Vickers Limited Partnership v. Lincoln County Assessor

IN THE OREGON TAX COURT MAGISTRATE DIVISION Property Tax VICKERS LIMITED PARTNERSHIP, ) ) Plaintiff, ) TC-MD 260068R ) v. ) ) LINCOLN COUNTY ASSESSOR, ) ) Defendant. ) DECISION Plaintiff appeals the Lincoln County Property Value Appeals Board real property orders for Accounts R113401, R120535, R122901, R125303, Rl27741, R130048, R132433, R134777, R137131, R139520, R141851, R144307, and R170375 (adjoining commercial lots, hereinafter collectively the subject), mailed February 20, 2026, for the 2025-26 tax year. A trial was held on May 27, 2026, at the Oregon Tax Court, in Salem, Oregon. Jamie Stanton, of the law firm Carmichael & Stanton, LLC, appeared on behalf of Plaintiff. Paul H. Schaffner (Schaffner), appraiser with Charles P. Thompson & Associates, Inc., testified on behalf of Plaintiff. Craig Waldron (Waldron) and Nick Kolen, county appraisers, appeared on behalf of Defendant. Waldron testified on behalf of Defendant. Plaintiff’s Exhibits 1 through 8 and Defendant’s Exhibits A through U were received into evidence. I. STATEMENT OF FACTS A. Subject Property, Ownership, and Roll Values The subject is a small shopping center located at the western terminus of Highway 20 in Newport, Oregon, consisting of approximately three acres of land comprising 13 tax lots, with a grocery store anchor and multiple inline tenants. (Ptf’s Ex 1 at 3-8.) The property has three separate buildings. The south retail building has four tenants consisting of an ice cream parlor, a DECISION TC-MD 260068R 1 retail shop, a financial advisor, and a law office. The building has a gross building area of 6,475 square feet and was constructed in 1995. (Ptf’s Ex 1 at 8.) The north retail building has a first floor building area of 7,415 square feet and a basement area of 4,468 square feet. (Id.) Tenants in that building include a hair salon, a wellness center, and a copy business. (Id.) The third building contains the anchor grocery store, with first floor retail and backroom area of 27,365 square feet and office and other area totaling 2,845 square feet. (Id. at 9.) The total gross building area is 49,736 square feet; the net rentable area reflected in the leases is 49,051 square feet. (Id.) The Vickers family formerly operated the grocery business located at the subject. In September 2023, the family sold the grocery store business to McKay’s Market but retained ownership of the real property. McKay’s thereafter became the anchor tenant. Schaffner testified that the property had remained fully occupied for at least three years preceding trial and probably for approximately five years. Plaintiff incurred several significant recent expenditures for the subject, including replacement of the roof in 2023 at a cost of approximately $125,641, replacement of the grocery store entry doors and modifications to other entrances after a vehicle damaged the front entry at a cost of approximately $62,000, and replacement of an HVAC unit at a cost of approximately $11,000. (Ptf’s Ex 1 at 10.) The Lincoln County tax roll real market values (RMV) for the 2025-26 tax year for the 13 tax accounts totaled $8,376,700. The Property Value Appeals Board (PVAB) reduced the cumulative RMV to $7,254,600. (See Compl at 4-16.) /// /// DECISION TC-MD 260068R 2 B. Appraisal Framework and Approaches Considered Both appraisers considered the subject’s highest and best use to be its existing use as a grocery-anchored shopping center with inline commercial tenants. Both considered the three traditional approaches to value: cost, sales comparison, and income. They considered the cost approach of limited usefulness for the subject—an older, multi-building commercial property— and each placed primary reliance on an income approach while also developing or considering a sales comparison approach. Their loaded capitalization rates were relatively close: Plaintiff concluded with 8.49 percent and Defendant with 8.77 percent. The principal differences concerned market rent, stabilized expenses, and the treatment and selection of comparable market evidence. The subject’s leases were generally modified-gross leases. The tenants paid their own utilities and garbage expenses, while Plaintiff incurred other operating expenses associated with the subject. (Ptf’s Ex 1 at 25, 28.) 