Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd. of Revision (Slip Opinion)

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as

Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd. of Revision, Slip Opinion No. 2017-

Ohio-8347.]

NOTICE

This slip opinion is subject to formal revision before it is published in an

advance sheet of the Ohio Official Reports. Readers are requested to

promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65

South Front Street, Columbus, Ohio 43215, of any typographical or other

formal errors in the opinion, in order that corrections may be made before

the opinion is published.

SLIP OPINION NO. 2017-OHIO-8347

OLENTANGY L OCAL SCHOOLS BOARD OF EDUCATION, APPELLEE, v.

DELAWARE COUNTY BOARD OF REVISION ET AL., APPELLEES; 7991 COLUMBUS

PIKE, L.L.C., APPELLANT.

[Until this opinion appears in the Ohio Official Reports advance sheets, it

may be cited as Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd. of

Revision, Slip Opinion No. 2017-Ohio-8347.]

Taxation—Real-property valuation—Significant changes to property between tax-

lien date and date of sale—Board of Tax Appeals’ determination that sale

was not “recent” sale under former R.C. 5713.03 was reasonable and

lawful—Board of Tax Appeals erred in reinstating auditor’s valuation—

Decision vacated and cause remanded.

(No. 2014-0826—Submitted June 6, 2017—Decided October 31, 2017.)

APPEAL from the Board of Tax Appeals, No. 2011-576.

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SUPREME COURT OF OHIO

Per Curiam.

{¶ 1} This case involves the valuation of the real property retained by an

owner after it sold a portion of its property during the tax year at issue. In April

2009, the owner of the original 16.3-acre parcel, appellant, 7991 Columbus Pike,

L.L.C., conveyed a single condominium unit (composed of an office building and

the immediately surrounding land) to the Board of County Commissioners of

Delaware County for $2,000,000. For tax year 2009, the Delaware County auditor

valued the conveyed parcel at $622,100 and the retained parcel at $1,677,900, for

a total value of $2,300,000.

{¶ 2} Columbus Pike contends that the April 2009 sale price must be used

in apportioning the $2,300,000 between the two parcels: It says that the conveyed

parcel’s 2009 value must be $2,000,000, leaving $300,000 as the value of its

retained parcel. The Delaware County Board of Revision (“BOR”) agreed, but the

Board of Tax Appeals (“BTA”) reversed the BOR and reinstated the auditor’s

valuation. Like the BTA, we reject Columbus Pike’s argument because the sale

was not “recent” to the tax-lien date under Ohio law.

{¶ 3} Nevertheless, we hold that the BTA improperly reinstated the

auditor’s valuation, because the auditor’s valuation incorrectly apportioned 2.815

acres of condominium property to the retained parcel. We therefore vacate the

BTA’s decision and remand the cause for the BTA to properly determine the value

of the subject property.

Facts and Procedural History

Rezoning, condominium creation, and sale

{¶ 4} On January 1, 2009, the tax-lien date, Columbus Pike owned a 16.3-

acre parcel, identified as parcel number 318-234-04-003-000. The property was

improved with an approximately 50,000-square-foot office building, parking lots,

driveways, and a garage. At that time, it was zoned Farm Residential 1, which

meant that it could not be further developed commercially.

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January Term, 2017

{¶ 5} In December 2008, less than two weeks before the tax-lien date,

Columbus Pike agreed to sell part of the 16.3 acres to the county, for use by the

Delaware County Board of Developmental Disabilities. The county agreed to

purchase the office building and some of the land for $2,000,000, on the conditions

that prior to the sale, the owner established the building as a condominium unit,

which the seller later did, and that the entire 16.3-acre parcel be rezoned for

commercial use, which it later was. The condominium property consists of 4.303

acres and includes the large office building, common elements, and limited

common elements. The condominium unit itself, which is composed of the office

building and the immediately surrounding land, is 1.488 acres. The limited

common elements and common elements, together, make up the remaining 2.815-

acre condominium property.

{¶ 6} The contingencies were satisfied in April 2009, and Columbus Pike

conveyed the condominium unit to the county. The retained parcel was assigned

the old parcel number, 318-234-04-003-000 (“retained parcel” or “subject

property”), while the new condominium unit was identified as parcel number 318-

234-04-003-500 (“conveyed parcel”).

