Brecksville-Broadview Hts. Bd. of Edn. v. Cuyahoga Cty. Bd. of RevisionBrecksville-Broadview Hts. Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision
William J. Day
Joseph A. Balbier
9100 South Hills Blvd., Suite 325
Broadview Heights, Ohio 44147
ATTORNEY FOR APPELLEE BRECKSVILLE-BROADVIEW HEIGHTS BOARD OF EDUCATION
William E. Blackie III
Fisher & Phillips LLP
9150 South Hills Blvd., Suite 300
Broadview Heights, Ohio 44147
ATTORNEYS FOR APPELLEE CUYAHOGA COUNTY BOARD OF REVISION
Timothy J. McGinty
Cuyahoga County Prosecutor
BY: Reno J. Oradini
Assistant Prosecuting Attorney
The Justice Center, 8th Floor
1200 Ontario Street
Cleveland, Ohio 44113
ATTORNEY FOR APPELLEE OHIO TAX COMMISSIONER
Mike DeWine
Ohio Attorney General
30 East Broad Street
Columbus, Ohio 43215
{¶1} Appellant TMMC Ohio, L.L.C. (“TMMC“) appeals from a decision of the Board of Tax Appeals reversing the Cuyahoga County Board of Revision‘s (“BOR“) valuation, for tax purposes, of a parcel of vacant commercial property owned by TMMC and reinstating the higher valuation of the property assessed by the Cuyahoga County Fiscal Officer (the “Fiscal Officer“). For the reasons that follow, we affirm the decision of the Ohio Board of Tax Appeals (“BTA“).
Factual and Procedural Background
{¶2} In February 2013, TMMC filed a complaint against the valuation of a 4.65 acre parcel of vacant commercial land located at 6250 Broadview Road, Broadview Heights, in Cuyahoga County (the “subject property“), seeking a reduction in the valuation of the property for tax year 2012. The Fiscal Officer had assigned a total value of $729,200 to the subject property. TMMC had been the highest bidder for the property at a public, absolute auction1 held in March 2012 and sought a reduction in the property‘s total true value for tax purposes to $368,500, the price it paid for the property in May 2012. Appellee, the Brecksville-Broadview Heights Board of Education (“Board of Education“), filed a counter-complaint seeking to maintain the Fiscal Officer‘s valuation
{¶3} In February 2014, the BOR held a hearing on the complaint and counter-complaint. At the hearing, Anthony Ciocca, one of the members of TMMC,2 testified regarding TMMC‘s purchase of the subject property. He testified that he learned the property was to be sold at auction when he saw a sign posted on the property, approximately six months prior to the March 2012 auction date. The sign, a copy of which was introduced at the hearing, indicated that the property was being “OFFERED ABSOLUTE, REGARDLESS OF PRICE!” Ciocca stated that the sign referenced a website, which provided additional information regarding the sale. Ciocca testified that the auction was held at the Holiday Inn on Rockside Road in Independence, Ohio, that the subject property was one of several properties for sale at the auction; and that there was “a room full of people” bidding on the subject property. He indicated that TMMC‘s winning bid for the property was $335,000 and that there was a 10% fee assessed, resulting in a total purchase price of $368,500.
{¶4} In support of TMMC‘s request for a reduction in the valuation of the subject property, Ciocca submitted copies of the following documents related to TMMC‘s purchase of the property: a “purchaser‘s statement” referencing the $368,500 purchase price executed by Guardian Title & Guaranty Agency, Inc. (“Guardian Title“) and TMMC, a statement of conditions of acceptance of escrow executed by Guardian Title (but not
{¶5} With respect to what TMMC planned to do with the subject property, Ciocca claimed that TMMC “had some plans to build something on [the property],” but was concerned that, based on the current tax valuation of the property, if it developed the property, the taxes on the property would increase to such a level that “you‘re not going to be competitive.” He stated that “we have some opportunity here” but “we need to soften things up for me in order to make it.” He further explained, “right now I feel if we could have the taxes where we purchased it, we could take the handcuffs off, * * * get it where it needs to be * * * more competitive” and “make something there successful.”
