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DEPARTMENT OF REVENUE

 

DIVISION 308

ASSESSMENT OF PROPERTY FOR TAXATION

150-308.010

Continuing Education Requirements for Registered Appraisers, Waiver of those Requirements, and Revocation of Registrations

(1) Registered appraisers in Oregon must participate in a continuing education program related to technical competency. To maintain their registration, appraisers must meet the continuing education requirements outlined in this rule. The requirements of this rule apply to any person who wishes to maintain registration, without regard to the person's place of employment.

(2) Definitions:

(a) For the purposes of this rule, a "registered appraiser" is a person who has satisfied the requirements of ORS 308.010 relating to employment or has successfully completed an appraiser skills examination.

(b) "Continuing education credits" are units of training that are approved by the department in subjects related to assessment and taxation. Credits are equal to the number of hours in a course or presentation the department approves for continuing education.

(A) Technical credits are awarded for training in assessment and taxation subjects. Topics eligible for technical credit include, but are not limited to: mass appraisal, tax rate calculation, ratio studies, personal property, farm or forest uses, board of property tax appeals, property tax exemptions and special assessments and computer applications.

(B) Instructor credits are awarded for course development and presentation. The course instructor will receive instructor credits for the first training session equal to the number of hours the department approved for continuing education for that training session. For each subsequent training session on the same subject, the course trainer will receive one-half hour of instructor credit for each hour of department approved continuing education credit.

(3) Required Credit Hours

(a) Registered appraisers must accumulate 30 credit hours of continuing education every two calendar years following registration. Registered appraisers with less than three years appraisal experience with either the Department of Revenue or an Oregon county assessor's office or a combination of the two must accumulate 60 credit hours of continuing education credits within the first two calendar years following their registration.

(b) In the case of registered appraisers employed by the county, the assessor annually will certify on forms provided by the Department of Revenue a list of those registered appraisers who have met the continuing education requirements. In the case of registered appraisers employed by the State of Oregon, the direct supervisor of those employees annually will certify on forms provided by the Department of Revenue a list of those registered appraisers who have met the continuing education requirements. In the case of registered appraisers not employed by the county assessor or the State of Oregon, individuals annually will self-certify on a form provided by the Department of Revenue as to the satisfactory completion of continuing education requirements.

(c) The Department of Revenue will maintain a database of training it provides to registered appraisers. That database may be supplemented by records provided by the registered appraiser as to qualifying appraisal training received from sources other than the Department of Revenue.

(d) The department will provide sufficient training programs to allow registered appraisers to meet continuing education credit requirements. Credit hours are approved for appraisal-related courses offered by the following organizations:

(A) Department of Revenue;

(B) International Association of Assessing Officials (IAAO);

(C) American Society of Appraisers (ASA);

(D) The Appraisal Institute.

(e) The department will approve credit hours provided through training given by other entities, individuals or by the county if it determines that the content of the training meets the definition for technical credits provided in this rule.

(4) Waiver of Requirement for Continuing Education Credits

(a) Prior to March 31 of the first year of any registered appraiser’s current certification period, either the registered appraiser or the appraiser's employer on behalf of the appraiser may submit a request to the Department of Revenue for waiver of the continuing education requirements to be certified for the current two-year certification period. A request for waiver must be in writing and signed by the requestor. If it is a waiver for a registered appraiser employed by the county, the assessor must approve it. For registered appraisers employed by the Department of Revenue, the appraiser's immediate supervisor must approve the request for waiver.

(b) The following are conditions for which the department may grant a waiver:

(A) Military service that prevents the completion of continuing education requirements.

(B) Disability or illness that prevents the completion of continuing education requirements.

(C) Accident or other uncontrollable events that prevent the completion of continuing education requirements.

(D) Limited duration assignments within the Department of Revenue but outside the Property Tax Division for Department of Revenue appraisers.

(E) Formal retirement from regular employment, whether or not the appraiser is working on a temporary or part-time basis in an appraisal capacity.

(F) Absence from the state that prevents completion of continuing education requirements.

(c) Waivers under this subsection for the conditions in subparagraphs (A) through (C) of paragraph (b) above may be allowed indefinitely as long as the condition continues. However waivers under subparagraphs (A) through (C) above will not be granted for more than a single two-year certification period if the appraiser is also practicing in an appraisal capacity, either independently or under the employ of an individual, entity, or public employer.

(d) Waivers under this subsection may be granted for no more than a single two-year certification period for the conditions in subparagraphs (D) through (F) above.

(5) Validation of Accumulated Credits

(a) Prior to January 1 each year registered appraisers must provide the department with a statement that they have met their education requirement. The statement must be made on a form provided by the department.

(b) Prior to February 1 of each year the department will notify the Human Resource Services Division of the Department of Administrative Services of:

(A) Those individuals who have met the continuing education requirements of ORS 308.010 and this rule or

(B) Have been granted a waiver of the requirements.

(6) Revocation of Appraiser Registration The Human Resource Services Division of the Department of Administrative Services:

(a) May revoke appraiser registration under ORS 308.010(1) for fraud or deceit in appraising or in the securing of a certificate or for incompetence.

(b) Will revoke appraiser registration under ORS 308.010(4)(d) for failing to submit satisfactory evidence to the department that the registered appraiser has met the continuing education requirement.

Stat. Auth.: ORS 305.100 & 308.010
Stats. Implemented: ORS 308.010
Hist.: RD 3-1989, f. 12-18-89, cert.ef. 12-31-89, Renumbered from 150-308.010; 11-1990, f. 12-20-90, cert. ef. 12-31-90; RD 8-1991, f. 12-30-91, cert. ef. 12-31-91; RD 8-1992, f. 12-29-92, cert. ef. 12-31-92; RD 6-1993, f. 12-30-93, cert. ef. 12-31-93; RD 6-1994, f. 12-15-94, cert. ef. 12-30-94; Renumbered from 150-308.010-(A), REV 12-2004, f. 12-29-04, cert. ef. 12-31-04; REV 9-2013, f. 12-26-13, cert. ef. 1-1-14

150-308.010(1)

Revocation of Appraiser Registration

(1) The department will permanently revoke the registration of an appraiser when it has received a certified copy of a final determination, as prescribed by this section, that the appraiser has committed civil or criminal fraud or misrepresentation.

(2) Such determination must be by a court, state or local government administrative body, or statutorily authorized board of arbitration, and must result from a claim or defense in the proceeding based upon an allegation that the appraiser committed such fraud or misrepresentation.

(3) Such determination shall be 'final,' when no longer subject to review by a court or body of higher jurisdiction. The department shall notify the Department of Administrative Services of the revocation. The appraiser's registration shall then be removed from the data base of currently registered appraisers.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.010
Hist.: RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

150-308.015

Appraiser Trainee Program

"Appraiser Trainee Program" provides on the job training for employees in a county assessor's office.

Employees in a county assessor's office may be enrolled in the program under the supervision of the county assessor and a Department of Revenue employee. A standardized training program outlining minimum training requirements for all trainees shall be developed by the Department of Revenue. An individualized training program may be prepared for each trainee, depending on their education and work experience.

(1) For the purpose of this rule, "employee" includes, but is not limited to:

(a) Any person filling a position included in the assessor's budget.

(b) Any person for whom the assessor has agreed to provide on the job training and is not in a position included in the assessor's budget i.e. a person referred to the county assessor through a licensed vocational rehabilitation organization.

(2) To be enrolled in the Appraiser Trainee Program, an individual must:

(a) Be currently working a minimum of 20 hours per week in the office of a county assessor or meet the definition of 'employee' as described in (1).

(b) Obtain a written recommendation from the county assessor to be accepted into the training program.

The county assessor shall make a written request to the Department of Revenue Training Coordinator, Property Tax Division, to have the employee enrolled in the Appraiser Trainee Program.

(3) Completion or termination of the Appraiser Trainee Program:

(a) Each person enrolled in the Appraiser Trainee Program must complete the requirements of the training plan within two years from the date of enrollment in the program.

(b) The trainee will automatically be terminated from the program upon termination of employment with the county assessor. Upon reemployment with a county assessor, the trainee may request reinstatement. Reinstatement must be approved by the county assessor and the Department of Revenue Training Coordinator. When reinstated, the total participation time in the program may not exceed two years.

Example: Trainee participates in program for eight months then moves from the area and terminates employment. Trainee returns to the area, requests and is granted reinstatement, and resumes the training program. The trainee has one year and four months from the date of reinstatement to complete the requirements of the training program.

The Department of Revenue will determine if the trainee has met the requirements of the program. Upon satisfactory completion, the Department and the assessor of the county will:

(1) Issue a certificate of completion to the trainee.

(2) Issue a Certification of Affidavit to the Department of Administrative Services, Human Resources Services Division.

The Department does not register the trainee as an appraiser. The trainee must take the County Property Appraiser 1 examination administered by the Department of Administrative Services, Human Resources Services Division in order to obtain registration in the State of Oregon.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.015
Hist.: 12-19-75; RD 9-1984, f. 12-5-84, cert. ef. 12-31-84; RD 9-1989, f. 12-18-89, cert. ef. 12-31-89; RD 11-1990, f. 12-20-90, cert. ef. 12-31-90; REV 8-1998, f. 11-13-98, cert. ef. 12-31-98

150-308.030

Standards for Imposition, Waiver, and Reduction of Penalty on Utilities and Designated Companies Assessed by the Department. Imposition of Penalty for Failure to File a Timely or Complete Return

(1) The department may impose a penalty under ORS 308.030 whenever an annual statement is not filed within the time fixed for filing an annual statement or by the approved extension date, or an incomplete annual statement is filed.

(a) The annual statement packets that are mailed to the taxpayer contain cover letters which specify the information that the taxpayer must include in the annual statement the taxpayer submits to the department. If a taxpayer submits an incomplete annual statement, the department will return it to the taxpayer with a notice stating the information that is required for the annual statement to be considered complete. A complete annual statement must be refiled within 14 days from the date on the notice of the incomplete filing.

(b) The taxpayer may be subject to a late-filing penalty under ORS 308.030 if the complete annual statement is not filed by the later of the original due date, the approved extension date, or 14 days from the date on the notice of the incomplete filing. Taxpayer Request for Waiver or Reduction

(2) Taxpayers who object to a late-filing penalty imposed under ORS 308.030 for late filing of an annual statement may request that the penalty be waived or reduced. The director of the department will consider all requests to waive or reduce late-filing penalties imposed under ORS 308.030 consistent with this rule.

(3) The request for waiver or reduction of a late-filing penalty must be in writing and must be signed by the taxpayer, an officer of the taxpayer, or an authorized representative of the taxpayer.

(4) The taxpayer may file a request for waiver or reduction of the late-filing penalty at any time after the taxpayer is subject to the late-filing penalty, but must be received by the department no later than July 31, of the year in which the director reviews the assessment roll for the year of delinquency.

(5) The request for waiver or reduction of a late-filing penalty must contain all the facts showing that one or more of the following factors for waiver or reduction of the late-filing penalty apply:

(a) The actions of the taxpayer resulted in the imposition of a penalty which constituted a first-time offense on the part of the taxpayer.

(b) Good and sufficient cause, as defined in ORS 305.288(5)(b), exists for a taxpayer's failure to file the annual statement required by law within the time fixed for filing or the approved extension date.

(6) Examples of situations the director may accept as good and sufficient cause for the late filing of an annual statement include:

(a) The delay was caused by the death or serious illness of the person who is solely responsible for filing the annual statement, or death or serious illness in that person's immediate family.

(b) The delay was caused by the unavoidable and unforeseen absence of the person who is solely responsible for filing the annual statement prior to the due date of the annual statement.

(c) The delay occurred because the taxpayer did not receive the annual statement packet mailed by the department to the taxpayer's last-known address, which was not the taxpayer's current address. The annual statement packet was returned to the department, remailed to a new address, and the taxpayer responded within the extended filing time.

(d) The delay was caused by the destruction by fire, natural disaster or other casualty of the taxpayer's records needed to prepare the annual statement.

(7) Examples of situations the director may not accept as good and sufficient cause for the late filing of the annual statement include:

(a) The delay was due to the taxpayer's reliance upon an individual (e.g., an accountant) to prepare the annual statement on time. The taxpayer has an affirmative duty to file timely.

(b) The delay was the result of personnel changes within the taxpayer's organization.

(c) For private railroad companies, the delay was the result of railroads not providing necessary mileage reports prior to the filing deadline or the approved extension date.

(8) The director will use the following guidelines when considering a request to waive or reduce a late-filing penalty.

(a) Non-filers No waiver of late-filing penalty.

(b) Filing delinquency 1-5 days: 6-30 days: Over 30 days.

(A) First time offense for late-filing: Waive: Waive: Waive.

(B) Good and sufficient cause established: Waive: Reduce 75%: No Waiver

(c) Promote long-term effectiveness and efficiency

(A) First delinquency in rolling three years: Waive: Reduce 75%: No Waiver

(B) Second delinquency in rolling three years Reduce 75%: Reduce 50%: No Waiver

(C) Third delinquency in rolling three years: No Waiver: No Waiver: No Waiver

(d) Days late are calculated from the later of the original due date or the approved extension date. If no delinquency has occurred within the preceding three years, any request for waiver or reduction may be considered the same as a "first delinquency in rolling three years." If a taxpayer has been subject to a late-filing penalty at any time within the preceding three years, a second delinquency will be considered a "second delinquency in rolling three years," even if a delinquency did not occur in the intervening year.

Stat. Auth.: ORS 305.100,. 308.030.
Stats. Implemented: ORS 308.030.
Hist: REV 2-2005, f. 6-27-05, cert. ef 6-30-05

150-308.057

Continuing Education Requirements for Assessors and Appraisal Supervisors

Definition: Continuing education credits equal the number of hours in a course or presentation approved for continuing education unless otherwise specified by rule.

Policy Statement: Continuing education is required of assessors and appraisal supervisors as a part of Chapter 796 Oregon Laws 1989. This requirement was adopted by the legislature in order to promote professional management of mass appraisal and to help ensure efficient and effective county operation in assessment and taxation throughout the state.

(1) Appraisal supervisors means employees classified in the county's management personnel category who supervises appraisal staff.

(2) Assessors, directors of assessment and taxation, and appraisal supervisors must have 15 credits of technical training, 15 credits of management training and 15 credits which they can allocate in any combination of technical or management credits for a total of 45 credits every two years. Newly appointed or elected assessors or appraisal supervisors must complete 20 credits of technical training, 20 credits of management training and 20 credits which they can allocate in any combination of technical or management credits for a total of 60 credits within the first two calendar years following their appointment or election.

[Table not included. See ED. NOTE.]

(a) Technical training must be in the area of assessment and taxation such as appraisal, budgets, ratio studies, and tax rate computation. A minimum of 15 credits of technical training must be completed every two years. Assessors, directors of assessment and taxation, and appraisal supervisors must complete a course in Basic Mass Appraisal.

(b) Management training must be in the area of personnel relations (hiring, discipline, dismissals) office management and management of an appraisal program. A minimum of 15 credits of management training must be taken every two years.

(3) Completion of the continuing education requirements under this rule for assessors, directors of assessment and taxation, and appraisal supervisors shall be considered to meet the continuing education requirements of ORS 308.010(4)(a).

(4) Tax collector and management positions in tax collector's office.

In order to maintain a high degree of technical and management competency, each tax collector and persons in management positions in that office should meet the same continuing education requirements outlined for assessor's offices.

[ED. NOTE: The Table(s) referenced in this rule is not printed in the OAR Compilation. Copies are available from the agency.]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.057
Hist.: RD 3-1989, f. 12-18-89, cert. ef. 12-31-89; RD 11-1990, f. 12-20-90, cert. ef. 12-31-90; RD 6-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-308.057-(A)

150-308.059-(A)

Continuing Education Requirement for Nonappraisal Managers

Definition: Continuing education credits equal the number of hours in a course or presentation approved for continuing education unless otherwise specified by rule.

(1) Nonappraisal management positions means county management staff who supervise personnel other than appraisers.

(2)(a) Nonappraisal managers in the assessors' and tax collectors' offices, such as office deputy or deputy tax collector, are subject to continuing education requirements.

(b) Determination of whether other county nonappraisal managers, including those in departments of A & T, are subject to continuing education requirements shall be made by the manager responsible for the operations of the county department. Examples of nonappraisal managers who may not be subject to education requirements might include data entry managers, some data processing managers or administrative support supervisors.

(3) Nonappraisal managers are required to successfully complete 30 credits of approved education every 2 years in any combination of technical or management credits. In the first 2 years following their appointment, 15 class credits must be management credits. [Table not included. See ED. NOTE.]

[ED. NOTE: The Table(s) referenced in this rule is not printed in the OAR Compilation. Copies are available from the agency.]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.059
Hist.: Hist.: RD 3-1989, f. 12-18-89, cert. ef. 12-31-89, Renumbered from 150-308.059; RD 11-1990, f. 12-20-90, cert. ef. 12-31-90; RD 8-1991, f. 12-30-91, cert. ef. 12-31-91; RD 8-1992, f. 12-29-92, cert. ef. 12-31-92; RD 6-1993, f. 12-30-93, cert. ef. 12-31-93

150-308.059-(B)

Qualifications of Managerial Employees of the Assessor's Office

(1) In order to ensure qualified management in county assessment offices, persons hired into a management position in a county must meet at least the following general minimum qualifications.

(a) Basic knowledge of the principles, practices and techniques of supervision and management.

(b) Skill in communicating effectively.

(c) Skill in supervising, including planning and assigning work according to the nature of the job to be accomplished.

(d) Ability to use the people, equipment and budgetary resources available to meet program goals and objectives.

(e) Ability to understand, apply, and explain provisions of the laws, rules, regulations, policies, procedures, standards and guidelines governing program operations.

(f) Some positions, for example chief appraiser, will require a high level of specialized technical expertise.

(2) The management positions in the various counties are distinguished by varying degrees of knowledge, problem solving and accountability determined by the nature of work, working relationships, number of employees, and other factors. Therefore, the minimum employment qualifications for each management position shall be agreed upon between the county and department prior to their use for hiring.

(3) In the event a county does not have established minimum employment qualifications, the department and the assessor shall agree upon the hiring criteria. The criteria used will consider the minimum qualifications listed above and the assessor's organizational structure and the management position. If, because of a lack of qualified applicants, it becomes necessary for the assessor to hire a person who does not meet the minimum qualifications, a training program for that person will be jointly established by the department and county.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.059
Hist.: RD 11-1990, f. 12-20-90, cert. ef. 12-31-90; RD 8-1991, f. 12-30-91, cert. ef. 12-31-91; RD 6-1993, f. 12-30-93, cert. ef. 12-31-93; RD 6-1993, f. 12-30-93, cert. ef. 12-31-93

150-308.105

Taxable Personal Property Whose Temporary Situs is in the State of Oregon

Personal property is assessable under ORS 308.105 if it is in Oregon on the assessment date, January 1, at 1 a.m., and meets the following conditions:

(1) The property is not in transit, but has come to rest in Oregon;

(2) The property was not here by misadventure or some reason beyond the owner's control. The owner intended the property to remain here for the time being;

(3) While in Oregon the property performed the service for which it was designed and for the benefit of the owner's business;

(4) Was not in Oregon solely for repairs.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.105
Hist.: RD 11-1990, f. 12-20-90, cert. ef. 12-31-90; RD 8-1991, f. 12-30-91, cert. ef. 12-31-91; RD 5-1992, f. & cert. ef. 12-29-92; RD 10-1992, f. 12-30-92, cert. ef. 12-31-92, Renumbered from 150-308.105-(A); RD 9-1997, f. & cert. ef. 12-31-97

150-308.115

Billboards as Real Property

All billboards that are erected upon the land or affixed to buildings or other permanent structures shall be classified as real property.

