Amherst Marketplace Station, L.L.C. v. Lorain Cty. Bd. of Revision
2021 Ohio 3866
Ohio Ct. App.2021Background
- Amherst Marketplace Station, LLC owns a commercial parcel in Lorain County occupied by a Giant Eagle store and two small tenant spaces.
- The property sold in 2015 for $11,655,000. Amherst’s appraisal (Racek) valued the property at $4,730,000 as of 2015 by treating the property as unencumbered (vacant-at-transfer); the Auditor’s appraisal (Sprout) valued it at $11,300,000 and accounted for the existing Giant Eagle lease.
- Amherst sought a reduction in taxable value as of January 1, 2017; the school district countered, arguing the 2015 arm’s-length sale reflected fair market value.
- The Lorain County Board of Revision and then the Board of Tax Appeals found the 2015 sale price to be the best evidence of value and set value at $11,655,000; the BTA found Racek’s vacant-at-transfer appraisal failed to rebut the sale presumption.
- Amherst appealed, arguing R.C. 5713.03 requires valuation “free of encumbrances” (vacant-at-transfer), but the Court of Appeals affirmed the BTA, relying on Ohio Supreme Court precedent that leased-fee sales are presumptively the best evidence and that vacant-at-transfer is not mandatory.
Issues
| Issue | Plaintiff's Argument (Amherst) | Defendant's Argument (BTA/Auditor/School) | Held |
|---|---|---|---|
| Whether R.C. 5713.03 requires valuation using a vacant-at-transfer (unencumbered) rule | Statute’s phrase "fee simple estate, as if unencumbered" mandates valuing as if vacant at transfer | Statute does not require vacant-at-transfer; prior leased-fee sales remain admissible and presumptive | Court: Vacant-at-transfer not required; precedent establishes a market-lease rule permitting leased-fee sales to be presumptive evidence of value |
| Whether a recent leased-fee sale is the best evidence of value and whether Racek appraisal automatically rebuts it | Racek appraisal (unencumbered valuation) rebuts and overrides the leased-fee sale | A recent arm’s-length leased-fee sale creates a rebuttable presumption of true value; Racek did not rebut that presumption | Court: Recent leased-fee sale presumptively controls; an appraisal using vacant-at-transfer does not automatically rebut the sale |
| Whether appraisers must adjust leased comparables to remove lease-related premiums or otherwise conform to vacant-at-transfer methodology | Appraisers must adjust sales of leased properties to reflect unencumbered value (reduce for premium paid for tenant) | Adjustments are not mandated by statute; appraisers may use market-lease assumptions and expert analysis to decide adjustments | Court: R.C. 5713.03 does not require or forbid adjustments; adjustments depend on expert analysis and market evidence |
| Whether BTA erred accepting Sprout appraisal’s highest-and-best-use based on regional/national tenant occupancy | Highest-and-best-use must assume unencumbered sale; acceptance of a use tied to a regional tenant is improper | Highest-and-best-use may reflect market realities (market rent/typical leases); BTA can credit Sprout’s analysis | Court: BTA did not err; market-lease methodology and highest-and-best-use tied to market rents are competent evidence |
| Whether BTA must independently compute an unencumbered fee-simple value when unencumbered appraisal is in record | BTA must adopt unencumbered appraisal if it is the only evidence of fee-simple value | BTA has fact-finding discretion to weigh competing evidence and is not compelled to adopt unencumbered appraisal | Court: BTA is the factfinder and may weigh evidence; it was not required to adopt Racek as dispositive |
| Constitutional claims (separation of powers, uniformity, equal protection) premised on alleged misinterpretation of R.C. 5713.03 | BTA’s contrary interpretation violates constitutional guarantees and uniform assessment | BTA’s interpretation aligns with Supreme Court precedent and statutory construction; no constitutional violation | Court: Constitutional claims fail because they rest on an incorrect premise; BTA’s decision upheld |
Key Cases Cited
- State ex rel. The Park Invest. Co. v. Bd. of Tax Appeals, 175 Ohio St. 410 (1964) (defines "true value" as amount a willing buyer and seller would agree upon)
- Alliance Towers, LTD. v. Stark Cty. Bd. of Revision, 37 Ohio St.3d 16 (1988) (earlier precedent on interpreting fee-simple/unencumbered valuation)
- Terraza 8, L.L.C. v. Franklin Cty. Bd. of Revision, 83 N.E.3d 916 (2017) (H.B. 487 changed "shall consider" sales language; sale price is best evidence but rebuttable)
- Lowe’s Home Centers, Inc. v. Washington County Bd. of Revision, 116 N.E.3d 79 (2018) (addressed interpretation of "as if unencumbered" language)
- Harrah’s Ohio Acquisition Co., LLC v. Cuyahoga Cty. Bd. of Revision, 154 Ohio St.3d 340 (2018) (appraisal methodology and valuation issues addressed)
- Columbus City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 159 Ohio St.3d 283 (2020) (describes the rebuttable presumptions attaching to recent arm’s-length sales)