No. 41 June 30, 2016 779

IN THE SUPREME COURT OF THE

STATE OF OREGON

OAKMONT, LLC,

an Oregon limited liability company,

Respondent,

v.

DEPARTMENT OF REVENUE,

State of Oregon; and

Clackamas County Assessor,

Appellants.

(TC 5178; SC S062342)

On appeal from the Oregon Tax Court.*

Argued and submitted September 14, 2015.

Kathleen J. Rastetter, Senior County Counsel, Oregon 

City, argued the cause and filed the briefs for appellant 

Clackamas County. With her on the briefs was Stephen L. 

Madkour.

Melisse S. Cunningham, Assistant Attorney General, 

Salem, argued the cause and filed the briefs for appellant 

Department of Revenue. With her on the briefs were Ellen F. 

Rosenblum, Attorney General, and Daniel Paul, Assistant 

Attorney General.

Jack L. Orchard, Ball Janik LLP, Portland, argued the 

cause and filed the brief for respondent. With him on the 

brief was Amy Heverly.

Before Balmer, Chief Justice, and Kistler, Walters, 

Landau, Baldwin, Brewer, and Nakamoto, Justices.**

KISTLER, J.

The judgment of the Tax Court is affirmed.

______________

** 21 OTR 375 (2014).

** Linder, J., retired December 31, 2015, and did not participate in the decision of this case.
780 Oakmont, LLC v. Dept. of Rev.

Case Summary: Taxpayer owns an apartment complex in Clackamas County. 

The Clackamas County Assessor valued the property at approximately $23 million as of January 1, 2008. In February 2008, taxpayer discovered construction 

defects and related damage. Taxpayer filed an appeal for the 2009-10 tax year, 

and the county agreed to reduce the assessed value from $21.7 million to $8.5 

million to reflect decreased market value due to damages resulting from the construction defects. Taxpayer then asked the Department of Revenue to exercise 

its supervisory jurisdiction and correct the assessed value for the 2008-09 tax 

year. The department determined that it lacked supervisory jurisdiction, and 

the Tax Court reversed. Held: (1) The department erred in determining that the 

taxpayer and the county did not agree to facts indicating a likely error on the tax 

roll; the taxpayer and the county later agreed to significantly lower the value of 

the property for the 2009-10 tax year, and the only reasonable conclusion is that 

that agreement indicated a likely error on the rolls for the preceding tax year; 

(2) in determining whether the parties agree to facts indicating a likely error on 

the roll, the department can consider an agreement made after the assessment 

date concerning facts learned after that date, as long as the facts were reasonably 

discoverable as of the assessment date.

The judgment of the Tax Court is affirmed. The case is remanded for further 

proceedings consistent with this opinion.
Cite as 359 Or 779 (2016) 781

KISTLER, J.

Oakmont LLC owns an apartment complex built in 

1996. Oakmont appealed the assessed value for the 2009-10

tax year for that complex on the ground that structural 

damages resulting from construction defects had substantially reduced the property’s value. In 2011, the county 

assessor and Oakmont agreed to reduce the assessed value 

of the complex from over $21 million to $8.5 million for the

2009-10 tax year. Because the time for appealing the valuation for the 2008-09 tax year had passed, the taxpayer 

asked the Department of Revenue to exercise its supervisory jurisdiction to correct a “likely error” in the 2008-09 

assessment. The department concluded that it had no jurisdiction to consider Oakmont’s request, and the Tax Court 

reversed. Oakmont LLC v. Clackamas County Assessor, 21 

OTR 375 (2014). Both the county and the department have 

appealed. For the reasons explained below, we affirm the 

Tax Court’s judgment.

