HomeMy WebLinkAbout2026-79-Property Value Appeals Board Recorded 3/20/2026Recorded in Deschutes County CJ2026-79
Steve Dennison; County Clerk
Commissioners' Journai 03/20/2026 9:25:05 AM
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2026-79
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Deschutes County Clerk
Certificate Page
ME County Clerk
Property Values Appeals Board
Adjourning Meeting for 2025-2026 Session
March 11, 2026 at 10:00 am
Clerk's Office Vote By Mail Room, Deschutes County Services Building
Present at Meeting:
Steve Dennison, Deschutes County Clerk
Mike Simpson, Board Member
Frances Harder, Board Member
Matthew Latimer, Board Member
Mike Walker, Board Member
Peggy O'Donnell, Board Member
Brian Ricker (via Teams), Board Member
Bob Horvat (via Teams), Board Member
Scot Langton, Deschutes County Assessor
Todd Straughan, Deschutes County Appraisal Manager
Amber Trindle, Deschutes County PVAB Clerk
Holly Veres, Deschutes County Assistant PVAB Clerk
Amber Trindle welcomed everyone and adjourned the session.
a. Orders have all been signed and mailed.
b. The Summary of Actions has been sent to the Department of Revenue (copy
attached).
c. The board appointments made during this session are valid for two years.
d. Amber asked that board members reach out if they have a conflict or are unable
to serve on the board next year.
2. Steve Dennison thanked everyone for their hard work on PVAB this year. Frances
Harder thanked the Assessor's Office and appraisers for the quality of their
presentations and evidence.
3. Todd Straughan and Scot Langton discussed how appraisers are assigned to work on
different types of accounts and how the reappraisal process works.
4. Todd discussed discounted cash flow as it pertains to commercial appraisal and
provided two pertinent court decisions (attached).
1300 NW Wall Street Suite 202 1 PO Box 6005 Bend, Oregon 97708-6005
(541) 388-6547 - elections@deschutescounty.gov 1 (541) 388-6549 - recording@deschutescounty.gov
www.deschutescounty.gov/clerk
5. Mike Walker asked how much info/evidence is shared with the petitioner prior to the
hearing. Scot responded that the Assessor's Office tries to communicate with all
property owners and that the level of responsiveness will determine how much
information is ultimately shared.
6. Mike W. talked about the challenge of receiving evidence the day of or at the hearing
and demonstrated a desire for more of a refresher than what the Department of
Revenue provides each year. Todd mentioned that the Assessor's Office has run mock
trials in the past.
7. Brian Ricker would like to discuss personal property penalty waivers at next year's
training.
8. Bob Horvat thanked Amber and Holly for being organized, assisting the board, and
assuring that hearings run smoothly.
9. Amber pointed out that if the board sustains all current roll values, they only need to
state the total RMV and total exception value for the account in the motion. She
reminded the board to reach out at any point throughout the year with any ideas or
issues to discuss for next session.
10. Mike Simpson asked that the appraisers refer to page numbers when going through
evidence.
Prepared by Holly Veres. Meeting ended at 10:52am
PROPERTY VALUE APPEALS BOARD
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ADJOURNING MEETING
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5
IN THE OREGON TAX COURT
MAGISTRATE DIVISION
Property Tax
SCENIC COLD STORAGE, LLC,
Plaintiff, ) TC-MD 150188N
V. )
CLACKAMAS COUNTY ASSESSOR, )
Defendant. ) FINAL DECISION
This Final Decision incorporates without change the court's Decision, entered
November 13, 2015. The court did not receive a statement of costs and disbursements within 14
days after its Decision was entered. See TCR-MD 16 C(1).
Plaintiff appealed the 2014-15 real market value of property identified as Account
05025771 (subject lot). Trial was held in the Oregon Tax Courtroom on July 27, 2015, in Salem,
Oregon, concurrently with Park Development Inc. v. Clackamas County Assessor,
TC-MD 150187N, the subject of which was 26 additional lots in the same subdivision as the
subject lot. John Taylor (Taylor), broker, appeared on behalf of Plaintiff and testified.
Plaintiff's president, Michael G. Park (Park), also testified on Plaintiff's behalf. Ronald R.
Saunders (Saunders), registered appraiser, appeared and testified on behalf of Defendant.
I. STATEMENT OF FACTS
The subject lot was one lot out of 27 similar lots (subdivision lots) in a 28-lot industrial
subdivision in Estacada. (Ptf's Ex 1 at 2-3; Def's Ex A at 25.) Park testified that he began
planning the subdivision in 2011 or 2012. He testified that he received a loan for the subdivision
from the State of Oregon in 2013. As of January 1, 2014, all the subdivision lots were improved
with streets and utilities, and one lot was improved with a building. (Id.) Most of the lots were
FINAL DECISION TC-MD 150188N 1
about one acre in size. (See Def" s Ex A at 14.) The smallest lot was 0.60 acre, and the largest —
Tax Lot 2800, which had the building on it — was 1.51 acre. (Id.) The subject lot was 1.35 acres.
