Whatchamacolumn: Understanding the taxation 'black box'

Break out the checkbooks, it’s property tax time!

The basics: Taxes are limited to $5 per $1,000 valuation for education, $10 per $1,000 for general government, plus added levies for voter-approved bonds. Tax rates are applied to the Real Market Value (RMV) or Maximum Assessed Value (MAV), whichever is lower. Almost always that’s MAV, since RMVs have skyrocketed in recent years while MAVs are limited to 3 percent annual growth unless increased by new property development.

With apologies to people who hate numbers and acronyms, that’s the easy part. But you, too, could understand the baffling “black box” process that is creating unusually low MAVs for new developments.

Each Jan. 1, Oregon county assessors establish RMV for all new construction from the previous year. Important tip: If you disagree with that RMV, appeal right away — you don’t get a second chance to change the original RMV and its discounted MAV.

Those RMVs are grouped by property class — residential, commercial, industrial, multi-family, manufactured homes, farm and forest. Each new RMV is reduced by the Change Property Ratio (CPR) for its property class, creating lower MAVs and tax bills. Since 2019, CPRs have been as high as 0.748 and as low as 0.345.

To clarify, a CPR of 0.480 — this year’s number for new residential property — means the Jan. 1 RMV appraisal will be reduced by 52 percent for MAV. By comparison, RMV for housing built in 2018 was reduced by 37 percent for tax purposes.

Here’s the related math: Grouping all unchanged property, class by class, assessors divide the average MAV by the average RMV. Thus, fast-rising RMVs create lower CPRs and larger tax reductions. Those tax savings provide at least some respite from today’s high construction costs and interest rates.

Sometimes, new construction crosses calendar years. RMV from each calendar year’s construction is reduced by that year’s CPR, so owners may have multiple chances to appeal original RMV calculations on the development.

This isn’t just an academic exercise for numbers nerds like me. We built a house 16 years ago, appealed the original RMV by citing an assessment error, and won reduced RMV, MAV and taxes. Those savings are repeated every year.

All this, and much more, is carefully detailed on the Yamhill County Assessor’s website. You can find the history and operating process of Oregon tax law; the five-year CPR chart; the ownership, historic RMVs and historic MAVs for every property parcel in the county.

You still have to pay taxes in 12 days, but at least you may know more about them.

Jeb Bladine can be reached at jbladine@newsregister.com or 503-687-1223.