Before turning to the facts of this case, we describe 

the applicable statutes briefly. Oregon’s ad valorem property tax system depends on assessments of taxable property within each county. Every year, each county assesses 

the value of all taxable property within the county. ORS 

308.210(1). The county assessor must determine the real 

market value of each parcel of property “as of” January 1 of 

the assessment year. Id. After making those assessments, 

the assessor places the value of the property on the assessment and tax rolls, and that value is used to determine the 

amount of taxes owed that year.1

Some taxpayers, inevitably, will disagree with the 

county’s assessment of their property’s value. Under the 

1 Measure 50 (1997) significantly changed property tax assessment and taxation procedures in Oregon. Essentially, Measure 50 established that, for the 

1997-98 tax year, the maximum assessed value for subject property was 90 percent of that property’s real market value for the 1995-96 tax year. See Or Const, 

Art XI, § 11(1)(a). Measure 50 limited the extent to which the maximum assessed 

value could increase each year, and it provided that, with some exceptions, property would be taxed based either on its maximum assessed value or its real market value, whichever was lower. See ORS 308.146 (implementing Measure 50); 

Flavorland Foods v. Washington County Assessor, 334 Or 562, 565, 54 P3d 582 

(2002) (discussing Measure 50).
782 Oakmont, LLC v. Dept. of Rev.

“normal” appeals procedure, a taxpayer who disagrees with 

the county’s assessment can file a petition with the county’s 

board of property tax appeals by December 31 of that tax 

year. ORS 309.100(1), (2). The taxpayer may then appeal 

“an order of the board [to the magistrate division of the Tax 

Court] as a result of the appeal filed under ORS 309.100[.]” 

ORS 305.275(3); see also ESCO Corp. v. Dept. of Rev., 307 

Or 639, 642, 772 P2d 413 (1989) (describing normal appeals 

procedure). A taxpayer has 30 days after the board’s order 

is issued or delivered in which to file an appeal under ORS 

305.275 to the magistrate division. See ORS 305.280(4) 

(specifying more particularly the events from which the 

30-day time limit for filing an appeal will run).

Independently of the “normal” taxpayer-initiated 

appeals process, the legislature has given the Oregon 

Department of Revenue “general supervision and control” 

over Oregon’s property taxation system. ORS 306.115 provides, in part:

“(1) The Department of Revenue shall exercise general supervision and control over the system of property 

taxation throughout the state. * ** Among other acts or 

orders deemed necessary by the department in exercising 

its supervisory powers, the department may 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 as provided under subsections (2) to (4) of this 

section.

“* ****

“(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.

“(4) Before ordering a change or correction to the 

assessment or tax roll under subsection (3) of this section, 

the department may determine whether any of the conditions specified in subsection (3) of this section exist[s] in 
Cite as 359 Or 779 (2016) 783

a particular case. If the department determines that one 

of the conditions specified does exist, the department shall 

hold a conference to determine whether to order a change 

or correction in the roll.”

ORS 306.115 gives the department supervisory 

authority that is both expansive and narrow. It gives the 

department broad 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.” Id. 

The department, however, is limited temporally to ordering 

corrections for “the current tax year and for either of the two 

tax years immediately preceding the current tax year[.]” Id.

The department has promulgated a rule that guides 

and limits the exercise of its supervisory authority. That 

rule provides, in part:

“(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 

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:
784 Oakmont, LLC v. Dept. of Rev.

“(A) The parties to the petition agree to facts indicating likely error; or

“(B) There is an extraordinary circumstance indicating a likely error. [The rule then specifies the categories 

of extraordinary circumstances that will indicate a likely 

error].”

OAR 150-306.115.

Under OAR 150-306.115, a petition invoking the 

department’s supervisory authority proceeds in two steps. 

See Willamette Estates II, LLC v. Dept. of Rev., 357 Or 113, 

118, 346 P3d 1207 (2015) (describing two-step process to 

correct tax rolls under OAR 150-306.115). First, a petitioner 

must demonstrate that the department has “supervisory 

jurisdiction” over the petition. See id.; OAR 150-306.115(3) 

(explaining that “[b]efore the department will consider the 

substantive issue in a petition,” the petitioner must establish 

the predicates listed in OAR 150-306.115(4) for invoking 

that jurisdiction). One method of establishing supervisory 

jurisdiction—the method at issue in this case—requires a 

petitioner to establish two prerequisites: (1) the petitioner 

has no remaining statutory right of appeal; and (2) the parties to the petition “agree to facts indicating likely error” 

on the tax roll. OAR 150-306.115(4)(b)(A). If a petitioner 

demonstrates those two predicates, the department has 

supervisory jurisdiction, and the petition proceeds to the 

second step. At that step, the question for the department 

is whether there is actually an error or omission on the rolls 

and, if so, whether the department should exercise its discretion to correct it. See Willamette Estates II, LLC, 357 Or 

at 118 (describing two-step procedure); OAR 150-306.115(2) 

(providing that “[t]he department may correct any errors in 

the assessment or tax roll under ORS 306.115(2) and (4)”).

