Akron City Sch. Dist. Bd. of Educ. v. Summit Cnty. Bd. of Revision

• Decision Date: 16 April 2014
• Docket Number: No. 2012–1542.,2012–1542.
• Parties: AKRON CITY SCHOOL DISTRICT BOARD OF EDUCATION, Appellee, v. SUMMIT COUNTY BOARD OF REVISION et al., Appellees; Barkoff et al., Trustees, Appellants.
• Court: Ohio Supreme Court

139 Ohio St.3d 92

9 N.E.3d 1004

AKRON CITY SCHOOL DISTRICT BOARD OF EDUCATION, Appellee,

v. SUMMIT COUNTY BOARD OF REVISION et al., Appellees;Barkoff et al., Trustees, Appellants.

No. 2012–1542.

Supreme Court of Ohio.

Submitted Sept. 10, 2013.

Decided April 16, 2014.

Brindza, McIntire & Seed, L.L.P., and David H. Seed, for appellee Akron City School District Board of Education.

Michael DeWine, Attorney General, and Regina M. VanVorous, Assistant Attorney General, for appellees Summit County Board of Revision and Summit County Fiscal Officer.

Sleggs, Danzinger & Gill Co., L.P.A., and Todd W. Sleggs, Cleveland, for appellants.

PFEIFER, J.

{¶ 1} In August 2005, the real property at issue was sold for $1,407,000. In assessing the property for tax year 2008, appellee Summit County fiscal officer performed the reappraisal that the law requires every six years and determined the value of the property to be $902,320. Appellee Akron City School District Board of Education (“school board”) filed a complaint asserting that the 2005 sale price should be adopted as the value of the realty. Relying entirely upon the presumption that the sale was within a reasonable time before the tax-lien date, the school board presented no evidence in support of the sale being recent with respect to the tax-lien date, January 1, 2008.

{¶ 2} Appellee Summit County Board of Revision (“BOR”) declined to use the sale price and retained the fiscal officer's value. On appeal, the Board of Tax Appeals (“BTA”) reversed. The property owners, appellants Rodger L. and Sharon L. Barkoff, trustees, appealed. They argue that when property has been the subject of the reappraisal that occurs every six years, a sale 29 months before the lien date is not recent and thus no presumption arises that the sale price reflects the property's value. We agree, and we therefore reverse the BTA's application of the recency presumption. We also remand for further proceedings.

Facts

{¶ 3} The property at issue is an Akron-area Arby's restaurant. For tax year 2008, which was a reappraisal year in Summit County, the fiscal officer ¹ determined the true value of the property at issue to be $902,320. In March 2009, the school board filed a valuation complaint asserting that the value of the property was $1,407,000, which was the sale price from an August 11, 2005 sale.

{¶ 4} A hearing was held before the BOR, at which the Barkoffs argued that a sale 29 months before the January 1, 2008 lien date was too remote. According to the Barkoffs, the remote sale should not be regarded as probative because the fiscal officer had conducted the reappraisal fully cognizant of the 2005 sale, but nonetheless determined a lower value than the sale price.

{¶ 5} More specifically, the Barkoffs also argued that market conditions had changed. They presented evidence that a substantially similar Arby's restaurant in the Toledo area sold for $1,000,000, all cash, in July 2008. This sale was offered to corroborate the lower value found by the fiscal officer for 2008 and to negate the validity of using the August 2005 sale price.

{¶ 6} On September 18, 2009, the BOR issued a decision retaining the fiscal officer's valuation of the property, and the school board appealed to the BTA.

{¶ 7} At the BTA, the parties waived a hearing, and the board decided the appeal based on the BOR transcript and the briefs submitted by the parties. Relying on R.C. 5713.03 and case law from this court regarding the presumption that a sale is recent, the BTA found that the Barkoffs had not rebutted that presumption and therefore adopted the $1.4 million sale price from August 2005 as the value of the property for tax year 2008. Akron City School Dist. Bd. of Edn. v. Summit Cty. Bd. of Revision, BTA No. 2009–K–3018, 2012 WL 3644672, *3 (Aug. 14, 2012). The board found the comparable-sale evidence unpersuasive, characterizing it as “uncorroborated evidence of a cash-only transaction” and emphasizing that the sale was “located in a different area” and that “little information” was available about the sale. Id. The BTA cited HK New Plan Exchange Property Owner II, L.L.C. v. Hamilton Cty. Bd. of Revision, 122 Ohio St.3d 438, 2009-Ohio-3546, 912 N.E.2d 95, as an example of the use of a 24–month–old sale. Id. at *3, fn. 1.

{¶ 8} In this appeal, the BOR and the fiscal officer have changed their positions: as appellees, they urge the court to affirm the BTA's adoption of the sale price, which constitutes a higher value and thereby increases the tax base.

