Kaur v. Clackamas County Assessor

• Court: Oregon Tax Court
• Decided: September 6, 2017
• Docket: TC-MD 160294N
• Status: Unpublished

Opinion

IN THE OREGON TAX COURT MAGISTRATE DIVISION Property Tax

AMARJIT KAUR, ) ) Plaintiff, ) TC-MD 160294N ) v. ) ) CLACKAMAS COUNTY ASSESSOR, ) ) Defendant. ) FINAL DECISION1

Plaintiff appealed the disqualification of property identified as Account 01684234

(subject property) from forestland special assessment for the 2016-17 tax year. A trial was held

on April 17, 2017, in Salem, Oregon. Dale Hult (Hult) appeared on behalf of Plaintiff. Plaintiff,

Kashmir Dhadwal (Dhadwal), and Hult testified on behalf of Plaintiff. Ravinder Waraich and

Kalpna Bentler were Punjabi–English interpreters for Plaintiff and Dhadwal. Lynn Longfellow

and Tony Hunter (Hunter) appeared on behalf of Defendant, and Hunter testified on behalf of

Defendant. No exhibits were received from Plaintiff before trial; Plaintiff’s Exhibits 5, 6, and 9

were received as rebuttal exhibits. Defendant’s Exhibits A to H were received without objection.

I. STATEMENT OF FACTS

The subject property is 9.08 acres of undeveloped land located along Highway 26 in

Clackamas County. Prior to the 2016-17 tax year, the subject property was specially assessed as

designated forestland. (See Def’s Ex A at 1.) On June 28, 2016, Defendant sent a letter

notifying Plaintiff that the subject property “has been removed from special assessment at the

owner[’]s request * * *.” (Id.)

1 This Final Decision incorporates without change the court’s Decision, entered August 18, 2017. The court did not receive a statement of costs and disbursements within 14 days after its Decision was entered. See Tax Court Rule–Magistrate Division (TCR–MD) 16 C(1).

FINAL DECISION TC-MD 160294N 1 Plaintiff testified that she could not recall exactly when she purchased the subject

property, but she believed it was sometime around the year 2000. The subject property was

partially logged at that time. Plaintiff testified that sometime after she purchased the subject

property, the previous owner logged the remaining timber and replanted trees. Plaintiff testified

that she did not apply for forestland special assessment for the subject property, but she knew

that the land had been subject to the special assessment since the time she purchased it.

Plaintiff testified that she applied for a change in land use with Clackamas County so that

the land could be developed into an RV park. She testified that she had hired Hult to help her

with that application. Plaintiff testified that she authorized the “scraping” of the subject

property—or the removal of the trees or bushes—in 2015 or 2016, in preparation for using the

land as an RV park. Plaintiff testified that she never requested that Defendant remove the land

from forestland special assessment.

Dhadwal testified that he is Plaintiff’s husband and that although he does not own the

subject property, he was involved in the land use application and signed that application on

behalf of Plaintiff. Dhadwal testified that he did not request that the subject property be removed

from special assessment as part of the land use application, or otherwise.

Plaintiff and Dhadwal each testified that they, along with Hult, met with Hunter at his

office to discuss the disqualification several weeks after they received the disqualification letter,

but they were unable to reach a resolution at that time.

Hunter testified that he is a senior appraiser in Defendant’s farm–forest section and has

worked for Defendant for nearly 30 years. Hunter testified that he characterized the reason for

disqualification as being “at the owner[’]s request” because of Plaintiff’s land use application; he

opined that the June 28, 2016, disqualification notice met the statutory requirements for such

FINAL DECISION TC-MD 160294N 2 notices. Hunter testified that he learned of the land use application and removal of vegetation

from the subject property via phone calls from neighbors, by driving past the subject property,

and from newspaper articles. (See Def’s Exs F, G.) He testified that he also contacted the

Clackamas County Zoning and Planning Division to discuss Plaintiff’s application.

