Case Title: West Linn Corporate Park v. City of West Linn

Citation: 

Docket Number: 

State: oregon

Court: Oregon Supreme Court

Date: 2010-09-23T00:00:00Z

Document:
FILED: September 23, 2010
IN THE SUPREME COURT OF THE STATE OF OREGON
WEST LINN CORPORATE PARK, L.L.C.,
Plaintiff,
v.
CITY OF WEST LINN,
BORIS PIATSKI,
and JOHN DOES 1-10,
Defendants.
WEST LINN CORPORATION PARK, L.L.C.,
Plaintiff,
v.
CITY OF WEST LINN,
BORIS PIATSKI,
and JOHN DOES 1-10,
Defendants.
(USCA 05-53061, 05-36062; SC
S056322)
On certified questions from the United
States Court of Appeals for the Ninth Circuit; certification order dated July
29, 2008; certification accepted December 10, 2008; argued and submitted
September 17, 2009.
D. Joe Willis, Schwabe, Williamson &
Wyatt, P.C., Portland, argued the cause and filed the brief for plaintiff. 
With him on the brief were Michael T. Garone and Jill S. Gelineau.
Robert E. Franz, Jr., Springfield, argued
the cause and filed the brief for defendants.  
Alan M. Sorem and Hunter B. Emerick,
Salem, filed a brief for amicus curiae National Association of
Homebuilders.
John M. Groen, Bellevue, WA, and Meriem
L. Hubbard, Sacramento, CA, filed a brief for amicus curiae Pacific
Legal Foundation.
Edward J. Sullivan, Carrie A. Richter,
and Harry Auerbach, Portland, filed a brief for amici curiae League of
Oregon Cities, American Planning Association, and the Oregon Chapter of the
American Planning Association.
Before De Muniz, Chief Justice, and
Durham, Balmer, Walters, Kistler, and Linder, Justices.*
WALTERS, J.
The certified questions are answered. 
Kistler, J., filed an opinion concurring in part and
dissenting in part in which Linder, J., joined.
*Gillette, J., did not participate in the decision of
this case.
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. 
The city answered, asserted a counterclaim, and sought invalidation of a city
ordinance that vacated a street abutting plaintiff's property.  The city then removed
the case to federal court.  Following a bench trial, the federal district court
entered judgment in favor of the city on plaintiff's inverse condemnation
claims and in favor of plaintiff on the city's road vacation counterclaim.  The
parties cross-appealed to the Ninth Circuit, which entered an order certifying
the following questions to this court:
1.  "[W]hether a plaintiff bringing an
inverse condemnation action alleging that a condition of development amounts to
an exaction or a physical taking is required to exhaust available local
remedies as a prerequisite to bringing his claim in state court."
2.  "[W]hether a condition of development
that requires a plaintiff to construct off-site public improvements, as opposed
to dedicating an interest in real property such as granting an easement to a
municipal entity, can constitute an exaction or physical taking." 
3.  "[W]hether the vacation of a street
approved by the City Council purporting to act pursuant to [ORS 271.110] is
ultra vires where the petition does not comply with the landowner consent
provisions of [ORS 271.080]."
West Linn Corporate Park
LLC v. City of West Linn, 534 F3d
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.(1) 
In its first claim for relief, plaintiff alleged that, as a condition of development,
the city "required [it] to construct and dedicate to the City numerous
public improvements for street and water"; that the cost of those
improvements was "well beyond what is roughly proportional to the impact
of Plaintiff's development"; and that the city's action constituted a
taking under Article I, section 18, of the Oregon Constitution.(2) 
As a result, plaintiff alleged, it was entitled to payment of just compensation
equal to the cost of the improvements that it had constructed.(3)
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.(4) 
Plaintiff alleged that, as a result, it was entitled to payment of just
compensation under the Fifth Amendment.  In addition, plaintiff alleged that
the city had violated its civil rights and was liable for attorney fees under
42 USC section 1983.(5)
Plaintiff's
allegations that the city effected a taking of its property by imposing costs
of construction not "roughly proportional" to the impact of plaintiff's
development derive from two United States Supreme Court cases -- Nollan v.
California Coastal Comm'n, 483 US 825, 831-32, 107 S Ct 3141, 97 L Ed 2d
677 (1987), and Dolan v. City of Tigard, 512 US 374, 384, 114 S Ct 2309,
129 L Ed 2d 304 (1994).  In Nollan, the California Coastal
Commission required that, in exchange for a permit to demolish an existing bungalow
and replace it with a three-bedroom house, the plaintiffs grant a public
easement across their beachfront lot connecting two public beaches located on
either side of the plaintiff's property.  483 US at 828.  The commission
asserted that requiring the easement was a valid exercise of its regulatory
authority to protect and grant visual access to the ocean and that that access would
be diminished by construction of the larger house.  The Court recognized the commission's
interest as legitimate but held that it did not justify requiring that the
plaintiffs provide physical access across their property.  The Court concluded
that, by demanding the easement as a condition of development, the commission
had converted "a valid regulation of land" into "an out-and-out
plan of extortion," id. at 837 (internal quotation marks omitted),
that effected a taking for which just compensation was required, id. at
842.
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 US at 387, 394-96.  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.
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
plaintiff's 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 P2d 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 (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 P3d 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 US 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 P2d 306 (1982) (entertaining, and
noting that state courts generally entertain, claims under section 1983).
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 (considering those issues).
When
the city removed the case to federal court, the federal district court was also
presented with those same issues.(6) 
In addition, however, the federal court was required to address a question
particular to the federal forum.  As the Ninth Circuit explains in its certification
order, the federal district court was required to decide whether plaintiff's
second claim for relief, based on the Fifth Amendment, was ripe for its consideration
under the Supreme Court's decision in Williamson Planning Comm'n v. Hamilton
Bank, 473 US 172, 105 S Ct 3108, 87 L Ed 2d 126 (1985).  Williamson holds
that a plaintiff's federal takings claims are not ripe for consideration by a
federal court unless the plaintiff establishes that it first pursued
available state court remedies to attempt to obtain payment of just
compensation from the state.
The Ninth Circuit explains the
Supreme Court's decision in Williamson as follows:  
"In Williamson, the Supreme Court
held that a land owner's Fifth Amendment takings claim against a local
government is not ripe until the claimant has availed himself of all the
administrative remedies through which the government might reach a final
decision regarding the regulations that effect the taking, and any state
judicial remedies for determining or awarding just compensation.  See [473 US at 186] * * * (holding
that '[b]ecause respondent has not yet obtained a final decision regarding the
application of the zoning ordinance and subdivision regulations to its
property, nor utilized the procedures Tennessee provides for obtaining just
compensation, respondent's claim is not ripe').  The first condition, which has
come to be known as 'prong-one ripeness,' requires a claimant to utilize
available administrative mechanisms, such as seeking variances from
overly-restrictive or confiscatory zoning ordinances, so that a federal court
can assess the scope of the regulatory taking. Id. at 190-91 * * *.  The
second condition ('prong-two ripeness') is based on the principle that '[t]he
Fifth Amendment does not proscribe the taking of property; it proscribes taking
without just compensation.' Id. at 194 * * *.  Consequently,
'if a State provides an adequate procedure for seeking just compensation, the
property owner cannot claim a violation of the [federal] Just Compensation
Clause until it has used the procedure and been denied just compensation.'  Id. at 195[.]"
