No. 13 April 9, 2015 113

IN THE SUPREME COURT OF THE

STATE OF OREGON

WILLAMETTE ESTATES II, LLC

Plaintiff-Appellant,

v.

DEPARTMENT OF REVENUE,

State of Oregon,

Defendant-Respondent,

and

MARION COUNTY ASSESSOR,

Defendant-Intervenor.

(TC 5146; SC S062027)

En Banc

On review from the Oregon Tax Court.*

Argued and submitted March 13, 2015.

Henry C. Breithaupt, Judge.

Ridgway K. Foley, Greene & Markley, P.C., Portland, filed 

the briefs and argued the cause for appellant. With him on 

the briefs was Donald H. Grim.

Melisse S. Cunningham, Assistant Attorney General, 

Salem, argued the cause and filed the brief for respondent. 

With her on the brief were Ellen F. Rosenblum, Attorney 

General, and Daniel Paul, Assistant Attorney General.

No appearance by Intervenor.

LANDAU, J.

The judgment of the Tax Court is affirmed.

______________

* Judgment dated January 13, 2014.
114 Willamette Estates II, LLC v. Dept. of Rev.

After taxpayer Willamette Estates II, LLC, had obtained a reduction of the 

real market value of only the improvements to real property, the Marion County 

Assessor filed a petition with the Department of Revenue under ORS 306.115 to 

correct the real market value of the land itself. The department corrected the 

land’s real market value, and the Tax Court affirmed. Taxpayer appealed. Held: 

(1) The assessor’s petition under ORS 306.115 did not amount to the assessor 

impermissibly appealing his own valuation decision; (2) the department’s correction of the land’s real market value did not violate Nepom v. Dept. of Revenue, 272 

Or 249, 536 P2d 496 (1975); and (3) the requirement for the department’s supervisory jurisdiction that “[t]he parties to the petition agree[d] to facts indicating 

likely error,” OAR 150-306.115(4)(b)(A), had been met in this case.

The judgment of the Tax Court is affirmed.
Cite as 357 Or 113 (2015) 115

LANDAU, J.

At issue in this case is whether the Marion County 

Assessor may obtain from the Department of Revenue a 

correction to the tax rolls concerning the valuation of the 

real property of taxpayer Willamette Estates II, LLC. The 

Tax Court Regular Division concluded that the assessor was 

authorized by administrative rule to seek such a correction 

and that the department was authorized by statute to allow 

it. Taxpayer appeals, arguing that the Tax Court’s decision 

essentially sanctions an assessor’s unlawful appeal of his 

own assessment. In the alternative, taxpayer argues that 

the Tax Court’s decision conflicts with this court’s precedents. For the reasons that follow, we affirm the decision of 

the Tax Court.

The relevant facts are not in dispute. Taxpayer owns 

an apartment complex located in Marion County. In 2008, 

the assessor assessed the following values for that property:

Land real market value (RMV): $ 1,002,840

Improvements RMV: $14,784,740

Total RMV: $15,787,580

Taxpayer appealed, and the local board of property 

tax appeals affirmed. Taxpayer then appealed to the Tax 

Court Magistrate Division, but challenged the value of the 

improvements only. In challenging the value of the improvements, however, taxpayer did not offer direct evidence of a 

lower real market value for the improvements. Instead, taxpayer offered evidence of the real market values for both the 

property as a whole and for the land only. Specifically, taxpayer offered an appraiser’s testimony that the real market 

value for the property as a whole was $12,309,000, while 

the real market value for the land alone was $5,594,000. 

Taxpayer then argued that, having established those two 

values, basic arithmetic led to the conclusion that the correct real market value for the improvements was the difference between the two: $6,715,000.

The assessor stipulated that the real market value 

for the property as a whole was $12,309,000, as taxpayer 

contended. The magistrate found that the real market value 
116 Willamette Estates II, LLC v. Dept. of Rev.

of the land was $5 million and, subtracting that value from 

the total stipulated value, concluded that the correct value 

of the improvements was $7,309,000. Because taxpayer 

had appealed only the value of the improvements, however, 

the magistrate’s order altered only that component of the 

total assessment. In other words, even though taxpayer had 

offered evidence—and the magistrate had found—that the 

value of the land was $5,000,000, the original valuation of 

$1,002,840 for that land remained on the tax rolls.

In a separate proceeding, the assessor then filed 

a petition with the Department of Revenue to correct precisely that discrepancy. The assessor cited as authority for 

its petition ORS 306.115,1

 which gives the department general supervisory authority over the property tax system and 

grants it discretion to “order the correction of clerical errors, 

errors in valuation or the correction of any other kind of error 

or omission in an assessment or tax roll[.]” ORS 306.115(1). 

The assessor also cited a department rule promulgated to 

implement ORS 306.115, which states that the department 

may consider a requested correction upon a showing that 

“[t]he parties to the petition agree to facts indicating likely 

error.” OAR 150-306.115(4)(b)(A). In this case, the assessor 

asserted, the parties had stipulated to a total real market 

value for taxpayer’s property that, when combined with the 

value of improvements found by the magistrate, necessarily 

meant that the original land valuation was erroneous.