Hunter testified that the statutes do not specify what form an owner’s request for removal

from special assessment must take. He testified that sometimes owners or title companies

request an estimate of back taxes due if the property were to be removed from special

assessment; if Defendant receives a check for the estimated amount, that check is considered to

be a “request,” and the property is removed from special assessment.

Hunter testified that he discussed the subject property with Mike Haasken (Haasken), a

forester with the Oregon Department of Forestry. In emails to Hunter, Haasken expressed the

opinion that the subject property no longer qualified for special assessment because it no longer

met stocking requirements. (See Def’s Exs C, D.) Haasken also wrote that because there had

been no commercial timber harvest, the rules that allowed for reforestation did not apply. (Def’s

Ex D.) The emails from Haasken offered by Defendant were sent in October 2016 and March

2017, after Plaintiff had initiated this appeal; however, Hunter testified that he frequently spoke

with Haasken by telephone. (Id.; Def’s Ex C.) Hunter testified that the manner in which the

land had been cleared (no commercial harvest) also indicated to him that Plaintiff was requesting

that the subject property be removed from special assessment.

II. ANALYSIS

The issue in this case is whether Defendant properly disqualified the subject property

from forestland special assessment for the 2016-17 tax year.

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FINAL DECISION TC-MD 160294N 3 A. Forestland Special Assessment—Qualification and Disqualification

In order to promote the ecological and economic benefits of forests and forestry, and to

promote the fair taxation of forest resources, the Legislative Assembly has established a program

of special assessment for land that qualifies as “forestland.” See generally ORS 321.204;

321.262.2 Forested land may qualify as forestland in one of two ways. First, it may be

determined that the land’s “highest and best use” is growing and harvesting a marketable species

of trees. ORS 321.257(2).3 Second, the assessor may designate the land as forestland if the

property owner makes an application showing that the land is “being held or used for the

predominant purpose of growing and harvesting trees of a marketable species * * *.” Id.; see

also ORS 321.358 (application for designation as forestland). To qualify as designated

forestland, the land must meet a number of regulatory requirements, including stocking and

acreage requirements. See OAR 150-321-0340.

Once land has been designated as forestland it remains as such until the assessor removes

the designation. ORS 321.359. Under ORS 321.359, the assessor is required to remove the

forestland designation if any of the following events occur:

“(A) Notification by the taxpayer to the assessor to remove the designation; “(B) Sale or transfer to an ownership making it exempt from ad valorem property taxation; “(C) Discovery by the assessor that the land is no longer forestland; or “(D) The act of recording a subdivision plat under ORS chapter 92.”

Removal of the forestland designation results in disqualification of the land from special

assessment. ORS 308A.700(1). Broadly speaking, the owner of designated forestland will pay

annual property taxes at reduced rate. If the land is disqualified from special assessment, 2 The court’s references to the Oregon Revised Statutes (ORS) are to 2015. 3 Oregon law distinguishes between forestland in eastern and western Oregon. See ORS 321.257 to 321.390; 321.805 to 321.855. Because the subject property in this case is located in western Oregon, the court’s discussion of forestland and accompanying citations focus on forestland in western Oregon.

FINAL DECISION TC-MD 160294N 4 however, additional taxes may be assessed based on the amount of tax savings for the five years

preceding the disqualification. ORS 308A.703.

When an assessor determines that land must be disqualified from forestland special

assessment, the assessor must generally send notice of the disqualification to the taxpayer. ORS

308A.718. The notice must include a statement of “the reason for disqualification,” the

opportunity to seek special assessment under a different program, and the “imposition of any

penalties” that would result from the disqualification. See ORS 308A.718(1)–(5). If the assessor

does not comply with ORS 308A.718, then the disqualification may be held invalid. See Smith v.

Dept. of Rev., 17 OTR 357, 362 (2004). However, the notice requirements of 308A.718(1)–(5)

do not apply if the disqualification is made at the property owner’s request. ORS

308A.718(6)(a).

