Submitted February 28, 2017
from the Board of Tax Appeals, No. 2011-714.
& Gillis Law Group, L.L.C., Mark H. Gillis, and Kimberly
G. Allison, for appellee Columbus City Schools Board of
Timothy A. Pirtle, for appellant.
1} This real-property-valuation case concerns
several residential parcels, all part of a
government-subsidized low-income-housing project in Franklin
County, and their value for 2008, 2009, and 2010. The
property owner, Network Restorations III, L.L.C., presented
an appraisal that was adopted by the Franklin County Board of
Revision ("BOR"), but the Columbus City Schools
Board of Education ("BOE") appealed to the Board of
Tax Appeals ("BTA"), which reversed and reinstated
the county auditor's higher valuations.
2} On appeal, the property owner asserts that its
appraiser followed the proper principles applicable when
valuing government-subsidized housing and that the BTA
misinterpreted the applicable case law. The proper legal
analysis for the type of property at issue in this case is
set forth in Woda Ivy Glen Ltd. Partnership v. Fayette
Cty. Bd. of Revision, 121 Ohio St.3d 175, 2009-Ohio-762,
902 N.E.2d 984. Because we find that the BTA's rejection
of the owner's appraisal rests upon an erroneous
interpretation of Woda, we reverse the decision of
3} At issue are 42 parcels scattered throughout
Franklin County, some of which have been improved with
renovated low-income housing. There are 35 buildings with 150
rental units-a mix of one-bedroom, two-bedroom, and
three-bedroom units. For tax year 2008, which was a triennial
update year in Franklin County, the county auditor valued the
properties individually, combining a cost approach and a
"gross rent multiplier" approach to arrive at a
value for each parcel, which when combined amounted to $4,
456, 910. For tax year 2009, the auditor increased
the values because some of the properties had been renovated;
the aggregate valuation for 2009 was $5, 490, 700, which was
carried over to tax year 2010.
4} After filing a complaint that sought a reduced
aggregate value of $3, 600, 000, the owner presented lay
testimony and an expert opinion of value at the BOR hearing.
The testimony established that to participate in the
"low-income-housing tax credit" program, the owner
was required to and did execute and record a restrictive
covenant. The covenant bound the current owner and its
successors to continue to use the property to provide
low-income housing on very specific terms over a 30-year
5} The owner's expert witness was Donald E.
Miller II, a member of the Appraisal Institute, who testified
in support of his appraisal report before the BOR. Placing
primary reliance on an income approach, which he checked
using a sales-comparison approach, Miller opined that the
aggregate property value was $2, 830, 000 for 2008. Miller
specifically discussed the low-income-housing tax credit and
the rent subsidies enjoyed by the properties at issue, which
made it possible to renovate the units and to rent the units
to low-income persons who could not afford market rents. He
then premised his report on those circumstances.
6} Miller identified two types of subsidy. The first
was acquisition and renovation assistance through the federal
low-income-housing tax credit ("LIHTC"), which was
enacted in 1986 and codified at 26 U.S.C. 42. The LIHTC is a
device for raising capital for low-income-housing projects
that by themselves generate little (if any) profits-investors
are attracted by federal income tax credits that are tied to
the amount of capital invested in the housing projects.
Woda, 121 Ohio St.3d 175, 2009-Ohio-762, 902 N.E.2d
984, at ¶ 16-17.
7} The second form of subsidy was housing-assistance
payments ("HAP"), which were available to tenants
through Section 8 of the Housing Act of 1937, as amended. 42
U.S.C. 1437f We have addressed this subsidy before in the
context of real-property-valuation cases. See Alliance
Towers, Ltd. v. Stark Cty. Bd. of Revision, 37 Ohio
St.3d 16, 20, 523 N.E.2d 826 (1988), fn. 4 (lead opinion);
Colonial Village Ltd. v. Washington Cty. Bd. of
Revision, 114 Ohio St.3d 493, 2007-Ohio-4641, 873 N.E.2d
298, ¶ 20.
8} Miller's opinion of value rested on his
finding of highest and best use. Noting the blight in the
neighborhoods in which the parcels at issue are located,
Miller found that the highest and best use would be
"intensive residential if special funding is made
available." Under the income approach, Miller noted that
the properties at issue operate as LIHTC properties and that
the owner receives HAP-subsidized rents, as the residents are
unable to afford the LIHTC rents. Miller stated that
"[g]iven the subsidized rents and the reality that this
appraisal may be ...