IN THE OREGON TAX COURT MAGISTRATE DIVISION Property Tax
PASTEGA INVESTMENT COMPANY ) LLC, ) ) Plaintiff, ) TC-MD 150284N ) v. ) ) BENTON COUNTY ASSESSOR, ) ) Defendant. ) FINAL DECISION
This Final Decision incorporates without change the court’s Decision, entered April 18,
2016. The court did not receive a statement of costs and disbursements within 14 days after its
Decision was entered. See TCR-MD 16 C(1).
Plaintiff appeals property identified as Account 421029 (subject property) for the 2014-
15 tax year. A telephone trial was held on January 11, 2016. David E. Carmichael, Attorney at
Law, appeared on behalf of Plaintiff. Daniel R. Orman (Orman), Certified General Appraiser,
testified on behalf of Plaintiff. Richard D. Newkirk (Newkirk), Registered Appraiser, appeared
and testified on behalf of Defendant. Plaintiff’s Exhibit 1 and Defendant’s Exhibit A were
received without objection. Plaintiff objected to the relevance of Defendant’s Exhibit B, a 2011
appraisal report prepared by Orman for another property in Corvallis, and the court excluded
Defendant’s Exhibit B. Plaintiff objected to Defendant’s Exhibit D, which was not timely
exchanged pursuant to Tax Court Rule-Magistrate Division 12 C(1)(a). The court excluded
Defendant’s Exhibit D. The parties filed written closing arguments on January 25, 2016.
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FINAL DECISION TC-MD 150284N 1 I. STATEMENT OF FACTS
A. Subject Property Description and Market
The subject property is a 10.82 acre parcel of industrial zoned land located in Corvallis,
Oregon.1 (Ptf’s Ex 1 at 2, 4.) It is zoned General Industrial (GI). (Id. at 4.) Orman testified that
the subject property has access to Walnut Boulevard, immediately to the south of the subject
property, and likely also has some access from Belvue Street and Jack London Street. (See Def’s
Ex A at 27.) He testified that the subject property does not have access to Highway 99W due to
the railroad tracks in between the subject property and Highway 99W. (See id.) Orman testified
that the subject property is located immediately east of the Pepsi-Cola plant in Corvallis. (See
id.) Newkirk testified that his description of the subject property was similar to Orman’s. (See
Def’s Ex A at 6.) He testified that he agreed that the subject property lacks access to Highway
99W, although it has temporary access through the Pepsi-Cola plant. (See id. at 13.)
Orman testified that the subject property is located near a commercial development
anchored by a Big K department store and a Safeway. (See Ptf’s Ex 1 at 13; Def’s Ex A at 27.)
He testified that the commercial development includes retail stores, restaurants, and a cinema off
of Circle Boulevard. (See id.) “Located behind the Big K and Safeway (to the south) is a 17.57
acre parcel that was developed with a Home Depot in 2007. Part of this larger parcel is three
smaller lots zoned for industrial use. One of these lots was recently improved with a vehicle
storage lot for the US Forest Service; the other two lots are available for sale.” (Ptf’s Ex 1 at 13.)
Orman testified that the commercial development along Circle Boulevard is of a different quality
than the subject property and does not benefit the subject property. He testified that the subject
property is surrounded by heavy industrial uses with some residential uses on its east side. (See
1 The subject property is 471,319 square feet. (Ptf’s Ex 1 at 4.)
FINAL DECISION TC-MD 150284N 2 id. at 14.) Orman wrote that, in addition to the Pepsi-Cola plant, other developments in the
subject property’s vicinity include “Sprick roofing, a mini-storage, and a warehouse building.”
(Id.) The Hewlett-Packard campus “is located along NE Circle Boulevard, between Highway
99W and Highway 20.” (Id.)
Orman testified that the Corvallis population grew from 2010 to 2014 and had low
unemployment relative to the state of Oregon. (See Ptf’s Ex 1 at 12.) He testified that Corvallis
is one of the “thriving communities” in Oregon. Orman testified that he anticipated a 12 to 18
month marketing time for the subject property. (Id. at 7.) He testified that that is a rough
estimate of how long it would take to sell the subject property at his real market value
conclusion, and it is supported by his comparable sales.2
B. Plaintiff’s Valuation of the Subject Property
Orman testified that he has 27 years of experience appraising commercial and industrial
properties. To determine the subject property’s real market value as of January 1, 2014, he relied
upon five sales of industrial zoned land in Corvallis, as well as a time-trended 2009 sale of a 3.7
acre parcel of land that is now part of the subject property. (See Ptf’s Ex 1 at 25-27.)
