822	                         June 30, 2016	                         No. 44

             IN THE SUPREME COURT OF THE
                   STATE OF OREGON

               DEPARTMENT OF REVENUE,
                    State of Oregon; and
                Deschutes County Assessor,
                        Appellants,
                              v.
            RIVER’S EDGE INVESTMENTS, LLC,
                        Respondent.
                  (TC 4962; SC S062829)

   En Banc
   On appeal from the Oregon Tax Court.*
   Henry C. Breithaupt, Judge.
   Argued and submitted January 14, 2016.
   Marilyn J. Harbur, Assistant Attorney General, Salem,
argued the cause and filed the briefs for appellant Depart-
ment of Revenue. With her on the briefs were Ellen F.
Rosenblum, Attorney General, and Daniel Paul, Assistant
Attorney General.
  Laurie E. Craghead, Deschutes County Assistant Legal
Counsel, Bend, filed the brief for appellant Deschutes County
Assessor.
   Mark G. Reinecke, Bryant Lovlien & Jarvis PC, Bend,
argued the cause and filed the brief for respondent. With
him on the brief were Neil R. Bryant and Danielle Lordi.
   BREWER, J.
  The judgment of the Tax Court is affirmed. The supple-
mental judgment awarding attorney fees is vacated, and the
matter is remanded to the Tax Court for further proceedings.


______________
	    *  21 OTR 469 (2014) (judgment); 22 OTR 46 (2015) (supplemental attorney
fee judgment).
Cite as 359 Or 822 (2016)	823

     Case Summary: After the taxpayer successfully challenged the 2008-09 real
market value of a convention center, the Department of Revenue (department)
and Deschutes County Assessor (assessor) appealed, arguing that the correct
real market value of the property was significantly higher. The Tax Court agreed
with the taxpayer. Because the department failed to develop an income approach
– and did not have a credible explanation for that omission – the Tax Court con-
cluded that it could place no reliance on the department’s appraisal. According
to the Tax Court, the department’s approach conflicted with the requirements
of Measure 50 and also violated accepted appraisal principles. The Tax Court
awarded attorney fees to the taxpayer. The department and assessor appealed
both determinations. Held: (1) under the facts of this case, the Tax Court did not
err in disregarding the department’s appraisal based on the appraiser’s failure to
explain the significant departure from standard appraisal practices; (2) evidence
in the record supported the Tax Court’s decision to rely on the income approach
– a failure to consider the department’s cost approach was not error; and (3) the
Tax Court’s conclusion that Measure 50 prohibited the consideration of outside
characteristics was not necessary to its decision and was of questionable valid-
ity. Because the attorney fee award relied, at least in part, on the Tax Court’s
Measure 50 conclusion, the Court vacated the award and remanded that issue to
the Tax Court for consideration in light of its opinion.
     The judgment of the Tax Court is affirmed. The supplemental judgment
awarding attorney fees is vacated, and the matter is remanded to the Tax Court
for further proceedings.
824	            Dept. of Rev. v. River’s Edge Investments, LLC

	          BREWER, J.
	        This is an appeal from a Tax Court decision involv-
ing the value of a convention center in Bend, Oregon, for
property tax purposes for the 2008-09 tax year. The tax-
payer who owns the convention center also owns a hotel
across the street. The convention center and the hotel are
held in different property tax accounts. Taxpayer’s appraisal
valued the convention center at $4,130,000, after applying
two different approaches to valuation—the cost approach
and the income approach (described in more detail below).
The appraiser for the Deschutes County Assessor (assessor)
and the Department of Revenue (department) appraised the
convention center at $16,700,000, after applying only the
cost approach to valuation. The Regular Division of the Tax
Court rejected the department’s appraisal for two indepen-
dent reasons. First, the court held that Measure 50 (cod-
ified as Article XI, section 11, of the Oregon Constitution)
and its enabling statutes required the property in each
tax account to be valued separately. The court also inde-
pendently concluded that the department’s appraisal was
unpersuasive because the appraiser lacked good reason
for not having used the income approach. Dept. of Rev. v.
River’s Edge Investments LLC, 21 OTR 469 (2014). In a sup-
plemental judgment, the Tax Court awarded taxpayer its
attorney fees, concluding that the department’s position was
not objectively reasonable and that the department should
be deterred from making similar arguments in the future.
Dept. of Rev. v. River’s Edge Investments, LLC II, 22 OTR 46,
48 (2015).
	       The department and the assessor have appealed to
this court, raising a narrow range of issues.1 As we explain,
we affirm the Tax Court’s decision to reject the department’s
appraisal on the ground that it was unpersuasive. Because
that independent reason supports the Tax Court’s decision,
	1
        Both the department and the assessor appealed the decision on the mer-
its, but the assessor’s briefs merely join in the arguments made by the depart-
ment. Accordingly, references in this opinion to the department’s arguments on
the merits should be understood to be arguments by the assessor as well. That
understanding does not apply to the attorney fee award, however. The Tax Court
awarded attorney fees only against the department, and only the department
appealed that supplemental judgment.
Cite as 359 Or 822 (2016)	825

