P
Patrick
Guest
An almost finalized version of a paper I wrote on UGBs in Oregon, for anyone with an interest in this area of land-use planning. I have tried to separate portions of the paper by bolding certain sections so that people needn't read the paper in its entirety if they are only interested in a particular subtopic.
I should also note that this paper has several spelling and grammatical errors of which I am aware...
Out of Bounds:
Reconciling Private Property Rights and Democracy in Oregon
I. Introduction:
Many metropolitan areas are experiencing growth at an alarmingly rapid rate. In Oregon, for example, the Greater Portland area alone is projected to grow by approximately one million additional residents over the next twenty years. (source 1). Cities like San Diego are projected to grow even faster. (mandelker p 753 text). With such an influx of new residents comes challenging land use and growth management questions as to where such people will live, work, recreate and do all of the other things associated with activities of daily life. The answers to such inquiries are of overwhelming importance in an age characterized by virtually unchecked sprawl and its attendant social, aesthetic and environmental ills. In terms of an explanation for such sprawl, widespread use of the car is a good place to start.
Modern land economics has been drastically altered by the advent of affordable automobiles and easily navigable roads, meaning today market equilibria are practically guaranteed in most places to compel low-density and dispersed development which ?leapfrogs? and darts across the countryside in a disconnected and widely strewn fashion. The compact settlement form of yesteryear?s streetcars and walkable city grids is largely gone; it has been replaced by a system of private-benefits resulting in an arguably public nuisance, manifesting itself as a suburban asphalt jungle of parking lots, freeways and pollutants. Such an approach to land use is unquestionably not a sustainable one, for a myriad of reasons.
Traffic congestion and pollution are bound to increase if sprawl is allowed to continue in an unimpeded fashion, and the cost of traditionally public services is guaranteed to rise as a result. Providing for a widely spread and scattered built environment is, for obvious reasons, much less efficient. Furthermore, agricultural and other delicate natural areas regularly succumb to encroaching urban land uses, and s such are at risk of being lost forever. Therefore, regions growing so speedily that development outpaces public facilities and consequently scatters and straggles across the landscape stand to benefit immensely from some form of ?growth management? plan which can restrain undesirable land uses and ensure a more sustainable long-term approach to the human environment. In many regions the particular policy course pursued to this effect heavily involves use of highly controversial Urban Growth Boundaries (UGBs).
UGBs are used in the following areas: Portland, OR; Sarasota County, FLA; Thurston County, Washington; Minneapolis/St. Paul, Minnesota; Boulder, CO; and numerous cities in California, among other places. (source 7). Of the preceding, Florida and Oregon implement their UGB strategies by way of State level growth management acts. Oregon?s policy specifically mandates use of UGBs, while Florida?s approach merely requires that measures be taken to ensure suburban sprawl is curbed in accordance with predetermined comprehensive planning objectives. (source 7). UGBs in these places strive to maintain a delicate and acceptable balance between urban growth and infrastructural and public service demands as well as suburban and rural land conservation. (source = mandelker text p 754). They are necessary, so the argument goes, because traditionally available zoning techniques fail to provide a comparable level of flexibility in regulating land use for metropolitan regions witnessing population explosions.
The usual ?wait-and-see? approach to the provision of updated infrastructure which characterizes conventional zoning is ill-equipped to deal with rapid urban growth of the sort occurring in mega regions across the country. Traditional zoning measures simply cannot ensure the infrastructure requisite to support sustainable development is in place prior to such growth taking shape. The conventional tools fail to enable proactive and preemptive management of anticipated growth trends. UGBs, on the other hand, attempt to plug the otherwise seemingly insurmountable loophole left open for sprawling land use by traditional zoning techniques by directly delineating the shapes of urbanized regions. They do so by demarcating the extent of permissible urban development.
Under the Portland system, widely looked to as a model by other areas both within and outside of Oregon, the provision of extra-UGB infrastructure is virtually prohibited, as is development of small-acreage lots. (source 7). The idea is to conserve open land that needn?t necessarily fall to unsustainable development practices, and to likewise conserve public financial expenditures by way of limiting municipal services in so doing. (mandelker text). The Portland area UGB is designed to control growth in an area capable of absorbing twenty years worth of urbanization at a time. (source 7).
To recapitulate, urban growth boundaries are tools of urban containment applied to curb the otherwise natural outward sprawl of cities into the countryside--an unattractive stretch of physical structures that has economic as well as environmental costs. UGBs is implemented literally as physical boundaries outside of which urbanized development is for all intents and purposes largely banned. For many reasons, some obvious and others not, such devices have been received with mixed fanfare and in some instances have been highly contested.
II. Elaboration of the UGB:
UGBs can be devised either at a local or state level. The Supreme Court of the United States held in 1974 that the constitutionality and validity of local restrictions on development is to be reviewed under a ?rational basis? standard, meaning they will be upheld as valid if a court can articulate a conceivably rational connection between their use and pursuit of the public welfare. (green book). Oregon implements UGBs on what is perhaps the most illustrative statewide level.
Oregon?s statewide approach is based on an urban ?stop line? created in Salem, the first of its kind in both Oregon as well as the United States. (green book). The current state-level comprehensive growth plan in Oregon was influenced by this approach and, since the time of the Salem stop-line, Metropolitan Portland has become more of a laboratory for land use decisions drawing on UGB techniques. Primarily for such reason, that region serves as the central focus of this paper.
Oregon?s comprehensive growth legislation has long and winding roots, but a watershed moment in its development dates to 1973, the year what is typically referred to as either Senate Bill 100 or the Land Conservation and Development Act was passed. (green book). Following the advent of this landmark legislation, Oregon became one of, if not the, most heavily land regulated states in the country. In Oregon, every acre of land is zoned in a manner reflective of local comprehensive plans that are required by State law. Moreover, such comprehensive plans, in addition to being State mandated, must also be State approved. The significance of these points is that virtually all local land use decisions have to be made in accordance with such State approved plans. (source 10 green book).
These unique and pioneering steps have in some ways catapulted Oregon to a position of land use planning ?guinea pig,? at least in the sense that other states have taken close note of the Oregonian trial run at extensive state-level land-use regulation. In fact, many states, including Maine, have followed suit.
There seems to be a trend towards returning the power of land use regulation to the State, as evidenced by what observers call the ?quite revolution? in this field, consisting of states following Oregon?s lead. (green book source 10). The successes, errors, and implications of Oregon?s state-level land-use regulations are, therefore, of extreme importance to policymakers considering regulatory models based on Oregon?s approach. As part of that approach UGBs have been an integral part of municipally adopted land-control ordinances since the late 1970s. (mandelker text). The physical limits to growth imposed by the State?s UGBs are not permanently fixed; rather, they are dynamic and to a degree flexible in that they expand over time. Given its status as a pioneer in this field, and its consequent centrality to the issues and controversies involved, Oregon will serve as the central contextual background for this paper?s investigation of specific legal issues raised by the use of UGB growth management techniques.
III. Oregonian UGB Specifics:
The backbone of Oregon?s urban-boundary-based growth management system consists of a compilation of planning objectives devised for the State by the Land Conservation and Development Commission (LCDC). (source 5). In 1980, the Oregon Court of Appeals held that LCDC proceedings were fundamentally legislative in nature, with the result that individual case-specific findings of fact were consequently unnecessary in LCDC?s deliberations regarding the appropriateness of UGB drawings. (source 5). Although based on a process devised at the state-legislative level, however, UGBs are implemented on a local or regional level. The process thus represents a cooperative intersection of state and local government regulatory efforts. When local governments attempt to alter UGBs, they do so in the shadow of State planning goals. (source 6).
Oregon municipal governments are permitted to rely upon tax policy or other incentive programs to encourage development within urbanizable intra-UGB lands, but under all circumstances are prohibited from permitting development within their jurisdiction that falls outside of UGBs. (green book). Although local governments can in effect channel patterns of development within UGBs, the shape such UGBs take on in the first place is an exclusively state-driven determination. Of LCDC?s numerous planning objectives, goal 14 is particularly important; it is specifically targeted at the issue of urbanization. That goal mandates that all Oregon cities utilize an urban growth boundary.