Tax proceedings

{¶ 7} The auditor valued the retained parcel at $1,677,900 and the conveyed

parcel at $622,100, both as of January 1, 2009. The auditor arrived at those

valuations after first determining that the value of the undivided parcel, as of

January 1, 2009, was $2,300,000. No party challenges that aggregate valuation,

which was determined in tax proceedings concerning tax year 2007.

{¶ 8} The auditor attributed $1,575,400 to the land, calculating a per-acre

value of $96,656 ($1,575,400 ÷ 16.299 acres). He valued the building at $478,300

and other improvements (paving and a garage) at $246,300. He then apportioned

value between the retained parcel and the conveyed parcel based on the conclusion

that the conveyed parcel included the building and 1.487 acres (for a total rounded

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SUPREME COURT OF OHIO

value of $622,100) and that the retained parcel included the other improvements

and 14.812 acres (for a total rounded value of $1,677,900).

{¶ 9} Columbus Pike filed a valuation complaint with the BOR concerning

the retained parcel, arguing that the conveyed parcel’s 2009 value must be

$2,000,000 (the April 2009 sale price) and that the retained parcel’s value therefore

must be $300,000 (the difference after subtracting $2,000,000 from the auditor’s

total value of the undivided parcel). The Olentangy Local Schools Board of

Education (“BOE”) filed a countercomplaint seeking to retain the auditor’s

valuation of the retained parcel. The BOR agreed with Columbus Pike and valued

the subject property at $300,000. It also determined that the acreage of the retained

parcel was 11.997 acres.

{¶ 10} The BOE appealed to the BTA, which reversed and reinstated the

auditor’s valuation. The BTA concluded that there was “no evidence the subject

property ‘recently’ transferred through a qualifying sale, nor did appellant provide

a competent appraisal of the subject property, attested to by a qualified expert, for

the tax lien date in issue.” 2014 Ohio Tax LEXIS 2515 at *2. The BTA further

stated: “[T]here exists insufficient evidence to support the BOR’s reductions in

value and, as a result, we must reinstate those values originally assessed by the

auditor.” Id. at *5. Columbus Pike appealed to this court.

Analysis

Standard of review

{¶ 11} We must affirm the BTA’s decision if it was “reasonable and

lawful.” R.C. 5717.04. In making this determination, we must consider legal issues

de novo, Akron City School Dist. Bd. of Edn. v. Summit Cty. Bd. of Revision, 139

Ohio St.3d 92, 2014-Ohio-1588, 9 N.E.3d 1004, ¶ 10-11, and defer to findings

concerning the weight of evidence so long as they are supported by the record,

Olmsted Falls Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 122 Ohio St.3d 134,

2009-Ohio-2461, 909 N.E.2d 597, ¶ 27.

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January Term, 2017

Using the sale price to determine value

{¶ 12} Columbus Pike argues that this case involves a recent arm’s-length

sale and that the subject property must be valued consistent with the price of that

sale under former R.C. 5713.03, Am.Sub.H.B. No. 260, 140 Ohio Laws, Part II,

2665, 2722. See Terraza 8, L.L.C. v. Franklin Cty. Bd. of Revision, ___ Ohio St.3d

___, 2017-Ohio-4415, ___ N.E.3d ___, ¶ 10-24 (explaining the applicability of

former R.C. 5713.03). This case, however, does not present a straightforward

application of the former statute: here, the transaction involves the sale of part of a

parcel (the conveyed parcel) and the valuation is of the remaining, unsold property

(the retained parcel).

{¶ 13} Columbus Pike’s first three propositions of law assert that former

R.C. 5713.03 applies under these circumstances to require the value of the

conveyed parcel to be set at $2,000,000 as of the January 1, 2009 tax-lien date.

