2018 Ohio 4282
Ohio
2018
Read the full case

Background

  • Subject property: a KeyBank branch in Hilliard on land owned by Hilliard Station, L.L.C.; KeyBank holds a ground lease and owns the improvements. 2014 auditor valuation: $1,260,000.
  • Hilliard Station sought reduction to $810,000; school board sought no change. At the BOR, Hilliard Station’s appraiser (Fried) testified and BOR adopted Fried’s $625,000 valuation.
  • School board appealed to the BTA and presented appraiser Thomas Sprout, who opined value at $1,880,000; Fried testified again for Hilliard Station.
  • The BTA adopted Sprout’s appraisal (the higher value). Hilliard Station appealed to the Ohio Supreme Court.
  • Core disagreement: whether Sprout’s appraisal improperly relied on the property’s current use (a bank) or constituted a use/special-purpose valuation, and whether Sprout properly valued the unencumbered fee simple given leased-fee comparables/adjustments.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether Sprout’s appraisal amounted to an impermissible use or special-purpose valuation Sprout relied heavily on bank-branch comparables and called the property "special-purpose," so his appraisal reflects present-use value rather than market (fee simple) value Sprout considered highest-and-best use as a freestanding commercial building and used bank comparables only as more analogous market comparables Court: Not a special-purpose or present-use valuation; BTA permissibly relied on Sprout’s market valuation
Whether the appraisal failed to value the fee-simple estate as if unencumbered (R.C. 5713.03) Sprout did not adequately adjust leased-fee comparables or explain adjustments for leases/build-to-suit, so appraisal may reflect encumbered value Sprout made explicit adjustments for leases and explained consideration of lease economics; BTA found adjustments adequate and credited Sprout’s testimony Court: BTA reasonably concluded Sprout valued unencumbered fee simple; no legal error
Whether BTA abused discretion in weighing conflicting appraisals/credibility Hilliard Station: BTA ignored weaknesses in Sprout’s methodology and gave undue weight to his appraisal School board/BTA: BTA has broad discretion to evaluate appraisals and credibility; it addressed criticisms and favored Sprout for articulated reasons Court: BTA did not abuse discretion; decision affirmed
Whether the decision violated uniformity or amounted to taxation of going-concern value Hilliard Station: BTA’s valuation effectively taxed going-concern value and failed to follow statute, violating uniformity clause BTA properly applied valuation rules; constitutional/uniformity claim merely repackages prior arguments rejected on merits Court: Uniformity claim rejected; no constitutional violation shown

Key Cases Cited

  • EOP-BP Tower, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 829 N.E.2d 686 (wide BTA discretion in weighing appraisal evidence)
  • Terraza 8, L.L.C. v. Franklin Cty. Bd. of Revision, 83 N.E.3d 916 (definition of true value; BTA must consider sale-price evidence when valuing unencumbered fee simple)
  • Meijer, Inc. v. Montgomery Cty. Bd. of Revision, 661 N.E.2d 1056 (use valuation vs. market valuation; role of special-purpose doctrine)
  • Johnston Coca-Cola Bottling Co. v. Hamilton Cty. Bd. of Revision, 73 N.E.3d 503 (distinguishing special-purpose valuations from ordinary disputes over comparables)
  • Target Corp. v. Greene Cty. Bd. of Revision, 909 N.E.2d 605 (affirming deduction for obsolescence where special adaptation reduced marketability)
  • Meijer Stores Ltd. Partnership v. Franklin Cty. Bd. of Revision, 912 N.E.2d 560 (affirming no deduction for obsolescence where marketability not impaired)
  • Lunn v. Lorain Cty. Bd. of Revision, 73 N.E.3d 486 (de novo review of legal issues; factual deference to BTA)
  • W. Carrollton City Schools Bd. of Edn. v. Montgomery Cty. Bd. of Revision, 80 N.E.3d 484 (special adaptation and marketability inquiry)
  • Steak ‘n Shake, Inc. v. Warren Cty. Bd. of Revision, 48 N.E.3d 535 (issues regarding leased-fee adjustments and appraisal treatment)
  • Rite Aid of Ohio, Inc. v. Washington Cty. Bd. of Revision, 54 N.E.3d 1177 (rule that leased-fee sales should be adjusted)
  • NWD 300, L.L.C. v. Franklin Cty. Bd. of Revision, 87 N.E.3d 199 (standard for showing BTA abuse of discretion)
Read the full case