Johnson v. McClain (Slip Opinion)

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

Johnson v. McClain, Slip Opinion No. 2021-Ohio-1664.]

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. 2021-OHIO-1664

JOHNSON, APPELLANT, v. MCCLAIN, TAX COMMR., APPELLEE.

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

may be cited as Johnson v. McClain, Slip Opinion No. 2021-Ohio-1664.]

Taxation—Property tax—Current agricultural use valuation—Property owner

failed to prove that tax commissioner abused his discretion in adopting

land-valuation table—Decision of Board of Tax Appeals affirmed.

(No. 2020-0472—Submitted January 26, 2021—Decided May 18, 2021.)

APPEAL from the Board of Tax Appeals, No. 2016-814.

__________________

Per Curiam.

{¶ 1} Appellant, William S. Johnson, appeals a decision of the Board of Tax

Appeals (“BTA”) affirming the June 22, 2016 journal entry issued by appellee,

Ohio Tax Commissioner Jeffrey McClain. That journal entry adopted a per-acre

valuation table for use by the county auditors in assessing land that qualifies for

“current agricultural use valuation” (“CAUV”). The BTA determined that Johnson

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failed to prove that the tax commissioner abused his discretion in adopting the

valuation table. We agree and therefore affirm the BTA’s decision.

I. COURSE OF PROCEEDINGS

{¶ 2} The journal entry at issue here prescribes the basis for property-tax

valuation of CAUV-qualifying farmland in 23 Ohio counties that conducted either

a reappraisal or a valuation update for tax year 2016. The entry adopts a 58-page

unit-value table that lists soil types along with (1) ratings of each soil type as to

several characteristics, including natural drainage, and (2) per-acre values for each

soil type based on potential income for crops grown in that soil. Each county

auditor consults the unit-value table when calculating the value of farmland in his

or her county and applies the per-acre values from the table to the farmland using

soil maps of the farms in the county. Ohio Adm.Code 5703-25-34(B).

{¶ 3} Johnson owns a farm in Clark County, which is one of the counties

subject to the tax commissioner’s June 2016 journal entry. In Adams v. Testa, 152

Ohio St.3d 207, 2017-Ohio-8853, 94 N.E.3d 539, ¶ 33, we held that a CAUV

journal entry is a “final determination” that is appealable to the BTA pursuant to

R.C. 5717.02 and that a taxpayer who is “subject to” the entry has standing to appeal

it to the BTA. Johnson appealed the tax commissioner’s journal entry to the BTA,

primarily arguing that the unit-value table does not differentiate certain soil types

based on whether they are drained or undrained.

{¶ 4} In its decision, the BTA summarized the structure of the CAUV

program and determined that because “th[e] appeal concerns the propriety of the

commissioner’s actions in adopting the tables, their application to a particular

property (i.e., Mr. Johnson’s farm) is not before us today.” BTA No. 2016-814,

2020 WL 1274335, *2 (Mar. 6, 2020). The BTA then reviewed the tax

commissioner’s decision adopting the CAUV table to determine whether the

commissioner abused his discretion—that is, whether the decision was

unreasonable, arbitrary, or unconscionable. Id. at *4. Specifically, it asked

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“whether the commissioner abused his discretion by adopting a CAUV table

without expressly setting forth a separate rate for somewhat poorly drained, poorly

drained, or very poorly drained soils that lack artificial drainage.” Id.

{¶ 5} For three reasons, the BTA found no abuse of discretion. First, the

administrative code calls for valuation based on normal management practices in

the area, not on the “ ‘management ability or decisions of an individual owner or

operator.’ ” Id. at *4, quoting Ohio Adm.Code 5703-25-33(B). Second, Johnson

failed to rebut testimony at the BTA hearing establishing that for purposes of

developing the unit-value table, the yields for all soil types may include data from

both drained and undrained soil. Id. Finally, because the typical management of

certain soil types includes artificial drainage, even if the commissioner did not

consider data regarding lack of artificial drainage in making his determination,

Johnson did not show an arbitrary or unconscionable attitude on the

commissioner’s part. Id. at *4-5.

{¶ 6} Johnson appealed to this court as of right pursuant to R.C. 5717.04.

