new residential construction in all of Marion County (note the “all”) from the average price of bare land lots less than one acre: $263,839 minus $93,435 equals $170,404. This seems to be how the $170,000 estimate of the cost of new construction on Marion County acreage sites was determined.

Clearly, it is not that at all. In fact, it is not even a meaningful number, since it takes the average price of all new home construction in the county (city lots, small acreages, large acreages) and divides that price by the average price of bare land lots less than one acre. This leaves out the price of lots greater than one acre, on many of which the “all new home construction in the county” figure is based. Thus the number tells us nothing about the cost of building a new home on acreage lots in Marion County.

Search of WVMLS data base

As a first step toward determining a valid estimate of what it would cost for the applicants to construct a home (including a well, septic system, driveway, utilities, and landscaping) on each of the 43 lots in the proposed subdivision, we asked a realtor (Sheryl Jaskoski) to search the WVMLS data base for all listings where a home built in 2006 or later, located on a lot of 1.25 acres or more, was sold since January 1, 2007.

Since the applicants’ erroneous estimate of $170,000 was based on 2007 data also, the results of this search would show much more valid information for the same time period. These are shown in a spreadsheet, along with the eight WVMLS listings. (Attachment 15) Because the sales price included the value of both the home and the lot, we used the “Valley Vacant Land Report” in the vesting application to obtain an estimate of the cost of the lot. This was subtracted from the sales price to get an estimate of the value of the newly constructed home.

The average estimated new home value on these eight small acreages was $355,866. This, of course, only represents the few homes constructed by a builder for sale (commonly known as a “spec” house, since it was built on the speculation that a buyer could be found). Most homes on lots of 2 to 6 acres are constructed by individuals who plan to live on the property. These houses would not appear in the WVMLS listings, since they never were put up for sale.

Marion County building permit applications

So to get a broader picture, we requested data on Marion County building permit applications for single family dwellings on a parcel of 2 to 6 acres, covering the period from January 1, 2006 to the present. Warren Jackson, Public Works Building Official, sent us a spreadsheet containing information on 146 applications. (Attachment 16)

He cautioned that the average total valuation for the homes would be an under-estimate of their true value, since this figure is not adjusted for quality differences in home construction, being based on a valuation table developed for the purpose of determining permit fees. We were told by building permit staff that the cost per square foot of single family dwellings always is calculated using the 5B type of construction, a catch-all category that has the lowest monetary value in the valuation table.

Even with this caveat about the “low balling” of building permit valuation data (which was echoed by appraiser Brian Beebe of the Assessor’s Office), the average value of the 146 homes ended up being close to the average of the WVMLS listings, after a necessary adjustment was made. This was to add in the cost of a well, septic, driveway, utilities, and landscaping.

For this necessary infrastructure we added an amount that Beebe said was typically used by the Marion County Assessor’s Office: $34,000 (well - $11,500; septic - $6,500; driveway/utilities - $4,000; average landscaping - $12,000). Since the average valuation of the house alone shown on the building permit valuations was $309,146, the building permit valuation including well, septic, driveway, utilities, and landscaping was $343,146 ($309,146 plus $34,000).

Assessor’s Office data for recently constructed Marion County homes on small acreages

We then turned to an examination of Marion County Assessor’s Office data. Mr. Beebe sent us a spreadsheet containing information for homes built in 2005 to 2007 on 2 to 6 acre lots. When we asked about the accuracy of these appraisals, Beebe said that the Assessor’s Office had been diligently working on improving them. Whereas previously the rule of thumb had been that appraisals were 10% or so low, now they are considered to be close to the true market value.

Beebe added that county appraisals are based on building permit, Multiple Listing Service, and other data (including onsite inspections). They are updated shortly before property tax bills go out, around October, to the real market value as of January 1 of that year. So currently the values shown on the publicly accessible online records are for January 1, 2007. Information available to Assessor’s Office staff is updated continuously, so may not match the online data.

He informed us that there are eight quality classes for homes, and sent us a link to an online Department of Revenue “Cost Factors for Residential Buildings” guide that contains a description of them. (Attachment 17) A pithy informal description of each class is:

(1) Shack in the woods

(2) Small house that doesn’t meet code

(3) Functional house that barely meets code

(4) Entry level house, mass produced

(5) Upper end house, but with stock plan

(6) Custom built house

(7) A “McMansion”

(8) Full on, no budget house

There is a cost per square foot for each level of quality. Marion County does studies throughout the year to adjust local construction to the Portland market, which the Department of Revenue appraisal figures are based on. These quotations from the “Cost Factors for Residential Buildings” guide indicate that appraisal data of existing homes is a good approximation of what it would cost to newly construct those homes.

The cost approach is one of several methods used to estimate value. This method assumes an informed purchaser would pay no more for a building than the cost of replacing it…The base cost method estimates replacement cost—the cost to build a similar structure using currently accepted materials and construction methods.

When reviewing county appraisal data, it is necessary to keep in mind that well, septic, utilities, driveway, and landscaping customarily are part of the land value, not the improvements value. Along this line, Beebe said that appraisers are seeing more nice landscaping going in on newly constructed homes on small acreages.

Information for the 135 Marion County homes built in 2005-2007 on 2 to 6 acre lots is shown in Attachment 18. The average Residential RMV (real market value) was $352,634. This does not include the value of outbuildings, which are included in the Improvements RMV, so is an underestimate of the overall value of improvements on the lots. Adding in the $34,000 for necessary infrastructure, we arrive at a figure of $386,634. This is a valid estimate of the average construction cost for a home on a small acreage, including the cost of a well, septic system, driveway, utilities, and landscaping.

Again, this is an average of all quality classes. The residential RMV broken down by quality class also is shown on the attachment. Below are the averages by quality class.

Acreage Res. RMV Total RMV Land RMV Number

Class 3 3.4 127,561 380,734 196,957 7

Class 4 3.2 244,584 436,426 175,007 55

Class 5 3.0 383,079 620,633 218,186 58

Class 6 2.6 699,551 991,669 249,966 13

Class 7 2.6 973,910 1,351,320 377,410 2

Total 3.1 352,634 579,701 204,913 135

We can see that 84% of the newly constructed homes were Class 4 or Class 5. Eleven percent were Class 6 or Class 7, while only 5% were Class 3. Not surprisingly, the average Residential RMV increases steadily with higher quality classes.

The overall average residential RMV of $352,634 comes closest to the Class 5 average of $383,079. As will be discussed later, an upper end Class 5 home is the type of house of Chinook Estates quality that the applicants intended for Ridge View Estates, so the average value of newly constructed Class 5 homes on small acreages in Marion County ($383,079) plus the value of necessary infrastructure ($34,000) is a reasonable estimate of what it would cost to build each of 43 homes on the Ridge View Estates subdivision: $417,079.

Additionally, $386,634 (average value of newly constructed homes plus the value of necessary infrastructure) is a valid estimate of what the applicants invalidly claimed was the average cost of new home construction on Marion County acreage sites: $170,000.

Since WVMLS data is based on sales, we assume that the applicants counted the cost of a well, septic, driveway, utilities, and landscaping in the $170,000 figure. This would make the home construction cost alone about $136,000 ($170,000 minus $34,000 for infrastructure). As indicated by the table above, this is close to the average value of the seven newly constructed Class 3 homes.

Quoting from the Department of Revenue guide’s description of a Class 3 home, we see that this type of house is of a far lower quality than the high-end “Chinook Estates” type homes that were planned for Ridge View Estates.

Houses in this class are generally built to meet government financing program specifications. Emphasis is on functional utility rather than styling. These homes just meet the minimum building code.

A simple rectangular shape is most common. Exterior dimensions are usually in multiples of four feet to minimize building material waste. There is little or no exterior ornamentation. Front entries typically open directly into the living area. Interior features are plain and economical. Bathrooms feature economy-grade fixtures. Appliances may or may not be built in and are the most affordable on the market. The overall concept is to provide housing for the economy market.

Thus the contention in the vested rights application that a $170,000 home (which, as above, translates into $136,000 for just the house construction) is what was planned to be built on the 43 Ridge View Estates lots lacks any substantiation. As noted previously, it is utterly inappropriate for the hearings officer to rely upon the post-Measure 49 stated intentions of the claimants regarding the complete build-out of the development.

These clearly reflect only an intention to achieve a “pass” on the statutory vesting factors, whereas the common law of vesting requires the total cost of development as originally intended or planned by the claimants to be considered. The fact that detailed home construction plans were not discussed in the subdivision approval process shows only that Ridge View Estates never proceeded past early stages of development, which is precisely our contention in holding that minimal progress has been made on constructing this non-conforming use.

To repeat – because this point is so important, it bears repeating – evidence in the record points to the claimants’ intention to build a high-quality Chinook Estates-like subdivision. There is an “Alpha and Omega” symmetry to key aspects of this evidence. The very first public utterances made by the would-be Ridge View Estates developers, at the December 19, 2006 Planning Commission meeting, spoke to this intention (Bill Lulay’s previously quoted comments).

Then, a Declaration of Covenants, Conditions and Restrictions for Ridge View Estates was filed on the Measure 49 election day, November 6, 2007. This marked the end of the Measure 37 phase of the development, since that evening it was learned that Measure 49 had been approved by the voters.

