Oregon has the nation’s most restrictive land-use regulatory system. Every square inch of Oregon has been zoned by government planners, with the result that development of any type is prohibited on most private land. In addition, over 60% of Oregon’s total land mass is owned by the government, so there are relatively few parts of the state where real estate markets can function effectively. The result is a government-enforced cartel of landowners who own buildable land. The consequence of any cartel is to drive up the price of the regulated good to above-market levels. The high cost of land in Oregon is one reason why the price of housing is relatively high in Oregon’s largest cities.

While it is often lauded by its proponents as a “model” for the nation, after 38 years no other state has chosen to emulate Oregon’s land-use program. Clearly the Oregon system is more of an aberration than a model, and needs to be reformed to incorporate the benefits of property rights, incentives, and markets.

We have a 1970s land system for a 21st century economy. The Stone Age did not end because they ran out of stones. It ended because something better came along.
When the government dictates the market, instead of letting market forces dictate the market, bad things happen and taxpayers are left paying the bill.

The Woodburn industrial land is the “post child” of how broken the implementation our land use laws. The land was not pristine forest or high quality agricultural land. It was flat land, on a highway interchange, surrounded by a Do It Best and Winco warehouses. Farmers struggled to grow grass on the property.

My prior company, Opus Northwest, had an option on 100 acres that could accommodate up to one million square feet of warehouse distribution space. For a minimal amount of money, several environmental groups have successfully blocked this project that could have brought over $150 million in new construction and hundreds of living wage jobs to an area that has unemployment and underemployment over 15%.

Last year, the final court of appeals hearing has held, and the court passed the entire process, after 10 years and over one million dollar in legal and other fees back to LUBA. I had a client interested in constructing a one million square foot fulfillment center that would have brought over 350 jobs with average salaries over $50,000. Due to Oregon’s inability to provide shovel ready land in a reasonably competitive amount of time, this client elected to move forward with construction in California.

Last December, I testified before the joint Economic Development and Sustainability committees for the State of Oregon. I shared the Woodburn story. I also offered a solution on how Oregon can better compete to create jobs. Current land use law requires a twenty year land supply. In 30+ years, Oregon has failed to ever reach consensus on what a twenty year supply is as our crystals balls are only so clear. My suggestion was twofold: focus on a “shovel ready” five year supply, with shovel ready being defined as construction can commence within six months. The other was to treat existing jobs land in the UGB like wetlands: if the State or Municipality passes legislation that reduces the amount of jobs lands an equal amount of jobs lands must be added to mitigate this loss.

The other solution is to require those that protest a project to have actual standing: either an interest in property or business that would be impacted by a development, or physically live or work in close proximity (such as being part of homeowners association or business district). Today, a K Falls resident can attempt to block a project in downtown Portland, even if they have no vested interest or standing. If an individual or group that does delay a project ultimately loses, the developer or tenant that is injured due to delay should be able to sue to be compensated for lost revenue, opportunity cost or increase in construction cost as a direct result of the delay. Have consequences for blocking job creation should have a penalty, which will hopefully result in less frivolous actions taken by the numerous anti growth groups in Oregon.

The sad reality is that the subject industrial land could have been developed three times over during this extended delay, resulting in hundreds of living wage jobs in Woodburn.

I strongly believe in the virtues of free enterprise, which is based on the strong enforcement of property rights. We need to slightly modify the implementation of our land use laws so that Oregon can compete in a global marketplace. Businesses need certainty and flexibility in the built environment to accommodate growth. More often than not, Oregon is not even considered by companies for relocation of headquarters or expansion of regional offices or manufacturing facilities due to our lack of shovel ready land. Does Oregon want to continue, “playing not to lose” and being mediocre or does it want to “play to win” and be a world class State?

Oregon is close to regulating itself out of existence.

The more the plans fail, the more the planners plan…