B. Disqualification of the Subject Property from Forestland Special Assessment

The subject property is land that was designated as forestland at some time before

Plaintiff purchased it. Defendant disqualified the subject property in 2016; the reason given for

the disqualification was “the owner[’]s request.” (Def’s Ex A at 1.) Defendant’s disqualification

notice invoked ORS 321.359(1)(b)(A), which requires the assessor to remove the forestland

designation upon “[n]otification by the taxpayer to the assessor to remove the designation.”4 The

court understands Defendant’s argument to be that Plaintiff provided notification to the assessor

in two ways. First, Plaintiff filed a land use application so that the subject property could be

developed into an RV park. Second, Plaintiff cleared vegetation from the subject property,

4 Defendant’s notice refers to “the owner[’]s request,” although the statute cited by Defendant refers to “notification by the taxpayer.” In this context, the court understands a “notification” and a “request” to largely mean the same thing. However, whether a “request” has been made to disqualify land from special assessment is legally significant. See ORS 308A.718(6). The parties’ evidence focused on whether Plaintiff had made a “request” to disqualify the subject property. The court will therefore use “request” or “notification,” as appropriate, to describe a communication that triggers the removal of forestland designation under ORS 321.359(1)(b)(A).

FINAL DECISION TC-MD 160294N 5 causing the land to be out of compliance with stocking requirements. In Defendant’s view, those

actions amounted to a “constructive request”5 to remove the forestland designation. Defendant

was therefore required by ORS 321.359(1)(b)(A) to remove the forestland designation and

disqualify the subject property from special assessment.

The court must determine whether Defendant properly understood its obligations under

ORS 321.359. Specifically, the court will consider whether ORS 321.359(1)(b)(A) permits an

assessor to infer a request to remove a forestland designation from land based on a taxpayer’s

actions with respect to that land. In its effort the court is guided by the framework set forth in

State v. Gaines, 346 Or 171–72, 206 P3d 1042 (2009) (describing Oregon’s approach to statutory

construction).

Beginning with the text and context of ORS 321.359, the court finds little support for

Defendant’s reading of the statute. ORS 321.359(1)(b)(A) provides that the notification be made

“by the taxpayer to the assessor.” (Emphasis added.) The prepositional phrase “to the assessor”

suggests that the notification—or, as in this case, request—must be directed toward the assessor

specifically, rather than toward the world at large. That is at odds with Defendant’s reading of

the statute, where the assessor may infer a taxpayer’s request because she takes actions that may

be inconsistent with the forestland designation.

In addition, ORS 321.359(1)(b)(C) requires the assessor to remove the forestland

designation upon “[d]iscovery * * * that the land is no longer forestland[.]” This court’s prior

cases illustrate that an assessor may discover that the land is no longer forestland because the

words or actions of the owner indicate that the land is no longer being held for the predominant

purpose of growing and harvesting trees of a marketable species. See, e.g., Sousa v. Josephine

5 The court uses the term “constructive request” to mean a request that is inferred from conduct, as opposed to a written or oral request. The term was not used by Defendant.

FINAL DECISION TC-MD 160294N 6 County Assessor, TC-MD 091279C, WL 4563373 (Or Tax M Div, Dec 4, 2009) (“Defendant

removed the special assessment pursuant to [ORS 321.359(1)(b)(C)] upon discovery that it was

no longer forestland, based on the information Plaintiffs provided in their questionnaire.”). Or

the assessor may discover that the land is no longer forestland because it does not meet stocking

requirements. See, e.g., Lay v. Clackamas County Assessor, TC-MD 101078C, WL 487610 (Or

Tax M Div, Feb 9, 2011). Defendant’s reading of the statute, as applied here, would obviate the

need for subsection (C) because the assessor could interpret any action that indicated the land no

longer qualified for the forestland designation as “the owner’s request” to remove the

designation. When possible, this court must interpret a statute so as to give effect to all of its

provisions. ORS 174.010.

