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OA 2026-016 Friends of Yamhill County v. Yamhill County
YouTube video by Oregon LUBA (https://www.youtube.com/watch?v=-Pvrnp4zCkw). Transcript is the auto-caption track — verbatim ASR, not a certified transcript.
Good morning. This is the time set for oral argument in Luba number 2026-016 Friends of Yamhill County versus Yamhill County. I'm board chair Smudio. Board members Wilson and Basham are also present. Please mute your audio when you're not speaking. That will help with the recording. This oral argument is being recorded and live streamed. Uh pending matters that I'm aware of are a motion to take official notice and a response. Those are pending with the board and we will resolve those in the final opinion and order. Is there anything else that the parties need to >> No. >> Thank you. Uh petitioner, you have a total of 15 minutes and may reserve up to 5 minutes for rebuttal. Would you like to reserve any time? >> Yes, with the board's permission, I would ask to reserve 3 minutes of my time for rebuttal. >> Okay. And uh I will watch the clock here and ask you keep track of your own time. The clock that's on the screen is just for reference. It's not keeping exact time for oral argument. And respondent intervener, you have a total of 15 minutes. Have you decided >> Uh yes, uh I believe the county is going to make a brief remark, but otherwise seed uh time to uh us as intervener. >> Okay. Thank you. Again, I will keep track of time and ask that you keep be mindful and keep track of your own time. Thank you for agreeing in advance how you'll share your time. Um and with that, petitioner, please state your name for the record and begin >> Thank you. Chair Zumudio, board members Basham and Wilson, good morning. My name is Ricky Armendariz. I'm an attorney with Crag Law Center in Portland, Oregon, and I'm here today representing petitioner >> Go ahead. Thank you. >> At issue in this case are two laws. The first is the permitted use on EFU land statute, ORS 215.283. This law allows a farm operator to build themselves a primary dwelling on their land, so they can live where they work while still protecting the agricultural land. The second law is the home occupation statute, ORS 215.448, and its local equivalent. This law allows a person, such as a farm operator, to run a business from within their dwelling, uh to unlock new economic opportunities for that resident. This case comes back before the board to address specific issues in the local proceedings following the most recent remands from both the Oregon Supreme Court and LUBA. In Green Hill 3, the Supreme Court rejected prior interpretations of the term dwelling made by the county, LUBA, and the Oregon Court of Appeals. In doing so, it clarified the meaning of dwelling as it applies to the laws at issue in this case. In Green Hill 4, LUBA confirmed the new approach for determining whether a structure is a dwelling, and remanded the case back to the county. LUBA's remand instructions were clear. The county must determine whether the applicant's structure qualifies as a dwelling under both state and local home occupation laws, and it must determine whether the structure was the home of the farm operator as required for a primary dwelling. Petitioner raised three assignments of error with the county's remand proceedings. I'll begin with petitioner's first assignment of error before moving on to Regarding our first assignment of error, the applicant is applying for a home occupation permit to operate a bed and breakfast in on EFU land. As LUBA recently clarified in its In the Ground case, determining whether the structure is a dwelling allowed in the EFU zone is a prerequisite to approving the home occupation permit. As such, the nature of the structure is once again at issue in this case despite the county's prior approval of the structure as a principal dwelling. When determining whether a structure was a dwelling in its remand proceedings, the county improperly construed the applicable law. Based on the Supreme Court's ruling, LUBA provided clear instructions for how the county was to make this determination. The county was to assess all relevant considerations including design standards and building code regulations. This is a nuanced, fact-based, context-specific inquiry. Petitioner positioned this as weighing all the evidence to decide. Respondents characterized it as a balancing test. While either explanation is correct, the county followed neither approach. The evidence presented by both the applicant and petitioner weighs heavily in favor of the structure being deemed a hotel or motel. Petitioner provided the county with ample evidence to demonstrate that the structure here is intended to be a hotel, not a dwelling. In response, the county did not weigh petitioner's evidence and balance it against the applicant's evidence, as a balancing test would require. Instead, the county did little more than attempt to explain how common hotel features might be construed as lavish amenities of an atypical dwelling. In contrast, the applicant's evidence mostly relied upon an argument regarding this the common atmosphere of the structure's design. There is no legal basis for a dwelling being a structure that has a common atmosphere. The applicant raised this point before with Luba and the Supreme Court, neither found it to be dispositive. Not to mention, hotels also have common atmosphere with their lobbies, dining and seating areas, and shared hallways. Under the Supreme Court's guidance, and >> Commissioners, I'm sorry to to interrupt you. Um, and I'm sorry if this sort of messes up the the schedule for your oral argument, but I really want to talk about the third assignment of error, and I'm afraid we might run out of time if we don't start now. Um, so would you agree that under the Supreme Court's decision, you