Next steps uncertain in Prineville M37 payout

Grover Palin’s claim is first M37 claim to be paid in state

By Rachael Scarborough King / The Bulletin
Published: October 25. 2006 5:00AM PST

PRINEVILLE – Standing on his steeply sloped property that looks out over downtown Prineville, Barnes Butte and the mountains beyond, Grover Palin reflected on the Prineville City Council’s decision last week not to let him build a home on his land.

“I’m just an average guy that … have worked hard all their life and would like to have the fruits of that work,” Palin said. “I don’t think we’d hurt the city of Prineville if we did.”

In the wake of the City Council’s historic decision last week – the first time in the state a government has agreed to pay out a claim instead of waiving land use regulations – officials and property-rights groups around the state are waiting to see what kind of repercussions the council’s vote could have on Measure 37 decisions in the future.

Measure 37 allows property owners who bought their land prior to certain regulations being enacted to file claims if the restrictions reduce property values. If a municipal government decides that a property owner has a valid claim, it can either waive the land use regulations or compensate the owner for the loss of value to the land.

At a special meeting last week, the City Council voted to compensate Palin $47,760 for the development rights on his land rather than to allow him to build on the edge of the rimrock that surrounds the city. Prineville is set in a valley bordered by juniper-covered, flat-topped cliffs.

Palin bought his land in 1963. In 1978, the county established regulations requiring that houses be set back at least 200 feet from the rimrock edge.

Palin, 80, said he originally bought the 15-acre property as a pasture for his horses and later realized that it included 2.04 acres on top of the rimrock.

After living and working for many years in a house near the bottom of the 15-acre parcel, he said he and his wife, Edith, 79, began seriously considering building a home around 1996.

The Palins continue to live on Southwest Crestview Road, near the bottom of his land that rises up from the Meadow Lakes Golf Course, with their daughter and son-in-law. The rimrock area is visible from the west entrance to town on state Highway 126, and there are no other houses on the edge of the rimrocks right now. Palin said that he would want to build a three-bedroom house, preferably one story but possibly two, because he could have to sell it as he and his wife get older.

The council set the loss of value to the Palins’ land at $47,760, saying the payout was contingent upon them filing another Measure 37 claim with the state and obtaining a waiver of the state’s land use regulations. The council decided on this provision because it said the land would be worth even less if the state would not waive its rules. Councilors said at the meeting that the Palins should have filed simultaneously with the state in the first place.

“They are the overriding land use body, so in essence if we were to waive it and say, ‘OK, we’re going to release our land use restrictions,’ that still wouldn’t be enough, he still has to go to the state,” said Jerry Gillham, assistant city manager in Prineville. “It’s a double-check system.”

Palin said that when he first filed his claim with Crook County, he was told he did not need to go to the state because the regulation preventing him from building was a county restriction.

Lane Shetterly, director of the Department of Land Conservation and Development in Salem, said his office – which handles Measure 37 claims filed with the state – currently takes about 170 to 175 days to process a claim.

Palin said he is not sure how he and his wife will proceed with their Measure 37 claim now. They originally filed with Crook County in November, before their land was annexed into Prineville along with about 200 “island” parcels of land in March. The city then accepted the claim and set a new start date for filing at May 1, because Measure 37 requires that action be taken within 180 days.

The Palins now have two basic options, according to officials from the city and Oregonians in Action, the property-rights group that wrote Measure 37. They can file a claim with the state in order to eventually collect the money awarded by the city – assuming the state grants a waiver. Or they can appeal the amount of money to the Crook County Circuit Court. If the state does not grant a waiver, the amount of compensation would have to be renegotiated.

Ross Day, director of legal affairs for Oregonians in Action, said he does not think Palin can appeal the decision not to let him build on the land because Measure 37 gives local governments power to decide whether to waive regulations or pay.

“It sounds to me like Measure 37 worked how it was supposed to work,” Day said. “The statute gives the discretion to the local government to decide whether or not they’re going to pay or waive, and that’s really not a place for a property owner to question. That is something that’s reserved to the local government, so I don’t know how they would challenge that.”

Palin said he is still not sure whether he will accept the money the council said he is due.

“I expected to be able to build up there, I’ve owned it for 43 years, and I’ve paid taxes on it,” he said. “I never wanted money, I’m not looking for money, all I’m looking for is the use of my land for a home.”

Settling on a number

The City Council considered two different appraisals of the land’s value to arrive at the figure of $47,760. An appraisal the Palins requested from Appraisal Associates of Oregon put the market value of the land at $195,000, assuming that it would be a buildable lot with city water and sewer service, according to Patrick Solitz of Appraisal Associates.

