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Kettering City Schools Board of Education v. Montgomery County Board of Revision

Court of Appeals of Ohio, Second District, Montgomery

June 15, 2018

KETTERING CITY SCHOOLS BOARD OF EDUCATION, Appellee
v.
MONTGOMERY COUNTY BOARD OF REVISION, Appellee; GEORGE E. RYNE, Appellant

          Administrative Appeal from Board of Tax Appeals BTA Case No. 2015-2331

          KAROL FOX, Atty. Reg. No. 0041916 and MARK GILLIS, Atty. Reg. No. 0066908, 6400 Riverside Drive, Suite D, Dublin, Ohio 43026 Attorneys for Plaintiff-Appellee Kettering City Schools Board of Education

          CHARLES L. BLUESTONE and PATRICK J. HEERY, Attorneys for Defendant-Appellant George E. Ryne

          OPINION

          FROELICH, J.

         {¶ 1} George E. Ryne appeals from the Decision and Order of the Ohio Board of Tax Appeals (BTA), which valued a McDonald's restaurant owned by Ryne at $2, 055, 000 for tax year 2014. For the following reasons, the Decision and Order of the BTA will be affirmed.

         Background Information

         {¶ 2} The property in question, parcel number N64 00803 0245, is located at 2901 Wilmington Pike in Kettering. The Wilmington Pike McDonald's was constructed in 2012, subject to a ground lease. As of January 1, 2014, the Montgomery County Auditor valued the property at $1, 402, 840. The McDonald's owner, Ryne, filed a complaint with the Board of Revision (BOR) requesting that the value of the property be reassessed at $1, 076, 200. The Kettering City Schools Board of Education (Kettering BOE) filed a counter-complaint objecting to the requested reduction in value.

         {¶ 3} The BOR conducted a hearing at which both Ryne and the Kettering BOE participated, but only Ryne presented expert evidence. Specifically, Ryne submitted a report and expert testimony from Stephen J. Weis, who opined that the property should be valued at $1, 115, 000. Ryne amended his request for the reassessment of the property to reflect this amount. The BOR voted to reduce the value of the subject property to $1, 118, 870, without explaining why its valuation differed from Weis's. For reasons that are unclear, no record of the BOR hearing was made.

         {¶ 4} The Kettering BOE appealed to the BTA. (BTA Case No. 2015-2331). Because there was no record of the BOR proceedings and because the parties sought to supplement the record, the BTA conducted a hearing on October 6, 2016.[1] At the hearing, Ryne again presented Weis's opinion and his appraisal report in support of a $1, 115, 000 valuation of the property. The Kettering BOE presented expert testimony and an appraisal report from Thomas D. Sprout, who opined that the value of the property was $2, 055, 000 as of January 1, 2014.

         {¶ 5} The BTA adopted the $2, 055, 000 valuation proposed by the Kettering BOE.

         {¶ 6} Ryne appeals, raising six assignments of error. [2] Each of these assignments challenges the BTA's assessment of the appraisal reports, the specific calculations contained in them, and/or the relative qualifications of the appraisers.

         Standard of Review

         {¶ 7} When cases are appealed to the BTA from boards of revision, the appellant has the burden of proving its right to a decrease or increase in value from the value that the board of revision has determined. (Citations omitted.) Shinkle v. Ashtabula Cty. Bd. of Revision, 135 Ohio St.3d 227, 2013-Ohio-397, 985 N.E.2d 1243, ¶ 24. This means that "the appellant must come forward and demonstrate that the value it advocates is a correct value. Once competent and probative evidence of value is presented by the appellant, the appellee who opposes that valuation has the opportunity to challenge it through cross-examination or by evidence of another value." (Citation omitted.) EOP-

          BP Tower, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 106 Ohio St.3d 1, 2005-Ohio-3096, 829 N.E.2d 686, ¶ 6.

         {¶ 8} The BTA itself, as a taxing authority, has an independent duty to weigh evidence and make findings, and the BTA reviews the administrative decisions of boards of revision de novo as to both fact and law. MacDonald v. Shaker Hts. Bd. of Income Tax Rev., 144 Ohio St.3d 105, 2015-Ohio-3290, 41 N.E.3d 376, ¶ 21; Coventry Towers, Inc. v. Strongsville, 18 Ohio St.3d 120, 122, 480 N.E.2d 412 (1985). Under R.C. 5717.01, the BTA has "three options when hearing an appeal: the board may confine itself to the record and the evidence certified to it by the board of revision, hear additional evidence from the parties, or may make such other investigation of the property as is deemed proper." Coventry Towers at 122.

