Multnomah County Assessor v. Portland Development Commission
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IN THE OREGON TAX COURT
REGULAR DIVISION
Property Tax
MULTNOMAH COUNTY ASSESSOR,
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Plaintiff,
v.
PORTLAND DEVELOPMENT
COMMISSION, an agent for the City of
Portland,
Defendant.
TC 5008
ORDER GRANTING PLAINTIFF’S
MOTION FOR PARTIAL SUMMARY
JUDGMENT AND DENYING
DEFENDANT’S MOTION FOR
SUMMARY JUDGMENT
I. INTRODUCTION
This matter is before the court on a second set of cross-motions for summary judgment.
In these motions the parties present their differing views as to whether the property in question is
exempt from property taxation under Oregon statutes. There is no disagreement about the
underlying facts of the case and they are found in a document entitled Agreed Facts as of January
1, 2009 (the Agreed Facts), filed with the court on May 30, 2012.
II. FACTS
The Agreed Facts establish the following:
(1) The Fairfield is an 82-unit single room occupancy (SRO) rental housing facility
consisting of 27,866 square feet of building area located at 1103-1121 SW Stark Avenue in
Portland, Oregon. It includes 7,780 square feet of street front commercial space. Part of the
commercial space is presently leased to the Roxy Café. The remainder of the commercial space
ORDER GRANTING PLAINTIFF‟S MOTION FOR
PARTIAL SUMMARY JUDGMENT AND DENYING
DEFENDANT‟S MOTION FOR SUMMARY
JUDGMENT TC 5008
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has been vacant since September 2008. This litigation relates only to The Fairfield‟s residential
component.
(2) The Fairfield was owned from October 1983 to January 2001 by the Fairfield Group,
a for-profit entity. During this period, the Fairfield Group entered into a Housing Assistance
Payments contract with the Housing Authority of Portland (HAP). HAP in turn was under
contract with the federal Department of Housing and Urban Development (HUD) to provide
assistance payments for eligible parties pursuant to 42 USC Ch 8, section 1437f, commonly
known as the HUD section 8 program. HAP is a public corporation. These contracts concern
only The Fairfield‟s residential component. The commercial space is not part of the section 8
program.
(3) Under the Fairfield Group-HAP contract, the Fairfield Group was required to meet
various facility operating and tenant leasing standards. Although the Fairfield Group and the
property‟s residential component continuously qualified under the section 8 program and was so
certified by HAP, the Fairfield Group neither sought, nor was the residential component granted,
any tax exempt status during the Fairfield Group‟s ownership.
(4) In January 2001, The Fairfield was acquired by the City of Portland, by and through
Defendant Portland Development Commission (PDC) at the request of, and for the benefit of, the
City of Portland. At the time of PDC‟s acquisition, the residential portion of the facility was
designated by PDC to be used exclusively for preserving affordable housing in downtown
Portland. PDC has determined to restrict the facility‟s residential use to such purpose and all
occupants must qualify as low income occupants.
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ORDER GRANTING PLAINTIFF‟S MOTION FOR
PARTIAL SUMMARY JUDGMENT AND DENYING
DEFENDANT‟S MOTION FOR SUMMARY
JUDGMENT TC 5008
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(5) PDC is the designated urban renewal agency for the City of Portland, formed under
Oregon Revised Statutes (ORS) chapter 457. PDC operates under the authority of a five member
commission. PDC‟s responsibilities are not confined to urban renewal matters.
(6) The Portland City Charter specifies three major areas of PDC responsibility under
Charter section 15-103: Urban Renewal; Economic Development; and Affordable Housing.
PDC is directed by the charter to “advance social equity in carrying out all its duties” and is to
“create, maintain and promote a diverse, sustainable community in which * * * quality housing
* * * opportunities are made available to all residents.” In carrying out its responsibilities
concerning affordable housing opportunities, PDC is to promote the creation and retention of
multi-family housing.
(7) Concurrent with PDC‟s acquisition, PDC assumed all of the Fairfield Group‟s
obligations under the Fairfield Group-HAP contract. On this basis, HAP approved the
assignment of the Housing Assistance Payments contract from the Fairfield Group to PDC.