we affirm its judgment, and we need not decide whether
Measure 50 requires valuing the property in each property
tax account separately. Because it was based in part on the
Tax Court’s Measure 50 analysis, we vacate the award of
attorney fees and remand for further proceedings.
                       I.  OVERVIEW OF LAW
	        Before turning to the facts of this case and the Tax
Court’s holding, it is useful to establish the legal context
in which those issues arise: taxation of real property. We
review the general principles and elaborate only on the
details that are in play in this case.
A.  Real Market Value and Appraisal
     1.  Real market value
	         The real market value of property is the starting
point for determining the amount of property tax. See ORS
308.232 (unless property is exempt from ad valorem taxa-
tion, it should “be valued at 100 percent of its real market
value”).2 “Real market value” is defined as essentially what
a hypothetical buyer would pay to a hypothetical seller in
an arm’s length transaction. See ORS 308.205(1) (defining
real market value); 3 Hewlett-Packard Co. v. Benton County
Assessor, 357 Or 598, 602, 356 P3d 70 (2015).4 The real mar-
ket value is derived from the “highest and best use” of the
property, because the highest sale price would come from a
buyer who intended to use the property in the most profit-
able way.5
	2
        Unless otherwise noted, all references to statutes or rules are to the ver-
sions in effect on the assessment date for this particular property: January 1,
2008.
	3
        ORS 308.205(1) provides:
    	     “Real market value of all property, real and personal, 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’s-length trans-
    action occurring as of the assessment date for the tax year.”
	4
        Hewlett-Packard Co. dealt with industrial property and relied on different
regulations. Nevertheless, the regulations applicable here show that the same
general principles apply.
	5
        “Highest and best use” means
    “the reasonably probable and legal use of vacant land or an improved prop-
    erty that is physically possible, appropriately supported, and financially
826	             Dept. of Rev. v. River’s Edge Investments, LLC

     2.  Maximum assessed value and Measure 50
	         The real market value of property, however, is not
necessarily the assessed value that goes on the tax roll.
That qualification derives from Measure 50, a constitutional
amendment enacted in 1997 (codified as Article XI, section
11, of the Oregon Constitution), and its enabling legislation.
In sum, Measure 50 caps property taxes: The assessed value
of the property will be the lesser of the real market value or
what is called the “maximum assessed value.” See Or Const,
Art XI, § 11(1) (describing calculation of maximum assessed
value); 6 ORS 308.146(2).7 The maximum assessed value
generally is designed to keep the assessed property value
from increasing more than three percent per year. See Or
Const, Art XI, § 11(1)(b); ORS 308.146(1).
	       For purposes of determining compliance with
Measure 50, “property” means “[a]ll property included
within a single property tax account[.]” ORS 308.142(1)(a).
A property tax account is an administrative division of

    feasible, and that results in the highest value. See The Appraisal of Real
    Estate, 12th edition (2001).”
OAR 150-308.205-(A)(1)(e). The “highest and best use” of real property is an inte-
gral part of determining its real market value. See OAR 150-308.205-(A)(2)(i):
    	     “Determining highest and best use for the unit of property is necessary
    for establishing real market value. This determination of highest and best
    use may include, among others, all possible uses that might result from
    retaining, altering or ceasing the integrated nature of the unit of property.”
	6
        The relevant part of Article XI, section 11, provides:
    	     “(1)(a)  For the tax year beginning July 1, 1997, each unit of property in
    this state shall have a maximum assessed value for ad valorem property tax
    purposes that does not exceed the property’s real market value for the tax
    year beginning July 1, 1995, reduced by 10 percent.
    	     “(b)  For tax years beginning after July 1, 1997, the property’s maximum
    assessed value shall not increase by more than three percent from the previ-
    ous tax year.”
	7
        ORS 308.146 provides in part:
    	     “(1)  The maximum assessed value of property shall equal 103 percent of
    the property’s assessed value from the prior year or 100 percent of the prop-
    erty’s maximum assessed value from the prior year, whichever is greater.
    	 “(2) Except as provided in subsections (3) and (4) of this section, the
    assessed value of property to which this section applies shall equal the lesser
    of:
    	     “(a)  The property’s maximum assessed value; or
    	     “(b)  The property’s real market value.”
Cite as 359 Or 822 (2016)	827

property. ORS 308.142(2) (also for purposes of complying
with Measure 50, the term “property tax account” means
“the administrative division of property for purposes of list-
ing on the assessment roll”).
     3.  Appraisal: cost, income, and comparable sales
	        To determine the real market value of property,
appraisers generally consider three different approaches
to valuation: cost, income, and comparable sales. OAR
150-308.205-(A)(2)(a) (requiring the consideration of cost,
income, or sales comparison approaches); 8 Hewlett-Packard
Co., 357 Or at 603. The cost approach estimates value from
the cost that would be needed to construct a similar prop-
erty; the income approach estimates value from the income
that the property could be expected to generate; and the
comparable sales approach estimates value from the prices
paid for similar properties. See id.
	        An appraiser must consider all three approaches,
even if the appraiser ultimately cannot use one or more
of them in developing the appraisal. OAR 150-308.205-
(A)(2)(a) (recognizing that some approaches cannot be
applied to a particular property, but “each [approach]
must be investigated for its merit”); see Hewlett-Packard
Co., 357 Or at 603. When an appraiser uses more than
one approach, the resulting values suggested by each
approach may not be identical. The appraiser then must
reconcile those value indications into a single, final value.
Id.; see also Appraisal Institute, The Appraisal of Real
Estate 65 (12th ed 2001) (“The final analytical step in
the valuation process is the reconciliation of the value
indications derived into a single dollar figure or a range
into which the value will most likely fall. The nature
of reconciliation depends on the appraisal problem, the
approaches that have been used, and the reliability of the
value indications derived.”).

