Gray v. Dept. of Rev. , 23 Or. Tax 220 ( 2018 )

220 December 20, 2018 No. 11
IN THE OREGON TAX COURT
REGULAR DIVISION
Diane R. GRAY,
Plaintiff,
v.
DEPARTMENT OF REVENUE,
Defendant.
(TC 5324)
Plaintiff challenged the Linn County Assessor’s assessment of Plaintiff’s
property as to tax years 2014-15, 2015-16, and 2016-17 at the Magistrate Division,
which decided in the assessor’s favor. Plaintiff appealed to the Regular Division.
Defendant filed a motion to dismiss Plaintiff’s complaint as to tax years 2014-15
and 2015-16 for lack of subject matter jurisdiction and failure to state ultimate
facts sufficient to constitute a claim. The court granted Defendant’s motion, hav-
ing held that, although the court does have subject matter jurisdiction, Plaintiff
failed to request that the court change the property’s real market value on the
tax roll by at least 20 percent. Plaintiff alleged a difference in value exceeding
the 20 percent threshold only as to the improvements to the land, not the value of
the improvements and the land together.
Submitted on Defendant’s Motion to Dismiss.
Diane R. Gray, Plaintiff, filed a response pro se.
Nate Carter, Assistant Attorney General, Department of
Justice, Salem, filed the motion for Defendant.
Decision for Defendant rendered December 20, 2018.
ROBERT T. MANICKE, Judge.
I. INTRODUCTION
This matter is before the court on the remainder
of Defendant Department of Revenue’s (the department’s)
motion to dismiss Plaintiff Diane Gray’s (taxpayer’s) com-
plaint as to tax years 2014-15 and 2015-16 for lack of subject
matter jurisdiction and failure to state ultimate facts suffi-
cient to constitute a claim.1 The court previously denied the
department’s motion to strike the complaint for failure to
properly sign it. Gray v. Dept. of Rev., TC 5324 (May 30, 2018).
1
Taxpayer’s complaint also contains a claim regarding tax year 2016-17. The
department did not move to dismiss taxpayer’s complaint as to that year.
Cite as 23 OTR 220 (2018) 221
II. FACTS
The record that the court considers on a motion to
dismiss depends on the basis asserted for dismissal. See
Tax Court Rule (TCR) 21 A. On a motion to dismiss for fail-
ure to state ultimate facts sufficient to constitute a claim,
the court’s review is limited to the allegations, accepted as
true, made in the complaint. Work v. Dept. of Rev., 22 OTR
396, 397-98, aff’d, 363 Or 745, 429 P3d 375 (2018) (quoting
Douglas County v. Smith, 18 OTR 450, 453 (2006)). On a
motion to dismiss for lack of subject matter jurisdiction,
the court also may consider “matters outside the pleading,
including affidavits, declarations and other evidence.” Work,
22 OTR at 398. Taxpayer’s complaint alleges the following:
“[Taxpayer] is owner of certain property in Linn
County, Oregon, identified by the assessor’s office as Account
number 219358.” “[Taxpayer] appealed an act, omission,
order, or determination of a county board of property tax
appeals, a county assessor, other county official, or the
Department of Revenue for such property to the Magistrate
Division of the Oregon Tax Court.” “The Magistrate’s deci-
sion is in error for the reasons stated below.”
The amounts discussed in the remaining recita-
tion of facts are illustrated in tables in the Analysis section
below. For tax year 2014-15, taxpayer challenges the real
market value (RMV)2 of “all structures” on her property.
Those structures include a “residential two-story home”
and a “pole barn.” Taxpayer alleges the RMV for all struc-
tures is $78,860. The RMV for all structures as listed on
the tax roll is $147,630, a difference of $68,770 or approx-
imately 47 percent.3 Taxpayer claims relief for tax year
2014-15 under ORS 305.288(1)4 “based on the evidence the
2
“Real market value” means “the amount in cash that could reasonably be
expected to be paid by an informed buyer to an informed seller, each acting with-
out compulsion in an arm’s-length transaction occurring as of the assessment
date for the tax year.” ORS 308.205(1).
3
Taxpayer also mentions a “requested” RMV for the structures of $112,169.
It is unclear to the court whether this reference is to a value Taxpayer requested
at some earlier time. The court interprets Taxpayer’s complaint as requesting an
RMV of $78,860.
4
Unless otherwise noted or the context dictates otherwise, all references to
the Oregon Revised Statues (ORS) are to the 2013 and 2015 editions.
222 Gray v. Dept. of Rev.
tax roll RMV was overstated by 20%.” Taxpayer also alleges
that the land RMV for her property is $104,270, but her
complaint does not inform the court of the land RMV on the
tax roll, or whether she requests a value for the land that
is different from the roll value. Accordingly, without look-
ing beyond the complaint, the court cannot determine the
percentage difference between the RMV on the tax roll for
the entire property and the RMV taxpayer requests for the
entire property.5
For tax year 2015-16, taxpayer challenges the RMV
of both the land and improvements on her property. As to
improvements, taxpayer alleges the tax roll RMV of $163,340
should be reduced to $103,935, a difference of $59,405 or
approximately 36 percent. As to land, taxpayer alleges the
RMV should be $105,626. Because taxpayer alleges that
the RMV of the entire property on the tax roll is $226,720,
the court can deduce that taxpayer alleges that the land
RMV on the tax roll is $63,380.6 Accordingly, taxpayer seeks
an increase in the RMV of the land. Just as with tax year
2014-15, taxpayer claims relief for tax year 2015-16 under
ORS 305.288(1) “based on the evidence the tax roll RMV
was overstated by 20%.” Although the complaint requests
a change in both land and improvement values, the court
interprets taxpayer’s complaint as seeking relief based
on the requested change in value of the improvements
alone.7
III. ISSUE
Under ORS 305.288(1)(b), must the court apply the
“20 Percent Correction Test” (defined below) using the total
real market value of all associated real property (in this
case, land plus improvements), or using the separate value
of each component that the party seeks to appeal (in this
case, improvements alone)?
5
The department states in its motion that the land value as stated on the tax
roll is $59,400.
6
($226,720 – $163,340 = $63,380).
7
Taxpayer’s requested change to the RMV of the entire property would result
in a difference of approximately 7.6 percent (($226,720 – $209,561) / $226,720).
Cite as 23 OTR 220 (2018) 223
IV. ANALYSIS
Relief under ORS 305.288(1) is a remedy for over-
valuation of property used primarily as a dwelling. The
relief is “in addition” to other remedies (ORS 305.288(6)),
but taxpayer’s complaint requests relief only under ORS
305.288(1), and there is no basis to conclude that tax-
payer has pursued any other route to relief as to tax years
2014-15 and 2015-16. See Work, 22 OTR at 404-05 (summa-
rizing the four potential sources of relief). The statute pro-
vides, in relevant part:
“The tax court shall order a change or correction appli-
cable to a separate assessment of property to the assessment
and tax roll for the current tax year or for either of the two
tax years immediately preceding the current tax year, or
for any or all of those tax years, if all of the following condi-
tions exist:
“(a) For the tax year to which the change or correc-
tion is applicable, the property was or is used primarily as a
dwelling (or is vacant) and was and is a single-family dwell-
ing, a multifamily dwelling of not more than four units, a
condominium unit, a manufactured structure or a floating
home.
“(b) The change or correction requested is a change in
value for the property for the tax year and it is asserted in
the request and determined by the tax court that the dif-
ference between the real market value of the property for
the tax year and the real market value on the assessment
and tax roll for the tax year is equal to or greater than
20 percent.”
ORS 305.288(1) (emphases added). The court must correct
“a separate assessment of property” for the current year,
either of the prior two years, or any or all of those years,
if two conditions are met. First, “the property” must meet
the dwelling requirements. ORS 305.288(1)(a). Second, the
change in value must be equal to or greater than 20 percent
of “the property’s” RMV as shown on the assessment roll (the
20 Percent Correction Test). ORS 305.288(1)(b).
This case requires the court to interpret the phrase
“the property” as used in the 20 Percent Correction Test.
Taxpayer argues that “the property” can mean any one of
224 Gray v. Dept. of Rev.
three things whose value is listed on the assessment roll,
(1) land only: the “land, excluding all buildings, structures,
improvement and timber thereon,” (2) improvements only:
the aggregate of all “buildings, structures and improve-
ments thereon,” or (3) land + improvements: the “parcel of
real property assessed.” See ORS 308.215(1)(a)(E), (F), (I).
Taxpayer cites a 2001 decision from the Magistrate Division
that reasoned that, because the legislature has required the
assessor to determine these three values and record them
on the roll, and because case law allows a party to appeal
the value of land or improvements separately, the 20 Percent
Correction Test applies to land or improvements separately.
See Ferschweiler v. Clackamas County Assessor, 16 OTR-MD
429, 434 (2001).
