Stearns v. Multnomah County Assessor

IN THE OREGON TAX COURT
MAGISTRATE DIVISION
Property Tax
NICK STEARNS, )
)
Plaintiff, ) TC-MD 110252D
)
v. )
)
MULTNOMAH COUNTY ASSESSOR, )
)
Defendant. ) DECISION
Plaintiff appeals the 2010-11 real market value of property identified as Account
R591892 (subject property). A telephone trial was held on January 19, 2012. Plaintiff, an
Oregon licensed real estate broker, appeared on his own behalf. David Babcock (Babcock),
Appraisal Supervisor, Division of Assessment, Recording & Taxation, Multnomah County
Oregon, appeared on behalf of Defendant. Jeff Sanders (Sanders), Real Property Appraiser,
Division of Assessment, Recording & Taxation, Multnomah County Oregon, testified on behalf
of Defendant.
Defendant objected to the court admitting Plaintiff‟s Exhibit 1, alleging that it was not
exchanged timely in accordance with Tax Court Rule-Magistrate Division 10 C(1). The court
sustained the objection and Plaintiff‟s Exhibit 1 was not admitted.1 Defendant‟s Exhibit A was
admitted without objection.
I. STATEMENT OF FACTS
Plaintiff and Defendant agree that the subject property improvement at issue is “a
condominium unit constructed in a townhouse configuration. [The condominium] is part of a
1
Plaintiff‟s evidence was a two page listing for a condominium in the subject property‟s same building
complex that sold ten months after the January 1, 2010, assessment date.
DECISION TC-MD 110252D 1
contiguous two-plus city block development situated between St. John‟s City Park to the east and
the core of St. John‟s downtown area to the west.” (Def‟s Ex A at 2.) Plaintiff requested a real
market value of $120,000. Plaintiff testified that he determined real market value based on the
price of the first unit sold after an “invasive forensic inspection” conducted in October 2009
revealed $4.5 million in damages to the development. Plaintiff testified that Western
Architectural, an accredited architectural firm specializing in building damage and construction
defect investigations, issued a report of its inspection in November 2009. Plaintiff testified that
the damage lead to a lawsuit “in 2010;” because the entire development is “still embroiled in the
lawsuit, the project[„s condominium units are] unmarketable.” Plaintiff testified that the lawsuit
“encumbers the common attributes” of the development and significantly reduces the value of all
of the condominium units located in the development, including the subject property.
Babbock questioned Plaintiff as to how buyers knew about the inspection report, stating
that Defendant discovered the lawsuit by reading a 2011 community newsletter. Plaintiff
testified that the homeowners‟ association informed homeowners in the development of the
inspection report “in November 2009;” sellers are required to alert prospective buyers about
known defects and pending legal actions that relate to a property offered for sale.
Sanders testified that he appraised the subject property using a market sales comparison
approach. (Def‟s Ex A.) Sanders discussed the three properties he concluded were comparable
to the subject property:
“All three Comparables share a close physical proximity to the Subject property.
[Comparables] One and Two were chosen for their nearly identical amenities and
age as they were constructed by the same builder and are located in the same
project as the subject. Comparable Three is also very similar in size and age to the
subject.”
(Def‟s Ex A at 3.) Sanders testified that the three comparable properties were sold between
DECISION TC-MD 110252D 2
June 1, 2009 and October 22, 2009. (See Def‟s Ex A at 4.) Sanders testified that after making
only a sale date adjustment, Comparable One‟s adjusted sale price was $183,350. (See id.) After
adjusting for sale date and age (one year) difference, Sanders testified that Comparable Two‟s
adjusted price was $205,357. (See id.) Sanders testified that after adjusting for sale date, year
built, size, and heating system, Comparable Three‟s adjusted price was $209,090. (See id.)
Sanders concluded that “[w]eighing all factors of comparability for each sale, a retrospective
estimate of market value of $197,000 [for the subject property] is indicated and well supported.”
(Def‟s Ex A at 3.) Plaintiff testified that Defendant‟s real market value determination was
inaccurate because all three of Defendant‟s comparable properties sold prior to the discovery of
the development‟s defects.
Sanders testified that, as part of the appraisal, an inspection of the subject property was
conducted. Sanders testified that water damage was known to have occurred in one bedroom of
the subject property, but the long-term tenant living at the property when the damage occurred
informed him that a contractor stripped the affected area down to the studs and replaced all the
damaged aspects with new materials; a follow-up atmospheric test confirmed that there were no
remaining impacts from the water damage.