{¶6} In response to questions by the BOR and cross-examination by the Board of Education, Ciocca stated that he knew very little about the subject property or the
{¶7} The Board of Education did not present any evidence at the hearing. It simply cross-examined Ciocca regarding his lack of knowledge of the circumstances that led to the sale of the property at an absolute auction.
{¶8} In February 2014, the BOR granted TMMC‘s request for a reduction in valuation, reducing the total true value of the property to $368,500. In its oral hearing worksheet and journal entry, the BOR indicated: “Complaintant [sic] provided testimony and evidence that indicates 2012 sales was arms [sic] length.” Accordingly, the BOR “revised [the] market value to [the] sales price” of the subject property.
{¶10} On April 13, 2014, the BTA issued its decision, reversing the BOR and reinstating the Fiscal Officer‘s original valuation. The BTA concluded that there was “insufficient evidence” to demonstrate that the May 2012 auction sale was an arm‘s-length transaction and that the BOR‘s reliance on the auction sale price as the basis for its determination of the true value of the subject property for tax year 2012 was, therefore, “improper.” The BTA further held that “in the absence of a qualifying sale, [TMMC] was required, but failed, to provide a competent appraisal of the subject property, attested to by a qualified expert, for the tax lien date in issue” and that “the remaining evidence in the record * * * is not competent or probative of the subject [property]‘s value.” TMMC appealed the decision of the BTA, raising the following assignment of error for review:
The Board of Tax Appeals (“BTA“) erred by setting the subject property‘s true value at $729,200, and its taxable value at $255,220 (BTA Decision and Order, 20140986) in spite of the Cuyahoga County Board of Revision (“BOR“) Decision relying upon competent evidence in reaching its decision.
Law and Analysis
{¶11} TMMC argues that the BTA erred in concluding that the May 2012 auction sale of the subject property was not an arm‘s-length transaction. It asserts that the auction sale price was “credible, competent and probative evidence” of the value of the subject
{¶12} This court reviews a decision of the BTA to determine only whether it is “reasonable and lawful.”
{¶13} Decisions of boards of revision are “‘not * * * accorded a presumption of validity.‘” Vandalia-Butler City School Bd. of Edn. v. Montgomery Cty. Bd. of Revision, 130 Ohio St.3d 291, 2011-Ohio-5078, 958 N.E.2d 131, ¶ 13, quoting Colonial Village, Ltd. v. Washington Cty. Bd. of Revision, 114 Ohio St.3d 493, 2007-Ohio-4641, 873 N.E.2d 298, ¶ 23; see also Bd. of Edn. of the Vandalia-Butler City School Dist. v. Montgomery Cty. Bd. of Revision, 106 Ohio St.3d 157, 2005-Ohio-4385, 833 N.E.2d 271, ¶ 10 (“‘[A] determination of the true value of real property by a board of revision * * * is not presumptively valid.‘“), quoting Amsdell v. Cuyahoga Cty. Bd. of Revision, 69 Ohio St.3d 572, 574, 635 N.E.2d 11 (1994). Where, as here, the statutory transcript is the only evidence before the BTA, the BTA must “make its own independent judgment based on its weighing of the evidence contained in the transcript.” Columbus Bd. of Edn. v. Franklin Cty. Bd. of Revision, 76 Ohio St.3d 13, 15, 665 N.E.2d 1098 (1996). Thus, the issue before this court is whether the BTA acted reasonably and lawfully when it concluded that there was insufficient evidence that the May 2012 auction sale was an arm‘s-length transaction and, on that basis, (1) reversed the BOR‘s decision adopting the May 2012 auction sale price as the property‘s value and (2) reinstated the Fiscal Officer‘s original valuation of the property.
{¶14} The “best evidence of true value” of real property is generally considered to be the actual sale price of the property in a recent arm‘s-length transaction, i.e.,“the price arrived at by a willing purchaser and willing seller.” Meyer v. Cuyahoga Cty. Bd. of Revision, 58 Ohio St.2d 328, 333, 390 N.E.2d 796 (1979); Gides v. Cuyahoga Cty. Bd. of Revision, 8th Dist. Cuyahoga No. 100830, 2014-Ohio-4086, ¶ 13. As applied to the tax
In determining the true value of any tract, lot, or parcel of real estate under this section, if such tract, lot, or parcel has been the subject of an arm‘s length sale between a willing seller and a willing buyer within a reasonable length of time, either before or after the tax lien date, the auditor shall consider the sale price of such tract, lot, or parcel to be the true value for taxation purposes. * * *
Am.Sub.H.B. No. 260, 140 Ohio Laws, Part II, 2665, 2772.
