The opinion
IN THE OREGON TAX COURT
MAGISTRATE DIVISION
Property Tax
CLACKAMAS COUNTY ASSESSOR, )
)
Plaintiff, ) TC-MD 120298D
)
v. )
)
KEVIN GEARY, )
)
Defendant. ) DECISION
Plaintiff appeals the 2011-12 real market value of property identified as Account
05003823 (subject property). A telephone trial (uncontested) was held on July 26, 2012. Todd
Cooper (Cooper), Registered Appraiser, appeared and testified on behalf of Plaintiff.
Plaintiff’s Exhibits 1 through 7 were admitted without objection.
I. STATEMENT OF FACTS
The subject property is a farmhouse style single family home that sits on 1.47 acres of
land in Northeast Clackamas County. (Ptf’s Ex 1 at 4.) The home is 3,832 square feet with two
stories, six bedrooms, and two bathrooms. (Id.) The home “was originally constructed around
the turn of the century and has had several subsequent additions and remodels. The most recent
addition was a 960 square foot area added in 2005.” (Id.) Cooper testified that the subject
property has good access to highway and freeway systems, shopping centers, employment
centers, and recreational centers.
Cooper testified that on December 6, 2000, approximately 300 gallons of heating oil were
mistakenly pumped into the subject property’s basement through an abandoned fill pipe that had
once been connected to a heating oil storage tank. (Ptf’s Ex 6 at 3.) Cooper testified that the
Department of Environmental Quality (DEQ) report stated that the oil spill contaminated the soil
DECISION TC-MD 120298D 1
below and around the subject property’s basement floor. (Id.) Cooper testified that DEQ
approved contractor Foss Environmental performed a “phase I investigation” and “phase II
mitigation and clean-up” of the subject property. (Ptf’s Ex 1at 17.) Foss Environmental
completed Phase I on March 16, 2001, and Phase II on May 16, 2001. (Ptf’s Ex 6 at 3.) Cooper
testified that Foss Environmental’s “Remedial Investigation Report” dated July 2001, identified
“no impacts to nearby domestic well” and “no residual risk from heating oil constituents using a
risk-based analysis.” (Id.) After inspecting the subject property on June 11, 2002, “DEQ
determined that no further remedial action was required.” (Id.)
Plaintiff appeals the Board of Property Tax Appeals (BOPTA) Order, dated March 13,
2012, determining a real market value of $100,000. (Ptf’s Compl at 2.) According to the
BOPTA Order, the subject property’s maximum assessed value is $313,163. (Id.) Cooper
testified that Plaintiff is requesting a real market value of $367,189 as of January 1, 2011.
Cooper testified that during the BOPTA hearing on February 6, 2012, the owner of the
subject property testified that the subject property was stigmatized from the contamination that
occurred in December 2000. Cooper testified that the owner of the subject property did not
provide BOPTA with any evidence indicating that the property suffered from a long term stigma.
Cooper testified that as a result of the BOPTA hearing, BOPTA reduced the real market value of
the subject property from $367,189 to $100,000. (Ptf’s Compl at 2.)
Cooper testified that he performed market research “to determine if a negative adjustment
was appropriate due to [the] prior contamination.” (Ptf’s Ex 1 at 17.) Cooper testified that he
began his research with 30 previously contaminated properties, and then narrowed the sample to
the six properties most comparable to the subject property based on type and degree of
contamination. Cooper testified that he compared the six properties’ sale prices with their real
DECISION TC-MD 120298D 2
market values assigned by the county. Cooper testified that he found that all of the previously
contaminated properties sold for prices higher than the county’s real market tax roll values. (See
Ptf’s Ex 7 at 1.) Cooper testified that his “research indicated that once the contamination is
properly remediated (and certified by D.E.Q.) and given adequate seasoning time of 12-36
months with no further reported contamination, similarly contaminated properties have sold at or
very near market values and with marketing times typical of non-contaminated properties.”
(Ptf’s Ex 1 at 17.) Cooper testified that his research found no long term stigma attached to
previously contaminated properties that are comparable to the subject property.