The department argues that taxpayer is focusing
on the wrong statute. Instead of considering the statute
that tells the assessor what values to list on the tax roll,
the court should base its decision on the statute that allows
taxpayer’s appeal only if the 20 Percent Correction Test is
satisfied: ORS 305.288(1). That statute requires “the prop-
erty” to be primarily used as a “dwelling.” According to the
department, the only way to compare the value of “the prop-
erty” as a dwelling with the value of “the property” on the
assessment roll is to limit the meaning of “the property” to
the land and improvements together.8
The parties’ calculations for each tax year are
expressed in the tables below as a ratio or percentage, with
the numerator representing the requested change in RMV
of the property, and the denominator representing the RMV
of the property as shown on the assessment roll. To resolve
the department’s motion, the court must decide whether
taxpayer has correctly limited her calculation of the value
of “the property” to the value of the improvements, which
for each of tax years 2014-15 and 2015-16 would result in
a percentage change exceeding the threshold prescribed by
the 20 Percent Correction Test.
8
The department defines a dwelling to mean either the land plus all improve-
ments, or just the residential structure. Because individual structures are not
listed on the assessment roll, the department argues that the “dwelling”—and
therefore “the property”—must be the land plus all improvements. The court dis-
cusses each party’s arguments at the end of this order.
Cite as 23 OTR 220 (2018) 225
Taxpayer’s Department’s
Position Position
Tax Year 2014-15
(Improvements (Land +
Only) Improvements)
RMV Change Requested $68,7709 $23,90010
RMV on Tax Roll $147,630 $207,03011
Percentage Change
(Must exceed 20% under 46.58% 11.54%
20 Percent Correction
Test)
Taxpayer’s Department’s
Position Position
Tax Year 2015-16
(Improvements (Land +
Only) Improvements)
RMV Change Requested $59,40512 $17,15913
RMV on Tax Roll $163,340 $226,720
Percentage Change
(Must exceed 20% under 36.37% 7.57%
20 Percent Correction
Test)
The department asks the court to dismiss taxpayer’s claims
as to tax years 2014-15 and 2015-16, claiming that the
requirements of ORS 305.288(1)(b) were not met for those
9
This number is calculated by subtracting the requested value of the
improvements from the value of the improvements shown on the assessment roll
for tax year 2014-15 ($147,630 – $78,860 = $68,770).
10
This number, which is based on the department’s allegations, is illustra-
tive only, as taxpayer’s complaint does not supply an RMV on the roll for the land
for 2014-15. The number is calculated by subtracting the requested value of the
land and improvements from the value of the land and improvements shown on
the assessment roll for tax year 2014-15 ($207,030 – $183,130 = $23,900).
11
This number, which is based on the department’s allegations, is illustra-
tive only, as taxpayer’s complaint does not supply an RMV on the roll for the land
for 2014-15.
12
This number is calculated by subtracting the requested value of the
improvements on taxpayer’s property from the value of the improvements on the
assessment roll for tax year 2015-16 ($163,340 – $103,935 = $59,405).
13
This number is calculated by subtracting the requested value of the land
and improvements from the value of the land and improvements on the assess-
ment roll for tax year 2015-16 ($226,720 – $209,561 = $17,159).
226 Gray v. Dept. of Rev.
years. The department gives two independent legal theo-
ries, citing this court’s recent decision in Work, which has
recently been affirmed on appeal to the Oregon Supreme
Court.14 The department asserts, first, that the court lacks
subject matter jurisdiction (TCR 21 A(1)), and second, that
taxpayer failed to state ultimate facts sufficient to consti-
tute a claim (TCR 21 A(8)). The department explains:
“The Tax Court recently has stated, in Work v. Dept. of Rev.,
[22 OTR 396 (2017),] that motions to dismiss for failure to
satisfy the requirements of ORS 305.275 and 305.288 are
properly characterized as motions to dismiss for failure to
state a claim, rather than motions to dismiss for lack of
subject matter jurisdiction, because the Tax Court gener-
ally has jurisdiction over any claims arising under the tax
laws of this state under ORS 305.410. See Work, [22 OTR at
402-03]. Work presently is under appeal. However, for pur-
poses of this motion, it is not necessary to argue the ques-
tion presented by Work, as the Department moves under
both TCR 21 A(1) and (8) with respect to the 2014-15 and
2015-16 tax years.
A. Subject Matter Jurisdiction
The department first argues that the court lacks
subject matter jurisdiction because the record to date fails
to show that the 20 Percent Correction Test is satisfied. The
court applies its decision on subject matter jurisdiction in
Work, which the Supreme Court did not disturb on appeal.
22 OTR at 402-03.
The department does not dispute that taxpayer’s
property tax burden would be lower if the court were to
grant her request to reduce the property’s RMV. See Sanok
v. Grimes, 294 Or 684, 697, 662 P2d 693 (1983) (stating that
“questions which must be resolved in order to decide tax-
ability or the amount of tax do arise under the tax laws”
and are within the Tax Court’s jurisdiction). Therefore, the
court has subject matter jurisdiction over taxpayer’s claims,
even if the court ultimately disagrees. The court denies the
department’s motion to dismiss to the extent it is based on
lack of subject matter jurisdiction (TCR 21 A(1)).
14
Work v. Dept. of Rev., 363 Or 745, 429 P3d 375 (2018).
Cite as 23 OTR 220 (2018) 227
B. Failure To State Ultimate Facts Sufficient To Constitute
a Claim
The court now considers the department’s second
argument, that taxpayer has failed to state ultimate facts
sufficient to constitute a claim (TCR 21 A(8)). The tables
above show that, if taxpayer’s interpretation of “the prop-
erty” in ORS 305.288(1)(b) is correct, she will have “asserted”
a change in RMV satisfying the 20 Percent Correction Test
and she will be entitled to pursue relief as to both 2014-15
and 2015-16. But if the department’s interpretation is cor-
rect, taxpayer will have failed to assert a change satisfy-
ing the 20 Percent Correction Test, and the court will be
required to dismiss her appeals as to those two years with-
out ordering a change to the roll for either year. Thus, the
court will resolve the department’s motion as to tax years
2014-15 and 2015-16 based on the department’s argument
that taxpayer has failed to state ultimate facts sufficient to
constitute a claim (TCR 21 A(8)).
C. Substantive Analysis: Defining “the Property” as Used in
ORS 305.288(1)(b)
When discerning the meaning of the statutory term
“the property” for purposes of the 20 Percent Correction
Test, the court considers the text, context, and legislative
history of ORS 305.288(1). See State v. Gaines, 346 Or 160,
206 P3d 1042 (2009). As explained below, the court concludes
that “the property” in ORS 305.288(1)(b) and its antecedent
“a separate assessment of property” refer to the land plus
the improvements because real property (except in circum-
stances not applicable here) is assessed as a whole parcel that
includes the land and any improvements. Taxpayer relies in
part on a 2001 Magistrate Division decision that supports
her position that “the property” refers to either land or
improvements separately because the value of each of those
items is listed separately on the assessment roll. In addi-
tion, the court has discovered language in nonprecedential
prior opinions of the Regular Division that also would sup-
port taxpayer’s position. Because the court now overturns
those cases to the extent that they conflict with today’s order
governing application of the 20 Percent Correction Test, the
court sets forth its reasoning at some length.
228 Gray v. Dept. of Rev.
1. Text and Context
As its first step, the court determines that the
phrase “the property” in ORS 305.288(1)(b) refers to its
antecedent “a separate assessment of property” earlier in
the same subsection. ORS 305.288(1), logically and gram-
matically, is a single sentence that starts with an overall
direction to this court and ends with two enumerated tests in
paragraphs (a) (the “dwelling” test) and (b) (the “20 Percent
Correction Test”). In each of paragraphs (a) and (b), the
antecedent can only be the same “property” referred to in
subsection (1), within the phrase “separate assessment of
property.” Accordingly, in order to follow the direction in
ORS 305.288(1)(b) to order a change or correction, the court
must determine the difference between the actual RMV and
the RMV on the roll for the property that is the subject of a
separate assessment of property. The court first will exam-
ine the legislature’s use of the complete phrase “separate
assessment of property,” and then analyze the terms “prop-
erty” and “assessment.”
a. The legislature uses the phrase “separate assess-
ment of property” in contrast to actions taken on
a class of property.
To find the meaning of “separate assessment of
property,” the court first looks at other places in Oregon tax
law where the legislature has used the same phrase. See
Comcast Corp. v. Dept. of Rev., 356 Or 282, 296-97, 337 P3d
768 (2014) (explaining need to analyze “data transmission
services” as a technical phrase). This approach reveals that
the legislature uses “separate assessment of property” to
distinguish actions of an assessor or the department with
respect to a discrete item of property from actions with
respect to an entire class or other grouping of property.
The legislature used the phrase in ORS 306.115,
which invests in the department general supervision and
control over the system of property taxation throughout the
state. Subsection (2) of that statute gives the department
broad authority to order a change to the tax roll for “all real
or personal property of the same class or in the same area,”
so long as the change is for the current tax year only and
Cite as 23 OTR 220 (2018) 229
the department issues the order no later than October 15.
ORS 306.115(2) (emphasis added); see generally OAR 150-
308-0310(8) (listing department’s description of property
“classes”). By comparison, the next subsection authorizes
the department (in its discretion) to order a change to the
tax roll for a “separate assessment of property” not only
for the current year but also for either of the two tax years
immediately preceding the current year, in order to “con-
form the roll to applicable law.” ORS 306.115(3).
