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| Legislation |
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The 74th Legislative Session saw a plethora of central assessment bills.
Tax Administration: Following a year’s worth of work
and with an interim workgroup, the department submitted a bill to update the
assessment statutes for centrally assessed utilities. Commonly referred to as
“central assessment,” “designated utilities,” or
“unitary appraised companies,” these are the accounts of selected
companies or services assigned to the department for appraisal. The statutes assign
companies or businesses involved in electrical generation, communications, and
transportation, by rail, pipeline, air, or sea, and communications to the department.
These statutes were first passed into law in 1909 and, in some places appear to
have not been updated in the last century.
The department’s utility team, led by Grant Merrill, established a plan to
review these statutes, called together a workgroup of stakeholders, and carefully
crafted a bill for the 2007 session. Those ideas became HB 2239, which passed both
chambers and was signed by the governor. The bill reorders the chronology of the
statutes and eliminates confusing references to due dates for various reports, forms,
or actions. Most importantly, HB 2239 clarifies that appeals of
property tax appraisals by these accounts go first to the director in the director’s
review process, which ends on August 1. The bill makes clear that a taxpayer
must use this administrative remedy and not go to the county boards of property
tax appeals before appealing to the tax court. At least once in the last two years,
a centrally assessed company has tried an appeal to various county boards of
property tax appeals. This appeal was ultimately dropped —but it still
caused more work for board clerks and time delays in resolving valuation, tax, and
refund issues on these often very high value property tax accounts.
Tax Policy and Tax Expenditures: Besides this central
assessment bill, several other concepts to change tax policy or tax expenditures
(better known in tax circles as tax exemptions or special assessments) caught
the legislature's attention.
Intangibles
A bill has been introduced in nearly every session over the last 12 years to
create an exemption for the intangible property of centrally assessed companies.
This session, the focus was limited to communication companies. HB 3064 and
HB 3065 each had one hearing in the House Revenue Committee, and both died
in that committee.
Before the start of the session, the central assessment workgroup and the
House Interim Committee on Revenue discussed at length whether the
department should assume appraisal responsibility for cable companies. The
department determined from those discussions that cable companies business has
evolved technologically and now falls under the definition of “communications”
implicit in the existing central assessment statutes. The department notified the
legislature and the cable companies that we would begin assessing cable
companies centrally beginning in 2008 or 2009. The legislature took no action
this session to change the definition of “communications” or
otherwise direct the department to change its interpretation of the statute or
plan of action.
Grant’s team continues preparing to assume the responsibility for
cable company appraisal in cooperation with all affected counties.
Intertie Exemption
In its final hours before adjournment, the 2005 legislature passed SB 31,
which, among other things, created an exemption for out-of-state municipalities’
use of the Pacific Northwest intertie. Oregon’s electrical cooperatives
wanted in on this exemption, but were unable to get such an amendment before
sine die. So, this session they requested HB 2793. The bill
provided for an exemption of the property interests in the Pacific Northwest
intertie. But, the bill described those eligible in such a way that we believe only
Power Resources Cooperative (PNGC) would have benefitted. This bill passed the
House and died at the close of session in the Senate Finance and Revenue
Committee. In the closing days of session, a proposed amendment to SB 816
would have inserted the substance of HB 2793 into that bill. That amendment
went nowhere, and SB 816 died in committee.
Public/Private Partnerships
Significant discussion of the taxable status of property involved in a
public/private partnership had been going on and continuing through the 2007
legislative session. The department considered an administrative rule outlining
the issue. Recent court cases provided some guidance and, ultimately, no rule
was adopted. Public-private partnership arrangements are becoming more
common and raise questions, particularly from the legislature, about the effect of
these blended ownership/use arrangements on the property tax obligation. The
city of Klamath Falls, the University of Oregon, Coos County, and others have
these types of property arrangements. Coos County and Northwest Natural Gas
proposed HB 3046 after the department determined that the Coos County
pipeline—owned by Coos County but used, operated, and maintained by
Northwest Natural Gas—was taxable property. The bill was narrowly crafted
so that only the 100 or so miles of pipe that runs through Douglas and Coos
counties would be exempt; it passed into law.
Wave Energy
This was an exciting legislature for citizens interested in “green
power.” One source of alternative power that received much discussion was
wave energy. Oregon State University has a research project exploring energy
buoys off the Reedsport coast in conjunction with private interests. Other private
interests are looking to Oregon for this potential. Lincoln County has taken a
leadership role in shaping the growth of this industry. SB 875 was introduced
because of concerns over the location of these projects, the effects they may
have on the fishing industry, and the tax consequences to this fledgling industry.
