NTD PROPERTIES, LTD. Plaintiff-Appellant
AUDITOR OF CLARK COUNTY, OHIO, et al. Defendants-Appellees
Civil appeal from Common Pleas Court, T.C. NO. 09CV323
RICHARD F. HEIL, JR., Atty. Reg. No. 0033661 and WAYNE E. SOUTHWARD, Atty. Reg. No. 0009439, Attorneys for Plaintiff-Appellant
KAROL C. FOX, Atty. Reg. No.0041916 and MARK H. GILLIS, Atty. Reg. No. 0066908, Attorneys for Defendant-Appellee Clark-Shawnee Local Schools
WILLIAM D. HOFFMAN, Atty. Reg. No. 0047109, Assistant Prosecuting Attorney, Attorney for Defendants-Appellees Auditor of Clark County, Ohio and Board of Revision of Clark County, Ohio
(¶ 1} This matter is before the Court on the Notice of Appeal of NTD Properties, Ltd. ("NTD"), filed February 7, 2013. NTD appeals from the January 8, 2013 judgment of the court of common pleas that overturned the February 6, 2009 decision rendered by the Board of Revision of Clark County ("BOR"), which recommended that the true value of real property owned by NTD be reduced to $3, 350, 000.00. The property is located at 785 Benjamin Drive, in Springfield. In overturning the decision by the BOR, the court adopted the original valuation of $4, 396, 750, as determined by the Auditor of Clark County.
(¶ 2} The record before us reflects that NTD filed its Complaint Against the Valuation of Real Property in March, 2008, regarding tax year 2007. The complaint provides that an appraisal is being obtained, and that the true market value of the property is $3, 000, 000.00. The complaint indicates that improvements in the amount of $21, 420.00 were made to the property in August, 2006. The Clark-Shawnee Local School District Board of Education ("BOE") filed a counter-complaint, asserting that the true market value of the property is $4, 396, 750.00. We note that the property record card shows that the Auditor applied a cost approach to determine the value of the property. The card indicates a value for the building of $3, 935, 750.00 and a value of $460, 780.00 for the land.
(¶ 3} A hearing was held on January 29, 2009, before the BOR. Present at the hearing were Leland Coe, of Leland M. Coe & Associates, Nick and Teresa Demana, the owners of NTD, as well as counsel for NTD and BOE. Members of BOR in attendance were George Sodders, Auditor; Roger Tackett, a representative from the Auditor's office; and John Ebert and Daniel Anderson of Cama Resources and Technologies.
(¶ 4} Coe testified that he appraised the Springfield property. He stated that it is located in the Prime Ohio Corporate Park. According to Coe, the property "is improved with a one-story metal heavy manufactured structure on a slab foundation, " which he described as "a long narrow building, which is very typical for a crane building." He stated that the building contains an office area with a "waiting room, a reception area, a general office, a conference room, 22 offices, a lunchroom, and four restrooms containing 10, 500 square feet." Coe stated, the "second area is the warehouse area, containing 105, 000 square feet for a total 115, 500 square feet." Coe stated that the building was built in 1995, and that it has 25-foot ceilings in the manufacturing area which are "not typical for an industrial building."
(¶ 5} Coe stated that he performed a "market approach" analysis in the course of appraising the property, and he described three properties outside of Clark County that he used for comparison purposes, one of which was in Springboro, and two of which were in Moraine. According to Coe, he "looked throughout the Springfield area. The Springfield area has got a very, very, very limited amount of sales. I talked to Jeff Levine, Doug Cox, and several other people, and you know, Pace and CoStar. So I've been trying to look for a crane-type building such as this." Coe stated that he did not perform a "cost approach" analysis because the building is "approximately 10 years old, " and it is difficult to calculate depreciation. Coe further stated that he did not perform an "income approach" analysis because the property is owner occupied, and the narrow nature of the building makes it difficult to rent or lease. According to Coe, "it's so specialized that it would not make any sense at all. * * * Yes, I can go all throughout southwest Ohio. Again, it can go from 50 cents all the way up to 2.50. But I decided because of an owner-occupied building the income approach is not for me at all for this type of building."
