Rogers Machinery, Inc. v. Washington Cty.

45 P.3d 966

181 Or. App. 369

ROGERS MACHINERY, INC., Appellant, v. WASHINGTON COUNTY, and City of Tigard, Respondents.

C971202CV; A104615.

Court of Appeals of Oregon.

Argued and Submitted December 13, 1999.

Decided May 8, 2002.

David J. Hunnicutt, Tigard, argued the cause and filed the briefs for appellant.

Loretta S. Skurdahl, Hillsboro, argued the cause and filed the brief for respondent Washington County.

G. Frank Hammond, Portland, argued the cause for respondent City of Tigard. With him on the brief were Timothy V. Ramis and Ramis Crew Corrigan & Bachrach, LLP.

Before LANDAU, Presiding Judge, and LINDER and BREWER, Judges.

LINDER, J.

Pursuant to ORS 34.010 et seq., Rogers Machinery, Inc., petitioned for a writ of review to challenge the imposition of a Traffic Impact Fee (TIF) assessed under a Washington County ordinance. Respondents are Washington County and the City of Tigard, which jointly administer the ordinance.¹ The TIF is assessed against property developers to provide funds for improvements to city streets and arterials. Petitioner challenges the TIF assessed against it as a taking of its property without just compensation, in violation of the Fifth Amendment to the United States Constitution.² Petitioner also argues that the TIF ordinance violates state statutes governing system development charges (SDCs). We review to determine whether, in upholding the assessment, the trial court misconstrued the applicable law. ORS 34.040(1)(d), (e); Johnson v. Civil Service Board, 161 Or.App. 489, 498, 985 P.2d 854, on recons. 162 Or.App. 527, 986 P.2d 666 (1999). We affirm.

The facts relevant to our review are not disputed. Petitioner operates a business that has its headquarters in the City of Tigard. Because of crowding in the existing headquarters building, petitioner decided to construct a second building on the same site. Petitioner planned to relocate approximately 40 employees from the existing building to the new one. In February 1997, petitioner applied for a building permit for the new building. After reviewing the permit application and other materials relating to the proposed development, the city determined that, under the TIF ordinance, petitioner's proposed development fit the use category of "general light industrial." Applying the formula applicable to that category, the city assessed a TIF of $37,102.³

Petitioner filed an administrative appeal of the assessment, raising its statutory and constitutional challenges to the TIF. See Washington County Code (WCC) § 3.17.110 (providing for appeals seeking refunds of monies collected under the TIF). After a hearing, a county hearing officer issued an order upholding the assessment generally but directing it to be recalculated based on the hearing officer's conclusion that the proposed development fit into three relevant use categories. The city recalculated the assessment, apportioning it according to the uses identified by the hearing officer and applying current rates; the recalculated assessment was $37,018.

After paying the assessment, petitioner brought this writ of review proceeding in circuit court, asserting that the TIF violates the federal Takings Clause. In particular, petitioner argued that the TIF is invalid under the individualized "rough proportionality" test announced in Dolan v. City of Tigard, 512 U.S. 374, 114 S.Ct. 2309, 129 L.Ed.2d 304 (1994). Petitioner also challenged the TIF as inconsistent with certain provisions of ORS chapter 223 relating to systems development charges.

In response to petitioner's federal constitutional challenge, respondents argued that the Takings Clause and Dolan's rough proportionality test do not apply to the TIF, for three reasons: (1) the TIF is a tax, not an exaction; (2) the TIF is not the result of an ad hoc adjudicative decision; and (3) the TIF, even if it is an exaction, does not require the dedication of property. Respondents argued alternatively that, even if the test announced in Dolan applies to the TIF, the ordinance satisfies that test. In response to petitioner's claim that the TIF violates portions of ORS chapter 223, respondents argued that ORS chapter 223 does not apply to the TIF because it is a tax and not a systems development charge. Respondents asserted further that, if ORS chapter 223 does apply, petitioner's challenge to the TIF as inconsistent with that statutory scheme is both untimely and without merit. The circuit court rejected petitioner's challenge to the TIF, reasoning that the TIF is a tax and that Dolan therefore does not apply to it. The circuit court further concluded that the TIF is "compatible" with the provisions of ORS chapter 223 relating to systems development charges.

