Granny Flats In Multnomah County Will Retool Some Tax Bills

Dated: November 23 2015

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A state agency told Multnomah County officials they should change tax bills sent recently to Portland property owners who built granny flats detached from their homes.


Those owners saw tax bills that were double, tripled or more from previous years, a county commissioner said. The county assessor's office received a letter from the state Department of Revenue late Friday that recommends officials calculate those property valuations differently.


"We are evaluating the impact and preparing the changes to individual tax bills. We will be contacting affected property owners over the next few weeks," Randy Walruff, director of the county's Division of Assessment, Recording and Taxation, said in a statement to The Oregonian/OregonLive.


The Oregonian/OregonLive reported on this issue earlier this month.


So what's the problem?


The short version: The City of Portland, through waivers on development fees, has encouraged homeowners to build detached accessory units since 2010. Until this year, Multnomah County increased the taxes on properties with new detached units to reflect only the additional value of the new units.


But this year, the county began readjusting the valuation of the entire property, in some cases bringing the total much closer to real market value and erasing years of discounts under Measure 50 adopted by voters in the late 1990s. The county  has said it only followed state tax law and acknowledged that it assessed properties with new detached units differently than the revenue department's interpretation.


"The assessor has been asking the department of revenue for guidance on this issue for some time," said David Austin, the county's director of communication. "We're glad that the department has finally spoken out on this issue to give clear direction to the assessor."


Gregg Thummel of the Oregon Department of Revenue and spokesman Bob Estabrook said Wednesday the real issue comes from zoning changes made by the city of Portland after Measure 50. The City Council adopted changes in 1998 to allow the construction of granny flats that are detached from the primary home, Phil Nameny, a city planner with the Bureau of Planning and Sustainability, said.


Those zoning changes should have triggered the county to place new taxable values on properties only after a property owner built a new unit that's consistent with the adopted zoning rules from 1998, Thummel said.


What's the new guidance from the state?


According to the letter from Gary Humphrey, administrator of the revenue department's property tax division, the county should only re-calculate the value of the land and the new construction of the granny flat but keep the value of the primary home untouched.


State law allows the county to "correct" the valuations made by the assessor's office for the 2015-16 tax roll for the people impacted by the new tax bills, Humphrey wrote.


What authority do elected commissioners have?


None.


On Monday, Commissioner Loretta Smith sent a letter to Chairwoman Deborah Kafoury asking for a review of how the county calculates taxable property values. She supports the city's effort to encourage the construction of granny flats, she said.


But the board is powerless in this particular matter.


Neither commissioners nor the chairwoman have the authority to force the county assessor to change his interpretation of the state's tax laws, both the county attorney and revenue department officials said this week.


Smith's staff emailed copies of her letter to Kafoury to the media this week to bring more awareness about the issue. Smith, through her chief of staff, declined to comment beyond what she said in her letter and a press release


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Mark Ross

For Mark Ross, founder of Ross NW Real Estate and professional real estate broker, real estate has always been the career of choice. During his 25+ years in the industry, Mark has gained experience in....

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