Orman testified that he confined his search for comparable sales to ones within a couple
years of January 1, 2014, because sales more remote in time from the assessment date tend to be
less comparable due to changes in market conditions over time. (See Ptf’s Ex 1 at 24.) His sales
occurred between January 28, 2011, and October 29, 2014. (Id. at 27.) Orman testified that he
found industrial land had appreciated after the recession of 2008-09. (See id. at 25.) He
determined a monthly appreciation of 0.92 percent “[b]ased on the unit value difference between
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2 Orman testified that his comparable sale 1 was on the market for 306 days, or 10 months; sale 2 was on the market 120 days, or 4 months; and sale 3 was on the market 434 days, or 14 months.
FINAL DECISION TC-MD 150284N 3 Comp 5 and Comp 1 * * *.” (Id.) Orman testified that he adjusted his comparable sales to
January 1, 2014, using a time adjustment of 0.92 percent per month. (See id.)
Orman testified that all of his comparable sales were zoned for industrial use and had a
similar highest and best use as the subject property. (See Ptf’s Ex 1 at 27.) He testified that all
of his comparable sales were smaller than the subject property, but he could not find any larger
sales within a reasonable time of January 1, 2014; they ranged from 1.09 to 4.31 acres. (See id.)
Orman testified that larger parcels tend to sell for less per square foot than smaller parcels.
Orman testified that all of his sales were located about four miles south of the subject
property. (See Ptf’s Ex 1 at 28.) He testified that the south Corvallis market is inferior to the
north Corvallis market, but he thinks that his sales provide the best indication of the subject
property’s likely selling price as of January 1, 2014. (See id. at 25.) Orman’s comparable sales
indicated adjusted values ranging from $2.87 to $3.63 per square foot. (Id.) Orman testified
that, based on his comparable sales, if the subject property were located in south Corvallis, it
would likely sell for $3.50 per square foot. (See id. at 25-26.) However, he determined a higher
value was supported due to the subject property’s location in north Corvallis. (See id.)
Orman testified that a 3.70 acre parcel that is now part of the subject property sold for
$3.50 per square foot in November 2009 after it was actively marketed for $5.00 per square foot.
(See Ptf’s Ex 1 at 6, 26.) He testified that the 2009 sale was between unrelated parties: the seller,
RCW Properties LLC (R.C. Wilson), and the buyer, Mario Pastega. (See id. at 26; Def’s Ex A at
15.) Orman applied his 0.92 percent per month time trend to the 2009 sale and found it indicated
a price of $4.87 per square foot as of January 1, 2014. (Id.) Due to the larger size of the subject
property as compared with the 3.70 acre parcel, Orman concluded that a price of $4.50 per
square foot was supported. (See id.)
FINAL DECISION TC-MD 150284N 4 Orman concluded the subject property’s real market value was $4.50 per square foot, or
$2,120,000, as of January 1, 2014. (Id. at 26.) He testified that his value conclusion represents a
28.5 percent upward adjustment from the $3.50 per square foot indicated by his comparable
sales. Orman testified that the 28.5 percent upward adjustment reflects the difference between
the superior north Corvallis location of the subject property and the inferior south Corvallis
location of his comparable sales.
Newkirk testified that he did not find Orman’s sales to be comparable to the subject
property because they were all located in south Corvallis, an inferior market to north Corvallis,
where the subject property is located. He thought it was important to focus on the north
Corvallis market. With respect to the 2009 sale of 3.70 acres that became part of the subject
property, Newkirk testified that it was the last remaining parcel of R.C. Wilson’s estate, after
Wilson passed away in July 2006. (See Def’s Ex A at 15.)
Orman testified that north Corvallis is superior in all respects to south Corvallis for retail
development, and it is generally superior to south Corvallis for residential development. He
testified that, for industrial development, the only requirements are utilities and close access to
primary routes; proximity to residential development is not an advantage. Orman testified that
he thinks north Corvallis is superior to south Corvallis for industrial purposes and made a 28.5
percent adjustment to account for that difference, but he does not think the difference is as
significant as for residential or commercial uses.
