Corvallis Nbhd. Housing Svcs. v. Linn Cty. Assessor , 21 Or. Tax 95 ( 2013 )

No. 14 February 27, 2013 95
IN THE OREGON TAX COURT
REGULAR DIVISION
CORVALLIS NEIGHBORHOOD
HOUSING SERVICES, INC.,
dba Willamette Neighborhood Housing Services,
and Carolina Sunset Development, LLC,
Plaintiffs,
v.
LINN COUNTY ASSESSOR,
Defendant,
and
DEPARTMENT OF REVENUE,
Defendant-Intervenor.
(TC 4996)
Plaintiffs (taxpayers) appealed denial of property tax exemption for previ-
ously exempt low-income housing projects in Linn County following a change of
ownership of the properties. Granting Defendant-Intervenor (the department)’s
cross-motion for summary judgment, the court ruled that pursuant to statutes
and case law, exemption from property tax is not appropriate where, as here,
lease agreements granted the residents of the properties an exclusive possessory
interest in each apartment for use as private residences, thus taxpayers’ use of
the subject properties was not exclusive, and an arguably charitable institution
cannot qualify for exemption when the particular purpose motivating the char-
itable institution’s activities allow the subjects of its charity to use property for
their own purposes.
Oral argument on cross-motions for summary judgment
was held March 21, 2012, in the courtroom of the Oregon
Tax Court, Salem.
David L. Canary, Garvey Schubert Barer, Portland, filed
the motion and argued the cause for Plaintiffs (taxpayers).
Rochelle A. Nedeau, Senior Assistant Attorney General,
Department of Justice, Salem, filed the cross-motion and
argued the cause for Defendant-Intervenor (the department).
Decision for Defendant-Intervenor rendered February 27,
2013.
HENRY C. BREITHAUPT, Judge.
96 Corvallis Nbhd. Housing Svcs. v. Linn Cty. Assessor
I. INTRODUCTION
This case comes before the court on the motion of
Plaintiffs Corvallis Neighborhood Housing (CNHS) and
Carolina Sunset Development LLC (Carolina LLC) for sum-
mary judgment and the cross-motion for summary judg-
ment of Defendant Linn County Assessor (the county) and
Defendant-Intervenor Department of Revenue (the depart-
ment). In this order Plaintiffs are collectively referred to as
“taxpayers” and Defendant and Intervenor are collectively
referred to as “the taxing authorities.” The tax year at issue
is 2010-11.
II. FACTS
The facts stated below largely reflect the Stipulation
of Facts and Stipulated Exhibits provided to the court by the
parties. During the 2010-11 tax year, taxpayer CNHS was
an IRC section 501(c)(3) nonprofit corporation.1 Taxpayer
Carolina LLC was not an IRC section 501(c)(3) corporation.
However, CNHS is the sole member of Carolina LLC and, as
was stated above, CNHS is a 501(c)(3) corporation.
Taxpayers provide housing for low-income individ-
uals and families in Linn County and Benton County. The
low-income housing projects at issue in this case are all
located in Linn County.
Prior to 2006, taxpayer operated primarily in
Corvallis and other areas of Benton County. However, in
2006 Linn County Affordable Housing (LCAH), a low-
income housing provider in neighboring Linn County, was
forced to wind down due to financial difficulties and trans-
ferred four low-income housing projects to CNHS. Two of
these projects were located in the city of Lebanon and two in
the city of Sweet Home. Three of these projects were multi-
family rental apartment buildings. The fourth consisted of
six single family rental homes located in Sweet Home. As
of July 1, 2010, CNHS owned only the single family homes
directly. The three apartment complexes were owned by
Carolina LLC, which was in turn wholly owned by CNHS.
These properties are referred to in this order collectively as
“the subject properties.”
1
All references to the Internal Revenue Code (IRC) are to the 2008 edition.
Cite as 21 OTR 95 (2013) 97
The construction capital for the subject properties
included government funding that requires the subject
properties to be reserved for low-income households. In some
instances these funds were conditioned upon, among other
things, recording rent restrictions and limits on tenant
income as covenants that run with the land. Most of the
funding sources relied upon by taxpayers required that ten-
ants’ household incomes not exceed some prescribed per-
centage of the Area Median Income, typically below 50 to
60 percent. Other funding sources relied upon by taxpayers
required taxpayers to provide social service programming
to tenants. The operating expenses for the subject proper-
ties, including debt servicing, were financed in part by rents
collected from taxpayers’ tenants.
