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Oregon Property Tax Valuation Case: Hermiston Foods vs. Oregon Department of Revenue Magistrates Opinion (large file, may take a few minutes to load) Summary: The magistrate's opinion strongly supports the case for economic obsolescence (see paragraph two, page three). The magistrates opinion on obsolescence is unwavering (last paragraph, page 13): Although an isolated bankruptcy may reflect a failed business plan, a remarkable string of bankruptcies is more likely to be the result of an obsolescence that reaches all properties within an industry. (Bold italics & underline added.) On page 14 (middle paragraph) of the decision, the magistrate clearly concludes the volume of bankruptcies among commodity vegetable producers leads to the conclusion that the causes of the bankruptcies are not the idiosyncratic failures of business plans, but instead the result of national, and even global, changes in production, consumption, and marketing. (Bold italics added.) The decision rejects the Department of Revenues methodology, which ignored or downplayed comparative sales of fruit and vegetable food processing plants and instead tried to value Hermiston Foods using the non-comparable sales of cheese and butter manufacturing facilities. Finally, the magistrate rejects the Departments argument regarding economic obsolescence and highest and best economic use: Considerations of highest and best use do not require treating the liquidation values of machinery and equipment as a floor below which the real market value of an operating plant cannot fall (paragraph one, page 18). All of these conclusions the magistrate made for a relatively new plant (less than ten years old from the tax years in question): The response of the court is that market forces are more of a determinant of contemporary values than of original investment and that, in the nine years since its inception, the market has worked to take value away from northwest vegetable producers. (Bold & underline added; see paragraph one, page 19 of the decision). |