	8
       OAR 150-308.205-(A)(2)(a) provides:
   	    “For the valuation of real property all three approaches—sales compari-
   son approach, cost approach, and income approach—must be considered. For
   a particular property, it may be that all three approaches cannot be applied,
   however, each must be investigated for its merit in each specific appraisal.”
828	          Dept. of Rev. v. River’s Edge Investments, LLC

    4.  Appraisal of especial property
	        In some cases, a property has no immediate market
value. In that circumstance, the real market value is deter-
mined based on just compensation. See ORS 308.205(2)(c)
(“If the property has no immediate market value, its real
market value is the amount of money that would justly com-
pensate the owner for loss of the property.”). The department
has implemented that statute through its “especial prop-
erty” rule, OAR 150-308.205-(A)(3). See STC Submarine,
Inc. v. Dept. of Rev., 320 Or 589, 595, 890 P2d 1370 (1995)
(so noting). Under the especial property rule, an appraiser
does not need to use the comparable sales approach, because
there are no comparable sales. Instead, real market value
is determined by estimating just compensation through
the cost approach and/or the income approach. The rule
provides:
   	 “Valuation of Especial Property: Especial property is
   property specially designed, equipped, and used for a spe-
   cific operation or use that is beneficial to only one particular
   user. This may occur because the especial property is part
   of a larger total operation or because of the specific nature
   of the operation or use. In either case, the improvement’s
   usefulness is designed without concern for marketability.
   Because a general market for the property does not exist,
   the property has no apparent immediate market value.
   Real market value must be determined by estimating just
   compensation for loss to the owner of the unit of property
   through either the cost or income approaches, whichever is
   applicable, or a combination of both.”

OAR 150-308.205-(A)(3).
       II.  FACTS AND TAX COURT PROCEEDINGS
A.  Facts
	       As noted, the property at issue here is a convention
center and related land in Bend. Taxpayer built the conven-
tion center south of its existing full-service hotel. The hotel
and convention center properties are adjacent, but are in
separate tax accounts. Taxpayer also owns other property
in the neighborhood, including a golf course.
Cite as 359 Or 822 (2016)	829

	        The department and the assessor filed a complaint
in the Regular Division of the Tax Court challenging the
real market value of the property as of January 1, 2008, for
the 2008-09 tax year. The department and assessor asserted
that the magistrate had erred in finding a real market value
of $3,538,000 for the property, and asserted that the correct
real market value was no less than $15,250,000.
	        At trial, each side presented an appraisal of the
property. Neither of the appraisals used the comparable
sales approach. See River’s Edge Investments LLC, 21 OTR
at 474 (noting that neither appraiser “developed a market
indicator of value”). The department’s appraiser concluded
that the highest and best use of the property as improved
was as a convention center “used in conjunction with” tax-
payer’s hotel. The department’s appraiser used only the cost
approach in valuing the property. He concluded that, as of
January 1, 2008, the property should have been valued at
$16,700,000.
	        The department’s appraiser did not use an income
approach. He concluded that the convention center property
would increase hotel room rentals, and so the income from
those extra hotel rentals should be counted in the income
approach toward the real market value of the convention
center. However, because taxpayer did not have information
regarding the extra room rentals that derived from the con-
vention center, the department’s appraiser concluded that
he could not use an income approach.9
	       The Tax Court later questioned the department’s
appraiser about his decision not to perform an income
approach analysis. The appraiser explained that it would
have been possible to value the hotel and convention center
as a package and then apportion those values between the
two properties. The court then asked why the appraiser had
not employed that apportionment methodology in using an
income approach analysis:
	9
      The taxpayer provided its financial statements to the department’s
appraiser at the appraiser’s request. There is no indication in the record that the
department’s appraiser asked the taxpayer to provide any further information
that might have facilitated the use of an income approach or that the appraiser
made any effort to estimate the extra room rentals derived from the convention
center based on any other data.
830	         Dept. of Rev. v. River’s Edge Investments, LLC

  	 “[THE COURT]:  We’ve got a problem with valuing just
  one parcel. We’re all scratching our heads. We’re worried
  that using just a focus on the convention center is lead—
  could be leading us astray. So maybe as a check, maybe as a
  valuation technique, and because you’ve done it elsewhere,
  you could value a package of two properties and then do an
  allocation. You said you could and you would have done it
  on the cost. Then you said, but I wouldn’t have done it on
  the income. Why not?
  	    “THE WITNESS:  I—
  	 “[THE COURT]:  You had the information. You testi-
  fied to that. Why didn’t you do the exercise?
  	 “THE WITNESS:  Why didn’t I—okay. I didn’t do the
  entire hotel and convention center. I didn’t—
  	 “[THE COURT]:  I know you didn’t. My question is
  why didn’t you?
  	 “THE WITNESS:  Because I was—my understanding
  of the 308.205, especial use property, I didn’t feel like the
  income approach was a proper approach.
  	 “[THE COURT]:  Why? Other than a bald conclusion
  with no support, why? Just because you didn’t feel that way,
  it won’t do it for me.
  	 “THE WITNESS:  Well, I—that’s my thinking at the
  time. I can tell you now I wish I had. But that was my
  thinking at the time that this is especial use property and
  in order to—
  	 “[THE COURT]:  But especial use property contem-
  plates property that’s part of a larger total operation; right?
  	    “THE WITNESS:  That’s correct.
  	    “[THE COURT]:  More than one property perhaps.
  	    “THE WITNESS:  Correct.
  	 “[THE COURT]:  That’s what we have here. And you’ve
  testified that in other circumstances, you started down
  that road and I told you to stop. But in other circumstances
  you’ve actually done that package and allocation process,
  haven’t you?
  	    “THE WITNESS:  Yes.
Cite as 359 Or 822 (2016)	831

