Westlake Med. Investors, L.P. v. Cuyahoga Cty. Bd. of Revision

[This opinion has been published in Ohio Official Reports at 74 Ohio St.3d 547.]

WESTLAKE MEDICAL INVESTORS, L.P., APPELLANT, v. CUYAHOGA COUNTY

BOARD OF REVISION ET AL., APPELLEES.

[Cite as Westlake Med. Investors, L.P. v. Cuyahoga Cty. Bd. of Revision,

1996-Ohio-288.]

Taxation—Real property—Valuation of nursing home—Board of Tax Appeals

does not abuse its discretion in disregarding real estate appraisal expert’s

report and opinion of value, when.

(No. 95-444—Submitted November 9, 1995—Decided February 14, 1996.)

APPEAL from the Board of Tax Appeals, No. 93-J-766.

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{¶ 1} Westlake Medical Investors, L.P. (“Medical Investors”), appellant,

owns and operates the Oakridge Nursing Home in Westlake. Medical Investors

purchased this property in 1986 for $3,360,000. It has since paid $380,000 to

improve the property.

{¶ 2} Oakridge is a one-hundred-nineteen-bed nursing home located on

Center Ridge Road. It is a one-story building of brick construction containing

26,679 square feet. It was originally erected in 1958 and underwent an addition in

1971.

{¶ 3} Medical Investors filed a complaint with the Cuyahoga County Board

of Revision (“BOR”), appellee, contesting the Cuyahoga County Auditor’s

valuation for the property at $3,879,600 for tax year 1991. The Westlake Board of

Education (“BOE”), appellee, filed a counter-complaint. Medical Investors

maintained at the BOR hearing that the true value in money of the property was

$2,110,000; the BOE claimed the value to be $4,000,000. Nevertheless, the BOR

determined the true value to be $3,700,000.

SUPREME COURT OF OHIO

{¶ 4} Medical Investors appealed this decision to the Board of Tax Appeals

(“BTA”). Medical Investors presented the testimony of Paul D. Provencher, a real

estate appraisal expert, who testified as to the $2,110,000 true value. The BOE did

not present any appraisal testimony.

{¶ 5} In any event, the BTA rejected Provencher’s report and approved the

determination made by the BOR. The BTA questioned the quantity of comparable

sales that Provencher had included in his report. It compared the amount of

comparable sales with the greater amount contained in another report he had

prepared for West Bay Manor Company, see W. Bay Manor Co. v. Cuyahoga Cty.

Bd. of Revision (1995), 73 Ohio St.3d 568, 653 N.E.2d 379, another nursing home

in Westlake for the same tax year. The BTA also challenged Provencher’s income

approach because his estimate of revenue for 1989 through 1991 fell short of the

actual growth pattern in Medical Investors’s actual revenues. The BTA also

concluded that his capitalization rate of 14.78 percent contradicted the rate he had

selected in the West Bay Manor appraisal, despite selecting the same supportive

data for both reports.

{¶ 6} As to the cost approach, the BTA noted that, using the same land sales,

he determined value of $44,625 per acre for the subject property, but $125,000 per

acre in the West Bay Manor appraisal. Finally, the BTA doubted his selection of

amounts for personal property and certificate of need deductions. At bottom, the

BTA found “that the estimates made by [Provencher] appear to be highly subjective

which serve to lower the value of the property. We therefore find his appraisal is

unpersuasive, and is not a reliable indicator of the property’s value on tax lien date.

We accordingly decline to fix value in accordance with it.

{¶ 7} “In addition, we find that the evidence supports the Board of

Revision’s value of $3,700,000. The appellant purchased the property in 1986 for

$3,360,000, and $380,000 of subsequent real property improvements were made.

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January Term, 1996

These figures support the findings of the Board of Revision and have been

unrefuted herein.”

{¶ 8} Consequently, the BTA determined the true value of the property to

be $3,700,000 as of January 1, 1991.

{¶ 9} This cause is now before this court upon an appeal as of right.

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Todd W. Sleggs, for appellant.

Rosenzweig, Schulz & Gillombardo Co., L.P.A., and Bill J. Gagliano, for

appellee Westlake Board of Education.

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Per Curiam.

{¶ 10} Medical Investors principally argues that the BTA should have

deducted amounts for the nonrealty items of the state-issued certificate of need,

goodwill, and tangible personal property. We disagree.

{¶ 11} A taxpayer has the duty to prove his right to a reduction in value.

Zindle v. Summit Cty. Bd. of Revision (1989), 44 Ohio St.3d 202, 203, 542 N.E.2d

650, 651. The BTA stated its reasons for why it did not believe Provencher’s

testimony, and the record supports its findings as to Provencher’s testimony. We

do not find that the BTA abused its discretion in discrediting his report and opinion

of value.

{¶ 12} Furthermore, the BTA may approve a board of revision’s value if the

taxpayer does not prove a right to a reduction in value. Cleveland Bd. of Edn. v.

Cuyahoga Cty. Bd. of Revision (1994), 68 Ohio St.3d 336, 626 N.E.2d 933.

Moreover, the circumstances of the 1986 sale of the subject property lend support

to the BTA’s conclusion. Medical Investors paid $3,560,000 to the seller, but

Medical Investors attributed $3,360,000 to the real estate. Thus, it deducted

$200,000 for nonrealty property from the purchase price. Furthermore, it paid

$380,000 to improve the property. The total, $3,740,000, comes very close to the

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SUPREME COURT OF OHIO

value decided by the BOR and the BTA. In light of the BTA’s criticism of

Provencher’s total methodology, the BTA properly decided that the true value of

the property, as of January 1, 1991, was $3,700,000.

Decision affirmed.

MOYER, C.J., DOUGLAS, WRIGHT, RESNICK, F.E. SWEENEY, PFEIFER and

COOK, JJ., concur.

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