LCDC enforces this mandate by the authority it has been granted to approve or reject local land use plans on the basis of the degree to which they further state supported goals. (mandelker text). The impact of goal 14 has been to effectively require a clear borderline to be drawn around urban areas such that adequate land remains available for twenty year?s worth of anticipated urban growth. Points beyond UGBs can be thought of as non-urban frontier land, which for the most part are not permitted to urbanize. (mandelker). In Greater Portland, UGB policy is pursued and implemented by an association known as ?Metro,? a district-wide planning organization the nature of which was necessitated by the regional nature of multi-town UGBs.
A. The Purpose of Oregon?s Pioneering Approach to Land-Use:
Arguably, one of the most significant motivating factors underlying adoption and implementation of UGBs in Oregon was a desire to protect the State?s treasured agricultural lands in the Willamette Valley. This has been achieved by prohibiting disorderly and inefficiently sprawling land development in that area. (mandelker). In this sense, then, Oregonian UGB policy can be seen as a manifestation of aspirations aimed less at sculpting urban form and more at environmental conservation efforts. Perhaps even more important than environmental concerns, however, were economic interests. Specifically, the Oregon sought to ensure the continued vitality of its billion-dollar farming sector. (source 7).
The practical effect of UGB policy, however, has also undoubtedly been increases in the density of urbanized areas; urban form is thus also significantly effected, albeit in an incidental manner, by UGBs. To illustrate, consider the following: average lot sizes of new developments in Oregon decreased by nearly 50% from 13,000 to 7,000 square feet since adoption of UGB policy. Furthermore, older inner urban core areas which were previously in a state of decline are now witnessing waves of gentrification as renovations and updated infill projects push affordable housing units farther and farther away from areas of convenience. (source 7). The goals that guide LCDC in its application of UGB policy, though, make no mention of development distribution or apportionment within UGBs, despite these very tangible and perceptible effects on urban form. Such indirect effects are, therefore, capable of significant drawbacks. UGB policy, then, perhaps somewhat unsurprisingly, has real and demonstrable effects of urban settlement patterns in Oregon. Some are clearly positive while others are more debatable.
Specifically, when low-density development inside a UGB occurs as a result of lacking controls over intra-UGB apportionment policies, less than anticipated density increases, and faster than anticipated demands for UGB expansion, have resulted. (mandelker). To an extent, therefore, these policy shortcomings undermine the purpose of preserving agricultural lands. Density increases within the Portland UGB have not been insignificant, however.
The true problem as to urban form and land use stemming from UGB policy--one which has necessitated additional legislative action--has been the development of so-called ?exception lands.? Such areas pose a threat to the objectives of Oregonian UGB policy to a much higher and credible degree than lack of intra-boundary development allocation. Specifically, exception lands are those agricultural areas that are either needed for uses other than strict conservation efforts, or have been committed to urbanization pursuant to state law (See Or. Rev. Stat. sec 197.732).
B. Extra-UGB Development and Urban Reserve Areas: (mandelker p 813).
To discourage development of exception areas UGB policy is applied in the Portland region such that public services are provided in a manner that effectively subsidizes growth within UGB bounds. (mandelker). However, this approach has not entirely prevented low-density sprawling development of exception lands adjoining UGBs. Furthermore, undesirable growth patterns potentially undermine the very grounds on which support for UGBs is based if, when expansion is necessary, development cannot occur in a continuously compact fashion. If low density development of exception lands occurs just outside of a UGB in an area contiguous with high density land use, for example, if and when expansion is contemplated for a UGB in order to accommodate future growth needs, officials will face a myriad of development obstacles. Not insignificantly, UGBs will be forced to play a vaulting game, whereby future urban development is forced to skip over suburban land uses similar to the very patterns UGBs are expected to eliminate. To remedy this outcome, Oregon has statutorily created what are known as ?urban reserve? areas which have made UGBs infinitely more effective. (Or. Stat. 197.298).
The thrust of urban reserve areas is to serve as a way that regional associations of local governments can set aside land just beyond official UGBs in a strategic anticipation of future growth. Such land is barred from developing in a prohibitively suburban fashion. With an eye to the future needs of urbanizing regions, these areas provide land especially ripe for developing in sustainable ways when the proper time arises. When deliberating if, how, and where UGBs should pursue geographic expansion, urban reserve areas are conveniently prioritized as growth districts.
The aforementioned background information is useful in understanding both the appeal of UGBs as well as some of the challenges--and there have been many--to their implementation. I will now discuss some of the specific legal challenges to Oregonian UGB policy, and the courts? reasoning in the adjudication of such issues, in an effort to draw broad implications to be used in an evaluation of the usefulness of UGBs as growth management techniques. Some of this discussion will focus on generally applicable legal issues that challenges have revolved around, but the majority will focus specifically on particular issues stemming from Greater Portland UGB implementation.
III. Legal Challenges to UGBs and Resulting Referenda:
The various legal arguments drawn upon to challenge use of UGBs differ, like UGB policy itself, based on context. Legal issues in Arizona, for example, are necessarily different from those presented in Oregon, because the motivating factors underlying adoption of growth management in these two contexts are fundamentally distinct. (source 7). Due to Oregon?s pioneering status in this realm, however, this paper focuses exclusively on legal challenges to the Oregonian system. These challenges and their resolutions are apt to be of the most widely applicable significance to other states considering policy options along similar lines.
Some challenges to the Oregon system have been based on the ?farmland paradox,? where inefficient agricultural land is uselessly conserved while other, more fertile, areas are developed due to convenient proximity to UGB expansion pathways. (green book). This weakens the persuasiveness of the underlying premise on which Oregonian UGBs are based. Other challenges highlight geographic inequities in affordable housing caused by an artificially scarce land market. To the exclusion of these not-unimportant issues, however, this paper focuses on what is perhaps the most significant legal controversy regarding UGBs: ?takings claims,? which assert UGBs illegally appropriate private property in contravention of the U.S. Constitution.
A. Constitutional Issues - Regulatory Takings Claims:
Adoption of UGB measures can effect regional land-economics in very specific ways. In particular, a twofold land market is likely to develop where such policies are implemented, with the speculative value of most land falling outside of such boundaries witnessing a precipitous drop, or even evaporating, while lands within UGBs retain, or in some cases increase in, the same. (source 3). The effects UGBs have on land values operate primarily through their affect on supply and demand, particularly supply. Specifically, while demand for land is likely to grow at a natural rate, supply of land is restricted to a less-than-market optimum level by UGBs. (green book). Basic economics indicates that this necessarily results in higher land prices and values, which in turn result in increased housing costs. Such increased costs stem from the bidding wars that occur when developers with sights previously set on suburban lands are forced to contend with infill developers for land within UGBs. (green book).
In short, regulatory constraints imposed on land-use options result in what can be thought of as a transfer of wealth from the party regulated--those outside the UGB--to the scheme?s beneficiaries (usually the general public). (source 4). This is true with all land use regulations, including traditional zoning, but it is particularly pronounced and noticeable in the use of UGBs, where an inequity results such that wealth is transferred from those owning land outside of a UGB to, rather than the general public, owners of land within the UGB. (green book).
Although some studies indicate that drawing UGBs with enough room for growth may facilitate market choice and thus avoid inflating urban land prices (green book), such approaches simultaneously fail to fundamentally serve the very purpose of UGBs--to constrain sprawling development. Thus, LCDC and Metro argued back and forth for some time regarding the proper size for the Portland UGB in 1980. Metro sought to restrain land cost inflation by drawing UGBs that were too big, while LCDC argued for reduced UGB areas. Eventually, a compromise between the two agencies was arrived at, and resulted in what has been termed an ?intermediate growth boundary,? or IGB.
IGBs can be described thus: LCDC consents to, and concedes the superiority of, Metro?s enlarged scale for the Portland area UGB, contingent on a short term (10 year) moratorium put in place for prime agricultural lands within the UGB. This may have facilitated marginal progress in terms of sidestepping land price inflation, but legal issues have nonetheless still arisen as to whether UGBs which still do negatively impact property values are permissible and, if so, what degree of ?just compensation? is due in such circumstances.
