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Wickliffe City Schools Board of Education v. Lake County Board of Revision

Court of Appeals of Ohio, Eleventh District, Lake

June 25, 2018

WICKLIFFE CITY SCHOOLS BOARD OF EDUCATION, Appellee,
v.
LAKE COUNTY BOARD OF REVISION, Appellee, LUBRIZOL CORPORATION, Appellant.

          Appeals from the Ohio Board of Tax Appeals. Case Nos. 2016-1023, 2016-1024, 2016-1025, & 2016-1026.

          Wayne E Petkovic, (For Appellee Wickliffe City Schools Board of Education).

          Charles E Coulson, Lake County Prosecutor, and Eric A. Condon, Assistant Prosecutor, Lake County Administration Building, (For Appellee Lake County Board of Revision).

          Victor V. Anselmo, James Kieran Jennings, III, and Cecilia Ji-Yun Hyun, Siegel Jennings Co., LPA, (For Appellant).

          OPINION

          TIMOTHY P. CANNON, J.

         {¶1} Appellant, Lubrizol Corporation ("Lubrizol"), appeals from the decision and order of the Ohio Board of Tax Appeals, reversing the decisions of the Lake County Board of Revision regarding the valuation of real property owned by Lubrizol in Wickliffe, Ohio, for purposes of assessing property taxes. Four parcels of property are the subject of this matter: 29-A-004-0-00-0005-0 ("Parcel 1"); 29-A-002-W-00-005-0 ("Parcel 2"); 29-A-002-S-00-011-0 ("Parcel 3"); and 29-A-002-S-00-010-0 ("Parcel 4"). The decision and order of the Board of Tax Appeals is affirmed.

         {¶2} The four parcels of property were assessed, for tax year 2015, at $82, 100.00; $171, 070.00; $188, 650.00; and $122, 780.00. On March 28, 2016, appellee, Wickliffe City Schools Board of Education, filed separate complaints with the Board of Revision seeking increases in the valuations to $200, 000.00; $360, 000.00; $550, 000.00; and $565, 000.00. In each of the complaints, the Board of Education asserted the requested change in value was justified due to the amounts of recent arm's-length sales.

         {¶3} No counter-complaint was filed; however, counsel for and a representative of Lubrizol appeared at the Board of Revision hearings.

         {¶4} At the hearings, the Board of Education submitted deeds and conveyance fee statements reflecting the recent transfer of each parcel. For Parcel 1, the documentation reflected a transfer from William Sopko & Sons Co., Inc. to Lubrizol for $200, 000.00 on December 1, 2015. For Parcel 2, the documentation reflected a transfer from EK North Creek, LLC to Lubrizol for $360, 000.00 on December 21, 2015. For Parcel 3, the documentation reflected a transfer from Terrence P. Chubb to Lubrizol for $550, 000.00 on October 26, 2015. For Parcel 4, the documentation reflected a transfer from Mario Raguz to Lubrizol for $565, 000.00 on December 21, 2015.

         {¶5} Counsel for Lubrizol stated it was not challenging the recentness or arm's-length nature of any of these transactions. Rather, Lubrizol argued that using recent arm's-length sales to determine value is discretionary under R.C. 5713.03 and that the transactions do not reflect the best evidence of valuation because the corporation was motivated to purchase the properties by a self-imposed "civic duty" to create "green space" for the city. Lubrizol also advanced an argument that relying on the recent sale prices would violate the uniformity clause of the Ohio Constitution: in other words, it argued, "by utilizing these atypically motivated sales, the assessment on these properties will be hundreds of percentages higher than other like type assessed properties."

         {¶6} Mark Sutherland, Lubrizol's corporate vice president in charge of global communications and global affairs, testified that Parcel 1 was the only parcel listed for sale at the time of purchase; no appraisals were performed to determine purchase prices; no restrictions relating to the corporation's alleged intent to create "green space" are currently contained in any of the deeds; and no substantial improvements have been made to any of the parcels since the time of purchase. Mr. Sutherland further testified that Lubrizol was willing to "pay a premium" price for the parcels; purchase prices were negotiated on a case-by-case basis by a broker openly representing Lubrizol; and there was no compelling need to acquire the parcels within a certain time frame.

         {¶7} The Board of Revision issued decisions on June 23, 2016, maintaining the initial assessed valuation of each parcel. In each decision it stated: "The complainant bears the burden of proving that the requested valuation is the true value of the subject property. That burden was not sufficiently proven at the hearing. Therefore, it is the decision of the Lake County Board of Revision that the value of the above-referenced property will not be changed."

         {¶8} The Board of Education appealed these decisions to the Board of Tax Appeals on July 20, 2016, and the appeals were consolidated for review. The parties jointly waived a hearing and submitted written arguments. The Board of Education maintained their initial argument that the arm's-length transactions constitute the best evidence of valuation for the purposes of assessing property taxes. Lubrizol contended those sales are unreliable indications of value because they were not generally exposed to the open market and because the parties were not typically-motivated market participants in that they did not act in their own self-interest.

         {¶9} The Board of Tax Appeals issued a decision and order on September 27, 2017, in which it rejected Lubrizol's argument that the sale prices are unreliable because they were not exposed to the open market. It further found Lubrizol's contention that the parties were not typically motivated and did not act in their own self-interest was without merit due to lack of evidence. To the contrary, the Board of Tax Appeals found, "a close review of the record reveals that this was simply a situation where a ...


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