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HomeMy WebLinkAboutItem 4: PH on Lane Plywood Measure 37 Claim ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Public Hearing: Lane Plywood Measure 37 Claim for Compensation (M37 05-1) Meeting Date: June 12, 2006 Agenda Item Number: 4 Department: Planning and Development Staff Contact: Lydia McKinney www.eugene-or.gov Contact Telephone Number: 682-5485 ISSUE STATEMENT The Eugene City Council is scheduled to hold a public hearing on June 12, 2006, regarding a Measure 37 claim submitted by Lane Plywood for compensation for the alleged reduction in fair market value to a number of lots located in Pioneer Resources Business Park, located on the west side of Bertelsen Road, roughly bisected by 1st Avenue West. BACKGROUND As detailed in the attached report and recommendation, the City Manager has concluded that Lane Plywood’s claim is invalid and should be denied. This recommendation is based on several factors including: the acquisition date of some of the lots; the fact that Measure 37 provides compensation for only “land use regulations” (as defined by Measure 37), yet Lane Plywood includes all of Eugene Code Chapter 9 and the Metro Plan as part of its claim; the fact that the since the passage of Measure 37, the City has not enforced or applied any of the provisions of Chapter 9 or the Metro Plan to the subject property; the fact that the Covenants Conditions and Restrictions (CC&R’s), voluntarily placed on the property by the owner, restrict its use even if the council agreed to not apply provisions of Eugene Code Chapter 9 and the Metro Plan. Please refer to the attached report and recommendation from the City Manager for further details. A copy of the original Measure 37 claim and the amended Measure 37 claim, along with other documents and information related to the issues in the Measure 37 claim, are contained in a notebook that has been placed in the Council Office. A copy of that notebook is also available for public inspection by contacting Lydia McKinney. RELATED CITY POLICIES Ordinance No. 20331, concerning real property compensation, is related to this claim. COUNCIL OPTIONS This is a public hearing only. Following the public hearing, staff will offer the council several options before the council is requested to take action. L:\CMO\2006 Council Agendas\M060612\S0606124.doc CITY MANAGER’S RECOMMENDATION The attached report recommends that the Measure 37 claim be denied. However, this is a public hearing only and no action is desired at this time. SUGGESTED MOTION No suggested motion at this time. This item is for public hearing only. ATTACHMENTS A. City Manager’s Recommendation and Report FOR MORE INFORMATION Staff Contact: Lydia McKinney Telephone: 682-5485 Staff E-Mail: lydia.s.mckinney@ci.eugene.or.us L:\CMO\2006 Council Agendas\M060612\S0606124.doc ATTACHMENT A BALLOT MEASURE 37 (CHAPTER 1, OREGON LAWS 2005) CLAIM FOR COMPENSATION CITY OF EUGENE REPORT AND RECOMMENDATION OF THE CITY MANAGER NAME OF CLAIMANT: Lane Plywood, Inc. MAILING ADDRESS: Donald Joe Willis, Esq. Schwabe, Williamson & Wyatt 1211 SW 5th Avenue, Suite 1900 Portland, Oregon 97204 PROPERTY IDENTIFICATION: Lots 1, 2, 3, 5, 9, 11, 12, 15-23, 24, 26-33 of Pioneer Resources Business Park in the City of Eugene I. SUMMARY OF CLAIM Lane Plywood, Inc. (LPI) submitted a claim under Ballot Measure 37 for compensation for the alleged reduction in fair market value to a number of lots located in Pioneer Resources Business Park. In its original claim, LPI claimed that it intended to use the lots for "commercial development and for the placement of billboards." LPI amended its claim to assert that it intends to use the property for "all forms of industrial, commercial, residential, signage, and mixed use, in addition to the commercial uses and placement of billboards described in the original claim." LPI claims that the value of its real property has been diminished in the range of $5 million as a result of amendments to the Eugene Land Use Code and Eugene-Springfield Metro Area Plan (Metro Plan). LPI essentially alleges that any land use provision enacted after it acquired these lots has the effect of restricting use and thereby diminishing the fair market value of the property, and so it seeks compensation or waiver of regulations under Measure 37. II. SUMMARY OF CITY MANAGER RECOMMENDATION Based on