Analysis

1. Whether the presumption of recency applies is a question of law

{¶ 9} The true value of property is a “question of fact, the determination of which is primarily within the province of the taxing authorities,” and accordingly, we “will not disturb a decision of the Board of Tax Appeals with respect to such valuation unless it affirmatively appears from the record that such decision is unreasonable or unlawful.” Cuyahoga Cty. Bd. of Revision v. Fodor, 15 Ohio St.2d 52, 239 N.E.2d 25 (1968), syllabus. This case poses the question whether, for purposes of former R.C. 5713.03 (140 Ohio Laws, Part II, 2722), the August 2005 sale of the property at issue should be presumed to have occurred “within a reasonable time” of the tax-lien date, January 1, 2008, even though the fiscal officer had conducted the intervening reappraisal and determined a lower value.

{¶ 10} Statutory construction presents a question of law that we determine de novo. See Akron Centre Plaza, L.L.C. v. Summit Cty. Bd. of Revision, 128 Ohio St.3d 145, 2010-Ohio-5035, 942 N.E.2d 1054, ¶ 10. With regard to whether a sale is recent, the statute conditions the use of the sale price on the sale having occurred “within a reasonable length of time, either before or after the tax lien date.” R.C. 5713.03. The statute does not state whether a sale should be presumed to be recent. In construing and applying the statute, we have recognized that this presumption is important, because if the taxing authorities were to “require a definitive showing by the proponent that no evidence controverted the recency and arm's-length character of the sale, then most cases involving a sale price would require the proponent to introduce appraisals and other extrinsic evidence showing the absence of any reason not to use the sale price to determine value.” (Emphasis sic.) Cummins Property Servs., L.L.C. v. Franklin Cty. Bd. of Revision, 117 Ohio St.3d 516, 2008-Ohio-1473, 885 N.E.2d 222, ¶ 41. Thus, the presumption of recency in relation to the tax-lien date falls into the category of “judicially created presumptions” that are designed to effectuate a statute that “makes no express provision for their use.” United States Dept. of Justice v. Landano, 508 U.S. 165, 174–175, 113 S.Ct. 2014, 124 L.Ed.2d 84 (1993).

{¶ 11} Because the BTA applied a judicially created presumption in this case, this appeal from its decision raises a purely legal issue whether that presumption ought to have been applied under the circumstances in this case. Just as with an issue of statutory construction, we exercise de novo authority.

2. The case law does not establish that a 29–month–old sale must be presumed to be recent

{¶ 12} Former R.C. 5713.03 stated that a county auditor (or in this case fiscal officer) “ shall consider the sale price * * * to be the true value for taxation purposes” when 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.” (Emphasis added.) ² 140 Ohio Laws, Part II, 2722. “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.” Conalco v. Monroe Cty. Bd. of Revision, 50 Ohio St.2d 129, 363 N.E.2d 722 (1977), paragraph one of the syllabus, citing State ex rel. Park Invest. Co. v. Bd. of Tax Appeals, 175 Ohio St. 410, 195 N.E.2d 908 (1964). “[T]he only rebuttal lies in challenging whether the elements of recency and arm's-length character between a willing seller and a willing buyer are genuinely present for that particular sale.” Cummins, 117 Ohio St.3d 516, 2008-Ohio-1473, 885 N.E.2d 222, ¶ 13, citing Berea City School Dist. Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 106 Ohio St.3d 269, 2005-Ohio-4979, 834 N.E.2d 782.

{¶ 13} We have not set a bright line to establish when a sale is sufficiently close to the tax-lien date to be presumed to be recent. See New Winchester Gardens, Ltd. v. Franklin Cty. Bd. of Revision, 80 Ohio St.3d 36, 44, 684 N.E.2d 312 (1997) (“The question of how long after a sale the sale price is to be considered the best evidence of true value will vary from case to case”), overruled in part on other grounds, Cummins; see also Dublin–Sawmill Properties v. Franklin Cty. Bd. of Revision, 67 Ohio St.3d 575, 576, 621 N.E.2d 693 (1993) (noting that there is “no statutory guidance for the time frame within which the purchase price of land will govern true value determinations for purposes of real estate taxation” but reversing as unreasonable the BTA's finding that the sales at issue were too remote to receive any consideration).

{¶ 14} We have not accorded a presumption of recency to a sale that occurred more than 24 months before the lien date, though there are a couple of instances in which we appear to have done so. The BTA cited one in rejecting the Barkoffs' argument. In HK New Plan, 122 Ohio St.3d 438, 2009-Ohio-3546, 912 N.E.2d 95, we affirmed a BTA decision that determined the value of property for the 2005 tax year by using the price from a sale in which the deed was executed in December 2002 and the conveyance-fee statement was filed in mid-January 2003. But for two reasons, HK New Plan does not constitute authority for using a 24–month–old sale. First, in HIN, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 124 Ohio St.3d 481, 2010-Ohio-687, 923 N.E.2d 1144, the court held that for...