Jefferson Industries Corp. v. Madison Cty. Bd. of Revision (Slip Opinion)
148 Ohio St. 3d 181
| Ohio | 2016Background
- Property: ~81 acres with ~685,000 sq ft industrial/warehouse/office improvements built in 11 increments from 1988–2010; lien date January 1, 2011.
- Auditor valuation for 2011: $34,504,964; Madison County BOR reduced value to $28,000,000 after consulting an appraiser.
- Jefferson Industries (owner) presented appraiser Eberly (MAI) valuing the property at $10,420,000 (sales-comparison primary; cost approach as cross-check).
- West Jefferson Local School District (BOE) presented appraiser Hinkle (MAI) valuing the property at $28,000,000 (cost and sales-comparison approaches; used heavy-manufacturing Marshall schedules and lower depreciation).
- Board of Tax Appeals (BTA) adopted Hinkle’s $28,000,000 valuation; Ohio Supreme Court vacated and remanded, affirming some legal points but requiring the BTA to address material evidentiary conflicts before adopting Hinkle’s appraisal.
Issues
| Issue | Plaintiff's Argument (Jefferson) | Defendant's Argument (BOE / BOR) | Held |
|---|---|---|---|
| 1. Must the BTA address conflicting evidence before adopting an appraiser’s opinion? | BTA failed to resolve or explain significant conflicts between appraisals and evidence, preventing meaningful review. | BOE argued Hinkle’s appraisal was internally consistent and supported the BOR decision. | Court: BTA must explicitly address potentially material conflicts in evidence before adopting an appraisal; vacated and remanded for that reason. |
| 2. Was reliance on the cost approach improper given the facility’s age? | Eberly: large/older portions make cost approach unreliable; depreciation and obsolescence undermine it. | BOE/Hinkle: substantial portions (over 50%) were recently built (2007–2010), so cost approach is appropriate. | Court: Use of cost approach was permissible here; many improvements were recent, so BTA’s reliance on cost approach is not legally erroneous. |
| 3. Was Hinkle’s use of heavy-manufacturing Marshall cost schedules and related cost selections legally improper? | Jefferson: Hinkle used reproduction rather than replacement cost, used average instead of low-cost figures, included superadequacies (e.g., factory A/C), and may have included personal property. | BOE/Hinkle: heavy-manufacturing classification supported by reinforced floors/walls and operational demands; BTA acted within its fact-finding discretion. | Court: No legal error in BTA endorsing use of heavy-manufacturing schedules; but BTA must address Eberly’s specific methodological objections on remand. |
| 4. Were Hinkle’s sales comparables sufficiently reliable to support his cost approach? | Eberly: several comparables were not open-market arm’s-length sales, included allocated sale prices or tenant-purchasers, or had distress—undermining reliance. | BOE: Hinkle’s sales-comparison corroborates cost approach and supports valuation. | Court: BTA relied on Hinkle’s sales-comparison to support cost approach but failed to address Eberly’s targeted criticisms; BTA must consider and explain these objections on remand. |
Key Cases Cited
- Gen. Motors Corp. v. Cuyahoga Cty. Bd. of Revision, [citation="67 Ohio St.3d 310" ] (1993) (BTA must explain resolution of conflicting appraisal evidence to permit appellate review)
- Villa Park Ltd. v. Clark Cty. Bd. of Revision, [citation="68 Ohio St.3d 215" ] (1994) (same principle requiring BTA to address evidentiary conflicts)
- HealthSouth Corp. v. Levin, [citation="121 Ohio St.3d 282" ] (2009) (BTA’s duty to resolve and explain responses to conflicting valuation evidence)
- Sears, Roebuck & Co. v. Franklin Cty. Bd. of Revision, [citation="144 Ohio St.3d 421" ] (2015) (distinguishes cases where only one appraisal exists from those requiring detailed BTA explanation when multiple appraisals conflict)