Dublin-Sawmill Properties v. Franklin Cty. Bd. of Revision
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8 OPINIONS OF THE SUPREME COURT OF OHIO The full texts of the opinions of the Supreme Court of Ohio are being pursuant transmitted electronically beginning May 27, to a pilot project implemented by Chief Justice 1992, Thomas J. Moyer. Please Office of call any errors to the attention of the the Kobalka, Supreme Court of Ohio. Reporter, Assistant. Tel.: or Deborah J. Reporter s Attention: Barrett, Walter S. Administrative (614) 466-4961; in Ohio 1-800-826-9010. Your comments on this pilot project are also welcome. NOTE: Corrections may be made by the Supreme Court to the full texts of the opinions after they have been released electronically to the public. The reader is therefore advised to check the bound volumes of Ohio St.3d published by West Publishing Company for the final versions of these opinions. The advance sheets to Ohio St.3d will also contain the volume and page numbers where the opinions will be found in the bound volumes of the Ohio Official Reports. Dublin-Sawmill Properties, Appellant, v. Franklin County Board of Revision et al., Appellees. [Cite as Dublin-Sawmill Properties v. Franklin Cty. Bd. of Board of Tax Revision (1993), ___ Ohio St.3d ___.] Taxation Valuation determination of land by 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 acres, the first of eight parcels of land, totalling upon which it constructed three buildings for shopping 1987, the shopping center was valued by at a true value of $5,300,914. by Franklin County Board of Revision. the as 161 a and As of tax lien date, January Auditor the Franklin That value was County accepted appeal, the the subject Upon 1, of Tax Appeals ( BTA ) found the fair market value of Board as use center at the southwest corner of State Route Sawmill Road in Columbus, Ohio. 14.0556 property to be $2,944,028 as to the land and to $2,356,886 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 James R. Franklin and Miller, Franklin County Prosecuting Attorney, Gorry, Assistant Prosecuting Attorney, County Auditor. Jeffrey A. for Teaford, Rich, Coffman Rich, for appellee Dublin City School and appellee & Wheeler 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 board evidence the hearing before the BTA, appellant opted to contest of revision s true value determination by presenting of the cost of acquisition of the land in question and the construction cost, without presenting any appraisal evidence. Although as appellant initially challenged the BTA s it related challenges the to the land and buildings, determination appellant only the value of the land because the BTA s valuation improvements virtually equals appellant s costs of of construction. The subject BTA real found estate, appellant s purchases of portions between November 1984 and of the April and September 1985, too remote from the tax lien date of January 1987 to be indicative of its current value. BTA found the sale price of the land does In addition, not 1, the take into consideration increases in value related to * * * the passage of time * * *. Although there is no statutory guidance for the time within which the purchase price of land will govern determinations decision frame true value the BTA s for purposes of real estate taxation, that appellant s purchases were too remote in time is unreasonable and unlawful. R.C. 5713.03 provides, in part: value of such tract between In determining the true any tract * * * of real estate under this section, * * * has been the subject of an arm s length if sale 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 Bd. of Hilliard City School Dist. Bd. of Edn. v. Franklin Cty. Revision (1990), 53 Ohio St.3d 57, 59, 558 N.E.2d 1172, we said: occurred thereafter. on 1170, Tax listing day was January 1, 1986 and the sale December 29, 1986, within a reasonable The sale price constitutes a proper measure of time true value. In the the instant appeal, the BTA appears to acknowledge that 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 determination not of give true that sale any value. consideration That decision by in BTA the its was unreasonable and unlawful, in light of R.C. 5713.03 and Hilliard, supra. were Appellant presented substantial credible evidence of what indisputably arm s-length sales of portions of the property. The May 1986 sale was such a sale. entitled to BTA consideration. of subject That evidence was It was within a reasonable length time of the tax lien date and, thus, it constituted a proper measure of true value. Even if the were too remote, they were some indication of true value and should have been taken into account by the BTA in its other sales deliberations. Appellant notes that it paid $170,377 per acre for the land. Appellee Dublin City School District s appraiser valued the at $180,000 $310,580 its per acre. However, the BTA found the value per acre and there is no probative evidence to finding. to be support The BTA did not explain this discrepancy, and are unable to understand how such a v. land value can be found. we Howard 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. concur in this Given the facts of this court s judgment. case, However, our decision I 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 appraisal. way In