the analysis set forth in section III below, the City Manager has concluded that LPI's claim is invalid and should be denied. Measure 37 generally grants a property owner the right to compensation (or waiver at the option of the government) for a regulation that existed as of the effective date of Measure 37 (December 2, 2004) if five substantive. requirements are met. First, the regulation must constitute a "land use regulation" as that term is defined by Measure 37. Second, the public entity must have enforced the regulation in some manner. Third, the regulation must "restrict the use" of private property. Fourth, the effect of the regulation must cause a reduction in the fair Page 1 of9 market value of the property. And fifth, the regulation must not fall within one of Measure 37's five exemptions. As discussed below, many of the regulations that are the subject of this claim are not "land use regulations" as that phrase is defined by Measure 37. Following the passage of Measure 37, none of the regulations have been enforced against claimant's property. Many of the regulations neither "restrict the use of land" as that phrase is used in Measure 37, nor reduce the fair market value of property. Moreover, even the regulations that may, in the abstract, "restrict the use" and "reduce the value" of the property (when compared to an absence of regulation), do not "restrict" or "reduce value," given that the property at the time of acquisition was zoned heavy industrial. Some of the regulations that are the subject of the claim fall within one or more of Measure 37's exemptions, including the exemptions for regulations prohibiting certain public nuisances, regulations adopted to protect the public health and safety, and regulations adopted after the property owner acquired some of the lots that are the subject of this claim. Finally, LPI's own actions in applying for and obtaining a subdivision approval and in recording Covenants, Conditions and Restrictions (CC&Rs) against all of the lots incorporate all of the regulations that are the subject of this claim. As a result, even if the City agreed to not apply the regulations, those regulations would still govern development on the property as a result of the subdivision approval and CC&Rs. In light of the subdivision approval and CC&Rs, the regulations themselves neither restrict the use of property nor reduce its value. III. ANALYSIS OF CLAIM ,A. Ownership. \. Ballot Measure 37 provides for payment of compensation or relief from (waiver of) specific laws. for "owners" as that term is defined by the Measure. Ballot Measure 37, Section 11 (C) defines "owner" as "the present owner of the property, or any interest therein;" LPI 'has asserted claims on 25 parcels of land (lots) within the Pioneer Resources' Business Park.in the City of Eugene. Based on the information that is available, the parcels can be divided into three categories: (1) lots owned continuously by LPI since at least 1980; (2) lots previously owned and sold by LPI, and then reacquired in 2005; (3) one lot owned by LPI for which no date of ownership was provided. 1. Lots 15-24 and 26-33: Appear to have been continuously owned by LPI since various dates between 1964 and 1980. LPI acquired title to lots (or portions of lots) 15 through 24, and 26 through 33, between . October 20, 1964 and November 19, 1980, and appears to have owned these. lots continuously since acquisition. The information submitted by LPI consists of title guarantees for each of the above lots, with deeds attached to support the guarantee documentation. Where more than one deed is identified for one lot, the property at issue generally was described by metes and bounds, and we assume, based on the title guarantees, that some portion of the lot was transferred by each listed deed (the lot numbers were assigned as part of the subdivision and platting of the Pioneer Business Park that was finalized in 1998). Page 2 of9 These lots were acquired before Eugene's current Land Use Code, Chapter 9 of the Eugene Code, became effective on August 1, 2001. Consequently, from an ownership perspective, these lots may qualify to make a Measure 37 claim with respect to the current version of the Land Use Code that became effective on or after August 1,2001. 