Oregon Advisory Opinions May 23, 1963: OAG 63-73 (May 23, 1963)

OAG 63-73.

This is in reply to your request for an opinion principally concerning the assessment of farm lands. For convenience of reply your request has been herein restated in full as follows:

"1. Can the assessor designate a higher assessment rate for that part of a farm on which the farmer's residence and farm buildings are situated than that of the rest of the farm when the class or type of soil is the same?

"2. Can the assessor designate that portion of a farm on which are situated the farm residence and buildings as 'view property' and assess such necessary building sites at a higher assessment rate for reasons of 'view'?

"3. Can the assessor set a higher assessment rate on a farm which is used exclusively for agriculture because it has a better 'view' than similar nearby farm land of the same class or soil type?

"4. Can the assessor classify a district or sub-district which contains one or more sections of farm land as sub-division land when such land has on the average more than 20 acres per residence and is more than five miles from town?

"5. Can an assessor set an assessment rate on land in a district or sub-district, based on the asking price of a small minority of land owners, or must there be substantial sales to justify a tax assessment rate?

"6. What percent of recorded sales are required as a criterion to set the value to use for the general assessment rate of a district or sub-district?

"7. What protection does the public have from the unethical practice of some real estate operators and builders who, after shifting property amongst themselves, trade-puff the true values by placing excessive federal revenue stamps on deeds, which, in turn, causes the assessor to place unreal values on such properties which result in abnormal assessment for the district or subdistrict in which such land is located?

"8. Can a county court make a mandatory requirement that a farmer's residence under construction be subjected to a county building code and fees on land that is either not zoned or is zoned for agriculture usage?"

There are two major factors which control the "assessment rate" as it applies to taxable properties, only one of which is herein involved. A parcel of property usually lies in several taxing districts, each of which deals with a different subject, such as county roads, drainage, fire protection, sanitation, schools, soil conservation, water conservation, etc. The amount of taxes levied by each of the various taxing districts in which a particular parcel of property happens to lie all have some effect upon the total amount of taxes levied. After the amount of tax for each taxing district is determined, it is then levied and collected proportionately from all of the taxable properties within each taxing district according to the assessed value placed upon the properties by the assessor. The nature of the questions asked indicates that you are primarily concerned with the problem of valuation which faces the assessor and which in turn affects the proportionate division of the taxes to be collected.

A fundamental requirement concerning uniformity of tax legislation is provided for in the Constitution of Oregon, which provides in Article I, § 32, as follows:

"No tax or duty shall be imposed without the consent of the people or their representatives in the Legislative Assembly; and all taxation shall be uniform on the same class of subjects within the territorial limits of the authority levying the tax."

"The Legislative Assembly shall, and the people through the initiative may, provide by law uniform rules of assessment and taxation. All taxes shall be levied and collected under general laws operating uniformly throughout the State."

Basically, the requirement relative to uniformity of assessment under the ad valorem tax structure is achieved by applying the same standard of value in the assessment of all taxable property. The standard so adopted is referred to as "true cash value" and is provided in ORS 308.205, which states as follows:

"True cash value of all property, real and personal, means market value as of the assessment date. True cash value in all cases shall be determined by methods and procedures in accordance with rules and regulations promulgated by the State Tax Commission. With respect to property which has no immediate market value, its true cash value shall be the amount of money that would justly compensate the owner for loss of the property."

ORS 308.205 through 308.235 generally set forth the assessor's duties with

respect to the assessment and tax roll. Under the provisions of ORS 308.232, the assessed value is a uniform percentage of the true cash value applied uniformly to all classes of property. Under this statute the ratio between assessed value and true cash value has now been established at 25 percent in most counties.

ORS 308.235 provides:

"Taxable real property shall be assessed by a method which takes into consideration the improvements on the land and in the surrounding country and also the use, earning power and usefulness of such improvements, and any rights or privileges attached thereto or connected therewith, the quality of the soil, and the natural resources in, on or connected with the land, its conveniences to transportation lines, public roads and other local advantage of a similar or different kind. Where land is situated within an irrigation, drainage, reclamation or other improvement district, the value of the land shall not be deemed to be increased until the construction and improvement of the district have been completed to the point that water may be delivered to or removed from the land, as the case may be."

A succinct statement concerning the appraisal and assessment of property appears in Appeal of Kliks et al., (1938) 158 Or. 669, 684, 76 P. (2d) 974, wherein the court stated:

"* * * The ultimate objective of appraisement and assessment is to bring about the distribution of the cost of government in just relationship to the value of each taxpayer's property. * * *"

In ORS 308.205, defining "true cash value," it is also provided that this value in all cases shall be determined by methods and procedures in accordance with rules and regulations promulgated by the State Tax Commission. Ordinarily, there are comparable sales of farm properties and therefore the following excerpt from rules and regulations promulgated by the State Tax Commission has been selected. Article 8205.1B3 provides as follows:

"3. The Market Data Approach:

"The market data approach is one in which the subject property is valued on the basis of sales price of comparable properties which have been recently sold. It is based upon the principle of substitution which is that a prudent man will not pay more to buy or rent a given property than it will cost him to buy or rent a comparable (substitute) property.

"Properties which have been exchanged in bona fide sales are compared and rated with the subject property. The comparisons are made of various factors, including the following:

"a. Relative utility and desirability of the property.

"b. Relative supply and demand for the properties.

"c. Relative value of the locations.

"d. Relative value of future income.

"From an accumulation of this type of data, a degree of comparability between the property under appraisement and the benchmark properties is obtained."