CNHS provides a variety of social services, some
aimed specifically at tenants of its low-income housing proj-
ects and others aimed at the general public. These services
included microbusiness courses, foreclosure assistance, and
homeownership classes. Services aimed at the general pub-
lic were not performed on site at taxpayers’ housing proj-
ects and taxpayers did not keep records showing whether
the tenants of any of their housing projects utilized these
services. Taxpayers offered services specific to its tenants
at the subject properties, including referrals to other local
resources for rent and energy assistance, food and cloth-
ing. Other services offered by taxpayers to their tenants
included encouraging community safety, after school care
and activities for children, senior support services, referrals
for dispute resolution, financial planning, life management
skills, and community event sponsorship.
Under the lease agreement used by taxpayers
during the tax year at issue, taxpayers granted to its res-
idents the right to use a given housing unit as a residence
in consideration for payment of rent. Taxpayers reserved
the right to enter leased premises in emergencies or upon
24-hours’ notice to perform maintenance or other tasks
aimed at ensuring the serviceability of the premises.
Otherwise, tenants appear to have had the right to exclude
others, including agents or employees of taxpayers, from
their own leased dwellings.
98 Corvallis Nbhd. Housing Svcs. v. Linn Cty. Assessor
While in possession of LCAH, all four of the sub-
ject properties were exempted from property tax under ORS
307.130.2 In December of 2009 the owner of record in the
Linn County property records for the three multifamily
projects acquired by Carolina LLC changed to reflect their
acquisition by Carolina LLC. This record change prompted
the county to review the exemption given to these proper-
ties and to disqualify the multifamily projects owned by
Carolina LLC from property tax exemption for the 2010-11
tax year. After further review of the county’s records, the
county also disqualified the single family homes in Sweet
Home that CNHS owned directly from property tax exemp-
tion for the 2010-11 tax year. Taxpayers appealed these dis-
qualifications to the Oregon Tax Court.
This case was specially designated for hearing in
the Regular Division by an order entered on March 9, 2011.
The parties agreed to proceed through cross-motions for
summary judgment under Tax Court Rule (TCR) 47 and
have provided the court with a fairly extensive stipulation of
facts. The parties have also stipulated to many of the exhib-
its in the record before the court. Nonetheless, the parties
have also each provided declarations and exhibits in support
of their motions to which their opposing party has not stip-
ulated. The taxing authorities object to the admissibility of
several of the affidavits submitted by taxpayers in support of
their case. These objections are dealt with in the “Analysis”
section below.
At oral argument on these cross-motions, the court
determined that there existed evidence in the record from
which a reasonable finder of fact could determine that tax-
payers do not rent units in their housing projects at below
market rents and that this prevented the court from grant-
ing summary judgment on the question of whether tax-
payers’ activities involve the type of “gift or giving” required
of a charitable institution under ORS 307.130. The court is
of the opinion that the record likewise does not mandate a
ruling that taxpayers’ activities lacked the required degree
of gift or giving. For reasons that will be stated below, the
motion of the taxing authorities is likewise denied with
2
All references to the Oregon Revised Statutes (ORS) are to the 2009 edition.
Cite as 21 OTR 95 (2013) 99
respect to “gift or giving.” However, other issues raised by
the parties in their briefing and at oral argument are ripe
for summary judgment on the record before the court and
are dispositive.
III. ISSUE
The issue is whether the subject properties are
exempt from property tax under ORS 307.130.
IV. ANALYSIS
A. The Admissibility of the Declarations Submitted by
Taxpayers
As a preliminary matter the court will address the
objections the taxing authorities raise as to the admissibil-
ity of certain affidavits that taxpayers have presented in
support of their motion for summary judgment. The taxing
authorities argue that these affidavits contain statements
that would not be admissible at trial and therefore, pursuant
to TCR 47 D, cannot be used to support taxpayers’ motion
for summary judgment. The taxing authorities’ objections
primarily fall under the headings of relevance, lack of foun-
dation, and hearsay.3 Because of the alleged pervasiveness
of these defects, the taxing authorities have declined to iden-
tify specific inadmissible passages.
