Cleveland Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision

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Cleveland Board of Education, Appellee, v. Cuyahoga County

Board of Revision et al; EOB Group Trust C, Appellant.

[Cite as Cleveland Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision

(1994), Ohio St.3d .]

Taxation -- Real property valuation -- Determination of true

value by Board of Tax Appeals not disturbed by court when

supported by substantial probative evidence.

(No. 93-175 -- Submitted November 12, 1993 -- Decided

August 24, 1994.)

Appeal from the Board of Tax Appeals, Nos. 90-K-102 and

90-K-103.

On December 11, 1986 appellant, EOB Group Trust C ("EOB"),

purchased the East Ohio Building, a twenty-one story office

building built in 1958-1960 and located at 1717 E. Ninth Street

Cleveland, with an attached eight and one-half story garage

containing five hundred forty parking spaces, for $30,750,000.

Immediately after the sale, EOB paid $2,798,224 for upgrades

and repairs of the building, which were completed on or before

tax lien date, January 1, 1988.

EOB leases approximately one-third of the 330,000 square

feet of floor space, under a twenty-five year lease with two

ten-year renewal periods, to East Ohio Gas Company. East Ohio

Gas Company pays between $9.65 and $9.73 per square foot for

upper floor space and $15.48 for first floor retail space. EOB

leases space to other tenants for between $17.50 per square

foot for upper floor office space and $25 per square foot for

first floor retail space.

The Cuyahoga County Auditor assessed the property at a

true value of $31,430,020 for tax year 1988. EOB filed a

complaint as to value, and the Cuyahoga County Board of

Revision decreased the true value of the property to

$30,749,990. The appellee, Cleveland Board of Education

("school board"), appealed the board of revision's

determination to the Board of Tax Appeals ("BTA"), ultimately

contending that the true value of the property was $37,000,000.

At the BTA hearing, the school board submitted, among

other things, the appraisal testimony of Robert J. Kocinski, an

MAI appraiser who used the three standard appraisal methods:

cost approach, sales comparison approach and income approach.

EOB did not present any appraisal evidence.

The BTA found that EOB's purchase of the property was an

arm's-length sale and that "Kocinski's income approach to value

is most reflective of the subject property's true value.

Moreover, this amount is supported by the sale price of the

subject property with some upward adjustment being warranted

for the period between the sale date and the tax lien date, the

upgrades and repairs actually made in this interim period, and

the primary lessee's favorable long-term rental rate." The BTA

concluded that the true value of the property was $34,600,000,

the value estimated in Kocinski's income approach.

The cause is now before this court upon an appeal as of

right.

Armstrong, Mitchell & Damiani, Deborah J. Papushak and

Timothy J. Armstrong, for appellee.

Arter & Hadden, Jacob I. Rosenbaum and Karen H.

Bauernschmidt, for appellant.

Per Curiam. For the reasons that follow, we affirm the

decision of the BTA.

EOB contends that the BTA erred in rejecting a recent

arm's-length sale of the property and, instead, relied on an

appraisal using the income approach to valuation; that the

BTA's decision did not specify what adjustments were made from

the sales price; and that the BTA's decision did not explain

the basis for its true value conclusion. We disagree.

The determination of true value or fair market value of

property for tax purposes is a question of fact which is

primarily within the province of the taxing authorities. N.

Olmsted Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision (1990), 54

Ohio St.3d 98, 99, 561 N.E. 2d 915, 917. As we said in R.R.Z.

Assoc. v. Cuyahoga Cty. Bd. of Revision (1988), 38 Ohio St.3d

198, 201, 527 N.E. 2d 874, 877: " * * * [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 only when it

affirmatively appears from the record that such decision is

unreasonable or unlawful."

Here, the BTA analyzed Kocinski's appraisal testimony,

considered his three approaches to valuation, and found that

the true value of the subject property was $34,600,000. The

BTA, in adopting Kocinski's income approach to value, took into

consideration the arm's-length sale of the property on December

11, 1986; the passage of time until tax lien date, January 1,

1988; the upgrades and repairs made immediately after the sale

and completed or in process prior to tax lien date; and the

primary lessee's favorable long-term rental rates. The BTA

decision is a textbook example of a reasoned decision on the

true value of property.

Moreover, under Banbury Village, Inc. v. Cuyahoga Cty. Bd.

of Revision (1990), 53 Ohio St.3d 251, 559 N.E.2d 1356, we

reject EOB's contention that the BTA violated EOB's

constitutional protections by abusing the BTA's discretion and

violating the Constitution of the United States and the Ohio

Constitution.

We conclude, as we did in Banbury:

"We find no violation of appellant's constitutional rights

and we find that the decision of the BTA is supported by

substantial probative evidence, is reasonable and lawful and is

hereby affirmed." Id. at 254, 559 N.E.2d at 1358.

Decision affirmed.

Moyer, C.J., A.W. Sweeney, Douglas, Wright, Resnick, F.E.

Sweeney and Pfeifer, JJ., concur.