(See Ptf s Ex 1 at 2.)
Plaintiff bought the subject lot for $308,750 in May 2014. (Ptf s Ex 1 at 2; Def's Ex A at
43.) Two of the other subdivision lots were sold in 2014 after the subject lot, and the remaining
24 were individually listed for sale. (See Ptf s Ex 1 at 3; Def's Ex A at 18.) Park testified that
two lot sales were pending as of the trial date. He testified that, in June 2015, he accepted an
offer of $3.50 per square foot for a lot because he needed to make a payment on his loan.
The appraisal reports prepared by Taylor and Saunders each stated that the highest and
best use of the subject lot was industrial.' (Ptf s Ex 1 at 2; Def's Ex A at 34.)
A. Taylor's Appraisal
Taylor provided valuations under the captions "cost approach," "market approach," and
"income approach." (Ptf s Ex 1.) He modified each of those approaches by applying discounted
cash flow analysis over the projected absorption period for all the subdivision lots. (See id. at 8,
11, 12.) Taylor wrote that his adjustments to value using discounted cash flow analysis were
meant to account for the subject lot's competition with every other lot in the subdivision, which
would "either reduce selling prices or lengthen time to sell." (Id. at 4.) Park testified that he
previously developed an industrial subdivision in Estacada and it took approximately nine years
to sell all of the lots. Based on the rate of absorption of Park's last industrial development,
Taylor concluded it would take "about 9 years" for all the subdivision lots to sell. (Id. at 5.)
Based on Consumer Price Index data, Taylor calculated a rate of inflation of 2.4 percent per year.
(Id. at 10.)
1 At trial, Taylor suggested the subdivision lots might have an "interim" highest and best use; naincly, for
sale to a developer of industrial sites.
FINAL DECISION TC-MD 150188N 2
1. Cost Approach
Taylor testified that, under his cost approach, he sought to determine what it would cost
to develop a 28-lot subdivision. He wrote that the subdivision lots were developed using state -
originated loans totaling $2,825,867, plus engineering and management costs totaling $402,168.
(Ptf's Ex 1 at 6.) Taylor testified that, using those two figures, he concluded the direct cost of
development was $3,228,035, or $0.99 per square foot. (Id.) Taylor testified that he identified
four land comparables; they ranged in size from 7.55 acres to 160 acres, in sale date from
December 2012 to February 2014, and in sale price per square foot from $0.52 to $2.43.
(See id.) Taylor testified that he concluded the value of the land throughout the subject
subdivision was $1.25 per square foot and, adding the land value to development cost,
determined that the "actual cost" of the subdivision lots was $2.24 per square foot. (Id. at 7.) He
testified that he calculated a developer's profit of $0.95 per square foot. (See id, at 9.)
Taylor used discounted cash flow analysis to calculate the entire subdivision's expected
profit over the course of a nine-year absorption period. (Ptf's Ex 1 at 8.) He testified that he
used nine years based on the time it took Park to sell all of the lots in his previous Estacada
subdivision. Taylor applied his projected inflation of 2.4 percent per year and a discount rate of
10 percent. (Id.) He testified that he selected a 10 percent discount rate based on "a number of
publications" and noted that eight percent is typical for apartments, which are a safer investment
than a subdivision. (See id. at 9.) Taylor's analysis included projected income from sales of
three lots per year, and expenses from holding costs comprising taxes, insurance, maintenance,
and management. (Id. at 8.) After applying discounted cash flow analysis, Taylor concluded
under his cost approach that the subdivision lots had a total present value of $3,699,043, or $3.19
FINAL DECISION TC-MD 150188N 3
per square foot. (Id.) He reached a real market value for the subject lot of $187,591 under the
cost approach. (Id. at 13.)
2. Market Approach
Taylor wrote in his appraisal report that, at the time of trial, the unsold subject lots were
listed for sale at $5.00 per square foot. (Ptf's Ex 1 at 9.) He testified that on January 1, 2014,
they had been listed for more. Taylor's report listed as comparables the subject lot and two
additional subdivision lots, one of which was a sale and the other of which was a listing. (Id.)
He testified that his first comparable sale was the subject lot itself, a single 1.35-acre lot that sold
in May 2014 for $308,750—resulting in a price per square foot of $5.25,2 Taylor testified that
the listing he used as a comparable was a one -acre lot with a price of $5.00 per square foot.3
(Id.) His third sale comprised two tax lots totaling 1.35 acres, which sold in June 2015 for
$205,850, resulting in a price per square foot of $3.50. (Id.)
Taylor adjusted his comparables for inflation at 2.4 percent per year and he adjusted them
for holding time. (Ptf's Ex 1 at 10-11.) Taylor testified that it would take nine years to sell all
the lots in the subdivision and, therefore, an average lot could be expected to sell in four and
one-half years. (See id. at 11.) He wrote that he applied the same discounted cash flow analysis
he used for his cost approach, concluding that the present value of the subject lot and the two
comparables should be reduced by 32 percent due to the expected time of the sale. (Id. at 11.)
