WKL Investments Airport LLC v. City of Lake Oswego

Under ORS 222.750(2), the determination of whether the territory is partially or entirely encompassed by the city’s boundaries is made when the annexation is authorized by the governing body, not when the annexation becomes effective. Thus, different effective dates in one annexation ordinance do not result in an impermissible incremental annexation.Petitioners appeal the city’s annexation of 1.5 acres of property pursuant to ORS 222.750(2). ORS 220.750(2), also known as the island annexation statute, authorizes a city to annex territory that is completely encompassed by a city’s boundaries without the affected property owners’ consent.

The subject property is zoned Campus Industrial (CI) and Low Density Residential (R-8.5). Petitioner requested that the entire property be given the same effective annexation date, since the city delayed the effective annexation date of the R-8.5 properties for 10 years, but not the CI parcels. Petitioner alleges that the annexation is not consistent with state law because, if the entire subject property is not effectively annexed at the same time, some of it is not “surrounded by the corporate boundaries of the city” as required by ORS 222.750(2).

Interpreting a prior version of ORS 222.750, the Supreme Court concluded that incremental annexation of territory was not allowed. Upon reviewing that case, LUBA agrees with the city that different effective dates in one annexation ordinance do not result in an impermissible incremental annexation. This is because the determination of whether the territory is partially or entirely encompassed by the city’s boundaries is made when the annexation is authorized by the governing body, not when the annexation becomes effective. This conclusion is supported, in part, by the fact that, under ORS 222.750(5), while the effective annexation date for residential land must be delayed between three and ten years, the legislature did not impose the same requirement on other properties. In addition, under ORS 222.750(6), conveyance of property within the territory results in immediate annexation notwithstanding any delay under ORS 222.750(5). The first assignment of error is therefore denied and the city’s decision is AFFIRMED.