Hughes v. Multnomah County Assessor

• Court: Oregon Tax Court
• Decided: July 10, 2012
• Docket: TC-MD 110903N
• Status: Unpublished

Opinion

IN THE OREGON TAX COURT MAGISTRATE DIVISION Property Tax

WILLIAM A. HUGHES ) and NANCY L. RICHMOND, ) ) Plaintiffs, ) TC-MD 110903N ) v. ) ) MULTNOMAH COUNTY ASSESSOR, ) ) Defendant. ) DECISION

Plaintiffs appeal Defendant‟s disqualification of 3.75 acres of property identified as

Account R531277 (subject property) from forestland special assessment for the 2011-12 tax

year. (Ptfs‟ Compl at 2.) The parties filed cross motions for summary judgment and oral

argument was held by telephone on January 27, 2012. Plaintiffs appeared on their own behalves.

Lindsay Kandra (Kandra), Assistant County Counsel, appeared on behalf of Defendant. On

February 2, 2012, the court issued an Order granting in part and denying in part Defendant‟s

Motion for Summary Judgment, and denying Plaintiffs‟ Motion for Summary Judgment. The

court‟s Order granted Defendant‟s Motion for Summary Judgment with respect to the issue of

whether the disqualification may be deferred or cancelled for the purpose of allowing Plaintiffs

additional time to qualify for a different special assessment program. The court‟s Order found

that issues of material fact existed such that the summary judgment was inappropriate on the

issue of whether the disqualification from forestland special assessment was in error.

Trial in the matter was held in the Tax Courtroom in Salem, Oregon on February 23,

2012. Plaintiffs appeared on their own behalves. William A. Hughes (Hughes) testified on

behalf of Plaintiffs. Kandra appeared on behalf of Defendant. Karla Hartenberger

(Hartenberger), registered farm/forest appraiser and exemption specialist, testified on behalf of

DECISION TC-MD 110903N 1 Defendant. Plaintiffs‟ Exhibits 1 through 9 and Defendant‟s Exhibits A through J were received

without objection.

I. STATEMENT OF FACTS

Plaintiffs filed an application for forestland special assessment with Defendant on

March 26, 1987, and their application was approved. (Ptfs‟ Second Decl at Ex 1.) Plaintiffs‟

1987 application indicates that “there [was] a forest management plan for [the subject property].”

(Id.) In 2002, Plaintiffs filed a “response * * * to a questionnaire” from Defendant, which stated

that Defendant was “reviewing all properties with designated forest land to ensure they still meet

the requirements for a forest deferral.” (Id. at Ex 3.) Plaintiffs indicated on the questionnaire

that there was not a “forest management plan” for the subject property. (Id.) Plaintiffs‟ response

to the question “what [are you] doing to ensure proper growth of your trees” states “[r]emoval of

deciduous trees and deadfall and thinning to promote growth of fir and cedar. Planting fir

seedlings in open areas where appropriate.” (Id.)

On June 22, 2011, Defendant sent to Plaintiffs a notice disqualifying the subject property

from forestland special assessment. (Ptfs‟ Compl at 2.) The notice of disqualification states that

the subject property was disqualified because:

“The land is no longer in a qualifying use and has been disqualified from * * * Designated Forestland, ORS 321.359(1)(b)(C), western Oregon; Note: It has come to our attention that either The City or County Planning Department has applied one of the following Environmental Overlays to your property: (c), (p). These overlays have restrictions such that the property no longer meets the definition of forestland.”

(Id.)

The subject property “is zoned RF - Residential Farm/Forest” and it “lies within two City

environmental overlay zones: the Environmental Protection Zone and the Environmental

Conservation Zone.” (Def‟s Mot for Summ J at 2.) In the environmental overlay zones,

DECISION TC-MD 110903N 2 “continued agricultural uses” are allowed “if there is evidence of historic and ongoing

agricultural activity. If such evidence cannot be provided, any tree removal from the property

must meet the Environmental Plan Check Standards in PCC 33.430.1401 or be approved by the

City through a Type II or Type III Environmental Review.” (Id.) Plaintiffs note that “[t]he RF

zone allows agriculture as a primary use” and that “ „[a]griculture‟ includes forestry and tree

farming.” (Ptfs‟ Resp and Cross Mot for Summ J at 1.) Hughes testified that the environmental

overlays have been in place since the mid-1990s. (Id. Ex 2 at 1.)