they, not you, they basically have to go back and get reapproved for a farm dwelling. Is >> I'm not sure that I would characterize that as the issue that the Supreme Court put forward. I might have a different interpretation of it. The Supreme Court just denoted that this dwelling must or this structure must constitute a primary dwelling in order to be approved for a home occupation permit. >> Right. >> So, any issue there? >> In this case, that would be as a farm dwelling, right? So, all the what I'm getting at is the approval criteria for a farm dwelling are back in play, right? And so, looking at those um, those approval criteria, the first thing is they have to satisfy the farm income test. They had to the farm operator had to earn $80,000 in you know certain years. Um and then the third one I think under that is that the person or persons who produce the commodities that satisfy the farm income test have to live there, right? >> [snorts] >> Um do you think that those approval criteria or are prospective looking forward or retrospective looking backwards? And I guess to to clarify what I mean by that is um it seems to me that when you're satisfying the the farm income test it has to be made by the the farm operator has to be the person who actually made that $80,000, right? And it also seems to me that the under the per the person or persons who uh produce that commodities, that has to look backwards, too. And it seems to me that the county is saying we the grain shell can just go out and hire somebody who has like wasn't even with the company and make them the farm operator. And I don't see how that person could have been the person or persons who produced the commodities. And uh my first question is do you agree with that understanding? And B did you raise that issue? Cuz I think you sort of dance around that in some of the the sort of Simon Vera, but I'm not sure it's raised. So, those are my two questions. >> That's a good question. I think I I would agree that the farm income test is looking at the history, so retrospective earnings of the person who resides on the dwelling. And that just represents why the context of these laws and the interplay between them is so important. The primary dwelling statute is intended to allow a farm operator to build on their land. And the home occupation statute is intended to then allow the person who's built on their land to operate a business within it. That's not what was happening here. Here the structure was built with the purpose and intent for it to serve as a hotel, and now the applicant is retroactively trying to identify a farm operator who can live in the dwelling in order to qualify it as a primary dwelling. So, the because this the procedure of this case is so unique and it's not the intent of the laws, it's hard to say how exactly the farm income test would apply in this particular scenario. We didn't explicitly state that the farm income test has to be applied in a different way because of these circumstances. However, the applicant still has to prove that it meets the farm income test in order to qualify the structure as both a primary dwelling and in order to qualify that person as the farm operator. It could be that the law could be construed that a former farm operator could meet the test and that uh satisfactory criteria could carry forward to a new farm operator. I know respondents in their brief characterized our position as you would have to re-evaluate the farm operator and farm income test every time hands changed. We didn't make that point. In fact, the county requires a review of the permit every 2 years, and perhaps it could be in that 2-year review of the permit that the farm operator and the farm income test are re-evaluated. Does that answer your question? >> So, is it your position that cuz there's a condition of approval that says they have to appoint a farm operator, and you argue about whether they have to name that person now or whether it's deferred properly or but is it your position that they could bring in a brand new employee that didn't have anything to do with satisfying the farm income test in the first place, and you think that would be okay to be the the person or persons who >> I wouldn't say that I would characterize it as that. If a new person were being brought in as the farm operator, the applicant would still have to show that they had met the farm income test over the previous 5 years under one of the ways in which it's calculated under the OAR regulations. So, the >> farm operator who satisfied that would be different than the person or persons who would be living in the dwelling, that which would be this new brand new employee? >> It could potentially be a different person, uh and that is why it's important to identify who the particular person was in the past, who it is currently, and who it will be going forward so that you can ensure that the farm income test continues to be met as required. >> Okay, thank you. >> Mhm. So, returning to my point regarding the under the Supreme Court's guidance and Luwa's test, the structure must be primarily intended and designed to be a dwelling. In balancing all relevant considerations, the scale must tip toward the structure being primarily a dwelling to qualify for a home occupation permit. An applicant cannot purpose build a hotel on EFU land and have it qualify as a farm operator's primary dwelling for home occupation. Here, Foley Entertainment Group, a sports, entertainment, and hospitality company, has built the Grange Estate on EFU land next to its other ventures, the Black Walnut Inn and Four Graces. It intended to build the structure to serve as a bed and breakfast inn, not as the home for a farm operator. This is a situation of a hotel in search of a farm operator, not a farm operator in search of a home occupation. If there are no questions about the first assignment of >> Go