The opinion
IN THE OREGON TAX COURT
MAGISTRATE DIVISION
Property Tax
WILLIAM R. PEARCE, )
)
Plaintiff, ) TC-MD 170277R
)
v. )
)
JOSEPHINE COUNTY ASSESSOR, )
)
Defendant. ) FINAL DECISION1
Plaintiff appealed Defendant’s removal of 16.76 acres of land, identified as Account
R325421 (subject property), from western Oregon forestland special assessment. A trial was
held on February 12, 2018, in the Oregon Tax Court. William R. Pearce (Pearce) appeared on
his own behalf. Pearce and Kendon R. Leet (Leet) testified as witnesses on behalf of Plaintiff.
Constance L. Roach (Roach), Josephine County Assessor, appeared and testified on behalf of
Defendant. Defendant’s Exhibits A to G were received into evidence without objection.
I. STATEMENT OF FACTS
Pearce was a property developer and apartment owner in another state. He decided to
move to Oregon and “disappear.” In 2016, he engaged Leet, an experienced rural real estate
broker, to find a suitable property in southern Oregon. Leet testified that he was instructed to
look for property with income potential, which for that area meant timber property. Most of the
properties Leet and Pearce looked at had a timber component. Pearce eventually found the
subject property: a house and forestland on approximately 20 acres of land, which was approved
for western Oregon forestland special assessment in 1988. (Def’s Ex F at 1.)
1
This Final Decision incorporates the court’s Decision, entered August 22, 2018, with the addition of the
court’s analysis regarding costs and disbursements in Section III.
FINAL DECISION TC-MD 170277R 1
Prior to the close of escrow, Pearce asked Leet if he knew anyone knowledgeable about
timber. Leet connected Pearce with Tim Cummings (Cummings), whom Leet testified was a
known forester in the area and the owner of a logging company. At trial, Leet read a December
13, 2016, email he sent to Cummings, which contained an aerial photograph of the subject
property, asked Cummings for his thoughts about the subject property’s timber value, and
informed him he could have the gate code if needed. Pearce subsequently walked the property
with Cummings. Pearce testified that Cummings told him that he had about $100,000 worth of
marketable timber on the property. He further said that Pearce appeared “handy” and it might be
more economical if he did the work of managing the timber himself. Escrow closed on the
subject property on December 14, 2016.
Roach testified that she regularly sends questionnaires to new property owners under a
forestland special assessment to ascertain their intention for the property. She testified that she
sends approximately 250 questionnaires per year. On January 19, 2017, Roach sent a
questionnaire to Pearce. It stated in pertinent part:
“Our records indicate that you recently acquired property that includes specially
assessed forestland under ORS 321.257 to 321.390. Please return this
questionnaire to the Josephine County Assessor’s Office, within 30 days of the
date of this letter. Your cooperation is needed to determine your eligibility for
this special assessment.
“1) If you acquired the forestland in a sale, what (if any) value was placed on
timber as part of your purchase price? _____
“2) Do you intend to hold the forestland for the predominant purpose of growing
and harvesting marketable timber? (consider the forestland, not the residential
portion of your property)
_ Yes _ No
“* * * * *
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FINAL DECISION TC-MD 170277R 2
“5) If there is a dwelling on the parcel, is it used in conjunction with management
of the forestland?
_ Yes _ No”
(Def’s Ex A.)
Pearce completed the form by hand and responded to question 1 as follows: “I purchased
the property to live in the house.” (Id.) He answered “No” to question 2 and did not check a box
for question 5, but wrote “there is a house—I will manage the property from there—but it is not
primarily a timber property.” (Id. (emphasis in original).) Pearce signed the completed
questionnaire on January 25, 2017, and mailed it to Defendant.
On May 15, 2017, Defendant mailed a letter to Pearce notifying him that 16.76 acres of
the subject property was removed from western Oregon forestland special assessment. (Def’s Ex
B.) The letter described the reason as “Discovery by the Assessor that the land is no longer held
for the predominant purpose of growing and harvesting trees as defined under ORS 321.257 and
therefore, no longer meets the qualifications for this classification.” (Id.) Pearce testified that
upon receiving the disqualification letter he immediately went to talk to Roach. Pearce told
Roach that the questionnaire was confusing and that he did intend to market the timber. Pearce
asked to change his answers to the questionnaire. Roach declined to make a change because she
felt his answers on the questionnaire were the best expression of his intent regarding the subject property.
