Case Information
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[This opinion has been published in
Ohio Official Reports
at
P INGUE A PPELLANT , v. F RANKLIN OUNTY B OARD OF R EVISION ET AL ., A PPELLEES .
[Cite as
Pingue v. Franklin Cty. Bd. of Revision
,
hundred-twenty-six-unit condominium project—True value of real property—Purchase of forty-five units within thirteen months of tax lien date established the best evidence of true value.
(No. 98-1494—Submitted March 16, 1999—Decided October 20, 1999.) A PPEAL from the Board of Tax Appeals, No. 96-P-263. On March 30, 1995, appellant, Guiseppe Pingue, filed a complaint
with the Franklin County Board of Revision (“BOR”) concerning the valuation of forty-four noncontiguous parcels of real property in Hilliard that Pingue purchased in February 1995 for $2,530,000, or $57,500 per parcel. The forty-four units are part of a one-hundred-twenty-six-unit condominium project built in 1989. Located on each of the forty-four parcels is a three-bedroom, two-and-a-half-bath condominium townhouse unit with a basement and a one-car garage, all essentially identical. The remaining eighty-two units in the project are owned by over thirty different owners, most of whom own only two units each. In his complaint, Pingue claimed a true value of $57,500 per parcel,
for a total of $2,530,000. The auditor had assessed the forty-four parcels at $74,500 per parcel. The Board of Education of the Hilliard City School District (“BOE”) filed a countercomplaint claiming that the forty-four parcels had a true value of $76,000 per parcel. At the hearing before the BOR, Pingue introduced the conveyance fee
statement, real estate purchase contract, and warranty deed showing that he purchased the forty-four parcels in February 1995, for the sum of $2,530,000 or $57,500 per parcel. Pingue’s only witness was Stanford Goldstein, the general partner of the seller. Goldstein testified to the arm’s-length nature of the sale and confirmed that at the closing, Pingue had been given credit of $90,200 for exterior repairs and maintenance, thereby making the final purchase price $55,450 per parcel. The BOE introduced the testimony and appraisal of Joseph
Wightman. Wightman’s evaluation of the parcels was based upon actual sales of units essentially identical to Pingue’s that had been sold on an individual basis or in sales of up to four units at once. His review of the sales in the same development showed that one unit sold in May 1995 for $74,950, two units sold in September 1995 for $72,500 per unit, two units sold in July 1993 for $73,300 per unit, and four units sold in January 1991 for $75,000 per unit. Wightman also reviewed current and prior listings for other units whose asking prices ranged from $74,950 to $79,950. Wightman’s appraisal estimated the value of the forty-four parcels to be $74,000 per parcel as of January 1, 1994. The BOR rejected the sales price as the true value of the parcels,
apparently accepting the BOE’s argument that it represented a bulk sale reflecting a discount for the large number of units sold. Consequently, the BOR relied upon the appraisal evidence and reduced the valuation per parcel from $74,500 to $74,000. Before the Board of Tax Appeals (“BTA”), the parties agreed to waive
a hearing, and the matter was submitted on the record made before the BOR. After reviewing the record, the BTA concurred with the BOR and accepted Wightman’s appraisal as probative and credible evidence. The BTA adopted Wightman’s valuation of $74,000 per parcel.
Todd W. Sleggs & Associates, Todd W. Sleggs and Susan K. French-Scaggs , for appellant.
Ronald J. O’Brien , Franklin County Prosecuting Attorney, and Matthew H. Chafin , Assistant Prosecuting Attorney, for appellees Franklin County Board of Revision and Franklin County Auditor.
Teaford, Rich & Wheeler and Jeffrey A. Rich , for appellee Board of Education of the Hilliard City School District.
L UNDBERG TRATTON J. Pingue contends that his purchase of the forty-four parcels within thirteen months of the tax lien date established the best evidence of true value. We agree. Consequently, we find that the BTA acted unreasonably and unlawfully, and we reverse the decision of the BTA. R.C. 5713.03 requires that the auditor, when determining the true
value of any tract, lot, or parcel of real estate,
shall consider
the sale price
as the
true value
for taxation purposes if the property 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. Furthermore, this court has
repeatedly held that an actual, recent sale of property in an arm’s-length transaction
is the best evidence of its “true value in money.”
Columbus Bd. of Edn. v. Fountain
Square Assoc., Ltd.
(1984),
a review of independent appraisals based upon other factors is appropriate.
