WALTERS, J.
In this case, we answer three questions certified to us by the United States Court of Appeals for the Ninth Circuit (Ninth Circuit). The questions arise from an action that West Linn Corporate Park (plaintiff) originally filed in state court against the City of West Linn (the city) alleging that the city effected a taking of plaintiff's property when the city required, as a condition of development of that property, that plaintiff construct off-site public improvements. In that action, plaintiff asserted two claims for inverse condemnation and sought payment of just compensation.
West Linn Corporate Park LLC v. City of West Linn, 534 F.3d 1091, 1093-94 (9th Cir. 2008) (certification order).
To understand fully the basis for the Ninth Circuit's first two questions, it is necessary to explain in greater detail the procedural history of this case and the inverse condemnation claims that plaintiff filed in state court.
In its second claim for relief, plaintiff incorporated the facts that it alleged in its first claim for relief—that the city had required it to construct off-site improvements at a cost not "roughly proportional" to the impact of plaintiff's development—but alleged that those facts constituted a taking under the Fifth Amendment to the United States Constitution.
In Dolan, although the Court did not see the same "gimmicks" that it had noted in Nollan, it again concluded that the city had not established the necessary nexus between the conditions that it wished to impose and the effects of the proposed development. 512 U.S. at 387, 394-96, 114 S.Ct. 2309. The plaintiff had applied for a permit to double the size of her retail store and pave her gravel parking lot. The city had required her to dedicate a pedestrian/bicycle pathway and a public greenway along a creek to relieve anticipated increases in congestion and flooding. After concluding that the dedications and the projected impact of the development must be "roughly proportional" to one another and that the city's findings were inadequate to establish that that standard had been met, the Court concluded that the dedications were unconstitutional takings that could not be sustained. Id. at 394-96, 114 S.Ct. 2309.
In this case, plaintiff alleged that the city's requirement that it construct off-site improvements at a cost not "roughly proportional" to the impacts of its development constituted a taking under the state and federal constitutions, entitling it to payment of just compensation. To obtain that compensation, plaintiff filed two claims for "inverse condemnation": the first asserting that the city had effected a taking under the state constitution; the second asserting that the city had effected a taking under the federal constitution. The term "inverse condemnation" encompasses both of plaintiffs claims. An "[i]nverse condemnation" claim is any claim "against a governmental agency to recover the value of property taken by the agency although no formal exercise of the power of eminent domain has been completed by the taking agency." Boise Cascade Corp. v. Board of Forestry, 325 Or. 185, 187 n. 1, 935 P.2d 411 (1997) (internal quotation marks and citation omitted).
Plaintiff appropriately filed both of its claims for inverse condemnation in state court. See id. at 187-88, 935 P.2d 411 (inverse condemnation action alleging taking under state and federal constitutions in state court); Coast Range Conifers v. Board of Forestry, 339 Or. 136, 151-55, 117 P.3d 990 (2005) (inverse condemnation action alleging taking under federal constitution in state court); see also San Remo Hotel, L.P. v. City & County of San Francisco, 545 U.S. 323, 347, 125 S.Ct. 2491, 162 L.Ed.2d 315 (2005) (state courts fully competent to hear federal takings claims). Plaintiff also appropriately filed its section 1983 claim in state court. See, e.g., Suess Builders v. City of Beaverton, 294 Or. 254, 264-65, 265 n. 10, 656 P.2d 306
If this case had remained in state court, the state trial court would have been required to decide whether plaintiff alleged facts sufficient to assert state claims for just compensation and, if so, whether plaintiff was entitled to compensation and in what amount. The state court's conclusion as to the viability of plaintiff's claims would have depended on that court's determination whether what plaintiff alleged—that plaintiff was required to construct off-site improvements at a cost that was not "roughly proportional" to the impact of plaintiff's development—could amount to a taking under the state constitution, as plaintiff alleged in its first claim for relief, or under the federal constitution, as plaintiff alleged in its second claim for relief. The state court also would have been required to determine whether state law required exhaustion of administrative remedies as a prerequisite to assertion of those claims. See id. at 261-62, 656 P.2d 306 (considering those issues).
When the city removed the case to federal court, the federal district court was also presented with those same issues.
The Ninth Circuit explains the Supreme Court's decision in Williamson as follows:
West Linn Corporate Park LLC v. City of West Linn, 534 F.3d at 1091, 1099-1100 (9th Cir.2008).
The plaintiff in Williamson had filed an action in federal court alleging, under section 1983, that a local government had adopted land use regulations that denied it the economically viable use of its property and seeking damages based on the government's failure to compensate plaintiff for that taking. The Supreme Court ruled that the plaintiff's claim was not yet ripe. Under prong one of its analysis, the Court ruled that the plaintiff had not obtained a final decision from the local government enabling the federal court to determine with certainty the permitted uses of the plaintiff's property.
In this case, the federal district court decided that plaintiff's second claim for relief was not ripe under prong two of Williamson. The district court ruled that, before plaintiff could file an inverse condemnation action in state court, it was required, by state law, to appeal the city's requirement that plaintiff construct off-site improvements to the city's land use hearings officer, the city council, and finally to the state Land Use Board of Appeals (LUBA). Plaintiff had failed to take those administrative steps and, consequently, had deprived the state court of the opportunity to award just compensation. As a result, the federal district court held that plaintiff's second claim for relief, seeking just compensation under the Fifth Amendment and damages under section 1983, was barred.