West Linn Corporate Park
LLC v. City of West Linn, 534 F3d at
1091, 1099-1100 (9th Cir 2008).(7)
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.(8) 
Under prong two of its analysis, the Court ruled that the plaintiff had not
obtained a decision from the state court denying it just compensation.  Under
state law, as it had been interpreted by the state court, a property owner that
claimed that governmental regulation denied it all economically viable use of
its property could obtain compensation by filing an inverse condemnation action
in state court.  The Supreme Court decided that, because the plaintiff had not demonstrated
that that procedure was unavailable or inadequate, the plaintiff's federal
claim was premature.  The Court stated:  "[I]if a state provides an
adequate procedure for seeking just compensation, the property owner cannot
claim a violation of the Just Compensation Clause until it has used the
procedure and been denied just compensation."  Williamson, 473 US
at 195.
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.(9) 
Exercising supplemental jurisdiction, the district court then turned to
plaintiff's first claim for relief seeking just compensation under the Oregon
Constitution and concluded that plaintiff's failure to pursue available administrative
remedies also precluded that claim.
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:
"The Oregon Supreme Court has not had occasion to
consider this specific question of exhaustion. Two decisions, however, one from
the Oregon Court of Appeals, and another from the Land Use Board of Appeals,
reach opposite conclusions, highlighting, we feel, the unsettled nature of this
aspect of Oregon law. Compare Nelson v. City of Lake Oswego, [126 Or App 416, 869 P2d 350 (1994)], with
Reeves v. City of Tualatin, [31 Or LUBA 11, 1996 WL 33118832 (1996)]."
West Linn, 534 F3d 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:
"The Oregon Supreme Court similarly has not had
occasion to consider whether conditions of development that require off-site
public improvements, that is, a requirement that a landowner improve public
property -- outside of the proposed development site -- in which the landowner
has no property interest can amount to an exaction. One case from the Oregon
Court of Appeals of which we are aware squarely answers that question in the
affirmative. See Clark v. City of Albany, [137 Or App 293, 904 P2d 185
(1995)]. However, a recent Oregon Court of Appeals decision has cast doubt on
the continuing validity of Clark.  See
Dudek v. Umatilla County, [187 Or App 504, 69 P3d 751 (2003)]."
Id. at 1102.  As a result, the Ninth Circuit explains:
"[I]t is unclear how Oregon law would classify the
conditions placed on the development of the West Linn Corporate Park to improve
public property off its site. On the one hand, if the Oregon Supreme Court
holds that such conditions can amount to an exaction, then assuming there is no
need for exhaustion, we may proceed to analyze the conditions under the Dolan
framework. If, on the other hand, the Oregon Supreme Court concludes that
off-site public improvements do not amount to exactions, then it is unclear
whether under Oregon law, there is any viable cause of action for inverse
condemnation."
Id. at 1104.  
With
that background, we return to and repeat the Ninth Circuit's first two
questions:
1. "[W]hether a plaintiff bringing an
inverse condemnation action alleging that a condition of development amounts to
an exaction or a physical taking is required to exhaust available local
remedies as a prerequisite to bringing his claim in state court." 
2. "[W]hether a condition of development
that requires a plaintiff to construct off-site public improvements, as opposed
to dedicating an interest in real property such as granting an easement to a
municipal entity, can constitute an exaction or physical taking."
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.(10) 
To reflect that meaning and the allegations of plaintiff's complaint, we
rephrase the Ninth Circuit's first two questions as follows:(11)
1.  Whether a plaintiff bringing an inverse
condemnation action alleging that a city imposed, as a condition of
development, a requirement that plaintiff construct off-site improvements at a
cost not "roughly proportional" to the impacts of the development is
required to pursue administrative remedies before filing that claim in state
court.
2.  Whether 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 impacts of the development, as opposed to dedicating
an interest in real property such as granting an easement, alleges a taking that
gives rise to a claim for just compensation.
We proceed to the first
question.
I.  WAS PLAINTIFF REQUIRED TO PURSUE ADMINISTRATIVE
REMEDIES?
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 P2d 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:
"First, the fact that one use is impermissible under
the regulations does not necessarily mean that other economically productive
uses are also precluded; and second, until alternative uses are applied for or
alternative means of obtaining permission for the first use are attempted,
there can be no conclusive authoritative determination of what is legally
permitted by the regulations.  Therefore, the courts cannot perform their
adjudicative function on a claim predicated on a single denial, because
something more must be decided by the local or other regulatory authority
before there can be a demonstrable loss of all use and, therefore, a
taking.  See Suess Builders v. City of Beaverton, [294 Or 254, 261-62,
656 P2d 306 (1982)]."
126 Or App at 422 (emphasis in original).
However, the court distinguished a local government's requirement that a property
owner dedicate real property from such regulatory takings and decided that
exhaustion of administrative remedies was not required under the circumstances
presented in Nelson, because  
"the condition has been imposed and the easement has
been acquired by the city.  There is nothing left to happen at the local or
administrative level in order for the claim to be susceptible to adjudication;
the only question is whether what has occurred is a taking under
the legal test that the condition must bear a reasonable relationship to the
impacts of the use to which the city has attached it. Dolan v.
City of Tigard, 317 Or 110, 854 P2d 437,
cert granted 510 US 989[,
114 S Ct 544, 126 L Ed 2d 446] (1993).  The facts on both sides of
the equation are readily susceptible to conventional judicial proof, and the
adjudication of the facts and of the applicable law is well within the judicial
competence."
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) (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 
"ascertain how and to what extent the conditions will
be imposed on the petitioner's property, [it would] have no way of determining whether
the conditions bear an 'essential nexus' to the impacts of the development and
whether any exactions are roughly proportional to the impacts of petitioner's
proposed development." 
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 P2d 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.(12) 
The comprehensive plan prohibited the plaintiff from building a district
shopping center on its property, but local procedure entitled the plaintiff to
seek a zone change or a plan amendment, which, if obtained, would have
permitted that development.  The court treated the issue as one of exhaustion of
administrative remedies and observed that one of the purposes of that doctrine is
to permit an administrative body with expertise "to determine[,] at least
initially, factual and policy questions with which it is familiar, and, if
litigation does result, to provide the reviewing court with a complete and well[-]organized
record upon which it may base its judgment."  Id. at 623 n 23.  The
court relied on the local planning body's expertise and the principle that "[o]rdinarily
those who seek judicial relief must show they have exhausted their
administrative remedies" in holding that the plaintiff's failure to
exhaust administrative remedies barred his claim.  Id. at 614 (internal quotation
marks omitted).
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.
In Boise
Cascade, the court declined, however, to require appeal to LUBA as a
prerequisite to an inverse condemnation action.  325 Or 185, 935 P2d 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 P2d 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.
