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HomeMy WebLinkAboutItem A - Measure 37 DiscussionEUGENE CITY COUNCIL AGENDA ITEM SUMMARY Work Session: Discussion of Ballot Measure 37 Meeting Date: September 29, 2004 Agenda Item Number: A Department: City Attorney's Office Staff Contact: Glenn Klein www. cl. eugene, or. us Contact Telephone Number: 682-5080 ISSUE STATEMENT A work session on Measure 37 has been scheduled for September 29, 2004. The discussion will focus on the legal implications and the potential effects of Measure 37 on the various City of Eugene land use processes. No action is being requested at this time with respect to this agenda item. A separate agenda item follows this one, which is the continuation of the council's discussion of a resolution opposing passage of Measure 37; at the September 13th council meeting, the council postponed the motion on that resolution to September 29th. BACKGROUND If Measure 37 is passed by the voters at the November election, it generally will require governmental entities to compensate some owners of property if a "land use" regulation restricts the use of the owner's property in a way that reduces the value of the property, unless the governing body waives the restriction. A copy of Measure 37 is attached as Attachment A. A summary of the measure is attached as Attachment B. As additional background on possible fiscal impacts, also attached are fiscal impact statements from the City of Beaverton (Attachment C), City of Portland (Attachment D), and the League of Oregon Cities (Attachment E). RELATED CITY POLICIES Measure 37, if passed, will affect many City policies, including land use policies contained in the Metro Plan and refinement plans, growth management strategies, provisions in the land use code, and, depending on whether the council chooses to waive restrictions or compensate for them, some of the City's fiscal policies. A copy of the council's 2003 Legislative Policy related to Ballot Measure 7 and just compensation is attached to Agenda Item B (on the proposed resolution related to Measure 37). COUNCIL OPTIONS The purpose of this work session is to brief the council on Measure 37 and on the possible effects on the City. Should the measure pass, staff will return to the council shortly after the election with possible options for council action. Between now and the election, the City Manager has asked the City Attorney' s Office to work with staff from the Planning Division, Building and Permit Services Division, and Public Works Department to explore various options for council consideration in November. L:\CMO\2004 Council Agendas\M040929\S040929A. DOC CITY MANAGER'S RECOMMENDATION None at this time. Should Measure 37 pass, staff would return to the council with specific recommendations related to implementation of the measure. SUGGESTED MOTION None. ATTACHMENTS A. Measure 37 B. Summary of Measure 37 C. Beaverton Fiscal Impact Statement D. Portland Fiscal Impact Statement E. League of Oregon Cities Estimated Financial Impact of Measure 37 FOR MORE INFORMATION Staff Contact: Glenn Klein Telephone: 682-5080 Staff E-Mail: glenn.klein~harrang, com L:\CMO\2004 Council Agendas\M040929\S040929A. DOC OFFICE OF THE SECRETARY OF STATE ~ ELECIIONS DD/ISION JOI-IN LINDBACK BILL BRADBURY DIRECTOR SECRETARY OF STATE 141 STATE CAPITOL SALEM, ORE¢ON 97310-0722 ELEC?IONS -- (503) 986-1518 March 17, 2003 To All Interested Parties: Secretary of State Bill Bradbury is responsible for the pre-election review of proposed initiative petitions for compliance with the procedural constitutional requirements established in the Oregon Constitution for initiative petitions. This review will be completed before approving the form of the cover and signature sheets for the purpose of circulating the proposed initiative petition to gather signatures. The Secretary of State is seeking public input on whether proposed initiative petition (~f36), satisfies the procedural constitutional requirements for circulation as a proposed initiative petition. Petition #36 was filed in our office on March 14, 2003, by Eugene Prete and Barbara Prete, for the General Election of November 2, 2004. Enclosed is a copy of the text of this proposed initiative petition. If you are interested in providing comments on whether the proposed initiative petition meets the procedural constitutional requirements, please write to the secretary at the.Elections Division in the State Capitol. Your comments, if any, must be received by the Elections Division no later than April 7, 2003, in order for them to be considered in the review. BILL BRADBURY Secretary of State Summer Davis Compliance Specialist The following provisions are added to and made a part of ORS chapter 197: (1) 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 this amendment that restricts the use of private real property or any interest therein and has the effect of reducing the fair market value of the property, or any interest therein, then the owner of the property shall be paid just compensation. (2) Just compensation shall be equal to the reduction in the fair market value of the affected property interest resulting from enactment or enforcement