1. Plaintiff’s evidence Schaffner analyzed the income approach beginning with the rent roll in effect as of the assessment date. (Ptf’s Ex 1 at 25.) The subject was fully occupied. The leases covered 49,051 square feet of rentable area and produced monthly contract rent of $32,839, or approximately $394,068 annually. The average contract rent for the property was approximately $0.67 per square foot per month. (Id.) a. Anchor grocery store The anchor tenant, McKay’s Market, occupied approximately 33,500 square feet and paid monthly rent of $18,360, or approximately $0.55 per square foot. Its lease extended through August 31, 2033, with two additional ten-year options. (Ptf’s Ex 1 at 25.) Schaffner concluded DECISION TC-MD 260068R 3 that the existing rent was below market rates and considered four comparable grocery store leases in determining market rent. (Id. at 26.) The first comparable was a Safeway located in Eugene, Oregon. The store contained 34,825 square feet and was leased beginning in January 2024 for ten years on a triple-net basis at $29,017.25 per month, or $0.83 per square foot. Schaffner considered that property significantly superior to the subject because of its income and demographic characteristics and the absence of immediate grocery competition. (Id.) The second comparable was a Grocery Outlet in Florence, Oregon, containing 17,700 square feet. Its February 2021 lease was for five years at $6,480 per month, or $0.37 per square foot, on a triple-net basis. Schaffner considered that property inferior because of its visibility and exposure to Highway 101 and competition from other grocery stores, and he concluded that its rent was below market. (Id.) The third comparable was Ray’s Market in Roseburg, Oregon. That store contained 20,268 square feet and was leased beginning in April 2025 for five years at $13,829 per month, or $0.68 per square foot, on a triple-net basis. Schaffner considered the indicated rent slightly higher than appropriate for the subject because the Roseburg property was smaller and had less immediate grocery competition. (Id.) The fourth comparable was a Safeway in Newport, Oregon, containing 32,100 square feet. Its September 2021 lease was for five years at $8,000 per month, or $0.25 per square foot, on a triple-net basis. Schaffner considered that rent significantly below an appropriate market rent for the subject. (Id.) Schaffner concluded from those leases that market rent for the subject’s grocery space was $0.65 per square foot per month, producing monthly market rent of $21,775. (Ptf’s Ex 1 at DECISION TC-MD 260068R 4 26-27.) All four grocery store rent comparables were triple-net leases. Schaffner described his adjustments among the grocery comparables as primarily qualitative, based on such factors as age and quality, competition, the earning capacity of the local population, and other market characteristics. Schaffner noted that Newport had a competitive grocery market, identifying Fred Meyer, Safeway, Walmart, Dollar General, Grocery Outlet, and McKay’s as stores serving a community with a permanent population of approximately 10,256. He viewed that competition as contributing to lower grocery store rents than would ordinarily be found in other communities. (Id. at 27.) He further testified that Newport’s population could exceed 20,000 during approximately three summer months because of tourism. He described Newport as highly tourism-oriented and testified that he considered that seasonality to some degree in his rent analysis, although the increased activity occurred for only part of the year. Schaffner did not use the Lincoln City, Oregon, Grocery Outlet anchor lease as one of his grocery store rent comparables. He testified that the Lincoln City grocery space was substantially smaller than the subject’s grocery space, had been extensively upgraded and remodeled, was in newer condition, and had superior access. He did, however, use rents from the inline spaces at that center in his inline shop analysis. He removed the highest and lowest rents from that center in his analysis because he considered those as outliers. b. Inline shops Schaffner separately analyzed rents for the subject’s inline spaces. The subject’s inline rents ranged from approximately $0.66 to $1.57 per square foot per month and averaged approximately $0.93 per square foot. The tenants paid their own utilities and garbage expenses. (Ptf’s Ex 1 at 25, 27.) DECISION TC-MD 260068R 5  Schaffner considered inline leases at three shopping centers. At the Grocery Outlet Center in Lincoln City, six leases ranged from $0.56 to $1.30 per square foot per month and averaged approximately $0.90 per square foot; those leases were identified as triple-net leases. At Pacific Plaza in Newport, six leases ranged from $0.40 to $0.72 per square foot and averaged approximately $0.57 per square foot. Those leases included both gross and triple-net terms. At Green Valley Center in Roseburg, six leases ranged from $0.26 to $0.92 per square foot and averaged approximately $0.62 per square foot, again using a mixture of gross and triple-net terms. (Ptf’s Ex 1 at 27.) Schaffner calculated an average rent of approximately $0.70 per square foot per month from the three centers. In analyzing the inline rents, he estimated an approximately $0.20-per- square-foot adjustment to place the triple-net rents on a modified-gross basis comparable to the subject. That indicated approximately $0.90 per square foot per month. Because the subject’s inline rents averaged approximately $0.93 per square foot, Schaffner concluded that the existing inline rents were at or near market and used the