Hughes testified that Plaintiffs purchased the subject property in 1978 and built a home in

1979 and 1980 and an outbuilding several years later. He testified that Plaintiffs had been

interested in the Skyline Drive area prior to purchasing the subject property because he liked the

area and because he wanted to build a “passive” home and utilize solar energy. Hughes testified

that the subject property included a clearing that had previously been used as a staging area for

logging and that is where the home was built. (See Ptfs‟ Ex 7 (map and aerial photograph of the

subject property).) He testified that the character of the neighborhood at the time that Plaintiffs

purchased the subject property was primarily rural; houses were a lot smaller and the minimum

lot size was (and continues to be) two acres. Hughes testified that Plaintiffs originally

considered subdividing the subject property lot at some point and selling part of it to help pay for

the education of their children and their retirement. He testified that Plaintiffs determined that to

be unfeasible due to the two acre lot size requirement. Hughes testified that Plaintiffs‟ next idea

was to make some money for their retirement from sustainably harvesting trees on the subject

property.

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1 The Code of the City of Portland, Oregon (PCC).

DECISION TC-MD 110903N 3 Hughes testified that he believes Plaintiffs could satisfy the requirements for commercial

harvest under the environmental overlays; specifically, he believes Plaintiffs could prove

“historic and ongoing harvesting of trees.” (See Ptfs‟ Ex 3 at 2; Ptf‟s Cross Mot for Summ J at

4.) Hughes testified that the subject property was originally logged in the 1800s and again in the

1940s. He testified that trees on the subject property are between 60 and 90 years old. Hughes

testified that the subject property includes old logging roads and, shortly after Plaintiffs

purchased the subject property, they ran a “Cat” down the logging roads to clear them. He

testified that, in subsequent years, Plaintiffs have kept the roads clear and removed debris.

Hughes testified that Plaintiffs have cut down dead and dying trees and maintained the health of

existing trees on the subject property. (See Ptfs‟ Ex 8 (photographs of the logging road and of a

stump after removal of a damaged tree).) He testified that he talked with a logging company that

confirmed the roads can be used. Hughes testified that Plaintiffs do not have a written forest

management plan; it is their understanding that a written forest management plan is not required

because the subject property meets the minimum acreage and stocking requirements. He

testified that Plaintiffs do not have any written documents from the State Forester regarding the

subject property.

Hughes testified that there has been some commercial harvesting of trees in the

neighborhood. He testified that, shortly before the environmental overlays were placed, there

was quite a bit of tree-cutting as property owners sought to ensure that they would be able to cut

trees in the future. Hughes testified that, about one month before trial, he contacted a

commercial logging company and received a bid; Plaintiffs would receive about 50 percent of

the proceeds of any tree harvested on the subject property.

DECISION TC-MD 110903N 4 Hughes testified that the subject property meets the minimum acreage requirement, the

stocking requirements, and the “trees of a marketable species” requirement. Hartenberger

testified that she agrees that the subject property meets those requirements; the only issue is

whether Plaintiffs‟ predominant purpose is the growing and harvesting trees of a marketable

species. Hartenberger testified that she disqualified the subject property because she determined

that it no longer meets the requirements of forestland special assessment. Hartenberger testified

that the environmental overlays greatly restrict the ability of property owners to cut trees within

the zone; property owners must seek special approval from the city.

Hughes testified that, in 2002, the environmental overlay had been in place for several

years and Plaintiffs‟ practices with respect to the subject property have not changed since that

time. Hughes asked Hartenberger what is different about 2011 as compared with 2002 that

caused Defendant to disqualify the subject property in 2011. Hartenberger testified that she did

not know and that Defendant‟s disqualification is based on its determination that the subject

property no longer meets the definition of “forestland.”

II. ANALYSIS

The issue before the court is whether the disqualification of 3.75 acres of the subject

property from forest special assessment was in error. Hughes stated that he considers a second

issue to be whether the disqualification was improper given that the subject property conditions

have remain unchanged since 2002, when the subject property was re-qualified by Defendant,

and given that the environmental overlays have been in place since the 1990s. Plaintiffs

characterize this as “double jeopardy” and argue based on fairness. The court will first address

Plaintiffs‟ argument that disqualification was improper because there have been no changes to

the subject property or applicable zoning since 2002, when the subject property was re-qualified.

