Opinion ID: 835098
Heading Depth: 3
Heading Rank: 3

Heading: Method of valuation for centrally assessed property

Text: Under its third theory, the department asserts that the method of valuation prescribed by the legislature for centrally assessed property is not conducive to identifying, valuing, or exempting inventory. In assessing property subject to central assessment, the department's assessors engage in unit valuation based on information provided by the company in its annual statement. ORS 308.520; ORS 308.555. The unit valuation includes property both within and without the State of Oregon. ORS 308.555. Once the department ascertains the assessable property in Oregon, it apportions the assessed values to each of the counties. Id.; ORS 308.565. As the department explains, unit valuation, as a method of assessment, does not separate real from personal property, or tangible from intangible property. Neither does unit valuation identify a separate value for inventory. The department thus urges that unit valuation does not provide a means by which business inventory can be separately valued and exempted from the value of the unit. The department, however, again ignores the fact that several statutes exempt from taxation certain property that is subject to central assessmentand, thus, unit valuation. See, e.g., ORS 308.665 (exempting railroad cars owned by private car companies undergoing major work). Those statutes foreclose the department's contention that unit valuation precludes, or is otherwise impossible to reconcile with, the valuation and exemption of individual types of centrally assessed property. Furthermore, Oregon has adopted the Western States Association of Tax Administrators, Appraisal Handbook: Valuation of Utility & Railroad Property (1989) (WSATA Handbook) as the official valuation guide for centrally assessed property in this state. OAR 150-308.205-(B). Included in the WSATA Handbook is a prescribed uniform procedure for separating tax exempt property from the unit valuation. The WSATA Handbook explains that, although generally no attempt is made to assign values in a unit appraisal to individual items of property, such value must be assigned if it is a legal requirement. WSATA Handbook at 8. The WSATA handbook thus aims to provide consistent application of allocation techniques for removing nontaxable property from the unit valuation. Id. at 10. The WSATA Handbook further specifies that, under any of several methods of unit valuation, the appraiser must specifically identify and account for exempt property to be excluded from the valuation. See, e.g., id. at 22-23, 38 (appraisers engaged in cost method are required to exclude property exempt from property taxation; common exclusions include inventory); id. at 70, 76 (adjustments to income approach are required to account for assets not taxable); id. at 98 (value contribution of nontaxable assets must be removed from the stock and debt indicator under the stock and debt approach). The department has also acknowledged, via promulgation of its own administrative rule, that assessors are required to value, and remove from the unit, exempt property. The department mandates that the unit value for gas distribution companies be adjusted to exclude nontaxable property included in the unit. OAR 150-308.205-(B)(2)(b). That rule forecloses the department's contention that identifying exempt property and removing it from the unit valuation is impossible or unreasonable. Finally, we observe that, in this case, the department had before it the information necessary to exempt the disputed property. Specifically, taxpayer's annual report expressly identified the property at issue in such a way that the assessed value of that property could be removed from the unit valuation of taxpayer's property. See also ORS 308.525(9) (annual statement must contain a detailed statement of personal property located in Oregon owned by the centrally assessed company); WSATA Handbook at 13 ([m]andatory reporting usually requires a detailed listing of all items of taxable property with descriptions and original cost). Thus, the practicality argument that the department makes finds no support in the statutory scheme or in the record in this case. Accordingly, the method of valuation prescribed by the legislature for centrally assessed property does not convince us that it is impossible to value and exempt inventory subject to central assessment. We therefore decline to read into ORS 307.400 a limitation i.e., an exemption for locally assessed property onlythat the statute does not contain and that the broader statutory scheme does not compel.