IN THE OREGON TAX COURT MAGISTRATE DIVISION Property Tax
DEPOT INVESTORS, LTD., ) ) Plaintiff, ) TC-MD 150309D ) v. ) ) BENTON COUNTY ASSESSOR, ) ) Defendant. ) FINAL DECISION
This Final Decision incorporates without change the court’s Decision, entered
February 18, 2016. The court did not receive a statement of costs and disbursements within 14
days after its Decision was entered. See TCR-MD 16 C(1).
Plaintiff appeals the real market value of personal property, identified as Account 39965
(subject property), for the 2014-2015 tax year. A trial was held in the Oregon Tax Courtroom on
November 23, 2015, in Salem, Oregon. Hollis McMilan appeared on behalf of Plaintiff. Dean
Rothenfluch (Rothenfluch) and Arthur Garnet “Gary” Pond (Pond) testified on behalf of
Plaintiff. Richard Newkirk (Newkirk) and Taryn Selvey (Selvey) appeared and testified on
behalf of Defendant. Plaintiff’s Exhibits 1 to 3 were received without objection. Defendant’s
Exhibits C and G were received over Plaintiff’s objection. Defendant’s Exhibit B was not
received. This matter was tried concurrently with case TC-MD 150308D.
On November 19, 2015, Plaintiff filed an Unopposed Emergency Motion to allow the
testimony of Terry Emmert (Emmert) to be by telephone on the basis that he had injured himself
while in Mexico and was unable to attend the trial. On November 20, 2015, Plaintiff filed an
Emergency Motion to Reschedule Trial based on the unavailability of Emmert. The court
granted Plaintiff’s motion to allow Emmert to testify by phone, however, counsel for Plaintiff
FINAL DECISION TC-MD 150309D 1 was unable to contact him. The court denied Plaintiff’s request to reschedule the trial pursuant to
TCR-MD 8 B(3) because Emmert’s testimony was not necessary to the presentation of the case
and because it was unknown how long Emmert would be unavailable.
I. STATEMENT OF FACTS
The subject property consists of restaurant equipment and fixtures located at 603 NW
Second Street, Corvallis, Oregon (Second Street property), which is owned by Plaintiff. (Ptf’s
Ex 2.) For the last 20 years, Plaintiff has leased the Second Street property to a number of
tenants operating restaurants. (Id.) In 2009, Plaintiff’s long term tenant, Michael’s Landing,
defaulted on its lease. (Ptf’s Ex 3 at 1.) The tenant agreed that Plaintiff would retain the fixtures
and restaurant equipment at the Second Street property. (Id.) Selvey testified that Plaintiff told
Defendant all the equipment had been removed prior to January 10, 2010. Selvey testified that
Defendant’s records show that Lafontaine Nguyen, the owner of Riverfront Restaurant, leased
the Second Street property from Plaintiff and left in June 2011, and Mr. Nguyen then sublet to
Terminus. Selvey testified that in 2011, Terminus presented Defendant with a personal property
list indicating that much of the equipment from Michael’s Landing was still located at the
Second Street property and being utilized. She testified that Terminus filed personal property tax
returns from 2011 to 2013 and they added some items of equipment. In July 2013, Terminus
provided Defendant with an updated copy of the equipment list in the Second Street property at
that time. (Ptf’s Ex 1). In December 2013, Terminus sent a Letter to Defendant stating that he
had been subletting from Mr. Nguyen and was abandoning the lease and Mr. Nguyen did not
intend to resume the lease. (Test of Selvey.) The Second Street property was vacant as of
January 1, 2014. (Test of Rothenfluch.)
///
FINAL DECISION TC-MD 150309D 2 In March 2015, Plaintiff negotiated a lease with Old Spaghetti Factory (OSF). (Test of
Pond.) In connection with those negotiations, OSF advised Plaintiff that the personal property
and fixtures contained in the Second Street property had no value for its business, and worse, had
a cost associated with their removal. (Test of Pond.) Plaintiff gave OSF a rent concession, in
part, for the removal of the personal property and fixtures at the Second Street property. (Test of
Pond.)
Rothenfluch testified that he has no personal knowledge of the items of personal property
that were in the Second Street property on January 1, 2014. In preparation for the trial,
Rothenfluch took the list of personal property which was prepared by Terminus in 2013, and
researched the value of items using the websites Craigslist and E-bay. (Test of Rothenfluch.)
Rothenfluch found a few of the items on the personal property list and opined that they had a
maximum combined value of $3,000 to $4,000. (Id.)
Selvey testified that Defendant relies on businesses to self-report their personal property
and file a return by March 1st of each year. Selvey testified that Defendant does not specifically
appraise each item, but relies on the original cost and then applies a discount factor based on a
formula provided by the Department of Revenue. Selvey also testified that Plaintiff did not file a
personal property tax return in March of 2014 for the 2014-15 tax year.
