Washington State

Office of the Attorney General

Attorney General

Bob Ferguson

AGO 1979 No. 17 -
Attorney General Slade Gorton


When a county assessor lists and values new construction for property tax purposes, such new construction may not be valued at less than its true and fair value.

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                                                               September 7, 1979

Honorable Hubert F. Donohue, Chairman
Senate Committee on Ways & Means
105 Public Lands Building
Olympia, Washington 98504

                                                                                                                 Cite as:  AGO 1979 No. 17

Dear Sir:

            By letter previously acknowledged you have requested the opinion of this office on a question which we paraphrase as follows:

            When a county assessor lists and values new construction for property tax purposes, may such new construction be valued at less than its true and fair value?

            We answer this question in the negative for the reasons set forth in our analysis.


            Real property, with the exception of new construction, must be assessed and listed on the assessment rolls with its value as of January 1 of each assessment year.  RCW 84.40.020.  New construction, however, is valued as of April 30 of the assessment year.  RCW 36.21.080.  The public official responsible  [[Orig. Op. Page 2]] for the listing and valuation of property is generally the county assessor,1/ who must complete the assessment roll by May 31 of each year.  RCW 84.40.040.

            The state constitution does not now explicitly require that property be valued with reference to its true and fair value.2/   However, Article VII, § 2 imposes, subject to some exceptions, a 1 percent tax limitation based on the "true and fair value" of such property in money.  To provide an effective means for determining compliance with that limitation, the legislature has, therefore, required that property be valued at its true and fair value.  Specifically, the 1973 legislature, after the November, 1972, voter approval of the 1 percent tax limitation, provided in § 96, chapter 195, Laws of 1973, 1st Ex. Sess. that:

            "All property shall be valued at one hundred percent of its true and far value in money and assessed on the same basis unless specifically provided otherwise by law."  (RCW 84.40.030)

            A similar reference to true and fair value as being the standard which must be used for the assessment of property will be found in RCW 84.40.040, referring to one hundred percent of the value of land and improvements.  RCW 84.40.045 requires the assessor to notify property owners of any change in the "true and fair value of real property. . . ."

            An assessor's valuation of property can be reviewed by the county board of equalization which also is to consider the property with reference to its true and fair value.  See, RCW 84.48.010.  And finally, the Department of Revenue is likewise empowered and directed to examine and compare the assessment rolls of the various counties and in so doing is to consider those values with reference to their true and fair value.  RCW 84.48.080.  Accordingly, the department has promulgated a series  [[Orig. Op. Page 3]] of rules respecting the valuation of property for tax purposes.  See, WAC 458-12-300, 458-12-301, 458-12-339, 458-12-341, 458-12-345 and WAC 458-14-155.  All of those rules direct and require that property be assessed so as to reflect current market value and that the assessment be set at 100 percent of true and fair value.

            It is, therefore, abundantly clear that state statutes and Department of Revenue rules require the assessor, in valuing property for tax purposes, to do so with reference to the property's true and fair value.  This conclusion, however, is not a complete answer to your question inasmuch as the department, in a recent property tax bulletin (PTB 79-1), which apparently prompted your inquiry, has taken the position by virtue of the uniformity clause in the constitution3/ that new construction not included within the area subject to the current year's cyclical revaluation by the county assessor should be valued for tax purposes at the same ratio of true and fair value as other property located in that area.

            Real property must be inspected and revalued at least once every four years.  RCW 84.41.030 and 84.41.041.  Moreover, this cyclical revaluation by the county assessor must be:

            ". . . conducted in an orderly manner and pursuant to a regular plan, and . . . not [be] done in an arbitrary, capricious or intentionally discriminatory manner. . . ."  Sator v. Department of Revenue, 89 Wn.2d 338, 344, 572 P.2d 1094 (1977).

            By virtue of RCW 84.41.090 and WAC 458-12-335 through 458-12-339 (as promulgated by the Department of Revenue), each county assessor is required to have developed and submitted to the Department of Revenue for its approval a revaluation plan which insures that

            ". . . substantially an equal amount of taxable property in a county be revalued in each year of the cyclical program. . . ."  Dore v. Kinnear, 79 Wn.2d 755, 763, 489 P.2d 898 (1971); WAC 458-12-335, 458-12-339.

             [[Orig. Op. Page 4]]

            In answering your question, we will assume that the assessor's cyclical revaluation program meets all of the applicable requirements of chapter 84.41 RCW.  As such, assuming a four-year revaluation cycle, this means that substantially 25 percent of the taxable property in the county is being revalued each year (Dore,supra), and further, that this revaluation is orderly and not intentionally discriminatory (Sator, supra).

