No. 13	                      April 9, 2015	113

             IN THE SUPREME COURT OF THE
                   STATE OF OREGON

               WILLAMETTE ESTATES II, LLC
                     Plaintiff-Appellant,
                               v.
                DEPARTMENT OF REVENUE,
                      State of Oregon,
                   Defendant-Respondent,
                             and
               MARION COUNTY ASSESSOR,
                    Defendant-Intervenor.
                   (TC 5146; SC S062027)

   En Banc
   On review from the Oregon Tax Court.*
   Argued and submitted March 13, 2015.
   Henry C. Breithaupt, Judge.
   Ridgway K. Foley, Greene & Markley, P.C., Portland, filed
the briefs and argued the cause for appellant. With him on
the briefs was Donald H. Grim.
   Melisse S. Cunningham, Assistant Attorney General,
Salem, argued the cause and filed the brief for respondent.
With her on the brief were Ellen F. Rosenblum, Attorney
General, and Daniel Paul, Assistant Attorney General.
   No appearance by Intervenor.
   LANDAU, J.
   The judgment of the Tax Court is affirmed.




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

    After taxpayer Willamette Estates II, LLC, had obtained a reduction of the
real market value of only the improvements to real property, the Marion County
Assessor filed a petition with the Department of Revenue under ORS 306.115 to
correct the real market value of the land itself. The department corrected the
land’s real market value, and the Tax Court affirmed. Taxpayer appealed. Held:
(1) The assessor’s petition under ORS 306.115 did not amount to the assessor
impermissibly appealing his own valuation decision; (2) the department’s correc-
tion of the land real market value did not violate Nepom v. Dept. of Revenue, 272
Or 249, 536 P2d 496 (1975); and (3) the requirement for the department’s super-
visory jurisdiction that “[t]he parties to the petition agree[d] to facts indicating
likely error,” OAR 150-306.115(4)(b)(A), had been met in this case.
    The judgment of the Tax Court is affirmed.
Cite as 357 Or 113 (2015)	115

	       LANDAU, J.
	        At issue in this case is whether the Marion County
Assessor may obtain from the Department of Revenue a
correction to the tax rolls concerning the valuation of the
real property of taxpayer Willamette Estates II, LLC. The
Tax Court Regular Division concluded that the assessor was
authorized by administrative rule to seek such a correction
and that the department was authorized by statute to allow
it. Taxpayer appeals, arguing that the Tax Court’s decision
essentially sanctions an assessor’s unlawful appeal of his
own assessment. In the alternative, taxpayer argues that
the Tax Court’s decision conflicts with this court’s prece-
dents. For the reasons that follow, we affirm the decision of
the Tax Court.
	       The relevant facts are not in dispute. Taxpayer owns
an apartment complex located in Marion County. In 2008,
the assessor assessed the following values for that property:
	   Land real market value (RMV):	           $ 1,002,840
	   Improvements RMV:			                     $14,784,740
	   Total RMV:				 $15,787,580
	        Taxpayer appealed, and the local board of property
tax appraisals affirmed. Taxpayer then appealed to the Tax
Court Magistrate Division, but challenged the value of the
improvements only. In challenging the value of the improve-
ments, however, taxpayer did not offer direct evidence of a
lower real market value for the improvements. Instead, tax-
payer offered evidence of the real market values for both the
property as a whole and for the land only. Specifically, tax-
payer offered an appraiser’s testimony that the real market
value for the property as a whole was $12,309,000, while
the real market value for the land alone was $5,594,000.
Taxpayer then argued that, having established those two
values, basic arithmetic led to the conclusion that the cor-
rect real market value for the improvements was the differ-
ence between the two: $6,715,000.
	       The assessor stipulated that the real market value
for the property as a whole was $12,309,000, as taxpayer
contended. The magistrate found that the real market value
116	                     Willamette Estates II, LLC v. Dept. of Rev.

of the land was $5 million and, subtracting that value from
the total stipulated value, concluded that the correct value
of the improvements was $7,309,000. Because taxpayer
had appealed only the value of the improvements, however,
the magistrate’s order altered only that component of the
total assessment. In other words, even though taxpayer had
offered evidence—and the magistrate had found—that the
value of the land was $5,000,000, the original valuation of
$1,002,840 for that land remained on the tax rolls.
	         In a separate proceeding, the assessor then filed
a petition with the Department of Revenue to correct pre-
cisely that discrepancy. The assessor cited as authority for
its petition ORS 306.115,1 which gives the department gen-
eral supervisory authority over the property tax system and
grants it discretion to “order the correction of clerical errors,
errors in valuation or the correction of any other kind of error
or omission in an assessment or tax roll[.]” ORS 306.115(1).
The assessor also cited a department rule promulgated to
implement ORS 306.115, which states that the department
may consider a requested correction upon a showing that
“[t]he parties to the petition agree to facts indicating likely
error.” OAR 150-306.115(4)(b)(A). In this case, the assessor
asserted, the parties had stipulated to a total real market
value for taxpayer’s property that, when combined with the
value of improvements found by the magistrate, necessarily
meant that the original land valuation was erroneous.
	        The department agreed with the assessor and
revised the land value to $5,000,000. Taxpayer appealed
to the Magistrate Division, which affirmed. Taxpayer then
appealed to the Regular Division of the Tax Court, which
also affirmed.
	        In its opening brief on appeal to this court, taxpayer
advances two arguments in support of the contention that
the Tax Court erred in affirming the department’s decision
to allow the correction to the tax rolls. First, taxpayer argues
that the Tax Court impermissibly permitted the assessor to
appeal his own decision. Second, taxpayer argues that the