There may or may not be merit to the objections of
the taxing authorities, but their method of presenting these
objections is self-defeating. Where an objection is offered to
a whole document—as opposed to some discrete part of the
document—and the document is found to contain material
that does not fall within the ambit of the objection, the objec-
tion must fail. See Brown v. J.C. Penney Co., 297 Or 695, 688
P2d 811 (1984). The court has examined each of the affida-
vits submitted by taxpayers and is of the opinion that while
some of the affidavits contain objectionable material, each
of the affidavits and attached documents likewise contain
3
The taxing authorities further object to the declaration of Tad Everhart on
the basis that Everhardt is an attorney representing taxpayers in this case and
his declaration contains substantive details about the development and financing
of the properties at issue in this case. The rules of professional conduct typically
forbid an attorney from testifying in a case if that attorney is also representing
a party in that case. See Oregon Rules of Professional Conduct 3.7. However, the
Oregon Rules of Evidence do not address this matter.
100 Corvallis Nbhd. Housing Svcs. v. Linn Cty. Assessor
some clearly admissible material. For this reason the court
overrules the objection of the taxing authorities.
B. Whether the Subject Properties are Exempt under ORS
307.130
This case involves real property owned by two dis-
tinct entities, CNHS and Carolina LLC. However, ORS
307.022 provides that where, as here, a limited liability com-
pany is owned by a nonprofit corporation, the property of the
limited liability company is exempt to the same extent as
the property of the nonprofit is exempt, if at all. Therefore, if
CNHS qualifies for exemption under ORS 307.130, then the
properties owned by Carolina LLC likewise are exempt.
ORS 307.130 reads in pertinent part:
“(2) * * * the following property owned or being purchased
by art museums, volunteer fire departments, or incorpo-
rated literary, benevolent, charitable and scientific institu-
tions shall be exempt from taxation:
“(a) * * * only such real or personal property, or proportion
thereof, as is actually and exclusively occupied or used in
the literary, benevolent, charitable or scientific work car-
ried on by such institutions.”
Oregon courts look to answer two main questions in deter-
mining whether property falls within the “charitable insti-
tutions” exemption of ORS 307.130. First, whether the entity
seeking the exemption is a “charitable institution,” and sec-
ond, whether the property is “actually and exclusively occu-
pied or used in the * * * charitable * * * work carried on” by
the organization. Taxpayers argue that they are charitable
institutions and that the subject properties are either occu-
pied or used by taxpayers exclusively in furtherance of their
charitable work—specifically, providing housing for individ-
uals and families that could not otherwise afford housing,
and doing so on a not-for-profit basis. The taxing authori-
ties argue that taxpayers are not charitable institutions and
that taxpayers do not exclusively occupy or use the subject
properties.
In deliberating on these cross-motions, the court
bears in mind that it must put into effect the intentions
Cite as 21 OTR 95 (2013) 101
of the legislature, if those intentions can be discerned.
North Harbour Corp. v. Dept. of Rev., 16 OTR 91, 95 (2002).
However, where the court cannot discern legislative intent,
ambiguities in the text of a statute must be construed
against the taxpayers. Id. This is consistent with the rule
that a party claiming exemption under a statute is required
to bring itself within the terms of the statute. Id.Because the parties have chosen to proceed via
motions for summary judgment, each party is entitled to
succeed only where there are no questions of material fact
and one party or the other is entitled to prevail as a mat-
ter of law. TCR 47 C. However, because taxpayers must
satisfy each of the requirements of ORS 307.130 to qualify
for exemption, in order to survive the motion of the tax-
ing authorities for summary judgment, taxpayers must at
a minimum show that there are material questions of fact
with regard to every one of the requirements of the statute.
If the taxing authorities’ motion is granted as to any one of
the requirements of the statute, then taxpayers simply can-
not qualify for exemption under ORS 307.130.
On any given factual question, summary judgment
must be denied if there is any evidence in the record from
which a reasonable finder of fact, granting all reasonable
inferences to the party opposing summary judgment, could
find in favor of the party opposing summary judgment. TCR
47 C.
1. Whether CNHS is a “charitable institution”
Oregon courts look to three sub-questions to deter-
mine whether a given organization is a ‘ “charitable insti-
tution’ under ORS 307.130: (1) the organization must have
charity as its primary, if not sole, object; (2) the organization
must be performing in a manner that furthers its charitable
object; and (3) the organization’s performance must involve
a gift or giving.” SW Oregon Pub. Def. Svcs. v. Dept. of Rev.,
312 Or 82, 89, 817 P2d 1292 (1991).
On the first factor, the taxing authorities argue that
taxpayers’ primary purpose was housing, rather than char-
ity. The court does not consider this argument well taken.