II. ANALYSIS

A. Agricultural-use valuation

{¶ 7} Generally, Ohio taxes real estate by determining, as a first step, the

property’s fair market value at its highest and best use; such a value is the “true

value” as that term is used in R.C. 5713.01(B). “ ‘[T]he value or true value in

money of real property’ refers to ‘the amount for which that property would sell on

the open market by a willing seller to a willing buyer * * *, i.e., the sales price.’ ”

(Brackets and ellipsis added in Terraza 8, L.L.C.) Terraza 8, L.L.C. v. Franklin

Cty. Bd. of Revision, 150 Ohio St.3d 527, 2017-Ohio-4415, 83 N.E.3d 916, ¶ 8-9,

quoting State ex rel. Park Invest. Co. v. Bd. of Tax Appeals, 175 Ohio St. 410, 412,

195 N.E.2d 908 (1964); see also Rite Aid of Ohio, Inc. v. Washington Cty. Bd. of

Revision, 146 Ohio St.3d 173, 2016-Ohio-371, 54 N.E.3d 1177, ¶ 34. But under

Article II, Section 36 of the Ohio Constitution and the statutes implementing that

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provision, property that qualifies for CAUV treatment is assessed not on the basis

of its highest and best use, but on the basis of its “current agricultural use”—a

valuation that typically is lower than a highest-and-best-use valuation for the same

land. Johnson v. Clark Cty. Bd. of Revision, 155 Ohio St.3d 264, 2018-Ohio-4390,

120 N.E.3d 823, ¶ 10-12. This tax break is available to owners who prove that their

property is “devoted exclusively to agricultural use,” R.C. 5713.30(A)(1), 5713.31,

and 5715.01(A).

{¶ 8} The tax commissioner prescribes the basis for determining CAUV

pursuant to administrative rules promulgated under R.C. 5715.01.1 Ohio

Adm.Code Chapter 5703-25, Sections 30 through 36, govern the CAUV process

and Ohio Adm.Code 5703-25-33(A) prescribes a potential-income approach for

developing CAUV tables. The prescribed approach relies on determining “typical

net income before real property and income taxes from agricultural products

assuming typical management, cropping and land use patterns and yields for a given

type of soil.” To ensure uniformity, the commissioner must annually “adopt a

proposed entry setting forth the necessary modifications and values to be used in

establishing the current agricultural use value of land in counties completing a

sexennial reappraisal or [completing a triennial update].” Ohio Adm.Code 5703-

25-31(D).

{¶ 9} In preparing the journal entry, the commissioner must consult with an

“agricultural advisory committee,” id., that consists of representatives from “farm

related organizations and public agencies having knowledge in this field,” Ohio

Adm.Code 5703-25-32(A). Through the journal entry, the commissioner adopts a

1. Ohio’s 2017 budget bill, 2017 Am.Sub.H.B. No. 49, amended R.C. 5715.01 to add specific

requirements concerning the CAUV methodology. Those amendments were not in effect in June

2016 when the tax commissioner adopted and Johnson contested the unit-value table at issue here.

Accordingly, we refer in this opinion to the version of R.C. 5715.01 in effect for tax year 2016 as

“former R.C. 5715.01.”

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CAUV table listing soil types and the per-acre values for each soil type. Ohio

Adm.Code 5703-25-33. We have explained that process as follows:

The commissioner compiles this table by first calculating the

typical net income from agricultural products for each soil type. * *

* Next, the commissioner capitalizes the incomes expected to be

derived from each soil type by a rate that he has previously

determined. Finally, he lists the unit values per acre so determined

in the table and distributes the table to the auditors.

Renner v. Tuscarawas Cty. Bd. of Revision, 59 Ohio St.3d 142, 145, 572 N.E.2d 56

(1991).

{¶ 10} When the commissioner lists soil types in the unit-value table, he or

she relies on “Bulletin 685” for guidance. The bulletin is a 1980s publication

reflecting the input of the Ohio State University’s Cooperative Extension Service,

the Ohio State University’s Ohio Agricultural Research and Development Center,

the Division of Soil and Water Conservation of the Ohio Department of Natural

Resources, and the United States Department of Agriculture’s (“USDA”) Soil

Conservation Service (now known as the National Resource Conservation Service).

When the USDA adds soil types and data to its taxonomy of soils, those findings

are presented to the tax commissioner’s agricultural advisory committee for

inclusion in the unit-value tables.

{¶ 11} Using the CAUV journal entry, a county auditor determines the

agricultural-use value of each qualifying property in his or her county, and those

valuations “will be accepted as prima-facie correct valuation for parcels or tracts of

land devoted exclusively to agricultural use where the parcel and tract of land has

a ‘true’ or ‘market’ value reflecting a higher and better use than agricultural [use].”

