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Hilliard City Schools Board of Education v. Franklin County Board of Revision

Supreme Court of Ohio

May 31, 2018

Hilliard City Schools Board of Education, Appellee,
Franklin County Board of Revision et al., Appellees; UTSI Finance, Inc., Appellant.

          Submitted January 23, 2018

          Appeal from the Board of Tax Appeals, Nos. 2014-3748 and 2014-3749.

          Rich & Gillis Law Group, L.L.C., Mark Gillis, and Kimberly G. Allison, for appellee Hilliard City Schools Board of Education.

          Vorys, Sater, Seymour & Pease, L.L.P., Karen H. Bauernschmidt, Nicholas Ray, and Heather M. Lutz, for appellant.

          PER CURIAM.

         {¶ 1} In this real-property-valuation case, appellant, UTSI Finance, Inc. ("UTSI"), appeals a Board of Tax Appeals ("BTA") decision that valued UTSI's property in accordance with a sale price. In assigning this value, the BTA determined that UTSI's appraisal evidence did not negate the presumption that the sale was characteristic of true value. Because we conclude that the BTA's decision is reasonable and lawful, we affirm it.


         {¶ 2} The subject property consists of two parcels located on the west side of Columbus. The first parcel consists of 3.160 acres of unimproved land. The second parcel consists of 24.710 acres, part of which is improved with a 9, 600-square-foot industrial warehouse used for servicing semitrailers. For tax year 2011, the Franklin County auditor valued the first parcel at $132, 700 and the second parcel at $1, 717, 300, for a total valuation of $1, 850, 000. Appellee Hilliard City Schools Board of Education ("BOE") and UTSI each filed original and countercomplaints against these tax-year-2011 valuations, and the two cases were consolidated for a hearing before the Franklin County Board of Revision ("BOR").

         A. BOR proceedings

         {¶ 3} At the BOR hearing, the BOE presented a quitclaim deed memorializing a transfer of the subject property from Lakeshore Ventures, L.L.C., to Universal Truckload Services, Inc. The deed was signed and notarized in September 2002, but it bears a stamp from the auditor's office dated March 2009. The BOE also presented the conveyance-fee statement associated with this transfer, showing that the subject property sold for $2, 313, 489. The statement was filed with the auditor's office in March 2009. Relying on these two documents, the BOE argued that the subject property should be valued according to the sale price.

         {¶ 4} As additional support, the BOE provided copies of the BOR's decision that assigned a value of $2, 313, 500 to the subject property for tax year 2009. The BOE asserted that during the tax-year-2009 proceedings, the BOR determined that the sale was arm's length in nature, and thus, it insisted, UTSI was barred from contesting the arm's-length nature of the transaction during the tax-year-2011 proceedings.

         {¶ 5} For its part, UTSI presented the testimony of Kelly Fried, a certified appraiser whose qualifications were stipulated to by the BOE. Fried appraised only the second parcel (the one improved with the industrial warehouse) as of the January 1, 2011 tax-lien date, relying on both a sales-comparison and an income approach to value to arrive at a reconciled valuation of $1, 470, 000.

         {¶ 6} Fried commented on market trends, observing that "there appears to be limited demand for similar [properties] at the time of value as there appears to be an excess supply of space in this area." More specifically, she wrote that "demand for real property peaked around 2006 and then began to decline from late 2007 until leveling off in late 2011/early 2012 due to economic conditions." During this decline, she observed, vacancy rates started to trend upward.

         {¶ 7} Fried's appraisal report additionally noted:

The property last transferred in March 3, 2009 from Lakeshore Ventures LLC to Universal Truckload for $2.3 million in a sale that the owner reported to be between related entities. The majority owner of UTSI also owns Lakeshore Ventures. There was an additional transfer in 2009 from Universal Truckload to UTSI for no consideration in what was considered to be a non-arm's-length transfer.

         Fried elaborated on this passage by testifying that the commonality between the "related entities" was based on their relationship to "Crown Enterprises." Fried never identified the name of the "owner" who had reported to her that the sale was between related entities, nor did this owner testify. The BOE raised a hearsay objection to Fried's reliance on her conversation with the owner, but the BOR permitted her to testify on this topic.

