The opinion
IN THE OREGON TAX COURT
MAGISTRATE DIVISION
Property Tax
ERIC M. KALIK, )
)
Plaintiff, ) TC-MD 120183N
)
v. )
)
CLACKAMAS COUNTY ASSESSOR, )
)
Defendant. ) DECISION
Plaintiff appeals the real market value (RMV) of property identified as Account
00821490 (subject property) for the 2009-10, 2010-11, and 2011-12 tax years. A trial was held
in the Tax Courtroom in Salem, Oregon on September 17, 2012. Plaintiff appeared and testified
on his own behalf. Fred Dodd (Dodd), Registered Appraiser, appeared and testified on behalf of
Defendant. Plaintiff’s Exhibits 1 through 13 and Defendant’s Exhibit A were received without
objection.
I. STATEMENT OF FACTS
The subject property is a 2,705-square foot home with a partially finished basement and
an 864-square foot detached garage. (Def’s Ex A at 4, 11.) The subject property improvement
was built in 1978. (Id. at 11.) Dodd inspected the subject property and observed “a significant
amount of deferred maintenance.” (Id. at 10.) He testified that he observed “significant dry rot”
on the exterior siding and some interior beams of the subject property, as well as water damage
to the roof. The subject property lot is 2.55 acres. (Id. at 4.) During his inspection, Dodd
observed “a topography problem with the land.” (Id. at 10.) He testified that the subject
property lot is sloped and the portion of the subject property lot sloping downhill is covered in
blackberries and trees. Dodd testified that the subject property lacks a view.
DECISION TC-MD 120183N 1
A. Land real market value
Plaintiff challenges the land real market value of the subject property. He testified that
the lot located next to the subject property, Lot 1, is 2.67 acres and sold on January 6, 2011, for
$105,000. (Ptf’s Ltr at 1, Sept 5, 2012; Ptf’s Ex 12-1 (the subject property is Lot 2).) Plaintiff
testified that Lot 1 was bare land at the time of sale in January 2011. He testified that the 2011-
12 roll real market value of Lot 1 was $87,959 and that Defendant made “a significant[]
topography adjustment of minus 53%” to Lot 1. (Ptf’s Ltr at 1, Sept 5, 2012.) Based on the
2011 sale and roll real market value of Lot 1, Plaintiff reasons:
“[Lot 1] * * * is 4.7 percent larger than [the subject] property, sold for [$]105000
and has an appraised RMV at [$]87959, reducing my land by the corresponding
4.7 percent and RMV appraised value by the same 4.7 percent, one could
conclude that my values should be [$]100065.00 and RMV [$]83768
respect[ively] for the 2011 tax year.”
(Id.)
With respect to the January 2011 sale of Lot 1, Dodd responded:
“The difference in the land values [between Lot 1 and the subject property] is due
to the adjustments made to the bare land. [Lot 1] was given a significant
topography adjustment of (minus) -53%. Additionally, since this was an
unimproved lot, no OSD (on-site-development) value was added to the value of
the bare land. * * * * * Without the topography adjustment, the land value for
[Lot 1] would be $187,145. Adding OSD to make both parcels comparable would
yield a real market value on the bare lot of $204,350 for 2.67 acres. This
compares with the subject’s land value of $198,197 for 2.55 acres. The reduced
price of the sale at $105,000 and RMV of $87,959 from the county reflect the fact
that the county must take into account factors such as size, zoning, topography,
power lines, rail lines, access, etc. in order to come to a realistic market value.”
(Def’s Ex A at 5.) Dodd further noted that, “once a lot has been developed, the topography
adjustment is removed or reduced, as is the case with the subject property. The market has
shown that once a negative to the land has been overcome, as in the lot having a home placed on
it, regular market forces will apply.” (Id.)
