Oregon’s land use and water laws suppress housing and jobs, developer says

The Thornburgh Resort planned in Deschutes County would provide 950 residential units, 380 overnight lodging units, two golf courses and a luxury hotel, among other offerings. For more than two decades, the resort has faced continued challenges with the state’s regulatory laws, delaying its progress. A new report from the developer says the continued delays have cost the state and county hundreds of millions of dollars in potential public revenue. Thornburgh Resort founder Kameron Delashmutt joins us to share more on where things stand with the project.

Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.

Geoff Norcross: This is Think Out Loud on OPB. I’m Geoff Norcross. There’s a high-end resort planned for Central Oregon. It’s called the Thornburgh Resort. When built, it will have nearly 1,000 homes, golf courses, and a luxury hotel, among other offerings. If the name of this proposed development sounds familiar, it might be because it’s been in the works for over 20 years. Developer Kameron Delashmutt first proposed the Thornburgh Resort in 2005. For the next 21 years, Delashmutt says he has faced delay after delay. He says Oregon’s regulatory framework is a big part of the problem. I spoke with Kameron Delashmutt earlier this week, and I started by asking him to describe his vision in a little more detail.

Kameron Delashmutt: Well, we sit on the south and west facing slopes of Cline Buttes, kind of in a little triangle between Redmond, Bend and Sisters. The property’s got 700 feet of elevation change, and as you kind of come down rolling hills, we’ve got thousands of 1,000-year-old juniper trees that we’re super protective of. You have lots of rock outcroppings, really unique character to the land. And on this, we’re going to build the destination resort that is permitted under Oregon’s Goal 8, to promote tourism, housing. And it will be what we believe will be the first truly luxury project in the state of Oregon, a five-star, high-end development that serves both with housing, hotel, lodging components, spa, fitness, golf, all of which we intend to do very well with a high level of care and comfort.

Norcross: You speak about the land lovingly and just to be sure, it used to belong to your grandparents, didn’t it?

Delashmutt: The bulk of it did, about 1,400 acres of it belonged to my grandparents. They bought it in 1953 for $5000 and 35 yearling heifers and used it after that as part of their summer pasture in their commercial cattle operation. They would bring cows on site towards the end of April. They ran 1,000 mother cows at their peak, and they would put them here for a couple of months until it got too hot and the grass was gone, and then they’d move them elsewhere. So for I guess close to 50 years or so, my grandparents, a little over 50 years, they would use it as their summer pasture for a couple of months a year.

Norcross: You first applied for permission to build this resort over 20 years ago. I know the answer is very complicated, but basically speaking, why isn’t it getting built?

Delashmutt: Well, that’s a really complicated answer, but in general it falls down to the regulatory structure in the state of Oregon. Permitting these is a multiple stage process. So you go through a conceptual master plan, a final master plan, and then every time you go to do a subdivision or an amenity, you’ve got to do tentative plans or site plans. And at every one of those steps, we have had just an onslaught of opposition, really kind of emanates from one group, and just everything that we do, there’s multiple appeals on everything.

Our conceptual master plan was filed in 2005, and it took us until 2010, 2009 to get that approved. We filed the final master plan, I believe, in 2007 and got that finally approved in 2018. So it’s just ongoing and kind of every one of these appeals, you get the first one and then you can do the second one. And then you can do the third and it’s just been ongoing and to date we have somewhere in the range of 90 separate appeals that we have fought through and prevailed on.

Norcross: Do you feel that any of those groups or those citizens that stepped up to oppose your project or repeal the project, do you feel they did so in bad faith?

Delashmutt: Oh, completely. Yes, and to give you just an example, I mean, we have reached out on numerous occasions, in numerous occasions, numerous ways with opponents to say, hey, let’s sit down and talk about what’s important to you, what we can do to modify, change, amend, and come up with a way that makes things palatable and works for you and really kind of takes care of things that are most critical in your mind. And we’ve been rebuffed at every single one of those. I mean, just completely and totally, and I think what would work would be for me to go away and not do anything, so it’s kind of an all or nothing. I mean, I’ll fight you to death kind of thing.

Norcross: There’s also a regulatory part of this, and I’d like to talk about water a little bit just to illustrate this issue. The Oregon Department of Water Resources said your proposed water use for construction would likely not be “within the capacity of the resource,” and the resource being groundwater in the Deschutes Basin. A county judge agreed with that last year. I bring this up because I wonder if you feel like state agents like the ODWR are operating within regulations that are unreasonable?

Delashmutt: Oh, completely. I mean, the department, Water Resources, was developed to effectively kind of oversee and manage water, and really it was to do so, in the guise of maintaining kind of growth and development and aiding with economic growth and development. And instead, I mean, it has turned and it’s become what I believe is a highly ideological organization that is focused on “no” instead of “how.” I think, in many, many cases, and we have an extension case on a water rights permit that was granted us in 2000 and applied for in 2005, granted in 2008, I believe, and that extension case really kind of highlights where the department is, we believe far outside of their statutory authority.

And that’s not the only case. I think it happens over and over again. One of the things you cite, the capacity of the resource, the Deschutes Basin, is a massive aquifer and it covers some 4,500 square miles with an average depth of 1,000 to 1,300 ft. So if you just kind of figure that there’s a water bearing zone in there that’s 1,000 ft deep on 4,500 square miles, I mean, that is a really, really big area.