Another statute distinguishing a separate assess-
ment from a class of property is the so-called “adjudicated
value” statute, which applies after a property tax valuation
dispute is resolved by this court, the department, or the
local board of property tax appeals. ORS 309.115 generally
freezes, for up to five years, the adjudicated real market
value of a “separate assessment of property.” As an excep-
tion, however, the statute allows an adjustment for “[a]nnual
trending or indexing applied to all property of the same
property class in the county, or within clearly defined areas
of the county under this chapter.” ORS 309.115(2)(a) (empha-
sis added).
Both ORS 306.115 and ORS 309.115 tend to
undermine any notion that “separate assessment of prop-
erty” refers to the separate listing of values for land and
improvements.
b. Neither the plain meaning of “property” nor the
statutory definition of “real property” answers
the question.
The court next considers the plain meaning, and
any statutory definition, of portions of the phrase, start-
ing with the term “property.” See PGE v. Bureau of Labor
and Industries, 317 Or 606, 610-11, 859 P2d 1143 (1993). No
statute defines “property” for purposes of ORS 305.288(1).15
15
ORS 308.142(1) generally defines “property” as “[a]ll property included
within a single property tax account,” a definition consistent with this court’s
interpretation of “separate assessment of property” in this case. However, the
definition in ORS 308.142(1) is for purposes of determining whether the assessed
value of property exceeds the property’s maximum assessed value permitted
under Measure 50 (Or Const, Art XI, § 11). The court assigns no weight to the
definition in ORS 308.142(1).
230 Gray v. Dept. of Rev.
The plain meaning, as found in the dictionary, is unhelpful
because it encompasses any “real estate” and thus all three
contenders (land, improvements, or land + improvements).16
See Webster’s Third New Int’l Dictionary 1818 (unabridged
ed 2002). The statutes do define “real property,” but with
a similarly unhelpful result. ORS 307.010(1)(b), which the
legislature has declared applicable to all “property tax laws
in this state,” provides:
‘ “Real property’ includes:
“(A) The land itself, above or under water;
“(B) All buildings, structures, improvements, machin-
ery, equipment or fixtures erected upon, above or affixed to
the land;
“(C) All mines, minerals, quarries and trees in, under
or upon the land;
“(D) All water rights and water powers and all other
rights and privileges in any way appertaining to the land;
or
“(E) Any estate, right, title or interest whatever in the
land or real property, less than the fee simple.”
ORS 307.010(1)(b). The connector “or” allows the possibility
that the term “real property” may refer to fewer than all
of the rights listed in ORS 307.010(1)(b), or it may refer to
all of them together, including land, improvements, or both.
Application of this definition to ORS 305.288(1) requires
additional context.
c. “Separate assessment” involves more than sepa-
rate valuation.
The court finds it significant that ORS 305.288(1)
refers to a separate “assessment” of property, as opposed
to separate “valuation” of property. Whatever else may
be said about the undefined term “assessment” in Oregon
16
Neither party has asserted that any personal property is at issue here, and
personal property in any event is subject to a number of distinct rules govern-
ing reporting of value, assessment, and collection of tax. See, e.g., ORS 308.290
(requiring, among other things, annual tax returns reporting the RMV of taxable
personal property such as business personal property).
Cite as 23 OTR 220 (2018) 231
property tax law,17 the term includes, but also may mean
more than, “valuation.”18 It is true that valuation of prop-
erty, as of each January 1, is a key step in the annual task of
assessment; hence the general requirement in ORS 308.210
that the assessor “assess the value of all taxable property
within the county.” ORS 308.210(1) (emphasis added). How-
ever, the same statute makes it clear that the assessor’s
overall task is much larger than valuation: Preparing the
“full and complete record of the assessment” that consti-
tutes the “assessment roll” requires the assessor to engage
in substantial legwork and decision-making behind the
scenes and throughout the year.19 Paragraph (1)(a) of ORS
308.215 requires the assessor to create and maintain a cat-
egorization system that includes “account numbers,” “code
areas,” and “property classes.” See ORS 308.215(1)(a)(B),
(C). The assessor also must gather and maintain specific
information such as ownership, acreage, and description by
metes and bounds or otherwise. See ORS 308.215(1)(a)(A),
(B), (D). Other statutes require the assessor to update the
roll to track events such as divisions, combinations, and
transfers, as well as changes to the boundaries of taxing
districts. See ORS 308.210(3) - (5); ORS 308.225. Finally, the
assessor must make and record determinations about the
property’s eligibility for any of Oregon’s programs of special
assessment for farm, timber, and other particular uses,20 or
17
See, e.g., Northwest Natural Gas Co. v. Dept. of Rev., 347 Or 536, 553, 226
P3d 28 (2010) (declining to “engage in the complicated and nuanced analysis of
whether and when ‘assessment’ is ‘taxation’ ”).
18
The dictionary definition of “assessment” runs the gamut, covering “a
valuation of property usu[ally] for the purpose of taxation,” “a valuation and an
adjudging of the sum to be levied on property,” “a specific charge or tax determined
upon by assessing,” and “the entire plan or scheme fixed upon for charging or
taxing.” Webster’s Third New Int’l Dictionary 131 (unabridged ed 2002) (emphases
added).
19
See Multnomah County Assessor v. Portland Devel. Comm., 20 OTR 395,
396-97 (2011) (describing the “annual and inexorable process that makes possible
the proper administration of the property tax system and the collection of reve-
nue on which so many local governments depend”).
20
See, e.g., ORS 308A.083 (requiring assessor to record on the roll “potential
additional tax liability” that will apply if property is disqualified from exclu-
sive or nonexclusive farm use zone special assessment); ORS 308A.119 (requir-
ing assessor to abate deferred additional taxes, subject to certain conditions, for
disqualified nonexclusive farm use zone farmland); ORS 308A.706(3) (requiring
the assessor to continue the “potential additional tax liability” notation on the
rolls for property that has been disqualified from farmland, forestland, and other
232 Gray v. Dept. of Rev.
programs of full or partial exemption from tax.21 Thus, by
referring to property subject to “separate assessment” when
it could have referred to separate valuation, the legislature
signaled at least the possibility that it did not intend that
the 20 Percent Correction Test apply to each separately val-
ued component of real property.
(1) The “property” that is subject to “separate
assessment” is a “parcel.”
The foregoing analysis still does not answer whether
the 20 Percent Correction Test applies to the value of land
and improvements separately, or only to the aggregate
value of land and improvements. The answer lies in the text
and context of the first sentence of ORS 305.288(1), which
directs this court to order a change or correction “to the
assessment and tax roll” if the requisite 20 percent value
difference is present. Preparing the annual assessment roll,
certifying it, and delivering it to the county tax collector
before the start of the annual billing cycle in late October
is the ultimate job of each county assessor.22 The content
of the roll, as prescribed in ORS 308.215 and discussed in
part above, must include numerous data points, including
the identity of the owner, the legal description, the acreage,
the RMV of the land alone, the RMV of the improvements
alone, and the “total” RMV, assessed value, and maximum
assessed value. See ORS 308.215(1)(a)(A) - (I).23 For present
special assessment programs but additional taxes have been deferred); ORS
308A.312 (requiring the assessor to add potential additional tax notation on the
tax roll for “open space lands” special assessment program); ORS 308A.362(6)
(similar for “riparian habitat exemption” program); ORS 308A.427(2) (similar for
“wildlife habitat special assessment”); ORS 308A.459(4) (similar for “conserva-
tion easement special assessment”).
21
See, e.g., ORS 307.115(3) (assessor must add to the roll property disquali-
fied from nonprofit parks exemption); ORS 307.157(3) (notation of potential addi-
tional taxes for certain property transferred out of cemetery use); 2017 Or Laws
2017, ch 537, § 3(4) (similar for property exempt under seismic retrofitting pro-
gram); see also ORS 307.035 (requiring assessor to “publish” summary valuations
of all property that is subject to certain exemptions).
22
See ORS 311.115 (requiring delivery of the roll). The offices of assessor
and collector are distinct but may be occupied by the same individual. See ORS
311.020.
23
The terms “assessed value” and “maximum assessed value” are rele-
vant only for purposes of Measure 50 and are not discussed further in this
order.
Cite as 23 OTR 220 (2018) 233
purposes, the critical feature of ORS 308.215 is that the
assessor must record each such data point “[f]or each parcel
of real property.” ORS 308.215(1)(a) (emphasis added). Thus,
for real property, the entire roll is organized by parcel. See
Oakmont, LLC v. Dept. of Rev., 359 Or 779, 781, 377 P3d 523
(2016) (“The county assessor must determine the real mar-
ket value of each parcel of property ‘as of’ January 1 of the
assessment year.”).
(2) A “parcel” comprises a “tract of land” and
includes any improvements.
