SSN II, Ltd. v. Warren Cty. Bd. of RevisionSSN II, Ltd. v. Warren Cty. Bd. of Revision
David P. Fornshell, Warren County Prosecuting Attorney, Michael Greer, 500 Justice Drive, Lebanon, Ohio 45036, for defendants-appellees
O P I N I O N
S. POWELL, J.
{¶ 1} Plaintiffs-appellants, SSN II, LTD and Randal R. Sadler, trustee, appeal from a decision in the Warren County Court of Common Pleas affirming two administrative decisions of the Warren County Board of Revision regarding valuation of properties. For the reasons outlined below, we affirm the decision of the common pleas court.
{¶ 3} In 2009, the Warren County Auditor valued the properties. Appellants appealed the auditor‘s valuation to the Warren County Board of Revision (“BOR“). Appellants alleged in their complaints that the properties’ valuations should be reduced because certain aspects of the properties should have been classified as business fixtures under
{¶ 4} Appellants appealed the BOR decision to the Warren County Court of Common Pleas. Appellants again argued that certain aspects of the property were erroneously classified as real property, including golf features. Appellants also contended that the driving range canopy deck was erroneously classified as real property.
{¶ 5} At the common pleas court level, the magistrate found that the tees, cart paths, water hazards, fairways, bunkers, roughs, and holes fell under the definition of real property
{¶ 6} Appellants now appeal, and assert two assignments of error for review.
{¶ 7} Assignment of Error No. 1:
{¶ 8} THE TRIAL COURT ERRED BY NOT MAKING FINDINGS OF FACTS AND CONCLUSIONS OF LAW CONSISTENT WITH STATUTORY LAW AND THE SUPREME COURT‘S DICTA IN FUNTIME, INC. VS. WILKINS, TAX COMMISSIONER BY NOT PROPERLY APPLYING THE OTHERWISE SPECIFIED TEST AND THE DECISIVE TEST TO THE GOLF COURSE FEATURES OF THE PROPERTY; AND, NOT FINDING THAT GOLF COURSE FEATURES SHOULD NOT BE TAXED AS REAL PROPERTY.
{¶ 9} Appellants argue that the golf features and driving range canopy deck were improperly classified as real property, when in fact, they constitute personal property. Appellants assert that these aspects are not real property because they fall under the “otherwise specified” category outlined by
{¶ 10} Under
{¶ 11} As fact-finder, the court must “independently weigh and evaluate all evidence properly before it.” Black at 13. “[T]he court‘s review of the evidence should be thorough and comprehensive, and should ensure that its final determination is more than a mere rubber stamping of the board of revision‘s determination.” Id. at 13-14. In essence,
{¶ 12} Whether property is classified as real property or as personal property for tax purposes depends on the interaction of two statutes,
(A) “Real property,” “realty,” and “land” include land itself, whether laid out in town lots or otherwise, all growing crops, including deciduous and evergreen trees, plants, and shrubs, with all things contained therein, and, unless otherwise specified in this section or section 5701.03 of the Revised Code, all buildings, structures, improvements, and fixtures of whatever kind on the land, and all rights and privileges belonging or appertaining thereto.1
{¶ 14} In Funtime, Inc. v. Wilkins, 105 Ohio St.3d 74, 2004-Ohio-6890, ¶ 33, the Ohio Supreme Court outlined the interaction between these two statutes, and stated:
Reading the two statutes in pari materia and harmonizing them to give effect to the language of both statutes, we find that the correct order of application is as follows: first, determine whether the item meets the requirements of one of the definitions of real property set forth in
R.C. 5701.02 . If the item does not, then it is personal property. If the item fits a definition of real property inR.C. 5701.02 , it is real property unless it is “otherwise specified” inR.C. 5701.03 . If an item is “otherwise specified” underR.C. 5701.03 , it is personal property.
{¶ 15}
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(C) “Fixture” means an item of tangible personal property that has become permanently attached or affixed to the land or to a building, structure, or improvement, and that primarily benefits the realty and not the business, if any, conducted by the occupant on the premises.
(D) “Improvement” means, with respect to a building or structure, a permanent addition, enlargement, or alteration that, had it been constructed at the same time as the building or structure, would have been considered a part of the building or structure.