(1) The person or persons who are responsible for paying the taxes on the billboard must file annually with the assessor's office a Real Property Return for all billboards within the county.

(2) Either of the following procedures may be used by the assessor in assessing billboards.

(a) Establish one "A1-improvement only" account for each billboard based upon location; or

(b) The county may establish one "A1-improvement only" account for each individual ownership in each tax code area where the billboards are located. This account lists the locations -- by address, map/tax lot or both -- of all billboards in the tax code area.

(3) Mobile billboards shall be classified as personal property. A billboard is mounted on a frame so it can be carried by a person, on a flatbed, or in the back of a pickup.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.115
Hist.: RD 8-1992, f. 12-29-92, cert. ef. 12-31-92

150-308.146

Determining Maximum Assessed Value when the Property Class is Changed

(1) The single act of changing the property classification, described in OAR 150-308.215(1)-(A), to better reflect the highest and best use of the property, does not qualify as an exception to the 3 percent limitation on growth in the maximum assessed value (MAV), as described in ORS 308.146(1).

(2) Any exception value added to the base MAV after the change is made to the property class will be calculated by applying the changed property ratio of the current property class to the real market value of any qualified exception identified in ORS 308.146.

Stat. Auth.: ORS 305.100.
Stats. Implemented: ORS 308.146.
Hist: REV 2-2005, f. 6-27-05, cert. ef 6-30-05

150-308.146(5)(a)

Reduction of Maximum Assessed Value (MAV) for Property Destroyed or Damaged by Fire or Act of God

(1) "Fire or act of God" has the same meaning and restrictions as used in ORS 308.425 including the arson restriction of ORS 308.440.

(2) As used in ORS 308.146(5)(a), "reduction in real market value" means that the total real market value (RMV) after adjustment is less than it would otherwise have been, had the damage or destruction by fire or act of God not occurred.

(3) When a portion of property is destroyed or damaged by fire or act of God, use the following procedure to adjust MAV for the year in which the destruction or damage is reflected by a reduction in RMV.

Note: An example is incorporated into the steps with the following assumptions:

2008-09 MAV = $187,379

2008-09 (1-1-08) total RMV equals $300,000.

2008-09 assessed value (AV) = $187,379.

9-1-08 the house is destroyed by fire. The house RMV for 1-1-08 was $180,000.

There is no market trending in this area.

Step 1: Multiply the prior year AV by 1.03. Compare the result to the prior year MAV to determine the larger amount. The larger amount becomes the current year MAV (unadjusted) as if the account had not changed, i.e., the larger of: Prior year AV x 1.03 or prior year MAV = current year MAV of unchanged account.

Example: Larger of: $187,379 x 1.03 = $193,000 or $187,379. Current year MAV = $193,000.

Step 2: Determine the prior year’s RMV for the affected portion. The affected portion is that part of the property that was destroyed or damaged by fire or act of God. The RMV of the loss is the RMV of the affected portion.

Example: RMV of affected portion equals $180,000.

Step 3: Subtract the RMV of the affected portion (Step 2) from the prior year total RMV to determine the RMV of the unaffected portion, i.e., the prior year total RMV - RMV of the affected portion = RMV of the unaffected portion.

Example: $300,000 - $180,000 = $120,000.

Step 4: Divide the RMV of the unaffected portion (Step 3) by the total prior year RMV to determine the percentage of unaffected property, i.e., the RMV of the unaffected portion / total prior year RMV = percentage of unaffected property.

Example: $120,000 / $300,000 = 40%

Step 5: Multiply the unadjusted MAV (Step 1) by the percentage of unaffected property (Step 4) to determine MAV that has been adjusted to reflect the loss from fire or act of God (MAV attributable to the unaffected portion only), i.e., the unadjusted MAV x percentage of unaffected property = MAV adjusted to reflect the loss from fire or act of God.

Example: $193,000 x 40% = $77,200.

(5) As used in section (4), the "year" in which the RMV is reduced due to fire or act of God can be either:

(a) The assessment year.

(b) The tax year if RMV is determined as of July 1 under ORS 308.146(6) or 308.428.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.149
Hist.: REV 8-2000, f. & cert. ef. 8-3-00; REV 5-2009, f. & cert. ef. 7-31-09

150-308.146(8)

Reduction of Maximum Assessed Value (MAV) When a Building is Demolished or Removed

(1) As used in ORS 308.146(8)(a), “reduction in real market value” means the total real market value (RMV) after adjustment is less than it would otherwise have been, had the demolishment or removal not occurred.

(2) As used in section (3) of this rule, the “year” in which the RMV is reduced due to demolishment or removal is either:

(a) The assessment year, or

(b) The tax year, if RMV is determined as of July 1 under ORS 308.146(6).

(3) When a building is demolished or removed, use the following procedure to adjust the maximum assessed value (MAV) for the year in which the demolishment or removal is reflected by a reduction in RMV.

Note: An example is incorporated into the steps with the following assumptions:

2007-08 MAV = $87,379

2007-08 (1-1-07) total RMV = $100,000.

2007-08 AV = $87,379.

There is no market trending in this area.

On September 1, 2007 the house is demolished. The RMV of the house for 1-1-07 was $75,000.

Step 1: Perform the 103% test as if the property had not changed. Multiply the prior year assessed value (AV) by 1.03. Compare the result to the prior year MAV to determine the larger amount. The larger amount becomes the current year MAV (unadjusted) as if the account had not changed.

Larger of: Prior year AV x 1.03 or prior year MAV = current year MAV of unchanged account.

Example: Larger of: $87,379 x 1.03 = $90,000 or $87,379. Current year MAV = $90,000.

Step 2: Determine the prior year RMV for the affected portion. The affected portion is the building or buildings that were demolished or removed. The RMV of the loss is the RMV of the affected portion.

Example: RMV of affected portion = $75,000.

Step 3: Determine the prior year RMV for the unaffected portion. Subtract the RMV of the affected portion (from Step 2) from the prior year total RMV to determine the RMV of the unaffected portion.

Prior year total RMV – RMV of the affected portion = RMV of the unaffected portion.

Example: $100,000 - $75,000 = $25,000.

Step 4: Determine the percentage of the unaffected property. Divide the RMV of the unaffected portion (from Step 3) by the total prior year RMV to determine the percentage of the unaffected property.

RMV of the unaffected portion / total prior year RMV = percentage of the unaffected property.

Example: $25,000 / $100,000 = 25%

Step 5: Determine the MAV that has been adjusted to reflect the loss. Multiply the unadjusted MAV (from Step 1) by the percentage of the unaffected property (from Step 4) to determine an MAV that has been adjusted to reflect the loss from demolishment or removal (MAV attributable to the unaffected portion only).

Unadjusted MAV x percentage of unaffected property = MAV adjusted to reflect the loss from demolishment or removal.

Example: $90,000 x 25% = $22,500.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.146
Hist.: REV 7-2008, f. 8-29-08, cert. ef. 8-31-08

150-308.149-(A)

Definitions

(1) For purposes of ORS 308.149:

(a) "New construction" means any new structure, building, addition or improvement to the land, including site development.

(b) "Reconstruction" means to rebuild or replace an existing structure with one of comparable utility.

(c) "Major addition" means an addition that has a real market value over $10,000 and adds square footage to an existing structure.

(d) "Remodeling" means a type of renovation that changes the basic plan, form or style of the property.

(e) "Renovation" means the process by which older structures or historic buildings are modernized, remodeled or restored.

(f) "Rehabilitation" means to restore to a former condition without changing the basic plan, form or style of the structure.

(2)(a) For purposes of ORS 308.149 "general ongoing maintenance and repair" means activity that:

(A) Preserves the condition of existing improvements without significantly changing design or materials and achieves an average useful life that is typical of the type and quality so the property continues to perform and function efficiently;

(B) Does not create new structures, additions to existing real property improvements or replacement of real or personal property machinery and equipment;

(C) Does not affect a sufficient portion of the improvements to qualify as new construction, reconstruction, major additions, remodeling, renovation or rehabilitation; and

(D) For income producing properties is part of a regularly scheduled maintenance program.

(b) Regardless of cost, the value of general ongoing maintenance and repairs may not be included as additions for the calculation of maximum assessed value.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.149
Hist.: RD 9-1997, f. & cert. ef. 12-31-97; REV 8-1998, Renumbered from 150-308.149, f. 11-13-98, cert. ef. 12-31-98; REV 11-1998, f. 12-29-98, cert. ef. 12-31-98; REV 13-1999, f. 12-30-99, cert. ef. 12-31-99

150-308.149(3)

Computation of Changed Property Ratio for Centrally Assessed Property

The ratio of average maximum assessed value to average real market value, also known as the changed property ratio, shall be rounded to two decimal places for purposes of assessed value calculation. See OAR 150-308.540.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.149
Hist.: REV 9-1997, f. & cert. ef. 12-31-97; REV 8-1998, Renumbered from OAR 150-1997 Or. Law Ch. 541 Sect. 19, f. 11-13-98, cert. ef. 12-31-98

150-308.149(5)

Net Capitalized Additions

(1) Definitions:

(a) For purposes of centrally-assessed property, the term "improvements" means changes in the value of property (as defined in 1997 OR Law Ch. 541, Sect. (7)(1)(b)) as the result of new construction, reconstruction, major additions, remodeling, renovation, rehabilitation or acquisition of property except on-going maintenance and repair. "Improvements" are measured by changes in Oregon net capitalized additions as defined below.

(b) The term "capitalized" refers to company expenditures for certain assets with a useful life typically extending beyond one year. These assets are aggregated in fixed asset accounts subject to annual depreciation charges, rather than repair and maintenance expense accounts. Examples include acquisitions of or changes to buildings, equipment, and personal property such as furniture and fixtures.

(c) The term "net additions" means the difference between the aggregate costs of Oregon assets in the prior and current years. For the 1997-98 implementation year, additions include the change from the 1995-96 base year. In all subsequent years, additions include the change from the prior year.

(d) The term "net capitalized additions" means "net additions" as calculated using capitalized costs in the company's annual reports.

Examples:

(A) For the current year, a new transformer is added for $100,000 and there are no retirements. The net addition is $100,000.

(B) A seven-year old transformer with a ten-year life expectancy (net book value of $30,000) is retired from service and replaced by a new transformer (cost $100,000). The net addition is $70,000, reflecting the additional 7 years' life expectancy. (The remaining $30,000 is considered maintenance).

(C) Same as (B) above, except that the new transformer is added to the existing number of transformers. No other transformers are retired; however, $30,000 of other capitalized equipment is retired. The net addition is still $70,000.

Typical fixed asset accounting procedures provide for annual removal of retired assets. Using successive years' account totals to determine maximum assessed value will result in a netting of retirements against true improvements.

(D) Same as (B) above, except that no new transformer is added. The net capitalized addition is $0, since there have been no improvements.

(E) If the change in Oregon assets can only be determined by an allocation of system additions, then these changes shall be allocated to Oregon in the same manner as other company property.

(F) In the case of mobile property, additions shall also include the change in presence in the state as measured by the change in allocation factors.

(e) The term "ongoing maintenance and repair" means expenditures which the company has elected to record as an expense in repair and maintenance accounts rather than aggregate in a fixed asset account as described (1)(b). Items may be expensed because the useful life of the expenditures does not extend over one year, or because their associated dollar amounts are too small to qualify as a capital asset under company capitalization threshold guidelines. Typical examples include spare parts and maintenance supplies.

Example: A private car company maintains a capitalization threshold for its equipment accounts of $2000. The company frequently makes purchases of spare parts for its repair shops. One of these was a bulk purchase of miscellaneous car bearings for $1000, and the company expensed this item. The company also decided to upgrade half of its fleet with a $20,000 investment in specialized bearings which would allow the cars to travel at significantly higher speeds. This investment was capitalized. The expenditure of $1000 would be considered "ongoing maintenance and repair." The expenditure of $20,000 would be considered an "improvement." The fact that each expenditure is for bearings is not controlling.

(2) Application of Definitions:

(a) In the case of companies which do not keep fixed asset accounts, the department may make a reasonable analysis of reported assets using capitalization practices under accepted accounting principles.

(b) In cases where the Department of Revenue annual company reporting is based on aggregate account balances, the department will not undertake an item-by-item analysis of the amount and purpose of each expenditure within statutory appraisal timelines. Expensed items shall be considered "ongoing maintenance and repair" and net capitalized additions shall be considered "improvements." The department may undertake an item-by-item analysis when the appraisal is challenged by the taxpayer in litigation or otherwise.

(c) Typical accounting policies include a "capitalization threshold" of a certain dollar amount for different types of expenditures. The department recognizes that certain assets which qualify as improvements under the law may be expensed as a matter of company policy. In these cases, the department shall presume that the minor construction thresholds of $10,000 and $25,000 are addressed by this accounting convention. The department may make a reasonable adjustment when the application of this approach results in a material error.

(3) For purposes of computing maximum assessed value for centrally-assessed property, the aggregate Oregon net capitalized additions shall be adjusted to reflect their real market value as a result of wear, aging, and the impact of market conditions since placement in service. The net capitalized additions shall then be multiplied by the statewide maximum assessed value to real market value ratio for centrally-assessed property (always 1.00 or less). The maximum assessed value shall be compared to the real market value, and the lesser of the two shall be placed on the roll as the company's assessed value.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.149
Hist.: RD 9-1997, f. & cert. ef. 12-31-97

150-308.149(6)

Minor Construction

(1) Definition: "Minor construction" is an improvement to real property that results in an addition to real market value (RMV), but does not qualify as an addition to maximum assessed value (MAV) due to a value threshold. The value threshold is an RMV of over $10,000 in any one assessment year, or over $25,000 for all cumulative additions made over five assessment years.

(2) Minor construction does not include general ongoing maintenance and repairs.

(3) When testing the over $25,000 threshold, use the cumulative RMV of all minor and major construction over a period not to exceed five consecutive assessment years.

(a) Minor and major construction values are not market trended.

(b) Values for retirements are not considered in the threshold test.

(c) Values for minor construction items that are removed or destroyed prior to being an adjustment to MAV are subtracted from the minor construction cumulative RMV.

(4) Once the over $25,000 threshold is met, use the following steps to calculate the MAV adjustment:

(a) Use minor construction values that are not market trended.

(b) Make adjustments for any retirements from the prior assessment year. The net value of additions and retirements can not go below zero.

(c) Apply the changed property ratio (CPR) from the year the cumulative RMV becomes an addition to MAV.

(d) Reset the cumulative RMV for minor construction to zero and restart the five-year period.

(5) For implementation of the five-year period, the first year is 1997–98 reflecting minor construction added after July 1, 1995, and on or before July 1, 1997. The following examples demonstrate the over $25,000 threshold. RMVs in the following examples are not market trended and/or depreciated. [Examples not included. See ED. NOTE.]

[ED. NOTE: The Examples referenced in this rule are not printed in the OAR Compilation. Copies are available from the agency.]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.149
Hist.: REV 8-1998, f. 11-13-98, cert. ef. 12-31-98; REV 8-2000, f. & cert. ef. 8-3-00

150-308.156

Establishing a Changed Property Ratio

(1) The assessor must establish a CPR for property classes 0 through 8 each assessment year. For determining the ratio of the average maximum assessed value over the average real market value, only the first digit of the property class needs to be recognized. These ratios must be rounded to three decimals.

(a) Property classes may be combined to arrive at a ratio. The resulting ratio would become the CPR for each property class used to calculate the ratio.

(b) For specially assessed properties , only the non-specially assessed portion of value will be used to determine a ratio. For specially assessed properties such as farm or timber, the assessor may use either of the following methods to arrive at a CPR:

(A) The non-specially assessed portion of the unchanged 5-x-x or 6-x-x property classes may be used to create the CPR for those classes; or,

(B) The 4-x-x property class values may be combined with the non-specially assessed values from the 5-x-x and/or 6-x-x property classes to calculate the ratio. The resulting ratio would become the CPR for each property class used to calculate the ratio.

(2) Residential property class (1-x-x) includes all manufactured structures and floating homes not assigned to other property classes.

(3) For locally and centrally assessed property, the value of the CPR may not be greater than 1.000.

Stat. Auth.: ORS 305.100, 308.156(7)
Stats. Implemented: ORS 308.156
Hist.: REV 13-1999, f. 12-30-99, cert. ef. 12-31-99; REV 1-2003, f. & cert. ef. 7-31-03

150-308.156(5)

Definition of Affected

"Affected property" means property that is subject to one or more of the following events: partitioned or subdivided; added to the account as omitted property; rezoned and used consistent with the rezoning; disqualified from a special assessment, exemption, or partial exemption.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.156
Hist.: REV 4-1998, f. & cert. ef. 6-30-98

150-308.156(5)-(A)

Subdivided and Partitioned Property MAV

For purposes of calculating maximum assessed value when a property is subdivided or partitioned, the portion of the property that is "affected" includes:

(1) The entire land that was subdivided or partitioned into smaller lots or parcels, if any.

(2) The improvements if one or more of the following apply:

(a) The act of subdividing or partitioning the land results in the apportionment of a single improvement (building or structure) to more than one tax lot.

Example 1: A lot improved with a duplex is partitioned such that the duplex is split into two single-family residences.

(b) The act of subdividing or partitioning the land changes the market's perception of the value of the improvements.

Example 2: A partition includes a vacant warehouse that was previously part of a large industrial complex. Prior to the partition, the market perceived the warehouse as unnecessary to the industrial complex and of little or no value. After the partition, the warehouse is a stand-alone improvement no longer associated with the industrial complex. The market now perceives the warehouse as a property that can be used for many different purposes with considerable value. By contrast, there is no change in market perception regarding the remaining improvements in the industrial complex.

(c) The improvements are divided into separate units of property.

Example 3: The legal subdivision of an apartment building into condominium units.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.156
Hist.: REV 4-1998, f. & cert. ef. 6-30-98; REV 6-2001, f. & cert. ef. 12-31-01; REV 2-2002, f. 6-26-02, cert. ef. 6-30-02

150-308.156(5)-(B)

Rezoned Property -- Calculating Maximum Assessed Value (MAV)

(1) For purposes of determining MAV under ORS 308.142 to 308.166:

(a) "Rezoned" means on or after July 1, 1995, the governmental body that regulates zoning:

(A) Made a change in the zone designation of the property on the zoning map;

(B) Made a change in one or more conditions or restrictions affecting the authorized uses of the property in the zone that is applicable to the property; or

(C) Made any other change in the authorized uses of the property.

(b) "Rezoned" does not include:

(A) Changes in the authorized uses of the property that were imposed before July 1, 1995, by the government that regulates zoning of the property;

(B) Satisfaction of conditions or restrictions on the authorized uses of the property that were imposed before July 1, 1995, by the government that regulates zoning of the property;

(C) Changes in the authorized uses of the property imposed by a government other than the government that regulates zoning of the property; or

(D) The issuance of a conditional use permit.

(2) The Entire Property is Rezoned. The assessor will calculate a new MAV for the entire property tax account for the current assessment year, if:

(a) The entire property has been rezoned, and

(b) After January 1 of the preceding assessment year and on or before January 1 of the current assessment year, the entire property is used consistently with the rezoning.

Example 1: In 1998 the zoning ordinance was modified to allow additional permitted uses to the zone and was approved by the governing body. The designation on the zoning map did not change. Last year the entire property was developed under one of the new permitted uses.

Prior Year Values: Real Market Value (RMV) = $250,000; MAV = $97,088; Assessed Value (AV) = $97,088.

Current year RMV of the affected portion = $750,000.

Current year changed property ratio (CPR) for this property type = .800.