   	 “[THE COURT]:  So the only reason you didn’t do it
   here is because you didn’t do it here?
   	 “THE WITNESS:  That and just compensation, the
   portion that requires just compensation.”
	        Taxpayer presented evidence of a substantially
lower value. Taxpayer’s appraiser began with a somewhat
different highest and best use for the property: As a stand-
alone convention center. Taxpayer’s appraiser then used both
cost and income approach analyses. His cost approach analy-
sis was substantially similar to the one performed by the
department’s appraiser, suggesting a value of $15,460,000.
The income approach analysis, however, suggested a much
lower value: $4,130,000. Taxpayer presented expert testi-
mony that the income approach represented the more accu-
rate value.
B.  Tax Court’s Ruling on the Merits
	       On the valuation issue, the Tax Court ultimately
agreed with taxpayer. The Tax Court’s opinion may be
broadly broken down into two separate parts. In the first
part, the Tax Court evaluated the department’s appraisal
and rejected it. River’s Edge Investments LLC, 21 OTR at
472-77. In the second part, the Tax Court independently
evaluated taxpayer’s appraisal and concluded that it was
reasonable. Id. at 477-78. In short, the Tax Court did not
merely accept the taxpayer’s appraisal by default.
	        Substantively, the Tax Court rejected the depart-
ment’s appraisal because it contained only a cost approach;
it did not contain an income approach. Id. at 474-75. It was
not merely the absence of an income approach that the court
found critical, however. It was the appraiser’s inability to
offer a good explanation for failing to perform the income
approach. Id. at 475. As noted, the department’s appraiser
had explained his decision not to use the income approach on
the ground that he did not have information on hotel income
that identified the extra income received by the hotel as a
result of the convention center. Id. The Tax Court found that
explanation problematic for several reasons. Id. at 475-76.
	     First, the Tax Court noted that Measure 50 caps
maximum assessed value increases at three percent per
832	               Dept. of Rev. v. River’s Edge Investments, LLC

year, see ORS 308.146, and for purposes of complying with
Measure 50, “property” means “ ‘[a]ll property included
within a single property tax account.’ ORS 308.142(1)(a).”
River’s Edge Investments LLC, 21 OTR at 473. The Tax
Court opined that those and other provisions of Measure
50 indicate that the value of property in a single property
tax account must be determined without “reference to the
[real market value] or any other characteristic of property
in a different property tax account.” Id. In so concluding,
the court also relied in part on this court’s decision in
Flavorland Foods v. Washington County Assessor, 334 Or
562, 54 P3d 582 (2002), which discussed Measure 50, and
which we briefly address below. River’s Edge Investments
LLC, 21 OTR at 473. Because Measure 50 would have pre-
cluded the department’s appraiser from giving any consid-
eration to the hotel’s income (which involved property in a
different tax account from the convention center), the court
opined, the department’s appraisal suffered from two prob-
lems: The appraiser’s “conclusion that the highest and best
use of the convention center was operation in conjunction
with the hotel is simply inconsistent with the account focus
of Measure 50,” id. at 474, and the appraiser had no basis
to insist that the income of the convention center should
include any of the extra income received by the hotel. Id.;10
see also id. at 475 (concluding that Measure 50 required
that “the [real market value] of the convention center, and
any other property in the same property tax account, must
be determined independently of consideration of prop-
erty (here the hotel) contained in another property tax
account.”).
	       Second, the court concluded that the department’s
appraisal was unpersuasive, even aside from any Measure 50

	10
          The Tax Court explained:
      	 “The department’s expert therefore had no legal basis for taking into
      account, in the valuation of the convention center, what he considered to be
      augmented income at the hotel, produced by the presence of the convention
      center. That income could only be relevant to the value of the property in
      the tax account in which the hotel property was found. Further, his conclu-
      sion that the highest and best use of the convention center was operation in
      conjunction with the hotel is simply inconsistent with the account focus of
      Measure 50.”
Id.
Cite as 359 Or 822 (2016)	833

issue. According to the court, the decision of the department’s
appraiser not to perform an income approach analysis was
“a serious departure from appraisal practice”—one that, “[i]f
not adequately justified, * * * would lead the court to place
no reliance on the appraisal.” River’s Edge Investments LLC,
21 OTR at 474-75.
	         The court then explained why it rejected the apprais-
er’s reason for concluding that the income approach required
considering hotel income attributable to the convention cen-
ter.11 First, adding hotel income to convention center income
would create a risk of double-counting that income toward
the value of both properties. Id. at 475. While the conven-
tion center was expected to produce more revenue for the
hotel, according to the court, the extra hotel income should
be counted as hotel income, not convention center income.
Id. Second, the appraiser’s reasoning depended on it being
legally significant that the taxpayer owned both the hotel
and the convention center, when “the identity of an owner is
not a factor that is taken into account in valuation of prop-
erty.” Id. at 476 (adding that nothing in the record showed
that the convention center and hotel had to remain owned
by the same party).
	         The Tax Court noted the emphasis that the depart-
ment had placed on the especial property rule. The court
questioned the relevance of the rule to the issues presented
by this case: The rule provides only that the comparable
sales approach is not used to value especial property, and
neither party relied on the comparable sales approach in
their appraisals. Id. at 474.12 The Tax Court concluded that
the department’s appraiser had not offered a good reason for
failing to use an income approach analysis, and his failure
to do so was a departure from fundamental appraisal prin-
ciples. Id. at 477. Accordingly, “the court place[d] no reliance
on his conclusion of value.” Id.

	    11
         Initially, the Tax Court reiterated its conclusion that counting hotel
income toward the value of the convention center would violate Measure 50, see
id. at 475, but that was not a separate and independent reason why the appraisal
should be rejected.
	12
         The Tax Court did not decide whether the subject property was espe-
cial property under the rule, nor does our analysis require us to make that
determination.
834	             Dept. of Rev. v. River’s Edge Investments, LLC

	        To sum up the court’s reasoning: the department
had argued that it was entitled to assign income from some
of the hotel rooms to the convention center to determine the
value of the convention center using the income approach.
The department was unable to do that, however, because
the hotel’s records did not show how much additional rental
income for the hotel the convention center generated. The
Tax Court’s concern was twofold. First, the department’s
argument, if accepted, would lead to counting income from
the same hotel rooms twice if it used the income approach
to value both the hotel and the convention center. Second,
if the department wanted to treat the two properties as a
single unit, it would need to combine all the income from the
two, determine the combined value, and then allocate the
value between the two properties. The department could not
do the former, and it had not done the latter.
	        The Tax Court explained, however, that its rejection
of the department’s appraisal did not necessarily mean that
it should accept the taxpayer’s appraisal by default. Id. at
477. The court therefore independently examined whether
the taxpayer’s proposed real market value was reasonable.
Id. at 477-78. In doing so, the court agreed with taxpayer’s
appraiser that the income indicator was the better basis
from which to determine value:
    	 “The property is an income producing property. It is
    in its early stages of operation and came onto the scene at
    one of the worst times in American economic history. The
    court considers the income indicator to be the most reliable
    indicator of value in this situation. The department has
    not established that the elements employed by the witness
    for taxpayer were unreasonable. Accordingly, the court
    accepts as reasonable the value conclusion of taxpayer’s
    expert witness.”

