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  • 26 Nov 2015

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  • 27 Nov 2015

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Clackamas County to pay Oregon City legal fees after failed lawsuit against city right-of-way fee

Judge Henry C. Breithaupt ruled that Clackamas County will have to pay back Oregon City for its attorney fees after the county’s failed attempt to challenge the ability of cities to charge right-of-way fees.

In matters of two public agencies, attorney fees are rarely awarded to the winning side, noted Oregon City Mayor Dan Holladay. But Oregon City not only received 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.

“They really didn’t have a cause of action,” Holladay said.

In July, Breithaupt determined that Oregon City can apply its right-of-way fee to the Tri-City Service District, which provides wastewater treatment for OC, Gladstone and West Linn. The fee imposed in October 2013 assessed the district nearly $200,000 last year, with the amount increasing annually.

In his Nov. 5 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.

When the county filed its case against awarding the fees, the Oregon Supreme Court had ruled in the “Phoenix vs. Rogue Valley Sewer” case, virtually nullifying any arguments against Oregon City’s fee.

The county’s behavior in suing the city “was overly aggressive and contentious and required the prevailing party to incur unnecessary costs,” Breithaupt wrote in his decision to award the attorney fees to Oregon City.

Clackamas County spokesman Tim Heider was troubled by the judge’s ruling.

“The county believes the litigation against Oregon City was justified and necessary and was supported by our regional partners,” Heider said.

The county still may appeal, Heider said. The county has 30 days from the date of Breithaupt’s order to decide that question.

In June 2014, Clackamas County, on behalf of the district, sued Oregon City. The county argued that the city did not have authority to impose the fee on the district.

“The charges imposed on Tri-City ... bear no rational relationship to the costs that those Tri-City utility facilities which are located within, under, or above the city’s rights of way impose on (Oregon City),” Clackamas County attorney Stephen L. Madkour wrote in the complaint.

Breithaupt is typically a judge for the Oregon Tax Court, but he was acting for the Clackamas County Circuit Court in this case. On July 6, he rejected all of the county’s claims, upholding the city’s authority and finding that the fee is not a tax on the district’s property, as the county asserted, and that the county failed to show the fee was unlawful or unreasonable in any way.

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. Oregon City began charging the county and other street users based on either the total linear feet of utility facilities located on Oregon City rights of way or a percentage of the gross revenue generated by those facilities — whichever was greater.

“The opinion of this court is that the charge levied by Oregon City is not a tax on real property,” Breithaupt wrote in the July 6 decision. “It is a fee for certain actions or uses and not on ownership without regard to use of any asset. Tri-City has presented no authority for its explicit or implicit proposition that there is in Oregon law some numerical limit on the amount of the charge at question here.”

Holladay called the decision a great one for all cities in Oregon, providing another confirmation of local authority to determine what is in the best interest of city residents.

“Cities around the state are struggling to maintain their public rights of way, and this usage fee helps cities improve the management of this crucial public asset,” Holladay said in July.