Ohio Adm.Code 5703-25-31(E).

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B. Basis of the controversy

{¶ 12} Through four claims of error, Johnson presents a narrow challenge

to the CAUV unit-value table adopted in the tax commissioner’s June 2016 journal

entry. Specifically, he faults the table for not listing separate values for drained and

undrained Crosby, Kokomo, and Patton soils, given that it does list separate values

for drained and undrained Adrian, Carlisle, and Linwood soils. By arguing for a

lower unit value for the Crosby, Kokomo, and Patton soil types, which are present

but undrained on his farmland, Johnson seeks to reduce the prima facie agricultural-

use value of the land, which would reduce his property-tax liability.

C. Ohio Adm.Code 5703-25-34(E) furnishes no basis for challenging the

CAUV journal entry

{¶ 13} Johnson predicates his first claim of error on Ohio Adm.Code 5703-

25-34(E), which requires a county auditor, “[i]f a particular soil type is not included

in the ‘current agricultural use value of land table or tables’ prescribed by the tax

commissioner for the given year,” to “contact the tax commissioner to secure the

per acre unit value for the soil type.” The commissioner “shall then compute a use

value [for that soil type] * * *.” Id.

{¶ 14} Johnson argues that this provision compels the tax commissioner to

recognize undrained versions of specified soil types on the unit-value table. By

challenging the BTA’s determination that Ohio Adm.Code 5703-25-34(E) does not

apply to his challenge to the CAUV journal entry, Johnson raises an issue of law

that we review de novo. See Kinnear Rd. Redevelopment, L.L.C. v. Testa, 151 Ohio

St.3d 540, 2017-Ohio-8816, 90 N.E.3d 926, ¶ 14.

{¶ 15} As a starting point, we note that “unless the [commissioner’s] rule is

unreasonable or contrary to law, the Tax Commissioner must apply it as

formulated.” Kroger Grocery & Baking Co. v. Glander, 149 Ohio St. 120, 126, 77

N.E.2d 921 (1948), overruled on other grounds, Fichtel & Sachs Industries, Inc. v.

Wilkins, 108 Ohio St.3d 106, 2006-Ohio-246, 841 N.E.2d 284. We agree with the

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BTA’s conclusion that Ohio Adm.Code 5703-25-34(E) does not support Johnson’s

claim of error.

{¶ 16} By their own terms, the provisions of Ohio Adm.Code 5703-25-34

apply to a county auditor’s use of the unit-value table, not to the commissioner’s

adoption of the table. Division (A) of the rule addresses the auditor’s determination

as to whether property qualifies for CAUV treatment, and divisions (B), (C), and

(D) prescribe the initial steps for appraising CAUV property using the unit-value

table. County soil-survey maps are to be used to develop soil maps for each farm

to be assessed. Ohio Adm.Code 5703-25-34(B). And as the BTA correctly

recognized below, the division of labor between the tax commissioner and the

auditor reflects “two distinct aspects” of “the process by which the value of land

qualifying for CAUV is established.” BTA No. 2016-814, 2020 WL 1274335, at

*2. Generally, the tax commissioner’s duty is to “direct and supervise the

assessment for taxation of all real property” in the state, former R.C. 5715.01(A),

whereas a county auditor’s duty is to serve as the “assessor of all the real estate in

the auditor’s county for purposes of taxation,” R.C. 5713.01(A).

{¶ 17} Ohio Adm.Code 5703-25-34(E) clearly applies to the auditor’s

duties in making an assessment: it requires the auditor to contact the commissioner

when “a particular soil type is not included” in the unit-value table, and then the

commissioner may take further action. Accordingly, Ohio Adm.Code 5703-25-

34(E) addresses a county auditor’s duties when assessing CAUV property—not the

duties of the tax commissioner—and the auditor’s determinations may be reviewed

by the county’s board of revision if the affected taxpayer contests the assessment

by filing a complaint under R.C. 5715.19(A).2

2. In his merit brief, Johnson details the factual background of his efforts to obtain relief through

the county auditor. Those matters lie outside the record before us and, as the BTA correctly

observed, the county auditor’s assessment of the soil on Johnson’s farmland lies beyond the scope

of review in this case. Previously, Johnson raised arguments relating to soil drainage in connection

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{¶ 18} We affirm the BTA’s conclusion that Ohio Adm.Code 5703-25-

34(E) does not apply in the context of Johnson’s claim against the tax

commissioner.