To calculate a measure of decrease in monetary value in any way approaching a degree of precision for land the value of which is primarily speculative it is necessary to understand the ?time value of money.? Essentially, a sum of money received today is worth more than the same sum received tomorrow, due in large part to two economic factors: (1) inflation; and (2) the potential for accrual of investment-based interest gains. The amount by which a land-use regulation might decrease the value of land can therefore be thought of as closely related to the decrease in the present value of discounted anticipated future returns from previously permissible land uses. More straightforwardly, if a parcel of land previously had a value reflective of the potential for later development, and that development potential is nixed by regulation, the anticipated return to an investor (the landowner) decreases by an amount which is, in theory, calculable in today?s dollars. This is true even though for present purposes such land may be relatively useless or unattractive from a development standpoint.
Thus, mere potential can possess a real and demonstrable land value. The precise calculations to use in arriving at UGBs? potential to influence such value is anything but agreed upon. Some argue the land value impact of UGBs depends on the specific location of a parcel of land within a UGB, with land values fluctuating depending on whether an intra-UGB parcel is situated beyond a ?value-tipping point,? at which proximity to rural lands outside a UGB outweighs the value of urban amenities provided inside a UGB. (green book). Even if this is true, however, it has also been argued that any such change in value that is negative is only so in the short term, and even then only in areas close enough to UGB transition zones as to be influenced by speculation. In the long run, however, it is quite possible that UGBs, if steady and predictable, serve to increase efficiency in land use investments by providing a reliable indicator of future values. (green book).
Nonetheless, despite confusion and controversy regarding which lands fluctuate and to what degree in response to UGB imposition, it is certain that at least some landowners suffer negative effects on the value of their land when the anticipated effects of UGBs are capitalized into present value. (green book). Decreases in such value stemming from land-use regulations, assuming they are legitimate, and which are not followed by payment of just compensation, have been argued by some to be unconstitutional. Claims like these revolve around the Fifth Amendment to the U.S. Constitution and the federal ?takings? jurisprudence stemming therefrom. A length line of Supreme Court precedent has established that government regulation is valid if instituted in pursuit of the goals of constitutional police powers: protecting welfare, morals, health and safety. (source 20 land use text this semester). The same line of cases, however, has also come to stand that such a right is limited by other constitutional requirements, such as due process and just compensation for property appropriations. (red land use book, source 20).
The Fifth Amendment states, in pertinent part, ?Nor shall private property be taken, for public use, without just compensation.? (source 21, cosntitution). For the aforementioned reasons, it has been argued that this is precisely the effect of UGBs on Oregonian property owners who witness a regulation-based decrease in the value of their land. Federal jurisprudence on this issue is long and complex, but in general the following rules represent federal takings law as it has developed at the Supreme Court level.
Takings can be split into two umbrella categories, physical and regulatory, and it is regulatory with which we are here concerned. The existence of a regulatory taking can be determined either categorically or based on a balancing of public interest versus reasonable investment backed expectations, depending on whether its effects represent a total or partial reduction in property values, respectively. (source 22 and source 23). These broad legal frameworks are anything but straightforward or intuitive.
As a result, in response to political pressure stemming from interest groups supporting deregulation of land uses, Oregon legislatively shifted course from such precedent and experimented with legally imposed categorical compensation requirements in 2004, dramatically changing the State?s legal landscape as regards land use. There has been some pull in addition to this push, however, and as of late the legal pendulum seems to have at least partially swung back in the other direction. The political turbulence surrounding these citizen initiatives, Measures 37 and 49, respectively, makes Oregonian UGBs particularly ripe for examination. Specifically, the broader implications of Oregon UGB policy may enable other states to learn from the trail Oregon blazes, rather than reinventing the wheel.
( A ). Legislative Dynamics - Measure 37:
In 2004, the State passed what is known as Measure 37 by a vote of nearly 2 to 1 in a popular referendum. It states that government enforcement of land use regulations which negatively impact property owners in a land-value sense is contingent on the payment of just compensation. (source ? 195.305). Essentially, if the State diminishes the worth of someone?s land by imposition of prohibitive regulations, Measure 37 mandates that it must pay just compensation in the form of fair market value for any resulting depreciation. This has been anything but uncontroversial. Less than a year after the law was enacted, it was ruled illegal by the State Appeals Court for violating the ?privileges and immunities? clause of the Oregon Constitution for want of serving a legitimate State purpose. (source 12). That ruling, however, was in turn quickly overruled and rendered null by the Oregon Supreme Court on appeal, and Measure 37 was thereby reinstated. (source 9). The act has, to say the least, provoked strongly divisive and contentious levels of debate. This reality came to light in a particularly emphasized manner in 2007, when Measure 49 was adopted by Oregon voters, largely reversing a good portion of Measure 37. Measure 49 will be discussed in more detail later in this paper.
Although at first blush the soundness of Measure 37 might seem beyond criticism, as anything aimed at addressing negative effects on land values arguably could, upon further reflection it appears that support for Measure 37 based on Fifth Amendment violations represents a fundamental misunderstanding of federal takings jurisprudence. (source 9). The Oregonian UGB approach to growth management was not unconstitutional as it existed prior to Measure 37. The reasons for this conclusion are as follows.
Measure 37 embraced the central holding of Penn. Central Transportation Co. v. New York, a 1978 case from the United States Supreme Court establishing that compensation is due to landowners when governmental regulations diminish ?investment backed expectations? and resultantly decrease the fair market value of land in a manner out of line with public interests. (source 9). In so doing, Measure 37 demonstrated a fundamental misunderstanding of that case?s reasoning. (source 9). Penn. Central does not stand for the proposition that every government regulation resulting in diminution of value is necessarily a taking in contravention of the Constitution; it merely states that takings can occur as the result of regulations as opposed to purely physical appropriations. (See source 9). This holding has been adopted and expanded upon by subsequent Supreme Court cases, particularly Lucas v. South Carolina Coastal Council, in which the Court affirmed the validity of the Penn Central balancing test as to when regulations amount to takings. The Court highlighted that such determinations should take into account the degree to which use restrictions benefit the public good, and further indicated that only total deprivation of all economically viable use of land could constitute a categorical or per se taking. (source 22).
Presumably, every use-based regulation diminishes the value of land to some extent; but, according to Penn. Central and Lucas, not every regulation is unconstitutional. Some regulatory mandates, including those addressed by Measure 37, are within the bounds of a state?s police powers, granted to ensure the public safety and welfare, and are therefore capable of being entirely legal. This does not mean, however, that the converse is true; that is, neither is Measure 37 itself unconstitutional merely because the use restrictions it is aimed at are (or might be) constitutionally permissable, as some have argued. (source 9). It, too, is likely completely constitutional. Issues of constitutionality, then, should bear very little on the logical foundations upon which support for, or opposition to, legislative action like that embodied by Measure 37 is based. In fact, numerous times since the 1920s, the Supreme Court has, in exercising judicial review of the Constitutionality of government regulations, established that the mere desire of landowners to use their land in a manner different or more lucratively than allowed by zoning restrictions is not enough to require rezoning or an abandonment of regulation. (source 9). In so holding, the Court has recognized the legitimacy and, implicitly, the lack of takings violations inherent in many regulatory land-use restrictions imposed for the common good. (source 14).
To be completely free from constitutional attack, however, such use restrictions must not amount to a ?total? depletion of economic value, or even one disproportionately favoring the public interest. It has been argued that even if land is restricted to rural farm use, a total depletion of economic value does not result, because some use of the land is still permissible, even if less than hoped for by the owner. (source 9). Thus, assuming some economically viable and valuable use of land remains post-regulation, most deliberations regarding the use of UGBs in Oregon are likely to revolve less around issues of federal legality, and more on voter sentiment at relevant political junctures. Indeed, this is what Measure 37, which sidesteps issues of constitutionality in pursuit of a legal landscape in which any diminution in value is compensable, has shown us. (source 9).
