Case Name: MANTON CARL v. DEPARTMENT OF REVENUE
Court: Oregon Tax Court
Jurisdiction: Oregon
Decision Date: 1970-05-13
Citations: 4 Or. Tax 117
Docket Number: 
Parties: MANTON CARL v. DEPARTMENT OF REVENUE
Judges: 
Reporter: Oregon Tax Reports
Volume: 4
Pages: 117–121

Head Matter:
MANTON CARL v. DEPARTMENT OF REVENUE
Plaintiff Mantón Carl appeared in propria persona.
G. P. Bartz, Assistant Attorney General, Salem, represented defendant.
Decision in part for plaintiff and in part for defendant rendered May 13, 1970.

Opinion:
Edward H. Howell, Judge.
This case involves the fair market value and the farm use value of 240 acres of farmland owned by the plaintiff and located on the Pudding River in Marion County.
The subject property, together with three smaller parcels, was purchased by plaintiff in 1945 for $40,000. Approximately 43 acres consists of tillable benchland and the balance of 197 acres has been characterized by the parties as bottomland as it lies adjacent to the Pudding River. The bottomland is subject to periodic and sometimes substantial flooding from the Pudding River.
The court viewed the entire property.
The plaintiff raises cattle on the farm and has water rights for the entire 240 acres, although all the land is not irrigated each year. The deputy assessor who made the appraisal for the county agreed that the highest and best use of the bottomland is for pasture.
As of January 1,1968, the assessment date involved in this appeal, the county board of equalization and the defendant found the true cash value of the property to be $84,560, and the farm use value to be $61,390. As of January 1, 1968, the plaintiff contends that the true cash value should be $40,020, and the farm use value should be $18,658.
In support of the true cash value of $84,560 for the entire property the defendant relied on numerous sales in the northern portion of Marion County. The plaintiff contends that the sales were not comparable and that insufficient consideration was given to the flooding problem.
The defendant's value of $84,560 for the total parcel results in a per acre value of approximately $350. On the other hand the plaintiff's value of $40,020 would result in a true cash value of approximately $165 per acre which in this court's experience is not realistic for land with water rights, even though it is subject to periodic flooding from Pudding Kiver. The defendant's valuation of $84,560, or $350 per acre, in this court's opinion, properly reflects the true cash value of the subject property as of January 1,1968.
To determine the farm use value of the property in this case it is necessary that the value be determined by using an income approach. ORS 308.345. In so doing it is necessary to use a capitalization rate that reflects the net income which the land or comparable land would return. The county appraiser found that rentals for irrigated tillable cropland ranged from $35 to $45 per acre, and dryland at $20 per acre. He also recognized the peculiar problems of the bottomland because of the flooding.
The difficulty with defendant's rental values is that they are based on a gross rental to the landlord instead of a net rental and the fact that the highest and best use of the bottomland is not for raising grass seed or other crops but for grazing cattle. Obviously the landlord in a typical farm rental will have various expenses including fence maintenance and repair, depreciation and fertilizing, among other items, depending on the rental arrangement. It is difficult to determine a typical or standard net rental because the leasing arrangements vary in almost every instance.
The plaintiff does not disagree with the reasonable rental of $20 used by the defendant for the 43 acres of benchland. He does contend, however, that the bottom-land is more expensive to maintain because of the flooding.
It is this court's conclusion that a reasonable net rental for the bottomland would be $15 per acre.
The following are the values that should be assigned to plaintiff's property:
True cash value $84,560.00
Farm use value:
1 acre homesite $ 1,000.
42 acres benchland at $20 per acre and using a capitalization rate of 8.5% (6% capitalization rate plus 2.5% tax rate) 9,882.
197 acres bottomland at $15 per acre and using same capitalization rate as above 34,765.
Total Farm Use Value $45,647.00