The CC&Rs testify to the continued intention of the property owners, some eleven months after the Planning Commission meeting, for Ridge View Estates to be a premier development. We have already quoted a section of the CC&Rs dealing with the Design Control Committee’s approval of construction plans. Other provisions in the CC&Rs that indicate the subdivision was intended to be much more than a “trailer park” or to provide housing for the economy market include:

--“No trucks (except pickups of ¾ ton weight or less), campers, motor homes, trailers, boats, golf carts, motorcycles, 4-wheelers, or similar recreational vehicle of any kind shall be parked on the Lot or street other than temporarily (in no case in excess of twelve (12) hours and then only may be kept within an Owner’s enclosed garage.”

--“No basketball hoop, flag poles, exterior mounted television, radio antenna or satellite dishes, or window air conditioning units shall be installed or maintained on any Lot or any other portion of the subdivision unless approved in advance by the DCC.”

--“No exterior lighting shall be placed or operated upon or within any Lot which shall, in the opinion of the DCC, cast excessive or unreasonable amounts of light or glare on adjacent Lots of the Common Property.”

--“All such installations [of utilities] shall be underground.”

--“Except during periods of construction of any improvements thereon, all portions of each Lot shall be kept entirely free of trash and rubbish.”

--“All lawns which are visible from beyond any boundary of a Lot shall be regularly cut and edged, so as not to permit the grass to attain a height greater than six inches; and shall be regularly fertilized, weeded, and watered. All other landscaped areas which are visible from beyond any boundary of the Lot shall be regularly and carefully maintained, including but not limited to watering, fertilizing, weeding, bark dusting, pruning and trimming.”

--“No garments, rugs, rags, bed sheets, laundry or other clothing or materials shall be allowed to hang from windows or from any other façade or extension of an improvement on a Lot where the same would be visible from the boundary of the Lot.”

It also should be noted that Ridge View Estates property owners would be required to become members of a homeowners association, and to pay an annual assessment for the expenses listed on page 12 of the CC&Rs. This assessment likely would be substantial. It would include funding of a reserve account that would pay for the repair or replacement of improvements on the Common Property, including streets (we have been told by Marion County Public Works staff that the subdivision’s streets would be public roads but privately maintained).

In short, Ridge View Estates clearly was intended to be a high quality development, with homes to match.

We have shown that $386,634 is a valid estimate of the average cost of recent new construction on Marion County acreages of 2 to 6 acres, the size of Ridge View Estates lots. However, this development was intended to be considerably better than average. So we conducted further research aimed at determining what sorts of houses reasonably would have been constructed on the claimants’ property if Measure 49 hadn’t passed.

Assessor’s Office data on new home construction in surrounding area for past 10 years

First, we researched the value of new home construction in the surrounding neighborhoods: Spring Lake Estates, Twin Hills Estates, and the Stonecrest/Liberty area. Attachment 19 is a map that shows the relation of these neighborhoods to the applicants’ property. Spring Lake Estates and Twin Hills Estates border it to the south; the Stonecrest/Liberty area borders it to the west, on the other side of Liberty Road.

Using name and address lists for each neighborhood, we found and printed out data for each of the 191 lots. Then we produced a spreadsheet (Attachment 20) that analyzes the 36 homes built in the last ten years: from 1997 to the present. Two partially constructed homes were excluded since Brian Beebe, the appraiser for this area, said that they were less than 50% complete at the time of the most recent January 1, 2007 assessment.

The acreages on which the homes were built averaged 3.4 acres, close to the 3 acre average lot size in the 42-lot section of Ridge View Estates. The average living area square footage was 3,834 sq. ft. The average Improvements RMV (real market value) was $414,446. When $34,000 is added on for necessary infrastructure (well, septic, driveway, utilities, and landscaping), the average appraised Improvements RMV of properties with recently constructed homes in this area is found to be $448,446. As noted previously, this also is a valid estimate of the cost to construct replacement improvements of the same type and quality.

This is 16% more than the comparable average cost of new construction on small acreages in all of Marion County, $386,634. This fits with the fact that the south Salem hills is considered to be one of the more desirable areas to live in the county, a conclusion supported by appraiser Brian Beebe.

While the average lot size of the Assessor’s Office report for new construction on small acreages in all of Marion county was about the same as that in the neighborhoods adjoining Ridge View Estates (3.1 and 3.4 acres respectively), the average assessed value of the Marion County lots (RMV Land) was considerably less than the value in the surrounding neighborhoods: $204,913 vs. $275,082.

Here is the breakdown in Attachment 20 by quality class, showing averages:

RMV Land RMV Improve. RMV Total Sq. ft. Acres # homes

Class 4 266,986 246,336 513,321 2,810 3.7 7

Class 5 271,623 361,102 632,725 3,458 3.4 25

Class 6 327,477 1,041,280 1,368,757 8,777 2.9 3

Class 7 261,060 1,044,300 1,305,360 5,555 3.1 1

Total 275,082 414,446 689,528 3,834 3.4 36

We see that 81% (29/36) of newly constructed homes in the neighborhoods surrounding Ridge View Estates are Class 5 or higher, with none being Class 3. By comparison, for all of Marion County 54% of new homes on small acreages are class 5 or higher, with 5% being class 3. This explains why, when we asked county appraiser Brian Beebe if it was reasonable to assume that a $136,000 home (value excluding well, septic, driveway, utilities, and landscaping) would be built on a 2 to 6 acre Marion County lot, he said “no.”

And this assumption is especially unreasonable for small acreages in the neighborhoods adjoining Ridge View Estates, since zero Class 3 homes have been constructed here in the past ten years.

Comparison of building permit application data and Assessor’s Office data

Since we had both Marion County building permit application data and Assessor’s Office RMV data for new home construction in the neighborhoods adjoining Ridge View Estates for 1997 to the present, we prepared a spreadsheet that compared the valuations from these two sources. (Attachment 21) Because the building permit data were as much as ten years old and Assessor’s Office data are updated regularly, we applied a U.S. Census Bureau construction inflation factor to the building permit valuation (shown with attachment).

One questionable building permit valuation was omitted, leaving 35 homes in this comparison (Warren Jackson said on the R332114 permit, the living area valuation was listed as unfinished basement instead of normal living space). On average, building permit values for the 35 new homes were 97% of the RMV Improvements values. This shows that while a building permit and RMV valuation may differ quite a bit for an individual home, on the whole they end up in balance.

However, the overall average RMV Improvements valuation for the 36 homes ($415,185) was 12% higher than the updated building permit valuation ($370,141). This appears to be due to the building permit valuation not reflecting differences in the quality of construction, as noted previously. When the four highest value homes are omitted (last four listings), the RMV Improvements valuation for the remaining 32 homes ($334,301) is only 1.1% higher than the updated building permit valuation ($330,788).

This indicates that the Assessor’s Office data are a more accurate reflection of home replacement/construction costs, since the RMV (real market value) incorporates the aforementioned quality factors described in the Department of Revenue appraisal guide.

Chinook Estates home values

With that in mind, we obtained a report from the Marion County Assessor’s Office for all properties in Chinook Estates, which the applicants’ representative testified is “the type of development we’d like to have.” Lots without houses were deleted from the report and summary statistics calculated. (Attachment 22)

The average Improvements RMV for the 114 Chinook Estates homes is $455,008. Adding on $34,000 for well, septic, driveway, utilities, and landscaping, the total average value of the improvements is $489,008. The average square footage is 3,814 and the average lot size is 3.8 acres, both close to the figures for recent new home construction in the three neighborhoods surrounding Ridge View Estates (3,834 square feet and 3.4 acres).

As noted above, the average appraised value for the newly constructed homes in the surrounding area, including $34,000 for infrastructure, is $448,446 – 9% under the overall Chinook Estates average value. In both cases, more homes are of Quality Class 5 than any other type (60/114 in Chinook Estates, 25/36 for new construction in the local area). From the reports we have prepared, for both the area surrounding Ridge View Estates and for Chinook Estates the average Improvements RMV value can be described as a “high end Class 5.”

This fits with the description of Class 5 houses in the Department of Revenue appraisal guide. These sorts of homes are what one would expect to be built in a quality south Salem hills development, such as Ridge View Estates was intended to be. From the guide:

Class 5 represents average quality homes built for speculation or on order by a custom builder. They reflect popular combinations of style, design, and functional utility with a convenient floor plan and are acceptable to a broad portion of the market.

Thus $489,008, the typical value of homes in Chinook Estates, is the cost of building a home that is at the high end of “average quality.” While this figure is far above the $170,000 construction cost cited in the vested rights application, the distance between them is due to the applicants’ new home cost being absurdly low rather than to $489,008 being unreasonably high. It is not.

The $498,008 figure includes the value of outbuildings, since these normally are part of the Improvements RMV. To obtain the value of Chinook Estates homes only, we requested a report from the Assessor’s Office that omitted the value of outbuildings from the Improvements RMV. (Attachment 23)

The average appraised value of Chinook Estates homes only is $433,556, showing that the average value of outbuildings is $21,452 ($455,008 minus $433,556). Adding on $34,000 for well, septic, driveway, utilities, and landscaping, the average “home alone” Chinook Estates value is $465,772.

Now that we have a valid estimate of the cost of constructing a home on the 43 Ridge View Estates lots – $489,008 to the claimants’ intended Chinook Estates quality standard (including outbuildings) or $465,772 to the Chinook Estates quality standard excluding outbuildings, we can estimate the total cost of the Ridge View Estates project.

