FILED: July 27, 2006
IN THE SUPREME COURT OF THE STATE OF OREGON
BHAGWATI P. PODDAR,
Appellant,
v.
DEPARTMENT OF REVENUE,
Respondent,
and
CLATSOP COUNTY ASSESSOR,
Intervenor-Respondent.
(TC 4689; SC S52877)
En Banc
On appeal from the Oregon Tax Court.*
Henry C. Breithaupt, Judge.
Submitted on the record May 5, 2006.
Bhagwati P. Poddar, Astoria, filed the brief pro se.
Heather Reynolds, Clatsop County Counsel, Astoria, filed the
brief for intervenor-respondent.
No appearance for respondent Department of Revenue.
DE MUNIZ, C. J.
The judgment of the Tax Court is affirmed in part and
vacated and remanded in part.
*Appeal from General Judgment and Money Award dated September 28, 2005.
DE MUNIZ, C. J.
In this property tax case, appellant Bhagwati Poddar
(taxpayer) asserts that the tax assessment of his real property
for the tax years 1994-95 and 1995-96 erroneously failed to take
into account the effect of governmental restrictions that applied
to that property.  Following trial, the Oregon Tax Court upheld
the assessment.  Taxpayer appealed to this court pursuant to ORS
305.445.  For the reasons set forth below, we affirm in part and
vacate and remand in part the judgment of the Tax Court.
We take the following facts from the record.  Taxpayer
and his spouse purchased rural property in Clatsop County (the
county) in 1974.  That property contained a house (the old house)
and other buildings.  In 1993, the county split the property into
two tax accounts.  The old house and other buildings were located
on one five-acre parcel, which was located in a Residential-Agriculture-5 zone, under Clatsop County Land and Water
Development and Use Ordinance No. 80-14 (Clatsop County Ordinance
No. 80-14), § 3.220.  Section 3.228 of that ordinance permits
only one single family dwelling on a five-acre parcel.  
In 1992, taxpayer obtained a development permit from
the county to build a new residence to be constructed on the same
five-acre parcel as the old house.  The county conditioned that
permit on taxpayer's agreement to remove the old house within six
months of occupancy or completion of the new house.  Taxpayer
thereafter began construction of the new house.
In June 1994, taxpayer received a certificate of
occupancy for the new house.  On July 1, 1994, Legg, an appraiser
for the county, visited the property to inspect the new house,
but taxpayer refused Legg entry.  Taxpayer and Legg discussed the
status of the old house.  Legg asked if the old house still had
plumbing and heat, and taxpayer replied that it did.  Legg told
taxpayer that those were among the criteria used to classify
structures.  Presuming that taxpayer would convert the house into
storage and cap the plumbing, Legg reduced the assessed value of
the old house.
On July 13, 1994, the county wrote to taxpayer, stating
that it had been advised that the new house had been completed on
March 30, 1994, and informing taxpayer that he had until
September 30, 1994, to remove the old house.  On July 25, 1994,
taxpayer informed the county that the old house "ha[d] been
converted to a storage building effective June 27, 1994." (1) 
In response, the county informed taxpayer that he needed to
obtain a permit for a storage building or completely remove the
old house by September 30, 1994.  Taxpayer did neither. 
Thereafter, the county assessed the value of taxpayer's real
property at $411,240 for the 1994-95 tax year.
By 1996, taxpayer had not yet completed demolition of
the old house.  In May 1996, the county sent another letter and
set forth the process to bring the old house into compliance for
