Walwyn v. Lane County Assessor ( 2014 )

IN THE OREGON TAX COURT
MAGISTRATE DIVISION
Property Tax
ROBERT D. WALWYN and CAROLYN J. )
WALWYN, TRUSTEES UNDER TRUST )
AGREEMENT DATED JUNE 6, 2007, )
)
Plaintiffs, ) TC-MD 130454N
)
v. )
)
LANE COUNTY ASSESSOR, )
)
Defendant. ) FINAL DECISION
The court entered its Decision in the above-entitled matter on March 10, 2014. The court
did not receive a request for an award of costs and disbursements (TCR-MD 19) within 14 days
after its Decision was entered. The court’s Final Decision incorporates its Decision without
change.
This matter is before the court on Plaintiffs’ Motion for Summary Judgment (Motion),
filed December 4, 2013. Defendant filed its Response on January 2, 2014. Plaintiffs filed their
Reply on January 16, 2014. Oral argument was held by telephone on January 29, 2014.
David E. Carmichael, Attorney at Law, appeared on behalf of Plaintiffs. Bryce Krehbiel
(Krehbiel), Residential Appraiser 3, appeared on behalf of Defendant. This matter is now ready
for the court’s determination.
I. STATEMENT OF FACTS
Plaintiffs appeal Defendant’s omitted property assessment, dated June 5, 2013, increasing
the real market value and maximum assessed value of property identified as Account 1552049
(subject property) for the 2007-08 to 2012-13 tax years. (Ptfs’ Compl at 7.) The subject
property is a single-family residence that includes a garage connected to the house by a
FINAL DECISION TC-MD 130454N 1
breezeway. (Decl of Robert D. Walwyn at 2, ¶ 4.) The subject property’s garage was originally
constructed as a detached garage in 1999 or 2000. (Id. at ¶¶ 3-4; see also Ptfs’ Motion, Ex 2 at
1-2 (permits for unattached garage).) A breezeway connecting the garage to the house and a
living area above the garage were added in 2005. (Id.) Plaintiffs obtained permits for the
improvements made in 2005 and the improvements were inspected and approved in 2005. (Ptfs’
Motion, Ex 3 at 1-2; 5 (permits for “ADD/ALT OF PORCH-DECK/GAR. MOD./BREEZW”).)
Defendant inspected the subject property on May 18, 2006, and issued a notice of omitted
property assessment to Plaintiffs on May 30, 2006. (Ptfs’ Motion, Ex 1 at 1.) The May 30,
2006, notice states that Defendant added “value for home and paving.” (Id.)
Defendant acknowledges that it “appraised the subject property on May 18, 2006[,]” and
asserts “that appraisal did not include the detached garage, the breezeway between the garage
and the house, or the improvements to interior of the garage.” (Def’s Resp at 1-2.) Krehbiel
stated at oral argument that Defendant does not dispute that the garage was complete at the time
of the May 2006 appraisal. He acknowledged that the garage is plainly visible and was unable to
provide any explanation as to how it could have been missed during an inspection.
Based on its determination that the garage with a studio living area and breezeway to the
house (“garage,” collectively) had been omitted from the tax and assessment rolls, Defendant
issued an omitted property assessment, dated June 5, 2013, adding value to the subject property
for the 2007-08 to 2012-13 tax years. (Ptfs’ Compl at 7.) The omitted property notice stated that
value was added for a “[d]etached garage with living above.” (Id. at 8.) Plaintiffs challenge the
omitted property assessment, asserting that “[a]ny purported failure by the appraiser to include
the garage, studio and breezeway * * * results in an undervaluation not an omission of any
‘buildings, strictures [sic] or improvements’.” (Ptfs’ Motion at 4.)
FINAL DECISION TC-MD 130454N 2
II. ANALYSIS
The issue before the court is whether the subject property’s garage was omitted property
that may be added to the tax and assessment rolls for the 2007-08 to 2012-13 tax year under
ORS 311.216,1 even though the garage was in existence at the time of Defendant’s physical
inspection and appraisal of the subject property in May 2006.
A. Standard for Summary Judgment
Plaintiffs filed a Motion for Summary Judgment. The standard for summary judgment is
provided by Tax Court Rule (TCR) 47,2 which states in pertinent part:
“The court shall grant the motion if the pleadings, depositions, affidavits,
declarations, and admissions on file show that there is no genuine issue as to any
material fact and that the moving party is entitled to prevail as a matter of law.
No genuine issue as to a material fact exists if, based upon the record before the
court viewed in a manner most favorable to the adverse party, no objectively
reasonable juror could return a verdict for the adverse party on the matter that is
the subject of the motion for summary judgment.”