C. Defendant’s Valuation of the Subject Property
Newkirk testified that he has been a registered appraiser since 2002 and was previously a
certified general appraiser in Missouri. (See Def’s Ex A at 37.) To determine the subject
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FINAL DECISION TC-MD 150284N 5 property’s real market value as of January 1, 2014, Newkirk relied upon two comparable sales
and four comparable listings. (See id. at 28.)
Newkirk testified that his comparable sale 1 was the only reported sale with similar
zoning, size, and neighborhood as the subject property; it was the June 2006 sale of 11.08 acres
of land for $6.73 per square foot to develop a Home Depot. (See Def’s Ex A at 21.) He testified
that Home Depot was one of the buyers. (See id.) Newkirk testified that his comparable land
listings 2 and 3, each at $9.00 per square foot, were listed by Corvallis Station LLC. (Id. at 22-
23.) He testified that his references to “current listings” 2 and 3 were as of January 1, 2014, but
he thought those properties were still listed as of the trial date. (See id.) Newkirk testified that
his comparable land listings 4 and 5, at $10.39 and $10.29 per square foot, were located in the
Mixed Use Employment (MUE) zone and listed by the Bridgid W. Allen Trust. (See id. at 24-
25.) He testified that his comparable land sale 6 at $7.70 per square foot occurred in July 2014;
the 0.88 acre parcel was zoned Mixed Use General Commercial (MUGC). (See id. at 26.)
Newkirk testified that he applied a qualitative analysis to his comparables and determined
that comparable listings 2 through 5 were superior to the subject property primarily because of
their smaller sizes. (See Def’s Ex A at 28.) He concluded that sales 1 and 6 were about equal to
the subject property. (See id.) Newkirk testified that he reviewed data from the CoStar
Industrial Report on the Portland industrial market and concluded that neither industrial flex
space vacancies nor rental rates changed much from 2007 through 2014. (See id. at 30.)
Newkirk testified that, according to data from the Willamette Valley MLS, the Corvallis
residential market in 2014 was about the same as in 2007; the average sale price of residential
single family homes was $306,718 in 2007 and $306,782 in 2014. (See id. at 31.) Newkirk
testified that four paired sales of commercial properties in Corvallis revealed a “very nominal”
FINAL DECISION TC-MD 150284N 6 increase of about 4.64 percent between 2006 and 2014. (See id. at 32.) Based on his review of
that market data, Newkirk concluded that the $6.73 per square foot sale price of his comparable
sale 1 in 2006 provides a good indication of the subject property’s real market value as of
January 1, 2014. (See id.)
Newkirk concluded that his comparable sales 1 and 6 indicated a value range of $6.73 to
$7.70 per square foot. (Def’s Ex A at 34.) He noted that, if comparable sale 1 were increased by
4.64 percent, as indicated by his paired sales analysis, it would indicate a value of $7.04 per
square foot. (Id.) Newkirk concluded the subject property’s real market value was $7.00 per
square foot, or $3,300,000, as of January 1, 2014. (Id.)
Orman testified that he did not use Newkirk’s comparable sale 1 from 2006 because it
was dated and indicative of what big box stores pay for land. He testified that he discussed the
Home Depot sale with the seller’s representative and learned that the negotiations for that sale
occurred in 2002. Orman testified that the Home Depot sale included some entitlements; the
selling party had to obtain approval of site development plans prior to closing at a cost of
$300,000 so the site was “shovel ready” the day after closing. He testified that the Home Depot
sale indicates a value of $6.00 per square foot, adjusted for the entitlements. Orman testified that
he did not use Newkirk’s comparable sale 6 because it was very small and zoned MUGC.
Orman testified that he did not use current listings because they show what a buyer wants
to receive, not a completed market transaction. He testified that Newkirk’s listings 2 and 3 have
been on the market since 2006 and the current owner is now trying to rezone those properties to
commercial because they have not sold. Newkirk’s listings 2 and 3 are zoned GI, like the subject
property. Orman and Newkirk agreed that some retail use, such as a Home Depot, is allowed in
the GI zone. Orman testified that there had been a pending sale of Newkirk’s listing 3 for $6.00
FINAL DECISION TC-MD 150284N 7 per square foot, but the sale fell through. Newkirk testified in response that the adjusted sale
price for the useable area of listing 3 would have been $8.00 per square foot and Orman agreed.