Taylor's final adjusted comparable values were $3.25 per square foot, $3,40 per square foot, and
Z Taylor testified that his appraisal report erroneously listed different data for his first sale. (Cf Ptf's Ex 1
at 9.)
3 Taylor testified that some of the data for the listing contained in his appraisal report was incorrect. He
testified to an acreage differing from the acreage stated in the report, and he confirmed that the price per square foot
given in the report was correct. Given that testimony, the "sale price" stated in the appraisal report must be
incorrect, but Taylor did not testify to its correct value.
FINAL DECISION TC-MD 150188N 4
$2.29 per square foot. (Id.) Taylor testified that he concluded under his market approach that
the subject lot had a value of $3.25 per square foot, or $191,120. (Id.)
3. Income Approach
Taylor wrote in his report that the subject lot "is not income property in the normal
sense." (Ptf s Ex 1 at 12.) He wrote that discounted cash flow analysis was, nevertheless, useful
to determine the subject lot's value because "if a prospective buyer expressed the idea that he or
she might be interested in buying the lot in four or five years, that buyer might be induced to buy
if shown that the waiting period would be compensated for." (Id.) Taylor's income approach
used discounted cash flow analysis on a single lot over a 4.5-year period, again with a 2.4
percent inflation rate, a 10 percent discount rate, and expenses for holding costs. (Id.) Taylor
wrote that he concluded a real market value of $3.40 per square foot, or $199,689, under the
income approach. (Id. at 12-13.)
4. Reconciliation
Taylor wrote that he reconciled his three approaches "[wiithout pinning a
disproportion[ate] amount of weight on any one method * * *." (Ptf s Ex 1 at 13.) He testified
that he reached a real market value for the subject lot of $194,000. (See id.)
B. Saunders' Appraisal
Saunders testified that he prepared an appraisal of the subject lot and rested on his
appraisal report. (See Def's Ex A.) Taylor declined to ask Saunders any questions about his
appraisal report and stated that he agreed with Saunders' real market value conclusion, assuming
the court accepts Saunders' valuation methodology.
Saunders used the sales comparison approach exclusively to value the subject lot and the
25 subdivision lots without buildings that were under appeal in Park Development Inc. v.
FINAL DECISION TC-MD 150188N 5
Clackamas County Assessor, TC-MD 150187N. (Def's Ex A at 61-62.) He concluded that the
sale of the subject lot in May 2014 sale at $5.25 per square foot was the best comparable sale.
(Def's Ex A at 43-45.) Saunders gave most weight to the sale of the subject lot because it was
"located in the subject subdivision and [was] recent in date of sale[.]" (Id. at 45.)
In his appraisal report, Saunders identified five other comparable "lot/land" sales,
including another one of the subdivision lots that Taylor had identified in his market approach.
(Def's Ex A at 43.) Their sale dates ranged from December 2011 to June 2015, their sizes
ranged from 40,176 square feet to 170,755 square feet, and their sale prices per square foot
ranged from $2.98 to $6.36. (Id.) Saunders wrote that 25 of the subdivision lots were listed at
$5.50 per square foot on the date of valuation. (Id. at 45.)
Saunders wrote that he "did not rely" on his other comparable sale among the subdivision
lots —which he reports sold for $4.60 per square foot in June 2015—because "it occurred 18
months after the date of valuation." (Def's Ex A at 45.) He wrote that his other three sales
indicated a real market value of "slightly more than $4.62 per [square foot], approximately $4.87
per [square foot], and less than $6.36 per [square foot] in comparison." (Id.) Saunders reported
that the $5.50-per-square-foot listing price of 25 subdivision lots on the valuation date indicated
a real market value of less than $5.50 per square foot. (Id.) Saunders concluded under the sales
comparison approach that the real market value of all the subdivision lots without buildings was
$5.25 per square foot. (Id.) He concluded the real market value of the subject lot was equal to
its May 2014 sale price of $308,750. (Id. at 62.)
II. ANALYSIS
The issue in this case is the real market value of the subject lot. At trial, Taylor stated
that the parties' disagreement about value arose largely from a disagreement about the valuation
FINAL DECISION TC-MD 150188N 6
methodology required by ORS 308,205.4 Taylor stated that Plaintiff would accept Defendant's
value if the court found that Saunders' methodology was correct.
The burden of proof falls on Plaintiff, the party seeking affirmative relief from the tax
assessment. See ORS 305.427, Plaintiff will have proved its case if a "preponderance of the
evidence" shows it is entitled to relief. See id. Asserted facts are proven by a preponderance of
the evidence when they are shown to be "more probably true than false." Cook v. Michael,
214 Or 513, 527, 330 P2d 1026 (1958). Ultimately, this court has jurisdiction to determine real
market value "without regard to the values pleaded by the parties." ORS 305.412.