subject’s contract rents for the inline spaces. (Id.) Schaffner testified that he generally preferred completed, negotiated leases over asking-rent listings because a listing had not yet resulted in an agreement between a landlord and tenant. c. Stabilized income and expenses Schaffner reviewed the subject’s actual income and expenses for 2022 through 2024. Gross rental revenue was $402,770 in 2022, $384,380 in 2023, and $393,724 in 2024. Reported net operating income (NOI) declined from $248,573 in 2022 to $221,644 in 2023 and $145,895 in 2024. The 2024 expenses included $114,061 in property taxes, $33,768 in insurance, and $49,878 in repairs and maintenance. (Ptf’s Ex 1 at 28.) Schaffner stated that the property tax figures included significant personal property taxes associated with the grocery business that DECISION TC-MD 260068R 6 were no longer appropriate after the owners sold the grocery business to McKay’s. He also considered the 2024 repair expenses unusually high because a vehicle had damaged the electronic grocery store doors, requiring replacement of those doors and modifications to other entrances. (Id.) For his stabilized pro forma income analysis, Schaffner applied his concluded market rent of $0.65 per square foot to the 33,500-square-foot grocery space and $0.93 per square foot to the remaining 15,551 square feet. Those figures produced monthly rental revenue of $36,237 and annual gross rental revenue of $434,844. He deducted 3.5 percent for vacancy and credit loss, resulting in effective gross income of $419,624. (Id.) Schaffner deducted stabilized expenses of $20,148 for insurance, $6,000 for legal and accounting expense, $10,000 for repairs and maintenance, $7,800 for utilities, $750 for miscellaneous expenses, $10,491 for reserves, and $20,981 for management fees. He excluded property taxes from the expense calculation because he incorporated them through the capitalization rate tax load. His total stabilized expenses were $76,170, or approximately 18.2 percent of effective gross income, resulting in an NOI of $343,454. (Id. at 28-29.) d. Capitalization rate and income indication Schaffner considered four sales of Oregon shopping centers in determining an overall capitalization rate. The sales indicated capitalization rates of 7.19 percent, 7.59 percent, 5.73 percent as occupied at sale (with an indicated 8.10 percent rate at full occupancy), and 6.24 percent. He concluded that an unloaded capitalization rate of 7.40 percent was appropriate for the subject. (Ptf’s Ex 1 at 29-30.) Schaffner added an effective property tax rate of 1.09 percent to his 7.40 percent capitalization rate, resulting in a loaded capitalization rate of 8.49 percent. Capitalizing his $343,454 NOI at 8.49 percent produced an indicated value of $4,045,395, which he rounded to $4,045,000. (Id. at 30.) DECISION TC-MD 260068R 7  e. Sales comparison and reconciliation Schaffner also developed a sales comparison approach. Because the available shopping center sales differed substantially from the subject’s location and other characteristics, he compared the sales in part through their NOI per square foot rather than making a conventional grid of individual percentage adjustments. His sales comparison approach indicated a value of $4,020,000. (Ptf’s Ex 1 at 31.) Schaffner considered the income approach the primary indicator of value and testified that an investor would place approximately 75 to 80 percent weight on that approach. Reconciling his $4,045,000 income indication with the $4,020,000 sales comparison indication, Schaffner concluded that the subject had a RMV of $4,040,000 as of January 1, 2025. (Id. at 32.) 2. Defendant’s evidence a. Income approach to the subject Waldron began his income analysis with the subject’s reported income and expenses for 2022, 2023, and 2024. (Def’s Ex D.) For each year, he reconstructed the reported figures to what he considered a fee-simple basis, including replacing contract rents with his concluded market rents, removing property taxes from operating expenses because they were accounted for through the loaded capitalization rate, and making other adjustments to reported expenses. (Def’s Ex E.) He then averaged the reconstructed figures for the three years to derive stabilized income and expenses. (Def’s Ex M.) Waldron’s market-rent analysis used the Lincoln City Grocery Outlet center and six additional coastal Oregon listings located in Florence, Brookings, Tillamook, North Bend, Newport, and Lincoln City. (Def’s Ex K.) He calculated an average rent of approximately DECISION TC-MD 260068R 8 $15.07 per square foot per year, or approximately $1.26 per square foot per month. Waldron did not separately derive market rent for the anchor grocery space and the inline spaces; rather, he averaged anchor and inline rent data together. The rent data included both triple-net and modified-gross leases, and Waldron did not make a separate adjustment for the differing lease structures. He testified