Kohl's Homeport Associates LLC v. Washington County Assessor

• Court: Oregon Tax Court
• Decided: January 14, 2015
• Docket: TC-MD 140171D
• Status: Unpublished

Opinion

IN THE OREGON TAX COURT MAGISTRATE DIVISION Property Tax

KOHL’S HOMEPORT ASSOCIATES LLC, ) ) Plaintiff, ) TC-MD 140171D ) v. ) ) WASHINGTON COUNTY ASSESSOR, ) ) ) Defendant. ) FINAL DECISION

The court entered its Decision in the above-entitled matter on December 9, 2014.

Plaintiff filed timely filed a statement for costs and disbursements on December 22, 2014.

Defendant filed its Objection to Statement of Costs on January 2, 2015. Plaintiff filed its “leave

of the Court to file” Response to Defendant’s Objections to State of Costs on January 7, 2015.

This matter is now ready for the court’s Final Decision.

The court’s Final Decision incorporates its Decision without change and includes the

court’s analysis and determination of Plaintiff’s/Defendant’s statement for costs and

disbursements in section III.

Plaintiff appeals the real market value of property identified as Account R66421 (subject

property) for the 2012-13 and 2013-14 tax years.1 A trial was held in the courtroom of the

Oregon Tax Court, Salem, Oregon, from July 22 to July 23, 2014. Jack L. Orchard, Attorney at

Law, appeared on behalf of Plaintiff. Grant Norling, MAI appraiser, (Norling) and David Lees,

Kohl’s Senior Manager of Real Estate Expense (Lees), testified on behalf of Plaintiff. Brad

Anderson, Senior Assistant County Counsel, appeared on behalf of Defendant. Kimmerle

1 The facts and analysis in this Decision apply to both the 2012-13 and 2013-14 tax years. The only tax year at issue in this case is 2013-14, the 2012-13 tax year is addressed in Kohl’s Department Stores v. Washington County Assessor, TC-MD 130220D.

FINAL DECISION TC-MD 140171D 1 Culver, Senior Property Appraiser (Culver), and Dylan Ross, appraiser, (Ross) testified on behalf

of Defendant. Plaintiff’s Exhibit 1 and Defendant’s Exhibit A were admitted without objection.

Following trial both parties were allowed to submit corrections for typographical and

mathematical errors stated in their appraisal reports. Culver submitted replacement pages for her

appraisal report and Norling submitted a new appraisal. Defendant filed objections to Plaintiff’s

new appraisal on August 19, 2014. Culver’s replacement pages are within the court’s ruling and

are admitted. Norling’s new appraisal report included both corrections and changes to his

original appraisal report based on information that was developed during trial. Norling’s new

appraisal report is beyond the scope of typographical and mathematical changes. The portion of

Norling’s new appraisal report, consisting of his computed loaded capitalization rate and the

subsequent mathematical changes is admitted, and all other pages of his new appraisal report are

excluded.

I. STATEMENT OF FACTS

Norling and Culver testified that they inspected and appraised the subject property. The

parties agreed to the following facts:

(1) The subject property is currently operated as a Kohl’s department store, a single-tenant, big box retail store located on a 6.04-acre site at 11055 SW Canyon Road in Beaverton, Oregon. (Ptf’s Ex 1 at 20; Def’s Ex A at 35.)

(2) The subject property’s highest-and-best use as vacant is to develop as a commercial/retail site. Its highest-and-best use improved is as a big box store. (Ptf’s Ex 1 at 28; Def’s Ex A at 60-61.)

(3) The subject property is located in a mixed use neighborhood with single-family homes to the north, a retail strip center and gas station to the south, a car dealership to the east, and the Beaverton Tigard Highway to the west of the subject property. (Ptf’s Ex 1 at 15; Def’s Ex A at 35.)

(4) The subject property was built in 1989 and remodeled in 2006 and 2011. (Def’s Ex A at 35.)

FINAL DECISION TC-MD 140171D 2 (5) The subject property’s net rentable area is 103,909 square feet. (Def’s Ex A at 35; Ptf’s Ltr at 1, July 24, 2014.)

A. Plaintiff’s Evidence

Norling reviewed his appraisal report. Norling’s appraisal report stated that he

considered, but did not develop, all three valuation approaches (cost, sales comparison, and

income). (Ptf’s Ex 1 at 29.) Norling testified that he did not rely on the cost approach because it

“has limited applicability due to the age of the [subject property’s] improvements and lack of

market based data to support an estimate of accrued depreciation.” (Id.) Norling testified that he

relied on the income approach and the sales comparison approach to determine the subject

property’s 2012-13 and 2013-14 real market value of $8,770,000. (Id. at 46.)

1. Income Approach

Norling testified that, for his income approach, he selected six rent comparables located

between 0.7 and 9.4 miles of the subject property. (See id. at 32.) Norling’s testimony described

the primary elements of comparison, stating that the subject property’s “location and

condition/age are good, quality is average, exposure is average to good” and “access and parking

ratio are substandard.” Norling testified that he adjusted the market rent rates, using two

separate adjustment categories called “transactional adjustments” and “property adjustments.”

(Id. at 34.)

In his appraisal report, Norling’s first adjustments were labeled “transactional

adjustments” and the adjustments made were solely for “concessions.” (Id.) Norling testified

that his concessions adjustment is “a basis for creating a comparable market standard [of] free

rent [for] 3 months and a tenant improvement allowance of $0/SF.” (Id. at 31.) On cross-

examination, Norling testified that the concessions adjustment was based on “direct confirmation

with leasing brokers.” Norling explained that the differences between free rent and tenant

FINAL DECISION TC-MD 140171D 3 improvements were then “divided by the comparable’s lease term, and applied to the beginning

base rent of the comparable lease.” (Id.) Norling testified that the range of concessions

adjustments was from a downward adjustment of $4.15 per square foot to an upward adjustment

of $0.39 per square foot. (Id. at 34.)

Norling testified that his second adjustments included location, space size, quality,

condition, year built, exposure, access, and parking ratio, and were “qualitative.” (Id.) Norling

testified that he “used smaller size buildings, 40,000 to 55,000 square feet,” because there were

no “recent lease comps within the Portland MSA that transacted within a reasonable timeframe

of the effective valuation date that are reflective of the subject’s size.” (Id. at 35.) In his

appraisal report, Norling stated that he “applied a downward adjustment of [five percent]to all of

the comparables” for space size and and an additional five percent downward adjustment for

access. (Id.) On cross-examination, Culver questioned why the “same five percent adjustment

was applied” for the parking ratio “whether the parking ratio was 8.6 or 1.6.” (See id. at 34.)