ORS 308.205(1) defines real market value for the purposes of tax assessment as follows:
"Real market value of all property, real and personal, means the amount in
cash that could reasonably be expected to be paid by an informed buyer to an
informed seller, each acting without compulsion in an arm's-length transaction
occurring as of the assessment date for the tax year."
(Emphases added.) Taylor reads ORS 308.205(1) as requiring property to be valued at the price
for which it could reasonably expected to sell during the tax year.5 Taylor argues that the real
market value of the subject lot can only be found by assuming that all of the subdivision lots will
sell during the tax year at issue. Taylor contends that it could not "be reasonably expected" that
the subject lot would sell for the same price at which it would sell if it were the only lot sold.
(Ptf s Ex 1 at 3-4.) Therefore, each of Taylor's valuation methods uses discounted cash flow
analysis to calculate the amount by which the sale price of the subject lot must be reduced in
order to reasonably expect to sell it along with all the other subdivision lots in one year.
a Unless otherwise noted, the court's references to the Oregon Revised Statutes (ORS) are to 2013.
s Taylor stated his view that the relevant time for the valuation of the subject lots under ORS 308.205(l)
was not limited to the assessment date, but included the entire tax year. The court does not adopt Taylor's view on
that question, but its analysis of this case is unaffected by it.
FINAL DECISION TC-MD 150188N 7
Implicit in Taylor's interpretation of a "reasonably * * * expected" sale price under
ORS 308.205(1) is an interpretation of the statute's use of the word "property." To be consistent
with Taylor's view, the "property" projected to be sold within the tax year must include a group
of tax lots, not just one individual tax lot —at least where, as here, each tax lot is a part of a
subdivision. If, instead, the "property" of ORS 308.205(l) were one individual tax lot, then that
tax lot would have to be valued without assuming the sale of other lots in the subdivision.
Therefore, if "property" in ORS 308.205(1) were to refer only to a single tax lot, Taylor's
rationale for using discounted cash flow analysis would no longer hold.
The Oregon Supreme Court considered the term "property" as used in ORS 308.205(1)
in First Interstate Bank v. Dept. of Rev., 306 Or 450, 453, 760 P2d 880 (1988). The court held
that each tax lot in a "fully developed" subdivision—i.e., a subdivision developed with roads
and utilities —must be assessed individually. The court's holding was based on reading
ORS 308.205 (1981) in the context of other assessment statutes:
"Based solely on its context within the statute, `property' could mean tax lot or it
could mean a group of tax lots. ORS 308.205, like all statutes, must be read in the
context of other statutes. ORS 308.210(2), (3) and (4) provide for the possibilities
that properties can be divided and combined. ORS 308.215(1) provides that the
assessment roll shall list each parcel of real property. We believe that, when
taken in the context of these other relevant statutes, ORS 308,205 requires the true
cash value of each tax lot to be assessed separately. The value of each lot by
itself, not as a portion of a larger piece of property, must be assessed."
First Interstate Bank, 306 Or at 453 (emphasis in original). Although ORS 308.205(1) has since
been amended to make the standard of valuation "real market value" rather than "true cash
value," the other statutes cited by the court still provide for division and combination of
properties, and for the listing of parcels on the assessment roll. See ORS 308.210(2), (3), (4);
ORS 308.215(l). The current context of ORS 308.205(1) therefore still supports the conclusion
reached in First Interstate Bank. The price to "reasonably be expected" under ORS 308.205(1)
FINAL DECISION TC-MD 150188N
is the price at which one tax lot by itself —not as part of a larger subdivision —would sell on the
assessment date.
In the present case, Taylor assigned a value to the subject lot that includes adjustments
for the entire subdivision's projected time to sell out. By considering the sale of all the other
subdivision lots when valuing the subject lot, Taylor's method fails to value the subject lot
separately. See First Interstate Bank, 306 Or at 453. Effectively, Taylor's valuation method
provides the value of the subdivision to a single owner ---or a coordinated group of owners —
rather than to the market, and then assigns the subject lot a proportional share of that total
"owner value." ORS 308.205(1), in contrast, requires the tax rolls to be set from the market
value, "not the market value less a cost to hold." First Interstate Bank, 306 Or at 456.
Taylor's appraisal methodology is indistinguishable from the unconstitutional
"developer's discount" method, in which the market value of subdivision lots under common
ownership is discounted "based on the time required to sell all of the lots individually." First
Interstate Bank v. Dept. of Rev., 10 OTR 452, 454 (1987), aff'd 306 Or 450, 760 P2d 880 (1988).
This court held that a statute requiring valuation using the developer's discount method "directly
violates the basic protection afforded by Article I, section 32, of the Oregon Constitution."
Mathias v. Dept. of Rev., 11 OTR 347, 352 (1990), aff'd 312 Or 50 (1991). The court explained
the consequences of setting tax rolls using developer's discount valuation:
"Property of the same class, i.e., lots in subdivisions, are not subject to uniform
taxation. Owners of lots of equal true cash value would not pay taxes on equal
values. This is not because the properties are different or are used differently but
simply because the owners are different. It is difficult for this court to imagine a
more discriminatory scheme."