use as a storage building.  The county stated that if those steps
were not taken, the county would proceed with an enforcement
hearing.  Again, taxpayer neither complied with the requirements
to convert the old house to a storage building nor immediately
removed the old house from his property.  As a result, the county
ordered taxpayer to pay $7,500 for violating Clatsop County
Ordinance No. 80-14.  The county also assessed taxpayer's real
property for the 1995-96 tax year at $458,380.
Taxpayer allowed no county appraiser to inspect his
property until January 1997, after the county obtained a court
order.  During the January 1997 inspection, an appraiser
inspected and photographed the old house.  The county did not
then change the assessed value of the old house.  In June 1997,
the county again inspected the old house.  At that time, taxpayer
had demolished the old house to the satisfaction of the county. 
The county thereafter retroactively reduced the value of the old
house to zero for the 1996-97 tax year.
Taxpayer challenged the county's assessment of the
five-acre parcel for the 1994-95 and 1995-96 tax years in the Tax
Court.  Taxpayer claimed that the county should have assessed the
old house on that property as having no taxable value for those
tax years.  The Magistrate Division rejected taxpayer's claims
and upheld the county's assessment for both tax years.  Taxpayer
then filed a complaint with the Regular Division of the Tax
Court. (2)  Taxpayer alleged that the real market value of the
old house should have been zero for both tax years.
Taxpayer moved for summary judgment.  The Tax Court
denied that motion and held that, because the parties disputed
the value of the old house, there was a triable issue of fact. 
Following trial, the Tax Court issued an opinion upholding the
county's assessment.  Specifically, the Tax Court held that
taxpayer had failed to satisfy his burden of proving that the old
house had no value for the tax years 1994-95 and 1995-96.  Poddar
v. Dept. of Rev., 18 OTR 324 (2005). (3)  The Tax Court
explained that taxpayer's theory was "all or nothing" -- that is,
because taxpayer's only theory was that the old house should be
valued at zero, if taxpayer failed to prove that the old house
had no value, the only alternative was to uphold the county's
assessed value.  Id. at 329.  The Tax Court noted that, although
the old house could not be used as a dwelling, the county had
suggested two alternatives that allowed the house to have value: 
use as a storage structure and sale of its component parts prior
to demolition. (4) Id. at 330.  Because of those alternative
uses, the Tax Court concluded that the old house had some taxable
value and upheld the county's assessment for the 1994-95 and
1995-96 property tax years.  Id. at 332.  Taxpayer appealed to
this court pursuant to ORS 305.445.
Taxpayer had the burden of proof before the Tax Court
to come forward with a preponderance of evidence in support of
his position.  ORS 305.427 (2005). (5)  Because taxpayer filed
this action in the Tax Court on June 18, 2004, we review the Tax
Court's decision for "errors or questions of law or lack of
substantial evidence in the record."  ORS 305.445 (2005); Delta
Airlines Inc. v. Dept. of Rev., 328 Or 596, 603, 984 P2d 836
(1999) (concluding that that standard of review applies to cases
filed in Tax Court after September 1, 1997).  
Several statutes apply to the valuation and taxation of
real property.  ORS 308.205(1) defines real market value as
follows:

"Real market value of all property, real and
personal, as the property exists on the date of
assessment, means the minimum amount in cash which
could reasonably be expected by an informed seller
acting without compulsion from an informed buyer acting
without compulsion, in an arm's-length transaction
during the fiscal year."

The "date of assessment" is July 1 of each year.  ORS 308.210(1). 
ORS 308.205(2) provides, in part:

"Real market value in all cases shall be
determined by methods and procedures in accordance with
rules adopted by the Department of Revenue and in
accordance with the following:
"* * * * *
"(c) If the property has no immediate market
value, its real market value is the amount of money
that would justly compensate the owner for loss of the
property.
"(d) If the property is subject to governmental
restriction as to use on the assessment date under
applicable law or regulation, real market value shall
not be based upon sales that reflect for the property a
value that the property would have if the use of the
property were not subject to the restriction unless
adjustments in value are made reflecting the effect of
the restrictions[.]"

ORS 308.235 governs valuation of land.  Paragraph (1)(a) of that
statute provides, "Taxable real property shall be assessed by a
method which takes into consideration: (a) The applicable land
use plans, including current zoning and other governmental land
use restrictions[.]" 
Taxpayer contends that the county's assessment violated
ORS 308.205(2)(c) and (d) and ORS 308.235(1).  Taxpayer asserts
that, because the county did not assign a real market value of
zero to the old house for the tax years 1994-95 and 1995-96, the
county failed to take into account applicable government
restrictions as to use, in violation of ORS 308.205(2)(d) and ORS
308.235.  Additionally, taxpayer contends that the Tax Court
erred in failing to conclude that the old house had no "immediate
market value" under ORS 308.205(2)(c).  Finally, taxpayer argues
that the Tax Court erred in awarding costs to the county without
holding a hearing.  
As noted, the county's ordinance permitted taxpayer to
have only one single family dwelling on his five-acre parcel. 
Clatsop County Ordinance No. 80-14, §§ 3.224 & 3.228.  Taxpayer
contends that the county ignored that restriction when it
assessed his property for the 1994-95 and 1995-96 tax years. 
Taxpayer argues that, following the issuance of the certificate
of occupancy for the new house, the old house was not legally
usable for any purpose.  Taxpayer contends that he could not have
used the old house as a storage building because he had not
acquired a permit for a storage building.  For those reasons,
taxpayer asserts, the assessor should have concluded that the old
house had zero taxable value, under ORS 308.205(2)(c) and (d).
In response, the county argues that taxpayer failed to
satisfy his burden of proof to show that the old house had no
value.  Additionally, the county asserts that the government
restrictions on the property were not so limiting that the
property had no value.  Instead, the county contends, the
restrictions merely disallowed the building's use as a dwelling
and required taxpayer to obtain a permit to use the old house as
a storage unit.  The fact that taxpayer chose not to obtain that
permit did not make the property useless or valueless.  The
county further argues that, even if taxpayer were correct that
the old house had no value as a building, the old house's
component parts had value.  The county also notes that taxpayer
did not allow county appraisers access to the property during the
tax years in dispute.  Therefore, even if the value of taxpayer's
property required adjustment, the assessor had no information on
which to base such an adjustment. (6) 
For the reasons that follow, we agree with the county
and the Tax Court that the taxpayer did not satisfy his burden to
show that the old house had no value.  ORS 305.427 places the
burden of proof squarely on the party seeking affirmative relief;
here, that party is the taxpayer, who "has the burden to show
that [his] approach to valuation best reflects the property's
real market value."  STC Submarine, Inc. v. Dept. of Rev., 320 Or
589, 597, 890 P2d 1370 (1995) (internal quotation marks omitted). 
Here, taxpayer has not presented any evidence -- beyond his own
argument and assertions -- that the old house was worth nothing
during the tax years at issue.  
Relying on this court's decisions in Bayridge Assoc.
Ltd. Partnership v. Dept. of Rev., 321 Or 21, 892 P2d 1002
(1995), and Tualatin Development v. Dept. of Rev., 256 Or 323,
473 P2d 660 (1970), taxpayer argues that he has submitted ample
evidence showing that the old house had no value because there
existed no legal use for the old house after completion of the
new house.  Neither Bayridge nor Tualatin Development assist
taxpayer.  
In Bayridge, 321 Or at 27-31, this court construed the
phrase "governmental restriction as to use," as that phrase is
used in ORS 308.205(2)(d).  The dispute in that case concerned
the valuation of two apartment complexes with respect to which
the property owner had participated in a federal low-income
housing program that imposed tenant and rent limitations in
exchange for tax credits.  Id. at 24.  This court held that
participation in such a program constituted a "governmental
restriction as to use" of the property, despite the fact that the
property owner had chosen to participate in the program and had
received some financial benefit from participating in the
program.  Id. at 28-29 (quoting ORS 308.205(2) (1989)).  
Taxpayer relies on the following passage from Bayridge:

"Even if taxpayers wanted to use the properties for
nonresidential purposes (such as commercial purposes),
and even if those uses were permitted by applicable
zoning laws, the governmental restrictions placed on
those properties would inhibit such a use.  Those
limits on what taxpayers may do with their properties,
resulting from taxpayers' participation in the section
42 program, constitute 'governmental restriction[s] as
to use.'"

