Yarbrough v. Dept. of Rev. ( 2011 )

400 December 20, 2011 No. 47
IN THE OREGON TAX COURT
REGULAR DIVISION
Jack R. YARBROUGH,
Plaintiff,
v.
DEPARTMENT OF REVENUE,
Defendant,
and
MARION COUNTY ASSESSOR,
Defendant-Intervenor.
(TC 4974)
Plaintiff (taxpayer) appealed a Magistrate Division decision regarding the
real market value (RMV) of real property in Marion County. Following trial, the
court found that taxpayer had not provided the court with an appraisal by or
testimony of an expert witness as to the real market value (RMV) of the real
property at issue and thus failed to meet his burden of proof and sustained the
county assessor’s values as previously determined.
Trial was held August 5, 2011, in the courtroom of the
Oregon Tax Court, Salem.
William L. Ghiorso, Attorney at Law, Salem, argued the
cause for Plaintiff (taxpayer).
Scott A. Norris, Marion County Counsel, Salem, argued
the cause for Defendant-Intervenor Marion County Assessor
(the assessor).
Decision for Defendant-Intervenor rendered December 20,
2011.
HENRY C. BREITHAUPT, Judge.
I. INTRODUCTION
Plaintiff (taxpayer) appeals certain real property
assessments for the 2008-09 tax year. The properties at
issue in this case are identified in the Marion County tax
records as tax lots R26196 (parcel 1), R342250 (parcel 2),
and R342251 (parcel 3).
Cite as 20 OTR 400 (2011) 401
II. FACTS
The subject properties are located on Evergreen
Street, adjacent to the Oregon State Fairgrounds in
north-central Salem. Parcels 1 and 2 consist entirely of bare
land. Parcel 3 is a “flag lot,” with a “flag” portion consisting
of bare land, and a “flag pole” section consisting of a paved
driveway that connects with Evergreen Street from the east.
Parcel 1 is adjacent to Evergreen Street, while parcels 2 and
3 are accessible from Evergreen Street via the paved “flag
pole” portion of parcel 3.
Taxpayer acquired the subject properties as one
undivided lot roughly five years ago. Taxpayer subsequently
subdivided the one lot into the three parcels at issue in this
case. Prior to the assessment date for the 2008-09 tax year,
taxpayer made several unsuccessful efforts to sell the sub-
ject properties. Taxpayer subsequently sold the subject prop-
erties in a deal that included other real property owned by
taxpayer that was needed by another developer to complete
a commercial development in Keizer.
Taxpayer appealed the 2008-09 tax year prop-
erty tax assessments for each of the parcels subject to this
appeal to the Magistrate Division of the Oregon Tax Court.
The Magistrate found for the assessor. See Yarbrough v.
Marion County Assessor, TC-MD No 090332B (Dec 3, 2010).
Taxpayer now appeals to the Regular Division.
At trial, the court received in evidence an appraisal
report prepared by an appraiser employed by Defendant-
Intervenor Marion County Assessor (the assessor). This
report supports a real market value (RMV) for each of the
subject properties of $48,000 as of January 1, 2008—the
assessment date for the 2008-09 tax year.
Taxpayer, in turn, argues that the RMV of each of
the three parcels on January 1, 2008, was no more than
$30,000. Taxpayer has not provided the court with an
appraisal report of an expert witness to support this con-
tention, but at trial produced the testimony of three local
developers of real estate, one of whom was also a real estate
broker, to support taxpayer’s proposed RMV.
402 Yarbrough v. Dept. of Rev.
III. ISSUE
What is the RMV of each of the subject properties?
IV. ANALYSIS
RMV is defined 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.”
ORS 308.205(1).1 The RMV of a given parcel of real prop-
erty is a question of fact. As the party requesting affirma-
tive relief in this proceeding, taxpayer bears the burden of
proof in this proceeding on questions of fact. ORS 305.427.
Phrased differently, in order to succeed in this case, taxpayer
must affirmatively prove that the RMV figure of $30,000 he
has given for each of the parcels at issue in this case is more
likely than not the value of the property.
As was mentioned above, taxpayer has not provided
the court with an appraisal by or testimony of an expert
witness as to the value of the parcels at issue in this case.
Taxpayer did, however, call several witnesses to provide esti-
mates as to the cost of developing the three parcels. Taxpayer
derives his proposed RMV for the parcels at issue in this
case by subtracting these estimated development costs from
the amount for which his witnesses estimate they could sell
the developed lots. The assessor, on the other hand, has pro-
vided the court with an appraisal report and testimony and
testimony from an appraiser qualified as an expert.
An appraiser’s role in a valuation dispute is “to
review and evaluate market data, and base conclusions on
such data.” McKee v. Dept. of Rev., 18 OTR 58, 64 (2004).
Such a review of market data is the only way that the court
can reasonably choose between competing valuations for any
given parcel. That is especially true where, as here, the com-
parable sales indicator of value is of primary importance. It
is for precisely that reason that in a case such as this one
“[p]ersonal conclusions with no basis in actual market data
are entitled to little or no weight.” Id.1
All references to the Oregon Revised Statutes (ORS) are to 2007.
Cite as 20 OTR 400 (2011) 403
The assessor’s appraisal report relies on the “sales
comparison” method of valuation. That is to say that the
assessor supports the assessor’s valuation of the property
at issue in this case by comparing each of the parcels to
closed sales, listings, or pending sales of similar properties.
See Appraisal Institute, The Appraisal of Real Estate 297
(13th ed 2008). Specifically, the assessor chose three sales
of bare land in north-central Salem occurring between
September of 2007 and July of 2009. The court considers the
appraisal report and the supporting testimony of the asses-
sor’s appraiser credible.
While the court appreciates that taxpayer’s wit-
nesses possess considerable experience in developing real
property in the Salem-Keizer area, it does not appear that
these witnesses relied on any specific market data in for-
mulating their estimates as to the costs of developing the
parcels at issue in this appeal. At the very least, taxpayer
has not provided any such data to the court or, as far as the
court can tell, to the assessor. Consequently, the court gives
very little weight to the testimony of taxpayer’s witnesses.
In addition, taxpayer has made certain criticisms of
the comparable sales chosen by the assessor. In the absence
of a competing appraisal report, however, taxpayer cannot
bear his burden of proof relying only on such criticisms. “[I]t
is not enough for a taxpayer to criticize a county’s position.
Taxpayers must provide competent evidence of the RMV
of their property.” Poddar v. Dept of Rev., 18 OTR 324, 332
(2005).
V. CONCLUSION
Taxpayer has not borne the burden of proving his
proposed RMV for the parcels subject to this appeal. Now,
therefore,
IT IS DECIDED that the RMVs for each of parcels 1,
2, and 3 were $48,000 on the assessment date of January 1,
2008.