(8) Had PDC not assumed the obligations of the Fairfield Group-HAP contract and
retained The Fairfield as a section 8 housing resource, PDC would not have been authorized to
acquire the property, nor to operate it. The agreements pertaining to PDC‟s ownership and
operation of The Fairfield were fully integrated with HAP‟s contract oversight and HAP‟s preexisting control of the property as a section 8 housing resource. HAP‟s authority and control
over The Fairfield remained unchanged following PDC‟s acquisition of the property.
(9) Upon PDC‟s acquisition of The Fairfield, PDC retained Income Property
Management (IPM), a for-profit company, to manage the property under a services agreement.
For the 2001 and 2002 tax years, the property was managed by IPM. For the 2001 and 2002 tax
years, The Fairfield‟s residential component was exempt from real property taxes. Plaintiff (the
ORDER GRANTING PLAINTIFF‟S MOTION FOR
PARTIAL SUMMARY JUDGMENT AND DENYING
DEFENDANT‟S MOTION FOR SUMMARY
JUDGMENT TC 5008
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county) asserts that there was no basis for exemption of the property in those years and now
claims the exemptions were placed on the roll in error. PDC disagrees with this assertion. The
county is unable to provide any documentation concerning the decision to grant the exemption in
2001-02.
(10) The section 8 program limits the amount of rent that can be charged to occupants
and sets conditions for how PDC may administer and manage The Fairfield. PDC is not
permitted to make units available to the general public except in compliance with section 8
requirements. Other than one unit subject to a special rental arrangement, all of The Fairfield‟s
units are designated as section 8 units, subject to the HAP contract. For purposes of calculating
the HUD section 8 assistance payment and the “contract rent” that is legally chargeable to
occupants at The Fairfield, no reimbursement for property taxes has been included. HAP
administers the qualification of residents under the section 8 program and disburses section 8
subsidy payments.
(11) The PDC-HAP section 8 contract was most recently renewed effective September 9,
2009. The Fairfield is designated as HUD Project No. 002 MB002-0001, HUD Contract No. OR
16-K002-002-1. The section 8 contract terms have not been materially changed from the
original Fairfield Group-HAP contract, nor have the responsibilities of HAP and PDC
concerning The Fairfield‟s operation.
(12) From 2003 to February 28, 2006, The Fairfield was operated by Central City
Concern under a “Master Lease and Management Agreement.” It replaced IPM. Central City
Concern is an Internal Revenue Code (IRC) section 501(c)(3) tax exempt organization. While
Central City Concern “rented” the 82 SROs, it occupied none. Instead, it was required to limit
all 82 SRO units to qualifying section 8 eligible residents (other than the exception unit
ORDER GRANTING PLAINTIFF‟S MOTION FOR
PARTIAL SUMMARY JUDGMENT AND DENYING
DEFENDANT‟S MOTION FOR SUMMARY
JUDGMENT TC 5008
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identified above). No occupant had any position with Central City Concern, nor performed any
services for Central City Concern at The Fairfield. All residents had (and have) signed
occupancy agreements, limited to a specified SRO unit at The Fairfield. Residents are obligated
to pay rent accordingly and The Fairfield receives a section 8 payment associated with each SRO
unit. No occupant has contractual obligations under an occupancy agreement to pay real
property taxes, directly or indirectly.
(13) During the period of Central City Concern‟s management of The Fairfield,
applications for exemption were made under ORS 307.540-548. The residential portion of the
property was exempted under that statute for tax years up through 2005-06.
(14) No applications for exemption were made under ORS 307.540-548 or any other
statute for the 2009-10 tax year, nor for any tax year after 2005-06. The exemption remained in
continuous effect.
(15) On March 1, 2006, Central City Concern discontinued its management of The
Fairfield. IPM was then renewed as manager under a flat fee, personal services contract. It is
the current manager under a “qualified management contract” pursuant to the section 8 program.
(16) All responsibility for property taxes has remained with PDC throughout PDC‟s
ownership of the property. The actual use and operation of The Fairfield has not changed from
the original PDC acquisition, irrespective of its operation by IPM or Central City Concern. IPM
has no ownership or possessory right in the property. All real property interests, except for
occupants‟ use of their SROs are held exclusively by PDC, subject to the HAP contract. No one
associated with IPM occupies or leases a SRO unit at The Fairfield.