102 Corvallis Nbhd. Housing Svcs. v. Linn Cty. Assessor
The court does not understand the requirement that an
entity seeking exemption under ORS 307.130 have charity
as its “primary, if not sole, object” to mean that the entity
must exist to pursue only some abstract notion of “char-
ity.” This is supported by past cases of this court and of the
Oregon Supreme Court. For example, in SW Oregon Pub.
Def. Svcs. the Supreme Court ruled that an organization
providing legal representation to indigent criminal defen-
dants was charitable, even though the obvious purpose of
that organization was to provide legal services to indigent
clients, not just abstract “charity.” 312 Or at 94. Likewise,
in several instances this court has ruled that hospitals and
adult foster care facilities can be charitable institutions for
purposes of ORS 307.130, even though those organizations
exist to provide specific services and not simply some broadly
construed notion of “charity.” See, e.g., Mercy Medical Center,
Inc. v. Dept. of Rev., 12 OTR 305 (1992) (hospital); Rigas
Maja, Inc. v. Dept. of Rev., 12 OTR 471 (1993) (adult foster
care facility).
Rather, what “charity as primary, if not sole, object”
stands for is that, as the first step in its analysis, the court
must determine whether an organization seeking exemption
exists to enrich the private individuals who own or operate
it, or whether it exists to benefit society at large without an
eye to private gain. See Dove Lewis Mem. Emer. Vet. Clinic
v. Dept. of Rev., 301 Or 423, 427, 723 P2d 320 (1986).
In past cases Oregon courts have regarded an
allegedly charitable institution’s articles of incorporation
and bylaws as prima facie evidence of the purpose of the
organization. Id. The articles of incorporation of CNHS, as
amended and in effect during the 2010-11 tax year, state:
“The Corporation is formed exclusively for charitable pur-
poses to serve low and moderate income people through
community development/neighborhood revitalization needs
and community self-help activities within Linn and Benton
Counties, State of Oregon. This purpose includes the provi-
sion of safe, decent, safe, [sic] sanitary, affordable housing
for persons of low and moderate income.
“* * * * *
Cite as 21 OTR 95 (2013) 103
“No part of CNHS’ earnings or property shall inure to the
benefit of any founder, contributor, member, director, offi-
cer, individual, firm or corporation.”
The purpose professed in CHNS’ articles of
incorporation—to provide housing for needy individuals and
families—indisputably answers an important social need.
The taxing authorities dispute that taxpayers’ mission is
charitable, but they do not dispute that CNHS was formed
to provide housing to low-income households and to carry
out that purpose without private benefit to the individuals
controlling CNHS. Rather, the taxing authorities rely on
the decision of the Supreme Court in Friendsview Manor
v. Tax Comm., 247 Or 94, 420 P2d 77 (1967) to argue that
an organization providing housing cannot be considered
charitable if the recipients of that housing have to pay for
it. Friendsview Manor is distinct from the case at bar, how-
ever, because the retirement home at issue in that case was
merely an exercise in self-help.
The retirees in Friendsview Manor collectively put
up the capital to establish and operate their retirement
home. 247 Or at 96. In a sense these retirees stood in the
position of principals in a corporate entity that they, in turn,
personally extracted benefits from in the form of housing.
Friendsview Manor thus does not stand for the proposition
that housing that is paid for through, among other things,
financial contributions from tenants cannot be charitable
per se. Rather, it makes clear that a charitable entity for
purposes of ORS 307.130 cannot exist primarily to benefit
specified private individuals. Id. at 101-02.
Because taxpayers’ purported mission answers an
important need of society at large, taxpayers professed not
to be doing so on a for-profit basis, and the taxing author-
ities have not introduced evidence to counter either of tax-
payers’ assertions, the court concludes that taxpayers meet
the first of the three charitable classification factors.