In 2003, Oakmont purchased a 266-unit apartment 

complex built in 1996 and located in Clackamas County. 

The Clackamas County assessor valued that property at 

$22,914,810 as of January 1, 2008, and placed that value 

on the assessment and tax rolls for the 2008-09 tax year. 

Oakmont did not appeal that valuation. In February 2008, 

a maintenance worker noticed unusual swelling on the exterior surfaces of some of the apartment buildings. Oakmont 
Cite as 359 Or 779 (2016) 785

hired a forensic building inspection firm to determine the 

cause of the swelling. The firm inspected the buildings 

between May and June 2008. The inspection report, dated 

July 24, 2008, revealed significant construction defects 

and associated damage in the building exteriors, including 

water intrusion and wood rot due to elevated moisture levels. In November 2008, Oakmont initiated litigation against 

various contractors and architects for negligence in the construction and repair of the property. That litigation eventually settled, and Oakmont obtained undisclosed damages.

For the 2009-10 tax year, the county valued the 

property at $21,726,425. Oakmont appealed that valuation. After Oakmont filed its appeal, the county conducted 

an appraisal of the property in 2011. The county’s appraisers initially concluded that construction defects affected 

the value of the property in the 2009-10 tax year, and they 

determined an “as is” real market value of $13,065,000 for 

the property as of January 1, 2009.2

 Later that year, after 

Oakmont’s litigation against the contractors and architects concluded, Oakmont and the assessor agreed that 

the real market value of the property on January 1, 2009, 

was $8,500,000—a 60 percent reduction from the initial 

$21,726,425 valuation for the 2009-10 tax year. They also 

agreed to an approximately 70 percent reduction for 2010-11 

tax year, compared to the initial 2009-10 valuation.3

When Oakmont and the county agreed on the value 

of the property for the 2009-10 tax year, the time for appealing 

the assessment for the 2008-09 tax year had passed. Oakmont 

accordingly asked the department to exercise its supervisory 

authority under ORS 306.115 and OAR 150-306.115 to correct the value on the rolls for the 2008-09 tax year. Oakmont 

argued that the construction defects discovered in early 2008 

predated the January 1, 2008, valuation date, meaning that 

the value listed on the rolls for the 2008-09 tax year was far 

in excess of the actual real market value of the property.

2 The county reached that figure by deducting the cost of repairs for the 

construction defects and associated rental loss from the initial valuation of 

$21,726,425.

3 The parties agreed that the real market value of the property for the

2010-11 tax year was $6,800,000. When compared to the listed valuation for the 

2009-10 tax year, that amounts to a 69 percent reduction in value.
786 Oakmont, LLC v. Dept. of Rev.

To satisfy the applicable requirements for invoking the department’s supervisory jurisdiction, Oakmont 

had to demonstrate that it no longer had any remaining 

right to appeal and that the parties agreed to facts that 

indicated a likely error on the roll. At a hearing before the 

department, Oakmont identified three “agreed facts” that 

demonstrated, in its view, a likely error in the valuation for 

the 2008-09 tax year. First, the county had acknowledged 

in the 2011 appraisal report that the construction defects 

were discovered in 2007 and thus predated January 1, 

2008—the valuation date for the 2008-09 tax year. Second, 

the county had agreed to substantially reduce the valuations for the 2009-10 and 2010-11 tax years. Third, the 

county had made a determination to wait until the litigation between Oakmont and the contractors and architects 

concluded before adjusting the valuations for the 2009-10 

and 2010-11 tax years.