II. ANALYSIS
The issue in this case is whether Defendant properly disqualified the subject property
from western Oregon forestland special assessment based on Defendant’s finding that the
property was no longer held for the predominant purpose of growing and harvesting trees under
ORS 321.257.2
2
The court’s references to the Oregon Revised Statutes (ORS) are to the 2015 version.
FINAL DECISION TC-MD 170277R 3
ORS 321.257(2) defines “forestland,” in pertinent part, as “land in western Oregon that is
being held or used for the predominant purpose of growing and harvesting trees of a marketable
species and has been designated as forestland or land in western Oregon, the highest and best use
of which is the growing and harvesting of such trees.” The parties agree that the subject property
meets all the other requirements of forestland, except they differ on Pearce’s predominant
purpose for the land.
Once land has been designated as forestland it remains as such until the assessor removes
the designation. ORS 321.359. Under that section, the assessor is required to remove the
forestland designation if any of the following events occur:
“(A) Notification by the taxpayer to the assessor to remove the designation;
“(B) Sale or transfer to an ownership making it exempt from ad valorem property
taxation;
“(C) Discovery by the assessor that the land is no longer forestland; or
“(D) The act of recording a subdivision plat under ORS chapter 92.”
ORS 321.359(1)(b).
Removal of the forestland designation results in disqualification of the land from special
assessment. ORS 308A.700(1). Generally, the owner of designated forestland will pay annual
property taxes at reduced rate. If the land is disqualified from special assessment, additional
taxes may be assessed based on the amount of tax savings for the five years preceding the
disqualification. ORS 308A.703(3)(d)(B).
Defendant contends that Pearce’s intent or “predominant purpose” for the subject
property was clearly and unequivocally stated in his response to its January 19, 2017,
questionnaire: “[The subject property] is not primarily a timber property.” (Def’s Ex A.) Based
on Pearce’s stated intent, Roach testified that she was required by ORS 321.359(1)(b)(C) to
FINAL DECISION TC-MD 170277R 4
disqualify the subject property from special assessment.
Pearce makes three primary arguments. First, Defendant’s questionnaire is not statutorily
required and is confusing. The parties readily agree that the questionnaire is not statutorily
required. Yet, the statutory scheme makes it clear that it is a county assessor’s job to ascertain
the primary purpose for a timber property to determine its eligibility for special assessment. A
questionnaire is one way to accomplish that task. Even though the questionnaire is not required
by law, the court should not dictate to counties on how to do their job, absent statutory authority.
Plaintiff has cited no authority for the court to do so.
Pearce also contends that if he had known that his property could be disqualified from
special assessment based on his answers to the questionnaire he would have been more careful.
Pearce cites to the case of Evans v. Josephine County Assessor, TC-MD 110892C, WL3027140
(Or Tax M Div July 25, 2012), where the court considered a similar claim that Defendant’s
questionnaire was confusing. In Evans the taxpayers argued that the term “marketable” in the
questionnaire was confusing. The taxpayers apparently equated the term “marketable” with
“commercial.” (Id. at 2.) Because they “were not intending to operate ‘commercially,’ they
answered “no” to the question of whether the land was being held for the purpose of growing and
harvesting marketable timber; instead, they wrote that “their intent was to ‘preserve’ the
forestland[.]” Id. The court found that the taxpayers, who had harvested timber in the state of
Washington, were familiar with a different definition of the term “preservation” in that state and
were confused. Id. Unlike the Evans case, however, Pearce offered no specific term that was
confusing. Instead, it appears that he was only confused about the consequences of his answers.
Thus, in this regard the Evans case can be distinguished.
Pearce’s second argument is that the 5-year lookback additional tax is unconstitutional.
FINAL DECISION TC-MD 170277R 5
He argues that he should not be compelled to pay property tax for the person who owned the
property prior to him. This argument fails because property tax applies to the property and not to
the property owner. Pearce would not be paying the property tax of another but, rather, the
property tax assessed on the property. One statutory provision, ORS 311.235, protects a “bona
fide purchaser” from the reach of taxes that were not a matter of public record at the time of
purchase. Here, the potential additional taxes were public information at the time Pearce
purchased the subject property. Property tax records as of 2016 show “POTENTIAL ADDL.
TAX LIAB,” as does the 2016-17 property tax bill. (Def’s Exs C, D.) Because the potential
additional taxes were a matter of public record at the time he purchased the property, Pearce
knew or should have known that additional taxes could be assessed against the property in the
future. The court is unable to discern any constitutional violation.