to determine value of property this case, one of the parties is did through submit appraisal which the BTA correctly rejected as unpersuasive. appraisal was based on estimates, surveys, and other information been rather than on actual information which secured from the property owner. an That unverified could The submitted have documents could not even be considered a windshield appraisal. The BTA faced the added problem in this case of which was not yet completely developed at the time of lien date. That fact makes an appraisal especially property the tax difficult. Since the project was not yet completed and rented at the time of the tax lien date, income could not be used determine value. The increased assessment school based board upon the a method to overzealously sought an value as 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 this case. to of opinion The circumstances of this case have forced this court allow a determination of value based upon the purchase the in property. While use of the purchase price 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 cost of assembling the parcels of property may resemblance to the actual value of the property. of a multiparcel particular the new take on part a pay substantially is worth to complete the set. value unique property having the of may bear no developers more Once than a assembled, property may become very unique in nature and therefore purchase price. Blind tract The the that bears no resemblance to the original Additionally, a person who falls in love with and overpays should not be doubly purchase price determine the value punished for estate grounded is simplistic and naive. in statute and in the common law. troubling by taxation. reliance on purchase price to determine fair market real a It is also, value however, Beginning with decision in State ex rel. Park Invest. Co. v. the Bd. 432, of Tax Appeals (1964), 175 Ohio St. 410, 412, 25 O.O.2d 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 slength price Cty. sale shall be the true value, the usefulness of for tax purposes has been overrated. Bd. In Ratner purchase v. of Revision (1986), 23 Ohio St.3d 59, 23 OBR 192, Stark 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 there to is equate with fair market value. no other reliable evidence In the credible Douglas, J., dissenting. at best, reason, the not before to so purchase I therefore concur. I respectfully dissent. unusual tax case. chose hearings board an then Unfortunately, evidence was lacking in this case, price is indeed the best evidence available. that value, regarding purchase price may be used to gauge market value. other event The appellant, present any appraisal the board of revision or This is, for whatever evidence the BTA. at the Appellee, of education, presented an extensive appraisal report testimony of the appraiser. However, the BTA and found appraisal to be non-persuasive because it was based * * the * on estimates, surveys, and other unverified information. Accordingly, since there was no appraisal evidence one and side on on the unacceptable (to the BTA) appraisal evidence other, the BTA was left with the valuation fixed by the board revision which, of course, is presumptively correct. Alliance Towers, Ltd. v. Stark Cty. Bd. of Revision (1988), of See 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 evidence that performed in Absent the action of the board found revision good faith and in the exercise of sound this proof, the action of the board of revision BTA by unlawful. was or not judgment. must be The decision of in this case to adopt the valuation of the property as presumed to be valid. * * * the of testimony the board of (Emphasis added.) revision is neither unreasonable nor 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. value Its true decision is a question of fact which will be disturbed this court that such decision is unreasonable or unlawful. * * * This court is not only when it affirmatively appears from a overrule BTA probative super Board of Tax Appeals. * * * We findings evidence. (sufficient) the by of fact that are based (Emphasis added.) There probative evidence in this record findings of fact of the BTA. record will not upon sufficient is substantial to support The decision of the BTA is the 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 unreasonable and of time unlawful. * * * [of] In support tax of its lien date was 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 In Hilliard, the tax listing day was January 1, 1986. of the property occurred on December 29, 1986. We 1170. The sale found that this slightly less than one-year period met the R.C. 5713.03 test of a the reasonable length of time. land was purchased September of 1985. 1987. too value. In the case at bar, much in November of 1984 and April The tax lien date in this case is January The BTA found, and I agree, that the purchase dates remote from the tax lien date to be indicative of of and 1, were current It does not take much judicial notice to recognize that the Road property at the intersection of State Route 161 and in Columbus, Ohio, had a higher (maybe even higher) value in 1987 than it did in 1984 and 1985. Sawmill substantially 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.
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