Rite Aid of Ohio, Inc. v. Washington Cty. Bd. of Revision (Slip Opinion)
146 Ohio St. 3d 173
| Ohio | 2016Background
- Property: 1.13-acre downtown Marietta site with an 11,052 sq. ft. Rite Aid built in 1999; 2010 auditor valuation ≈ $3,319,000; owner sought reduction to $1,396,920.
- Procedural history: BOR retained auditor value; owner appealed to the BTA where competing appraisals were submitted; BTA adopted owner’s appraisal; county appealed to Ohio Supreme Court.
- Owner’s appraiser (Hatcher) used general retail sale comparables (mostly unencumbered) and local lease comparables, concluding value ≈ $1,150,000 (sales and income approaches reconciled).
- County’s appraiser (Blosser) used first-generation, leased drugstore sale comparables (sold subject to long-term leases) and a leased-fee income approach, concluding value ≈ $2,400,000.
- Central factual dispute: whether sale prices of properties sold subject to long-term leases (leased-fee comparables) must be adjusted when the subject property is owner-occupied/unencumbered, and whether special-purpose (use) valuation applies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether sale prices of leased-fee comparables must be adjusted when subject is unleased | Rite Aid: yes — leased-fee sales reflect lease effect and should be adjusted to value an unencumbered fee | County: no — precedent treating leased sales as reliable evidence means no adjustment needed | Court: adjust leased-fee comparables when subject is unencumbered; thus county’s view is illogical and inapplicable here |
| Whether property qualifies for special-purpose / use valuation so leased comparables may be preferred | Rite Aid: property is marketable for general retail; not special-purpose; use valuation inappropriate | County: analogizes to Meijer Stores — leased/comparable first-generation stores reflect continued-use market for drugstores | Court: not special-purpose; 11,000 sq ft drugstore is readily marketable for general retail; special-purpose doctrine not shown on this record |
| Whether Meijer Stores requires use of first-generation, leased drugstore comparables | County: Meijer Stores supports using first-generation leased drugstore data and use valuation | Rite Aid: Meijer Stores applies only where special-purpose facts support use valuation; not applicable here | Court: Meijer Stores inapplicable—case more like Target where absence of evidence for special-purpose valuation justified rejecting county’s approach |
| Whether BTA reasonably adopted owner’s appraisal over county’s appraisal | Rite Aid: Hatcher’s comparables were more comparable and persuasive | County: Blosser’s leased-drugstore comparables better represent market for drugstore properties | Court: BTA reasonably found Hatcher more persuasive; affirmed BTA decision |
Key Cases Cited
- Cummins Property Servs., L.L.C. v. Franklin Cty. Bd. of Revision, 117 Ohio St.3d 516 (recognizes that an arm’s-length sale of an encumbered fee need not be adjusted when valuing that encumbered interest)
- AEI Net Lease Income & Growth Fund v. Erie Cty. Bd. of Revision, 119 Ohio St.3d 563 (same principle regarding elevated sale prices from above-market lease payments)
- Park Invest. Co. v. Bd. of Tax Appeals, 175 Ohio St. 410 (establishes exchange/sales price as primary measure of true value for tax assessment)
- Dinner Bell Meats, Inc. v. Cuyahoga Cty. Bd. of Revision, 12 Ohio St.3d 270 (special-purpose doctrine permits cost-based valuation in certain circumstances)
- Meijer, Inc. v. Montgomery Cty. Bd. of Revision, 75 Ohio St.3d 181 (limits acceptance of obsolescence findings absent special-purpose justification)
- Target Corp. v. Greene Cty. Bd. of Revision, 122 Ohio St.3d 142 (refused to apply Meijer-type reasoning where county lacked evidentiary support for special-purpose valuation)
- Oakwood Club v. Cuyahoga Cty. Bd. of Revision, 70 Ohio St.3d 241 (applies Dinner Bell Meats in rejecting improper use-valuation)
- Rhodes v. Hamilton Cty. Bd. of Revision, 117 Ohio St.3d 532 (recognizes build-to-suit/above-market rent can elevate sale price and affect valuation)