Finally, SB 172 was amended on the House side to
change the filing date for centrally assessed cooperatives from February 1 to
March 1.
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| Appraisal Team Profile: Food Team |
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Team Members: Don Brutke (team leader), Zafer Abuelkhair, Michael McEvoy,
Michael Saladino, Tina Rodriguez*, Randy Thoesen, Nancy Taylor, Ruben
Delos-Reyes
What our team values: Canneries and frozen food facilities;
meat processing plants; dairy processing plants (milk, cheese, ice cream);
value-added food plants (potato salad, prepared meals, sauces, snacks, etc.);
bakeries (bread, cookies, specialty products); bottling plants; alcohol (breweries,
wineries, one distillery, one sake plant); dehydrating and freeze-drying plants;
seafood processing; grain milling operations; feed mills; and many miscellaneous
companies (coffee, algae, juices, nuts, etc.).
Value the Food Team manages: As of 2006, we value 150
sites and 643 accounts in 23 different counties at nearly $1.6 billion in real market
value. For 2007, there are several new plants so that value will go up significantly.
About the team: The team members are assigned companies
grouped by market segment so they can develop specialization. We are making an
effort to visit companies and become familiar with their operations. At the same time,
we are educating the taxpayer on Oregon property tax laws and instructing them on
proper reporting. In addition to regular appraisals, valuation reviews, and site
visits, we keep track of industry conditions and do some specialized industry
studies to maintain current market values.
*Tina will be moving to the Electronics Team once all her Food Team accounts
have been processed.
Photo: Back row from left: Mike Saladino, Mike McEvoy, Randy Thoesen,
Zafar Abuelkhair. Front row from left: Tina Rodriguez, Don Brutke, Nancy Taylor.
Not pictured: Ruben Delos-Reyes.
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| Health of the Property Tax System |
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Check up for the Property Tax System
The Department recently released the 2007 Health of the Property Tax
System report. It describes where the system is and analyzes several key
components of the system to assess how well we carry out the dictates of the
constitution and state law.
This easy-to-read guide explains the current property tax system and measures
six key performance areas statewide. The measures are:
- Administrative efficiency of the property tax system.
- Percent of real estate markets within COD (co-efficient of dispersion) standards.
- Administration cost as a percent of RMV (real market value).
- Percent of property taxes collected.
- Collection efficiency of property tax.
- Percent of assessors’ maps digitized.
We’ll explore these measures in more detail in future Grapevine
issues.
For more information, you can read the report online here .
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| Karen's Korner |
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Karen Gregory, Property Tax Division Administrator
As I reflect on the last six months, the legislative session is winding down and the only thing that is certain is change. John Phillips and Judi James will have complete updates for all of us as soon as the legislative dust settles. Not only have we had legislative change these last few months, but we’ve experienced substantial change at DOR, too. I thought I’d share some of those changes with you!
Valuation
Valuation has experienced major personnel changes in the last six months. Eleven people from outside the section were hired to join the appraiser/analyst ranks, and there were four internal promotions during that same time period. There are also five section employees currently filling temporary work assignments. This is all very exciting and has had a positive impact on morale and productivity.
With all this movement, excellent training is imperative. Our training coordinator is working hard to get her second class of new hires through our new, and much improved, training program. This concept—a full-time employee dedicated solely to training our appraisers—has worked exceedingly well since we instituted it two years ago.
The Valuation Section has focused on being proactive in its approach to the appeals caseload. They’ve been successful in resolving many appeals before they move to formal litigation. They’ve also settled some very difficult cases and have taken steps to involve the assessors in addressing the appeals.
Assessment and Taxation Standards
ATS is currently looking at a mini restructure. Section members are trying to deploy their resources to maximize effectiveness and provide some successor planning for areas that have one person as the expert. ATS managers relied on the assessor satisfaction survey to identify areas that the counties would like us to focus on. ATS is also trying to maximize the ability to make positive changes to its section performance measures (which were developed from the survey). This restructure is still an exciting work in progress. ATS is also in the midst of hiring a permanent replacement for Gary Humphrey.
Timber Tax and Deferral Programs
We had the opportunity to use our new rule that many of you had a hand in developing. Under ORS 150-294.181, a county that cannot meet the CAFFA acceptable standards can develop a three-year plan that moves it, year by year, back to the acceptable level. Both the county and DOR must agree to the plan, and the county must provide DOR with quarterly reports to show that it is on track with the plan. Jim Bucholz and I traveled to Curry and Coos counties in May to describe this option to the county commissioners; Curry County decided to use this option.
