Oregon Voters Approve Landowner Compensation
Passed by the voters last November, Oregon’s new Measure 37 stipulates that property owners who see the value of their land decline as the result of land use regulations should receive compensation equal to the fair market value of the loss.
If the local government fails to provide compensation, the new law allows the owner to receive a waiver from the land use regulation and pursue the uses that were permitted at the time the property was acquired.
Since the ballot proposition was passed, approximately 800 claims seeking compensation or a waiver from a land use regulation have been filed with state and local governments.
In a state that has relied on downzoning, urban growth boundaries and other restrictions to limit development of open space and farms, the measure is expected to precipitate many claims from rural property owners who have seen government regulations undermine the value of their land.
Property owners who take advantage of the law are more likely to receive waivers than actual compensation from Oregon’s financially strapped localities.
There are also complexities in the new law that have not been fully tested. “It’s unclear whether any uses allowed by waiver of regulations are transferable, because the measure refers to the owner of a property in the present tense,” said Jon Chandler, executive officer of the Oregon Home Builders Association.
Also, under Oregon law, the term “use,” as in “use” of property, may not include the right to subdivide or partition — but simply to build.
The measure also fails to establish a process for making claims, allowing local governments to develop their own. “Some counties, who weren’t all that fond of the land use system to begin with, have adopted ‘come-on-down’ procedures and have been waiving everything they can get their hands on,” said Chandler. “Other cities and counties have required claimants to do backflips and eat a bug before their claim will be processed.”
A new bill, which attempts to revise Measure 37 and make it more workable, has been introduced in the Oregon Legislature.
Among other things, Senate Bill 1037 would create a standardized process for claims at both the state and local levels. The bill would create special rules for land within, and immediately adjacent to, urban growth boundaries and it would create a compensation fund to handle those claims where the state or local government doesn’t want to allow a waiver. “This is a bit tricky, because it will likely require a new tax of some flavor and that’s not going to be fun at all,” said Chandler.
Chandler said that he is “guardedly optimistic” about the fate of Measure 37. And if in the end it doesn’t look exactly like what was approved at the ballot box, it will come close to providing what voters said they wanted — a system that’s more equitable in how it balances property rights with the need for long-range planning.
For more information, contact the Oregon Home Builders Association at 503-378-9066; or e-mail Sam Leyvas at NAHB, or call him at 800-368-5242 x8584.