PacifiCorp v. Dept. of Rev.

ORDER ON CROSS-MOTIONS FOR
RECONSIDERATION TC 5411 	Page 1 of 5
IN THE OREGON TAX COURT
REGULAR DIVISION
Property Tax
PACIFICORP,
Plaintiff,
v.
DEPARTMENT OF REVENUE,
State of Oregon,
Defendant.
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TC 5411
ORDER ON CROSS-MOTIONS FOR
RECONSIDERATION
This matter is before the court on the parties’ cross-motions for reconsideration under
Tax Court Rule (TCR) 80A.
A. 	Plaintiff’s Motion
On May 24, 2023, the court issued its Opinion (Valuation), which addressed legal issues
raised by the parties at trial and determined the real market value of Plaintiff’s Oregon-situs
property based on the evidence. On June 8, 2023, Plaintiff submitted a letter, which the court
treats as Plaintiff’s motion for reconsideration, requesting the correction of certain “clerical type
errors or omissions” in the May 24 Opinion. Specifically, Plaintiff’s motion:
(1) Points out that the May 24 Opinion inconsistently determines Plaintiff’s
capital structure as 36 percent debt and 64 percent equity (Opinion at 46) but later
uses a structure of 37 percent debt and 63 percent equity (Id. at 73), with a
corresponding difference in the weighted average cost of capital;
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ORDER ON CROSS-MOTIONS FOR
RECONSIDERATION TC 5411 	Page 2 of 5
(2) Notes an erroneous use of the multiplication symbol in a formula that should
read: “System Value = Cash Flow ÷ WACC” (Id.) and a statement of the System
Value (Id.1) that should read “$17,241,379,310” if the WACC is corrected to
reflect a capital structure of 36/64 as described earlier;
(3) Notes additional potential corrections to the court’s concluded values that flow
from the foregoing (Opinion at 79-81, 83, 90); and
(4) Asks the court to either (a) amend the May 24 Opinion to reflect the removal
of the value of licensed vehicles and other locally assessed properties located in
Oregon, or (b) amend the concluding sentence of the May 24 Opinion (at 90) to
state that the determined real market value is “prior to adjustments for licensed
vehicles and other locally assessed properties.”
(Ptf’s Ltr at 1.) Attachment 1 to Plaintiff’s motion reprints pages 73, 79, 80, 81, 83, and 90 of
the May 24 Opinion, with requested edits marked in underline and strikethrough.
On June 15, 2023, Defendant responded with a letter addressing each of Plaintiff’s four
points. Defendant defers to the court as to the capital structure and, if the court determines the
capital structure to be 36 percent debt and 64 percent equity, agrees with Plaintiff’s corrections in
points (1) through (3).
As to point (4), Defendant disagrees, arguing that “plaintiff’s trial appraisal did not make
or request such a reduction” for exempt vehicles and locally assessed property, and that “plaintiff
did not allege, much less prove, that any of the income capitalized was attributable to nontaxable
property.” (Def’s Ltr at 1.) On June 22, 2023, Plaintiff replied that Defendant’s own rule
requires it to “remove exempt property values of various types (for example motor vehicles)
from the correlated system value,” and that Defendant “routinely removes the vehicles licensed
in Oregon from the value allocated to Oregon” if the valuation unit is located in multiple states.
(Ptf’s Reply at 2-3 & n 2, citing OAR 150-308-0695(4).) Plaintiff’s reply states further that
neither party’s appraiser “removed income from the total unitary income they capitalized so as to
1 Capitalized terms are defined in the court’s May 24, 2023, Opinion (Valuation).

ORDER ON CROSS-MOTIONS FOR
RECONSIDERATION TC 5411 	Page 3 of 5
remove the value for exempt vehicles or locally assessed property,” with the consequence that
the court’s determined value necessarily includes value attributable to such property. (Id. at 3.)
The court concludes that Plaintiff’s arguments are well taken as to all of points (1)
through (4) in Plaintiff’s motion. The court adopts the revisions to the Opinion proposed in
Attachment 1 to Plaintiff’s motion. The court will issue an amended opinion reflecting those
revisions.
B. 	Defendant’s Motion
On June 15, 2023, Defendant filed a motion for reconsideration asking the court to
reconsider four portions of the May 24 Order:
“(1) The deference to be given OAR 150-308-0690, the department’s rule
adopting the WSATA Handbook unitary valuation guidelines for the central
assessment of plaintiff’s property according to ORS 308.655 and ORS 308.205;
“(2) Application of the HCLD approach to value as one of the indicators of value
for all property owned, used, or held for future use by a centrally assessed
taxpayer;
“(3) ORS 308.205 and OAR 150-308-0690 require consideration of market
evidence, i.e., the amount typical buyers would offer that could reasonably be
expected by sellers of the unitary property; and
“(4) Internal confidential planning documents used by typical buyers, the PUC,
and the company for planning purposes, support some estimated amount of real
growth in cash flows/income greater than zero.”
(Def’s Mot for Recons at 1.)
As to Defendant’s first issue, Defendant’s arguments are not well taken. The court
adheres to its reasoning, based on the text and statutory development, that ORS 308.655,
referring to rules “to be followed in answering any requirement of ORS 308.505 to 308.674,” is
not “delegative” as to the application of valuation methods. The court also adheres to its
conclusion that Portland Canning and the later cases cited in the May 24 Opinion bind this court
and preclude any discretion in Defendant under ORS 308.205(2) to compel the use of valuation