of the land use regulation as of the date the owner makes written demand for compensation under this act. (3) Subsection (1) of this act shall not apply to land use regulations: (A) Restricting or prohibiting activities commonly and historically recognized as public nuisances under common law. This subsection shall be construed narrowly in favor of a finding of compensation under this act; (B) Restricting or prohibiting activities for the protection of public health and safety, such as fire and building codes, health and sanitation regulations, solid or hazardous waste regulations, and pollution control regulations; (C) To the extent the land use regulation is required to comply with federal law; (D) Restricting or prohibiting the use of a property for the purpose of selling pornography or performing nude dancing. Nothing in this subsection, however, is intended to affect or alter rights provided by the Oregon or United States Constitutions; or (E) Enacted prior to the date of acquisition of the property by the owner or a family member of the owner who owned the subject property prior to acquisition or inheritance by the owner, whichever occurred first. (4) Just compensation under subsection (1) of this act shall be due the owner of the property if the land use regulation continues to be enforced against the property 180 days after the owner of the property makes written demand for compensation under this section to the public entity enacting or enforcing the land use regulation. (5) For claims arising from land use regulations enacted prior to the effective date of this act, written demand for compensation under subsection (4) shall be made within two years of the effective date of this act, or the date the public entity applies the land use regulation as an approval criteria to an application submitted by the owner of the property, whichever is later. For claims arising from land use regulations enacted after the effective date of this act, written demand for compensation under subsection (4) shall be made within two years of the enactment of the land use regulation, or the date the owner of the property submits a land use application in which the land use regulation is an approval criteria, whichever is later. (6) If a land use regulation continues to apply to the subject property more than 180 days after the present owner of the property has made written demand for compensation under this act, the present owner of the property, or any interest therein, shall have a cause of action for compensation under this act in the circuit court in which the real property is located, and the present owner of the real property shall be entitled to reasonable attorney fees, expenses, costs, and other disbursements reasonably incurred to collect the compensation. (7) A metropolitan service district, city, or county, or state agency may adopt or apply procedures for the processing of claims under this act, but in no event shall these procedures act as a prerequisite to the filing of a compensation claim under subsection (6) of this act, nor shall the failure of an owner of property to file an application for a land use permit with the local government serve as grounds for dismissal, abatement, or delay of a compensation claim under subsection (6) of this act. (8) Notwithstanding any other state statute or the availability of funds under subsection (10) of this act, in lieu of payment of just compensation under this act, the governing body responsible for enacting the land use regulation may modify, remove, or not to apply the land use regulation or land use regulations to allow the owner to use the property for a use permitted at the time the owner acquired the property. (9) A decision by a governing body under this act shall not be considered a land use decision as defined in ORS 197.015(10). (10) Claims made under this section shall be paid from funds, if any, specifically allocated by the legislature, city, county, or metropolitan service district for payment of claims under this act. Notwithstanding the availability of funds under this subsection, a metropolitan service district, city, county, or state agency shall have discretion to use available funds to pay claims or to modify, remove, or not apply a land use regulation or land use regulations pursuant to subsection (6) of this act. If a claim has not been paid within two years from the date on which it accrues, the owner shall be allowed to use the property as permitted at the time the owner acquired the property. (11) Definitions - for purposes of this section: (A) "Family member" shall include the wife, husband, son, daughter, mother, father, brother, brother-in-law, sister, sister-in-law, son-in-law, daughter-in-law, mother-in-law, father-in-law, aunt, uncle, niece, nephew, stepparent, stepchild, grandparent, or grandchild of the owner of the property, an estate of any of the foregoing family members, or a legal entity owned by any one or combination of these family members or the owner of the property. (B) "Land use regulation" shall include: (i) Any statute regulating the use of land or any interest therein; (ii) Administrative roles and goals of the Land Conservation