2. Lots 1,2,3,5,11 and 12: Re-acquired by LPI on April 13, 2005. For convenient reference, the chart below summarizes the deeds submitted and other information about that ownership oflots 1,2,3,5, 11 and 12. Lot Number Deeds Submitted by LPI and Information from Lane County Regional Land Information Database (RLID) 1 LPI submitted deeds on this lot as follows: - C.J. Montag and Sons to LPI, recorded May 16, 1972 - LPI to Edward J. King, Jr., et al., dated March 19,2002 - Edward J. King, Jr., et aI., to EJK Investments, LLC, dated December 18, 2002 - EJK Investments, LLC, to LPI dated April 13, 2005 2 LPI submitted deeds on this lot as follows: - Wendell P. Wick and Evelyn M. Wick to LPI, recorded February 6, 1964 - LPI to Edward J. King, Jr., et a~., dated.March.19, 2002 . . - Edward J. King, Jr., et aI., to EJK Investments, LLC, dated December 18, 2002 - EJK Investments, LLC, to LPI dated April 13, 2005 3 Same as lot 2 5 LPI submitted deeds on this lot as follows: . . - C.J. Montag and Sons to LPI, recorded May 16, 1972 - C.J. Montag and Sons to LPI, recorded June 15, 1972 - LPI to Edward J. King, Jr., et aI., dated March 19,2002 - Edward J. King, Jr., et aI., to EJK Investments, LLC, dated December 18, 2002 - ElK Investments, LLC, to LPI dated April13, 2005 11 LPI did not provide any deeds on this lot. RLID reflects the following transfers: -LPI to Frontier Real Estate Holdings, Inc., dated May 14, 2001 -Frontier Real Estate Holdings, Inc. to LPI, dated May 23, 2001 -Deed from LPI to Edward J. King, Jr. Trust, dated March 19,2002 -Deed from Edward 1. King, Jr. Trust to EJK Investments, LLC, dated December 18, 2002 -Deed from EJK Investments, LLC to LPI, dated April 13, 2005 Page 3 of9 12 LPI submitted deeds on this lot as follows: -Indenture between Southern Pacific Company and LPI, recorded September 14, 1956 -Deed from LPI to Edward J. King, Jr. Trust, dated March 19, 2002 -Deed from Edward J. King, Jr. Trust to EJK Investments, LLC, dated December 18, 2002 -Warranty Deed from William S. Anderson, Trustee to Ander Properties, LLC, recorded July 10, 2003 -Bargain & Sale Deed from EJK Investments, LLC, to LPI, dated April 13, 2005 -Bargain & Sale Deed from William S. Anderson, Trustee to Ander Properties, LLC, recorded September 26, 2005 -Warranty Deed from ElK Investments, LLC to LPI, recorded February 15, 2006 -Quitclaim Deed from Edward J. King Ir., Trustee to LPI, recorded February 15, 2006 Lots 1, 2, 3, 5 and 12 were first acquired by LPI between 1956 and 1972. LPI owned these properties continuously until, on March 19,2002, LPI transferred all of these properties to the Edward I. King, Ir., Trust. Lot 11 was transferred to and held by Frontier Real Estate Holdings, Inc., for nine days in May of 2001, before being transferred back to LPI. LPI did not provide a deed showing when it first acquired lot 11, but it apparently had title to that land before May of 20,01. Lots 1,2,3,5 and 11 (i.e., all of these lots except lot 12), were then transferred by Edward 1. King, Jr. Trust to EJK Investments, LLC, on December 18, 2002. The lot 12 deeds to and from William S. Anderson, Trustee, and Ander Properties, LLC, appear to be -associated . with a lease and option on the property dated October 2, 2002. That lease and option document, however, was not provided by LPI. LPI ultimately reacquired complete title to lot 12 ori February 16, 2006. None. of these lots were acquired before Eugene's current Land Use Code, Chapter 9 of the Eugene Code, became effective on August 1,2001, and therefore a valid Measure 37 claim cannot be made on these lots. Apparently recognizing this problem, on January 14, 2005, Edward 1. King, Jr. Trust (King) and Frontier Resources, LLC (Frontier), executed 'a document entitled "Memorialization of Loan Agreement." That document states that King and Frontier verbally agreed that the March 19, 2002 conveyances of lots 1 through 3, and 10 through 12 from LPI to King were intended only for the purposes of securing a portion of a loan made by King to Frontier (the same person, Greg Demers, owns a contrOlling interest in both Frontier and LPI). Approximately three months later, on April 13, 2005, King transferred these properties to LPI. Several months after that, LPI filed this Measure.37 claim. Given that King and Demers have been working together since about 1997 to develop this property, the fact that it took them over three years to "memorialize" their "verbal agreement," and the fact that the "Memorialization of