Washington County Assessor v. Christ Gospel Church , 21 Or. Tax 452 ( 2014 )

452 July 29, 2014 No. 57
IN THE OREGON TAX COURT
REGULAR DIVISION
WASHINGTON COUNTY ASSESSOR,
Plaintiff,
v.
CHRIST GOSPEL CHURCH OF PORTLAND,
Defendant.
(TC 5169)
Plaintiff Washington County Assessor (the county) appealed from a
Magistrate Division decision as to exemption of real property owned by Defendant
(taxpayer). The magistrate had ruled that recently enacted provisions of ORS
307.162 that allowed first-time filers for exemption to make such filing “for the
five years prior to the current tax year” applied in that case. Because taxpayer
was a first-time filer for property tax exemption, the magistrate had determined
that taxpayer’s application for exemption, accompanied as it was by the appropri-
ate late filing fee, should not have been rejected by the county as untimely. The
county had argued that the only years that would be affected by a proper claim
were years in or after the 2011-12 tax year. Granting taxpayer’s cross-motion for
summary judgment, the court ruled that the 2011 legislation meant the retro-
spective time period indicated an intent of the legislature about the meaning of
the effective date for the 2011 legislation and that the intent was that the time
period for relief should parallel or be coterminous with the time period within
which an assessor can add property to the rolls where no otherwise timely claim
for exemption had been filed.
Oral argument on cross-motions for summary judgment
was held by telephone on February 11, 2014.
Brad Anderson, Washington County Counsel, Hillsboro,
filed the motion and argued the cause for Plaintiff (the
county).
Elisabeth S. Shellan, Stoel Rives LLP, Portland, filed the
cross-motion and argued the cause for Defendant (taxpayer).
Decision for Defendant rendered July 29, 2014.
HENRY C. BREITHAUPT, Judge.
I. INTRODUCTION
This property tax exemption case is before the court
on cross-motions for summary judgment filed by Plaintiff
(the county) and Defendant (taxpayer). The facts are estab-
lished by a stipulation of the parties. The year in question is
the 2010-11 tax year.
Cite as 21 OTR 452 (2014) 453
II. FACTS
The 2010-11 tax year (tax year) is the only tax
year at issue between the parties. Mosaic Covenant Church
(Mosaic) applied for and was granted property tax exemption
for the 2008-09 tax year in March of 2008 on the portion of
the property it used at 161 NW Adams Avenue, Hillsboro,
Oregon (the property). In January 2010, taxpayer entered
into an agreement with Mosaic to sub-lease the property for
the period January 15, 2010 through April 30, 2011. Neither
party to the sub-lease notified the county. On February 8,
2010, the county terminated the exemption because Mosaic
had vacated the premises.
Unbeknownst to the county, Garner Green LLC, the
property management company for the property, told tax-
payer to “get its exemption paperwork in order.” Taxpayer
applied for and received federal tax exemption status under
IRC § 501(c)(3) of the Internal Revenue Code of 1986, as
amended, and supplied the property management company
with its determination letter from the Internal Revenue
Service. Taxpayer believed that all necessary tax exemp-
tion paperwork had been completed, unaware that a sepa-
rate exemption application with the county was required to
obtain a property tax exemption for the property.
In October of 2010, taxpayer entered into a lease
directly with the property’s owner for the period of May 1,
2011 through April 30, 2012. Neither party to the lease noti-
fied the county of the lease.
In early February 2012, taxpayer was contacted by
Garner Green LLC and was told it owed Garner Green LLC
“back taxes” for the tax year and the 2011-12 tax year. Also
in early February 2012, a representative of taxpayer con-
tacted the county and asked about obtaining a property tax
exemption for the property for the tax year and the 2011-12
tax year. On March 9, 2012, taxpayer submitted an applica-
tion for exemption for the property, together with late filing
fees, for the tax year and the 2011-12 tax year. The county
denied the exemption for both tax years.
