Measure 37 Rights are Fully Transferable

In the past few months, we have repeatedly been asked whether a Measure 37 claim can be transferred by the owner making the Measure 37 claimant, or alternatively, is the claim personal to the claimant, and thus not transferrable.

The source of the controversy is a “letter of advice” prepared by the Oregon Attorney General’s Office on behalf of the Oregon Department of Land Conservation and Development, in which the Attorney General’s Office concluded that Measure 37 rights are personal to the property owner, and are not transferrable to subsequent property owners. If an Oregon appellate court agrees with that argument, a Measure 37 claimant will be required to exercise his/her Measure 37 rights before transferring the property to a subsequent purchaser.
For example, if the Attorney General’s theory was correct, a property owner with a successful Measure 37 claim for the right to build a home on his property would have to take action to “vest” the construction of the home before the property could be sold or otherwise transferred. The owner could vest the right to build the home in many ways, the most obvious and complete of which is to construct the dwelling.

Fortunately, Oregonians In Action, along with land use lawyers and local officials across the state, have banded together to oppose the Attorney General’s interpretation of Measure 37. While the Attorney General’s letter of advice has no binding effect on the state or local governments, or any private citizen, it has caused concern and reluctance among Measure 37 claimants and has led to unfair criticism of the Measure by certain media publications.

But the fight is just beginning, and in the end, the Attorney General’s “letter of advice” will be ignored for one simple fact – there is nothing in the text of section (8) that puts a limit on transferability of rights restored to a Measure 37 claimant.

The portion of section (8) being used to justify non-tranferability is the provision authorizing a government entity to remove a land use regulation ” to allow the owner to use the property for a use permitted at the time the owner acquired the property,” in lieu of paying compensation. The Attorney Generals “letter of advice” on the issue simply interpreted this language to say the restored “use” rights are personal to the owner and therefore not transferable.

There is no justification whatsoever for such a narrow interpretation. As discussed below, in order for the Attorney General’s opinion to be accepted, a court would have to insert words into Measure 37 that do not exist, redefine the word “property” in a way that is novel and unique not just in Oregon, but across the country, and ignore the very heart of the measure, the just compensation requirement of subsection (1) of the measure. This a court will not do.

A. The Attorney General’s Interpretation Inserts Words Into Measure 37 That Do Not Exist, In Violation of ORS 174.010

ORS 174.010 prohibits a court from inserting words into a statute when interpreting that statute or omitting words that appear in the statute. Unfortunately, the Attorney General has ignored that statutory proscription when interpreting Measure 37.

Subsection (8) of Measure 37 allows a governing body to avoid paying just compensation to a property owner with a valid Measure 37 claim by “modifying, removing, or not applying” the challenged land use regulations to “allow the owner to use the property for a use permitted at the time the owner acquired the property.” In essence, the governing body has four distinct options.

First, the government can modify the challenged regulations. Webster’s Third New International Dictionary (1993 edition), the dictionary used by the Oregon appellate courts, defines “modify” to mean to “change” or “alter”. In this case, by modifying a regulation under Measure 37, the governing body would be changing or altering it.

For example, if Farmer Jones sought to partition his 60 acre parcel into three 20 acre parcels, but could not do so because of the 80 acre minimum parcel size requirements in ORS 215.750, the Oregon Department of Land Conservation and Development could “modify” the application of ORS 215.750 to Farmer Jones’ property by changing or altering the statute as it applied to Farmer Jones’ property to allow for the 20 acre parcels.

Alternatively, instead of “modifying” the challenged regulation, a governing body processing a Measure 37 claim may “remove” the challenged regulation. Webster’s Third New Internation Dictionary (1993 edition) defines “remove” as “to get rid of” or “eliminate.” Using the Farmer Jones example from above, instead of “modifying” ORS 215.750 to allow Farmer Jones to use his land, the DLCD can eliminate application of ORS 215.750 from Farmer Jones’ property such that he can make application to partition the property and create three new lots.

Finally, instead of “modifying” or “removing” the challenged land use regulation, a governing body processing a Measure 37 claim can “not apply” the challenged regulation. While there is no dictionary definition for the phrase “not apply,” the courts will interpret the term differently from “modify” or “remove” in order to give each phrase a separate meaning. ORS 174.010.

To “not apply” a land use regulation means to simply ignore its application to a various parcel. “Not applying” a land use regulation differs from “modifying” or “removing” a land use regulation in that the governing body responsible for the regulation is not required to affirmatively change the law in order to make the change.

This is why the DLCD’s Measure 37 administrative rules authorize the DLCD to “not apply” challenged LCDC rules and provisions of the Oregon Revised Statutes, but do not authorize the Department to “modify” or “remove” a challenged state statute or LCDC administrative rule. Only the state legislature can “modify” or “remove” a land use law under Measure 37, and only the Land Conservation and Development Commission can “modify” or “remove” one of its administrative rules.

That does not mean, however, that a decision to “modify, remove or not apply” a challenged land use regulation is temporary in nature, as the Attorney General asserts. Under the Attorney General’s interpretation, a decision to modify, remove, or not apply a regulation is temporary, and lasts only for such time as the current owner of the land maintains an ownership interest.

According to the Attorney General, once the current owner divests himself of his interest in the property, the regulations which have been modified, removed, or not applied suddenly spring back into being, as if by magic.

The flaw in the Attorney General’s theory is that there is nothing in the text of Measure 37, or in subsection (8) in particular, which indicates that the modification, removal, or non-application of a challenged land use regulation is temporary in nature. The measure does not provide that the governing body can “temporarily” modify, remove or not apply a challenged regulation, nor does it indicate that the governing body can modify, remove, or not apply a challenged regulation to allow the owner, “but nobody else” to make a use authorized by waiving the regulations.

