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 deci-
sion 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 mil-
lion 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 con-
struction 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 substan-
tially 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 val-
uation for the 2008-09 tax year had passed, the taxpayer
asked the Department of Revenue to exercise its supervi-
sory jurisdiction to correct a “likely error” in the 2008-09
assessment. The department concluded that it had no juris-
diction 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 prop-
erty tax system depends on assessments of taxable prop-
erty 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 assess-
ment 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 tax-
ation procedures in Oregon. Essentially, Measure 50 established that, for the
1997-98 tax year, the maximum assessed value for subject property was 90 per-
cent 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, prop-
erty would be taxed based either on its maximum assessed value or its real mar-
ket 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 pro-
vides, in part:
   	 “(1)  The Department of Revenue shall exercise gen-
   eral 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 cor-
   rection of clerical errors, errors in valuation or the correc-
   tion 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 correc-
   tion 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 condi-
   tions 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 cler-
ical 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 omis-
   sions 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 substan-
   tive 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 statu-
   tory 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 indicat-
   ing likely error; or
   	 “(B)  There is an extraordinary circumstance indicat-
   ing 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 par-
ties 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 dis-
cretion 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 exte-
rior 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 lev-
els. In November 2008, Oakmont initiated litigation against
various contractors and architects for negligence in the con-
struction and repair of the property. That litigation eventu-
ally settled, and Oakmont obtained undisclosed damages.
	        For the 2009-10 tax year, the county valued the
property at $21,726,425. Oakmont appealed that valua-
tion. After Oakmont filed its appeal, the county conducted
an appraisal of the property in 2011. The county’s apprais-
ers 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 archi-
tects 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 cor-
rect 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 invok-
ing 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 valu-
ations for the 2009-10 and 2010-11 tax years. Third, the
county had made a determination to wait until the litiga-
tion 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 “indi-
cat[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 consider-
ing 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 valua-
   tion error. The first written evidence is from an appraisal
   report by Ron Saunders of Clackamas County dated
   February 11, 2011. [That appraisal report mentioned con-
   struction 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 asser-
   tions 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 indi-
cated 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 discre-
tion 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, ordi-
narily, 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 depart-
ment abuses its discretion when it acts arbitrarily and capri-
ciously 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 ques-
tion 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,’ ” con-
trary 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 par-
ties 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 agree-
ment, 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 construc-
tion defects existed and affected the value of the property
as of January 1, 2009, when the assessor agreed to the stip-
ulated judgment reducing the assessed value of the prop-
erty from over $21 million to $8.5 million for the 2009-10
tax year. The court also reasoned that the assessor “implic-
itly, if not explicitly, agreed that the defects dated from
the time of construction in 1996.” Id. at 380. That agree-
ment, 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 par-
ties 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 dis-
cretionary 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 exer-
cise 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 con-
tends that no construction defects were discovered until 2008 at the earliest.
Oakmont does not argue otherwise, and it notes that the defects were first dis-
covered 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 construc-
tion 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 iden-
tified 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 offi-
cer 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 con-
ference 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 con-
clusion 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 depart-
ment, “[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 evi-
dence 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 prop-
erty. 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 deter-
mined 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 fur-
ther 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 cor-
rectly 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 supervi-
sory jurisdiction is a valuation error, only facts that were
actually known on the date of valuation may be consid-
ered in determining whether the listed valuation is erro-
neous.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 legis-
lature 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 defi-
nition, 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) (explain-
ing 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 statu-
tory definition of “real market value.” The statutory defini-
tion does not say that only facts that are actually known on
the date of valuation can be considered in determining prop-
erty’s real market value. Rather, the statute says that real
market value means “the amount in cash that could rea-
sonably 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”). Implicit in the phrase “informed buyer” is the prop-
osition 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 val-
uation would have revealed, even if those facts did not actu-
ally come to light until later.
	        The county and the department argue, however,
that this court held in Sabin that only facts that were actu-
ally 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 tax-
payers’ commercial property was worth between $6.00 and
$7.00 per square foot. 270 Or at 425. The taxpayers con-
tended that the assessor had overvalued their property and
appealed. Approximately two years after the date of valua-
tion, part of the property sold for $5.00 per square foot, and
the taxpayers argued that the Tax Court should have con-
sidered 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 deter-
mining 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 min-
erals 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 discov-
ered 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 reason-
able 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 apart-
ment 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 interpre-
tation 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 dis-
cretion 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.