II. ANALYSIS
ORS 308.2901 requires that taxpayers report their acquisitions and dispositions of
personal property on their property tax returns. As part of the return, the taxpayer must include
information as to each piece of property, including its description, the year it was acquired, and
its cost. ORS 308.290(3)(b). The filing of a return does not bar a taxpayer, on a subsequent
1 The court’s references to Oregon Revised Statutes (ORS) are to the 2013 edition.
FINAL DECISION TC-MD 150309D 3 appeal, from correcting inaccurate or incomplete information as to the listed items on which the
tax is assessed. See Benj. Franklin Savings and Loan v. Dept. of Rev., 310 Or 651, 801 P2d 771
(1990). A plaintiff may, on appeal, present information supplementing, or even contradicting,
the original returns, and this information may be used to value the subject property, so long as
plaintiff meets its burden of demonstrating that this new information is the more reliable and
persuasive. (Id. at 667.) “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.
Personal property is required to be valued at 100 percent of its real market value.
ORS 308.232. “Real market value” is defined 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). If, however, “the property has no immediate market value, its real market value is
the amount of money that would justly compensate the owner for loss of the property.” ORS
308.205(2)(c). Consequently, to determine the real market value of the property under appeal,
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IN THE OREGON TAX COURT MAGISTRATE DIVISION Property Tax
DEPOT INVESTORS, LTD., ) ) Plaintiff, ) TC-MD 150309D ) v. ) ) BENTON COUNTY ASSESSOR, ) ) Defendant. ) FINAL DECISION
This Final Decision incorporates without change the court’s Decision, entered
February 18, 2016. The court did not receive a statement of costs and disbursements within 14
days after its Decision was entered. See TCR-MD 16 C(1).
Plaintiff appeals the real market value of personal property, identified as Account 39965
(subject property), for the 2014-2015 tax year. A trial was held in the Oregon Tax Courtroom on
November 23, 2015, in Salem, Oregon. Hollis McMilan appeared on behalf of Plaintiff. Dean
Rothenfluch (Rothenfluch) and Arthur Garnet “Gary” Pond (Pond) testified on behalf of
Plaintiff. Richard Newkirk (Newkirk) and Taryn Selvey (Selvey) appeared and testified on
behalf of Defendant. Plaintiff’s Exhibits 1 to 3 were received without objection. Defendant’s
Exhibits C and G were received over Plaintiff’s objection. Defendant’s Exhibit B was not
received. This matter was tried concurrently with case TC-MD 150308D.
On November 19, 2015, Plaintiff filed an Unopposed Emergency Motion to allow the
testimony of Terry Emmert (Emmert) to be by telephone on the basis that he had injured himself
while in Mexico and was unable to attend the trial. On November 20, 2015, Plaintiff filed an
Emergency Motion to Reschedule Trial based on the unavailability of Emmert. The court
granted Plaintiff’s motion to allow Emmert to testify by phone, however, counsel for Plaintiff
FINAL DECISION TC-MD 150309D 1 was unable to contact him. The court denied Plaintiff’s request to reschedule the trial pursuant to
TCR-MD 8 B(3) because Emmert’s testimony was not necessary to the presentation of the case
and because it was unknown how long Emmert would be unavailable.
I. STATEMENT OF FACTS
The subject property consists of restaurant equipment and fixtures located at 603 NW
Second Street, Corvallis, Oregon (Second Street property), which is owned by Plaintiff. (Ptf’s
Ex 2.) For the last 20 years, Plaintiff has leased the Second Street property to a number of
tenants operating restaurants. (Id.) In 2009, Plaintiff’s long term tenant, Michael’s Landing,
defaulted on its lease. (Ptf’s Ex 3 at 1.) The tenant agreed that Plaintiff would retain the fixtures
and restaurant equipment at the Second Street property. (Id.) Selvey testified that Plaintiff told
Defendant all the equipment had been removed prior to January 10, 2010. Selvey testified that
Defendant’s records show that Lafontaine Nguyen, the owner of Riverfront Restaurant, leased
the Second Street property from Plaintiff and left in June 2011, and Mr. Nguyen then sublet to
Terminus. Selvey testified that in 2011, Terminus presented Defendant with a personal property
list indicating that much of the equipment from Michael’s Landing was still located at the
Second Street property and being utilized. She testified that Terminus filed personal property tax
returns from 2011 to 2013 and they added some items of equipment. In July 2013, Terminus
provided Defendant with an updated copy of the equipment list in the Second Street property at
that time. (Ptf’s Ex 1). In December 2013, Terminus sent a Letter to Defendant stating that he
had been subletting from Mr. Nguyen and was abandoning the lease and Mr. Nguyen did not
intend to resume the lease. (Test of Selvey.) The Second Street property was vacant as of
January 1, 2014. (Test of Rothenfluch.)
