Sheikh v. Multnomah County Assessor

IN THE OREGON TAX COURT
MAGISTRATE DIVISION
Property Tax
ZARYAB Y. SHEIKH, )
)
Plaintiff, ) TC-MD 110224C
)
v. )
)
MULTNOMAH COUNTY ASSESSOR, )
)
Defendant. ) DECISION
Plaintiff has appealed the real market value (RMV) of certain real property identified in
the assessor‟s records as Account R282584 for the 2010-11 tax year. Trial in the matter was held
by telephone November 28, 2011. Plaintiff appeared on his own behalf. Defendant was
represented by Dave Babcock (Babcock), Appraisal Supervisor, and Jeff Sanders (Sanders), an
Oregon registered appraiser, both of whom worked for the Multnomah County Assessor.
I. STATEMENT OF FACTS
The subject property is a three-bedroom, three and one-half bathroom, single-family
residential home on a one third (1/3) acre lot in Portland, Oregon. The subject is a 3,900 square
foot single story home with a daylight basement, built in 1966.1 The main floor is approximately
2,800 square feet, and the daylight basement is approximately 1,100 square feet. The home has a
two car attached garage. Other amenities include forced air and radiant floor heating, central air
conditioning, two fireplaces, a concrete patio/deck, a wood fenced yard, and a wood shake roof.
The values the assessor placed on the assessment and tax rolls for subject property for the
2010-11 tax year are $623,840 RMV, and $536,930 for the maximum assessed value (MAV) and
1
Plaintiff‟s appraiser indicates in his report that the home has a 1,496 square foot "[b]asement [a]rea" but
Sanders inspected and measured the basement for this trial and the parties agree that the daylight basement area is
approximately 1,100 square feet. (Ptf‟s Ex 1 at 2.)
DECISION TC-MD 110224C 1
assessed value (AV). Plaintiff appealed those values to the Multnomah County Board of
Property Tax Appeals (Board), and the Board sustained the values. Plaintiff then appealed to
this court, requesting a reduction in the RMV to $474,900. Defendant has asked the court to
sustain the RMV (and other values – MAV and AV).
Plaintiff submitted an appraisal report that estimates the value of his home at $500,000 as
of October 26, 2011. (Ptf‟s Ex 1 at 3.) The appraiser did not testify.2 Plaintiff also submitted
three property listings for $445,000, $379,800, and $475,000. (Ptf‟s Exs 2, 3, and 4.) Finally,
Plaintiff presented his own value analysis using county roll values. (Ptf‟s Ex 5.)
Defendant's appraiser, Sanders, submitted a five page document with a single page
valuation grid that provides a value estimate of $685,000 (rounded) based on three comparable
sales. Defendant, however, is only requesting that the current RMV on the rolls be sustained at
$623,840 (RMV).
II. ANALYSIS
The issue in this case is the RMV of Plaintiff‟s home as of January 1, 2010, because that
is the assessment date for the 2010-11 tax year. ORS 308.007; ORS 308.210.3 Oregon law
defines RMV for property assessment and taxation purposes as “the amount in cash that could
reasonably be expected to be paid by an informed buyer to an informed seller, each acting
without compulsion in an arm‟s-length transaction occurring as of the assessment date for the tax
year.” ORS 308.205(1).
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2
Defendant‟s representative Babcock asked on cross-examination if the appraiser was available to testify
and Plaintiff indicated that he could be reached by telephone. However, no advance arrangements for telephone
testimony were made as required by Tax Court Rule (TCR) 59 B (requiring the filing of a written motion for
telephone testimony at least 30 days prior to trial and based on “good cause shown”).
3
All references to the Oregon Revised Statutes (ORS) and Oregon Administrative Rules (OAR) are to
2009.
DECISION TC-MD 110224C 2
While there are three recognized methods for valuing property, the sales comparison
approach is most appropriate for valuing residential property.4 Ward v. Dept. of Rev., 293 Or
506, 511, 650 P2d 923 (1982) (citations omitted). The court looks at arm‟s-length sales
transactions of similar property to determine a correct RMV. Richardson v. Clackamas County
Assessor, TC-MD No 020869D, WL 21263620 at *3 (Mar 26, 2003). The value of property is
ultimately a question of fact. Chart Development Corp. v. Dept. of Rev., 16 OTR 9, 11 (2001)
(citation omitted).
Plaintiff did submit an appraisal report. However, the report indicates that the valuation
date for the $500,000 value estimate is October 26, 2011, which is almost 22 months after the
applicable assessment date. The report relies on three sales and two listings. The sales all
occurred in August 2011. (Ptf‟s Ex 1 at 3.) The appraiser did not adjust those sales for market
changes between the sales dates and the January 1, 2010, assessment date, probably because he
was providing a “current” value estimate (November 2011). The report also erroneously
indicates that the home has a 1,496 square foot basement, whereas the parties agree that the
basement is actually closer to 1,100 square feet in size. (Ptf‟s Ex 1 at 2.) There may well be
other inaccuracies. More importantly, there is no explanation for the appraiser‟s adjustments,
and there is no statement as to the purpose for the appraisal or the scope of work other than
standard boilerplate language indicating “[t]he scope of work * * * is defined by the complexity
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4
An administrative rule promulgated by the Oregon Department of Revenue instructs that the three
approaches to value (sales comparison, cost, and income) be considered in determining a property‟s value, but
recognizes that all three approaches may not be applicable in a given case. OAR 150-308.205-(A)(2). Because the
subject property is owner occupied and does not generate any income, neither party used the income approach in
valuing Plaintiff‟s property. Because land value is at issue, the typical methodology prescribed by the cost approach
is not relevant.