Cooper testified that he considered the three valuation approaches in determining the
subject property’s 2011-12 real market value. (Ptf’s Ex 1 at 11.) Cooper testified that “[t]he
income approach was considered, but [was] not felt to be a credible indicator of market value as
homes in the subject area are generally acquired for owner occupied, single family use rather
than as income producing properties.” (Id.)
Cooper testified that “[t]he cost approach indicates a value for the subject property of
$367,189 as of 01/01/2011.” (Ptf’s Ex 1 at 11.) Cooper testified that “[t]he cost approach is the
basis for the original valuation of the subject property for tax assessment purposes for January 1,
2011 * * *.” (Id. at 17.) Cooper testified that the county’s original valuation of the subject
property supports a real market value of $367,189. (Ptf’s Compl at 2.) Cooper testified that he
included the $367,189 as the cost approach value in his appraisal report, but did not perform a
new cost approach valuation. Cooper testified that the cost “valuation approach is typically more
reliable with newly constructed homes * * * therefore the cost approach was given less weight in
the final reconciliation.” (Ptf’s Ex 1 at 11.)
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DECISION TC-MD 120298D 3
Cooper testified that the sales comparison approach “supports a final estimate of value
for the subject property of $415,000 as of 01/01/2011.” (Ptf’s Ex 1 at 11.) Plaintiff submitted
the sale prices for five comparable properties as evidence of the subject property’s real market
value.1 (Ptf’s Ex 1 at 5.) The sale prices range from $317,500 to $465,000. (Id.) Cooper
testified that he adjusted each comparable property’s sale price to accurately reflect the
conditions of the subject property. The sale prices of Comparable # 2, # 3, # 4, and # 5 were
increased $81,300 (22.2 percent), $27,800 (7.5 percent), $32,540 (8.6 percent), and $76,040
(23.9 percent) respectively. (Id.) The sale price of Comparable # 1 was decreased $24,500
(5.3%). (Id.) The adjusted sale prices range from $393,540 to $447,800. (Id.)
The subject property is “located in an area that experienced a decline in property values
for the twelve months prior to the effective date of appraisal.” (Ptf’s Ex 1 at 15-16.) Cooper
made adjustments “based upon the estimated rate of decline of 8.0% over the prior twelve
months.” (Id. at 16.) Adjustments for differences in above grade finished living area and
differences in garage area were made at the rates of $40.00 per square foot and $10.00 per square
foot respectively. (Id.) Cooper increased the sale price of Comparable # 1 by $2,500, because
the property lacked central air conditioning. (Id.) Cooper decreased the sale prices of
Comparables # 1 and # 4 by $35,000 each, because the properties were remodeled and in better
condition than the subject property. (Id.) Cooper decreased the sale price of Comparable # 3 by
$15,000, because the property “included a small finished guest quarters area at the time of sale.”
(Ptf’s Ex 1 at 17.) Cooper did not make adjustments for lot size and age differences. (Id. at 16.)
Cooper explained that “the subject and comparable [lots were] felt to be functionally equal,” and
“[t]he subject and comparable sales [were] felt to be of similar overall effective age * * *.” (Id.)
1
Plaintiff did not include any of the six previously contaminated properties as one of the five comparable
properties analyzed to determine the subject property’s real market value.
DECISION TC-MD 120298D 4
Cooper testified that “[t]he sales comparison approach is the primary approach to value
and was given the most consideration as it best represents the actions of buyers and sellers of
similar properties in the current marketplace.” (Id. at 11.) Cooper testified that Comparables #
1, # 3, and # 4 were “felt to be the best indicators of market value as they [had] the lowest overall
net adjustments. These comparables were given more weight when arriving at the estimated
value by the sales comparison approach.” (Id. at 17.)
II. ANALYSIS
At issue in this case is the subject property’s real market value for tax year 2011-12. Real
market value is defined in ORS 308.205 as:
“[T]he 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 2011-12 tax year was January 1, 2011. ORS 308.007(2).
The legislature requires real market value to be determined in all cases by “methods and
procedures in accordance with rules adopted by the Department of Revenue.” ORS 308.205(2).
There are three methods of valuation that are 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)(a) (stating
that all three approaches must be considered, although all three approaches may not be
applicable to the valuation of the subject property).
