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

Supreme Court of Ohio

July 25, 2018

Worthington City Schools Board of Education, Appellee,
v.
Franklin County Board of Revision et al., Appellees; The Kroger Company, Appellant.

          Submitted February 14, 2018

          Appeal from the Board of Tax Appeals, No. 2016-414.

          Rich & Gillis Law Group, L.L.C., Mark H. Gillis, and Karol C. Fox, for appellee Worthington City Schools Board of Education.

          Vorys, Sater, Seymour & Pease, L.L.P., Nicholas M.J. Ray, Steven L. Smiseck, and Lauren M. Johnson, for appellant.

          FRENCH, JUDGE

         {¶ 1} This property-tax appeal involves the tax-year-2014 valuation of a parcel of land with a supermarket owned by appellant, the Kroger Company. The supermarket sits on an unusually small parcel of real property compared to parcels owned by similar retail establishments. Kroger does not have a parking lot on its parcel, but it does have the benefit of a parking easement that allows its patrons to park on adjacent property. The ultimate question is how to value the parcel Kroger owns. And the answer to that question hinges on how we understand an adjustment to the property's valuation made by Kroger's appraiser.

         {¶ 2} The Franklin County Board of Revision ("BOR") reached a tax-year-2014 valuation of $2, 390, 000 by relying on Kroger's appraiser's valuation, which was primarily based on using the sale prices of comparable retail properties and then making adjustments to reflect the unique characteristics of the smaller Kroger property.

         {¶ 3} The Board of Tax Appeals ("BTA") reversed the decision of the BOR and determined the true value of the property to be $3, 950, 000. The BTA concluded that Kroger's appraiser's adjustment to account for the parking situation improperly removed the benefit of the parking easement from the value of Kroger's parcel.

         {¶ 4} We hold that the BTA erred and that Kroger's appraiser's valuation conforms to R.C. 5713.03, which requires a determination of "the true value of the fee simple estate, as if unencumbered." We reverse the BTA's decision and reinstate the BOR's tax-year-2014 valuation.

         COURSE OF PROCEEDINGS AND APPRAISAL EVIDENCE

         {¶ 5} Kroger's property is located adjacent to the Shops at Worthington Place, a shopping mall in northern Franklin County. For tax year 2014, a triennial update year in Franklin County, the Franklin County auditor assigned a value of $3, 000, 000 to the subject property, which is a 1.699-acre site improved with a 56, 154-square-foot store building. Kroger filed a complaint seeking a tax-year-2014 valuation of $2, 000, 000. Appellee Worthington City Schools Board of Education ("BOE") filed a countercomplaint seeking to retain the auditor's valuation.

         {¶ 6} The BOR convened a hearing on February 8, 2016, and both sides presented appraisal reports along with testimony of the appraisers.

         Hannah's appraisal

         {¶ 7} Kroger presented the testimony and written appraisal of Curtis P. Hannah, a member of the Appraisal Institute. To value Kroger's property, Hannah used two approaches to value: the sales-comparison approach and the income-capitalization approach. His sales-comparison analysis yielded a tentative value of $3, 930, 780; his income-capitalization analysis yielded a tentative value of $3, 995, 247. He then adjusted each value to account for the fact that Kroger's ...


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