Id. Accordingly, the court found that the 2008-09 real mar-
ket value for the subject property was $2,668,000.13 Id.

	13
      Taxpayer had included personal property in both its income approach
analysis and the reconciled final value in its appraisal; the Tax Court deducted
that amount in reaching its final valuation. See id. at 478 (noting that taxpayer’s
appraiser’s value conclusion was “$2,668,000, which number did not include per-
sonal property”).
Cite as 359 Or 822 (2016)	835

C.  Tax Court’s Ruling on Attorney Fees
	        Under ORS 305.490(4)(a)(A), the Tax Court may
award attorney fees when it rules in favor of the taxpayer in
an ad valorem property tax matter. (We discuss that statute
in more detail later in this opinion.) Here, the Tax Court
recognized that its exercise of discretion to award attorney
fees was subject to the criteria of ORS 20.075. See River’s
Edge Investments, LLC II, 22 OTR at 47 (citing that statute)
and, as explained below, the court addressed four of the stat-
utory factors. The court ultimately entered a supplemental
judgment that awarded the taxpayer attorney fees and costs
against the department of $243,040.40.14
                          III. DISCUSSION
A.  Standard of Review
	       The department challenges the Tax Court’s deci-
sion on the merits and its decision awarding attorney fees
against the department. In both challenges, our standard
of review is the same: We review the Tax Court’s legal
determinations for errors of law, and we review its factual
findings for lack of substantial evidence in the record. See
ORS 305.445 (“The scope of the review of either a decision
or order of the tax court judge shall be limited to errors or
questions of law or lack of substantial evidence in the record
to support the tax court’s decision or order.”).
B.  Assignments of Error on Merits
	       As to the Tax Court’s decision on the merits regard-
ing the value of the convention center, the department
asserts a narrow range of issues. Specifically, its assign-
ments of error are as follows:
   	 “The [T]ax [C]ourt misinterpreted the provisions of
   Measure 50, and the effect of those provisions on ORS
   308.205, when it held that the highest and best use and
   real market value of property must be determined without
   reference to any property outside of the tax account under
   appeal.”

	14
       The Tax Court’s fee award included fees that taxpayer had incurred before
the Magistrate Division. The propriety of that aspect of the award has not been
challenged on appeal.
836	             Dept. of Rev. v. River’s Edge Investments, LLC

    	 “The [T]ax [C]ourt misinterpreted OAR 150-308.205-
    (A)(3) [the especial property rule] when it held that the
    department’s cost approach should be given no weight
    because the department did not also perform an income
    approach to value the property.”15

	        As a prudential matter, we begin with the depart-
ment’s arguments regarding the administrative rule on
especial property, OAR 150-308.205-(A)(3), because it rep-
resents the narrowest possible ground on which we might
resolve the case. See Wallace P. Carson, Jr., “Last Things
Last”: A Methodological Approach to Legal Arguments in
State Courts, 19 Willamette L Rev 641, 643-45, 654 (1983)
(advocating legal analysis in sequence beginning with
administrative rules, then statutes, then state constitution,
then federal law, then federal constitution). With respect to
that issue, the department makes two arguments. The first
is that the Tax Court erroneously concluded that the espe-
cial property rule required the department to use an income
approach, when in fact the rule only required the department
to consider an income approach. The second is that, even if
the Tax Court correctly rejected the department’s apprais-
er’s reasons for declining to perform an income approach,
the court still should have considered the department’s cost
approach.
	       We believe that the department’s first argument mis-
reads the Tax Court’s opinion. The court recognized that the
especial property rule requires an appraiser to consider the
various approaches to valuation and that the department’s
	15
        The department raised four additional issues on the merits in two foot-
notes of its opening brief. In both footnotes, the department challenged the valid-
ity of the taxpayer’s income approach analysis. The first footnote argued that tax-
payer’s appraisal should have given more weight to the cost approach, and that its
valuation improperly relied on functional and economic obsolescence. The second
footnote asserted that the taxpayer’s income approach was incorrect because it
did not include the income from the hotel, and because there was no “stabilized
income history” for the property.
	    The department’s arguments are not appropriate assignments of error. See
ORAP 12.05(1) (rules regarding appeals generally also apply to direct appeals to
Supreme Court). Because the department’s additional arguments were not them-
selves presented as assignments of error, and because they are not implicitly con-
tained within the assignments that the department did make, we do not consider
them. See ORAP 5.45(1) (appellate courts do not consider assignments of error
that are not presented in the opening brief).
Cite as 359 Or 822 (2016)	837