Norling’s total property adjustments ranged from a negative 20 percent adjustment to a positive

five percent adjustment. (Id.)

Norling testified that his unadjusted market rent rates ranged from $7.75 per square foot

to $15.00 per square foot. (See Ptf’s Ex 1 at 36.) Norling testified that he gave lease

comparables 4 and 6 “primary consideration” as they “required the lowest level of total

adjustment.”2 (Id.) Norling’s appraisal report stated that lease comparables 4 and 6 are

respectively located 2.8 miles and 9.4 miles from the subject property and are superior to the

subject property in terms of access and parking ratio. (Id. at 32, 34.) He testified that the subject

property has a parking ratio of 2.5 spaces per 1,000 square feet while market standards require 3

2 Norling labeled comparable lease 4 as 4-A on page 34 of his appraisal report but otherwise referred to the comparable as 4. (See Ptf’s Ex 1 at 32-36.) The court refers to the lease comparable as 4.

FINAL DECISION TC-MD 140171D 4 to 5 spaces per 1,000 square feet. (Id. at 35.) Norling testified that the adjusted rent rates ranged

from $8.29 per square foot to $8.68 per square foot and he concluded the subject property’s

market rent rate to be $8.50 per square foot as of the assessment date. (Id. at 36.) Using his

determined market rent rate, Norling testified that he concluded an annual potential gross rent of

$884,400. (Id.) Norling subsequently adjusted the annual potential gross rent to $883,915 based

on the parties’ agreed net rental area of 103,909 square feet. (Ptf’s Ltr at 1, July 24, 2014.)

Norling testified that because the market rent rate is based on a “triple net lease,” the

operating expenses, including property taxes, insurance, maintenance, management fees and

reserves, are “passed through” to the tenant. Norling concluded that the operating expenses were

matched with reimbursements. (See Ptf’s Ex 1 at 39.) Norling testified that his only reduction to

the annual potential gross rent was a “10 percent vacancy and credit loss,” resulting in a 10

percent reduction. (Id.) Norling testified that he determined a net operating income of $772,043.

(Id.) Norling subsequently adjusted the net operating income to $771,620. (Ptf’s Rev Ex 1 at

35.)

In his appraisal report, Norling concluded an 8.87 percent capitalization rate based on a

review of regional and national capitalization rate comparables. (Ptf’s Rev Ex 1 at 34.) He

stated that regional capitalization rate comparables indicated a range from 6.77 percent to 9.87

percent and an average of 8.19 percent, with the subject property being “most comparable with

the sales of the upper end” of comparable sales 5 through 8. (Ptf’s Ex 1 at 37.) The national

capitalization rate comparables selected by Norling ranged from 6.78 percent to 8.87 percent

with an average of 7.56 percent. (Id. at 38.) In his appraisal report, Norling concluded that the

subject property was most comparable with the sales “at the upper end of this range” of

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FINAL DECISION TC-MD 140171D 5 comparables. (Id.) Norling stated that he “considered the PricewaterhouseCoopers * * *

national net leased data for 4Q 2011 and 4Q 2012” in his capitalization rate conclusion. (Id.)

In his appraisal report, Norling concluded that “a middle-upper range conclusion of

8.75 %” was supported for the subject property. (Id.) Norling testified that he adjusted the

capitalization rate upward by 0.12 percent for the “load for real estate taxes” resulting in a “final

cap rate conclusion” of 8.92 percent. (Id.) On cross-examination, Defendant challenged

Norling, stating that none of Norling’s “sales” were “local” and Norling relied on “regional sale

data.” Norling concluded a real market value of $8,660,000 (rounded). (Id. at 39.) In response

to Defendant’s questions, Norling stated that the correct capitalization rate should be 8.87

percent. In his appraisal report submitted after trial, Norling concluded a real market value of

$8,700,000 (rounded) for both tax years. (Ptf’s Rev Ex 1 at 35.) Defendant accused Norling of

“double counting” his conclusion that the subject property “was a below average property” in the

capitalization rate. Norling rebutted, stating that the “capitalization rate is influenced by the

subject’s actual position.”

2. Sales Comparison Approach

In his appraisal report, Norling discussed his sales comparison approach. (Ptf’s Ex 1 at

40.) Norling testified that it was “challenging to collect comparables to the subject property”

because properties similar to the subject property “do not trade hands on a fee simple basis.”

Norling stated that he selected four properties comparable to the subject property. Three

properties were located within 12.3 miles of the subject property and the fourth was located in

Kirkland, Washington, a distance of 155.7 miles from the subject property. (Id. at 41.) Norling

stated that the net rentable area of those four properties ranged from 66,085 square feet to

200,000 square feet, with reported unadjusted sale prices per square foot ranging from $77 to

FINAL DECISION TC-MD 140171D 6 $112. (Id. at 43-44.) In his appraisal report, Norling stated that he considered transactional

adjustments (property rights, conditions of sale, financing, and market conditions) but concluded

that none was necessary. (See id. at 43.) Norling testified that he made adjustments to the sale

prices for location, size, quality, condition and age, exposure, access, and parking ratio and site

coverage. (Id. at 43-44.) Norling testified that the sum of his adjustments ranged from a

downward 15 percent adjustment to an upward 10 percent adjustment. (Id.) Norling stated that

the “level of total adjustment applied to the comparables is considered to range from minimal to

moderate and warranted to bring their locational and physical characteristics in alignment to

those of the subject.” (Id. at 44.) Norling stated that the adjusted comparable properties ranged

from $82 to $95 per square foot. (Id. at 45.) In his appraisal report, Norling concluded a price

per square foot of $85. (Id.) Norling determined a real market value under the sales comparison

approach of $8,840,000 for both tax years. (Id.)

In reaching this conclusion, Norling testified that comparable sale 3, the sale of a larger

“building to Costco” with a real market value of $85 per square foot, was given primary

consideration due to its location in the market area, as well as its similar quality, condition, and

access. When questioned, Norling testified that if comparable sale 3 were a land-only sale, it

would not be a comparable sale for the subject property. Norling subsequently “removed

Hillsboro Costco sale (previously comp 3) from the Sales Comparison Approach[.]” (Ptf’s Ltr at

1, July 24, 2014.) Norling’s appraisal report stated that comparable sale 1 “fell out of escrow,”

and in response to questions Norling stated that the “failed sale” was “completed a couple years

later.” (Ptf’s Ex 1 at 43.) Norling admitted during cross-examination that the Kirkland,

Washington property was given “minimal emphasis.”