Pearce’s third argument is that his evidence demonstrates that he had the intent of
growing and harvesting marketable timber. On that issue the court will ascertain Pearce’s intent
by looking to his answers to the questionnaire and to his overt actions. Pearce’s answers to
Defendant’s questionnaire are unhelpful for his case, as they indicate his predominant purpose
for the property was use as a residence. Pearce defended his responses as unreflective and
guided by his desire to be left alone. Or possibly, in light of his interactions with Defendant’s
office and the court, it could be because of his bellicose style. In either case, the best that could
be said is the questionnaire does not reveal the whole story. Thus, the court turns its attention to
his overt actions.
Pearce told his real estate broker he was seeking property with a potential source of
income. Leet testified that meant timber property for the area of southern Oregon where Pearce
was looking. Next, Pearce reached out to a commercial logger prior to the close of escrow to
FINAL DECISION TC-MD 170277R 6
talk about the value of marketable timber on the property. At the time Pearce received the
questionnaire, he had only owned the subject property for a month. The growth cycle of
marketable trees is long, and it is understandable that Pearce may have needed some time to
settle into his new home before considering long term plans for the property. Additionally, the
court is persuaded that his prior career as a developer made him inclined to exploit profit from
his property rather than merely wanting to preserve trees, as Roach stated is typical of many new
property owners in the county.
In cases before the court, the party seeking affirmative relief, here the Plaintiff, bears the
burden of proof and must establish his case by a “preponderance” of the evidence. ORS
305.427. This court has previously ruled that a “[p]reponderance of the evidence means the
greater weight of evidence, the more convincing evidence.” Feves v. Dept. of Revenue, 4 OTR
302, 312 (1971). Despite Pearce’s responses on the questionnaire, Pearce’s over actions were
sufficient to eke-by his burden of persuasion. Pearce’s overt actions reveal an intention to
purchase the property to generate income—that would indicate cutting trees for economic gain.
III. COSTS AND DISBURSEMENTS
Plaintiff filed a Statement for Costs and Disbursements on September 4, 2018, requesting
that the court award him costs and disbursements totaling $477.77. Defendant filed an
Objection to Statement of Costs (Objection) on September 7, 2018, stating that:
“Defendant declassed Plaintiff’s property based on a questionnaire completed by
Plaintiff which indicated that the property was not held for the predominate
purpose of growing and harvesting marketable timber. * * *
Plaintiff testified at trial that he had been seeking property that could produce
income and had ‘…reached out to a commercial logger prior to the close of
escrow to talk about the value of marketable timber…’ Prior to trial, Defendant
had no knowledge of such actions taken by [Plaintiff]. Had this information been
provided to Defendant prior to filling this appeal, it is likely that the
declassification of the forest land would have been reversed.”
(Def’s Objection at 1.)
FINAL DECISION TC-MD 170277R 7
The Magistrate Division has discretionary authority under ORS 305.490(2) to award
costs and disbursements to the prevailing party. Wihtol I v. Dept. of Rev., 21 OTR 260, 267-268
(2013). There is no question that Plaintiff received a favorable decision, as the court reversed
Defendant’s decision to disqualify the subject property from western Oregon forestland special
assessment. The question is whether the court should, in its discretion, award Plaintiff the
requested costs and disbursements.
The court agrees with Defendant, that the information Plaintiff initially provided to
Defendant, stating in no uncertain terms that the property would not be used “for the
predominant purpose of growing and harvesting marketable timber,” created the impetus for this
trial. Therefore, Plaintiff's request for costs and disbursements is denied.
IV. CONCLUSION
After careful consideration, the court finds that Plaintiff’s predominant purpose for the
subject property was the growing and harvesting of marketable timber. The subject property
should not be disqualified from western Oregon forestland special assessment. Now, therefore,
IT IS THE DECISION OF THIS COURT that Plaintiff’s appeal is granted. The subject
property, identified as Account R325421, qualified for western Oregon forestland special
assessment as designed forestland for the 2017-18 tax year.
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FINAL DECISION TC-MD 170277R 8
IT IS FURTHER DECIDED that Plaintiff’s request for costs and disbursements is
denied.
Dated this day of September, 2018.
RICHARD DAVIS
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 signed by Magistrate Richard Davis and entered on
September 18, 2018.
FINAL DECISION TC-MD 170277R 9