By Edward J. Sullivan and Carrie A. Richter
Oregon has a reputation for planning. However, when it comes to transportation planning, efforts often appear to be moving in different directions and at speeds slower than melting glaciers.
In October 2013, the governors of California, Oregon, and Washington, as well as a proxy for the premier of British Columbia, signed the Pacific Coast Action Plan on Climate and Energy. Among other things, the pact promises provincial or state-level action in furthering the usual panoply of clean transportation modes including adoption of low carbon fuel emission standards, expansion of the use of zero-emission vehicles, and support of high-speed rail.
In 2012, the Oregon Department of Transportation (ODOT) launched its Oregon Passenger Rail Project to study the creation of a high-speed rail line from Eugene to Portland. The study, as opposed to the construction of the line, is due to be complete sometime in 2016. ODOT has also begun work on updating its Oregon State Rail Plan, initially adopted in 1997. This study follows ODOT’s update of its Highway Plan and its creation of Design Guidelines for its Pedestrian and Bicycle Plan in 2011.
As Oregon moves sluggishly toward planning a regional alternative transportation system, other counties such as Germany has not only built them, they are now integrating them. In the article “A Mobility Wunderkind: Transportation Lessons for Germany,” by Nicholas Oyler, Planning, the Magazine of the American Planning Association, December 2013, Oyler explains that the German government has made providing “safe and affordable mobility to people” a priority. The focus for the German system is “full mobility” or Gesamtmobilität, combining bike-sharing, car-sharing, and transitional public transit into one coordinated system.
For example, a bicycle or the commuter rail may make sense for getting a rider to the office but getting to a lunch meeting during a rainstorm or running a quick errand may be more efficiently accomplished by checking out a car. Some regions, particularly the Ruhr Valley that includes many rural areas, have created an office whose sole function is the coordination of transportation services. In Dusseldorf, for about $100 per month, customers receive a ticket card that includes a monthly pass for local transit, 90 minutes of Car2Go usage and four hours’ daily usage with Nextbike.
Another example taken from the Oyler article tells the tale of a rural resident who drives his mini van from his rural village to a parking lot of a commuter rail station, where he loads his bicycle onto a commuter train into Frankfurt, where he cycles along greenways, under highway and railroad overpasses to his office building. Coordinating the various modes of transportation seems obvious from those who are commuting but what are we doing on the planning end to connect and coordinate these multi-modal approaches? Adopting separate state, county and city highway, pedestrian and bicycle and rail plans, with an entirely separate state-sponsored Passenger Rail Project – Eugene to Portland -- does not seem to integrate any of these systems on the front end.
Further, the Portland metro area served by Tri-Met, as the single public transportation provider, is distinguishable from the German system that includes a greater number of public and private transportation options including bus, trolley bus, streetcar, light rail, heavy rail and intercity rail. Tri-Met’s recent adoption of a flat fare system along with providing electronic tickets may make it simpler for riders to get around, it does not go nearly far enough to suggest any partnering with bike-sharing and car-sharing companies, when car-sharing appears to be gaining in popularity.
As an autonomous public entity, Tri-Met enjoys some degree of freedom from transportation planning obligations imposed by the statewide land use system regarding reliable service. It is not required to guarantee service and cut-backs have left developments, already allegedly underserved by adequate off-street parking, without the 15-minute bus service they had expected. It is conceivable that this could lead to other entities jumping into the public transportation game; imagine the DR Horton Express transporting its residents from new developments in Happy Valley or Oregon City to stops on Tri-Met’s Milwaukee Express Line. After all, Portland’s development history is filed with developer-built and run ferries and trolley lines transporting people to and from new developments.
The upside is that decisions about how and where to enhance the public transportation system have yet to be made, in many respects, and can be accomplished using a more integrated approach that includes both public and private options. However ODOT’s myopic-focus on separately planning for rail, passenger rail, highway, bicycle and pedestrians coupled with no certainty that Tri-Met will provide adequate service over the long-term as required by the statewide planning goals, suggests that such glacial speed planning efforts will likely continue to be anything but integrated.
Muscarello v. Winnebago County Board, 2012 WL 6062515 (7th Cir.) involved a farmer challenging defendant’s provision for wind farm zoning, citing possible hazards from shadow flicker, reduction of light, noise, ice and blade throw, interference with communications and crop dusting, raptor loss, and similar matters. Some of these harms were conjectural and other harms to agriculture were unproven. The court noted that the only relief sought was against Defendant County and that various wind company defendants should have been dismissed for that reason. The 7th Circuit noted that the District Court dismissed the suit, “a blunderbuss of federal and state claims” under FRCP 12(b)(6), i.e., that there was no claim under which plaintiff would be entitled to relief.