(E) “Structure” means a permanent fabrication or construction, other than a building, that is attached or affixed to land, and that increases or enhances utilization or enjoyment of the land. “Structure” includes, but is not limited to, bridges, trestles, dams, storage silos for agricultural products, fences, and walls.
{¶ 16} There is very little case law citing Funtime, and no subsequent case law directly on point regarding the interaction between these two statutes in the context of business fixtures. Nevertheless, there are several administrative decisions from the Board of Tax Appeals (“BTA“) that provide guidance, and which the common pleas court relied upon when making its determination. In interpreting
{¶ 17} We discuss the particular aspects of the golf course in the same order as the common pleas court for ease of analysis. First, we address the golf features absent the sprinkler systems, which we collectively refer to as golf features. In Inverness, the BTA found golf features to be land itself under
{¶ 18} In this case, the common pleas court found that similar to Inverness, the golf features were “more akin to permanent fabrication and construction to the property rather than personal property that has become permanently attached to the land.” The common pleas court also found that the golf features are not removable from the land and add value to the real estate itself. The plain language of
{¶ 19} Next, we address the driving range canopy deck. The common pleas court found the driving range canopy deck to be an improvement. An improvement is generally classified as real property and “means, with respect to a building or structure, a permanent addition, enlargement, or alteration that, had it been constructed at the same time as the building or structure, would have been considered a part of the building or structure.”
{¶ 20} Last, we discuss the sprinkler systems. When a taxpayer fails to separately value items that may be classified as tangible personal property, the taxpayer fails to meet the burden of proving a right to a reduction. York Temple Country Club v. Franklin Cty. Bd. of Revision, BTA No. 2006-R-50, 2008 WL 1771265 (April 8, 2008); Goecke Ents., Inc. v. Greene Cty. Bd. of Revision, BTA Nos. 2005-H-598, 2006-H-465, 2007 WL 3226538 (Oct. 19, 2007). The common pleas court found that the sprinkler systems could fall into the
{¶ 21} Assignment of Error No. 2:
{¶ 22} THE TRIAL COURT ERRED BY CREATING ITS OWN ELEMENT NOT REQUIRED BY STATUTE AND OTHERWISE ERRED BY FINDING THAT THE GOLF COURSE FEATURES WERE NOT A [SIC] BUSINESS FEATURES BECAUSE “APPELLANTS FAIL TO IDENTIFY HOW, PRECISELY, THESE THINGS AT ONE TIME [WERE] TANGIBLE PERSONAL PROPERTY.”
{¶ 23} Appellants argue that the common pleas court erred when it required them to show how golf features were at one time tangible personal property. They argue this was improper because
{¶ 24} Judgment affirmed.
RINGLAND, P.J., and M. POWELL, J., concur.
Notes
Other relevant portions of
(B)(1) “Building” means a permanent fabrication or construction, attached or affixed to land, consisting of foundations, walls, columns, girders, beams, floors, and a roof, or some combination of these elemental parts, that is intended as a habitation or shelter for people or animals or a shelter for tangible personal property, and that has structural integrity independent of the tangible personal property, if any, it is designed to shelter. “Building” includes a manufactured or mobile home building as defined in division (B)(2) of this section.
The full text of
“Business fixture” means an item of tangible personal property that has become permanently attached or affixed to the land or to a building, structure, or improvement, and that primarily benefits the business conducted by the occupant on the premises and not the realty. “Business fixture” includes, but is not limited to, machinery, equipment, signs, storage bins and tanks, whether above or below ground, and broadcasting, transportation, transmission, and distribution systems, whether above or below ground. “Business fixture” also means those portions of buildings, structures, and improvements that are specially designed, constructed, and used for the business conducted in the building, structure, or improvement, including, but not limited to, foundations and supports for machinery and equipment. “Business fixture” does not include fixtures that are common to buildings, including, but not limited to, heating, ventilation, and air conditioning systems primarily used to control the environment for people or animals, tanks, towers, and lines for potable water or water for fire control, electrical and communication lines, and other fixtures that primarily benefit the realty and not the business conducted by the occupant on the premises.