On appeal, the parties renew the arguments they made below.⁴ We begin by describing the provisions of the ordinance and the assessment that it authorizes. We then consider petitioner's claim that the TIF is invalid under the statutes relating to system development charges. See State v. Kennedy, 295 Or. 260, 262-65, 666 P.2d 1316 (1983) (statutory issues should be resolved before reaching constitutional issues). Because we reject that challenge, we finally consider petitioner's claim that the TIF violates the federal Takings Clause.

I. THE ORDINANCE IMPOSING THE TIF

Washington County first adopted the ordinance authorizing the TIF in 1985. In 1990, the ordinance was amended to apply to cities and was readopted as amended. The ordinance is codified in the Washington County Code as chapter 3.17 and, at the outset, identifies its purpose and scope as follows:

"A. This tax is adopted to ensure that new development contributes to extra capacity transportation improvements needed to accommodate additional traffic generated by such development.

"B. This tax shall provide funds for extra capacity improvements to county and city arterials and certain collectors or state facilities. It applies throughout the county, including within incorporated cities."

WCC § 3.17.020.

Section 3.17.050 describes the method for determining the amount of the assessment to be imposed. In effect, under that section and Appendix A of the ordinance, the assessment depends on the type of use proposed for the new development. As pertinent here, the ordinance specifically provides:

"A. The amount of the tax due shall be determined by multiplying the following applicable dollar amount, adjusted as provided in subsection E of this section, by the number of average weekday trips generated by the new development in accordance with the basis for trip determination set forth in Appendix A attached hereto and incorporated herein.

"* * * * *

"Office use $124 per average weekday trip "Industrial use $130 per average weekday trip

"* * * * *

"B. In the event an identified use does not have a basis for trip determination stated in Appendix A, i.e., not available, the director⁵ shall either:

"1. Determine the trip generation based on the use listed in Appendix A most similar in traffic generation; or

"2. At the election (and expense) of the applicant, consider actual trip generation of a same or similar use verified by a registered traffic engineer. In the event actual trip generation is utilized, the director may make such adjustments as he deems applicable in consideration of location, size and other appropriate factors in determining the average weekday trip.

"C. It is recognized that single structures may include more than one use. In such event the director for purposes of establishing the traffic impact fee shall proportion the uses accordingly.

"D. The applicant shall, at the time of application for a building permit, provide the department with necessary and applicable information, such as the type of use, number of employees or square footage of structures, necessary to calculate the traffic impact fee."

Appendix A further sets out various specific land use categories (which are listed under the general categories of "residential," "institutional," "business and commercial," "office," and "industrial,"), the bases for "trip determination" for those categories (e.g., square footage, number of employees, or similar criteria), and the weekday and weekend average trip rates that apply to the various uses.⁶ Using those calculations, the amount of the fee is then determined by applying a "weighted average daily" trip rate formula for the use. WCC § 3.17.050(A).

Under subsection E of section 3.17.050, the dollar amounts specified in subsection A are subject to yearly increases of six percent or, if determined to be a "more accurate estimate of the increase or decrease in construction costs," they can be increased or decreased based on a "construction cost index" prepared and maintained by the county. In all events, any increase in the dollar amounts may not exceed six percent.

The tax is "due and payable at the time of issuance of a building permit[.]" WCC § 3.17.060(A). If the amount due for any one building exceeds $5,000, an applicant may request a "payment deferral," in which event payment is due when the occupancy permit issues. WCC § 3.17.060(B). Applicants may finance their TIF obligations with "Bancroft Bonding" under ORS 223.205 to ORS 223.295. See WCC § 3.17.060(C). The ordinance also provides for certain credits and offsets against the TIF obligation. For example, an applicant is entitled to a credit for constructing certain "eligible capital improvements," such as "extra capacity road or transit" improvements and improvements constructed "to address a safety hazard." WCC § 3.17.070(A) and (B). If a developer files a written request for an offset within a specified time period after the assessing authority's acceptance of the traffic safety improvement, the developer is reimbursed for the cost of the improvement from TIF funds collected directly from that developer. WCC § 3.17.080. Developers may also apply for refunds of TIF payments. Refunds are granted upon a finding by the director of a...