	1
       All references to statutes and rules are to the 2009 versions in effect when
the assessor filed his petition with the department.
Cite as 357 Or 113 (2015)	117

effect of the Tax Court’s decision is to allow “impermissible
value shifting” in violation of Nepom v. Dept. of Revenue, 272
Or 249, 536 P2d 496 (1975). We address each of those argu-
ments in turn, concluding that neither has merit.
	        We begin with taxpayer’s argument that allow-
ing the assessor to seek a correction of a prior valuation
amounts to an impermissible appeal of the assessor’s own
decision. Taxpayer relies on two prior Tax Court decisions
for its argument. Its reliance on those decisions, however,
is misplaced. To the contrary, as we will explain, the law
expressly authorizes an assessor to seek, and the depart-
ment to allow, a correction of errors on the tax rolls.
	        The statute at issue here is ORS 306.115(3). It pro-
vides in part:
   	 “(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.”
Textually, that statute does not limit the party who may
seek a correction.
	        To implement that statute, the department pro-
mulgated OAR 150-306.115, which specifically authorizes a
local tax assessor to petition for such a change or correction:
   	 “(1)  ORS 306.115 is an extraordinary remedy that
   gives the Department of Revenue authority to order a
   change or correction to a separate assessment of property.
   An assessor or taxpayer may request a change or correction
   by filing a petition with the department. * * *
   	 “(2)  The department may correct any errors or 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
118	                Willamette Estates II, LLC v. Dept. of Rev.

   burden of showing that the requirements for supervisory
   jurisdiction, as stated in ORS 306.115 and section (4) of
   this rule, have been met. The department will base its
   determination on the record before it.
   	   “* * * * *
   	 “(4)  The department will consider the substantive
   issue in the petition only when:
   	 “(a)  The assessor or taxpayer has no remaining 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:
   	 “(A)  The parties to the petition agree to facts indicat-
   ing likely error[.]”
	       Thus, under the department’s administrative rule,
an assessor may petition the department to correct the tax
roll.
	       An assessor’s petition to correct the tax rolls pro-
ceeds in two steps. The first step requires the assessor to
demonstrate that the department has what the rule denom-
inates as “supervisory jurisdiction.” Specifically, the asses-
sor must prove that the assessor has no remaining right of
appeal and that an error on the tax rolls is likely as indicated
by, among other things, an agreement between the taxpayer
and the assessor. The second step requires the assessor to
demonstrate that, in fact, there is an error on the tax rolls.
	        In this case, the assessor satisfied those require-
ments. It is undisputed that there remained no avenue of
appeal for the assessor. Further, it cannot be disputed that
an error in the valuation of taxpayer’s land necessarily fol-
lowed from the parties’ stipulation as to the total value of
the real property and the magistrate’s determination of the
value of the improvements.
	        The Tax Court decisions on which taxpayer relies
are not to the contrary. Neither holds that an assessor may
not seek a correction of an error in the tax rolls pursuant to
ORS 306.115 and OAR 150-306.115.
Cite as 357 Or 113 (2015)	119

	       The first case, Bear Creek Plaza v. Dept. of Rev.,
12 OTR 272 (1992), held that, when a taxpayer appeals an
assessment under the normal appeal statute, ORS 305.275,
and that taxpayer challenges only one component of that
assessment, the statute did not authorize an assessor to
cross-appeal the other component of the assessment. Id.
at 274. The court noted that ORS 305.275(2) authorizes
an assessor to appeal only when the lower tribunal’s order
changed the value that the assessor had set, which had not
occurred in that case. Id. But, the court added, even though
there can be no cross-appeal in such cases, the department
nevertheless could correct the tax rolls under ORS 306.115
and OAR 150-306.115. Id. at 275 n 3.