and Development Commission; (iii) Local government comprehensive plans, zoning ordinances, land division ordinances, and transportation ordinances; (iv) Metropolitan service district regional framework plans, functional plans, planning goals and objectives; and (v) Statutes and administrative rules regulating farming and forest practices. (C) "Owner" is the present owner of the property, or any interest therein. (D) "Public entity" shall include the state, a metropolitan service district, a city, or a county. (12) The remedy created by this act is in addition to any other remedy under the Oregon or United States Constitutions, and is not intended to modify or replace any other remedy. (13) If any portion or portions of this act are declared invalid by a court of competent jurisdiction, the remaining portions of this act shall remain in full force and effect. ATTACHMENT B Summary of Measure 37 · If a land use regulation restricts the use of private property and has the effect of reducing the fair market value of the property, the owner shall be paid just compensation unless the government waivers the restriction · Compensation shall be the reduction in fair market value of the property resulting from the enactment or enforcement of the regulation as of the date owner makes a claim · This measure does not apply to: o Public nuisances (to be construed narrowly) o Regulations to protect public health and safety such as fire and building codes, health & sanitation regs., solid or hazardous waste regs. & pollution control regs. o Land use regs required to comply with federal law o Regulations related to most adult oriented businesses o Any regulation that was put into place before the current owner purchased the property · Gives jurisdictions 180 days to pay once claim is made if regulations remain in effect · For existing regulations, claims must be made within 2 years of December 3, 2004 or of the date that the regulation is applied or enforced. For new/future regulations claims must be made within 2 years of the enactment or enforcement of the regulations · If a regulation still applies after 180 days from when claim is made and no compensation has occurred, circuit court will be the venue for relief and will include attorney fees and other costs · Jurisdictions can adopt procedures for M37 claims, but they cannot be a prerequisite to filing a claim · If a claim is filed, a jurisdiction may modify, remove, or not apply the regulation involved in the claim · Decisions made under this measure are not land use decisions ....... --~ ~ DP' ~m-,'l L~-HGUD_ UF OR CITIES 07f23'/(},t~ '~.$~' 43 I?AX 5036127003 CDD P. 12/33 CITY Of BF_AV RTON "''",,,:,', ,' JUly 23,,2004 ' ' M' chd '" ,,', s, stinaShearer · ,. .... '., , S~'ff Analyst .... ,' Department of Administrative ServiCes ,,. ,' 15fi Cottage Street NE i .~'i'. "", $~alem, OR 0730'i · ".~.~ ~, ~',,, , RE: Request for Gity of BeaYerton Fiscal Information '.: " ,!~volving Local Fiscal Impact of BM 36 ", ' , "",.::Ms, Shearer:, ~:,. ',' ,i ~', Fiscal impacts for Admin!stmfiYe Processing BM 38 Claims ., ,!. ,~, ',~ am faxir/§ to your Of-flee the ¢it¥ of Beavert.on', previous work ,' :,,!i ,:, ,performed as to how the City would handle the former BM 7. This ,, '~ ~,: ,~, "~,, . ,[axed mated~l lncludos a Copy of the City's draft ordinance as to Bow ~..',~ .,, ': ,:to process such claims and a Ci~ Council a§onda bill adoptin~ ~, ,, ." ~: ~,c0sts,~to process such claims, In a'prelimina~ r. view of proposed ':',,/ "~ ' :, 3~, i antidpate,the City Council will be asked to adopt a faidy similar "" ,," 6rdinance to process such potential claims in that much of what is , i ~;" "'.,,contemplated in BM 36 is similar in nature to the former BM 7. , ," "' ",,, 'A*'~o the administrative costs to implement such a new ordinance, '. ,' ,:, ,"have updated the previous fee structure the City Council would b~ 'i,, , ',":: alsked to adopt taking, into consideration that it has been four years -, ,', ~ln~e the CKy Council was last asked to adopt ~uch ~ fee structure. '" '" :, ·. ,,:, As Such, I anticipate the City Council would be asked to a'dopt the ,~ '; ,, ,' fpllow!ng fee s.tructure to process BM 36 claims: · , HUb l'J '.1~,4 09:23AH LEAGUE OF OR CITIES ' FA.~..51~3~1 ZTOO;J C, DD ' ,107'/23'/,o4 , '1~ ~ 43 P. 13/33 ' 7,- --, ,', ~ "' ' ' '.'" · 'Pre Application Fee $ 107 : ' ~', ', · Ctatm Pursuant to Measure,Thirty Six Fee $3170, ','.. ,, ,i ,,. Appraisal Fee (Deposit) $3300 ' , .... "' ": .., :,'; TOTAL FEE (per a~plioation) $6577 ,:i,? , ,,,,,',, "I am not in a pos~on to state how many such claims the Cltg would ., ," ~ ,likely process in any given fiscal year. However, our administrative · , , ",f~e analysis is premised oB the need to have a Senior .: .~.,,/' '::', ',Pl~nned^nalyst (FrE cost: $100,00 per year) on staff in order to ,,.: ,., ,.. ," ,:pmces~ Such complex claims and that such a position would spend at ,, ~, "I~a~t hue their time for the first two to three year~ processing such ",i :claims,. · ;, .' ', Fiscal Impacts of Purchasing Property and/or Waiving City .... Regulations · : . , ,, , ~, ': ' ',, !:! have l~aken the opportunity to review several tax parcels ia the City , .. ,. '. ?' ,,of: Beaverton that am more likely to be candidates for claims under · ' '~ ' BM 36= These parcels are: a) zoned Regional Center (RC); b) have , ,,..":, ).