What does Lake Oswego’s status as shareholder of Lake Corporation mean for lake trial?

The Lake Corporation, which represents shareholders along Oswego Lake, has argued to Clackamas County Circuit Court that the city of Lake Oswego should not be required to allow water access from its parks because the local government is a shareholder within the corporation and therefore subject to deed restrictions disallowing public access to the water.

In the last few days of the trial over lake access, the corporation has enlisted a few witnesses to build the case for why the status quo of no universal public access should be maintained .

Lake Oswego resident Todd Prager and Portland resident Mark Kramer filed a lawsuit in 2012 after the city passed a resolution enshrining rules prohibiting lake access from Millennium Plaza Park, Sundeleaf Plaza and the Headlee Walkway, the three city facilities next to the lake.

The case was considered by the Oregon Court of Appeals and the Oregon Supreme Court before being remanded to Clackamas County Circuit Court for this two-part trial. In the first phase of the trial, the court determined that the waters of the lake are public. The second phase will be decided by Judge Kathie Steele but will include advisory recommendations from a jury. The trial is slated to conclude this week.

History of the bay

Lakewood Bay — which abuts the three park properties — was a marshy area with spongy soil before Oregon Iron & Steel blasted a canal, filled the bay with water and connected it with the original Oswego Lake. The bay has different water quality characteristics like depth and temperature compared to the original lake, according to a water quality specialist who testified in court. While Judge Ann Lininger ruled in phase one of the trial that the entirety of the lake is subject to public trust doctrine, the Lake Corporation has argued that Lakewood Bay was human-made and was always intended for private development, not public use.

“Phase two is about, can we let public access to a lake that hasn’t been accessible for 100 years and was created not to provide access but to people who live along the lake?” said Lake Corporation lawyer Brad Daniels.

David Ellis, an archaeologist for Willamette Cultural Resources, testified about the property history near the three parks in question. He noted that Oregon Iron & Steel had pivoted to residential development after its industrial pursuits fell through in the early 20th century and started platting land around the lake that it owned. Improved transportation access from additions like the Pacific Highway made the location of modern Lake Oswego more accessible and attractive and was possibly buoyed by the wilderness movement that viewed city life as corrupt, Ellis said; the plan for residential development was successful.

Following the transfer of management and ownership of the lake to the Lake Corporation, the corporation had riparian rights while shareholders along the lake had the right to access its waters.

Meanwhile, when the city purchased these park properties along the lake in the late 1990s and early 2000s, the local government became one of the shareholders within the corporation and therefore subject to the deeds and restrictions of the other shareholders. The city is worried about legal risks associated with allowing access and therefore breaking such restrictions.

Lake Corporation General Manager Jeff Ward testified that the corporation’s first step if the city said it would allow access would be to respond with letters from the corporation’s attorney. He said the corporation participated in the case “to protect our property rights.”

Paul Conable, a Tonkon Torp lawyer representing the city, said at court that the city could be “standing under a barrel” based on the deed restrictions if the city were to allow access due to potential legal liability.

Ward also testified that public safety and the potential increase of invasive species would be the primary risks of allowing public access.

“If 1% of people disobey rules, 1% of 2,000 is a lot less than 1% of 200,000,” he said.

Ward also noted that the corporation pays property taxes for the bed below the lake, which it owns.