ORDER ON CROSS-MOTIONS FOR
RECONSIDERATION TC 5411 	Page 4 of 5
methods and procedures that fail to result in market value in a particular case. Portland Canning
Co. v. Tax Com., 241 Or 109, 113, 404 P2d 236 (1965).
Defendant’s second request asks the court to reconsider its decision to assign no weight
to Defendant’s cost approach indicator of value. The court adheres to the reasoning in its May
24 Opinion but will clarify its conclusion by making the following changes to the text shown on
page 34 of the May 24 Opinion:2
“And even if an exhaustive analysis of Defendant’s historical market-to-book
ratio studies were to reveal that HCLD was below real market value in the subject
transactions, those historical studies of sales of other companies do little to help
the court decide the real market value of the specific property at issue in this case
as of January 1, 2020.
“Defendant’s market-to-book ratio studies do not persuade the court that
a willing buyer and seller would be likely to give any particular weight to the
result of an HCLD analysis as of any particular date, nor do they overcome the
loose and tenuous connection that the WSATA Handbook declares between an
HCLD result and fair market value. First, in post-trial briefing Plaintiff raised
evidentiary issues regarding the comparability of the historical transactions,
which Defendant dismissed as ‘attempts to pick nits.’ (Ptf’s Post-Trial Br at 60-
62; Def’s Post-Trial Response Br at 18.) But assuming that the parties were to
engage in an exhaustive analysis of the historical transactions that would allow
the court to lay those issues to rest, a larger issue would remain. Defendant
argues that Eyre’s HCLD result, which he ‘tested’ against the ‘actual market
evidence’ of his market-to-book ratio study, ‘would certainly constitute the lowest
price a knowledgeable seller would be willing to accept for the property.’ (Def’s
Motion for Reconsideration at 8; Ex A at 23.) Yet Defendant’s position is directly
contrary to the discussion of HCLD in the WSATA Handbook, which states that
‘HCLD cannot be considered either a lower or upper limit of value * * *.’
WSATA Handbook at II-10 (emphases added). Rather, according to the WSATA
Handbook, HCLD is at most an ‘anchor’ that ‘provides a vague limit.’ Id. In
other words, Defendant’s own rule states that as of any given valuation date real
market value is likely to have drifted above or below HCLD. Id. (‘[T]he market’s
perception of value is likely to be at odds with rate base at any given time * * *.’)
Defendant’s evidence, and the disclamatory statements in the WSATA Handbook,
leave the court without a basis to assign any weight to a cost approach based on
HCLD, with or without Defendant’s market-to-book ratio studies.”
2 Text to be deleted is shown in quotes with strikethrough. Text to be added is shown in quotes and in
italics.

As 	to 	Defendant's 	third 	request, 	the 	"market 	evidence" 	that 	Defendant 	asserts 	the 	court
failed 	to 	consider 	is 	the 	historical market-to-book 	analysis 	conducted 	by 	Defendant's 	expert
Johnson. 	(See 	Def's 	Mot 	for 	Recons 	at 	11-13.) 	The clarifying 	change 	above 	applies 	to
Defendant's 	third 	request 	as 	well. 	The 	court 	otherwise 	adheres 	to 	the 	reasoning 	in 	the 	May 	24
Opinion.
Defendant's 	argument 	supporting 	its 	fourth 	request 	repeats 	arguments 	made 	in 	earlier
briefing, 	with 	the 	addition 	of new 	factual 	assertions 	without 	citation 	to 	any 	evidence. 	(Def's 	Mot
for 	Recons 	at 	13-20.) 	The 	court 	adheres 	to 	the 	reasoning 	in 	the 	May 	24 	Opinion. 	Now,
therefore,
1T 	IS 	ORDERED 	that 	Plaintiff's 	motion 	for 	reconsideration 	is 	granted.
1T 	IS 	FURTHER 	ORDERED 	that 	Defendant's 	motion 	for 	reconsideration 	is granted.
1T 	IS 	FURTHER 	ORDERED 	that 	the 	court 	modifies 	the 	May 	24 	Opinion 	to 	the 	extent
stated 	herein. 	Those 	modifications, 	along 	with 	minor 	clerical 	corrections, 	will 	be 	reflected 	in 	an
Amended 	Opinion 	(Valuation) 	to 	be 	issued 	today.
Dated 	this 	17th 	day 	of July, 	2023.
7/17/2023 	10:48:02 AM
Judge 	Robert 	T. 	Manlcke
ORDER 	ON 	CROSS-MOTIONS 	FOR
RECONSIDERATION 	TC 	5411 	Page 	5 	of 5