The Chinook Estates figure is the preferred way of estimating the total project cost because it reflects the stated intention of the applicants for Ridge View Estates homes. Below we summarize this and alternative less desirable ways of arriving at a per home construction cost for the Ridge View Estates development.

(A) Constructed to the standard of Chinook Estates homes, including outbuildings: $498,008 per house

Based on Assessor’s Office data for the Improvements RMV for all lots in Chinook Estates with a home (114 houses), adding in average Assessor’s Office value for well, septic, driveway, utilities, and landscaping: $34,000.

(B) Constructed to the standard of Chinook Estates homes only, excluding outbuildings: $465,772 per house

Based on Assessor’s Office data for the Residential RMV (no outbuildings) for all lots in Chinook Estates with a home, adding in average Assessor’s Office value for well, septic, driveway, utilities, and landscaping: $34,000.

(C) Constructed to the standard of homes built in the neighborhoods adjoining Ridge View Estates from 1997 to the present: $448,446 per house

Based on Assessor’s Office data for the Improvements RMV for all lots in Spring Lake Estates, Twin Hills Estates, and the Stonecrest/Liberty area with a home built in 1997 or later (36 houses), adding in average Assessor’s Office value for well, septic, driveway, utilities, and landscaping: $34,000.

(D) Constructed to the standard of Class 5 homes built in all of Marion County on lots of 2 to 6 acres from 2005-07: $417,079 per house.

Based on Assessor’s Office data for the Residential RMV (Improvements RMV excluding outbuildings) for 58 newly constructed homes of Class 5 quality in the county, adding in average Assessor’s Office value for well, septic, driveway, utilities, and landscaping: $34,000.

(E) Constructed to the standard of homes built in all of Marion County on lots of 2 to 6 acres from 2005 – 2007: $386,634 per house

Based on Assessor’s Office data for the Residential RMV (Improvements RMV excluding outbuildings) for 135 newly constructed homes in the county, adding in average Assessor’s Office value for well, septic, driveway, utilities, and landscaping: $34,000.

(F) Constructed to the standard implied on Marion County building permit applications for houses built on a lots of 2 to 6 acres from 2006 to the present: $343,146 per house

Based on building permit data (146 applications), which, as noted previously, are calculated from a valuation table for an estimated cost per square foot building cost that does not consider differences in the quality of construction, adding in average Assessor’s Office value for well, septic, driveway, utilities, and landscaping: $34,000.

This range of home construction costs, beginning with the most reasonable and ending with the least reasonable, bears on the question of “overall cost of the project” discussed by the Oregon Court of Appeals in the 1979 Webber v. County of Clackamas decision. (Attachment 24) On page 3 of the decision, the Court said (beginning with a reference to a water system):

Here, plaintiffs invested approximately $110,000 between 1967 and 1973 to serve residential development of the 127 acres at half-acre density. Because plaintiffs intended to sell parcels of their property for development by others rather than construct the houses themselves, the record contains no estimate of the overall cost of the project. Consequently, we cannot determine the precise ratio of the cost of the water system to the total development cost. The difficulty of the so-called “ratio test” of Holmes is that it does not tell us which ratio is sufficiently great to justify a nonconforming use and which is not. Applying the ratio test here, we are able to say that construction of 250 houses is obviously a multimillion dollar proposition, and that the ratio of prior expenditures to the total cost of the project is far less favorable to a vested right than the 1:14 ratio in Holmes, where the court found a vested right based on the prior expenditures plus other factors which weighed in favor of the nonconforming use. The ratio test does not favor plaintiffs.

The aforementioned U.S. Census Bureau new home cost of construction index (Attachment 21) has the 1979 index value as 52.1 and the 2007 index value as 158.2. So the cost of construction has approximately tripled during this time period. A $360,000 home today would have cost approximately $120,000 to build in 1979. So the court correctly noted that the 250 homes would be a “multimillion dollar proposition” – likely at least $30,000,000, actually ($120,000 times 250).

Our point is that the Court of Appeals ruled “the ratio test does not favor plaintiffs” on the basis of a common sense observation that the very large cost of building 250 homes far outweighs the small amount expended on the project. In this Ridge View Estates Case we are able to determine a more precise estimate of the home construction cost, but the same principle applies: the applicants fail the ratio test no matter what reasonable estimate of the cost of home construction is used.

As shown above, we have six estimates of the average cost to construct a home on the Ridge View Estates development. Along with the applicants, we assume that the project consists of 43 home sites (this is the number used in the vested rights determination application). We further assume, most reasonably, that the cost of a well, septic system, driveway, utilities, and landscaping must be included in the home construction cost for each lot.

Attachment 25 is a map submitted by the applicants along with their request for septic site evaluations. It shows proposed well and house locations for each of 42 lots (the 43rd lot was not included). It should be noted that the proposed house locations have a footprint of 80’ by 60’, or 4800 square feet – a large home.

The claimants have submitted an application to the Water Resources Department for a community water system. However, we have learned that no action has been taken on the application. Because the property is located in a groundwater limited area, approval of a community water system would require an exception to the current permitted water uses. Thus it must be assumed that 43 individual wells would serve the 43 home sites.

As shown below, an adjustment has been made to avoid double-counting of the three wells and 42 septic site evaluations that have been completed on the property. This results in an adjusted cost of $20,991,734 to build the 43 subdivision homes and associated infrastructure for the homes.

The remainder of the total project cost, $2,034,656, reflects other expenses listed in the vested rights application (with a dollar difference, due to a minor error in the application). It should be emphasized that our use of this figure does not mean that we consider it to be accurate, nor that all of the expenditures reflected in this amount are valid vesting expenses. We simply are using it to come up with a total project cost for purposes of discussion – one purpose being to show that the total is so large as to make the ratio of expenditures incurred to the total cost of the project exceedingly small.

| |Cost per home |# of homes |$ Amount |

| | | | |

|Build subdivision homes and associated infrastructure (well,septic,driveway, utilities, |489,008 |43 |21,027,344 |

|landscaping) | | | |

|Adjustment for cost of three wells and 42 septic | | | |

|site evaluations in NSP bid ($21,250 + $14,360) | | |-35,610 |

|Adjusted cost of home building and home infrastructure | | |20,991,734 |

| | | | |

|North Santiam Paving bid | | |1,890,450 |

|Pacific Hydro-Geology Inc. services | | |17,236 |

|Legal expenses | | |72,019 |

|Application fees | | |6,005 |

|Permit and inspection fees | | |35,548 |

|Disqualification/annexation fee | | |13,398 |

|Total of preparatory work in application | | |2,034,656 |

| | | | |

|Total cost of project | | |23,026,390 |

Before examining the question of what valid vesting expenditures have been incurred, so that we can compare them with the total cost of the project (the “ratio test”), we turn to an overview of the work that has been done on the Ridge View Estates property.

Construction and preparatory work

Prior to November 28, 2007 no Ridge View Estates construction work had been conducted under a permit. The non-permitted work on the site from September 17 to September 21 initially was described as “pushing dirt around” by Marion County staff.

However, since the “pushing dirt” was taking place in areas designated as subdivision roads, delineated by survey markers, and actually was grading/excavation of the roads, soon Marion County agreed with the KOWS Committee that road construction was taking place without required permits from Marion County and DEQ. After being contacted by the Marion County legal counsel, Ridge View Estates stopped work and applied for a Major Construction Permit on September 24.

After the Major Construction Permit was approved on November 27, improvements to Liberty Road, the public road adjoining Ridge View Estates, were begun on November 28. These improvements consisted of widening the road with a strip of pavement approximately two feet wide and graveling the shoulder. Work was conducted from November 28-30 and December 4-5 (five days).

Road improvements generally are required by Marion County for any sort of property development along Liberty Road, including those uses allowed under Measure 49. The construction activity already completed brought the width of the road on one side up to new standards.

Marion County planning staff have confirmed that Liberty Road improvements almost certainly would be required for the Measure 49 use of three home sites. The nature of these improvements would be proportional to the impact on Liberty Road, but the county might have required the pavement widening and shoulder gravelling that has already occurred. So this construction is adaptable to the Measure 49 use, since any road improvements required for three home sites already have been completed by the property owners.

A short distance south of the Ridge View Estates property, in November 2007 a Spring Lake Estates resident , Patrick Shaw, received approval to partition his lot into two parcels. The Shaw lot adjoins Liberty and Lake Roads. The “Notice of Decision Partitioning Case No. 07-73” included this statement: (Attachment 26)

Liberty Road is a rural Minor Collector road that does not meet current road standards. If the development is approved, the applicant will be required to improve Lake Drive and Liberty Road along their frontage to county standards as directed by the Public Works Department. This is anticipated to include some vegetation clearing on Lake Drive and gravel shoulder construction on Liberty Road.

This shows, as noted above, that the Liberty Road improvement work conducted by the applicants is required of all new development along this public road, whether it be a 43 lot proposed subdivision or a single proposed lot from a partitioning.

Thus essentially no construction under a permit has taken place on the actual Ridge View Estates property that is related to the proposed Measure 37 use: a 43 lot subdivision. The only work that has occurred is either preparatory in nature (wells, septic test holes, brush clearing) and/or applicable to any kind of development of the property (improvements to Liberty Road). The sole possible exception is some minor brush/tree clearing and minimal bulldozing in an area close to the Liberty Road work.

Attachment 27 is an email message to us from Wayne White, who lives directly across Liberty Road from the center of the Ridge View Estates property. He confirms the observations we made ourselves of the work that took place between November 28 and December 5, 2007. Namely, that very little activity took place on the subdivision property itself, almost the sole purpose of the work being to make required improvements to Liberty Road, a county road.