Plaintiff appealed to the Ninth Circuit. To decide whether the district court had erred, the Ninth Circuit was required, as the district court had been, to examine state law and determine whether plaintiff was required to utilize available state procedures before filing its claims for inverse condemnation. The Ninth Circuit concluded that state law is unsettled with respect to whether pursuit of administrative remedies is a prerequisite to an inverse condemnation action premised on a taking under Dolan and Nollan:
West Linn, 534 F.3d at 1100. Thus, the Ninth Circuit asks this court to answer that question of state law, namely, whether "[plaintiff's] complaint filed in the Clackamas County Circuit Court [was] sufficient under Oregon law to seek a final determination of compensation[.]" Id.
The district court's ruling that plaintiff was required to pursue local remedies before filing its claims for inverse condemnation presumed the viability of those claims. If state law does not recognize those claims, then plaintiff's failure to take administrative steps preliminary to their assertion cannot serve as a basis for entry of judgment against plaintiff. The Ninth Circuit therefore also needed to decide a second issue that the state court would have confronted had the case remained within its jurisdiction: does Oregon law recognize claims for inverse condemnation based on allegations that a local government has required a property owner to construct off-site improvements as a condition of development? The Ninth Circuit again considered Oregon law in that regard to be unsettled. In its certification order, the Ninth Circuit states:
Id. at 1102. As a result, the Ninth Circuit explains:
Id. at 1104.
With that background, we return to and repeat the Ninth Circuit's first two questions:
Id. at 1093. In those questions, the Ninth Circuit uses the word "exaction" to mean a governmental action equivalent to a physical taking that entitles a property owner to payment of just compensation.
We proceed to the first question.
As noted, the Ninth Circuit views Oregon law regarding the pursuit of administrative remedies to be unsettled based on a conflict that it perceives between the decision of the Court of Appeals in Nelson v. City of Lake Oswego, 126 Or.App. 416, 869 P.2d 350 (1994), and the decision of LUBA in Reeves v. City of Tualatin, 31 Or. LUBA 11 (1996). In Nelson, the plaintiffs alleged that the city had effected a taking of their property under the state and federal constitutions when the city manager required, as a condition of development, that the plaintiffs dedicate a 55-foot easement to the city. The plaintiffs filed judicial claims for inverse condemnation without first appealing the city manager's decision to the city council. The court recognized that plaintiffs who base inverse condemnation claims on use restrictions—claims that the court described as "regulatory takings" claims—must exhaust administrative remedies for two reasons:
126 Or.App. at 422, 869 P.2d 350 (emphasis in original).
However, the court distinguished a local government's requirement that a property
Id. (emphasis in original).
Reeves was a LUBA decision that purported to apply the court's decision in Nelson, The petitioner in Reeves, like the plaintiffs in Nelson, objected to a required dedication of real property. LUBA ruled that the petitioner was required to seek a variance from the city before appealing that requirement to LUBA. LUBA noted that that option had not been available to the plaintiffs in Nelson. Reeves, 31 Or. LUBA at 17. Further, in Nelson, the city had acquired the easement at issue, and there was "nothing left to happen at the local level in order for a claim to be susceptible for adjudication." Reeves, 31 Or. LUBA at 17 (citing Nelson, 126 Or.App. at 422, 869 P.2d 350) (internal quotation marks omitted). In Reeves, the city had not yet acquired the easement, and there were other actions that the city could take that could affect LUBA's decision. Id. LUBA explained that, until it could
Id.
In addressing the Ninth Circuit's first question, plaintiff argues that Nelson is controlling Oregon law and stands for the proposition that exhaustion is not required when a plaintiff brings an inverse condemnation action based on a taking under Nollan and Dolan. We disagree. Although we do not apprehend the conflict that the Ninth Circuit sees as rendering Oregon law unsettled, we also do not see Nelson as determinative of the question that the Ninth Circuit poses. In this case, the city did not require plaintiff to dedicate real property as a condition of its development. Because the circumstances extant here may argue for exhaustion for the reasons that LUBA stated in Reeves and that the Court of Appeals did not have the opportunity to fully explore in Nelson, we take up the merits of the first question that the Ninth Circuit poses. We begin with a review of relevant precedent.
In Fifth Avenue Corp. v. Washington County, 282 Or. 591, 622 n. 23, 581 P.2d 50 (1978), this court determined that a plaintiff that sought a declaratory judgment that a comprehensive plan was unconstitutional on the basis that it was arbitrary, capricious, and unreasonable as applied was required to exhaust administrative remedies before asserting that claim in court.
The court extended the exhaustion requirement of Fifth Avenue to a plaintiff's claim for inverse condemnation in Suess Builders. In that case, the plaintiff alleged that the city had designated its property for future public acquisition and that that designation constituted a taking for which just compensation was required. The court decided that the plaintiff could not rest its claim on the plan designation, but had to demonstrate that it had sought relief, including pursuing administrative procedures for amending the plan. The court stated that, "if a means of relief from the alleged confiscatory restraint remains available, the property has not been taken." 294 Or. at 262, 656 P.2d 306.
In Boise Cascade, the court declined, however, to require appeal to LUBA as a prerequisite to an inverse condemnation action. 325 Or. 185, 935 P.2d 411 (1997). Although LUBA has jurisdiction to decide whether governmental action constitutes a compensable taking, Dunn v. City of Redmond, 303 Or. 201, 207, 735 P.2d 609 (1987), the court in Boise Cascade refused to stay the plaintiff's inverse condemnation action until LUBA had an opportunity to rule, reasoning that the issue presented—whether a taking had occurred—was a constitutional question that fell within an area traditionally adjudicated by courts. Boise Cascade, 325 Or. at 196, 935 P.2d 411.
