Western Mills, Inc. v. HOUSING AUTH., ETC.

TANZER, J.

Plaintiff brought this breach of contract action against the Housing Authority of the City of Salem to recover expenditures it made in preparation for the construction of a low-income housing project which was to be purchased by defendant upon completion. The project was never built. Plaintiff complied with all the pre-construction requirements of the contract except one: It failed to obtain a required conditional use permit because the city council rejected plaintiffs application after a public hearing. Plaintiff did not seek review of the city council’s action. Instead, it seeks to hold defendant accountable for the costs incurred in reliance on defendant’s representations that it planned to proceed with the project.

The equitable basis of plaintiffs complaint arises from the fact that defendant housing authority, which encouraged plaintiff to proceed with the housing project, is composed of the same individuals as the city council which denied the conditional use permit after a public hearing. Nevertheless, the city council and the housing authority are distinct entities with different functions even though their membership is identical. ORS 456.095(l)(b) provides that "any act of the governing body acting as a housing authority shall be, and shall be considered, the act of the housing authority only and not of the governing body.”

Citation to ORS 456.095(1) should be the short answer, but plaintiff’s legal theory is more convoluted: plaintiff argues that its contract with the housing authority required the housing authority to enforce for plaintiffs benefit the provisions of a cooperation agreement between the housing authority and the city council, and that the cooperation agreement required the city council to approve the conditional use permit. The housing authority denies the existence of a contract and raises several affirmative defenses.

We assume for purposes of discussion that the housing authority was contractually bound to assist plaintiff in bringing the project to a successful completion. The issue then is whether the housing authority could have compelled the city council to issue the conditional use permit.

The source of the city council’s allegedly ministerial duty to issue the conditional use permit is a provision in the cooperation agreement that "in so far as the Municipality may lawfully do so,” the city council would make such changes in the zoning of the site as were reasonable and necessary for the development of the housing project. Plaintiff contends that this provision obligated the city to grant a conditional use permit¹ for any housing project approved by the housing authority and that the housing authority could and should have compelled the city to issue the permit as a ministerial task.

Housing projects such as the one plaintiff sought to construct are "subject to the planning, zoning, sanitary and building laws, ordinances and regulations applicable to the locality in which the housing project is situated.” ORS 456.150(1). In this case, city ordinances required plaintiff to obtain a conditional use permit before the proposed development could proceed.

The decision to grant or deny a conditional use permit is a quasi-judicial decision. Rockway v. Stefani, 23 Or App 639, 642, 543 P2d 1089 (1975) rev den (1976). Such decisions are to be made on the record after a hearing before an impartial tribunal. Fasano v. Washington Co. Comm., 264 Or 574, 588, 507 P2d 23 (1973). These requirements defeat plaintiffs contention that the Salem city council had lawfully bound itself before the hearing to approve plaintiff’s application: The city has no authority to pre-judge the merits of the proposed conditional use.²

Because the cooperation agreement did not vitiate the city council’s duly to consider the proposed conditional use on its merits after a quasi-judicial hearing, neither plaintiff nor the housing authority could have compelled issuance of the desired permit by invoking the cooperation agreement. This conclusion is dispositive; therefore, it is unnecessary to consider the other asserted deficiencies in plaintiffs theory of recovery.

Affirmed.

1 We assume for the sake of argument that the agreement regarding zone changes applies as well to issuance of conditional use permits.

2 The cases relied on by the dissent are distinguishable because they do not recognize this principle, which is now firmly settled in Oregon .They are also distinguishable on the facts and procedural posture. Cuyahoga Metropolitan Housing Auth. v. Harmody, 474 F2d 1102 (6th Cir 1973), and Housing Authority v. City of L. A., 38 Cal 2d 853, 243 P2d 515 (1952), were suits by the local housing authorities to prevent the cities from withdrawing from the cooperation agreement altogether; Salem has attempted no such withdrawal. In State ex rel. v. City of Great Falls et al., 110 Mont 318, 100 P2d 915 (1940), the court relied on the limited powers of a municipality under Montana law and on a statutory provision that the state housing act superseded inconsistent provisions of any other law. Neither factor is present in this case. There are other distinguishing factors as well, but these suffice.