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 land use regulation); ORS 197.835(2)(b) (LUBA bound by
any findings of fact of the local government for which there is substantial
evidence in the record); ORS 197.835(7)(a), (b) (LUBA shall reverse land use
regulation if not in compliance with local government's comprehensive plan or
the comprehensive plan lacks specific policies which provide the basis for the
regulation).  Requiring appeal to LUBA would not serve the same purposes as
does requiring the pursuit of local government remedies.(13)
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.(14)
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 F3d 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. 
II.  DID PLAINTIFF ALLEGE FACTS GIVING RISE TO A CLAIM FOR
JUST COMPENSATION?
The Ninth Circuit's second question, as we have
restated it, is:
Whether 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 impacts of the plaintiff's development, as opposed to
dedicating an interest in real property such as granting an easement, alleges a
taking that gives rise to a claim for just compensation.
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 P2d 123 (1981) (proper sequence is to
analyze state law, including constitutional law, before reaching federal constitutional
claim).  Nevertheless, we do so here because we must determine the viability of
both of plaintiff's claims for just compensation to answer the Ninth Circuit's
questions, and because plaintiff uses United States Supreme Court cases -- Nollan
and Dolan -- as the theoretical basis for each of those claims.  An
initial discussion of Fifth Amendment jurisprudence therefore provides a
helpful backdrop for our analysis.      
A.        Did
Plaintiff Allege Facts Giving Rise to a Claim for Just Compensation Under the
Federal Constitution?
After Nollan
and Dolan, the Supreme Court decided a case that clarified the
constitutional basis of those decisions -- Lingle v. Chevron USA Inc.,
544 US 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:
1.  A physical invasion of property,  Loretto
v. Teleprompter Manhattan CATV Corp., 458 US 419, 102 S Ct 3164, 73 L Ed 2d
868 (1982);
2.  A regulation that completely deprives a plaintiff
of all economically beneficial use of property, Lucas v. South Carolina
Coastal Council, 505 US 1003, 112 S Ct 2886, 120 L Ed 2d 798 (1992); or
3.  A regulation that, on balance, imposes
economic impacts that constitute a taking under the several factors identified
in Penn Central Transp. Co. v. New York City, 438 US 104, 98 S Ct 2646,
57 L Ed 2d 631 (1978).(15)
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:
"A permanent physical invasion, however
minimal the economic cost it entails, eviscerates the owner's right to exclude
others from entering and using her property -- perhaps the most fundamental of
all property interests.  See Dolan[, 512 US at 384]; Nollan[,483
US at 831-32]; Loretto[, 458 US  at 433]; Kaiser Aetna v. United
States, 444 US 164, 176, 100 S Ct 383, 62 L Ed 2d 332 (1979). * * *
"[T]he complete elimination of a property's
value is the determinative factor.  See Lucas[, 505 US at 1017]
(positing that 'total deprivation of beneficial use is, from the landowner's
point of view, the equivalent of a physical appropriation').  * * * 
"[T]he Penn Central inquiry turns in
large part, albeit not exclusively, upon the magnitude of a regulation's
economic impact and the degree to which it interferes with legitimate property
interests."
Lingle, 544 US at 539-40 (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 US 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 precludes the regulation entirely,
and not as a claim that the takings clause requires payment of just
compensation.  The Court stated:
"Instead of addressing a challenged regulation's effect
on private property, the 'substantially advances' inquiry probes the regulation's
underlying validity.  But such an inquiry is logically prior to and distinct
from the question whether a regulation effects a taking, for the Takings Clause
presupposes that the government has acted in pursuit of a valid public purpose.
 The Clause expressly requires compensation where government takes private
property 'for public use.'  It does not bar government from interfering
with property rights, but rather requires compensation in the event of otherwise
proper interference amounting to a taking.  * * * Conversely, if a
government action is found to be impermissible -- for instance because it fails
to meet the 'public use' requirement or is so arbitrary as to violate due
process -- that is the end of the inquiry.  No amount of compensation can
authorize such action."
Lingle, 544 US at 543 (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'": 
"Although Nollan and Dolan
quoted Agins' language, see Dolan, [512 US at 385]; Nollan,
[483 US at 834], the rule those decisions established is entirely distinct from
the 'substantially advances' test we address today.  Whereas the 'substantially
advances' inquiry before us now is unconcerned with the degree or type of
burden a regulation places upon property, Nollan and Dolan both involved
dedications of property so onerous that, outside the exactions context, they
would be deemed per se physical takings.  In neither case did the Court
question whether the exaction would substantially advance some legitimate state
interest.  See Dolan, [512 US at 387-88]; Nollan, [483 US at
841].  Rather, the issue was whether the exactions substantially advanced the
same interests that land-use authorities asserted would allow them to deny the
permit altogether.  As the Court explained in Dolan, these cases involve
a special application of the 'doctrine of "unconstitutional conditions,"'
which provides that 'the government may not require a person to give up a
constitutional right -- here the right to receive just compensation when
property is taken for a public use -- in exchange for a discretionary benefit
conferred by the government where the benefit has little or no relationship to
the property.'  [512 US at 385].  That is worlds apart from a rule that says a
regulation affecting property constitutes a taking on its face solely because
it does not substantially advance a legitimate government interest.  In short, Nollan
and Dolan cannot be characterized as applying the 'substantially
advances' test we address today, and our decision should not be read to disturb
these precedents."
Id. at 547-48 (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.  Under that analysis, the
government is precluded from making the exaction and must pay just compensation
for the real property that it acquires unless the exaction is "roughly
proportional" to the effect of the proposed development.   
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 US at 547.
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 P2d
185 (1995), rev den, 322 Or 644, 912 P2d 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.
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 P2d 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 US 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 P3d 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 F3d 1219  (9th Cir 2008), cert den, 129 S Ct 2765 (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 obligation and decided
that the validity of the condition that it imposed should be subjected to a Penn
Central, and not a Nollan/Dolan, analysis.  The Ninth Circuit based
its decision on the fact that the condition was legislatively imposed and
applied to all development; it was not, as were the conditions in Nollan and
Dolan, a condition imposed in an adjudicatory proceeding on the
plaintiff alone. 
 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:  
"[T]he City already had an easement for the storm pipe
such that the McClungs gave up no rights to their real property.  To extend the
Nollan/Dolan analysis
here would subject any regulation governing development to higher
scrutiny and raise the concern of judicial interference with the exercise of
local government police powers.  As noted by San Remo Hotel [L.P. v.
City And County of San Francisco, 117 Cal Rptr 2d 269, 291, 41 P3d 87, 105 (Cal
2002)], any concerns of improper legislative development fees are better kept
in check by 'ordinary restraints of the democratic political process.'"
McClung, 548 F3d 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 US 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.(16) 
McClung, 548 F3d at 1228.