appraiser had failed to develop an income approach. River’s
Edge Investments LLC, 21 OTR at 474 (appraiser “did not
develop an income indicator”). It was the appraiser’s lack
of good reason for not using the income approach, however,
that was critical to the court; it put into question the credi-
bility of the appraisal. Id.
	        As we noted, the Tax Court first explained its gen-
eral position:
   “[T]he department’s expert witness did not develop an
   income indicator. That is a serious departure from appraisal
   practice. Appraisal Institute, The Appraisal of Real Estate
   130 (13th ed 2008). If not adequately justified, it would lead
   the court to place no reliance on the appraisal of the expert
   who took the departure.”
Id. at 474-75 (emphasis added). The court then concluded
that the appraiser’s justification for not performing an
income analysis was deficient:
   	 “The justification given by the appraiser for the depart-
   ment for this departure from standard practice was that
   the income information he had for the convention center did
   not include income augmentation experienced by the hotel
   by reason of the existence and operation of the convention
   center. That explanation is deficient for two reasons.”
Id. at 475 (emphasis added). Because of the deficiencies
(which the court discussed in detail), the court ultimately
concluded that there had been
   “no reason to depart from fundamental appraisal princi-
   ples or the consideration of the income method required by
   OAR 150-308.205-(A)(3). Because the expert witness for
   the department made such departures, the court places no
   reliance on his conclusion of value.”
Id. at 477.
	        The department’s argument that the Tax Court
misinterpreted the especial property rule thus fails because
it challenges a conclusion that the Tax Court never made.
Contrary to the department’s position, the Tax Court did
not require all appraisals of especial property to use both
a cost approach and an income approach. The Tax Court
merely held that an appraisal’s credibility is harmed when
838	         Dept. of Rev. v. River’s Edge Investments, LLC

the appraiser declines to use one of the two remaining
approaches to valuation in the absence of a credible expla-
nation. The department offers no argument as to why the
Tax Court would have erred in concluding that that affected
the credibility of the department’s appraisal.
	        The department’s second argument is that the Tax
Court was required to consider the cost approach that its
appraiser had performed, even if the court had correctly
concluded that the department’s appraiser also should have
performed an income approach. According to the depart-
ment, there is no authority under the especial property rule
for the Tax Court to refuse to consider the department’s cost
approach. We do not find that argument persuasive.
	         The department’s argument appears to assume
that the mere existence of a cost approach analysis would
have affected how the Tax Court determined the final value
of the property. That assumption, however, is inconsis-
tent with the reconciliation process in appraisals. A final
value is not determined by averaging results from different
methods, but by comparing the approaches used and their
reliability in context. See The Appraisal of Real Estate at
597-98 (“The final value opinion does not simply represent
the average of the different value indications derived. No
mechanical formula is used to select one indication over
the others, rather, final reconciliation relies on the proper
application of appraisal techniques and the appraiser’s judg-
ment and experience.”); id. at 65 (“The nature of reconcilia-
tion depends on the appraisal problem, the approaches that
have been used, and the reliability of the value indications
derived.”). The department does not assert that the espe-
cial property rule—which provides that just compensation
for especial property shall be estimated “through either the
cost or income approaches, whichever is applicable, or a com-
bination of both”—indicates otherwise.
	        In this case, the Tax Court explicitly found, when
evaluating the taxpayer’s appraisal, that the income
approach was the more correct approach to valuation.
River’s Edge Investments LLC, 21 OTR at 478. The weight
to be given to the various approaches is a question of
fact, and evidence in the record supports the Tax Court’s
Cite as 359 Or 822 (2016)	839

determination. See Pacific Power & Light Co. v. Dept. of
Rev., 286 Or 529, 533, 596 P2d 912 (1979) (“While, under
the statute and rule, it is allowable for defendant to use
only one approach in valuing property, whether in any
given assessment one approach should be used exclusive of
the others or is preferable to another or to a combination
of approaches is a question of fact to be determined by the
court upon the record.”); see also Brooks Resources Corp. v.
Dept. of Revenue, 286 Or 499, 505-06, 595 P2d 1358 (1979)
(although income approach was “speculative,” the finder of
fact “may decide as a matter of fact that despite its inade-
quacies, the income approach is a better measure of value
than the cost approach with respect to” the property at
issue (emphasis omitted)). Because the Tax Court permis-
sibly chose to accept the income approach valuation, the
department’s cost approach simply would not have affected
the Tax Court’s final valuation decision.
	        In sum: The Tax Court determined that the income
approach—not the cost approach or a combination of the
cost and income approaches—was applicable in this case.
The department has not shown that the Tax Court erred
in making that determination, either factually or legally.
Because the Tax Court permissibly made that determina-
tion, the details of the department’s cost approach would not
affect the Tax Court’s final conclusion on valuation. We thus
find no merit in either of the department’s arguments based
on the especial property rule, OAR 150-308.205-(A)(3).
D.  Measure 50
	       The department’s second assignment of error is that
the Tax Court incorrectly interpreted Measure 50 to require
that a property’s highest and best use and its real market
value be determined without reference to property outside
the tax account at issue on appeal.
	       In order to assess the department’s argument, we
review in greater detail the Tax Court’s holding regarding
Measure 50. After explaining that Measure 50 required the
assessed value to be the lesser of the maximum assessed
value or the real market value, the court noted that ORS
308.146(2) required the comparison to be made using the
840	             Dept. of Rev. v. River’s Edge Investments, LLC

real market value and maximum assessed value of all prop-
erty in a single property tax account:
    	 “Consistently with the constitution, the assessed value
    is the lesser of the [real market value] or the [maximum
    assessed value] for ‘property.’ ORS 308.146(2). For pur-
    poses of determining whether the [assessed value] of prop-
    erty exceeds the property’s [maximum assessed value],
    ‘property’ means, except for centrally assessed property
    not relevant here, ‘[a]ll property included within a single
    property tax account.’ ORS 308.142(1)(a).”
River’s Edge Investments LLC, 21 OTR at 473 (final alter-
ation in original).
	        Because the real market value for property in a tax
account was compared to the maximum assessed value for
property in the same account, according to the Tax Court,
the real market value could not include value from property
in another tax account. Id.16 From that point, the Tax Court
drew the additional conclusion that the real market value
of property in one tax account must be determined without
any reference to other property tax accounts. Id. The court
stated that “[n]othing in the language of the constitution,
the statutes or the Flavorland decision provides any support
for determining the [real market value] of property in one
property tax account by reference to the [real market value]
or any other characteristic of property in a different prop-
erty tax account.” River’s Edge Investments LLC, 21 OTR at
473.
	       As we understand the Tax Court’s rationale, it drew
from Measure 50 the idea that income from property in sep-
arate tax accounts should be treated separately and, for
that reason, the department’s efforts to attribute some hotel
income (from one tax account) to the convention center (in