Loan Agreement" and transfer of these properties back to LPI all took place within a several month period, immediately before LPI filed its Measure 37 claim, LPI's assertion that the transfer to King was merely to secure a (portion) of a debt, rather than being a bona fide transfer, appears implausible - particularly in light of the minimal evidence that LPI Page 4 of9 has provided. Thus, the City should reject LPI's assertion that the date of acquisition for these properties should be the first date of acquisition. For the reasons set forth in the preceding section, the correct date of acquisition for lots 1, 2, 3, 5 and 11 is April 13, 2005, and the correct acquisition date for lot 12 is February 26, 2006. Consequently, the claims made on these lots should be denied, as LPI acquired title to these lots after the effective date of the City's Land Use Code, August 1,2001. 3. Lot 9: Insufficient information to determine date of acquisition. LPI did not provide ariy deeds or other information concerning lot 9. RLID reflects that LPI is the current owner of this lot, but provides no information about when the lot was acquired. B. "Land use regulations." Measure 37 requires compensation (or waiver) only for those regulations which constitute "land use regulations" as that term is defined by Measure 37. Measure 37 and other. state land use laws define differently the phrase "land use regulations." Measure 37 defines land use regulation, with respect to local governments, as "local government comprehensive plans, zoning ordinances, land division ordinances and transportation ordinances." On the other hand, ORS 197.015(11) defines land use regulation as "any local government zoning ordinance, land division ordinance adopted under ORS 92.044 or 92.046 or similar general ordinance establishing standards for implementing a comprehensive plan." This. difference between Measure 37's .definition and the prior statutory definition -i.e., the omission in Measure 37 of the languageunderiined above - is significant.. Existing state law and Measure 37 both include zoning ordinances and land divisiohordinances. ' Measure ,37, however, does not include the' language "or' similar general ordinance establishmgstandards for implementing a comprehensive ' plan." Because Measure 37 omits that language, while including the other language from ORS 197.015(11) relating to zoning ordinances and land division ordinances, a proper interpretation of Measure 37 limits "land use regulation" to zoning ordinances and land division ordinances (in addition to comprehensive plan provisions and transportation ordinances). LPI includes as part of its claim all of Chapter 9 of the Eugene Code and the Metro Plan. Measure 37 defines "land use regulation" to include comprehensive plans, and consequently, to the extent that LPI's claim is based on the Metro Plan, the claim meets this requirement. Measure 37, however, does not define "land use regulation" to include all land use code provisions, but instead, only "zoning ordinances," "land division ordinances" and "transportation ordinances." Most of the regulations in Chapter 9 do not constitute any of those types of ordinances. To the extent that LPI's claim is based on those parts of Chapter 9, the claim lacks merit. C. Enforcement. Measure 37 states that a property owner has a claim if a public entity "enacts or enforces a new land use regulation or enforces a land use regulation enacted prior to the effective date" of Measure 37. With very few exceptions, all of the provisions of Chapter 9 of the Eugene Code Page 5 of9 and the Metro Plan were enacted prior to Measure 37. Therefore, the mere adoption or existence of those provisions is not enough to give rise to a Measure 37 claim. Instead, Measure 37 requires something more. Following the passage of Measure 37, the City has not applied or enforced any of the provisions of Chapter 9 or the Metro Plan to LPI's property. Measure 37 requires that some type of "enforcement" take place. Since that has not happened, the claim should be denied in its entirety. D. Restriction on nse, reduction in value, LPl's subdivision and CC&Rs. A "land use regulation" gives rise to a Measure 37 claim only if the regulation would "restrict the use" of private property and have the effect of reducing the fair market value of property. LPI did not identify which of the more than 550 pages of