Akron Ctr. Plaza Ltd. Liab. Co. v. Summit County Bd. of Revision

• Citation: 942 N.E.2d 1054,128 Ohio St.3d 145
• Decision Date: 21 October 2010
• Docket Number: No. 2009–2137.,2009–2137.
• Parties: AKRON CENTRE PLAZA LIMITED LIABILITY COMPANY, Appellant,v.SUMMIT COUNTY BOARD OF REVISION et al., Appellees.
• Court: United States State Supreme Court of Ohio

128 Ohio St.3d 145

942 N.E.2d 1054

2010 -Ohio- 5035

AKRON CENTRE PLAZA LIMITED LIABILITY COMPANY, Appellant,

v.SUMMIT COUNTY BOARD OF REVISION et al., Appellees.

No. 2009–2137.

Supreme Court of Ohio.

Submitted Oct. 13, 2010.Decided Oct. 21, 2010.

Siegel, Siegel, Johnson & Jennings Co., L.P.A., J. Kieran Jennings, Cleveland, and Jason P. Lindholm, Columbus, for appellant.Brindza, McIntyre & Seed, L.L.P., David H. Seed, and Jennifer A. Hoehnen, for appellee Akron City School District Board of Education.PER CURIAM.

[Ohio St.3d 145] {¶ 1} This is an appeal from a decision of the Board of Tax Appeals (“BTA”) in a real property valuation case. In its decision and order, the BTA affirmed the decision of the Summit County Board of Revision (“BOR”) to dismiss the tax–year–2007 complaint on the grounds that it was the second complaint filed within a three-year “interim period” in violation of R.C. 5715.19(A)(2). In doing so, the BTA rejected the argument of appellant, Akron Centre Plaza Limited Liability Company (“Akron Centre”), that its tax–year–2007 complaint falls within the exception at R.C. 5715.19(A)(2)(d) based upon a loss of occupancy in October 2006. According to the BOR and the BTA, that exception does not apply, because the occupancy loss had already been “taken into consideration with respect to the prior [tax–year–2006] complaint,” thereby violating an explicit condition of R.C. 5715.19(A)(2).

{¶ 2} Renewing its principal argument before this court, Akron Centre contends that the substantial economic impact of the decline in occupancy of its building could be “taken into consideration” only after that decline had actually occurred during 2006. Under this theory, taking into consideration the prospect of the decline as of January 1, 2006, does not equate to taking into consideration the actual impact on January 1, 2007, once the decline had actually occurred in October 2006.

{¶ 3} Although we do not embrace the same argument that Akron Centre advances, our construction of R.C. 5715.19(A)(2)(d) leads us to conclude that Akron Centre's position is correct. We therefore reverse and remand for further proceedings.

[Ohio St.3d 146] Facts

{¶ 4} Akron Centre owns an office building in downtown Akron that was constructed in 1981 and that encompasses rentable area of 195,623 square feet. In Summit County, tax year 2005 was the year of a triennial update and accordingly the first year of an interim period leading up to the sexennial reappraisal in 2008. On March 30, 2007, Akron Centre filed a complaint against the valuation of the property for tax year 2006, the second year of the triennial period.¹ The complaint sought a reduction from a true value of $16,710,250 to $11,600,000.

{¶ 5} In conjunction with the 2006 complaint, Akron Centre presented an owner's opinion of value to the BOR, which urged that the BOR adopt a value of $15,860,000 based on an income approach. This opinion specifically referred to an October 17, 2005 letter from the principal tenant of the building (the law firm Buckingham, Doolittle & Burroughs) declaring its intent to vacate the space it had leased since 1984 as of the expiration of the lease on October 31, 2006. The opinion states that “[t]his negative news was disclosed and therefore public as of the January 1, 2006 lien date and would have a negative effect on the value of the building as of the tax lien date.” When the BOR on August 3, 2007 ordered no change in valuation, Akron Centre appealed to the BTA, and that appeal became BTA case No. 2007–K–859. That case terminated when the BTA issued a decision and order on March 16, 2010, adopting a stipulated taxable value for tax year 2006—a taxable value that reflected an agreed true value of $12,500,000.

{¶ 6} On March 28, 2008, Akron Centre filed another valuation complaint, this time challenging the auditor's valuation for the 2007 tax year. The new complaint sought a reduction from a true value of $16,710,250 to $10,000,000. On the complaint form, Akron Centre checked the box that gives as a reason for the reduction an “[o]ccupancy change of at least 15% [that] had a substantial economic impact on the property.” That checkmark alleges that the present case comes within one of the exceptions to the usual prohibition against multiple complaints within a triennial period. The Akron City Schools Board of Education filed a countercomplaint seeking to retain the valuation of $16,710,250 for tax year 2007.