Ratner
v. Stark Cty. Bd. of Revision
(1986),
between a willing seller and a willing buyer. The sale involved no extraneous
factors that affected the sale price, such as a pending bankruptcy, a distress sale,
coercion, lease arrangements, or other factors that would cast suspicion on the sale
price as representative of true value. Yet the BTA apparently considered the bulk
nature of the sale to be a factor that vitiated the sale as an indicator of the true value
of the properties. The BTA concurred with the BOR’s valuation of these units
based upon their highest and best use as individual investor condominiums. The
BTA relied upon
Park Ridge Co. v. Franklin Cty. Bd. of Revision
(1987), 29 Ohio
St.3d 12, 29 OBR 231,
in an arm’s-length transaction. The reality of the marketplace was that the seller wanted to sell forty-four condominiums and found one buyer for all forty-four units but only at a price of $57,500 per unit. Had the seller been able to sell each condominium for $74,000 per unit, common sense dictates that the seller would have done so. However, the seller had to discount the price in order to sell all forty- four units at the same time. The BOR concluded that the seller should have sold at a higher price without any evidence that the seller could have done so. Pingue should be entitled to recognition of the purchase price as the property’s value. R.C. 5713.03 is clear that the auditor shall consider the sale price in an arm’s-length transaction to be the true value for tax purposes. We reaffirm the rule in Ratner that appraisal evidence may be considered when the sale price has been influenced by other factors so that it does not reflect the true value of the property. However, in this case, Pingue presented competent, probative, and credible evidence that the sale price was the best evidence of value for the forty- four parcels. The parcels had been on the open market. Both the buyer and the seller voluntarily entered into the transaction. There was no evidence of compulsion or duress. The BTA did not question the arm’s-length nature of the sale. Consequently, there was no reason to resort to an appraisal. For all the foregoing reasons, we find that the decision of the BTA
is unreasonable and unlawful. It is therefore reversed, and the cause is remanded for proceedings in accordance with this decision.
Decision reversed and cause remanded.
R ESNICK and F.E. WEENEY , JJ., concur.
P FEIFER , J., concurs separately.
M OYER C.J., D OUGLAS and C OOK , JJ., dissent. C
__________________
P FEIFER J., concurring.
{¶ 14}
My views regarding the relative worth of appraisals versus purchase
price in real estate valuations were made clear in my concurrence in
Dublin-
Sawmill Properties v. Franklin Cty. Bd. of Revision
(1993),
value,’ ”
Dublin-Sawmill
at 578,
Board of Tax Appeals in this case. The majority believes that the R.C. 5713.03 presumption (that a
recent sale price is the best evidence of true value) applies to Pingue’s transaction involving the price that he paid for the purchase of multiple, noncontiguous condominium units, each of which is deemed to be a separate parcel for purposes of real estate taxation. See R.C. 5311.11. The presumption in R.C. 5713.03, however, does not apply to Pingue’s multiple-parcel purchase because the statutory scheme prefers the valuation of individual parcels unless multiple parcels are shown to be a single economic unit. We start with the fundamental proposition that calculations for real
property valuation and taxation proceed from the basic unit of a parcel or lot. To this end, R.C. 5713.01 requires the auditor to determine the true value in money of “ each lot or parcel of real estate.” (Emphasis added.) R.C. 5713.01(B). Likewise, the valuation statute at issue in this case, R.C. 5713.03, permits the taxpayer to benefit from a presumption that the purchase price represents the true value for taxation purposes of “any tract, lot, or parcel * * * if such tract, lot, or parcel has been the subject of an arm’s length sale between a willing seller and a willing buyer[.]” (Emphasis added.) R.C. 5713.03. The language of these Revised Code sections, as well as the cases
considering multiple-parcel issues, such as Park Ridge, Youngstown Sheet & Tube, and Banbury [1] all support the view that the “sale presumption” applies to individual-parcel sales, unless multiple parcels are shown to have a “highest and best use” as a single economic unit. The “sale presumption,” therefore, does not encompass aggregate valuations of various parcels of real estate unless the multiple parcels can be said to be part of an economic land unit. Pingue paid an aggregate price for forty-four individual
noncontiguous parcels. Pingue’s purchase price allocation to each parcel was
not
the result of a sale of “
such
tract, lot, or parcel,” as the plain language of the
presumption in R.C. 5713.03 requires. Rather, it was the result of a sale of forty-
four parcels, with no showing that those forty-four parcels should be considered
together as an economic unit. Pingue simply divided the aggregate price he paid
1.
Park Ridge Co. v. Franklin Cty. Bd. of Revision
(1987),
by the number of units purchased and declared the result, $57,500, to represent the per parcel sale price. But that $57,500 price was determined by allocation per parcel rather than by an arm’s length negotiation for the sale of “such tract, lot, or parcel.” Such a sale is not the best evidence of the value of each of the forty-four parcels, if the highest and best use of each individual condominium parcel is as a single unit. If, on the other hand, the highest and best use of these forty-four units
is as a single economic unit, and future sales of the units would not be sales of each
condominium but rather as a “package,” the taxpayer could introduce evidence to
support that position. The aggregate price could then properly be allocated among
the units for a per parcel price. In
Park Ridge
, for instance, this court confirmed
that “tract, lot, or parcel” are terms used interchangeably by the Revised Code.
Though the “sale presumption” was not at issue in
Park Ridge
, the ruling there
proceeded from the premise that R.C. 5713.01 requires the auditor to determine the
true value in money of each lot or parcel of real estate, and that unless multiple
parcels could be deemed an economic unit, the plain meaning of “lot,” “parcel,”
and “tract” requires the auditor to value parcels individually. See
Park Ridge
at 15-
16, 29 OBR at 234,
use” as a single economic unit, the fact that it includes multiple parcel numbers does not preclude its being valued as a single unit. Park Ridge , 29 Ohio St.3d at 16, 29 OBR at 234-235, 504 N.E.2d at 1120-1121. However, the discount attributed to a bulk sale is not entitled to the presumption of true value for each parcel, unless the taxpayer demonstrates that the multi-parcel purchase or sale corresponds to the proper economic unit. For the foregoing reasons, I would affirm the decision of the Board
of Tax Appeals in this case.
M OYER C.J., and D OUGLAS , J., concur in the foregoing dissenting opinion.