At a meeting on Sept. 26, the council decided to get a second appraisal from Bucknum’s Appraisals, which gave a market value of $60,000 and made similar assumptions as the first appraisal, appraiser Steve Bucknum said.

Under Measure 37, if a municipality decides to pay a property owner rather than waive land use regulations, it is not paying to buy the land, but rather compensating the owner for the loss of value in not being able to develop the land. That means that the compensation figure could be lower than the market value of the land, Bucknum said.

The Palins’ appraisal did not include a value for the land if it could not be developed, but only the assumed market value of the land if a home could be built. The city’s appraisal put the current value of the land without development rights at $12,240; the council subtracted that figure from the appraised market value of $60,000 to arrive at the amount of $47,760 for the loss of value to the land.

At the meeting, Palin disputed the second appraisal’s statement that the valley floor is not visible from the rimrock property and that the land does not have an easement providing access from the highway.

The city’s appraiser, Bucknum, said at the meeting that he “probably was on the wrong piece of land.”

“I’m angry that the City Council can eliminate our appraisal and accept another one that I think I had seven or eight holes to punch into it that night, but they had their minds made (up) before they got there,” Palin said this week.

But Bucknum said that his appraisal made several assumptions in the Palins’ favor and that the view of the valley floor was not a factor in it. He added that he purposefully stayed off the Palins’ property in order to avoid charges of trespassing.

Eric Stachon, communications director for 1000 Friends of Oregon, a land use watchdog group that initially opposed Measure 37, said that in considering these claims local governments need to carefully work out the loss of value to the land and make sure that either the waiver or the amount of compensation is equivalent to that loss.

“If you can show a million-dollar loss of value on your property (from not being able to build), it’s not fair and it’s a windfall profit to allow somebody to build a $50 million subdivision on a loss of value of a million dollars,” Stachon said. “We don’t think that’s what voters intended.”

Historic trendsetter or isolated case?

Stachon and others across the state said they are not sure what impact the Prineville case could have on other Measure 37 claims.

“It’s pretty amazing – I’m not sure what kind of repercussions it has,” Stachon said. “It’s certainly more of an isolated case. There’s been over 3,300 claims filed and this has been the first one where there’s serious talk of compensation.”

Day, of Oregonians in Action, said the payout could have an effect on other decisions.

“I suspect that what it will do is it will show folks how exactly that paying somebody isn’t necessarily a scary thing,” he said. “I don’t know that it will lead to more payments per se.”

Shetterly of Department of Land Conservation and Development said that many local governments simply do not have the option of offering compensation because of a lack of funding.

“Other governments around the state, both local and at the state level as well, will be very interested in following this,” Shetterly said. “I think, though, that in most jurisdictions the reason you haven’t seen payments is just that most local governments either don’t have or aren’t in a position to commit the resources to pay, and this isn’t going to change that.”

Prineville city officials said that the money for the Palins’ claim would most likely come from the general fund or dollars from the city-owned City of Prineville Railway.

In making their decision last week, council members said they believe they were acting according to the wishes of Prineville residents.

“I think the rimrock is extremely important to this community, it’s what defines it and to allow a home built that is a visual blight, if you will, on that rimrock,” Councilor Bobbi Young said at the meeting. “(That) would be a very tough thing for me to accept.”

Curt Saunders, a Prineville resident, said he thinks the council made the right decision.

“I think that a person should be allowed to (do) with their land, within reason, they should be able to do whatever they want with it,” Saunders said. “I’m glad that they did what they did, that they paid him off, and I would hate to see a skyline of houses there.”

But Jeff Jones, who lives around the corner from the Palins on Southwest Rimrock Road, said he thinks the Palins should have the right to build.

“It doesn’t bother me, no, the people own the land, they should be able to do what they want with it,” Jones said. “I don’t think we should be spending our tax dollars to keep them from doing it.”

The Palins said at the City Council meeting that they don’t think Prineville residents would mind a house built on top of the rimrock since no one showed up for any of the three public hearings on the issue. Mayor Mike Wendel said he does not think that can be taken as evidence of public sentiment.

“I think just because people don’t show up to the meeting doesn’t mean they’re not concerned, it just means for some people that they’re very busy and they have things going on in their lives,” Wendel said.

For now, Palin said he is still weighing his options. He and his wife asked the City Council questions about their claim at a meeting Tuesday night, but councilors told them they would set up a later meeting to address their concerns.

“We know how to work and we know how to save and we didn’t need a lot of money, we’re really just pretty simple people and it’s a crying shame that the city is making such a big deal of it,” he said. “It’s a dream we had and it may not ever come but it’s not going to make or break us either way.”