In the “good faith” section of this submission we discuss in more detail the road construction work that was done without required permits (Major Construction Permit and DEQ 1200-C permit) from September 17-21. Clearly this work cannot be counted as a valid vesting expense.

The guidance from DLCD/DOJ on Measure 49 and vested rights states:

Any development that occurs without permits that are lawfully required will not be considered in determining whether the use has vested at common law. Grading, clearing, building and development permits must be in place before activity begins in order to be considered. Mason v. Mountain River Estates, Inc., 73 Ore. App. 334, 337-340 (1985)

Indeed, the Court of Appeals in Mason v. Mountain River Estates, 73 Or App 334, 698 P2d 529 held that expenses incurred toward use, where use had not received all required approvals, could not be counted toward determining existence of a vested right. Expenses incurred prior to approval may not be relevant. See SK Fin. SA v. La Plata County, 126 F3d 1272, 1278 10th Cir. 1997 (distinguishing Ecklund on the basis of expenditures made before versus after approval similar to Mason).

From the North Santiam Paving payment vouchers included in the application, it is impossible to determine how much was charged for the construction work that was undertaken without a permit. In the September 30, 2007 billing period, $28,100 was charged for “excavation and site grading.” However, this exact same amount also was charged on the October 31 and November 1 to December 5 vouchers, leading us to suspect that the road construction work done without a permit was billed for on three separate vouchers.

Since the applicants’ Major Construction Permit was not approved until November 27, all of these charges ($84,300) should be disallowed as vesting expenses. The offsite Liberty Road improvements are listed as a separate line item, and as noted above virtually all of the work done in the five days between the issuance of the Major Construction Permit and the effective date of Measure 49 was for the paving and shoulder work along Liberty.

As discussed in more detail in the “notice” section of this submission, the Liberty Road work took place after Measure 49 was approved by the voters on November 6, 2007. The Major Construction Permit was approved on November 27, 2007. Thus the applicants had not started permitted improvements on the property prior to the passage of Measure 49. The vested rights application itself points to the necessity of excluding the Liberty Road improvements ($58,760, as shown on the North Santiam Paving voucher) in addition to the other expenses on the voucher ($56,350) as a valid vesting expense:

When a developer received notice of the proposed change in law may be relevant under Holmes and Marion County Ordinance 1255 Section 6(3)(b). However, both Marion County Ordinance 1255 Section 6(3)(b) (C) and the Oregon Supreme Court in Holmes stated that notice of a proposed change was relevant if received “before starting his improvements.” Holmes, 265 Or. At 198

Yes, we agree. No Ridge View Estates construction work had been carried out under a permit prior to November 6, 2007. After that date, it wasn’t a question of a “proposed change in law.” Instead, the applicants were aware of an actual change in law, Measure 49.

Yet they rushed ahead with construction after the voters of Oregon had spoken, working right up to December 6, 2007 in an evident attempt to spend as much money as possible as quickly as possible solely for the purpose of buttressing their weak vesting claim – not because construction work needed to be completed that had already been started.

That said, we recognize that the hearings officer must make some decisions regarding what expenditures by the claimants are valid vesting expenses, and which are not. The common law is not always crystal clear in this area. Our Crag Law Center attorneys will be submitting their own legal analysis on this vested rights determination application. We want to emphasize that with regard to matters of law, the Crag Law Center submission trumps this Keep Our Water Safe/Friends of Marion County submission, since we are not attorneys (though we have a good layperson’s understanding of vesting common law).

For the purpose of calculating an initial ratio of expenditures to the total cost of the project, we have subtracted $199,410 from the applicants’ claimed expenditures of $498,707, leaving $299,297 ($84,300 for non-permitted road construction plus $115,110 for North Santiam Paving work after passage of Measure 49 equals $199,410). Since the $115,110 payment voucher from North Santiam Paving covers the period from 11/1/2007 to 12/05/07, the applicants may be able to claim a portion of that amount if they can prove that the work for which payment was made occurred between 11/1/07 and 11/6/07.

Since the total cost of development is $23,026,390, expenditures of $299,297 result in a ratio of 1.3% (1:77). This is far below the Holmes standard of 7.1% (1:14). Even if all of the applicants’ claimed expenditures are taken as valid vesting expenses (which we strongly dispute), the ratio of $498,707 to $23,026,390 is only 2.2% (1:46). Further, even if the lowest of the six home construction costs is used, $343,146, and all claimed expenditures are taken as valid, the ratio of $498,707 to $16,754,324 is only 3.0% (1:33). Hence, the vesting application fails this standard, even using unreasonable cost/expenditures estimates favorable to the applicants.

In fact, the failure could well be even greater than we have calculated, since we find little or no evidence in the vested rights application that the valid claimants (whoever they might be) have actually paid for the claimed expenditures: no cancelled checks, no other proof of payment. Our “whoever they might be” refers to this hearing being conducted in the absence of action by Marion County on the LUBA remand. We note that Greg Eide, an owner of the Ridge View Estates property who is not a valid claimant, seems to be a bookkeeper of sorts for the applicants. On several invoices a handwritten entry divides the total amount by four. This implies that the applicants are sharing the cost of the project equally.

Since only LeRoy Laack and the Rainones are entitled to develop a subdivision on the property, this raises the question of whether the development of Ridge View Estates can be funded by people who are not valid Measure 37 claimants. We answer: “no.”

What is unquestionable is the aforementioned absence of documentation that the applicants have paid the amount claimed: $498,706.52. Copies of several checks are in the application, both written by Saalfeld Griggs (for the community water system application and the hydrogeology review peer review). The affidavit of Mark Shipman says that the claimants have timely paid the law firm’s charges, and we have no reason to suspect that this is untrue.

However, documentation is lacking for the payment of other expenses related to the Ridge View Estates development. This needs to be forthcoming so the hearings officer can: (1) confirm that money actually has passed from the claimants to those performing the development work, and (2) that only those applicants with a valid Measure 37 waiver to develop the subdivision are paying the expenses.

Further, we couldn’t help but notice the scratch out on the “Ridge View Owners” approval line on the 11/1/07 – 12/05/07 contract payment voucher from North Santiam Paving. An entry in the day portion of the date has been altered to read “12/6/07” – the effective date of Measure 49. Since the contractor approval occurred on 12/5/07, logically the original day entry would have been after 12/6/07 (before that would have required action prior to the contractor approval).

This is another reason for the hearings officer to require the applicants to provide dated proofs of payment, since there is reason to suspect that this $115,100 invoice was received by the owners after December 6, 2007 – and thus obviously paid after that date. This would prevent the $115,100 from being considered a valid vesting expense, even if somehow it were to be determined that expenditures between 11/6/07 and 12/6/07 are legal.

Such is unlikely. The instructions for the Marion County “Measure 49 Vested Rights Determination Application” (Attachment 28) state that the applicant must provide:

Identification of expenditures made to develop the property, as it relates to the approved Measure 37 claim, and the dates of those expenditures, specifically those incurred prior to June 28, 2007 and November 7, 2007. [emphasis in original]

November 7, of course, is the day after Measure 49 was approved by the voters. This strongly suggests a presumption that expenditures made on or after November 7 cannot be considered a valid vesting expense (the boldface and underlining is a strong typographical statement).

The application (page 11) claims that $14,360 was expended on 42 septic site evaluations on April 2, 2007. However, the application also includes copies of emails from Bill Lulay that cast doubt on this assertion. An October 15 email from Lulay to Jessica Joye regarding “Ridgeview septic site evaluations” says:

We have 31 site evaluations ready to submit. All holes will be completed this afternoon…If the payment and applications do not get in today, it will be first thing tomorrow morning.

Then, a November 14 email from Lulay to Greg Eide and Mark Shipman says:

I spoke with the sanitarian. She hopes to be on site tomorrow. It will take numerous site visits over the next week, +, with the paper work after that.

November 14 is after the passage of Measure 49. It also is far after the April 2, 2007 date that the application says payment for the septic site evaluation inspections was made, which the October 15 email says will be submitted that day or the next day.

It is the job of the applicant to provide accurate documentation about when expenditures related to the Ridge View Estates development were made, for what purpose, and who made the payments. This has not been done. Neither the Keep Our Water Safe committee nor the Hearings Officer can make a valid assessment of either the claimed expenditures to date, or the claimed total cost of the project, without this information.

(2) The good faith of the developer/claimants

The Oregon Supreme Court has decided that vesting of a non-conforming use is dependent on, among other things, “the good faith of the landowner, whether or not he had notice of any proposed zoning or amendatory zoning before starting his improvements. (Holmes v. Clackamas County at 198).

Trying to beat the clock before a land use change such as Measure 49 is passed into law is not good faith. Courts in other states have analyzed what “good faith” means when landowners continue their development in the face of pending legislation. These cases have concluded that the attempt to outrace the effective date of pending land use legislation by commencing construction prior to the legislation’s pending adoption is considered “bad faith” and precludes acquiring a vested right to complete the project.

LeRoy Laack and his co-owners were well aware of Measure 49. They attended several of the Land Use Fairness Committee hearings that resulted in the legislation (HB 3540) that became Measure 49. Attachment 29 is a photo of LeRoy Laack and one of us, Brian, following a committee hearing.

