Oregon’s Measure 37: Breaking New Ground on Property Rights
Oregon’s Measure 37, a ballot proposition designed to compensate property owners for losses in value from land use regulations, was passed by voters last November. The new law stipulates that property owners whose land is negatively affected by land use regulations receive monetary compensation equal to the loss in fair market value.

If the local government chooses not to compensate the property owner, the owner may avoid the existing land use regulation and use their property for a use permitted at the time the owner acquired the property. Since passage, approximately 800 claims seeking compensation or waiver have been filed with state or local governments. 

This measure is particularly significant occurring in Oregon because of the state’s historical land use system. Oregon is typically seen as a model by environmentalists and urbanists because of its system of urban growth boundaries and state regulation/restriction of rural development. The creation of this system relies on down-zoning and other restrictions on rural development. The environmental goals were to preserve open space, farms, and rural character. The urbanism goals were to channel development in central city locations, on smaller lots, and near transit stations.  Because rural land was, generally speaking, reduced in value by these types of regulations, many rural property owners now stand to claim compensation or waiver from the rules thanks to Measure 37.

Local governments in Oregon, like elsewhere, are financially strapped. With tax revenues already fully allocated, they are unlikely to financially compensate property owners who file claims under Measure 37. The result is likely to be, in many cases, that property owners will receive waivers from land use restrictions. 

Measure 37 is not without its share of hiccups. The measure is somewhat unclear on several important particulars. According to Jon Chandler, executive officer of the Oregon Home Builders Association, “It’s unclear whether any uses allowed by waiver of regulations are transferable because the measure refers to the owner of a property in the present tense”.  Moreover, under Oregon law, the term “use”, as in “use” of property, may not include the right to subdivide or partition — but simply to build. 

The text of the measure also fails to articulate a set process for making claims, thus allowing local governments to develop their own.  “Some counties, who weren’t all that fond of the land use system to begin with have adopted ‘c’mon down’ procedures and have been waiving everything they can get their hands on”, said Chandler.  “Other cities and counties have required claimants to do back flips and eat a bug before their claim will be processed.”

A new bill, which attempts to revise Measure 37 and make it more workable, has been introduced in the Oregon Legislature.  Among other things, Senate Bill 1037 would create a standardized process for claims at both the state and local level.  Additionally, the bill would create special rules for land inside, and immediately adjacent to, urban growth boundaries (UGBs).  SB 1037 also calls for the creation of a compensation fund to handle those claims where either the state or local government doesn’t want to allow a waiver.  “This is a bit tricky, because it will likely require a new tax of some flavor and that’s not going to be fun at all,” said Chandler.

As to the future face of Measure 37, Chandler remarked, “I’m guardedly optimistic. In other words, that by virtue of Measure 37 we will be able to have a conversation that we should have had 20 years ago.”  The end result may not look exactly like what voters approved last November, but the effect could well be close to what voters said they wanted — a system that’s fairer and equitable, that balances property rights with the need for long range planning, and one that doesn’t single out one segment of society to bear the burden without just compensation.

For more information on Oregon’s Measure 37, contact the Oregon Home Builders Association at 503-378-9066 or NAHB’s Sam Leyvas at 800-368-5242 x8584. [ return to top ]