FINAL DECISION TC-MD 140171D 7 B. Defendant’s Evidence

Culver testified that she developed all three approaches of value to determine the subject

property’s real market value. Culver’s appraisal report stated that she relied on the income, sales

comparison, and cost approaches to determine the subject property’s 2012-13 real market value

of $15,100,120 and 2013-14 real market value of $15,567,350. (Def’s Ex A at 8.) Culver stated

that she “gave the Cost Approach the least weight[,] * * * secondary consideration to the Sales

Comparison Approach[,] and [gave]the most weight to the Income Capitalization Approach.”

(Id.)

1. Cost Approach

Culver testified that in determining the subject property’s real market value she gave “2.5

percent weight” to the cost approach. Culver testified that she determined the subject property’s

land real market value using the sales of six comparable properties, and that “[a]ll of the sales

were located within the tri-county area.” (Id. at 63.) In her appraisal report, Culver stated that

two of the six sales were “raw land,” three of the six sales were “previously developed lot[s]”

and one sale was a “partially developed lot.” (Id. at 65-67.) Culver stated that “[n]one were

directly comparable to the subject site and all required varying upward and downward

adjustments.” (Id. at 68.) In her appraisal report, Culver stated that the parcel size ranged from

100,310 square feet to 801,504 square feet. (Id. at 65-67.) Culver testified that she could not

make “quantitative adjustments.” Culver reported unadjusted sale prices per square foot ranging

from $17.94 to $22.69 and adjusted sale prices per square foot ranging from $16.72 to $22.35 for

2012-13 and $16.72 to $22.13 for 2013-14. (Id. at 69-70.) Based on those adjusted sale prices,

Culver determined weighted average prices per square foot of $19.94 and $20.05 for 2012-13

and 2013-14, respectively. (Id.) Culver determined the subject property’s land real market value

FINAL DECISION TC-MD 140171D 8 as of January 1, 2012, to be $5,246,300 (rounded) and as of January 1, 2013, to be $5,275,200

(rounded). (Id. at 68.)

Culver testified that she used “the Marshall Valuation Service computerized Commercial

Cost Estimator in conjunction with Marshall’s Valuation Services publication” to determine the

subject property’s improvement real market value. (Id. at 71.) Culver concluded that the value

of the subject property improvements as of January 1, 2012, was $10,435,420 and as of

January 1, 2013, was $10,321,880. (Id. at 72.)

Culver testified that the cost approach indicated that the subject property’s real market

value as of January 1, 2012, to be $15,681,720 and as of January 1, 2013, to be $15,597,080.

2. Income Approach

In explaining her income approach, Culver testified that “whether a big box retail store

qualifies for an absolute net lease is dependent upon their credit status – the higher the credit

rating, the lower the lease rate * * * high credit rated tenants will often be able to negotiate better

lease terms, including absolute net leases vs. typical NNN [triple net] leases.” (Id. at 94.)

Referencing the foregoing statements, Culver testified that she developed an income approach

for both an “absolute net lease” and a “typical triple net lease.”

In developing her income approach, Culver testified that she selected 10 rent rate

comparables, from 2009 through 2012.3 (Id. at 88-92.) Culver testified that her rent rate

comparables ranged from $10 per square foot to $16.77 per square foot with an average of

$12.65 per square foot. (Id. at 88-93.) Culver testified that she selected rent rate comparables

3 All of Culver’s comparables were “NNN leases” except her comparable 10 which was an “absolute net lease.” (See Def’s Ex A at 94.)

FINAL DECISION TC-MD 140171D 9 that bracketed the subject property’s underlying lease rate, $10.74 per square foot, and the

sublease rate, $14 per square foot. (See id. at 94.)

Culver was questioned about the relevance of the subject property’s sublease between

Home Depot and Plaintiff, noting that the sublease “ends in seven to 10 years.” Culver testified

that she made qualitative adjustments to her rent comparables for categories of “Land

Characteristics,” “Building Characteristics,” and “Functionality.” (Id. at 95-96.) She testified

that after making these adjustments she assigned each comparable an overall qualitative

adjustment. (Id.) Culver testified that based on the overall adjustment to each “comparable

improved rental” she weighted each comparable sale. (Id.) She testified that comparable 10, the

Burlington Coat Factory, is “an absolute net lease,” and the “closest in size” to the subject

property but is “inferior in many other respects” such as land size, improvement size,

construction quality, age, and condition. (See id. at 96.)

In her appraisal report, Culver developed two different values for the subject property’s

rental rate under a “typical NNN lease,” one including comparable 10, concluding $12.13 per

square foot, and one excluding comparable 10, concluding $12.15 per square foot. (Id. at 95,

97.) In her appraisal report, Culver stated that “[i]nasmuch as the subject property is a big box

retail subject to absolute rent leases, I relied on the absolute net lease value conclusions

corroborated by the NNN lease value conclusions.” (Id. at 100.) Culver determined that “an

absolute net lease rate of $11.00/SF as of January 1, 2012 and January 1, 2013 is reasonable and

well supported.” (Id. at 94.)

Using her concluded rent rate, Culver determined potential gross income of $1,142,999

for both tax years. (Id. at 100.) Using her concluded rent rates excluding comparable 10

(absolute triple net lease), Culver’s appraisal report stated that she determined potential gross

FINAL DECISION TC-MD 140171D 10 income of $1,262,494. (Id. at 100.) Culver testified that “[b]ig box stores under absolute net

leases are typically single-tenant properties which are either 100% occupied or 100% vacant.”

(Id. at 97.) She testified that she concluded that a zero vacancy rate was appropriate for the

subject property. Culver testified that based on her research she “concluded that a NNN vacancy

rate of 9.5% as of January 1, 2012 was reasonable and well supported by the market” and “a

NNN vacancy rate of 8.5% as of January 1, 2013 was reasonable and well supported by the

market.” (Id.) Culver testified that “tenants are responsible for all property operating and

maintenance expenses in an absolute net lease,” and “I concluded an expense ratio of 0.0% as of

January 1, 2012 and January 1, 2013.” (Id.) Culver testified that for a triple net lease she

“concluded that an expense rate of 5.0% was appropriate as of January 1, 2012 and January 1,

2013.” (Id. at 98.)