Mr. Laack has been quoted in several newspaper stories (Attachment 8):

June 14, 2007. Salem Statesman Journal story, Subdivision is OK’d despite water concerns:

“Laack said they will start developing as soon as possible. Further waiting could mean changes in the very law that allowed them to propose a subdivision in the first place, Measure 37. Proposed changes to Measure 37 – agreed to this month by the Oregon legislature – will go to voters in November. Those changes include restricting development in areas with limited groundwater supplies. Laack and co-owners could end up being able to build only three homes instead of 42 if voters approve the legislature’s changes.”

October 10, 2007. Portland Oregonian story, Bulldozers roll to outrace vote:

“The Marion County developer, LeRoy Laack, late Tuesday was plain about his intentions: ‘Right,’ he said, ‘we want to get vested.’ But his project, the first to win approval in Marion County under Measure 37, remains stalled while he awaits permit approvals.”

November 9, 2007. Portland Oregonian story, Claims stall until Measure 49 sorted out:

“In Marion County, embattled developer LeRoy Laack told The Associated Press that he doesn’t know if he can ‘go forward or not.’ In October neighbors complained that Laack was working on his 43-lot subdivision without a permit and got the work temporarily stopped. Laack freely acknowledged he was rushing to get vested before the Nov. 6 election.” [Note: the neighbor complaints to Marion County about non-permitted road construction began in September and continued into October; the complaints to DEQ about ground clearing outside of what was allowed by the 1200-C permit were in October.]

November 29, 2007. Salem Statesman Journal story, Subdivision advances ahead of new restrictions:

“’Our intentions are to push ahead just as fast as we can within the context of the current law,’ Laack said. So we are still operating under Measure 37 until Dec. 6, when the other law is in effect. We will push as fast as weather or anything permits.’”

These quotations show that LeRoy Laack, the primary Measure 37 claimant, was well aware of the possibility that Measure 49 would be approved by the voters and rushed ahead with construction in an effort to “beat the clock” on legislative changes that would limit his development to three home sites.

As part of this rush to construction, Ridge View Estates began constructing roads on September 17 without required Marion County and DEQ permits. This is a significant sign of bad faith in another sense of the term: dishonesty.

Even though the September 27, 2007 Statesman Journal story said, “Loulay [Bill Lulay, of North Santiam Paving] said there was an agreement with Marion County to start work before getting the usual construction permit,” this contention is undermined by an email sent to us by Jim Sears, Marion County Public Works director (Attachment 30). Mr. Sears said:

The county did not have an agreement with the developer or their engineer to start construction without a permit. I cannot say why this was indicated in the Statesman’s article or the developers believed this was the case.

So Marion County had no agreement with Leroy Laack or Bill Lulay to start road construction without a permit. This written statement by the Public Works director is much more credible than unfounded assertions in the vested rights application that such an agreement existed.

We’re reminded of the classic 1980s Wendy’s commercial, “Where’s the beef?” Or rather in this instance, where’s the documentation? What we find in the application merely are assertions about supposed conversations between Lulay and Bryon Meadows, Public Works Engineering Supervisor. What we don’t find are any emails, letters, or other written authorizations for road construction work to commence without a Major Construction Permit.

On the other hand, we counted 18 email messages in the vested rights application from North Santiam Paving to Marion County staff about other subjects – mostly regarding review of the Major Construction Permit, and a few pertaining to the aforementioned septic site evaluations. Obviously Bill Lulay was fully capable of exchanging written information and agreements with Marion County staff on these issues, so we’re perplexed by the absence of similar documentation on a much more important issue: being able to start road construction without the customary Major Construction Permit.

All the application asserts is that Lulay “believed that no additional permits were necessary” (page 9 of application, page 1 of Affidavit of Bill Lulay). Well, people believe all kinds of things. This doesn’t make them legal, ethical, or correct. Also, we are perplexed by the mentions of “additional permits” in the application, and of “had received all of the necessary permits to start developing the site” in the affidavit. What are these? To our knowledge Ridge View Estates hadn’t received any permits from Marion County or DEQ prior to the start of the non-permitted road construction on September 17, 2007.

Perhaps Lulay and the applicants consider that a belief that permits weren’t necessary before starting work makes everything all right, conferring a mantle of good faith upon illegal activities. This seems to be the premise of the application’s supplemental legal memorandum, which says “The good faith of the claimant requires subjective honesty” (page 8) and “This standard can be satisfied even in cases where the Claimants or their agents acted carelessly so long as the Claimants did not deliberately act dishonestly.”

We must remember this argument the next time (if ever) we get a speeding ticket. Apparently all that is needed to make things right with the law when pulled over is to tell the officer, “I didn’t believe I was driving 90 miles an hour.”

Speed limit signs are the equivalent of county ordinances and final orders. Speedometers are akin to a knowledge of what was happening with construction on the Ridge View Estates property, which the applicants and Lulay certainly possessed. We observe that in his affidavit Lulay says “I have over 25 years of engineering experience working on subdivisions in Marion County,” and LeRoy Laack’s realtor web page says “I have over 50 years of experience in general real estate specializing in commercial and multi-family properties with several hundred millions in sales factoring in inflation.” (Attachment 31)

It’s reasonable to expect that these experienced professionals would have heard the adage, “get it in writing.” Yet statements in the application would have us accept that Lulay and Laack trusted that some comments supposedly made by Marion County staff (for which no corroboration exists) sufficed to negate the statement in the Board of Commissioners Final Order for the subdivision:

A Major Construction Permit is required before construction of roadway and drainage improvements may commence.

A thread of email messages that preceded the aforementioned assertion by Jim Sears that the county had no agreement to start work without a permit can be read in Attachment 30. It will be seen that while we have no evidence the applicants were told the road construction work could begin without a Major Construction Permit, we were told by county staff about efforts to allow the work to continue without a permit.

These efforts did not succeed, for very good reasons, which speaks to the desire of Marion County Public Works to assure that county ordinances and orders were enforced properly. Attachment 32 is the Public Works form for a “Major Construction Plan Check Pursuant to Marion County Ordinance 671.” At the bottom it reads in large bold-face type,

“A construction permit is required prior to the start of construction.”

Words used in Ordinance 671 (Attachment 33) to describe “start of construction” include “construct, reconstruct, repair, alter, grade, lay, install.” Testimony from a neighbor, Don Dean, who lives adjacent to the Ridge View Estates property and saw the non-permitted road construction work that was done from September 17-21 can be found in Attachment 34. He worked for the Oregon Highway Department for thirty years.

Dean points out that land clearing is conducted prior to the placement of survey stakes, since obviously clearing of vegetation will rip out any stakes. Yet the application erroneously asserts that land clearing was part of the construction activities that took place during this period. The subdivision roads were staked prior to the Caterpillars and other equipment coming onto the property. Other aspects of Dean’s testimony point to a clear and obvious conclusion: the applicants engaged in non-permitted road construction. The last paragraph of Dean’s letter is:

Considering the above information the only conclusion to be made is that Mr. Laack and the other owners were not just engaged in mowing and clearing but in major road construction and doing so without a major construction permit.

Two photographs of the Ridge View Estates road construction that were taken on September 18 and September 21, 2007 can be found in Attachment 44. The survey stakes mentioned by Don Dean are clearly visible (as they are in photographs included with the vested rights application). It is evident that both at the beginning of the five days during which construction activities were carried out (Tuesday, September 18) and at the end (Friday, September 21), the work was indeed road construction – not mowing and stripping/clearing as the application contends.

More accurately, non-permitted road construction. A September 27, 2007 front page Salem Statesman Journal story by reporter Beth Casper says: (Attachment 8)

The first Measure 37 claim to gain approval in Marion County broke ground last week – without the proper construction and erosion permits…Last week’s work moving dirt and leveling a road went on without the proper Marion County and Oregon Department of Environmental Quality permits.

Casper spoke with us, Bill Lulay, LeRoy Laack, and Public Works staff. Her professional journalistic conclusion: the work lacked necessary permits. As noted previously, this means that the cost of the September 17-21 construction activities cannot be considered a valid vesting expense. Also, this is one indication that the claimants proceeded with the development of Ridge View Estates in bad faith (we also will discuss other indications).

To return to the speeding analogy, the applicants are trying to absolve themselves of responsibility for their illegal actions by saying, in effect, that a guy in the back seat said, “Go ahead and drive as fast as you want. You don’t have to follow the speed limit.” (In this case, the requirement for a Major Construction Permit before construction of road improvements commences.)

Yet there is no evidence that this person, who supposedly was Byron Meadows, actually gave an authorization to start construction without a permit. Nor does the application offer any reason why Lulay and Laack should have considered that a verbal comment by a Marion County staff member carries more legal weight than county ordinances and the BOC Final Order.

It seems clear that the applicants were looking for some sort of excuse to start construction before fall rains and Measure 49 put an end to the road work. Their expectation likely was that Marion County somehow would agree to allowing the construction activities to continue, not realizing that the KOWS committee and other concerned neighbors would put strong pressure on the county to enforce its ordinances and final orders.

Understand: we are not implying that county staff were complicit in allowing the illegal construction work either to begin, or to continue. Rather, we are saying that the applicants were hoping they could cajole Marion County into bending rules on their behalf. Fortunately, this did not happen, which points to the integrity of Public Works employees and managers.

Mention must be made of a conversation we had with Greg Eide, one of the Ridge View Estates owners, at a south Salem coffeehouse after the illegal road construction had been stopped. The meeting was at Eide’s request. Near the end of it, one of us (Brian) asked Eide who at Marion County had authorized the construction. He refused to give a name, saying that he didn’t want to “get them in trouble.”