Id.
FINAL DECISION TC-MD 150188N 9
Taylor argued that his appraisal method did not rely on common ownership of the subject
lot and the other lots in the subdivision, and provided a hypothetical situation in which a
developer died and left the lots to numerous heirs. However, Taylor's discounted cash flow
analysis spreads out the adjustments for inflation and holding costs across all of the subdivision
lots —a method that does not make sense if each owner is independent. Ultimately, Taylor has
not provided market evidence to support his valuation theory. The market evidence before the
court —including the sale of the subject lot near the assessment date ---supports Saunders'
valuation of $5.25 per square foot.
The court has jurisdiction to determine the real market value of the subject lot "without
regard to the values pleaded by the parties." ORS 305.412. Taylor stated that if the court
disagreed with his appraisal method, he would accept Saunders' valuation. In light of controlling
precedent, the court disagrees with Taylor's method. Taylor's method is calculated to reach the
value of the subject lot to the owner of all the lots within the subdivision —who must take into
account holding costs —rather than the value of the lot to the market as required by
ORS 308.205(1). The court accepts Saunders' valuation of the subject lot. Plaintiff's appeal
must be denied.
III. CONCLUSION
After careful consideration, the court finds that Taylor's appraisal method did not arrive
at real market value as required by ORS 308.205(1), and the court accepts Saunders'
determination of the subject lot's real market value. Now, therefore,
FINAL DECISION TC-MD 150188N 10
IT IS THE DECISION OF THIS COURT that Plaintiffs appeal is denied.
Dated this day of December, 2015.
ALLISON R. BOOMER
MAGISTRATE
If you want to appeal this Final Decision, file a complaint in the Regular
Division of the Oregon Tax Court, by mailing to: 1163 State Street, Salem, OR
97301-2563; or by hand delivery to: Fourth Floor,1241 State Street, Salem, OR.
Your complaint must be submitted within 60 days after the date of the Final
Decision or this Final Decision cannot be changed. TCR-MD 19 B.
This document was filed and entered on December 1, 2015.
FINAL DECISION TC-MD 150188N I I
IN THE OREGON TAX COURT
MAGISTRATE DIVISION
Property Tax
DESCHUTES LANDING LLC,
Plaintiff,
v.
DESCHUTES COUNTY ASSESSOR,
Defendant.
TC-MD 090599C
DECISION
Plaintiff appeals the 2008-09 real market value of 35 tax accounts located in a planned
unit development named Deschutes Landing, located in Bend, Oregon. A trial was held in the
Oregon Tax Courtroom, Salem, Oregon on August 31, 2010. Christopher K. Robinson, Attorney
at Law, appeared on behalf of Plaintiff. Richard P. Herman (Herman), MAI, SRA, Certified
Real Estate Appraiser, testified on behalf of Plaintiff. Laurie E. Craghead, Deschutes County
Assistant Legal Counsel, appeared on behalf of Defendant. Todd Straughan (Straughan),
Certified Appraiser, testified on behalf of Defendant.
Plaintiff's Exhibit 1 and 2 and Defendant's Exhibits A through F were received without
objection.
I. STATEMENT OF FACTS
There is no dispute with the following subject property overview presented in Herman's
appraisal report:
"Development Overview:
"Deschutes Landing is a luxury class townhome development that is
situated along the southerly shoreline of the Deschutes River. The development
tract is approximately 6.11 acres in size, of which 2.0 acres has been utilized to
accommodate common areas consisting of open space, buffering and a pedestrian
path. The tract was divided into 37 homesites with final plat recording occurring
in December, 2005. The lot inventory ranges in size from 1,464 square feet to
DECISION TC-MD 090599C
4,717 square feet, averaging 2,355 square feet. Of the total, 18 lots are located
along the Deschutes Riverfront, 10 of which are comparatively larger homesites
ranging in size from 3,878 square feet to 4,717 square feet, averaging 4,219
square feet. * * * The (8) remaining Riverfront Lots are comparatively smaller
with a size range of 1,464 to 2,182 square feet, averaging 1,767 square feet. This
lot category was designed to accommodate `Middle' Units and have a relatively
uniform width of 20 feet relative to a depth range of approximately 73 to 111 feet.
***
"Vertical Build Overview:
"The vertical build agenda for Deschutes Landing consists of two and
three level wood frame townhomes offering essentially three floor plans. The
revised Riverfront `End' Plan is a three bedroom, 3.5 bath unit that has
approximately 3,067 square feet of finished living area on two floor levels.
Situated between the End Units are `Middle' Units which are a three level floor
plan having approximately 2,486 square feet of finished living area. * * *
Situated to the east of Theater Drive will be comparatively smaller `Terrace'
Plans which have approximately 2,203 to 2,239 square feet of living area and a
built-in tandem car garage. At present, four of these units have been completed
on Lots 34 through 371 that are priced at $699,000 to $799,000. * * * All of the
units exhibit Central Oregon Craftsman architecture that is complimented by
abundant masonry trim, hardiplank lap siding, metal roof, wood windows, Trex
decking and stone paver driveways.
