Court Opinion

ID: 3844435
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:12:57.489098+00
Date Added: 2024-06-11T07:40:40.775438
License: Public Domain

Decision for defendant Z X Ranch, Inc., rendered May 17, 1968.
This case involves the valuation of the real property in the Z X Ranch in Lake County, Oregon.
The county assessor found the true cash value of the real property to be $3,823,000. The board of equalization reduced the assessor's valuation to $3,356,500 and the taxpayer appealed to the tax commission, which reduced the board's valuation to $2,755,000. The board appealed this valuation to the Tax Court. The taxpayer filed an answer and cross-appeal contending that the true cash value of the property should be $2,210,145. The tax commission filed an answer in the Tax Court but offered no evidence at the trial. *Page 222 
The Z X Ranch, located in the Paisley-Silver Lake area of southeastern Oregon, is one of the largest cattle ranches in Oregon. It consists of 64,000 acres of land of which 38,000 are irrigated. The carrying capacity of the ranch is approximately 8,500 cows, together with 1,200 replacement heifers, 400 bulls and 100 horses. The ranch was purchased by the present owners in June, 1966, for $6,064,000. Included in the purchase price were 8,566 cows, 1,299 yearling heifers, 400 bulls, 6,500 calves, 135 horses, 7,000 tons of hay and $530,000 worth of equipment.
The taxpayer's appraiser used the market data approach. He also found that the ranch had a carrying capacity of 8,500 cows. In breaking down the total sales price of $6,064,000 and deducting for the cattle and other personal property included in the sale he assigned a residual sales price of $2,834,735 on the land. Using a cow unit approach he found $350 to be the value of a cow unit.
The appraiser for the assessor and the board of equalization valued the real property using a land classification system which is used on a county-wide basis. It consisted of breaking down the 64,000 acres into individual land classifications, using a value for each class times the number of acres to arrive at a total value of $3,508,450.
The county appraiser also testified that he considered an approach based on the valuation of an animal unit which he considered to be substantially the same as a cow unit. Using this system he assigned a value of $345 per animal unit to 9,908 units, including 9,683 cows for a total of $3,418,260.
At the trial the county appraiser admitted that under this approach if he was in error in the number of cows considered in the carrying capacity of the *Page 223 
ranch it would result in a reduction of the total valuation. The assessor's estimate of 9,683 cows as the carrying capacity is excessive. There were only 8,566 cows involved in the sale and the better unit figure to use should be 8,500 cow units. Using the latter figure and the assessor's value per unit of $345 would amount to $2,932,500.
Using the cow unit approach the taxpayer's appraiser testified, and the county appraiser agreed, that certain deductions should be made from the gross value of the real property on a cow unit basis ($2,932,500 using the assessor's value and $2,975,000 using the taxpayer's value). The deductions were:
     $202,500    BLM and Forest Service grazing permits 92,800    Irrigation equipment 52,430    Land located in Klamath County, Oregon 417,125    Deduction under ORS 307.320 for deciduous plants and crops -------- $764,855
The county appraiser agreed with all of the above deductions except the amount of $417,125 for deciduous plants and crops. However, in his original breakdown of the total sales price of $6,064,000, the assessor allowed a deduction of $600,000 for deciduous plants and crops to arrive at the value of the land.1 This was computed by taking approximately ten percent of the total sales price for the entire ranch. This is not proper because the total sales price included the cattle and other personal property, in addition to the real property. *Page 224 
Mr. Kolberg, the taxpayer's appraiser, admitted that it was difficult to compute the deduction for the value of the exempted deciduous plants and grasses and testified that he arrived at the deduction of $417,125 by assigning a value for the crops ranging from $1.50 per acre for rangeland, $10 per acre for the native hay land and $15 per acre for alfalfa land.
1. The court will allow $262,700 as a deduction for the deciduous crops. This amount is arrived at by using the ten percent deduction allowed by the assessor and applying it to the taxpayer's land value of $2,975,000, less the above deductions which total $347,730, or $2,627,270.
The taxpayer has clearly presented the better case and is entitled to prevail.2
The true cash value of the subject property is therefore computed as follows:
   8,500 cow carrying capacity at $    350     $2,975,000. Less: BLM  Forest Service rights 13,500 AUM's at $15        $202,500. Irrigation equipment and installation (1,160 acres at $80)                      92,800. Klamath County land            52,430. Deduction under ORS  307.320                    262,700.      610,430. --------   ----------- $2,364,570.
1 In the county sales ratio study for farmland a deduction is made under ORS 307.320 for deciduous plants and shrubs to arrive at the residual land values to be used in the study.
2 It should be emphasized that one of the reasons for using a valuation of $350 per cow unit and allowing the deduction for growing crops is the fact that the assessor used comparable values per cow unit and also considered the crop deduction in arriving at his values. *Page 225