With respect to the second charitable classification
factor, the taxing authorities argue that taxpayers’ oper-
ations did not further taxpayers’ charitable goals because
taxpayers’ operations lack an aspect of “gift or giving.” The
taxing authorities’ argument in this regard conflates the
104 Corvallis Nbhd. Housing Svcs. v. Linn Cty. Assessor
second and third factors of the analysis laid out above.4
While there is a dispute between the parties as to whether
taxpayers’ operations were charitable for purposes of ORS
307.130, there is no dispute that taxpayers operated low-
income housing projects. The parties have also stipulated
that none of taxpayers’ founders, employees, or officials
obtained any profit, private advantage, or benefit from the
operations of taxpayers. The court is satisfied that tax-
payers’ activities contributed to the specific goals identified
in CNHS’ organizing documents. Inasmuch as the court has
ruled that those goals were charitable, taxpayers satisfy the
second charitable classification factor.
The parties expend considerable attention in their
briefing on the third charitable classification factor—the
presence in taxpayers’ activities of “gift or giving” sufficient
to justify characterizing taxpayers as charitable institu-
tions. At oral argument on these cross-motions for sum-
mary judgment, the court denied the motion of taxpayers
with regard to this element because despite taxpayers’ evi-
dence to that effect, the taxing authorities had produced evi-
dence from which an adverse conclusion could reasonably
be drawn. For much the same reason that the court denied
taxpayers’ motion at oral argument, the court here also
denies the motion of the taxing authorities on the issue of
the presence or absence of “gift or giving.” The affidavits and
exhibits provided by taxpayers in support of their motions
contain data from which a reasonable fact finder could con-
clude that taxpayers’ rents were below the market rates for
similar properties during the 2010-11 tax year.
2. Whether the subject properties are “exclusively occu-
pied or used” in the charitable work of taxpayers
Taxpayers argue that even though they leased units
in the subject properties to individuals who used them as
private residences, the projects were nonetheless exclusively
used for taxpayers’ charitable purpose of providing housing
4
The conflation is understandable. The elements of the “charitable institu-
tion” test evolved over numerous cases and neither this court nor the Supreme
Court have always articulated the elements precisely as laid out in SW Oregon
Pub. Def. Svcs. See, e.g., Dove Lewis, 301 Or at 427-428.
Cite as 21 OTR 95 (2013) 105
for low-income households. The taxing authorities, for their
part, do not appear to dispute that taxpayers did, indeed,
lease units in the subject properties only to low-income
individuals, in accordance with the purpose claimed in the
articles of both taxpayers. However, the taxing authorities
argue that because the residents’ lease agreements granted
the residents an exclusive possessory interest in each apart-
ment for use as private residences, taxpayers’ use of the sub-
ject properties is not exclusive. In short, the issue is whether
property owned by an arguably charitable institution can
qualify for exemption when the particular purpose motivat-
ing the charitable institution’s activities requires allowing
the subjects of its charity to use the property for their own
purposes.
Both this court and the Supreme Court have dealt
with the question of whether the granting of a possessory
interest in real property to another can be consistent with
the exclusive use or occupancy required by ORS 307.130.
In YMCA v. Dept. of Rev., 268 Or 633, 522 P2d 464 (1974),
the Supreme Court determined that property leased by the
downtown Portland YMCA to the US Department of Labor’s
Job Corps as administrative office space remained exempt
despite the leasehold given to the Job Corps.5 YMCA, 268 Or
at 637. Several factors contributed to the court’s decision,
but most significant was the fact that the Job Corps had
joined with the YMCA and the University of Oregon in a
collective effort to provide services to Job Corps enrollees
during periods of weekend leave. Id. at 638-39. The court
found that this program contributed to the charitable objec-
tives espoused by the YMCA and that it was material to
the success of the program to have Job Corps administra-
tive staff in the YMCA building to supervise the Job Corps
enrollees while they were using the facilities and services
provided by the YMCA as part of the program. Id.5
The court’s opinion in YMCA also concerned certain property used to pro-
vide temporary housing to draftees under a contract with the US Department of
Defense. The court concluded that this property remained “exclusively occupied
or used” for the YMCA’s charitable purposes. However, that aspect of YMCA is
distinct from the case at bar in that the YMCA did not grant any interest in its
property to the draftees and the draftees only occupied the housing provided by
the YMCA on a transient basis.
