Powell Street I v. Multnomah County Assessor

“If the owner of a shopping center has driven out tenants by mismanagement, then that mismanagement is a characteristic of the owner and generally should not affect the property’s real market value for ad valorem tax purposes.”

Petitioner appealed from a valuation of commercial property for tax purposes. Petitioner assigned error to the Tax Court’s decision to lower the real market value of the property because the shopping center lacked an anchor tenant and had a high vacancy rate. On appeal, Petitioner argued that the property’s vacancy rate is a reflection of the owner’s ability to find a tenant. Therefore, Petitioner asserted that to value a property based on its actual vacancy rates is to value the property based on characteristics of the owner instead of on characteristics of the property. In response, Respondent argued the vacancy of the anchor tenant was due to external factors and that the space had been vacant for a time consistent with the market. Thus, the vacancy rate was not a result of the owner’s individual characteristics. “If the owner of a shopping center has driven out tenants by mismanagement, then that mismanagement is a characteristic of the owner and generally should not affect the property’s real market value for ad valorem tax purposes.” The Court found that there was no evidence presented that the vacancy rate of the shopping center was high due to the individual characteristics of the owner. Thus, the Court held that the Tax Court’s decision to lower the real market value of the property for taxes due to the vacancy rate was a reasonable finding of fact. Affirmed.