Measure 37 may not be repugnant to the constitution, but to a degree it most does offend principles of logic and reason. It has been argued, and this paper adopts the view, that it makes very little sense indeed for laws like Measure 37 to demand compensation for regulation-based reductions of value in private property rights. (source 9). This is so for numerous reasons, perhaps the most important of which is that property owners do not exist in a Hobbesian ?state of nature;? that is, they, and the rights appurtenant to their property, exist as they do within, and more importantly because of, an implied social contract with numerous forms of governing bodies. (source 9).
According to this theory, society collectively relinquishes certain rights individuals would otherwise be entitled to, for the good of community governance. This is a common occurrence which pervades all regulatory structures plagued by problems of collective action, from local zoning to federal management of natural resources. It is this act which enables private property to have most of its value in the first place, as otherwise tragedies of the commons would be an all too frequent occurrence. To enter such a contract, even if by default, is to accept its benefits. Once accepted, to subsequently claim the particular types of the very regulations which confer benefit to you in some contexts must compensate you when they are not similarly beneficial in others is silly, immature, and a fundamentally confused position. Yet this was the exact result of Measure 37.
The potential deregulatory impacts of laws like Measure 37 could be negative and widespread, ranging from increased sprawl and consequent loss of farmland and agricultural areas, to decreased quality of life and increased infrastructural investment. Passage of the measure increased levels of uncertainty regarding the direction Oregon land-use would take and how the rest of the nation would be impacted in terms of the pursuit of UGBs. Fortunately, Oregon voters realized these pitfalls and other shortcomings, leading to the passage of Measure 49. Measure 49 seeks the best of both worlds in that it strives to achieve the aims championed by proponents of UGBs while compensating effected landowners in a manner more sustainable than that provided by Measure 37.
B. Legislative Dynamics - Measure 49:
Similar to Measure 37, Oregon?s Measure 49 resulted from a citizen-led voter initiative. It was placed before the electorate in November of 2007 and passed by nearly a two-thirds majority. (source 15). its intent is to modify Measure 37 and ?fix? its perceived shortcomings. (source 17). Specifically, Measure 49 aims to protect farms, forests and ground waters; limit large developments; and further clarify residential development rights. (source 15). The idea is to provide a sustainable legal mechanism for just compensation while simultaneously furthering the original goals of urban containment: protection of natural resources. (source 16).
Measure 49 consists of two primary sections, each of which pertains to a temporally distinct set of compensatory legal claims filed by effected landowners. (Source 16). One part of the law is applicable to previously filed Measure 37 compensatory claims filed prior to June 28, 2007; the other addresses new claims arising strictly under Measure 49. Part One supersedes the alternatives provided under Measure 37 for effected property owners: payment of compensation or foregoing enforcement of regulation. It uses a alternative compensation mechanism implemented by way of an approved plan for a limited number of residential sites allowed for effected property owners. In theory this provides substitute compensation for those negatively impacted by regulations adopted after they purchased land. (source 16).
Part Two of Measure 49 is strictly aimed at the filing of new claims by aggrieved landowners, defined as those commencing anytime after January 1, 2007. These new claims are similar to Measure 37 claims with a twist. Similar to its predecessor Measure 49 provides an alternative to local government land-use officials: either pay just compensation to those negatively effected by new ordinances, or forego enforcement. (source 16). It differs, however, in the manner used to flesh out this broad statutory framework.
Under Measure 49, for example, the arena of land-use regulations susceptible to claims for legislatively mandated legal redress has been narrowly tailored. According to the new law, only land-use restrictions which limit farming, forest, or residential uses are eligible for reprieve. (source 16). Moreover, landowners are only capable of seeking a legal remedy if they fully carry their burden of proof under Measure 49--i.e., if they can demonstrate actual reduction in value--in order to recover anything from local government. Finally, regarding claims stemming from residential use restrictions, successful litigants are able to have regulations waived only to an extent that would enable construction of a dwelling capable of replacing the value which would otherwise be lost through regulation; all other regulatory effects remain intact. (source 16).
IV. Implications:
By 2006, at least $250 million worth of Measure 37 claims had been filed in the City of Portland alone, threatening to undermine comprehensive planning efforts aimed at urban containment and increase sprawling and inefficient land uses. (source 18). At least one of these claims was filed by super-big-box retailer Wal-Mart. Rather than pay the exorbitant compensation rates that necessarily would have resulted from masses of successful Measure 37 claims, Oregon would have likely chosen to forego enforcement of regulatory land-use measures altogether. Instead, however, Oregonians wisely adopted Measure 49 to narrow instances in which legal redress is appropriate and limit the relief available. This move should effect land use policy favorably because it permits urban containment and anti-sprawl measures in a much more practicable (and just) fashion than previously existed. However, two years following its adoption, statistics on exactly what, if any, effect Measure 49 has actually had remain indeterminately vague. (source 19).
Part of the reason for this stems from the global recession and a resultantly cool real estate market decreasing pressure for the filing of relief claims, but a major further explanatory factor is that Portland State University, which closely monitored the effects of Measure 37, has not similarly observed the impacts of Measure 49. (source 19). While it remains to be seen what the exact impact of Measure 49 shall be, intuitively the results are likely to represent a highly advantageous and appropriate balance between anti-sprawl proponents and private property advocates.
V. Conclusion and Recommendations:
Ultimately, the facts as borne out in Oregon indicate that urban growth boundaries, if implemented with due consideration, are a useful tool for land-use planning in fast-growing metropolitan areas otherwise susceptible to unsustainable suburban sprawl. Since the 1970s, urbanized areas in Oregon have become more compact; farms and forests have witnessed decreased pressure for development; and settlement patterns have generally experienced increases in overall density, corresponding to heightened infrastructural efficiency. (green book). Furthermore, UGBs have, by necessity, forced cities and counties cooperate and coordinate their planning efforts in order to accommodate future growth. Land use in Oregon is more efficient and sustainable because of this top-down, state imposed planning framework. UGBs, however, have not been implemented without pitfalls.
First, UGBs have attained less than projected intra-boundary increases in density, and secondly, development outside of UGBs has continued in exception areas at suburban sprawl rates, thus jeopardizing future expansion efforts and creating an exurban landscape. This form of development is anything but perfect, pierced and dotted as it must become by leapfrogging attempts at future UGB expansions.
Additionally, and perhaps more importantly, UGBs have faced significant opposition from landowners claiming to suffer decreased property values. The dynamic course of citizen-led political initiatives in Oregon illustrate how this opposition has played out vis-?-vis countervailing smart growth momentum. It is clear that UGB policy cannot be implemented without regard to the sacrifices its unrestrained use necessarily entails for property owners situated in disadvantageous locales; Measure 37 and its obliteration of the initial UGB goals tells us that much. It is also clear, however, that these sacrifices can in fact be taken into account and the interests of those who bear them accommodated; Measure 49 tells us that much. What remains unclear, however, is the degree to which this aim will require further refinement in the years to come.
Quite possibly the most important conclusions to draw from an examination of UGB policy in Oregon is that state-led land use policies do have coordinative benefits, and the extra-municipal, multi-town UGBs Oregon has enabled facilitate preservation and conservation of natural resources that might otherwise never occur due to market failures and problems of collective action. Certain natural resource elements that would otherwise suffer from degradation resulting from being valued little by prevailing market conditions are undeniably better off because of UGBs. Both urban and rural land uses seem to approach more optimal states of existence when UGBs are in force, and the ugly stepsibling of these two environments--suburban sprawl--is being systematically rooted out in the process.
This, if nothing else, is the bottom line of UGBs: if approached correctly, they promote a far more sustainable template for urban growth. Oregon has been a pioneer in this arena, and it should continue to be watched and observed by local and state government officials across the country for cues on how the intersection of fundamental legal principles adds to the complexity of an already convoluted subject. It is possible to remain ?within bounds?--literally, figuratively, and legally-- in approaches to urban land use. The case of Oregon has shown us important lessons to bear in mind in our attempts to do so, and these should be heeded, lest legal issues derail a land use concept with extreme potential for addressing the untenable development patterns that have recently plagued American metropolitan areas. Oregonian UGBs, in short, provide ample evidence that democratic attempts to regulate land-use can in fact be reconciled with legal principles manifested by private property rights.