Whether or not, as a general matter, a partial sale qualifies as a sale for purposes of

former R.C. 5713.03 to require property to be valued in the manner Columbus Pike

suggests, for the partial sale to qualify, it would have to have been “recent” to the

tax-lien date. See Cummins Property Servs., L.L.C. v. Franklin Cty. Bd. of Revision,

117 Ohio St.3d 516, 2008-Ohio-1473, 885 N.E.2d 222, ¶ 13. We hold that the BTA

reasonably and lawfully disregarded the April 2009 sale in apportioning value,

because unrebutted evidence shows that the property underwent significant changes

between the tax-lien date and the date of the sale, thus preventing it from being a

“recent” sale.

{¶ 14} A sale that occurs within four months after the tax-lien date (like the

sale here) ordinarily is considered to have occurred “within a reasonable length of

time” of the tax-lien date under former R.C. 5713.03. See Akron City School Dist.,

139 Ohio St.3d 92, 2014-Ohio-1588, 9 N.E.3d 1004, at ¶ 26. But temporal

proximity “is not the sole factor affecting recency.” Worthington City Schools Bd.

of Edn. v. Franklin Cty. Bd. of Revision, 124 Ohio St.3d 27, 2009-Ohio-5932, 918

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SUPREME COURT OF OHIO

N.E.2d 972, ¶ 32. “[R]ecency ‘encompasses all factors that would, by changing

with the passage of time, affect the value of the property.’ ” Id., quoting Cummins

at ¶ 35.

{¶ 15} The record shows that significant factors affected the value of the

undivided parcel: the parties’ agreement was contingent on rezoning and the

creation of a condominium, both material changes to be made after the tax-lien date

and before the sale. Columbus Pike’s sole witness at the BOR hearing, Stephen D.

Martin, testified that there were “two big changes in that period of time between

January 1 and the sale date. You had a rezoning and you had the creation of a

condominium.” Continuing, Martin said:

What we’re talking about is 2009 January 1 what was the condition

of that property. The condition of that property is it was zoned Farm

Residential 1 [“FR1”]. You could build nothing on it and it wasn’t

condoed. Okay. Subsequent to January 1 it was rezoned and it was

condoed. Its value today because of those events is more than 300.

And I’m not arguing that it’s only 300 today, 2010. What I’m

arguing is, you’ve got to look at the tax lien date of January 1, 2009,

and you had a building and you had raw land that you couldn’t do

anything with because you’re FR1 zoning.

{¶ 16} Martin provided similar testimony at the BTA hearing:

The contract, as you will see, required us to rezone the property and

condominium it and convey a condominium. The zoning became

final and nonappealable on or about the 15th of April, 2009, after

the tax lien date. * * *

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January Term, 2017

* * * So basically on [the] tax lien date you had unzoned

property and no condominium.

In April we created a condominium. We had completed the

zoning of the property, substantially changing it from the tax lien

date * * *. * * *

***

* * * This parcel is a different parcel than it was on January

1. On January 1, 2009 it was not [a] condominium. It was a building

of 16 acres and the Auditor had it valued at 2,300,000.

{¶ 17} There is, therefore, sufficient and unrebutted evidence from

Columbus Pike’s own witness showing that the undivided parcel—which is the

subject of the January 1, 2009 valuation—experienced significant changes after the

tax-lien date and before the sale. It is clear that the parties themselves regarded

these changes as material to the sale because they made the sale contingent on the

changes occurring. Under these circumstances, we defer to the BTA’s finding that

“there exists no evidence the subject property ‘recently’ transferred through a

qualifying sale,” 2014 Ohio Tax LEXIS 2515 at *2. We hold, therefore, that the

April 2009 sale cannot be used to determine the tax-year-2009 value, because it

was not recent to the tax-lien date under Ohio law.

{¶ 18} Because the BTA’s finding that the sale was not recent to the tax-

lien date was reasonable and lawful, we need not consider the arguments raised in

Columbus Pike’s first three propositions of law.

Reinstating the auditor’s valuation

{¶ 19} Although we agree with the BTA’s finding that the April 2009 sale

cannot be used to determine the tax-year-2009 value of the retained parcel, we

vacate the BTA’s decision reinstating the auditor’s valuation. In reinstating the

original valuation, the BTA adopted the auditor’s allocation of 14.812 acres to the

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SUPREME COURT OF OHIO

retained parcel and 1.487 acres to the conveyed parcel. Columbus Pike correctly

points out that this allocation was wrong.

