Hilliard City Schools Board of Education v. Franklin County Board of Revision
139 Ohio St. 3d 1
| Ohio | 2014Background
- U-Store-It, L.P. bought nine self-storage properties in a single 2006 bulk transaction from Jernigan Property Group; the contract allocated prices to individual parcels and conveyance-fee statements reported those allocations.
- School boards challenged valuation for tax year 2006; the Franklin County Board of Revision (BOR) rejected the 2006 sale as non–arm’s-length and used 2005 sale prices; the Board of Tax Appeals (BTA) reversed and adopted the 2006 allocated prices for 2006–2008.
- U-Store-It argued the 2006 sale was a related-party transaction (per its SEC Form 10-Q disclosure concerning Dean Jernigan) and therefore not presumptively arm’s-length, and that the contract included personal property and a covenant not to compete without allocating value between realty and personalty.
- U-Store-It’s in-house underwriting (income-capitalization approach) produced the per-parcel allocations used in the sale; no third‑party appraisals or separate valuation breakdowns for personalty were presented.
- The BTA found the Form 10-Q disclosure did not establish common ownership or control that would defeat an arm’s-length presumption, and concluded U-Store-It failed to carry its burden to show misallocation or that personalty materially affected the reported real‑estate values.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2006 sale was arm’s-length despite a related-party SEC disclosure | Form 10‑Q disclosure shows a related‑party transaction, so sale is not arm’s‑length | Disclosure did not show common ownership or aligned interests; contract predated Jernigan’s hiring and independent trustees approved the deal | Sale was arm’s‑length; disclosure alone did not rebut presumption of arm’s‑length |
| Whether contract allocation among parcels reflects true value or must be reallocated | Bulk sale allocation is suspect in a related-party context and should be disallowed | Contract allocations resulted from in‑house income underwriting and were reported on conveyance statements; opposing party bears burden to rebut | Allocations are admissible; U‑Store‑It failed to prove misallocation |
| Whether sale price included personal property/intangible value requiring deduction from realty value | Sale included tangible personalty and noncompete; absent allocation, sale price improperly inflates realty value | No evidence or corroborating indicia that personalty value materially affected allocated real‑estate prices; self‑storage business value is predominantly real‑estate | U‑Store‑It failed to present corroborating indicia; BTA reasonably adopted full allocated prices |
| Standard of review / burden of proof when sale price reported on conveyance fee statement | N/A (procedural) | When sale price is reported, opposing party must show why it does not reflect true market value | Court upholds that burden rule; BTA’s factual findings supported and not unreasonable or unlawful |
Key Cases Cited
- FirstCal Indus. Acquisitions, L.L.C. v. Franklin Cty. Bd. of Revision, 125 Ohio St.3d 485, 929 N.E.2d 426 (2010) (party opposing reported sale price bears burden to show it does not reflect true value)
- N. Royalton City School Dist. Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 129 Ohio St.3d 172, 950 N.E.2d 955 (2011) (related‑party inquiry tests whether parties acted as typically motivated market participants)
- Shiloh Automotive, Inc. v. Levin, 117 Ohio St.3d 4, 881 N.E.2d 227 (2008) (common ownership that aligns seller and buyer interests can defeat arm’s‑length character)
- Cummins Property Servs., L.L.C. v. Franklin Cty. Bd. of Revision, 117 Ohio St.3d 516, 885 N.E.2d 222 (2008) (discusses when contractual arrangements adjacent to a sale can affect market motivations)
- St. Bernard Self‑Storage, L.L.C. v. Hamilton Cty. Bd. of Revision, 115 Ohio St.3d 365, 875 N.E.2d 85 (2007) (contractual allocation accepted when face of contract or attending circumstances support it)
- Consol. Aluminum Corp. v. Monroe Cty. Bd. of Revision, 66 Ohio St.2d 410, 423 N.E.2d 75 (1981) (contrasting fact pattern where purchase of combined realty and operating personalty required inquiry into allocation)