         {¶ 8} Fried stated that the owner had told her that the March 2009 sale included more than just realty. But Fried did not specify what the nonrealty items may have been.

         {¶ 9} The BOR assigned a total value to the subject property of $1, 602, 700 for tax years 2011, 2012, and 2013. For the first parcel, the BOR retained the auditor's valuation of $132, 700. For the second parcel, it assigned Fried's opined value of $1, 470, 000. The BOR rejected the BOE's argument that the March 2009 sale price established the subject property's value, explaining that changes in market conditions rendered the sale too remote.

         B. BTA proceedings

         {¶ 10} The BOE appealed to the BTA, which heard the case on the record developed before the BOR and on briefs filed by the BOE and UTSI. The BTA determined that the subject property's value should be $2, 313, 490 for tax years 2011, 2012, and 2013. Although the BTA rejected the BOE's argument that UTSI was collaterally estopped from contesting the sale's arm's-length nature, the BTA nevertheless found that the sale price presumptively established the subject property's value and that UTSI had failed to rebut that presumption by showing that the sale was not a recent arm's-length transaction. The BTA held that it could not rely on Fried's statement that the sale was between related parties, because in its view, that statement was hearsay. The BTA rejected UTSI's argument that the sale took effect in September 2002, ruling instead that the sale took effect for real-property-valuation purposes in March 2009, the date the conveyance-fee statement was filed. And the BTA rejected Fried's analysis of changed market conditions as empirically unsupported. UTSI then filed this appeal.


         {¶ 11} We will affirm a BTA decision that is reasonable and lawful. Satullo v. Wilkins, 111 Ohio St.3d 399, 2006-Ohio-5856, 856 N.E.2d 954, ¶ 14. We review de novo the BTA's resolution of legal issues but will defer to the BTA's findings concerning the weight of the evidence if there is evidence in the record to support them. Lunn v. Lorain Cty. Bd. of Revision, 149 Ohio St.3d 137, 2016-Ohio-8075, 73 N.E.3d 486, ¶ 13.


         {¶ 12} We begin with well-established principles. The price from a recent arm's-length sale presumptively establishes a property's true value pursuant to former R.C. 5713.03, Am.Sub.H.B. No. 260, 140 Ohio Laws, Part II, 2665, 2722.[1]E.g., Utt v. Lorain Cty. Bd. of Revision, 150 Ohio St.3d 119, 2016-Ohio-8402, 79 N.E.3d 536, ¶ 9. To benefit from this presumption, the proponent need only meet a relatively light initial burden to show that the "sale on its face appears to be recent and at arm's length." Cummins Property Servs., LLC v. Franklin Cty. Bd. of Revision, 117 Ohio St.3d 516, 2008-Ohio-1473, 885 N.E.2d 222, ¶ 41. The proponent can make this showing by furnishing " 'basic documentation of a sale.' " Utt at ¶ 13, quoting FirstCal Indus. 2 Acquisitions, LLC v. Franklin Cty. Bd. of Revision, 125 Ohio St.3d 485, 2010-Ohio-1921, 929 N.E.2d 426, ¶ 24. When, for example, the proponent provides a deed and conveyance-fee statement, this requirement is met and the presumption arises. See Dauch v. Erie Cty. Bd. of Revision, 149 Ohio St.3d 691, 2017-Ohio-1412, 77 N.E.3d 943, ¶ 17.

         {¶ 13} After the presumption arises, the opponent may rebut it only by showing that the sale was either not recent or not at arm's length. Cummins at ¶ 13. An appraiser's opinion of value is not enough on its own to overcome the validity of a sale price. Columbus City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 146 Ohio St.3d 470, 2016-Ohio-757, 58 N.E.3d 1126, ¶ 20 ("Buckeye Hospitality"). But an opponent is permitted to rebut the presumed recency and arm's-length nature of a sale by "rely[ing] on information contained in an appraisal report and an appraiser's testimony." Id. at ¶ 19. With these principles in mind, we now take up the parties' contentions.

         A. The BOE did not preserve its ...

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