· "', ~, 'b0en owned by the same individual or family before the Citg adopted .,,,, , ":'i(S first Comprehensive Plan in 1972; c) the parcels in questions fall ' ' :'urider the regional definition of being undeveloped and/or .... ,:,'"u~r~derdeveloped; and d) the parcels have a Iow building to land value , ,, !,, ,., ' ' ' ratio (as such making such parcels desirable for redevelopment ;"' i"" ,, "' ~hout any land use r~strictions). ,,...,,:. ~'; ', ':.~c. enario A: 3 parcels totaling 2,79 Acres, Total MAV of $1,672,856 , ,, ,:,as ,of, FY 04-05. Average cost per square foot ranging from $12 to '",,' 'i" , $~6, Highly visible; adjacent to light rail and owned by same family :,,,, ,,s~nce well before 1972 and has potential for any type of use other , i'i, , ,- ", !:',,than those uses' specified the Regional Center zoning. PotenMal ,,: :',', ~ ' Impa~s to Git-y: waive development regulations to resolve current , ' ', , .',' :,' claim; purchase properties for at lea~t $1.7 million; property · ,. ,, ~ d~velopment could be Well below minimum FAR for area; loss o1: on- .: ;', ,.,, .g?.mg h~gher property taxes; lost mvesfment in light ,,. ,:, ,', "tktl/street/wateflsewer. infrastructure; and processing claims from ,, ,· "~djamnt property owners who claim their own value loss due to ,, Scenario A'$ development, I HU~ i~ '~4 09:ZBAM LEAGUE OF OR CITIES ,, ~n~rio B: 2 pameis ~otaling 2.97 Acres. To~l MAV ,.,, ,,,,, ,, ,,, ~.~':04:05, Average ~st per square foot is $14. Prope~ is slightly , ,, ~,Visible, adjacent to a railroad and o~ed by same family since ' ',","' well befqre 1972 and also has ,potential for a varie~ of other uses ~at "' "' "~hese:~pecified in the Regional Center zoning. Potential Impels to " '~'J"~e', ci~ are the same as S~nario A. ~ C: 3 parcels totaling 6.83 Acres. To~l MAV of $1,198,193 ,, ,,;'as, of,FY 04-05. Average ~st per square f~t is $5. Prope~,is not ,,, . '~,h~hly yi~ible, it is adja~nt to light rail, has soil issues and is owned ",' ~Sy~e same family membem before 1972 and has the ~tential fora t .,;, ,,'vaH~ of uses other than those us~ specified in ~e R~ional Center .... zoning, Potehttal Impacts to ~e Ci~ am the same as Scenario A. '},,' :,~,', ',.,' ~ ', ~' ~-I of',~ese e~mples in 'one ama' of the Ci~ repr~ent poten~al " ""~' ~ims to the Ci~ of BeaveKon under BM 36. At this point, there is ..' ",, , ,~ufficient time to mn a Ci[y-wide analysis of similar a~ributes as ';,' ",.,~: '. {Nose ~0und in Scenarios A, B and C, to dateline ~e total potential ,,," ' m~gnitude of BM 36 on the Ci~. The par~ls cited above repmse~ ' ',. ,,,,, ~!, potential claims and the dsK of the,Ci~ deciding baleen waiving .... ," ,, ~ ,such development regulations and losing the light mil/other ',~, ,. ,::;' ·: l~mSt~ctum (roads', water and sewer upgrades) investments made ," .."to date in order to maximize development in the Ci~s regional ~ ~nter. ,, ,,, ~'~ , " '[ I hOPe these obse~ations 'regarding administrative ~s~ to' pro,ss ;. ~" B~ 36 and the potential fiscal impacts to the Ci~ to waiver and/or · ,. ' ,, , ~r6base propedies will be.of assistance. If i ~n be of fu~her ,: ,,., assls~nce, please do not hesitate to conta~ me at 503-526-2422 or ., .,' ";. · "bY email at ~gril!0_~,.beave~op._or, us. · ': Res ' , ~' ~' ~mun~ Deve~opmont Bire~or : ,"i., ;, HUG 19 '04 09:~4AM LEAGUE OF OR CITIES P.15/33 , ,' , ~ '~ ' C~Y OF Marge ~ou~, Director ': PO TL GON ~22~ S~.W. Fou~ Ave., Room 410 Po~l~d, OR 97~ (503) 8234130 GO~~~ ~~ONS F~: (50~) 823-3014 ,' ' ' M~br~dm " ;' . Da~' J~ly 2'1,, 2004 ' :.,' 'T~: ,M~yor'Vera Kaz ~ ' ~ssioner R~dy ~n~d " '", ';' ' ~ssioner Efik'Sten, ' C6~s~i'oner Jim Francesconi ~ ~ ~ Commissioner Dan S~m~ ~,~. 'Ah~tor G~y Blacker ,- .. '.~ Fr~ ~ge Kafoury ,~ ,, ~I K~tley : , ,~ -LiddaMeng .. ;. , ~~RaY Kemdge ', ,.,~; ce~ ',' ~oSe Taylor, Con~tt~ A~s~ator, Financi~ ~pact Com~, Secret~ of State .,. , , "City of Ponl~d Planing and D~velopment Directors · , :,,Re: ,Inifiatige 36 Poten~ FiscM ~p~ts ?.., .. ,. W&'. ~ i~nding you this memo to Men you to the pot~nti~ fisc~ ~p~ts of a ~n~ng ballot ,.'m~d,presently c~led imd afive petition ~36 (hifiafive 36). ~ · ~ ,, ~ ,, ,' 'In~o~uetion:, , ' , , . , ~ifia~d 3~ is'expected to appear on ~e November 2, 2004, General Elation bMlbt. ~ officially .,: approved apd,ceaified, and, if ultimately passe~ I~fiative 36 will haw i~edime fiscal impacts ,~ 'd~ng ~ 2004-05 budget yem'. ' ",':'~ Is ini~ative petaio~ 36? ,,. ~¢' ~eP~ed b~0t title is as follows: "~'G0~~~S MUST PAY O~~, OR FORGO E~ORCE~NT, WHEN .'' ' ' . C~TAIN LAND USE ~ST~CTIONS ~DUCE PROPERTY VAL~" ~ ~ · , ., ,~AUG. 19,,'04, 09:P4AM LEAGUE OF OR CITIES P.16×B3 ,,. ,],' ,:, ,Tael;ax'tified, , ballot t{tle SUMMARY states, ,~' ":cu?r'~itly, Oregc)n constitution requirex government(s) to pay owner '~ust compensation" when ' 2 ' ,', ,,,"¢" :,: ~br~ernn, ing privatk property or taking it by other action, including laws precluding ali xubstantiat' ;; ' b~,h.