///
FINAL DECISION TC-MD 150309D 2 In March 2015, Plaintiff negotiated a lease with Old Spaghetti Factory (OSF). (Test of
Pond.) In connection with those negotiations, OSF advised Plaintiff that the personal property
and fixtures contained in the Second Street property had no value for its business, and worse, had
a cost associated with their removal. (Test of Pond.) Plaintiff gave OSF a rent concession, in
part, for the removal of the personal property and fixtures at the Second Street property. (Test of
Pond.)
Rothenfluch testified that he has no personal knowledge of the items of personal property
that were in the Second Street property on January 1, 2014. In preparation for the trial,
Rothenfluch took the list of personal property which was prepared by Terminus in 2013, and
researched the value of items using the websites Craigslist and E-bay. (Test of Rothenfluch.)
Rothenfluch found a few of the items on the personal property list and opined that they had a
maximum combined value of $3,000 to $4,000. (Id.)
Selvey testified that Defendant relies on businesses to self-report their personal property
and file a return by March 1st of each year. Selvey testified that Defendant does not specifically
appraise each item, but relies on the original cost and then applies a discount factor based on a
formula provided by the Department of Revenue. Selvey also testified that Plaintiff did not file a
personal property tax return in March of 2014 for the 2014-15 tax year.
II. ANALYSIS
ORS 308.2901 requires that taxpayers report their acquisitions and dispositions of
personal property on their property tax returns. As part of the return, the taxpayer must include
information as to each piece of property, including its description, the year it was acquired, and
its cost. ORS 308.290(3)(b). The filing of a return does not bar a taxpayer, on a subsequent
1 The court’s references to Oregon Revised Statutes (ORS) are to the 2013 edition.
FINAL DECISION TC-MD 150309D 3 appeal, from correcting inaccurate or incomplete information as to the listed items on which the
tax is assessed. See Benj. Franklin Savings and Loan v. Dept. of Rev., 310 Or 651, 801 P2d 771
(1990). A plaintiff may, on appeal, present information supplementing, or even contradicting,
the original returns, and this information may be used to value the subject property, so long as
plaintiff meets its burden of demonstrating that this new information is the more reliable and
persuasive. (Id. at 667.) “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.
Personal property is required to be valued at 100 percent of its real market value.
ORS 308.232. “Real market value” is defined 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). If, however, “the property has no immediate market value, its real market value is
the amount of money that would justly compensate the owner for loss of the property.” ORS
308.205(2)(c). Consequently, to determine the real market value of the property under appeal,
we must determine if it has a real market value, and, if not, what value would justly compensate
the owner for its loss. “Real market value in all cases shall be determined by the methods and
procedures in accordance with the rules adopted by the Department of Revenue * * *.” ORS
308.205(2). Department of Revenue regulations provide that the “[r]eal market value of all
personal property must be as of the date of assessment in accord with the statutory definition and
must take into account the location and place in the level of trade or items of property in the
hands of manufacturers, producers, wholesalers, distributors, retailers, users, and others.” OAR
FINAL DECISION TC-MD 150309D 4 150-308.205-(A)(4). In determining those values, however, the law does not provide fixed
principles of valuation for the appraisal of property. The appropriateness of a particular method
or combination of methods of valuation is a question of fact to be determined by the record in
each case. Brooks Resources Corp. v. Dept. of Revenue, 286 Or 499, 503–04, 595 P2d 1358
(1979). The assessment date for the 2014-15 tax year is January 1, 2014. ORS 308.250(1).
Plaintiff did not file the required personal property tax return on March 1, 2014. See
ORS 308.290(4). Plaintiff contends that the personal property had little or no value based on the
sampling research performed by Rothenfluch and by the testimony of Pond that the personal
property had no value and was actually an impediment to the OSF lease agreement. While the
personal property may have had little or no value to Plaintiff or its new tenant, OSF, the personal
property was located at the Second Street property as of January 1, 2014, and was used as late as
2013. The personal property had some value. Plaintiff offered insufficient evidence of what
personal property was in the subject property on January 1, 2014, or its real market value.
Rothenfluch did not know the actual contents and his testimony was not persuasive as to real
market value of the subject property. The burden of proof is on the Plaintiff. Here, Plaintiff
failed to meet its burden of proof.
III. CONCLUSION
The court has carefully evaluated the evidence and testimony in light of the applicable
law and concludes that Plaintiff has failed to meet its burden of proof. Now, therefore,
FINAL DECISION TC-MD 150309D 5 IT IS THE DECISION OF THIS COURT that Plaintiff’s appeal is denied.
Dated this day of February 2016.
RICHARD DAVIS 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. TCR-MD 19 B.
This document was filed and entered on March 14, 2016.
FINAL DECISION TC-MD 150309D 6