{¶15}
{¶16} The party opposing the use of an auction sale price as evidence of a property‘s value “has a very light burden to establish that a transaction was on its face an auction or a forced sale.” Olentangy at ¶ 43. “Once that threshold is crossed,” then the proponent of the auction sale price as evidence of the property‘s value “bears the burden to prove that the sale was nevertheless an arm‘s-length transaction between typically motivated parties.” Id. In this case, it was undisputed that the subject property was sold at an absolute auction. Thus, the Board of Education met its burden of establishing that the May 2012 sale was an auction sale. Accordingly, a presumption arose that the May 2012 auction sale price was not evidence of the value of the subject property. The burden then shifted to TMMC to prove that the May 2012 auction sale was an “arm‘s-length transaction between typically motivated parties.” Id.
{¶17} An arm‘s-length transaction is one that “‘encompasses bidding and negotiation in the open market between a ready, willing and able buyer, and a ready,
{¶18} In determining whether a transaction occurred at arm‘s length, the Ohio Supreme Court has identified three “relevant” factors: (1) “whether the sale was ‘voluntary; i.e., without compulsion or duress,‘” (2) “whether the sale ‘[took] place in an open market,‘” and (3) “whether the buyer and seller ‘act[ed] in their own self interest.‘” Olentangy at ¶ 47, quoting Walters at 25.
{¶19} TMMC argues that the auction sale of the subject property was an arm‘s-length transaction because (1) the property was generally advertised on the open market by means of a large sign that had been prominently placed on the property that was located near a busy intersection for more than six months; (2) the property was sold at a public auction along with several other properties; (3) “a room full of people” bid on the subject property; (4) there was no prior relationship between TMMC and the seller or auctioneer; and (5) there were no back taxes owed on the property.
{¶21} The BOR issued a decision reducing the 2009 tax year valuation to $414,750. Id. at ¶ 15. The Board of Education appealed, and the BTA affirmed, concluding, based on the record before it, that all elements of an arm‘s-length transaction were present for the 2008 sale and that the sale price at auction was, therefore, the “best evidence of [the] property‘s value.” Id. at ¶ 19. The Ohio Supreme Court affirmed the decision of the BTA, reasoning as follows:
On this record, the BTA could reasonably have concluded that Countrywide acted under duress and was not a typically motivated seller. But the record also contains sufficient evidence to support the BTA‘s contrary conclusion. As a result, we must defer to the BTA‘s finding that this particular auction sale was voluntary and occurred at arm‘s length. See Satullo, 111 Ohio St.3d 399, 2006-Ohio-5856, 856 N.E.2d 954, at ¶ 14.
