Dublin-Sawmill Properties v. Franklin Cty. Bd. of Revision

1993 Ohio 230

• Court: Ohio Supreme Court
• Decided: November 16, 1993
• Docket: 1992-1366
• Status: Published

Opinion

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Dublin-Sawmill Properties, Appellant, v. Franklin County Board of

Revision et al., Appellees.

[Cite as Dublin-Sawmill Properties v. Franklin Cty. Bd. of

Revision (1993), ___ Ohio St.3d ___.]

Taxation — Valuation determination of land by Board of Tax

Appeals not reasonable and lawful, when.

(No. 92-1366 — Submitted March 19, 1993 — Decided November 17,

1993.)

Appeal from the Board of Tax Appeals, No. 89-M-497.

In November 1984, appellant, Dublin-Sawmill Properties, acquired the first of eight parcels of land, totalling 14.0556

acres, upon which it constructed three buildings for use as a

shopping center at the southwest corner of State Route 161 and

Sawmill Road in Columbus, Ohio. As of tax lien date, January 1,

1987, the shopping center was valued by the Franklin County

Auditor at a true value of $5,300,914. That value was accepted

by the Franklin County Board of Revision. Upon appeal, the

Board of Tax Appeals (“BTA”) found the fair market value of the

subject property to be $2,944,028 as to the land and $2,356,886

as to the buildings, and affirmed the decision of the board of

revision.

The cause is before this court upon an appeal as of right.

___________________

Fred Siegel Co., L.P.A., Fred Siegel, Karen H.

Bauernschmidt, Todd W. Sleggs and Steven R. Gill, for appellant.

Michael Miller, Franklin County Prosecuting Attorney, and

James R. Gorry, Assistant Prosecuting Attorney, for appellee

Franklin County Auditor. Teaford, Rich, Coffman & Wheeler

and Jeffrey A. Rich, for appellee Dublin City School District

Board of Education.

Per Curiam. The question before us is whether the valuation

determination by the BTA is reasonable and lawful. We find that

it is not.

In the hearing before the BTA, appellant opted to contest

the board of revision’s true value determination by presenting

evidence of the cost of acquisition of the land in question and

the construction cost, without presenting any appraisal evidence. Although appellant initially challenged the BTA’s determination

as it related to the land and buildings, appellant only

challenges the value of the land because the BTA’s valuation of

the improvements virtually equals appellant’s costs of

construction.

The BTA found appellant’s purchases of portions of the

subject real estate, between November 1984 and April and

September 1985, “too remote from the tax lien date of January 1,

1987 to be indicative of its current value.” In addition, the

BTA found “the sale price of the land does not take into

consideration increases in value related to * * * the passage of

time * * *.”

Although there is no statutory guidance for the time frame

within which the purchase price of land will govern true value

determinations for purposes of real estate taxation, the BTA’s

decision that appellant’s purchases were too remote in time is

unreasonable and unlawful.

R.C. 5713.03 provides, in part: “In determining the true

value of any tract * * * of real estate under this section, if

such tract * * * has been the subject of an arm’s length sale

between a willing seller and a willing buyer within a reasonable

length of time, either before or after tax lien date, the auditor

shall consider the sale price of such tract * * * to be the true

value for taxation purposes.”

In Hilliard City School Dist. Bd. of Edn. v. Franklin Cty.

Bd. of Revision (1990), 53 Ohio St.3d 57, 59, 558 N.E.2d 1170,

1172, we said: “Tax listing day was January 1, 1986 and the sale

occurred on December 29, 1986, within a reasonable time

thereafter. The sale price constitutes a proper measure of true value.”

In the instant appeal, the BTA appears to acknowledge that

the land sale of May 1986 was not too remote, since it did not

lump that sale with others it characterized as “too remote,” even

though it did not give that sale any consideration in its

determination of true value. That decision by the BTA was

unreasonable and unlawful, in light of R.C. 5713.03 and Hilliard,

supra. Appellant presented substantial credible evidence of what

were indisputably arm’s-length sales of portions of the subject

property. The May 1986 sale was such a sale. That evidence was

entitled to BTA consideration. It was within a reasonable length

of time of the tax lien date and, thus, it constituted “a proper

measure of true value.” Even if the other sales were “too

remote,” they were some indication of true value and should have

been taken into account by the BTA in its deliberations.

Appellant notes that it paid $170,377 per acre for the land.

Appellee Dublin City School District’s appraiser valued the land

at $180,000 per acre. However, the BTA found the value to be

$310,580 per acre and there is no probative evidence to support

its finding. “The BTA did not explain this discrepancy, and we

are unable to understand how such a value can be found.” Howard

v. Cuyahoga Cty. Bd. of Revision (1988), 37 Ohio St.3d 195, 197,

524 N.E.2d 887, 889.

Accordingly, the decision of the BTA is reversed. The cause

is remanded to the BTA so that it can redetermine the true value

of the subject property by giving due regard to all the land

sales to appellant.

Decision reversed and cause remanded.

Moyer, C.J., Wright and Resnick, JJ., concur.

Pfeifer, J., concurs in judgment.

A.W. Sweeney, Douglas and F.E. Sweeney, JJ., dissent.

Pfeifer, J., concurring. Given the facts of this case, I

concur in this court’s judgment. However, our decision today

should not be accorded great value as precedent since it is based

on an unrealistic method of determining this property’s value for

tax purposes.

The best way to determine value of property is through

appraisal. In this case, one of the parties did submit an

appraisal which the BTA correctly rejected as unpersuasive. That

appraisal was based on estimates, surveys, and other unverified

information rather than on actual information which could have

been secured from the property owner. The submitted documents

could not even be considered a “windshield appraisal.”