At the very least, Defendant’s interpretation of the statute would create confusion as to

the correct reason for the disqualification, confounding assessors, taxpayers, and this court alike.

The reason for the disqualification matters. For example, if the assessor discovers that the land is

no longer forestland, then the assessor may only disqualify the land in that tax year if the notice

of disqualification is mailed prior to August 15. ORS 321.366. Not so if the taxpayer provides

notification that the designation should be removed. Moreover, ORS 308A.718 sets forth the

requirements for notices of disqualification from special assessment. This court has held on

several occasions that the failure of the assessor to comply ORS 308A.718 renders the

disqualification invalid. However, those requirements do not apply if the disqualification is

made at the owner’s request. ORS 308A.718(6). Defendant’s interpretation of the statute would

allow an assessor to construe a taxpayer’s actions as constructive requests and thereby

circumvent the notice requirements of 308A.718(1)–(5).

FINAL DECISION TC-MD 160294N 7 The court doubts that the Legislative Assembly intended such a result. Instead, the court

concludes that when an assessor removes a forestland designation pursuant to ORS

321.359(1)(b)(A), it must be based on a communication by the taxpayer, to the assessor, that

evinces the taxpayer’s desire to have the forestland designation removed.

The court finds that no such communication took place here. Plaintiff filed a land use

application with Clackamas County Planning and Zoning Division to begin a process of

developing the subject property into an RV park. That application was not directed at

Defendant, Clackamas County Assessor. In any event, nowhere does the application state that

the owner desired to remove the forestland designation, even if the development of an RV park

would have been incompatible with the forestland designation. Likewise, the fact that Plaintiff

removed vegetation from the subject property was a not a request, or notification, to remove the

forestland designation, regardless of whether the land met stocking requirements afterward. In

short, it might have been reasonable for Defendant to conclude that the land should be

disqualified from forestland special assessment, but Defendant was incorrect to conclude that

Plaintiff had requested the disqualification.

As discussed above, when the assessor fails to give proper notice of a disqualification

from special assessment, the disqualification is invalid. In Smith, the disqualification notice sent

to the taxpayer stated that the property had been disqualified “by request of the owner,” but the

assessor appears to have set that contention aside on appeal. 17 OTR at 360–61. The court

concluded that the assessor had failed to comply with the notice requirements of ORS 308A.718

and declared the disqualification invalid. “Most importantly,” the court explained, “the county

did not comply with ORS 308A.718(3) in providing the [correct] reason for disqualification.” Id

at 363.

FINAL DECISION TC-MD 160294N 8 Here, Defendant also gave an incorrect reason for the disqualification: a request by the

owner pursuant to ORS 321.359(1)(b)(A). Therefore, as in Smith, the court concludes that the

disqualification must be declared invalid. In addition, Smith explains why the court need not

address whether the subject property’s forestland special designation should be removed under

ORS 321.359(1)(b)(C). The assessor must provide a notice to the taxpayer that complies with

ORS 308A.718 before August 15 of the tax year. Smith, 17 OTR at 363 (applying ORS

308A.116(6); ORS 321.366 (disqualification notice under 321.359(1)(b)(C) must be mailed prior

to August 15.) No such notice was provided to Plaintiff for the 2016-17 tax year. This court

may not cure Defendant’s failure to follow the procedural requirements for disqualification

III. CONCLUSION

Defendant incorrectly determined that Plaintiff had requested that the subject property’s

forestland designation be removed under ORS 321.359(1)(b)(A). Consequently, Defendant’s

disqualification of the subject property from forestland special assessment for the 2016-17 tax

year was invalid. Now, therefore,

IT IS THE DECISION OF THIS COURT that Plaintiff’s appeal is granted.

Dated this day of September 2017.

ALLISON R. BOOMER 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 signed by Magistrate Boomer and entered on September 6, 2017.

FINAL DECISION TC-MD 160294N 9