D. The BTA correctly determined that the tax commissioner did not abuse

his discretion

{¶ 19} In his second, third, and fourth claims of error, Johnson renews his

argument, which was rejected by the BTA, that the tax commissioner abused his

discretion by not adopting separate per-acre values for undrained versions of

Crosby, Kokomo, and Patton soils. The BTA applied the abuse-of-discretion

standard based on our holding in Adams that the rules vest discretionary authority

in the tax commissioner in adopting CAUV tables and that such actions are not

merely ministerial. BTA No. 2016-814, 2020 WL 1274335, at *3-4, citing Adams,

152 Ohio St.3d 207, 2017-Ohio-8853, 94 N.E.3d 539, at ¶ 28. Indeed, in analogous

circumstances we have acknowledged the tax commissioner’s “high degree of

official judgment or discretion” in determining the manner in which he discharges

his assigned duties. Ashland Cty. Commrs. v. Ohio Dept. of Taxation, 63 Ohio

St.3d 648, 656, 590 N.E.2d 730 (1992); see also State ex rel. Delaware Joint

Vocational School Dist. Bd. of Edn. v. Testa, 149 Ohio St.3d 634, 2017-Ohio-796,

76 N.E.3d 1190, ¶ 13. And when the BTA reviews a determination of the tax

commissioner that involves the commissioner’s exercise of a discretionary power

conferred by statute, the BTA must apply the abuse-of-discretion standard. See

J.M. Smucker, L.L.C. v. Levin, 113 Ohio St.3d 337, 2007-Ohio-2073, 865 N.E.2d

866, ¶ 16.

{¶ 20} Two well-settled principles apply to our review in this context. First,

“it is not the role of this court to substitute its judgment for that” of the

commissioner, absent a finding of “unreasonableness, arbitrariness, or

with the tax-year-2010 assessment of his farmland. See Johnson v. Clark Cty. Bd. of Revision, 2d

Dist. Clark No. 2013 CA 32, 2014-Ohio-329.

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unconscionability.” Valentine v. Conrad, 110 Ohio St.3d 42, 2006-Ohio-3561, 850

N.E.2d 683, ¶ 9; see also Renacci v. Testa, 148 Ohio St.3d 470, 2016-Ohio-3394,

71 N.E.3d 962, ¶ 32 (“Abuse of discretion connotes an unreasonable, arbitrary, or

unconscionable attitude”). Second, the tax commissioner’s determinations when

adopting a unit-value table are “presumed, in the absence of proof to the contrary,

to be valid and to have been done in good faith and in the exercise of sound

judgment.” Wheeling Steel Corp. v. Evatt, 143 Ohio St. 71, 54 N.E.2d 132 (1944),

paragraph seven of the syllabus.

{¶ 21} At the hearing before the BTA, the tax commissioner’s assistant

administrator in charge of the CAUV program, Gloria Gardner, testified that the

2016 unit-value table generally follows the USDA’s taxonomy of soils and that the

taxonomy does not include drained and undrained Crosby, Kokomo, and Patton

soils as separate soil types.

{¶ 22} Johnson contends that the tax commissioner abused his discretion by

selectively departing from the USDA’s taxonomy of soils. He bases that assertion

on his cross-examination of Gardner, in which she conceded that Bulletin 685,

which provides yield data for particular soils used to develop the unit-value tables,

does not have separate listings for drained and undrained Adrian, Carlisle, and

Linwood soils—and yet the 2016 unit-value table does distinguish between drained

and undrained versions of those soils.

{¶ 23} We reject Johnson’s argument for two reasons. First, the tax

commissioner’s admitted departure from the bulletin does not prove that the

commissioner departed from the USDA’s soil taxonomy. That is so because

Gardner’s testimony indicates that the soil types in the bulletin have been updated

and that updating might account for any differential treatment of soil types—

including drained and undrained variants—in the current unit-value table. Second,

even if the CAUV journal entry did depart from the USDA’s soil taxonomy, we

must presume that the commissioner’s decision to do so reflects his exercise of

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sound judgment following his consultation with the agricultural advisory

committee.

{¶ 24} Johnson further argues that the tax commissioner “excluded data for

land lacking artificial drainage” with respect to Crosby, Kokomo, and Patton soil

types. Johnson bases this argument on the drainage characterizations for those soil

types set forth in the unit-value table and the explanation of drainage set forth in

Bulletin 685. In the unit-value table, Crosby soil in its natural state is rated

“somewhat poorly drained,” Kokomo soil in its natural state is rated “very poorly

drained,” and Patton soil in its natural state is rated “poorly drained.” The bulletin

explains that with respect to soil types with “poorly drained” or “very poorly

drained” ratings, “most crops cannot be grown” without artificial drainage.

