Ratner v. Stark County Board of Revision

Locher, J.,

dissenting. I respectfully dissent. Today’s decision once again disregards this court’s holding in Columbus Bd. of Edn. v. Fountain Square Assoc., Ltd. (1984), 9 Ohio St. 3d 218 , 9 OBR 528, 459 N.E. 2d 894 , and places the finishing touch on the creation of a bureaucratic nightmare for the taxing authorities of this state.

In Fountain Square, supra, this court unanimously stated at 219, 9 OBR at 529, 459 N.E. 2d at 895 :

“We have consistently adhered to the rule that ‘[t]he best evidence of the “true value in money” of real property is an actual, recent sale of the property-in an arm’s-length transaction. * * *’

“Appraisals based upon factors other than sales price are appropriate for use in determining value only when no arm’s-length sale has taken place * * *, or where it is shown that the sales price is not reflective of true value * * *.

“The fact that appellee obtained favorable financing does not render the sales price unrepresentative of true value.”

In Ratner I, the majority attempted to distinguish Fountain Square because the taxpayer in that case “produced no evidence other than the terms of the sale to indicate that the sale price did not reflect the true value of the property.” Ratner v. Stark Cty. Bd. of Revision (1986), 23 Ohio St. *31 3d 59, 61 , 23 OBR 192, 193, 491 N.E. 2d 680, 682 . However, the taxpayer did submit an appraisal which determined the value of the property by reducing the sale price to reflect the cash equivalency value of the notes, i.e., the price for which the notes could have been sold on the date the property was purchased. See Fountain Square, supra, at 219 , 9 OBR at 528-529, 459 N.E. 2d at 895 . The cash equivalency analysis was utilized and considered in Fountain Square and this court soundly rejected it.

Regardless, as reflected in Ratner I, and now in the instant case, it appears that this court and the BTA will ignore Fountain Square, embrace the cash equivalency analysis and reject the objective, common-sense method of equating fair market value of real estate with its most recent arm’s-length purchase price. As Justice Douglas so aptly noted in his dissent in Ratner I: “* * * I take umbrage with today’s decision because of an even greater concern. * * * [C]ounty auditors, boards of revision and the BTA will be required to engage in an endless number of subjective adjustments in every sale of real properly in order to determine the ‘cash equivalency’ of the sale price. Appraisers will be required, in every sale case, to value the notes and mortgages. Lost in the process would be the only objective criterion for determining market value — an actual sale. Replacing this objective criterion would be the subjective arguments of appraisers as to what value must be placed on the financing that went with the transaction.” Id. at 64, 23 OBR at 196, 491 N.E. 2d at 684 . This loss of the only objective criterion for valuing real property will also open the veritable “floodgates” of litigation and increase uncertainty on this subject.

Finally, in Ratner I, the majority remanded the action and directed the BTA to “review evidence presented by independent real estate appraisers that adjusts the contract sale price to reflect both the price paid for real estate and the price paid for favorable financing.” Id. at 62 , 23 OBR at 194, 491 N.E. 2d at 682 . It would appear from its decision in the instant case that the BTA misinterpreted this language to mean that it should adopt the taxpayer’s evidence of value and hold in favor of the taxpayer. In fact, this is precisely what it did on remand. Thus, now that the BTA has reached the result the majority originally desired, the majority recognizes the well-established standard of review that it disregarded in Ratner /: “The fair market value of property for tax purposes is a question of fact, the determination of which is primarily within the province of the taxing authorities, and this court will not disturb a decision of the Board of Tax Appeals with respect to such valuation unless it affirmatively appears from the record that such decision is unreasonable or unlawful.” Bd. of Revision v. Fodor (1968), 15 Ohio St. 2d 52 , 44 O.O. 2d 30, 239 N.E. 2d 25 , syllabus. For Ohio’s taxing authorities, this recognition comes far too late.

Accordingly, I respectfully dissent.

Douglas, J., concurs in the foregoing dissenting opinion.