Ferment Brewing Co. v. Hood River County Assessor

CourtOregon Tax Court
DecidedSeptember 15, 2022
DocketTC-MD 220020N
StatusUnpublished

This text of Ferment Brewing Co. v. Hood River County Assessor (Ferment Brewing Co. v. Hood River County Assessor) is published on Counsel Stack Legal Research, covering Oregon Tax Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ferment Brewing Co. v. Hood River County Assessor, (Or. Super. Ct. 2022).

Opinion

IN THE OREGON TAX COURT MAGISTRATE DIVISION Property Tax

FERMENT BREWING COMPANY, LLC, ) an Oregon Limited Liability Company, ) ) Plaintiff, ) TC-MD 220020N ) v. ) ) HOOD RIVER COUNTY ASSESSOR, ) ) Defendant ) ) and ) ) DEPARTMENT OF REVENUE, ) State of Oregon, ) ) ORDER DENYING MOTION TO Defendant-Intervenor. ) DISMISS

This matter came before the court on Defendant’s Motion to Dismiss (Motion), filed

February 23, 2022. The parties filed written briefings and participated in an oral argument held

by remote means on May 12, 2022. During that oral argument, the court requested that the

parties file additional documents pertaining to whether Plaintiff is aggrieved under ORS 305.275.

A second oral argument was held by remote means on June 15, 2022.

A. Statement of Facts, Background

Plaintiff is a brewing company that leased two floors of a property located at 403

Portway Ave in Hood River beginning April 1, 2017.1 (Decl of Roediger, Ex 1 at 1-2.) The

building is one of two owned by Key Development & Asset Management, Inc. (Key

Development) at that location. (See id.) The leased space totaled 9,582 square feet, comprised

1 Various applications submitted by Plaintiff list the address as 407 Portway Ave. (See, e.g., Def’s Mot, Ex 1; Decl of Mangan, Ex C at 1, Ex D at 1.) The reason for the discrepancy is unclear.

ORDER DENYING MOTION TO DISMISS TC-MD 220020N 1 of the entire ground floor and the second floor of the building. (Id.) Plaintiff’s leased space

represents 62 percent of the rentable square feet within the building. (Id.) The lease lists

Plaintiff’s use as “a brewhouse, fermentation area, cooler and storage on the ground floor, and

* * * retail, office, restaurant and bar space on the second floor * * *.” (Id.)

Pursuant to its lease with Key Development, Plaintiff is responsible for its share of real

property taxes, 2 which are included within common area maintenance fees and costs (CAMs).

(Decl of Roediger, Ex 1 at 5, 17.) Key Development must provide Plaintiff with an accounting

of CAMs (including real property taxes) each April and Plaintiff must pay the amount within 30

days. (Id. at 7-8.) “Each accounting provided by [Key Development] * * * will be conclusive

and binding upon [Plaintiff] unless” Plaintiff notifies Key Development of a dispute within 60

days. (Id. at 8.) In November 2021, Key Development “informally notified” Plaintiff that its

second-floor rental space was not exempt from taxation and “subsequently notified [Plaintiff]

that [it] owes the proportional share of any property taxes attributable to its second floor

premises.” (Decl of Roediger at 2.) Plaintiff offered no evidence that it had received from Key

Development an accounting or bill for real property taxes for any of the tax years a t issue.

1. Plaintiff’s exemption filings

On April 20, 2016, Plaintiff filed an Oregon Enterprise Zone (EZ) Authorization

Application. (Def’s Mot at 2, Ex 1.) It indicates that Plaintiff will engage in the eligible

activities of “manufacturing” and “processing.” (Def’s Mot, Ex 1 at 1.) The application also

states that Plaintiff will engage in “ineligible activities,” specifically that “retail sales shall occur

on a separate floor from manufacturing and processing.” (Id.) It lists an “expected estimated

value” of property totaling $2,950,000, with $1,950,000 allocated to real property (new

2 Plaintiff is responsible for paying any taxes due on its personal property. (Decl of Roediger, Ex 1 at 17.)

ORDER DENYING MOTION TO DISMISS TC-MD 220020N 2 construction) and $1,000,000 to personal property. (Id. at 2.) Plaintiff describes the intended use

of the qualified property as: “industrial brewing space will be used as a brewhouse, fermentation

area, cooler, and storage.” (Id.) An EZ Authorization Approval form was signed by Defendant

on March 27, 2017. (Id. at 2, Ex 2.) It lists the same estimated property value of $2,950,000.