Fifth Avenue and Suess Builders impose a requirement that a property owner obtain a clear and final ruling from the local government as to the permitted uses of its property before filing judicial action to challenge limitations on the use of that property. That rule can be viewed as ensuring that the decision of the local government is in truth its final decision or as a general requirement of efficiency in judicial administration. Through either lens, that requirement permits the local government to fully determine and review factual questions about the effect that its regulations have on a particular property and policy questions about whether, given the specific circumstances presented, the government wishes to enforce those regulations. And through either lens, that requirement is of great benefit in avoiding unnecessary litigation or better informing a court should litigation ensue.
With regard to whether Oregon law imposes a requirement of finality or exhaustion before permitting the filing of an action for inverse condemnation, we do not see a significant difference between takings claims that are based on regulations that limit the use of property and those that are based on regulations that place conditions on its development. In either instance, a property owner that asserts objections to the regulations at the local level may obtain relief from regulatory restraint. In either instance, a requirement that a property owner take administrative steps prior to bringing judicial action permits the local government to determine the necessary effects of the regulations and whether, knowing those effects, it wishes to impose or enforce them. Just as a court benefits by requiring that local governments have the opportunity to assess fully the effects that use limitations have on property owners, so too does a court benefit from requiring that local governments have the opportunity to consider fully whether the conditions on development that it seeks to require are proportional to the impacts of development and whether to insist on imposing those conditions, given the assessment that it makes.
That conclusion does not mean, however, that a landowner must appeal the decision of the local government to LUBA before filing an action for inverse condemnation. LUBA reviews the decisions of local government, but it does not decide facts and cannot make policy decisions for local governments. See ORS 197.829(1)(c) (LUBA shall affirm local government's interpretation of a regulation unless that interpretation is inconsistent with underlying policy of comprehensive plan or
Accordingly, we answer the Ninth Circuit's first question as follows: Assuming that Oregon law permits an inverse condemnation action premised on allegations that a condition of development requires a landowner to construct off-site improvements at a cost not roughly proportional to the impacts of development, Oregon law requires the landowner to pursue available local administrative remedies, but not to appeal to LUBA, as a prerequisite to bringing that action in state court.
In this case, it is undisputed that plaintiff did not use available local procedures to seek to modify or annul the requirement that it construct off-site improvements. West Linn, 534 F.3d at 1102. Therefore, assuming that plaintiff had viable claims for inverse condemnation against the city, it did not pursue available local administrative remedies before bringing those judicial claims.
The Ninth Circuit's second question, as we have restated it, is:
In its second question, the Ninth Circuit asks that we decide the question assumed in responding to its first question—were plaintiff's claims for just compensation as alleged in its first or second claims for relief viable in state court?
We begin with plaintiff's second claim for relief alleging that the city effected a taking under the Fifth Amendment. We realize that beginning with the federal constitution is contrary to our normal practice. See, e.g., Sterling v. Cupp, 290 Or. 611, 614, 625 P.2d 123
After Nollan and Dolan, the Supreme Court decided a case that clarified the constitutional basis of those decisions—Lingle v. Chevron USA Inc., 544 U.S. 528, 548, 125 S.Ct. 2074, 161 L.Ed.2d 876 (2005). In Lingle, the Supreme Court began by observing that governmental action that falls into one of the following categories constitutes a taking:
The Court explained that those categories are intended to describe governmental actions that are functionally equivalent to the classic taking in which government directly appropriates private property or ousts the owner from his or her domain. Accordingly, each category describes governmental acts that impose burdens on private property rights. The Court stated:
Lingle, 544 U.S. at 539-40, 125 S.Ct. 2074 (paragraph structure added for clarity).
In Lingle, the Court then declared that other governmental acts that do not impose similarly severe burdens are not subject to challenge under the Takings Clause, but are, instead, subject to challenge under the Due Process Clause. Thus, the Court explained, a property owner's claim under Agins v. City of Tiburon, 447 U.S. 255, 260, 100 S.Ct. 2138, 65 L.Ed.2d 106 (1980), that a governmental regulation is invalid because it does not "substantially advance legitimate state interests" is properly viewed as a claim that due process
Lingle, 544 U.S. at 543, 125 S.Ct. 2074 (emphases in original; internal citation and quotation marks omitted).
Although not necessary to its holding, the Court also addressed how its prior decisions in Nollan and Dolan fit into that paradigm. The claims of the property owners in those cases could have been seen as implicating the Due Process Clause, because they challenged the sufficiency of the nexus between the state interest and the condition imposed and sought judicial invalidation of the condition. However, the claims in those cases also could have been seen as implicating the Takings Clause, because the conditions that the governments imposed required the property owners to dedicate real property for governmental use — the classic taking in which the government directly appropriates private property. The Court chose neither and placed Nollan/Dolan challenges into their own category — a "special application of the `doctrine of unconstitutional conditions'":
Id. at 547-48, 125 S.Ct. 2074 (emphases added; original emphases deleted).
Thus, under Lingle, in circumstances in which the government exacts "dedications of property so onerous that, outside the exactions context, they would be deemed per se physical takings," the Supreme Court subjects the government's exaction to a Nollan/Dolan analysis. Id. at 547, 125 S.Ct. 2074. Under that analysis, the government is precluded from making the exaction and
The Ninth Circuit's second question requires that we consider the reasoning of the Supreme Court in Nollan, Dolan, and Lingle and decide whether the Nollan/Dolan analysis extends to a requirement that a property owner construct off-site improvements at a cost that is not "roughly proportional" to the impacts of the owner's development. In Lingle terms, we must decide whether such a requirement is "so onerous that, outside the exactions context, [it] would be deemed [a] per se physical taking." Lingle, 544 U.S. at 547, 125 S.Ct. 2074.