that he selected coastal properties because he considered them more comparable to the subject than properties in the Portland metropolitan area or the Willamette Valley. Using the three year stabilized reconstructed income and expense figures, Waldron’s income approach indicated a value of approximately $7,067,728 for the subject. (Def’s Ex M.) b. Lincoln City Grocery Outlet center Waldron also relied on a shopping center located at 2401-2429 NW Highway 101 in Lincoln City, Oregon, anchored by Grocery Outlet. The Lincoln City property contained approximately 29,534 square feet of rentable building area on approximately 1.6 acres and had nine tenants. The improvements were originally constructed in 1961. A September 2025 offering memorandum identified the property as renovated in 2023 and elsewhere stated that it was fully renovated in 2024, when Grocery Outlet relocated to the property from another Lincoln City location approximately one mile away. (Def’s Ex H at 4, 8-9.) Grocery Outlet occupied 14,855 square feet, approximately 50 percent of the Lincoln City center’s rentable area. Its lease commenced August 29, 2023, and extended through August 31, 2038, with five five-year renewal options. The lease was triple-net and subject to a corporate guarantee. Monthly base rent was $32,495, or $2.19 per square foot, with scheduled increases approximately every five years. (Id. at 4, 9, 19.) /// DECISION TC-MD 260068R 9  The remaining tenants occupied spaces ranging from 304 to 4,361 square feet. Their contract rents ranged from $0.25 to $2.17 per square foot per month and included both triple-net and modified-gross leases. The offering memorandum characterized the shop space rents as below market and described potential increases in those rents as an investment opportunity. (Id. at 4, 9, 19.) The Lincoln City property was offered for sale at $8,350,000. The offering memorandum reported annual base rent of $608,208, additional reimbursement or “recapture” income of $93,435, total income of $701,643, and operating expenses of $116,371, resulting in reported NOI of $585,272. The asking price represented a stated capitalization rate of 7 percent. (Id. at 4, 18.) Waldron reconstructed the Lincoln City property’s reported income and expenses, resulting in an NOI of $607,533 and indicated value of $6,923,796. (Id. at 4, 18; Def’s Ex I.) Defendant’s report identified contract rents that could be above or below market and that no market-rent analysis had been performed; it similarly stated that no market analysis had been performed to determine vacancy and collection loss. Id. The Lincoln City offering memorandum was dated September 2, 2025, approximately eight months after the January 1, 2025, assessment date. Waldron testified that the property subsequently sold in February 2026 for $7,900,000. Waldron made no time adjustment to the Lincoln City evidence, testifying that he considered the market relatively flat over the relevant period. He acknowledged that the September 2025 listing information was not available as of January 1, 2025. /// /// DECISION TC-MD 260068R 10  c. Capitalization rate and sales comparison Waldron used the Lincoln City sale and its financial information to support a loaded capitalization rate of 8.77 percent. He also reviewed capitalization rates reflected in several coastal Oregon listings and other market sources, which indicated a lower overall rate of approximately 7 percent, but he placed greater weight on the Lincoln City transaction because the transaction had become a verified arm’s-length sale and financial information was available. (Def’s Ex L.) For his sales comparison approach, Waldron treated the Lincoln City center as a comparable sale to the subject. He compared NOI and expense ratios and made no adjustment for those differences but made an adjustment for the differing relationship of land to building improvements. (Def’s Ex J.) That analysis indicated a value of approximately $9,521,728 for the subject. (Def’s Ex M.) d. Reconciliation Waldron’s stabilized income approach indicated approximately $7,067,728, and his sales comparison approach indicated approximately $9,521,728. He averaged those indications to $8,294,728. (Def’s Ex M.) Waldron testified, however, that he placed greater weight on the income approach than on the sales comparison approach. Waldron testified that Defendant did not seek an increase above the value ordered by PVAB; it offered its analyses to support the Board’s cumulative RMV of $7,254,600. II. ANALYSIS RMV is “the amount in cash that could reasonably be expected to be paid by an informed buyer to an informed seller, each acting without compulsion in an arm’s-length transaction DECISION TC-MD 260068R 11 occurring as of the assessment date for the tax year.” ORS 308.205(1).1 RMV must be determined under methods and procedures adopted by the Department of Revenue. ORS 308.205(2). In valuing real property, all three traditional approaches to value must be