DECISION TC-MD 120183N 2
Dodd stated that “[t]here are few bare acreage land sales in the area,” so he relied
primarily on “a land residual” analysis to determine the subject property land values for each tax
year at issue. (Def’s Ex A at 6.) Dodd identified one “bare land sale” on November 30, 2010;
his other sales were of improved lots that sold in 2008 (as evidence for the 2009-10 tax year) and
in 2010 (as evidence for the 2010-11 and 2011-12 tax years). (Id. at 7-8, 10.) Based on his “land
residual analysis,” Dodd concluded that the roll land values of the subject property were
supported for each tax year at issue. (Id. at 10.) In rebuttal, Plaintiff provided a listing of 14.37
acres of land located 1.76 miles from the subject property for $465,000. (Ptf’s Ex 13.) The price
per acre for that listing is $32,359. Dodd testified in response that he only considered properties
ranging in lot size from two to four and one-half acres, noting that price typically decreases as
size increases.
B. Total real market value
Plaintiff testified that his requested real market value for the subject property for the three
tax years at issue is $225,000. He testified that, in 2009, he was going through a divorce and he
received “an offer to short sell the [subject] property to the bank, which the bank refused for
[$]225000.” (Ptf’s Ltr at 2, Sept 5, 2012.) Plaintiff stated that he was not able to provide any
evidence regarding that offer because “the mortgage company that refused to accept the offer[]
has also lost the correspondence showing the offer.” (Id.) He testified that that offer is the basis
for his requested real market value for each year.
Plaintiff also raised “an issue of defects to cure issues on the [subject] property.” (Ptf’s
Ltr at 2, Sept 5, 2012 (citing Ptf’s Exs 6-10).) Plaintiff provided cost estimates from several
contractors for projects including “roof replacement,” “siding replacement,” “master bathroom
deck” repair, “rear deck” repair, and “rear window replacement.” (Id. at 3 (“Exhibit guide”);
DECISION TC-MD 120183N 3
Ptf’s Exs 6-10.) Plaintiff’s cost estimates total $59,459.80. (Ptf’s Ltr at 2, Sept 5, 2012.)
Plaintiff testified that the subject property suffers from a mold problem that will likely cost an
additional $10,000 to $15,000. (See id.; Ptf’s Ex 11.) He stated that, with respect to the mold
problem, “[two] different plumbers * * * told [him] that [he] need[s] to remove a section of
ceiling drywall to identify the leak and determine the total cost of the repair.” (Ptf’s Ex 11-1.)
For each of the three tax years at issue, Dodd determined the real market value for the
subject property using the sales comparison approach. (Def’s Ex A at 11-13.) Based on three
comparable sales between April 2010 and July 2011, Dodd determined the 2011-12 real market
value of the subject property to be $327,848. (Id. at 11.) Based on three comparable sales
between November 2009 and May 2010, Dodd determined the 2010-11 real market value of the
subject property to be $348,178. (Id. at 12.) Based on two comparable sales, one in February
2009 and one in September 2009, Dodd determined the 2009-10 real market value of the subject
property to be $395,477. (Id. at 13.) Dodd stated that,
“in order to reflect the actual market value of the subject property, both the land
and the improvements should receive adjustments in value due to topography and
condition. It is recommended that an adjustment of (minus) -15% in land value
and a $25,000 reduction in improvement value be made for each of the tax years
at issue. Additionally, the (minus) -12.5% reduction to the land value granted to
the plaintiff by the Board of Property Tax Appeals * * * for 2011-12 should also
be given to the land value for the 2010-11 and 2009-10 tax years.”
(Id. at 23.) After reviewing Plaintiff’s exhibits, including the “cost-to-cure estimate of $59,459,”
Dodd revised his value conclusions to $293,389 for the 2011-12 tax year, $313,719 for the 2010-
11 tax year, and $361,018 for the 2009-10 tax year. (Def’s Ltr, Sept 13, 2012.)
For the 2011-12 tax year, the real market value of the subject property determined by the
board of property tax appeals was $380,000; the maximum assessed value was $348,711. (Ptf’s
Compl at 2.) For the 2010-11 tax year, the roll real market value of the subject property was
DECISION TC-MD 120183N 4
$462,958 and the maximum assessed value was $338,554. (Def’s Ltr, Sept 13, 2012.) For the
2009-10 tax year, the roll real market value of the subject property was $521,544 and the
maximum assessed value was $328,693. (Id.)