ahead. >> Under Under petitioner's second assignment of error, the county did not properly address how the structure qualifies as a dwelling under local laws. Given the limitations imposed by the county's definition of both dwelling and family, respondents attempted to provide an explanation for the first time in their response brief, but that does not satisfy the county's requirements to establish adequate findings supported by substantial evidence. LUPA should reject respondents' explanation and require the county to adequately address this issue on remand. >> Didn't the county address it about the same way they did in the in the ground >> I don't think that the way in which the county addressed this case was adequate. The information that the county provided, or I'm sorry, the applicant provided and promised to provide, did not demonstrate that this criterion had been met, and it did not demonstrate that the criterion could feasibly be met. And respondents even admitted in their brief that the job description that was provided to the county was not intended to prove feasibility for this criterion. In order for this criterion to be satisfied, the county would have to ensure that the um Oh, I'm sorry. I I I was missing my point in in talking about the farm operator issue. Um The issue with this particular uh assignment of error, the county did not properly interpret the term family and apply it to this particular situation. So, there wasn't the same findings that were in the >> for rebuttal. You have 2 minutes. You're welcome to use the rest of your time for primary argument, but you will not have time for rebuttal if you don't. Go ahead. >> Thank you. Thank you, Chairwoman Modio. I'll just briefly finish to say in the in the ground case, there were more adequate findings regarding the local code and its meaning and application. In this case, they did not have similar findings. >> Okay, thank you. >> You'll have a minute and a half left for your rebuttal, so short time but still get the last word in. Uh we will turn now to respondent and intervener respondent, whoever's going first, please go ahead. >> Good morning, Your Honors. Uh Jody Gallahan for Yamhill County. Uh the I'm just want to briefly very briefly say county supports and agrees with the intervener respondents' arguments here in their briefs, and therefore we're going to seat our time to them fully. Uh unless there's factual questions specific to the county, I'm always happy to respond to. >> Thank you. We appreciate you being here for that purpose. Any specific questions for the county? No, okay. Go ahead, intervener respondent. >> Great, thank you very much. Good morning. Kevin Kono for intervener respondent Grain Shell LLC. Um I'm going to start by addressing some of the questions and issues that were raised with respect to the farm income test and that line of questioning. First, um I may have misunderstood sort of the framing of the question, but to be clear, there's a primary there's a there's a dwelling permit which authorizes the construction of a primary dwelling, and that permit is not at issue. What the Supreme Court said is that to have a home occupation um under these circumstances, the meaning of dwelling within 215.448 here means a primary dwelling conjunction with farm use. So, the question is whether this structure is a dwelling for purposes of 215.448. And that might be a nuanced distinction, but it's limited to the conditional unit use permit question and not the primary dwelling permit and the ability to build a primary dwelling on the property. With respect to the farm income test, this highlights that um farm operator has a different meaning in different places in the OAR. Um first, we don't think farm income is properly at issue here within the scope of remand, and I'll touch on that um a bit further. But on my point about farm operator uh most of the authority that the petitioner here cites um has related to a farm operator in the context of a relative farm help dwelling, where the question is whether um a a dwelling an additional dwelling is going to be allowed on property where it wouldn't otherwise be allowed. But because it's a relative farm help dwelling, the farm operator necessarily must be a natural person. And then there's questions about what that means in terms of the requirements for a farm operator where you're asking to build an additional dwelling for someone to come in and not take over that role, but provide assistance to someone who still will be operating as the farm operator with that primary responsibility that the regulation describes in the definition of farm operator for that context. In the farm income context, you have a farm operator who is the the person or in almost all circumstances entity who is the one who to whom the income is attributed, who is reporting the income and all of those things, which is not the same necessarily as an individual. Most farms today operate with a a structure where the the actual reporter of the income is an entity, not a natural person, and that's why the rule talks about um individuals uh who participate in producing the commodities residing in the dwelling because an entity can't reside in the dwelling. >> Right, Mr. Conant, I'm to interrupt, but yeah, I see your point. How about sub A says the farm operator. This is the farm dwelling rule. And then sub C says it's person or persons who have to reside in the dwelling. With the Supreme Court's case, they specifically said that you have to show that the farm operator operates or is going to be the person living in the dwelling. How do you square the different language in the rule with the Supreme Court saying the farm operator has to live there? >> So, the Supreme Court also noted that neither it nor the Court of Appeals have construed the meaning of farm operator in this context. It did make a reference to Luba having