Lead Opinion
Pаrtnership contends that the BTA erred in not allocating the purchase price between the two parcels. We disagree.
The amount that the Partnership paid for the two parcels containing Corporate Exchange Buddings IV and V is not in dispute. In addition, the BTA determined that the sale to Partnership was an arm’s-length salе; presumably then, the sale price reflects true value. Walters v. Knox Cty. Bd. of Revision (1989),
The two parcels are not identical. While the amount of land contained in each parcel is about the same, the buildings located on the parcеls are different in size and age. Partnership set forth an allocation of the purchase price in the complaints it filed with the BOR. However, as the appellant before the BTA
Partnership’s two witnesses, however, testified only about their involvement with the negotiations that culminated in the purchase of the two parcels. In addition, the voluminous amount of documents presented by Partnership related only to thе negotiations, purchase, and transfer of the two parcels.
After hearing this testimony and reviewing these documents, the BTA correctly refused to accept the allocation of the purchase price made by Partnership. The BTA concluded that it could find no basis to “justify reliance upon appellant’s suggested valuation allocation.”
Partnership argues that the BTA had testimony before it to allocate the purchase price based on rentable square feet. Partnership quotes from the BTA’s decision. That quote, however, was taken from the brief Partnership filed with the BTA. Partnership cites no source in the record for the statement.
Moreover, the only reference in the BTA record as to how the allocation could be made is contained in the opening statement of counsel for Partnership. He stated that the purchase price was allocated based on square footage and that he “believe[d] therе will be testimony that this is also a reasonable way in this type of property to apportion.” However, statements of counsel are not evidence. In State v. Green (1998),
Partnership further contends that Youngstown Sheet & Tube Co. v. Mahoning Cty. Bd. of Revision (1981),
Partnership also cites Zazworsky v. Licking Cty. Bd. of Revision (1991),
The BTA affirmed the board of revision’s valuatiоn of $184,500 for the purchased warehouse, stating that the sale occurred “under peculiar circumstances.” We reversed and ordered the BTA to enter a valuation of $100,000, holding that no evidence supported the BTA’s decision.
Zazworsky differs from this case. Only one piece of real property was at issue in Zazworsky, and we did not need to allocate a purchase price between two pieces of real property. Indeed, Zazworsky himself maintained that the true value of the purchased warehouse was $100,000.
Since Partnership has failed to produce sufficient competent and probative evidence to meet its burden of proof and has not presented evidence to support an independent valuation by the BTA, the BTA may approve the board of revision’s valuation. Simmons v. Cuyahoga Cty. Bd. of Revision (1998),
For all the foregoing reasons, the decision of the BTA is reasonable and lawful and it is affirmed.
Decision affirmed.
Dissenting Opinion
dissenting. Beсause I do not understand how the BTA can insist on taxing these two properties at a combined value of $19,030,000, while agreeing that the true value is $14,500,000, I must strongly dissent from the
A long line of cases in Ohio has held that a recent sale of property that is an arm’s-length transaction is the best evidence of the “true value” of the property. Cincinnati School Dist. Bd. of Edn. v. Hamilton Cty. Bd. of Revision (1997),
In Conalco, this court held, at the syllabus:
“1. The best evidence of the ‘true value in money’ of real property is an actual, recent sale of the property in an arm’s-length transaction. (State, ex rel. Park Investment Co., v. Bd. of Tax Appeals,175 Ohio St. 410 [25 O.O.2d 432 ,195 N.E.2d 908 ], approved and followed.)
“2. In valuing real property sold within three days of the tax lien date in an arm’s-length transaction, the best evidence of ‘true value in money’ is the proper allocation of the lump-sum purchase price and not an appraisal ignoring the contemporaneous sale.” (Emphasis added.)
The appellees totally misinterpret Conalco. In Conalco, the allocation issue was not between two pieces of property, but rather between real estate and other assets, such as accounts receivable, related to the same property. In that case, a sale of the property occurred two days after the tax vаluation conducted by the appraiser for the county auditor. The BTA ignored the sale and relied only on the appraiser’s value. No appraiser testified for the taxpayer Conalco on allocation of the purchase price. Rather, Conalco relied on accounting principlеs for allocation. In rejecting the BTA’s position, the court stated:
“The board should have determined, under the specific facts of this case, whether [Conalco’s] allocation resulted in a distorted valuation of the real property.
“* * * Apparently, the board adopted the fair market value apprаisal made by appellee [county auditor], despite testimony by appellee’s appraiser that he ignored the contemporaneous sale of the property.
«íJí ‡
“The board’s decision in the present case, accepting the appellee’s appraisal, despite an arm’s-length sale within close proximity to the tax: lien date, and rejecting APB 16, thereby avoiding a determination upon [Conalco’s] allocation of the purchase price, is unreasonable and unlawful.” Id.,50 Ohio St.2d at 131-132 , 4 0.0.3d at 310-311,363 N.E.2d at 723-724 .