The department agreed with the assessor and 

revised the land value to $5,000,000. Taxpayer appealed 

to the Magistrate Division, which affirmed. Taxpayer then 

appealed to the Regular Division of the Tax Court, which 

also affirmed.

In its opening brief on appeal to this court, taxpayer 

advances two arguments in support of the contention that 

the Tax Court erred in affirming the department’s decision 

to allow the correction to the tax rolls. First, taxpayer argues 

that the Tax Court impermissibly permitted the assessor to 

appeal his own decision. Second, taxpayer argues that the 

1 All references to statutes and rules are to the 2009 versions in effect when 

the assessor filed his petition with the department.
Cite as 357 Or 113 (2015) 117

effect of the Tax Court’s decision is to allow “impermissible 

value shifting” in violation of Nepom v. Dept. of Revenue, 272 

Or 249, 536 P2d 496 (1975). We address each of those arguments in turn, concluding that neither has merit.

We begin with taxpayer’s argument that allowing the assessor to seek a correction of a prior valuation 

amounts to an impermissible appeal of the assessor’s own 

decision. Taxpayer relies on two prior Tax Court decisions 

for its argument. Its reliance on those decisions, however, 

is misplaced. To the contrary, as we will explain, the law 

expressly authorizes an assessor to seek, and the department to allow, a correction of errors on the tax rolls.

The statute at issue here is ORS 306.115(3). It provides in part:

“(3) The department may order a change or correction applicable to a separate assessment of property to the 

assessment or tax roll for the current tax year and for either 

of the two tax years immediately preceding the current tax 

year if for the year to which the change or correction is 

applicable the department discovers reason to correct the 

roll which, in its discretion, it deems necessary to conform 

the roll to applicable law without regard to any failure to 

exercise a right of appeal.”

Textually, that statute does not limit the party who may 

seek a correction.

To implement that statute, the department promulgated OAR 150-306.115, which specifically authorizes a 

local tax assessor to petition for such a change or correction:

“(1) ORS 306.115 is an extraordinary remedy that 

gives the Department of Revenue authority to order a 

change or correction to a separate assessment of property. 

An assessor or taxpayer may request a change or correction 

by filing a petition with the department. ** *

“(2) The department may correct any errors or omissions in the assessment or tax roll under ORS 306.115(2) 

through (4), including but not limited to clerical errors and 

errors in property value, classification, or exemption.

“(3) Before the department will consider the substantive issue in a petition (for example, value of the property, 

qualification for exemption, etc.), the petitioner has the 
118 Willamette Estates II, LLC v. Dept. of Rev.

burden of showing that the requirements for supervisory 

jurisdiction, as stated in ORS 306.115 and section (4) of 

this rule, have been met. The department will base its 

determination on the record before it.

“*****

“(4) The department will consider the substantive 

issue in the petition only when:

“(a) The assessor or taxpayer has no remaining statutory right of appeal; and

“(b) The department determines that an error on the 

roll is likely as indicated by at least one of the following 

standards:

“(A) The parties to the petition agree to facts indicating likely error[.]”

Thus, under the department’s administrative rule, 

an assessor may petition the department to correct the tax 

roll.

An assessor’s petition to correct the tax rolls proceeds in two steps. The first step requires the assessor to 

demonstrate that the department has what the rule denominates as “supervisory jurisdiction.” Specifically, the assessor must prove that the assessor has no remaining right of 

appeal and that an error on the tax rolls is likely as indicated 

by, among other things, an agreement between the taxpayer 

and the assessor. The second step requires the assessor to 

demonstrate that, in fact, there is an error on the tax rolls.

In this case, the assessor satisfied those requirements. It is undisputed that there remained no avenue of 

appeal for the assessor. Further, it cannot be disputed that 

an error in the valuation of taxpayer’s land necessarily followed from the parties’ stipulation as to the total value of 

the real property and the magistrate’s determination of the 

value of the improvements.

The Tax Court decisions on which taxpayer relies 

are not to the contrary. Neither holds that an assessor may 

not seek a correction of an error in the tax rolls pursuant to 

ORS 306.115 and OAR 150-306.115.
Cite as 357 Or 113 (2015) 119

The first case, Bear Creek Plaza v. Dept. of Rev., 

12 OTR 272 (1992), held that, when a taxpayer appeals an 

assessment under the normal appeal statute, ORS 305.275, 

and that taxpayer challenges only one component of that 

assessment, the statute did not authorize an assessor to 

cross-appeal the other component of the assessment. Id.

at 274. The court noted that ORS 305.275(2) authorizes 

an assessor to appeal only when the lower tribunal’s order 

changed the value that the assessor had set, which had not 

occurred in that case. Id. But, the court added, even though 

there can be no cross-appeal in such cases, the department 

nevertheless could correct the tax rolls under ORS 306.115 

and OAR 150-306.115. Id. at 275 n 3.

