Steak 'n Shake, Inc. v. Warren Cty. Bd. of Revision (Slip Opinion)
145 Ohio St. 3d 244
| Ohio | 2015Background
- Steak ‘n Shake (owner-operator) sought reduction of the 2009 real-property tax valuation for its 3,496 sq. ft. restaurant on 1.5 acres in Warren County; BOR retained auditor’s higher valuation and Steak ‘n Shake appealed to the BTA.
- At the BTA hearing both sides presented appraisals: owner’s appraiser Wilkins (sales-comparison and income approaches; reconciled value ~$680,000) and county appraiser Rinck (sales- and income-based analyses using three leased comparables; reconciled value ~$997,000).
- Rinck relied on three comparable restaurant sales that were long-term leased (sale-leasebacks or sales subject to leases) and did not adjust sale prices to remove lease effects; he also used lease rents directly in the income approach.
- The BTA found Rinck’s appraisal more persuasive and adopted the county’s $997,000 valuation; Steak ‘n Shake appealed to the Ohio Supreme Court.
- The Supreme Court affirmed the BTA’s discretion to admit and weigh Rinck’s testimony but held that Rinck’s failure to adjust sale prices of leased comparables for valuing an unencumbered, owner-occupied property was reversible error.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Competency/independence of county appraiser | Rinck (county consultant employee) lacked independence/qualification to testify | Rinck is an experienced appraiser; admissibility and credibility are BTA matters | Court rejected competency/independence challenge; BTA acted within discretion to admit and weigh testimony |
| Admission of supplemental highest-and-best-use testimony not in report | Supplemental testimony surprised owner and violated disclosure rules | Rinck’s report sufficiently implied restaurant use; BTA discretion to allow testimony | Court upheld admission; no ambush or reversible discovery violation |
| Use of leased comparables without adjusting sale prices when valuing an unencumbered owner-occupied property | Sales of leased properties must be adjusted because leases affect sale price; failure to adjust misstates market value | Reliance on Meijer and prior cases permits use of unadjusted leased sales in some circumstances | Court held unadjusted sale prices of leased comparables are improper here; sales must generally be adjusted when subject property is unencumbered unless special-purpose doctrine applies |
| Applicability of Meijer (special-purpose doctrine) | Meijer allows relying on encumbered sales only when property is special-purpose or value-in-use dictates | County argued Meijer supports Rinck’s approach | Court found Meijer inapposite: no evidence this restaurant was special-purpose; general market-exchange valuation governs |
Key Cases Cited
- Meijer Stores Ltd. Partnership v. Franklin Cty. Bd. of Revision, 122 Ohio St.3d 447 (application of special-purpose doctrine and value-in-use analysis)
- Cummins Property Servs., L.L.C. v. Franklin Cty. Bd. of Revision, 117 Ohio St.3d 516 (discussing adjustment of sales for lease terms in valuation disputes)
- AEI Net Lease Income & Growth Fund v. Erie Cty. Bd. of Revision, 119 Ohio St.3d 563 (valuation principles for leased-fee issues)
- HIN, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 138 Ohio St.3d 223 (treatment of sale prices and leased properties in valuation)
- Dinner Bell Meats, Inc. v. Cuyahoga Cty. Bd. of Revision, 12 Ohio St.3d 270 (when current use may be considered for unique/special-purpose properties)
- State ex rel. Park Invest. Co. v. Bd. of Tax Appeals, 175 Ohio St. (market-exchange valuation principle)
- Witt Co. v. Hamilton Cty. Bd. of Revision, 61 Ohio St.3d 155 (BTA discretion over credibility and independence of appraisers)
- Loveland Pines v. Hamilton Cty. Bd. of Revision, 66 Ohio St.3d 387 (deference to BTA on witness credibility)