In
reaching its conclusion in McClung, the Ninth Circuit observed, however,
that "[o]ther courts addressing this general issue have come to different
conclusions."(17) 
Plaintiff asks that we adopt the reasoning of one of those courts -- that of
the Texas Supreme Court in Town of Flower Mound v. Stafford Estates, 135
SW 3d 620 (Tex 2004).  In that case, the town had conditioned its
approval of the plaintiff's development on its rebuilding of an abutting road.  The
Texas court saw "no important distinction between a dedication of property
to the public and a requirement that property already owned by the public be
improved" and held that the Dolan standard should apply to both.  Id.
at 640.  The court dismissed the town's contention that the doctrine of
unconstitutional takings was not applicable "when the thing given up in
exchange for a discretionary benefit is simply money, for which the owner has
no constitutional right of recompense."  The court stated:
"Assuming that the doctrine of unconstitutional
conditions is limited as the Town argues, a position on which we express no
opinion, the Town's argument does not limit the application of Dolan
because the doctrine was not the only foundation on which it rested and was not
even mentioned in Nollan.  Nollan was
grounded entirely in the Supreme Court's takings jurisprudence."
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 US at 547.  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.  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 Takings Clause, 62 Vand L Rev 1315,
1343-44 (2009) (asserting that only conceivable way for impact fee to amount to
per se physical taking is if the fee imposed is so high that it deprives
owner of all economically beneficial use of real property). 
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.
De Monte Dunes at Monterey, 526 US 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 US at 390-91 (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).(18) 
See also Switzer, 62 Vand L Rev at 1332-36 (explaining common-law "dual
rational nexus" test used by various courts).  Further, as the Court in Lingle
acknowledged, the Due Process Clause may serve as a check on arbitrary land
use regulation.  544 US at 540; see also Miller Bros. Co. v. Maryland,
347 US 340, 342, 74 S Ct 535, 98 L Ed 744 (1954) ("It is a
venerable if trite observation that seizure of property by the State under
pretext of taxation when there is no jurisdiction or power to tax is simple
confiscation and a denial of due process of law.").     
B.        Did Plaintiff
Allege Facts Constituting a Taking Under the Oregon Constitution?
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 P2d 65 (1992).  This court
recently summarized that methodology in the context of interpreting Article I,
section 18:
"[W]e consider the text of Article I, section 18, its
history, and the cases interpreting it.  Our goal in undertaking that inquiry
is to identify the historical principles embodied in the constitutional text
and to apply those principles faithfully to modern circumstances."
Coast Range Conifers v. Board
of Forestry, 339 Or 136, 142, 117 P3d
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:
"Private property shall not be taken for
public use, nor the particular services of any man be demanded, without just
compensation; nor except in case of the state, without such compensation first
assessed and tendered."(19)
Coast Range Conifers elucidated that text as follows:
"Because Article I, section 18, was part of the
original Oregon Constitution, we look to the meaning of the words that the
framers used.  See Bobo v. Kulongoski, 338 Or 111, 120, 107 P3d
18 (2005) (looking to dictionary relevant to time constitutional provision
adopted).  In 1857, the word 'take' meant '[i]n a general sense, to get
hold or gain possession of a thing in almost any manner.'  Noah Webster, An
American Dictionary of the English Language (1828) (emphasis in original). 
That definition implies that governmental acts that result in the appropriation
of private property for public use will constitute a taking -- a conclusion
that is consistent with the corollary prohibition in Article I, section 18,
against demanding or appropriating the uncompensated services of any person. 
Webster defined 'property' in 1828 both concretely (as '[a]n estate, whether in
lands, goods or money') and more abstractly (as '[t]he exclusive right of
possessing, enjoying and disposing of a thing').  Id.  Put differently,
the dictionary definition of property in 1828 was broad enough to include both
the tangible or physical thing and the legal interests pertaining to it."
339 Or at 142-43 (footnote
omitted).
After
exploring the historical circumstances of the enactment and interpretation of
Article I, section 18, the court in Coast Range Conifers recognized that
a "classic" taking occurs when the government physically occupies or
appropriates property, but that physically invasive intentional government
action also may rise to the level of a taking.  Id. at 145; see also
Morrison v. Clackamas County, 141 Or 564, 569, 18 P2d 814 (1933)
(government takes property when it intentionally floods private property for
public use).  The court also acknowledged that Article I, section 18, is not
limited to those circumstances, citing the following cases as examples of other
governmental acts that effect takings under Article I, section 18:  Boise
Cascade Corp. v Board of Forestry, 325 Or 185, 198,
935 P2d 411 (1997) (regulations constitute taking if they deny owner any
economically viable use of real property); Dodd v. Hood River County,
317 Or 172, 182, 855 P2d 608 (1993) (regulatory taking occurs if real property
does not retain "some substantial beneficial use"); Thornburg v.
Port of Portland, 233 Or 178, 192, 376 P2d 100 (1962) (government-authorized
overflights constitute taking when they deny owner use and enjoyment of
property); McQuaid v. Portland & V. R'y Co., 18 Or 237, 22 P 899
(1889) (government act of placing railway in a public street and thereby
denying owner access to street constitutes taking); accord Iron Works v.
O.R. & N. Co., 26 Or 224, 228-29, 37 P 1016 (1894) (explaining and
applying McQuaid).  Coast Range Conifers, 339 Or at 145.  
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.  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.
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.(20) 
Plaintiff does not argue that that condition deprives it of all economically
viable use of its land or is of comparable severity and thereby is tantamount
to a physical taking.  Plaintiff contends instead that the city's action
constitutes a taking because (1) Article I, section 18, applies to the taking
of personal property such as livestock or crops, see Hawkins v. City of La
Grande, 315 Or 57, 67, 843 P2d 400 (1992); Coos Bay Oyster Coop.
v. Highway Com., 219 Or 588, 596, 348 P2d 39 (1959); Bowden v. Davis et
al, 205 Or 421, 434-35, 289 P2d 1100 (1955) (each so applying Article I,
section 18); (2) the materials necessary for plaintiff to construct off-site
improvements are personal property; and (3) plaintiff was required to transfer
those materials to the city.  
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 to the city for a specific purpose -- the construction of
public improvements.  
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 NY 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.(21) 
The California Supreme Court also noted that distinction in Emery v. San
Francisco Gas Co., 28 Cal 345, 350-54 (1865), quoting extensively from People
ex rel. Griffin, and concluding that "assessments for improvements,
upon whatever principle distributed, are not taking private property for public
use" because special assessments take only money; "[t]he property
referred to in the Constitution for which special compensation must be made, is
something other than money, as where land is taken to be used as a street."
In
1867, a legal treatise by the Chief Justice of the Vermont Supreme Court
agreed:   
"The principal point of difference [in recent cases]
has been to determine where taxation ends, and the tenure of the right of
eminent domain begins.  Since the decision of the case of [People ex rel.
Griffin], the courts seem very composedly to have sunk down into the quiet
conviction that it is nothing but taxation, and that where the municipal
authorities assess the land to its full value for the purpose of assumed
improvements, more or less remote from the land, and without regard to the
extent of the ratio of equalization, it is still nothing but taxation."