Because the rezone affects the entire property, multiply the current year RMV of the entire property by the CPR. This is the MAV for the entire property.

$750,000 x .800 = $600,000 (Current year MAV for the affected portion.)

(3) The Property is Partially Rezoned. The assessor will calculate a new MAV for a portion of the property tax account for the current assessment year, if:

(a) The affected portion of the property has been rezoned, and

(b) After January 1 of the preceding assessment year and on or before January 1 of the current assessment year, the affected portion of the property is used consistently with the rezoning. Use the following steps to determine the MAV for the property.

Example 2: Property was partially rezoned two years ago, and the rezoned portion has now been improved.

Prior year values: RMV = $250,000; MAV $97,088; AV = $97,088.

Prior year RMV of unaffected portion = $50,000.

Current year RMV of affected portion = $700,000.

Current year CPR for this property type = .800.

Step 1: Calculate the current year MAV as if the account had not changed.

Multiply the prior year AV by 1.03. Compare the result to the prior year MAV to determine the larger amount. This becomes the current year MAV as if the account had not changed.

Larger of: Prior year AV x 1.03 compared to prior year MAV = current year MAV of unchanged account.

Larger of: $97,088 x 1.03 = $100,000 or $97,088.

$100,000 = Current year MAV of the unchanged account

Step 2: Calculate the percentage of the unaffected portion.

Determine the prior year's RMV for the unaffected portion of the property. Divide that value by the prior year RMV for the whole account. This is the percentage of the account that is unaffected by the change to the property.

Prior year RMV (unaffected portion) divided by prior year RMV (total account) = percentage of the property that is unaffected.

$50,000 = prior year RMV for the unaffected portion.

$250,000 = prior year RMV for the total account.

$50,000 / $250,000 = 20% (Percentage of the account that is unaffected.)

Step 3: Calculate the current year MAV for the unaffected portion.

Multiply the current year MAV (Step 1) by the percentage of the unaffected portion (Step 2). This is the current year MAV for the unaffected portion.

$100,000 x 20% = $20,000 (Current year MAV for the unaffected portion.)

Step 4: Calculate the MAV for the affected portion.

Multiply the current RMV of the affected portion by the CPR. This is the MAV for the affected portion.

$700,000 x .800 = $560,000 (Current year MAV for the affected portion.)

Step 5: Calculate the MAV for the account.

Add the MAV for the unaffected portion (step 3) and the MAV for the affected portion (step 4) to get the MAV for the account.

$20,000 + $560,000 = $580,000 (Current MAV for the account.)

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.156
Hist.: REV 4-1998, f. & cert. ef. 6-30-98; REV 8-2000, f. & cert. ef. 8-3-00; REV 6-2003, f. & cert. ef. 12-31-03

150-308.156(5)-(C)

Omitted Property -- Allocating Maximum Assessed Value (MAV)

(1) When omitted property is added to the property tax account after January 1 preceding the current assessment year and before January 1 of the current assessment year, only the omitted property portion is considered affected. The existing property is the unaffected portion. The intent is to correct the tax roll for current and prior years as if the omitted property had been a regular part of those tax rolls.

(2) To correct the first year’s Assessed Value (AV) when the omitted property is added to the roll :

(a) Multiply the real market value (RMV) of the omitted property for the first year it should have been added to the roll by that year’s appropriate changed property ratio (CPR) to determine MAV for the omitted property.

(b) Add the RMV and MAV of the omitted portion to the existing RMV and MAV to get a corrected RMV and MAV for the account.

(c) The lesser of the corrected RMV or MAV is the AV that should have been on the roll had the property been discovered timely.

EXAMPLE 1: Property was built in 2003 and should have been added to the 2004-05 tax roll. The assessor discovers the property in December 2004 and adds it to the 2004-05 tax roll. [Table not included. See ED. NOTE.]

(3) To correct the AV for subsequent years that omitted property should be added to the roll:

(a) Add the omitted property’s trended or recalculated RMV to the property’s existing RMV to get a corrected RMV for the account.

(b) Multiply the prior year’s corrected AV by 1.03 and compare to the prior year’s corrected MAV. The greater of the two will be the corrected MAV for the account.

(c) The lesser of the corrected RMV or MAV is the account’s AV.

EXAMPLE 2: Property was built in 2003 and should have been added to the 2004-05 tax roll. The assessor discovers the property in December 2008, and adds it to the 2004-05 through 2008-09 tax rolls. RMV trending is 5 percent per year. [Table not included. See ED. NOTE.]

[ED. NOTE: Tables referenced are not included in rule text. Click here for PDF of tables.]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.156
Hist.: REV 4-1998, f. & cert. ef. 6-30-98; REV 5-2009, f. & cert. ef. 7-31-09

150-308.156(5)-(D)

Exemption, Partial Exemption or Special Assessment Disqualification -- Allocating MAV

When an exempt, partially exempt or specially assessed property is disqualified after January 1 of the assessment year preceding the current assessment year and before January 1 of the current assessment year, a new MAV for the account must be calculated. The new MAV total will be the MAV of any unchanged portion and the new MAV of any disqualified portion. The new MAV of the disqualified portion is the RMV multiplied by the appropriate changed ratio.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.156
Hist.: REV 4-1998, f. & cert. ef. 6-30-98

150-308.159

Calculation of Maximum Assessed Value (MAV) for Lot Line Adjustments

(1) For purposes of calculating MAV when properties are subject to a lot line adjustment, the portion of the property that is "affected" includes:

(a) All the land comprising the properties subject to the lot line adjustment.

(b) Buildings or structures when a new lot line divides the building or structure.

NOTE: An example of how to perform the mathematics of this rule is incorporated throughout the rule based upon the following information:

The zoning for both tax lot 100 and tax lot 200 is RR-5 (Rural Residential 5-acre minimum) requiring a minimum of five acres before a dwelling may be built.

Before the lot line adjustment, tax lot 100 was a vacant 4-acre lot that was unbuildable due to its size. Undersized lots sell for $7,000 per acre, making the real market value (RMV) of this unbuildable tax lot $28,000. The associated MAV for this tax lot was $22,400. Tax lot 200 is a vacant 8-acre lot that is buildable under the current zoning. Buildable lots sell for $15,000 per acre, making the RMV of this tax lot $120,000. The associated MAV for this tax lot is $96,000.

After the lot line adjustment both lots are 6 acres in size and are buildable under the current zoning. Because buildable lots sell for $15,000 per acre, it makes the RMV of each tax lot $90,000.

The changed property ratio (CPR) to be used in this example is .800.

(2) Calculate the total MAV of the affected portion before the lot line adjustment as follows:

(a) For each account subject to the lot line adjustment:

(A) Divide the affected portion's RMV by the total RMV of the account.

Tax Lot (TL) 100: $28,000/$28,000 = 1.00

TL 200: $120,000/$120,000 = 1.00.

(B) Multiply the result of (A) by the property's total MAV to determine the MAV attributable to the affected portion.

TL 100: 1.00 x $22,400 = $22,400.

TL 200: 1.00 x $96,000 = $96,000.

(b) Add the MAV attributable to the affected portion for each account to determine the total MAV of the affected portion before the lot line adjustment.

$22,400 + $96,000 = $118,400.

(3) Calculate the total MAV for the affected portion after the lot line adjustment as follows:

(a) For each account subject to the lot line adjustment, multiply the new RMV of the affected portion by the appropriate CPR to determine the MAV for the affected portion as follows.

TL 100: $90,000 x .800 = $72,000.

TL 200: $90,000 x .800 = $72,000.

(b) Add the MAV for the affected portion of each account to determine the total MAV of the affected portion after the lot line adjustment.

$72,000 + $72,000 = $144,000.

(4) Compare the total MAV of the affected portion before the lot line adjustment to the total MAV of the affected portion after the lot line adjustment as follows:

Before = $118,400. After = $144,000.

(a) If the total MAV of the affected portion after the lot line adjustment is equal to or lesser than the total MAV of the affected portion before the lot line adjustment: Add the MAV for the affected portion of each account to any unaffected MAV for that account to determine the total MAV for each account.

The example does not fit this description. Continue to paragraph (b).

(b) If the total MAV of the affected portion after the lot line adjustment is greater than the total MAV of the affected portion before the lot line adjustment, the MAV for the affected portion of each account must be proportionally reduced.

The example fits this description. Proceed to paragraph (A).

(A) Divide the total MAV of the affected portion before the lot line adjustment by the total MAV of the affected portion after the lot line adjustment to determine the proportionate reduction.

$118,400/$144,000 = .822222.

(B) Multiply the proportionate reduction by the MAV of the affected portion after the lot line adjustment for each account.

TL 100: .822222 x $72,000 = $59,200.

TL 200: .822222 x $72,000 = $59,200.

(C) Add the MAV of the affected portion after the proportionate reduction in (B) to any unaffected MAV for that account to determine the total MAV for each account.

TL 100: $59,200 + $0 = $59,200.

TL 200: $59,200 + $0 = $59,200.

Stat. Auth.: ORS 305.100, 308.156
Stats. Implemented: ORS 308.159
Hist.: REV 6-2003, f. & cert. ef. 12-31-03

150-308.205-(A)

Real Property Valuation for Tax Purposes

(1) For the purposes of this rule, the following words and phrases have the following meaning:

(a) A "unit of property" is the item, structure, plant, or integrated complex as it physically exists on the assessment date.

(b) "Real property" means the real estate (physical land and appurtenances including structures, and machinery and equipment which comprise an integral part of the property or manufacturing operation) and all interests, benefits, and rights inherent in the ownership of the physical real estate.

(c) "Rural lands" means those lands with property classification 400, 401, 500, 501, 600, 601, 800, and 801 as defined by OAR 150-308.215. They are distinguished from platted land as acreages in varying sizes and are either improved or unimproved.

(d) "Utility" means the quality or property of being useful which may either add to or subtract from market value.

(e) "Highest and best use" means the reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, and financially feasible, and that results in the highest value. See The Appraisal of Real Estate, 12th edition (2001).

(2) Methods and Procedures for Determining Real Market Value:

(a) For the valuation of real property all three approaches-sales comparison approach, cost approach, and income approach-must be considered. For a particular property, it may be that all three approaches cannot be applied, however, each must be investigated for its merit in each specific appraisal.

(b) The real market value of a unit of property shall not be determined from the market price of its component parts, such as wood, glass, concrete, furnaces, elevators, etc., each priced separately as an item of property, without regard to its being integrated into the total unit.

(c) 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.

(d) If there are no market transactions of property comparable to the subject, then it is still appropriate to use market value indications derived by the cost, income or stock and debt approaches.

(e) Sales on the basis of disposal at salvage or scrap levels are indicators of market value only when on the assessment date such disposal of the subject property is imminent, or has actually taken place.

(f) The cost approach must use the reproduction, replacement, or used equipment technique; however, original historical cost may be used when appraising property under ORS 308.505 to 308.730. The value estimate must include all costs required to assemble and construct the unit of property.

(g) The income to be used in the income approach must be 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. Income from the operation of the property may be utilized for property types, such as industrial plants that are not typically leased or rented.

(h) The real market value for rural lands is based on an average price per acre for each size of parcel. Adjustments to the value must be made to those acres with more or less utility. For improved parcels the value of the site developments as defined by OAR 150-307.010(1)(2)(a)(A) must be added.

(i) Determining highest and best use for the unit of property is necessary for establishing real market value. This determination of highest and best use may include, among others, all possible uses that might result from retaining, altering or ceasing the integrated nature of the unit of property.

(3) Valuation of Especial Property: Especial property is property specially designed, equipped, and used for a specific operation or use that is beneficial to only one particular user. This may occur because the especial property is part of a larger total operation or because of the specific nature of the operation or use. In either case, the improvement's usefulness is designed without concern for marketability. Because a general market for the property does not exist, the property has no apparent immediate market value. Real market value must be determined by estimating just compensation for loss to the owner of the unit of property through either the cost or income approaches, whichever is applicable, or a combination of both.

(4) Real market value for all personal property must be as of the date of assessment in accord with the statutory definition and must take into account the location and place in the level of trade of items of property in the hands of manufacturers, producers, wholesalers, distributors, retailers, users, and others.

(5) Valuation of Land Under Improvements Having Only Partial Exemption. This does not apply to those cases where land is not eligible for inclusion in the exemption.

(a) The value of land under a single story improvement when part of the improvement is receiving an exemption must be apportioned between the exempted and taxable portions of the improvement based on the value of each portion.

Example 1: There is a one-story building of which a part representing 80 percent of total value is under exemption and the remaining part is taxable and consists of new construction representing 20 percent of the total value. The value of the land under the building would be apportioned 80 percent to the exemption and 20 percent to the taxable or market value each year.

(b) The value of land under a multiple story improvement when all or part of one or more stories of the improvement is receiving an exemption must be apportioned between the exempted and taxable portions of the improvement based on the contribution of the current market value of each portion.

Example 2: There is a two story building which occupies a 100' x 100' lot in its entirety.

The first story is under exemption, and the value carried on the roll represents 60 percent of the total improvement value. The second story, valued at market, represents 40 percent of the total improvement value. The value of the land under the building must be apportioned 60 percent to the exemption and 40 percent to the property valued at market.

(c) Where an improvement does not fully occupy the land and where only a portion of the improvement and land are used for an exempt purpose, then the value of the improvement and land must be allocated between the exempt and taxable portions of the parcel. Any portion of the land or improvement that is not used, developed, or that is being held for future expansion is fully taxable.

Example 3: Assume a parcel that measures 200' by 200', a building measuring 100' x 100', paved parking measuring 100' x 100' and unimproved land measuring 200' x 100'. One-half or 50% of the building and parking are used by an exempt entity. One-half (50%) or 5000 square feet of the building is exempt, one-half (50%) of the parking is exempt. The remainder of the building, the parking lot and unimproved land are fully taxable.

Example 4: There is a building measuring 100' x 100' located on one-fourth of a 200' x 200' lot. The remaining portion of the lot is a parking area. The taxable portion of the building rents or leases a 100' x 100' parking area and has exclusive use. The value of the remaining 100' x 200' area of the lot is exempted only to the extent it is used as a parking area for the exempt entity. If 100' x 100' of this 100' x 200' parking area is used for parking and the remainder is held by the exempt entity for future expansion, the area held for expansion is fully taxable.

(d) When an improvement is partially exempted and that improvement contains common areas (i.e., hallways, restrooms, conference rooms, etc.), the percentage of the total area of these common areas that receives exemption shall be the same as the percentage of the total net rentable area occupied by the exempt entity.

(6) Valuation of Land Under Improvements Having Only Partial Special Assessment: The procedures described in Section (5) of this rule also apply to properties receiving a partial special assessment, such as a partial historical designation.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.205
Hist.: 1-54; 12-55; 11-59; 8-62; 1-64; 12-65; 1-66; 3-70; 11-71; 12-31-79; 12-31-81; RD 16-1987, f. 12-10-87, cert. ef. 12-31-87; RD 9-1989, f. 12-18-89, cert. ef. 12-31-89; RD 11-1990, f. 12-20-90, cert. ef. 12-31-90; RD 8-1991, f. 12-30-91, cert. ef. 12-31-91; REV 12-2004, f. 12-29-04, cert. ef. 12-31-04

150-308.205-(C)

Derivation of Capital Structure and Discount Rates for Valuing Industrial Properties and Department-Assessed Properties

(1) CAPITAL STRUCTURE. The capital structure of a company refers to the make-up of its financial structure, i.e., long-term debt and equity. For ad valorem appraisal purposes, the appropriate capital structure for a company is the typical capital structure for the industry group to which the property belongs based upon current market cost of debt and equity.

If it can be shown that use of an industry capital structure would not reflect the market value of the property because of the unique nature of the property or its operation, the current owner's capital structure may be used.

The procedures to be followed in determining capital structure are as follows:

(a) Select industry group, i.e., electric utility, airline, railroad, lumber, food processing, etc.

(b) Determine if it is necessary to have industry sub groups. Sub groups are groupings of properties within an industry type that have similar characteristics and that are different from other sub groups within the industry type. Sub groups have similar qualities such as bond ratings, degree of risk if unrated, business activities and size.

(c) For each group or sub group, a sufficient number of companies should be selected that have publicly traded securities and similar debt ratings (e.g., Moody's Aa, A, Baa, etc.). The company or companies whose property is subject to appraisal may be included as part of the data set.

(d) The appropriate capital structures shall be determined by a correlation of the capital structures of the companies in the selected group.

(e) Capital structures for companies with nonrated debt must be estimated from the best data available, such as balance sheets, public utility commission-approved structures, sales data, lenders' opinions, industry recommendations, or patterns established by companies with rated debt within the same industry.

(2) BASIC DISCOUNT RATE. Basic discount rate, cost of capital, and capitalization rate are synonymous as used herein. The band-of-investment method is the preferred method for calculating basic discount rate. An example of this method, assuming a capital structure of 50 percent debt, 10 percent preferred stock, and 40 percent common equity, is shown below: [Table not included. See ED. NOTE.]

(a) The band-of-investment capitalization rate can readily be converted to an after-tax rate. The after-tax interest rate is substituted for the current cost of debt in the band-of-investment procedure. This after-tax cost of debt is calculated by multiplying the current cost of debt by one minus the corporate tax rate.

When the after-tax cost of capital is used, the tax expense of the prospective purchaser must be deducted from the income to be capitalized as though the property had no tax shelter from debt interest to avoid double counting the deduction for income taxes.

(b) Cost of Debt. The cost of debt is the current market rate for new securities. The embedded rate on securities previously issued is not a proper measure.

In order to determine the cost of debt the appraiser should:

(A) Refer to the rates for seasoned bond issues from Moody's Utility, Industrial, and Transportation weekly news reports or other rating services for at least two months immediately prior to the appraisal date. This should be done by bond rating (Aa, A, Baa, etc.) and industry type.

(B) Obtain information on new bond issues by industry type and bond rating from Moody's Bond Survey or other publications for at least two months immediately prior to the appraisal date.

(C) Consider recommendations on debt rates submitted by industry.

(D) Select rates for each industry group by bond rating after analyzing the data in the steps above.

(c) Preferred Stock. The cost of preferred stock is determined from the current market rates, not the embedded rate.

(d) Cost of Equity. The two preferred methods for determining the cost of equity capital are the Discounted Cash Flow (DCF) model and Capital Asset Pricing Model (CAPM). The appraiser should consider other models if circumstances and data justify their use. [Table not included. See ED. NOTE.]

Information on the estimated annual dividend for the next period (year) and the expected rate of growth can be obtained from such financial publications as Value Line. The current price for the common stock is the average price near the appraisal date.

The DCF equity rate for the industry group is determined by correlating equity rates of return computed for the companies in the industry capital structure group. [Table not included. See ED. NOTE.]

Information on the risk free rate (Rf) can be obtained from the Federal Reserve Bulletin containing rates for U.S. Treasury notes or bonds as near the appraisal date as possible. Data for Beta (Bi) and the market rate (Rm) shall be obtained from a reliable source such as Value Line. A single number for risk premium (Rp) such as those published by Ibbotson Associates, Kidder Peabody, and others may be used.

The CAPM equity rate for the industry group is determined by correlating equity rates of return computed for the companies in the industry capital structure group.

(3) EFFECTIVE DATE: This rule first applies to property valuations as of January 1, 1990.

[ED. NOTE: The Table(s) referenced in this rule is not printed in the OAR Compilation. Copies are available from the agency.]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.205
Hist.: RD 2-1990, f. & cert. ef. 3-15-90

150-308.205-(D)

Industrial Property Valuation for Tax Purposes

(1) For the purposes of this rule, the following words and phrases have the following meaning:

(a) A "unit of property" is the item, structure, plant, or integrated complex as it physically exists on the assessment date.