The parties agree that if taxpayer had applied for
an exemption for the tax year on or before December 31,
454 Washington County Assessor v. Christ Gospel Church
2010, it would likely have been granted exemption under
either ORS 307.130 or ORS 307.140. The county does not
contest that taxpayer, as an entity, meets the require-
ments for exemption under ORS 307.130 and ORS
307.140, or that taxpayer’s sublease and lease meet the
requirements for exemption under ORS 307.112 and ORS
307.166. When taxpayer applied for exemption on March
9, 2012, it had never filed a previous claim for exemption
for the property, and had never received a notice from the
county regarding any potential property tax liability of
the property.
In proceedings before the Magistrate Division, the
magistrate determined that recently enacted provisions of
ORS 307.162 that allowed first-time filers for exemption to
make such filing “for the five years prior to the current tax
year” applied in this case. Christ Gospel Church of Portland
v. Washington County Assessor, TC-MD No 120512D at 7
(Jan 7, 2013). Those provisions were added to ORS 307.162
by Oregon Laws 2011, chapter 655 (the 2011 Legislation).
Because taxpayer was a first-time filer for property tax
exemption, the magistrate determined that taxpayer’s
application for exemption, accompanied as it was by the
appropriate late filing fee, should not have been rejected by
the county as untimely. Id. The county appeals from that
decision.
III. ISSUE
The issue is the proper reading of the effective date
provisions of the 2011 Legislation.
IV. ANALYSIS
To begin with, the parties agree that no issue exists
in this case regarding qualification for exemption other than
whether the claim for exemption was timely under the 2011
Legislation. The parties also agree that this issue is solely a
matter of the construction of the effective date provisions of
the 2011 Legislation.
The effective date provision of the 2011 Legislation
states that the amendments made by the legislation “apply
to property tax years beginning on or after July 1, 2011.”
Cite as 21 OTR 452 (2014) 455
The 2011 Legislation, § 4. In considering this language it is
helpful to remember that a property tax year is a period of
12 months beginning on July 1. ORS 308.007(1)(c).1
The problem in this case is that the relief contained
in the substantive provisions of the 2011 Legislation neces-
sarily refers to, or takes into account, two years. The first
would be the year in which the claim for exemption contem-
plated by the legislation is made. The second would be the
year for which the claim for exemption is made.
The construction of the effective date provision
offered by the county is that the property tax year beginning
July 1, 2011, is the first year for which exemption is avail-
able under the legislation.2 As the year for which exemption
is claimed in this case is the year beginning July 1, 2010, the
county concludes that the 2011 Legislation offers no relief to
taxpayer.
The construction offered by taxpayer is that the
property tax year beginning July 1, 2011, is the first year
in which a claim for exemption provided by the legislation
may be made. Taxpayer made such a claim in that tax year.
Taxpayer then applies the substantive provisions of the leg-
islation that allow a claim of exemption for any of the five
tax years prior to the “current tax year” of 2011-12. One of
those five years is the year in controversy here, namely the
2010-11 tax year.
The question is therefore one of statutory construc-
tion. As the Supreme Court has directed in such cases, the
court has considered the text, context and legislative history
of the 2011 Legislation. See PGE v. Bureau of Labor and
Industries, 317 Or 606, 610-12, 859 P2d 1143 (1993); State v.
Gaines, 346 Or 160, 164-69, 206 P3d 1042 (2009). In doing
so, the court has applied the construction offered by each
party to possible factual occurrences to consider how the
statute would operate under the competing constructions.
1
Except as otherwise noted, all references to the Oregon Revised Statutes
(ORS) are to the 2009 edition.
2
Both parties agree the tax year beginning July 1, 2011, would be the
first year in which a claim for exemption would be permitted under the 2011
Legislation.