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.(22) 
As the Supreme Court helpfully explained in Lingle, a takings
analysis assumes that the government has the power to acquire the property
taken; it requires only that the government pay just compensation for that
property.  It does not make sense to say that, although government has the
power to impose a monetary obligation, it must repay the value received as just
compensation.  The real objection that a property owner has to the imposition
of a monetary obligation in excess of what is necessary to mitigate the impacts
of development is that the government does not have authority to impose such an
obligation, or that the obligation offends some statutory or constitutional
provision other than Article I, section 18.
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,(23)
and, consequently, plaintiff's claim for inverse condemnation under the state
constitution was not cognizable in state court. 
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.
III. THE VACATION OF GREENE STREET
We now
address the Ninth Circuit's third certified question: 
"Under [ORS] 271.120, is a City Council's purported
vacation of a street ultra vires when the petition for vacation does not
comply with the landowner consent provisions of [ORS 271.080]?"(24)
West Linn, 534 F3d 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:
"In accordance with the City's demand, Show
Timber * * * employed engineers to draw up a legal description of the proposed
vacation of Greene Street. Thereafter, consent of area property owners was
obtained based on the legal description. * * *
"The proposed vacation was then submitted
to the City.  However, City planner Eric Spir objected to the proposal, and the
City ultimately demanded that Greene Street be vacated in its entirety.  The
consulting engineers objected to the City's demand because, they reasoned,
through traffic on 13th Street would be blocked as a result.
"Show Timber and [plaintiff] acquiesced.  A
new legal description was prepared that included the disputed intersection.  This
second legal description was incorporated into public notices published for
proposes [sic] of the vacation and the subsequent public hearing on the
matter. Following the public hearing, the City Council approved the vacation of
Greene Street in its entirety and passed City Ordinance No. 1439, which
codified the vacation.
"[Plaintiff] contends that Ordinance No.
1439 had the full legal effect of vacating Greene Street, and by operation of
law, a portion of the intersection vested in it free of any interest held by
the City.  The City maintains that the ordinance has no legal effect because it
was adopted without the consent of all necessary landowners."
West Linn, 534 F3d 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 P2d 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 P2d 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.(5) 
One mechanism allows any person to initiate a vacation proceeding (ORS
271.080);(26)
the other allows a city governing body(27)
to do so (ORS 271.130).(28) 
Both mechanisms call for notice and public hearing and, if the vacation is
approved, for enactment of an ordinance vacating the street.  ORS 271.110 -
271.130.  Another statute expressly provides that the authority granted by
those statutes is not exclusive.  ORS 271.170.(29) 
Thus, we can say without hesitation that a city possesses broad power to vacate
its streets and that its failure to exercise that power in accordance with specified
procedures does not make its action ultra vires.  
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.  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 P2d 527
(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 P2d 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.  After surveying those earlier cases, the
court in Nyman concluded: 
"It is difficult, if not impossible, to determine from
these cases why certain statutory requirements are considered 'jurisdictional'
and others not.  * * * We are now of the opinion that clear analysis in this
area requires that we establish criteria for determining what statutory
requirements are indispensable to the validity of the challenged action
* * * and focus * * * on the specific statutory language that permits the
government to affect the rights and obligations of its citizens."
Id. at 53 (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 relevant statutory mechanisms by which a city may vacate a city street. 
ORS 271.080(1) permits any person to initiate vacation proceedings.  Under that
provision, the person files a petition "setting forth a description of the
ground proposed to be vacated, the purpose for which the ground is proposed
to be used and the reason for such vacation." (Emphasis added.)  ORS
271.080(2) mandates that the person filing the petition append, "as a part
thereof and as a basis for granting the same, the consent of the owners of all
abutting property and of not less than two-thirds in area of the real property
affected thereby."  After such a petition is filed, the city either may
deny the petition or set a time for formal hearing.  ORS 271.100.  If the city
decides to hold a hearing, it is required to publish notice of the hearing. 
The notice must include, among other things, "the ground covered by
the petition."  ORS 271.110(1) (emphasis added).  
ORS
271.130(1)(30)
sets forth a second statutory mechanism by which a city governing body may
initiate vacation proceedings.  Using that mechanism, a city proceeds without
the filing of a petition and attached legal description and without consent of
affected landowners.  The city gives notice of hearing that includes a
description of the street to be vacated to abutting and affected landowners.  After
hearing, the city may vacate the street unless (1) the abutting landowners do
not consent and the vacation will substantially affect the market value of such
property, unless the city provides for payment of damages; or (2) a majority of
the affected landowners object in writing.  
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 
"did not consider the true 'petition.'  * * * Since the
'ground proposed to be vacated' changed by the time of the City Council
hearing, it is clear that the City Council considered a different 'petition'
than the one that was initially filed after obtaining consent."  
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.  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.  Other statutory requirements that did not
render the notice to the property owners ineffectual did not render the county's
action void.  Id. 
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 P2d
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.(31)
The
certified questions are answered.
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 Planning Comm'n v.
Hamilton Bank, 473 US 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; see MacDonald, Sommer & Frates v. Yolo County, 477 US 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.
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 F3d 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 to resolve that
issue.  Id.  For the reasons explained below, I would give a different
answer to the court's second question.
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 P2d 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.(1)
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 US at 185 (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 US at 194-95.  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 (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.
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 US 304, 312 and n 6, 107 S Ct 2378, 96 L Ed 2d 250
(1987); see Williamson, 473 US at 194 n 13 (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 procedures for
obtaining just compensation in the Oregon courts are adequate.  Williamson does
not require a federal court to determine how the state court will rule on the
merits of the landowner's federal takings claim.  Were the rule otherwise, the
United States Supreme Court would have asked in Williamson whether the
Tennessee courts would have recognized a temporary taking before holding that
the property owner's failure to bring its takings claim initially in the
Tennessee courts meant that its federal takings claim was not ripe.  The Court
did not do so, and there is no need for us to tell the Ninth Circuit how we
would rule on the substantive federal question in this case.  It is or should
be sufficient to say that a property owner who alleges that a local government
requirement constitutes an exaction that violates the Fifth Amendment may bring
that claim in the Oregon courts and receive all the compensation that the Fifth
Amendment requires.  Answering whether the property owner would win or lose on
its substantive federal claim goes beyond what ORS 28.200 permits and Williamson
requires.
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 P2d 306 (1982). 
Rather, the phrase "inverse condemnation" is
"only 'the popular description of a cause of action
[which we would now refer to as a claim for relief] against a government
defendant to recover the value of property which has been taken in fact by the
government defendant, even though no formal exercise of the power of eminent
domain has been attempted by the taking agency.'"
Id. (quoting Thornburg v. Port of Portland, 233
Or 178, 180 n 1, 376 P2d 100 (1963)); accord United States v. Clarke,
445 US 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, and the nature of the claim turns on the substantive
law that gives rise to it, see First Lutheran, 482 US at 315 (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.(2)
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 USC
section 1983.  See Patsy v. Florida Board of Regents, 457 US 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).(3)  
We would, however, require exhaustion for other claims alleging that an
exaction constituted an unconstitutional taking.(4) 
Some questions remain regarding how that state court exhaustion requirement
would affect the issue whether WLCP's federal takings claims are ripe for the
purposes of Article III.(5) 
However, those questions are issues of federal law for the Ninth Circuit.