Additionally, the bulletin states that regarding “somewhat poorly drained” soils,

“[w]etness markedly restricts the growth of crops unless artificial drainage is

provided.”

{¶ 25} Johnson’s point may be illustrated by comparing the table’s

treatment of two soil types: Adrian and Kokomo. In the 2016 unit-value table,

Adrian soil and Kokomo soil are both rated “very poorly drained,” but only Adrian

soil has separate unit-value entries based on drainage: $1,160 per acre for drained,

and the minimum agricultural value of $350 per acre for undrained. By contrast,

Kokomo soil has values of $3,970 and $3,690 per acre and the table does not

distinguish between drained and undrained variants of the soil. Johnson maintains

that the commissioner should recognize a value for undrained Kokomo soil—and

he makes the same argument regarding two other soil types on his farmland—

Crosby soil and Patton soil.

{¶ 26} Although those soil types in their natural states are rated as being

somewhat poorly drained, poorly drained, or very poorly drained, and although

relatively high per-acre values are assigned to those soil types through the 2016

CAUV journal entry, Gardner testified that the data regarding crop yields from the

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soil types may have included yields from both drained and undrained soil types.

The BTA found that this testimony was unrebutted, BTA No. 2016-814, 2020 WL

1274335, at *4, and we affirm the BTA’s determination that the inferences Johnson

draws from the differing drainage ratings, though perhaps plausible, do not rebut

Gardner’s testimony.3

{¶ 27} Furthermore, we question whether proof that the tax commissioner

did not consider data regarding the soils from farmland lacking artificial drainage

would establish an abuse of discretion. At the hearing before the BTA, Johnson

admitted that the installation of artificial drainage on farmland is the norm—

according to him, “probably 95 percent of the farms” in his county that have the

Patton soil type have artificial drainage. Because Ohio Adm.Code 5703-25-33(A)

calls for the commissioner to base the CAUV journal entry on “typical net income

* * * assuming typical management, cropping and land use patterns and yields for

a given type of soil” (emphasis added), the commissioner is justified in according

little weight to atypical practices when preparing the journal entry.

{¶ 28} Finally, Johnson argues more broadly that by listing some soil types

with drained and undrained variants, while listing other soil types without such

variants, the tax commissioner abused his discretion. Johnson contends that the

difference between artificially drained and undrained soil cannot be viewed as a

question of differing management practices, and separate entries in the unit-value

table are required for them because installing drainage tile involves additional

capital investment.

3. At the hearing before the BTA, Johnson stated that he had subpoenaed a USDA soil specialist,

but the specialist did not attend the hearing. According to Johnson, the specialist would have

testified that “all of the somewhat poorly drained, poorly drained, and very poorly drained [soils]

contained in the OSU bulletin report are for drained soils.” Johnson has not set forth as error any

alleged nonenforcement of his subpoena, and we do not consider the proffered evidence here. See

E. Liverpool v. Columbiana Cty. Budget Comm., 116 Ohio St.3d 1201, 2007-Ohio-5505, 876 N.E.2d

575, ¶ 9 (argument “never pressed” in the appellant’s briefs deemed abandoned).

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{¶ 29} We reject this argument. To repeat: the differential treatment of soil

types reflects the exercise of judgment by the commissioner, which we presume to

be sound. The possibility that the tax commissioner may have considered the

investment required for artificial drainage for some soil types, but not for others,

does not by itself prove that the commissioner abused his discretion.

{¶ 30} The record does not disclose the rationale for every consideration

underlying the unit-value table, but it was not the commissioner’s burden to

demonstrate the reasonableness of the CAUV journal entry—it was Johnson’s

burden to show an arbitrary or unconscionable attitude on the part of the

commissioner. He has not done so.

III. CONCLUSION

{¶ 31} For the foregoing reasons, we affirm the decision of the BTA.

Decision affirmed.

O’CONNOR, C.J., and KENNEDY, FISCHER, DEWINE, DONNELLY, STEWART,

and BRUNNER, JJ., concur.

_________________

William S. Johnson, pro se.

Dave Yost, Attorney General, and Raina Nahra Boulos and Kimberly

Allison, Assistant Attorneys General, for appellee.

_________________

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