(Id.)

Plaintiff submitted EZ Authorization Applications again in 20173 and 2018,4 each

indicating that Plaintiff will engage in the eligible activities of manufacturing and processing.

(Decl of Mangan at 2, Exs C, D.) The 2017 application lists the ineligible activities of “retail

sales,” which “shall occur on a separate floor from manufacturing and processing.” (Id. at Ex

D.) The 2018 application indicates that Plaintiff does or will engage in ineligible activities but

does not specify what they are. (Id. at Ex C.) The 2017 application lists an “expected estimated

value” of $1,950,000 for newly constructed buildings or structures, and of $200,000 for personal

property, for a total of $2,150,000.5 (Id. at Ex D.) The 2018 application lists a “total estimated

value” of $1,800,000 for real property, composed of $1,500,000 for new buildings or structures;

$150,000 for new additions to existing buildings or structures; and $150,000 for he avy or affixed

machinery and equipment. (Id. at Ex C.)

///

3 The 2017 application was not signed or dated but Mangan identified as a document submitted to Defendant. (Decl of Mangan at 2, Ex D at 2.) 4 The 2018 application lists a different address and is for “Abide LLC dba Camp 1805” and adds a new eligible activity: distillation of spirits. (Decl of Mangan, Ex C at 1.) No explanation was provided for the se discrepancies. 5 On March 20, 2017, Plaintiff filed an Application for Construction-in-Process (CIP) EZ Exemption. (Decl of Mangan, Ex B at 1.) It estimates a cost of $2,150,000 for the “building, structure, or addition” and estimates a completion date of October 2017. (Id.)

ORDER DENYING MOTION TO DISMISS TC-MD 220020N 3 On April 1, 2019, Plaintiff filed an EZ Exemption Claim that references the authorization

submitted April 20, 2016, and approved March 27, 2017.6 (Decl of Mangan, Ex E at 2; Def’s

Reply at 3.) It identifies the account number as 15725 and the total cost of investment property

as $4,809,982. (Decl of Mangan, Ex E at 2.) Defendant identified the account number as 21440

and checked a box indicating the claim was approved. (Id.) The property schedule attached to

Plaintiff’s 2019 EZ claim form lists the following investment costs claimed for exemption:

Real property, new additions or modifications to buildings or structures $450,0007 Real property, newly installed machinery and equipment $342,430 Certain personal property in excess of $1,000 8 $17,552 Total of owned qualified property $359,9829 Total of leased qualified property $4,000,000 Total cost of investment $4,809,982 10

(Supp Decl of Beebe, Ex B at 2.) In the same section, “tasting room” and “kitchen” appear to

have been listed and then scribbled out. (Id.) The $4 million for leased real property lists the

Portway Ave address without any further specificity. (Id. at 4.) Plaintiff maintains that $4

million is the approximate cost to construct its entire leased space on both floors.

A letter from Defendant to Plaintiff, dated November 1, 2019, stated that its claim had

been approved for the 2019-20 tax year but did not specify in what amount or otherwise indicate

Also in 2019, Plaintiff filed a CIP EZ Exemption Application for Account 21439 for a “commercial 6

kombucha brewery production and packaging, distillery production and packaging plant and storage” with a cost of $300,000. (Decl of Mangan, Ex G.) Defendant approved Plaintiff’s application on November 1, 2019.

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Ferment Brewing Co. v. Hood River County Assessor, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ferment-brewing-co-v-hood-river-county-assessor-ortc-2022.