DECISION TC-MD 110903N 5 A. Re-qualification in 2002

Under Oregon law, “[w]hen land has once been designated as forestland[,] * * * it shall

be valued as such until the assessor removes the forestland designation under paragraph (b) of

this subsection.” ORS 321.359(1)(a). 2 It falls to the assessor to determine if property meets the

requirements to be designated forestland. “The county assessor shall remove the forestland

designation upon * * * [d]iscovery by the assessor that the land is no longer forestland[.]”

321.359(1)(b)(C). The use of the term “shall” in the statutes indicates a mandatory action that

the assessor must follow. The statutes do not provide criteria to make that determination;

however, the statutes provide a remedy to property owners who think the assessor has acted in

error. ORS 321.359(2) states that “a taxpayer whose forestland has had the designation thereof

removed in whole or in part, may appeal to the tax court within the time and in the manner

provided in ORS 305.404 to 305.560.”

Plaintiffs argue that the issue of whether the disqualification of subject property was

improper is controlled by Defendant‟s re-qualification of the subject property in 2002 and lack of

any material changes to the subject property or applicable zoning since 2002. “It has long been

held in Oregon tax cases that each tax year stands alone; thus, each tax year is its own cause of

action.” Safley v. Jackson County Assessor and Dept. of Rev., TC-MD No 091206C, WL

4923355 at *5 (Dec 2, 2010), citing U.S. Bancorp v. Dept. of Rev., 15 OTR 13, 15 (1999).

Defendant‟s re-qualification of the subject property in 2002 is not controlling for the 2011-12 tax

year at issue in this appeal.

2 All references to the Oregon Revised Statutes (ORS) and Oregon Administrative Rules (OAR) are to the 2009 editions unless otherwise noted.

DECISION TC-MD 110903N 6 B. Disqualification

ORS 321.257(2) provides the applicable definition of western Oregon “forestland”:

“ „Forestland‟ means land in western Oregon that is being held or used for the predominant purpose of growing and harvesting trees of a marketable species and has been designated as forestland or land in western Oregon, the highest and best use of which is the growing and harvesting of such trees.”

“[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. As the party

seeking affirmative relief, Plaintiffs have the burden of proof to establish that they qualify for

forestland special assessment. A “[p]reponderance of the evidence means the greater weight of

evidence, the more convincing evidence.” Feves v. Dept. of Revenue 4 OTR 302, 312 (1971).

Defendant argues that, under ORS 321.257(2), there are two ways to meet the definition

of “forestland”: One is to establish that the predominant purpose of the property owner is to

grow and harvest trees of a marketable species; the other is to establish that the highest and best

use of the property is the growing and harvesting of trees of a marketable species. With respect

to the highest and best use as forestland, this court has stated:

“While some land may be used as forestland, its highest and best use may be another or additional use. The highest and best use of any particular parcel depends upon what is allowed by the zoning or land use laws as well as by the characteristics of the property.”

Kliewer v. Dept. of Rev. (Kliewer), 15 OTR 139, 142 (2000).3 The court in Kliewer further

stated that “[i]f the highest and best use of the property was forestland, it never should have been

designated forestland in the first place.” Id. at 146. The court did not receive any reliable

evidence concerning the highest and best use of the subject property. Thus, the issue is whether

Plaintiffs‟ predominant purpose was growing and harvesting trees of a marketable species.

3 Kliewer interpreted ORS 321.257(3) (1997), which has been renumbered to ORS 321.257(2).

DECISION TC-MD 110903N 7 Plaintiffs‟ stated purpose with respect to the subject property has changed over time.

Hughes testified that Plaintiffs wanted to build a “passive” home and utilize solar energy when

he purchased the property. Plaintiffs built a home on the subject property in 1979 and 1980 and

an additional outbuilding several years later. Hughes testified that Plaintiffs originally

considered subdividing the subject property at some point and selling part of it to help pay for

the education of their children and their retirement. Hughes testified that, after determining that

plan to be unfeasible, Plaintiffs decided to make money by sustainably harvesting trees on the

subject property and Plaintiffs applied for forestland designation in 1987.

Plaintiffs understand Defendant‟s disqualification to be based on its interpretation of the

environmental overlays as prohibiting timber harvest. (Ptfs‟ Resp and Cross Mot for Summ J at

2.) Plaintiffs argue that the environmental overlays do not “bar [P]laintiffs from using [the

subject property] as forestland.” (Id. at 3.) Plaintiffs concede that the City of Portland “might”

require Plaintiffs to “obtain an environmental review before they harvest commercial timber on

[the subject] property.” (Id.) Plaintiffs note that the City of Portland allows Plaintiffs “to

maintain their property as forestland and harvest trees if they can document historic use of the

property for forestland.” (Id. at 4.) Plaintiffs believe that they can satisfy the requirement of

“historic use” and conclude that “[i]t is thus likely that [P]laintiffs would be able to obtain City

permission to continue forest operations on [the subject] property.” (Id.)

