Oregon Broadcasting Co. v. Department of Revenue

• Jurisdiction: Oregon
• Court: Oregon Supreme Court
• Writing for the Court: Before DENECKE; LENT
• Citation: Oregon Broadcasting Co. v. Department of Revenue, 598 P.2d 689, 287 Or. 267 (Or. 1979)
• Decision Date: 02 October 1979
• Parties: OREGON BROADCASTING COMPANY, formerly Southern Oregon Broadcasting Company, Appellant, v. DEPARTMENT OF REVENUE, State of Oregon, Respondent. TC 1155; SC 25739.

Page 689

598 P.2d 689

287 Or. 267

OREGON BROADCASTING COMPANY, formerly Southern Oregon Broadcasting Company, Appellant, v. DEPARTMENT OF REVENUE, State of Oregon, Respondent.

TC 1155; SC 25739.

Supreme Court of Oregon, Department 1.

Argued and Submitted Feb. 8, 1979.

Decided Aug. 7, 1979.

Rehearing Denied Oct. 2, 1979. See 601 P.2d 473.

[287 Or. 268-A] Douglass H. Schmor, Medford, argued the cause for appellant. With him on the briefs were Carl M. Brophy and Brophy, Wilson & Duhaime, Medford.

James D. Manary, Asst. Atty. Gen., Salem, argued the cause for respondent. With him on the brief was James A. Redden, Atty. Gen., Salem.

Before DENECKE, C. J., and HOLMAN, HOWELL and LENT, JJ.

LENT, Justice.

Plaintiff appeals from a decree of the Oregon Tax Court establishing a value of $219,340 for its property as of January 1, 1976.

Plaintiff's property consists of approximately 7.95 acres together with improvements in the form of a broadcast television studio, the administrative offices of Oregon Broadcasting, Inc., formerly Southern Oregon Broadcasting Company, and facilities for the transmission and reception of microwave signals. The property has a northwesterly boundary consisting of 500 feet of frontage on Crater Lake Highway and is one-quarter of a mile to the southwest from the highway's intersection with I-5. Its southeasterly boundary is of similar length and is formed by Bear Creek. The north and south boundaries are parallel lines. Approximately 2.3 acres of the property consists of unimproved land with a depth from the street of 200 feet, fronting on Crater Lake Highway, zoned C-7 (freeway service commercial); approximately 4.9 acres contains all of plaintiff's improvements, zoned C-5 (thoroughfare commercial); and approximately .75 acre consists of a channel easement for Bear Creek.

The Jackson County assessor divided plaintiff's land into these three separate parcels to determine its highest and best use and true cash values. ¹ Using the market approach and an analysis of comparable sales he valued the C-7 land at $.75 per square foot, or $75,000, the C-5 land at $.092 per square foot, or $19,600, and the channel easement at $500, giving a total land value of $95,100. A value of $111,820 was placed on the improvements, giving a total for the property of $206,920.

Plaintiff accepted the value of the improvements but appealed the land value to the Jackson County Board of Equalization which reduced the assessed value to $77,550. The county assessor appealed to the defendant pursuant to ORS 306.515, which restored the original assessed value in its Order No. VL 77-190. Plaintiff then appealed from defendant's order to the tax court, which in an unpublished opinion raised the assessed value of the land to $107,520 by assigning a value of $.15 per square foot for the C-5 land. Before the tax court the assessor's appraiser had raised her valuation of the C-5 land to that figure.

An initial question to be resolved in this case is whether the value of the improvements is properly at issue before this court. The department contends that only the value of the land is at issue and that the improvements are not properly under appeal in this case. The county assessor's appraiser testified that she valued the land at its highest and best use without taking into consideration any resulting effect on the improvements because "(t)he improvements aren't weren't in issue."

Plaintiff admits that it only appealed the value of the land to the Jackson County Board of Equalization, but contends that ORS 305.425 requires only that an issue be "raised" before the department in order to be considered by the tax court, and then by this court. ORS 305.425(3) governs reviewable issues before the tax court and provides in pertinent part:

"In the case of proceedings to set aside an order or determination of the department, except as provided in subsection (1) of ORS 305.560, the issues of fact and law shall be restricted to those Raised by the parties in the appeal to the department. If the court finds that other issues are important to a full determination of the controversy, it shall remand the whole matter to the department for further determination and the issuance of a new order, unless the parties and the department stipulate to the determination of such other issues without remand to the department." (emphasis added)

ORS 305.445 governs appeals to the Supreme Court and states that such appeals "shall be in accordance with the procedure in equity cases on appeal from a circuit court." ORS 19.125(3) governs the scope of review by this court in equity cases and provides that "the cause shall be tried anew Upon the record." (emphasis added) Unless an issue is raised before the tax court, this court will not consider it. Bazar, Inc. v. Dept. of Revenue, 266 Or. 177, 187, 511 P.2d 1226 (1973).