Orman testified that Newkirk’s listings 4 and 5 have been on the market since the early 2000s
and were zoned MUE.
D. Tax Roll Values
The subject property’s 2014-15 tax roll real market value was $3,299,233, and its 2014-
15 maximum assessed value of $2,562,160. (Compl at 2.) The board of property tax appeals
sustained the subject property’s 2014-15 real market value. (See id.)
II. ANALYSIS
The issue before the court is the real market value of the subject property for the 2014-15
tax year. ORS 308.205(1) defines real market value:
“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.”3
The assessment date for the 2014-15 tax year was January 1, 2014. See ORS 308.007; 308.210.
There are three approaches to value that must be considered to determine the real market
value of real property: the sales comparison approach, the cost approach, and the income
approach. See Oregon Administrative Rule (OAR) 150-308.205-(A). In a particular case, all
three approaches may not be applicable; however, each approach “must be investigated for its
merit.” Id. Whether any one approach is more persuasive in a given case “is a question of fact
to be determined by the court” based on the record before it. Pacific Power & Light Co. v. Dept.
of Revenue, 286 Or 529, 533, 596 P2d 912 (1979). In addition to the three approaches to value, a
recent sale of the subject property “is important in determining its market value. If the sale is a
3 The court’s references to the Oregon Revised Statutes (ORS) are to 2013.
FINAL DECISION TC-MD 150284N 8 recent, voluntary, arm’s length transaction between a buyer and seller, both of whom are
knowledgeable and willing, then the sales price, while certainly not conclusive, is very
persuasive of the market value.” Kem v. Dept. of Rev., 267 Or 111, 114, 514 P2d 1335 (1973).
Plaintiff bears the burden of proving its case by a preponderance of the evidence. See
ORS 305.427. “Preponderance of the evidence means the greater weight of evidence, the more
convincing evidence.” Feves v. Dept. of Revenue, 4 OTR 302, 312 (1971). To meet its burden,
Plaintiff must “provide competent evidence of the [real market value] of [its] property.” Woods
v. Dept. of Rev., 16 OTR 56, 59 (2002). Competent evidence of real market value “includes
appraisal reports and sales adjusted for time, location, size, quality, and other distinguishing
differences, and testimony from licensed professionals such as appraisers, real estate agents, and
licensed brokers.” Danielson v. Multnomah County Assessor, TC-MD 110300D, WL 879285
(Mar 13, 2012).
A. The Sale of Part of the Subject Property
Under Kem, a recent, voluntary, arm’s-length sale of the subject property provides
persuasive evidence of the subject property’s real market value. In November 2009, 3.70 acres
of land that comprises part of the subject property sold for $3.50 per square foot. That sale
occurred over four years before the January 1, 2014, assessment date. Orman acknowledged in
his report that “the sale occurred during a time of weaker market conditions due to the economic
downturn in 2008 and 2009, which extended into 2010.” (Ptf’s Ex 1 at 26.) He sought to
account for the change in market conditions with an upward time adjustment of 0.92 percent per
month, which resulted in a real market value of $4.87 per square foot as of January 1, 2014.
Ultimately, Orman thought that a lower real market value of $4.50 per square foot was supported
for the subject property given that it is larger than the 3.70 acres that sold in November 2009.
FINAL DECISION TC-MD 150284N 9 The November 2009 sale of 3.70 acres of the subject property was not “recent” as of
January 1, 2014, due to the market changes during that time period. Orman’s time trend of 0.92
percent per month provides some help to adjust the sale price to January 1, 2014, but is not
sufficient to meet Plaintiff’s burden of proof absent other evidence.
B. Sales Comparison Approach
Both appraisers used the sales comparison approach to value the subject property. The
sales comparison approach “may be used to value improved properties, vacant land, or land
being considered as though vacant.” Chambers Management v. Lane County Assessor, TC-MD
060354D, WL 1068455 at *3 (Apr 3, 2007) (citations omitted). Under the sales comparison
approach, “only actual market transactions of property comparable to the subject, or adjusted to
be comparable” may be used and all sales “must be verified to ensure they reflect arm’s-length
market transactions.” OAR 150-308.205-(A)(2)(c). To be comparable, properties should be
“similar in size, quality, age and location” to the subject property. Richardson v. Clackamas
County Assessor, TC-MD 020869D, WL 21263620 at *3 (Mar 26, 2003.)