I should also note that this paper has several spelling and grammatical errors of which I am aware...
Out of Bounds:
Reconciling Private Property Rights and Democracy in Oregon
I. Introduction:
Many metropolitan areas are experiencing growth at an alarmingly rapid rate. In Oregon, for example, the Greater Portland area alone is projected to grow by approximately one million additional residents over the next twenty years. (source 1). Cities like San Diego are projected to grow even faster. (mandelker p 753 text). With such an influx of new residents comes challenging land use and growth management questions as to where such people will live, work, recreate and do all of the other things associated with activities of daily life. The answers to such inquiries are of overwhelming importance in an age characterized by virtually unchecked sprawl and its attendant social, aesthetic and environmental ills. In terms of an explanation for such sprawl, widespread use of the car is a good place to start.
Modern land economics has been drastically altered by the advent of affordable automobiles and easily navigable roads, meaning today market equilibria are practically guaranteed in most places to compel low-density and dispersed development which ?leapfrogs? and darts across the countryside in a disconnected and widely strewn fashion. The compact settlement form of yesteryear?s streetcars and walkable city grids is largely gone; it has been replaced by a system of private-benefits resulting in an arguably public nuisance, manifesting itself as a suburban asphalt jungle of parking lots, freeways and pollutants. Such an approach to land use is unquestionably not a sustainable one, for a myriad of reasons.
Traffic congestion and pollution are bound to increase if sprawl is allowed to continue in an unimpeded fashion, and the cost of traditionally public services is guaranteed to rise as a result. Providing for a widely spread and scattered built environment is, for obvious reasons, much less efficient. Furthermore, agricultural and other delicate natural areas regularly succumb to encroaching urban land uses, and s such are at risk of being lost forever. Therefore, regions growing so speedily that development outpaces public facilities and consequently scatters and straggles across the landscape stand to benefit immensely from some form of ?growth management? plan which can restrain undesirable land uses and ensure a more sustainable long-term approach to the human environment. In many regions the particular policy course pursued to this effect heavily involves use of highly controversial Urban Growth Boundaries (UGBs).
UGBs are used in the following areas: Portland, OR; Sarasota County, FLA; Thurston County, Washington; Minneapolis/St. Paul, Minnesota; Boulder, CO; and numerous cities in California, among other places. (source 7). Of the preceding, Florida and Oregon implement their UGB strategies by way of State level growth management acts. Oregon?s policy specifically mandates use of UGBs, while Florida?s approach merely requires that measures be taken to ensure suburban sprawl is curbed in accordance with predetermined comprehensive planning objectives. (source 7). UGBs in these places strive to maintain a delicate and acceptable balance between urban growth and infrastructural and public service demands as well as suburban and rural land conservation. (source = mandelker text p 754). They are necessary, so the argument goes, because traditionally available zoning techniques fail to provide a comparable level of flexibility in regulating land use for metropolitan regions witnessing population explosions.
The usual ?wait-and-see? approach to the provision of updated infrastructure which characterizes conventional zoning is ill-equipped to deal with rapid urban growth of the sort occurring in mega regions across the country. Traditional zoning measures simply cannot ensure the infrastructure requisite to support sustainable development is in place prior to such growth taking shape. The conventional tools fail to enable proactive and preemptive management of anticipated growth trends. UGBs, on the other hand, attempt to plug the otherwise seemingly insurmountable loophole left open for sprawling land use by traditional zoning techniques by directly delineating the shapes of urbanized regions. They do so by demarcating the extent of permissible urban development.
Under the Portland system, widely looked to as a model by other areas both within and outside of Oregon, the provision of extra-UGB infrastructure is virtually prohibited, as is development of small-acreage lots. (source 7). The idea is to conserve open land that needn?t necessarily fall to unsustainable development practices, and to likewise conserve public financial expenditures by way of limiting municipal services in so doing. (mandelker text). The Portland area UGB is designed to control growth in an area capable of absorbing twenty years worth of urbanization at a time. (source 7).
To recapitulate, urban growth boundaries are tools of urban containment applied to curb the otherwise natural outward sprawl of cities into the countryside--an unattractive stretch of physical structures that has economic as well as environmental costs. UGBs is implemented literally as physical boundaries outside of which urbanized development is for all intents and purposes largely banned. For many reasons, some obvious and others not, such devices have been received with mixed fanfare and in some instances have been highly contested.
II. Elaboration of the UGB:
UGBs can be devised either at a local or state level. The Supreme Court of the United States held in 1974 that the constitutionality and validity of local restrictions on development is to be reviewed under a ?rational basis? standard, meaning they will be upheld as valid if a court can articulate a conceivably rational connection between their use and pursuit of the public welfare. (green book). Oregon implements UGBs on what is perhaps the most illustrative statewide level.
Oregon?s statewide approach is based on an urban ?stop line? created in Salem, the first of its kind in both Oregon as well as the United States. (green book). The current state-level comprehensive growth plan in Oregon was influenced by this approach and, since the time of the Salem stop-line, Metropolitan Portland has become more of a laboratory for land use decisions drawing on UGB techniques. Primarily for such reason, that region serves as the central focus of this paper.
Oregon?s comprehensive growth legislation has long and winding roots, but a watershed moment in its development dates to 1973, the year what is typically referred to as either Senate Bill 100 or the Land Conservation and Development Act was passed. (green book). Following the advent of this landmark legislation, Oregon became one of, if not the, most heavily land regulated states in the country. In Oregon, every acre of land is zoned in a manner reflective of local comprehensive plans that are required by State law. Moreover, such comprehensive plans, in addition to being State mandated, must also be State approved. The significance of these points is that virtually all local land use decisions have to be made in accordance with such State approved plans. (source 10 green book).
These unique and pioneering steps have in some ways catapulted Oregon to a position of land use planning ?guinea pig,? at least in the sense that other states have taken close note of the Oregonian trial run at extensive state-level land-use regulation. In fact, many states, including Maine, have followed suit.
There seems to be a trend towards returning the power of land use regulation to the State, as evidenced by what observers call the ?quite revolution? in this field, consisting of states following Oregon?s lead. (green book source 10). The successes, errors, and implications of Oregon?s state-level land-use regulations are, therefore, of extreme importance to policymakers considering regulatory models based on Oregon?s approach. As part of that approach UGBs have been an integral part of municipally adopted land-control ordinances since the late 1970s. (mandelker text). The physical limits to growth imposed by the State?s UGBs are not permanently fixed; rather, they are dynamic and to a degree flexible in that they expand over time. Given its status as a pioneer in this field, and its consequent centrality to the issues and controversies involved, Oregon will serve as the central contextual background for this paper?s investigation of specific legal issues raised by the use of UGB growth management techniques.
III. Oregonian UGB Specifics:
The backbone of Oregon?s urban-boundary-based growth management system consists of a compilation of planning objectives devised for the State by the Land Conservation and Development Commission (LCDC). (source 5). In 1980, the Oregon Court of Appeals held that LCDC proceedings were fundamentally legislative in nature, with the result that individual case-specific findings of fact were consequently unnecessary in LCDC?s deliberations regarding the appropriateness of UGB drawings. (source 5). Although based on a process devised at the state-legislative level, however, UGBs are implemented on a local or regional level. The process thus represents a cooperative intersection of state and local government regulatory efforts. When local governments attempt to alter UGBs, they do so in the shadow of State planning goals. (source 6).
Oregon municipal governments are permitted to rely upon tax policy or other incentive programs to encourage development within urbanizable intra-UGB lands, but under all circumstances are prohibited from permitting development within their jurisdiction that falls outside of UGBs. (green book). Although local governments can in effect channel patterns of development within UGBs, the shape such UGBs take on in the first place is an exclusively state-driven determination. Of LCDC?s numerous planning objectives, goal 14 is particularly important; it is specifically targeted at the issue of urbanization. That goal mandates that all Oregon cities utilize an urban growth boundary.