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.
1. In
addition to the claims for inverse condemnation at issue here, plaintiff asserted
claims for unjust enrichment, breach of contract, First Amendment retaliation,
violation of Equal Protection, and claims for inverse condemnation arising from
the vacation of Greene Street.  The Ninth Circuit does not pose questions to
this court relating to those claims.  
2. Article
I, section 18, provides, in part: 
"Private property shall not be taken for
public use, nor the particular services of any man be demanded, without just
compensation; nor except in the case of the state, without such compensation
first assessed and tendered[.]"
3. In
its complaint, plaintiff alleged that it was entitled to just compensation in
the amount of $840,260.  That amount reflects the total that plaintiff alleged
that it spent in construction of off-site street and water improvements, and in
System Development Charges (SDCs).  The Ninth Circuit does not pose questions
that require our consideration of the validity of the SDCs.
4. The
Fifth Amendment provides, in part:  
"No person shall be * * * deprived of life, liberty, or
property, without due process of law; nor shall private property be taken for
public use, without just compensation." 
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, &c. R'D.
v. Chicago, 166 US 226, 241, 17 S Ct 581, 41 L Ed 979 (1897).
5. 42
USC section 1983 makes persons acting under the color of law liable for the
violation of the federal constitution or laws.  It provides, in part:
"Every person who, under color of any statute,
ordinance, regulation, custom, or usage, of any State * * * subjects, or causes
to be subjected, any citizen of the United States or other person within the
jurisdiction thereof to the deprivation of any rights, privileges, or
immunities secured by the Constitution and laws, shall be liable to the party
injured in an action at law * * *."
6. The
federal district court was permitted to decide plaintiff's first claim for
relief under the doctrine of supplemental jurisdiction.  See 28 USC §
1367 (with limited exceptions not relevant here, "in any civil action of
which the district courts have original jurisdiction, the district courts shall
have supplemental jurisdiction over all other claims that are so related to
claims in the action within such original jurisdiction that they form part of
the same case or controversy under Article III of the United States Constitution");
Vaden v. Discover Bank,  ___ US ___, ___ n
18, 129 S Ct 1262, 1277 n 18, 173 L Ed 2d 206 (2009) (citing 28 USC section
1367 and noting that federal courts "routinely exercise supplemental
jurisdiction" over state law claims); see also Chicago v. International
College of Surgeons, 522 US 156, 165, 118 S Ct 523, 139 L Ed 2d 525 (1997)
(federal supplemental jurisdiction applies with equal force in cases in which
the action has been removed from state court to federal court as a
"removed case is necessarily one of which the [federal] district courts
have original jurisdiction" (internal citation and ellipsis omitted)).
7. In
its certification order, the Ninth Circuit refers to the issue as one of
jurisdiction.  West Linn, 534 F3d at 1099.  Since the entry of
that order, however, the Ninth Circuit has stated that the issue of Williamson
ripeness is prudential only.  Guggenhiem v. City of Goleta, 582
F3d 996, 1008-09 (9th Cir 2009), relying on Suitum v. Tahoe Regional
Planning Agency, 520 US 725, 733-34, 117 S Ct 1659, 137 L Ed 2d 980
(1997).
8. The
Court distinguished between the need for finality, which the Court did require,
and exhaustion of administrative remedies, which the Court did not require. 
The Court stated:  
"While the policies underlying the two concepts often
overlap, the finality requirement is concerned with whether the initial
decisionmaker has arrived at a definitive position on the issue that inflicts
an actual, concrete injury; the exhaustion requirement generally refers to
administrative and judicial procedures by which an injured party may seek
review of an adverse decision and obtain a remedy if the decision is found to
be unlawful or otherwise inappropriate."  
Williamson, 473 US at 193.  
9. The
district court's analysis is consistent with other federal decisions following
Williamson.  If state law provides a mechanism that a plaintiff must
follow to obtain payment of just compensation, a plaintiff's failure to utilize
that mechanism precludes federal claims based on the alleged taking.  See, e.g.,
Carson Harbor Village, Ltd. v. City of Carson, 353 F3d 824, 826 (9th Cir
2004), cert den, 543 US 874 (2004) (failure to pursue inverse
condemnation claim in state court precluded plaintiff's section 1983 claim); Hacienda
Valley Mobile Estates v. City of Morgan Hill, 353 F3d 651, 661 (9th
Cir 2003), cert dismissed, 543 US 1041 (2004) (failure to pursue relief
under state law claim, precluded federal court from considering federal takings
claim); Kottschade v. City of Rochester, 319 F3d 1038, 1042 (8th
Cir 2003), cert den, 540 US 825 (2003) (same); Baumgardner v.
Town of Ruston, ___ F Supp 2d ___, ___, 2010 WL 1734830 (WD Wash April
28 2010) (failure to bring administrative land use petition under state law
barred federal takings claim).
10. The
Ninth Circuit notes: 
"The term 'physical taking,' or a physical intrusion to
benefit the public that the government causes to be placed on private property,
generally is synonymous with an 'exaction,' or a condition of development that
local government places on a landowner to dedicate a real interest in the
development property for public use.  See, e.g., Dolan."  
West Linn, 534 F3d at 1100 n 4.  
11. See
Western Helicopter Services v. Rogerson Aircraft, 311 Or 361, 370-71, 811
P2d 627 (1991) (recognizing this court's discretion to reframe and restate
certified questions).  Plaintiff and the amici that filed a brief in
support of the city agree that the Ninth Circuit's questions are more easily
analyzed if rephrased.  Plaintiff urges us to rephrase the Ninth Circuit's
second question as follows:  "[W]hether the required condition is an exaction
that is subject to the 'rough proportionality' requirements set forth by the
United States Supreme Court in Dolan."  The amici ask us to
restate the second question as follows:  "Can a condition of development
that requires a landowner to develop off-site public property in which the
landowner has no property interest constitute an exaction for which a Fifth
Amendment remedy is available?"
12. The
plaintiff also brought a claim for inverse condemnation, but the court held
that that claim was not cognizable.  Id. at 609-14.
13. In
reaching that conclusion, we do not consider the impact of ORS 197.796, which
was not in effect at the time that the city imposed the conditions at issue in
this case.  That statute requires exhaustion before bringing state court claims
for damages and provides, in part:
"(1)  An applicant for a land use decision
* * * may accept a condition of approval imposed * * * and file a challenge to
the condition[.] 
"* * * * *
"(3)(a)  A challenge filed pursuant to this
section may not be dismissed on the basis that the applicant did not request a
variance to the condition of approval or any other available form of
reconsideration of the challenged condition. However, an applicant shall comply
with ORS 197.763(1) prior to appealing to the Land Use Board of Appeals or
bringing an action for damages in circuit court and must exhaust all local
appeals provided in the local comprehensive plan and land use regulations
before proceeding under this section.
"(b)  In addition to [other requirements,]
* * * a statement shall be made to the applicant that the failure of the
applicant to raise constitutional or other issues relating to proposed
conditions of approval with sufficient specificity to allow the local
government or its designee to respond to the issue precludes an action for
damages in circuit court.