In Tucker v. Lane County Assessor, the county assessor disqualified the property at issue

based on “deed restrictions that prohibit and/or restrict the harvesting of trees, prohibit any

commercial or industrial use to the land and is restricted to a residential use.” TC-MD No

080902D, WL 88120 at *1 (Jan 14, 2009) (internal quotations omitted). The county assessor

argued that “is not reasonable to assume harvest is possible, thus a predominate purpose, when it

DECISION TC-MD 110903N 8 is at the discretion of neighboring land owners, by committee approval, for harvesting trees of

greater than a 12 inch diameter and the outright restriction of the harvesting of trees over a 40

inch diameter or trees buffering a neighboring parcel.” Id. (internal quotations omitted). The

court agreed with the county assessor, finding that the deed restrictions “interfere[] with the

legislative purpose of the forestland special assessment program” and do “not permit [the

taxpayers] to hold or use the [property at issue] „for the predominant purpose of growing and

harvesting trees.‟ ” Id. at *3.

The environmental overlays greatly restrict the harvest of trees on the subject property.

Hughes testified that Plaintiffs believe they would be able to gain permission from the city to

harvest trees, but have not taken steps to receive such permission. Plaintiffs‟ only inquiry into

the commercial harvesting of trees on the subject property came one month before trial in this

matter when the Plaintiffs contacted a commercial logging company. In support of his belief that

Plaintiffs could establish historic use and harvest trees on the subject property, Hughes testified

that Plaintiffs‟ have maintained logging roads, cut down dead and dying trees, and maintained

the health of the trees on the subject property. Hughes testified that the last commercial harvest

of trees on the subject property occurred in the 1940s and that the trees are 60 to 90 years old.

Plaintiffs have not engaged in commercial logging activities on the subject property.

Taken alone, Plaintiffs‟ lack of tree harvesting activities on the subject property since

purchasing it in 1978 does not preclude a finding that Plaintiffs‟ predominant purpose was “the

growing and harvesting of trees of a marketable species.” E.g., Ferrero v. Clackamas County

Assessor, TC-MD No 080984D, WL 2086012 at *3, *4 (Jun 24, 2009) (finding that the property

at issue qualified for forestland special assessment despite the fact that “the trees [had] not been

harvested since [the 1970s] except for storm-damaged trees”). When considered in light of the

DECISION TC-MD 110903N 9 environmental overlay restrictions on harvest, the court is not persuaded that Plaintiffs‟

predominant purpose is “the growing and harvesting of trees of a marketable species.” The

parties agree that, under the environmental overlays, Plaintiffs cannot harvest trees without either

establishing “historic and ongoing” harvesting activity or approval by the City of Portland under

a “Type II or Type III Environmental Review.” Hughes testified that Plaintiffs believe it would

be possible to obtain permission from the city to harvest trees based on the “historic use” of the

subject property. However there is no evidence in the record that the Plaintiffs have received

such permission or attempted to receive such permission. Plaintiffs‟ only inquiry into the

possibility of harvesting trees on the subject property occurred about one month before trial, well

after the environmental overlays were placed on the subject property.

Plaintiffs have failed to prove by a preponderance of the evidence that their predominant

purpose was to hold or use the subject property for growing and harvesting trees of a marketable

species or that harvesting trees is possible on the subject property.

III. CONCLUSION

After careful consideration of the testimony and evidence presented, the court finds that

Plaintiffs have not established by a preponderance of the evidence that the subject property is

“forestland” within the meaning of ORS 321.257(2). The environmental overlays restrict

Plaintiffs‟ ability to harvest trees on the subject property and Plaintiffs have not presented

persuasive evidence that they may harvest trees under those restrictions. Now, therefore,

DECISION TC-MD 110903N 10 IT IS THE DECISION OF THIS COURT that Plaintiffs‟ appeal is denied.

IT IS FURTHER DECIDED that the disqualification of the subject property may not be

deferred or cancelled for the purpose of allowing Plaintiffs additional time to qualify for a

different special assessment program.

Dated this day of July 2012.

ALLISON R. BOOMER 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 Allison R. Boomer on July 10, 2012. The Court filed and entered this document on July 10, 2012.

DECISION TC-MD 110903N 11