Oregon Voters Move to Protect Landowners’ Rights

Published February 1, 2005

In November, 60 percent of Oregon voters approved Measure 37, protecting private property owners against the effects of land-use regulations imposed by service districts, cities, counties, or state government agencies.

The ballot measure added a new statute, effective December 2, to Oregon state law. Under the law, when a government entity imposes regulations that affect private land–to preserve wetlands or wildlife habitat, for example–landowners are entitled to claim just compensation for the property’s loss in value. The government entity must either pay the compensation or agree not to enforce the regulations on the property of claiming landowners.

City and county officials throughout the state are scrambling to establish claims procedures.

The measure applies even when the land-use regulation affects only a portion of a landowner’s property. In most other states, property owners have no recourse unless all economic use of the property is taken.

In 2002, a similar ballot proposal–Measure 7, approved by voters in 2000–was ruled invalid by the state supreme court because it addressed two separate issues simultaneously. The Oregon constitution requires that no initiative address more than a single issue. Measure 37 divested the secondary issue and is therefore cured of its earlier technical defect.

Massive Rural Rezoning

Following passage in 1973 of SB 100 and creation of the state’s Land Conservation and Development Commission, 97 percent of all rural private land in Oregon was rezoned to farm or forestland, with stringent development restrictions. Building a home on most farmland was forbidden. Subdividing parcels smaller than 80 acres (in some areas, 160 acres) was prohibited. Millions of acres of nonproductive, marginal lands were mis-zoned, denying alternative uses.

The zoning had little to do with farming or forestry, and everything to do with protecting open space, according to critics of the policy.

As noted by J. David Breemer, an attorney with the Pacific Legal Foundation, in the December 12 Sacramento Bee, “Nationwide, the tension between private property owners and government land-use regulators traces to the early 1970s, when states began passing comprehensive planning schemes. The goal was to ensure that development proceeded in an orderly and environmentally sound fashion.

“But the process was soon hijacked in Oregon and elsewhere by ‘smart-growth’ bureaucrats and activists who figured out that planning could be used to stop all or most building on rural lands,” Breemer continued.

Former Oregon State Sen. Bob Smith was in office when SB 100 was passed. He said policymakers intended to compensate landowners whose lands were rezoned, but it never happened.

“Many realized SB 100 would cause economic harm to Oregon property owners,” Smith said in the October 6 Eugene Register-Guard, “though none of us could have imagined the extent of those impacts. … For 31 years, land-use regulations have destroyed property values, ruined retirement dreams, and bankrupted businesses.”

Unfriendly Business Climate

Only when Oregon’s unemployment rates crept upward did policymakers connect punitive taxes and land-use restrictions to statewide job losses. Businesses found it impossible to locate outside designated urban boundaries, and there wasn’t sufficient room inside them. So they left.

For example, in “How Oregon Made a Texan out of Me,” an essay posted on the Web site of Oregonians in Action, homebuilder Joe Hollman said absurd land-use laws and frivolous regulations were making homes unaffordable in the state. He said he decided to manufacture racquetball courts and lockers instead.

The state’s unfriendly-to-business policies resulted in Hollman’s $4 million operation moving out. By 2002, his business was worth more than $30 million, with a hundred employees, but Texans got the jobs.

“It is no wonder Oregon has the highest unemployment rate in the country,” Hollman wrote. “Both outside investors as well as local business owners have an uphill battle against the government’s tight regulations on land use. Unless matters are implemented to change these laws, businesses will continue to leave Oregon and the unemployment rate will continue to rise.”

Reducing Regulatory Burdens

During the initiative campaign, initiative sponsor Oregonians in Action insisted landowners didn’t want compensation; they wanted to be free to use their property in reasonable ways. The success of the initiative is expected to curtail excessive land-use restrictions, as few cities or counties can afford to buy up land and remove it from the tax rolls.

Measure 37 applies retroactively, but only to property that was in a person’s family prior to the enactment of any particular land regulation. No one knows how many residents might qualify, or whether they will want money or waivers. Landowners have two years to file claims.

Measure 37 does not apply to statutes, administrative rules, or regulations aimed at protecting the public’s health and safety, such as fire codes, building codes, health codes, sanitation codes, solid waste or hazardous waste regulations, pollution control, or traffic safety regulations. Nor does it apply to regulations designed to comply with federal law, rules governing activities commonly recognized as public nuisances, etc.

For and Against

Opponents of the measure pointed to its retroactive nature, projected it would cost up to $344 million in administrative expenses alone, pointed out that no funding source was identified out of which compensation might be paid, and said farmland and open space would suffer. Several county farm bureaus, small business owners, the Oregon League of Women Voters, senior citizen groups, and state elected officials were among those who registered their opposition.

Other county farm bureaus, family farm associations, individual farmers, homeowners associations, the Oregon chapter of the National Federation of Independent Business, Oregon Citizens for a Sound Economy, Oregon Cattlemen’s Association, county commissioners, and the Oregon State Grange were among those who urged a yes vote on the measure.

Ross Day, an attorney for Oregonians in Action who drafted the ballot measure, explained the pro-landowner position to New York Times reporter Felicity Barringer on November 26. He noted that land-use regulations might have public benefits, but “the people paying the cost are property owners.”

“If Enron does something like this,” Day said, “people call it theft. If Oregon does it, they call it land-use planning.”

Paula Easley, an Anchorage public policy consultant, is vice chair of the Nationwide Public Projects Coalition, president of the Alaska Land Rights Coalition, and a board member of Alaska’s Resource Development Council.

For more information …

More information about Measure 37, including the full text and extensive discussions of arguments in favor and against, is available on the Oregon secretary of state’s Web site at http://www.sos.state.or.us/elections/nov22004/guide/meas/m31_bt.html.