Oakmont argued that those agreed facts “indicat[ed] likely error” in the 2008-09 assessed value. The 

county replied that it did not agree that the assessed value 

for the 2008-09 tax year should be reduced, stating that 

“we don’t agree to facts for 2008, we didn’t have any facts” 

that the 2008-09 valuation was incorrect. After considering Oakmont and the assessor’s arguments, the department 

conference officer concluded that the department lacked 

supervisory jurisdiction over Oakmont’s petition. The officer 

explained:

“The petitioner presented written documentation from 

previous court records asserting three agreements to facts 

that would predate the date of the value January 1, 2008 

for the tax year 2008-09 that could likely indicate a valuation error. The first written evidence is from an appraisal 

report by Ron Saunders of Clackamas County dated 

February 11, 2011. [That appraisal report mentioned construction defects that were discovered in 2007 but did] 

not specify the nature or extent of th[os]e construction 

defects, only that some were noted and investigated. Since 

there is no agreement as to the condition of the property 

as of January 1, 2008 the agreed fact that that [sic] an 

investigation was conducted [in 2007] is not an indication 

of a likely error on the roll. The other two written assertions offered did not predate the [January 1, 2008] date of 
Cite as 359 Or 779 (2016) 787

valu[ation] or indicate the condition of the property as of 

the valuation date. Consequently, they cannot indicate a 

likely error on the roll as of January 1, 2008.

“The only relevant agreement is an ambiguous statement 

in a county appraisal prepared three years (February 11,

2011) after the [January 1, 2008] date of valu[ation] for the 

tax year in question. That statement does not account for 

the conditions that existed at the date of valu[ation] with 

sufficient specificity to indicate a likely error on the roll. 

The record indicates knowledge and extent of the condition 

of the property was not known for the tax year in question 

as of the January 1, 2008 valuation date.”

To summarize, the conference officer found that 

none of the three agreed facts established a likely error on 

the rolls as of January 1, 2008. Regarding the first agreed 

fact, the officer found that the references in the county’s 

2011 appraisal report to the discovery of construction 

defects in 2007 were not sufficiently specific to indicate a 

likely error in the January 1, 2008, valuation. Regarding 

the second and third agreed facts, he found that they “did 

not predate the [January 1, 2008,] date of valu[ation] or 

indicate the condition of the property as of the valuation 

date.” He accordingly concluded that no agreed facts indicated a likely error on the rolls and that the department 

lacked supervisory jurisdiction to consider Oakmont’s 

petition. As a result, the conference officer did not decide 

whether there was in fact an error on the rolls, nor did he 

decide whether the department should exercise its discretion to correct any error.

Oakmont appealed the conference officer’s decision, 

and the magistrate division affirmed. Before the regular 

division, Oakmont moved for summary judgment and the 

department and county filed cross-motions for summary 

judgment. After considering the parties’ arguments, the 

regular division of the Tax Court (the Tax Court) granted 

Oakmont’s motion for summary judgment and remanded 

the case to the department for a hearing on the merits of 

Oakmont’s petition. The Tax Court explained that, ordinarily, it reviews the department’s decisions de novo. See 

ORS 305.425(1) (“All proceedings before the judge of the Tax 

Court shall be original, independent proceedings and shall 
788 Oakmont, LLC v. Dept. of Rev.

be tried without a jury and de novo.”). However, because 

the legislature gave the department discretion to decide 

whether to exercise its authority to correct an error on the 

tax roll, see ORS 306.115(3), the court stated that it reviews 

that decision for abuse of discretion. Oakmont LLC, 21 OTR 

at 377; see also ADC Kentrox v. Dept. of Rev., 19 OTR 91, 

100 (2006) (so stating). The court explained that the department abuses its discretion when it acts arbitrarily and capriciously or arrives at a decision that is clearly wrong. See 

Martin Bros. v. Tax Commission, 252 Or 331, 338, 449 P2d 

430 (1969).

As the Tax Court framed the issue, the question before it was whether the department’s decision that 

it lacked supervisory jurisdiction was clearly wrong. 