II. ANALYSIS
The issue before the court is the real market value of the subject property for the 2009-10,
2010-11, and 2011-12 tax years.1 “Real market value is the standard used throughout the ad
valorem statutes except for special assessments.” Richardson v. Clackamas County Assessor
(Richardson), TC-MD No 020869D, WL 21263620 at *2 (Mar 26, 2003) (citations omitted).
Real market value is defined in ORS 308.205(1), which states:
“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.”2
The assessment date for the 2009-10 tax year was January 1, 2009; the assessment date for the
2010-11 tax year was January 1, 2010; and the assessment date for the 2011-12 tax years was
January 1, 2011. ORS 308.007; ORS 308.210.
The real market value of property “shall be determined by methods and procedures in
accordance with rules adopted by the Department of Revenue[.]” ORS 308.205(2). The three
approaches of value that must be considered are: (1) the cost approach; (2) the sales comparison
approach; and (3) the income approach. OAR 150-308.205-(A)(2)(a). Although all three
approaches must be considered, all three approaches may not be applicable in a given case. Id.
1
Plaintiff’s appeal of the 2009-10 and 2010-11 tax years is allowed under ORS 305.288(1) (2009), which
provides the court jurisdiction to reduce the value of property “for the current tax year or for either of the two tax
years immediately preceding the current tax year, or for any or all of those tax years, if” there is an allegation of an
error in value of at least 20 percent and it is attributable to property that was used “primarily as a dwelling.”
2
All references to the Oregon Revised Statutes (ORS) and to the Oregon Administrative Rules (OAR) are
to 2009. The 2007 ORS are applicable for the 2009-10 tax year, but do not differ materially from the 2009 ORS and
OAR provisions cited in this Decision.
DECISION TC-MD 120183N 5
Plaintiff relied on the 2011 sale of a lot located adjacent to the subject property and on a 2009
offer to purchase the subject property. Defendant relied on the sales comparison approach.
“In utilizing the sales comparison approach only actual market transactions of
property comparable to the subject, or adjusted to be comparable, will be used.
All transactions utilized in the sales comparison approach must be verified to
ensure they reflect arms-length market transactions.”
OAR 150-308.205-(A)(2)(c). “The court looks for arm’s length sale transactions of property
similar in size, quality, age and location * * * in order to determine the real market value” of the
subject property. Richardson, TC-MD No 020869D, WL 21263620 at *3 (Mar 26, 2003).
Plaintiff has the burden of proof and must establish his case by a preponderance of the
evidence. ORS 305.427. A “[p]reponderance of the evidence means the greater weight of
evidence, the more convincing evidence.” Feves v. Dept. of Rev., 4 OTR 302, 312 (1971). “[I]t
is not enough for a taxpayer to criticize a county’s position. Taxpayers must provide competent
evidence of the [real market value] of their property.” Poddar v. Dept. of Rev., 18 OTR 324, 332
(2005) (citing Woods v. Dept. of Rev., 16 OTR 56, 59 (2002)). “[I]f the evidence is inconclusive
or unpersuasive, the taxpayer will have failed to meet his burden of proof.” Reed v. Dept. of
Rev., 310 Or 260, 265, 798 P2d 235 (1990). “[T]he court has jurisdiction to determine the real
market value or correct valuation on the basis of the evidence before the court, without regard to
the values pleaded by the parties.” ORS 305.412.
Plaintiff challenges the 2011-12 land real market value of the subject property based on
the January 6, 2011, sale of “Lot 1” for $105,000; Lot 1 is 2.67 acres and located adjacent to the
subject property. Plaintiff did not offer any evidence of the land real market value of the subject
property for the 2009-10 and 2010-11 tax years. The court finds that the sale of Lot 1 is not
persuasive evidence of the 2011-12 land real market value of the subject property. First, as Dodd
noted, one sale does not make a market. (Def’s Ex A at 5.) Furthermore, Lot 1 was bare land at
DECISION TC-MD 120183N 6
the time of sale and did not include on-site developments as did the subject property as of
January 1, 2011. Plaintiff argues that the subject property should receive a similar topographical
adjustment as Lot 1, but offered no competent evidence in support of that request. Dodd testified
that the county’s “land tables,” which were created based on paired sales analyses, support a
larger topographical adjustment for bare land than for land with improvements. Dodd testified
that, if the subject property lot was bare land, he would agree that it should receive a 53 percent
topographical adjustment; instead, he used a 15 percent topographical adjustment.
