Measure 50 and Oregon’s Maximum Assessed Value

Measure 50, approved in 1997, replaced Oregon’s levy-based system with permanent tax rates and created a second value for every property: a maximum assessed value that grows on its own schedule, separate from what the property is worth. Understanding the one formula behind it removes most of the confusion about Oregon assessments — and the formula is not the one most explanations give.

The 103% test, exactly as the rule states it

The administrative rule implementing the statute describes the test as being performed as if the property had not changed:

• multiply the prior year’s assessed value by 1.03; and
• compare that with 100% of the prior year’s maximum assessed value;
• the larger of the two becomes the current year’s unadjusted MAV.

That last word matters. Because the test compares against the prior year’s assessed value as well as the prior MAV, a property that has been taxed below its MAV — which happens whenever the real market value has been lower than the limit — can see its MAV rise by more than 3% in a single year with nothing done to the property. The percentage is not a promise that the limit moves by 3%; it is a formula, and the formula can outrun 3%.

And then the assessed value is the lower of two

The MAV is a ceiling, not a tax base. The figure the tax rate is actually applied to is the assessed value: the lower of the MAV or the real market value. Two consequences follow, and both of them bite in real life:

• A falling market does reach your bill — through the assessed value, once the RMV drops below the MAV. It just does not lower the MAV, which keeps climbing in the background.
• An assessed value can jump far beyond 3% when the RMV, having sat below the MAV for years, rises above it again. The counties name that as one of the two reasons an assessed value increases sharply, the other being an exception event.

Where the first MAVs came from

Measure 50 did not start the limit from each property’s market value. It redefined assessed value as 90% of the 1995-96 assessed value, and set each property’s first MAV for 1997-98 as the 1995-96 real market value less 10%. Because those two bases are different, some properties came into the system with an MAV below their market value and some closer to it — which is exactly the gap that the changed property ratio later measures and reuses for new construction.

When the MAV may rise by more than 3%

Only one thing does it: an exception event. The published list covers new construction or additions, and remodelling, renovation or rehabilitation, above thresholds the Department of Revenue publishes and indexes to inflation; partitioning or subdivision; rezoning where the property is used consistently with the new zoning; the discovery of omitted property; and disqualification from an exemption or special assessment. Ordinary ongoing maintenance and repair is not an exception event — a distinction the counties spell out because it decides a lot of arguments. The changed property ratio page takes that list apart.

Worked example (illustrative)

Illustrative numbers only. This shows how the limit behaves, not what any property is worth.

1. Inputs: last year’s assessed value was $240,000, last year’s MAV was $310,000, and this year’s real market value is $390,000.
2. Step — the 103% leg: $240,000 × 1.03 = $247,200.
3. Step — the MAV leg: $310,000.
4. Step — the greater: the MAV is $310,000, which is 29% above the prior year’s assessed value — with no work done to the property.
5. Step — the assessed value: the lower of $310,000 (MAV) or $390,000 (RMV) is $310,000.
6. Then the market falls: if the RMV were $280,000, the assessed value would be the lower of $310,000 or $280,000 — $280,000 — so the bill falls even though the MAV limit is unchanged.

What this tells you: “the MAV rose 29%,” “the MAV rose 3%” and “my taxes rose 29%” are three different statements. Only the last one is about your bill, and it depends on the assessed value, your rate and compression.

What it does not tell you: that disputing the MAV is usually the route to a lower bill. It can be, in the situations where the county board has jurisdiction over MAV, SAV or AV — but if your MAV sits above your RMV, your bill is driven by the RMV, and that is the figure to challenge with market evidence.

What this does not tell you either

• The size of the exception thresholds in your year. They are published and indexed to inflation, so the figures in circulation go stale.
• Whether a particular repair or upgrade is maintenance or rehabilitation. The counties describe the difference in terms of how many components are replaced and over what period; a borderline case is worth asking the assessor about before it becomes an appeal.