(17) For the 2006, 2007 and 2008 tax years, The Fairfield was certified as exempt
property on the annual roll.
ORDER GRANTING PLAINTIFF‟S MOTION FOR
PARTIAL SUMMARY JUDGMENT AND DENYING
DEFENDANT‟S MOTION FOR SUMMARY
JUDGMENT TC 5008
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The county now asserts that there was no basis for exemption of the property for those years and
they were placed on the roll in error. PDC disagrees with this assertion.
(18) On September 21, 2009, the county determined that The Fairfield was not exempt
from real property taxation for the 2009-10 tax year. On that date, the county corrected the roll
to make the property taxable for the 2009-10 tax year on September 21, 2009. The 2009-10 tax
roll was certified on October 9, 2009. PDC was not notified of the county‟s change in position
until it received its 2009-10 tax bill in mid-October 2009. Up to that time, The Fairfield‟s
residential component had been continuously exempt from property taxes during PDC‟s entire
period of ownership.
(19) PDC is required to prepare and submit to HAP an annual budget for The Fairfield‟s
operation, including revenue, expenses and any needed capital improvements. Based upon the
continuously exempt nature of The Fairfield‟s residential component, PDC has never budgeted
for any property tax expense nor has it been taken into account in setting the section 8 subsidy
amounts by HAP and HUD.
(20) Because of the special purpose housing function of The Fairfield, the property is
available only for section 8 residential occupancy under its existing section 8 contracts with HAP
and HUD. The property‟s use has been restricted by resolution by PDC and cannot be changed
without action by the PDC commissioners.
(21) PDC timely protested the asserted loss of The Fairfield‟s exempt status and timely
filed its appeal of the county‟s change in taxable status for The Fairfield. The appeal relates
solely to the residential portion of The Fairfield.
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ORDER GRANTING PLAINTIFF‟S MOTION FOR
PARTIAL SUMMARY JUDGMENT AND DENYING
DEFENDANT‟S MOTION FOR SUMMARY
JUDGMENT TC 5008
Page 6 of 10
III. ISSUE
The issue is whether the property at issue is entitled to exemption from property taxation
for the 2009 year under Oregon law.
IV. ANALYSIS
This order will address the various statutes that are identified by Defendant (taxpayer) as
potential sources of exemption. Such a statutory source of exemption must exist if the property
is to escape taxation. See ORS 307.030; 308.210; ORS 308.232 (establishing that all property
not exempt is to be assessed and taxed).1
A.
ORS 307.090
ORS 307.090(1) provides, in relevant part:
“Except as provided by law, all property of the state and all public or corporate
property used or intended for corporate purposes of the several counties, cities,
towns, school districts, irrigation districts, drainage districts, ports, water districts,
housing authorities and all other public or municipal corporations in this state, is
exempt from taxation.”
However, ORS 307.110(1) provides:
“Except as provided in ORS 307.120, all real and personal property of this
state or any institution or department thereof or of any county or city, town or
other municipal corporation or subdivision of this state, held under a lease or
other interest or estate less than a fee simple, by any person whose real property,
if any, is taxable * * * shall be subject to assessment and taxation for the assessed
or specially assessed value thereof uniformly with real property of nonexempt
ownerships.”
Although taxpayer argues that the individuals residing in the property are not doing so
under a lease or other interest less than fee simple, the court concludes that they are occupying
space in the property under some form of lease or license sufficient to fit within the statutory
1
All references to the Oregon Revised Statutes (ORS) are to 2009.
ORDER GRANTING PLAINTIFF‟S MOTION FOR
PARTIAL SUMMARY JUDGMENT AND DENYING
DEFENDANT‟S MOTION FOR SUMMARY
JUDGMENT TC 5008
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provisions of ORS 307.110(1).
Taxpayer also argues that exemption should apply because the legislature did not intend
ORS 307.110(1) to apply so as to cause taxation when provision of housing to low income
occupants is involved. Unfortunately for taxpayer, the legislature specifically addressed the
extent to which ORS 307.110(1) should not apply in such situations when it stated in
ORS 307.110(3) as follows:
“Nothing contained in this section shall be construed as subjecting to assessment
and taxation any publically owned property described in subsection (1) of this
section that is:
“*****”
“(g) Property of a housing authority created under ORS chapter 456 which is
leased or rented to persons of lower income for housing pursuant to the public and
governmental purposes of the housing authority. For purposes of this paragraph,
„persons of lower income‟ has the meaning given the phrase under ORS 456.055.”
