Citation Numbers: 7 Or. Tax 532
Judges: CARLISLE B. ROBERTS, Judge.
Filed Date: 11/30/1978
Status: Precedential
Modified Date: 1/13/2023
Pursuant to ORS
The subject property, located on the North Delta Highway just outside the Eugene city limits, consists of two adjoining, contiguous parcels. Tax Lot 300, covering 13.73 acres, is the rear lot, and has no public access. Tax Lot 1100, comprising 11.94 acres, is the front lot, with over 160 feet of road frontage along North Delta Highway. Both lots were zoned SG/CP (Sand, Gravel, and Rock Products — Controlled Processing District) as of the assessment date. The property, owned by the intervenors Gerald and Marguerite Saunders, and leased to Eugene Sand and Gravel Company, was and is used as a sand and gravel processing plant site.
[1.] As of the assessment date, the county's assessed value for the property was $137,300 for Tax Lot 300, and $119,400 for Tax Lot 1100, for a total of $256,700. The Lane County Board of Equalization reduced these land values to $35,320 for Tax Lot 300, and $79,460 for Tax Lot 1100, a total value of $114,780. The Department of Revenue sustained the board of equalization values in its Order No. VL 77-786. Subsequently, plaintiff pleaded for a value of $256,700, while defendant and intervenors pleaded that the Department of Revenue's order should be affirmed in all respects. In the trial before this court, plaintiff's expert witness concluded that the value of the subject property should be $216,700 ($40,000 less than pleaded) and the intervenors' expert contended the property should be valued at $165,000 (over $50,000 more than pleaded). These discrepancies are of interest, illustrating once again the highly subjective quality of the concept of value, even among expert witnesses, acting in good faith. Nevertheless, the court *Page 534
is not confined to the values pled by the parties. Rather, it is the court's duty to determine value based upon the preponderance of the evidence before it. ORS
[2.] The goal of the appraisal process is to determine the property's true cash value, which is its market value as of the assessment date. ORS
The intervenors' appraiser investigated the market value of the subject property under both the market data and capitalized income approaches. He discarded the market data approach because he found only two possible "comparable" sales (also considered by plaintiff), both of which were, in his opinion, too dissimilar to the subject to be reliable. Instead, he relied on the capitalized income approach. Under this approach, he divided the annual net income from the intervenors' lease of the subject property, $10,824 per year, by a capitalization rate of 8.5 percent (selected from a number of capitalization rate comparables), to yield an indicated bare land value of $127,500 for the 25.67 acres. To this amount, he added the lessee's improvements to the land, consisting of fill and perimeter tree planting (the latter apparently required under the SG/CP zoning). He added fill costs of $3,000 per acre for the 11.2 acres which he believed were stabilized. Finally, he added a value for the trees of $4,104, computed at $27 per tree (the estimated cost on January 1, 1977, for a 3-to-4-foot tree, the height of the trees when planted). Intervenors' appraiser allocated this $165,000 valuation between the two tax lots.2 *Page 536
As the table below indicates,3 the parties, although they utilized two different approaches, came remarkably close to agreeing on the bare land value of the subject property ($128,350 versus $127,500). The parties obviously did not agree, however, on (1) the number of acres "filled" or stabilized (15.4 versus 11.2); (2) the cost per acre-foot to stabilize ($5,000 versus $3,000); (3) the value per tree ($75 versus $27).
Regarding the first item, plaintiff adjusted the bare land value for 15.4 acres of "stabilized" land. Intervenors found it proper to adjust only 11.2 acres. The court finds that intervenors' acreage figure is more reasonable, because it excludes areas under concrete *Page 537 aggregate stockpiles, surge piles, and other areas where the allegedly compacted land was native soil; the filled acreage includes only those acres to which the "pit run" fill was brought for the sole purpose of stabilization.
As to the fill costs, this court believes that intervenors' figure of $3,000 per acre-foot is more reasonable than plaintiff's adjustment of $5,000. Intervenors computed the cost per acre-foot by comparing three recently placed bid prices for "pit run" in the area. Plaintiff's two comparables were less reliable. In one of those comparables, a time constraint was involved, which increased the costs for overtime, leasing equipment, etc. The other comparable involved fill made with quarry rock, which is much more costly than filling with "pit run." The result is that plaintiff's comparables overestimate the value of the filled portion of the subject property.
