News and Opinion from Sisters, Oregon

Local developer sues state for $30 million

After 17 years of trying to build an “eco-resort” somewhere in Oregon, Camp Sherman resident Shane Lundgren and his partner Jim Kean, of Dutch Pacific Resources, are suing the state of Oregon for $30 million. They claim the state has not lived up to their agreement that the partners had pre-approved development rights to build their eco-resort elsewhere in the state, outside the Metolius Basin.

The case was filed in the Circuit Court of Jefferson County, which originally approved the resort.

They had originally planned to build The Metolian on 647 acres of forest land off Jack Lake Road (see related story on page 19). Thirteen years ago, their plans were derailed by legislative action overturning the land-use approval given by Jefferson County.

Because the state realized the Dutch Pacific investors had already spent a great deal of time and money on their plans for The Metolian, they were given “transferable development opportunities” (TDO), basically granting state preapproval for an eco-resort somewhere else in Oregon.

The TDO deal was the first — and last — of its kind. Every three years since 2009, Lundgren has had to appear in Salem to request a three-year extension on the TDO, which the legislature approved. During that time, Dutch Pacific has worked closely with a number of state officials to locate a suitable site for an eco-resort. They looked at four or five parcels in Central Oregon, east of Bend. There was one location on the lower Columbia River, 22 miles in from Astoria, that looked promising and had an owner willing to sell. They also found land in Curry County near the Bandon Dunes golf course. None of these locations worked, for a variety of reasons.

The TDO expired in 2020, after the Republican legislators staged a walk-out that session. But in 2021, Rep. Brian Clem, D-Salem, who helped draft the legislation protecting the Metolius Basin as well as HB 2228 creating the state assistance program for the developers, was determined to revive the TDO by including it in an unrelated bill concerning expansion of the Bend Urban Growth Boundary.

According to a story in the September 29, 2022 Oregonian, then-Senator Betsy Johnson was adamantly against it. She reportedly made numerous phone calls to legislators urging them to kill the developer assistance. As the chair of the Ways and Means Committee, Johnson enjoyed power and influence over many legislators.

Former House Speaker Tina Kotek requested the chair of the Economic Development Committee, Rep. John Lively, D-Springfield, put the renewal on hold and Johnson lobbied him as well.

Kotek also asked Clem to not move forward with bills before his Wildfire Recovery Committee, which would have revived the temporary development rights granted to Dutch Pacific.

According to The Oregonian, Kotek said she was acting to prevent the Metolius controversy from sinking the Bend UGB deal, and in particular a large affordable housing component.

Lively indicated that even if he had gone ahead with the renewal, the votes weren’t there.

When it came up for a vote, The Metolian development rights had been removed from the Bend UGB bill, thus ending any chance for Dutch Pacific to find a new location for the eco-resort. Lundgren and Kean told The Nugget they do not know why Johnson was so adamant in her opposition to the TDOs.

Now that they no longer have the TDOs deal that essentially granted state pre-approval for a resort somewhere else in Oregon, Dutch Pacific Resources has filed a lawsuit seeking monetary damages arising from the state “taking” Dutch Pacific’s private property rights for public use without just compensation under the Fifth and Fourteenth Amendments to the U.S. Constitution.

The suit claims that designating the property as within an Area of Critical State Concern, prohibiting development, constitutes an unconstitutional taking of the property for public use. Dutch Pacific attempted to utilize the TDOs for 11 years but was unable to glean any benefit from them. Instead, they have been left without the TDOs and sizeable bills accumulated over that time and investors who were owed their funds.

Lundgren said several of the investors purchased the 647 acres from Dutch Pacific to provide money to pay investors and creditors.

“This lawsuit is strictly a business decision,” Lundgren and Kean told The Nugget.


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