What, then, is a “parcel of real property”? No stat-
ute defines the phrase for this purpose. However, the plain
meaning of “parcel” is a “tract or plot of land.” Webster’s at
1640 (emphasis added). This indicates that the legislature
viewed each tract of land as the primary unit of real prop-
erty to record on the assessment roll, and that it intended the
various subparagraphs in ORS 308.215(1)(a) as attributes to
be noted as part of the record for each tract. Among those
attributes are the RMV of any improvements on the tract of
land (subparagraph (F)), the RMV of the tract of land itself
(subparagraph (E)) and the total RMV (subparagraph (I)).
This statutory context strongly suggests that, by requiring
this court to order a change to the “roll” that applies to a
“separate assessment of property,” the legislature was refer-
ring to a change applicable to an entire tract of land, includ-
ing all improvements on that tract of land. See Shields v.
Dept. of Rev., 266 Or 461, 470, 513 P2d 784 (1973) (“Gener-
ally, real property is assessed as a whole in the name of the
owner. An exception is where the buildings, improvements,
etc., are owned separately and apart from the land, in which
case ORS 308.115(2) requires the assessor to assess and tax
them separately.”).
d. Additional statutory context confirms that land
and improvements are considered together.
In addition to the foregoing, the court notes the fol-
lowing indications that the phrase “separate assessment
of property” refers to the entire parcel, including land and
improvements.
234 Gray v. Dept. of Rev.
(1) The legislature created exceptions to the
general rule that land and improvements
are assessed together.
The court finds most compelling the fact that the
legislature expressly provided for the assessment of two
kinds of property separately from the land. ORS 308.115(3)
provides for separate assessment of land and improvements
in cases where the ownership differs:
“Whenever any building, structure, improvement,
machinery or equipment is owned separately and apart from
the land or real property on which it stands or to which it is
affixed, such building, structure, improvement, machinery
or equipment shall be assessed and taxed in the name of
the owner.”
ORS 308.115(3) (emphasis added). This means that, unless
the land and improvements are under different ownership
from the land, they are assessed together. Otherwise, ORS
308.115(3) would be superfluous. ORS 174.010; Northwest
Natural Gas Co. v. Dept. of Rev., 347 Or 536, 556, 226 P3d 28
(2010). Similar assessment treatment exists for mineral or
gas and oil rights under different ownership from the land.
ORS 308.115(1) and (2).
(2) ORS 308.235 treats improvements as attri-
butes of the real property.
In the primary statute directing assessors how to
value real property, the legislature omitted any distinc-
tion between land and improvements. See ORS 308.235.
When assessing real property, an assessor must “take[ ] into
consideration”:
“(a) The applicable land use plans, including current
zoning and other governmental land use restrictions;
“(b) The improvements on the land and in the sur-
rounding country and also the use, earning power and use-
fulness of the improvements, and any rights or privileges
attached thereto or connected therewith; and
“(c) The quality of the soil, and the natural resources
in, on or connected with the land, its conveniences to trans-
portation lines, public roads and other local advantage of a
similar or different kind.”
Cite as 23 OTR 220 (2018) 235
ORS 308.235(1) (emphases added). Thus, improvements
and their specific traits, are valued as attributes of the real
property as a whole.
2.  Statutory and legislative history supports treating
land and improvements together.
The court now considers the statutory development
and legislative history of ORS 305.288(1). Neither party
provided any legislative history to the court, nor is there
any legislative history directly on point. However, the court
finds it relevant that the legislature has, from a very early
date, consistently treated land and the improvements on the
land together for assessment purposes, subject to specific
statutory exceptions.
a. Pre-1951 law assessed all real property together
and created exceptions.
Similar to today’s statutes, Oregon territorial law
provided that “lands” were required to be valued for tax-
ation purposes, “taking into consideration the improve-
ments on the land.” General Laws of Oregon, Miscellaneous
Laws, ch LVII, § 16, pp 751-52 (Deady & Lane 1843-1872).
Both “real property” and “land” were defined to “mean and
include not only the land itself, whether laid out into town
lots or otherwise, with all things contained therein, but
also all buildings, structures, improvements, trees and other
fixtures of whatever kind thereon, and all right and privi-
leges belonging or in any wise appertaining thereto.” Id. § 2,
p 748 (emphasis added). As of 1854, on the assessment roll
the assessor was required to separately list only:
“1. The names of all the taxable persons in his county;
“2. A description of each tract or parcel of land to be taxed
specifying under separate heads, the township, range and
section, in which the land lies; or if divided into lots and
blocks, then the number of the lot and block;
“3. The number of acres and parts of an acre, as near as
the same can be ascertained, unless the land be divided
into blocks and lots;
“4. The full cash value of each parcel of land taxed;
236 Gray v. Dept. of Rev.
“5. The full cash value of all the taxable personal prop-
erty owned by, or to be taxed to such person, as provided
by law;
“6. The total valuation of all property taxed, real and
personal.”
Id. § 29, p 754.
The rule that land and all associated real property
were valued and recorded on the roll together remained
firmly in place until after the First World War. The leg-
islature created the first exception in 1919, for sepa-
rately owned mineral interests. Or Laws 1919, ch 356, § 1
(“[W]henever any mineral gas, coal, oil or other similar inter-
ests in real estate are owned separately and apart from and
independently of the rights and interests owned in the sur-
face of such real estate, such * * * interests may be assessed
and taxed separately from such surface rights * * *.”) (later
codified as Oregon Code, title LXIX, ch 2, § 69-211 (1930))
(emphases added). The general rule continued to apply to tim-
ber interests, however. See Nehalem Timber Co. v. Columbia
Co., 97 Or 100, 106-07, 189 P 212 (1920), reh’g den, 97 Or 100,
191 P 318 (1920). There, the court held that timber rights
must be assessed together with the land. Id. (“For tax pur-
poses [the definition of ‘lands,’ ‘real estate,’ and ‘real prop-
erty’] inseparably yokes the timber to the land on which it
is growing.” (brackets added)). Relying in part on Nehalem
Timber, as well as the specific statutory exception for min-
eral interests, in 1934 the Attorney General concluded that a
county was prohibited from assessing timber separately from
the land and thus could not foreclose on timber separately
from the land. 16 Op Atty Gen 643 (1934), available at 1934
WL 31303. The following year, the 1935 legislature amended
Oregon Code § 69-211 to allow timber interests owned sepa-
rately from the land to be assessed separately from the land.
Or Laws 1935, ch 274, § 5. This was later codified into Oregon
Compiled Laws Annotated (OCLA) § 110-314.24 It is notable
24
Section 110-314 provides:
“Whenever any standing timber, or any mineral, coal, oil, gas or other
severable interests in or part of real property is owned separately and apart
from the rights and interests owned in the surface ground of such real prop-
erty, such standing timber, minerals, coal, oil, gas or other such interests
or parts may be assessed and taxed separately from such surface rights and
Cite as 23 OTR 220 (2018) 237
that, at this time, Oregon law still did not require an assessor
to separately state the value of land and improvements on the
assessment roll. OCLA § 110-336.
The last major exception, for separately owned
improvements, came about during the Second World War.
In 1942, the Oregon Supreme Court decided First National
Bank v. Marion County, a case concerning whether fixtures
could be assessed separately from the land and the building
for tax years 1929 to 1939. 169 Or 595, 603, 130 P2d 9 (1942).
The fixtures were assessed to the plaintiff bank (or its ven-
dor), and the land and the building were assessed to an unre-
lated Oregon corporation. Id. at 597, 601-02. After reviewing
a variety of cases, including Nehalem Timber Company, the
court concluded that “various interests in real property are
not, for the purpose of taxation, made severable and assess-
able in the names of the owners of the respective interests,
except in certain specified instances, such as those men-
tioned by section 69-211, Oregon Code 1935 Supplement.”
Id. at 613. Because the county assessor had no authority to
impose the assessments on the fixtures separately, the court
held that the assessments were void. Id. at 616.
In 1943, in the wake of First National Bank of
Portland, and of importance to this case, the legislature
amended OCLA section 110-314 to allow separate assessment
of improvements if they are owned separately from the land:
“Whenever any standing timber, or any mineral, coal,
oil, gas or other severable interest in or part of real prop-
erty is owned separately and apart from the rights and
interests owned in the surface ground of such real prop-
erty, such standing timber, minerals, coal, oil, gas or other
such interests or parts shall be assessed and taxed as real
interests in said real property and may be sold for taxes in the same manner
and with the same effect as other interests in real property are sold for taxes.
It is intended that this section shall apply to any severable interest in or
part of real property owned separately and apart from the surface ground of
such real property, whether the deed or other instrument whereby any such
interest or part was conveyed or reserved be unconditional or conditioned on
the removal of such standing timber, mineral, coal, oil, gas or other part of
such real property in a specified manner or within a limited time; provided,
however, that this section shall not apply to any such interest in or part of
real property sold under an executory contract.”
(Emphases added.)
238 Gray v. Dept. of Rev.
or personal property in accordance with existing law in the
name of the owner thereof, separately from such surface
rights and interests in said real property and may be sold
for taxes in the same manner and with the same effect as
other interests in property are sold for taxes. Similarly,
whenever any building, structure, improvement, machinery,
equipment or fixture is owned separately and apart from
the land or real property whereon it stands or to which it is
affixed, such building, structure, improvement, machinery,
equipment or fixture shall be assessed and taxed in the name
of the owner thereof.”