These may be the words that the Attorney General wishes appeared in the measure, but they do not, and a court is forbidden from inserting these words into the statute.

In fact, under the Attorney General’s theory, there can be no “removal” of a challenged regulation, as once “removed” by the governing body, the regulation would spring back into life without any further action by the governing body upon transfer of the property by the current owner. Utilizing the definition of “remove” from Webster’s, the Attorney General’s theory results in no removal at all, and would render the term “remove” meaningless. A court simply cannot and will not interpret a statute in that manner.

B. The Attorney General’s Letter of Advice Creates a Unique and Non-Traditional Definition of “Property”

It is a long-standing maxim of statutory construction that a court is to give words of common usage their plain, natural, and ordinary meaning. See Moustachetti v. State, 319 Or 319 (1994); Lindsey v. Farmers Ins. Co. of Oregon, 170 Or App 458 (2000). In order to hold that Measure 37 rights are personal to the claimant and not-transferable, the Attorney General has to severely limit the definition of “property” in a manner that is unique to both Oregon and federal law. The Oregon courts will not allow such a definition.

The word “property” denotes a group of rights inhering in a citizen’s relation to a physical thing, such as the right to possess, use, and dispose of the thing. Cereghino v. State By and Through State Highway Comm., 230 Or 439 (1962). Thus, “property” is often considered not as a physical thing, but as a “bundle of sticks,” with each stick representing a right possessed by the owner, such as the right to possess, use, or transfer the tangible item. Bedortha v. Sunridge Land Co., Inc., 312 Or 307 (1991).

Thinking of “property” in its common usage, the right to “use the property” as that phrase appears in subsection (8) of Measure 37 would include the right to transfer that interest, as the right to dispose of property is one of the main “sticks in the bundle” of rights that comprise “property.”

The Attorney General, however, confuses the term “property” with the term “real property” and therefore attempts to insert words into Measure 37 that do not appear in the measure, in violation of ORS 174.010. Measure 37 authorizes a governing body to “modify, remove, or not apply” a land use regulation to allow the owner of the property to “use” the “property.”

Because “property” includes not only the physical thing, but also the right to transfer that physical thing, the “use” of the “property” must include the right to transfer the property. To hold otherwise is to give the term “property” a definition that is far too narrow, and is unique to both Oregon and federal law. This a court will not do.

C. The Attorney General’s Interpretation of Measure 37 Would Render the Just Compensation Provisions Ineffective

The “heart” of Measure 37 is found in subsection (1) of the measure, which requires a governing body to pay just compensation to a property owner for regulations which limit or prohibit the use of the property, with exceptions.

When calculating “just compensation,” the law requires a calculation of the “fair market value” of the property taken. State by and Through Dept. of Transp. v. Lundberg, 312 Or 568 (1992). The “fair market value” of property equals the amount of money that would be paid by a willing purchaser for the property from a willing seller. Id.

Thus, in order for a property owner to receive “just compensation” under Measure 37 for the loss of uses which have been taken from the property owner by changes in land use regulations, the property must be capable of being transferred by the Measure 37 claimant with the ability to make the uses that could have been made when it was purchased. If the Measure 37 rights are not transferrable, then there cannot be a fair market value calculated for them, as there can be no willing seller or willing buyer. This is the only interpretation that makes sense.

The language of subsection (8) confirms this interpretation. As the first sentence makes clear, the purpose of subsection (8) of Measure 37 is to provide the governing body with an equivalent alternative to payment of just compensation – the waiver of the challenged land use regulations. Not only would the Attorney General’s interpretation make the alternative less than equivalent, it would render subsection (1) meaningless, as “just compensation” could never be paid, given the inability to transfer (by sale or otherwise) the rights received under the Measure. Thus, the Attorney General’s interpretation invalidates the measure.

When interpreting a statute, a court will not make an interpretation that renders the statute meaningless. EQC v. City of Coos Bay, 171 Or App 106 (2000). The Attorney General’s Letter of Advice regarding transferability would render Measure 37 meaningless, for all intents and purposes. As a result, it cannot stand.

D. The Attorney General’s Letter of Advice Unustifiably Limits the Meaning of the Word “Use.”

To justify the conclusion that “use” rights are personal to the owner and therefore not transferable, the letter of advice apparently interpreted the word “use” in Subsection (8) to mean “personal” use. Again, the Attorney General inserted a word that is not in the Measure. The word use appears twice in the phrase “to allow the owner to use the property for a use permitted at the time the owner acquired the property.”

The word “use” appears in 24 other places in the Measure and there is no indication they are limited to “personal” use. Most important, subsection (1) requires compensation for a regulation that “restricts the use of . . . property.” As specified in subsection (8), the waiver provisions are in lieu of the just compensation provisions in subsection (1). Instead of paying just compensation, the government can modify, remove, or not apply the regulation so that it no longer restricts the use of the property, thus eliminating the need for payment of just compensation. Properly understood, subsection (8) simply acts as an option in which the governing body can avoid the need for just compensation by putting the property owner back in the position that he/she was in at the time the property was acquired.

If, however, the Attorney General’s letter of advice is followed, the land use regulations are not truly “modified, removed, or not applied,” in that they spring back into life upon the subsequent transfer by the owner of the property. There is no example or support in the history of zoning in the United States where a zoning regulation magically comes back into existence as a result of a transfer of property.

Moreover, the Attorney General’s reading of subsection (8) does not result in the property owner being put into the same position that they were at the time of acquisition of the property, as at the time of acquisition of the property, the rights to use land were freely transferrable. Thus the Attorney General’s interpretation does not truly restore to the property owner the uses that he/she possessed at the time of acquisition of the property, and does not serve as an equivalent alternative to the payment of just compensation under subsection (1) of the measure, which it was clearly intended to do.