Oregon City Faces $3.4M Lawsuit After Zoning Blocks Home Depot Sale

Lumberjack LP, the owner of the 159,400-square-foot building at 29400 SW Town Center Loop West in Wilsonville, filed a federal lawsuit against the city seeking $3.4 million in carrying costs after zoning enforcement killed a $23 million sale to Home Depot. The case, filed in U.S. District Court for the District of Oregon (case 3:2026cv00542), argues that Wilsonville effectively stripped the property of any economically viable use without paying compensation, and demands a jury trial.

The dispute traces to June 2019, when Wilsonville's Town Center Plan took effect and reclassified the former Fry's Electronics site as a legal nonconforming structure. The plan, built around walkable mixed-use "15-minute city" principles, capped retail footprints in the zone at 30,000 square feet. The Fry's building is more than five times that limit at 159,400 square feet.

When Fry's closed in 2021, Lumberjack LP was left with a vacant big-box shell the city's own code prevented any comparable retailer from occupying. Home Depot applied to move into the space in 2023, but Wilsonville's Development Review Board denied the application twice. The city's position was that Home Depot would not constitute a "continuation of use" because it differed fundamentally from what officials had formally defined as a "159,400-square-foot electronics-related retail store." That narrow classification, which Home Depot's own lawyers called "impermissibly narrow," effectively made the building untenantable under current rules.

The Oregon Land Use Board of Appeals sided with Wilsonville in October 2024. The Oregon Court of Appeals affirmed that ruling on January 2, 2025, and Home Depot chose not to escalate the matter to the state Supreme Court. "The city would like to thank the Court of Appeals' time and consideration of this matter," Wilsonville City Attorney Amanda Guile-Hinman said following the decision.

That outcome closed the land use chapter but opened a new one. With the $23 million Home Depot transaction off the table, Lumberjack LP turned to federal court. The $3.4 million figure represents carrying costs accumulated on a building that, under the city's interpretation, no large retailer can legally occupy. The legal theory is a regulatory taking, grounded in the Fifth and Fourteenth Amendments, arguing that government regulation has so thoroughly eliminated the property's economic utility that compensation is constitutionally required. Home Depot's lawyers had flagged precisely this risk during their own appeals, warning that the city's narrow nonconforming-use determination left no party with any viable economic use of the site.

Wilsonville maintained throughout that legitimate redevelopment paths existed, including downsizing the retail footprint to comply with Town Center standards or pursuing a formal change-of-use application. Neither option was acceptable to Lumberjack LP, which instead chose to litigate the question of whether a city's urban planning vision can legally strand a private landowner with a $23 million building and nowhere to go. A trial date has not been set.