Orman relied upon five sales of industrial land in a development in south Corvallis. The
sales occurred between January 28, 2011, and October 29, 2014. Orman made time adjustments
using his time trend of 0.92 percent per month, and found that his sales indicated adjusted values
ranging from $2.87 to $3.63 per square foot. He concluded that his comparable sales indicated a
real market value of $3.50 per square foot for the subject property.
Newkirk questioned the comparability of Orman’s sales given that they were all located
in south Corvallis, a location that both he and Orman agreed was inferior to the subject
property’s location in north Corvallis. In order to adjust for the subject property’s superior
location, Orman determined its real market value was $4.50 per square foot as of January 1,
FINAL DECISION TC-MD 150284N 10 2014, which is 28.5 percent more than the value of $3.50 per square foot indicated by his
comparable sales in south Corvallis. The time-trended sale of part of the subject property
provides additional support for Orman’s 2014-15 real market value conclusion of $4.50 per
square foot.
Newkirk did not consider any sales of industrial land in south Corvallis because he
considered that area to be inferior to the subject property’s location in north Corvallis. Instead,
he focused only on properties in north Corvallis. Evidently there were few recent sales of
industrial land in north Corvallis, because Newkirk relied upon two sales and four listings to
determine the subject property’s real market value as of January 1, 2014. Listings are not “actual
market transactions” and are given little weight in this analysis. OAR 150-308.205-(A)(2)(c).
Of the two sales identified by Newkirk, one occurred in June 2006, over 7.5 years before
the January 1, 2014, assessment date. Orman testified that, according to the seller’s
representative, the sale was negotiated even earlier in 2002. Newkirk did not make any time
adjustment to that sale, but nevertheless concluded that it provided a good value indication for
the subject property as of January 1, 2014. He supported that conclusion using CoStar data on
vacancy and rental rates in the Portland industrial property market, home prices in the Corvallis
residential market, and four paired sales of commercial properties in Corvallis.
Although the court agrees with Newkirk that the 11.03 acre parcel of industrial land was
very similar to the subject property with respect to its size, location, and zoning, the court is not
persuaded that the price paid for that parcel in June 2006 provides persuasive evidence of the
subject property’s real market value as of January 1, 2014, absent any adjustment for time.
Evidence from the Portland industrial market and from the Corvallis residential and commercial
markets does not support the conclusion that the market for industrial land in Corvallis was
FINAL DECISION TC-MD 150284N 11 unchanged between 2006 and 2014. To the contrary, Orman determined that industrial land
prices were impacted by the recession of 2008-09, and did not begin to recover until 2011.
Newkirk’s second sale was a 0.88 acre parcel zoned MUGC that sold for $7.70 per
square foot in July 2014. That sale was closer in time to the January 1, 2014, assessment date.
However, it was zoned commercial rather than industrial. Thus, it could be developed for
different uses than the subject property and may have a different highest and best use than the
subject property. No adjustment was made for the different zoning of that property.
C. Reconciliation
Orman supported his real market value conclusion of $4.50 per square foot with actual
sales of industrial zoned land in Corvallis and a time-adjusted 2009 sale of part of the subject
property. The primary weakness of Orman’s comparable sales was the fact that they were all
located in the inferior south Corvallis area. Orman acknowledged that deficiency and made an
adjustment for the inferior location of his comparable sales. The court observes that Orman’s
sales were all smaller than the subject property. However, both Orman and Newkirk agreed that
smaller parcels tend to sell for more per square foot than larger parcels. That suggests that any
adjustment for the size of Orman’s comparable sales would be downward.
Newkirk tried to find comparable sales from the north Corvallis area, but produced only
four listings, a sale from 2006, and a sale of commercial zoned property. That evidence is
insufficient to rebut Orman’s evidence supporting a finding that the subject property’s real
market value was $4.50 per square foot, or $2,120,000, as of January 1, 2014.
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FINAL DECISION TC-MD 150284N 12 III. CONCLUSION
After careful consideration, the court finds that the subject property’s real market value
was $2,120,000 as of January 1, 2014. Now, therefore,
IT IS THE DECISION OF THIS COURT that Plaintiff’s appeal is granted. The 2014-15
real market value of property identified as Account 421029 was $2,120,000.
Dated this day of May, 2016.
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 filed and entered on May 6, 2016.
FINAL DECISION TC-MD 150284N 13