Or Laws 1943, ch 304, § 2 (emphasis added). It was then
clear that improvements that were owned separately and
apart from the land could be assessed separately.
b. 1951 amendments required itemized values,
retained assessment of land and improvements
together, created first percentage-based test
The requirement to itemize the value of land and
improvements owned by the same person entered the law in
1951, as one of three relevant provisions enacted that year.
The legislature amended OCLA section 110-336 to require
the assessor to separately state the value of the land and the
improvements on the roll:
“The assessor shall set down in the assessment roll, in
separate columns, and according to the best information he
can obtain:
“(1) The names of all taxable persons in his county.
“(2) A description of each tract or parcel of land to be
taxed, specifying under separate heads the township and
range in which the land lies, according to the government
survey, except where the same is described by metes and
bounds; or, if divided into lots and blocks, then the number
or numbers thereof; provided, however, that the assessor
shall describe lands in tracts not larger than a quarter-
section when so requested by the owner or mortgagee thereof;
and provided further, that the owner thereof shall, upon the
request of the assessor, furnish a description of said prop-
erty from which the area thereof can be computed accurately
and the location and boundary lines made certain.
Cite as 23 OTR 220 (2018) 239
“(3) The number of acres and parts of an acre of each
parcel assessed, as nearly as can be ascertained, unless the
same be divided into blocks and lots.
“(4) The true cash value25 of each parcel of land
assessed, excluding all buildings, structures and improve-
ments thereon.
“(5) The true cash value of all timber assessed.
“(6) The true cash value of all buildings, structures
and improvements assessed.
“(7) The taxable personal property of each person,
as provided by law, and the true cash value thereof, and
exemptions allowed, if any.
“(8) The total valuation of all real property and, like-
wise, of all personal property assessed.”
Or Laws 1951, ch 541, § 1 (emphases added). For purposes
of this case, this provision as amended contains the same
essential requirements now codified in ORS 308.215(1)(a)(A) -
(I): to record data by parcel, to itemize the value of the
land and improvements, and to record the total value.26
25
The phrase “true cash value” expressed a fair market value standard that
for purposes of this case is similar to today’s “real market value.” Compare Or
Laws 1941, ch 440, § 4 (defining “true cash value” as “the amount such property
would sell for at a voluntary sale made in the ordinary course of business, taking
into consideration its earning power and usefulness under normal conditions”)
with ORS 308.205(1) (defining “real market value” as “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”).
26
The court notes that, effective from 1963 to 1999, the legislature changed
the description of the values required to be shown for land, improvements, and in
total, from the “true cash value” of each item to the “assessed value.” See Or Laws
1963, ch 270. Barring further inquiry, this phrase might have led a reader to con-
clude that land and improvements were “separately assessed” for purposes of the
20 Percent Correction Test. In fact, however, the 1963 Legislative Assembly made
this change only to conform to a short-lived regime, adopted in 1961 and repealed
in 1967, under which all property was assessed at 25 percent of its true cash
value. See former ORS 308.232(2) (1959) (“Except as provided in subsection (3) of
this section, beginning with the assessment date January 1, 1961, all property
shall be assessed at 25 percent of true cash value.”). The calculation of “assessed
value” was a simple arithmetic exercise, unlike today’s more complex process
under Measure 50. The legislative history of the 1963 change makes clear that
the new reference to “assessed” value was mere housekeeping, and the court has
found no evidence of an intention to depart from the principle that a “separate
assessment” referred to both land and improvements together. See Minutes,
House Committee on Taxation, Apr 26, 1963, 2 (testimony of Don Burnett, State
Tax Commission) (“In the process of changing the expression from tcv to assessed
valuation in the field of ad valorem taxation, it was overlooked that ORS 308.215
240 Gray v. Dept. of Rev.
Also in 1951, the legislature amended the omit-
ted property provisions to specifically add the discovery of
improvements previously omitted from the roll as an event
requiring an assessor to correct the roll for up to the prior
five years. Prior law had required correction upon the dis-
covery of “any real * * * property.” Or Laws 1951, ch 577,
§ 1.27 As the State Tax Commission explained in a letter
urging passage:
“Under the existing law, real property is defined to include
the improvements thereon, and likewise all trees upon the
land, and thus an assessment of real property is conclu-
sively presumed to include the improvements and timber
located thereon, even though such improvements and tim-
ber have not in fact been taken into consideration in mak-
ing the assessment. By amending the omitted property
statute so that it refers specifically to improvements and
timber, a way would be provided to add the same to the
rolls as omitted property.”
Letter from State Tax Commission to Dean Walker,
Chairman, Senate Committee on Assessment and Taxation
at 2 (Jan 16, 1951) (on file with Oregon State Archives). By
referring to improvements “on land previously assessed
still speaks in terms of tcv.”). Although the legislature repealed the 25 percent
assessment regime in 1967, the legislature left the reference to “assessed value” in
ORS 308.215 until the 1999 “cleanup” bill in the aftermath of Measure 50, when
it substituted the current references to “real market value” essentially reverting
to the pre-1963 language. See Or Laws 1967, ch 293, § 6 (amending ORS 308.232
to state: “All real or personal property within each county shall be assessed at
100 percent of true cash value.”); Tape Recording, House Committee on Revenue,
Mar 17, 1999, Tape 92, Side B; Tape 93, Side A, (testimony of James Manary,
Department of Revenue, discussing need to avoid confusion with “assessed value”
as defined under Measure 50).
27
As amended, the provision stated:
“Whenever, after the return of the assessment rolls to the county assessor by
the board of equalization, the officer having the possession of the roll shall
discover or receive credible information, or if he has reason to believe that
any real or personal property, or any buildings, structures, improvements or
timber on land previously assessed without the same, has from any cause, been
omitted, in whole or in part, in the assessment of any year or number of years
not exceeding five years prior to the last roll so equalized and returned, or
from the assessment roll or the tax roll, he shall proceed to correct the assess-
ment or tax roll in his hands, and add such property thereto, with the proper
valuation, and charge such property and the owner thereof with the proper
amount of taxes thereon at the rate which the said property would have been
taxed had it been properly upon the tax roll for the year or years as to which
it was omitted[.]”
Or Laws 1951, ch 577, § 1 (emphasis added to show new text).
Cite as 23 OTR 220 (2018) 241
without the same,” the legislature reinforced the existing
general rule that an assessment ordinarily must include
improvements as part of an assessment of the land. The new
law simply provided a mechanism to correct an assessor’s
failure to do so.
Finally, the 1951 Legislative Assembly also enacted
a new provision requiring the assessor to notify the taxpayer
when the value of real property has increased by more than
$100 or five percent, whichever is greater, over the assessed
value of the preceding year, subject to certain exceptions
(the Five Percent Notice Requirement). Or Laws 1951,
ch 516, § 2. This requirement was codified as ORS 308.280
and remained in place until the legislature repealed it in
1991 as inconsistent with Measure 5.28 It appears to have
been a model for what is now the 20 Percent Correction Test
in ORS 305.288(1); both provisions are based on a percent-
age change in the value of a “separate assessment of * * *
property”:
“(1) Whenever, in any year, the county assessor shall
increase the assessed valuation of any separate assessment
of real property more than $100 or five percent, whichever is
greater, over the assessed valuation of the preceding year,
unless such increase represents an increase in certain pro-
portion applicable to all real property upon the assessment
roll, and whenever, in any year, the county assessor shall
increase the unit valuation of personal property valued
uniformly throughout the county on a unit basis and not
on an individual basis, the said assessor shall give notice of
such increase in valuation as hereinafter provided.”
Or Laws 1951, ch 518, § 2 (emphases added).
c.
1971 amendments created predecessor to
20 Percent Correction Test
In 1971, the legislature amended the Five Percent
Notice Requirement in ORS 308.280 to require the assessor
28
See Or Laws 1991, ch 96 (explaining that county board of equalization
hearings each May are “redundant” in light of Measure 5); see also Or Laws 1991,
ch 459 (HB 2550) (implementing Measure 5, Or Const, Art XI, § 11b). See gener-
ally Multnomah County v. Dept. of Rev., 13 OTR 281, 285 (1995) (“Adoption of sec-
tion 11b required the 1991 Oregon Legislature to reevaluate and reexamine the
whole property tax system.”). Among many other things, HB 2550 changed the
assessment date from January 1 to July 1. See Or Op Atty Gen OP-6425 (1991).
