Advisories & Insights

Oregon voters at the November 2, 2004 general election approved Ballot Measure 37, and unless the effective date is delayed by any legal challenge, this measure becomes effective December 2, 2004. This measure amends Oregon's land use laws by providing for claims by property owners for "land use regulations" that restrict the use of their property and have the effect of reducing the fair market value of their property. Such claims may be made against the city, county, state or metropolitan service district that enacted the subject land use regulation. The measure requires the public entity to either (i) pay just compensation for any reduction in fair market value of the property as a result of the enactment or enforcement of the land use regulation; or (ii) modify, remove or not apply the regulation.

Measure 37 is replete with ambiguities and cannot be easily applied to the Oregon land use process. There undoubtedly will be challenges to the measure as it is now written and as it may be applied. Given it is a statutory measure, the Legislature could repeal or modify the measure during the 2005 legislative session.

Measure 37 provision for claims arising from land use regulations is based upon the owner's right to use the property as of the time the owner or family member of the owner acquired the property. Accordingly, we recommend that these historical rights be considered prior to conveyance of property to a new owner, and that sellers and buyers conduct due diligence review of the ownership of the property to ascertain whether the property may be beneficially impacted by Measure 37 and, if so, if there is a way of preserving such beneficial impacts.

It is doubtful in the near future that there will be any standard statewide procedure for processing a Measure 37 claim, and therefore many cities and counties around the state are proposing a variety of procedures for presenting a claim. Some of the proposed procedures are onerous and require significant fees. Measure 37 recognizes that public entities may provide procedures to process a Measure 37 claim, however, Measure 37 also provides that failure to follow any such procedures does not preclude a property owner from proceeding with a claim. To present a Measure 37 claim the property owner must make a written demand of compensation from the public entity whose land use regulation is causing the reduction in the property's fair market value, and if the land use regulation continues to apply to the property more than 180 days after making the written demand, the property owner may file a complaint in the circuit court in which the property is located. Since many land use regulations are founded on state law, the property owner should review all potentially applicable land use regulations thoroughly and may want to present claims to the state as well as the local public entity. Measure 37 also provides that the owner is entitled to recover attorney fees and other costs incurred in collecting compensation.

Although Measure 37 does not provide the level of detail that must accompany a claim, the Measure provides, in lieu of paying compensation, that the public entity may choose, within the 180 day time period, to modify, remove or not apply the subject land use regulation. Therefore, any claim should be presented with a clear and concise statement of the land use regulation and its impact to the property.

Bullivant Houser Bailey is available to assist sellers and buyers in conducting Measure 37 due diligence.

John Junkin, a Portland Shareholder, has more than thirty years experience in the area of real estate and land use law. Prior to joining Bullivant, Mr. Junkin served as Washington County Counsel for over twelve years and as General Counsel to the Unified Sewerage Agency, Washington County Housing Authority and the Washington County Consolidated Communications Agency. He provides advice and representation of businesses and government before courts and regulatory agencies in a variety of areas, including contract, property acquisition and condemnation and land use.

Bullivant Houser Bailey's Real Estate and Land Use Group assists clients involved in real estate transactions and developments of almost every size and type, including industrial, commercial and residential properties. Our unique experience in taking real estate development projects from beginning to end, from site selection and land use approval through development, construction, finance and refinance, leasing, and sales benefits businesses of all sizes and industries. We understand what our real estate clients need and provide a practical approach to solve their problems. Learn more at www.bullivant.com