LCDC enforces this mandate by the authority it has been granted to approve or reject local land use plans on the basis of the degree to which they further state supported goals. (mandelker text). The impact of goal 14 has been to effectively require a clear borderline to be drawn around urban areas such that adequate land remains available for twenty year?s worth of anticipated urban growth. Points beyond UGBs can be thought of as non-urban frontier land, which for the most part are not permitted to urbanize. (mandelker). In Greater Portland, UGB policy is pursued and implemented by an association known as ?Metro,? a district-wide planning organization the nature of which was necessitated by the regional nature of multi-town UGBs.
A. The Purpose of Oregon?s Pioneering Approach to Land-Use:
Arguably, one of the most significant motivating factors underlying adoption and implementation of UGBs in Oregon was a desire to protect the State?s treasured agricultural lands in the Willamette Valley. This has been achieved by prohibiting disorderly and inefficiently sprawling land development in that area. (mandelker). In this sense, then, Oregonian UGB policy can be seen as a manifestation of aspirations aimed less at sculpting urban form and more at environmental conservation efforts. Perhaps even more important than environmental concerns, however, were economic interests. Specifically, the Oregon sought to ensure the continued vitality of its billion-dollar farming sector. (source 7).
The practical effect of UGB policy, however, has also undoubtedly been increases in the density of urbanized areas; urban form is thus also significantly effected, albeit in an incidental manner, by UGBs. To illustrate, consider the following: average lot sizes of new developments in Oregon decreased by nearly 50% from 13,000 to 7,000 square feet since adoption of UGB policy. Furthermore, older inner urban core areas which were previously in a state of decline are now witnessing waves of gentrification as renovations and updated infill projects push affordable housing units farther and farther away from areas of convenience. (source 7). The goals that guide LCDC in its application of UGB policy, though, make no mention of development distribution or apportionment within UGBs, despite these very tangible and perceptible effects on urban form. Such indirect effects are, therefore, capable of significant drawbacks. UGB policy, then, perhaps somewhat unsurprisingly, has real and demonstrable effects of urban settlement patterns in Oregon. Some are clearly positive while others are more debatable.
Specifically, when low-density development inside a UGB occurs as a result of lacking controls over intra-UGB apportionment policies, less than anticipated density increases, and faster than anticipated demands for UGB expansion, have resulted. (mandelker). To an extent, therefore, these policy shortcomings undermine the purpose of preserving agricultural lands. Density increases within the Portland UGB have not been insignificant, however.
The true problem as to urban form and land use stemming from UGB policy--one which has necessitated additional legislative action--has been the development of so-called ?exception lands.? Such areas pose a threat to the objectives of Oregonian UGB policy to a much higher and credible degree than lack of intra-boundary development allocation. Specifically, exception lands are those agricultural areas that are either needed for uses other than strict conservation efforts, or have been committed to urbanization pursuant to state law (See Or. Rev. Stat. sec 197.732).
B. Extra-UGB Development and Urban Reserve Areas: (mandelker p 813).
To discourage development of exception areas UGB policy is applied in the Portland region such that public services are provided in a manner that effectively subsidizes growth within UGB bounds. (mandelker). However, this approach has not entirely prevented low-density sprawling development of exception lands adjoining UGBs. Furthermore, undesirable growth patterns potentially undermine the very grounds on which support for UGBs is based if, when expansion is necessary, development cannot occur in a continuously compact fashion. If low density development of exception lands occurs just outside of a UGB in an area contiguous with high density land use, for example, if and when expansion is contemplated for a UGB in order to accommodate future growth needs, officials will face a myriad of development obstacles. Not insignificantly, UGBs will be forced to play a vaulting game, whereby future urban development is forced to skip over suburban land uses similar to the very patterns UGBs are expected to eliminate. To remedy this outcome, Oregon has statutorily created what are known as ?urban reserve? areas which have made UGBs infinitely more effective. (Or. Stat. 197.298).
The thrust of urban reserve areas is to serve as a way that regional associations of local governments can set aside land just beyond official UGBs in a strategic anticipation of future growth. Such land is barred from developing in a prohibitively suburban fashion. With an eye to the future needs of urbanizing regions, these areas provide land especially ripe for developing in sustainable ways when the proper time arises. When deliberating if, how, and where UGBs should pursue geographic expansion, urban reserve areas are conveniently prioritized as growth districts.
The aforementioned background information is useful in understanding both the appeal of UGBs as well as some of the challenges--and there have been many--to their implementation. I will now discuss some of the specific legal challenges to Oregonian UGB policy, and the courts? reasoning in the adjudication of such issues, in an effort to draw broad implications to be used in an evaluation of the usefulness of UGBs as growth management techniques. Some of this discussion will focus on generally applicable legal issues that challenges have revolved around, but the majority will focus specifically on particular issues stemming from Greater Portland UGB implementation.
III. Legal Challenges to UGBs and Resulting Referenda:
The various legal arguments drawn upon to challenge use of UGBs differ, like UGB policy itself, based on context. Legal issues in Arizona, for example, are necessarily different from those presented in Oregon, because the motivating factors underlying adoption of growth management in these two contexts are fundamentally distinct. (source 7). Due to Oregon?s pioneering status in this realm, however, this paper focuses exclusively on legal challenges to the Oregonian system. These challenges and their resolutions are apt to be of the most widely applicable significance to other states considering policy options along similar lines.
Some challenges to the Oregon system have been based on the ?farmland paradox,? where inefficient agricultural land is uselessly conserved while other, more fertile, areas are developed due to convenient proximity to UGB expansion pathways. (green book). This weakens the persuasiveness of the underlying premise on which Oregonian UGBs are based. Other challenges highlight geographic inequities in affordable housing caused by an artificially scarce land market. To the exclusion of these not-unimportant issues, however, this paper focuses on what is perhaps the most significant legal controversy regarding UGBs: ?takings claims,? which assert UGBs illegally appropriate private property in contravention of the U.S. Constitution.
A. Constitutional Issues - Regulatory Takings Claims:
Adoption of UGB measures can effect regional land-economics in very specific ways. In particular, a twofold land market is likely to develop where such policies are implemented, with the speculative value of most land falling outside of such boundaries witnessing a precipitous drop, or even evaporating, while lands within UGBs retain, or in some cases increase in, the same. (source 3). The effects UGBs have on land values operate primarily through their affect on supply and demand, particularly supply. Specifically, while demand for land is likely to grow at a natural rate, supply of land is restricted to a less-than-market optimum level by UGBs. (green book). Basic economics indicates that this necessarily results in higher land prices and values, which in turn result in increased housing costs. Such increased costs stem from the bidding wars that occur when developers with sights previously set on suburban lands are forced to contend with infill developers for land within UGBs. (green book).
In short, regulatory constraints imposed on land-use options result in what can be thought of as a transfer of wealth from the party regulated--those outside the UGB--to the scheme?s beneficiaries (usually the general public). (source 4). This is true with all land use regulations, including traditional zoning, but it is particularly pronounced and noticeable in the use of UGBs, where an inequity results such that wealth is transferred from those owning land outside of a UGB to, rather than the general public, owners of land within the UGB. (green book).
Although some studies indicate that drawing UGBs with enough room for growth may facilitate market choice and thus avoid inflating urban land prices (green book), such approaches simultaneously fail to fundamentally serve the very purpose of UGBs--to constrain sprawling development. Thus, LCDC and Metro argued back and forth for some time regarding the proper size for the Portland UGB in 1980. Metro sought to restrain land cost inflation by drawing UGBs that were too big, while LCDC argued for reduced UGB areas. Eventually, a compromise between the two agencies was arrived at, and resulted in what has been termed an ?intermediate growth boundary,? or IGB.
IGBs can be described thus: LCDC consents to, and concedes the superiority of, Metro?s enlarged scale for the Portland area UGB, contingent on a short term (10 year) moratorium put in place for prime agricultural lands within the UGB. This may have facilitated marginal progress in terms of sidestepping land price inflation, but legal issues have nonetheless still arisen as to whether UGBs which still do negatively impact property values are permissible and, if so, what degree of ?just compensation? is due in such circumstances.