And at about the same time, literally at the exact same time as that case that you’re referring to was going on, the University of Oregon and Oregon State, a total of six universities, the USGS, the U.S. Forest Service, environmental and academic organizations, came out with the results of a study that had been going on and says that we have this massive aquifer that is 19.5 cubic miles and 65 trillion acre feet of water, and they refer to it as a continental size lake underground. And so from a scientific standpoint, water resources looked simply at a decline, and the amount of decline in a particular area to determine the capacity of the resource, without even assessing or considering the actual capacity of the resource or how much water there is. It’s the strangest thing that I’ve ever seen.

Norcross: How does Oregon compare to other states when it comes to the ease of getting projects like these built?

Delashmutt: I think it’s not just projects like this, but it’s industrial projects. It’s all sorts of projects. So in the state of Washington, for example, to appeal in the state of Washington, you have to have standing. So if you wanted to appeal a housing development that was five miles away from your house because you thought that it’s an area that you go to and you hike or you like something, you would have to show that you were damaged to be able to appeal, and that’s kind of that’s standing, you would have to directly show that you had been negatively impacted, and in Oregon you don’t have to do that.

And what happens is it’s given rise to this group of what I call professional litigation organizations that exist solely to be opponents and they have teams and hordes of lawyers that just kind of go out and they appeal projects and they appeal different things and they do it at a water law or wildlife or land use, and they don’t have to show that they’re damaged. They’d make this general statement that some public is damaged, but it’s not them. And they get donations, and so they’re using other people’s money to fight, and when they lose, there is no ramification. There is no attorneys’ fees, there is no anything, and that’s a huge thing.

In land use, you have to, as a developer, I am considered to be guilty until I prove that I’m innocent, so to speak. In a civil case, you’re assumed to be innocent until the prosecutor shows that you’re guilty, so we have this higher burden of proof, but then we get laid on all of these different layered regulatories, and anybody can appeal. I mean, for $125 you file your appeal and it delays us for six months, a year, or if it’s the Court of Appeals, it’s a year or it’s two years. It can go on and it can go on.

Norcross: Yeah, I’m wondering how you think, you probably have a lot of thoughts about this, but how you think Oregon’s regulatory structure should change and what could happen now? What’s the lowest hanging fruit?

Delashmutt: Well, I think the appellate process for land use, if that was changed where you had to have standing, or when you lose, I could give somebody a bill to pay my attorney’s fees. So if you appeal and you lose and you get a $75,000 bill, you probably think about that the next time that you appeal. So that would be a huge thing if you had to have standing, it would be great.

If there was some coordination between land use and water law where, once you have land use, you you eliminate some of the battles in water. And what we have instead is we have the Department of Transportation, the Department of Water Resources, we have all these different things and you’ve got to independently kind of do it. They all have different timelines and time frames. If the regulatory process could be more consistent and more stable where the rules didn’t change. I mentioned that we’ve got a permit that was issued in 2008, and kind of we go through and the rules change and the rules change and the rules change. And so you really never know what you’re dealing with until you kind of get so far down the process.

And it’s such a burdensome thing that when your investment becomes millions of dollars, you look and say, well, do I make that kind of investment in the state of Oregon or do I make it someplace else? And in housing in general, there should be a process that just kind of streamlines and green lights housing, because we have such an acute housing shortage in the state of Oregon and really that is a symptom of the regulatory process. And unless we get a hold of housing and we can provide people houses, it’s hard to create jobs if we can’t house people and do it at an effective cost or something.

Our cost of capital is high, our cost of insurance is high, our cost of materials are high and our cost of land is high. I mean, all of these things, particularly today, affordable housing is this huge buzzword, and with the costs we have to bear and the risk that we have to bear, it’s almost like there can be no such thing as affordable housing without government subsidies, and we need to get a handle on kind of all of these things that that are creating this problem.

Norcross: You’ve been fighting for the Thornburgh Resort for 21 years now. Why are you so adamant about getting it built and building it there in Central Oregon?

Delashmutt: Well, four generations of my family have been kind of traipsing up and down these hills and chasing the dirty end of a cow to begin with. So it has a tremendous amount of family history for me. The name Thornburgh itself, my mother’s maiden name is Thornburgh. So Everett and Eva Thornburgh were my grandparents. So there is that. And then the other side of it is just kind of the justice part of it. I set out to do it and I just think it’s flat wrong that the system can be so completely and utterly abused to stop somebody, and at this point, we’re so close to starting construction.

I’ve got a golf course that’s fully shaped and routed. We’ve got roads that are started, an irrigation lake is going in, our water system has been installed, and the time to quit was probably in 2009 to 2012 or 13, and when the economy was terrible, but kind of the outlook, and I love Central Oregon. We call it home and it’s been home for a long time, so yeah, a whole lot of reasons that are kind of at the core. I mean, I’ve got a fair amount of perseverance as well. I’m not likely to give up now, so.

Norcross: For sure. Kameron Delashmutt, thank you so much for the time. I appreciate it.

Delashmutt: All right, take care.

Norcross: Kameron Delashmutt is the manager and founder of the Thornburgh Resort in Central Oregon. We spoke earlier this week, and you can find more of OPB’s reporting on Delashmutt’s efforts to get that resort built at our website, OPB.org.

“Think Out Loud®” broadcasts live at noon every day and rebroadcasts at 8 p.m.

If you’d like to comment on any of the topics in this show or suggest a topic of your own, please get in touch with us on Facebook, send an email to thinkoutloud@opb.org, or you can leave a voicemail for us at 503-293-1983.