Plaintiff first posits that the Oregon Court of Appeals already has recognized such a requirement as a Fifth Amendment taking and that this court should not disturb that ruling in answering a certified question. The case that plaintiff deems determinative is Clark v. City of Albany, 137 Or.App. 293, 299, 904 P.2d 185 (1995), rev. den., 322 Or. 644, 912 P.2d 375 (1996). In Clark, the Court of Appeals considered a ruling by LUBA that, as relevant here, applied Dolan's "rough proportionality" standard to development conditions that required the petitioner "to make road improvements on and extending beyond the affected property." The Court of Appeals affirmed the application of that standard, seeing "little difference between a requirement that a developer convey title to the part of the property that is to serve a public purpose, and a requirement that the developer himself make improvements on the affected and nearby property and make it available for the same purpose." Id. at 300, 904 P.2d 185.
Although we agree with plaintiff's assertion that "[c]ertification is not an appropriate vehicle to obtain clarification of existing law or to test the continued viability of long-standing legal precedent against current conditions," see Western Helicopter Services v. Rogerson Aircraft, 311 Or. 361, 374, 811 P.2d 627 (1991), we do not think that those principles describe the posture of this case. Clark was decided in 1995, and, although Nollan and Dolan both had been decided, the Supreme Court had not had occasion to opine on their reach. In 1999, the Supreme Court decided Monterey v. Del Monte Dunes at Monterey, Ltd., 526 U.S. 687, 702, 119 S.Ct. 1624, 143 L.Ed.2d 882 (1999), and stated that it had not extended the application of Nollan and Dolan "beyond the special context of [such] exactions." As a result of that statement, the Court of Appeals considered its decision in Clark "open to question." Dudek v. Umatilla County, 187 Or.App. 504, 516 n. 10, 69 P.3d 751 (2003). Then, in 2005, the Supreme Court decided Lingle and discussed, in the context of its disaggregation of due process and takings challenges, the jurisprudential underpinnings of Nollan and Dolan. We choose not to rest on a Court of Appeals case that predated Lingle.
On the merits, plaintiff contends that the city's requirement that it use "asphalt, concrete, bedding material, pipe and other personal property" to construct public improvements cannot be distinguished from the requirements imposed by the governments and considered by the courts in Nollan and Dolan. Plaintiff argues that any coerced transfer of property, whether real or personal, must meet the Nollan/Dolan standard. The city disagrees and urges that Nollan and Dolan are limited to required dedications of real property and do not extend to the imposition of an obligation to construct off-site improvements. Such an obligation, the city contends, is, functionally, a monetary obligation that the city has authority to impose to offset the impacts of plaintiff's development. Plaintiff responds that, even if that condition appropriately is characterized as a monetary exaction, the Nollan/Dolan analysis applies when government uses its regulatory power in an adjudicative proceeding to coerce such payment.
The Ninth Circuit considered a similar question in McClung v. City of Sumner, 548 F.3d 1219 (9th Cir.2008), cert. den., ___ U.S. ___, 129 S.Ct. 2765, 174 L.Ed.2d 270 (2009). The issue in that case was whether a city ordinance that required property owners, as a condition of development, to install storm pipes effected a taking. The Ninth Circuit viewed the ordinance as imposing a monetary
The Ninth Circuit also stated, as an alternative basis for its ruling, that the property owners had not been required to relinquish an interest in real property:
McClung, 548 F.3d at 1227-28 (emphasis in original). The Ninth Circuit rejected the plaintiffs' argument that the city had effected a per se taking of its money and the plaintiff's citation to Brown v. Legal Foundation of Washington, 538 U.S. 216, 123 S.Ct. 1406, 155 L.Ed.2d 376 (2003). In Brown, the Supreme Court held that interest that accrued on lawyers' trust accounts (IOLTA accounts) was private property that the state could not acquire without payment of just compensation, but that the plaintiff in that case had suffered no loss for which compensation was due. In McClung, the Ninth Circuit distinguished the imposition of a new monetary obligation from the acquisition of accrued interest on an existing account and noted that Brown did not treat the acquisition of accrued interest as an exaction or apply the Nollan/Dolan analysis to the facts presented.
In reaching its conclusion in McClung, the Ninth Circuit observed, however, that "[o]ther courts addressing this general issue have come to different conclusions."
Id. at 636.
Of course, as we now know from the Supreme Court's opinion in Lingle, the Court's decision in Nollan was, indeed, premised on the doctrine of unconstitutional conditions. Understanding that premise, we see a clear distinction between a requirement that a property owner dedicate property to the public and a requirement that a property owner spend money to mitigate the effects of development. In the former circumstance, the government seeks to acquire a landowner's existing real property. To do so, it is required to proceed by the exercise of its power of eminent domain and to pay just compensation. In the latter circumstance, the government does not seek to acquire a landowner's existing real property. It seeks to compel the landowner to pay money to mitigate the effects of development and cannot proceed to do so by instituting eminent domain proceedings. When the landowner makes payment, it does not relinquish existing property; it fulfills a newly imposed monetary obligation. See Daniel L. Siegel, Exactions after Lingle: How Basing Nollan and Dolan on the Unconstitutional Conditions Doctrine Limits Their Scope, 28 Stan. Envtl. L.J. 577, 592-601 (2009) (discussing reasons that subjecting permits conditioned on payment of fees to Nollan/Dolan analysis cannot be justified doctrinally after Lingle).
