Oregon’s Land Use and Conservation Development Commission Issues Final Enforcement Order Against the City of Corvallis

March 24, 2017

The tension around whether clear and objective standards must apply to a proposed residential development gripped the City of Corvallis and one developer in a multi-year legal battle at the Oregon Land Use Board of Appeals (“LUBA”) that left the developer in a cycle of remands about how the city would apply its standards. Fed up with the cycle, the developer took its case to the state agency, the Land Conservation and Development Commission (“LCDC”) that under a 2015 law is tasked with determining whether a city is in compliance with the state’s needed housing statutes.

In December 2016, the LCDC concluded good cause existed to initiate an enforcement proceeding against the City of Corvallis. It noticed a contested case hearing to answer two questions that arose out of an attempt to develop the remaining 223-acre vacant property (commonly known as the Timberhill property, which in 1969 was about 800 acres in total) with residential use:

(1) whether the needed housing statute applies to City provisions for lands on the residential buildable lands inventory that are subject to Planned Development regulations, and if so, whether those provisions comply with Oregon’s needed housing statute (ORS 197.307); and

(2) whether the City’s clear and objective standards related to Hillside Development are possible to satisfy.

Former LUBA referee, John Bagg, served as the hearings officer and made a recommendation to issue an enforcement order against the City of Corvallis. On March 21, 2017, LCDC issued a final order, slightly modifying the recommendation but finding that development must be reviewed under clear and objective development criteria (the “Enforcement Order” available here). The following summary focuses on the analysis of the first question reviewed in the Enforcement Order.

The parties to the Enforcement Order included the developer and property owner, GPA1, LLC, the Oregon Home Builders Association and limited party participation by 1000 Friends of Oregon (“1000 Friends”) and Northwest Alliance of Corvallis. This case finds the Oregon Home Builders Association and 1000 Friends on the same side of the fence, as 1000 Friends has a focused agenda on land use planning for needed housing inside urban growth boundaries. The City of Corvallis was the responding party, and Northwest Alliance of Corvallis, the local neighborhood group, joined as a limited party on the city’s side.

The Timberhill property is zoned for residential development and subject to the city’s Planned Development overlay zone. An overlay zone has been applicable to the property since the late 1960s. The developer, who purchased the site in 2012, had determined it would develop the property with housing approved under clear and objective standards, but faced opposition from the city which was committed to review any development proposal under the discretionary standards of the Planned Development overlay.

Buildable Lands Inventory

These diametrically opposed views led to much disagreement between the property owner and the city. Ultimately, when the developer moved forward with a development proposal, the city determined that based on the requirements of the Planned Development overlay, it would review the development under discretionary development criteria instead of the “clear and objective” development criteria otherwise applicable to lands within the Buildable Lands Inventory (“BLI”). The BLI identifies land available for residential housing (land “needed” for housing) over a 20 year planning period. The city’s comprehensive plan explicitly states that the BLI will implement the plan’s housing policies and incorporated the BLI as part of the plan.

However, the city argued that it could not find a copy of its BLI, but that based on its draft 2016 Urbanization Study that is part of the city’s pending revision to its BLI, the city has a surplus of buildable residential land. With the surplus, the city concluded that the property is not necessary to meet its housing needs for the applicable 20 year planning period. Going further, the city also said that it was legally constrained by the Planned Development overlay to apply anything but those discretionary development standards applicable to the overlay.

LCDC did not give the city the benefit of the doubt because it found that while the city’s records may not be complete, the City of Corvallis-Benton Community Library contained a complete copy of the 1998 BLI. Based on the availability of the maps and the reference contained in the city’s comprehensive plan, the Commission rejected the city’s disavowal of the BLI’s applicability. The Commission concluded that the Timberhill property was identified on the BLI as residential land and subject to statutory requirements applicable to “needed” lands within the city’s urban growth boundary.

State Requirements to Plan for Needed Housing

Oregon’s Statewide Land Use Planning Goal 10 requires local jurisdictions to provide for the housing needs of the citizens of the state. Goal 10 requires a BLI for residential use, and Statewide Land Use Planning Goal 2 requires that it be included as part of the comprehensive plan.

ORS 197.307 addresses what is to be done with “buildable land.” Subsection (1) of the statute declares the availability of “affordable, decent, safe and sanitary housing opportunities for persons of lower, middle and fixed income … a matter of statewide concern.” ORS 197.307(3) provides that when a need has been shown for housing within an urban growth boundary, needed housing “shall be permitted in one or more zoning districts or in zones described by some comprehensive plans as overlay zones with sufficient buildable land to satisfy that need.”

With LCDC’s conclusion that the Timberhill property was in fact needed housing land by virtue of the inclusion of the property in the 1998 BLI, one would think that the clear and objective standards requirements would apply directly. However, LCDC had to consider the city’s argument that the Planned Development overlay constrained its ability to act.

Planned Development Overlay

The city argued that the Planned Development overlay effectively took land out of the category of buildable land need for housing, making it exempt from clear and objective standards. LCDC rejected this assertion because local land use policies governing the development of land do not control whether land falls within the state definition of buildable lands. Rather, the Commission found that only state law identifies exceptions to the definition of “buildable land,” and a local Planned Development overlay designation is not consistent with any of those exceptions.

As stated above, the Timberhill property is about 800 acres, and the subject controversy is about an undeveloped 223-acre portion. The previous development of the property had applied, at the then-owner’s request, the Planned Development standards. The city, in a secondary argument, asserted that the use of the Planned Development standards for a portion of the property in the past meant that the same standards must be applied to the entire 800 acres.

LCDC once again struck down this claim because Oregon’s statutory mandate for clear and objective standards allows an applicant to opt-out of such standards, but does not extend the decision to “opt-out” to local governments. LCDC recognized that current statutes regarding clear and objective standards may pose difficulties for local governments reviewing large, discretionary multi-phased “planned development” applications, but concluded

“[s]uch local governments should ensure that later phases of such applications comply with the intent of the original approval through available mechanisms such as conditions of approval, development agreements, or other contractual measures.”

In other words, good luck to cities figuring out how to carefully draft conditions of approval that do not turn into exercises of discretion.

LCDC’s Order

Because the Commission found the subject property to be in the acknowledged 1998 BLI, it required the City of Corvallis to accept and grant the developer’s application to remove the Planned Development overlay from the property and otherwise review the application for development under clear and objective standards.

This process put the new 2015 legislation to a test, and LCDC showed it has a stake and a role to play in ensuring that the requirement for clear and objective standards are offered for developments involving needed housing identified on a local jurisdiction’s BLI. This author does not expect rampant enforcement efforts like the one in Corvallis, but there may be one or two other cities out there that could be subject to similar action. However, LCDC’s shot across the bow here might make those cities look for solutions and avoid state action.

The Commission’s order in this matter is subject to potential appeal by the City within 60 days.