Because the subject property is a residence and not an income producing property, the
income approach is inapplicable. Plaintiff included a value of $367,189 for the cost approach;
however, Plaintiff did not perform a cost approach valuation. Plaintiff gave the comparable sales
2
All references to the Oregon Revised Statutes (ORS) and Oregon Administrative Rules (OAR) are to
2011.
DECISION TC-MD 120298D 5
approach “the most consideration as it best represents the actions of buyer and sellers of similar
properties in the current marketplace.” (Ptf’s Ex 1 at 11.)
OAR 150-308.205-(A)(2)(c), states that, “[i]n 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.”
As the party seeking affirmative relief, Plaintiff bears the burden of proving that the
subject property’s real market value is incorrect on the tax roll. ORS 305.427. Plaintiff must
establish its claim “by a preponderance of the evidence, or the more convincing or greater weight
of evidence.” Schaefer v. Dept. of Rev., TC No 4530 at 4 (July 12, 2001) (citing Feves v. Dept.
of Revenue, 4 OTR 302 (1971)). Plaintiff must also provide competent evidence of the real
market value of the property. Woods v. Dept. of Rev., 16 OTR 56, 59 (2002) (citing King v.
Dept. of Rev., 12 OTR 491 (1993)). “Competent evidence includes appraisal reports and sales
adjusted for time, location, size, quality, and other distinguishing differences, and testimony
from licensed professionals such as appraisers, real estate agents, and licensed brokers.”
Danielson v. Multnomah County Assessor, TC-MD No 110300D, WL 879285 (March 13, 2012).
Evidence that is inconclusive or unpersuasive is insufficient to sustain the burden of proof. Reed
v. Dept. of Rev.,310 Or 260, 265, 798 P2d 235 (1990).
When evaluating the evidence, “the court looks to the comparability of the different sales
and the application of all necessary adjustments for differences. Adjustments are a key
component in evaluating properties.” Voronaeff v. Crook County Assessor, TC-MD No
110361C, WL 1426847 at *3 (April 25, 2012).
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DECISION TC-MD 120298D 6
In the case before the court, Plaintiff submitted an appraisal report using five comparable
properties to estimate the subject property’s real market value. Plaintiff adjusted the five
comparable properties to account for differences in size, quality, and other distinguishing
features. (Ptf’s Ex 1 at 5.) Plaintiff relied most heavily on Comparables # 1, # 3, and # 4 when
calculating the subject property’s market value, because those properties required the least
amount of adjustments. (Id. at 17.) Plaintiff’s appraisal report supports a value of $415,000 for
the subject property. (Id. at 11.)
Plaintiff alleges that the subject property does not suffer from a long term stigma because
of the contamination that occurred in December 2000; thus, the subject property’s real market
value should not be adjusted to account for the prior contamination. Plaintiff provided evidence
that six previously contaminated properties sold at or above their county determined real market
values once they had been properly remediated and given “adequate seasoning time” 12 to 36
months without any report of contamination. (Ptf’s Ex 1 at 17.) Plaintiff provided evidence that
the subject property was properly remediated as of 2001. (Ptf’s Ex 6 at 3.)
Even though Plaintiff relied heavily on the comparable sales approach, which supported a
value of $415,000, and provided evidence that an adjustment for prior contamination was not
necessary, Plaintiff requests that the court determine a real market value of no more than
$367,189. Plaintiff’s requested real market value is the value the county originally determined
for the subject property as of January 1, 2011.
Because Plaintiff submitted a complete comparable sales valuation that supports a value
of $415,000, Plaintiff met its burden of proof. The court grants Plaintiff’s request that the real
market value of the subject property be $367,189.
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DECISION TC-MD 120298D 7
III. CONCLUSION
After careful consideration of the testimony and evidence, the court concludes that the
subject property’s real market value for the 2011-12 tax year is $367,189. Now, therefore,
IT IS THE DECISION OF THIS COURT that the 2011-12 real market value of property
identified as Account 05003823 is $367,189.
Dated this day of September 2012.
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
September 21, 2012. The Court filed and entered this document on
September 21, 2012.
DECISION TC-MD 120298D 8