Olentangy at ¶ 52. Thus, in Olentangy, the court determined — based on the evidence presented in that case — that the BTA could have reasonably concluded that the taxpayer had proven that that the 2008 auction sale was an arm‘s-length transaction, thereby rebutting the presumption that the auction sale price was not evidence of a property‘s
{¶22} Ciocca‘s testimony demonstrates (1) that the auction sale in this case had certain “open-market elements,” e.g., the auction was public, several people bid on the subject property and TMMC had no ties to the seller or auctioneer, see Olentangy, 141 Ohio St.3d 243, 2014-Ohio-4723, 23 N.E.3d 1086, at ¶ 51, citing N. Royalton School Dist. Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 129 Ohio St.3d 172, 2011-Ohio-3092, 950 N.E.2d 955, ¶ 30, (2) that the sale was voluntary as to TMMC and (3) that TMMC acted in its own self interest in purchasing the property. However, in this case — unlike in Olentangy — there is very limited information in the record regarding the seller, the circumstances that led to the sale of the subject property or the seller‘s motivation in selling the subject property. Ciocca testified that he knew nothing about the seller. The only evidence in the record regarding the seller or the circumstances under which the seller sold the subject property is: (1) the identity of the seller; (2) Ciocca‘s testimony that the seller had owned the property since 1974 and that no back taxes were owed on the property at the time of the sale; and (3) that the property was offered for sale at auction “ABSOLUTE, REGARDLESS OF PRICE,” i.e., with no minimum bid. Although Ciocca claimed the parties entered into a purchase agreement, the purchase agreement is not part of the record. There is no information as to why the seller sold the property at an absolute
{¶23}
{¶24} TMMC argues that the “Bedford rule” controls the result in this case and that under the Bedford rule, once TMMC “presented testimony [from Ciocca] on what TMMC paid for the property and his opinion of the property‘s value,” that value “should have been
{¶25} As the Ohio Supreme Court explained in Columbus City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 144 Ohio St.3d 324, 2015-Ohio-3633, 43 N.E.3d 387,
the Bedford rule * * * states that the BTA may not, at the request of a board of education, reinstate the auditor‘s valuation when a BOR rejected that valuation based on competent evidence. Worthington City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 140 Ohio St.3d 248, 2014-Ohio-3620, 17 N.E.3d 537, ¶ 38-41, citing Bedford Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 115 Ohio St.3d 449, 2007-Ohio-5237, 875 N.E.2d 913. The BTA can override the Bedford rule and reinstate the auditor‘s valuation when the BOR‘s decision to reject the auditor‘s valuation is completely unsupported in the record, see Worthington City Schools at ¶ 38, citing Columbus City School Dist. Bd. of Edn. v. Franklin Cty. Bd. of Revision, 90 Ohio St.3d 564, 567, 740 N.E.2d 276 (2001), or when the party challenging the BOR‘s action presents evidence that the auditor‘s valuation is more accurate than the BOR‘s.
Columbus City Schools Bd. of Edn. at ¶ 44.
{¶26} Thus, the “Bedford rule” applies only where a party presents competent evidence of a valuation different than the value assessed by the Fiscal Officer that the BOR relies upon in establishing a new property valuation. See, e.g., Worthington City Schools Bd. of Edn. at ¶ 32, 35, 38 (“[I]f a board of revision makes a valuation change that is completely unsupported in the record, the BTA may not affirm or adopt it. * * * [T]he
{¶27} As set forth above, with respect to the evidence TMMC presented regarding the auction sale price, the BTA concluded, following its independent review of the statutory transcript, that TMMC had failed to prove that the May 2012 auction sale was an arm‘s-length transaction by typically motivated parties and thus had failed to rebut the presumption under
{¶28} Aside from the evidence of the May 2012 auction sale of the subject property, the only other “evidence” TMMC submitted at the hearing were comparison lists of tax values for several neighboring properties it claimed were similar to the subject property. The BOR concluded at the hearing that this information was not competent, probative evidence of the tax value of the subject property and, therefore, did not rely on it in valuing the property. The BTA reached a similar conclusion. TMMC does not claim that the BOR or BTA erred in reaching this conclusion.
{¶29} Although TMMC asserts that Ciocca also “presented testimony” at the hearing regarding “his opinion of the property‘s value” and that the BOR relied on this “competent evidence” in determining the value of the property, Ciocca did not, in fact,
{¶30} Here, there is no evidence in the record upon which the BTA could have undertaken an independent assessment of the value of the subject property. “In the absence of probative evidence of a lower value,” the BTA is “justified in fixing the value at the amount assessed by the county [fiscal officer].” Salem Med. Arts & Dev. Corp. v. Columbiana Cty Bd. of Revision, 82 Ohio St.3d 193, 195, 694 N.E.2d 1324 (1998); Vandalia-Butler City School Dist. Bd. of Edn., 106 Ohio St.3d 157, 2005-Ohio-4385, 833 N.E.2d 271, at ¶ 12.
{¶32} Judgment affirmed.
It is ordered that appellee recover from appellant the costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the Board of Tax Appeals to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.
EILEEN A. GALLAGHER, JUDGE
KATHLEEN ANN KEOUGH, P.J., and TIM McCORMACK, J., CONCUR