This struck us as strange. If there’s nothing wrong with what you’re trying to get someone to agree to, it isn’t possible for that person to get into trouble. It seemed to us at the time of the meeting with Eide, as it continues to seem now, that his comment is much more an indictment of the applicants and Bill Lulay, their representative, than of anyone at Marion County. That is, we consider that the effort to make an end run around Public Works permit requirements began (and also ended) with those seeking to develop the Ridge View Estates subdivision.

When these efforts were thwarted, an apparent desire for a cover-up of sorts led to Eide declining to tell us what happened. Again, when someone is making an honest effort to talk a public official into doing something legal, there’s no need to say “I don’t want to get them into trouble.” We submit that it was the applicants and their representative who were doing something wrong, not anyone at Marion County.

It appears that Bill Lulay himself recognizes that some (we say, all) of the road construction work conducted between September 17-21 lacked required permits. In his affidavit he says:

During my repeated contact with Marion County Public Works, I was told that no permits were necessary prior to conducting the construction activities that occurred on the site between September 17,2007 and September 19, 2007.

We ask, “What about September 20 and 21?” The same heavy equipment was being operated all five days, seemingly doing the same sorts of grading and excavating work. The statement above seems to be an admission that part of the work done that week didn’t require a permit and some of the work did. However, our contention is that all of the activity was for road improvements work, and this requires a Major Construction Permit.

It is possible that Lulay was told by county staff that general vegetation clearing that doesn’t change the natural contours of the land, or other non-road construction related work (“moving dirt”) didn’t require a permit. He then took this inch of a verbal comment and ran with it for a mile of illegal road construction, which equals: bad faith.

Regardless, the plain fact is that the applicants began road construction without the required Major Construction Permit and DEQ 1200-C permit. Just as a speeding ticket validly can be issued even if the driver believed he was going the posted limit, so are the applicants guilty of bad faith for not adhering to ordinances and regulations of which they were well aware.

Hence, the aforementioned $84,300 for excavation and grading work must be excluded as a vesting expense since it was conducted without required permits.

Now we turn to the matter of the required DEQ 1200-C permit, which also had not been issued when North Santiam Paving began the road construction work on September 17. Greg Eide, one of the property owners (but not a valid Measure 37 claimant), applied for the first 1200-C permit. Supposedly Bill Lulay never checked with Eide to see if the permit had been granted before he moved the North Santiam Paving heavy equipment onto the property and began tearing up the land – also without a Major Construction Permit.

We ask of Mr. Lulay: “Have you heard of this device called a telephone?” We agree with the statement in the application (page 9): “North Santiam also erred in not checking with the Claimants that the 1200-C permit had been received prior to beginning construction.”

The “also” refers to another error of Lulay which the vested rights application characterizes as innocent, but actually wasn’t. Attachment 35 consists of two complaints the KOWS committee filed with DEQ. The first, dated October 8, 2007, documents that aside from the fact the Ridge View Estates owners started construction work without the required 1200-C permit, before and after the permit was issued ground clearing on the property took place that exceeded the 4.6 acres for which the first permit was granted.

Thus this statement in the application is not correct:

Specifically, North Santiam erred in submitting the 1200-C permit mistakenly believing that only the work intended to be constructed during the fall of 2007 was necessary to be authorized. Essentially, North Santiam viewed the construction of Twin Hills Estates Road and Best View Road as the initial phase of construction. DEQ initially agreed, but they then changed their interpretation.

Actually, it is fair to say that DEQ changed their interpretation for this reason: the KOWS committee proved that ground clearing already had been conducted on the property that exceeded the 4.6 acres allowed by the first 1200-C permit. Our complaint included photos of ground clearing over the crest of the Twin Hills that had been carried out before the permit application. It also included evidence that additional clearing had taken place after the permit had been issued for acreage not described in the permit application. We said:

To summarize, all of this ground clearing activity on the crest and other side of the hill occurred without a 1200-C permit. The clearing which took place after road construction was stopped also was not mentioned in the 1200-C permit. In aggregate, we believe the total ground that has been disturbed is over five acres, and the property owners should not be allowed to skirt the 1200-C permit requirements by only applying for a permit that describes a portion of the ground clearing that has taken place.

So DEQ’s revocation of the Ridge View Estates 1200-C permit was not due to a “changed interpretation.” Rather, it was a response to our complaints that the property owners and North Santiam Paving had cleared ground in excess of the 4.6 acres allowed by the permit. We told DEQ:

Thus the current permit should be revoked and the property owners should be required to go through the above-mentioned public review process for a permit involving five acres or more of disturbed ground.

This is what happened. Our November 13, 2007 letter described our concerns about the second Ridge View Estates 1200-C application. It was approved after North Santiam Paving applied for an additional ten acres of disturbed area and described additional erosion control practices.

Thus the DEQ responded by stopping work after receiving documented evidence of additional ground clearing/disturbing activities both before and after the 1200-C permit was granted. This work put the disturbed ground considerably over five acres – well beyond the representations the claimants’ representative made in the application to DEQ. As a result, DEQ staff rescinded the permit and required a 30-day public comment period. The DEQ specifically required two weeks more than usual and noted that the first permit application actually was “part of [a] common plan of development that will exceed 5 acres of disturbance.” (Attachment 36)

A pattern is evident here. With both the Major Construction Permit and 1200-C permit, the applicants and North Santiam Paving tried to cut legal/regulatory corners in a rush to construction that was being spurred on by the likely passage of Measure 49. In each instance, the vigilance of concerned neighbors and the integrity of government bodies prevented the applicants from succeeding in their attempt to speed their construction by shading the truth.

Such is bad faith.

Further evidence of this pattern is seen in the October 5, 2007 letter to Jim Sears, Public Works director, from the applicants’ attorney, Mark Shipman. Even though Ridge View Estates had been caught engaging in non-permitted road construction and forced to apply for a Major Construction Permit, Shipman wanted Marion County to give the permit application special favor that would speedily approve it.

Anticipating that this might happen, on September 21, 2007 we presciently wrote Bill Worchester of Marion County Public Works (Attachment 37), saying:

Thanks for moving to require the Laack subdivision to get a Major Construction Permit, as the final order requires…We can envision that Laack’s attorney, Mark Shipman, might request an expedited review. Again, given that the subdivision has already skirted Marion County rules and the final order, we would strongly object to “fast-tracking” the Major Construction Permit process.

They don’t deserve to be moved ahead of other permit applicants…We hope to continue interacting with Marion County in a friendly cooperative fashion, but any sort of fast-tracking of the Major Construction Permit would require us to bring this to the attention of our attorney, J.D. Brown.

We can’t say whether Public Works was influenced by our letter. Regardless, the Ridge View Estates Major Construction Permit application was appropriately put at the end of the line for review, and eventually the permit was approved under the normal review process.

The vested rights application says (page 9):

Without debating whether a Major Construction Permit was in fact necessary for the preliminary construction work, the evidence clearly shows that the Claimants and North Santiam had an honest belief that their conduct was lawful.

Again, this is not what the evidence shows. How is it possible to prove the honesty of a belief? No one can know what was going through the minds of the owners and Bill Lulay when road construction was started without required permits. We do, however, know that the applicants and their representative had a great deal of experience in real estate and subdivision construction. A reasonable person would expect them to know what was legally required of them.

Not surprisingly, we also strenuously disagree with this following statement in the application:

The Claimants honest actions are in stark contrast to those of the opposition who unnecessarily delayed the subdivision and permit process at every possible stage. The opponents appealed the 1200c permit which was nevertheless granted with minor modifications and the opponents appealed the subdivision approval, which was affirmed on all but one technical assignment of error, i.e. the superfluous names on the application. These actions have caused unnecessary delay and have been almost entirely meritless.

“Meritless?” We beg to differ. Though the claimants obviously are the ones who have to demonstrate their good faith in the vested rights determination review process, not the Keep Our Water Safe committee, we are pleased to offer this summary of our central objections to the subdivision, showing the disposition of each.

(A) Water in this groundwater restricted area is limited. Development of a 43 lot subdivision poses a threat to the springs that feed Spring Lake and to neighboring wells.

The applicants agreed to submit a Hydrogeology Review of the area for peer review (this also was required by the Planning Commission). The independent peer reviewers under contract with Marion County, AMEC Earth & Environmental, failed the Hydrogeology Review, concluding that there is insufficient evidence of groundwater availability. Marion County then notified the applicants that an extensive Hydrogeologic Study of the area must be conducted before further development of the subdivision could take place. The Board of Commissioners ignored the AMEC water experts and approved the subdivision anyway on a 2-1 vote. Our objection was vindicated.

(B) Road construction and ground clearing commenced illegally, lacking required permits.

Following our complaints to Marion County Code Enforcement, Public Works, and the Board of Commissioners, county legal counsel contacted the applicants’ attorney and work stopped on September 21. On September 24 the applicants applied for a Major Construction Permit, as they should have before starting work. There is no dispute that a DEQ 1200-C permit was required before starting road construction; the applicants didn’t have one. When we pointed out to DEQ that disturbed ground on the property exceeded the 4.6 acres allowed by the first 1200-

C permit, it was rescinded and the applicants were forced to apply for a second permit that allowed 14.6 acres of disturbed ground. Our objection was vindicated.