The court finds that Plaintiff failed to prove by a preponderance of the evidence that the
2011-12 land real market value of the subject property is in error. The court further finds that
Plaintiff failed to present any evidence that the 2009-10 or 2010-11 land real market values of
the subject property are in error.
As additional evidence of the real market value of the subject property, Plaintiff testified
that he received an offer to “short sell” the subject property for $225,000 in 2009. Plaintiff’s
testimony that the offer was for a “short sale” when he was going through a divorce suggests that
the offer may be below the real market value of the subject property. It appears that, in 2009,
Plaintiff was under some duress to sell the subject property and a sale for $225,000 would not
have been an arm’s-length market transaction. The 2009 offer to purchase the subject property
for $225,000 is not reliable evidence of the real market value of the subject property for any of
the tax years at issue. Plaintiff has failed to meet the burden of proof with respect to his
requested reductions in real market value for the three tax years at issue.
Even though the burden has not shifted under ORS 305.427, the court has jurisdiction to
determine the “real market value or correct valuation on the basis of the evidence before the
court, without regard to the values pleaded by the parties.” ORS 305.412. Dodd determined the
DECISION TC-MD 120183N 7
real market value for the subject property for each of the three tax years at issue using the sales
comparison approach. Dodd’s comparable sales analysis is reasonable and Plaintiff offered no
evidence to rebut Dodd’s real market value conclusions for each tax year. Plaintiff presented
evidence supporting a “cost-to-cure estimate” of $59,459, which is reflected in Dodd’s final
value recommendations for each tax year. Plaintiff requests that the court make an additional
reduction in value of $10,000 to $15,000 for the estimated cost to cure mold problems. The
court found Plaintiff to be a credible witness and does not doubt his testimony that the subject
property is affected by mold problems. However, the cost to cure the mold problem is
speculative and the court was not presented with any reliable evidence of that cost. Absent
persuasive evidence of the cost to cure the mold problem, the court finds that no additional
adjustment to the subject property real market value is supported.
The court finds that the real market value of the subject property for each of the tax years
at issue was, as determined by Dodd: $293,389 for the 2011-12 tax year; $313,719 for the 2010-
11 tax year; and $361,018 for the 2009-10 tax year. The 2009-10 real market value, $361,018,
exceeds the 2009-10 maximum assessed value of the subject property, $328,693. For the court
to order a change to the tax roll, Plaintiff must be aggrieved. ORS 305.275(1)(a). To be
aggrieved, the ordered change to the tax roll must result in a property tax reduction. Dodd
testified that he did not think that a reduction in the 2009-10 real market value to $361,018
would result in tax savings to Plaintiff for the 2009-10 tax year, but he was not sure. Thus, the
court will not order a change to the 2009-10 tax roll unless Plaintiff is aggrieved.
III. CONCLUSION
After carefully considering the testimony and evidence presented, the court finds that the
real market values of the subject property for the 2009-10, 2010-11, and 2011-12 tax years were
DECISION TC-MD 120183N 8
those determined by Defendant’s appraiser, Dodd. The court will not order a change to the
2009-10 tax roll unless Plaintiff is aggrieved. Now, therefore,
IT IS THE DECISION OF THIS COURT that the real market value of property
identified as Account 00821490 was $293,389 for the 2011-12 tax year.
IT IS DECIDED that the real market value of property identified as Account 00821490
was $313,719 for the 2010-11 tax year.
IT IS DECIDED that the real market value of property identified as Account 00821490
was $361,018 for the 2009-10 tax year. The tax roll will be adjusted only if Plaintiff is aggrieved
under ORS 305.275.
Dated this day of November 2012.
ALLISON R. BOOMER
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 Magistrate Allison R. Boomer on November 16,
2012. The Court filed and entered this document on November 16, 2012.
DECISION TC-MD 120183N 9