In the Supreme Court of Oregon case Bhagwati P. Poddar v. Department of Revenue, appellant Bhagwati Poddar challenged the tax assessment of his real property for the years 1994-95 and 1995-96, claiming it did not account for governmental restrictions on the property. The Oregon Tax Court upheld the assessment, which Poddar appealed under ORS 305.445. The court affirmed in part and vacated and remanded in part the judgment.
Poddar purchased rural property in Clatsop County in 1974, which included an old house and other buildings. In 1993, the county split the property into two tax accounts, with one five-acre parcel subject to a Residential-Agriculture-5 zone ordinance that allowed only one dwelling per parcel. In 1992, Poddar obtained a permit to build a new residence on the same parcel, conditioned on the removal of the old house within six months of occupancy. After receiving a certificate of occupancy in June 1994, he refused entry to a county appraiser, and discussions led to a reduction in the assessed value of the old house based on its assumed conversion to storage.
Despite being informed of the requirement to remove or permit the old house as a storage building by September 30, 1994, Poddar did not comply. The county assessed his property at $411,240 for the 1994-95 tax year and later at $458,380 for 1995-96, issuing a $7,500 fine for violations of the ordinance. Poddar did not allow an appraisal of the property until January 1997, after the county secured a court order, but the assessed value remained unchanged.
In June 1997, the county inspected a property where the taxpayer had demolished an old house, leading the county to retroactively assess its value as zero for the 1996-97 tax year. The taxpayer contested the county's valuation of a five-acre parcel for the 1994-95 and 1995-96 tax years, arguing that the old house should have been assessed as having no taxable value during those years. The Tax Court's Magistrate Division rejected this claim, affirming the county's assessments for both years. Subsequently, the taxpayer appealed to the Regular Division of the Tax Court, asserting that the real market value of the old house should have been zero for those years. The taxpayer's motion for summary judgment was denied, as the court found a factual dispute regarding the house's value. After trial, the Tax Court upheld the county's assessment, determining that the taxpayer had not met the burden of proof to demonstrate that the old house had no value. The court noted that, although the house was uninhabitable, it could still serve as a storage structure or have parts sold prior to demolition, indicating that it retained some taxable value. The taxpayer appealed, asserting the burden of proof was on him to provide substantial evidence supporting his claim. The legal standards for review included assessing for errors of law and substantial evidence per ORS 305.445. Relevant statutes outlined the definition and valuation of real market value, emphasizing the importance of informed transactions and the applicability of land use restrictions in determining property value.
Taxpayer argues the county's property assessment contravenes ORS 308.205(2)(c) and (d) and ORS 308.235(1) by not assigning a zero real market value to an old house during the 1994-95 and 1995-96 tax years, claiming the county neglected relevant government use restrictions. Taxpayer believes the Tax Court improperly ruled the old house had "immediate market value" and wrongfully awarded costs to the county without a hearing. The county's ordinance limited the property to one single-family dwelling, which taxpayer claims renders the old house unusable following the new house's occupancy. Taxpayer argues the lack of a storage building permit further negates any potential use for the old house, warranting a zero taxable value under ORS 308.205(2)(c) and (d).
The county counters that taxpayer did not meet his burden of proof to demonstrate the old house lacked value and that the restrictions did not render the property valueless, only limited its use as a dwelling. The county asserts that the old house's components still hold value and highlights taxpayer's refusal to allow appraisers access to the property during the contested tax years, which hindered any valuation adjustment. The court agrees with the county and Tax Court, asserting taxpayer failed to provide evidence supporting his claim of no value. ORS 305.427 places the burden of proof on the taxpayer, who must demonstrate that their valuation approach accurately reflects the property's real market value. Taxpayer's reliance on previous court decisions is deemed unhelpful, as the cited cases involve distinct circumstances not applicable to the current situation.
Participation in a governmental program is deemed a "governmental restriction as to use" of property, even when the property owner voluntarily participates and receives financial benefits. Taxpayer argues that limitations on property use, particularly concerning a 1992 development permit that required further permits for certain uses, constitute such restrictions. However, the court notes that while governmental restrictions, including zoning laws, apply, they do not prohibit all uses of the property or render it valueless. The old house could potentially be used for storage or sold for parts following permit approval.
In contrast to a prior case (Tualatin Development), where severe restrictions left the property without market value, the current case allows for beneficial use of the old house, albeit with permit requirements. These requirements do not equate to a total prohibition on use, thus not eliminating its taxable value. The Tax Court's conclusion that the taxpayer did not prove the property had no value is affirmed.
Lastly, the taxpayer contests the Tax Court's award of costs, claiming improper procedure under former Tax Court Rule (TCR) 68 C(4)(c)(i), which mandates a hearing for objections to attorney fees or costs.
Parties are entitled to a reasonable opportunity to present evidence, including affidavits and declarations, on any factual issues. Taxpayer filed objections to the county's cost bill regarding photocopy costs, but the county waived its appearance. The Tax Court did not hold a hearing and awarded costs to the county without addressing the taxpayer's objections. The taxpayer argues that he is entitled to a hearing per former TCR 68 C(4)(c)(i), which mandates a hearing when objections are filed. The Tax Court did not conduct such a hearing, and there is no indication that the taxpayer waived this right. Consequently, the Tax Court's award of costs is vacated, and the case is remanded for a hearing on the taxpayer's objections. The judgment is partially affirmed and partially vacated and remanded. Additionally, the taxpayer acknowledged a false statement made to delay the demolition of an old house. Clatsop County intervened as the real party in interest, with the Department of Revenue defending the county but not participating in proceedings before this court. The Tax Court's opinion was later amended without changing its analysis or outcome. The Tax Court observed that the taxpayer's refusal to allow appraisers to inspect the old house left any potential value reductions unknown. The appraiser had adjusted the house's value based on the assumption of a change in use, influenced by the taxpayer's representation regarding plumbing. Citations refer to the 1993 and 1995 editions of the Oregon Revised Statutes for the applicable tax years.