(C) Approval of the subdivision by the Marion County Board of Commissioners was legally flawed.

The Keep Our Water Safe committee appealed BOC order 07-373 that approved the Ridge View Estates subdivision to the Land Use Board of Appeals. LUBA agreed with one of our Assignments of Error, issuing a remand back to Marion County on the issue of which of the property owners are valid Measure 37 claimants, and which are not. Our objection was vindicated.

(3) Whether the developer had notice of any proposed zoning or amendatory zoning before starting the improvements

Evidence that Leroy Laack and other Ridge View Estates owners were well aware of the impending potential passage of Measure 49 already has been presented. And obviously after Measure 49 was approved by the voters on November 6, 2007, the “proposed” change to Oregon’s land use laws was known to be a certainty.

This is why development expenditures incurred after November 6 should not be considered as valid vesting expenses. Even though Measure 49 says a Measure 37 claimant will be allowed to continue their development if they were vested as of December 6, 2007, this does not mean that work done on the project after the passage of Measure 49 (November 6, 2007) counts as a valid vesting expense.

That is, Measure 49 states that the common law of vesting shall be the means by which a vested rights determination is made. Measure 49 itself makes no reference to vesting criteria. These are found in the common law, not in Measure 49. So the applicants’ argument that expenditures made up to December 6 are valid vesting expenses finds no support in Measure 49 itself.

The application considers that the Ridge View Estates improvements were started prior to April 30, 2007. However, expenditures made during this period were preparatory in nature. The only improvements made under a properly approved construction permit were made between November 28 and December 5 (and virtually all of these were offsite improvements to Liberty Road).

So this vesting factor earns a “fail,” given that the applicants knew that a change in Oregon’s land use laws had been approved by the voters three weeks prior to starting work under a Major Construction permit.

(4) The type of expenditures, i.e., whether the expenditures have any relation to the completed project or could apply to other various uses of the land

Previously we referred to Webber v. County of Clackamas, a Court of Appeals case, regarding its applicability to the “ratio test” factor. That case also speaks to this factor, which can be succinctly described as the “adaptability” factor.

Webber, as has already been noted, said that when it comes to conforming vs. non-conforming uses, the conforming use is favored:

Generally, nonconforming uses are not favored because, by definition, they detract from the effectiveness of comprehensive land use regulation.

Webber also said that the plaintiffs needed to show “that the water system is incompatible with alternative uses,” quoting from a statement by the defendants in their brief:

It may be that the plaintiffs would realize the largest profit from their well and their property if allowed to develop the land under the old, more intensive zoning, but that is not the issue here. The issue is whether the development of the water system has committed the plaintiffs to only one use of the land, or whether there are reasonable alternatives. The issue is whether the water system ‘could apply to various other uses of the land.’ Eklund v. Clackamas County, supra. Clearly it could.

The applicants cite another Court of Appeals case, Cook, in support of their contention that all they need to show is that expenditures are “more consistent with the proposed use than the permitted use of the land.” We would observe that in the Ridge View Estates case the proposed use and the permitted use are similar in this respect: the permitted Measure 49 use is for three home sites, while the proposed use is for 43 home sites.

This distinguishes Ridge View Estates from Cook, in that the issue in the latter case was not whether few versus many mobile homes could be established on the property. Here, there is a much closer connection between the permitted Measure 49 use and the proposed use, since each use is residential (the Measure 49 use allows three home sites on six acres of the property, with the remaining 211 acres remaining as a farm use, so an alternative residential use and an alternative farm use both must be considered in evaluating whether the applicants have met this vesting factor).

Also, in Cook the Court of Appeals said that if Webber is taken to mean that only development work irrevocably committed to the proposed use is a valid vesting expense, this goes too far, because “the use can always be reversed and the property put to a different use if cost is not considered.” This is true. A skyscraper can revert back to bare land, and a garden grown on the city lot, if enough money is spent on demolition and renovation of the property.

The goal in vesting common law is to find a proper balance between conforming and non-conforming uses, as noted previously. If a vested rights applicant can’t ever demonstrate that this “adaptability” factor is passed in their particular case, then the scales of justice tilt too far toward favoring the conforming use.

However, the opposite also is true. We find it difficult to believe that in 1981, just two years after Webber, the Court of Appeals had swung the complete opposite way as the applicants seem to contend. Namely, that a “pass” on this factor must be granted merely if development work is more consistent with the non-conforming use than with the conforming use.

This would make the adaptability factor meaningless, as it is akin to saying “it is what it is.” Namely, work done for a non-conforming use by definition is work done for a non-conforming use. Logically what was done must be more akin to what was done than to anything else, no matter how similar.

Such an interpretation is at odds with the preference for conforming over non-conforming uses noted in Webber. We see no sign that the court weakened that preference in Cook. So it must be assumed that under some circumstances, work needed to establish a conforming use is akin enough to work needed to establish a non-conforming use (though not identical) to warrant a ruling that the non-conforming use is adaptable to the conforming use.

Our contention is that such is the case here, since both the conforming and non-conforming uses are for the placement of single-family homes on the land. The vested rights determination application errs in assuming that the only other use of the land, aside from a 43 lot subdivision, is an EFU use.

As previously noted, the applicants have chosen to pursue the “Express” use of the Ridge View Estates property under the DLCD Measure 49 election process. Meaning, they have stated a desire for three home sites on two acre lots located on the least productive farmland, with the remainder of the 211 acres being available for use and/or sale as farmland – most likely a vineyard.

So the Measure 49 use obviously is an alternative use of the land, since the applicants have chosen it themselves as an option to the subdivision.

Regarding the expenditures for preparatory work done so far on the Ridge View Estates project, three wells have been drilled on the property: one to 210 feet, two to 340 feet (Attachment 38). The wells were completed on March 29, October 15, and October 16, 2007. The three wells are centrally located, so are nicely positioned to supply water to the three home sites allowed under Measure 49, no matter where the homes are built.

Septic test holes also have been dug and evaluated, but as noted previously it is unclear whether this is an allowable vesting expense. Regardless, three of the test holes are on lots that would be home sites under the conforming Measure 49 use.

Brush/ground clearing is the only other legally permitted activity that has taken place on the property, though most of this activity took place without a required permit. The DEQ obtained evidence that there were several instances of ground clearing that had occurred without the required 1200-C permit. In one instance (prior to the issuance of the first 1200-C permit) a track was roughed out in the Neil Creek drainage area, along with other clearing, apparently as part of a firewood collection effort. In another instance (after issuance of the first 1200-C permit) machinery cleared ground in an area immediately adjacent to Spring Lake Estates that wasn’t described in the permit.

The cost of the legally permitted brush/ground clearing is minimal. Further it is adaptable to the farm use that would take place on the 211 acres allocated for this activity under the Measure 49 conforming use. One to two acres of brush have been cleared on the property in the area of subdivision lot 24. Because the soils in this area are high-value, this clearing work adds to the acreage available for farming under Measure 49.

The non-permitted road construction that took place in September 2007 is not a valid vesting expenditure, so it is irrelevant whether it can be adapted to an alternative use. That said, we mention the possibility that some of the road grading and excavating could be adapted to driveways leading to the three Measure 49 home sites. The three home sites allowed under Measure 49 likely would be located on the north side of the property where the least valuable soil is. The “Twin Hills” and “Rainone” street grading leads to this section of the property.

Photos taken recently of the property (Attachment 39) show that the illegal road construction has not markedly altered the land. These roughed-out roads are still bare earth, so the ground can be re-graded to fit a desired farm use. Someone pursuing a farm use would have little difficulty restoring the contours to a form suitable for, say, a vineyard.

As noted above, the widening of Liberty Road that took place from November 28 to December 5, 2007 was required because any sort of new development along this “minor collector” must bring the road up to current standards. Thus the work is completely adaptable to the Measure 49 use, since road improvements are required for a three-home development, just as improvements are required for a 43-home or 1-home development (as shown by our previous mention of the Shaw partitioning).

Thus no significant construction or other work has taken place on the Ridgeview Estates property that is incapable of being adapted to the uses allowed under Measure 49: three homes on six acres and farming on the other 211 acres.

The application (page 12) erroneously states that “If the county does not finding [sic] the Claimants have vested their rights, the county will essentially destroy the value $443,664 worth of goods and services.”

It’s unclear how the $443,664 figure was arrived at, since the application asserts that the total expenditures for the project have been $498,706.52. Leaving that question aside (along with the aforementioned lack of evidence that claimed expenditures have actually been paid by valid Measure 37 claimants), it is ludicrous to assert that if the applicants are found not to be vested, the money they have spent will have been destroyed.

First, the three 2-acre home sites to which the applicants will be entitled under Measure 49 have a value of at least $600,000 and probably considerably more. LeRoy Laack’s Measure 37 claim assumed that 2 to 3.5 acre lots could be sold for an average of $225,000, and prices of bare land have risen substantially in the past few years, according to appraiser Brian Beebe of the Assessor’s Office.

Land RMV values for five 1.9 – 2.1 acre lots in Spring Lake Estates, just south of Ridge View Estates, average $229,890. Subtracting an estimated $34,000 for the value of well, septic, driveway, utilities, and landscaping included in the Land RMV, the bare land value becomes $195,890. The three home sites permitted by Measure 49 probably would have a higher value, given the lay of the Ridge View Estates land.

So the Measure 49 use alone will enable the Ridge View Estates owners to recoup all that has been expended on the subdivision development, and then some. The remainder of the property, 211 acres, could then be sold for a farm use.