         {¶ 9} Under what is called the "Bedford rule, " " 'when the board of revision has reduced the value of the property based on the owner's evidence, that value has been held to eclipse the auditor's original valuation, ' and the board of education as the appellant before the BTA may not rely on the latter as a default valuation." Dublin City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 147 Ohio St.3d 38, 2016-Ohio-3025, 59 N.E.3d 1270, ¶ 6, referencing Bedford Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 115 Ohio St.3d 449, 2007-Ohio-5237, 875 N.E.2d 913. (Other citation omitted.) Thus, when the board of revision adopts a new value based on an owner's evidence, the burden of going forward shifts to the board of education on appeal to the BTA. Id. The board of education then has the burden to establish a new value, whether that be the valuation of the auditor or another value. Id. at ¶ 7.

         {¶ 10} With respect to our review of BTA decisions, we note that Ryne's notice of appeal was filed before the effective date of recent amendments to R.C. 5717.04, which became effective on September 29, 2017. See Am. Sub. H.B. 49, 2017 Ohio Laws File 14. Prior to the amendments, parties had the option of appealing decisions of the BTA to the Supreme Court of Ohio, as well as to the court of appeals for the county in which the taxed property was situated. However, the statute was amended to eliminate initial appeals to the Supreme Court of Ohio, and the court of appeals now has exclusive jurisdiction over such an appeal.[3] See Am. Sub. H.B. 49, 2017 Ohio Laws File 14, Part 15.

         {¶ 11} R.C. 5717.04, as amended, states that:

If upon hearing and consideration of such record and evidence the applicable court decides that the decision of the board appealed from is reasonable and lawful it shall affirm the same, but if the court decides that such decision of the board is unreasonable or unlawful, the court shall reverse and vacate the decision or modify it and enter final judgment in accordance with such modification.[4]

          {¶ 12} The general standards for reviewing BTA decisions are well settled. If the BTA's decision is both "reasonable and lawful, " the reviewing court must affirm. NWD 300 Spring, L.L.C. v. Franklin Cty. Bd. of Revision, 151 Ohio St.3d 193, 2017-Ohio-7579, 87 N.E.3d 199, ¶ 13, citing R.C. 5717.04. Nonetheless, a reviewing court does not hesitate to reverse BTA decisions that are based on incorrect legal conclusions. See, e.g., Satullo v. Wilkins, 111 Ohio St.3d 399, 2006-Ohio-5856, 856 N.E.2d 954, ¶ 14, citing Gahanna-Jefferson Local School Dist. Bd. of Edn. v. Zaino, 93 Ohio St.3d 231, 232, 754 N.E.2d 789 (2001). Consequently, questions of law are reviewed de novo. Terraza 8, L.L.C. v. Franklin Cty. Bd. of Revision, 150 Ohio St.3d 527, 2017-Ohio-4415, 83 N.E.3d 916, ¶ 7; Dublin City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 139 Ohio St.3d 193, 2013-Ohio-4543, 11 N.E.3d 206, ¶ 13.

         {¶ 13} Review of BTA decisions "is guided by the premise that ' "[t]he 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." ' " NWD 300 Spring at ¶ 13, quoting EOP-BP Tower, 106 Ohio St.3d 1, 2005-Ohio-3096, 829 N.E.2d 686, at ¶ 17. (Other citation omitted.) The BTA's factual decisions are upheld "if the record contains reliable and probative evidence supporting the BTA's determination." Dublin City Schools Bd. of Edn., 139 Ohio St.3d 193, 2013-Ohio-4543, 11 N.E.3d 206, at ¶ 13, citing Satullo at ¶ 14. Deference is also given to BTA findings about the weight of the evidence, as long as the findings are supported by the record. Terraza 8 at ¶ 7, citing Olmsted Falls Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 122 Ohio St.3d 134, 2009-Ohio-2461, 909 N.E.2d 597, ¶ 27.

         {¶ 14} Article XII, Section 2 of the Ohio Constitution requires property to be "taxed by uniform rule according to value." "This provision generally requires a real-property valuation to ascertain 'the exchange value' of the property." (Citation omitted; emphasis sic.) Johnston Coca-Cola Bottling Co. v. Hamilton Cty. Bd. of Revision,149 Ohio St.3d 155, 2017-Ohio-870, 73 N.E.3d 503, ¶ 13. As a general rule, "the value or true value in money of any property is the amount for which that property would sell on the open market by a willing seller to a willing buyer. In essence, the value of property is the amount of money for which it may be exchanged, i.e., the sales price." State ex rel. Park Inv. Co. v. Bd. of Tax Appeals,175 Ohio St. 410, 412, 195 N.E.2d ...


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