The BTA faced the added problem in this case of property

which was not yet completely developed at the time of the tax

lien date. That fact makes an appraisal especially difficult.

Since the project was not yet completed and rented at the time of

the tax lien date, income could not be used as a method to

determine value. The school board overzealously sought an

increased assessment based upon the value of the completed

property for a time period before the property was completed.

The difficulty associated with a mid-construction appraisal

is the main reason that I concur with the majority opinion in

this case. The circumstances of this case have forced this court

to allow a determination of value based upon the purchase price

of the property. While use of the purchase price was unfortunately necessary in this case, it is generally overused

and overrated as an accurate measure of fair market value.

Purchase price is especially not useful in cases where the

cost of assembling the parcels of property may bear no

resemblance to the actual value of the property. The developers

of a multiparcel tract may pay substantially more than a

particular part is worth to complete the set. Once assembled,

the new property may become very unique in nature and therefore

take on a value that bears no resemblance to the original

purchase price. Additionally, a person who falls in love with a

unique property and overpays should not be doubly punished by

having the purchase price determine the value for taxation.

Blind reliance on purchase price to determine fair market value

of real estate is simplistic and naive. It is also, however,

grounded in statute and in the common law. Beginning with the

troubling decision in State ex rel. Park Invest. Co. v. Bd. of

Tax Appeals (1964), 175 Ohio St. 410, 412, 25 O.O.2d 432, 434,

195 N.E.2d 908, 910, where this court stated that purchase price

is the “best method of determining value,” and continuing through

the amendment of R.C. 5713.03 by Am.Sub.H.B. No. 290, 136 Ohio

Laws, Part II, 3182, 3247, to declare that the price of an arm’s-

length sale shall be the true value, the usefulness of purchase

price for tax purposes has been overrated. In Ratner v. Stark

Cty. Bd. of Revision (1986), 23 Ohio St.3d 59, 23 OBR 192, 491

N.E.2d 680, this court began to turn the corner when it held that

there is only a presumption that the sale price is the true

value, and that the presumption may be rebutted.

In my view, purchase price should be regarded only as “some evidence of value” for real estate tax purposes and should not be

presumed to equate with fair market value. In the event that

there is no other reliable evidence regarding value, then

purchase price may be used to gauge market value. Unfortunately,

other credible evidence was lacking in this case, so purchase

price is indeed the best evidence available. I therefore concur.

Douglas, J., dissenting. I respectfully dissent. This is,

at best, an “unusual” tax case. The appellant, for whatever

reason, chose not to present any appraisal evidence at the

hearings before the board of revision or the BTA. Appellee,

board of education, presented an extensive appraisal report and

the testimony of the appraiser. However, the BTA found the

appraisal to be “non-persuasive” because it was based “* * * on

estimates, surveys, and other unverified information.”

Accordingly, since there was no appraisal evidence on one

side and unacceptable (to the BTA) appraisal evidence on the

other, the BTA was left with the valuation fixed by the board of

revision which, of course, is presumptively correct. See

Alliance Towers, Ltd. v. Stark Cty. Bd. of Revision (1988), 37

Ohio St.3d 16, 25, 523 N.E.2d 826, 834, where the lead opinion of

this court said that “[t]he taxpayers offered no testimony or

evidence that the action of the board of revision was not

performed in good faith and in the exercise of sound judgment.

Absent this proof, the action of the board of revision must be

presumed to be valid. * * *” (Emphasis added.) The decision of

the BTA in this case to adopt the valuation of the property as

found by the board of revision is neither unreasonable nor

unlawful. Further, in R.R.Z. Assoc. v. Cuyahoga Cty. Bd. of Revision

(1988), 38 Ohio St.3d 198, 201, 527 N.E.2d 874, 877, we said that

the BTA “* * * has wide discretion to determine the weight given

to evidence and the credibility of witnesses before it. Its true

value decision is a question of fact which will be disturbed by

this court only when it affirmatively appears from the record

that such decision is unreasonable or unlawful. * * * This court

is not a ‘ “super” Board of Tax Appeals.’ * * * We will not

overrule BTA findings of fact that are based upon sufficient

probative evidence.” (Emphasis added.) There is substantial

(sufficient) probative evidence in this record to support the

findings of fact of the BTA. The decision of the BTA is neither

unreasonable nor unlawful.

Finally, I disagree with the majority that the BTA’s

decision not to base valuation on sales of the property “within a

reasonable length of time * * * [of] tax lien date” was

unreasonable and unlawful. In support of its position, the

majority cites Hilliard City School Dist. Bd. of Edn. v. Franklin

Cty. Bd. of Revision (1990), 53 Ohio St.3d 57, 558 N.E.2d 1170.

In Hilliard, the tax listing day was January 1, 1986. The sale

of the property occurred on December 29, 1986. We found that

this slightly less than one-year period met the R.C. 5713.03 test

of “a reasonable length of time.” In the case at bar, much of

the land was purchased in November of 1984 and April and

September of 1985. The tax lien date in this case is January 1,

1987. The BTA found, and I agree, that the purchase dates were

“too remote” from the tax lien date to be indicative of current

value. It does not take much judicial notice to recognize that the property at the intersection of State Route 161 and Sawmill

Road in Columbus, Ohio, had a higher (maybe even substantially

higher) value in 1987 than it did in 1984 and 1985. The decision

of the BTA was neither unreasonable nor unlawful.

I would affirm the decision of the BTA. Since the majority

opinion does not do so, I must respectfully dissent.

A.W. Sweeney and F.E. Sweeney, JJ., concur in the foregoing

dissenting opinion.