106 Corvallis Nbhd. Housing Svcs. v. Linn Cty. Assessor
This court articulated its understanding of the
teachings of YMCA in Albany Gen. Hospital v. Dept. of Rev.,
6 OTR 446 (1976), aff’d, 277 Or 727, 561 P2d 1029 (1977).
In that case, this court held that property owned by Albany
General Hospital but leased to Linn County for use in county
public health programs was not exempt because, while the
activities of Linn County on the leased premises were health
related, they were independent of the activities of the hospi-
tal. Id. at 450. The court concluded that because the county
was not acting as a “joint actor” with the hospital, the prem-
ises leased to the hospital were not exclusively used or occu-
pied for the charitable purposes of the hospital and were
therefore not exempt. On appeal the Supreme Court upheld
the decision of this court in Albany Gen. Hospital in a per
curiam decision. 277 Or at 729.
Other decisions of this court have found for exemp-
tion when the possessor is an agent of a charitable institution
engaged in work necessary to the purposes of the institution.
For example, in Mult. School of Bible v. Mult. Co., 218 Or 19,
343 P2d 893 (1959) the Supreme Court held that on-campus
quarters used as private residences by the school’s super-
intendant of buildings and the school’s cafeteria supervisor
were exempt because the presence of those individuals on
campus on a round-the-clock basis permitted them to carry
out “essential functions” related to the school’s responsibil-
ity for the health, safety, and comfort of students resident
on campus. 218 Or at 30-31. In Lewis & Clark College v.
Commission, 3 OTR 429, 432 (1969), this court held that the
residence of the president of the college—a building owned
by the college but about two miles off campus—was likewise
exempt because the president used his residence “primarily
for the benefit of the college” and that such use was “rea-
sonably necessary for the fulfillment of the functions of the
college.”
The upshot of these cases is that a grant of a posses-
sory interest in property owned by a charitable institution
to another person or entity violates the exclusive occupation
or use requirement of ORS 307.130 unless the lessee’s use
or occupation of the property actively contributes to the pur-
poses of the charitable institution in such a way that the
Cite as 21 OTR 95 (2013) 107
lessee can be viewed as a partner or “joint actor” with a char-
itable, public, or governmental institution in accomplishing
its charitable purposes.6 Albany Gen. Hospital, 6 OTR at 450.
Likewise, if the possessor is actively engaged in the work of
an exempt institution and the possessor’s occupation of the
leased premises enhances the ability of the possessor to do
the work of the institution, then “exclusive occupancy or use”
is not impaired by the fact that the possessor is also using
the property for purposes other than those strictly related
to the mission of the charitable owner. If, however, owner
and possessor pursue separate purposes—even if those pur-
poses are substantially similar despite being pursued inde-
pendently of one another, then exclusive use of the property
at issue for the charitable purpose of the owner is lost. Id.This would also be the result where, as in the case at bar,
an interest in property is given to persons who are not “joint
actors” or agents actively engaged in the charitable work of
the owner, but are rather the passive recipients of the owner’s
charity.
The court’s decision in Albany Gen. Hospital
prompted the legislature to adopt ORS 307.166, permitting
property owned by an exempt entity but leased to another
entity exemption from property tax only if the lessee is also
an “institution, organization or public body that is likewise
granted exemption or the right to claim exemption for prop-
erty under a provision of law contained in this chapter.” ORS
307.166 is not applicable here, however, because taxpayers’
tenants are private individuals—a category not listed in the
statute—and because those tenants do not purport to be
themselves engaged in any charitable work.
The legislature has also, on numerous occasions,
taken up the question of providing relief from property taxes
for owners of rental housing for low-income persons. The
taxing authorities, in their briefing, refer the court to two
sets of statutes—ORS 307.540 to 307.548 and ORS 307.515
to 307.537—that offer partial exemptions from property
6
The court uses the language of lessor and lessee here purely for conve-
nience. The important factor is the grant by the owner of property of a possessory
interest in its property to another individual or organization, whether or not that
interest is styled as a leasehold.
