CAMP SHERMAN – On a sunny day at his Lake Creek Lodge resort, Gordon Jones grinned while strolling through stands of ponderosa pine.

”I could live here the rest of my life and be happy,” he said.

Jones doesn’t actually plan to live at the resort, and the conservation group Friends of the Metolius wants to make sure that no one else does either.

The Portland-based developer and his brother, Jeff Jones, bought the resort two years ago with plans to build 23 new cabins on the 42-acre site and renovate the existing 16 cabins. Jones said the nonprofit conservation group is trying to prevent any growth in the small community – even a project that he says will restore the resort to its historic appearance while reducing its impact to the environment.

Since proposing the development, however, the Jones’ plans have been held up by appeals by the Friends of the Metolius conservation group, which argues the development doesn’t meet zoning requirements for tourist-rental accommodations because Jones would allow investors to own individual cabins and live in them for up to 120 days a year.

While local challenges to development are nothing new in Central Oregon, the fight over Lake Creek Lodge has led to a tussle between Jefferson County and the state Land Use Board of Appeals (LUBA) over who has the final say in interpreting the county’s own development code.

Jefferson County decided last month to take the fight to the Oregon State Court of Appeals after LUBA twice overturned the county’s decision to approve the development.

Oral arguments in the case are scheduled for April 4. Lawyers for the Jones brothers submitted the first briefs last Thursday.

If the State Court of Appeals upholds LUBA’s ruling, the result will be a loss of local control over land-use decisions, said Jacki Haggerty, Jefferson County counsel.

”What’s at stake is pretty much LUBA is telling counties across the state of Oregon how they can interpret their own ordinances,” Haggerty said. ”The folks who make the laws are the ones who best understand the background policy and the context of that policy.”

The legal issue started with the definition of a tourist rental. Gordon Jones and the county agreed that the cabins could be sold to individual owners, but rented to tourists for 245 days each year. The owners could use the cabins for 120 days and no more than 30 days at a time. The Friends of the Metolius – and LUBA – contend that 120 days of owner use means the cabins will be more like second homes than rentals. The most recent LUBA decision, which sided with The Friends of The Metolius, came last month.

The Friends also argued that Jefferson County should count decks and porches as part of the limited ”buildable space” allowed on the property.

The commission originally approved the site plan for the resort’s expansion in 2003, but the Friends of the Metolius appealed the decision to LUBA. The county approved the plan a second time in 2004. After another appeal, LUBA rejected the county’s interpretation again. Rather than comply with LUBA’s orders, the county decided to appeal the decision to the Oregon State Court of Appeals.

The legal battle hasn’t been cheap for the Jones brothers, according to Gordon Jones. And in its current state, the lodge is a consistent money-loser, he said.

The Friends of the Metolius have a history of successfully challenging developments in the small tourist community.

In 1993 Redmond real estate agent Dan Richartz planned to tear down a R.V. park and hotel at Black Butte Resort and replace them with 12 rental cabins. Jefferson County approved the development, but the Friends of the Metolius appealed the project. Richartz said he spent $80,000 on legal fees before abandoning his plans. Richartz sold the resort in 1996, he said.

Board President Gregory McClarren said that Friends of the Metolius don’t oppose growth – they’re just trying to make sure the county stands by its own rules and requires the cabins are truly tourist rentals, not used as second homes.

”Tourists will go use local facilities, rent equipment, patronize local markets, restaurants, rent bikes, they’ll engage fishing guides,” McClarren said. ”If an owner is occupying the space, the Jefferson County tax revenues fall because there’s no tourist rental accommodation tax being paid.

Board member Dick Kellogg said attracting tourists is an underpinning of Camp Sherman’s economy and atmosphere.

”The more tourist rental properties you have, the more people can enjoy it,” board member Dick Kellogg said.

The conservation group doesn’t have any problem with the environmental impact of the development, according to Kellogg.

”We don’t have any particular issues with the environmental mitigations,” Kellogg said.

Those mitigations include replacing the resort’s current septic system with a new sewage treatment plant that will sharply reduce leakage of waste into water sources, Gordon Jones said.

He’s also signed onto a plan with the Upper Deschutes Watershed Council to restore sections of Lake Creek where the stream was diverted into concrete channels, according to the council’s executive director, Ryan Houston. The stream, which runs from Suttle Lake to the Metolius River, could eventually become an important spawning ground for spring-run Chinook salmon, Houston said.

But all that work costs money and Gordon Jones wants to be sure his resort is profitable before investing resources to update its infrastructure, he said.

”We have to somehow pay for them and the only way to do that is further expand the lodge,” he said.

Keith Chu can be reached at 541-383-0348 or at kchu@bendbulletin.com.