The vested rights application states (page 13) that “the location of the Site makes it generally unsuitable for commercial farm operations. The Claimants have actively marketed the property to tenants, but no farmers are interested in the property.” Several letters are included with the application that supposedly prove this. However, the applicants did not include a June 10, 1999 letter from LeRoy Laack to the Marion County Commissioners that included correspondence from a soil scientist, Robert McDole. (Attachment 40) McDole said:

As a soil scientist I am familiar with the “red hills soil” of this area and know that it is not a productive agricultural soil. It is suited for high return cash crops like orchards and vineyards (if the price and market are good) or production of grass, but not very productive for other crops.

Additionally, testimony before the Planning Commission from Peter Dinsdale, a local farmer, further undermines the applicants’ contention that this EFU land is unfarmable, and no farmers have expressed an interest in using it. At the January 2, 2007 hearing on the Ridge View Estates subdivision application, Dinsdale began by saying this (transcript prepared by Tim Jaskoski from a tape of the hearing):

Farms adjacent to Laack property. Approx. 250 acres, about 150 acres a mile down Liberty road. A total of about 40 acres of farm ground and about 550 acres of ground. I first started farming this in the early 90s. When my brother-in-law bought those two properties, I rented the properties from him, paid him $80/acre for the farm ground for ten years through 2005.

Still farming, still have it leased. Went through one rotation of Christmas trees, Doug fir, Grand fir and Noble fir. I would unequivocally state that from a standpoint of farmability this is some of the best ground you can grow Christmas trees on in the valley. It has elevation, it’s up off the valley floor, it’s got some slope so that especially for Noble fir that need cooler afternoons, it has that protection, especially with an east or north slope.

These Nekia and Jory soils are well drained, they’re really quite extraordinary for growing many different things. I farm a good deal of ground down in the valley bottom, valley floor, along rivers, the Willamette, Yamhill and so I take quite an interest in soils. Don’t want to classify myself as an expert, but I have a lot of practical experience. These soils are very good farms for farming. The limitation on the hills are primarily slope. This Twin Hills farm does not have extreme hills; it has lesser slopes in general than the ground that I have been farming for the past twelve years. The classification for Nekia refers to slope.

Of interest, especially after reading the article in the paper was the statement by the applicant that he couldn’t find anyone to farm the ground. I found that . . . it elicited some sounds, actually some snorts I would call it because I had approached him three different times over the last ten to twelve years, and I don’t have precise dates because I don’t remember exactly when it was, but I know when I first planted these two farms starting in ’95 I approached the owners of this ground and asked them if I could rent their ground also.

I subsequently did that two more times over the next ten years. Each time the answer was the same: No. We are not interested in renting it, no we do not want trees on this ground. We want to be able to develop it whenever we get the chance to do so. And I think Mr. Rawlins earlier in his testimony corroborated that when he said they bought it with the idea to develop it. That was originally their intent. They had no interest, as far as I can tell, in having anybody farming it because I did approach them with a cash offer for rent three times and was rebuffed. So I was incensed when I read that. I thought that was disingenuous to say the least, but an outright lie, really.

Then, in response to a question from Planning Commission member Roger Kaye about the valuation of the Ridge View Estates property for farm use, Dinsdale said:

Oh I’m more than happy to comment on it, take my view for what they’re worth, but I guess I put a little perspective on it. I’ve got another parcel that’s over 600 acres out SW of Monmouth. It’s all in Christmas trees, and I’m in the process of selling it to a winery, people that will plant wine grapes and put a vineyard out there, and I frankly have a hard time believing the numbers that I am seeing, the amount of money that they are willing to pay, and the people that I talked to, they are very credible people, and I don’t need to go into any more details, they are very credible, they have the money . . . they were really excited when they thought I was talking about some of my south Salem property. This Jory/Nekia complex for soils is about as good as it gets for wine grapes, as far as I know. I don’t want to pass myself off as an expert on wine; I’m not at all. But I’m talking values in excess of $5,000 an acre, up to ten or twelve or fifteen thousand an acre.

Thus contrary to the applicants’ assertion that this property is useless for farming and nobody is interested in it for that use, a knowledgeable farmer who works acreages immediately north of Ridge View Estates (Blue Heron Farms) has testified that these 217 acres are “as good as it gets for wine grapes” and could be worth as much as $10,000 to $15,000 an acre.

This further undermines the statement in the application that if the claimants aren’t found to be vested, Marion County will essentially destroy $443,664 worth of goods and services. Well, only if you don’t count upwards of $600,000 for selling the three home sites on a total of six acres allowed under Measure 49, and potentially upwards of $2,110,000 (remaining 211 acres times $10,000 an acre) for selling the rest of the property as a vineyard. Obviously $2,710,000 is much more than $443,664.

(5) The nature, location, and ultimate cost of the project

Under this vesting factor we would like to emphasize that the Ridge View Estates property is in a groundwater limited area, and the applicants have failed to demonstrate that the water needs of 43 additional homes would not adversely affect the wells of surrounding home owners and the springs that feed Spring Lake.

As noted previously, the Hydrogeology Review prepared by the applicants (both voluntarily and as required by the Planning Commission) received a “fail” from the AMEC Earth & Environmental peer reviewer under contract with Marion County to conduct an independent assessment of the Hydrogeology Review.

Yet the applicants continued to press on with the project, even though they had testified before the Planning Commission that they would submit their Hydrogeology Review to peer review. These are excerpts from the minutes of the December 19, 2006 and January 2, 2007 Planning Commission meetings (Attachment 11).

Ms. Kupillas [applicants’ hydrogeologist] then explained the hydro review she is working on and that the Marion County peer reviewer should review her work and make the decision if a hydro study is needed.

Applicant Duane Rawlins testified he was originally going to develop 80 lots but reduced the number based on the hydrogeologic information and is not opposed to peer review of their pending hydro review.

Bill Lulay, applicants’ representative, testified the development is designed to coincide with the location of available water. He added they propose to include a hydro review with a third party reviewer, and the county could include the opposition’s hydro expert to review it at his cost.

Then, on April 25, 2007 the applicants’ attorney, Mark Shipman, sent a letter to the Marion County Board of Commissioners that said:

Furthermore, if the Board continues to have questions or concerns regarding the sufficiency of the Review, Applicants urge the Board to rely on the advice of the County’s Periodic [actually, “Peer”] Reviewer.

All this goes to show the bad faith of the applicants and their representatives in another sense from that already discussed. Namely, that commitments to respect the county’s peer review process vanished when the peer reviewer concluded that the applicants’ Hydrogeology Review did not show that there is adequate water for the subdivision.

This uncaring attitude toward the neighbors of Ridge View Estates who have demonstrably valid concerns that the subdivision will cause their wells to go dry, along with the springs which feed Spring Lake, reflects the aforementioned “rush to construction” regardless of legal or ethical standards.

(6) Whether the actions rise beyond mere preparation

In short, clearly not. As has been noted in this submission, no significant work has taken place on the Ridge View Estates property under a permit. All of the improvements to Liberty Road were off-site, and could apply to another use of the land (notably, the Measure 49 use of three home sites).

Three wells have been drilled, which also are fully adaptable to the Measure 49 use. The septic site evaluations were a minimal expense in comparison to the total cost of the project, and also were preparatory in nature. The road construction grading and excavating occurred without a required permit, so cannot count toward vesting. Most brush and ground clearing also was done outside of the 1200-C permit requirements, as evidenced by DEQ’s revocation of the first Ridge View Estates permit.

We have shared some photos of the property taken last weekend. (Attachment 39) They show land that looks nothing like a subdivision. This is because almost no actions have occurred on the property that pertain to a subdivision. Virtually all of the work has been preparatory in nature.

Hopefully the hearings officer will choose to drive out Liberty Road to the property. You are most welcome to park in Wayne White’s driveway (directly across from the mail box on the Ridge View Estates side of the road that sits almost directly in front of the illegal roughed-out road snaking up the middle of the Twin Hills). If the White’s come out to greet you, tell them that the Keep Our Water Safe committee extended an invitation.

What you will see are beautiful rolling hills, with little sign of subdivision construction. Grass is re-growing on much of the disturbed ground. Piles of topsoil await being spread back on the ground by a vineyard owner, or other farmer of the property. A naïve passer-by would not think, “here is the beginning of a 43-lot subdivision.”

Rather, what is apparent is this: some illegal grading; a narrow strip of asphalt on Liberty Road; some barely visible piles of dirt from septic test holes. And that’s it. This reflects the fact that the applicants have made minimal progress on the subdivision, having acquired their Major Construction Permit just ten days before Measure 49 went into effect (and three weeks after Oregon voters passed Measure 49, saying “we don’t want subdivisions on high-value farmland or groundwater restricted land”).

Conclusion

The ratio test shows that only 1% to 2% of the total cost of development has been expended (and probably much less). The applicants did not show good faith, having proceeded without required permits and continuing work after the passage of Measure 49. Almost all of the physical improvements are adaptable to uses allowed under Measure 49. Work on the property has not proceeded beyond mere preparation.

The claimant has not vested. The application for vested rights should be denied.

Thank you for your kind attention to this matter.

Sincerely,

Brian Hines

for the Keep Our Water Safe committee, Friends of Marion County, and personally

Laurel Hines

for the Keep Our Water Safe committee, Friends of Marion County, and personally

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