Under the challenge Code amendment, wind farms became permitted uses in certain zones, subject to setback and environmental standards. No application for this use had been filed and Judge Posner, writing for the majority, observed for the court that a “pall of prematurity hangs over the case.” Nevertheless the court found standing based on plaintiff’s allegations of loss of property value, stated at $500,000, to be sufficient, though Judge Posner observed that the number was “suspiciously rounded and unexplained.”
The court found no taking as there was no showing of a transfer of ownership or of rendering plaintiff’s land valueless, nor any case under the Illinois Constitution under which in addition to taking there was a guarantee of just compensation for the damaging of property. Neither ground was sufficiently alleged in this case. Similarly, the court found no deprivation of property under the federal Due Process clause by this change in procedure for wind farms from a conditional use to a permitted use – a change the court found too remote for any loss. Moreover, the court noted that the instant challenge was facial in nature, so the court could not speculate on a possible application made on or near plaintiff’s property. Judge Posner observed:
"Evaluating the plaintiffs objections to the ordinance would require comprehensive knowledge not only of wind farms and their effects pro or con on the environment and on energy independence, but also of the most valuable potential uses of all rural land in the county. A judge could review the ordinance for rationality, but that is an undemanding test, and the national interest in wind power as a clean source of electrical energy and as a contribution to energy independence is enough to establish the ordinance's rationality. (There is federal money to support wind farms; why shouldn't Winnebago County try to get a bit of it by making it easier to build wind farms in the county?) For a court to allow a hypothetical harm to one person's property from a yet to be built (or even permitted to be built) wind farm to upend a county-wide ordinance would be an absurd judicial intrusion into the public regulation of land uses.
Stepping down from the dizzying heights of constitutional law, we can restate the plaintiff’s contention as simply that a wind farm adjacent to her property would be a nuisance. That is a more sensible conceptualization of her claim than supposing as she does that she has a property right in her neighbors' use of their lands. Should any of them create a nuisance by building a wind farm, she can seek to abate the nuisance when the wind farm is built, or maybe a bit earlier, when a permit to build it is granted. The fact that the County Board has zoned agricultural property to allow wind farms would complicate her effort to establish that it was a nuisance, but not defeat it. The operation of the wind farm might turn out to cause a kind or amount of damage that the Board had not foreseen, and in that event the ordinance would not bar the suit.
Sufficient unto the day is the evil thereof. For all one knows, no wind farm will ever be built close enough to any of the plaintiffs properties to do any harm, let alone harm sufficient to constitute a nuisance under the standard for determining nuisance, which involves a balancing of the costs and benefits of the land use claimed to have caused a nuisance. Even a wind farm that was only a stone’s throw from one of her properties might do no damage to it, given the use to which she puts her Winnebago county properties – of which we have not been informed."
The court also noted the procedural challenge to the adoption of the ordinance in the initial version of this case which was mooted by the reenactment of the same and dismissed various other challenges to the ordinance, procedural and substantive, as well. The District Court decision was thus affirmed.
It is difficult to bring a facial challenge to a regulation in the absence of a clear procedural or constitutional infirmity. Plaintiff must await a permit proceeding to challenge the application of the ordinance under constitutional and statutory standards. Judge Posner has once again enlivened this rather dull application of constitutional law.
Muscarello v. Winnebago County Board, 2012 WL 6062515 (7th Cir.).
In our DJC column for November, 2010, It's About Time - How Not to Plan For Future Industry in Oregon, we wrote about the agonizing 15-year odyssey endured by the City of Woodburn to amend its urban growth boundary (UGB) to include an additional 409 acres of land, some of which is high value farmland and adjacent to the I-5 Freeway, for industrial use as part of periodic review. The city justified the number of acres necessary for inclusion using a “target-industries” approach that evaluates the city’s employment needs based on the type of industries it would like to attract and then identifying an amount of land needed to attract those particular employers, given their site and building preferences. The target-industries approach differs from the more typical “employees-per-acre” approach which projects employment growth and divides that growth by the number of employees per acre to reach the number of acres needed to support employment growth.
Petitioners 1000 Friends of Oregon and others objected to the target-industries approach and argued to the Oregon Court of Appeals that this approach resulted in designating more industrial land than was needed to accommodate projected job growth in violation of Statewide Land Use Planning Goal 9, Economic Development. Petitioners also argued that the city’s target-industries approach “inflated” the number of acres needed to be included within the UGB in violation of Goal 14, Urbanization. The Land Conservation and Development (LCDC) approved the city’s expansion of the UGB and concluded that the decision to “provide market choice among sites…is a key component of a successful industrial development strategy” required by the administrative rules implementing Goal 9.
