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Willamette Estates II, LLC v. Department of Revenue

Supreme Court of Oregon

April 9, 2015

WILLAMETTE ESTATES II, LLC, Plaintiff-Appellant,
v.
DEPARTMENT OF REVENUE, State of Oregon, Defendant-Respondent, and MARION COUNTY ASSESSOR, Defendant-Intervenor

Argued and Submitted March 13, 2015.

On review from the Oregon Tax Court TC 5146.[*] Henry C. Breithaupt, Judge.

Willamette Estates II, LLC v. Dep't of Revenue, 21 OTR 294, (2013)

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.

OPINION

[357 Or. 115] LANDAU, J.

At issue in this case is whether the Marion County Assessor may obtain from the Department of Revenue a correction to the tax rolls concerning the valuation of the real property of taxpayer Willamette Estates II, LLC. The Tax Court Regular Division concluded that the assessor was authorized by administrative rule to seek such a correction and that the department was authorized by statute to allow it. Taxpayer appeals, arguing that the Tax Court's decision essentially sanctions an assessor's unlawful appeal of his own assessment. In the alternative, taxpayer argues that the Tax Court's decision conflicts with this court's precedents. For the reasons that follow, we affirm the decision of the Tax Court.

The relevant facts are not in dispute. Taxpayer owns an apartment complex located in Marion County. In 2008, the assessor assessed the following values for that property:

Land real market value (RMV):

$1,002,840

Improvements RMV:

$14,784,740

Total RMV:

$15,787,580

Taxpayer appealed, and the local board of property tax appraisals affirmed. Taxpayer then appealed to the Tax Court Magistrate Division, but challenged the value of the improvements only. In challenging the value of

Page 1208

the improvements, however, taxpayer did not offer direct evidence of a lower real market value for the improvements. Instead, taxpayer offered evidence of the real market values for both the property as a whole and for the land only. Specifically, taxpayer offered an appraiser's testimony that the real market value for the property as a whole was $12,309,000, while the real market value for the land alone was $5,594,000. Taxpayer then argued that, having established those two values, basic arithmetic led to the conclusion that the correct real market value for the improvements was the difference between the two: $6,715,000.

The assessor stipulated that the real market value for the property as a whole was $12,309,000, as taxpayer contended. The magistrate found that the real market value [357 Or. 116] of the land was $5 million and, subtracting that value from the total stipulated value, concluded that the correct value of the improvements was $7,309,000. Because taxpayer had appealed only the value of the improvements, however, the magistrate's order altered only that component of the total assessment. In other words, even though taxpayer had offered evidence--and the magistrate had found--that the value of the land was $5,000,000, the original valuation of $1,002,840 for that land remained on the tax rolls.

In a separate proceeding, the assessor then filed a petition with the Department of Revenue to correct precisely that discrepancy. The assessor cited as authority for its petition ORS 306.115,[1] which gives the department general supervisory authority over the property tax system and grants it discretion to " order the correction of clerical errors, errors in valuation or the correction of any other kind of error or omission in an assessment or tax roll[.]" ORS 306.115(1). The assessor also cited a department rule promulgated to implement ORS 306.115, which states that the department may consider a requested correction upon a showing that " [t]he parties to the petition agree to facts indicating likely error." OAR 150-306.115(4)(b)(A). In this case, the assessor asserted, the parties had stipulated to a ...


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