considered, although not all approaches may be applicable in a particular appraisal. Oregon Administrative Rule (OAR) 150-308-0240(2)(a). Plaintiff seeks affirmative relief and therefore bears the burden of proof. ORS 305.427. A preponderance of the evidence is sufficient to sustain that burden. Id.; see also Feves v. Dept. of Rev., 4 OTR 302, 312 (1971). Because Plaintiff seeks a reduction in the value ordered by PVAB, Plaintiff must establish that the existing RMV is incorrect and that a lower value is supported by the evidence. See SP 260 Limited Partnership v. Deschutes County Assessor, TC- MD 250104R, 2026 WL 2236805 at *6 (Or Tax M Div, July 31, 2026). When RMV is in issue, the court may determine value on the basis of the evidence before it without regard to the values pleaded by the parties. ORS 305.412. The parties agree on much of the appraisal framework. Both concluded that the subject’s highest and best use is continuation as a grocery-anchored shopping center with inline commercial tenants. Both considered the cost approach inapplicable and gave primary weight to the income approach. Their vacancy assumptions are relatively close, and their loaded capitalization rates differ by only 28 basis points: 8.49 percent for Plaintiff and 8.77 percent for Defendant. The principal dispute is therefore not capitalization but the market income and expenses used to derive NOI. /// /// 1 The court’s references to the Oregon Revised Statutes (ORS) are to 2023. DECISION TC-MD 260068R 12 A. Income Approach The income approach estimates the value of income-producing property from the income the property is capable of generating. Under direct capitalization, potential gross income is adjusted for vacancy and collection loss, reasonable operating expenses are deducted to arrive at NOI, and the NOI is capitalized at a market-derived rate. Allen v. Dept. of Rev., 17 OTR 248, 253-54 (2003). The approach therefore depends principally on two inputs: a reliable NOI and an appropriate capitalization rate. 1. Market rent OAR 150-308-0240(2)(g) directs that the income used in the income approach be the economic rent that the property would most probably command in the open market, as indicated by current rents being paid and asked for comparable space. On balance, the court finds Schaffner’s market-rent analysis more persuasive than Waldron’s. Schaffner separately analyzed the subject’s 33,500-square-foot grocery anchor and its substantially smaller inline spaces. That distinction is persuasive. The evidence demonstrates that the anchor space differs materially from the inline spaces in size, tenant use, and lease characteristics. Schaffner’s treatment also avoids allowing rents from small retail, office, or service spaces to drive the concluded rent for a 33,500-square-foot grocery store. For the anchor space, Schaffner considered four executed grocery store leases for spaces ranging from approximately 17,700 to 34,825 square feet. (Ptf’s Ex 1 at 26.) Those leases ranged from $0.25 to $0.83 per square foot per month. Schaffner concluded that the Safeway in Eugene and Ray’s Market in Roseburg were superior to the subject in significant respects, including grocery competition, demographics, size, and other property characteristics. He also considered the Newport grocery market unusually competitive. Although Schaffner’s DECISION TC-MD 260068R 13 adjustments were primarily qualitative rather than expressed as discrete dollar or percentage adjustments, he explained the considerations underlying his conclusion of $0.65 per square foot per month. The court finds that conclusion reasonably supported by the executed grocery store leases and the evidence concerning the subject’s competitive market. The court does not agree with Defendant’s argument that Schaffner’s reliance on triple- net grocery store leases, standing alone, created a defect in his market rent analysis. The subject is valued in fee simple, and the relevant inquiry is the rent the property would command under market lease terms rather than the terms of the existing below-market McKay’s lease. The lease structure is nevertheless relevant in considering the relationship between market rent and operating expenses. Defendant’s market rent methodology is less persuasive. Waldron derived an average rent of approximately $15.07 per square foot annually, or approximately $1.26 per square foot per month, from the Lincoln City Grocery Outlet center and six additional coastal Oregon listings. He did not separately derive rent for the grocery anchor and the inline spaces; instead, he averaged the anchor and inline data together. He also combined triple-net and modified-gross lease data without making a separate adjustment for lease structure. Given the substantial differences between a large grocery anchor and small inline spaces, the court is not persuaded that a single blended rent reliably measures the economic rent of the subject. Defendant also relied on asking-rent listings. Asking