Wait v. Clatsop County Assessor ( 2017 )

IN THE OREGON TAX COURT
MAGISTRATE DIVISION
Property Tax
KEVIN D. WAIT and K’LYNN M. WAIT, )
)
Plaintiffs, ) TC-MD 160298N
)
v. )
)
CLATSOP COUNTY ASSESSOR, )
)
Defendant. ) FINAL DECISION1
Plaintiffs appeal Defendant’s notice disqualifying from special assessment, for the 2016-
17 tax year, a one-acre homesite within property identified as Tax Lot 507280000103 (subject
property).2 (Compl at 2-3.) A telephone trial was held on January 30, 2017. Kevin D. Wait
(Wait) appeared and testified on behalf of Plaintiffs. Catherine Harper and Lisa Lindberg
(Lindberg) appeared on behalf of Defendant. Lindberg, Appraiser II, testified on behalf of
Defendant. Plaintiffs’ Exhibits 1 to 4 and Defendant’s Exhibits A to D were received without
objection.
I. STATEMENT OF FACTS
The parties agree that the subject property is approximately 70 acres of exclusive farm
use (EFU) zone land located in the Nehalem River Valley that is primarily pastureland with a
wood lot of approximately 10.5 acres. (See Def’s Ex A at 3-4.) The subject property also
includes a fenced area of approximately 4.5 acres upon which a manufactured home was situated
until 2014. (See id. at 3.) Wait testified that the manufactured home was placed on the subject
1
This Final Decision incorporates without change the court’s Decision, entered June 23, 2017. Plaintiffs
filed a Statement for Costs and Disbursements on July 7, 2017, requesting an award of $252, the cost of the filing
fee. See Tax Court Rule-Magistrate Division (TCR-MD) 16C(1). The court did not receive an objection to that
request within 14 days after its Decision was entered. See TCR-MD 16C(2).
2
The subject property, Tax Lot 507280000103, is split into two property tax accounts 3624 and 3625.
(Compl at 1; Def’s Ex A at 3.) The homesite at issue is on Account 3625. (Compl at 2.)
FINAL DECISION TC-MD 160298N 1
property in 1992 and removed in 2014. “The established vacant home site has been developed
with water, electricity, septic and has access from the paved two-lane Highway 103.” (Id.) The
parties agree that a 1,728-square-foot structure is also situated within the 4.5-acre fenced area.
(See id.) Wait testified that the structure is a “machine shed” in which he stored tractors, spray
buggies, and similar equipment. Lindberg described the structure as a “general purpose
building.” (See id.) Lindberg testified that cattle cannot access the 4.5-acre fenced off area
within the subject property. (See also id.) Wait disagreed, testifying that cattle could access that
area.
Wait testified that he acquired the subject property from his father in 2008 and, at that
time, the subject property received farm use special assessment and a one-acre homesite special
assessment for the land under the manufactured home. Defendant disqualified the one-acre
homesite from special assessment for the 2016-17 tax year, giving the following reasons in its
notice: (1) “The home site is no longer used in conjunction with special assessment, ORS
308A.259[;]” and (2) “The dwelling is no longer habitable.” (Ptfs’ Ex 1.) Lindberg testified that
Defendant did not disqualify the remaining 3.5-acre fenced area from special assessment.
Wait testified that the entirety of the subject property is used for farm use – specifically,
cattle grazing – and the remainder receives farm use special assessment. He testified that no
“non-farm use” is made of the subject property. Wait testified that he leases the subject property
to another individual who grazes cattle; the lease is oral. Wait testified that he is obligated to
maintain the fence lines, so he does some mowing and spraying. He testified that, when he
performs that maintenance, he stays in a trailer on the one-acre homesite.
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FINAL DECISION TC-MD 160298N 2
Lindberg testified that she inspected the subject property and observed that it was being
mowed and, presumably, held for a future dwelling. She testified that holding the subject
property for a future dwelling is a non-farm use; she characterized that as “residential use.”
Lindberg testified that Wait told her that he was going to place another manufactured home on
the subject property for his son to live in. She acknowledged that Wait made that statement after
disqualification, so it was not the reason for the disqualification. Lindberg testified that a new
dwelling placed on the subject property and used in conjunction with farm use would qualify for
homesite special assessment. However, merely having a home on farm land is insufficient for
special assessment. Wait testified that he is unsure whether he can place a new dwelling on the
subject property.
Wait and Lindberg each provided excerpts from the Oregon Department of Revenue’s
Farm Use Manual. (Ptfs’ Ex 3; Def’s Ex A at 22.) Wait highlighted text stating that “[l]and
under homesites that are no longer habitable may be assessed as a farm related storage building if
used as part of the farm operation.” (Ptfs’ Ex 3.) Lindberg highlighted text stating that
“[e]xisting specially assessed farm homesites that are vacant shall continue to qualify for special
assessment as long as the homesite remains habitable.” (Def’s Ex A at 22 (emphasis added by
Defendant).) Defendant also highlighted several statements that a farm homesite must be used in
conjunction with farm use special assessment to qualify for homesite special assessment. (Id.)