(b) "Real property" means the real estate (physical land and appurtenances including structures, and machinery and equipment erected upon the land or attached to the land or structures) and all interests, benefits, and rights inherent in the ownership of the physical real estate.

(c) "Highest and best use" means the reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, and financially feasible, and that results in the highest value. See The Appraisal of Real Estate, 12th edition (2001).

(2) If the highest and best use of the unit of property is an operating plant or an operating integrated complex, the real market value will be considered to be a "going concern." The going concern concept recognizes that the value of an assembled and operational group of assets usually exceeds the value of an identical group of assets that are separate or not operational.

(3) Methods and Procedures for Determining the Real Market Value of Industrial Property:

(a) For the valuation of industrial property all three approaches sales comparison, cost, and income, must be considered. For a particular property, it may be that all three approaches can not be applied, however, each must be investigated for its merit in each specific appraisal.

(b) The market value of a unit of property must not be determined from the market price of its component parts, such as wood, glass, concrete, furnaces, elevators, machines, conveyors, etc., each price separately as an item of property, without regard to its being integrated into the total unit.

(c) 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 transactions. When non-typical market conditions of sale are involved in a transaction (duress, death, foreclosure, bankruptcy, liquidation, 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 non-typical market condition.

(d) Properties utilized in the sales comparison approach, although not necessarily identical, at the very least must be similar in many respects. Adjustments must be made for differences in location, product, production capacity, and all other factors that may affect value. Excessively large adjustments or an excessive number of adjustments is an indication that the properties are not comparable.

(e) When utilizing the sales comparison approach, the appraiser must take into consideration difference between the subject and the comparable properties for physical condition, functional obsolescence and economic obsolescence. Adjustments must be made for differences between the subject and comparable properties for factors such as physical condition, functional deficiencies, operating efficiency, and economic obsolescence. If the properties are functionally or economically equivalent, verification of the equivalency must be included in the appraisal.

(f) Sales for the disposal of properties through auction, liquidation or scrap sales are indicators of market value only when on the assessment date such disposal of the subject property is imminent, or has actually taken place.

(g) The cost approach may utilize either the reproduction, replacement, or the used equipment technique. It is acceptable to use trended historical cost to estimate the reproduction cost new. The value estimate must include all costs required to assemble and construct the unit of property.

(h) When using the income approach, the income from the operation of the property may be utilized for industrial properties and other properties that are not typically leased or rented. When the income from the property's operation is used, the unit of property must be valued as a going concern. In utilizing the income approach for the valuation of industrial properties, the discounted cash flow technique is one of the appropriate methods to derive a value estimate. Consideration in the discounted cash flow technique is given to items such as the anticipated free cash flow available to the debt and equity holders, inventory valuation methods, intangible assets, income taxes, net working capital, capital reinvestment, etc. When utilizing the discounted cash flow technique, the capitalization or discount rate must be derived in accordance with OAR 150-308.205-(C).

(i) Determining the highest and best use for the unit of property is necessary for establishing real market value. This determination of highest and best use may include, among others, all possible uses that might result from retaining, altering or ceasing the integrated nature of the unit of property.

(4) Basic information for an appraisal. Basic data and procedures in making appraisals normally include the following when applicable:

(a) Location of property by tax codes and tax lot numbers;

(b) Map or sketch of land owned and layout of plant;

(c) Inventory of physical plant;

(d) Reproduction or replacement cost computations, as applicable;

(e) Analysis of depreciation;

(f) Analysis of economics as they affect valuation;

(g) Analysis of sales data, when applicable;

(h) Field inspection;

(i) Research and familiarization with typical properties of the industry;

(j) Annual reports to stockholders;

(k) Fixed assets schedules;

(l) Income statements;

(m) Such other data that may affect value.

(5) Basic information for an appraisal utilizing the annual report method. Basic data for an appraisal utilizing the annual report method normally includes the following:

(a) Report of additions;

(b) Report of retirements;

(c) Knowledge of miscellaneous technical and economic conditions that affect value;

(d) Trending factors:

(A) Separate factors for yard improvements, buildings, and equipment classified as real property must be developed.

(B) The development of the factors must use data published by the United States Department of Labor, the Oregon Building Construction Trades Council, and other sources the Department of Revenue deems to be reliable indicators of property value over time.

(C) Data developed by physical inspection together with appraising a segment of the total property or making a general review of the total value under certain circumstances may supplement the data utilized in (A) above.

(e) Depreciation allowances;

(f) Real market value for prior year.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.205
Hist.: RD 9-1989, f. 12-18-89, cert. ef. 12-31-89; RD 8-1991, f. 12-30-91, cert. ef. 12-31-91; REV 12-2004, f. 12-29-04, cert. ef. 12-31-04

150-308.205-(E)

Valuation of Contaminated Property

(1) DEFINITIONS:

(a) "Contaminated site" means real property that, on the assessment date:

(A) Is on the National Priority List of the Environmental Protection Agency;

(B) Is included by the Department of Environmental Quality in an inventory of confirmed releases pursuant to ORS 465.225;

(C) Is an illegal drug manufacturing site as defined in ORS 453.858; or

(D) Is demonstrated as provided under Section (2) of this rule to have had a release of a hazardous substance as defined in ORS 465.200.

(b) "Contaminated site" does not include any permitted release or permitted facility approved by the Department of Environmental Quality for storage or disposal of a hazardous substance.

(c) "Cost to cure" means the discounted present value of the estimated after tax cost of the remaining remedial work specific to the subject property to remove, contain, or treat the hazardous substance. Cost to cure may include the cost of environmental audits, surety bonds, insurance, monitoring costs, and engineering and legal fees. The costs must be directly related to the clean up or containment of a hazardous substance.

(2) DEMONSTRATING CONTAMINATION OF SITE: A property is defined as a contaminated site under Section (1)(a)(D) above if it is shown that the property has had a release of a hazardous substance. This will be demonstrated through:

(a) the submission of reliable, objective information such as engineering studies, environmental audits, laboratory reports or historical records; or

(b) evidence that the release has been reported to the Department of Environmental Quality.

(3) APPRAISING CONTAMINATED SITES: The real market value of a contaminated site shall be determined in accord with this rule. The appraiser shall consider the Sales Comparison Approach, the Cost Approach, and the Income Approach. For a particular contaminated site, it may be that all three approaches cannot be applied, however, each shall be investigated for its merit. In all cases, actual market data are the most reliable indicators.

(a) The Sales Comparison Approach may be used to determine the real market value of a contaminated site by comparison with verified sales of similarly contaminated sites. If no sales exist of property similarly contaminated, a comparison may be made to sales of properties without contamination. Adjustment factors shall be developed to account for the influence of contamination based upon a cost to cure analysis. These factors shall be applied to the subject property.

Adjustments shall be considered for the following:

(A) Limitations upon the use of the contaminated site due to the nature and extent of the contamination or due to governmental restrictions related to contamination;

(B) The increased cost to insure or finance the property;

(C) The potential liability for the cost to cure;

(D) Governmental limitations and restrictions placed upon the transferability of all or any portion of the contaminated sites;

(E) Other market influences.

(b) The Cost Approach may be used to determine the value of the contaminated site without the contamination. The cost to cure may be deducted as a measure of functional obsolescence.

(c) The Income Approach should use market rental data. If market rental data are not available, the property's actual income may be used.

(A) The income stream may be adjusted to reflect the estimated annual cost of remedial work specific to the subject property to remove, contain, or treat the hazardous substance during those years the cost is incurred. The annual cost of remedial work may include the cost of environmental audits, surety bonds, insurance, monitoring cots, and engineering and legal fees. The costs must be directly related to the clean up or containment of a hazardous substance.

(B) If the capitalization rate is derived from properties with similar contamination, no adjustment should be made to that rate. If the rate is developed from properties without contamination, or a built-up rate is used, consider adjustments for the increased present and contingent future risk of ownership, difficulties in future appreciation or depreciation, and the effect upon the ability to sell or transfer the property; that is, the liquidity of an investment in the property.

(C) Alternately, an income approach projecting the income stream as if the subject property was not contaminated, may be used when the cost to cure is deducted from the resultant value indicator.

(d) The market may respond to contamination in a variety of ways. In all cases, actual market sales and income data are the most reliable indicators.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.205
Hist.: RD 9-1989, f. 12-18-89, cert. ef. 12-31-89; RD 1-1995, f. 12-29-95, cert. ef. 12-31-95; RD 9-1997, f. & cert. ef. 12-31-97

150-308.205-(F)

Measuring Functional Obsolescence in Industrial Property

(1) The procedure for estimating functional obsolescence for industrial property in the reproduction cost approach is as follows:

(a) The total functional obsolescence equals:

(A) The physically depreciated reproduction cost of the property with a deficiency requiring a substitution or modernization, or a superadequacy, less

(B) The physically depreciated cost of the replacement property with a deficiency requiring a substitution or modernization, or a superadequacy, plus

(C) The cost to cure or the value of the loss (if less).

(b) For an industrial property with a deficiency requiring an addition follow the same steps as listed in subsection (1)(a), except step (A) equals zero.

(c) The result of (1)(a) equals the total functional obsolescence deduction in the reproduction cost approach attributable to the property with a deficiency or superadequacy.

(d) In specific situations, the procedure in subsection (1) can be simplified:

(A) For curable functional obsolescence caused by a deficiency requiring a substitution or modernization, or a superadequacy, functional obsolescence equals the physically depreciated reproduction cost of the property with a deficiency or superadequacy plus the excess cost to cure.

(B) For curable functional obsolescence caused by a deficiency requiring an addition, functional obsolescence equals the excess cost to cure.

(e) For purposes of measuring functional obsolescence, the property with a deficiency or superadequacy in subsection (1) of this rule can be the entire subject property or one or more portions of the property that are being analyzed for the existence of functional obsolescence. If the entire property has multiple deficiencies or superadequacies, multiple applications of the procedure in subsection (1) of this rule may be required to measure the total functional obsolescence.

(f) Some methods of measuring depreciation may capture more than just physical depreciation. The depreciation measured may include elements of functional and external obsolescence.

(A) If in subsection (1)(a)(A) an age-life method is used to estimate the total depreciation of the property with a deficiency or superadequacy, no additional functional obsolescence should be deducted from the depreciated reproduction cost of the individual assets.

(B) If in subsection (1)(a)(A) the selling price of used equipment is used to estimate the depreciation of the property with a deficiency or superadequacy, no additional functional obsolescence should be deducted from the depreciated reproduction cost of the individual assets.

(C) In situations where all functional obsolescence of individual assets is fully captured by the depreciation method used, there may be additional functional obsolescence due to the assemblage of the individual assets into the layout of the property. Functional obsolescence due to layout can be accurately measured using the procedures described in subsection (1) of this rule. However, care must be taken to avoid double counting the functional obsolescence.

(2) The deduction for functional obsolescence in the replacement cost approach equals the cost to cure or the value of the loss (if less).

(a) When using the procedure in subsection (1)(a) of this rule to estimate the deduction for functional obsolescence in the replacement cost approach, steps (A) and (B) must equal zero ($0).

(b) When using consistent estimates of reproduction and replacement cost new, physical depreciation, and functional and external obsolescence, the market value indicator from replacement cost approach must equal the market value indicator from the reproduction cost approach. (see example 3) [Example not included. See ED. Note.]

(3) Definitions:

(a) The reproduction cost approach is an appraisal method for estimating market value of the subject property. The formula for this method is: Market Value equals the Reproduction Cost New less physical depreciation less functional obsolescence less external obsolescence.

(A) The reproduction cost new is the cost to construct a new replica of the subject property as of the appraisal date using the same materials, design, layout, quality of workmanship and embodying the deficiencies and superadequacies of the subject property.

(B) The appraisal approach where the appraiser estimates the depreciation based on the selling prices of used equipment is a reproduction cost approach when the used prices utilized in the appraisal are for pieces of equipment that are replicas of the subject equipment. The formula for this method is: Market Value equals the Reproduction Cost New less the depreciation from used equipment prices less the functional and external obsolescence not captured in the used equipment prices.

(C) The appraisal approach where the appraiser estimates the depreciation using an age-life method is a reproduction cost approach when the starting point is the reproduction cost new. The formula for this method is: Market Value equals the Reproduction Cost New less the depreciation from an age-life analysis less the functional and external obsolescence not captured in the age-life analysis.

(b) The replacement cost approach is an appraisal method for estimating the market value of the subject property as of the appraisal date. The formula for this method is: Market Value equals the Replacement Cost New less physical depreciation less the cost to cure (or the value of the loss, if less) less external obsolescence. The replacement cost new is the cost, as of the appraisal date, to construct a property having equivalent utility to the subject property but built with the most cost-effective materials, design, and layout. The most cost effective materials, design, and layout is that combination of investment (cash out-flows) and the present value of anticipated after tax net income (cash in-flows) that produces the highest net present value.

(c) Functional Obsolescence is a loss in market value of a subject property when there is a reasonable feasibility of a typical prospective purchaser acquiring, without undue delay, a replacement property possessing an equivalent utility but is more cost-effective in terms of design, materials, or equipment. Functional obsolescence exists only by a comparison between the subject and the replacement property. There is no loss in value due to functional obsolescence unless the physically depreciated reproduction cost of the subject property minus the physically depreciated replacement cost of the replacement property plus the cost to cure (or value of the loss, if less) is greater than zero.

(A) Functional obsolescence due to a deficiency requiring a substitution or modernization is caused by an asset present in the subject property that is substandard compared to the replacement property.

(B) Functional obsolescence due to a deficiency requiring an addition is caused by a component that is missing from the subject property that is present in the replacement property

(C) Functional obsolescence due to a superadequacy is caused by an asset present in the subject property that is not present in the replacement property and does not contribute to value an amount equal to its cost.

(d) The physically depreciated reproduction cost of the property with a deficiency or superadequacy is the cost, as of the appraisal date, to construct a new replica of that property using the same materials, design, layout, quality of workmanship and embodying the deficiencies and superadequacies of that property less the amount of physical depreciation due to physical deterioration associated with wear and tear, the impact of the elements, and aging.

(e) The physically depreciated cost of the replacement property is the cost, as of the appraisal date, to construct a new property with the equivalent utility to the property with the deficiency or superadequacy using the most cost effective materials, design, and layout less the appropriate physical depreciation.

(A) For curable functional obsolescence, the appropriate percent of physical depreciation for the replacement property in subsection (1)(a)(B) is equal to the percent of physical depreciation of the replacement property included in the cost to cure in subsection (1)(a)(C) and (3)(h)(A). For example, if curable functional obsolescence is cured by purchasing and installing a new machine, the replacement property is also new (zero depreciation). (See example (3). However, if curable functional obsolescence is cured by purchasing and installing a used machine that is 70% physically depreciated, the replacement property also must be 70% depreciated. (See example 4) [Example not included. See ED. Note.]

(B) For incurable functional obsolescence, the appropriate percentage of physical depreciation for the replacement property in subsection (1)(a)(B) is the same percentage of physical depreciation as the percentage of physical depreciation of the property with a deficiency or superadequacy, as it exists in the uncured condition.

(f) Functional obsolescence is incurable if the cost to cure is greater than the value of the loss.

(g) Functional obsolescence is curable if the cost to cure is less than the value of the loss.

(A) To be considered curable, it must be physically possible, legally permissible, and financially feasible to cure the functional obsolescence.

(B) If curing functional obsolescence is required to allow the existing assets to continue to function at their highest and best use and the requirements of subsection (3)(g)(A) are met, the obsolescence is curable even if the cost to cure is greater than the value of the loss. (See Example 6) [Example not included. See ED. Note.]

(h) The cost to cure equals the net cash out-flow anticipated to be necessary to eliminate the deficiency or superadequacy. This equals:

(A) The physically depreciated replacement cost of the replacement property, plus

(B) The retrofitting cost associated with installing the replacement property in the subject property, plus

(C) The cost to remove the property with a deficiency or superadequacy; less

(D) The salvage value of the property with a deficiency or superadequacy.

(i) The excess cost to cure recognizes that installing an asset in an existing property may cost more than installing the same asset when a property is constructed new on the appraisal date. The excess cost to cure equals:

(A) The retrofitting cost associated with installing the replacement property in the subject property; plus

(B) The cost to remove the property with a deficiency or superadequacy, less

(C) The salvage value of the property with a deficiency or superadequacy.

(j) Retrofitting cost is the cost as of the appraisal date to install an asset in the subject property less the cost as of the appraisal date to install the same asset as part of new construction.

(k) The value of the loss equals the present value of the after-tax loss in anticipated income from the continuing operation of the property with a deficiency or superadequacy compared to the projected operation of the replacement property. For industrial plants, this loss in income is often the result of excess operating costs due to inefficiencies in the subject plant compared to the subject property when cured of the functional obsolescence. The present value includes factors for the time period that the plant will continue to incur the loss in income and an appropriate discount rate. See OAR 150-308.205-(C) for the appropriate method of calculating the discount rate.

(4) Examples (Assume zero external obsolescence for all examples):[Examples not included. See ED. NOTE.]

(a) Example 1: An example of incurable functional obsolescence due to a deficiency requiring a substitution or modernization. [Examples not included. See ED. NOTE.]

(b) Example 2. An example of incurable functional obsolescence due to a superadequacy. [Examples not included. See ED. NOTE.]

(c) Example 3: An example of curable functional obsolescence due to a deficiency requiring and addition. [Examples not included. See ED. NOTE.]

(d) Example 4: An example of curable functional obsolescence due to a deficiency requiring a substitution. [Examples not included. See ED. NOTE.]

(e) Example 5: An example of a deficiency in the subject plant that does not indicate the presence of functional obsolescence. [Examples not included. See ED. NOTE.]

(f) Example 6: An example of curable functional obsolescence due to a deficiency requiring an addition. [Examples not included. See ED. NOTE.]

[ED. NOTE: Examples referenced are available from the agency.]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.205
Hist.: REV 6-2001, f. & cert. ef. 12-31-01

150-308.205-(G)

Effective Tax Rate

(1) Definitions for this rule:

(a) “Changed property ratio” (CPR) is the ratio, not greater than 1.00, of the average maximum assessed value over the average real market value for the assessment year in the same area and property class.

(b) “Nominal tax rate” is the tentative consolidated ad valorem property tax rate by code area described in ORS 310.147(2). When applicable, the nominal tax rate can be adjusted to reflect a reduction of tax to meet the limitations identified under Section 11b, Article XI of the Oregon Constitution

(c) “Effective tax rate” for any given property is the nominal tax rate, as described in subsection 1(b), multiplied by the appropriate CPR, described in subsection 1(a).

(2) The effective tax rate can be determined by the following methodology:

(a) Select the nominal tax rate known on the assessment date. For example, the assessment date of January 1, 2008 requires the nominal tax rate calculated for the prior tax year, 2007-08.

(b) Multiply the nominal rate by the CPR applicable to the assessment date, considering the subject property classification and location. The result is the effective tax rate.

Example 1: An apartment complex is being valued for assessment purposes, in an area with a changed property ratio of 65% or 0.65 and a nominal tax rate of $19.8615 per thousand of assessed value (1.98615%) or .0198615; the effective tax rate is calculated as follows: Changed Property Ratio (CPR) x Nominal Tax Rate (NTR) = Effective Tax Rate (ETR) 0.65 (CPR) x .0198615 (NTR) = 0.01291 (ETR) or 1.3%

Stat. Auth.: ORS 305.100, 308.205, 308.724
Stats. Implemented: ORS 308.205
Hist.: REV 7-2008, f. 8-29-08, cert. ef. 8-31-08

150-308.205(2)

Valuation Review of Principal and Secondary Industrial Property.