To calculate a measure of decrease in monetary value in any way approaching a degree of precision for land the value of which is primarily speculative it is necessary to understand the ?time value of money.? Essentially, a sum of money received today is worth more than the same sum received tomorrow, due in large part to two economic factors: (1) inflation; and (2) the potential for accrual of investment-based interest gains. The amount by which a land-use regulation might decrease the value of land can therefore be thought of as closely related to the decrease in the present value of discounted anticipated future returns from previously permissible land uses. More straightforwardly, if a parcel of land previously had a value reflective of the potential for later development, and that development potential is nixed by regulation, the anticipated return to an investor (the landowner) decreases by an amount which is, in theory, calculable in today?s dollars. This is true even though for present purposes such land may be relatively useless or unattractive from a development standpoint.
Thus, mere potential can possess a real and demonstrable land value. The precise calculations to use in arriving at UGBs? potential to influence such value is anything but agreed upon. Some argue the land value impact of UGBs depends on the specific location of a parcel of land within a UGB, with land values fluctuating depending on whether an intra-UGB parcel is situated beyond a ?value-tipping point,? at which proximity to rural lands outside a UGB outweighs the value of urban amenities provided inside a UGB. (green book). Even if this is true, however, it has also been argued that any such change in value that is negative is only so in the short term, and even then only in areas close enough to UGB transition zones as to be influenced by speculation. In the long run, however, it is quite possible that UGBs, if steady and predictable, serve to increase efficiency in land use investments by providing a reliable indicator of future values. (green book).
Nonetheless, despite confusion and controversy regarding which lands fluctuate and to what degree in response to UGB imposition, it is certain that at least some landowners suffer negative effects on the value of their land when the anticipated effects of UGBs are capitalized into present value. (green book). Decreases in such value stemming from land-use regulations, assuming they are legitimate, and which are not followed by payment of just compensation, have been argued by some to be unconstitutional. Claims like these revolve around the Fifth Amendment to the U.S. Constitution and the federal ?takings? jurisprudence stemming therefrom. A length line of Supreme Court precedent has established that government regulation is valid if instituted in pursuit of the goals of constitutional police powers: protecting welfare, morals, health and safety. (source 20 land use text this semester). The same line of cases, however, has also come to stand that such a right is limited by other constitutional requirements, such as due process and just compensation for property appropriations. (red land use book, source 20).
The Fifth Amendment states, in pertinent part, ?Nor shall private property be taken, for public use, without just compensation.? (source 21, cosntitution). For the aforementioned reasons, it has been argued that this is precisely the effect of UGBs on Oregonian property owners who witness a regulation-based decrease in the value of their land. Federal jurisprudence on this issue is long and complex, but in general the following rules represent federal takings law as it has developed at the Supreme Court level.
Takings can be split into two umbrella categories, physical and regulatory, and it is regulatory with which we are here concerned. The existence of a regulatory taking can be determined either categorically or based on a balancing of public interest versus reasonable investment backed expectations, depending on whether its effects represent a total or partial reduction in property values, respectively. (source 22 and source 23). These broad legal frameworks are anything but straightforward or intuitive.
As a result, in response to political pressure stemming from interest groups supporting deregulation of land uses, Oregon legislatively shifted course from such precedent and experimented with legally imposed categorical compensation requirements in 2004, dramatically changing the State?s legal landscape as regards land use. There has been some pull in addition to this push, however, and as of late the legal pendulum seems to have at least partially swung back in the other direction. The political turbulence surrounding these citizen initiatives, Measures 37 and 49, respectively, makes Oregonian UGBs particularly ripe for examination. Specifically, the broader implications of Oregon UGB policy may enable other states to learn from the trail Oregon blazes, rather than reinventing the wheel.
( A ). Legislative Dynamics - Measure 37:
In 2004, the State passed what is known as Measure 37 by a vote of nearly 2 to 1 in a popular referendum. It states that government enforcement of land use regulations which negatively impact property owners in a land-value sense is contingent on the payment of just compensation. (source ? 195.305). Essentially, if the State diminishes the worth of someone?s land by imposition of prohibitive regulations, Measure 37 mandates that it must pay just compensation in the form of fair market value for any resulting depreciation. This has been anything but uncontroversial. Less than a year after the law was enacted, it was ruled illegal by the State Appeals Court for violating the ?privileges and immunities? clause of the Oregon Constitution for want of serving a legitimate State purpose. (source 12). That ruling, however, was in turn quickly overruled and rendered null by the Oregon Supreme Court on appeal, and Measure 37 was thereby reinstated. (source 9). The act has, to say the least, provoked strongly divisive and contentious levels of debate. This reality came to light in a particularly emphasized manner in 2007, when Measure 49 was adopted by Oregon voters, largely reversing a good portion of Measure 37. Measure 49 will be discussed in more detail later in this paper.
Although at first blush the soundness of Measure 37 might seem beyond criticism, as anything aimed at addressing negative effects on land values arguably could, upon further reflection it appears that support for Measure 37 based on Fifth Amendment violations represents a fundamental misunderstanding of federal takings jurisprudence. (source 9). The Oregonian UGB approach to growth management was not unconstitutional as it existed prior to Measure 37. The reasons for this conclusion are as follows.
Measure 37 embraced the central holding of Penn. Central Transportation Co. v. New York, a 1978 case from the United States Supreme Court establishing that compensation is due to landowners when governmental regulations diminish ?investment backed expectations? and resultantly decrease the fair market value of land in a manner out of line with public interests. (source 9). In so doing, Measure 37 demonstrated a fundamental misunderstanding of that case?s reasoning. (source 9). Penn. Central does not stand for the proposition that every government regulation resulting in diminution of value is necessarily a taking in contravention of the Constitution; it merely states that takings can occur as the result of regulations as opposed to purely physical appropriations. (See source 9). This holding has been adopted and expanded upon by subsequent Supreme Court cases, particularly Lucas v. South Carolina Coastal Council, in which the Court affirmed the validity of the Penn Central balancing test as to when regulations amount to takings. The Court highlighted that such determinations should take into account the degree to which use restrictions benefit the public good, and further indicated that only total deprivation of all economically viable use of land could constitute a categorical or per se taking. (source 22).
Presumably, every use-based regulation diminishes the value of land to some extent; but, according to Penn. Central and Lucas, not every regulation is unconstitutional. Some regulatory mandates, including those addressed by Measure 37, are within the bounds of a state?s police powers, granted to ensure the public safety and welfare, and are therefore capable of being entirely legal. This does not mean, however, that the converse is true; that is, neither is Measure 37 itself unconstitutional merely because the use restrictions it is aimed at are (or might be) constitutionally permissable, as some have argued. (source 9). It, too, is likely completely constitutional. Issues of constitutionality, then, should bear very little on the logical foundations upon which support for, or opposition to, legislative action like that embodied by Measure 37 is based. In fact, numerous times since the 1920s, the Supreme Court has, in exercising judicial review of the Constitutionality of government regulations, established that the mere desire of landowners to use their land in a manner different or more lucratively than allowed by zoning restrictions is not enough to require rezoning or an abandonment of regulation. (source 9). In so holding, the Court has recognized the legitimacy and, implicitly, the lack of takings violations inherent in many regulatory land-use restrictions imposed for the common good. (source 14).
To be completely free from constitutional attack, however, such use restrictions must not amount to a ?total? depletion of economic value, or even one disproportionately favoring the public interest. It has been argued that even if land is restricted to rural farm use, a total depletion of economic value does not result, because some use of the land is still permissible, even if less than hoped for by the owner. (source 9). Thus, assuming some economically viable and valuable use of land remains post-regulation, most deliberations regarding the use of UGBs in Oregon are likely to revolve less around issues of federal legality, and more on voter sentiment at relevant political junctures. Indeed, this is what Measure 37, which sidesteps issues of constitutionality in pursuit of a legal landscape in which any diminution in value is compensable, has shown us. (source 9).