In her appraisal report, Culver determined net operating income for the absolute net lease

to be $1,142,999 for January 1, 2012, and January 1, 2013, the same as potential gross income.

(Id. at 100.) Culver determined net operating income for the triple net lease to be $1,085,430 for

January 1, 2012, and $1,097,423 for January 1, 2013. (Id.)

Culver testified that she developed two income capitalization models, using “three of the

properties analyzed in the Sales Comparison Approach,” stating that “[i]n general, OARs

[overall capitalization rates] outside the Portland MSA [metropolitan statistical area] are higher

than those within.” (Id. at 98.) Culver testified that for an absolute net lease, an “OAR of 8.3%

as of January 1, 2012 and an OAR of 8.0% as of January 1, 2013 was both appropriate and

warranted.” (See id. at 99.) Culver testified that for a triple net lease, an “OAR of 7.75% as of

January 1, 2012 and an OAR of 7.5% as of January 1, 2013 was both appropriate and

FINAL DECISION TC-MD 140171D 11 warranted.” (Id.) Norling testified that Culver “consistently” selected a rate “lower than

average.”

Using her determined net operating income and capitalization rates, Culver concluded

that the subject property’s real market value (rounded) using the income approach, was:

January 1, 2012 January 1, 2013

Absolute Net Lease: $13,771,070 $14,287,490

Triple Net Lease: $14,005,540 $14,632,310

(Id. at 100.)

In his rebuttal testimony, Norling testified that he believed Culver’s lease comparables

did not adequately address concessions and owner/tenant improvements. He testified that he

verified that “five of the six comparables chosen by Culver were given tenant improvement

allowances.” Norling further testified that while the stated values of both his and Culver’s

comparable rent rates are similar, Culver’s comparable rent rates do not adequately reflect the

effective rental rates because there is no allowance for rent concessions and owner/tenant

improvements.

3. Sales Comparison Approach

Culver testified that she developed the sales comparison approach, giving “47.5 percent

weight” to this approach. Culver selected four comparable sales, stating that comparable

property 5 was a resale of comparable property 3. (Id. at 80.) She testified that “Sale 1 and Sale

2 were fee simple sales[,]” and “Sale 3, [and] Sale 4 * * * were leased fee sales.” (Id.) Culver

testified that “[a] leasehold interest exists when there is a difference between market lease rates

and terms and existing lease rates and terms. When there is no difference, the leased fee interest

is equivalent to the fee simple interest. Accordingly, no adjustments were required for property

FINAL DECISION TC-MD 140171D 12 rights conveyed.” (Id.) The unadjusted sale prices ranged from $83.23 per square foot to

$245.11 per square foot. (See id. at 75, 77-79.)

Culver testified “[a]ll but one of the sales is located outside Washington County.

Accordingly, I valued the subject land. I then extracted the land value from each improved sale

and compared their improvements.” (Id. at 75.) Culver adjusted each sale price for time,

building characteristics and functionality. (See id. at 81.) Culver testified that she considered the

sales to be “best reflective of real market value for the subject property” and adjusted the sales

prices for functionality and improvement characteristics. (Id. at 75, 80.) Culver testified that

after making adjustments she assigned an overall qualitative adjustment to each sale and derived

a weighted average adjusted sale price of $108.00 [rounded] per square foot. (Id. at 81.) Culver

testified that she determined an “Indicated Improvement RMV Rounded to $11,222,200” for tax

year 2012-13 and “$11,637,800” for tax year 2013-14. (Id. at 81-82.)

In response to Orchard’s questions critiquing Culver’s use of the extraction method to

determine the subject property’s land value, Culver testified that the extraction method is used in

cases where there are a limited number of property sales located in the subject property’s vicinity

and it is necessary to identify comparable sales in locations outside of the subject property’s

vicinity. Culver testified that in such cases, it is necessary to make allowances for differences in

location factors that are attributed to land by extracting the comparable land values from their

total real market values.

Norling testified that he has never known the land extraction method to be applied to the

valuation of big box properties and questioned how, once the land value is extracted, an

appraiser might make adjustments for property deficiencies. Referring to Culver’s reliance on

the ratio of land real market value to total real market value on the tax roll to extract a land value,

FINAL DECISION TC-MD 140171D 13 Norling rhetorically asked: “When was the last time the county reappraised or trended real

market value?”

C. Reconciliation

In his appraisal report, Norling concluded that the subject property’s real market value as

of January 1, 2012, and January 1, 2013, was $8,770,000. (Ptf’s Ex 1 at 46.) Norling stated that

he placed “equal emphasis * * * on the Income and Sales Comparison Approaches.” (Id.) In her

appraisal report, Culver concluded that the subject property’s real market value as of January 1,

2012, was $15,100,120 and as of January 1, 2013, was $15,567,350. (Def’s Ex A at 8.) Culver

testified that her real market value conclusion was based on weighting her three approaches to

value: 2.5 percent weight on the cost approach, 47.5 percent weight on the sales comparison

approach, and 50 percent weight on the income capitalization approach. (Id.)

D. Other Factors

Ross, who relied on his more than 15 years of prior retail (“big box”) management

experience, testified that various factors impacting the subject property’s real market value were

considered by Culver. He testified that even though access to the subject property is not “ideal,”

the subject property is “in a strong location, next to other retail stores,” with access to “two

major thoroughfares” and “highly visible from the Highway 217.” Ross testified that the subject

property is close to residential neighborhoods and other retail stores and as a “stand alone big

box” the subject property “draws its own traffic.”

Lees, who is currently employed by Plaintiff as a senior real estate manager, testified that

Plaintiff entered the Oregon market in 2006, opening “four to five stores in a short period of

time.” Lees testified that the subject property’s real market value is negatively impacted by

numerous factors. Lees testified that the square footage of the subject property is larger than

FINAL DECISION TC-MD 140171D 14 “what is typical for Kohl department stores,” that access to the property makes “large deliveries

difficult,” and that parking on the subject property is “very limited.” Lees testified that he “could

not identify future possible tenants for the subject property.” In response to possible use as a

home improvement store, Lees testified that even though the size of the property makes it

suitable for home improvement stores, the subject property “lacks the outdoor space and

adequate access to the property for deliveries that home improvement stores require.”