(1) The department may conduct valuation reviews of principal and secondary industrial properties to verify the accuracy of the property's real market value and maximum assessed value.

(2) Valuation reviews will follow procedures adopted by the Department of Revenue.

(3) The real market value and maximum assessed value of a property may change for the current year and previous years following the requirements in ORS 311.205 and 311.216, as a result of the valuation review.

(4) The real market value and maximum assessed value of a property may change for subsequent tax years if the result of the valuation review is a change in valuation judgment.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.205
Hist.: REV 9-1998, f. 12-11-98, cert. ef. 12-31-98; REV 12-1998, f. 12-29-98, cert. ef. 12-31-98

150-308.215(1)-(A)

Real Market Value and Property Classification as Part of Assessment Roll

(1) In addition to the assessed value of property, the assessment roll must show:

(a) The real market value (RMV) of the land, excluding all buildings, structures, and improvements thereon;

(b) The RMV of all buildings, structures, and improvements; and

(c) The total RMV for each parcel of real property not required to be assessed as a unit.

(d) For properties subject to ORS Chapter 100, for example, condominiums and time shares that are required to be assessed as a unit, the assessment roll must show the RMV as well as the assessed value of each unit.

(2) The assessment roll must include the property classification code number for each parcel of real property in the county, except for those properties assessed by the department under ORS 308.505 to 308.665. The assessor must classify and assign a property classification code number to each parcel as provided in section (8) of this rule.

(3) The assessor must maintain the proper classification on each parcel of property.

(4) A county must separately identify and adjust land and improvement values for each property class for each market area to bring real property to RMV. These adjustments to value must be developed from market studies or by any other method approved by the department as provided under ORS 309.200.

(5) The class code numbers that this rule establishes must be used for computing the real property class ratios required by ORS 309.200.

(6) An assessor must obtain written approval from the Department of Revenue before deviating from the basic property classes defined in section (8) of this rule.

(7)(a) All classification must be based upon highest and best use of the property. The term "highest and best use" is defined in OARs 150-308.205-(A) and 150-308.205-(D). The class associated with the property may or may not be its current use.

(b) Unique properties can be classified under the "miscellaneous" category in section (8). The "miscellaneous" category can also be used for property requiring a separate trend.

(c) The property classification system must not be used to categorize market data that is more accurately described by other characteristics, such as the quality class of the improvements, market areas, or neighborhoods.

(d) The property class for mixed-use or transitional properties will be assigned based upon the use that contributes the most to the real market value on the current assessment date.

(A) A mixed-use property is one in which different parts of the property are used differently, such as a commercial use on one part, and a residential use on another part.

(B) A transitional use property is one in which the real market value on the current assessment date, at its current highest and best use, is being influenced in the market by an anticipated change in future use, such as residential property that is likely to sell for a commercial use in the future, but is not in commercial use on the assessment date.

(8) DEFINITIONS FOR PROPERTY CLASSIFICATION SYSTEM. [Classificaton not included. See ED. NOTE.]

(9) Starting with the 2006–07 tax year, each assessor must prepare an annual plan that outlines how the county will comply with the provisions of this rule no later than the January 1, 2009 assessment date. The plan must be submitted as part of the sales ratio study and accompanying appraisal plan submitted under ORS 309.200 and 309.203. The plan must address how the county complies with, or intends to comply with the provisions of this rule for the initial tax year and all subsequent tax years up to the 2009–2010 tax year.

[ED. NOTE: Classificaton referenced are available from the agency.]

Stat. Auth.: ORS 305.100, 308.215
Stats. Implemented: ORS 308.215
Hist.: 3-70; 9-71; 11-73; 1-1-77; TC 10-1978, f. 12-5-78, cert. ef. 12-31-78; TC 17-1979, f. 12-20-79, cert. ef. 12-31-79; RD 9-1984, f. 12-5-84, cert. ef. 12-31-84; RD 16-1987, f. 12-10-87, cert. ef. 12-31-87; RD 9-1989, f. 12-18-89, cert. ef. 12-31-89; RD 8-1991, f. 12-30-91, cert. ef. 12-31-91; RD 6-1993, f. 12-30-93, cert. ef. 12-31-93, Renumbered from 150-308.215(1); RD 6-1994, f. 12-15-94, cert. ef. 12-30-94; RD 1-1995, f. 12-29-95, cert. ef. 12-31-95; RD 9-1997, f. & cert. ef. 12-31-97; REV 11-2000, f. 12-29-00, cert. ef. 12-31-00; REV 2-2002, f. 6-26-02, cert. ef. 6-30-02; REV 2-2005, f. 6-27-05, cert. ef 6-30-05; REV 4-2006, f. & cert .ef. 7-31-06

150-308.215(1)-(B)

Property With Multiple Leases Assessed as One Parcel

Properties with multiple leases must be assessed as one parcel except those properties covered by 307.110(2). The statutes have no provisions for assessing multiple leaseholds of undivided parcels of real property as separate tax accounts. It is not the assessor's responsibility to divide the assessed values and tax amounts for each leasehold for the owner. The accounts shall be set up as one account and the appraisal card(s) shall reflect the value of the entire parcel. Only buildings, machinery and equipment or fixtures owned separately from other associated property shall be separately assessed.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.215
Hist.: RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

150-308.215(1)(g)

Contents of Assessment Roll for Condominiums

For purposes of the assessment roll for condominiums, the land, buildings, structures and improvements are to be considered together as a single value for the real market value. Where appropriate, the land, buildings, structures and improvements are to be considered together as a single value for the assessed value.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.215
Hist.: RD 8-1992, f. 12-29-92, cert. ef. 12-31-92

150-308.219

Printout Required When Assessment and Tax Rolls do not Constitute a Written Record

All information specified in the laws and administrative rules relating to the assessment roll, the tax roll and the June 30 Tax Collector's Report must be on the printouts or microfiche. The information required on these printouts or microfiche is specified below.

(1) The tax roll must reflect the assessments as of September 25 and show all corrections, changes, and additions made to the data in the computer occurring between September 25 and the date the roll is delivered to the tax collector. In addition to the information specified under ORS 308.215 for the assessment roll, printouts or microfiche must contain the following information.

(a) Tax year

(b) County

(c) Mailing address for the tax statement

(d) Building class

(e) Manufactured structure "X" plate number or HUD identification number

(f) All current year taxes extended

(g) All delinquent taxes as specified in ORS 311.125

(2) The June 30 Tax Collector's Report must be prepared by July 15 and include all changes, corrections, and additions made to the roll since the preceding June 30 Tax Collector's Report. The report must include all unpaid accounts. This includes all changes from the roll and all effects on tax monies on each account.

(3) The printouts referred to in ORS 308.219 are specifically the assessment roll, tax roll, and the June 30 Tax Collector's Report. Any other listings used are supplemental documents and not part of the required rolls, microfiche or report printouts.

[ED. NOTE: Forms referenced in this rule are available from the agency.]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.219
Hist.: RD 10-1985, f. 12-26-85, cert. ef. 12-31-85; RD 8-1991, f. 12-30-91, cert. ef. 12-31-91; REV 6-2003, f. & cert. ef. 12-31-03

150-308.225

Filing Requirements for Certain Delayed Annexations by Cities

(1) This rule applies to delayed annexations by cities allowed under ORS 222.750. In these annexations, all nonresidential zoned property and all residentially zoned property in nonresidential use become annexed immediately, while all properties zoned for and in residential use are annexed on a delayed basis, with the length of the delay specified by the ordinance or resolution. Properties subject to delay are annexed immediately upon transfer of ownership.

(2) For purposes of ad valorem taxation, the requirements for notification can be found in ORS 308.225, and the procedure is as follows:

(a) During initial submission of a code boundary change request for annexation of unincorporated territory subject to delayed annexation under ORS 222.750, the map and legal description must at a minimum describe the initially annexed properties. If describing the entire exterior boundary of the annexation in the initial submission, any areas subject to delayed annexation must be clearly excepted by separately describing the areas and noting them on the filed map.

(b) A code boundary change request must be submitted for any property subject to delayed annexation that becomes part of the city before the end of its delay period due to transfer of ownership.

(c) If not described in a previous submission, a code boundary change request must be submitted for any remaining properties at the conclusion of their delay.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.225
Hist.: REV 11-2010, f. 7-23-10, cert. ef. 7-31-10

150-308.231

Appraisals of Real Property by Registered Appraisers

Only appraisers registered under ORS 308.010 shall appraise real property. If nonregistered appraisal assistants are utilized for gathering inventory data, it shall be only for gathering or recording factual inventory data or property characteristics. Any value estimates, or appraisal judgment decisions shall be made only by registered appraisers. Value estimates include lump sum dollar adjustments or percentage adjustments, depreciated replacement costs (DRC), land or site valuation. Judgment decisions include determination of quality class, quality adjustment, depreciation from all causes; or overimprovement or underimprovement and estimated market rent.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.231
Hist.: RD 6-1986, f. & cert. ef. 12-31-86; RD 8-1991, f. 12-30-91, cert. ef. 12-31-91

150-308.232

Determining Taxable Value for Assessment Charges on Property Exempt from Taxation

If a property that is exempt from ad valorem taxation is subject to assessment charges, the assessor shall determine the maximum amount of assessment charges by using the real market value of the property.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.232
Hist.: RD 8-1991, f. 12-30-91, cert. ef. 12-31-91

150-308.234

Appraisal of Real Property

The following constitutes standards for the valuation of real property except for property assessed under ORS 308.505 to 308.665 and ORS 308.805 to 308.820.

(1) Industrial property. In the case of industrial properties, appraisals must conform with the following conditions:

(a) Basic data and supplemental data for an appraisal must be the same as required in ORS 308.290 and 308.411. Valid data in any previous appraisal such as property descriptions, inventory listing, maps, etc., may be used in the appraisal.

(b) An appraisal as provided by the industrial property return process is not an appraisal contemplated under ORS 308.234.

(c) A valuation review as provided in OAR 150-308.205(2) is an appraisal as contemplated under ORS 308.234, if the valuation review meets the requirements of 308.411.

(d) Nothing in this rule is intended to invalidate any assessment that appears on the assessment roll.

(2) All other real property. Real property must be valued at its real market value (RMV) using methods approved by the department and the results must meet the performance standards required by this rule.

(a) The following definitions apply for the purposes of this rule:

(A) "Coefficient of dispersion" (COD) is the average absolute deviation of a group of numbers from the median expressed as a percentage of the median. In ratio studies, it refers to the average absolute deviation from the median ratio, expressed as a percent of the median ratio.

(B) "Homogeneous" describes a market area where the properties have a high degree of similarity in one or more of the following: type, use, quality, or condition.

(C) "Market area" is defined as a group of properties that share important characteristics affecting their value. It may be defined along physical/geographical or abstract boundaries or, as in the case of commercial property, according to use. Properties included in a market area do not have to be contiguous.

(D) "Nonhomogeneous" means market areas that do not meet the definition of "homogeneous."

(b) ORS 308.232 requires that all real property be valued at 100 percent of its RMV. Achieving and maintaining RMV is measured by the ratio study. Ratios must be computed for each market area, where possible. In market areas where the amount of sales data is insufficient for statistical analysis, one or more of the following actions should be taken to provide adequate data:

(A) A two-year sales sample may be used;

(B) Comparable market areas may be combined; or

(C) Appraisal ratio data may be included.

(c) Criteria for results-based valuation standards:

(A) RMV at 100 percent.

(B) COD standards for measuring equity of RMV: [Formula not included. See ED. NOTE.]

(C) Exceptions to COD standards. When a market area does not meet the standards because of a market anomaly, the correction may be delayed until the following year, waived, or have alternate standards applied, as approved by the Department of Revenue.

(d) The department will determine compliance with standards of this rule by annual reviews of the results determined by the county.

(A) If compliance deficiencies are found, the department must make written notification to the assessor of the deficiencies and identify appropriate corrective action. Within 30 days of notification of the deficiencies, the assessor must respond in writing to the department as to the action to be taken to correct the identified deficiencies.

(B) In the event an assessor's program has been found to be deficient and the assessor does not take action to correct the deficiencies as outlined in the department's written notification, the department will take action as required by ORS 308.062.

[ED. NOTE: Formulas referenced are not included in rule text. Click here for PDF copy of formula(s).]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 321.234
Hist.: 8-65; 1-66; 3-70; 9-70; 9-71; 8-72; TC 10-1978, f. 12-5-78, cert. ef. 12-31-78; REV 4-1998, f. & cert. ef. 6-30-98; REV 9-1998, f. 12-11-98, cert. ef. 12-31-98; REV 12-1998, f. 12-29-98, cert. ef. 12-31-98; REV 6-2001, f. & cert. ef. 12-31-01; REV 11-2010, f. 7-23-10, cert. ef. 7-31-10

150-308.235

Agricultural Land Devoted to Agricultural Purposes; Valuation for Ad Valorem Tax Purposes

(1) Agricultural land devoted to agricultural purposes as defined in OAR 150-307.320 is real property and shall, insofar as possible, be valued by the methods provided in 150-308.205-(A). When practical, the value of comparable bare land shall be utilized as primary evidence.

(2) In the absence of comparable bare land sales, or when a partial appraisal is not feasible, the appraiser shall estimate the market value of the land and the deciduous trees, shrubs, plants and crops as a unit. The taxable value of the agricultural land devoted to agricultural purposes shall then be determined by deducting the market value of the deciduous trees, shrubs, plants and crops thereon from the total appraised market value. The market value of the deciduous trees, shrubs, plants and crops shall be determined by a method which considers:

(a) The cost of seed, shrub, nursery tree, or cutting as culture dictates.

(b) The cost of implanting the seed, shrub, nursery tree or cutting into the land as culture dictates.

(c) The loss of income from the land during the period of establishing the tree, shrub and plant in condition to produce a crop.

(d) The risk involved in establishing the tree, shrub and plant.

(e) The quality and quantity of the trees, shrubs, plants and crops.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.235
Hist.: 1-58; 11-59; 1-66; 3-70; 9-71

150-308.242(3)

Stipulation Procedures

(1) The phrase "the convening of the board" in ORS 308.242 (3)(b) means the first meeting of the year during which the Board of Property Tax Appeals (BOPTA) officially opens the session under ORS 309.026.

(2) The assessor may change the roll after December 31 and without an order of the board when:

(a) A petition is filed with BOPTA under ORS 309.100;

(b) The assessor and the petitioner sign a stipulation that specifies a reduction in value prior to the date the board convenes as required by ORS 309.110(2); and

(c) The stipulation is delivered to the clerk of the board prior to the time the board convenes.

Stat. Auth.: ORS 305.100, 305.102
Stats. Implemented: ORS 308.242, 309.110
Hist.: REV 7-2005, f. 12-30-05, cert. ef. 1-1-06

150-308.250

Cancellation of Personal Property Assessments

(1) The assessor must cancel the personal property assessment for any taxpayer whose taxable personal property in the county has a total assessed value (AV) below the threshold value computed annually under ORS 308.250(4).

(2) The department will notify the assessor of the threshold value no later than March 1 of the tax year for which the threshold value applies.

(3) After the first year of cancellation, the taxpayer must complete and file Form 150-553-004, Confidential Personal Property Return, annually with the assessor by the personal property return due date under ORS 308.290. The taxpayer must check the box that indicates the assessor cancelled the AV the previous year and must include the following:

(a) Taxpayer's name, address, and phone number;

(b) If applicable, the business name, address, and type of business;

(c) Location of property, if different from (a) and (b) above; and

(d) Assessor's account number.

(4) The department will provide to the assessor the Confidential Personal Property Return on which the taxpayer may make the claim in subsection (3).

(5) If the taxpayer fails to file the form required in section (3) of this rule, the assessor will determine the AV of taxable personal property based on available information. Such information may be obtained from a phone call to the taxpayer or a review of taxpayer's property or records. If the assessor finds that the total AV of the taxpayer's property within the county is equal to or greater than the threshold value, the assessor must place the computed value on the next assessment and tax roll.

(6) The assessor may review the taxpayer's taxable personal property or business records to verify that the value of the taxable personal property is less than the threshold value. If the assessor finds that the value of the taxable personal property is equal to or greater than the threshold value, the assessor must add the value of all taxable personal property to the assessment and tax roll.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.250
Hist.: RD 6-1993, f. 12-30-93, cert. ef. 12-31-93; RD 9-1997, f. & cert. ef. 12-31-97; REV 6-2003, f. & cert. ef. 12-31-03

150-308.256(4)

Exemption of Watercraft Undergoing Repairs

(1) Watercraft owned or operated by centrally assessed water transportation companies and undergoing "major" repairs as defined in ORS 308.256(4), shall be deemed exempt from taxation if such repairs are in progress as of January 1, of the assessment year, but only upon receipt by the Department of Revenue of documentation included in the annual filing stating the nature, extent, and location of such repairs.

(2) All other assessable Watercraft undergoing "major" repairs as defined in ORS 308.256(4), shall be deemed exempt from taxation if such repairs are in progress as of January 1, of the assessment year.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.256
Hist.: RD 2-1992, f. 5-28-92, cert. ef. 6-1-92; RD 9-1997, f. & cert. ef. 12-31-97

150-308.275(1)

Valuation of New Construction

New construction including additions, remodeling, and rehabilitation, not in the current reappraisal area, shall be valued using the same appraisal data used for the building classes in that area when last appraised. The resulting value for new construction shall then be adjusted from the base appraisal year in the same manner as similarly classed improvements in the area.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.275
Hist.: 1-54; 11-59; 1-66; 3-70; RD 9-1989, f. 12-18-89, cert. ef. 12-31-89; RD 8-1992, f. 12-29-92, cert. ef. 12-31-92

150-308.290

Confidentiality -- Returns of Taxable Property

Refer to OAR 150-192.501 for clarification of what is confidential information and how to safeguard that material.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.290
Hist.: TC 7-1980, f. 11-28-80, cert. ef. 12-31-80; RD 8-1988, f. 12-19-88, cert. ef. 12-31-88

150-308.290-(A)

Extending Filing Deadline for Property Tax Returns

For purposes of ORS 308.290 and this rule,

(1) “Property tax return” means a personal property tax return, a real property tax return, or a combined property tax return. Personal and real property tax returns are described in ORS 308.290(1) and filed with the county assessor in whose county the taxable property is sited. A combined property tax return is described in 308.290(4) and filed with the Department of Revenue when the department is responsible for appraising the taxpayer’s property.

(2) “Office” means the office of one or more county assessors or the department to which property tax returns are delivered.

(3) “Good and sufficient cause” means an extraordinary circumstance that is beyond the control of the taxpayer, or the taxpayer’s agent or representative, which prevents the taxpayer from filing the property tax return by the deadline.

(a) An extension of the filing deadline for ‘good and sufficient cause’ applies to the property tax return for the current year only.

(b) “Good and sufficient cause” includes, but is not limited to:

(A) Unavoidable and unforeseen absence, illness, or disability of the person who is solely responsible for filing the return and which substantially impairs a taxpayer’s ability to file a timely property tax return. The substantial impairment must have been of such a nature that a reasonable and prudent taxpayer could not have been expected to conform to the deadline.

Example 1: The taxpayer’s spouse manages the financial records including tax returns for their construction business. In January, the spouse is diagnosed with lung cancer and begins in-patient treatment that is expected to continue for several months. The assessor grants an extension of filing deadline for good and sufficient cause for the current year only.

Example 2: The accountant for a florist shop experiences a home tragedy (child in auto accident) and must take time away from work in February. As the only person responsible for the taxpayer’s books and tax filings, no one can step in to complete the property tax return timely. The assessor accepts a request for extension of filing deadline for good and sufficient cause for the current year only.