Measure 37 may not be repugnant to the constitution, but to a degree it most does offend principles of logic and reason. It has been argued, and this paper adopts the view, that it makes very little sense indeed for laws like Measure 37 to demand compensation for regulation-based reductions of value in private property rights. (source 9). This is so for numerous reasons, perhaps the most important of which is that property owners do not exist in a Hobbesian ?state of nature;? that is, they, and the rights appurtenant to their property, exist as they do within, and more importantly because of, an implied social contract with numerous forms of governing bodies. (source 9).
According to this theory, society collectively relinquishes certain rights individuals would otherwise be entitled to, for the good of community governance. This is a common occurrence which pervades all regulatory structures plagued by problems of collective action, from local zoning to federal management of natural resources. It is this act which enables private property to have most of its value in the first place, as otherwise tragedies of the commons would be an all too frequent occurrence. To enter such a contract, even if by default, is to accept its benefits. Once accepted, to subsequently claim the particular types of the very regulations which confer benefit to you in some contexts must compensate you when they are not similarly beneficial in others is silly, immature, and a fundamentally confused position. Yet this was the exact result of Measure 37.
The potential deregulatory impacts of laws like Measure 37 could be negative and widespread, ranging from increased sprawl and consequent loss of farmland and agricultural areas, to decreased quality of life and increased infrastructural investment. Passage of the measure increased levels of uncertainty regarding the direction Oregon land-use would take and how the rest of the nation would be impacted in terms of the pursuit of UGBs. Fortunately, Oregon voters realized these pitfalls and other shortcomings, leading to the passage of Measure 49. Measure 49 seeks the best of both worlds in that it strives to achieve the aims championed by proponents of UGBs while compensating effected landowners in a manner more sustainable than that provided by Measure 37.
B. Legislative Dynamics - Measure 49:
Similar to Measure 37, Oregon?s Measure 49 resulted from a citizen-led voter initiative. It was placed before the electorate in November of 2007 and passed by nearly a two-thirds majority. (source 15). its intent is to modify Measure 37 and ?fix? its perceived shortcomings. (source 17). Specifically, Measure 49 aims to protect farms, forests and ground waters; limit large developments; and further clarify residential development rights. (source 15). The idea is to provide a sustainable legal mechanism for just compensation while simultaneously furthering the original goals of urban containment: protection of natural resources. (source 16).
Measure 49 consists of two primary sections, each of which pertains to a temporally distinct set of compensatory legal claims filed by effected landowners. (Source 16). One part of the law is applicable to previously filed Measure 37 compensatory claims filed prior to June 28, 2007; the other addresses new claims arising strictly under Measure 49. Part One supersedes the alternatives provided under Measure 37 for effected property owners: payment of compensation or foregoing enforcement of regulation. It uses a alternative compensation mechanism implemented by way of an approved plan for a limited number of residential sites allowed for effected property owners. In theory this provides substitute compensation for those negatively impacted by regulations adopted after they purchased land. (source 16).
Part Two of Measure 49 is strictly aimed at the filing of new claims by aggrieved landowners, defined as those commencing anytime after January 1, 2007. These new claims are similar to Measure 37 claims with a twist. Similar to its predecessor Measure 49 provides an alternative to local government land-use officials: either pay just compensation to those negatively effected by new ordinances, or forego enforcement. (source 16). It differs, however, in the manner used to flesh out this broad statutory framework.
Under Measure 49, for example, the arena of land-use regulations susceptible to claims for legislatively mandated legal redress has been narrowly tailored. According to the new law, only land-use restrictions which limit farming, forest, or residential uses are eligible for reprieve. (source 16). Moreover, landowners are only capable of seeking a legal remedy if they fully carry their burden of proof under Measure 49--i.e., if they can demonstrate actual reduction in value--in order to recover anything from local government. Finally, regarding claims stemming from residential use restrictions, successful litigants are able to have regulations waived only to an extent that would enable construction of a dwelling capable of replacing the value which would otherwise be lost through regulation; all other regulatory effects remain intact. (source 16).
IV. Implications:
By 2006, at least $250 million worth of Measure 37 claims had been filed in the City of Portland alone, threatening to undermine comprehensive planning efforts aimed at urban containment and increase sprawling and inefficient land uses. (source 18). At least one of these claims was filed by super-big-box retailer Wal-Mart. Rather than pay the exorbitant compensation rates that necessarily would have resulted from masses of successful Measure 37 claims, Oregon would have likely chosen to forego enforcement of regulatory land-use measures altogether. Instead, however, Oregonians wisely adopted Measure 49 to narrow instances in which legal redress is appropriate and limit the relief available. This move should effect land use policy favorably because it permits urban containment and anti-sprawl measures in a much more practicable (and just) fashion than previously existed. However, two years following its adoption, statistics on exactly what, if any, effect Measure 49 has actually had remain indeterminately vague. (source 19).
Part of the reason for this stems from the global recession and a resultantly cool real estate market decreasing pressure for the filing of relief claims, but a major further explanatory factor is that Portland State University, which closely monitored the effects of Measure 37, has not similarly observed the impacts of Measure 49. (source 19). While it remains to be seen what the exact impact of Measure 49 shall be, intuitively the results are likely to represent a highly advantageous and appropriate balance between anti-sprawl proponents and private property advocates.
V. Conclusion and Recommendations:
Ultimately, the facts as borne out in Oregon indicate that urban growth boundaries, if implemented with due consideration, are a useful tool for land-use planning in fast-growing metropolitan areas otherwise susceptible to unsustainable suburban sprawl. Since the 1970s, urbanized areas in Oregon have become more compact; farms and forests have witnessed decreased pressure for development; and settlement patterns have generally experienced increases in overall density, corresponding to heightened infrastructural efficiency. (green book). Furthermore, UGBs have, by necessity, forced cities and counties cooperate and coordinate their planning efforts in order to accommodate future growth. Land use in Oregon is more efficient and sustainable because of this top-down, state imposed planning framework. UGBs, however, have not been implemented without pitfalls.
First, UGBs have attained less than projected intra-boundary increases in density, and secondly, development outside of UGBs has continued in exception areas at suburban sprawl rates, thus jeopardizing future expansion efforts and creating an exurban landscape. This form of development is anything but perfect, pierced and dotted as it must become by leapfrogging attempts at future UGB expansions.
Additionally, and perhaps more importantly, UGBs have faced significant opposition from landowners claiming to suffer decreased property values. The dynamic course of citizen-led political initiatives in Oregon illustrate how this opposition has played out vis-?-vis countervailing smart growth momentum. It is clear that UGB policy cannot be implemented without regard to the sacrifices its unrestrained use necessarily entails for property owners situated in disadvantageous locales; Measure 37 and its obliteration of the initial UGB goals tells us that much. It is also clear, however, that these sacrifices can in fact be taken into account and the interests of those who bear them accommodated; Measure 49 tells us that much. What remains unclear, however, is the degree to which this aim will require further refinement in the years to come.
Quite possibly the most important conclusions to draw from an examination of UGB policy in Oregon is that state-led land use policies do have coordinative benefits, and the extra-municipal, multi-town UGBs Oregon has enabled facilitate preservation and conservation of natural resources that might otherwise never occur due to market failures and problems of collective action. Certain natural resource elements that would otherwise suffer from degradation resulting from being valued little by prevailing market conditions are undeniably better off because of UGBs. Both urban and rural land uses seem to approach more optimal states of existence when UGBs are in force, and the ugly stepsibling of these two environments--suburban sprawl--is being systematically rooted out in the process.
This, if nothing else, is the bottom line of UGBs: if approached correctly, they promote a far more sustainable template for urban growth. Oregon has been a pioneer in this arena, and it should continue to be watched and observed by local and state government officials across the country for cues on how the intersection of fundamental legal principles adds to the complexity of an already convoluted subject. It is possible to remain ?within bounds?--literally, figuratively, and legally-- in approaches to urban land use. The case of Oregon has shown us important lessons to bear in mind in our attempts to do so, and these should be heeded, lest legal issues derail a land use concept with extreme potential for addressing the untenable development patterns that have recently plagued American metropolitan areas. Oregonian UGBs, in short, provide ample evidence that democratic attempts to regulate land-use can in fact be reconciled with legal principles manifested by private property rights.
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