Scott Inc. v. City of Ont.

316 Or.App. 633

503 P.3d 502

SCOTT INC., an Oregon domestic business corporation, Petitioner-Appellant,

v.CITY OF ONTARIO, a political subdivision of the State of Oregon, Respondent-Respondent.

A174340

Court of Appeals of Oregon.

December 29, 2021

Argued and submitted December 8, 2021

Ross A. Day, Portland, argued the cause for appellant. Also on the briefs was Day Law, PC.

Jeffrey G. Condit, Portland, argued the cause for respondent. Also on the brief was Miller Nash LLP.

Before Armstrong, Presiding Judge, and Aoyagi, Judge, and Hadlock, Judge pro tempore.

AOYAGI, J.

In this writ of review proceeding, the circuit court affirmed the City of Ontario's decision on a Land Use Compatibility Statement ("LUCS") that petitioner requested in connection with applying for a license to operate a retail marijuana dispensary. Petitioner challenges the court's judgment on review. For the following reasons, we reverse and remand.

When applying for a marijuana retail license from the Oregon Liquor and Cannabis Commission (OLCC), an applicant must request a LUCS from the city or county responsible for land use. ORS 475B.063. OLCC "may not issue a license if the [LUCS] shows that the proposed land use is prohibited in the applicable zone." ORS 475B.063(1). Rather, the LUCS "must demonstrate that the requested license is for a land use that is allowable as a permitted or conditional use within the given zoning designation where the land is located." Id. Upon receiving a LUCS request, the city or county must act within 21 days of receipt of the request "if the land use is allowable as an outright permitted use," or within 21 days of final local permit approval "if the land use is allowable as a conditional use." ORS 475B.063(2). A city or county action concerning a LUCS under ORS 475B.063 "is not a land use decision for purposes of ORS chapter 195, 196, 197, 215 or 227." ORS 475B.063(4).

In this case, petitioner requested a LUCS from the city in connection with applying for an OLCC license to operate a retail marijuana dispensary. Petitioner's property is zoned I-2 Heavy Industrial. Marijuana retail is not an outright permitted use in the I-2 zone, but it is allowable as a conditional use. There is no dispute on this point; for example, in its answering brief, the city acknowledges that "a retail marijuana business is a conditional use in the IP [sic ] zone in which Petitioner's property is located." Petitioner had not obtained a conditional use permit when he made his LUCS request.

Six weeks after receiving the LUCS request, the city issued its decision. At the top of the LUCS form, the city checked a box stating that the proposed land use had been reviewed and "is prohibited":

In the "Comments" section, the city stated:

"Recreational Cannabis Dispensary in the I-2 Heavy Industrial zone is only allowed under a Conditional Use Permit (CUP) under City Code 10A-59-10 and 10A-41-10(8) and must meet the conditions under City Code 10A-59-15.

"The LUCS form was not submitted with a Conditional Use Permit as required by City Code 10A-59-10^[1] and in reviewing the information and location submitted with the LUCS form it was determined that property stated in the LUCS form does not comply with City Code 10A-59-15(A)(7) as all of the property falls within the 500 feet Residential restriction area and therefore the applicant and property is Prohibited from operating a Retail Recreational Cannabis Dispensary on this property."

Petitioner sought a writ of review, challenging the city's decision. See ORS 34.040(1) (providing for when a writ of review shall be allowed). The circuit court affirmed. Petitioner now appeals that judgment. See ORS 34.100 (providing for an appeal to be taken from the circuit court's judgment on review "in like manner and with like effect as from a judgment of a circuit court in an action"). We review for errors of law. Gross v. Multnomah County , 305 Or. App. 408, 409, 468 P.3d 1038 (2020).

The crux of petitioner's argument is that the city checked the wrong box on the LUCS.² We agree with petitioner on that point. The purpose of a LUCS is established by statute—it is to inform OLCC whether a license applicant's proposed land use "is allowable as a permitted or conditional use within the given zoning designation where the land is located." ORS 475B.063(1) ; see also Loosli v. City of Salem , 345 Or. 303, 310, 193 P.3d 623 (2008) (stating that a local land use certificate provided under a different but somewhat analogous statute, ORS 822.025(6), is intended to assist the licensing agency in deciding whether to grant a license and thus protects the general public interest, not the applicant's interests). If the proposed use is not allowable as a permitted or conditional use within the zoning designation where the land is located, the use is "prohibited," and OLCC "may not issue a license." ORS 475B.063(1). If the proposed use is allowable as a permitted or conditional use within the zoning designation where the land is located, then, necessarily, the use is not "prohibited," and OLCC may issue a license subject to the applicant obtaining any necessary permits (and otherwise meeting the licensing criteria). The "Comments" section on the LUCS form provides a place for the city to note what permits are required, "[i]f the proposed land use is permissible only as a conditional use."

We agree with petitioner that, under the circumstances, the city checked the wrong box on the LUCS. Marijuana retail is not a prohibited use in the I-2 zone. It is a conditional use, requiring a conditional use permit. Because petitioner had not obtained a conditional use permit at the time of his LUCS request, the city had two options. The city could wait to complete the LUCS until petitioner obtained a conditional use permit. See ORS 475B.063(2) (requiring a city to act upon a LUCS request within 21 days of receipt of "[f]inal local permit approval, if the land use is allowable as a conditional use"). Or the city could complete the LUCS accurately, by checking the box that the use is "not prohibited" in the zone where the land is located and then stating in the "Comments" section that a conditional use permit is required and has not been obtained.

Instead, the city checked the box that the use "is prohibited," and then explained in the "Comments" section why it believes that petitioner will be unable to obtain a conditional use permit. That is inconsistent with ORS 475B.063 and the LUCS process that it creates. The purpose of a LUCS under ORS 475B.063(1) is to inform OLCC whether a license applicant's proposed land use "is allowable as a permitted or conditional use within the given zoning designation where the land is located." (Emphases added.) If the use is allowable as a conditional use in the zone, then it is not "prohibited." Nothing in the statutory scheme allows the city to go beyond that basic question—Is the proposed use prohibited, permitted, or conditionally allowed in the zone?—to decide whether a conditional use permit will be granted if the applicant applies for one.³ The decision whether to grant or deny a conditional use permit is a land use decision that must be made by the appropriate city officials in the legally provided manner, and, unlike the "Comments" section on a LUCS, that decision is subject to review by the Land Use Board of Appeals and the appellate courts. See Clark v. Jackson County , 313 Or. 508, 510, 836 P.2d 710 (1992) (describing the review process for a local land use decision to grant or deny a conditional use permit); cf. ORS 475B.063(4) (providing that a city action concerning a LUCS under ORS 475B.063 "is not a land use decision for purposes of ORS chapter 195, 196, 197, 215 or 227").

We are unpersuaded by the city's arguments that it was permissible under ORS 475B.063 for the city to evaluate the likelihood of petitioner being able to secure a conditional use permit for his specific property, decide that issue in the "Comments" section on the LUCS, and then use that decision to justify checking the "prohibited" box. The proposed use (marijuana retail) is not prohibited "within the given zoning designation where the land is located." ORS 475B.063(1). The city admits that the use is not prohibited in the I-2 zone. It argues, however, that the use is prohibited on petitioner's specific property, due to a zoning code provision that restricts the operation of retail marijuana businesses within 500 feet of a residential area, Ontario Municipal Code 10A-59-15(A)(7), which the city analogizes to an overlay zone. Petitioner responds with various arguments as to why that restriction does not preclude the proposed use on his specific property.

It is irrelevant who is legally correct on the foregoing point, and we express no opinion as to...