rents may properly be considered under OAR 150-308-0240(2)(g), so the court does not reject that evidence merely because a lease had not yet been executed. Its weight nevertheless depends on comparability and on whether the asking rent is shown to reflect the market. Here, Waldron did not make adjustments for differences in size, use, age, or lease structure. Schaffner explained that he generally DECISION TC-MD 260068R 14 preferred completed, negotiated leases because a listing does not establish the terms ultimately accepted by a landlord and tenant. Under these circumstances, the court gives the listing evidence less weight than the executed lease evidence. The Lincoln City Grocery Outlet center is Defendant’s strongest comparison because it is another grocery-anchored center on Highway 101 in a nearby coastal community. It nevertheless differs materially from the subject. The Lincoln City center contains approximately 29,534 square feet in total, while the subject contains 49,051 square feet of rentable area. Grocery Outlet occupies 14,855 square feet, less than half the subject anchor’s 33,500 square feet. The Lincoln City center had also been recently renovated, and Grocery Outlet’s lease was a new 15- year triple-net lease with a corporate guarantee. Schaffner testified that those differences, together with superior access and the extensive renovation, were why he did not use the Grocery Outlet anchor lease as one of his grocery store rent comparables. The fact that the Lincoln City transaction occurred after the assessment date does not make it irrelevant. Subsequent events may inform value where the condition of the property and relevant market conditions permit a reasonable inference concerning value on the assessment date. See Pacific Ethanol Columbia, LLC v. Morrow County Assessor, TC-MD 200380N, 2023 WL 3297100 (Or Tax M Div, Apr 20, 2023) (discussing Oakmont, LLC v. Dept of Rev., 359 Or 779, 793-94, 377 P3d 523 (2016) and Sabin v. Dept. of Rev., 270 Or 422, 426-27, 528 P2d 69 (1974)). Waldron testified that the market was relatively flat. Nevertheless, the transaction’s timing and the material physical and lease differences described above reduce its weight. Schaffner’s inline rent analysis is also more persuasive. He considered executed inline leases at three grocery-anchored centers, including Lincoln City and Newport, and concluded that the subject’s existing average inline rent of approximately $0.93 per square foot per month DECISION TC-MD 260068R 15 was at or near market. He adjusted the comparable inline evidence to a modified-gross basis and then used the subject’s contract rents because he concluded they reflected market rent. Defendant’s use of a single, blended rent for both anchor and inline space does not provide a more reliable alternative. The evidence concerning Newport’s seasonal tourism does not support a separate numerical adjustment. Schaffner acknowledged that Newport’s population and commercial activity increase substantially during the summer and testified that he considered seasonality to some degree. His comparable evidence also included properties in Newport, Florence, and Lincoln City. Neither party quantified a separate seasonal rental adjustment. The court therefore considers seasonality as one aspect of comparability but makes no separate adjustment for it. 2. Operating expenses Plaintiff’s treatment of operating expenses raises some concern because Schaffner derived the grocery store market rent from triple-net leases but deducted expenses associated with the subject’s existing modified-gross leases. Under a triple-net structure, some landlord expenses may be reimbursed by the tenant. See Kohl’s Department Stores v. Washington County Assessor, TC-MD 130220D, 2015 WL 196150 (Or Tax M Div, Jan 14, 2015). The evidence here, however, does not establish the reimbursement obligations that would apply under a hypothetical market lease of the subject’s anchor space. In particular, no evidence established what insurance coverage the landlord would maintain, what portion of the premium would be attributable to the anchor, or what amount the tenant would reimburse. The evidence is similarly insufficient to quantify reimbursement of utilities, repairs, maintenance, or other expenses. Although Schaffner could have developed the relationship between his assumed market lease and stabilized expenses more clearly, the court lacks a reliable evidentiary basis to DECISION TC-MD 260068R 16 substitute different expense amounts. The court therefore accepts his stabilized operating expenses. 