~fii:id, l ~or' economically viable use. Meaxure enacts stature r~quiring that when state, city, ',,., " , ,,,count,, )netropolitan service district enact,, or enforces land us~ regulation that restricts use of ~ ': '; ', '" ,p~ivate,?eal, property or interest thereon, government mustpay owner reduction in fair market value ",,,, ':, ofhff~'cted property. , interest, or forego enforcement. Governments may repeal, change, or not apply ',' ,.., ,,'rebtrhCtii~ns, ,,. in lieu of payment; if co,mpensation not timely paid, owner not subject to restrictions. , r "( fi ..... of , .., ,,. 'Ap.p ~,~qfarnt rn~mber ned) acqmredproperty. Creates ctvtl right action including ,~ '.:'atto~ri~. fees. Provides nO new revenue source for payments. Certain exceptions. Other provisions. , ,,; some differences between Initiative 36 and Ballot Measur~ 7? ~ "'~' ? "A~ th:&,~l~ove ballot summary points out, it b important to note that the Oregon and U.S, ., ~nst~tuuons already currently provide protection from "taking" of a landowner's property without ',' ~', ,,ju risation. ,, ',' You wiil r~call that a similar stat6wide land use regulation and compensation measure, Ballot ",'..: . i., Me~shi-e 7, passed in 2000, and was later invalidated by the Oregon Supreme Com. Measure 7 and ,I~iitiati've'36 share some fundamental principles' and mechanics for implementation. Both measures ?,' .reiltti~ ,,s[a, te ar/d local govemmerits to set up processes for property owners to seek compensation 9 ' ,.:, 'ii,~fo~ alain~ of reduced value on properties impacted by land use regulations. A compensation clam ,',,,,'~'i,i:,, , .~6u!d,ko,mpme the existing fair market value of a property under new regulations ~ith what the fair '"' :market v'alue o.f the property would be without the regulation(s). Under Initiative 36, governments nm~y e~ther pay a claim or waive regulations. '. · ,; J, 'i~i'~hti~e'36 differs from Ballot Measure 7 in that it is statutory rather than constitutional. You ,, ' ; ma~, ret,all that the Oregon Snpreme Court invalidated Ballot Measure because the measure violated ,. :"the Oregon Constitution's prohibition on a single vote amending multiple unrelated sections of the ".,.", In~tia.tiv¢ 36.is not worded clearly. For example the relationship between subsection) (i) (3) and ,.,, .',se~fi~ia' (~) are ambi guou~. H~wever the initiative is potentially more retroactive than Measure 7 :~ ,, ", because it applies tb regulations that include affected em-rent owners' ancestors. It is also " .' piSt,¢r~tially more expansive in that its' definition of "family member" is broader. This could create a ' ,", , , I,a~l~ricmbhr ~of applications for compensation by allowing claims based on ancestors of the ',,' , , ', ctirre ,nt owner, ha,addition, there is, a question whether the "equal protecti6n" clause of the U.S. " ~, ~ Co~tstlt{iLion and "equal privileges" clause of,the Oregon Constitution, require that a legal entity ..... ' have ~he same fights as individuals. If so i~terpreted, a "current owner" may include a legal entity ,' ,, ', s~tfi.h"a,s a corporation or YJ~C. Measure 7 only applied to regulations "applied 'after'the current ~,, ..... : ow, ncr'became the owner." ' P0rtl~/t~ first Zoning Code was adopted in 1924, some 80 years ago, yet many family ownership's ,, ~ ~ lurid t~ifrd}y corporate holdings pre-date 1924. Many modern zoriirig regulations and developmer~t "" "',.sta,,n.dir. d,",s were not enacted until the 1960's and 1970's. Claims could be based On regulations ::,: ,ap[5iie4 ckca46s ago, potentially going back to when the City had no land use regulations '" whats6ever. In general, the longer tha iandowuer's ancestral lineage, the greater likelihood that · ,,',1 :'; ,' ,. .. ,' ~ ', f~UG 19 .'04 09:P4AH LEAGUE OF OR CITIES · ~ , ' P. 17/33 ",. , '~" mpre'pennissj.ye regulations will be used, at some time during the ownei'ship for the purposes 6f ,, ,.' . ea~bli~rtg fair market value. This will lead to potentially greater the costs to the city. : .,, W.h.y.in~,'orm City Council? ·' ~: Iuifi~,'¥e¥36 ha~ xeceived more signatures than required for certification. The next step in the '~ ~,ro, qes~,i,s fei the State of Oregon Financial Impact Committee, convened by the Secretary of State ,. "to, m~,gJ~e,'a determination of the "estimate of financial impact". Based on very significant fiscal ' ~, iinpa¢'ts', . 'esthmtted, , by the State for Ballot Measure 7 in 2000, it is prudent for the city ,to begin ,, ii".ex~n,g how fiscal and pro~mara aspects could be affected by Initiative 36. : .. 4: B~16w,.i~;., , hn overview, of Initiative 36 and our initial thoughts on the typ. e of administrative costs ",,' expected'to result;and the potential impact of compensation elaims~ ,,. ,':,' ,. What ate potential costs to,Portland based on Ballot Measure 7 experience? ;' ,:,; ...' , , :. , ', ~ 20,00',',the Oregon Secretary of State estimated that Measure 7 would have resulted in'direct costs :, , ,?,~,~ 'of. $5~4,b, illi, ort,per year - $1.6 billion per year for state agencies and $3.8 billion per year to local ,,' ?~. goye~,ents. 