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West Carrollton City Schools Board of Education v. Montgomery County Board of Revision

Supreme Court of Ohio

June 20, 2017

West Carrollton City Schools Board of Education, Appellant,
v.
Montgomery County Board of Revision et al., Appellees.

          Submitted April 4, 2017

         Appeal from the Board of Tax Appeals, No. 2012-4862.

          Rich & Gillis Law Group, L.L.C., Mark H. Gillis, and Karol C. Fox, for appellant.

          John R. Koverman Jr., for appellee Carmax Auto Superstores, Inc.

          Per Curiam.

         {¶ 1} Appellant, West Carrollton City Schools Board of Education ("BOE"), challenges the decision of the Board of Tax Appeals ("BTA"), which retained the auditor's update-year valuation of $4, 716, 690 for 2011. The BOE argues that the subject property, two contiguous parcels developed by appellee Carmax Auto Superstores, Inc., should be valued by reference to the 2008 purchase of the land for $5, 850, 000 along with actual construction costs of $7, 015, 740 for subsequent improvements. Appellee Montgomery County Board of Revision ("BOR") and the BTA both disagreed and retained the auditor's value.

         {¶ 2} On appeal to this court, the BOE argues that the BTA acted unreasonably and unlawfully by refusing either to rely on the land-sale price and actual-cost evidence to value the property or to perform an independent valuation of the property. We disagree, and we therefore affirm the decision of the BTA.

         FACTUAL BACKGROUND

         {¶ 3} On January 9, 2008, the two parcels at issue-vacant land at that time, amounting to about 15 acres-were purchased by Carmax for $5, 850, 000. The BOE filed a complaint seeking an increase in the value for tax year 2008 of the land from the $578, 100 valuation determined by the auditor to its sale price. The BOR ordered an increase but not to the full amount of the sale price, and the BOE appealed to the BTA, which found that the sale was a recent arm's-length transaction. BTA No. 2009-K-3910, 2012 WL 4338747, *7 (Sept. 11, 2012). On that basis, the BTA granted the requested increase to $5, 850, 000. Id. at *8.

         {¶ 4} During 2008 and 2009, Carmax constructed on the subject property a used-car sales center comprising about 45, 435 square feet of interior space. Construction records indicate actual costs, and Carmax spent a total of $7, 015, 740.76 to construct the building and other improvements.

         {¶ 5} 2011 was a triennial update year in Montgomery County, and the auditor set the value of the subject property at $4, 716, 690-the components of the valuation being $52, 460 for the smaller, undeveloped parcel and $4, 664, 230 for the main parcel (a land value of $2, 476, 800 plus improvements valued at a "replacement cost new" amounting to $2, 187, 430).

         {¶ 6} The BOE filed a complaint seeking an increase to the 2008 land-sale price of $5, 850, 000. At the BOR hearing, the BOE relied on evidence of the sale and Carmax presented sworn testimony from its counsel. The BOR retained the auditor's valuation, and the BOE appealed to the BTA, where the BOE presented cost evidence along with Carmax's stipulation that it spent $7, 015, 740.76 to construct the building and other improvements. Carmax presented the testimony of an appraiser, Michael N. Moorhead, who had appraised the unimproved property as of January 1, 2008. That appraisal had been admitted in the prior case but was not introduced here.

         {¶ 7} As for the tax-year-2011 valuation, Moorhead did not perform a complete new appraisal but reviewed additional market data at Carmax's request. One comparable land sale for $1, 800, 000 for approximately 14 acres occurred in January 2014. As for the value of the improvements, Moorhead testified that a cost approach would be appropriate only in conjunction with using the market-sales and income approaches. Moorhead also opined that the facility was a special-purpose building. Lastly, Moorhead pointed out that additional costs do not necessarily add to the market value of a property.

         {¶ 8} In its decision, the BTA made no mention of Carmax's construction costs as a basis for determining a value for the improvements. The BTA rejected using the sale price to value the land because the sale occurred more than 24 months before the January 1, 2011 update valuation, relying on the authority of 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. BTA No. 2012-4862, 2015 WL 750651, *2 ...


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