Example 3: The local accountant for a nationwide chain of auto stores wins a three week Caribbean cruise that must be taken in February. Management authorizes the vacation. The person who would have stepped in to cover the accountant’s work takes a new job and leaves January 15. The department denies a request for extension of filing deadline. This is not “good and sufficient cause,” as the taxpayer could have reasonably foreseen this situation and made other arrangements to complete the tax return by the March 1 deadline.

(B) Destruction by fire, natural disaster, or other casualty of the taxpayer’s records needed to prepare the return.

Example 4: ABZ Company buys an Oregon business in December. The records of the Oregon firm are not transferred to the new company’s accountant until early February and records of the prior tax returns are not included. The accountant cannot gather the information to provide an accurate tax return by March 1. The department grants a request for extension of filing deadline for good and sufficient cause for the current year only.

(4) “Administrative need” means the taxpayer has a recurring inability to obtain the information needed to complete and file the return by the March 1 deadline, due either to the volume of information that the taxpayer must process or competing internal year end reporting requirements.

(5) “Substantially complete” means a return that contains sufficient information to allow the return to be processed by the department or county. A return is not substantially complete if:

(a) It is submitted with blank or missing schedules unless the schedules are appropriately left blank and are labeled with an identifying notation such as “no”, “none”, or “not applicable”; or

(b) It is submitted with attachments that do not include required information as specified on the schedule.

(c) A return that is not substantially complete will not be considered “filed”.

(6) Requesting an Extension. Taxpayers may request an extension of filing deadline of property tax returns. Extensions will be granted for “good and sufficient cause” or “administrative need.”

(7) A taxpayer may apply for an extension to:

(a) The department, if the subject property is assigned to the department for appraisal under ORS 308.290(4);

(b) The department, if the taxpayer is required to file returns in more than one county and requests an extension for all property tax returns required to be filed within Oregon as provided by ORS 308.290(7); or

(c) The county assessor, if the taxpayer’s subject property is sited in only that county and appraised by that office as provided by ORS 308.290(1).

(8) A request for extension of filing deadline must meet all of the following requirements:

(a) The request must be postmarked on or before February 15, in the office responsible for appraisal of the subject property.

(b) The request for extension must be in writing and must contain:

(A) The business or company name on the property tax account(s),

(B) The company’s complete mailing address and telephone number,

(C) The county property tax account number(s) when known,

(D) The situs address and county of each property listed, and

(E) Other information as required by the assessor or the department.

(c) The request must be signed by the taxpayer(s), an officer of the taxpayer, or the authorized representative of the taxpayer;

(d) The request must contain all of the facts explaining the need for an extension, including, but not limited to:

(A) For a request due to good and sufficient cause, the taxpayer must describe the extraordinary circumstance that prevents the return from being filed timely.

(B) For a request due to administrative need, the taxpayer must describe the administrative need and how the conditions described in Sections (10) and (11) of this rule will be met.

(e) If the taxpayer is a leasing company (lessor) and is requesting an extension for locations in multiple counties as provided by ORS 308.290(7)(a):

(A) The lessor must have sole responsibility for payment of taxes charged to all property items on the asset listing; and

(B) The lessor must provide a list of all equipment classified as real or personal property and identify the situs and county of each property listed.

(9) The office receiving the request for extension will advise the taxpayer whether the request for extension of filing deadline is granted or denied. The department will notify both the taxpayer and the assessor when an extension is granted or denied by the department under ORS 308.290(7)(a).

(10) Granting an Extension. When a request for extension is granted, the office will send an “Extension Approval” letter along with instructions for reporting requirements which include, but are not limited to:

(a) A complete listing of assets describing each item of real and personal property (including those fully depreciated, expensed, or held in storage), the date each was purchased, original cost, and location; or

(b) A listing of equipment which identifies the situs and county of the property for both real and personal property reported by a leasing company; or

(c) A summary by classification of assets, with the specific real and personal property additions and retirements for the current year. This method is only acceptable if the office has agreed to an addition/deletion listing from the taxpayer.

(11) In addition to the requirements in Section (10) of this rule, the taxpayer must also:

(a) Provide a summary by classification of assets in a combined return that includes each asset’s trending and depreciation codes or valuation factors applied to all property according to schedules supplied by the office; or

(b) Apply the personal property valuation factors provided by the office to the asset list(s) by property classification to develop the value of the personal property.

(12) When filing a return after approval of an extension, the taxpayer must:

(a) Submit a complete return;

(b) Submit information as required in Sections (10) and (11) of this rule; and

(c) Include a copy of the Extension Approval letter.

(13) Denying an Extension. When an office denies a request for extension of filing deadline:

(a) The office will promptly advise the taxpayer in writing of the denial, and

(b) The completed property tax return(s) must be filed with the office on or before March 1.

(14) Reasons for denying a request for extension include, but are not limited to:

(a) The request for extension was not received on or before February 15;

(b) The office lacks authority to grant an extension because the office is not responsible for appraisal of the subject property;

(c) The request for extension is based on an administrative need that was previously denied or had been granted but subsequently revoked; or

(d) The reason for the request does not meet the definition of good and sufficient cause or an administrative need as described in this rule.

(15) If the taxpayer is granted an extension for administrative need, the extension will continue for subsequent tax years unless canceled by the taxpayer or revoked by the assessor or the department after discussion with the taxpayer concerning the taxpayer’s failure to meet the requirements described in Sections (10) and (11) of this rule.

(16) Revoking an Extension. The assessor or the department may revoke an extension of filing deadline a year after written notification to the taxpayer explaining reasons for revocation. Reasons for revoking an extension include, but are not limited to:

(a) The property tax return is not received on or before April 15;

(b) The property tax return does not substantially comply with the requirements described in Sections (10) and (11) of this rule;

(c) The property tax return is not signed by the taxpayer(s), an officer of the taxpayer, or the authorized representative of the taxpayer;

(d) Property has been omitted from the property tax return;

(e) Property has been incorrectly classified;

(f) Responsibility for appraisal of the subject property transfers to another office. The taxpayer may then apply to the appropriate office for an extension; or

(g) Taxpayer fails to provide the county with a copy of the Extension Approval letter.

(17) Consequence of Filing after Extension Date. The taxpayer must submit a substantially complete property tax return to the proper office on or before April 15 to be considered timely filed by the extended deadline.

(18) If an office grants an extension and the taxpayer files a return that is not substantially complete by April 15, the office will reject the property tax return(s) and return it to the taxpayer with a request that the required information be added and the return re-submitted within the timeframe specified by the office.

(19) If the taxpayer fails to re-submit the return, the office shall list and value the taxable property based on the best information obtainable from other sources as described in ORS 308.290(9).

(20) Any return filed after April 15 will be considered as late filed and a penalty assessed as described in ORS 308.295 and 308.296.

Stat. Auth.: ORS 305.100, 308.290
Stats. Implemented: ORS 308.290
Hist.: REV 7-2008, f. 8-29-08, cert. ef. 8-31-08; REV 3-2014, f. & cert. ef. 7-31-14

150-308.290-(B)

Industrial Property Returns — Incomplete Returns and Late Filing Penalties

(1) Industrial Property Returns are combined returns of real and personal property for principal and secondary industrial property. The Industrial Property Return forms and instructions specify the information to be included in the return and submitted to the department.

(2) A taxpayer must submit a substantially complete return by the due date of the return. A return is substantially complete if it contains sufficient information to allow the return to be processed by the department. A return is not substantially complete if:

(a) It is submitted with blank or missing schedules unless the schedules are appropriately left blank and are labeled with an identifying notation such as "no", "none", or "not applicable"; or

(b) It is submitted with attachments that do not include required information as specified on the schedule.

(3) For the purposes of the late filing penalty imposed by ORS 308.295, a return that is not substantially complete will not be considered "filed".

(4) If a taxpayer submits a return that is not substantially complete, the department will send the return back to the taxpayer with a request that the return be filed with the required information. The taxpayer will be subject to a late filing penalty under ORS 308.295 if a substantially complete Industrial Property Return is not filed by the due date or within the time allowed by an extension as described in OAR 308.290(A).

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.290
Hist.: REV 4-1998, f. & cert. ef. 6-30-98; REV 2-2002, f. 6-26-02, cert. ef 6-30-02; REV 10-2002, f. & cert. ef. 12-31-02; Renumbered from 150-308.290(4)(b) by REV 4-2011, f. 12-30-11, cert. ef. 1-1-12

150-308.290(7)-(A)

County Contractors Having Access to Confidential Records

Each county shall include in all vendor contracts, where a firm's officers or employees may have access to confidential tax information, a clause prohibiting disclosure of information by any officer or employee of the vendor. The recommended clause follows:

The disclosure of confidential information, obtained from the administration of tax laws, shall be unlawful. All reports, displays or discussions of confidential information shall be clearly labeled and protected by all officers or employees of the firms.

Specific reference is made to ORS 308.290, ORS 308.413, and ORS 310.630 to 310.690.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.290
Hist.: RD 8-1992, f. 12-29-92, cert. ef. 12-31-92, Renumbered from 150-308.290(5); RD 6-1994, f. 12-15-94, cert. ef. 12-31-94, Renumbered from 150-308.290(7)

150-308.290(7)-(B)

Confidentiality of Property Tax Information for Centrally Assessed Companies; Exchange Under Reciprocal Agreements

(1) The following information must be held confidential by the department:

(a) Returns filed under ORS 308.290, 308.525, and 308.810;

(b) Appraisals containing information from returns filed under ORS 308.290, 308.525, and 308.810;

(c) Any data or information obtained during an inspection of the subject property or audit of a company subject to the filing requirements of ORS 308.290, 308.525, and 308.810;

(d) Trade secrets as defined in ORS 192.501(2).

(2) The following information will not be held confidential by the department:

(a) Information contained in the central assessment roll as defined in ORS 308.560;

(b) Appraisal conclusions developed or derived by the department for a company subject to the filing requirements of ORS 308.290, 308.525, and 308.810, including:

(A) Interstate allocation percentages;

(B) Capitalization rates;

(C) Value indicators;

(D) System values.

(3) For the purposes of exchange under reciprocal agreements authorized in ORS 308.290(7), subject to the limitations of section (4) of this rule, "property tax information" includes:

(a) Information contained in annual returns filed under ORS 308.290, 308.525, and 308.810;

(b) Appraisals conducted under ORS 308.290, 308.505 to 308.660, 308.705 to 308.730, and 308.805 to 308.820;

(c) Any information developed by the department in conjunction with such appraisals including, but not limited to, capitalization rates, market and sales studies, and cost and depreciation schedules;

(d) Any data or information obtained during an inspection of the subject property or audit of a company subject to the filing requirements of ORS 308.290, 308.525, and 308.810;

(e) Any other information regarding unitary valuation, allocation, or taxation.

(4) For the purposes of exchange under reciprocal agreements "property tax information" does not include:

(a) Trade secrets as defined in ORS 192.501(2);

(b) Information or data restricted by order of a court of competent jurisdiction.

(5) Any reciprocal agreement with the federal government or the several states entered into for the purposes of exchange of property tax information must require the reciprocating party to apply the confidentiality standards, limitations, and definitions contained in ORS 192.501, ORS 308.290, 308.413, and this rule to any exchanged Oregon property tax information.

(6) Confidential information must not be exchanged under a reciprocal agreement with another state unless the reciprocal agreement meets the standards specified in section (4) of this rule.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.290
Hist.: RD 6-1994, f. 12-15-94, cert. ef. 12-30-94; REV 10-2002, f. & cert. ef. 12-31-02

150-308.411-(A)

Appraisal and Valuation of Industrial Plants

(1) The preliminary survey is defined as gathering of data necessary to determine the methods and approaches to be used in the appraisal to value the plant. Data pertaining to the plant may be obtained from files in the Department of Revenue, from the county assessor's office, from the company itself or from other sources. Information to be obtained may include but is not limited to:

(a) Type of industry;

(b) Chronological age of the plant;

(c) Dates of major modernizations;

(d) Production rates relative to plant capacity;

(e) Economic factors affecting the industry;

(f) Records of sales of comparable plants;

(2) Following the collection and analysis of data, a preliminary survey letter will be written to the taxpayer summarizing the information found in (2) above. The letter should describe the property with the following:

(a) Company name;

(b) Address;

(c) Property description;

(d) County;

(e) Account number;

(f) Code number. The letter will also indicate the approaches that will most likely be used in the appraisal of the property. If the appraiser has determined that the income approach is an appropriate appraisal technique to use, an "Initial Request for Financial Data" form will be included with the preliminary survey letter.

(3) Following receipt of the preliminary survey letter the plant owner or owner's representative shall meet with the appraiser. This meeting may take place in person, or may take place as a telephone conversation. The purpose of the meeting is to clarify any points in the preliminary survey letter or the "Initial Request for Financial Data" and to assist the taxpayer in making a decision concerning the election options.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.411
Hist.: RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

150-308.413

Confidentiality of Industrial Plant Information

Any information furnished to the department and made confidential under ORS 308.411 shall be available to each officer and employee of the office of the county assessor who has been authorized by the county assessor. All authorized personnel shall have signed certificates required under 308.413(3). The county assessor shall prepare a written list of the personnel authorized to receive the information. The list shall be mailed to the Director, Department of Revenue. The assessor shall review the list annually and shall correct it by additions and deletions as appropriate. Any changes shall be mailed to the Director, Department of Revenue.

The safeguard procedures set forth in OAR 150-192.501 apply to the information made confidential under ORS 308.411.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.413
Hist.: RD 11-1990, f. 12-20-90, cert. ef. 12-31-90

150-308.425

Definition of Destroyed or Damaged

"Destroyed or Damaged" means that the real or personal property is physically degraded by a qualifying fire or Act of God event. Property whose value is affected only by its proximity to another property physically degraded by a qualifying fire or Act of God event is not considered destroyed or damaged for purposes of proration of tax.

Example: A landslide caused by an Act of God occurs in a subdivision. Some properties in the subdivision are physically damaged or destroyed by the landslide. Other properties in the subdivision are not physically affected by the slide, but may have a degraded market value due to the market attaching a stigma to the subdivision. Only those properties in the subdivision, which were physically degraded by the slide, are "damaged or destroyed" and eligible for a proration of tax under ORS 308.425.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.435
Hist.: REV 11-2000, f. 12-29-00, cert. ef. 12-31-00

150-308.490

Valuation of Nonprofit Homes for the Elderly

(1) Comparable Facilities includes both nonprofit and for-profit facilities with similar:

(a) Levels of care:

(A) Retirement living only: no meals are included in the rent; similar to apartment or condominium living.

(B) Retirement living: monthly rent can include meals; laundry; utilities; housekeeping; and, assistance with daily living activities.

(C) Retirement living: includes all of (B), and nursing services.

(b) Age, quality, and building condition.

(c) Functional considerations: For example; ADA requirements; room mix; and, size.

(d) Locational considerations.

(2) Qualified Operating Gross Income is income that meets the 95 percent test outlined in ORS 307.375, and tenant rent is competitive with other comparable facilities. If the tenant rent is not at market rent, then stabilized market rent is to be used. Periodic donations made solely to keep the facility solvent are excluded from the 95 percent test.

(3) Qualified Operating Gross Income includes the income generated from the following sources:

(a) Meals;

(b) Amortized entrance fees. The present worth of amortized entrance fees is based on both life expectancy and level of care provided according to GAAP. The interest rate is the same as calculated in (6).

(c) Monthly tenant rent;

(d) Pharmacy fees;

(e) Nursing fees;

(f) Income or fees received for space rent from vendors who provide social services, such as a bank, beauty parlor, gift shop, or post office.

(g) Recreational facility income from the publics participation and use of the facility.

(h) Service income from rented storage space, laundry machines, concessions, etc.

(4) Investment Income earnings from invested entry fees or other invested revenues is specifically excluded from the Qualified Operating Gross Income calculation ORS 307.375(2).

(5) For the purpose of determining net operating income, income and expenses must be adjusted to typical market levels for comparable facilities. If actual expenses are at typical market levels for comparable facilities, they may be used to calculate the net operating income. Expenses may include, but are not limited to, the following:

(a) Real Estate Taxes. If real estate taxes are a line item expense, they may not be included in the overall rate.

(b) Repairs and Maintenance. Charges may not include accounted for replacement reserves.

(c) Real Estate Insurance;

(d) Landscaping Maintenance;

(e) Replacement Reserve is based on current replacement costs. Items in this category are short lived and may include built-in appliances, carpeting, roofing, heating, air conditioning, elevator machinery, plumbing fixtures, and electrical fixtures. Reserves to replace personal property may be included in this category;

(f) Payroll;

(g) Management not included in payroll;

(h) Food;

(i) Supplies;

(j) Phones;

(k) Utilities such as gas, electricity, water, sewer, garbage;

(l) Housekeeping not included in payroll;

(m) Advertising. Does not include start-up costs;

(n) Publication and membership dues;

(o) Purchased Services other than those accounted for in listed categories;

(p) Nursing Services not included in payroll;

(q) Liability Insurance;

(r) Security;

(s) Other miscellaneous operating costs.

(6) Overall Rate. The appropriate overall rate is selected from the analysis of sales of comparable for-profit facilities. The overall rate includes the appropriate tax component.

(7) Additional Depreciation. Additional depreciation shall be calculated using age life tables and current cost information from commercial cost publications for the type and quality of structure being appraised. The amount of additional annual depreciation will be capitalized using the rate calculated in (6). This amount is deducted from the estimated real market value.

(8) Personal Property. The current assessed value of personal property is deducted from the estimated value. If there is no personal property account for the facility being appraised, no deduction shall be made.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.490
Hist.: 3-70; RD 8-1991, f. 12-30-91, cert. ef. 12-31-91; RD 9-1997, f. & cert. ef. 12-31-97

150-308.505(6)

Defining "Communication Services"

(1) Irrespective of the origin of the property, it is the policy of the department to treat as "communications services," for purposes of ORS 308.505 and the central assessment statutes, not merely the direct provision of communication services to customers, but also the indirect provision of such communication services through the leasing of communication facilities by tower aggregators.

(2) For purposes of centrally assessed property, "communication services" includes paging services and tower aggregators. Tower aggregators provide towers, poles, buildings or similar facilities that are used in providing centrally assessed wireless communication service. This rule shall first apply to tax year 2000.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.505
Hist.: RD 9-1997, f. & cert. ef. 12-31-97; REV 2-2000, f. 2-29-00, cert. ef. 3-1-00

150-308.515

Assessment of Properties of Designated Utilities and Companies by Department of Revenue

(1) As required by ORS 308.510(5), 308.515, and 308.517, the Director shall make determinations as to which properties of companies engaged in any of the activities named in 308.515(1)(a) (herein referred to as "utility service") shall be included on the assessment roll required under 308.560 and which shall be included on the several county assessment rolls. To document these determinations, the Department will issue serially numbered property classification memorandums (PCM's) which describe the property and state that it is subject to the assessment jurisdiction of either the Department or the assessor of the county in which it is located.

(2) In reaching its determinations the Department will be guided by the following:

(a) Change in classification of property from state to county assessment or vice versa is made necessary by changes in use of the property. Under the statute, ORS 308.515, the controlling factor determining assessment responsibility is the use, present or intended, of the property.

In accordance the Department will classify:

(A) Those properties being used in utility service as subject to the assessment jurisdiction of the Department.

(B) Those properties which are acquired or held for subsequent use in utility service but assigned to and used by another in a non-utility use as subject to assessment jurisdiction of the county assessor.

(C) Those properties which are acquired for use in utility service but not yet placed into such service and where no other use is being made of the property as subject to assessment by the county assessor or the Department of Revenue as may be determined by the department.