Finally, regarding the tree costs, intervenors' approach is again the more reasonable. Plaintiff's value of $75 per tree is based upon the market value of a 7-to-10-foot tall tree, the height of the trees as of the January 1, 1977, assessment date. Defendant's value is based upon the value of a 3-to-4-foot tree, the height of the trees when planted. It appeared from the evidence that the lessee, Eugene Sand and Gravel Company, was required to plant trees of a minimum 3-to-4-foot height, apparently to comply with the zoning ordinance. It is unlikely that a willing buyer, intending to use the property for its current purposes (i.e., sand and gravel processing), would pay more for the trees than it cost to comply with the zoning ordinance.
The court concludes that the preponderance of the evidence has been adduced by the intervenors. The court holds that the true cash value of the subject property on January 1, 1977, was $165,000. Of this amount, the court finds that $66,000 is the value of Tax Lot 300 and $99,000 is the value of Tax Lot 1100. *Page 538 Defendant's Order No. VL 77-786 is modified in accordance with this decision and plaintiff's appeal is dismissed.
Each party shall bear its own costs and disbursements.
Total Tax Lot 300
Bare land . (10.27 A.) $ 51,350 (7.63 A.) $ 38,150 ($5,000/acre)
Stabilized land .. (15.40 A.) 154,000 (6.10 A.) 61,000 ($10,000/acre)
Trees ... (152 trees) 11,400 (76 trees) 5,700 ($75 each) -------- --------
Total ................. $216,700 $104,800 ======== ======== (rounded) (rounded)
Total Tax Lot 1100
Bare land . (10.27 A.) $ 51,350 (2.64 A.) $ 13,200 ($5,000/acre)
Stabilized land .. (15.40 A.) 154,000 (9.30 A.) 93,000 ($10,000/acre)
Trees ... (152 trees) 11,400 (76 trees) 5,700 ($75 each) -------- --------
Total ................. $216,700 $111,900 ======== ======== (rounded)
Intervenors' Approach — Capitalized Lease Income
Total Tax Lot 300
Bare land* (25.67 A.) $127,500 (13.73 A. $46,545 x $3,390/A.)
Fill costs (11.20 A.) 33,600 (5.9 A.) 17,700 ($3,000/acre)
Trees ..... (152 trees) 4,104 (60 trees) 1,620 ($27 each) -------- -------
Total ................. $165,000 $66,000 ======== ======= (rounded) (rounded)
Total Tax Lot 1100
Bare land* (25.67 A.) $127,500 (11.94 A. $80,955 x $6,780/A.)
Fill costs (11.20 A.) 33,600 (5.3 A.) 15,900 ($3,000/acre)
Trees ..... (152 trees) 4,104 (92 trees) 2,484 ($27 each) -------- -------
Total ................. $165,000 $99,000 ======== ======= (rounded) (rounded)
* Lease income ($10,824 annually) ÷ capitalization rate (8.5%) = value ($127,500).
Intervenors' appraiser believed the bare land on Lot 1100 had twice the value ($6,780/acre) of Lot 300 ($3,390/acre), since Lot 1100 had access and frontage, while Lot 300 did not. Having established the total bare land value of both lots at $127,500, he broke down this value into the respective lots through an arithmetic computation.
The following table remedies the inconsistencies and allows a direct comparison between plaintiff's and intervenors' valuations:
Plaintiff
(Bare land)
Lot 300 ... (13.73 A. $ 68,650 x $5,000)
Lot 1100 .. (11.94 A. 59,700 x $5,000) --------
Total ..... (25.67 A. $128,350 x $5,000)
(Fill)
Lot 300 ..... (6.1 A. 30,500 x $5,000)
Lot 1100 .... (9.3 A. 46,500 x $5,000) --------
Total .... (15.4 A. 77,000 x $5,000)
(Trees)
Lot 300 .... (76 x $75) 5,700
Lot 1100 ... (76 x $75) 5,700 -------- Total ... (152 x $75) 11,400 -------- $216,700 ======== (rounded)
Intervenors
(Bare land)
Lot 300 ... (13.73 A. $ 46,545 x $3,390)
Lot 1100 .. (11.94 A. 80,955 x $6,780 --------
Total $127,500
(Fill)
Lot 300 ..... (5.9 A. 17,700 x $3,000)
Lot 1100 .... (5.3 A. 15,900 x $3,000) --------
Total .... (11.2 A. 33,600 x $3,000)
(Trees)
Lot 300 .... (60 x $27) 1,620
Lot 1100 ... (92 x $27) 2,484 -------- Total ... (152 x $27) 4,104 -------- $165,000 ======== (rounded) *Page 539