'The City of Portland represents approximately 15% of Oregon's population. · ,' : '~.' ~umii~ B allot Measure 7 financial estimates from 2000 provide a good model for estimating ', '" :i']h-dtiafi-¢6,. ,. ~ 36 impacts, this would i'esult in costs to Portland of $570 million in the first year, Mille " ,, expdcti,ng that projecti6ns for subsequent years would be lower. · ':" )i~, 0Mug t~ its general economic acti,vity, redevelopment and expanding commercial and industrial ' ' :"~ ', "i"' ';', dse~}'poffiand's proportionate or per capita assessed value is much higher than other parts of the ", ~', sta, te.:port/and has relatively hi.et densities than other Oregon communities and higher volumes ',, 6)* Jand,use rev/ews. The Bureau of Development Services processed over 850 land use reviews in '"'; ~; '2tX~,'3-04'and over 6,500 commercial and residential plan checks. This volume could foretell higher hu~il~rs of claimants. Portland coutai~ 92,000 acres of land uses where ifitense development ' ' oppqr~unifies and protecti6ns for environmentally sensitive lands must co-exist in close prorim/ty_ , TI~.e'alty,:conta, ins 273 miles of streams and rivers and hundreds of acres of wetlands and upland :' ', lmbit~t~ ih close proximity to developmen't. · , general, ,costs to the c~ty and its citizens may be measured in at least five ways: ' :I. S~tar, ,t-lip costs to 12r, epare an ordinance, new code provisions and,forms for ~ling a claim for : .... .c'.ompensation. ,',,,:' :, ,2., A'd,/~inistrative costs to respond to ~re-claim property owner inqtfiries, This would require · , ~' "~. ~a~chi,v, al' land use and property ownership research to determine what reg~alations, permissible ," ,, ~ _.'ilses'"artd development standards existed at any given point or points in time, on any given , ,, ,, ,, , ? .3.,,;Admi, 'nistr, ative costs to process claims. The burden of proof to process and validate claims .... .,: ,w~uld fall to the city. A staff report and recommendation to the City Council m" other city " ,,', :.' ', :',h6ar[hgs body would need to contain extensive research, conduct code analysis, bid and contract , ,, for,property appraJ,sals, ancestral title and ownership searches would be required. Printing and , ' "'" ," 'nftice costs, for hearings and decision,s would need to be covered. Professional, administrative ' ,arid deric~il staff support would be required before and during a headr~g body to formally hear ,',, ,., ,, ,' ,',and, a,'djud~cate; claims,,or consider, wa/ring regulations. The cost of maintaining new data :' ', ,, .... e~itries in an archival tracking and mapping system would likely result in a substantial increase . ~. ~4UG 19 '04 09:Z5AM LgAglJE OF OR CITIES P 18/33 ;,, , ,, ,, to document the site-specific d~isions ~d con~fions on a p~cel b~ p~l basis. B~ed on o~ " ~ '. .,:, ":' 'e~fien6e mse~ng land use h~sto~ for l~d use reviews, zoning conf~afion lette~, ~d ,,. , , , ,~p,~nor ep~fions, ~ese costs could be si~fficant, esp~ially considering the umber of ' ' ,. ,: , 'chgfiges a~ting a ~6pe~y over a len~ of time ~at would each needto be r~emched ~d ,' ',; ' ~ed. Another tmpo~ant cost hctor concerns app~sfls. At a ~mum, one or mom ·, ~ ,,, , ~ cgh~gct appr~sers would be ret~ed by ~e City to verify &e l~downer's apprise. Apprhsal "' : , .~ , ' co~B,~ depen~ng on ~e location, potenfifl ~e, vflue, histo~, size of ~e prope~, whether ':', , "~ it~, v~mt l~d, or rqukes a ch~ged scope of work. hde~ndent private con~t appr~sal · ~ ' ,'" 'm~ts,would be substm~fl. Appr~sers ch~ge $90-$120 per hour. An appr~sfl for residenfi~ " ', prgp~ ' ~ ':"~tb es r e ~om $400~I',000 in t~ical Po~land n~ghborhoo~ and much ~gher in ~e ,,:' ' ' :' wn for mul~s~u M~ ~se residences. Commerci~ or indus~ ".' , *,~ ~ prope~es r~ge from " .... $2 to $i0,000 ~d at ~e h~er end of ~e rage in the cen~ city ~a ($7,0~-$10,000) ' "' ~ '4. "Compensation cos~ to pay for successful property owner clams and awed of a~ome~ ';' . .~' i&", Po~ntial lost local prope~ ~x revenue may r~ult from reducfioqs in ~e f~r ma, ket value ',",'',"; ":" 'qf ~rqp'e~es adja~en~ to cl~ants whgse cl~m results in a w~ver. These he.by ,, , ' ~o~d'~ ~e~ prope~y value aff~ted by incompatible development where zo~g r~u~ments '" , ': .... h'ave,~en wmved_ ~e pro.ffles would have to fffm~vely appeal to ~e county ,' "' ~s~or to have thek assess~ valu& lower~ on ~e t~ rolls. For exmple, hom~ sit~ in a "" " ,., resl3~nfifl,zone ne~ a Prope~y wffh wmved re~lafions fllowing a eonve~ence store to locate ,,, ' ih ~eit ~dst, %i~ no aceo~odafion for ~affic congestion, ~'~fic ~ety, or any off-str~t , ;, · , P~ag r~emenB c~uld ex~fience a d~line in propeay v~ue. .... ,, .' ? '~e P~lmd Zoning Code is' developed t~ou~ extensive citizen input ~d pmic/pahon ~at ,"~ ~~:~e developmefl~ ri~U of propeay ownem M~ the n~d to pro~ect s~o~din uses .from ~)~m~ of ~e~ghboh~g uses ~p~i~ly incompa~ble uses. In so doing, ~e Zonin* :' P~~ me pro ea v~ues of ~I r ' . . ~ ~ e ,,; ,,,: .,., :. _ . . P .Y p ope~ and prowdes ce~tmnty to existing l~downers as wh :. .maT,~ ~lowea on ~mr property ~d the prope~y of their nei~bors, at · . :o '(, , ~h~,g~'~nis~afiv~ costs for ~fiafive 36 for both "pre-cl~m inqm~es" md "cl~m application ",, :.' ~rp~s~ng" alone could be substantial. The Zoning Code o~en contorts mul~ple reg~afions on · ':' .,., gn~ p~ff~el. Fqr ex~ple, re.la, ohs c~ ~ver allowable uses, b~e zone development st~d~ds, "', , ~rb~n,'~ign regulations, overlays