Specifically, the court asked whether the record showed 

that “‘the parties to the petition agree[d] to facts which 

indicate it is likely that an error exists on the roll,’” contrary to the department’s conclusion. Oakmont LLC, 21 

OTR at 378 (quoting rule). The court emphasized that the 

department’s supervisory jurisdiction does not turn on the 

parties’ agreeing to an error on the roll—rather, the parties need agree only to facts that indicate a likely error. 

Id. (citing Ghazi-Moghaddam v. Dept. of Rev., 20 OTR 288 

(2011)). The court also explained that both the agreement 

between the parties and the facts indicating a likely error 

on the roll can arise after the original valuation date. Put 

another way, the parties can agree to facts that were not 

known until after the valuation date, and those facts can 

indicate a likely error on the roll as of that date. The agreement, therefore, “can occur, and often does occur, after a 

valuation date has passed.” Id. at 379.

Applying that framework, the court first found that 

the assessor “clearly agreed” with Oakmont that construction defects existed and affected the value of the property 

as of January 1, 2009, when the assessor agreed to the stipulated judgment reducing the assessed value of the property from over $21 million to $8.5 million for the 2009-10 

tax year. The court also reasoned that the assessor “implicitly, if not explicitly, agreed that the defects dated from 

the time of construction in 1996.” Id. at 380. That agreement, in turn, indicated a “likely error” on the rolls in the 
Cite as 359 Or 779 (2016) 789

$22,914,810 valuation for the 2008-09 tax year.4 The Tax 

Court concluded that the department abused its discretion 

in declining to exercise supervisory jurisdiction because the 

department was “clearly wrong” in concluding that the parties had not agreed to facts indicating a likely error as of the 

January 1, 2008, valuation date. Id.

Before considering the parties’ arguments on appeal, 

we briefly address the appropriate standard of review of the 

department’s order. As we explained in Espinoza v. Evergreen 

Helicopters, Inc., “[w]hen a trial court [or administrative 

agency] exercises discretion, it acts within certain legal 

boundaries to choose from several permissible outcomes[.]” 

359 Or 63, 116, ___ P3d ___ (2016). More specifically, a discretionary ruling by a trial court or agency can subsume both 

factual and legal issues. In reviewing a ruling for abuse of 

discretion, it can be important to distinguish the factual and 

legal issues that underlie an agency or a trial court’s exercise of discretion. See State v. Rogers, 330 Or 282, 312, 4 P3d 

1261 (2000) (explaining that, when a trial court’s exercise of 

discretion rests on an incorrect legal premise, an appellate 

court will review that legal premise independently).

In this case, the department’s conference officer 

did not “choose from several permissible outcomes” when 

he determined that the department lacked supervisory 

jurisdiction. Rather, he ruled, as a legal matter, that the 

second and third agreed facts that Oakmont identified did 

not establish a “likely error” because they did not predate 

January 1, 2008, the valuation date for the 2008-09 tax 

year.5

 Alternatively, he ruled, as a factual matter, that those 

4 Clackamas County argues that the statement in its 2011 appraisal report 

that construction defects were discovered in 2007 was incorrect; the county contends that no construction defects were discovered until 2008 at the earliest. 

Oakmont does not argue otherwise, and it notes that the defects were first discovered in February 2008. As we read the Tax Court’s opinion, it did not rely 

on the erroneous statement in the county’s 2011 appraisal report that construction defects were discovered in 2007. Rather, it relied on the proposition that the 

magnitude of the agreed reduction in value for the 2009-10 tax year (from over

$21 million to $8.5 million) and the cause of that reduction (construction defects) 

necessarily indicated a likely error in the valuation for the 2008-09 tax year.

5 As noted, no party disputes that the first “agreed fact” that Oakmont identified before the department was based on an erroneous statement in the county’s 

2011 appraisal report. Accordingly, we focus, as the Tax Court did, on the second 

and third agreed facts that Oakmont identified. 
790 Oakmont, LLC v. Dept. of Rev.

agreed facts did not establish a “likely error” on the rolls 

because they did not “indicate the condition of the property 

as of valuation date.” The conference officer’s first ruling 

presents a legal issue while his second ruling presents a 

factual one. It follows that, in reviewing those two rulings, 

the question is not, generically, whether the conference officer abused his discretion. Rather, the question is whether 

the first ruling was correct as a matter of law and whether 

there was sufficient evidence in the record to support the 

second.

