Hill v. City of Portland

293 Or.App. 283

428 P.3d 986

Daniel HILL, Petitioner,

v.CITY OF PORTLAND, Respondent.

A167793

Court of Appeals of Oregon.

Argued and submitted July 12, 2018.

August 8, 2018

Christopher P. Koback, Portland, argued the cause for petitioner. Also on the brief was Hathaway Larson LLP.

Lauren A. King argued the cause for respondent. Also on the brief was Linly F. Rees.

Before Lagesen, Presiding Judge, and Egan, Chief Judge, and Garrett, Judge.

LAGESEN, P. J.

Petitioner seeks judicial review of a final order of the Land Use Board of Appeals (LUBA). In that order, LUBA affirmed the decision of a City of Portland hearings officer in which the hearings officer rejected petitioner’s challenges to certain conditions that the city placed on its approval of petitioner’s application to divide his 1.06 acre property into three separate parcels. In particular, the hearings officer determined that a condition requiring petitioner to dedicate a two- to seven-foot wide right-of-way along the site’s frontage along SE 122nd Avenue to accommodate future street improvements was not an unconstitutional exaction of property in violation of the Fifth and Fourteenth Amendments to the United States Constitution under Nollan v. California Coastal Comm’n , 483 U.S. 825, 107 S.Ct. 3141, 97 L.Ed.2d 677 (1987), and Dolan v. City of Tigard , 512 U.S. 374, 114 S.Ct. 2309, 129 L.Ed.2d 304 (1994). In addition, the hearings officer determined that the city permissibly conditioned its approval on the requirement that petitioner execute street and storm sewer waivers of remonstrance for future storm sewer and street improvements. Before us, petitioner contends that the hearings officer erred in both respects and that LUBA erred in concluding otherwise. For the reasons that follow, we conclude that the hearings officer’s and LUBA’s rejections of petitioner’s unconstitutional exaction claim were based on an erroneous understanding of Nollan and Dolan . We also conclude that LUBA erred in upholding the condition requiring that petitioner sign waivers of remonstrance on the basis that it did. We therefore reverse and remand.

BACKGROUND

To frame the discussion, we start with an overview of the constitutional limitations on governmental exactions of private property as conditions of land use approvals. Under Nollan and Dolan , the Fifth and Fourteenth Amendments permit the government to exact a dedication of private property as a condition of approval of a land use permit if the government demonstrates (1) a nexus between a governmental interest that would furnish a valid ground for the denial of the permit and the exaction of property, and

(2) that the nature and extent of the exaction are roughly proportional to the effect of the proposed development. Brown v. City of Medford , 251 Or. App. 42, 47, 283 P.3d 367 (2012). For purposes of the first element, a governmental interest is one that allows the denial of a permit if the impacts of the project, alone or with other construction, would substantially impede that interest. Nollan , 483 U.S. at 835-36, 107 S.Ct. 3141. The purpose of the Nollan / Dolan framework is to "enable permitting authorities to insist that applicants bear the full costs of their proposals while still forbidding the government from engaging in ‘out-and-out ... extortion’ that would thwart the Fifth Amendment right to just compensation." Koontz v. St. Johns River Water Management Dist. , 570 U.S. 595, 606, 133 S.Ct. 2586, 186 L.Ed.2d 697 (2013) (ellipsis in original).

In this case, petitioner applied to the city to divide his property into three separate parcels. Under petitioner’s proposal, an existing residence would remain on one of the new parcels and two new single-family residences would be permitted to be constructed on the other two parcels. The property fronts on two streets, SE 122nd Drive and SE 124th Avenue. The widths of those streets do not meet current city standards. The streets also do not contain improvements meeting current city standards and are not wide enough to accommodate those improvements.

The city approved petitioner’s application, but imposed several conditions of approval. First, the city required petitioner to dedicate additional rights-of-way along SE 122nd Drive and SE 124th Avenue so that those streets could be brought into compliance with city standards governing street width and improvements. It required those dedications to meet city standards even though it had found, when evaluating the transportation impacts of petitioner’s proposed development, that "the transportation system is capable of safely supporting the proposed development in addition to the existing uses in the area for all travel modes" and that "[n]o mitigation is necessary for the transportation system to be capable of safely supporting the proposed development in addition to the existing uses in the area." The city also imposed a condition requiring that petitioner "complete

street and storm sewer waivers of remonstrance (for future street and storm sewer improvements) as required by the City Engineer."