Lindberg completed an appraisal of the subject property to determine its real market
value, including the value attributable to the disqualified one-acre homesite. (Def’s Ex A.) She
testified that the subject property’s highest and best use is “farmland with a potential homesite.”
(See also id. at 4.) Lindberg concluded that the subject property’s real market value as of
January 1, 2016, was $458,595, with $45,634 allocated to the one-acre homesite with onsite
FINAL DECISION TC-MD 160298N 3
developments. (See id. at 5-6, 26.3) The 2016-17 tax roll real market value was $567,053. (See
id. at 3, 26.)
II. ANALYSIS
The issue before the court is whether one acre of the subject property was properly
disqualified from homesite special assessment under ORS 308A.259 for the 2016-17 tax year.4
Plaintiffs are the party seeking affirmative relief and, therefore, must prove their case by
a preponderance of the evidence. ORS 305.427. “Preponderance of the evidence means the
greater weight of evidence, the more convincing evidence.” Feves v. Dept. of Revenue, 4 OTR
302, 312 (1971).
A. Homesite Special Assessment – Qualification and Disqualification
“Before 1987, the land beneath farm dwellings was considered, for
property tax purposes, to be farmland. * * * The 1987 legislature repealed [the
former statute], enacting in its place a new statutory formula (“homesite
assessment”) * * * [that] values farm homesites at a rate higher than the farmland
rate but usually lower than the nonfarm residential property rate. The 1987
legislature also provided for disqualification of farm homesites from the special
assessment when the homesites no longer had a farm purpose.”
Douglas County v. Dept. of Rev., 316 Or 383, 386, 852 P2d 181 (1993) (citations omitted).5
A “homesite” is defined as “land described in ORS 308A.253, including all tangible
improvements to the land under and adjacent to a dwelling and other structures, if any, that are
customarily provided in conjunction with the dwelling.” ORS 308A.250(3). “Land under
dwellings located within an [EFU] zone and used in conjunction with farm use shall qualify for
3
In her reconciliation, Lindberg wrote that $45,252 should be allocated to the one-acre homesite. (Def’s
Ex A at 26.) That appears to be a typographical error; $45,252 was the low end of the value range indicated by her
market approach. (See id. at 6-7.)
4
The court’s references to the Oregon Revised Statutes (ORS) are to 2015.
5
The homesite special assessment statutes were formerly ORS 308.376 to 308.378. Those statutes were
renumbered ORS 308A.253 to ORS 308A.259 in 1999.
FINAL DECISION TC-MD 160298N 4
special assessment under ORS 308A.256.” ORS 308A.253(2). Use of a dwelling “in
conjunction with farm use” includes use of the dwelling by an owner “who is engaged in the
operation of the farm use land”; by an employee of the owner “who is employed in connection
with the farming operation”; or by another “person who is involved in the farming operation.”
ORS 308A.253(6). No application is required “to receive the special assessment on a qualified
homesite situated on” an EFU zone farm use parcel. OAR 150-308-1130(2).
ORS 308A.259(1)(b) sets forth two requirements for disqualifying a farm homesite from
special assessment. It states:
“(1) A homesite shall be disqualified from [special] assessment under ORS
308A.256 and shall be assessed at the assessed value under ORS 308.146 if the
dwelling:
“* * * * *
“(b)(A) Is not being used in conjunction with farm use; and
“(B) Is used for a nonfarm purpose; however, vacancy does not constitute a
change in use.”
In order to conclude that disqualification of the subject property was proper, the court must find
that both requirements for disqualification are satisfied because they are connected by the word
“and.” See Preble v. Dept. of Rev., 331 Or 320, 325, 14 P3d 613 (2000).
B. Disqualification of the Subject Property’s Homesite from Special Assessment
Defendant’s notice gave two reasons for disqualifying the subject property’s homesite
from special assessment: (1) “The homesite is no longer used in conjunction with special
assessment, ORS 308A.259[;]” and (2) “The dwelling is no longer habitable.” (Ptfs’ Ex 1.) The
first reason matches the first requirement for disqualification in ORS 308A.259(1)(b)—that the
dwelling “is not being used in conjunction with farm use.” However, Defendant’s notice does
not address the second requirement in the disqualification statute – that the dwelling be “used for
FINAL DECISION TC-MD 160298N 5
a nonfarm purpose.” At trial, Lindberg testified that Plaintiffs’ “nonfarm” use of the subject
property’s homesite was holding the subject property for a future dwelling. Upon further
questioning, she acknowledged that a future dwelling placed on the subject property would
qualify for homesite special assessment if it were used in conjunction with the subject property’s
farm use.
