Icon Construction and Development v. City of Oregon City

Where a local government does not apply clear and objective standards to an application that includes a needed housing argument under ORS 197.307(4), LUBA will remand the matter.

The subject property was zoned within the City’s Future Urban zone on the Oregon City Comprehensive Plan (OCCP), prior to annexation to the City, and within the County’s Future Urbanizable (FU-10) zone. The City later adopted the Park Place Concept Plan (PPCP) into the OCCP to conform to Metro rules. Petitioner filed an application to rezone the property and annex it into the City. The application was approved subject to conditions, one of which was Petitioner must obtain a master plan approval before development within the City’s zoning ordinances. A master plan is made of a general development plan and a detailed development plan pursuant to Oregon City Municipal Code (OCMC) 17.65.020(A). Until Petitioner obtained master plan approval from the City, the property could be developed within the County’s zoning ordinances.

Petitioner then filed an application for approval of a general development plan including a general development permit, adjustments to lot size, density and garage orientation standards, and a variance for lot sizes. Before the close of the record, Petitioner objected to certain standards under a needed housing argument. The Planning Commission voted to approve Petitioner’s application and determined that the application met the standards Petitioner objected to.  Intervenors appealed to the City Commission who denied the application because the application did not meet the standards. Petitioner appealed to LUBA.

OCMC 17.50.190(F) provides, in part, that the appealable “issues under consideration shall be limited to those listed in the notice of appeal.” ORS 197.307(4) provides, in part, that “[e]xcept as provided in subsection (6) of this section, a local government may adopt and apply only clear and objective standards, conditions and procedures regulating the development of housing, including needed housing.”

In their first assignment of error, Petitioner argued that the City erred when it denied the general devlopment plan based on OCMC 17.65.050(C)(6) (the general development plan must be consistent with the PPCP) and OCMC 17.65.050(C)(7) (the general development plan must be consistent with underlying zoning districts and applicable overlay zones or conceptual plans). First, petitioner argued that the City misinterpreted OCMC 17.50.190(F) to read that it limited its scope of review to only review issues listed in the notice of appeal, and that it could not review new evidence. Second, Petitioner argued that ORS 197.307(4) barred the application of those local approval criteria because they were not clear and objective.

Under ORS 197.829(1), LUBA must affirm a local government’s interpretation of its own land use regulation if that interpretation is "plausible" given the text and context of the regulation. Siporen v. City of Medford, 243 P3d 776 (2010). Additonally, issues under consideration are limited to what is listed in the notice of appeal. OCMC 17.50.190(F). LUBA found that the needed housing argument was not listed as an issue. LUBA held that the city commisson's decision to consider the substance of the issues listed in the notice of appeal was plausible. LUBA also held that OCMC 17.65.050(C)(6) and (7) were not clear and objective because those standards did not identify what provisions of the PPCP and the OCCP that the general development plan needed to be consistent with. The City conceded this point. Accordingly, LUBA held that the first assignment of error was sustained in part.

ORS 197.522(3) provides, in part, that “[i]f an application is inconsistent with the comprehensive plan and applicable land use regulations, the local government, prior to making a final decision on the application, shall allow the applicant to offer an amendment or to propose conditions of approval that would make the application consistent with the plan and applicable regulations. If an applicant seeks to amend the application or propose conditions of approval … [the local governing body may extend the timeline for making a final decision.]”

In their second assignment of error, Petitioner argued that the City erred when it made its final decision because it refused to allow Petitioner to propose amendments to its application as required by ORS 197.522(3). The City argued that ORS 197.522 did not apply to the application because it was not for the development of housing under ORS 197.307 because a general development plan approval is only the first step in the process and no housing would be developed directly because of the approval of the application. LUBA agreed with Petitioner that the general development plan was for the development of housing under ORS 197.307(4) because OCMC 17.65.030 required an approval of a general development plan for Petitioner to develop housing on the property under the City’s zoning ordinance. The City also argued that Petitioner had a clear and objective path through the County’s FU-10 zoning pursuant to ORS 197.307(6). LUBA rejected the City’s arguments and reasoned that the City, and not the County, was required to provide only a clear and objective path under ORS 197.307(4). Group B, LLC v. Corvallis, 72 Or LUBA 74, 82, aff’d, 366 P3d 847 (2015); ORS 197.307(6); OCMC 17.65.050(C)(5). LUBA reasoned that because the City did not provide Petitioner with a clear and objective path, ORS 197.522 applied to the application and therefore the City erred in not allowing Petitioner to propose amendments to its application before the City made a final decision. Accordingly, LUBA held that the second assignment of error was sustained.