State Housing Council v. City of Lake Oswego

• Decision Date: 06 October 1980
• Docket Number: No. 78-030,78-030
• Parties: STATE HOUSING COUNCIL and 1000 Friends of Oregon, Petitioners-Cross-Respondents, v. CITY OF LAKE OSWEGO, Respondent-Cross-Petitioner, Land Conservation and Development Commission, Department of Land Conservation and Development, W. J. Kvarsten, Director, City of Beaverton, City of Milwaukie and City of Gresham, Respondents. ; CA 15395.
• Court: Oregon Court of Appeals

Page 655

617 P.2d 655

48 Or.App. 525

STATE HOUSING COUNCIL and 1000 Friends of Oregon Petitioners-Cross-Respondents, v. CITY OF LAKE OSWEGO, Respondent-Cross-Petitioner Land Conservation and Development Commission, Department of Land Conservation and Development, W. J. Kvarsten Director, City of Beaverton, City of Milwaukie and City of Gresham Respondents.

No. 78-030; CA 15395.

Court of Appeals of Oregon.

Argued and Submitted March 24, 1980.

Decided Oct. 6, 1980.

Mark J. Greenfield, Portland, argued the cause for petitioners-cross-respondents State Housing Council and 1000 Friends of Oregon. With him on the briefs was Robert E. Stacey, Jr., Portland.

James M. Coleman, City Atty., Lake Oswego, argued the cause and filed the briefs for respondent-cross-petitioner City of Lake Oswego.

Mary J. Deits, Asst. Atty. Gen., Salem, argued the cause for respondent Land Conservation and Development Commission and Dept. of Land Conservation and Development. With her on the brief were James A. Redden, Atty. Gen., and Walter L. Barrie, Sol. Gen., Salem.

Eleanore S. Baxendale, Asst. City Atty., Beaverton, argued the cause and filed the brief for respondent City of Beaverton.

Greg Eades, City Atty., Milwaukie, waived appearance for respondent City of Milwaukie.

Thomas Sponsler, City Atty., Gresham, waived appearance for respondent City of Gresham.

Before SCHWAB, C. J., and JOSEPH, WARDEN and WARREN, JJ.

SCHWAB, Chief Judge.

The issue is the jurisdiction of the Land Conservation and Development Commission to review local government taxation and budget ordinances for compliance with the statewide planning goals. We hold that LCDC does not have such jurisdiction.

The State Housing Council initiated this proceeding before LCDC, contending that the City of Lake Oswego did not consider or comply with the statewide planning goals in adopting Ordinance No. 1706. That ordinance imposes a "system development charge" on all new construction in Lake Oswego. The Housing Council contended generally that Lake Oswego had failed to consider the statewide planning goals. The Housing Council argued more specifically that Ordinance No. 1706 is not supported by adequate findings in violation of Goal 2; ¹ and that the systems development charge unreasonably increases housing costs in violation of Goal 10. ²

Numerous parties intervened in the LCDC proceedings. 1000 Friends of Oregon, the Oregon State Homebuilders Association and the Homebuilders Association of Metropolitan Portland joined the State Housing Council in challenging Ordinance No. 1706. ³ The cities of Beaverton, Milwaukie and Gresham joined Lake Oswego in defending the ordinance.

The several issues raised by the various parties fall into two broad categories: (1) whether LCDC had jurisdiction to consider this challenge to the systems development charge; and if so (2) whether it complies with the statewide planning goals. LCDC's final order upheld Ordinance No. 1706, although it is not completely clear whether it was on the merits or on jurisdictional grounds. That order states:

" * * * we conclude that there is no substantial evidence in the record that the Ordinance impacts the availability of housing nor makes such housing unaffordable to persons who would otherwise be in the market for housing in Lake Oswego. An ordinance resulting in increased housing costs does not necessarily, by that fact alone, violate the interests to be protected * * * by Goal 10. An ordinance increasing housing costs may significantly affect a shift in land use or discourage affordable housing, and would then constitute a land use action and require addressing the planning goals. There is, however, no such evidence in this case.

" * * *

"It is hereby ordered and declared that the enactment of Ordinance No. 1706, creating a systems development charge, was not proven to be a land use action." (Emphasis supplied.) ⁴

We reach only the issue of LCDC's jurisdiction.

I

This proceeding was brought pursuant to former ORS 197.300(1)(a) which provided that LCDC

"shall review * * * a comprehensive plan provision or any zoning, subdivision or other ordinance or regulation * * * that the (petitioner) considers to be in conflict with state-wide planning goals * * *." ⁵

Read literally and in isolation, this statute implies that LCDC's review jurisdiction is invoked merely by an allegation that a local ordinance violates the statewide planning goals. However, when considered in context with the balance of ORS ch. 197, we are certain that never was the intended meaning.