3. Capitalization rate and income indication The parties’ capitalization rate conclusions are sufficiently close so that capitalization is not a significant source of their disagreement. Plaintiff derived a 7.40 percent unloaded capitalization rate from four shopping center transactions and added a 1.09 percent effective property tax rate, resulting in a loaded rate of 8.49 percent. Defendant concluded a loaded rate of 8.77 percent. The court finds Plaintiff’s 8.49 percent rate adequately supported and accepts it. Using Schaffner’s stabilized NOI of $343,454 and his loaded capitalization rate of 8.49 percent produces an indicated value of $4,045,395, rounded to $4,045,000. The court finds that indication more persuasive than Defendant’s income conclusion because it rests on the more persuasive market-rent analysis described above. B. Sales Comparison Approach The court gives substantially less weight to the sales comparison approach because neither appraiser identified closely comparable shopping center sales. Schaffner’s sales comparison approach indicated $4,020,000. (Ptf’s Ex 1 at 31.) His methodology relied in part on relationships between NOI and sale price per square foot, and Defendant identified legitimate concerns with portions of that analysis. The court therefore does not rely on the sales comparison approach as a primary indicator. Defendant’s sales comparison indication of approximately $9,521,728 is less persuasive. Defendant relied principally on the Lincoln City Grocery Outlet center. Although that property is geographically relevant and shares a grocery-anchored use, it is materially smaller, had recently undergone substantial renovation, and was anchored by a recently negotiated long-term, DECISION TC-MD 260068R 17 corporate-guaranteed lease. Defendant made an adjustment for the differing land-to-building relationship but did not make a demonstrated adjustment for the substantial difference in rentable building area or for other material differences between the centers. The court gives Defendant’s sales comparison indication little weight. C. Reconciliation and Burden of Proof Neither appraisal is without weakness. Schaffner’s grocery rent conclusion relies substantially on qualitative judgment, and the relationship between the market lease structure and his stabilized operating expenses could have been developed more fully. Those shortcomings do not establish a different expense amount and do not outweigh the more substantial difficulties in Defendant’s valuation, particularly its use of a single blended market rent for economically different anchor and inline spaces and its reliance on rent and sales evidence without persuasive adjustments for material differences. A preponderance of the evidence does not require certainty. Plaintiff must present the more convincing evidence of value. The court finds that Plaintiff has done so. Schaffner’s separate treatment of the anchor and inline spaces, his reliance principally on executed comparable leases, and his analysis of the subject’s competitive Newport grocery market provide a more persuasive foundation for estimating market income. His income approach indicated $4,045,000 and his sales comparison approach indicated $4,020,000. Schaffner gave approximately 75 to 80 percent weight to the income approach and lesser weight to the sales comparison approach. The court likewise gives primary weight to the income approach and finds that the sales comparison approach provides secondary support for a value in the same range. /// DECISION TC-MD 260068R 18  Considering the evidence as a whole, the court finds Schaffner’s reconciled conclusion of $4,040,000 supported by a preponderance of the evidence. The court therefore finds that the subject’s RMV as of January 1, 2025, was $4,040,000. D. Allocation Between Accounts The court’s determination of value concerns the subject as a single economic unit. Allocating that value among the 13 tax accounts requires a sufficient factual basis to determine the portion attributable to each account. The court has considered the testimony together with Exhibit N and finds that evidence insufficiently persuasive to support an allocation among the individual accounts. The court cannot supply the missing factual basis from the evidence presented or through assumption. State v. Kamph, 297 Or App 687, 694-95, 442 P3d 1129, 1135 (2019). Accordingly, the court determines the aggregate real market value of the subject but makes no determination of the amount attributable to any individual tax account. III. CONCLUSION After careful consideration, the court finds that the total value of Accounts R113401, R120535, R122901, R125303, Rl27741, R130048, R132433, R134777, R137131, R139520, R141851, R144307, and R170375 for the 2025-26 tax year equals $4,040,000. Now, therefore, IT IS THE DECISION OF THIS COURT that Plaintiff’s appeal is granted. RICHARD D. DAVIS MAGISTRATE If you want to appeal this Decision, file a complaint in the Regular Division of the Oregon Tax Court, by mailing to: 1163 State Street, Salem, OR 97301-2563; or by hand delivery to: Fourth Floor, 1241 State Street, Salem, OR. Your complaint must be submitted within 60 days after the date of this Decision or this Decision cannot be changed. TCR-MD 19 B. This document was signed by Magistrate Richard D. Davis and entered on November 3, 2026. DECISION TC-MD 260068R 19