In a subsequent case, also misinterpreted by appellees, this court reaffirmed the best evidence rule of a recent sale:
“We hold that the best evidence of the ‘true value in money’ of tangible personal property is the proper allocation of the purchase price of an actual, recent sale of the property in an arm’s-length transaction.
* *
“* * * The board is required to arrive at its own valuation in an appeal from the valuation assessed by the Tax Commissioner. Clark v. Glander (1949),151 Ohio St. 229 [39 O.O. 56 ,85 N.E.2d 291 ], paragraph one of the syllabus.” Tele-Media Co. v. Lindley (1982),70 Ohio St.2d 284 , 287-289,24 O.O.3d 367 , 369-370,436 N.E.2d 1362 , 1365.
In Tele-Media, the taxpayer was seeking a valuation lower than the actual sale price. The court found that the book value, properly allocated, is the best evidence of true value. Id. at 286, 24 0.0.3d at 368-369,
I do not find Elsag-Bailey, Inc. v. Lake Cty. Bd. of Revision (1996),
In this case, the BTA did not fulfill its duty of properly allocating the true value. Instead, it arbitrarily clung to the appraised value and ignored the sale price, contrary to the mandate of Conalco. Hаd the property sold for more than the appraised value, the appellees certainly would have been the ones appealing and making the same arguments Partnership now makes.
In fact, Partnership offered the BTA a reasonable, logical method of allocating the purchase pricе between the two buildings based upon the rentable square footage of each building. Evidence of the rentable space of each building was before the BTA in the numerous exhibits offered by Partnership related to the
The BTA made no determination that allocation of value between the buildings was not possible. Further, BTA made no factual finding that Partnership’s proposed method of allocation was improper, unreasonable, or not based upon verifiable information. None of the appellees presented any evidеnce in rebuttal. No other method of allocation was even suggested. Instead, the BTA summarily rejected Partnership’s proposed method of allocation of value without any legal or factual basis, citing only Partnership’s failure to have “appraisal evidence or testimony.”
Yet the BTA concluded that Partnership did not justify its allocation method, and, therefore, the BTA affirmed the auditor’s valuation of the properties. The auditor’s assessment of value for both parcels totaled $19,030,000. The auditor assessed the value of Building IV at $7,930,000, approximately forty-two percent of the combined values, and assessed the value of Building V at $11,100,000, approximately fifty-eight percent of the combined values.
Partnership’s allocated values closely mirrored those of the auditor. The true value, as evidenced by the recent sale, was $14,500,000 for both parcels. Partnership requested that a value of $6,255,300 be placed on Building IV, approximately forty-threе percent of the combined sale price. Partnership requested that a value of $8,244,700 be placed on Building V, approximately fifty-seven percent of the combined sale price.
If the BTA had reason not to adopt the Partnership’s proposed allocation, the BTA had before it sufficient information about each building from which to derive its own allocation of the $14,500,000 sale price it already accepted as the true value. Exhibits revealed similarities about the buildings. They are in close proximity to each other within the same office park. Both are situated on five acres of land. They were built within a few years of each other. Building IV has three stories with 90,891 rentable square feet, with three hundred forty-one parking spaces and a ninety-six percent occupancy
The BTA’s finding that the purchase of Corporate Exchange Buildings IV and V was an arm’s-length transaction reinforces the presumption that the sale price of $14,500,000 was the true value for the two properties. The BTA’s decision to affirm the auditor’s separate assessments of value results in both prоperties being valued, for tax purposes, at $4,530,000 more than they were valued in an arm’s-length transaction. I fail to see how this can be fair or just. Such a decision, without further justification, is inherently arbitrary, capricious, and unreasonable. The BTA had a duty in light of the unrefuted and voluminous evidence before it to fairly and justly allocаte the true value between the two buildings. To arbitrarily ignore the purchase price and blindly adhere to the appraisal because the buildings are “independent” is grossly unfair and flies in the face of Conalco. If the BTA did not accept the Partnership’s allocation, it could perform its own. Yet appellees offer no alternative. It did not matter a great deal if the allocation differed by some percentage, since the Partnership was the same taxpayer. But what the BTA could not do was totally ignore the $14,500,000 value it already recognized, refuse to allocate the price between the two buildings, and impose a value of $19,030,000, a $4,530,000 difference, because the taxpayer did not separately appraise the two buildings. An appraisal is not necessary in light of the best evidence before it which the law required the BTA to consider. I cannot condone such a patently outrageous result.
I believe that Partnership met its burden by establishing the arm’s-length nature of the sale transaction and by proposing a logical, reasonable, and verifiable method of allocating the sale price between the two buildings for tax purposes. The BTA arbitrarily refused to consider Partnership’s allocation or any other allocation. Therefore, I would reverse the deсision of the BTA and remand this matter to the BTA with instructions to determine a formula to allocate the $14,500,000 sale price between the two buildings.
Notes
. Occupancy of Building IV was reported as seventy-six percent in a March 1993 financial statement; however, sales information dated July 1993 reported occupancy at ninety-six percent.