Covington v. Dept. of Rev. , 24 Or. Tax 77 ( 2020 )

No. 4 March 3, 2020 77
IN THE OREGON TAX COURT
REGULAR DIVISION
Graham L. COVINGTON
and Lorraine D. Covington,
Plaintiffs,
v.
DEPARTMENT OF REVENUE,
and Multnomah County Assessor,
Defendants.
(TC 5370)
Taxpayers appealed a Magistrate Division decision that increased their
home’s real market value (RMV) above the value that was shown on the roll
before taxpayers appealed. In the Regular Division, taxpayers sought to start
with the roll value and pursue a reduction due to the loss of a view; they objected
to the increase imposed by the magistrate. On the assessor’s motion to dismiss,
the court held that its task is to determine the RMV of the property, not the effect
of one factor on the RMV shown on the roll. The court dismissed the complaint
with leave to amend to specify a requested RMV for the property as a whole.
Submitted on Defendant-Intervenor’s Motion to Dismiss.
Carlos A. Rasch, Multnomah County Counsel, Portland,
filed the motion for Defendant-Intervenor Multnomah County
Assessor.
Plaintiffs Graham L. Covington and Lorraine D.
Covington filed a response pro se.
Decision rendered on March 3, 2020.
ROBERT T. MANICKE, Judge.
I. INTRODUCTION
In this residential property tax case, the follow-
ing facts derive from Plaintiffs’ filings, and for purposes of
this order the court assumes that they are true. See Allied
Timber Co. v. Dept. of Rev., 8 OTR 428, 429 (1980). Plaintiffs
allege that their home suffered a loss of view that dimin-
ished its value by $100,000. Sometime before July 1, 2012, a
neighbor built a structure that blocked a portion of the view
from Plaintiffs’ home, and the same neighbor later built
a second house nearby that blocked the remainder of the
78 Covington v. Dept. of Rev.
view. Plaintiffs appealed to the Magistrate Division for the
2017-18 tax year, seeking a $100,000 reduction of the real
market value (RMV). The RMV then shown on the roll was
$660,470. The case proceeded to trial, where Defendant-
Intervenor Multnomah County Assessor (the Assessor) pre-
sented appraisal evidence that the RMV was $800,000. The
magistrate accepted the Assessor’s evidence and determined
that the RMV was $800,000.
Plaintiffs appealed to this division of the court,
alleging that the magistrate’s decision was “non-responsive
to the issue,” which Plaintiffs describe as their loss of a view
worth $100,000. Other than that allegation, Plaintiffs have
not specified an RMV that they seek for the property. The
Assessor moved to dismiss on the grounds that Plaintiffs
have not shown that they are “aggrieved” by any action of
the Assessor because they claim not to contest the real mar-
ket value of their property and have failed to assert an RMV
that they want the court to adopt.
In briefing on the Assessor’s motion, the Assessor
acknowledges that the property’s RMV declined due to the
neighbor’s 2012 construction that blocked the view. However,
the Assessor submitted a declaration of an appraisal super-
visor who testified that the Assessor addressed the 2012
construction in 2013 by “reclassifying” the view from “VW
6, which includes city and mountain views, to a VW 2, which
is a lower classification and includes woodlot hillside ter-
ritorial views,” resulting in a $32,000 reduction of RMV.
Plaintiffs assert that they were not aware of this adjustment
until they saw the declaration. Plaintiffs claim that the
2013 adjustment is insufficient because it fails to account
for the additional loss of view caused by construction of the
second property. The Assessor responds that, because the
2013 reclassification applied to Plaintiffs’ entire property,
further loss of view due to later construction would not have
led to a greater reduction in value.
In addition to finding the 2013 adjustment insuf-
ficient, Plaintiffs’ reply indicates they are dissatisfied with
the magistrate’s characterization of the issue in Plaintiffs’
appeal as “ ‘the real market value of the subject property
for the 2017-18 tax year.’ ” Likewise, Plaintiffs object to the
Cite as 24 OTR 77 (2020) 79
result of the magistrate’s decision, which is an increase to
RMV that has caused an increase in tax.
II. ISSUES
(1) May the court make a limited adjustment to the
property’s RMV for loss of view?
(2) May the court conclude that the property’s RMV
exceeds the RMV shown on the assessment roll?
III. ANALYSIS
Plaintiffs seek to limit the scope of this litigation.
They have made several statements that the court inter-
prets to mean that they may not want to engage in a full
valuation dispute to determine the RMV of their property.
“[W]e are not appealing our property taxes[.]”
“We have never contested our assessments. We have paid
our property taxes in full each year. We have only sought a
narrow assessment remedy for the loss of our view.”
Plaintiffs essentially want the court to start with a fixed
dollar value, presumably the RMV shown on their tax bill
for the 2017-18 tax year, and to subtract from that RMV
an amount that reflects the loss of view that resulted from
their neighbor’s construction of two houses downhill from
Plaintiffs’ property.