II. ANALYSIS

The issue before the court is the subject property’s real market value as of the assessment

dates for the 2012-13 tax year and 2013-14 tax year. “Real market value is the standard used

throughout the ad valorem statutes except for special assessments.” Richardson v. Clackamas

County Assessor (Richardson), TC-MD No 020869D, WL 21263620 at *2 (Mar 26, 2003)

(citing Gangle v. Dept. of Rev., 13 OTR 343, 345 (1995)). Real market value is defined in

ORS 308.205(1),4 which states:

“Real market value of all property, real and personal, means 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.”

The assessment date for the 2012-13 tax year and the 2013-14 tax year was January 1, 2012, and

January 1, 2013, respectively. See ORS 308.007; ORS 308.210.

“Real market value in all cases shall be determined by methods and procedures in

accordance with rules adopted by the Department of Revenue * * *.” ORS 308.205(2). There

are three approaches of valuation that must be considered, although all three approaches may not

be applicable: the cost approach, the sales comparison approach, and the income approach. Allen

v. Dept. of Rev., 17 OTR 248, 252 (2003); OAR 150-308.205-(A)(2)(a). The real market value

4 The court’s references to the Oregon Revised Statutes (ORS) are to 2011.

FINAL DECISION TC-MD 140171D 15 of property is ultimately a question of fact. Chart Development Corp. v. Dept. of Rev., 16 OTR

9, 11 (2001).

Plaintiff has the burden of proof and must establish its case by a preponderance of the

evidence. See ORS 305.427. 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). If

the evidence is inconclusive or unpersuasive, Plaintiff will have failed to meet its burden of

proof. See Reed v. Dept. of Rev., 310 Or 260, 265, 798 P2d 235 (1990). “[T]he court has

jurisdiction to determine the real market value or correct valuation on the basis of the evidence

before the court, without regard to the values pleaded by the parties.” ORS 305.412.

A. Cost Approach

“The cost approach is particularly useful in estimating the real market value of new

construction because cost and market value can be more closely related when properties are

new.” Anderson v. Lane County Assessor, TC-MD No 090298 at 6 (Nov 17, 2009). The parties

agree that the subject property was built in 1989 and remodeled in 2006 and 2011. The parties

agree that the subject property is not “new” but the remodels have extended its life. Norling did

not develop the cost approach, having determined that “the Cost Approach has limited

applicability due to the age of the improvements and lack of market based data to support an

estimate of accrued depreciation.” (Ptf’s Ex 1 at 29.) Culver did develop the cost approach but

attributed 2.5 percent of her real market value determination to the cost approach. Norling and

Culver substantially agree that the cost approach is not a reliable indicator of the subject

property’s real market value. The court agrees that the cost approach is not applicable to

determine the subject property’s real market value.

FINAL DECISION TC-MD 140171D 16 B. Sales Comparison Approach

The sales comparison approach “may be used to value improved properties, vacant land,

or land being considered as though vacant.” Chambers Management Corp v. Lane County

Assessor, TC-MD No 060354D, WL 1068455 at *3 (Apr 3, 2007) (citations omitted). The

“court looks for arm’s length sale transactions of property similar in size, quality, age and

location” to the subject property. Richardson, WL 21263620 at *3.

“In utilizing the sales comparison approach only actual market transactions of property

comparable to the subject, or adjusted to be comparable, will be used. All transactions utilized in

the sales comparison approach must be verified to ensure they reflect arms-length market

transactions. When nontypical market conditions of sale are involved in a transaction (duress,

death, foreclosures, interrelated corporations or persons, etc.) the transaction will not be used in

the sales comparison approach unless market-based adjustments can be made for the nontypical

market condition.” OAR 150-308.205-(A)(2)(c).

Norling and Culver both developed the sales comparison approach. Norling presented

sales of four comparable properties in his appraisal report. One of Norling’s comparable

properties (comparable 1) was not a sale; it was a transaction that according to Norling “fell out

of escrow.” (Ptf’s Ex 1 at 43.) Another comparable property (comparable 3) selected by Norling

was a land sale that he gave “primary consideration,” concluding it was “a good indicator for the

subject property.” (Ptf’s Ex 1 at 44.) Norling subsequently withdrew this property. Only two of

Norling’s four properties were sold and adjusted to be comparable to the subject property. One

of those two sales (comparable 4) was given “minimal” consideration by Norling and the other

sale (comparable 2) was selected by Defendant and given “secondary” weight by Norling. (Id.)

FINAL DECISION TC-MD 140171D 17 Norling’s sales comparison approach consists of one sale that he gave “secondary”

weight. “Usually, one sale does not make a market.” Truitt Brothers, Inc. v. Dept. of Rev., 302

Or 603, 609, 732 P2d 497 (1987). In this case, there is no evidence to conclude that one sale

does make a market. Norling’s sales comparison approach is incomplete and does not support

his determination of the subject property’s real market value.

Culver selected five sales with one of the sales a resale of a property located in Eugene,

Oregon (comparable 3, 5). (Def’s Ex A at 77.) Two of Culver’s five sales were “fee simple

sales” and three sales were “leased fee sales.” (Id. at 75.) In her appraisal report, Culver

addressed the difference between fee simple and lease fee, stating:

“A leasehold interest exists when there is a difference between market lease rates and terms and existing lease rates and terms. When there is no difference, the leased fee interest is equivalent to the fee simple interest. Accordingly, no adjustments were required for property rights conveyed.”

(Id.) Culver offered no evidence other than her reference to “discussions with the various

buyers, sellers, real estate agents, County Assessors’ staff” to support her conclusion that “the

various lease rates and terms, where available, appeared to reflect market conditions at the time

of sale.” (Id.) (Emphasis added.)

In determining the adjusted sale prices for each sale, Culver’s approach differed from

Norling in that she extracted the land value from the total sale price before making adjustments

to the remaining improvement value. Culver “extracted” the land value by relying on the tax roll

values and developing a relationship between the land tax roll real market value and the total tax

roll real market value. The extraction method uses a combination of actual sales data and tax roll

values to estimate land value. This court has previously noted the Oregon Department of

Revenue’s warning that “[t]he extraction method is less reliable than the direct comparison

approach and should be used with caution.” Coos County Assessor v. Smith,

FINAL DECISION TC-MD 140171D 18 TC-MD No 040520D, WL 2055955 at *10 (Aug 19, 2005) (citing Oregon Department of

Revenue, 1993 Appraisal Methods for Real Property at 1). The method should be used with a

large sample of properties within the same neighborhood to give a reliable range of values.