(D) Those properties no longer being used in utility service and not being held for future use in utility service as subject to the assessment jurisdiction of the county assessor.

The status of a property as of January 1 shall be the determining fact in its classification for that assessment year.

(b) In the case of railroad properties, the law (ORS 308.510(4)(c)) has moved the classification a step away from use by stating "a rail transportation company shall be deemed the user of property situated within its station ground reservations or rights of way notwithstanding the fact that such property may be leased, rented or otherwise assigned by it for the use or benefit of another." Thus in the case of railroad property the determining fact is whether or not a property is "within its station ground reservations or rights of way."

In making that determination the following definitions shall apply:

(A) Railroad Right of Way: The land owned or used by a rail transportation company as the site for its railroad. The term "railroad" includes rails, ties, ballast, tunnels, trestles, bridges, cuts, fills, drainage systems, signal systems, communication systems, power systems, equipment and employee service buildings and structures, and all other facilities needed in the business of rail transportation except station facilities. The dimensions of the right-of-way will vary depending on requirements imposed by function and terrain and no fixed size limits can be set.

(B) Railroad Station Ground Reservation: A parcel of land, usually contiguous to a railroad right-of-way, acquired for and used as a station site.

(C) Station Site: All land area reasonably necessary to provide for the transition from and to rail transportation of people and property is logically classifiable as station ground reservation.

(c) The Department will determine whether a particular parcel is includable within one of the definitions on the basis of the following rules:

(A) If the land is owned by a railroad and is being used or is held for use as a station site or as right-of-way as defined above, it shall be classified as station ground reservation or right-of-way.

(B) If the land is owned by a railroad but is leased to another for use as a station site it shall be classified as station ground reservation. Examples would include: leases to freight forwarding, express, and trucking companies for use in assembling small shipments for movement by rail; leases to grain buying and warehousing companies who buy small quantities to accumulate into bulk rail shipments; and leases to companies in the reverse activity of receiving bulk shipments by rail and selling in small quantity.

(C) Land owned by a railroad and not included in items (A) or (B) shall be classified as not being station ground reservation or right-of-way. Examples would include: Leases to retail sales organizations as store or parking lot sites; leases to farmers for agricultural uses (this would not include agricultural permits or casual, transitory or informal agricultural uses along rights-of-way); leases to manufacturing concerns as factory sites. In marginal cases, the Department will make its decision based on the primary use being made of the land.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.515
Hist.: 1-69; TC 10-1978, f. 12-5-78, cert. ef. 12-31-78; TC 8-1981, f. 12-7-81, cert. ef. 12-31-81

150-308.515(2)(b)

Property Used for Guide Service

(1) Water transportation property otherwise assessable by the department under ORS 308.515 will be excluded from department assessment if such property is used exclusively in "for hire" transportation of other persons in guide service.

(2) Guide service as used in ORS 308.515(2)(b) is the service provided by an individual or entity who for pay aids or assists, or offers to aid or assist, any person or persons to locate, angle for, hunt or trap wildlife.

(3) Property used exclusively in the provision of guide service is, unless otherwise provided by law, subject to the assessment jurisdiction of the assessor of the county in which it is located.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.515
Hist.: RD 8-1988, f. 12-19-88, cert. ef. 12-31-88

150-308.525

Confidentiality of Appraisals of Designated Utilities and Companies by Department of Revenue

The files of designated utilities and companies appraised by Department of Revenue will be safeguarded in the manner stated in OAR 150-192.501.

Stat. Auth.:ORS 305.100
Stats. Implemented: ORS 308.525
Hist.: TC 7-1980, f. 11-28-80, cert. ef. 12-31-80

150-308-540

Computation of Changed Property Ratio for Centrally Assessed Property

The ratio of average maximum assessed value to real market value, also known as the changed property ratio, shall be rounded to two decimal places for purposes of assessed value calculation. See OAR 150-308.149(3).

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.540
Hist.: REV 8-1998, f. 11-13-98, cert. ef. 12-31-98

150-308.550(2)-(A)

Allocation of Mobile Aircraft Property Value

(1) The percent of the unit value of the mobile aircraft property of air transportation and air express companies assessed by the department pursuant to ORS 308.515 allocated to Oregon shall be determined by the following formula: [Formula not included. See ED. NOTE.]

(2) Definitions:

(a) Ground time is the amount of time between the moment an aircraft comes to rest from one flight until it first moves under its own power for purposes of another flight.

(b) Flight time is the amount of time between the moment an aircraft first moves under its own power for the purposes of flight until it comes to rest at the next point of landing. Oregon flight time is the product of the total flight time of a flight originating or terminating in Oregon multiplied by the Oregon percentage of the airport-to-airport distance of the flight.

(c) A departure occurs each time an aircraft takes off from one airport for purposes of flight to another airport.

(d) Tons enplaned and deplaned are the total number of tons (passengers and cargo) loaded on and unloaded from company aircraft. Passengers and cargo entering a carrier's system on interchange flights are considered as enplaning or deplaning at the interchange point.

(e) Equated plane hours are calculated by multiplying the actual plane hours of an aircraft type by the ratio of the average value of that aircraft type to the base value. The base value is defined as the average value of one designated aircraft type for each air transportation company.

(f) Equated departures are calculated by multiplying the actual number of departures for an aircraft type by the ratio of the average value of that aircraft type to the base value.

(3) If, for a particular company, reliable data for all three factors in the formula are not available, the department shall determine the factors, for which the company provided inadequate data according to the best of its information and belief.

[ED. NOTE: The Formula referenced in this rule is not printed in the OAR Compilation. Copies are available from the agency.]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.550
Hist.: RD 2-1987(Temp), f. & cert. ef. 4-3-87; RD 7-1987, f. & cert. ef. 6-5-87; RD 9-1989, f. 12-18-89, cert. ef. 12-31-89, Renumbered from 150-308.550(2); RD 5-1990, f. 11-15-90, cert. ef. 12-1-90

150-308.550(2)-(B)

Procedure for Determining Oregon Property Value for Private Railroad Car Companies

(1) Private car companies shall report the total miles their railroad cars traveled on the railroads in Oregon and the corresponding total system mileage for the prior two calendar years as part of their annual report to the Department of Revenue. If complete information for the most recent year is not available at the time the report is required, the company shall report its best estimate based on the information it has available at that time.

(2) The department shall determine Oregon's equivalent number of railroad cars for allocation purposes by use of the ratio of Oregon mileage to the system total for the prior year. This ratio shall be adjusted for any corrections of the previous estimated mileage report. The resulting ratio shall be applied to the average number of cars in the fleet for which the mileage was reported to determine the average car presence in Oregon.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.550
Hist.: RD 9-1989, f. 12-18-89, cert. ef. 12-31-89

150-308.550(2)-(C)

Allocation of Centrally Assessed Electric Company Property Value

Electric companies. The value of the Oregon portion of a unit of property used by a company operating both within and without this state in the business of distributing electricity shall be allocated to this state by multiplying the total value of the unit by a percentage, which shall be the sum of the Oregon production plant percentage, the Oregon distribution plant percentage and the Oregon other plant percentage.

(1) The Oregon production plant percentage shall be the ratio the total original cost of the production plant of the unit bears to the total original cost of the unit times the sum of:

(a) The ratio the Oregon portion of the original cost of the production plant bears to the total unit original cost of the production plant times 75 percent;

(b) The ratio the Oregon portion of the unit's capacity to generate electricity, measured in kilowatts, bears to the unit's total capacity to generate electricity times 10 percent; plus

(c) The ratio the Oregon portion of the unit's total energy generation during the prior year, measured in megawatt hours, bears to the unit's total energy generation during the prior year times 15 percent.

(2) The Oregon distribution plant percentage shall be the ratio the total original cost of distribution plant of the unit bears to the total original cost of the unit times the sum of:

(a) The ratio the Oregon portion of the original cost of distribution plant bears to the total unit original cost of distribution plant times 50 percent;

(b) The ratio the Oregon portion of the unit's energy production sold in the prior year, measured in kilowatt hours, bears to the unit's total energy production sold times 10 percent; plus

(c) The ratio the Oregon portion of the unit's revenue generated from the sale of energy for the prior year bears to the unit's total revenue generated from the sale of energy for the prior year times 40 percent.

(3) The Oregon other plant percentage shall be the ratio the original cost of the remaining plant of the unit bears to the total original cost of the unit times the ratio the Oregon portion of the original cost of the remaining plant bears to the total original cost of the remaining plant of the unit.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.550
Hist.: RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

150-308.550(2)-(D)

Allocation of Centrally Assessed Gas Distribution Company Property Value

Gas distribution companies. The value of the Oregon portion of a unit of property used by a company operating both within and without this state in the business of distributing natural gas shall be allocated to this state by multiplying the value of the unit by a percentage, which shall be the sum of:

(1) The ratio the Oregon portion of the unit cost bears to the total unit cost times 75 percent;

(2) The ratio the Oregon portion of the unit's total operating revenue for the prior year bears to the unit's total operating revenue for the prior year times 15 percent; plus

(3) The ratio the Oregon portion of the unit's net operating income from the prior year bears to the unit's net operating income for the prior year times 10 percent.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.550
Hist.: RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

150-308.550(2)-(E)

Allocation of Centrally Assessed Pipeline Company Property Value

Pipeline companies. The value of the Oregon portion of a unit of property used by a pipeline company operating both within and without this state shall be allocated to this state by multiplying the value of the unit by a percentage, which shall be the sum of the Oregon pipeline percentage and the Oregon other property percentage.

(1) The Oregon pipeline percentage shall be the ratio the cost of lines of pipe in the unit bears to the total cost of the unit times the sum of:

(a) The ratio the Oregon portion of the unit cost of lines of pipe bears to the total unit cost of lines of pipe times 75 percent;

(b) The ratio the Oregon portion of pipe line use, measured in barrel miles or thousand cubic foot miles (MCF miles), bears to the unit's total pipe line use times 20 percent; plus

(c) The ratio the Oregon portion of the unit's total terminal activity during the prior year, measured in barrels or thousand cubic feet, bears to the unit's total terminal activity during the prior year times five percent.

(2) The Oregon other property percentage shall be the ratio the cost of all other property in the unit bears to the total cost of the unit times the ratio the cost of the Oregon portion of the other property of the unit bears to the total cost of other property of the unit.

(3) For natural gas pipelines, depreciated original cost shall be used. For other pipelines, undepreciated original cost shall be used.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.550
Hist.: RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

150-308.550(2)-(F)

Allocation of Centrally Assessed Railroad Company Property Value

Railroad companies. The value of the Oregon portion of a unit of property used in the business of railroad transportation by a company operating both within and without this state shall be allocated to this state by multiplying the value of the unit by a percentage, which shall be the sum of the following factors:

(1) The ratio the Oregon single track mileage of the unit bears to the total single track mileage of the unit times 20 percent.

(2) The ratio the Oregon car miles and locomotive miles traveled in the prior year bears to the total car and locomotive miles of the unit for the prior year times 20 percent. An Oregon car mile is the movement of any car, loaded or unloaded, the distance of one mile.

(3) The ratio the Oregon railway operating revenue for the prior year bears to the total railway operating revenue of the unit for the prior year times 20 percent.

(4) The ratio the Oregon property original cost bears to the total property original cost of the unit times 20 percent.

(5) The ratio the Oregon revenue freight ton-miles for the prior year bears to the total revenue freight ton-miles of the unit for the prior year times 20 percent.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.550
Hist.: RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

150-308.550(2)-(G)

Allocation of Centrally Assessed Communication Company Property Value

(1) Definitions

(a) “Original Cost” means the cost of tangible property, plant and equipment as reported on the company’s financial statements including construction work in progress, property held for future use, land, and leasehold improvements.

(b) “Oregon operating revenue” means gross revenue from customers whose billing address is an Oregon address.

(c) “Oregon customers” means customers whose billing address is in the state of Oregon.

(2) The value of the Oregon portion of a unit of property used by a company operating both within and without this state in the communication business must be allocated to this state by multiplying the value of the unit by a percentage, which is the sum of:

(a) The ratio of the Oregon portion of the unit’s original cost to the total unit’s original cost, multiplied by 75 percent; plus

(b) The ratio of the Oregon portion of the unit’s total gross operating revenue for the prior year to the unit’s total gross operating revenue for the prior year, multiplied by 15 percent; plus

(c) The ratio of the total year-end Oregon customers for the prior year to the unit’s total year-end customers for the prior year, multiplied by 10 percent.

(3) If a company is not able to provide, or does not provide, the information required to compute the ratio in (2)(a), (b) or (c) of this rule, the department will proportionally increase the percentage of the unit’s remaining ratio(s) by the percentage(s) of the ratios not used.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.550
Hist.: RD 6-1994, f. 12-15-94, cert. ef. 12-30-94; REV 6-2009, f. & cert. ef. 7-31-09

150-308.550(2)-(H)

Allocation of Centrally Assessed Water Transportation Company Property Value

Water transportation companies. The value of the Oregon portion of a unit of mobile watercraft property used by a company operating both within and without this state in the business of providing water transportation shall be calculated by multiplying the assessable value of the unit by a percentage, which shall be the sum of:

(1) The ratio the Oregon portion of the originating and terminating tons of the assessable unit for the prior year bears to the total originating and terminating tons of the unit for the prior year times 50 percent; plus

(2) The ratio the Oregon portion of the ton-miles of the assessable unit for the prior year bears to the unit's total ton-miles for the prior year times 50 percent.

(3) The assessable unit of mobile watercraft property is defined as the value of all mobile watercraft property owned or used by the company less:

(a) That portion of value of any watercraft that ply the high seas or between the high seas and inland ports, such portion to be based on the ratio the days in service on the high seas or between the high seas and inland ports for the prior year bears to the total days available for service for the prior year (ORS 308.256(2)(b) and 308.515(2)(a)); and

(b) That portion of value of any watercraft engaged in locally assessable activities described in ORS 308.515(2)(b), such portion to be based on the ratio the days in service engaged in locally assessable activities described in 308.515(2)(b) for the prior year bears to the total days available for service for the prior year; and

(c) The value of any vessel undergoing substantial repairs as of the assessment date as defined in OAR 150-308.256(4).

(4) For companies primarily providing passenger or excursion service, trips shall replace tons and trip-miles shall replace ton-miles in sections (1) and (2).

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.550
Hist.: RD 6-1994, f. 12-15-94, cert. ef. 12-30-94

150-308.555

Unit Valuation of Centrally Assessed Properties

(1) ORS 308.555 authorizes the department to assess property by valuing the entire property as a unit. Determination of the proper unit of property to be valued is a question of fact to be decided by the appraiser under rules adopted pursuant to 308.655 and the guidelines in the WSATA Handbook, adopted in OAR 150-308.205-(B).

(2) For purposes of determining the assessed value of centrally assessed property appraised as a unit pursuant to ORS 308.505 to 308.665, the following definitions apply:

(a) “Controlling interest” means owning or holding more than 50 percent of the voting stock or shares in a company.

(b) “Holding company” means a company that is formed to own the stock in other companies,

(A) A holding company usually owns enough voting stock in another corporation to influence its board of directors and, therefore, to control its policies and management.

(B) A holding company’s operations are the operations of the companies in which it holds stock.

(c) “Parent Company” means a company that owns a controlling interest in another company.

(d) “Unit” means all property, real and personal, tangible and intangible, as described in ORS 308.510, and used or held for future use by a company in providing the services and commodities listed in ORS 308.515.

(e) “Unit valuation” is the valuation of integrated assets functioning as an economic unit at their highest and best use.

(3) The department may consider a variety of facts to determine what property should be assessed as a unit. These include, but are not limited to:

(a) Functional integration, determined by looking at the operation of the property used in the business at its highest and best use,

(b) Integration of management, administration, marketing, financing, use of employees and other resources of the business in which the property is used;

(c) Use of the property that contributes to the service or business listed in ORS 308.515;

(d) How both stock investors and investors acquiring all or a portion of the business assets or stock view investment in the property;

(e) Information in:

(A) Reports filed by publicly traded companies with the Securities and Exchange Commission;

(B) Filings with other governmental or nongovernmental agencies or organizations; and

(C) Other documents or materials used by the business in its service or sales.

(4) When valuing property as a unit:

(a) The department may include property used or held for future use by a parent company, holding company, subsidiary, or any other type of legal entity, including but not limited to partnerships, LLCs or joint ventures, when the department determines that the property of such business is operationally or financially integrated without regard to the physical location of the property, whether within or without the United States.

(b) The department will generally assess the property of each company on the roll (ORS 308.560) in the name of the parent corporation when the company unit includes more than one corporate entity.

NOTE: Publications: The publication referred to or incorporated by reference in this rule is available from the Department of Revenue pursuant to ORS 183.360(2) and 183.355(6).

Stat. Auth.: ORS 305.100 & 308.655
Stats. Implemented: ORS 308.555 & 308.515
Hist.: REV 14-2008, f. & cert. ef. 11-14-08

150-308.560

Contents of the Utility Assessment Roll

For each company assessed, the department will include on the assessment roll according to the best information available, the following information:

(1) The name of the company;

(2) The name of a company contact or authorized agent;

(3) The last known address of the company or authorized agent;

(4) A general property description;

(5) The assessed value (AV), real market value (RMV), AV exceptions, and the RMV of exceptions;

(6) The values apportioned to each county where the property is located, including code areas, locations, county reference number, miles of track, wire or pipe, and values per mile, as applicable;

(7) Any penalty assessed under ORS 308.030;

(8) Any other information the department deems necessary for the counties to perform their duties as it pertains to the value determined for utility companies.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.550
Hist.: REV 10-2002, f. & cert. ef. 12-31-02

150-308.605(2)

Contents of Department's Journal

The department's journal shall contain:

(1) A schedule of hearings conducted by the director during review of the tentative roll;

(2) The date the review is completed;

(3) The change property ratio for centrally assessed property;

(4) The name of each company assessed a late filing penalty and the amount of the penalty.

(5) The name of each company receiving a waiver of the late filing penalty from the director; and

(6) Any other information pertaining to the review of the tentative roll that the director deems appropriate.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.605
Hist.: REV 8-1998, f. 11-13-98, & cert. ef. 12-31-98

150-308.655

Centrally Assessed Property -- Appraisal Guidelines

The 2009 Western States Association of Tax Administrators Appraisal Handbook: Unit Valuation of Centrally Assessed Properties is adopted as the official valuation guide for property assessed by the Oregon Department of Revenue under ORS 308.505 to 308.665 for ad valorem tax purposes.

[Publications: Contact the Oregon Department of Revenue for information about how to obtain a copy of the publication referred to or incorporated by reference in this rule pursuant to ORS 183.360(2) and 183.355(1)(b).]

Stat. Auth.: ORS 305.100, 308.655
Stats. Implemented: ORS 308.655
Hist.: TC 17-1979, f. 12-20-79, cert. ef. 12-31-79; RD 2-1990, f. & cert. ef. 3-15-90; Renumbered from 150-308.205-(B), REV 11-2010, f. 7-23-10, cert. ef. 7-31-10

150-308.704

Qualification of Property for Special Assessment as Government Restricted Multiunit Rental Housing

(1) Definitions:

(a) "Qualified income rental housing" means property subject to the occupancy by tenants who meet restricted incomes and rents as described in the government incentive program in which the owner of the property is participating.

(b) "Dwelling unit" means a structure or the part of a structure that is used as a home or residence.

(c) "Contiguous" means having a common boundary to some extent greater than a point. Tax lots are contiguous if separated by public or county roads, state highways, or non-navigable streams or rivers. Tax lots are not contiguous if they are separated by interstate freeways or navigable streams or rivers, except where there is direct connecting access, such as an underpass, for property separated by an interstate freeway.