for sensitive envkonment~ ~e~, noir, ~lomed floor are~ ~'~mended; often sever~ times in one ye~ to k~p up with charting loe~ circumstances, ,- :~ ~ ~emB~e stmdhr~ ~d proced~s, to account for emer~ng redevelopment, to respond to ~:,, ~6'f~er~ po~cies and regulations ~d accomplish other new initiative. Detem~ng a point in :"'" ,, ' ¢~ ~heh,~ set 6f regulations is most favorable to a claimer, based on ances~ fi~ts, could be ' ;" '~' 0~e'~d ve~ time consu~ng. ', ~[ f~ ~0mCt clem' whether ~e ct~m~t could base his cl~m solely on one aspect of a complex ,' ~.': pack~ge, gf'm~afions adopted at a p~int in time. Most'often, ch~ges ~e a combinahon ~l~fl6ns ~th~t may both increase ~d decrease development pomnfl~. For exmple, fl~e City : C6~cfl'g r~nt acaons ~ ~oah~est Po~land, rezoning indusffially zoned prope~es to Cenmal ' ' ~. ~io~h~fit ~d) gmaa~ incre~ed the number of uses ~low~ on those properties, while also ,. ,,,'~PlT~hg ~6me resections C.g. ~owing residenO~ ~d commerchl ~es that hadn't been allowed ',', ~fom, w~l~ resetting ~utdoor storage uses). In ad~0on, ~e EXd zone ' ' has height resections ,, , )[,~". ~ ~d,hot,apply pmviously in ~e indt~M'~ae since fndus~al ~es do not generally seek ,,,, , h~fiofi~ 'height. This siiuaflon gives rise to a question of whether a claim could be b~ed.solelY on , ;,~ '"' '~ AUG 19 '04 09:25AM LEAGUE OF OR CITIES ' "· ' : P.1D/BB ~ ' ,, :i the' outd6ot storage use or height resections wi~out t~ng into conside~on the fu~ p~kage of ' ~' '~ r~to~,ghi~ges that inc~ase both fle~bi~ and ~velopment potenfi~ for ~e property owner. , ,, ', ~ '.:,'D~i'~e prope~y owner get to choose only the m~lation ~at may have the potenfi~ to ~duce ·: ,." :,,. ' value absent ~e other regu]ato~ ch~ges,where v~ue may accrue ~om an incre~e in development '"~ ,, ,'fi'g~?', ' :,," ,. ~_ It'ap~,,,, ~t the burden of proof to respond to a el~ f~ls to ~e city~ yet it i~ not c]e~ ~at the ci~'c~d eh~:ge a De to coYe~ its co,ts to va~date cl~. The Initiative ' ,":. ', ~hic~ ~ el~mant may go ~r~dy to eo~, ~d ~ ~is i~s~ace it would ~ the city's obligation and ,. , .~r~. ,, ,t~,respond, with rese~ch an~ an~ys~s as well ~ leg~ · ":, .... ~i~a~q~ '36 ~fi~ a variety of l~d use ac~ons, w~eh is defin~ to iac]ude "~aaspo~a~on ~,or~n~". Ii is not clear whether ~is implicates l~ ~spo~afion improve~en~ finance ~'m~6~, ~uch ~, enactment of system development chm'ges to pay for tr~spoaation imvrovemen~ ~" 0r'~d'cr~flon of local improvement districts to pay for system ~provement projects. ~ni~ative 36 ,, ,. .... : ~fi~es, l~d use re~la~on in a way that may also baclude ~1 fo~s of development stand~ such ,~ , ~-,~q~e ~ound in the Ciw's sto~water manual and erosion consol standm.~. . An Oeto~r ~000 repoa ev~u~ing the ~pacts of Meas~e 7 prepped By ECO No.west used the ' ~'~i$~,~['Pd~and Neighborhood Proposal of Southwest ~ one of nine e~se studi~. ~e study is ,? tried, "F~cal Impacts of Ballot Me~ure 7 of State and ~caI Government.t: An A~lysis of ,~, '~cted'R~gut~ions" idenfifi~ 90 state ~d local government acdons ~at could ~gger .: ' co~p~tion. ~e repo~ found ~at ~e nine c~e ~udies resulted in $946 billion in compznsa~on ',',, ,, ~, aI,~st ~Not6J this was not the final projosal adopted by ~e City Coun~l with the SouDwest 0~' ,, ' qommu~i~Plan). : ' ', ' ~a! a~Ofi, did City Council ~ke to p'repare for Ba~ot M~ure 7 in 2000 that ~e instructive .,:'"' " ' uafl~e I~tiative g~67 ' :,,, ,. ":PoltS~ag ~assage of B~lot Me.ute 7 in November 2000, the City Council adopt~ a'two page ,.,, : o~i?~e d~h~g finings and en~ting ~ new City Code; ~apter 5.75. ~hs ~on was t~en to ",, , h~e ~ new claims procedure in place to ~ze potenfi~ liability ~sing from fmlure to process : "":: ,, cl~deq~a~ely. Chapter 5.75 included eight sections, including P~ose, DeriSions, Claim for ,, Comp6nsation, Fo~ of Cl~m. ~ouat of C]~m ~essing Fee, Cl~m Completeness and ,, ,,, ,~ Acbep~6~ f~r Filing, Sched~in~ ~d No,ce, of C~ty Council H~ing, City Council He~ng and ,, A~o~. ~e new chapter det~s 15 specific elements necess~y to file a clx. Staff review would ',: ' 'r~?~ ~gbstantia~ st~f ti~e and specific ex~se " . Wd:~fi~end that you direct the planning and development bureaus ~d the Office of "" ' M~gement, and Fin~ce with assist~c~ from the Office of Gove~ent Rela~ons and the City " .... ~t'i~y':s ~ce, to be~n a det~led analys~s of the meas~e as w~ done fox a Ballot Measure "" , ,~e,p~ose of ~i's an~ysis would be to assess the impact on revennes, on planing and " '~y~lop~eflt progra~ and off work pro~a~s recently approved in more det~l. We recommend ',.',, , , ,,:,' ~at ~s' an~jsis co~ence i~ediately and be fo~d~ to you, as it becomes available. ,, ',' . ~,': To: Financial Impact Statement Commi~ee Members " ' "~" ~' From: Linda Ludwig, Lea~m of Oregon Cities " , ," . ','. ~: Est~ated Financial ~paet of Initiative 36 .,, '~ , ,, Date: July 28, 2004 : ,, Th9 Lea~e bas reviewed Initiative ~36 in order'to ascertain cos~ to .. .... loc~ governments that would be associated with ~e idfiative if it were ...... ., , ,, to pass ~ the November election. It is easy to see that the costs of ' ', . ,,,: ,, ~ Initiative ~36, would be substantial- when comparing ~e initiative to " ,',': me~od~lo~ ~at was used to evaluate the local govemme~t fiscal ' · ,,...,, ,, impacts of a, prior.but essentially similar ballot me.ute, Me.ute 7. '... We be~eve that, if pa~sed~ Initiative ~36 wffi result in claim costs to :, "' ' '., local government resembling Measure 7~s conservative estimates at ' ' · ~.8 bffiion per year. Additiona~y, the League has asee~a~ed that ",,, '"' .., ~ :there would be additional administrative costs to local governments , · · :' ..,, ,.:, m the range of $162-830 ~Hon per year. "'"'~ " '"' Essentially, ~e intent and the language of~e me~ures is Similar~ ·, ' '." '". ,. creating a process, for pr,ope~ owners to seek compensation when state ,, ,. ".,~ ' or local regulations diminish prope~ value. Although ~36 provides , ' .. additional exclusions and a waiver provision that w~ not explicit h g7, ," ,, ,: ,, ,, it ~lows for a broade~ set of potential claimm~ts ,~om multiple ' ' /'. ,..,,,,,, generations of finally members of the cu~ent omer- l~ely resulting in -',.., , : ' ', ' costlier claims.' :;,, ,' ~' ,' Additionally, ~ pu~eyors of good public policy, local gove~en~ will · : ,,,' ' ' ':, ': likely Eeed to make an assessment of each claim, whe~er to pay or to " ', '. , :' , waive, and the ramifications ofbo~ decisions. Tbs process at a ~' ', ,,, ,. minimum would include ownership research, costs of an appraisal that "~ makes multiple value determinations, staffrepo~s, assessments of . ," ,, impacts to nei~bors, assessmenb of collateral impacts to inrxastrnctnre : ,.~ ;, inves~nents, legal assis~nce and public heahngs. ~e result'would be ,,"',~, ,, significant, costs to local govemmen~ even if the claim is waived or ' denied., '::. , '. ,, .;" ~,", ' Thee woula also potentially be costs to local governments that have ,,.. ',, ' ,: ,, ,, been previo,usly borne by developers, such as c611ateral cos~ when a · ',. ',', .:. ,, ',' ' local government waived a foliation that put additional unplmmed ,, . .,. ~, '., capacity on infrastmc~re systems or open space requirements. ,,,~ , · ,. . Fina,cfng these cgsts often cu~ently occur t~ough system development .,, ,,, HUG,,i~ '"04 09:22AM LEAGUE OF' OR CITIES P. 11/33 ,, ,', .,,' ; ~harge¢ or other mechanisms currently paid by largely the developer that don't directly .. ,,. . "., ,' place die bm:den on the mdi¥idual ~axpayer. ,~ ',Th~ magnitude of claim liability for this initiative is difficult to determine- but we know ' ," ~ . .: it would be substantial. ECONortltwest prepared a entitled "Fiscal impacts of Ballot ,, ,, ,"', , Measure, 7 on State and Local Governments: An Artalysis of Selected...Uegulations,' ' "in ,, ' ' ",which ,their nine case stud/es resulted in $9-16 billion i~ compensation claims. ,, , ,' ,","Additionally, shortly after Measure 7 passed, Jackson County received a sir~gle , ·':compensation claim for over $5 milliorL " ' ' i ,, Oregon has approximately 27,000,000 acres of private property. 'If an average parcel siZe , ' ' w,as 10 acres- both inside and outside the urban growth boundary,- and 1% of the property · ' ..... ' ,d¢ners filed and received compensation in the amount of $150,000, it would cost local ~; :. , . ,:g6vermnents $4.5 billion per year in claims costs alone. Or, if 5% of the property owners .... '"' ' rebeived compensation in the amount of $28,000, it would cost loeaI govemmetats .;,. .... ,, ,approximately $4 billion per year irt claims costs( These'amounts of'claims and/or ., ,,,, ~', · :" c,,o'nil~ensation liability are very sm~ill considering the potential both in terms of numbers ,., ,,.' ,.of claims, or costs of compensation. , , , '. ' ' ' ' U,tilizing these same parcel and claim rate assumptions, administrative costs to process .. '" ' . e,taims will cost local governments, fi'om $162- 830 million dollars per year u~der this , ,' ~ , ,, .frti.~iativc.2 · ,, A more detailed comprehensive fi seal analysis of the proposed statutory amendment ,. : , ,. ,, . ;'would require a through a~alysis of potential claims for each individual property in a . .; ,control group. Additional!y, in order to detemfine the complete costs of the initiative, an " ': ' ,' analysis would be required o£ a new administrative process that local government would : ' ," · ,. ,. likely, enact' in order to make the claim determination necessary under the language of the " '~ inidativh. ,, ,,' :', ,,Without a comprehensive property-by-property type analysis, we believe the . * ~ ., ,esti,'mates of claim costs for Initiative #36 in the amount of $3.8 billion per year and ,,' ",, , adm~mstrattve costs in the amount of $162 - 830 million per year to be reasonable. ,' : '~ I *Chose figures assume acres inside urban growth boundaries as 740,560; outside urban growth boundaries ,' ", ,' i"' ' as £611ows: farm zoned, 15.5 million; forest and farm/forest, 10.5 million, rural/other rural, l million. ,. ~' .,&vet, age density m~es are assumed as follows; inside urban growth boundaries, 4 parcels per acre; farm , ~ ' ., ' ¢,ohed, 80'acres per pamel; forest and farm/foresk 300 acres per parcel; rural/other rural, 10 acres per ,, ,., ,',,', ' ", ' ' ', ~. Fhese figures assume an average claim cost at $6,000 for appraisals, assessment, and processing. .?