Oregon Measures 37  and 49

In November 2004, Oregon voters passed Ballot Measure 37. The measure created a “just compensation” right for Oregon property owners if a public entity enacts or enforces a land use regulation that restricts the use of private property and has the effect of reducing the value of the property.The law become part of Oregon’s land use statutes effective December 2, 2004.  In November, 2007 Oregonians voted on and passed Measure 49 which substantially amended Measure 37.

The Oregonian reported on developments taking place as a result of Measure 37 in their June 20, 2008 edition: 

Measure 49's clamp on rural development in Oregon is becoming clear. Instead of having potentially more than 100,000 new houses built in the countryside, Oregonians will see about 13,000, according to state projections.

In a report to the Legislature last week, the state Department of Land Conservation and Development said most landowners caught up in Oregon's enduring property rights battle are pursuing modest developments of one to three homes under Measure 49 instead of subdivisions allowed under the law it replaced, Measure 37.

One estimate, by the American Land Institute of Portland, indicated that successful Measure 37 claims might result in 124,613 houses. The Institute of Portland Metropolitan Studies at Portland State University reviewed 42 percent of the state's Measure 37 claims and estimated those alone would create 58,745 new residential lots.

With passage of Measure 49, housing plans have been scaled back and lawsuits are quietly dropping from the courts, DLCD Director Richard Whitman said in a June 13 report to the Oregon Legislature House Interim Committee on Agriculture and Natural Resources.

History of Oregon's Land Use Statutes

Governor Tom McCall and his allies convinced the Oregon Legislature in 1973 to adopt the nation's first set of land-use planning laws. McCall, with the help of a unique coalition of farmers and environmentalists, persuaded the legislature that the state's natural beauty and easy access to nature would be lost in a rising tide of urban sprawl. The new goals and guidelines required every city and county in Oregon to have a long-range plan addressing future growth that meets both local and statewide goals.  The legislature delegated the authority to establish the state standards to the Oregon Land Conservation and Development Commission. This commission adopted standards called the Statewide Planning Goals. Several Oregon Administrative Rules, as well as regional policies and city policies supplement the Statewide Planning Goals.

What is Measure 37?

Measure 37 creates a “just compensation” right for Oregon property owners if a public entity enacts or enforces a land use regulation that restricts the use of private property and has the effect of reducing the value of the property.

The Measure allows, but does not require, governing bodies to modify, remove, or not apply land use regulations in lieu of paying compensation. The ability to seek compensation, and therefore the potential to benefit from modification, removal or non-application of land use laws, is contingent on, among other things, the date on which the owner purchased the property or the date on which it was purchased by a family member of the owner, whichever occurred first.

Measure 37 allows government entities to modify, remove, or not apply land use regulations to allow the owner to use the property for a use permitted at the time the owner acquired the property in lieu of payment of just compensation. The Measure does not, however, “waive” land use regulation or create any right in property owners to demand that land use regulations be waived. Because Measure 37 is triggered when government enforces a land use regulation enacted after the owner (or owner’s family) acquired the property, no issue of waiver can arise until the owner applies for some use, is denied the use and then files a claim for just compensation.

No Consensus Regarding Operation of the Measure 37 Provisions

In early 2005, there was no consensus in the legal community regarding the operation of the provisions of Measure 37 beyond a general belief that new land use regulations will not be enacted until, and unless, the Legislature can craft some kind of “fix” to the Measure. In the meantime, development projects that require legislative comprehensive plan amendments, zone changes or other regulatory actions that involve amendments or new regulation may prove difficult or impossible to accomplish. This may slow certain kinds of commercial development within urban growth boundaries.

Measure 37 Creates Uncertainty in the Oregon Real Estate Market

Measure 37 creates, and will continue to create for the foreseeable future, considerable uncertainty in the real estate market. The use of land, and therefore its value, is now less predictable. Property that has been in single ownership, or held in a family over a long period of time, may have more development potential and, therefore, value than a neighboring property purchased more recently. The potential is, however, far from certain. At the same time, the neighboring property may be less valuable because the surrounding uses are contingent on unknowns like ownership history, the owner’s plans, the government’s ability to pay compensation, or the manner in which government chooses to avoid compensation.

The uncertainty created in the real estate market may affect some clients and customers more than others. Owners of rural bare land, in particular, may be affected because they conceivably could be entitled to compensation or have the ability to get regulations modified, removed or not applied. Basically, anyone who believes government regulations enacted after they purchased the land prevent the highest and best use of the land may have a compensation claim or some new potential to obtain that highest and best use. The value of other properties, however, may be negatively affected because their neighbors may be able to create conflicting non-conforming uses that decrease the value of their land.

Real Estate Licensees and Measure 37

The analysis of Measures 37, and prediction of property value in the face of the Measure, is beyond the scope of a real estate licensee’s expertise. Real estate licensees are not trained to predict the contingent and uncertain potential effects of complex laws like Measure 37 when assisting clients in developing the asking or offering price for property. Nor can agents advise real estate clients on how to make claims under the Measure or what, if any, development rights the client might be able to gain by making such claims. Real estate licensees do not have the training or means to assess the potential impact on the value or desirability of property abutting or near properties which may qualify for compensation under Measure 37.

October 2005: Court Rules Measure 37 is Unconstitutional

In mid-October 2005, Marion County Circuit Judge Mary James overturned Measure 37.  Judge James as struck down the law as violating five provisions of the state and federal constitutions.

• James said the statute violates equal protection provisions of the Oregon Constitution and a state constitutional ban on suspending laws.
• She also ruled it breaches the separation of powers between government branches, "intrudes on" legislative authority and violates due process protections under the U.S. Constitution.
• Foes of the law argued that it violates the "equal privileges and immunities" provisions of the state constitution because it gives benefits to people who buy their land before regulations were applied but not to those who purchase property later.

The judge said the distinction between those groups "is not reasonably related to a legitimate state interest and, therefore, is unconstitutional."

February 2006:  Oregon Supreme Court Rules on Measure 37

In February 2006 the Oregon Supreme Court issued its opinion in the MacPherson vs. DAS case reversing the trial court decision and upholding Measure 37 as constitutional. Measure 37 claims against the state have been on hold since the trial court ruled last October that the measure was unconstitutional.  Starting on March 13, 2006, the Measure 37 claims process will resume.  You can read more about the decision at the State or Oregon Land Conservation and Development Web site.

November 2007 Special Election:  Measure 49 Amends Measure 37

The 2007 Oregon Legislature referred Measure 49 to the Oregon voters for their approval or disapproval at a special election on November 6, 2007 and Oregon voters approved Measure 49 by over 60 percent.  Measure 49 fixes flaws in Measure 37 that allow large housing subdivisions, big-box stores and strip malls where they don't belong. At the same time, it protects the rights of families to build a few homes on their own property.

Measure 37 was billed as the way to provide small landowners with the ability to build a home or two on their land. In the two years since its passage, more than 7,500 claims for development have been filed on over 750,000 acres across the state.  Included were over 2,700 claims for housing subdivisions with another 2,000 possible subdivisions from claims for unspecified development on over 10 acres.

To read different views on Measure 49, visit these Web sites.

• Oregonians in Action  This group oppose Measure 49.
• Oregon Environmental Council  The council support Measure 49.