Id. at 30 (quoting ORS 308.205(2) (1989) (emphasis in original)). 
Taxpayer contends that, here, even if he had wanted to use the
old house for storage and that use had been permitted by
applicable zoning laws, the development permit that he obtained
in 1992 prohibited any such use unless he applied for a further
permit.  Therefore, taxpayer argues, the limit on taxpayer's use
of his property constituted a governmental restriction as to use. 
Taxpayer's argument misses the point.  The county does not
dispute that governmental restrictions -- including zoning laws
and permit requirements -- applied to the old house.  Those
governmental restrictions did not, however, prohibit all uses of
the old house or render it valueless.  As the Tax Court
explained, the old house could, following permit approval, be
used as a storage building or sold for component parts.
In Tualatin Development, 256 Or at 324, the Tax Court
had held that certain property had no value for property tax
purposes, and the Department of Revenue appealed.  The taxpayer
in that case owned a golf course in a residential development. 
Id.  The local planning commission had placed restrictions on the
residential development, requiring recreational open areas within
the development.  Id. at 325.  The taxpayer constructed a golf
course in the required open area, but it had not been profitable. 
Id. at 326.  The taxpayer could not sell the land free of the
applicable zoning restriction or use it in any way other than as
open space.  Id. at 327.  The parties agreed that the property
had no immediate market value; therefore, "'its true cash value
[would] be the amount of money that would justly compensate the
owner for the loss of the property.'"  Id. at 326 (quoting
earlier version of ORS 308.205).  The question before this court
was the proper valuation of the golf course, given that the use
of the land was "so severely restricted that its owner derives no
benefit from the ownership" of the land.  Id. at 329.  Given
those considerations, this court agreed with the Tax Court that
the taxpayer's property had no taxable value during the tax years
at issue.  Id. at 331.  
Taxpayer contends that his property was similarly
restricted.  We disagree.  Although the county ordinance did not
permit him to use the old house as a dwelling, that ordinance did
provide permissible alternative uses.  Taxpayer asserts, however,
that possible use of the dwelling as a storage building cannot be
relied upon in determining value because, as of the assessment
date, the old house was not legally usable as a storage building. 
Again, taxpayer's argument fails.  Unlike in Tualatin
Development, a purchaser of the property here could make
beneficial use of the old house.  The fact that such a purchaser
would have to pay for permits may lessen the market value of the
property, but would not necessarily render it completely without
taxable value.  Permit requirements are merely a hurdle to
certain types of use of the property, not a blanket prohibition
of any beneficial use.  We agree with the Tax Court's conclusion
that taxpayer failed to demonstrate by a preponderance of the
evidence that the old house had no value and therefore affirm
that part of the Tax Court's decision.  
Taxpayer raises one final issue concerning the Tax
Court's award of costs.  Taxpayer contends that the Tax Court
failed to follow the procedure required in former Tax Court Rule
(TCR) 68 C(4)(c)(i) (2005), which provided:

"If objections are filed in accordance with paragraph
C(4)(b) of this rule, the court, without a jury, shall
hear and determine all issues of law and fact raised by
the statement of attorney fees or costs and
disbursements and by the objections.  The parties shall
be given a reasonable opportunity to present evidence
and affidavits, declarations and other evidence
relevant to any factual issue." 

Former TCR 68 C(4)(c)(i) (2005), renumbered as TCR 68 C(2)(c)(i)
(2006).  Taxpayer filed objections to the county's cost bill on
the issue of photocopy costs.  The county waived appearance. 
Thereafter, the Tax Court held no hearing but awarded costs to
the county.  The judgment did not address taxpayer's objections. 
Taxpayer claims that he is entitled to the procedure outlined in
former TCR 68 C(4)(c) (2005), and requests remand for further
proceedings under that rule.
Taxpayer is correct that former TCR 68 C(4)(c)(i)
(2005) required the Tax Court to conduct a hearing and allow the
parties to present evidence regarding costs, where objections
have been filed.  It is undisputed that the Tax Court held no
such hearing here.  Nothing in the record indicates that taxpayer
waived his right to a hearing.  We therefore vacate the Tax
Court's award of costs and remand for a hearing on taxpayer's
objections.
The judgment of the Tax Court is affirmed in part and
vacated and remanded in part.


1. Taxpayer admits that that statement was false and that
he had made that statement to gain more time to demolish the old
house.
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2. Clatsop County intervened in the Tax Court as the real
party in interest, and the Department of Revenue tendered its
defense to the county.  The Department of Revenue did not
participate in proceedings before this court.
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3. After publishing its opinion, the Tax Court amended its
opinion by deleting one sentence.  That deletion does not alter
the analysis or outcome.  We therefore cite to the published
opinion.
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4. The Tax Court noted that, because taxpayer did not
allow the county's appraisers to inspect the old house during the
tax years at issue, any reductions in value -- as opposed to
elimination of all value -- that might have resulted are unknown. 
Poddar, 18 OTR at 331.  The Tax Court also noted that the
appraiser had decreased the value of the old house to a certain
extent because he assumed that taxpayer would change the use of
the old house.  Id.
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5. Unless otherwise stated, we cite to the 1993 edition of
the Oregon Revised Statutes, which is applicable to the 1994-95
tax year.  The 1995 edition of the Oregon Revised Statutes, which
is applicable to the 1995-96 tax year, contains no changes to the
relevant statutes.
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6. As noted, the assessor did make an adjustment in value
based on taxpayer's representation that the plumbing in the old
house would be capped in conjunction with a change in the
structure's use.
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