That does not mean, of course, that monetary obligations could not, at least theoretically, be "so onerous that, outside the exactions context, they would be deemed per se physical takings." Lingle, 544 U.S. at 547, 125 S.Ct. 2074. In Lingle, the Court recognized two circumstances in which governmental regulations that impose economic burdens are considered equivalent to physical takings: (1) where the regulation deprives the owner of all viable economic use of the property; and (2) where the regulation is so burdensome that the Penn Central standard is met. Id. at 539-40, 125 S.Ct. 2074. It is conceivable that a local government could require, as a condition of development, monetary obligations so burdensome as to deprive the property owner of all economically viable use of the property, or to meet the Penn Central standard, as the Ninth Circuit recognized in McClung. If a local government did so, such conditions perhaps could be considered sufficiently onerous to be tantamount to physical takings. But in that circumstance, there would be no need for a Nollan/Dolan analysis. Conditions imposing burdens of that significance would require payment of just compensation without further inquiry, in contrast to conditions that impose exactions subject to the Nollan/Dolan analysis. Under Nollan/Dolan, just compensation is required only when the conditions imposed are not "roughly proportional" to the impacts of development. See Charles T. Switzer, Escaping the Takings Maze: Impact Fees and the Limits of the
In Lingle, the Court did not express an intent to treat regulations that impose economic burdens that do not deprive a property owner of all economically viable use of property or meet the Penn Central standard as takings under the Fifth Amendment. The Court emphasized, as it had in Monterey v. Del Monte Dunes at Monterey, 526 U.S. 687, 702, 119 S.Ct. 1624, 143 L.Ed.2d 882 (1999), the "special context" in which Nollan and Dolan arose and pointedly did not categorize the exactions at issue in Nollan and Dolan as takings, instead analyzing them under the doctrine of "unconstitutional conditions."
In the absence of a Supreme Court ruling to the contrary, we conclude that a government's requirement that a property owner undertake a monetary obligation that is not roughly proportional to the impacts of its development does not constitute an unconstitutional condition under Nollan/Dolan or a taking under the Fifth Amendment, nor does it require payment of just compensation. We also conclude that a requirement that a property owner construct off-site improvements is the functional equivalent of the imposition of a monetary obligation. When a governmental entity requires a property owner to construct improvements, it simply requires the property owner to put money to a particular use. The government could accomplish the same result by requiring the property owner to pay a specified sum, which the government could then use to construct the improvements. The government, through its exercise of the power of eminent domain, can compel neither off-site construction nor the expenditure of money.
That conclusion does not mean, of course, that a property owner required to construct off-site improvements at a cost not roughly proportional to the impacts of its development may not have some other legally sound basis for a claim against the government. The Takings Clause may not be the only constraint on such governmental action. For instance, prior to Nollan and Dolan, state courts had invalidated governmental conditions that were not "reasonably related" to the impacts of development without relying on the Takings Clause as the basis of their decisions. See Dolan, 512 U.S. at 390-91, 114 S.Ct. 2309 (noting that a majority of states have adopted common-law rule that there must be "some reasonable relationship or nexus" between required dedication and impact of proposed development).
We turn to whether, under the circumstances alleged in plaintiff's first claim for relief, Oregon law recognizes an inverse condemnation action premised on a taking under the Oregon Constitution. In interpreting original provisions of the Oregon Constitution, we apply a now-familiar methodology first articulated in Priest v. Pearce, 314 Or. 411, 415-16, 840 P.2d 65 (1992). This court recently summarized that methodology in the context of interpreting Article I, section 18:
Coast Range Conifers v. Board of Forestry, 339 Or. 136, 142, 117 P.3d 990 (2005) (citations omitted). In Coast Range Conifers, this court analyzed Article I, section 18, to address a different issue — whether that clause addressed only physical takings of property, or whether it also extended to "regulatory takings." Although the issue was different from that presented in this case, much of the analysis is useful to our analysis here.
As originally adopted, Article I, section 18, provided:
Coast Range Conifers elucidated that text as follows:
339 Or. at 142-43, 117 P.3d 990 (footnote omitted).
The court explained that, although the framers may not have anticipated the precise circumstances detailed in those cases, the framers "would have been aware that governmental actions that did not fit precisely within the classic paradigm of a taking still could be `equivalent to a taking' and thus entitle the owner to compensation." Id. at 145-46, 117 P.3d 990. Thus, the issue in Coast Range Conifers was whether the governmental action at issue a state wildlife regulation that prevented plaintiff from logging approximately nine acres of a 40-acre parcel that plaintiff alleged "substantially interfered" with its use of its property — was equivalent to the governmental acts that the court had recognized as takings. The court held that, although "[r]egulation in pursuit of public policy" could be "tantamount to a public appropriation of private property," the regulation at issue did not present that circumstance. The court applied the "whole parcel rule" and held that the challenged rule did not deprive the plaintiff of all economically viable use of the land and therefore did not effect a taking. Id. at 147, 117 P.3d 990.
The question that this case presents is similar — whether this court will recognize a condition of development that requires construction of off-site improvements as the modern "equivalent" of a physical taking.
Although we agree that Article I, section 18, extends to the taking of personal, as well as real, property, we disagree that the city effected a taking of plaintiff's personal property in this case. As we explained in our analysis of the federal constitution, the city did not acquire personal property that plaintiff owned; it required that plaintiff construct public improvements that previously did not exist. That was the functional equivalent of requiring that plaintiff make a monetary payment
At the time that the Oregon Constitution was adopted, there was at least a question about whether the government's imposition of such monetary obligations implicated the power of eminent domain, and arguably a consensus that it did not. In 1851, the New York Court of Appeals considered the constitutionality of special assessments imposed to pay the cost of grading and pavement of roads. People ex rel. Griffin v. City of Brooklyn, 4 N.Y. 419 (1851). The court began by noting that taxation and eminent domain "rest substantially on the same foundation": In both circumstances, the government takes property for public use, and in both cases, it provides compensation — in the case of taxation, by the protection and increased value presumed to result from the government services paid for by the tax. Id. at 422-23. Nevertheless, the court explained, the power of taxation was distinct from the power of eminent domain. One of the distinctions that the court made was that "[m]oney can always be had by taxation; lands can not [sic]', and therefore lands may be taken by right of eminent domain, but money may not." Id. at 424.
