When Is A Building Permit A "Land Use Decision"?

An Oregon court recently issued a decision with unsettling implications for area developers. In Tirumali v. City of Portland, the Oregon Court of Appeals ruled that Portland’s issuance of a building permit for the construction of a singlefamily dwelling was a "land use decision" that could be appealed to the Land Use Board of Appeals. Since the city issues thousands of building permits every year, this decision raises the possibility that any of these permits could be subject to protracted litigation.

At issue in Tirumali was the construction of a multistory house in Portland’s Corbett District. The lot was moderately sloped and required grading to make it suitable for building. The city code limits houses in this area to a height of 30 feet, measured from the "base point" of the lot. For relatively level lots, the "base point" is the highest grade on the site. For steeper lots, the base point is located 10 feet above the lowest site grade. Under the city code, "grade" is defined as the "lowest point of elevation of the finished surface of the ground, paving or sidewalk."

The neighbors objected to the design of the house, claiming that it was too tall. They claimed that the "base point" should be the original "grade" of the site, before any leveling activities occurred. The city’s building permit was issued based on measuring the height of the house from the "grade" that was established as a result of filling a portion of the lower part of the property.

Regardless of which interpretation of "grade" is correct, the fact that two interpretations exist was enough for the court to conclude that the decision to issue the building permit was a discretionary decision — i.e., the city had to exercise discretion to choose between possible interpretations. By law, a decision made by a local government that requires it to exercise discretion to approve or deny a proposed development is a "land use decision" that may be appealed to the Land Use Board of Appeals. If the standards the city must use are clear and objective, no discretion is necessary and the decision is not a land use decision.

In Tirumali, LUBA concluded that the standards in the city building code were clear and objective and that the decision to issue the building permit was thus not a discretionary decision over which LUBA had jurisdiction. The court of appeals disagreed, concluding that the terms "grade" and "finished surface" were ambiguous and thus could be interpreted several different ways. Under one set of definitions, the house met the city’s height limit; under another, it was too tall. Because the city had to exercise discretion in choosing which definition to use to approve the building permit, the court concluded that the city’s decision to issue the permit was a land use decision.

In its written opinion, the court noted that "it is almost axiomatic that the more extensive and more complicated the standards are, the greater the opportunity for ambiguity becomes." Anyone who has looked at the Portland Building Code or the Oregon Structural Specialty Code lately knows that these documents are extremely "extensive" and "complicated." As a result of the Tirumali decision, many of the thousands of building permits issued every year by local governments — decisions that were previously insulated from review by LUBA — now may be appealed by neighbors, community groups, or competitors if any of the myriad building code standards that apply to a proposed development require interpretation by the local government.

It is interesting to note that the Oregon Legislature in 1999 created the TriCounty Building Industry Service Center to, among other things, "assist local building officials in interpreting the state building code." By all accounts, the Service Center has been busy. Given the level of ambiguity in state and local building codes that created the need for the Service Center in the first place, we may expect to see many more building permits appealed to LUBA once the decision in Tirumali becomes more widely known.

Ironically, in a decision released after Tirumali, LUBA concluded that a building permit issued by the City of Gladstone was not a land use decision. In Gagnier v. City of Gladstone, Mr. Gagnier submitted an application to build a duplex in an area zoned for residential use. At the time, the city code allowed duplexes in the zone. As a condition of approving the application, the city required Mr. Gagnier to begin construction within one year of the date of approval. Sometime later, but before the year expired and before Mr. Gagnier had obtained his building permit, the city amended its code to prohibit duplexes in the zone. When Mr. Gagnier went to apply for his building permit, he was told that the city would not issue the permit because duplexes were no longer permitted.

When Mr. Gagnier appealed the city’s decision to LUBA, the board initially concluded that "as a general proposition, a city’s approval or denial of a building permit" is not a land use decision under state law. But LUBA went on to conclude that the approval of a land use application, such as for Mr. Gagnier’s duplex, "carries with it the right to obtain the building permits that are necessary to build the approved proposed development." So Mr. Gagnier was entitled to his building permit if he applied for it within one year following approval of his duplex application, even if issuing the permit allowed a development that violated the amended city code.

After the decisions in these two cases, it is increasingly difficult for a developer to know with certainty the conditions under which a city or county will issue a building permit. Apparently, the city or county is required to issue any permit "necessary to build a proposed development" once the development has been approved. If issuing the permit involves an interpretation of one or more provisions of the state or local building code, however, the decision to issue the permit may be appealed to LUBA.