This matter involves a factual dispute of whether the garage was omitted from the tax and
assessment rolls. Krehbiel stated at oral argument that Defendant’s records for the subject
property did not include a sketch or a description of the subject property’s garage, leading
Defendant to the conclusion that the property was omitted. However, Defendant failed to offer
any evidence supporting that assertion. TCR 47 C instructs the court to view the facts in a light
most favorable to the adverse party, which is Defendant in this case. Thus, for purposes of ruling
on Plaintiffs’ Motion, the court accepts Defendant’s contention that its records did not include a
sketch or description of the garage.
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1
The court’s references to the Oregon Revised Statutes (ORS) are to 2011.
2
TCR 47 is made applicable through the Preface to the Magistrate Division Rules, which states in pertinent
part, that “[i]f circumstances arise that are not covered by a Magistrate Division rule, rules of the Regular Division
of the Tax Court may be used as a guide to the extent relevant.”
FINAL DECISION TC-MD 130454N 3
B. Omitted Property vs. Undervaluation
Defendant increased the subject property’s real market value and maximum assessed
value based on the alleged omission of the garage pursuant to ORS 311.216(1), which states:
“Whenever the assessor discovers or receives credible information, or if the
assessor has reason to believe that any real or personal property, including
property subject to assessment by the Department of Revenue, or any buildings,
structures, improvements or timber on land previously assessed without the same,
has from any cause been omitted, in whole or in part, from assessment and
taxation on the current assessment and tax rolls or on any such rolls for any year
or years not exceeding five years prior to the last certified roll, the assessor shall
give notice as provided in ORS 311.219.”
The court begins its analysis of ORS 311.216(1) with the Oregon Supreme Court’s
decision in Clackamas Cty Assessor v. Village at Main St. Phase II, (Village at Main Street), 349
Or 330, 333-34, 245 P3d 81 (2010), in which “the assessor sought to add the value of the site
developments to the assessment roll as ‘omitted property’ under ORS 311.216[,]” although the
site developments had been in existence during the assessor’s previous physical inspections. The
court explained the narrow issue was one “of statutory interpretation—does the statutory
authorization to add property to the assessment roll that has been omitted ‘in part’ apply to an
integral part of property that is listed on the assessment roll.” Id. at 336.
The court reviewed the text and context of ORS 311.216(1), including cases from other
jurisdictions, concluding “[i]t follows from the Indiana cases decided before 1907 that, for
property to qualify as ‘omitted property,’ the property must be ‘distinct, definite, and
recognizable articles, which had not been listed * * * by the assessor.’ ”3 Id. at 341 (citation
omitted). The court was “persuaded that the 1907 Oregon legislature did not intend for the
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3
The court explained that “the provision that, with some amendments, is now codified as ORS 311.216”
was enacted in 1907. Village at Main Street, 349 Or at 337.
FINAL DECISION TC-MD 130454N 4
phrase ‘in whole or in part’ to authorize the assessor to include an integral part of property that
the assessor already had listed on the assessment roll.” Id. at 342.
The question becomes what is “an integral part of property” listed on the tax and
assessment rolls. In Village at Main Street, the court explained that, when it was enacted, the
omitted property statute reflected the practice at the time to list a value that “for real property
included the value of both the land and any buildings or improvements on the land.” Id. at 338.
The statute was amended in 1951 to expand the definition of omitted property to allow the
addition of “buildings, structures, improvements or timber on land previously assessed without
the same.” Id. at 342 (internal quotation marks omitted).
It is clear that for purposes of the omitted property statute, the land and improvements are
considered separately. See Miller v. Dept. of Rev. (Miller), 16 OTR 4, 7 (2001) (“Oregon law
provides that within the category of real property, buildings, structures, and improvements are
analyzed separately from land”). That is consistent with ORS 308.215(1), which requires the
assessor to “set down in the assessment roll” for each parcel of real property “[t]he real market
value of the land” separate from “[t]he real market value of all buildings, structures and
improvements thereon.” See also Nepom v. Dept. of Revenue, 272 Or 249, 254, 536 P2d 496(1975) (“[o]ur statutes specifically require the assessor to separate the value of the land and
improvements on the assessment roll”).
The specific question, then, is whether the garage was an integral a part of the subject
property’s improvements. In Village at Main Street, the court “infer[red] from [the] statutory
directive [that land includes site developments] that the site developments are an integral part of
the land.” 349 Or at 346. The court concluded, “[i]t follows that the site developments come
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FINAL DECISION TC-MD 130454N 5
within the general rule that we draw from the 1907 statute—that an integral part of property,
which is listed on the assessment roll, does not qualify as omitted property.” Id.Here, as in Village at Main Street, the garage is not separately stated on the tax and
assessment rolls from the subject property’s improvements; rather, one real market value is
stated for the subject property’s buildings, structures, and improvements. To put it another way,
the garage is not distinct or separate from the subject property’s other improvements for purposes
of stating the real market value on the tax and assessment rolls. There is no dispute that the tax
and assessment rolls included a real market value for the subject property’s improvements for
each of the tax years listed on the omitted property notice. (Ptfs’ Compl at 8.) The garage was
an integral part of the subject property’s improvements. Because the garage was in existence as
of Defendant’s May 2006 physical inspection and appraisal of the subject property, the court
concludes that Defendant undervalued rather than omitted the garage.