(d) "Assisted Living Facility" means a building, complex or distinct part thereof, consisting of fully self-contained individual living units where six or more seniors and adult persons with disabilities may reside in homelike surroundings. The facility offers and coordinates a range of supportive services available on a 24-hour basis to meet the activities of daily living, health, and social needs of the residents. A program approach is used to promote resident self-direction and participation in decisions that emphasize choice, dignity, privacy, individuality, and independence.

(e) "Residential Care Facility" means a building, complex or distinct part thereof, consisting of shared or individual living units in a homelike surrounding where six or more seniors and adult persons with disabilities may reside. The facility offers and coordinates a range of supportive services available on a 24-hour basis to meet the activities of daily living, health, and social needs of the residents. A program approach is used to promote resident self-direction and participation in decisions that emphasize choice, dignity, individuality, and independence.

(f) "Services" means supervision or assistance provided in support of a resident's needs, preferences and comfort, including health care and activities of daily living, that help develop, increase, maintain, or maximize the resident's level of independent, psychosocial and physical functioning.

(2) To qualify for special assessment as government restricted multiunit rental housing, all of the following criteria must be met:

(a) The owner must file an application with the assessor in the county where the property is located;

(b) The property must be subject to a government restriction, which limits the use of the housing to qualified income rental housing, as of January 1 of the assessment year.

(c) The property owner must receive a government incentive for agreeing to limit the use of the property to qualified income rental housing. These incentives may include, but are not limited to:

(A) A low-income housing tax credit under section 42 of the Internal Revenue Code;

(B) Financing derived from exempt facility bonds for qualified residential rental projects under section 142 of the Internal Revenue Code;

(C) Financing derived from non-hospital bonds issued by entities that are tax-exempt pursuant to section 501(c)(3) of the Internal Revenue Code;

(D) A low interest loan under section 235 or sec 236 of the National Housing Act (12 U.S.C. 1715Z or 1715Z-1) or under 42 U.S.C. 1485;

(E) A government rent subsidy;

(F) A government guaranteed loan; or

(G) A rural development 515 low interest multifamily loan.

(d) The property must be residential rental housing consisting of four or more dwelling units situated on the same or contiguous tax lots. If there are multiple residential structures, at least 50 percent of the structures must contain two or more dwelling units; and

(e) The property must not be an assisted living or residential care facility, or provide a program of assisted living or residential care services.

(3) Examples of properties that may qualify for special assessment as having four or more dwelling units include:

(a) Two duplexes on the same tax lot.

(b) Two tax lots, each having one duplex and separated by a local street.

(c) Two duplexes plus two single family units, one of which may be a manager's unit, with each structure on a separate but contiguous tax lot.

(4) Examples of properties that do not qualify for special assessment as having four or more dwelling units include:

(a) A triplex.

(b) Scattered, non-contiguous sites with no more than three units per site.

(c) One duplex plus two single family units.

(d) Single family homes, regardless of how many, whether on a single or contiguous tax lots.

(e) Group homes.

(5) If a single housing project consists of some units that qualify under this rule, such as two duplexes on the same tax lot, plus some units that do not qualify, such as two more duplexes on non-contiguous tax lots, only those units that qualify under this rule may be subject to special assessment.

[Publications: Publications referenced are available from the agency.]

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 205.320, 308.205, 308.027, 308.156, 308.234, 308.704, 308.709, 308.205, 308.712, 308.714, 309.200, 311.806, 309.200, 457.450
Hist.: REV 6-2001, f. & cert. ef. 12-31-01; REV 10-2002, f. & cert. ef. 12-31-02; REV 7-2008, f. 8-29-08, cert. ef. 8-31-08

150-308.709

Application and Election Process for Government Restricted Multiunit Rental Housing

(1) The property owner must file an application and election form with the county assessor to obtain a special assessment for government restricted multiunit rental housing (LIH) provided by ORS 308.701 to 308.724. The application and election form must be filed on or before April 1 of the assessment year. The application and election form may be filed after April 1 and on or before December 31, if accompanied by a late filing fee equal to the greater of $200 or one-tenth of one percent of the real market value (RMV) of the property described in the application filed. Any application and election form that is filed late must be accompanied with the late filing fee. If the fee is not paid, the special assessment will not be granted. If the special assessment is denied by the assessor, the late filing fee must be refunded to the applicant.

(2) At the time the application and election form is filed, the property owner must elect the method the assessor is to use to determine the specially assessed value (SAV) of the property.

(a) If the property owner elects the income approach method, the application and election form must be accompanied by income and expense documentation. The required documents are:

(A) The rent roll for the month of December immediately preceding the date of application. The rent roll must show the rents charged for each unit and which units, if any, are vacant; and

(B) Annual income and expense statements for at least the three most recent years. Audited statements should be submitted, but unaudited statements may be provided if audited statements are not available; or

(C) Pro forma income and expense statements, but only if the project is new and historical documents are not available; or

(D) A combination of actual and pro forma income and expense statements for at least three years, if the property is not more than three years old.

(E) For mixed-use property the applicant must provide income and expense statements only for the portion of the property used as government restricted multiunit rental housing. Mixed-use property is property that consists of both government restricted multiunit rental housing and property used for other purposes.

(b) If the property owner elects the ratio method, the application and election form must be accompanied by the rent roll for the month of December immediately preceding the date of application. The rent roll must show the rents charged for each unit and which units, if any, are vacant.

(3) When one of the following events occurs after the initial application and election form has been approved, the owner must submit additional information to the assessor:

(a) The property owner wishes to change the election of the method used to determine the SAV; or

(b) New property has been constructed at the site, or new improvements are made to the government restricted multiunit rental housing; or

(c) The county assessor requests current income and expense statements.

(4) The county assessor will review the application and election form and accompanying documentation and determine if the property qualifies for special assessment.

(a) The application and election form must contain the information required under ORS 308.709 for the assessor to approve the special assessment. If the application and election forms are incomplete, the assessor may request additional information from the applicant in writing, as necessary, for completion or clarification. The applicant must submit the requested information, in writing, to the assessor within 15 days of the date of the request or by the filing deadline, whichever is later, for the assessor to accept the application as a timely filing. If the applicant does not submit the requested information within the time required, the assessor may deny the application.

(b) The assessor must notify the applicant of the determination, in writing, within 120 days of the date the application was filed with the assessor's office.

(A) If the application is denied, the notice to the property owner must include the instructions for appealing a denial of the special assessment by the assessor.

(B) If the application is approved, the assessor must add the following notation to the tax and assessment rolls each year: "LIH special assessment (potential penalty if disqualified)."

Stat. Auth.: ORS 305.100, 306.120, 308.709, 308.724
Stats. Implemented: ORS 308.709
Hist.: REV 6-2001, f. & cert. ef. 12-31-01; REV 10-2002, f. & cert. ef. 12-31-02; REV 10-2002, f. & cert. ef. 12-31-02; REV 4-2007, f. 7-30-07, cert. ef. 7-31-07

150-308.712

Special Assessment of Government Restricted Multiunit Rental Housing Property

(1) The assessed value (AV) of government restricted multiunit rental housing property is the lower of:

(a) The specially assessed value (SAV);

(b) The maximum assessed value based on the special assessment (MSAV); or

(c) The real market value (RMV).

(2) An owner of government restricted multiunit rental housing property may elect to have the property specially assessed using:

(a) An income approach method using actual income and stabilized expenses; or

(b) A ratio method.

(3) The income approach method: For the initial year of special assessment, the assessor must utilize the property's actual income statements for at least the prior three years if available. Pro forma statements may be used for recently constructed properties. Economic or market based rents cannot be used. A combination of actual and pro forma statements may be used.

(a) The goal of the income approach is to determine the value of only the real property. No personal property value should be included. The assessor may remove personal property value by one of the following methods:

(A) Include revenues and expenses for both the real and personal property. After the net operating income has been capitalized, deduct the value of the personal property; or

(B) Remove all income and expense generated by the personal property assets prior to capitalization.

(b) In determining the SAV, no income should be included for government income tax credits or mortgage interest subsidies.

(c) The assessor must use actual income (revenues) and stabilized expenses rather than market or economic rents. However for recently built or recent conversions to government restricted multi-unit rental housing, a combination of pro forma and actual rental income may be used.

(d) Actual revenues included are those that result from the operation of the property. They include the rent paid by tenants and any monthly rent subsidies. Also, rent for parking or other amenities must be included. Revenue not directly related to the property, such as interest income, should be excluded.

(e) Stabilized expenses are those that would be expected to be typical for the property, not those that reflect unusual or extraordinary circumstances. The assessor may use averages for the three years and may express expenses on a per-unit basis or as a percentage of revenue. Expenses for a particular year should be adjusted if they are atypical. The goal is to find the typical level of expenses.

(f) Expenses to include are those directly related to the operation of the property including, but not limited to, repairs and maintenance, utilities, government required tenant services, management, and insurance. Certain expenses such as depreciation, mortgage interest, payments to developers, and property taxes must be excluded. Reserves for replacements should be included, but any expense in the repair and maintenance category should be disallowed if it comes from the reserve account.

(g) The net operating income is determined from the above steps by subtracting the stabilized annual expenses from the actual annual revenues.

(h) The capitalization rate is estimated as follows:

(A) Factors to be considered in selecting a rate include the risks associated with multiunit rental housing subject to government restriction. These include diminished ownership control, income-generating potential, and liquidity. The assessor must also consider any other factors or risks typically taken into account when estimating a capitalization rate.

(B) The selected capitalization rate must be equal to or greater than the rate used by the assessor for similar unrestricted properties.

(C) To the selected rate, add the effective property tax rate for the code area where the property is located, as described in OAR 150-308.205-(G). This is the overall rate to use for capitalization.

(D) The value determined from the income approach is calculated by dividing the overall capitalization rate into the net operating income. This is the SAV. Notwithstanding the result of the calculation, the SAV of the real property land and improvements may not be less than $1,000 per dwelling unit.

(4) The ratio method: This method utilizes a ratio of restricted to market rents.

(a) The assessor estimates the RMV of the property as if unrestricted.

(b) The actual annual total rent, including subsidies, is determined.

(c) The annual market rent for the property, if unrestricted, is estimated. If insufficient county data is available, the assessor may look to regional data.

(d) The ratio of the actual rent to the market rent is calculated.

(e) The unrestricted value from step (4)(a) is multiplied by the ratio from step (4)(d). This is the SAV. Notwithstanding the result of the calculation, the SAV of the real property land and improvements may not be less than $1,000 per dwelling unit.

(5) Other issues of value, including unusual physical or functional circumstances affecting the property, are not considered in determining the SAV. They are appropriately addressed in estimating the property's RMV.

(6) Certain properties may have a mixed use. For example, a portion of the property may be used as government restricted multiunit rental housing property, while another portion may be commercial or retail. The special assessment applies only to the portion that is used as government restricted multiunit rental housing property. The assessment of the remainder of the property is unaffected by this rule.

(a) For mixed-use properties, a portion of the land value may be subject to special assessment as government restricted multiunit rental housing property. The remainder of the land value is not subject to this special assessment.

(b) The portion of the total land value subject to special assessment equals the portion that the gross square footage of the real property improvements used for government restricted multiunit rental housing bears to the total gross square footage of all the real property improvements, both restricted and unrestricted.

(7) The SAV must be allocated between land and improvements.

(a) The portion of the SAV allocated to the land is equal to the RMV of the land at its highest and best use.

(b) The remaining SAV is allocated to the improvements.

(c) If the SAV is equal to or less than the RMV of the land, a minimum value will be placed on the improvements and the remaining value will be assigned to the land.

(8) For the initial year of application, the MAV of the specially assessed property (MSAV) is found by multiplying the SAV determined using the method chosen by the property owner by the changed property ratio (CPR). The assessor must use the same CPR that is used for similar unrestricted multiunit housing.

(9) Following the initial year, the SAV may be redetermined using the income approach method or the ratio method (whichever the property owner elected) as follows:

(a) The property owner may request a redetermination of the SAV. The owner must make a written request to the assessor by April 1 of the assessment year and must provide necessary income statements.

(b) The assessor may decide to redetermine the SAV. No later than April 1 of the assessment year, the assessor will notify the property owner in writing and request income statements for the three most recent years (if not already provided).

(c) If the SAV is not redetermined under (9)(a) or (9)(b), the assessor may leave the SAV unchanged or may use an appropriate trend or index.

(10) For years after the initial year, the MSAV is 103% of the prior year's AV or 100% of the prior year's MSAV, whichever is greater.

(a) If omitted property is assessed or there is a lot line adjustment, the MSAV is calculated as provided in ORS 308.149 to 308.166.

(b) If new improvements are made to the property, and the owner applies for special assessment of the new improvements, the MSAV of the new improvements as determined by this rule is added to the existing MSAV.

(c) If the property is disqualified from special assessment, and the property is not requalified, a new MAV, based on RMV, will be determined under ORS 308.149 to 308.166.

(d) If the property is disqualified from special assessment, and the property is later requalified, the MSAV will be determined using the same method as prescribed in this rule for the initial application.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 205.320, 308.205, 308.027, 308.156, 308.234, 308.704, 308.709, 308.205, 308.712, 308.714, 309.200, 311.806, 309.200 & 457.450
Hist.: REV 6-2001, f. & cert. ef. 12-31-01; REV 10-2002, f. & cert. ef. 12-31-02; REV 10-2002, f. & cert. ef. 12-31-02; REV 7-2008, f. 8-29-08, cert. ef. 8-31-08

150-308.714-(A)

Special Assessment Disqualification Process

(1) The assessor must disqualify property from special assessment as government restricted multiunit rental housing if:

(a) The property is no longer multiunit rental housing subject to a government restriction on use; or

(b) An event described in ORS 308.146 (3)(b) or (c) occurs with respect to the multiunit rental housing; or

(c) The owner requests disqualification.

(2) The property owner must notify the county assessor, in writing, within 60 days of a disqualifying event.

(3) Property disqualified from special assessment must be valued by ordinary appraisal methods in the tax year immediately following the disqualifying event.

(4) For any tax year following the tax year of disqualification, a property owner may reapply to the county assessor for special assessment if:

(a) The multiunit rental housing property again becomes subject to a government restriction on use; or

(b) An event described in ORS 308.146(3)(b) or (c) caused the disqualification.

(c) The property was voluntarily disqualified from special assessment and the owner is filing a new application under the conditions described in the voluntary disqualification rule.

(5) The following penalties apply if the property owner fails to notify the assessor within 60 days of the disqualifying event:

(a) If the property is disqualified because the multiunit rental housing is no longer subject to a government restriction on use, the penalty is the difference between the taxes imposed and those that would have been imposed had the property not been specially assessed, plus any applicable interest.

(b) If the property is disqualified because new property is constructed or new improvements are made to the qualified property, no penalty will be charged. The new property or improvements will be assessed as omitted property.

(c) If the property is disqualified because of an event described in ORS 308.146(3)(b) or (c), the penalty is the difference between the taxes imposed and those that would have been imposed had the property not been specially assessed, plus any applicable interest.

(d) If the property is disqualified at the owner's request and none of the disqualifying events in (1)(a) or (1)(b) exist, there is no penalty.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.714
Hist.: REV 6-2001, f. & cert. ef. 12-31-01

150-308.714-(B)

Process for Voluntary Disqualification from Special Assessment Program and Subsequent Application

(1) An owner may choose to remove their property from special assessment as government restricted multiunit rental housing at any time. The voluntary disqualification from special assessment becomes effective as follows:

(a) If the request for withdrawal from the program is filed with the assessor between January 1 and June 30 inclusive, the property will be removed from special assessment for the tax year beginning July 1 of the same calendar year.

(b) If the request for withdrawal from the program is filed with the assessor between July 1 and December 31 inclusive, the property will be removed from special assessment for the tax year beginning July 1 of the next calendar year.

(2) If a property is voluntarily disqualified from special assessment, the owner may file a new application and election form with the county assessor, on or before April 1 of any assessment year within 10 years immediately following the first tax year the property was first qualified for special assessment. If the application is approved, the property will be specially assessed for the next tax year.

(3) If a property has been voluntarily disqualified from special assessment, the property can qualify only one more time for special assessment. This subsequent qualification must occur within the 10 year period following the first tax year the property was first qualified for special assessment. Any applications for special assessment received by the assessor after the 10-year period will be denied.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.714
Hist.: REV 6-2001, f. & cert. ef. 12-31-01

150-308.865

Payment of Taxes on Manufactured Structure That Allows Change from Real Property to Personal Property Status

When a manufactured structure that is currently assessed as real property under ORS 308.875 is being moved, the tax collector must allocate the taxes between the manufactured structure and the remainder of the property. The full payment of the taxes on the value attributable to the manufactured structure releases the manufactured structure from the property tax lien.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.865
Hist.: RD 5-1996, f. 12-23-96, cert. ef. 12-31-96; REV 7-2005, f. 12-30-05, cert. ef. 1-1-06

150-308.875-(A)

Manufactured Structure Classified as Real or Personal Property

(1) When the records in the assessor's office or the ownership document issued by Building Codes Division of the Department of Consumer and Business Services (DCBS) do not identify the same ownership for a manufactured structure as for the land upon which the structure is located, the assessor must classify the manufactured structure as personal property. However, if the taxpayer submits documentation establishing that the ownership of the manufactured structure and land upon which the structure is located is the same, the assessor must classify the manufactured structure as real property.

Example 1: The land is in the name of Pat Public, Inc., a corporation, and the manufactured structure is in the name of Pat Public. Because a corporation is a different legal entity than an individual, the ownership is not the same, so the manufactured structure must be classified as personal property.

Example 2: A husband and wife are owners of a parcel of land upon which a manufactured structure is located. The ownership document for the manufactured structure is in the husband's name only. The ownership is not the same and the manufactured structure must be classified as personal property.

Example 3: Pat Public owns a manufactured structure and is buying on contract the parcel of land upon which the structure is located. For purposes of ORS 308.875 the ownership is the same and the manufactured structure must be classified as real property.

(2) When the owner of a manufactured structure has a leasehold estate of 20 years or more, and the lease specifically permits the owner to record that lease in the county deed records, the owner may complete an application as prescribed by DCBS to have the home classified as real property. If the assessor determines that the manufactured structure qualifies for recording as required by ORS 446.626, and the lease has subsequently been recorded in the county deed records, the assessor must then classify the home as real property.

(3) When the owner of a manufactured structure is a member of a manufactured dwelling park nonprofit cooperative formed under ORS 62.800 to 62.815 that owns the land on which the manufactured structure is located, the owner may complete an application as prescribed by DCBS to have the home classified as real property. If the assessor determines that the manufactured structure qualifies for recording as required by ORS 446.626, the assessor must then classify the home as real property.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.875
Hist.: RD 11-1990, f. 12-20-90, cert. ef. 12-31-90; RD 6-1994, f. 12-15-94, cert. ef. 12-30-94; RD 5-1996, f. 12-23-96, cert. ef. 12-31-96; REV 9-2006, f. 12-27-06, cert. ef. 1-1-07; REV 11-2009, f. 12-21-09, cert. ef. 1-1-10

150-308.875-(B)

Real and Personal Manufactured Dwellings to be Assessed in Like Manner

All manufactured dwellings are assessable.

(1) Under ORS 308.875, the owner of a personal property manufactured dwelling need not file a personal property return on the structure.

(2) The personal property assessment cancellation provided in ORS 308.250 does not apply to such dwellings.

(3) They shall be assessed at 100 percent of real market value.

Stat. Auth.: ORS 305.100
Stats. Implemented: ORS 308.875
Hist.: RD 11-1990, f. 12-20-90, cert. ef. 12-31-90; RD 6-1993, f. 12-30-93, cert. ef. 12-31-93

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