We begin with the factual issue on which the conference officer’s order rests—that Clackamas County’s agreement to reduce the valuation for the 2009-10 tax year from 

over $21 million to $8.5 million did not “indicate the condition of the property” for the 2008-09 tax year. See Bay 

v. State Board of Education, 233 Or 601, 605, 378 P2d 558 

(1963) (“Whether or not the Board arrived at a conclusion 

that was clearly wrong depends upon whether a review of 

the entire record discloses any facts from which the conclusion drawn by the Board could be reached by reasonable 

minds.”).

On that issue, the county and the department contend that 

there was evidence from which the conference officer could 

have found that the assessor and Oakmont did not agree 

to facts showing a likely error on the roll for the 2008-09 

tax year. They note that the county assessor stated at the 

hearing before the department, “[W]e don’t agree to facts for 

2008, we don’t have any facts” regarding the condition of the 

property on January 1, 2008. They reason that, because the 

assessor did not agree that construction defects affected the 

value of Oakmont’s property as of January 1, 2008, there is 

evidence from which the conference officer could have found 

that no agreed fact indicated a likely error on the rolls 

regarding the 2008-09 tax year.

It is certainly true that the county assessor never 

agreed that the valuation for the 2008-09 tax year was 

erroneous, nor did he agree to the condition of the property 

on January 1, 2008. However, as the Tax Court observed, 

the county assessor agreed to facts regarding the value 

of the property for the 2009-10 tax year that necessarily 
Cite as 359 Or 779 (2016) 791

“indicat[ed] likely error” on the tax rolls for the preceding 

tax year. After Oakmont filed its tax appeal for the 2009-10

tax year, the county conducted an appraisal of the property. The county’s appraisers concluded that construction 

defects affected the value of the property in the 2009-10 tax 

year. Consequently, they assigned an “as is” market value of 

$13,065,000 as of January 1, 2009—a value that they determined by subtracting the cost of repairing the construction 

defects and the associated loss of rental income from the 

initial valuation for the 2009-10 tax year.6

That agreed value—$13,065,000—is significantly 

lower than the initial valuation of $21,726,425. Moreover, 

later in 2011, Oakmont and the county agreed to a further reduction in the value of the property for the 2009-10

tax year; specifically, they agreed to an approximately

60 percent reduction in the valuation for the 2009-10 tax 

year from $21,726,425 to $8,500,000. Given the magnitude 

of the agreed reduction in value for the 2009-10 tax year 

and given the only identified reason for the county’s agreed 

reduction in value (construction defects), the Tax Court correctly determined that the only reasonable finding that the 

conference officer could have made on this record was that 

the parties agreed to facts indicating a likely error in the 

valuation for the 2008-09 tax year.

The county and the department raise a second 

argument, which goes to the legal premise underlying the 

conference officer’s order. They argue that, when a taxpayer 

contends that the “likely error” that gives rise to supervisory jurisdiction is a valuation error, only facts that were 

actually known on the date of valuation may be considered in determining whether the listed valuation is erroneous.7

 As the county puts it, “Facts which are not known 

to the market as of the date of valuation cannot be used 

6 The Tax Court noted that the construction defects had existed since 1996 

when the apartment complex was constructed. Although the damages resulting 

from those defects presumably increased as time passed, it is at least likely that 

the damages that resulted in the property’s value being substantially reduced 

for the 2009-10 tax year also affected the property’s value in the preceding tax 

year.