108 Corvallis Nbhd. Housing Svcs. v. Linn Cty. Assessor
taxes levied by county and local governments for providers
of low-income housing. Taxpayers rightly note that the exis-
tence of these statutes does not necessarily bar taxpayers
from obtaining full exemption from property tax by way of
ORS 307.130. However, the existence of these alternative
routes to relief from property tax does suggest that the leg-
islature recognized the need for low-income housing of the
type provided by taxpayers, but also believed that the type
of relatively long-term, low-income housing that taxpayers
and similarly situated institutions provide did not fit the
contours of ORS 307.130—contours construed by this court
and by the Supreme Court in the cases discussed above.
There is support for this view in the legislative his-
tory of ORS 307.540 to 307.548. ORS 307.540 to 307.548
were adopted by the legislature as Senate Bill 503 (SB 503)
during the 1985 legislative session. The written testimony
of Debbie Wood, a housing policy analyst with the State
Housing Council and supporter of SB 503, contains the fol-
lowing passage:
“It is widely assumed that the kinds of [low-income hous-
ing] projects * * * that I have described to this commit-
tee are tax exempt. Unfortunately, this is not the case.
The housing projects that are not given specific statutory
exemption from taxes are not covered under the general tax
exemptions for charitable organizations.”
Counsel for taxpayers correctly points out that this passage
from Wood’s written testimony does not occur in the audio
recording of Wood’s oral testimony before the legislature.
The court does not consider the omission material, however.
Whatever its form, there is no question that the statement
was in the record before the legislature. Given this witness’
expertise in questions of housing and prominence in sup-
porting SB 503, the court gives her written testimony con-
siderable weight.
Taxpayers rely primarily on past cases of this court
and of the Supreme Court where property used to provide
housing to needy people has been found to be exclusively
used for a charitable purpose. In particular, taxpayers rely
heavily on the decision of this court in Rigas Maja, Inc. v.
Dept. of Rev., 12 OTR 471 (1993). In that case the court
Cite as 21 OTR 95 (2013) 109
found that property used as an adult foster care facility was
exempt under ORS 307.130. However, that case is distinct
from the case at bar because exclusive use or occupancy
does not appear to have been at issue. That opinion does
not discuss at all whether the elderly individuals residing
in that adult foster care facility had a possessory interest
in the property or were simply allowed to live at the facility
and receive needed care in exchange for a fee.7 Moreover, the
court in that case stated its understanding that residents in
adult foster care often require assistance with basic living
functions like eating, bathing, and dressing. Id. at 472. The
particular residents at issue in Rigas Maja also required
24-hour supervision by an on-site caregiver. Id. Providing
this level of care and supervision is inconsistent with the full
measure of rights that typically attend a possessory interest
in property for use as a personal residence, such as the right
to exclude others from any given part of the premises.
In contrast, taxpayers’ residents clearly have the
rights to possess their rented dwellings and exclude others
under the terms of the lease agreement used by taxpayers.
While taxpayers did and do provide services needed by its
tenants, those services do not entail the sort of intimate care
and supervision present in Rigas Maja or, except under the
limited circumstances provided for in the lease agreement,
entry into the areas occupied by the residents. The ruling in
that case is thus not applicable here.
The court has sympathy for the position of tax-
payers: that it is taxpayers’ charitable purpose to provide
housing for low-income individuals and households and that
it substantially furthers—and in fact, is essential to—that
purpose for taxpayers to allow the residents at the subject
properties to use the apartments at the subject properties
as personal residences. However, there is no provision of
Oregon law providing for an exemption from property tax
for property leased to private individuals and used solely
as a personal residence. The case law on ORS 307.130 like-
wise does not go so far as to allow this court to find that
taxpayers exclusively use or occupy the subject properties
7
A fee that the court determined to be well below market rates for the kind
of housing and care provided. See Rigas Maja, Inc., 12 OTR at 474-75.
110 Corvallis Nbhd. Housing Svcs. v. Linn Cty. Assessor
where the residents are neither agents nor partners of the
institution occupying the premises in furtherance of their
work for or with the institution but have, with only limited
exceptions, exclusive possession of the property. Other stat-
utory provisions do exist, however, and it is to those that
taxpayers must look.
For these reasons the court concludes that tax-
payers’ housing projects are not exempt under ORS 307.130.
V. CONCLUSION
Now, therefore,
IT IS ORDERED that the motion of Plaintiffs is
denied and the cross-motion of Defendant and Defendant-
Intervenor is denied in part, but granted as to the issue of
exclusive occupation or use.