The opinion
8
OPINIONS OF THE SUPREME COURT OF OHIO
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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.