242 Gray v. Dept. of Rev.
to itemize the value of the land and improvements, as well
as timber.29 Or Laws 1971, ch 472, § 1. The legislative his-
tory suggests that the legislature intended the itemization
to give more detailed information to homeowners as to
the underlying events causing the value increase, such as
a jump in land value or the construction of a home.30 See
Tape Recording, Senate Committee on Taxation, SB 33,
Feb 22, 1971, Tape 3, Side 1 (testimony of Ira Jones, attorney
for department). The court has found no indication, in case
law or in the legislative history of the 1951 and 1971 acts that
created and amended the Five Percent Notice Requirement,
that the legislature intended an assessor to generate a
notice if, for example, only the value of the improvements
on a parcel of real property increased more than five per-
cent. Moreover, the court notes that over the 40-year life of
the Five Percent Notice Requirement, the Attorney General
issued at least two informal opinions concluding that land
and improvements must be counted together in determin-
ing whether the five percent threshold was reached. See
Letter from Ted de Looze of Attorney General’s office to Coos
County Assessor Francis Flanagan (Dec 20, 1966) (concur-
ring with prior opinion of Ira Jones) (available from Oregon
State Archives); Letter from Donald Seymour of Attorney
General’s office to Clackamas County Assessor Donald
Hattan (Sept 22, 1972) (same) (summarized in Or Dept of
Rev, Pub No 150-303-408 “Property Tax Law Abstracts,”
ORS 308.280, OF 1589-V (1993 Cumulative Ed)).
29
To clarify, the legislature appears to have intended the amendment to
require the valuation of land, timber, and improvements on the notice. However,
the specific paragraphs referenced were “(d), (e), and (f) of subsection (1) of ORS
308.215.” Or Laws 1971, ch 472, § 1. At the time, those paragraphs of ORS
308.215(1) (1971) referred to the amount of acreage, and the values of land and
timber, respectively. The apparent mistake appears to have resulted from a
renumbering of ORS 308.215 in Or Laws 1971, ch 568, § 1, adding a new para-
graph (c). The legislature corrected the mistake in 1975 and added a new require-
ment. The notice now had to state the value of the land, timber, improvements,
and any percentage of undivided interest in the common elements of property
subject to ORS 91.505 to 91.675. Or Laws 1975, ch 780, § 6; see ORS 308.215(1)(e) -
(h) (1975).
30
This motivation is in line with the concept that “[a]ssessments showing
separate values for land and improvements are generally more easily justifiable
to the taxpayer.” See Nepom v. Dept. of Revenue, 272 Or 249, 254 n 3, 536 P2d 496(1975) (quoting International Association of Assessing Officers, Assessing and the
Appraisal Process 16 (2d ed 1968)).
Cite as 23 OTR 220 (2018) 243
In the same 1971 bill in which it amended the Five
Percent Notice Requirement in former ORS 308.280, the leg-
islature also created a new and similar five percent test in
the omitted property provisions of ORS 311.205. Section 3
of the bill enhanced31 the department’s authority to correct
a “separate assessment of property” by allowing the depart-
ment to correct the roll for the prior two years in the case
of a valuation error exceeding $2,000 or five percent of the
assessed value of the property (the Five Percent Correction
Test). Or Laws 1971, ch 472, § 3.32 Over the course of a regret-
tably complex history, summarized below, the Five Percent
Correction Test in ORS 311.205(1) (1971) essentially gave
rise to the current 20 Percent Correction Test now in ORS
305.288(1). The court has found nothing in the statutory
development that suggests that the legislature intended
31
The power to correct a separate assessment of property for the current year
already existed, provided the department made the change by December 31 of the
year. See Or Laws 1971, ch 472, § 3.
32
ORS 311.205 (1971) provides, in pertinent part:
“(1) If after the roll has been returned to the assessor from the board of
equalization, the officer having charge of the rolls discovers errors or omis-
sions of any kind therein, he may, with the assent and concurrence of the
assessor or of the Department of Revenue, properly correct the rolls to con-
form to the facts in whatever manner may be necessary to make the assess-
ment, tax or other proceeding whatsoever regular and valid. The officer in
charge of the roll shall make any change requested by the Department of
Revenue which relates to an assessment of property made by the department.
Such corrections may be made to rolls for any year or years not exceeding five
years prior to the last roll so returned. No change or correction applicable
to all real or personal property of the same class or in the same area shall
be made to the assessment roll for the current assessment year where any
request or order of the Department of Revenue issued under ORS 305.090
or 306.111 is made or mailed later than July 31 of such year. No change or
correction applicable to a separate assessment of property shall be made to
the assessment roll for the current assessment year where any request or
order issued under ORS 305.090 or 306.111 is made or mailed later than
December 31 of such year.
“(2) Notwithstanding the time limitations for corrections contained in
subsection (1) of this section, the Department of Revenue may order the cor-
rection of the rolls for a separate assessment of property for any of the last two
preceding years when all of the following conditions exist:
“(a) The amount of the error is in excess of $2,000 or five percent of
assessed value.
“(b) The aggrieved individual has no statutory right of appeal.
“(c) The aggrieved individual has notified the department of the error
within one year after the error becomes actually known to him.”
(Emphases added.)
244 Gray v. Dept. of Rev.
to depart from the general rule that the phrase “separate
assessment of property” referred to an assessment of the
aggregate land and improvements constituting a parcel.
d. Later history of 20 Percent Correction Test
In 1983, the legislature removed the roll correc-
tion provisions that included the Five Percent Correction
Test from ORS 311.205(2), it also removed the provisions
declaring the department’s supervisory authority from
ORS 306.111, and it combined both sets of provisions into
a new statute codified as ORS 306.115. Or Laws 1983,
ch 605, §§ 1, 5-6. In doing so, the legislature eliminated the
percentage-based correction test altogether, briefly expand-
ing the department’s discretion to determine when to cor-
rect the roll due to an asserted large overvaluation. By
1985,33 however, the department had adopted a rule under
ORS 306.115 specifying a 30 percent “gross error” threshold.
OAR 150-306.115(3)(b)(A)(i) (1985). In 1987, the legislature
amended ORS 306.115 to add the concept of a gross error,
thereby essentially codifying the department’s administra-
tive rule. Or Laws 1987, ch 656, § 1.34 However, the legisla-
ture’s percentage threshold for gross error was 20 percent,
not 30 percent as used in the department’s administrative
33
The department initially promulgated a rule without any percentage
threshold. See OAR 150-306.115 (1984 Supplement).
34
ORS 306.115 (1987) provides:
“(1) The Department of Revenue shall exercise general supervision and
control over the system of property taxation throughout the state. The depart-
ment may do any act or give any order to any public officer or employee that
the department deems necessary in the administration of the property tax
laws so that all properties are taxed or are exempted from taxation according
to the statutes and Constitutions of the State of Oregon and of the United
States. Among other acts or orders deemed necessary by the department in
exercising its supervisory powers, the department may order the correction
of clerical errors, errors in valuation or the correction of any other kind of
error or omission in an assessment or tax roll as provided under sections (2)
to (4) of this section.
“(2) The department may order a change or correction to the assessment
or tax roll for the current assessment year applicable to all real or personal
property of the same class or in the same area if the order of the department
is mailed not later than October 15 of the current assessment year.
“(3)(a) The department may order a change or correction applicable to a
separate assessment of property to the assessment or tax roll for the current
assessment year and for either of the two assessment years immediately pre-
ceding the current assessment year if for the year to which the change or
correction is applicable:
Cite as 23 OTR 220 (2018) 245
rule. ORS 306.115(5)(b) (1987). Notably, the 20 Percent
Correction Test in ORS 306.115 (1987) continued to apply to
a “separate assessment of property” and also referred to the
Five Percent Notice Requirement in ORS 308.280 (1987),
which likewise continued to apply to a “separate assessment
of property.” See ORS 308.280(2) (1987).35
In 1991, the legislature moved the provisions gov-
erning retrospective correction of residential property from
ORS 306.115 to a new provision codified as ORS 306.116. Or
Laws 1991, ch 459, §§ 32, 32a. This change also removed the
gross error provisions from ORS 306.115, thereby limiting
the availability of gross error relief to residential proper-
ties under new ORS 306.116 (1991).36 ORS 306.116 remained
“(A) The assessor or taxpayer has no statutory right of appeal remaining
and the department determines that good and sufficient cause exists for the
failure by the assessor or taxpayer to pursue the statutory right of appeal; or
“(B) The department discovers that with respect to the value given to the
separate assessment of property on the assessment or tax roll that a gross
error in value exists; or
“(C) The department discovers other reason to correct the roll which, in
its discretion, it deems necessary to conform the roll to applicable law with-
out regard to any failure to exercise a right of appeal.
“(b) In the case of property other than residential property, the depart-
ment may not order a change or correction to the assessment or tax roll under
subparagraph (B) of paragraph (a) of this subsection if a notice of the valua-
tion of the property was sent to the owner or person in control of the property
for the year at issue in the manner and at the time provided in ORS 308.280
and 208.289 or 308.595.
“* * * * *
“(5) For purposes of this section:
“(a) ‘Current assessment year’ means the calendar year in which the need
for the change or correction is brought to the attention of the department.
“(b) A ‘gross error in value’ exists if the difference between the value
claimed or requested for the property and the true cash value of the property
as it appears on the assessment or tax roll is equal to or greater than 20 per-
cent of the true cash value as it appears on the assessment or tax roll.
“(6) The remedies provided under this section are in addition to all other
remedies provided by law, including but not limited to those available under
ORS 305.285.”
(Emphases added.)