The Assessor has a different goal. The Assessor
wants the court to determine the RMV of the property, a much
more general inquiry, and the Assessor freely describes the
case as “a valuation appeal.” This is not surprising, because
state law provides: “The assessor shall proceed each year to
assess the value of all taxable property within the county
* * *.” ORS 308.210(1).1 State law specifically directs each
assessor to “prepare the assessment roll” to show “the real
market value of the land” and the “real market value of all
buildings * * *.” ORS 308.215(1)(a).
The court’s task is to decide the RMV if a tax-
payer challenges the RMV. Here, Plaintiffs clearly have
challenged the RMV by asking for a $100,000 reduction,
which necessarily is a reduction of the RMV. If the Assessor
1
The court’s references to the Oregon Revised Statutes (ORS) are to 2017.
80 Covington v. Dept. of Rev.
were to agree with Plaintiffs on a starting point for consid-
ering such a reduction, such as the $660,470 RMV shown
on Plaintiffs’ original bill, the court could take that agree-
ment into account and potentially move on to determine
the amount, if any, of a reduction.2 But the Assessor has
not agreed to stipulate to a starting value. The Assessor
wants to litigate the entire RMV, including any effect of
the blockage of the view. State law requires the court to
allow the Assessor to put on his evidence of value because
the court must decide the challenged issue (the RMV) “de
novo,” meaning “anew,” and the court is not bound by the
value shown on the assessment roll and on a taxpayer’s
bill. See ORS 305.425(1) (“All proceedings before the judge
of the tax court shall be original, independent proceedings
and shall be tried without a jury and de novo.”); Hoyt St.
Properties LLC v. Multnomah County Assessor, TC-MD
011093C, 2004 WL 3118904 at *3 (Or Tax M Div, Nov 16,
2004) (“the Magistrate Division has generally operated
under the de novo review standard since its inception in
1997”). Because the Assessor has not agreed to limit the
scope of this litigation in the manner that Plaintiffs desire,
the court cannot do so.
Plaintiffs also object to the magistrate’s conclusion
that the RMV of the property is higher than the amount
shown on the assessment roll and on the bill they received
before appealing to the Magistrate Division. Plaintiffs feel
that an increase would be unfair and punitive. The court
recognizes that taxpayers may be frustrated to end up with
a higher value than before their appeal. However, there is
nothing punitive about that. By requiring de novo proceed-
ings for this court, the legislature has declared that the
court must determine the RMV based on the evidence. In
most litigation, a plaintiff incurs some risk that evidence
will come to light that will undermine a plaintiff’s claim,
or even make matters worse for the plaintiff. In property
tax cases, the legislature has not chosen to limit the risk
to taxpayers by capping RMV at the roll value. Thus, if an
assessor puts on credible evidence that points to a value
2
The court does not suggest that the parties’ agreement on a starting value
would necessarily bind the court. ORS 305.412 authorizes the court to determine
property value “without regard to the values pleaded by the parties.”
Cite as 24 OTR 77 (2020) 81
higher than the value shown on the roll, the value on the
roll is not controlling. It is up to the taxpayer to put on the
taxpayer’s own evidence for the court to weigh. The mag-
istrate’s decision states that Plaintiffs “failed to present
any competent evidence of the real market value of their
home.”
In this appeal to the Regular Division, the court’s
role is not to decide whether the magistrate correctly deter-
mined the RMV, to examine the Assessor’s evidence before
the magistrate, or to evaluate whether Plaintiffs did or did
not present competent evidence to the magistrate. Rather,
by appealing to the Regular Division, Plaintiffs have asked
this division to give them a fresh chance to present evidence
of their property’s RMV. The same de novo principles apply.
There is no indication that the Assessor now agrees that
the property’s RMV is capped at any particular amount.
Absent such an agreement, the case would again go to trial
in this division to determine the RMV anew based on all the
evidence the parties present in the new trial. The resulting
RMV could be higher, lower, or the same as the amount that
the magistrate determined, or the amount on the assess-
ment roll, all depending on the evidence.
The court thus rejects Plaintiffs’ effort to limit the
scope of this appeal to the determination of a loss-of-view
adjustment to a fixed RMV, at least if the Assessor has not
agreed to the fixed RMV and there is no evidence to sup-
port such a starting value. The court also rejects Plaintiffs’
assertion that the court has acted or would act improperly
by concluding, based on the evidence, that the RMV exceeds
the amount shown on the assessment roll. The court grants
the Assessor’s motion, except that, if Plaintiffs wish to
amend their complaint to specify an RMV for the property
that they intend to prove at trial, they may do so within
30 days after the date of this order. See Tax Court Rule 21
A. If Plaintiffs fail to file an amended complaint within
30 days after the date of this order, the court will dismiss
this appeal, and the court will enter a judgment enforc-
ing the magistrate’s decision. See Work v. Dept. of Rev.,
22 OTR 396, 410-11 (2017), aff’d, 363 Or 745, 429 P3d 375
(2018).
82 Covington v. Dept. of Rev.
IV. CONCLUSION
Now, therefore,
IT IS ORDERED that Defendant’s motion to dis-
miss is granted unless Plaintiffs file an amended complaint
within 30 days after the date of this order.