Under ORS 305.425(3) it is apparently not necessary for an issue to be considered at the board of equalization hearing before it could be considered at the tax court. Defendant did not mention this statute in its brief to this court or in oral argument before this court, but in its brief to the tax court defendant cited the statute for the proposition that "(w)hen the issue of the assessed value of improvements was not before the Department of Revenue, the tax court is prohibited from reviewing that value unless essential for determination of the controversy." We find the value of the improvements was raised by plaintiff at the department hearing. It is apparent that plaintiff did argue that the value of the C-7 land could not be determined without considering the impact of C-7 development on the improvements existing on the C-5 land. The department referee referred to this argument in his opinion and order:

"In his brief, Counsel for Intervenor attempts to distinguish Sabin because the parties there were in agreement that the highest and best use of the subject property was as land suitable for commercial development. Counsel suggests that if the Sabin rule were to be applied to the facts in the instant case the existing improvements on the subject property would have no taxable value. Though we do not agree with Counsel's conclusion, his argument warrants consideration."

It is not clear how defendant expected the issue to otherwise be raised at the department hearing since it was the county assessor who appealed the matter to the department and limited is appeal to the value of the land.

As for whether the improvement valuation issue was properly raised before the tax court, in paragraph IV of its complaint plaintiff stated:

"The assessor valued each parcel separately, based upon the assessor's determination of the highest and best use of each such parcel, without considering the highest and best use of the property as a whole or the manner in which the continued present use of plaintiff's broadcast facilities located on Parcel 2 precluded or restricted development of plaintiff's unimproved land (Parcel 1), and without considering the degree to which the assessed value of plaintiff's broadcast facilities and improvements (Parcel 2) would be reduced if development occurred on Parcel 1."

We find that the issue of the value of the improvements was adequately raised before the tax court and is properly considered on appeal by this court. The tax court also decided in favor of plaintiff on this issue in overruling a department motion to keep out evidence of the value of the improvements and in stating that the department would have a ground for appeal on that basis.

Defendant's citation of authority on this issue is unpersuasive. In its brief to this court defendant cites Nepom v. Dept. of Revenue, 272 Or. 249, 536 P.2d 496 (1975) for the proposition that "(w)hen a taxpayer separately appeals either the land or improvements of a property, the unappealed element is not at issue and cannot be modified." In Nepom the taxpayer appealed only the value of the improvements to the tax court. The record was not clear as to whether the appeal was so limited at the board of equalization and department hearings. The tax court judge in his decree modified the value of the land and this court held that the plaintiff was entitled to challenge only the value of the improvements and that the value of the land was not at issue in the case.

The facts in the case at hand are substantially different from those in Nepom. As discussed above, at the department hearing it was the county assessor who appealed only the value of the land, and even then the taxpayer raised the issue of the value of the improvements in its argument. Since the issue of the improvements was raised at the department hearing, we need not decide whether plaintiff would be foreclosed from raising an issue before the tax court that was not raised at the department hearing at which it was the department or county assessor who brought the appeal. Also unlike Nepom, at the tax court proceeding in the case at hand plaintiff in its complaint addressed the values of both the land and improvements.

Defendant also cites the Bazar case as authority supporting its argument that plaintiff did not properly raise the issue of the value of the improvements. However, in that case the issue of valuation of improvements was not considered by this court because it was not raised by the plaintiffs before the tax court.

Having decided that the value of the improvements as well as of the land is properly at issue before us, the next issue to determine is the role of the concept of "highest and best use" in finding a value for the property. Both parties agree that the standard of "highest and best use" is to be applied in this case. However, the record is lacking in an adequate definition of the term and discussion of its application.

The parties in their briefs and the tax court in its opinion cited and quoted from several authorities as to the meaning of and method for determining ...