Lead Opinion
The question before us is whether the valuation determination by the BTA is reasonable and lawful. We find that it is not.
In the hearing before the BTA, appellant opted to contest the board of revision’s true value dеtermination by presenting evidence of the cost of acquisition of the land in question and the construction cost, without presenting any appraisal evidence. Although appellant initially challеnged the BTA’s determination as it related to the land and buildings, appellant only challenges the value of the land because the BTA’s valuation of the improvements virtually equals appellant’s costs оf construction.
Although there is nо statutory guidance for the time frame within which the purchase price of land will govern true value determinations for purposes of real estate taxation, the BTA’s decision that appellant’s purchases were too remote in time is unreasonable and unlawful.
R.C. 5713.03 provides, in part: “In determining the true value of any tract * * * of real estate under this section, if such tract * * * has been the subject of an аrm's length sale between a willing seller and a willing buyer within a reasonable length of time, either before or after tax lien date, the auditor shall consider the sale price of such tract * * * to be the true value for taxation purposes.”
In Hilliard City School Dist. Bd. of Edn. v. Franklin Cty. Bd. of Revision (1990),
In the instant appeal, the BTA appears to acknowledge that the land sale of May 1986 was not too remote, since it did not lump that sale with others it characterized as “too remote,” even though it did not give that sale any consideration in its determination of true value. That decision by the BTA was unreasonable and unlawful, in light of R.C. 5713.03 and Hilliard, supra. Appellаnt presented substantial credible evidence of what were indisputably arm’s-length sales of portions of the subject property. The May 1986 sale was such a sale. That evidence was entitled to BTA cоnsideration. It was within a reasonable length of time of the tax lien date and, thus, it constituted “a proper measure of true value.” Even if the other sales were “too remote,” they were some indication of true value and should have been taken into account by the BTA in its deliberations.
Appellant notes that it paid $170,377 per acre for the land. Appellee Dublin City School District’s appraiser valued the land at $180,000 per acre. However, the BTA found the value to be $310,580 per acre and there is no probative evidence to support its finding. “The BTA did not explain this discrepancy, and we are unable to understand how such a value can be found.” Howard v. Cuyahoga Cty. Bd. of Revision (1988),
Decision reversed and cause remanded.
Concurrence Opinion
concurring. Given the facts of this case, I concur in this court’s judgment. However, our decision today should not be accorded great value as prеcedent since it is based on an unrealistic method of determining this property’s value for tax purposes.
The best way to determine value of property is through appraisal. In this case, one of the parties did submit an appraisal which the BTA correctly rejected as unpersuasive. That appraisal was based on estimates, surveys, and other unverified information rather than on actual infоrmation which could have been secured from the property owner. The submitted documents could not even be considered a “windshield appraisal.”
The BTA faced the added problem in this casе of property which was not yet completely developed at the time of the tax lien date. That fact makes an appraisal especially difficult. Since the project was not yеt completed and rented at the time of the tax lien date, income could not be used as a method to determine value. The school board overzealously sought an increased assessment based upon the value of the completed property for a time period before the property was completed.
The difficulty associated with a mid-construction appraisal is the main reason that I concur with the majority opinion in this case. The circumstances of this case have forced this court to allow a determination of value based upon the purchase price of the property. While use of the purchase price was unfortunately necessary in this case, it is generally overused and overrated as an accurate measure of fair market value.
Purchase price is especially not useful in cases where the cost of assembling the parcels of property may bear no resemblance to the actual value of thе property. The developers of a multiparcel tract may pay substantially more than a particular part is worth to complete the set. Once assembled, the new property may become very unique in nature and therefore take on a value that bears no resemblance to the original purchase price. Additionally, a person who falls in
Blind reliance on purchase price to determine fair market value of real estаte is simplistic and naive. It is also, however, grounded in statute and in the common law. Beginning with the troubling decision in State ex rel. Park Invest. Co. v. Bd. of Tax Appeals (1964),
In my view, purchase price should be regarded оnly as “some evidence of value” for real estate tax purposes and should not be presumed to equate with ■ fair market value. In the event that there is no other reliable evidence regarding value, then purchase price may be used to gauge market value. Unfortunately, other credible evidence was lacking in this case, so purchase price is indeed the best evidence' аvailable. I therefore concur.
Dissenting Opinion
dissenting. I respectfully dissent. This is, at best, an “unusual” tax case. The appellant, for whatever reason, chose not to present any appraisal evidence аt the hearings before the board of revision or the BTA. Appellee, board of education, presented an extensive appraisal report and the testimony of the appraiser. Howеver, the BTA found the appraisal to be “non-persuasive” because it was based “ * * * on estimates, surveys, and other unverified information.”
Accordingly, since there was no appraisal evidence on one side and unacceptable (to the BTA) appraisal evidence on the other, the BTA was left with the valuation fixed by the board of revision which, of course, is presumptively correct. See Alliance Towers, Ltd. v. Stark Cty. Bd. of Revision (1988),
Further, in R.R.Z. Assoc. v. Cuyahoga Cty. Bd. of Revision (1988),
Finally, I disagree with the majority that the BTA’s decision not to base valuation on sales of the property “within a reasonable length of time * * * [of] tax lien date” was unreasonable and unlawful. In suрport of its position, the majority cites Hilliard City School Dist. Bd. of Edn. v. Franklin Cty. Bd. of Revision (1990),
I would affirm the decision of the BTA. Since the majority opinion does not do so, I must respectfully dissent.