	16
         The Tax Court explained:
     	    “The [assessed value] of any property can be determined only after com-
     paring the [real market value] of the property and the [maximum assessed
     value] determined for the property. It therefore logically follows that the
     [real market value] of any property must be determined by reference to what
     the [real market value] of all property in a tax account is. Consideration of
     the [real market value] or [maximum assessed value] of property found in
     another tax account is, as a necessary conclusion, not permitted.”
Id. at 473.
Cite as 359 Or 822 (2016)	841

another tax account) were impermissible. As the court saw
it, the notion of discrete tax accounts and the provisions of
Measure 50 provided a simple way of separating one income-
producing property from another.
	       The concern that we have with that rationale is that
tax accounts are an administrative means of tracking prop-
erty that may or may not reflect whether the property con-
tained in one or more tax accounts is a single economic unit.
See ORS 308.142(2) (for purposes of Measure 50, the term
“property tax account” means “the administrative division
of property for purposes of listing on the assessment roll”).
Sometimes property comprising a single economic operation
will be contained in multiple tax accounts and sometimes
not. Measure 50 does not teach us one thing or another
about that.
	        It is universally recognized that the location of real
estate affects its value—so much so that the principle needs
no citation. A convention center is worth more next to a hotel
than to a factory; a gasoline station is worth more next to
a freeway than to a rural road; a house is worth more next
to a golf course than to a railway. The real market value of
property thus will undisputedly be affected by some “char-
acteristics of property in a different property tax account,”
even though the Tax Court seemingly thought otherwise.
See River’s Edge Investments LLC, 21 OTR at 473 (real mar-
ket value is not to be determined “by reference to the [real
market value] or any other characteristic of property in a
different property tax account” (emphasis added)). Measure
50 does not exclude those sorts of characteristics from the
valuation process.17
	       Neither does Flavorland Foods meaningfully inform
our analysis. That case dealt only with the internal aspects
of a single property tax account: Specifically, this court

	17
        It does not appear that the Tax Court found the common ownership of the
two properties to be the characteristic forbidden by Measure 50. The court seems
to have treated common ownership as a matter separate and apart from the con-
stitutional question. See River’s Edge Investments LLC, 21 OTR at 476 (court’s
statement that “the identity of an owner is not a factor that is taken into account
in valuation of property” is not part of its Measure 50 discussion, but rather part
of its explanation of the independent reasons why court rejected department’s
appraisal).
842	         Dept. of Rev. v. River’s Edge Investments, LLC

considered whether the phrase “each unit of property” in
Measure 50 established a single maximum assessed value
for all of the property in a tax account, or separate maximum
assessed values for the land and the improvements. 334 Or
at 567. When this court in Flavorland Foods stated that the
voters intended Measure 50 “to refer to all the property in
a property tax account,” id. at 578, the court was only indi-
cating that the property in a property tax account should
be treated as a unified whole. The court did not address the
relationship between property held in different property tax
accounts or make any statement about how real property
should be valued.
	        In short, there is no support in the pertinent stat-
utes, this court’s decisions, or in the evidentiary record in
this case, for the proposition that the determination of what
constitutes an economic unit (or the appropriate unit to
value) for purposes of the income approach valuation cor-
responds to or is driven by the existence of separate tax
accounts. Because there is no indication that tax accounts
define an economic unit for the purposes of the income
approach, the Tax Court’s reliance on Measure 50 to sup-
port its rejection of the department’s appraisal is of ques-
tionable validity.
	        We do not believe, however, that it is necessary for
us to resolve the Measure 50 question in this case, because,
as indicated, the Tax Court also found another independent
and fully adequate reason for accepting the real market
value proposed by taxpayer. The issue in this case is the real
market value to be assigned to the property. In determining
the property’s value, the Tax Court had before it two apprais-
als. As discussed, the court concluded that the department’s
appraisal was not credible. The court’s conclusion on that
issue did not depend on its holding regarding Measure 50.
See River’s Edge Investments LLC, 21 OTR at 475 (explain-
ing why appraiser’s justification for not performing income
approach was deficient; “even if Measure 50 did not com-
pel separate consideration of the convention center and the
hotel, basic valuation principles would”). The court then
independently evaluated taxpayer’s appraisal, concluded
that it was reliable, and accepted taxpayer’s valuation. See
Cite as 359 Or 822 (2016)	843

id. at 477-78. Again, the court’s decision to accept taxpayer’s
valuation did not depend on Measure 50.
	        Those conclusions support the result that the Tax
Court reached. The court accepted the real market value of
the only credible appraisal before it. The department has not
successfully challenged any of those conclusions, and so we
must affirm the judgment. Nothing that we could say about
Measure 50 would change that.
E.  Attorney Fees
	        In addition to its arguments on the merits, the
department also challenges the Tax Court’s award of attor-
ney fees to taxpayer. We turn now to that issue.
	       The Tax Court is authorized to award attorney
fees when the court rules in favor of the taxpayer in an
ad valorem property tax case. The relevant statute, ORS
305.490, provides in part:
   	 “(4)(a)  If, in any proceeding before the tax court judge
   involving ad valorem property taxation, exemptions, spe-
   cial assessments or omitted property, the court finds in
   favor of the taxpayer, the court may allow the taxpayer, in
   addition to costs and disbursements, the following:
   	 “(A)  Reasonable attorney fees for the proceeding under
   this subsection and for the prior proceeding in the matter,
   if any, before the magistrate[.]”
	        In reviewing an award of attorney fees under that
statute, the ultimate question is whether the Tax Court
abused its discretion. See Clackamas Cty. Assessor v. Village
at Main Street, 352 Or 144, 151, 282 P3d 814 (2012) (so not-
ing). The Tax Court’s exercise of discretion is guided by the
factors found in ORS 20.075(1). Id. at 153 (“[i]n determin-
ing whether to exercise its discretionary authority to award
attorney fees under ORS 305.490(4)(a)(A), a court must con-
sider the factors listed in ORS 20.075(1)”).18