In a 2010 proceeding, the Court of Appeals reversed and remanded, finding that LCDC failed to adequately explain its decision. This concept is known as providing substantial reason. “Although LCDC discusse[d] Goal 9 and its implementing rules and conclude[d] that the UGB amendment complies with both Goals 9 and 14, LCDC provided essentially no reasoning as to that conclusion with respect to Goal 14.” Regarding Goal 9, the court stated that LCDC’s “mere reference to ‘market choice’ [was] insufficient to explain the reason that the city’s UGB expansion is consistent with that goal.” Although the court did accept that some forms of “market choice” could be consistent with Goal 9, LCDC was left to determine to what extent it could exist and still comply with Goal 9.
Back at the drawing board, LCDC drafted a revised order and again approved the city’s decision for the same acreage. This time, LCDC’s analysis was based on a determination of a “close correlation” between the amount of land needed using the target-industries when compared against the employees-per-acre approaches – a 51 acre or a 16% difference. LCDC explained that “the more a city’s land need for employment based on its analysis of economic opportunities and sites diverges from what would be predicted…the more thoroughly the city will need to substantiate its economic opportunities analysis and resulting site needs.” Since the two numbers, 311 acres needed under the employees per acre approach and 362 acres for the target employment approach, are “relatively close,” LCDC concluded that Goals 9 and 14 were satisfied. On appeal for the second time, the Court of Appeals disagreed and found that LCDC failed to explain why a close correlation between the two approaches signified anything. Why was a 16% divergence sufficient and when would these numbers diverge so much as to violate the goals? The court explained that “LCDC did not explain why the relationship between the two numbers, in any case, should relieve it from reviewing—or local governments from explaining—why the amount of land proposed to be added to the UGB is consistent with the goal and other law just as carefully as it would if the correlation were not ‘close.’” Just finding a “close correlation” did not provide adequate “analytical support” for LCDC’s conclusion.
LCDC’s second reason for affirming the city’s decision focused on the city’s analysis of population, employment, target industries and site requirements upon which LCDC found compliance with Goals 9 and 14. Here, LCDC’s findings go through exhaustive detail explaining the steps taken by the city to determine how much additional land should be added to the UGB. LCDC’s findings identified the applicable goals and other legal provisions, and concluded that the city’s decision complied with these requirements. In what can only be describes as “déjà vu all over again,” the court-identified defect with this approach was that LCDC failed to provide “a meaningful explanation of why the steps taken by the city satisfy the legal standards.” Sensing that it was not getting through in this second go-around, the court not only quotes two pages of LCDC findings but spends another two-and-a-half pages paraphrasing those same findings through the use of bullets and categorized them as statements of policy, fact, and conclusions. The applicable standard “substantial reason” according to the court requires “an explanation of why the process in which a local government engaged and the results that it reached are consistent with the law.”
This decision is not just about an abject failure in writing findings but is indicative of an agency and local government desiring a particular result and working furiously to make the means justify that end with no particular consideration of whether the outcome was consistent with the law. The land use laws, particularly when it comes to UGB amendments require two matters to be addressed – identifying a need for housing and employment lands and then expanding the UGB to accommodate the identified need and not the other way around.
Understanding the myriad of options available for structuring the construction and design aspects of project development at an early stage in development can give an owner or developer maximum flexibility in setting up the project in a way that will maximize that project’s success – success being defined as consistency with the owner’s expectations and needs. These options are generally referred to as project delivery methods, or systems. Some of these methods go well beyond just construction, and may encompass project planning, design, financing, operations, maintenance, and other aspects of the development and completion of a particular facility. There are often three primary delineations:
(a) where privity (contractual relationships) is established,
(b) how risk (and potentially reward) is allocated, and
(c) the timing of involving key players.
In addition to these differences, there can also be differences in the payment provisions. One contracting method may be used in conjunction with a variety of payment options, although some methods more typically use certain types of payment arrangements.
This series of postings will discuss some of the more common methods for project delivery and their advantages or disadvantages, starting first with design-bid-build, the focus of this posting. The next part will discuss design-build and engineer-procure-construct, and the third part will discuss construction manager at risk contracting.
Design-bid-build is generally recognized as the most traditional delivery method. In this approach, the owner contracts directly with the architect. After completion of design, the owner then enters into a construction contract. The architect might or might not have any involvement once the project entered the construction phase. This method is generally very sequenced, which impacts the timing of completion.
The owner is the primary point of privity with the architect and, separately, with the contractor.
This type of scheme can give the owner a great deal of control. For example, it oversees the design and can dictate what the final product should be to a very finite level of detail if it so desires. The owner is responsible for financing the project and, after construction, maintaining and operating the facility (although the contractor would typically provide certain warranties for a limited period of time following completion of the project).