456 Washington County Assessor v. Christ Gospel Church
To begin with, the court observes that prior to the
2011 Legislation, if substantive requirements were satisfied,
exemption was available where:
(1) Claim was made on or before April 1 of the tax year
preceding the tax year for which exemption was
claimed (ORS 307.162(1));
(2) Claim was made on or before December 31 of the
tax year for which exemption was claimed and a late
filing fee was paid (ORS 307.162(2)(a)(A)); or
(3) Claim was made on or before April 1 of the tax year
for which exemption was claimed, and the claimant
both paid a late filing fee and demonstrated status
as a first time filer or public entity (ORS 307.162(2)
(a)(B)).
Under this regime, which the legislature had repeatedly
extended in favor of taxpayers, claim for exemption could
occur over a year-long period beginning on the April 1 pre-
ceding the tax year for which exemption was claimed and
extending to the April 1 falling within such year—that is,
within one year following the earliest of the application dates.3
The effect of the substantive amendments made
by the 2011 Legislation was to further extend the time
period within which certain first time filers and govern-
ment entities could, if a late filing fee was paid, claim
exemption.
The claim extension was not to a fixed date, as had
been the approach when the earlier claim extensions found
in ORS 307.162(2)(a)(A) and (B) had been adopted. Rather
the time for a claim was extended to “at any time,” unless the
assessor had mailed to the applicant a notice of additional
taxes being due. ORS 307.162(2)(b)(A)(ii) as amended by the
2011 Legislation. In the event of such a notice, the claim
deadline was extended to 60 days following the date of mail-
ing of such a notice. ORS 307.162(2)(b)(A)(i) as amended by
the 2011 Legislation.
3
A claim could be made prior to April 1 of the year prior to the year for which
the claim was made, but the claim had to be made no later than that April 1 date
if late filing fees were to be avoided.
Cite as 21 OTR 452 (2014) 457
Further, the years affected by the claim for exemp-
tion were extended. The claims would not just apply to
either the upcoming or current tax year, as allowed by prior
statutes. Rather, they could apply for up to “five tax years
prior to the current tax year.” The starting point for the
calculation was therefore the tax year in which the claim
was made. ORS 307.162(2)(b)(A) as amended by the 2011
Legislation.
The “current tax year” is, however, not the focus of
the substantive exemption. Rather, it begins a measuring
period needed to define the years to which a substantive
claim for exemption may be made.
In the opinion of the court, this retrospective time
period indicates an intent of the legislature about the mean-
ing of the effective date for the 2011 Legislation. The intent
was that the time period for relief should parallel or be
coterminous with the time period within which an asses-
sor can add property to the rolls where no otherwise timely
claim for exemption has been filed. Under ORS 311.216, the
same five-year retrospective period, measured from the cur-
rent year, is defined as the period for which an assessor can
add property to the rolls and, having corrected the rolls,
extend on the roll additional taxes under ORS 311.206. The
relief offered by the 2011 Legislation should extend back to
the same period.
Indeed, the 2011 Legislation makes specific refer-
ence to “additional taxes owing under ORS 311.206.” It is
notice of that occurrence that is used to define one of the two
time periods within which a claim for exemption may be made
under the 2011 Legislation.4 See ORS 307.162(2)(b)(A)(i)
as amended by the 2011 Legislation.
The court is of the opinion that this linkage of the
exemption claim process to the potential action of assessors
in asserting tax liabilities for property where no exemption
claim has been made is decisive. It demonstrates that the
legislature intended its relief provisions to be available as
a defense (at least in those cases where an assessor first
4
The other time period is the indefinite “any time” contained in the legisla-
tion for cases in which an assessor’s notice is not issued.
458 Washington County Assessor v. Christ Gospel Church
acted) to the same years exposed under the omitted prop-
erty statutes to additional assessments.
The legislature is considered to have been aware of
the omitted property retrospective period. In fashioning a
relief provision using a reference to the very same roll cor-
rection and omitted property regime, the legislature was, in
the opinion of the court, providing a defense that would be
co-extensive to the potential threat to a taxpayer.
That intent, however, can only be fulfilled if the
effective date provisions are read as taxpayer here suggests.
