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Walmart: Use it or lose it?

City Council must re-examine Walmart vested right question

Did Walmart lose its right to expand under the Hood River Municipal Code when the store became a nonconforming property and failed to take steps to finish construction?

The Hood River City Council has been directed by the Oregon Land Use Board of Appeals, through a 29-page Final Order and Opinion issued June 21, to answer that seemingly simple question. The city’s decision to allow Walmart’s expansion was officially “remanded” on this point. A remand is a technical term calling for a reconsideration.

The legal reasoning laid out in LUBA’s directive is complex but does provide for the city to incorporate existing case law and local code into a revised decision — potentially nullifying Walmart’s right to expand.

However, a second question in the case is whether the Hood River City Council will be allowed to answer the remand that LUBA has posed to them.

According to Mayor Arthur Babitz, “the city will wait to see if LUBA’s decision is appealed to the Oregon Court of Appeals before responding.” If the LUBA decision is appealed, the city would actually be stopped from reviewing the case until the Court of Appeals has reviewed the LUBA decision.

The city will not be appealing the LUBA ruling, however, both Walmart and the Hood River Citizens for a Local Economy — the nonprofit opposing the expansion — have until July 12 to file an appeal. HRCLE has not indicated a desire to file.

“Our own code now clearly states that vested rights expire after a 12-month period and the City has to apply the code to Walmart. There is no way around that,” said Becky Brun, representative from HRCLE.

“We are weighing our options,” said Walmart spokesperson Jennifer Stahl. Attorneys have not yet issued a decision but the company may file an appeal. If it does, it will prevent the city’s review of their previous approval for the expansion.

A Walmart appeal would require the Oregon Court of Appeals to examine the LUBA’s legal arguments and analysis issued in their ruling and could overturn its directive to the city.

Why would Walmart wish to prevent the city from responding to LUBA?

If the city uses the LUBA analysis, it could find that Hood River Municipal Code would have required Walmart to initiate construction on the 30,000-square-foot expansion within either one or two years from the date it became a nonconforming property in 1997. The 1997 code contains language akin to a two-year time limited “use it or lose it” clause — when it comes to developers maintaining a “vested” (secured) right – referred to as “discontinuance.”

LUBA also indicated, through a circuitous analysis, that current code, which would discontinue vested rights after 12 months, could also be applied in this case.

Walmart did not initiate construction within either timeframe and could therefore lose its bid for expansion due to discontinuance.

The LUBA ruling says that the city erred and must reexamine its decision because it did not evaluate whether the HRMC on nonconforming use should have been applied to the determination of Walmart’s “vested” rights.

In fact, in the ruling LUBA notes that during deliberations the city “expressly declined to address or resolve that issue.”

LUBA went on to agree with HRCLE’s claim against the city’s determination that Walmart has established “vested rights,” saying that the city should have made a determination on the issue of “discontinuance” that can result from Walmart’s inaction.

LUBA also provides guidance for the city’s required response, noting that it must use the HRMC 17.05 in its new review of the case. That code would include the ability of the city to deny that vested rights were ever established by Walmart, again leading to a denial of the expansion.

The LUBA decision cites two legal cases (Fountain Village v. Multnomah County and Crosley v. Columbia County) in which vested rights were lost through discontinuance following initial development.

According to the LUBA brief, “Fountain Village and Crosley indicate that if the local government has adopted legislation governing discontinuance of a nonconforming use, that legislation will also apply to discontinuance of a vested right. In the present case . . . the city has adopted legislation, at HRMC 17.05, which provides that a nonconforming use is lost if discontinued for any reason for more than 12 consecutive months.”

In both cited cases, the initial construction was legal (as was Walmart’s) and substantial investments had been made toward future development (as with Walmart), but like the Walmart proposal, substantial time had passed between first and second phases of development. The right to build was lost through a lack of action towards completing those legally approved projects within coded time limits.

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