The second case, Wynne v. Dept. of Rev., 9 OTR 378 

(1984), likewise arose under ORS 305.275(2) and concerned 

the authority of an assessor to appeal under that statute. 

The court held that an assessor cannot appeal under that 

statute unless “aggrieved,” that is, unless the lower tribunal altered the original assessment. Id. at 379-80. Once 

again, the court noted that another statute, there ORS 

311.205, provided an avenue for correcting certain errors in 

an assessment. In that particular case, the court concluded 

that the assessor was not entitled to seek such a correction. 

Id.

Neither case, therefore, supports taxpayer’s assertion that an assessor’s petition to correct the tax rolls 

amounts to an impermissible appeal. Rather, both confirm 

that an assessor may seek corrections of errors in the tax 

rolls by other means.

We turn to taxpayer’s argument that, in any event, 

allowing the assessor to obtain a correction of the tax rolls 

under ORS 306.115 amounts to impermissible value shifting, in violation of Nepom. According to taxpayer, because it 

appealed only the valuation of its improvements, any correction to the valuation of its land “effectively shifted the reduction in the improvements [real market value] to increase the 

land [real market value] that was never in issue,” in violation of this court’s precedent. Taxpayer, however, misreads 

that precedent.
120 Willamette Estates II, LLC v. Dept. of Rev.

In Nepom, this court held that, under the statutory 

appeal process in effect at that time, when a taxpayer appealed 

and challenged the valuation of only one component—

either the land or the improvements—the sole issue before 

the reviewing body was the valuation of that component. See

272 Or at 254 (“In the instant case we see no valid reason 

why the parties by stipulation or by attacking only one of the 

valuations cannot raise the one specific issue on an appeal.” 

(Emphasis added.)). Nepom thus announced a limitation on 

the authority of the body or tribunal reviewing the appeal. It 

said nothing about the department’s supervisory authority 

later to correct errors in the tax rolls under ORS 306.115. 

That is unsurprising, given that, as we have noted, that 

supervisory authority is exercised outside of the appeal process that was at issue in Nepom.

2

In a reply brief, taxpayer asserts a final argument: 

Even if it might otherwise be permissible for the assessor 

to seek a correction to the tax rolls based on an agreement 

between the parties indicating likely error, it still was not 

permissible for the assessor to do so in this case because 

there was no such agreement. According to taxpayer, ORS 

306.115 and OAR 150-306.115(4)(b)(A) authorize a correction to the tax rolls only if the parties “unequivocally agree 

that an error existed on the tax roll,” and there was no such 

agreement in this case. At best, taxpayer argues, there was 

an agreement concerning the total value of the property as 

the basis for taxpayer’s proposed valuation of the improvements. In taxpayer’s view, such an agreement did not constitute an agreement that the tax rolls should be changed.

We do not approve of the practice of advancing an 

entirely new argument for the first time in a reply brief. 

See ORAP 5.45(1) (“No matter claimed as error will be considered on appeal unless the claim of error ** * is assigned 

as error in the opening brief[.]”). It could be argued that 

it is permissible to advance such an argument in this case 

because it goes to the “jurisdiction” of the department. See 

2 The legislature has since modified the rule in Nepom to allow other parties 

to a property tax appeal to put at issue any unappealed component of the property’s value. See ORS 305.287; Village at Main Street Phase II v. Dept. of Rev., 356 

Or 164, 339 P3d 428 (2014).
Cite as 357 Or 113 (2015) 121

State v. Hess, 342 Or 647, 653 n 4, 159 P3d 309 (2007) (“A 

party may raise the issue of the lack of subject matter jurisdiction at any time.”). OAR 150-306.115(3) does use the 

term “supervisory jurisdiction.” Whether the term is used 

in the sense of subject matter jurisdiction is debatable. But 

we need not join that debate because, even if taxpayer may 

raise its argument at such a late juncture, the argument is 

unavailing.

Taxpayer misstates what the administrative rule 

requires. Nowhere does the text of the rule require an assessor to establish that the parties “unequivocally agree[d] that 

an error existed on the tax roll.” Instead, the rule requires 

that the assessor demonstrate that “[t]he parties to the 

petition agree[d] to facts indicating likely error.” OAR 150-

306.115(4)(b)(A). The rule does not require that any agreement be “unequivocal.” Likewise, the rule does not require 

all parties to agree that an error existed in the tax roll. 

What the rule requires is evidence that the parties agreed 

to “facts” and that the facts they agreed to are ones “indicating likely error.”

In this case, as we have noted, the parties agreed to 

a fact—specifically the total value of the property at issue, 

based on taxpayer’s own appraiser’s testimony—that, if true, 

indicates the original land value was in error. Taxpayer may 

have agreed to that value for what it perceived to be a different or narrower purpose, but that purpose does not alter 

the situation in any relevant way. The parties agreed to that 

total value. That total value is a fact. And that fact indicates 

the original land value likely was in error.

The judgment of the Tax Court is affirmed.