Terraza 8, L.L.C. v. Franklin Cty. Bd. of Revision (Slip Opinion)
150 Ohio St. 3d 527
| Ohio | 2017Background
- Terraza 8, L.L.C. owns a fitness-center property sold in February 2013; Franklin County auditor assessed it for tax year 2013 at $4,850,000, and Hilliard City Schools argued the sale price ($15,403,200) should be the valuation.
- The Franklin County Board of Revision (BOR) increased the valuation to the sale price for tax years 2013 and 2014; Terraza appealed to the Board of Tax Appeals (BTA).
- Terraza presented an appraisal by Patricia Costello concluding the sale price did not represent the fee-simple (unencumbered) market value, using income and sales-comparison approaches to value the unencumbered fee-simple estate at $5.65–$7.055 million.
- The BTA admitted the appraisal evidence but nonetheless applied precedent treating a recent arm’s-length sale price as conclusive and set the 2013 value near the sale price, then Terraza appealed to the Ohio Supreme Court.
- Key statutory change: 2012 Am.Sub.H.B. No. 487 amended R.C. 5713.03 to require valuing the fee-simple estate "as if unencumbered" and changed sale-price language from "shall consider" to "may consider," effective for tax year 2013 valuations.
Issues
| Issue | Plaintiff's Argument (Terraza) | Defendant's Argument (BOE/BTA) | Held |
|---|---|---|---|
| Does H.B. 487 apply to tax year 2013 valuations? | H.B. 487 took effect Sept 10, 2012 and governs valuations for tax year 2013. | Section 757.51 delays application in some counties until their next reappraisal cycle, so not applicable in Franklin County for 2013. | H.B. 487 applies to tax year 2013; Section 757.51 does not bar application by BTA/boards reviewing post-2012 valuation disputes. |
| Does H.B. 487 override Berea (which treated recent arm’s-length sales as conclusive)? | Yes; the amendment requires valuing the unencumbered fee-simple estate and makes sale price permissive, so Berea is legislatively superseded. | The sale price remains the best/effectively presumptive evidence; sale-price rule still controls. | H.B. 487 overrode Berea; a recent arm’s-length sale is no longer conclusive, though it remains the best evidence. |
| Who bears burden to show sale does not reflect unencumbered fee-simple value? | Opponent of the sale price should have to affirmatively prove the sale does not reflect fee-simple value. | Sale price itself suffices unless rebutted. | Proponent of a sale need only present basic documentation; opponent bears burden to present rebuttal evidence (e.g., showing encumbrance effect). |
| Did the BTA properly consider Terraza's appraisal evidence? | Terraza: appraisal rebutted the sale price as reflecting unencumbered value; BTA should have weighed it. | BOE questioned appraisal reliability and contended sale price controls. | BTA erred by treating sale price as conclusive and failing to weigh the appraisal; decision vacated and remanded for factfinding. |
Key Cases Cited
- Park Invest. Co. v. Bd. of Tax Appeals, 175 Ohio St. 410 (1964) (sale between willing buyer and seller is best evidence of true value)
- Conalco, Inc. v. Monroe Cty. Bd. of Revision, 50 Ohio St.2d 129 (1977) (actual recent arm’s-length sale is best evidence of true value)
- Berea City School Dist. Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 106 Ohio St.3d 269 (2005) (prior holding that recent arm’s-length sale price shall be true value)
- Cummins Property Servs., L.L.C. v. Franklin Cty. Bd. of Revision, 117 Ohio St.3d 516 (2008) (statutory and precedent discussion of sale-price evidence and appraisal evidence)