(¶ 6} Coe provided a 44 page Summary Appraisal Report detailing his analysis and conclusion. His attached certification provides that "the reported analyses, opinions and conclusions were develope[d], and this report has been prepared, in conformity with the requirements of the Code of Profession Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute." The report includes the Warranty Deed, which reflects that NTD purchased the property for $1, 584, 500.00 on August 28, 2000. The report provides that the property is comprised of 15.90 acres. The report indicates that Coe considered the "Cost Approach, the Market Approach and the Income Approach to Value." The report provides that "Cost Approach Analysis" is "most beneficial when used on new or nearly new structures. Due to the age of the subject this approach is considered but not used." Regarding the "Income Approach Analysis, " the report indicates that it "is not typical to lease this type of building, but to purchase it. Therefore this approach is considered but not used."
(¶ 7} Regarding the "Market Approach Analysis, " the report identifies a 4.129-acre property on Sharts Road, in Springboro, containing a "one story crane building on a slab foundation, " consisting of 72, 000 square feet, that sold on October 10, 2006 for $840, 000.00. According to the report, "it is larger in land size and a % adjustment is warranted. It is smaller in building size and a -20% adjustment is warranted. The other factors are considered similar as compared to the subject. The total net adjustment is -10% or $1.17/SF. The adjustment price per square foot is $10.50."
(¶ 8} The report further identifies an 11.3-acre property on Elbee Road, in Moraine, containing "one industrial warehouse with a 3 story office section on a slab foundation, " consisting of 271, 864 square feet, that sold on January 3, 2006 for $2, 200, 000.00. According to the report, it "is larger in size and % adjustment is warranted. It is larger in building size, and -20% adjustment is warranted. The building design is superior and a -20% adjustment is warranted. The other factors are considered to be similar as compared to the subject. The total net adjustment is % or $0.81/SF. The adjusted price per square foot is $8.90."
(¶ 9} Finally, the report identifies a 3.2495-acre property on East River Road, in Moraine, containing a "one story heavy manufacturing structure on a slab foundation, " with a size of 78, 000 square feet, that sold on May 3, 2007 for $1, 250, 000.00. The report indicates that this property is "larger in land size and % adjustment is warranted. It is smaller in building size and a -20% adjustment is warranted. It is superior in design and a -25% adjustment is warranted. The other factors are considered to be similar as compared to the subject. The total net adjustment is -35% or -$5.59/SF. The adjusted price per square foot is $10.39." The report indicates that this property is "multi-tenant."
(¶ 10} The report concludes as follows: "After making the proper adjustments to each of the sales, the adjusted price range for the comparables is between $8.90/SF and $10.50/SF. The most weight is given to the middle of the range at $10.00/SF. Therefore, 115, 500 square feet at $10.00/SF indicates $1, 155, 000, which is rounded to $1, 150, 000."
(¶ 11} At the hearing, Nick Demana testified as follows regarding other property owned by NTD::
Well, actually, the one we sold back in 2003 approximately was our facility on York Street in Springfield. And it took approximately a year to a year and a half to sell. But it was listed with Doug Cox at Levine Realty. And I do not recall the final sale price, but it was in the neighborhood of $10 a square foot.
We had a building for sale in Dayton. And obviously, these are parts of a Benjamin Steel Operation. So they are somewhat similar to this facility. And the building in Dayton we had listed for sale for two or three years. Never had one bite on it, if you would, never had one offer. And we had it listed for $15 a square foot approximately. And the realtor company that we had it listed with certainly showed us lots of information similar to appraisal-type stuff indicating industrial buildings of our type in the $8 to $15 a square foot range as the going market price four years ago.
(¶ 12} When Sodders asked Coe why the appraisal value was less than the purchase price of the property, the following exchange occurred:
MR. COE: It is a very specific - - specified use as a crane building. Okay. But if you put it on the market today, how many people are willing to buy a crane building with a 24-plus height - -
MR. SODDERS: I have no idea.
MR. COE: That's right. Simply none. * * *
(¶ 13} Teresa Deman indicated that the $3, 000, 000.00 figure in her complaint "was a figure that was provided by our finance department and our cost accountant." She stated, "they are employed by Benjamin Steel Company. The number itself was also in a sense not that you're pulling it out of the air, but there wasn't any kind of appraisal behind it. So we had to come with a number at that point in time until we could get an appraisal." Nick Demana further indicted that the estimate was based upon an amount of $25.00 a square foot for 120, 000 square feet, and he stated, "we have some knowledge of what it costs to build new. And that number is certainly below that amount. And, therefore, that was the decision."
(¶ 14} Near the end of the hearing, Morrow indicated to Coe that he has "seen your comps at least two of the three on several occasions" at other hearings, and the following exchange ...