"* * * * *
"(6)  This section applies to appeals by
the applicant of a condition of approval and claims filed in state court
seeking damages for the unlawful imposition of conditions of approval in a land
use decision, limited land use decision, expedited land division or permit
under ORS 215.427 or 227.178."
14. Our
decision that pursuit of available local remedies is a prerequisite to an
action for inverse condemnation is not inconsistent with Patsy v. Florida
Board of Regents, 457 US 496, 102 S Ct 2557, 73 L Ed 2d 172 (1982), which
holds that exhaustion is not a prerequisite to assertion of a claim under
section 1983.  A section 1983 claim does not ripen until a landowner's inverse
condemnation claim for compensation has been denied.  Suess Builders,
294 Or at 267.  We do not mean to suggest that, if a section 1983 claim is
ripe, a landowner must take additional administrative steps before filing a
claim under 42 USC section 1983.
15. Penn
Central involved the question of whether the designation of New York City's
Grand Central Terminal as a historical landmark, and the restrictions on
development that that designation imposed, so adversely affected the
plaintiffs' economic interests in the property as to constitute a taking
requiring just compensation under the Fifth and Fourteenth Amendments to the
United States Constitution.  438 US at 107.  In deciding that the regulation at
issue did not amount to a taking, the Court held that no set formula exists to
determine when a regulation will constitute a taking, but it articulated
"several factors that have particular significance" in the analysis,
primary among which was "[t]he economic impact of the regulation on the
claimant and, particularly, the extent to which the regulation has interfered
with distinct investment-backed expectations[.]"  Id. at 124.
16. The
Ninth Circuit also stated:  
"A monetary exaction differs from a land exaction -- '[u]nlike
real or personal property, money is fungible.' United States v. Sperry
Corp., [493 US 52, 62 n 9, 110 S Ct 387, 107 L Ed 2d 290 (1989)]; see
also San Remo Hotel, L.P. v. S.F. City & County, [364 F3d 1088, 1097-98
(9th Cir 2004), aff'd, 545 US 323, 125 S Ct 2491, 162 L Ed
2d 315 (2005)] (stating that the state court's analysis of the state
issues 'was thus equivalent to the approach taken in this circuit, which has
also rejected the applicability of Nollan//Dolan to monetary
exactions such as the ones at issue here'); Garneau v. City of Seattle,
[147 F3d 802, 808 (9th Cir 1998)] (upholding a city ordinance that required
landlords to pay a $1,000 per tenant relocation assistance fee to low income
tenants displaced by the change of use or substantial rehabilitation of a property);
Commercial Builders of N. Cal. v. Sacramento, [941 F2d 872, 873-75 (9th
Cir 1991)] (rejecting application of Nollan to ordinance that
conditioned the issuance of nonresidential building permits on the payment of a
fee used to assist in financing low-income housing)."  
McClung, 548 F3d at 1228.
17. The
Ninth Circuit summarized those differing conclusions as follows: 
 "Compare Clajon Prod. Corp. v. Petera, [70 F3d 1566, 1579 (10th Cir 1995)]
(finding that '[g]iven the important distinctions between general police power
regulations and development exactions, and the resemblance of development
exactions to physical takings cases, we believe that the "essential nexus"
and "rough proportionality" tests are properly limited to the context
of development exactions'); City of Olympia v. Drebick, [156 Wash 2d 289, 126 P3d 802,
807-08 (2006)] (rejecting the view 'that local governments must base
GMA impact fees on individualized assessments of the direct impacts each new
development will have on each improvement planned in a service area'); San Remo Hotel L.P. v. City &
County of S.F., [27
Cal 4th 643, 117 Cal Rptr 2d 269, 41 P3d 87, 104-05 (2002)]
(distinguishing between a fee condition applied to a single property that would
be subject to Nollan/Dolan review, and
a generally applicable development fee); Home Builders Ass'n of Cent.
Ariz. v. City of Scottsdale, [187 Ariz 479, 930 P2d 993, 1000 (1997)] (finding that Dolan does not
apply to a generally applicable legislative decision); and McCarthy v. City of Leawood,
[257 Kan 566, 894 P2d 836, 845 (1995)] (concluding that nothing in Dolan supports its
application to impact fees); with Town of Flower Mound v. Stafford
Estates Ltd., [135
SW3d 620, 636 (Tex 2004)] (finding that the Nollan/Dolan analysis is
not limited to dedications of land); and Home Builders Ass'n v. City of
Beavercreek, [89
Ohio St 3d 121, 729 NE2d 349, 356 (2000)] (applying Nollan/Dolan in 'evaluating
the constitutionality of an impact fee ordinance')."
McClung, 548 F3d at 1225.
18. The
Dolan Court cited with approval the following state law cases as
exemplars of the "reasonable relationship" test:  
"A number of state courts have * * * require[d] the
municipality to show a 'reasonable relationship' between the required
dedication and the impact of the proposed development.  Typical is the Supreme
Court of Nebraska's opinion in Simpson v. North Platte, [206 Neb 240,
245, 292 NW2d 297, 301 (1980)], where that court stated:
"'The distinction, therefore,
which must be made between an appropriate exercise of the police power and an
improper exercise of eminent domain is whether the requirement has some
reasonable relationship or nexus to the use to which the property is being made
or is merely being used as an excuse for taking property simply because at that
particular moment the landowner is asking the city for some license or permit.'
"Thus, the court held that a city may not require a
property owner to dedicate private property for some future public use as a
condition of obtaining a building permit when such future use is not 'occasioned
by the construction sought to be permitted.'  Id. at [248, 292 NW2d at
302].
"Some form of the reasonable relationship
test has been adopted in many other jurisdictions.  See, e.g.,
Jordan v. Menomonee Falls, [28 Wis 2d 608, 137 NW2d 442 (1965)]; Collis
v. Bloomington, [310 Minn 5, 246 NW2d 19 (1976)] (requiring a showing of a
reasonable relationship between the planned subdivision and the municipality's
need for land); College Station v. Turtle Rock Corp., [680 SW2d 802, 807
(Tex 1984)]; Call v. West Jordan, [606 P2d 217, 220 (Utah 1979)]
(affirming use of the reasonable relation test).  Despite any semantical
differences, general agreement exists among the courts 'that the dedication
should have some reasonable relationship to the needs created by the
[development].'  Ibid.  See generally Note, '"Take"
My Beach Please!':  Nollan v. California Coastal Commission and a Rational-Nexus
Constitutional Analysis of Development Exactions, [69 B U L Rev 823 (1989)];
see also Parks v. Watson, [716 F2d 646, 651-53 (9th Cir 1983)]."
512 US at 390-91.
19. Article
I, section 18, was amended in 1920 and 1924 to add text defining what constitutes
a public use.  As a result of those amendments, that constitutional provision
currently provides:
"Private property shall not be taken for
public use, nor the particular services of any man be demanded, without just
compensation; nor except in the case of the state, without such compensation
first assessed and tendered; provided, that the use of all roads, ways and
waterways necessary to promote the transportation of the raw products of mine
or farm or forest or water for beneficial use or drainage is necessary to the
development and welfare of the state and is declared a public use."