            Clearly, if "new construction" is located within the current revaluation area of an assessor, it must be listed and valued along with all other real property within that revaluation area at its true and fair value, as statutorily mandated.  The Washington Supreme Court has in several opinions condemned any sort of intentional discrimination in the valuation of real property for tax purposes.  See,Sator v. Department of Revenue, supra;Dore v. Kinnear, supra; and Carkonen v. Williams, 76 Wn.2d 617, 458 P.2d 280 (1969).  Any program of intentionally setting lower values for new construction than 100 percent of true and fair value, which the assessor is obligated by statute to place upon other real property in the revaluation area, would constitute the type of intentional discrimination which has been prohibited by our supreme court.

            We thus must conclude that new construction in the current revaluation area is to be valued at 100 percent of true and fair value along with all other taxable real property in that area.  But what of the case where the new construction occurs in one of the county's revaluation areas not scheduled for revaluation in the current assessment year?  For example, if the ratio of locally assessed real property values to true and fair values in the revaluation area were 60 percent, may the assessor (as indicated in PTB 79-1,supra) lawfully list and value new construction in that area at 60 percent of true and fair value?  We think not.

            In the foregoing example, if new construction in an area not included in the current year's revaluation cycle were to be placed on the tax rolls at 60 percent of its true and fair value, there would be an appearance of uniformity.  That appearance of uniformity, however, would only relate to other properties located in the particular revaluation area.  If the county is proceeding with a systematic four-year revaluation cycle as mandated by statute, however, then comparable new construction in various parts of the county would be treated differently‑-ranging under the prior example from 60 percent to 100 percent of its true and fair value being placed on the assessment rolls.   [[Orig. Op. Page 5]] While there are various taxing districts within the boundaries of the county, the county itself is a taxing district and thus there would clearly not be uniformity regarding the treatment of new construction located within the county for tax purposes.

            Article VII, § 1 (Amendment 14) of the Washington Constitution provides that:

            ". All real estate shall constitute one class. . . ."

and within a given taxing district, that

            ". . . All taxes shall be uniform upon the same class of property. . . ."

            The Washington Supreme Court has recognized the virtual impossibility, in light of the statutory requirement for physical inspection of property (RCW 84.41.040) for valuation purposes, to annually reassess property for tax purposes.  The court has further recognized that when real estate values are increasing, the most recently reassessed property being placed on the tax rolls will be closer to its true and fair value than property on the rolls pursuant to its assessment two or three years earlier in time.  The court has therefore concluded that the application of a nondiscriminatory revaluation cycle in which the assessor is obligated to revalue the property with reference to its true and fair value does not constitute a violation of the uniformity clause even though disparities are created with respect to the valuation of property assessed in prior years under the cycle, which values continue until reassessed under the cycle.  See,Mason County Overtaxed, Inc. v. Mason County, 62 Wn.2d 677, 384 P.2d 352 (1963); andCarkonen v. Williams, supra.  The constitutional uniformity provision, therefore, as construed by the court, does not require that all property be annually revalued.  However, the uniformity clause does not relieve the assessor of the statutory responsibility in valuing property in any given year to do so with reference to its true and fair value.  Therefore, the valuation of new construction must be made in reference to its true and fair value and, for that reason, our ultimate answer to your question is in the negative.4/

             [[Orig. Op. Page 6]]

            We trust that the foregoing will be of some assistance to you.

Very truly yours,

Attorney General

Deputy Attorney General

                                                         ***   FOOTNOTES   ***

1/The Department of Revenue, however, has the assessment responsibility for public utilities (chapter 84.12 RCW); private car operating companies (chapter 84.16 RCW); and forest lands (RCW 84.33.020, et seq.)

2/Prior to the 1972 amendment of Article VII, § 2 of the state constitution, that provision required that property be assessed at 50 percent of true and fair value.

3/". . .  All taxes shall be uniform upon the same class of property . . ." (Article VII, § 1, Washington Constitution)

4/This response is based upon the existing statutes.  We are not expressing any opinion as to the constitutionality of a statute which might provide for valuation of new construction in the manner proscribed by the Department of Revenue Bulletin 79-1.  Also see, § 100, chapter 195, Laws of 1973, 1st Ex. Sess., which provided for adjustments in valuation.  However, that statute was repealed by § 1, chapter 29, Laws of 1977.

            Further, as this opinion addresses only new construction, it should not be read as authorizing or condoning other out-of-cycle revaluations.