{¶ 20} In establishing the condominium, Columbus Pike partitioned 4.303

acres as “condominium property,” which consisted of a single unit (1.488 acres),

common elements (1.101 acres), and limited common elements (1.714 acres).

Under R.C. 5311.04(A), ownership of the common elements and limited common

elements accrues to “the unit owners as tenants in common.” Because only one

condominium unit exists here, the county became the sole owner of that property,

which constitutes 2.815 acres. Following the sale, this left Columbus Pike with an

11.997-acre parcel.

{¶ 21} The BOE disagrees, arguing that Columbus Pike owns the 2.815

acres until it conveys that property to a condominium-unit-owners association.

This argument fails because statutory law unambiguously provides that the county,

as the sole unit owner, acquired an undivided interest in the common elements by

operation of R.C. 5311.04(A). See also R.C. 5311.01(K) (defining “condominium”

as “a form of real property ownership * * * under which each owner has an

individual ownership interest in a unit with the right to exclusive possession of that

unit and an undivided ownership interest with the other unit owners in the common

elements of the condominium property”); 5311.01(N) (defining “condominium

ownership interest” as “a fee simple estate * * * in a unit, together with an

appurtenant undivided interest in the common elements”); 5311.11 (“Each unit of

a condominium property and the undivided interest in the common elements

appurtenant to it is deemed a separate parcel for all purposes of taxation and

assessment of real property, and no other unit or other part of the condominium

property shall be charged with the payment of those taxes and assessments”).

Contrary to what the BOE argues, a unit-owners association exists for the

administration—not the ownership—of condominium property. See R.C.

5311.08(A)(1).

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January Term, 2017

{¶ 22} In allocating value between the parcels, the auditor determined that

the land had a value of $96,656 per acre and attributed 14.812 acres to the retained

parcel and 1.487 acres to the conveyed parcel. The auditor also concluded that the

conveyed parcel included the building (valued at $478,300) and that the retained

parcel included all other improvements (valued at $246,300). Because Columbus

Pike conveyed 4.303 acres of the original 16.3-acre parcel, it retained only 11.997

acres—2.815 fewer acres than what the auditor found. This caused the auditor (and,

by extension, the BTA) to overvalue the retained parcel by at least $272,086.64. In

addition, because other improvements may exist on those 2.815 acres, the auditor

may have improperly attributed some of that value to Columbus Pike.

{¶ 23} We remand for the BTA to independently determine the value of the

retained parcel based on its correct acreage and the value of any improvements

situated on that parcel. See Copley-Fairlawn City School Dist. Bd. of Edn. v.

Summit Cty. Bd. of Revision, 147 Ohio St.3d 503, 2016-Ohio-1485, 68 N.E.3d 723,

¶ 18, 29, 31 (requiring the BTA to independently determine value on remand when

evidence negated the auditor’s valuation). As in Copley-Fairlawn, “on remand, the

BTA may in the exercise of its discretionary authority hear additional evidence in

order to arrive at a proper valuation of the property” for tax year 2009. Id. at ¶ 31.

{¶ 24} Columbus Pike also invokes the Bedford rule, arguing that the BOE

failed to present sufficient evidence justifying reinstatement of the auditor’s

valuation. See Bedford Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 115 Ohio

St.3d 449, 2007-Ohio-5237, 875 N.E.2d 913. Because Columbus Pike has shown

that the auditor’s valuation was flawed and that the property’s value must be

redetermined, this proposition of law is moot.

Conclusion

{¶ 25} We vacate the BTA’s decision and remand the cause for the BTA to

determine the value of the subject property based on the acreage and improvements

properly attributable to that parcel.

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SUPREME COURT OF OHIO

Decision vacated

and cause remanded.

O’CONNOR, C.J., and O’DONNELL, FRENCH, O’NEILL, FISCHER, and

DEWINE, JJ., concur.

KENNEDY, J., concurs in judgment only.

_________________

Rich & Gillis Law Group, L.L.C., Mark H. Gillis, and Kelley A. Gorry, for

appellee Olentangy Local Schools Board of Education.

Manos, Martin & Pergram Co., L.P.A., and Stephen D. Martin, for

appellant.

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