20. In
Coast Range Conifers, the court took care to note that the categories of
claims that it described "do not exhaust the field; other categories
exist," citing, as an example, condemnation blight cases as a discrete
category of takings cases.  339 Or at 147 n 12.
21. The
court also explained, however, that equitable apportionment of the assessment
-- not merely the fact that it involved money -- was necessary to its
conclusion that the assessment was a tax rather than a taking.  The court noted
that the expenses of grading and paving the street could have been raised by a
general tax, but the legislature had chosen to place the burden on those
"whose lands were benefited by the work, and to impose it on them in
proportion to the benefit they respectively received therefrom."  Id.
at 425.  Specifically, the legislature
"professed to apportion the tax according to the maxim,
that 'he who receives the advantage ought to susta in
the burthen,' and to exact from each of the parties assessed no more than
his just share of the burthen according to this equitable rule of
apportionment.  The assessment, therefore, was taxation, and not an attempt to
exercise the right of eminent domain."
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. 
22. There
is a difference, of course, between a government's imposition of a monetary
obligation and its seizure of a discrete monetary fund.  See Brown, 538
US at 232 (distinguishing between tax and seizure of discrete monetary fund,
and noting that, if  state had attempted to raise same funds through tax,
"there would be no question as to the legitimacy of the use of the
public's money").   
23. To
the contrary, the facts included in the Ninth Circuit's certification order
disclose that plaintiff had lined up tenants to occupy its corporate park, and
the city had agreed to issue temporary occupancy permits.  West Linn
Corporate Park LLC v. City of West Linn, 534 F3d 1091, 1097-98 (9th Cir
2008).  Furthermore, the city contends that after it imposed the conditions of
development, but before plaintiff acquired the property, plaintiff's
predecessor in interest sold the property for a profit of more than $500,000.  
24. The
certified question identified ORS 271.120 as the source of the landowner
consent provisions.  That appears to have been a clerical error on the part of
the Ninth Circuit.  As the court correctly noted in its discussion of the issues,
ORS 271.080 provides the landowner consent requirements at issue.  See West
Linn, 534 F3d at 1105 ("[T]he question we confront is whether
Ordinance 1439 was an ultra vires act because[,] although the City
Council followed procedural formalities in its adoption, the petition presented
for its consideration did not fully comply with [ORS] 271.080.").
25. A
third mechanism applies to vacation of places in cities that are included in
port districts.  ORS 271.180 - 271.220.
26. ORS
271.080 provides, in part:     
"(1) Whenever any person interested in any
real property in an incorporated city in this state desires to vacate all or
part of any street, avenue, boulevard, alley, plat, public square or other
public place, such person may file a petition therefor setting forth a
description of the ground proposed to be vacated, the purpose for which the
ground is proposed to be used and the reason for such vacation.
"(2) There shall be appended to such
petition, as a part thereof and as a basis for granting the same, the consent
of the owners of all abutting property and of not less than two-thirds in area
of the real property affected thereby.  * * * In the vacation of any plat or
part thereof the consent of the owner or owners of two-thirds in area of the
property embraced within such plat or part thereof proposed to be vacated shall
be sufficient, except where such vacation embraces street area, when, as to
such street area the above requirements shall also apply.  The consent of the
owners of the required amount of property shall be in writing."
27. ORS
271.005(1) defines "[g]overning body" as "the board or body in
which the general legislative power of a political subdivision is vested."
 The city council in this case meets that definition.  
28. ORS
271.130 provides, in part:
"(1) The city governing body may initiate
vacation proceedings authorized by ORS 271.080 and make such vacation without a
petition or consent of property owners. Notice shall be given as provided by
ORS 271.110, but such vacation shall not be made before the date set for
hearing, nor if the owners of a majority of the area affected, computed on the
basis provided in ORS 271.080, object in writing thereto, nor shall any street
area be vacated without the consent of the owners of the abutting property if
the vacation will substantially affect the market value of such property,
unless the city governing body provides for paying damages. Provision for
paying such damages may be made by a local assessment, or in such other manner
as the city charter may provide.
"* * * * *
"(4) Any property owner affected by the
order of vacation or the order awarding damages or benefits in such vacation
proceedings may appeal to the circuit court of the county where such city is
situated in the manner provided by the city charter. If the charter does not
provide for such appeal, the appeal shall be taken within the time and in
substantially the manner provided for taking an appeal from justice court in
civil cases."
29. ORS
271.170 provides:
"The provisions of ORS 271.080 to 271.160
are alternative to the provisions of the charter of any incorporated city and
nothing contained in those statutes shall in anywise affect or impair the
charter or other provisions of such cities for the preservation of public
access to and from transportation terminals and navigable waters."
30. ORS
271.130(1) provides, in part:  "Notice shall be given as provided by ORS
271.110[.]"
31. In
reaching that conclusion, we do not decide that affected landowners would not
(or in this case did not) have a right to challenge the validity of the city
action.  The existence of such remedies is not the question that the Ninth
Circuit poses.  Instead, as we understand it, the Ninth Circuit asks whether
the city ordinance, as it stands, is void.  We answer that the failure to
satisfy the consent requirements of ORS 271.080 does not render the city's
otherwise valid exercise of its power void or without legal effect.
1. There
may be instances in which answering certified questions of state law requires
us to discuss federal law.  See Klamath Irrigation District v. United States,
348 Or 15, 38 n 15, 227 P3d 1145 (2010).  This is not one of them.
2. This
case also raises the question of how, if at all, the second prong of Williamson
applies when a property owner files its takings claim initially in state court,
but the defendant removes the case to federal court.  That question presents an
issue of federal law for the federal courts, and the majority properly declines
to address it.
3. Williamson
is not to the contrary.  The Court was careful to explain in Williamson,
in discussing the first prong of its ripeness analysis, that the requirement
that a property owner apply for a variance or take similar steps before
bringing a federal takings claim in federal court was not an exhaustion
requirement.  473 US at 192-93.  That requirement was instead an aspect of
ripeness and resulted from the peculiar nature of a regulatory takings claim; a
federal court cannot tell whether a local government regulation goes too far
and thus constitutes a taking until the local government has finally decided
the extent to which development will be permitted.  Id.
4. A
landowner may bring a federal takings claim in state court in one of two ways. 
"[A] landowner is entitled to bring an action in inverse condemnation [for
a Fifth Amendment taking] as a result of the self-executing character of the
[Fifth Amendment] with respect to compensation." First Lutheran,
482 US at 315-16 (internal quotation marks omitted).  Alternatively, a
landowner may bring a federal takings claim pursuant to section 1983.  As the
Court explained in Patsy, the prohibition against exhaustion derives
from congressional intent in enacting section 1983.  It does not extend to
federal claims brought pursuant to some other claim for relief.   
5. For
instance, as long as any Oregon exhaustion requirement is reasonable, it is not
clear how the presence or absence of a state court exhaustion requirement
affects the question that the second prong of Williamson poses -- the
adequacy of the state judicial procedures for affording just compensation.