35
For nonresidential properties, no correction was available if the assessor
had timely sent the notice of increased property value required by ORS 308.280.
See ORS 306.115(3)(b) (1987).
36
ORS 306.116 (1991) provides:
“(1) The Department of Revenue may order a change or correction
applicable to a separate assessment of property applicable to a separate
246 Gray v. Dept. of Rev.
unchanged until the creation of the Magistrate Division of
the Tax Court, when the legislature amended it to trans-
fer responsibility for correction of gross errors of residential
property to the Tax Court. Or Laws 1995, ch 650, § 66a.37
The legislature also changed the permissive authorization to
the department into a command to the Tax Court. Id. (“The
tax court shall order a change or correction * * *.” (Empha-
sis added.)). In 1997, the legislature moved the provisions
allowing correction of the assessment roll if a taxpayer or
assessor had “good and sufficient cause” for failing to pursue
the normal statutory right of appeal, provisions currently
contained in ORS 305.288(3). Or Laws 1997, ch 541, §§ 89,
92 (deleting “good and sufficient cause” requirement from
supervisory power under ORS 306.115 and adding similar
language to ORS 306.116). In 1997, the legislature recodified
ORS 306.116 to ORS 305.288.38 Also in 1997, in an apparent
“overcorrection” in response to Measure 50’s redefinition of
the term “assessed value” that year, the legislature initially
changed the gross error definition in ORS 306.116 to refer
assessment of the property to the assessment and tax roll for the current tax
year or for either of the two tax years immediately preceding the current tax
year, or for any or all of those tax years, if all of the following conditions exist:
“(a) For the tax year to which the change or correction is applicable, the
property was or is used primarily as a dwelling (or is vacant) and was and is
a single-family dwelling, a multifamily dwelling of not more than four units,
a condominium unit, a mobile home or a floating home.
“(b) The change or correction requested is a change in value for the prop-
erty for the tax year and it is asserted in the request and determined by the
department by order and no appeal is taken from the order, or determined by
the Oregon Tax Court or the Supreme Court by order that constitutes a final
determination of the matter, that the difference between the real market
value of the property for the tax year and the value on the assessment and
tax roll for the tax year is equal to or greater than 20 percent.
“(2) For purposes of this section, ‘current tax year’ has the meaning
given the term under ORS 306.115.
“(3) The remedy provided under this section is in addition to all other
remedies provided by law.”
37
ORS 306.116 as amended by Or Laws 1995, ch 650, § 66a, is set forth in
the 1995 edition of the ORS by note, since the amendments would not become
effective until September 1, 1997, pursuant to Or Laws 1995, ch 650, § 116. ORS
306.116 as amended does not appear in the 1997 edition of the ORS because, as
will be discussed, it was renumbered to ORS 305.288.
38
As indicated by the note after ORS 305.288 (1997), ORS 305.288 was
recodified into chapter 305 but not made a part of any smaller series therein.
ORS 305.288 did not become an official part of chapter 305 until 1999. Or Laws
1999, ch 767, § 3.
Cite as 23 OTR 220 (2018) 247
to the “assessed value,” but as noted above, the 1999 legis-
lature restored the term “real market value” in 1999. See
Or Laws 1997, ch 541, §§ 91-92; Or Laws 1999, ch 767, § 1.
Since 1999, for purposes of this case, ORS 305.288(1) has
remained unchanged.
e.   Conclusions from statutory development and leg-
islative history
One theme in this statutory development stands
out. The exceptions in which land and improvements are
assessed separately were carefully crafted in response
to specific court cases that consistently applied the gen-
eral rule requiring land and improvements to be assessed
together unless otherwise specified. ORS 305.288(1) as it
stands today must be viewed with that lens. By contrast, the
legislature adopted separate listing of values for land and
improvements under the same ownership as a convenience
to taxpayers, and without implying that land and improve-
ments are separately assessed.
3. Additional Case Law
Finally, the court considers additional case law
to the extent that it is relevant. No binding authority has
addressed the precise issue in this case. There are, however,
several cases that support the notion that land value and
improvement value are just two components of one single
assessment. Recently, the Supreme Court recognized that
“an assessment entails separate valuation of both the land
and the improvements.” Village at Main Street Phase II v.
Dept. of Rev., 356 Or 164, 169, 175-76, 339 P3d 428 (2014).
Although this court hesitates to ascribe too much signif-
icance to a single statement of the Supreme Court,39 it is
directly in accord with the holding of the court in this case.
39
This is especially true when the statement was made in a different context.
In Village at Main Street, the taxpayer appealed to the BOPTA and therefore was
not pursuing relief under ORS 305.288. 356 Or at 170. A taxpayer who follows
the normal appeals process through the BOPTA has a wider range of permissible
challenges to the value of the property. The court sees no inconsistency between
allowing a taxpayer in each year to challenge any value in an assessment (so long
as it affects the taxpayer’s tax burden), while also requiring a taxpayer under
ORS 305.288(1) to first show a 20 percent error in the assessment before a correc-
tion to a prior year can be made.
248 Gray v. Dept. of Rev.
A single assessment of property requires separate valuation
of the land and improvements on that property.
In Knapp v. City of Jacksonville, the Supreme Court
stated that “property taxes in Oregon are assessed on real
property as a whole and in the name of the owner of the whole.”
342 Or 268, 275, 151 P3d 143 (2007) (citing ORS 308.215
(1)(a)); see also Shields v. Dept. of Rev., 266 Or 461, 470, 513
P2d 784 (1973). However, the real property that is assessed
includes all lesser interests. Knapp, 342 Or at 275 (citing
ORS 307.010(1)(b)(E)). “The limited instances in which sev-
erable, separately owned interests may be separately taxed
are specifically prescribed.” Id. (citing ORS 308.115); see also
Shields, 266 Or at 470. Although the Supreme Court was
not addressing ORS 305.288(1), its characterization of the
general nature of assessment is consistent with this court’s
interpretation of a “separate assessment of property” under
ORS 305.288(1).
Finally, the court considers Nepom v. Dept. of
Revenue, 272 Or 249, 536 P2d 496 (1975). The Supreme
Court in that case addressed the extent to which a plaintiff
may limit the scope of an appeal in the Tax Court. Id. at 251.
The plaintiff (taxpayer) contended solely that the improve-
ments on her land were overvalued for the two tax years
at issue. Id. at 250. She stipulated that the total value was
as recorded on the assessment roll, and she and the asses-
sor also stipulated that the value of the improvements was
substantially lower than as shown on the roll.40 Pursuant
to the stipulation, the Tax Court reduced the value of the
improvements. Id. at 251. However, the court also increased
the value of the land so that the total value as corrected
would equal the total value already on the roll. Id. The tax-
payer appealed to the Supreme Court.
The Supreme Court concluded that a plaintiff may
frame an appeal so as to challenge the value of the land only,
the improvements only, or both. Id. at 256. Accordingly, the
Tax Court erred in increasing the value of the land above
40
For tax year 1971-72, the value of the improvements on the roll was $73,320
and was stipulated by the parties to be $5,000; for tax year 1972-73, the value of
the improvements on the roll was $75,510 and was stipulated by the parties to be
$5,000. Nepom, 272 Or at 250-51.
Cite as 23 OTR 220 (2018) 249
the amount shown on the roll because the taxpayer had
not appealed the land value. Id. Later cases address vari-
ous procedural issues involving the way parties may or may
not raise the value of particular components. See, e.g., Bear
Creek Plaza v. Dept. of Rev., 12 OTR 272 (1992) (taxpayer
challenged only one component; assessor could not cross-
appeal the other component before department); Willamette
Estates II, LLC v. Dept. of Rev., 357 Or 113, 120 n 2, 346
P3d 1207 (2015) (approving department’s parallel exercise
of supervisory authority on property under appeal to this
court). The legislature later implicitly acknowledged the
right of a party to appeal the value of only one component
separately, when it enacted ORS 305.287 in 2011, allowing
the opposing party to put the value of other components at
issue. See Or Laws 2011, ch 397, § 2. The Supreme Court’s
recent decision in Work is also consistent with this line of
cases and with today’s holding. See 363 Or at 758-59 (“[W]e
conclude that a party may appeal from a separate part of
the magistrate’s decision without necessarily putting the
other parts of the magistrate’s decision at issue before the
tax court.”).
Nothing in Nepom is inconsistent with the holding
in this case. The Supreme Court in Nepom framed the issue
narrowly as a procedural question: whether a party “by stip-
ulation or by attacking only one of the valuations [can] raise
the one specific issue on an appeal.” 272 Or at 254.41 The
court cited ORS 308.215 and recognized the overall impor-
tance of separately stating land and improvement values on
the assessment roll.42 However, the court said nothing about
41
See also Poddar v. Dept. of Rev., 328 Or 552, 560, 938 P2d 527 (1999) (“The
Nepom court did not suggest, let alone hold, that a party bringing a challenge
under ORS 309.100 must challenge the total land valuation or total improvement
valuation because of the structure of ORS 308.215(1). Rather, in Nepom, the court
relied on the unexceptional proposition that parties may stipulate to some factual
matters and dispute others.”).