In 1867, a legal treatise by the Chief Justice of the Vermont Supreme Court agreed:
Isaac F. Redfield, 2 The Law of Railways 389 (1867) (footnotes omitted). And in 1868, Thomas Cooley also asserted that the right to eminent domain can be exercised over every species of property except money and rights of action. Thomas M. Cooley, A Treatise on the Constitutional Limitations 526-27 (1868).
In our view, there is not any logical way to apply a takings analysis to the imposition of new monetary obligations.
When government regulates the use of a property, it effects a taking if it deprives the owner of all economically viable use of the land. In that instance, the regulation of the property is tantamount to the acquisition of the property. When, instead, the regulation requires that the owner pay a sum of money or use a sum of money for a particular purpose, the regulation is not tantamount to acquisition of the property, even when the obligation exceeds the impact of the development, unless, of course, the obligation is so high that it imposes a burden tantamount to acquisition. Absent additional allegations, a property owner that alleges that a local government has conditioned development on construction of off-site improvements at a cost that is not roughly proportional to the impacts of the development, does not allege a taking under Article I, section 18, of the Oregon Constitution. Plaintiff in this case did not allege such additional facts,
We answer the Ninth Circuit's second question, as we have rephrased it, as follows: No, a property owner that alleges that a city has required it to construct off-site improvements at a cost that is not "roughly proportional" to the impact of the development, as opposed to dedicating an interest in real property such as granting an easement, does not allege a taking that gives rise to a claim for just compensation.
We now address the Ninth Circuit's third certified question:
West Linn, 534 F.3d at 1105. That question arises because the city contended, in its counterclaim against plaintiff, that an ordinance that the city adopted vacating a portion of Greene Street abutting plaintiff's property is void and of no effect.
As a condition of development, the city required that plaintiff seek vacation of the portion of Greene Street abutting plaintiff's property. Show Timber, an entity that owned and sought to develop land on the opposite side of Greene Street, also was subject to that same condition. As the Ninth Circuit explains in its certification order, Show Timber began the vacation process:
West Linn, 534 F.3d at 1104-05. We understand Ninth Circuit to ask whether the procedural irregularity occasioned by the change in legal descriptions renders the vacation of Greene Street ultra vires.
An act of a city or other governmental entity is ultra vires when that act falls outside the entity's corporate powers. Keeney v. City of Salem, 150 Or. 667, 669-71, 47 P.2d 852 (1935). When a governmental entity's power is conferred by statute, actions outside the scope of that power are "extra statutory" and therefore ultra vires. See, e.g., State v. United States F. & G. Co. et al., 125 Or. 13, 24-25, 265 P. 775 (1928) (so applying to the context of state highway commission). However, where a city has broad power to act, but is required to exercise that power in conformance with certain procedures or limitations, a failure to so conform does not necessarily render a given governmental action ultra vires. For example, in Kernin v. City of Coquille, 143 Or. 127, 135-36, 21 P.2d 1078 (1933), the city charter granted the city council authority to contract, but required that it do so through a competitive bidding procedure. When the city failed to follow that procedure, the court held that the doctrine of ultra vires was irrelevant: the city possessed "ample power" to enter into contracts. Id.
To determine the extent of a city's power to vacate its streets, the parties direct us to Oregon statute, specifically the provisions of ORS 271.080 to 271.230, for a description of that authority. Those provisions grant cities authority to vacate streets and, relevant to this case, set forth two procedural mechanisms for doing so.
Even if a city has broad power to act, however, its failure to follow required procedures may, in some instances, render its action void and of no effect. Thus, in Kernin, although the city's action in entering into a contract was not ultra vires, the city's failure to follow competitive bidding procedures required by its charter rendered the contract void. 143 Or. at 137, 21 P.2d 1078. We would not fully address the city's argument in this case if we limited our discussion to the city's broad power to vacate its streets, and we therefore reframe the Ninth Circuit's question as asking whether the city's failure to obtain the consent of affected landowners rendered the vacation ordinance void and of no effect. See Western Helicopter Services v. Rogerson Aircraft, 311 Or. 361, 370-71, 811 P.2d 627 (1991) (recognizing this court's discretion to reframe and restate certified questions).
This court has not always been consistent or clear in defining the circumstances in which a government's procedural violation renders its action void. In Nyman v. City of Eugene, 286 Or. 47, 53, 593 P.2d 515 (1979), the court considered prior decisions that had used the concept of governmental "jurisdiction" to resolve the issue. In some of those cases, the court had deemed statutory requirements to be "jurisdictional" and decided that the failure to comply with those requirements rendered the governmental action void. In other cases, in which the court had concluded that statutory defects were not "jurisdictional," the court had presumed that the governmental proceedings were regular despite alleged noncompliance. Id. at 52-53, 593 P.2d 515. After surveying those earlier cases, the court in Nyman concluded:
Id. at 53, 593 P.2d 515 (emphasis added).
The parties in this case do not cite Nyman in their arguments. Nonetheless, the parties address the test used in Nyman — whether the consent procedure that the city failed to follow was indispensible to the vacation of Greene Street (as the city would have it) or merely a minor irregularity (in plaintiff's terms) not affecting the ultimate validity of the vacation.