DECISION TC-MD 110224C 3
of this appraisal assignment and the reporting requirements of this appraisal report form,” and
that the intended use “is for the lender/client to evaluate the property * * * for a mortgage
finance transaction.” (Ptf‟s Ex 1 at 5.)
Defendant‟s representative Babcock noted that the appraisal form was a standard Fannie
Mae document and asserted that the report appears to violate applicable Uniform Standards of
Professional Appraisal Practice (USPAP) requirements. Babcock did not elaborate, other than to
note that the appropriate section in the report designed for explaining the appraiser‟s adjustments
was left blank and that the appraiser‟s qualifications were not included in the report. Those
likely are violations of USPAP.
Plaintiff testified that he hired the appraiser and asked him to value the property for a
property tax appeal, and to estimate the value as of January 2010. The report does not reflect
either of those instructions. The court finds that Plaintiff‟s appraisal report is irrelevant because
of the many problems discussed immediately above, the two chief concerns being that the
appraiser did not testify and the valuation date is approximately two years after the applicable
assessment date.
Plaintiff‟s three listings are of no value for a number of reasons. First, they do not appear
to be similar to the subject property. Second, it appears that the listings are more or less current
as of the date of trial, which is roughly two years after the applicable assessment date of
January 1, 2010.
Finally, there is Plaintiff‟s own valuation analysis. (Ptf‟s Ex 5.) However, Plaintiff is not
qualified to value property, and his value estimates are simply the values per square foot based
on assessment and tax roll values, rather than comparable sales. Plaintiff testified that the
purpose of that exhibit was to demonstrate the disparity between his property and other
DECISION TC-MD 110224C 4
properties. However, the question is not whether Plaintiff‟s properties are uniformly valued
when compared to other similar properties, but rather, the market value of Plaintiff‟s property as
of January 1, 2010; as indicated above, the typical method for estimating a value is to evaluate
comparable sales and make adjustments for differences. Roll values may or may not reflect
actual market values. The court concludes that Plaintiff‟s valuation analysis document is also
irrelevant for purposes of determining the value of the subject property.
By statute, Plaintiff has the burden of proof and must establish an error in the record
assessment by a “preponderance” of the evidence. ORS 305.427. The court has previously ruled
that “[p]reponderance of the evidence means the greater weight of evidence, the more convincing
evidence.” Feves v. Dept. of Rev., 4 OTR 302, 312 (1971); see also Riley Hill General
Contractor, Inc. v. Tandy Corp., 303 Or 390, 394, 737 P2d 595 (1987) (where the Oregon
Supreme Court explained that the derivation of the word “preponderance” is Latin in origin and
“translates to „outweigh, be of greater weight.‟ ”).
Burden of proof requires that the party seeking relief (Plaintiff in this case) provide
evidence to support their argument. The evidence that the plaintiff provides must be competent
evidence of the requested RMV of the property in order to sustain the burden of proof. Woods v.
Dept. of Rev., 16 OTR 56, 59 (2002). Evidence that is inconclusive or unpersuasive is
insufficient to sustain the burden of proof. Reed v. Dept. of Rev., 310 Or 260, 265, 798 P2d 235(1990). Plaintiff has failed to meet the requisite burden of proof. The court could conclude its
analysis at this point. However, the court will briefly address Defendant‟s value evidence.
Defendant submitted an appraisal report with a value estimate $185,000 higher than
Plaintiff‟s appraisal report ($685,000 versus $500,000) and roughly $50,000 above the current
RMV on the assessment and tax rolls. The author of that report, Sanders, testified as to how he
DECISION TC-MD 110224C 5
selected his comparables and the basis for the adjustments he made to those sales. The court
does have some concerns about the reliability of that report. Most notable is the magnitude of
the adjustments Sanders made to two of his three comparable sales (#1 and #3). However,
Sanders testified that he relied most on comparable sale number two, which had total
adjustments of only approximately $25,500 on a property that sold for $699,000. (Def‟s Ex 1
at 4.)
III. CONCLUSION
After reviewing the evidence and testimony of the parties, the court concludes that
Plaintiff has failed to establish an error in the RMV of the subject property by a preponderance
of the evidence. Now, therefore,
IT IS THE DECISION OF THIS COURT that Plaintiff‟s appeal is denied and the values
currently on the assessment and tax rolls for the 2010-11 tax year are sustained.
Dated this day of December 2011.
DAN ROBINSON
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 Magistrate Dan Robinson on December 14, 2011.
The Court filed and entered this document on December 14, 2011.
DECISION TC-MD 110224C 6