Columbus City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision (Slip Opinion), 2020 Ohio 353

Background

Palmer House Borrower, L.L.C. owned a 264‑unit apartment complex in New Albany (built 2013). Auditor initially valued it at $16,000,000 for tax year 2015.
A Purchase and Sale Agreement (originally $35,000,000, amended to $35,250,000) for the property permitted a “Drop Down LLC” closing: the buyer could acquire membership interests in a newly formed LLC rather than a direct deed conveyance.
On October 6, 2015 the deed shows the property conveyed from Palmer Square, L.L.C. to Palmer House Borrower, and Palmer House Borrower assumed a preexisting mortgage; a settlement statement described the transaction as purchase of membership interest and reflected the $35,250,000 price.
The school board introduced the purchase agreement, settlement statement, mortgage/assumption documents, and two appraisals; Palmer objected to admission of sale documents and argued the entity sale did not equal a sale of the real estate and that its appraisal ($25,000,000 as of Jan. 1, 2015) controlled.
The BTA overruled evidentiary objections, found the entity transfer was essentially a sale of the income‑producing real estate, applied the sale‑price presumption to $35,250,000, deducted $792,000 for personal property (using Palmer’s appraisal), and set real‑estate value at $34,458,000.
The Ohio Supreme Court affirmed the BTA: documents were properly considered, the sale‑price presumption applied, Palmer’s appraisal failed to rebut the presumption, and no constitutional violation was shown.

Issues

Issue	Palmer's Argument	School Board's Argument	Held
Admissibility/authentication of sale documents	Documents were unauthenticated hearsay and inadmissible	Documents were produced in discovery, public records, notarized, and BTA may rely on hearsay; Evid.R.901 supports authentication	BTA reasonably admitted and relied on documents; deference to BTA and administrative hearings may consider hearsay
Application of sale‑price presumption to an entity sale	Prior cases prohibit treating sale of an entity as equivalent to sale of its real estate	Purchase agreement expressly described sale of the real estate and provided the Drop‑Down LLC mechanism to effectuate that sale	Presumption applies where contract and corroborating documents show intent to sell the real estate and entity transfer was a mechanism to effectuate that sale
Allocation of contract price when personal/intangible property transfers	Transaction included personal/intangible/business assets so contract price cannot be treated as real‑estate value	Income is derived from rent; transferred personal property was typical and can be deducted from total price	Sale of income‑producing property can presumptively set real‑estate value; BTA properly deducted supported personal‑property amount
Weight of Palmer’s appraisal	Weiler’s appraisal ($25M as of Jan. 1, 2015) was the only competent evidence and should control	Weiler did not account for or analyze the contemporaneous sale/contract price, so it failed to rebut the sale‑price presumption	BTA reasonably rejected Weiler’s appraisal as failing to rebut the prima facie sale price
Constitutional uniformity (taxing real vs. personal property)	Valuation violates Ohio Const. art. XII, §2 by effectively taxing personal property with real property	BTA deducted personal property value and applied established presumption for income‑producing realty	No constitutional violation shown; deduction for personal property and presumption usage lawful

Key Cases Cited

Terraza 8, L.L.C. v. Franklin Cty. Bd. of Revision, 150 Ohio St.3d 527, 83 N.E.3d 916 (2017) (actual recent arm’s‑length sale is best evidence of true value)
Westerville City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 154 Ohio St.3d 308, 114 N.E.3d 162 (2018) (sale‑price presumption is rebuttable)
Salem Med. Arts & Dev. Corp. v. Columbiana Cty. Bd. of Revision, 82 Ohio St.3d 193, 694 N.E.2d 1324 (1998) (going‑concern or entity value distinct from real‑estate value)
Gahanna‑Jefferson Pub. Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 89 Ohio St.3d 450, 732 N.E.2d 978 (2000) (partnership/entity interest sales require careful showing to equate to real‑estate sale)
St. Bernard Self‑Storage, L.L.C. v. Hamilton Cty. Bd. of Revision, 115 Ohio St.3d 365, 875 N.E.2d 85 (2007) (rent‑producing property sales generally reflect real‑estate value; goodwill allocation not appropriate)
Hilliard City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 128 Ohio St.3d 565, 949 N.E.2d 1 (2011) (conveyance‑fee reporting and sale evidence principles)
Cummins Property Servs., L.L.C. v. Franklin Cty. Bd. of Revision, 117 Ohio St.3d 516, 885 N.E.2d 222 (2008) (use of reported sale price on conveyance statement as presumptive value)
Cincinnati School Dist. Bd. of Edn. v. Hamilton Cty. Bd. of Revision, 151 Ohio St.3d 109, 86 N.E.3d 308 (2017) (treatment of total contract price and allocations in valuing realty)
HealthSouth Corp. v. Testa, 132 Ohio St.3d 55, 969 N.E.2d 232 (2012) (BTA is administrative tribunal and may rely on hearsay; Evid.R. guidance not binding)