Sanders testified that his $197,000 real market value of the subject property was so close
to the $191,000 certified tax roll value that a change was not requested.
II. ANALYSIS
The issue before this court is the subject property‟s real market value for the tax year
2010-11. “Real market value is the standard used throughout the ad valorem statutes except for
special assessments.” Richardson v. Clackamas County Assessor, TC–MD No 020869D, WL
21263620, at *2 (Mar 26, 2003) (citing Gangle v. Dept. of Rev., 13 OTR 343, 345 (1995)). ORS
DECISION TC-MD 110252D 3
308.205(1) defines the “real market value” of both real and personal property as “the amount in
cash that could reasonably be expected to be paid by an informed buyer to an informed seller [in
exchange for the property], each acting without compulsion in an arm‟s-length transaction
occurring as of the assessment date for the tax year.”2 OAR 150-308.205-(A)(2)(a) sets out three
“approaches” that Plaintiff “must” consider when determining the real market value of property:
the sales comparison approach, cost approach, and income approach.3 See ORS 308.205(2).
Plaintiff did not use any of the three approaches. Defendant relied on the sales comparison
approach.
“In all proceedings before the judge or a magistrate of the tax court and upon appeal
therefrom, a preponderance of the evidence shall suffice to sustain the burden of proof. The
burden of proof shall fall upon the party seeking affirmative relief * * *.” ORS 305.427.
Plaintiff must establish his claim “by a preponderance of the evidence, or the more convincing or
greater weight of evidence.” Schaefer v. Dept. of Rev., TC No 4530 at 4-5 (July 12, 2001) (citing
Feves v. Dept. of Rev., 4 OTR 302 (1971)). This court has stated that “it is not enough for a
taxpayer to criticize a county‟s position. Taxpayers must provide competent evidence of the
RMV [Real Market Value] of their property.” Poddar v. Dept. of Rev., 18 OTR 324, 332 (2005)
(quoting Woods v. Dept. of Rev., 16 OTR 56, 59 (2002) (citation omitted)). Competent evidence
includes appraisal reports and sales adjusted for time, location, size, quality, and other
distinguishing differences, and testimony from licensed professionals such as appraisers, real
estate agents and licensed brokers.
2
All references to Oregon Revised Statutes (ORS) are to the 2009 edition.
3
All references to Oregon Administrative Rules (OAR) are to the 2010 edition.
DECISION TC-MD 110252D 4
Plaintiff offered his own testimony as an Oregon licensed real estate broker in support of
his requested real market value. He did not submit an appraisal report. To rebut Defendant‟s
comparable sales approach, Plaintiff testified that each of Defendant‟s comparable properties
sold prior to the release of an inspection report. Plaintiff offered no evidence that the inspection
report had a direct impact on the subject property‟s real market value as of the assessment.
Plaintiff‟s assertion that the first unit sale in the development project after the forensic inspection
sold for $120,000 is not evidence of the subject property‟s real market value as of the assessment
date. Plaintiff did not testify or offer evidence that he made any adjustments to the sold unit‟s
selling price for time, size, or other distinguishing differences. Unfortunately, Plaintiff‟s
testimony alone cannot stand in the place of competent evidence, such as an appraisal report and
other documents and expert testimony, to determine the subject property‟s real market value as
of the assessment date.
Even though the burden has not shifted, “the court has jurisdiction to determine the real
market value or correct valuation on the basis of the evidence before the court[.]” ORS 305.412.
Defendant‟s comparable sales approach supports the real market value on the tax roll.
III. CONCLUSION
After careful consideration of the testimony and evidence, the court concludes that
Plaintiff did not carry his burden of proof. The court accepts the Multnomah County Board of
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DECISION TC-MD 110252D 5
Property Tax Appeals‟ Order, dated March 10, 2011, sustaining the subject property‟s 2010-11
real market value determined by Defendant. Now, therefore,
IT IS THE DECISION OF THIS COURT that Plaintiff‟s appeal is denied.
Dated this day of March 2012.
JILL A. TANNER
PRESIDING MAGISTRATE
If you want to appeal this 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 Decision or this
Decision becomes final and cannot be changed.
This document was signed by Presiding Magistrate Jill A. Tanner on March 13,
2012. The Court filed and entered this document on March 13, 2012.
DECISION TC-MD 110252D 6