Defendant argues that the lack of a sketch or description of the garage in Defendant’s
records proves that the garage was omitted. Even accepting Defendant’s contention that its
records did not include a sketch or description of the garage, that is not sufficient to establish that
the garage was omitted. See, e.g., Fox v. Washington County Assessor (Fox), TC-MD No
050711E, WL 734876 at *2 (Feb 28, 2006) (“Although there are no notes or drawings showing
the addition, an appraiser visited the property in 1984 and confirmed its completion. * * * It is
quite possible the appraiser included value for the addition, yet failed to note the additional
square footage in the drawings”). The fact that Defendant’s appraiser inspected and appraised
the subject property in May 2006 suggests that the real market value placed on the tax and
assessment rolls at that time included the garage, absent persuasive evidence to the contrary.
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FINAL DECISION TC-MD 130454N 6
Defendant further argues that, under Miller, “the assessor could add the value of a free
standing barn to the tax roll as omitted property.” (Def’s Resp at 2.) Defendant argues that this
case is similar to Miller because “the detached garage is a free standing building.” (Id.) In
Miller, the barn at issue “was assessed at one time in the 1980s” and, for reasons that were not
clearly explained, “the barn was not on the assessment roll or assessed for the tax years 1995-96
through 1999-2000.” 16 OTR at 5. Under those circumstances, the court concluded that the
barn could be added as omitted property. Id. at 8. In this case, there is no allegation or evidence
that the garage was included on the tax and assessment rolls and subsequently removed as the
result of a clerical or other error. Rather, Defendant contends the garage was never included on
the tax and assessment rolls despite the fact that Defendant inspected the subject property in May
2006 and placed a real market value of the subject property’s improvements on the rolls at that
time.4
This court has previously observed that “a tension exists between the policy of taxing
property that has been omitted and providing finality to assessments.” Fox, 2006 WL 734876 at
*2.
“[T]he bedrock issue in this case * * * is how to distinguish an undervaluation
from an omission? If an appraiser undervalues a property because he or she failed
to see or take into consideration some portion of that property, has that portion
been ‘omitted’ within the meaning of [the omitted property statute]? As the
department correctly points out, if this is the rule, there never will be any finality
to assessments (at least until they are more than five years old). On the other
hand, the language of [the omitted property statute] reflects an intent to provide
that all taxable property be assessed and taxed and that any errors in the assessor’s
knowledge or perceptions be corrected.”
Marion County Assessor v. Dept. of Rev. (Marion County), 10 OTR 265, 269 (1986).
4
See also Marion County Assessor v. Dept. of Rev., 10 OTR 265, 268-69 (1986), rejecting a rule under
which “a free standing garage, unattached to a residence, could be added as omitted property but one which was
attached to the residence could not be added.” Thus, whether the garage was a free standing structure is not relevant
to the determination of whether it was omitted from the property tax and assessment rolls or, rather, undervalued.
FINAL DECISION TC-MD 130454N 7
Plaintiffs provided evidence that it obtained permits for the garage, both initially when
the garage was constructed in 1999 or 2000 and again when the studio living area and breezeway
were added in 2005. Defendant acknowledged that it made a physical inspection of the subject
property in 2006 and, in fact, added omitted property at that time. Even if Defendant failed to
include a sketch or description of the garage in its records, the court is not persuaded under those
facts that the garage was omitted, rather than undervalued, by Defendant.
Finally, the court notes that the result in this case would likely be different if Defendant
had not previously inspected and appraised the subject property in May 2006.
“As a corollary [to the holding in West Foods v. Dept. of Rev., 10 OTR 7 (1985)],
this court now holds that where such improvements are added to or made a part of
other property after the other property has been physically appraised and are later
discovered by the assessor, they may be subject to taxation as omitted property
under [the omitted property statute]. Improvements not in existence at the time of
appraisal cannot be deemed to have been undervalued.”
Marion County, 10 OTR at 270 (emphasis in original). A garage, whether attached or detached,
is the type of property that could be added to the tax and assessment rolls as omitted property.
The court is not persuaded in this case that the garage was omitted rather than undervalued.
III. CONCLUSION
After careful consideration, the court concludes that the subject property’s garage was not
omitted from the tax and assessment rolls for property identified as Account 1552049, but rather,
undervalued. Plaintiffs’ Motion for Summary Judgment is granted. Now, therefore,
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FINAL DECISION TC-MD 130454N 8
IT IS THE DECISION OF THIS COURT that Plaintiffs’ Motion for Summary Judgment
is granted.
Dated this day of March 2014.
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.
This document was signed by Magistrate Allison R. Boomer on March 27, 2014.
The court filed and entered this document on March 27, 2014.
FINAL DECISION TC-MD 130454N 9