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Legal Center

Oregon Court of Appeals ignores Supreme Court
(and common sense)

In a disappointing but unsurprising decision, the Oregon Court of Appeals let stand a City of Tigard decision to impose a $37,000 "traffic impact fee" on Rogers Machinery, Inc., a small Tigard manufacturing business.

The facts of the case make the court’s decision troubling. In 1997, Rogers submitted an application to construct a new building on their existing site, which houses both their manufacturing plant and their corporate offices. The purpose for the new building was to upgrade Rogers’ existing facilities, which were outdated.

But the new building was simply an update, and nothing more. Manufacturing capabilities were not being increased, and no new employees were slated to be hired.

As a result, Rogers’ traffic engineer informed the City of Tigard that the construction of Rogers’ new building would generate no new traffic on Tigard’s public streets. You wouldn’t think that a traffic engineer would be needed to make that profound announcement. After all, if you aren’t increasing your manufacturing output, and you aren’t hiring any new employees, why would there be any more traffic?

But, as the Dolan case (won by the OIA Legal Center in 1994) reminds us, common sense and facts never seem to factor into a decision by the City of Tigard. The Rogers case was no different.

Tigard applied a formula to determine the number of vehicle trips that Rogers new building could (but really wouldn’t) generate, and then multiplied that number by a dollar amount that presumably would compensate the City for the needed traffic improvements that the City would have to make in order to serve all of the new cars that could (but really wouldn’t) be on Tigard’s streets as a result of the new building.

(As an aside, doesn’t it seem odd that a City demands compensation for public services that it has to provide a private landowner, but fights every time a landowner demands compensation for public services [e.g. open space, scenic views, wildlife habitat] that the landowner provides the public?)

In any event, Rogers logically thought that they should not have to pay for street improvements that weren’t going to be necessary, particularly when their construction did not result in any new cars on Tigard streets.

But the City realized that they had Rogers over a barrel. Without blinking an eye, the City planners informed Rogers that they must pay the $37,000 "traffic impact fee" before the City would give them a building permit to construct the new building. No payment, no building permit.

In reality, this is no different than the playground bully demanding lunch money for "protection." In the words of Justice Scalia of the United States Supreme Court, Tigard’s plan amounted to an "out and out plan of extortion."

Rogers believed that the City overstepped its bounds when demanding a $37,000 fee for unspecified traffic improvements that wouldn’t be needed. And Rogers thought that the Dolan case, which prohibits a local government from extorting property from a landowner in exchange for a land use permit, unless the local government can show that the property they want to take is needed to offset some public impact caused by the new development, would protect Rogers from the City’s arbitrary demand.

Unfortunately, the Court of Appeals did not agree with Rogers. According to the Court, the Dolan case does not apply to a "development fee imposed on a broad range of specific, legislatively determined subcategories of property through a scheme that leaves no meaningful discretion either in the imposition or in the calculation of the fee." Say what?

In layman’s terms, what the Court is saying is that a local government is free to adopt whatever fee it wants and demand payment of that fee as ransom for a landowner’s land use permit, provided the fee is imposed equally on everyone and there is no discretion on how the fee is calculated.

In even simpler terms, the local government can stick it to everyone, as long as they stick it to everyone equally.

That seems to turn Dolan on its head. What’s to stop a local government from demanding that a landowner pay a $50,000 "livability" fee for any project the landowner wants to make. While that sounds far-fetched, can we be that far off from that situation? After all, Tigard is demanding $37,000 to pay for imaginary traffic improvements needed to offset imaginary cars that will make imaginary trips on Tigard’s newly constructed imaginary streets.

And what is reality? Tigard stole $37,000 from Rogers Machinery, and used it for God knows what.

And the Oregon Court of Appeals said that was okay.

Needless to say, the Oregonians In Action Legal Center, who is representing Rogers, will appeal the Court of Appeals’ decision to the Oregon Supreme Court, and, if necessary, to the United States Supreme Court.