"Project Location:
"The subject development is situated in the heart of the Old Mill District
immediately north of Reed Market Road roughly two blocks south of Columbia
Street. The former is a primary north/south collector, whereas the latter provides
connectivity to Century Drive over the Deschutes River. The development site
has approximately 680 feet of frontage along the east side of the Deschutes River
and is thus positively influenced by a significant, unique view and recreational
amenity. The project is also within walking distance to the Shops at the Old Mill
as well as the nearby business park."
(Ptf's Ex Iat 6-8.)
Herman's appraisal stated that an "As -Is Market Value" as of July 2, 2008, for "30
Finished Lots as Currently Platted" was $4,291,700. (Id. at 8.) Herman's appraisal defined
The parties agree that as of the assessment date, January 1, 2008, Lots 34 through 37 were improved, but
not 100 percent complete. Plaintiff offered no testimony as to the percent complete. Defendant's report states that,
based on a telephone confirmation with the developer's representative, Lots 34 and 35 were 90 percent complete and
Lots 36 and 37 were 83 percent complete. (Def's Ex A at 8.)
DECISION TC-MD 090599C
"Market Value — As -Is" as "[a]n estimate of the market value of a property in the property in a
condition observed upon inspection and as it physically and legally exists without hypothetical
conditions, assumptions, or qualifications, as of the date of inspection." (Id. at 14.) "Market
Value" is defined as:
"The most probable price which a property should bring in a competitive
and open market under all conditions requisite to a fair sale, the buyer and seller
each acting prudently and knowledgeably, and assuming the price is not affected
by undue stimulus. Implicit in this definition is the consummation of a sale as of
a specified date and the passing of title from seller to buyer under conditions
whereby:
1. buyer and seller are typically motivated;
2. both parties are well informed or well advised, and acting in what they
consider their best interests;
3. a reasonable time is allowed for exposure in the open market;
4. payment is made in terms of cash or United States dollars or in terms of
financial arrangements comparable thereto; and
5. the price represents the normal consideration for property sold
unaffected by special or creative financing or sales concessions granted by
anyone associated with the sale."
(Id. at 13, 14.)
After analyzing sales of "luxury class" residential lots, Herman prepared a "Bend Luxury
Class Residential Lot Cost Allocation Summary." (Id. at 85.) Relying on that summary,
Herman concluded that the "value" of each type of lot and improvement as of July 2, 2008, was
as follows:
Riverfront Side: $1,273,725
Riverfront Middle: $1,056,000
Terrace Side: $716,000
Terrace Middle: $672,000
DECISION TC-MD 090599C
(Id. at 86.) Straughan testified that Defendant agrees with each of the values determined by
Herman as of July 2, 2008, and prior to allocation of value between land and improvements.
The parties differ on the percentage allocation attributable to the land value. Herman
concluded that a "lot value allocation of 25 percent would appear to be appropriate." (Id.)
Straughan testified that in Defendant's opinion "a 30% land ratio should be used instead of the
25% ratio used in the Herman appraisal." (Def's Ex A at 9.) Straughan testified that "the
County's Ratio Exhibit, attached and incorporated by reference herein" supports "the 30% ratio."
(Id.)
The parties differ on the subject property's value as of January 1, 2008. Straughan
testified that Herman's "values must be time trended backwards (or up) to the January 1, 2008
assessment date, using a -2% per month trend (increasing the value from 7/08 back to 1/08)."
(Id.) He testified that in determining the two percent per month trend factor Defendant relied on
the "Bratton Report median home price increase/decrease to time trend sales to the January 1st
assessment date" and Defendant's sales analysis. (Id. at 7.) Defendant did not offer a copy of
the Bratton Report or sales analysis as evidence. Using the Bratton Report, March 2010,
Plaintiff questioned Straughan's conclusion that the "values" needed to be increased.
(Ptf's Ex 2.) In its cross-examination, Plaintiff pointed out that for the "Bend area SFR - Median
Price in THOUSANDS" decreased slightly from January 2008 ($318) to June 2008 ($315)
whereas the "Bend area SFR — Median Sales Price per SF" actually increased from January 2008
($159) to June 2008 ($166). (Id.) Plaintiff concluded that a trend adjustment is not required.
Herman determined the subject property's "market value of the lot inventory to a single
purchaser," using a "Cash Flow Model." (Ptf's Ex 1 at 86, 87.) He stated that the "Cash Flow
Model reflects deductions and discounts for unearned profit specifically attributable to the
DECISION TC-MD 090599C 4
subject lot inventory together with costs of disposition and property taxes levied during vertical
build sell -out." (Id. at 87.) Herman concluded that "[t]he present value of allocated lot sale
revenues, and the as -is market value of the subject property, has therefore been calculated at
$4,291,700." (Id.) Straughan testified that "the county has to value each individual lot" because
the development "is not platted as three or four attached lots." He testified that the "highest and
best use" that is "legally permissible" is "single family attached housing." Herman testified that
it is "not practical" to value based on "single lot sales;" this is a "planned development" that is
"designed for this vertical build out." The parties agree that the "Highest and Best Use of the
subject properties is as currently platted, individual vacant lots ready for residential development,
with services at the curb." (Def°s Ex A at 3.)