Renzo II, LLC, v. Clackamas County Assessor, TC-MD No 130076D (Dec 3, 2013), (referencing

Oregon Department of Revenue, Appraisal Methods for Real Property, revised July 2003.)

Defendant relied on a narrow sample, selecting four comparable properties. The Appraisal of

Real Estate concludes that the extraction method is “applicable when [t]he contribution of the

improvements to total property value is generally small and relatively easy to identify” and is

most effective “when the improvements are new, their value is known and there is little to no

depreciation from any cause.” Appraisal Institute, The Appraisal of Real Estate 363 (13th ed

2008). The improvement value of each of the four comparable properties selected by Culver in

relation to total adjusted sale price ranged from between 50.9 percent to 67.0 percent. (Def’s Ex

A at 77-79.) The improvement value of each comparable property contributed substantially to

the total unadjusted and adjusted sales price. In the case before the court, the effectiveness of the

extraction method is questionable and generally not applicable to the subject property.

Even though the land tax roll value was extracted from the total sale price, Culver made

land related adjustments, specifically “land-to-building ratio, coverage ratio, and parking ratio”

to the unadjusted improvement sales price. (Def’s Ex A at 80.) Culver did not explain why

those adjustments were made to the allocated improvement sale price and no adjustment was

made to the extracted land value.

Like Norling, Culver’s sales comparison approach is incomplete and does not provide the

necessary detail or supporting calculations to adequately substantiate its applicability.

FINAL DECISION TC-MD 140171D 19 Norling and Culver selected properties with buildings that were substantially smaller than

the subject property. Norling’s one comparable property that was also selected by Culver stated

a building size of 66,085 square feet. Culver’s other selected comparable properties reported

building sizes ranging from 43,057 square feet to 69,358 square feet. (Def’s Ex A at 77-79.)

The subject property is 103,909 square feet. Culver stated that all comparable properties were

superior to very superior in size to the subject property. (Id. at 81.) Culver acknowledged that

“[l]arger buildings generally sell for a lower unit price than smaller ones” and then selected a

price per square foot in excess of her computed average for smaller sized buildings. Culver’s

conclusion is not supported by her testimony.

The court accepts the parties’ conclusion that there are a limited number of sales of big

box stores locally. There is a substantial national big box market. The parties presented no

evidence of that market adjusted for location.

In sum, the court concludes that the parties’ comparable sales approach is inconclusive in

determining the subject property’s real market value.

C. Income Approach

Both parties presented the court with analysis and estimates of real market value based on

the income approach. “Any property that generates income can be valued using the income

capitalization approach.” NYEI v. Umatilla County Assessor, TC-MD No 100605D at 19 (Jan

13, 2012) (citing Appraisal Institute, The Appraisal of Real Estate 447 (13th ed 2008)). “In the

income capitalization approach, an appraiser analyzes a property’s capacity to generate future

benefits and capitalizes the income into an indication of present value. The principle of

anticipation is fundamental to the approach.” Id. (citing The Appraisal of Real Estate at 445.)

“Anticipation is defined as ‘the perception that value is created by the expectation of benefits to

FINAL DECISION TC-MD 140171D 20 be derived in the future.’ ” Id. (citing The Appraisal of Real Estate at 35.) Because the primary

use of the subject property is leased for commercial business, both parties determined the subject

property’s real market value using the income approach.

Both parties relied on the direct capitalization method to determine expected future

income. “The direct capitalization method * * * focuses on two key components: (1) the

capitalization rate * * * and (2) net operating income * * *.” Allen v. Dept. of Rev. (Allen), 17

OTR 248, 253 (2003). Net operating income “is the currently expected net income of a property

after all operating expenses are deducted from gross income.” Id. at 254 (citation omitted). “To

calculate the [net operating income] appraisers look at historical gross income and expenses for

the subject, adjusted by reference to market data.” Id. at 254.

There are two important differences between the appraisal reports. Culver developed an

income approach for both an absolute net lease structure and a triple net lease structure, while

Norling only developed the income approach for a triple net lease structure and considered

concessions for tenant improvements. Both Norling and Culver placed substantial weight on the

income approach when they determined their reconciled values. (Ptf’s Ex 1 at 46; Def’s Ex A at

8.)

1. Potential Gross Income

Both appraisers researched market lease comparables to determine an appropriate rent

rate for the subject property. Culver developed two different conclusions of real market value,

using a triple net lease structure and an absolute net lease structure. (Def’s Ex A at 100.)

Norling determined the subject property’s real market value using a triple net lease structure.

(Ptf’s Ex 1 at 39; Ptf’s Rev Ex 1 at 35.) The initial question is the appropriate lease structure.

OAR 150-308.205-(A)(2)(g) states that “[t]he income to be used in the income approach must be

FINAL DECISION TC-MD 140171D 21 the economic rent that the property would most probably command in the open market as

indicated by current rents being paid, and asked, for comparable space.” Norling selected six

triple net leases. Culver selected nine triple net leases and one absolute net lease. Culver stated

in her appraisal that her absolute net lease comparable “was the only one I could confirm as an

absolute net lease.” (Def’s Ex A at 93.) The leases selected by Norling and Culver support the

conclusion that the “economic rent that the property would most probably command” would be a

triple net lease.

Norling selected six triple net lease rates ranging from $7.75 per square foot to $15.00

per square foot. (Ptf’s Ex 1 at 32, 36.) Norling adjusted his rent rates for “a comparable market

standard free rent of 3 months and a tenant improvement allowance of $0/SF.” (Id. at 31.) After

adjusting the rent rates for concessions and tenant improvements, Norling’s lease comparables

ranged from $8.14 to $10.85. Culver selected nine triple net lease rates, ranging from $10.00 per

square foot to $16.77 per square foot. (Def’s Ex A at 95-96.) Culver did not make any

adjustment for tenant improvements or concessions. (Id. at 95.) Both appraisers made

adjustments for the physical differences of the comparable properties to the subject property.

Norling chose a quantitative approach, while Culver chose a qualitative approach and weighted

her unadjusted rates based on the overall qualitative adjustments.

