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Housing projects on Oregon farmland hinge on ‘vested rights’

From the Capitol Press

The fate of two housing subdivisions planned in farm zones in Oregon’s Yamhill County depends on the landowners’ “vested rights” in the unfinished projects.

The Oregon Court of Appeals was recently asked to overturn the county’s approval of the two projects, which involve building 50 homes on nearly 80 acres.

More than a decade after Oregonians voted on significant changes to state land use laws, the legal repercussions continue to be sorted out on the ground.

In 2004, voters approved Measure 37, which required governments to compensate landowners for zoning restrictions imposed after they bought their properties, or to waive those regulations.

Due to the tremendous financial cost of providing compensation, counties predominantly granted waivers to landowners, raising concerns about major conversions of farmland to housing.

The controversy led voters to approve Measure 49 in 2007, which allowed landowners with valid Measure 37 waivers to have three to 10 homes on their property, depending on a variety of conditions.

Those who wanted to develop larger housing subdivisions could only proceed if they were far enough along with the projects to have “vested rights” to complete them.

In the two Yamhill County cases, a state judge ruled that Ralph and Norma Johnson had vested rights to develop homes sites on about 40 acres and that Gordon Cook had vested rights to develop home sites on about 39 acres.

A central question in both cases is whether these landowners could sell the subdivided lots and have other people build the houses, rather than constructing the dwellings themselves.

Friends of Yamhill County, a conservation group, and other critics of the proposed housing developments argue that under the language of Measure 37, waivers of zoning restrictions were not transferable.

During oral arguments on Nov. 21 in Salem, Ore., opponents of the two projects argued that landowners are barred from selling undeveloped parcels, so the “vested rights” findings should be overturned by the Oregon Court of Appeals.

Despite legal uncertainties about Measure 37’s implications at the time, the landowners decided against building the homes themselves, said Ralph Bloemers, attorney for Friends of Yamhill County and other critics.

“They only pursued subdivision. That’s the bed they made for themselves and that has legal consequences,” Bloemers said. “In both cases, they took the risky approach of just selling lots.”

Attorneys for the landowners countered that they’d invested enough in the projects to qualify for vested rights, even if they didn’t plan to build the homes.

One of the criteria used to determine if landowners have proven to have “vested rights” is the amount of money they’d spent on development in comparison to a project’s total cost.

The Johnsons spent $1.2 million subdividing their land, which was found to be a substantial enough portion of the project’s total estimated cost of $15 million to establish vested rights, said Greg Hathaway, their attorney.

“They produced that expert testimony. The county accepted that and the court accepted that,” Hathaway said.

Legal precedents allow landowners who proceed in “good faith” to establish vested rights in a development if it’s interrupted by a change in law, even if the ultimate developer is a third party, said Chip Hudson, the attorney for Gordon Cook.

“They should be protected equitably from having that investment swept away when the law changes,” Hudson said.