	18
       ORS 20.075 provides in part:
   	    “(1)  A court shall consider the following factors in determining whether
   to award attorney fees in any case in which an award of attorney fees is
   authorized by statute and in which the court has discretion to decide whether
   to award attorney fees:
844	            Dept. of Rev. v. River’s Edge Investments, LLC

	        In this case, the Tax Court relied on four statutory
factors to conclude that it was appropriate to award attorney
fees against the department: that the department’s position
was not objectively reasonable (ORS 20.075(1)(b)); that an
award of attorney fees would deter the department from
making meritless arguments (ORS 20.075(1)(d)); that the
department had not objectively been reasonable or diligent
in pursuing settlement (ORS 20.075(1)(f)); and that another
unspecified factor (ORS 20.075(1)(h))—the importance of
the Tax Court’s Measure 50 determination—also justified
an award. River’s Edge Investments, LLC II, 22 OTR 47-49.
	        The department asserts that the award of fees was
inappropriate because the department acted in good faith
and presented objectively reasonable arguments to the Tax
Court. The department’s appraiser had a reasonable basis
in fact and law, it asserts, for not using the income approach
and instead relying on the cost approach. Taxpayer count-
ers, consistently with the Tax Court’s analysis, that the
award of attorney fees was justified.
	        In light of our concerns about the Tax Court’s hold-
ing with respect to Measure 50, we conclude that we should
vacate the attorney fee award and remand to that court for
further consideration. The Tax Court’s conclusions about
Measure 50 thread through most of the factors that the
court identified in favor of an award of attorney fees. It was

   	 “(a)  The conduct of the parties in the transactions or occurrences that
   gave rise to the litigation, including any conduct of a party that was reckless,
   willful, malicious, in bad faith or illegal.
   	   “(b)  The objective reasonableness of the claims and defenses asserted by
   the parties.
   	   “(c)  The extent to which an award of an attorney fee in the case would
   deter others from asserting good faith claims or defenses in similar cases.
   	   “(d)  The extent to which an award of an attorney fee in the case would
   deter others from asserting meritless claims and defenses.
   	   “(e)  The objective reasonableness of the parties and the diligence of the
   parties and their attorneys during the proceedings.
   	   “(f)  The objective reasonableness of the parties and the diligence of the
   parties in pursuing settlement of the dispute.
   	 “(g)  The amount that the court has awarded as a prevailing party fee
   under ORS 20.190.
   	   “(h)  Such other factors as the court may consider appropriate under the
   circumstances of the case.”
Cite as 359 Or 822 (2016)	845

the only explicit “other factor” that the court found under
ORS 20.075(1)(h)—the conclusion that a decision regard-
ing Measure 50 resolved an important legal question that
would benefit taxpayers, the department, and other county
assessors. Id. at 49.19 It underlies at least part of the court’s
conclusion that the department’s position was not objectively
reasonable. See id. at 48 (asserting that “Measure 50, as
interpreted by the Oregon Supreme Court[,] makes such
consideration of other tax accounts improper”). The Tax
Court’s conclusion regarding deterrence (ORS 20.075(1)(d))
depended on its conclusion that the department’s position
was not objectively reasonable, and so its deterrence analy-
sis turned at least in some part on the Tax Court’s Measure
50 holding. River’s Edge Investments, LLC II, 22 OTR at 48.
In short, of the factors identified by the Tax Court, most of
them depended at least in part on its conclusions regarding
Measure 50. Because the Measure 50 issue seemingly was
raised by the Tax Court rather than the parties, it is diffi-
cult to say that the department had a position on Measure
50, much less a position that was unreasonable.
	        As noted, the decision to award attorney fees is a
discretionary one, granted to the Tax Court. Our opinion
here substantially affects the Tax Court’s original basis for
awarding fees. For that reason, we vacate the Tax Court’s
award of attorney fees and remand to that court. Because
it is not clear whether the Tax Court will choose to award
attorney fees on remand without regard to the Measure 50
issue, we do not at this time address the department’s other
challenges to the present attorney fee award.
                            IV. CONCLUSION
	        On the merits, because the otherwise-unchallenged
credibility determination by the Tax Court adequately and
independently supports its decision to accept taxpayer’s

	19
        We need not decide whether or under what circumstances it is appropriate
for a court to treat the resolution of an important question of law as a factor sup-
porting an award of attorney fees. We note, however, that such a consideration
might be counterproductive. The threat of an attorney fee award could cause
parties to settle important issues, even though the party’s position might be sup-
ported by objectively reasonable arguments. And an opinion resolving an import-
ant issue of law may be valuable in itself, regardless of the merit of the particular
arguments.
846	        Dept. of Rev. v. River’s Edge Investments, LLC

valuation, we affirm that part of the court’s opinion on the
merits and its judgment. Although we have concerns about
it, we do not decide the merits of the Tax Court’s conclusion
that Measure 50 and its enabling statutes prohibit valuing
a property tax account without reference to the character-
istics of other property tax accounts. On the department’s
appeal from the supplemental judgment awarding attorney
fees, the Tax Court’s discretionary decision to award fees
depended in part on its Measure 50 conclusion. We remand
for the Tax Court to decide whether it should exercise its
discretion to award attorney fees without regard to the
Measure 50 issue.
	       The judgment of the Tax Court is affirmed. The
supplemental judgment awarding attorney fees is vacated,
and the matter is remanded to the Tax Court for further
proceedings.