Norling determined an adjusted $8.50 per square foot rent rate and Culver determined an

adjusted $12.15 per square foot rent rate. The two rents for properties Culver identified as

“equivalent” to the subject property were $11.25 and $10.00. (Def’s Ex A at 95.) Culver did not

offer an explanation as to why the rent rate she selected was in excess of the two “equivalent”

properties’ rent rate. Norling’s adjusted rent rates including market concessions, specifically

“free” rent, ranged from $8.14 to $10.54 per square foot. (Ptf’s Ex 1 at 34.) The timing of rent

FINAL DECISION TC-MD 140171D 22 concessions can make a reduction for concessions moot. For example, if the rent concession

occurs only in the first year of a five year lease, the income generated in years after the first year

are not reduced by the concession awarded in the first year. Norling reduced the rent rate for

each of the comparable properties selected even if the lease was entered into in a year other than

the tax year before the court and he provided no evidence to support his approach to distribute

the concessions over the term of the lease.

The court accepts Norling’s testimony that the market as of the assessment dates dictated

rent concessions for those leases entered into in the assessment years. Norling’s property

adjustments were explained and overall were reasonable except the parking ratio adjustment that

included a zero percent adjustment for a 3.3 parking ratio and a minus five percent adjustment

for parking ratios that ranged from 4.4 to 8.6. (Id. at 34.) The testimony and evidence support a

rent rate conclusion of $10.00 per square foot and potential gross rent of $1,039,900 (rounded)

for both tax years.

2. Vacancy and Credit Loss

Norling determined that a typical vacancy rate for the market would be five percent, but

given the functional issues of the subject property a 10 percent vacancy rate was appropriate.

(Ptf’s Ex 1 at 36.) Culver determined that the market vacancy rate ranged from 3.80 percent to

7.93 percent. (Def’s Ex A at 97.) Culver concluded that the subject property would experience a

higher than average vacancy rate based on it being a “big box retail store” and a vacancy rate of

9.5 percent was appropriate as of January 1, 2012, and 8.5 percent was appropriate as of

January 1, 2013. The vacancy rates determined by the parties are relatively close to each other.

Based on the subject property’s size, the court agrees that the vacancy rate would be towards the

higher end of the range and accepts Norling’s vacancy rate of 10 percent for both tax years.

FINAL DECISION TC-MD 140171D 23 Norling concluded that in addition to the loss of rent income the subject property would

incur a loss of “other income.” (Ptf’s Ex 1 at 39.) Norling did not testify about how he

concluded that the subject generated other income nor submit any evidence substantiating his

claimed reduction. The court makes no adjustment to potential gross income for a loss of other

income.

3. Operating Expenses

Norling determined operating expenses to be $239,162, or 23.7 percent of his calculated

effective gross income. (Ptf’s Ex 1 at 37.) Norling offset the operating expenses with tenant

reimbursement (triple net lease) in the amount of $239,162, resulting in an effective expense rate

of zero percent. (Ptf’s Ex 1 at 39.) In his appraisal report, Norling described his expense

analysis as “[r]emaining consistent with the triple net [lease] expense structure used in this

analysis[,] real estate taxes, property insurance and common area maintenance are treated as

reimbursable expenses. Non-reimbursable expenses * * * include management fees and reserves

for replacement.” (Id. at 37.) When Norling’s expenses for management fees and reserves are

treated as the only non-reimbursable expenses, Norling’s expense ratio is two percent. (Ptf’s Ex

1 at 39.) Norling made no adjustment for non-reimbursable expenses.

Culver’s expenses were $59,714, or five percent of her calculated effective gross income.

Culver did not state what she included in her expense calculations, instead stating that she relied

on “market research” and “concluded that an expense ratio of 5.0% was appropriate” for both tax

years. (Def’s Ex A at 98.)

Norling’s expense ratio was based on the subject property’s “single tenant design”

resulting in a “nominal management expense” and a lower reserve expense based on the subject

FINAL DECISION TC-MD 140171D 24 property’s “relatively recent construction.”5 (Ptf’s Ex 1 at 37.) Culver’s slightly higher expense

ratio was based on “expense ratios for retail shopping centers.” (Def’s Ex A at 98.) Norling’s

expense ratio was more closely tied to the subject property and the court accepts his two percent

non-reimbursable expense ratio.

4. Capitalization Rate

Norling and Culver relied on local, regional, and national capitalization rates derived

from the sale of comparable properties. (Ptf’s Ex 1 at 37-38; Def’s Ex A at 98-99.) Norling

stated that the “regional cap rate comparables indicate a range from 6.77% to 9.87%, and average

8.19%.” (Ptf’s Ex 1 at 37.) He concluded that within the regional data the subject property was

“most comparable with the sale of the upper end of the middle tier,” showing capitalization rates

of 8.82 percent and 8.89 percent. (Id.) Norling stated that “national cap rate comparables

indicate a range from 6.78% to 8.87%, and average 7.56%.” (Id. at 38.) In her appraisal report,

Culver stated that “[l]ooking just at the data that best reflected the subject property type and

location, OARs ranged from 6.50% to 7.50% with an average of 7.13%. OARs as of January 1,

2013 ranged from 6.25% to 8.20% with an average of 7.30%.” (Def’s Ex A at 98.) Culver

stated that “CoStar provides the most comprehensive data available segregating OAR data based

on property size.” (Id. at 99.) Culver presented data for both tax years, noting that “[a]ll retail,

100,000 SF and Over averaged 8.3 percent in each tax year.” (Id.) Her data supported a

conclusion that there was no change or a slight upward change in capitalization rates between the

2012-13 tax year and 2013-14 tax year. Norling concluded an 8.75 percent capitalization rate

and Culver determined a 7.75 percent capitalization rate. Both appraisers’ conclusions were well

supported and reasonable. The appraisers have accurately determined a reasonable range of

5 The subject property was constructed in 1989 and remodeled in 2006 and 2011.

FINAL DECISION TC-MD 140171D 25 capitalization rates. The court concludes that an 8.25 percent capitalization rate is appropriate

for the 2012-13 tax year and 2013-14 tax year.

Norling increased his computed capitalization rate for an adjustment to account for

property taxes that were incurred during vacancy and not reimbursed. (Ptf’s Ex 1 at 38.)

Norling concluded that a 0.12 percent adjustment was appropriate for the 2012-13 tax year.

Culver did not include a capitalization rate adjustment for property taxes. The court agrees with

Norling that a .12 percent capitalization rate adjustment for property taxes is appropriate when

the subject property is not leased and there is no reimbursement consistent with the triple net

lease structure. The court determines a capitalization rate of 8.37 percent for the 2012-13 and

2013-14 tax years.