The improvements located on two tax accounts (commonly referred to as Lots 17 and 18)
were 100 percent complete as of January 1, 2008. In valuing those two accounts, Straughan
testified that he relied on the sale of an "identical" property identified as Lot 16: "This is the
same model [Lot 18] (riverfront side) as lot 16 that sold four months after the assessment date for
$1,189,000." (Id. at 8.) Straughan stated, "[t]he appealed lot 18 is appraised in the Herman
Appraisal at $1,273,725[.]" (Id. at 9.) Defendant's real market value (land and improvements)
for tax Lots 17 and 18 are $1,182,720 and $1,426,572, respectively. (Id. at 11.) Both values are
based on the July 2008 values determined by Herman and "trended at 12%." (Id. at 7.)
Plaintiff's real market value Tax Accounts 17 and 18 are $830,000 and $568,425, respectively.
(Ptfys Amended Comp at 2.) Plaintiff did not provide evidence to support its values for those tax
accounts.
DECISION TC-MD 090599C 5
II. ANALYSIS
At issue in this case is the subject property's real market value for tax year 2008-09. Real
market value is defined in ORS 308.205(1)2 which reads: "Real market value of all property,
real and personal, means the amount in cash that could reasonably be expected to be paid by an
informed buyer to an informed seller, each acting without compulsion in an arm's-length
transaction occurring as of the assessment date for the tax year." There are three methods used
to determine real market value: (1) the cost approach, (2) the sales -comparison or comparable
sales approach, and (3) the income approach. Allen v. Dept. of Rev., 17 OTR 248, 252 (2003).
See also OAR 150-308.205-(A)(2) (stating that all three approaches to valuation of real property
must be considered, although all three may not be applicable to the valuation of the subject
property). The parties did not discuss the cost approach.3
A. Comparable Sales Approach
Both parties relied on the comparable sales approach to determine a total land and
improvement real market value and an allocation percentage for land to improvement.
Defendant accepted Plaintiff's total real market values and adjusted each for time. When a value
is determined at a date other than the assessment date, a time adjustment is applied to the
determined value to bring that value to the assessment date. Defendant concluded that property
values were declining at the rate of two percent per month from January 2008 through June
2008. Unfortunately, Defendant submitted no evidence to support its conclusion. Plaintiff
submitted evidence showing that there was little, if any, change in value between January 2008
and July 2008 (the date of Herman's Appraisal). (Ptf s Ex 2.) The court notes that Plaintiff s
2 All references to the Oregon Revised Statues (ORS) are to 2007.
3 Herman's Appraisal Report stated that the subject property "was purchased from Riverbend Limited
Partnership in April 2005 for a stated consideration of $2,950,000." (Ptf's Ex 1 at 9.) Neither party provided
evidence relating the April 2005 purchase price to the assessment date.
DECISION TC-MD 090599C
evidence related to "median price" and the parties agree that the subject property is best
described as "luxury." The court has no evidence to determine whether a time trend adjustment
is appropriate for "luxury" properties sold between the assessment date and the date of Herman's
appraisal. Based on the lack of evidence, the court concludes that the real market values as of
July 2008 were substantially comparable as of the assessment date.
In addition to the time trend adjustment, Defendant determined that the land to
improvement allocation ratio should be 30 percent. (Def's Ex B.) Plaintiff determined the
allocation ratio to be 25 percent. (Ptf's Ex 1 at 86.) Plaintiffs data in support of its 25 percent
allocation factor compared a property's land price to its subsequent sale or listing of land and
improvements. (Ptf's Ex 1 at 85.) The sale dates for seven properties ranged from 2006 to early
2008. (Id.) The ratio of land to land and improvement varied from a low of 19.3 percent to a
high of 32.2 percent. Nine properties were listed as "active." (Id.) The ratio of land to land and
improvement varied from a low of 17.7 percent to a high of 32.6 percent. (Id.) Defendant used
the same seven property sales as Plaintiff, except Defendant "time trended the lot" to the sale
date of the property when both the land and improvements were sold. (Def's Ex B-l.)
Defendant "reconciled" to a 30 percent allocation percentage, concluding that "the nature of
trending sales over a long period of time" supported its conclusion. (Id.) The only information
provided to the court to evaluate the appropriateness of a time trend adjustment was the Bratton
Report. (Ptf's Ex 2.) The Bratton Report supports a conclusion that a time trend adjustment was
appropriate for the period 2005 to 2008. Given the evidence submitted to the court, Defendant's
30 percent allocation ratio percentage is accepted.