That analysis requires consideration of the statutory consent procedures and the role that they play in a city's decision to vacate a street. As noted, there are two
ORS 271.130(1)
The city argues that, in this case, the city council proceeded according to the mechanism initiated by petition outlined in ORS 271.080(1) but
The consequence of that defect, the city maintains, is that the vacation is "without legal effect," and to hold otherwise would be to eliminate the need for the consent of affected landowners in any vacation proceeding.
Plaintiff argues, on the other hand, that that irregularity is inconsequential. Although the vacation proceedings were initiated by petition and the petition did not describe the disputed intersection, the city's notice of hearing provided the correct description and included the disputed intersection. The abutting landowners, plaintiff and Show Timber, acquiesced in that change, and the record does not disclose a written objection by any affected property owner. Thus, had the city begun the proceedings anew when it decided that vacation of the disputed intersection was warranted, and itself initiated vacation proceedings, the vacation could have been accomplished in accordance with the second mechanism for street vacation outlined in ORS 271.130. When the city revised the street description, it gave affected landowners the same opportunity to file objections to the vacation or to appear at the hearing and oppose the vacation that they would have had had the city used its authority to initiate vacation proceedings from the outset.
Understanding that the consent of affected landowners is significant only when vacation proceedings are initiated by petition, we look to Nyman for guidance in assessing the arguments of the parties. Nyman involved the widening of a road. There was no affirmative showing that the widening of the road was a public necessity, that plaintiff's predecessor in interest had given written consent to the widening of the road, or that the city had given plaintiff's predecessor notice of the road widening proceeding. 286 Or. at 50, 593 P.2d 515. The court concluded that, in light of competing legislative goals to ensure that county actions establishing roads are final and unassailable and also that affected property owners receive notice of road proceedings, only the notice requirements were indispensable to the validity of the action. Id. at 57, 593 P.2d 515. Other statutory requirements that did not render the notice to the
Similar competing goals are at play in street vacation proceedings. Street vacation affects title to real property, and stability and certainty in real property records is essential. Cf. Bitte v. St. Helens, 251 Or. 548, 551, 446 P.2d 978 (1968) (holding as untimely an appeal from city-initiated vacation ordinance because, where "[t]itle to real property is involved, * * * orderliness and certainty of procedure are extremely important"). By the same token, Oregon statute clearly makes a provision for notice to property owners affected by street vacation and gives them an opportunity to be heard and oppose vacation. If, after notice, a majority of affected property owners object in writing, the city is precluded from vacating the street. However, consent of property owners prior to notice and hearing is necessary only if vacation is initiated by petition. Oregon statute permits city initiation of vacation proceedings without the prehearing consent of affected landowners. Thus, that consent is not indispensible to city street vacation, and, in answer to the Ninth Circuit's third question, we hold that the absence of such consent does not render the vacation ordinance void and of no effect.
The certified questions are answered.
KISTLER, J., filed an opinion concurring in part and dissenting in part in which LINDER, J., joined.
KISTLER, J., concurring in part and dissenting in part.
West Linn Corporate Park (WLCP) filed this action in state court, claiming that the City of West Linn (the city) took its property in violation of the state and federal constitutions when it required WLCP, as a condition of development, to pay for off-site improvements. The city removed the case to federal court, and the United States Court of Appeals for the Ninth Circuit certified three questions to this court. See ORS 28.200 (authorizing this court to accept certain certified questions). I agree with the majority's answer to the first and third questions but would answer the Ninth Circuit's second question differently. Specifically, I would decline to give an opinion whether requiring off-site improvements constitutes an exaction for the purposes of the Fifth Amendment. Not only does ORS 28.200 limit certified questions to issues of state law, but there is no need for this court to offer the Ninth Circuit our opinion on federal law.
In Williamson Regional Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985), the Court held that a federal takings claim will not be ripe in two instances. First, a federal regulatory takings claim will "not [be] ripe until the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue." Id. at 186, 105 S.Ct. 3108; see MacDonald, Sommer & Frates v. Yolo County, 477 U.S. 340, 351, 106 S.Ct. 2561, 91 L.Ed.2d 285 (1986) (explaining that the resolution of a regulatory takings claim depends on first knowing "the extent of permitted development" on the property). Second, "if a State provides an adequate procedure for seeking just compensation, the property owner cannot claim a violation of the [Fifth Amendment] Just Compensation Clause until it has used the procedure and been denied just compensation." Id. at 195, 105 S.Ct. 3108.
In its opinion certifying the three questions to us, the Ninth Circuit explained that, in this case, only the second prong noted in Williamson — whether Oregon "provides an adequate procedure for seeking just compensation" — is at issue. West Linn Corporate Park v. City of West Linn, 534 F.3d 1091, 1100 (9th Cir.2008). And the Ninth Circuit's opinion suggests that the first two questions that it has certified are, in its view, necessary
The Ninth Circuit's second question asks whether requiring a property owner to pay for an off-site improvement as a condition of development constitutes an exaction. In explaining its question, the Ninth Circuit notes that the Oregon Court of Appeals held, in one decision, that such a requirement would constitute an exaction under the Fifth Amendment but, in a later decision, questioned that holding. See id. at 1102-04 (discussing Oregon Court of Appeals decisions). As both the majority and I understand the Ninth Circuit's second question, it invites us to explain whether, in our view, requiring a developer to pay for off-site improvements constitutes an exaction under the Fifth Amendment. The majority accepts that invitation. I would decline it.