That is, a defense effective for up to five years prior to the
2011-12 tax year is available, if, as the parties here agree,
the other requirements of the 2011 Legislation are met.
The reading suggested by the county would leave taxpayers
exposed to as many as five years of omitted property assess-
ment, measured back from the 2011-12 year, without any
defense. That is inconsistent with the text and context of the
2011 Legislation.
This case is not one where the assessor issued a
notice to which taxpayer responded within the allowed time.
However, the resolution of the effective date argument must
take into account both such cases, and a case such as this
one where taxpayer files before receiving notice from the
assessor.
In addition, the construction of the effective date
of the statute offered by the county creates a result that
can easily be described as questionable. The county argues
that the only years that may be affected by a proper claim
are years in or after the 2011-12 year. Stated differently,
the county argues that those are the only years for which
exemption may be claimed under the 2011 Legislation.
However, the 2011 Legislation substantively
provides that claims under ORS 307.162 may only be
made for “tax years prior to the current tax year.” ORS
307.162(2)(b)(A). In the context of the argument of the
county, that statutory provision would mean that an other-
wise proper claim for exemption made between July 1, 2011
and June 30, 2012, could not apply to any year. It could not
apply to any year prior to the 2011-12 year under the county
Cite as 21 OTR 452 (2014) 459
argument. Nor could it apply to the 2011-12 year under the
substantive provisions limiting relief to “prior” years.
Further, relief claimed in the 2012-13 tax year could
only apply to one prior year—the preceding tax year. This
cascade would continue until the five-year relief language of
the 2011 Legislation would not become a reality except for
claims made in the 2016-17 tax year.
There is nothing in the text or context of the 2011
Legislation upon which such a strained result can be based.
The legislature in other areas has provided for sequential
benefit provisions. See, e.g., HB 3601, § 4 (2013). It did not do
so here. Nonetheless the county argues that its construction
of the effective date provision is supported by the legislative
history of the 2011 Legislation.
The county contends that certain testimony of a
proponent of the 2011 Legislation indicates that the benefits
of the legislation cannot extend to years prior to the 2011-12
tax year when a claim is filed in or after the 2011-12 tax
year. That testimony related to a problem, of the type
addressed in the 2011 Legislation, that had occurred in the
past for a taxpayer in the legislative district of the witness.
A user of property had failed to timely claim exemption and
the assessor had notified the user that the property was not
exempt by reason of the procedural failure to make a claim.
At the time of the notice, none of the existing extensions of
time for filing a claim for exemption were available to the
taxpayer.
The testimony of the witness upon which the county
relies was to the effect that the 2011 Legislation would not
help that unfortunate taxpayer because, in the words of the
witness, the 2011 Legislation “is prospective, it goes forward
rather than backward.”
The problem with the reliance of the county on this
testimony is that acceptance of the position of taxpayer here
does not conflict with the testimony. This is because in the
case described by the witness, the witness indicated that
the taxpayer had in fact received a notice from the asses-
sor and could not file a claim under the statutes then in
force. The provision of the 2011 Legislation upon which the
460 Washington County Assessor v. Christ Gospel Church
unfortunate taxpayer would have to rely is the provision
permitting a filing within 60 days of adverse notice from the
assessor.
The testimony upon which the county relies related
only to a situation where an assessor had taken action and
notified a taxpayer of that action, all prior to the effective
date of the 2011 Legislation and prior to July 1, 2011. It
did not deal with the problem that exists here—one that is
based on occurrences and actions taken after both the effec-
tive date of the statute and after July 1, 2011.
V. CONCLUSION
For the foregoing reasons the motion of taxpayer is
granted and that of the county is denied. Costs awarded to
taxpayer. Now, therefore,
IT IS ORDERED that Defendant’s cross-motion for
summary judgment is granted; and
IT IS FURTHER ORDERED that Plaintiff’s Motion
for Summary Judgment is denied.