Taxpayer is not a housing authority created under ORS chapter 456 and therefore
taxpayer‟s article fails. The court cannot expand the favorable provisions set forth by the
legislature. The provisions of ORS 307.110(1) cause the property to be taxable.
B.
ORS 307.092
ORS 307.092 provides, in relevant part:
“(1) As used in this section, „property of a housing authority‟ includes, but is not
limited to:
“(a) Property that is held under lease or lease purchase agreement by the
housing authority; and
“(b) Property of a partnership, nonprofit corporation or limited liability
company for which the housing authority is a general partner, limited partner,
director, member, manager or general manager, if the property is leased or rented
to persons of lower income for housing purposes.
“(2) Except as provided in subsection (3) of this section, the property of a
ORDER GRANTING PLAINTIFF‟S MOTION FOR
PARTIAL SUMMARY JUDGMENT AND DENYING
DEFENDANT‟S MOTION FOR SUMMARY
JUDGMENT TC 5008
Page 8 of 10
housing authority is declared to be public property used for essential public and
governmental purposes and such property and an authority shall be exempt from
all taxes * * *.”
Taxpayer is not a housing authority within the meaning of the statue. Therefore, paragraph
(1)(a) of ORS 307.092 does not apply to provide relief to taxpayer.
Taxpayer argues that because the Housing Authority of Portland (HAP) provides
oversight of the operation of the property on behalf of the federal Department of Housing and
Urban Development (HUD), the property in question here is property described in paragraph
(1)(b) of ORS 307.092. However, for that paragraph of the statute to apply, taxpayer would have
to be one of the specified types of entities (partnership, nonprofit corporation or limited liability
company) and HAP would have to bear the particular statutorily defined relationship (general
partner, limited partner, etc.) to that entity.
The facts are that taxpayer is not the type of entity described in the statute and HAP bears
none of the relationships to taxpayer required by the statute. Even if HAP has some role with the
property, it does not have one of the statutorily described roles with respect to taxpayer.
Taxpayer observes that the particular descriptions in ORS 307.092(1) are some but not all
definitions of “property of a housing authority.” That is true. However the court cannot
undertake to supply other definitions in this instance. The court concludes that the provisions of
subsection (1) were added to describe either ownership by a housing authority of less than a fee
interest (a lease interest or interest of a lessee with an option to purchase) or ownership by an
affiliate of a housing authority. Neither of these situations is present here.
The court concludes that ORS 307.092 offers no help to taxpayer.
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ORDER GRANTING PLAINTIFF‟S MOTION FOR
PARTIAL SUMMARY JUDGMENT AND DENYING
DEFENDANT‟S MOTION FOR SUMMARY
JUDGMENT TC 5008
Page 9 of 10
V. CONCLUSION
The statutes to which taxpayer points do not, by their express terms, apply to the property
in question under its current ownership. Taxpayer argues that all the policy purposes of the
various statutory provisions relating to housing for low income persons are satisfied and
therefore the existing statutes should be construed so as to slightly extend their reach to this set
of facts. The court is not authorized to make the determination that statutes that do not fit the
facts should be extended to apply to the property in question. It is for the legislature to
determine if statutes should be amended or added so as to provide the relief which taxpayer
seeks. Now, therefore,
IT IS ORDERED that Plaintiff‟s Motion for Partial Summary Judgment is granted and
the motion of Defendant is denied.
Dated this ___ day of December, 2012.
Henry C. Breithaupt
Judge
THIS DOCUMENT WAS SIGNED BY JUDGE HENRY C. BREITHAUPT ON
DECEMBER 14, 2012, AND FILED THE SAME DAY. THIS IS A PUBLISHED
DOCUMENT.
ORDER GRANTING PLAINTIFF‟S MOTION FOR
PARTIAL SUMMARY JUDGMENT AND DENYING
DEFENDANT‟S MOTION FOR SUMMARY
JUDGMENT TC 5008
Page 10 of 10
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