Botts Marsh, LLC v. City of Wheeler

Generally, LUBA will affirm a local government’s interpretation of its own provisions as long as those interpretations are “plausible.” Siporen v. City of Medford, 349 Or. 247, 259 (2010). If LUBA remands local provisions for interpretation and the local government makes new interpretations, the petitioner bears the burden of establishing that those interpretations are so different as to constitute an impermissible standard change under ORS 227.178(3)(a). However, in a limited land use decision, LUBA will find the local government erred and remand its decision if the local government adopts new interpretations in their final decision denying an application without allowing the applicant a meaningful opportunity to address those new interpretations, however plausible.

LUBA remanded a prior decision by the City denying Petitioner’s application for design review of a proposed seafood processing facility and retail space. LUBA instructed the City to adopt interpretations of vague and subjective local design review criteria the City had found Petitioner failed to satisfy. The City then refused to meet with Petitioner regarding its application and the criteria, rejected its revised application materials, and did not reopen the record. In the City’s final hearing on Petitioner’s application, the City adopted new interpretations of the standards at issue and concluded Petitioner failed to meet those standards. The City redenied the application and Petitioner appealed to LUBA.

On appeal, Petitioner made five assignments of error, three of which LUBA focused on: 1) the City’s new interpretations misconstrued the design review criteria as provided by local zoning ordinance, 2) the City’s standards were unconstitutionally vague, and Petitioner’s substantial rights were prejudiced when the City failed to allow Petitioner the opportunity to meet the newly interpreted standards, and 3) the City’s interpretations were so different as to constitute new standards in violation of ORS 227.178(3)(a) and were effectively a zone change without the proper procedure.

“[T]he city may articulate during a quasi-judicial proceeding on an application for design review specifically how vague and/or subjective standards will apply to a design review application, and [] the city is required to do so ‘sufficiently in advance of its final decision so as to grant the applicant a meaningful opportunity to address the standard.’” Dobaj v. Beaverton, 1 Or. LUBA 237, 244 (1992).

LUBA first addressed the second assignment of error, denying Petitioner’s claim that the standards were unconstitutionally vague as waived under the law of the case doctrine in Beck v. City of Tillamook, 313 Or. 148 (1992). Under Beck, a party fails to preserve an issue for review if, in a prior stage of a single proceeding, the party could have raised the issue but did not. However, LUBA agreed with Petitioner that the City erred in failing to allow Petitioner to participate in the proceeding and in adopting interpretations of the standards in the final decision, rather than sufficiently in advance to allow Petitioner a chance to meet those standards. LUBA concluded the City had to allow Petitioner to participate and communicate with Petitioner regarding the approval criteria.

Under ORS 197.829(1), “LUBA must affirm a governing body's interpretation of its own land use regulation if the interpretation is not inconsistent with the regulation’s express language, purpose, or policy. [] The test under ORS 197.829(1) is not whether the interpretation is correct, or the best or superior interpretation, but whether the governing body's interpretation is “plausible,” given its text and context.” Siporen v. City of Medford, 349 Or. 247, 259 (2010).

LUBA then turned to the first assignment of error, sustaining it in part. LUBA pointed out that, though the introductory provision to the design review criteria included that the following “guidelines” “shall be used by the Planning Commission in the evaluation of proposals,” the “guidelines” themselves contained both mandatory (“shall”) and permissive (“should”) language. LUBA rejected both Petitioner’s argument that the use of the word “guidelines” meant all the criteria were permissive and the City’s argument that the use of the word “shall” meant all the criteria were mandatory. Under ORS 174.020(2), LUBA concluded the specific provisions controlled the general, and thus the language in the “guidelines” themselves determined whether they were mandatory or permissive, not the language in the introductory provision. LUBA held that the City may not apply the permissive standards to Petitioner’s application on remand.

Under ORS 227.178(3)(a), the “goalpost rule,” “approval or denial of the application shall be based upon the standards and criteria that were applicable at the time the application was first submitted.” However, “it may often be a close call whether a local government has, in effect, promulgated new approval standards and criteria through the process of adjudication, and not merely refined by interpretation existing codified standards and criteria. Detecting the precise point at which an act of interpretation becomes an act of legislation can hardly be said to be a science.” Waveseer of Oregon, LLC v. Deschutes County, 308 Or. App. 494, 502 (2021).

Finally, LUBA denied the third assignment of error. While LUBA found that Petitioner was not precluded from raising the issue under Beck, LUBA concluded that, because the City adopted the interpretations only in its final decision, Petitioner had not established that the City’s interpretations of the “extremely vague and subjective” design review criteria were so different as to constitute the creation of a new standard. Lastly, LUBA rejected Petitioner’s claim that the City’s interpretations were effectively a zone change without proper procedures as undeveloped.

Remanded.