County unsuccessful in overturning the fee but successful in avoiding having to pay for the city's attorney time on the case

PHOTO BY: RAYMOND RENDLEMAN - In 2014, Oregon City pioneered a program to charge users of streets and sidewalk areas for permits to use the city's right-of-ways, whether the use is an underground utility line or a street closure for an intersection painting.Clackamas County's appeal of its lawsuit against Oregon City's new right-of-way fee was unsuccessful in overturning the fee but was successful in avoiding having to pay for the city's attorney time on the case.

Both sides are claiming victory in a case that has racked up hundreds of thousands of dollars in legal fees for Clackamas County and Oregon City taxpayers.

Oregon City officials enacted the fee in November 2013 to ensure that all utilities using the city's streets, including the city's own utilities, compensate the city fairly for their use of this public asset, which would otherwise be subsidized by Oregon City taxpayers.

The fee assessed the Tri-City Service District nearly $200,000 in 2014, with the amount increasing annually. An appeals-court decision last month affirmed a decision from 2015, determining that Oregon City can apply its right-of-way fee to the district that provides wastewater treatment for OC, Gladstone and West Linn.

"This fee is charged to users of the city's property, such as streets — and under or over streets — to compensate for the use of that property," Mayor Dan Holladay said. "This is the second loss for the county, and I hope that they will discontinue to fight the city on this issue."

In a Feb. 14 decision, the Oregon Court of Appeals said the fee is directed toward the use of the city's rights of way, and does not depend on property ownership, as it applies both to owners and users of utility facilities in the city's rights of way.

"Additionally, the tax is not assessed based on the value of any property owned, as taxes on property typically are, but is tied, instead, to how much of the city's rights of way a utility uses," wrote Oregon Appeals Judge Erin C. Lagesen.

In 2015, Judge Henry C. Breithaupt had awarded Oregon City nearly $85,000 in filing fees, staff and attorney time, but also an enhanced prevailing party fee of $5,000 designed to punish the county for the unreasonableness of its claims.

In his decision to award attorney fees, Breithaupt called out the county for "poorly founded arguments" that were "devoid of proof." The judge said he hoped that having to pay Oregon City's legal costs would deter the county from this type of behavior in the future.

Clackamas County unsuccessfully appealed Oregon City's right to assess right-of-way fees to the Tri-City Service District, but it was successful in overturning Breithaupt's decision to award attorney fees. Lagesen said the county's complaint was filed before an Oregon Supreme Court ruling in a separate case that showed right-of-way fees were valid.

Clackamas County Counsel Stephen Madkour said, "Clackamas County believes its legal challenge to Oregon City's right-of-way fees was necessary, important and justified by existing law. The Court of Appeals' reversal of the award of legal fees was a significant result for the county and affirmed that the county's legal action was justified."

Given the 2015 decision of the Oregon Supreme Court in a parallel case, Rogue Valley Sewer Services v. City of Phoenix, it seems unlikely that Clackamas County will pursue further appeals against Oregon City's right-of-way fee. Asked whether Oregon City would appeal the appeal court's decision not to award attorney fees to the Oregon Supreme Court, Holladay said city commissioners had not yet had an opportunity to discuss the issue in an executive session.

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