The parties agree that Lots 34 through Lot 37 were not 100 percent complete as of the
assessment date. Plaintiff offered no evidence as to the percent complete for those lots.
DECISION TC-MD 090599C 7
Defendant reported that as of the assessment date the developer's representative confirmed that
Lots 34 and 35 were 90 percent complete and Lots 36 and 37 were 83 percent complete.
Plaintiff has the burden of proof. See ORS 305.427. Having failed to offer any evidence, the
court accepts Defendant's report that Lots 34 and 35 were 90 percent complete and Lots 36 and
37 were 83 percent complete.
B. Discounted Cash Flow
Plaintiff alleges that because of its vertical build design the subject property value must
be determined using discounted cash flow. The Oregon Supreme Court, in a case with facts4
similar to those of the matter before the court, concluded that when there is no dispute that the
highest and best use of each lot is for the construction of a single-family residence, the property
must be valued at its highest and best use to determine the true cash value. First Interstate, 306
Or at 454, citing Sabin v. Dept. of Rev., 270 Or 422, 426-27, 528 P2d 69 (1974). The Court held
that using a valuation method that incorporates "[t]he developer's discount does not assess the .
value of the properties if put to their highest and best use, but reduces their value to arrive at the
value of the properties considered as an investment. Investment is not the highest and best use of
the properties." First Interstate Bank, 306 Or at 455.
In support of its use of the discounted cash flow method, Defendant relies on the court's
comment in footnote 2:
4 The properties that were the subject of that valuation appeal were "lots owned by taxpayer in Spencer's Crest
subdivision, which is located on the southern boundary of the City of Eugene in Lane County. Spencer's Crest
subdivision was subdivided and platted during the real estate boom of the 1970s. The streets in the subdivision are
private, but they are ,paved and have curbs. There are underground utilities, city water and sewer lines throughout
the subdivision.
"Spencer's Crest was planned to contain 38 lots plus three tracts of land. Two of the three tracts were for
common use, and the third, Tract C, was intended for the development of condominiums. Each of the lots was to be
used for the construction of a single-family residence. The real estate boom collapsed, and by January 1, 1985, the
relevant date for the valuation at issue, only six lots had been sold, and the plans for a condominium had been
scrapped. Taxpayer had obtained title to the remaining lots and Tract C by deed in lieu of foreclosure." First
Interstate Bank v. Dept. of Rev. (First Interstate), 306 Or 450, 452, 760 P2d 880 (1988).
DECISION TC-MD 090599C
"It is possible that in certain situations, the highest and best use of a lot
would be a part of a group of lots. If that were the case, it would be appropriate to
assess that lot based on its value as part of a group. That is not the situation in
the present case."
Id. at 453 n 2.
In the case before the court, the highest and best use of the subject property is single
family residential, not "a part of a group of lots." Id. The property is zoned residential and each
lot to date has been constructed for a single family residence. There was no evidence other than
Herman's belief that those interested in purchasing the subject property are delayed or
constrained by the proposed common wall vertical build design. His belief was not supported by
evidence because all sales to date have been to individuals who purchased only one single family
lot.
III. CONCLUSION
After careful review of the testimony and evidence, the court concludes that the real
market value of land and improvements for the subject property as of January 1, 2008, was:
Riverfront Side
$1,273,725
Riverfront Middle
$1,056,000
Terrace Side
$716,000
Terrace Middle
$672,000
A time trend factor should not be applied to the real market values set forth above. The land to
land and improvement allocation factor is 30 percent.
The real market value of Lots 17 and 18, which were 100 percent complete as of the
assessment date, were $1,273,725 and $1,056,000, respectively. A time trend factor should not
be applied to the real market values set forth above. The land to land and improvement
allocation factor is 30 percent.
Lots 34 and 35 were 90 percent complete and Lots 36 and 37 were 83 percent complete.
A time trend factor should not be applied and the land to land and improvement allocation factor
DECISION TC-MD 090599C 9
is 30 percent. The real market value of Lots 34 and 37 if improvements were 100 percent
complete would be $716,000, The real market value of Lots 35 and 36 if improvements were
100 percent complete would be $672,000. Now, therefore,
IT IS THE DECISION OF THIS COURT that the parties shall determine the real market
value of the 35 tax accounts identified as Deschutes Landing on Attachment A as set forth herein
for tax year 2008-09.
Dated this day of January 2011.
JILL A. TANNER
PRESIDING MAGISTRATE
If you want to appeal this Decision, file a Complaint in the Regular Division of
the Oregon Tax Court, by mailing to: 1163 State Street, Salem, OR 97301-2563;
or by hand delivery to: Fourth Floor, 1241 State Street, Salem, OR.
Your Complaint must be submitted within 60 days after the date of the Decision
or this Decision becomes final and cannot be changed
This document was signed by Presiding Magistrate Jill A. Tanner on
January 13, 2011. The Court filed and entered this document on
January 13, 2011.
DECISION TC-MD 090599C 10