7 The county and the department phrase this argument in different ways, 

but the same principle underlies most of their arguments on appeal.
792 Oakmont, LLC v. Dept. of Rev.

to value the property because such facts can have no effect 

on value.”8

 As we understand the basis for the county and 

the department’s argument, it runs as follows: The legislature has limited the department’s supervisory authority 

to making changes or corrections to a tax roll “to conform 

the roll to applicable law.” ORS 306.115(3). When a taxpayer 

claims that the roll contains an error in valuing property, 

“conform[ing] the roll to applicable law” means conforming 

the roll to the property’s “real market value”—“the amount 

in cash that could reasonably be expected to be paid by an 

informed buyer to an informed seller, each acting without 

compulsion in an arm’s-length transaction occurring as of 

the assessment date for the tax year.” See ORS 308.205(1) 

(defining “real market value”).9

The county and the department reason that, if facts 

affecting the condition of property were not actually known 

to the market on January 1, 2008, then those facts, by definition, cannot affect the property’s real market value and 

thus there was no error (or likely error) on the rolls. Both the 

county and the department find support for their position in 

Sabin v. Dept. of Rev., 270 Or 422, 528 P2d 69 (1974). The 

department argues alternatively that, even if there were 

other ways to read the phrase “likely error” in OAR 150-

306.115(4)(b)(A), its reading of its own rule is plausible and 

we should defer to it. See Crystal Communications, Inc. v. 

Dept. of Rev., 353 Or 300, 311, 297 P3d 1256 (2013) (explaining that courts will defer to the department’s interpretation 

of its own rule as long as the department’s interpretation is 

plausible and “not inconsistent with the rule, its context, or 

any other source of law”).

8 The conference officer explained that he could not consider the second and 

third agreed facts that Oakmont identified because they “did not predate the 

[January 1, 2008] date of value or indicate the condition of the property as of the 

valuation date.” (Emphasis added.) His order thus suggested that, even if the 

agreed facts postdated the January 1, 2008, valuation date, those facts could 

be considered if they indicated the condition of the property on that date. The 

county and the department appear to take a more absolute position. They appear 

to argue that, even if the agreed reduction in the assessed value for the 2009-10 

tax year did “indicate the condition of the property as of [January 1, 2008],” that 

agreement still could not be considered because the defective condition of the 

property was not actually known on that date. 

9 The statutory definition echoes, nearly verbatim, the definition used in the 

Oregon Constitution. See Or Const, Art XI, § 11(11)(a)(A).
Cite as 359 Or 779 (2016) 793

We note, as an initial matter, that the county and the 

department’s argument is difficult to square with the statutory definition of “real market value.” The statutory definition does not say that only facts that are actually known on 

the date of valuation can be considered in determining property’s real market value. Rather, the statute says that real 

market value means “the amount in cash that could reasonably be expected to be paid by an informed buyer to an 

informed seller, each acting without compulsion in an arm’slength transaction occurring as of the assessment date for 

the tax year.” See ORS 308.205(1) (defining “real market 

value”). Implicit in the phrase “informed buyer” is the proposition that an “informed buyer” would have engaged in a 

reasonable inspection of the property and thus would have 

learned facts that a reasonable inspection on the date of valuation would have revealed, even if those facts did not actually come to light until later.

The county and the department argue, however, 

that this court held in Sabin that only facts that were actually known on the date of valuation can be considered in 

determining property’s true market value. That argument 

is at odds with both the result and the reasoning in Sabin. 

In Sabin, the county assessor had determined that the taxpayers’ commercial property was worth between $6.00 and 

$7.00 per square foot. 270 Or at 425. The taxpayers contended that the assessor had overvalued their property and 

appealed. Approximately two years after the date of valuation, part of the property sold for $5.00 per square foot, and 

the taxpayers argued that the Tax Court should have considered that sale in determining the value of their property 

two years earlier. Id. at 426. This court agreed, explaining 

that “[a] sale of the property within a reasonable time of 

the assessment[,] while not conclusive, is very persuasive of 

market value.” Id. This court remanded the case to the Tax 

Court with directions to consider the later sale—a fact that 

was not actually known at the date of valuation—in determining the property’s real market value. Id. at 428.

