Property Tax Resources

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Oregon Property Tax Updates

UPDATED June 2021

Oregon Tax Court Defines “New Property” for Central Assessment Companies

The Oregon Constitution has a limitation on taxes referred to as “Measure 50.” Property is valued on the lower of the real market value or the Measure 50 value, which is called the “maximum assessed value.” The maximum assessed value of a property can only be increased by 3% each year, with certain limitations when the property first is assessed or from the 1995 property value. Thus, a home may have a real market value of $500,000 but only be taxed at $350,000 if it was first tax assessed in 2000 when it was built. One of the exceptions to this taxation floor is when “new property” is added to the tax account. In the home example, the addition of a garage or a remodel above $10,000 would be a “net addition” to the existing maximum assessed value. The Oregon Tax Court recently made a significant ruling for centrally assessed property in interpreting what is “new property” for purposes of adding on real market value to pre-existing property.

Tesoro Logistics Northwest Pipeline LLC (“Tesoro”), purchased a pipeline route from Chevron in June 2013. Tesoro had never been centrally assessed in Oregon prior to this purchase. As a pipeline, the property is regulated by the Federal Energy Regulatory Commission, which approved the transaction imposing contractual constraints on the transaction, which resulted in no change in the pipeline and no increase in tariffs. Thus, the property that changed ownership remained the same. The Oregon Department of Revenue (the “Department”) asserted that the entire purchase price of the transaction was “new property” and the purchase price could be added onto the existing maximum assessed value. Thus, the taxable value of the property increased by five times.  The Department’s legal position included that because it could “value” the worldwide unit of Tesoro, it could disregard the statutes that taxed “property” with a situs in Oregon. Tesoro asserted that only the addition of property with a situs in Oregon could constitute property or “new property” for Measure 50 purposes.

Based on the interpretation of the statutory context, the Court concluded that only property that had a situs in Oregon could be “new property” and only the addition of Oregon real property, Oregon-sitused tangible personal property, or Oregon-sitused intangible property, triggers the “exception” for new property under Measure 50. The addition of property sitused outside Oregon does not cause the new property “exception” to apply.

The Court also addressed a second argument the Department made that it could disregard the existing Chevron taxable unit because of the sale of property and the creation of a new tax account. The Court concluded that the legislature intended that “unit of property” to the property sitused in Oregon, including all Oregon-sitused real property, Oregon-sitused tangible personal property, or Oregon-sitused intangible property. The court found that because Tesoro acquired the same “Oregon unit of property” that had been assessed to Chevron the previous tax year, Oregon Revised Statute 308.162(1) precluded “revaluation” of the property’s maximum assessed value when the account transferred ownership, citing the holding in Dish Network Corp. v Department of Rev,  364 Or 254, 284, 434 P3d 379 (2019).

This is an unpublished Oregon Tax Court opinion, dated May 18, 2021; Tesoro Logistics Northwest Pipeline LLC v. Department of Revenue, 2021 WL 670471. Tesoro was represented by Cynthia Fraser, APTC counsel for Foster Garvey, Oregon. 

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