From the foregoing it seems apparent that the view, use, population density and such factors are but evidentiary matters which make up a part of the total picture concerning the market value or true cash value of particular property. Also, the number of sales, establishment of the correct sales price and the sufficiency of evidence of the value of comparable properties is an evidentiary matter more easily dealt with in the light of all the evidence available with respect to a particular parcel of property. The final test in every case would lie in the determination of the actual true cash value of the particular property in the light of all of the available evidence. In Robinson et ux v. State Tax Commission, (1959) 216 Or. 532, 536, 339 P. (2d) 432, the court stated as follows:

"* * * For example, ORS 308.232 requires that all property, real or personal, shall be assessed at 'its true cash value, or a percentage thereof, applied uniformly to all classes of property within each county.' Thus several methods might be used to determine true cash value, but irrespective of the method used, true cash value is one of the basic rules of assessment. * * * However, if the property is not assessed for more than its true cash value, and if the assessment is reasonably proportionate to assessed valuation of similar properties in the county, the assessment does not violate any constitutional or statutory provisions. * * *"

In the earlier case of Knappton Tow-boat Company v. Chambers, (1954) 202 Or. 618, 624, 276 P. (2d) 425, 277 P. (2d) 763, the court took further note of the flexibility afforded to the assessor in the use of judgment respecting determinations of value as follows:

"* * * in any assessment relative to true cash value there must be a basic study of the matter assessed, which information, combined with judgment as to the weight to be given to each element or factor affecting value, results in a finding of the true cash value. Men of equal learning and sound judgment may give greater weight to one factor than to another, thus causing variations in the end-result, so that in all assess

ments latitudes of judgment must be granted an assessing agency."

The establishment of fixed methods and rules pertaining to assessment practices including evidentiary matter which may be considered of all types does not in the final analysis give protection to the property owner. The rule is well established that the property owner is entitled to relief by showing either that his property is assessed at more than true cash value or that the assessment is not reasonably proportionate to the assessed valuations of similar properties within the county. See Appeal of Kliks, supra; In re GeBauer Apartments, (1942) 170 Or. 47, 131 P. (2d) 962; State Tax Commission v. Consumers' Heating Co., (1956) 207 Or. 93, 294 P. (2d) 887; and Robinson et ux v. State Tax Commission, supra.

The foregoing discussion has applicability to farm properties in general and must be distinguished from farm land which is zoned exclusively for farm use by cities, or pursuant to ORS 215.010 to 215.190, by counties. Under the so-called "green belt" provisions of ORS 308.237, farm land which is so zoned must be assessed at its true cash value for farm uses and may not be considered for the true cash value which it might have if considered for other than farm uses. These provisions were enacted under chapter 695, § 1, Oregon Laws 1961, and have been utilized to a very limited extent to date.

The foregoing answers the first seven questions which you have asked. As stated, basically, these questions concern themselves with the correctness of the end result of the valuation process---the value itself. However, in further response to question six, the number of sales, by itself, is not a satisfactory criterion. The assessor must see whether the sales are representative of the property types in the district, and must satisfy himself as to the quality of the sales data. This latter is especially true in considering question seven. The assessor verifies sales prices indicated by the stamps by calling on one of the parties to the transaction. The assessor, himself, has no protection against persons who consciously falsify such information to him. Legislative action in this area would appear necessary. See, for example, House Bill No. 1489.

Question number eight asks whether or not a county court may subject all farm residences to a county building code and fees if the land upon which the residence is situated is zoned or not zoned for agriculture usage.

ORS 215.108 provides as applicable in part as follows:

"(1) The governing body of a county may adopt ordinances establishing building codes for the county, or any portion thereof, in conformity with the standards set forth in ORS 215.055. * * *"

ORS 215.160 authorizes the governing body of a county to provide for the issuance of permits as a prerequisite to construction, alteration or enlargement of any building or structure otherwise subject to ORS 215.010 to 215.190 and permits it to establish and collect reasonable fees therefor. It would follow that if the governing body of the county may establish a building code for residences the issuance of permits on collection of fees constitutes no problem. Actually the establishment of authority for the issuance of building codes would seem to be clear except for ORS 215.130 which provides in part:

"(1) No ordinance adopted under ORS 215.010 to 215.190 shall regulate lands used for grazing, agriculture, horticulture or for the growing of timber."

In Opinions of the Attorney General, 1954-1956, p. 164, this office ruled upon the parallel question of whether or not a county court may enact a building code ordinance without a vote which is required on any question of zoning and land use. In that opinion it was noted as follows on page 165:

"* * * Building regulations relate to the physical construction of the buildings erected rather than use or character of buildings as contemplated by zoning and land use regulations. * * * It therefore likewise seems that this section was not intended to be subject to the prior affirmative vote of the people on the question of zoning and land use regulations. * * *"

In the case of Warren v. Marion County et al., (1960) 222 Or. 307, 353 P. (2d) 257, the Supreme Court upheld the position of this office that a county building code ordinance was not included within the terms "zoning or land use ordinances" or within the statute requiring that zoning or land use ordinances be submitted to vote and referendum and that the adoption of a county building code was not conditional upon submission to vote. It therefore follows that the establishment of a code regulating the erection of buildings to conform to safety or sanitation requirements which apply to the building construction are not regulatory with respect to the use which the owner may desire to make of the land. In the Warren case the particular building code ordinance did not apply by its own terms to buildings being constructed on land used exclusively for agricultural pur

poses. It is my opinion that the construction of the residence could be subjected to a county building code regardless of whether or not the land was zoned or not zoned for agriculture usage.