Not only is that result at odds with the county and 

the department’s argument, but so is the court’s reasoning 

in Sabin. This court rejected the “assumption” that “evidence 

of events subsequent to the assessment date is irrelevant” to 
794 Oakmont, LLC v. Dept. of Rev.

determining property’s real market value. Id. at 427 n 11; 

see also Truitt Brothers, Inc. v. Dept. of Rev., 302 Or 603, 

609, 732 P2d 497 (1987) (sale of similar industrial facility 

15 months after assessment date was properly considered 

in determining whether earlier assessment was correct). 

In rejecting that assumption, the court explained in Sabin 

that the condition of the taxpayer’s property had remained 

essentially unchanged and that the post-valuation sale was 

thus relevant to determining the real market value of the 

property two years earlier. 270 Or at 427 n 11; accord Ernst 

Brothers Corp. v. Dept. of Rev., 320 Or 294, 305, 882 P2d 591 

(1994) (applying that principle). The court contrasted that 

situation with a later discovery that the property contained 

valuable minerals. 270 Or at 427 n 11. The court observed 

that “hindsight acquired by a later discovery of such facts 

should not be employed to change the valuation found on the 

assessment date.” Id.

As we read Sabin, the discovery of valuable minerals involved a condition of the property that was neither 

known nor reasonably knowable as of the date of valuation. 

By contrast, the sale in Sabin two years after the date of 

the valuation bore on the value of the existing use of the 

property. The information may not have been known at the 

date of valuation but it was the type of information that an 

informed buyer and seller reasonably could have discovered on the date of valuation. The same is true here. We 

assume that Oakmont and the county did not actually know 

of the construction defects on January 1, 2008. However, as 

the worker’s discovery in February 2008 suggests and an 

inspection in May and June of that year revealed, a reasonable inspection of the property would have revealed those 

defects. In that respect, the discovery of those defects is like 

the later sale in Sabin. It is after-acquired information that 

reasonably could have been discovered on the valuation date 

and that bears on whether the assessor correctly valued the 

property on that date.

Not only is the legal principle on which the county 

and the department’s second argument turns—that only 

facts that are actually known on the date of valuation may 

be considered in determining property’s real market value—

squarely at odds with our decision in Sabin and other cases, 
Cite as 359 Or 779 (2016) 795

but that principle is also difficult to reconcile with the text of 

OAR 150-306.115. The text of that rule requires only that the 

parties agree to facts “indicating likely error” on the tax roll. 

It may be that, on further review, the department could find 

that the construction defects would not have been discovered 

if a reasonable buyer and seller had inspected the apartment complex on January 1, 2008. See Willamette Estates II, 

LLC, 357 Or at 118 (distinguishing between likely error and 

actual error for the purposes of OAR 150-306.115). However, 

the agreed facts “indicate” that it is at least “likely” that a 

reasonable inspection would have uncovered the existence of 

construction defects and that the error in the assessment for 

the 2008-09 tax year should be corrected. We recognize that 

the department argues that we should defer to its interpretation of its rule. However, the department’s interpretation 

of its rule rests on a legal principle that we rejected in Sabin. 

See Crystal Communications, Inc., 353 Or at 311 (explaining 

that no deference is due when department’s interpretation is 

“inconsistent with ** * any other source of law”).

The Tax Court correctly held that the department 

had supervisory jurisdiction over Oakmont’s petition to 

reduce the assessed value of the property for the 2008-09 tax 

year. Oakmont had no remaining statutory right of appeal, 

and the parties to the petition agreed to facts indicating a 

likely error on the tax rolls. It follows that the department 

had supervisory jurisdiction to consider whether there was 

in fact an error on the tax rolls and whether, if there was, 

the department should exercise its discretion to correct any 

error. The department did not reach those issues, and we 

express no opinion on them.10 Rather, we agree with the Tax 

Court that the case should be remanded to the department 

to consider those issues in the first instance.

The judgment of the Tax Court is affirmed.

10 The county argues that we should reverse the Tax Court’s decision and 

affirm the department’s order because the department correctly exercised its discretion to decline to correct any error on the rolls. As we read the department’s 

order, the department ruled that it lacked supervisory jurisdiction to consider 

the issue raised by Oakmont’s petition and thus never exercised its discretion. It 

follows that the county’s argument is premature.