Petitioner appealed the decision to a city hearings officer. He challenged the condition requiring that he dedicate additional rights-of-way along SE 122nd Drive and SE 124th Avenue, and also the condition requiring that he sign waivers of remonstrance. He argued that the right-of-way dedication requirements were unconstitutional because they were not supported by findings that the impacts of the proposed development were sufficient to justify the conditions under the analysis required by Nollan and Dolan , especially in view of the city’s findings that the transportation impacts of the project were insufficient to require mitigation. He further contended that the requirement that he sign waivers of remonstrance violated Portland City Code (PCC) 33.800.070.

In response, the city abandoned the condition requiring that petitioner dedicate a right-of-way along SE 124th Avenue. As to the dedication required along SE 122nd Drive, the city contended that the right-of-way standards contained in PCC 33.654.120 required petitioner to demonstrate that the local street right-of-way adjacent to petitioner’s property met current city design standards for rights-of-way, entitling the city to deny petitioner’s application if it did not. That, in the city’s view, permitted it to condition petitioner’s permit on petitioner’s dedication of sufficient land to bring the right-of-way into compliance with current city standards governing the width of rights-of-way and improvements in rights-of-way. Further, the city submitted evidence demonstrating that petitioner’s proposed development would increase traffic along SE 122nd by approximately five percent. According to the city’s analysis, the dedication that it was requiring along SE 122nd Drive would amount to at most four percent of petitioner’s total property, making that dedication requirement proportionate to the impact on traffic that the development would have.

The hearings officer agreed with the city. Rejecting petitioner’s argument that the right-of-way design standards contained in PCC 33.654.120 apply only to rights-of-way

included on the property within a proposed land division, the hearings officer determined that those design standards also applied to rights-of-way serving the property, such that the city could deny a permit application if those rights-of-way did not meet the design standards. The hearings officer further determined that the required dedication of the right-of-way substantially advanced the governmental interest in having the right-of-way meet the required design standards for right-of-way width and improvement, and that the exaction at issue satisfied the Nollan / Dolan requirement that it be "roughly proportional" to the impacts of the proposal. As to petitioner’s challenge to the requirement that he sign waivers of remonstrance, the hearings officer concluded that PCC 33.800.070, which allows the city to impose conditions to ensure enforcement of other code provisions, authorized the condition because, pursuant to PCC 17.88.020, the city would have been permitted to require petitioner to construct improvements himself and that, therefore, the condition was appropriate to ensure the enforcement of that requirement.

Petitioner next appealed to LUBA, again challenging the imposition of the right-of-way dedication condition as unconstitutional under Nollan and Dolan . LUBA affirmed. It concluded that the hearings officer correctly concluded that PCC 33.654.120 required petitioner to demonstrate that the right-of-way adjacent to his property met city design standards, and that the city was entitled to deny his permit if it did not. LUBA further determined that the hearings officer had correctly analyzed and rejected petitioner’s challenge under Nollan and Dolan .

LUBA also concluded that the city permissibly required petitioner to sign waivers of remonstrance, but did so on a basis different from that on which the hearings officer relied. Applying its own decision in Clark v. City of Albany , 31 Or. LUBA 375, 380, aff’d , 144 Or. App. 192, 924 P.2d 877 (1996), LUBA concluded that the condition was permissible because there was substantial evidence to support findings by the city "that there is a need for a local improvement district and that petitioner’s development will both contribute to the need for those improvements and be benefited by them."

Petitioner petitioned for judicial review. He reiterates his argument that the city’s right-of-way design criteria, properly construed, do not apply to rights-of-way that are located outside of a proposed land division. He also argues that the hearings officer and LUBA misapplied the analysis required under Nollan and Dolan in many respects, including in their analysis of whether the city had demonstrated a governmental interest that would permit the denial of petitioner’s permit. In particular, petitioner asserts that the hearings officer...