42
The court stated, “The publication, ‘Assessing and the Appraisal Process,’
prepared by the International Association of Assessing Officers (2d ed 1968),
states, at p. 16:
“ ‘* * * Land and improvements are generally valued separately because of
the different factors affecting the value of each.
“ ‘There are other reasons for placing separate values on land and
improvements, the most important being taxation. In many states the law
requires separate values; in others it is done in order to insure equalization
250 Gray v. Dept. of Rev.
whether a “separate assessment of property” encompasses
a parcel of land and all improvements, as opposed to the
land component or the improvements component, because
the appeal did not involve a statute referring to a separate
assessment of property.43
4. Parties’ Arguments
a. Ferschweiler and other cases are overruled
Taxpayer relies upon Ferschweiler v. Clackamas
County Assessor, 16 OTR-MD 429, 434 (2001). However, that
case is not directly on point, as the issue was whether the
taxpayer could seek a correction under ORS 305.288(1) by
applying the 20 Percent Correction Test to the value of only
one of two buildings. The magistrate correctly decided that
the taxpayer could not do so. In the Decision, however, the
magistrate incorrectly reasoned that the taxpayer could
prevail if the taxpayer could prove that all improvements
collectively were overvalued by at least 20 percent, with-
out regard to the value of the land. Id. at 434. The Decision
implies that the phrase “separate assessment of property”
in ORS 305.288(1) can refer to all improvements taken
together and without the land, or to the land without any
improvements, or to land and improvements taken together.
and uniformity. For example, land values may be changed without disturbing
the value of the improvements, and periodic depreciation may be applied to
improvements without disturbing the land value. Assessments showing sep-
arate values for land and improvements are generally more easily justifiable
to the taxpayer.
“ ‘In addition to these factors, land and improvements should be valued
separately for the following reasons: (1) Mortgages, so that the lending agency
will know the value imputable to the land. (2) Accounting, in order to com-
pute depreciation on improvement value and for income taxes. (3) Appraising,
in order to determine the highest, best and most profitable use of the land—
the key to economic obsolescence where land is under improved. (4) Leases,
in order to compute the amount of the reversion. (5) Residual techniques, in
order to compute the return to buildings.’ ”
Id. at 254 n 3.
43
In fact, the taxpayer in her briefings invited the Supreme Court to hold
that the department had violated the Five Percent Notice Requirement in former
ORS 308.280 by seeking to increase the value of the land in contravention of the
notice requirements. Appellant’s Brief at 6, Nepom, 272 Or 249. Had the court
based its decision on that argument, the analysis in this case might be more
complicated, because former ORS 308.280 referred to a separate assessment of
property, as discussed above. However, the court declined to address that issue
in its opinion.
Cite as 23 OTR 220 (2018) 251
The foregoing analysis of the text, context, and legislative
history of ORS 305.288(1), as well as other precedential case
law, shows that the implication in Ferschweiler is incorrect,
and the court hereby overrules Ferschweiler to the extent
of that implication. The court leaves intact the magistrate’s
conclusion that the value of a separate building cannot be
used for purposes of the 20 Percent Correction Test.44
b. The Department’s Argument Based on “Dwelling”
The department argues that, by using the word
“dwelling” the legislature signaled its intention that land
and improvements should be counted together. The depart-
ment correctly describes the plain meaning of “dwelling”
as “a building or construction used for residence.” (Citing
Webster’s at 706.) The department then points to more
expansive definitions of the synonyms “abode” and “habita-
tion,” both of which encompass a dwelling “place.” According
to the department, however, a dwelling place could encom-
pass all structures plus the underlying land but could not
encompass all structures without the land because the
assessment roll does not itemize the RMV of each struc-
ture on a parcel. From there, the department reasons that,
as between the two possible meanings (“dwelling” means
only the particular structure actually used for residence vs.
“dwelling” means all structures plus the underlying land),
the legislature must have intended the latter.
44
The court also clarifies dicta in Bear Creek Plaza v. Dept. of Rev., 12 OTR
272, 274 (1992). In rejecting the department’s resort to a “cross appeal” under
former law governing administrative hearings, the court stated: “An assessor
is directed by the legislature to properly assess property (see ORS 308.330) and
to assess the value of land separately from the value of improvements. ORS
308.215(1)(e) and (f).” Id. That statement should not be read to mean that the
assessor makes a “separate assessment of property” as to the land and as to the
improvements for purposes of the 20 Percent Correction Test in ORS 305.288(1)(b).
Similar caution should apply with respect to the court’s references in dicta to
the “long-established system of assessing land and improvements separately” in
Taylor v. Clackamas County Assessor (I), 14 OTR 504, 510 (1999), and to the similar
statement on reconsideration in that case, 14 OTR 581, 583 (1999) (“ORS 308.215
has long required the separate assessment of land and improvements.”), with-
drawn, 2000 WL 31987 (Jan 11, 2000). See also Flavorland Foods v. Washington
County Assessor, 15 OTR 182, 185 (2000) (referring to “separate assessments for
land and improvements”), rev’d, 334 Or 562 (2002); Chart Development Corp. v.
Dept. of Rev., 15 OTR 213 (2000), vacated, 335 Or 113 (2002) (“[A]ctual assess-
ments were made by types of property such as land [and] improvements * * *.
Consequently, the total represented separate assessments.”).
252 Gray v. Dept. of Rev.
The court does not find this argument persuasive.
In the same bill in which the legislature first adopted the
dwelling requirement in the predecessor to ORS 305.288(1),
the legislature amended several other property tax statutes
containing the word “dwelling.” See Or Laws 1991, ch 459.
In each of those statutes, “dwelling” referred specifically
to a structure used for habitation, consistent with the first
dictionary definition the department cites here. See, e.g.,
ORS 307.169 (1991), amended by Or Laws 1991, ch 459,
§ 46 (exemption for fallout shelters “located in structures
used as dwellings”); ORS 308.229(4)(b) (1991), amended by
Or Laws 1991, ch 459, § 95 (separately listing “dwelling,”
“other structures,” and “land” in defining “homesite” for
purposes of forestland special assessment); ORS 308.377(3)
(1991), amended by Or Laws 1991, ch 459, § 121 (similar for
farm use special assessment); see also ORS 308.372(3)(a)(A)
(1991), amended by Or Laws 1991, ch 459, § 117a (referring
to land “under dwellings” for purposes of farm use special
assessment). The department points to no evidence that
the legislature intended “dwelling” to mean anything other
than the residential structure itself.
Rather than stretch to find an expansive meaning
of “dwelling,” the court returns to the statutory text. The
key is that “the property” must be “used primarily” as a
dwelling. ORS 305.288(1)(a). The court’s prior analysis
shows that this means that the primary use of improve-
ments and land together must be as a dwelling. Although
the legislature has not provided guidance in ORS 305.288(1)
about how to apply this “primary use” test, the court need
not speculate on its application here because the department
has not raised the issue whether the property in this case is
used primarily as a dwelling.
c. Application of the 20 Percent Correction Test
Having determined that the property whose value
is considered for purposes of the 20 Percent Correction Test
in ORS 305.288(1) is the land plus improvements (unless
they are separately assessed pursuant to ORS 308.115 or
other law), the court now considers whether taxpayer has
adequately stated a claim for relief under ORS 305.288(1).
For tax year 2014-15, taxpayer failed to allege the land
Cite as 23 OTR 220 (2018) 253
value on the assessment roll,45 therefore, the court cannot
calculate the percentage change requested by taxpayer as
to the parcel of real property. For that reason, taxpayer has
failed to state a claim and her claim as to tax year 2014-15
is dismissed with leave to replead if taxpayer can, in good
faith, allege a difference of more than 20 percent. For tax
year 2015-16, taxpayer has alleged only a 7.6 percent differ-
ence between the value of the property requested and on the
roll. Taxpayer’s claim as to tax year 2015-16 is dismissed.
V. CONCLUSION
For purposes of ORS 305.288(1), taxpayer must
demonstrate a 20 percent difference between the RMV
requested and the RMV on the roll with respect to a “sep-
arate assessment of property.” Except in certain statutorily
specified circumstances not alleged to be present here, real
property is assessed as a parcel of real property, and that
parcel includes the land and improvements on the land.
Taxpayer has not alleged sufficient information for the court
to determine whether she requests a change in RMV for the
parcel of real property equal to or greater than 20 percent
for tax year 2014-15. Taxpayer has not alleged a change in
RMV for the parcel of real property equal to or greater than
20 percent for 2015-16. Taxpayer’s claims as to tax years
2014-15 and 2015-16 must be dismissed. Now, therefore,
IT IS ORDERED that Defendant’s motion to dismiss
Plaintiff’s complaint as to tax years 2014-15 and 2015-16 is
granted.
The court will contact the parties to set a case man-
agement conference to discuss how to address Plaintiff’s
complaint as to tax year 2016-17.
45
Recall that the department stated in its motion that the land value for tax
year 2014-15 was $59,400. However, the court cannot consider anything other
than the allegation in a plaintiff’s complaint on a motion to dismiss for failure to
state a claim.