For purposes of this analysis, the court will accept Defendant’s determination that the
subject property “dwelling” was no longer “being used in conjunction with farm use.” The
question becomes whether removal of a farm dwelling and holding the land for a future possible
dwelling constitutes “use for a nonfarm purpose” under ORS 308A.259(1)(b)(B).
In Douglas County v. Dept. of Rev., the Oregon Supreme Court considered whether the
county assessor could impose a “roll-back penalty” when “farmland” was converted to “farm
homesite.” 316 Or at 387. The court summarized the county’s argument as follows: “After a
farmer gets permission to build a second dwelling on the farmland, but before the dwelling is
built, that land is not a homesite and it is not farmland, rather it is bare land that does not qualify
for the farm homesite assessment.” Id. (emphasis in original). The court rejected the county’s
argument in light of the statutory text and context, disagreeing that “a portion of farmland on
which a dwelling is planned to be built at a future time is no longer farmland.” Id. Noting that
the roll-back penalty was imposed only as a result of “ongoing use inconsistent with farming,”
the court reasoned that “[l]and that lies fallow while its owners plan building a dwelling on it is
not then being used in a manner inconsistent with farming.” Id. at 388 (emphasis in original).
Although the decision in Douglas County v. Dept. of Rev. does not control the outcome of
this case, the court’s reasoning is persuasive, particularly its conclusion that land lying fallow
while its owners plan to build a farm dwelling is not inconsistent with farm use. Applying that
FINAL DECISION TC-MD 160298N 6
reasoning to this case leads to the conclusion that Plaintiffs’ activity of holding the land while
determining whether to add a new dwelling to it is not a “nonfarm purpose.” Moreover, Wait
testified that he used the vacant homesite to support farm activities: specifically, he stayed in his
trailer on the homesite when he performed work to maintain the fence lines. Defendant raised
the possibility that Plaintiffs might add a new dwelling for use by their son. That is a possible
future event that has no effect on the outcome of this appeal for the 2016-17 tax year.
Defendant also asserted that disqualification is proper because a nonexistent dwelling is
not habitable. The court finds no habitability requirement in the disqualification statute and
infers that Defendant found that requirement in the Farm Use Manual, which is “a guide to assist
counties with interpretation of farm use laws and administrative rules.” (Farm Use Manual at 1-
1 (2014).)
It is true that, in order to qualify a homesite for special assessment, a dwelling must exist
and be used in conjunction with farm use. See ORS 308A.253(2) (“[l]and under dwellings”
(emphasis added)); see also Douglas County v. Dept. of Rev., 316 Or at 387 (“The county is
correct, then, that farmland cannot be a ‘homesite’ without a ‘dwelling.’”). Even though land
must include a dwelling to qualify initially as a “homesite” for special assessment purposes,
there is no provision in the statute that removal of a dwelling disqualifies a homesite, absent
some nonfarm use. See ORS 308A.259(1).
That is in contrast with other statutes that require disqualification of land from special
assessment when the land ceases to meet the qualification requirements.6 See, e.g., ORS
308A.113(1) (requiring the assessor to disqualify EFU land from special assessment upon “the
6
Under the homesite special assessment statutes, a dwelling that becomes vacant may not be disqualified
from special assessment. ORS 308A.259(1)(b)(B). However, it is questionable whether land under a vacant
dwelling would qualify for homesite special assessment given the requirement that the homesite be “used in
conjunction with farm use.” ORS 308A.253(2).
FINAL DECISION TC-MD 160298N 7
discovery that the land is no longer being used as farmland.”). When interpreting a statute, the
court must not “insert what has been omitted, or * * * omit what has been inserted.” PGE v.
Bureau of Labor and Industries, 317 Or 606, 611, 859 P2d 1143 (1993), citing ORS 174.020.
Thus, the court concludes that the lack of a habitable dwelling on the subject property is not a
basis for disqualification from special assessment.
Finally, the court notes that the disqualified portion of the subject property is land located
within the EFU zone. Pursuant to ORS 308A.062(1), land located in the EFU zone without a
dwelling is farmland subject to special assessment so long as it is “used exclusively for farm use
* * *.” ORS 308A.062(1). Thus, the court questions Defendant’s determination that one acre of
EFU land within the subject property – the remainder of which qualifies for farm use special
assessment – does not qualify for either farm use or homesite special assessment. However, the
court need not make a determination on that question given its conclusion that the subject
property’s homesite was improperly disqualified from special assessment.
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FINAL DECISION TC-MD 160298N 8
III. CONCLUSION
Upon careful consideration, the court concludes that the subject property’s homesite was
improperly disqualified from homesite special assessment under ORS 308A.259 for the 2016-17
tax year. Now, therefore,
IT IS THE DECISION OF THIS COURT that Plaintiffs’ appeal is granted.
IT IS FURTHER DECIDED that Plaintiffs’ request for costs and disbursements in the
amount of $252 is granted.
Dated this day of July 2017.
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 July 24, 2017.
FINAL DECISION TC-MD 160298N 9