ORS 197.175(1) provides:

"Cities and counties shall exercise their planning and zoning responsibilities * * * in accordance with * * * the state-wide planning goals * * *."

ORS 197.180(1) imposes the same limit on state agencies:

"State agencies shall carry out their planning duties, powers and responsibilities and take actions that are authorized by law with respect to programs affecting land use in accordance with statewide planning goals approved pursuant to ORS 197.005 to 197.430 and 469.350."

ORS 197.185(1) imposes the same limit on special districts:

"Special districts shall exercise their planning duties, powers and responsibilities and take actions that are authorized by law with respect to programs affecting land use, including the annexation of territory to a district pursuant to ORS 198.850 to 198.865, in accordance with state-wide planning goals approved pursuant to ORS 197.005 to 197.430 and 469.350."

The wording varies slightly, but the concept is the same: all units of government must comply with the statewide planning goals when, but only when, exercising their land use planning responsibilities.

LCDC can only review actions of other units of government for compliance with the goals. Thus the concept "land use planning responsibilities" does two things: (1) it defines those actions of governmental units that must comply with the goals; and (2) it defines LCDC's review jurisdiction, i. e., LCDC can only review for goal compliance in those situations where the goals had to be considered. Viewed against this background, an allegation of goal violation standing alone does not invoke LCDC review jurisdiction, notwithstanding the broad language of former ORS 197.300(1); LCDC can only review an exercise of land use planning responsibility.

Land use planning responsibility is not defined in ORS ch. 197. The Supreme Court has interpreted that term as including annexation approvals, subdivision approvals and partition approvals. Alexanderson v. Polk County, 289 Or. 427, 616 P.2d 459 (1980); Meeker v. Clatsop County, 287 Or. 665, 601 P.2d 804 (1979); Petersen v. Klamath Falls, 279 Or. 249, 566 P.2d 1193 (1977). Those precedents are not especially helpful here, however, because of the fundamentally different nature of the systems development charge created by Ordinance No. 1706. It is a taxation ordinance providing a means of raising revenue and, to the extent that most of the revenue raised is earmarked for specific purposes, also a budget ordinance providing for expending revenue in the future.

II

Ordinance No. 1706 imposes a "systems development charge" on all forms of development that are connected to city water or sewer facilities, such as creation of a trailer or mobile home park, and on all buildings erected after its enactment-industrial, commercial, residential and governmental, e. g., schools. Despite the universal scope of the ordinance, the present dispute focuses only on its impact on future residential development. ⁶

The systems development charge on residential development is not a single flat fee. Instead, it is computed by totaling six separate components, some of which are flat fees, some of which are based on rate schedules, and some of which are based on formulas. The "park system development fee," for example, is a flat fee: "$400 per single family residential unit and $380 per multiple residential unit." The "water systems development fee" is based on a schedule linked to the size of the water meter connected to the city water system; this fee ranges from a minimum of $550 for a 5/8 inch or 3/4 inch meter to $37,800 for a 12 inch water meter. The "storm sewer systems development fee" is based on a formula. Ordinance 1706 also contains an escalator clause that increases one of the components of the systems development charge by $25 annually.

It is thus not possible to state precisely what the dollar amount of the systems development charge typically will be. In April, 1979, LCDC's hearings officer hypothesized:

"For a new $60,000 single family house occupying 2,500 sq. ft. of a 10,000 sq. ft. parcel (including garage and driveway), the total cost of the (systems development) charge would be * * * $1,957 * * *. The charge for a $100,000 home would be $2,037.

"The (approximately) $2,000 charge to the developer results in a $2,600 increase to the consumer at the time of purchase as the result of an added $600 reflecting the developer's profit interest and overhead charges. * * * On the basis of an 80%, 29 year mortgage at 101/2 percent interest, the $2,600 translates into an added monthly payment of $25 and $8,435 over the life of the mortgage."

There was also evidence that the systems development charge would increase the rental price of a "typical" Lake Oswego apartment by $15 to $20 per month. Before LCDC, the parties accepted the hearings officer's estimates and computations. ⁷

There was evidence that, for every $1,000 increase in the cost of a new home, about nine percent of the potential home-buying public is priced out of the housing market. There was other evidence that the effect of the Lake Oswego systems development charge would be to put the cost of homes in that community beyond the reach of 52,000 Oregon families who would otherwise be able to afford a home in Lake Oswego.

III

It is clear to us that the systems development charge has impacts on land use-the provision...