5. Conclusion of Value

Based on the above findings the court determines a potential gross income of $1,039,900,

rounded. The court determines a vacancy and credit loss of 10 percent, and non-reimbursable

expenses of two percent, resulting in an effective gross income of $915,000, rounded. The court

determines a capitalization rate, including property taxes adjustment, of 8.37 percent. The

overall conclusion of real market value using the income approach is $10,900,000, rounded.

III. COSTS AND DISBURSEMENTS FACTS AND ANALYSIS

The Magistrate Division has discretionary authority under ORS 305.490(2) to award

costs and disbursements to the prevailing party. Wihtol I v. Dept. of Rev. (Wihtol I), 21 OTR

260, 267 (2013). The Magistrate Division promulgated a rule, Tax Court Rule-Magistrate

Division (TCR-MD) 16,6 setting forth the procedure for a prevailing party to request costs and

disbursements. As required under TCR-MD 16C(1), Plaintiff filed a summary cost statement on

6 Plaintiff’s motion was filed under TCR-MD 19 (2014). TCR-MD 19 (2014) was renumbered to TCR-MD 16 (2015), effective Jan 2, 2015.

FINAL DECISION TC-MD 140171D 26 December 22, 2014, requesting that the court award it costs and disbursements totaling

$14,354.17. TCR-MD 16C(1) states that “[w]ith the exception of the filing fee, proof of claimed

costs and disbursements must be attached to the statement. Plaintiff did not attached proof of the

claimed costs and disbursements. Pursuant to TCR-MD 16C(2)(a), Defendant filed an Objection

to Statement of Costs (Objection) on January 2, 2015, stating that:

“Plaintiff has not provided the court the requisite detailed statement of costs and disbursements as required by TCR-MD 19 C(1) to determine if the costs are appropriate or otherwise substantiate the claim. On that basis, the court should deny costs requested, other than the filing fee, if the court allows costs and disbursements.”

(Def’s Objection at 3.) Plaintiff filed a request to file Plaintiff’s Response to Defendant’s

Objections to Statement of Costs (Response) on January 7, 2015. TCR-MD 16C(2)(b). Neither

party requested that the court schedule a hearing “to consider issues and evidence related to the

request for costs and disbursements[.]” TCR-MD 16C(3).

Under TCR-MD 16B, “costs and disbursements may be allowed to the prevailing

party[.]” “Prevailing party” in the context of an award of attorney fees is currently defined by

statute, ORS 20.077, which was promulgated in 2001. That statute currently states, “the

prevailing party is the party who receives a favorable judgment or arbitration award on the claim.

If more than one claim is made in an action or suit * * * the court * * * shall[] (a) [i]dentify each

party that prevails on a claim * * *.” ORS 20.077 (2013) (emphasis added). Two cases are

particularly useful in defining “favorable” under ORS 20.077. The court in Eagles Five, LLC v.

Lawton, stated that, “‘it does not necessarily follow that, merely because a party does not obtain

all the relief sought, a party is not a prevailing party[.]’ ” 250 Or App 413, 427, 280 P3d 1017

(2012) (quoting Beggs v. Hart, 221 Or App 528, 536, 191 P3d 747 (2008)). The court in Beggs

v. Hart stated that “[t]o determine who is the prevailing party on each claim, a court must weigh

‘what was sought by each party against the result obtained.’ ” 221 Or App 528, 537-38, 191 P3d

FINAL DECISION TC-MD 140171D 27 747 (2008) (quoting Lawrence v. Peel, 45 Or App 233, 243, 607 P2d 1386 (1980)). In the

absence of a “prevailing party” definition imbedded within ORS 305.490, the Oregon Tax Court

has looked to the “prevailing party” definition under ORS 20.09. E.g. Waterbury v. Dept. of

Rev., 11 OTR 314 (1989). ORS 20.096 (1), (5) (1997) stated:

“In any action or suit on a contract, where such contract specifically provides that attorney fees and costs incurred to enforce the provisions of the contract shall be awarded to one of the parties, the prevailing party, whether that party is the party specified in the contract or not, at trial or on appeal, shall be entitled to reasonable attorney fees in addition to costs and disbursements.

“* * * * *

“Except as provided in ORS 20.015, as used in this section and ORS 20.097 ‘prevailing party’ means the party in whose favor final judgment or decree is rendered.”

Emphasis added.

There is no question that Plaintiff received a favorable decision, specifically a reduction

in the subject property’s real market value and assessed value. Plaintiff is the prevailing party in

this matter.

The question is whether the court should, in its discretion, award Plaintiff the requested costs

and disbursements. See Wihtol, 2014 WL 274126 at *4 (“[t]he award of costs and disbursements is

entirely discretionary with the court.” (citations omitted)). TCR-MD 16C(1) states that with the

exception of a request for filing fee, “proof of claimed costs and disbursements must be attached

to the statement. (emphasis added.) Plaintiff failed to comply with the court’s rule, omitting any

substantiation for the claimed costs and disbursements. Plaintiff’s request is denied with the

exception that Plaintiff’s request for filing fee which need not be substantiated by Plaintiff is

granted.

FINAL DECISION TC-MD 140171D 28 IV. CONCLUSION

After considering the evidence and testimony the court concludes that the sales

comparison and cost approaches are not good indicators of the subject property’s real market

value. Based on the testimony and evidence presented, the income approach is the only reliable

approach to determine the subject property’s real market value. Using the income approach the

court finds that the subject property’s real market value was $10,900,000 for the 2012-13 tax

year and 2013-14 tax year. Now, therefore,

IT IS THE DECISION OF THIS COURT that the real market value of the subject

property, identified as Account R66421, was $10,900,000 for the 2013-14 tax year.

IT IS FURTHER DECIDED that Plaintiff’s request for filing fee is granted.

IT IS FURTHER DECIDED that Plaintiff’s request for costs and disbursements other

than the filing fee is denied.

IT IS FURTHER DECIDED that Plaintiff’s request to file its Response to Defendant’s

Objections to Statement of Costs (Response) is granted.

Dated this day of January 2015.

JILL A. TANNER PRESIDING 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.

This document was signed by Presiding Magistrate Jill A. Tanner on January 14, 2015. The court filed and entered this document on January 14, 2015.

FINAL DECISION TC-MD 140171D 29