The Timber Tax Unit maintained program continuity against a sea of personnel changes in the last several months. Down three employees out of a total of eight during a critical period, the staff still successfully developed and produced forest land value tables, addressed thorny special assessment and small tract forestland (STF) issues, delivered statewide training to county appraisers on the Forestland Manual, served as an ongoing source for taxpayer assistance and education, and reviewed and carefully monitored legislation.
The Senior and Disabled Deferral Unit responded to the challenge of changing customer requirements and expectations by providing quicker information access and better service through automation of the lookup of deferral account balances. Now taxpayers, counties, lending companies, and title companies can go directly to the internet to obtain deferral information on total property taxes paid, accrued interest, recording fees, and current balance calculated to a specific date.
Cadastral Information Systems Unit (CISU) and ORMAP
CISU is refining the tax lot base map to accommodate changing GIS application requirements. To keep up with these changes, the unit has emphasized formalized outside training for its employees, and internal team training to take advantage of existing expertise.
With 100 percent of all county Goal 2 data processed into a single-shape file, the public now may take full advantage of enhanced display and search functions, including assessor map files. Ultimately, this will facilitate public access to a broad array of GIS applications.
Thank You, Ray Erland
And last, but certainly not least, we will all experience massive change when Ray Erland hangs up his assessor/tax collector hat at the end of August. Ray has provided us with history and insight into the system and is always available to tackle a problem, be it at OACTC, OSACA, DOR, AOC, the legislature, or any other venue. Ray has never backed away from work, challenges, or controversy; he has always given his best to support the Oregon property tax system. Ray has had many original ideas, most of them very clever (he would say all), and he has never been shy or hidden his point of view on a topic. Ray is a person I have gone to for feedback, insight, and ideas—he never failed me. Thank you, Ray!
We will really miss Ray, but wish him all the best in his retirement. He is leaving some giant shoes to fill.
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| Property Tax Division Temporary Assignments |
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| Rick Schack, Bob Depuy, and Mark Kinslow |
Rick Schack, PTD, CDOT, Manager
Get out your temporary assignment scorecard. From April to August, three Property Tax Division folks are working 6-month stints outside the scope of their normal duties. Mark Kinslow, CDOT section manager, is on a developmental assignment as the administrator of the Administrative Services Division (ASD), which is the division that, among other programs, provides all information technology and human resources support to the rest of the department. Rick Schack, Assessment and Taxation Standards supervisor, is filling in for Mark on a temporary work assignment. Bob Depuy, Valuation Section appraiser analyst 4, is filling in for Rick.
They will return to their “regular” assignments in August, since the ASD administrator was hired. In the meantime, these three individuals are benefiting from exposure to new challenges while maintaining a toehold on their “roots.”
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| County Development of Geographic Information Systems |
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Brett Juul, Cadastral Information Systems, Manager
Over the past six years, the Oregon Map (ORMAP) project has been helping counties develop a Geographic Information System (GIS) to assist the county, Assessment & Taxation (A&T), and the cartography department. By maintaining assessors’ maps in GIS, the county cartographers can update maps and incorporate new subdivisions in a timely manner. Once the counties get their data converted, the Cadastral Information Systems Unit (Cadastral Unit) at the Department of Revenue (DOR) will create a statewide digital taxlot coverage. Over the past six years, ORMAP has awarded more than $8 million in grants to help develop this statewide GIS.
The ORMAP Technical Group has developed a set of Technical Specifications that the taxlot GIS coverage should meet. The completion date for statewide coverage to these specifications (Goal 6) is 2012. The Technical Specifications are posted on the ORMAP website (www.ormap.org).
Many of the counties have already mapped their counties to these specifications and have been asking, “What will be next for ORMAP?” Members of the tech group suggested various projects once we achieve ORMAP Goal 6 statewide. The following are examples:
- Improve soils maps.
- Develop and improve other taxing layers.
- Map building footprints.
As the counties move closer to completing large remapping projects, the Cadastral Unit is asking how they can help the 14 counties they maintain with their other A&T-related GIS needs. A digital countywide taxlot base is great for producing assessor’s maps, but it can be used for many other applications in the A&T function. Recently, Cadastral Unit manager Brett Juul, the CDOT section manager Rick Schack, and Mark Kinslow went on the road to visit five of the DOR-maintained counties—Crook, Grant, Malheur, Baker, and Union—to ask how the Cadastral Unit could provide increased A&T-related GIS services and technical support. Some of the responses they received were:
- Create digital countywide soil map layers.
- Set up a “remote” server so DOR map maintenance staff and county assessment staff can access the same map data daily.
- Develop a land class layer that could be used for appraisal.
- Put electronic processes in place to eliminate “paper shuffling,” especially with subdivisions.