	        The second case, Wynne v. Dept. of Rev., 9 OTR 378
(1984), likewise arose under ORS 305.275(2) and concerned
the authority of an assessor to appeal under that statute.
The court held that an assessor cannot appeal under that
statute unless “aggrieved,” that is, unless the lower tribu-
nal altered the original assessment. Id. at 379-80. Once
again, the court noted that another statute, there ORS
311.205, provided an avenue for correcting certain errors in
an assessment. In that particular case, the court concluded
that the assessor was not entitled to seek such a correction.
Id.

	        Neither case, therefore, supports taxpayer’s asser-
tion that an assessor’s petition to correct the tax rolls
amounts to an impermissible appeal. Rather, both confirm
that an assessor may seek corrections of errors in the tax
rolls by other means.

	        We turn to taxpayer’s argument that, in any event,
allowing the assessor to obtain a correction of the tax rolls
under ORS 306.115 amounts to impermissible value shift-
ing, in violation of Nepom. According to taxpayer, because it
appealed only the valuation of its improvements, any correc-
tion to the valuation of its land “effectively shifted the reduc-
tion in the improvements [real market value] to increase the
land [real market value] that was never in issue,” in viola-
tion of this court’s precedent. Taxpayer, however, misreads
that precedent.
120	                     Willamette Estates II, LLC v. Dept. of Rev.

	In Nepom, this court held that, under the statutory
appeal process in effect at that time, when a taxpayer appealed
and challenged the valuation of only one component—
either the land or the improvements—the sole issue before
the reviewing body was the valuation of that component. See
272 Or at 254 (“In the instant case we see no valid reason
why the parties by stipulation or by attacking only one of the
valuations cannot raise the one specific issue on an appeal.”
(Emphasis added.)). Nepom thus announced a limitation on
the authority of the body or tribunal reviewing the appeal. It
said nothing about the department’s supervisory authority
later to correct errors in the tax rolls under ORS 306.115.
That is unsurprising, given that, as we have noted, that
supervisory authority is exercised outside of the appeal pro-
cess that was at issue in Nepom.2
	        In a reply brief, taxpayer asserts a final argument:
Even if it might otherwise be permissible for the assessor
to seek a correction to the tax rolls based on an agreement
between the parties indicating likely error, it still was not
permissible for the assessor to do so in this case because
there was no such agreement. According to taxpayer, ORS
306.115 and OAR 150-306.115(4)(b)(A) authorize a correc-
tion to the tax rolls only if the parties “unequivocally agree
that an error existed on the tax roll,” and there was no such
agreement in this case. At best, taxpayer argues, there was
an agreement concerning the total value of the property as
the basis for taxpayer’s proposed valuation of the improve-
ments. In taxpayer’s view, such an agreement did not consti-
tute an agreement that the tax rolls should be changed.
	        We do not approve of the practice of advancing an
entirely new argument for the first time in a reply brief.
See ORAP 5.45(1) (“No matter claimed as error will be con-
sidered on appeal unless the claim of error * * * is assigned
as error in the opening brief[.]”). It could be argued that
it is permissible to advance such an argument in this case
because it goes to the “jurisdiction” of the department. See

	2
        The legislature has since modified the rule in Nepom to allow other parties
to a property tax appeal to put at issue any unappealed component of the proper-
ty’s value. See ORS 305.287; Village at Main Street Phase II v. Dept. of Rev., 356
Or 164, 339 P3d 428 (2014).
Cite as 357 Or 113 (2015)	121

State v. Hess, 342 Or 647, 653 n 4, 159 P3d 309 (2007) (“A
party may raise the issue of the lack of subject matter juris-
diction at any time.”). OAR 150-306.115(3) does use the
term “supervisory jurisdiction.” Whether the term is used
in the sense of subject matter jurisdiction is debatable. But
we need not join that debate because, even if taxpayer may
raise its argument at such a late juncture, the argument is
unavailing.
	        Taxpayer misstates what the administrative rule
requires. Nowhere does the text of the rule require an asses-
sor to establish that the parties “unequivocally agree[d] that
an error existed on the tax roll.” Instead, the rule requires
that the assessor demonstrate that “[t]he parties to the
petition agree[d] to facts indicating likely error.” OAR 150-
306.115(4)(b)(A). The rule does not require that any agree-
ment be “unequivocal.” Likewise, the rule does not require
all parties to agree that an error existed in the tax roll.
What the rule requires is evidence that the parties agreed
to “facts” and that the facts they agreed to are ones “indicat-
ing likely error.”
	        In this case, as we have noted, the parties agreed to
a fact—specifically the total value of the property at issue,
based on taxpayer’s own appraiser’s testimony—that, if true,
indicates the original land value was in error. Taxpayer may
have agreed to that value for what it perceived to be a dif-
ferent or narrower purpose, but that purpose does not alter
the situation in any relevant way. The parties agreed to that
total value. That total value is a fact. And that fact indicates
the original land value likely was in error.
	       The judgment of the Tax Court is affirmed.