To the extent that the Ninth Circuit asks for our views on the Fifth Amendment, it asks for more than ORS 28.200 permits us to give. ORS 28.200 provides that we may answer certified questions submitted by other courts to resolve potentially determinative issues of Oregon law. See ORS 28.200 (authorizing the Oregon Supreme Court to accept certified questions regarding the "law of this state"); Western Helicopter Services v. Rogerson Aircraft, 311 Or. 361, 365, 811 P.2d 627 (1991) (explaining that the certified question must "concern Oregon law, rather than the law of some other jurisdiction"). As the terms of that statute make clear, we may answer only questions of Oregon, not federal, law.
Nor does Williamson require us to give the Ninth Circuit our opinion on federal law. The ripeness concern raised in Williamson entailed a more limited inquiry. The substantive issue in Williamson was whether a government regulation that temporarily prevented a property owner from using its property constituted a taking in violation of the Fifth Amendment. 473 U.S. at 185, 105 S.Ct. 3108 (identifying that issue). The Court observed that the issue was an open one but declined to reach it because the issue was not ripe. Id. It explained that a state violated the Fifth Amendment only if it took property without providing an adequate procedure for obtaining just compensation. 473 U.S. at 194-95, 105 S.Ct. 3108. The Court noted that, under the applicable state law, a property owner claiming that restrictive zoning constituted a taking could bring an "inverse condemnation" claim in state court to recover just compensation. See id. at 196, 105 S.Ct. 3108 (discussing Tennessee law). Without some showing that the state's inverse condemnation procedure was unavailable or inadequate, the existence of that procedure was sufficient for the Court to hold that "until [the property owner] has utilized that procedure, its taking claim [in federal court] is premature." Id. at 197, 105 S.Ct. 3108.
In Williamson, the Court did not ask whether the Tennessee courts would recognize that a temporary deprivation constituted a taking before holding that the property owner's failure to bring its claim in the Tennessee courts meant that its claim in federal court was not ripe. Rather, the Court held that the Fifth Amendment claim that the property owner filed in federal court was not ripe, without regard to whether the property owner would win or lose on the merits of its Fifth Amendment claim in state court. Conversely, when the only remedy available in state court for a temporary taking was a declaratory judgment, and not damages, the Court held that the available state procedures were not adequate to provide "just compensation." First Lutheran Church v. Los Angeles County, 482 U.S. 304, 312 and n. 6, 107 S.Ct. 2378, 96 L.Ed.2d 250 (1987); see Williamson, 473 U.S. at 194 n. 13, 105 S.Ct. 3108 (suggesting that conclusion). The Court accordingly proceeded to reach the substantive federal question in First Lutheran — whether regulations that temporarily deprive a property owner of the use of its property violate the Fifth Amendment — that it had declined to reach in Williamson.
In my view, the only question raised by the second prong in Williamson is whether the
There is a suggestion in the Ninth Circuit's opinion that it views the scope of an "inverse condemnation claim" as presenting a question of state law, even when the source of law that gives rise to that claim is the Fifth Amendment. As a matter of Oregon law, however, there is no claim for "inverse condemnation" as such. Suess Builders v. City of Beaverton, 294 Or. 254, 258 n. 3, 656 P.2d 306 (1982). Rather, the phrase "inverse condemnation" is
Id. (quoting Thornburg v. Port of Portland, 233 Or. 178, 180 n. 1, 376 P.2d 100 (1962)); accord United States v. Clarke, 445 U.S. 253, 257, 100 S.Ct. 1127, 63 L.Ed.2d 373 (1980). As the court explained in Suess Builders, a claim for relief that a government action unconstitutionally took a person's property preceded the use of the phrase "inverse condemnation" as a "popular description" of that claim, 294 Or. at 258 n. 3, 656 P.2d 306, and the nature of the claim turns on the substantive law that gives rise to it, see First Lutheran, 482 U.S. at 315, 107 S.Ct. 2378 (explaining that form of relief "d[oes] not change the essential nature of the claim"). Describing a claim for relief as an inverse condemnation claim does not convert a claim that finds its source in the federal constitution into a state law claim on which we may offer an opinion pursuant to ORS 28.200. For that reason, I would not answer the Ninth Circuit's second question as the majority does.
The Ninth Circuit's first question, by contrast, asks our opinion on an issue of state law. It asks whether a property owner bringing a takings claim for an alleged exaction in state court would first have to exhaust its administrative remedies. Citing the reasons typically advanced for requiring exhaustion of administrative remedies, the majority holds that exhaustion is required in state court as a prerequisite to bringing a takings claim. As the majority correctly clarifies, we would not require exhaustion for a Fifth Amendment takings claim brought pursuant to 42 U.S.C. section 1983. See Patsy v. Florida Board of Regents, 457 U.S. 496, 516, 102 S.Ct. 2557, 73 L.Ed.2d 172 (1982) (holding that courts may not require exhaustion for actions brought pursuant to section 1983).
For the reasons stated above, I concur in part and dissent in part from the majority's answers to the certified questions.
LINDER, J., joins in this concurring and dissenting opinion.
The Just Compensation Clause of the Fifth Amendment has been incorporated into the Due Process Clause of the Fourteenth Amendment and is binding on the states. Chicago, Burlington, etc. R'D v. Chicago, 166 U.S. 226, 241, 17 S.Ct. 581, 41 L.Ed. 979 (1897).
Williamson, 473 U.S. at 193, 105 S.Ct. 3108.
West Linn, 534 F.3d at 1100 n. 4.
McClung, 548 F.3d at 1228.
McClung, 548 F.3d at 1225.
512 U.S. at 390-91, 114 S.Ct. 2309.
Id. Because the assessment was a tax, "any sound objection to the assessment as a tax * * * must be an objection which applies to the principle on which the tax is apportioned[.]" Id.