- Move totally to online forms and journal vouchers.
- Develop a way to produce neighborhood map mosaics.
- Produce maps showing taxing district boundaries.
Even though it will still be a couple years before the Cadastral Unit members can get through the major remapping projects, they are starting to plan now for ways they can work with all the county assessors and their staff to help them meet their A&T-related GIS needs. If you have additional ideas on how GIS could improve A&T functions, please contact Brett Juul at the Department of Revenue at 503-945-8336.
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| Bolt-N-Bean Charity Golf Tournament |
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Mike Buchanan and Shanne Johnson
The 2007 Bolt-N-Bean Charity Golf Tournament has once again been played out. Bruce Tindall, Rick Schack, Neil Stiffler, and Keith Bowman were the winning team of this year’s tournament, held on July 20. The team shot a seven under par at the Battle Creek Golf Course in South Salem. As a comparison, the team that took last place shot a seven over par. Eighteen teams competed this year, with each team consisting of four golfers. Volunteers Tina Rodriguez, Dan Watson, Teresa Pullen, and Merri Seaton contributed to the success of this year’s charity tournament.
Excess proceeds from the charity golf event go to the State Employees’ Food Drive. The money collected for the charity comes from a portion of the entry fees, sales of mulligans, team and collage photos, and string sales (the string is used to get closer to the hole on a par three hole). We have calculated the final tally and approximately $600 will be contributed to the State Employees’ Food Drive in February 2008.
Photo: From left: Neil Stiffler, Rick Schack, Bruce Tindall, and Keith Bowman
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| Court Case Corner: June 2007 |
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Doug Adair, Assistant Attorney General, Tax & Finance
Living Enrichment Center v. Dept. of Revenue, TC 4770
At issue was entitlement to exemption when ownership of the previously exempt property passed to a non-exempt entity by forfeiture during the period between January 1 and July 1. Although the taxpayer contended that an exempt use continued until after July 1, no new exemption applications were filed by either the new lessee (the prior owner) or lessor after the change in ownership. Noting that taxation is the rule and exemption is the exception, the court held that the failure to make the statutorily required new application following the change in ownership meant that the property did not qualify for exemption.
Derr v. Multnomah Co., TC-MD 060493B
The taxpayer owned a houseboat to which a swim float was attached by chains. A utility shop was constructed on the swim float and the county sought to assess the float and new structure. Citing Sideras v. Dept. of Revenue,13 OTR 310 (1995), the court found that the float and shop were not part of the taxable floating home because they could be easily detached and moved; thus, they were exempt from taxation under ORS 307.190(1).
Berst v. Benton Co., TC-MD 060529C
The taxpayer, a lay minister, leased his residential property to a religious entity that he controlled. The taxpayer, who conducted some religious functions at the property, as well as residing there with his family, then sought a property tax exemption. The court held that the property was not entitled to exempt status, reasoning that the primary use of the property was as an ordinary residence and that the religious use was incidental.
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| Name that Building |
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Can you identify this building and the county and city in which it is located?
You can find the answer in the next issue of the Grapevine.
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| Comings and Goings |
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New Employees: Bruce Tindall, ATS; John Clifford, Valuation; Ruben Delos-Reyes, Valuation; Steve Lucker, CIS; Nick Odom, Central Support
Resignation/Separations: Bill Schuette, ATS; Coleen Hanson, Valuation; Julie Cutsforth, Valuation; Ken Hill, CIS
Retirements: Kathleen Robinson, ATS; Gary Krueger, CIS
Promotions: Cindy Cochran, Valuation; Jennifer Scott, Valuation; Kathy Spear, Valuation; Rob Motley, Valuation; Vickie Crawford, Valuation; Bill Carter, Valuation; Shanne Johnson, Valuation
Temporary Work Assignments: Sally Hood, CIS; Rick Schack, CDOT; Alisha Macauley, CIS; Bob Depuy, ATS; Vicki Palmer, Valuation
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| Grapevine |
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Grapevine is published by the Oregon Department of Revenue, Property Tax Division.
Editorial Board: Al Gaines; Judi James; Shanne Johnson; Mary Kintner; John Phillips; Christie Wilson, Lead; Gary Wright.
To be added to the Grapevine mailing list or to submit articles, e-mail Grapevine, or contact us by mail at:
Oregon Department of Revenue
Property Tax Division
955 Center Street NE
Salem OR 97301-2555
Phone: 503-945-8292
Fax: 503-945-8737
TTY: 503-945-8617
In compliance with the Americans With Disabilities Act (ADA), this information is available in alternative formats upon request by calling 503-378-4988.
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