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defendantwillregulation

Related Cases

Kem v. Department of Revenue, 267 Or. 111, 514 P.2d 1335

Facts

The Cedar Hills Shopping Center, along with a gasoline service station, was owned by the plaintiff and assessed by the Department of Revenue at a true cash value of $1,247,500 as of January 1, 1970. The plaintiff had purchased the property for $775,000 in April 1969, which included a parcel of land subject to an option exercised by the lessee, resulting in a net cost of $650,000 for the property. An appraiser had previously valued the property between $600,000 and $650,000, and the property was sold after being examined by numerous prospective buyers.

The subject real property consists of a shopping center known as the Cedar Hills Shopping Center and a gasoline service station. The various stores and offices in the shopping center are being operated by lessees of the owner.

Issue

What is the true cash value of the Cedar Hills Shopping Center as of the assessment date, and how should it be determined?

Rule

True cash value means market value as of the assessment date, and if a market exists, the property should be valued using the market data approach. A recent, voluntary, arm's length sale between knowledgeable parties is persuasive in determining market value.

True cash value means market value as of the assessment date. Market value is defined in the Department of Revenue's Regulations as: ‘Market value as a basis for true cash value shall be taken to mean the amount of money or money's worth for which property may be exchanged within a reasonable period of time under conditions where both parties to the exchange are able, willing and reasonably well-informed.’ Regulation R308.205—(A)1.a.

Analysis

The court applied the rule by considering the recent sale of the property for $650,000 as a strong indicator of its market value. It noted that the sale was voluntary and between knowledgeable parties, which made the sales price more conclusive than the valuation methods used by the Department of Revenue. The court found that the evidence did not support the Department's valuation, as it would imply that the property was sold for significantly less than its market value.

We emphasize that a recent sale of the subject property is not necessarily determinative of market value and does not foreclose other methods of valuation, but under the circumstances of this case we believe it is more conclusive of value than the approach used by defendant's appraiser.

Conclusion

The Supreme Court reversed the Tax Court's decision and remanded the case, holding that the true cash value of the property was $650,000 based on the recent sale.

Reversed and remanded with directions to enter a decree in accordance herewith.

Who won?

Cedar Hills Shopping Center prevailed in the case because the court accepted the sales price of $650,000 as the true cash value, which was more reflective of the market conditions than the Department of Revenue's assessment.

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