Columbus City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision (Slip Opinion)
148 Ohio St. 3d 499
| Ohio | 2016Background
- Albany Commons, a 240-unit apartment complex in Franklin County, sought a tax-year-2005 valuation reduction from the auditor’s $13.6M to roughly $9.72M; appraiser James Horner (MAI) valued it at $9,338,000 using primarily the income approach.
- Horner relied on the subject property’s actual revenues/expenses (averaging 2004–2005), derived an NOI of $1,015,995, and applied an overall capitalization rate of 10.88% (8.5% plus a 2.38% tax additur).
- Horner included ten sale comparables but made no adjustments; he used them mainly to support the capitalization rate rather than as a detailed sales-comparison analysis.
- The Franklin County Board of Revision (BOR) adopted Horner’s valuation over the treasurer’s objection; the Board of Tax Appeals (BTA) affirmed without adjustment.
- Columbus City Schools Board of Education (BOE) appealed, arguing the appraisal was unreliable because it omitted market data, failed to make sales-comparison adjustments, and omitted a cost approach.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an appraisal that omits supporting market data and specific adjustments is per se unreliable for tax valuation | BOE: Omission of market data (and failure to show adjustments) violates appraisal standards and prevents meaningful review; appraisal is inherently unreliable | Albany Commons/BTA: Appraiser testified he reviewed market data and used subject’s actual performance; tax tribunals may credit the appraisal and testimony despite omissions | Court: Rejected per se rule; tax tribunals may rely on appraisal plus testimony; BOE failed to show BTA abused discretion |
| Whether reliance on subject property’s contract rents/expenses (rather than included market comparables in the report) improperly understates value | BOE: Appraiser relied on contract rents and averaged 2004–2005 rather than stabilized 2005 rents, risking understatement | Albany Commons: Appraiser testified that subject’s actual figures tracked market and averaging was justified due to lease-up in 2004 | Court: Crediting that testimony is within the factfinder’s discretion; BOE did not show the BTA acted unreasonably |
| Whether failure to perform a cost approach renders the appraisal invalid | BOE: Cost approach omission is error, especially for newer property | Albany Commons: Choice of approaches is an appraiser’s judgment; cost approach not necessary when income approach is primary | Court: Appraiser’s methodology is for the factfinder to weigh; omission alone is not reversible error |
Key Cases Cited
- Strongsville Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 859 N.E.2d 540 (Ohio 2007) (appellate court does not retry valuation facts de novo)
- DAK, PLL v. Franklin Cty. Bd. of Revision, 822 N.E.2d 790 (Ohio 2005) (limits on appellate factfinding in valuation cases)
- Cardinal Fed. S. & L. Assn. v. Cuyahoga Cty. Bd. of Revision, 336 N.E.2d 433 (Ohio 1975) (fair market value is a question of fact primarily for taxing authorities)
- EOP-BP Tower, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 829 N.E.2d 686 (Ohio 2005) (BTA has wide discretion to weigh evidence and witness credibility)
- Fawn Lake Apts. v. Cuyahoga Cty. Bd. of Revision, 665 N.E.2d 194 (Ohio 1996) (credibility and weight of appraisal evidence for BTA)
- Lowe's Home Ctrs., Inc. v. Washington Cty. Bd. of Revision, 49 N.E.3d 1266 (Ohio 2016) (USPAP violations do not automatically render an appraisal inadmissible)
- J.M. Smucker, L.L.C. v. Levin, 865 N.E.2d 866 (Ohio 2007) (definition of abuse of discretion standard)
- NFI Metro Ctr. II Assoc. v. Franklin Cty. Bd. of Revision, 676 N.E.2d 881 (Ohio 1997) (discussion of rent evidence and valuation; factual determinations matter)