referred to the definition of farm operator in the relative farm health dwelling context, but it essentially left it open for the county in Luba to determine what farm operator means in this context. And what the >> Speaker, I'll ask you the same question I asked petitioner. Um in for the relative farm dwelling, it doesn't matter what happened in the past. It's kind of going forward. Do you think under establishing a farm dwelling that when you look at farm operator or person or persons who produced commodities, do you think that is purely prospective or is that retrospective looking backwards? >> It It's So, looking the income is clearly looking backward, right? It's It's It's you know, three out of the last five years. And it doesn't matter who the individual farm operator occupying the dwelling for our purposes is cuz that is a role that can change over time. So, um I I may not be fully understanding the retrospective versus prospective aspect of the question, but here that farm operator >> I want to harp on this one is in sub C it talks about the person or persons who are going to live in the dwelling have to be the persons who produced the commodities that satisfied the $80,000 test. So, it seems to me that's retrospective. And so, it has to you you can't just I think there's a good argument that you can't just go hire somebody new that was never part of the company and didn't help produce those goods and then install them as the farm operator. And it seems to me that's what you're wanting to do. And then there's a whole issue where the this issue was raised, too, but just how the stat how the rule works. Uh I want to get your position on I'm assuming you're going to argue that you can do that and I want to know why you think it's okay to have somebody who didn't produce the commodities still be the person a person who lives in the dwelling. I hope that made sense. >> Um I I think it did. Thank you. And so to get to the second comment first, yes, it's absolutely our position that this wasn't raised it wasn't raised on remand, it wasn't raised in the initial proceedings, it wasn't raised in front of the Oregon Supreme Court or on remand here. So, I think I understand the line of questioning for the larger understanding um you know, to to ascertain how to address that where it may be at issue in the future, but in this case, it's not at issue because the Supreme Court's remand uh was narrow. What was before it was the question of is this a dwelling? And it focused in remand on two questions. Design characteristics, is this structure physically a dwelling? And is it occupied by a farm operator? So, there was no question built into the remand that um addressed farm income or this this question at all. So, I submit it's not in front of Luba at this time. But but to your >> not subsumed within the definition of what is a farm operator in this context? >> I'm sorry, could you repeat that, please? >> You're arguing that the scope of you're arguing two things as I understand it. This issue is waived because it wasn't raised in the remand or this issue is waived because it wasn't raised in the initial proceeding. >> It's both. It would hasn't been raised but >> which is a little bit challenging in this context because as you well know the >> [clears throat] >> ideas have morphed significantly from the first time it was before us to the court of appeals to the Supreme Court and back down. But the Supreme Court obviously thought the issue of farm operator was the was the issue before them. So why are the issues of farm impact or farm income and who produced the commodities not live issues under the remand question of whether the dwelling is occupied by a farm operator? >> Yeah, so that's the key focus of the farm operator discussion in the Oregon Supreme Court is occupancy by the farm operator. I understand where the direction of the question of sort of tying in this dwelling is occupied by a person or persons who produce the commodities, but what you're doing is reading into that rule where where it doesn't exist in sub C that that person is the farm operator. In the farm income test regulation, farm operator means the the uh person or I'm going to say or entity that earned that earned the income. And it purposely doesn't say the farm operator is the one who's who is producing the commodities. You can have a farm operator who for purposes of 215448 and I'll note that the Supreme Court was very careful to say it was talking about the meaning of dwelling for the home occupation statute, not for all all purposes. Um and the regulation here for farm income doesn't talk about the farm operator occupying the the dwelling. It talks about the person or persons plural which means that you can have multiple people. Um and you know, we're not talking about having multiple farm operators, but this says person or persons, indicating that we're talking about something different than the farm operator, even in the context of the farm uh income rule, than uh than we are here. So, here the question is, is a farm operator occupying the dwelling? And the board can correctly concluded um that it is. It correctly concluded that it's a dwelling and I'm happy to get in um to to that analysis and those arguments because the county did correctly walk through um all of the aspects of this structure and determine that it it is a dwelling and I would just add um that the uh Sorry, I want to make sure I'm watching my time here. That uh the arguments that petitioner relies on um conflate the the question of what the structure is and the home occupation use within it. And a lot of this boils down to a timing issue. If Grange Hill had built this structure under its primary dwelling permit as it as it has and is entitled to do and did not at that same time uh of construction seek to operate a bed and breakfast home occupation, there can be no question that