Chapter 9 LPI asserts "restrict the use" of property, and which "reduces the value" of property. To qualify as a valid claim, a provision must both restrict the use and reduce the value. Even if provisions of Chapter 9 restricted the use and reduced the value of some property within the City, there are three additional factors applicable to LPl's property which preclude a finding that LPI can meet these requirements: the historic zoning of the property; the land use approval that LPI sought and obtained for the lots; and the Covenants, Codes & Restrictions (CC&Rs) adopted for and recorded on all of the lots at issue in this Measure 37 claim. LPI first asserted that it intends to use the subject lots for "commercial development and billboards." LPI later amended its claim to assert its intent to use these lots for "all forms of : industrial,.commercial, residential, signage, and mixed use, in addition to the commercial uses and placement of billboards described in the original claim." LPI asserts that it is restricted from using the property for its intended uses by the City's. "industrial zoning" and by "a number of other city land use regulations currently in effecC However, these lots historically have been zoned heavy industrial (1-3 and 1\1-3). LPI has not offered any evidence that the zoning or regulations today reduce the value or restrict uses in any significant manner beyond what existed in the 1960s, 1970s and 1980s. Moreover, even if the City agreed to "not apply" or "waive" the regulations, the use and. development of the properties would remain restricted by the subdivision approval sought and obtained by LPI and the CC&Rs LPI voluntarily placed on the property. During the subdivision approval process, LPI asserted that a contract is established between the subdivider (LPI) and the municipality (the City) once a tentative plan for subdivision is approved. The tentative plan approval (and ultimately final plat) was consistent with LPI's subdivision application. That application limited the uses to which LPI would put the property in the future to those allowed in an 1-3 zone. LPI's application further stated that, although the 1-3 zone allowed uses permissible in both the 1-2 and 1-1 zones, it was not going to put the land to any of the uses allowed in the 1-1 zone. Thus, LPI has, by its own voluntary actions, limited itself to 1-3 and 1-2 (but not I-I) uses on the land, as subdivided. Just as LPI Page 6 of9 asserted the City was bound by the contractual nature of the tentative subdivision plan, so is LPI. LPI has restricted itself from using the property in a manner contrary to the subdivision approval. The CC&Rs LPI voluntarily placed on the property also restrict its uses, even in the absence of Chapter 9 of the Eugene Code. The following sections of the CC&Rs are particularly relevant to LPl's claim. Article 4, Development Standards Section 4.1; Site Planning Guidelines This section provides guidelines for the design and construction of improvements within the Pioneer Business Park. The business park is divided into two zones "which are intended to accommodate different types of uses within the Park." Zone. A (lots 1-11) is intended "for limited commercial uses which are allowed within industrial parks in the City of Eugene's 1-2 Industrial District and Office use which may be unrelated to industrial use." Zone B (lots. 12-35) is intended "to accommodate general industrial uses allowed in the City's Industrial Zones, primarily the 1-2 zone." Section 4.3; Signs. "Signs permitted 'on any Development parcel include business : park identification signs, information . and vehicular control signs, signs identifying the building or the business of the Owner or Occupant of a Development Parcel, signs offering the parcel for sale or lease, and temporary development signs." The section does not permit billboards. Article 5, Regulation of Operations and Uses Section 5.1, Introduction This section summarizes the City of Eugene's Heavy Industrial District 1-3 Zone and the types of uses permitted therein, and in the included 1-2 (Light -Medium) and I-I (Special- Light) Zones. The section also provides: "In order to facilitate a flexible business environment, Pioneer Business Park (which contains a total of 77 acres) allocates up to the maximum allowable area within the 1-2 District for non-industrial related office Page 7 of9