Opinion ID: 1234684
Heading Depth: 1
Heading Rank: 2

Heading: the central assessment statute

Text: This case is governed by a statute, ORS 308.505 to 308.665, which imposes standards and procedures for assessing the ad valorem property tax of designated public utilities. We have said that this statute is intended to be a complete and comprehensive scheme of taxation, State v. Wells, Fargo & Co., 64 Or. 421, 432, 130 P. 983, 985 (1913), although it may be more accurately described as a scheme of assessment for taxation. It has not changed markedly since first enacted by Oregon Laws 1909, chapter 218 (1909 Act). It provides for assessment of property, not income or franchises. Portland v. Portland Railway, Light & Power Co., 80 Or. 271, 294, 156 P. 1058 (1916). This statute authorizes the Department to assess property when two conditions are met: the property has a situs in this state, and it is used in certain designated utility businesses, including railroading. ORS 308.515(1). [4] The statute requires these utilities to be centrally assessed, i.e., assessed by the Department rather than by the counties. The basic allocation rule is that all property of such a company is assessed to the property user, ORS 308.517(1). Property is subject to the assessment only if put to one of the designated uses; an included corporation is excluded to the extent that it actively engages in a business not incidental to that designated, ORS 308.515(4). If property has an integrated use in more than one business, it is to be classified by the department as being within or without the definition of property    according to the primary use, ORS 308.510(5). [5] As used in this statute, the term property having situs in this state is defined in ORS 308.505(3), [6] and the term property is defined in ORS 308.510(1). [7] The definition of the term property applies to the entire statutory scheme, and therefore applies to the definition of property having situs in this state, which defines a class of real and personal property having a certain location. The natural reading of this pair of definitions is that property is the entire pie of which property having a situs in this state is a slice, so that property is equivalent to property irrespective of situs. This reading was even more natural when these provisions were first enacted, since they were consecutive sections of the 1909 Act. [8] For purposes of this property assessment scheme, ORS 308.510(1) defines a company's property broadly to include all property, real and personal, tangible and intangible, used or held by a company as owner, occupant, lessee, or otherwise, for or in use in the performance or maintenance of its designated business. The definition of property includes all real property and goods or chattels, but starting in 1977 has excluded intangible    claims on other property such as shares of stock in corporations. ORS 308.555 permits unit valuation of property, whereby the Department may value the entire property, both within and without the State of Oregon, as a unit. [9] Unit valuation assesses the going-concern value of a multi-state operation, and its constitutionality has long been established. [10] If the entire property is valued as a unit, then the allocation of a portion of that entire value to Oregon must be just and in fair proportion. ORS 308.555; see also ORS 308.550(2). This statutory limit on the range of permissible allocation is vague, but codifies the limit imposed by the commerce and due process clauses of the federal constitution. [11] The definition of the term property in ORS 308.510(1) applies to the term entire property in the unit rule, ORS 308.555. The adjective entire appears to be synonymous with the phrase that follows, both within and without the state of Oregon, so that entire simply emphasizes that property is included in the valuation unit irrespective of situs. The unit rule does not tax out-of-state property; rather, it assesses the increment of going-concern value that out-of-state property adds to taxable in-state property. The user of property is a corporation or company, expansively defined to include any of various forms of organization engaged in a designated business, ORS 308.505(2). [12] A parent corporation together with a subsidiary can be a corporation or company within this definition. If the unit rule is applied here, then the Southern Pacific/Cottonbelt combination is treated as a single company or corporation. Numerous provisions make clear that the legal form in which the company uses or holds the property is largely irrelevant to whether it is the company's property within the ambit of the statute. Property may be used or held    as owner, occupant, lessee, or otherwise, ORS 308.510(1), and property having a situs in this state may be owned, leased, used, operated or occupied, ORS 308.505(3). The assessment applies to all property owned, leased, rented, chartered or otherwise held for or used by [the property user] in performing a [designated] business, ORS 308.517(1). Railroad property includes land used or held and claimed exclusively as right of way, ORS 308.510(2), and includes property situated within its station ground reservations or rights of way, ORS 308.510(4)(c). The company reports the length of the routes both within and without the state, including those it controls or uses as owner, lessee or otherwise, ORS 308.525(11). When the unit rule is applied to a company which owns, leases, operates over or uses rail,    operational routes or property within and without this state, the allocation to Oregon may be according to a mileage ratio:    [T]he proportion which the number of miles of rail    or operational routes in Oregon, controlled or used by the company, as owner, lessee, or otherwise, bears to the entire mileage of rail    or operational routes controlled or used by the company, as owner, lessee, or otherwise. ORS 308.550(1). If, as here, the mileage ratio would not allocate fairly, then the department may use any other reasonable method, ORS 308.550(2), [13] but the language of the mileage formula nevertheless indicates the broad sweep of property subject to allocation under a unit valuation. The unit rule itself refers to property without specifying the mode of possession, but the statute has already defined the unrestricted term property to embrace forms more various than simple ownership. [14] The final stage of central assessment is apportionment of the value of property having a situs in this state to the several counties. ORS 308.525(12), 308.565, 308.635, 308.645. The counties may levy and collect taxes based on the Department's central assessment. ORS 308.635(4).