this structure with its enhanced safety features and all of the things that petitioner argues make it something other than a dwelling, would be a dwelling. It would be occupied as a dwelling. It would be sold, if it were ever sold, as a dwelling because it is a dwelling. And the arguments conflate that use of a home occupation bed and breakfast home occupation with the nature of the structure itself. If Grange Hill were seeking to operate a different home occupation, we use used the example of an embroidered pillow business and use nine of those bedrooms for sewing rooms and and inventory management with five employees. There's no question that that's not a hotel or a motel. It's still a dwelling operating a home occupation. And the fact that the home occupation is a bed and breakfast in which Oregon statute and the county code expressly contemplate doesn't change the nature of of the structure. But getting back to farm operator, that's my response is that this the the dwelling occupancy of person or persons isn't talking about farm operator. Um in this context, farm operator means what the county defined it to mean, which and that definition recognizes the practical realities of farming where um the owner may be someone other than the farm operator, but the owner is may want to retain authority to make uh the highest level decisions about what crops to plant and those sorts of things. But here, farm operator is defined defined to be an on-site person with day-to-day management also participating in the higher-level decision-making, negotiating contracts and the like. And that is entirely consistent with practical realities and what the Oregon Supreme Court um mandated uh remanded for consideration of. Um it left open to the county and this board to to define farm operator in this context. Farm operator can and does have different meanings in different contexts. And here, the definition of farm operator meets the context in which it's being uh used and defined. Um I want to touch briefly, if there aren't further questions on farm income or um design characteristics. Um touching briefly on the county's interpretation of its code. The primary argument there seems to be that uh family wasn't the definition of family wasn't adequately addressed. Uh we've addressed that in our brief, but I want to touch on it briefly here. A family can be a single person. The farm operator is a family. The the um so it meets the occupancy by a farm operator meets that requirement. Um and um so it wasn't necessary to to further address the definition of of family. Um I want to get back, I guess, to the Supreme Court's framing of the issues. Um as I said earlier, it framed the issues as twofold: design characteristics and whether the dwelling would be occupied by a farm operator, um but it also gave some some um guideposts that addressed many of the arguments that petitioners made in its uh its briefing. Um that is it expressly said at 373 OR ORS 805, "Land use provisions do not limit the number of bedrooms or bathrooms that a dwelling can have." And so the arguments that this is a motel because of the number of you know, the size and scope of the building, the Supreme Court expressly rejected. Um arguments about um the the relative proportion of the dwelling that will be used for the home occupation at 806, um the Supreme Court expressly said the legislature contemplated that a building uh can qualify as a dwelling for purposes of ORS 215.448 even when a resident is operating a home occupation large enough to occupy a substantial portion, if not a majority. Um and I see I'm running out of time. Um, so unless the board has additional questions, um, I'll leave it there. We ask that the board uh affirm >> Thank you. No further questions from the board. Uh, we will return to petitioner. You have a minute and a half for your >> Thank you. First, I want to reiterate that the nature of the structure is once again at issue because the applicant here has applied for a home occupation permit. Petitioner is not trying to collaterally attack the approval of the structure as a principal dwelling. We are just adhering to the Supreme Court and LUBA's direction that the structure itself must be assessed to determine if it's a dwelling. Second, the farm income test is necessarily implicated because a primary dwelling must meet the farm income test and a farm operator must meet the pri- farm income test. The Supreme Court noted the person who lives in the dwelling is the farm operator. And while the regulation says person or persons, the applicant has not demonstrated whether there will be multiple persons living within the structure. It only has one innkeeper suite and there's no evidence that a farm operator and somebody else will be living in the structure. The farm income test, I would say, is both retrospective and prospective. Retrospective because you have to make sure you meet those qualifications. Prospective because, as the Supreme Court noted, the issue of the farm operator is once again at issue because of the permit application. It is not something that can be established once and not readdressed when it is implicated. For all the reasons the petitioner has laid out in both its briefs and in the arguments today, we respectfully request that LUBA reverse the county's approval of the applicant's home occupation permit. In the alternative, we request that LUBA remand this case back to the county with clear instructions for how it is resolved to resolve petitioner's assignments of errors. Thank you for taking time to consider this issue. >> Thank you. That will conclude oral argument. The statutory due date for a decision in this appeal is July 23rd. We'll ask the parties to agree to an extension so that we issue our decision by August 13th. Is that okay with these parties? >> Yes, sure. >> Yes. >> Thank you. Uh have a good remainder of your day.