However, with control comes risk. In most jurisdictions, these contractual lines dictate some amount of risk and liability. For example, in many jurisdictions, the contractor cannot sue the architect directly for economic losses suffered by the contractor as a result of the architect’s design – instead, the contractor must seek recovery against the owner under the rights and restrictions set forth in the construction contract. The owner can then decide whether to try to pursue recovery of any amounts it pays the contractor from the architect. Under the particular law in a jurisdiction, the standard which the owner must meet vis-à-vis the contractor may be greater than the general standard of care owed the owner by the architect.
One of the most common payment methods for design-bid-build is referred to as lump sum or stipulated sum. Because the design is complete (or should be complete), the contractor can provide set pricing for the construction. This puts both the risk and reward on the contractor of unexpected costs. The contractor may not recover additional costs simply because it cost more than planned; conversely, if the contractor is able to do the work for less than anticipated, the contractor gets to keep those additional profits. The contractor is typically paid draws throughout the construction based upon the percent of the work complete and irrespective of the actual costs incurred during that payment period.
Alternatively, the contractor might be paid based on the cost of the work. Unless capped, this puts the risk of increased costs on the owner, but also gives the owner the benefit of underruns.
Design-bid-build can be a very effective contracting method when
(a) the owner wants or needs to retain control,
(b) the owner has time for a sequenced approach, and
(c) the owner is comfortable with the standard risk allocations or modifies those allocations by its contract documents.
The Portland region has had regional planning for nearly 30 years. Many in our region have strong opinions about the role of Metro and one of our popular pastimes, particularly during elections, is to throw stones at Metro and bridling regional planning efforts. Given that undercurrent of resentment in Portland, it is interesting to note that last year Jackson County, and most of its cities, completed a 13-year journey to embrace regional government land use planning that at times resembled the silent movie, The Perils of Pauline. These efforts had local governments, as well as their citizens, at loggerheads and threatened to give a black eye to the statewide planning process.
Jackson County is not an easy place for the State of Oregon. Its citizens are quite independent and self-reliant and run the gamut along the political spectrum. Ashland, and parts of Medford, are “blue” islands within “red” territory and it is safe to say that many in the county view statewide planning skeptically. While all the cities’ and the counties’ land use plans had been acknowledged, the problem in the late 1990s was dealing with the future – particularly in deciding how much and where urbanization would occur. The cities in the county had various views about how much land should be urbanized. Ashland was more likely to embrace greater urban densities and keeping its urban growth boundary in place, while most of the other cities would prefer to expand their UGBs outward. The county had the unenviable task of allocating population among its cities and unincorporated areas, which usually lead to squabbles over growth.
In 1999, then-candidate John Kitzhaber made a campaign pledge to seek legislation to provide local governments with a cooperative process to resolve planning disputes. That legislation provided for those local governments who entered into an agreement for regional problem solving to have state financial and logistical support for a process to plan for the future. The catch was that all of the parties to the agreement were required to enact the final product – usually an amalgam of plan policies, new or modified land use regulations, and zoning map changes. The requirement that all the parties concur in the final product caused other regional problem solving efforts to falter, such as the one that included Polk and Yamhill Counties, dealing particularly with challenges associated with planning adequate transportation facilities in and around the Spirit Mountain Casino in Grand Ronde.
The 13-year ride was full of twists and turns, as the cities and counties sought to further their own interests. At one point the City of Jacksonville, which was an original party, decided to end its participation, an act which threatened to end the process. But the other parties continued the process without Jacksonville. In addition, the expectations of landowners following the passage of Measure 37 (which could result in many more residential lots being allowed, with the consequent undermining of UGBs) and the expectations of cities that they were entitled to growth shares that would make acknowledgment impossible (because those shares combined would exceed the expected population of the County as a whole), were other significant threats to completion of the process.
It was then indeed a tribute to the pragmatism and goodwill of these very different parties that they cooperated (sometimes through gritted teeth) to produce a plan. State planning and natural resource experts and a bevy of citizen volunteers serving on committees provided advice, and 1000 Friends of Oregon was judicious in its comments (although it had a legal arsenal at its disposal, just in case). However, it was the planning staffs from the various local governments that, with truckloads of advice and the comments of the public, carried on and forged a plan that both the state and the local governments involved could accept. The Regional Problem Solving Plan for the Greater Bear Creek Valley was acknowledged by the Oregon Land Conservation and Development Commission on November 15, 2012 with little opposition and without any further appeal.
The next steps require the local governments involved to implement the plan by amending their UGBs when timely, along the lines set out in the plan. While there are sure to be disputes over the timeliness of land use changes, few will miss the squabbling over where growth should occur and where it should be located. Savor it – if history is any indication, such calm is likely to pass.
We regularly update clients about changes in real estate law and on industry trends. This includes briefing clients on legislative proposals in the federal tax, housing and other legal areas affecting their businesses. Staying current enables you to anticipate and prevent legal problems as well as capitalize on new developments.