[Ohio St.3d 147] {¶ 7} At the BOR hearing, Akron Centre presented the appraisal report and testimony of Roger Ritley, who opined a value of $11,000,000 as of January 1, 2007. For its part, the school board sought dismissal of the complaint pursuant to R.C. 5715.19(A)(2), arguing that the 2007 complaint constituted a prohibited second complaint within the three-year interim period. On October 10, 2008, the BOR issued its decision, which dismissed the complaint because it was the second complaint filed within the interim period.

{¶ 8} Akron Centre appealed to the BTA, where the school board filed a motion that, although it was styled a motion to dismiss, was treated by the BTA as a motion to affirm the BOR's dismissal. The BTA did not hold a hearing, but reached its decision on the basis of the BOR transcripts in the current case and in the 2006–tax–year case, along with the briefs filed by the parties. The BTA concluded that although the departure of the Buckingham law firm during 2006 involved a change in occupancy that had a substantial economic impact for the 2007 tax year, and although that event occurred after the 2006 lien date, R.C. 5715.19(A)(2)(d) did not permit the filing of the complaint. The BTA reasoned that the exception did not apply, because the change in occupancy had been “taken into consideration with respect to the prior complaint” for tax year 2006. Akron Centre appealed, and we now reverse.

Analysis

{¶ 9} When a BTA decision is appealed, this court looks to see whether that decision was “reasonable and lawful.” R.C. 5717.04. In reviewing a BTA decision under this standard, we acknowledge that “ ‘[t]he BTA is responsible for determining factual issues and, if the record contains reliable and probative support for these BTA determinations,’ ” we will affirm them. Satullo v. Wilkins, 111 Ohio St.3d 399, 2006-Ohio-5856, 856 N.E.2d 954, ¶ 14, quoting Am. Natl. Can Co. v. Tracy (1995), 72 Ohio St.3d 150, 152, 648 N.E.2d 483. On the other hand, we “ ‘will not hesitate to reverse a BTA decision that is based on an incorrect legal conclusion.’ ” Id., quoting Gahanna–Jefferson Local School Dist. Bd. of Edn. v. Zaino (2001), 93 Ohio St.3d 231, 232, 754 N.E.2d 789.

{¶ 10} This appeal presents a question of law for two reasons. First, determining an element of the jurisdictional sufficiency of a valuation complaint has been held to present an issue of law on appeal, see Toledo Pub. Schools Bd. of Edn. v. Lucas Cty. Bd. of Revision, 124 Ohio St.3d 490, 2010-Ohio-253, 924 N.E.2d 345, ¶ 14, fn. 2, and we have traditionally regarded R.C. 5715.19 as setting forth jurisdictional prerequisites to a board of revision's review of the auditor's determinations, see Worthington City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 124 Ohio St.3d 27, 2009-Ohio-5932, 918 N.E.2d 972, ¶ 17; Victoria Plaza L.L.C. v. Cuyahoga Cty. Bd. of Revision (1999), 86 Ohio St.3d 181, 183, 712 N.E.2d 751. Second, the dispute between Akron Centre and the school board [Ohio St.3d 148] concerns not the underlying facts of what occurred with respect to the complaint for tax year 2006, but whether those essentially undisputed facts indicate that the economic effect of the decrease in occupancy during 2006 was “taken into consideration” as that term is used in R.C. 5715.19(A)(2). Thus, the dispute calls for a construction of the statutory language—which is a question of law. Brennaman v. R.M.I. Co. (1994), 70 Ohio St.3d 460, 466, 639 N.E.2d 425. It follows that our review is not deferential, but de novo. State v. Consilio, 114 Ohio St.3d 295, 2007-Ohio-4163, 871 N.E.2d 1167, ¶ 8.

R.C. 5715.19(A)(2)(d) refers to the economic effect of an actual change in occupancy, not the prospect that such a change may occur in the future

{¶ 11} R.C. 5715.19(A)(2) prohibits a complainant from filing a second complaint within the interim period unless the new complaint “alleges that the valuation or assessment should be changed due to one or more of the following circumstances that occurred after the tax lien date for the tax year for which the prior complaint was filed and that the circumstances were not taken into consideration with respect to the prior complaint.” The circumstance at issue in this case reads as follows:

{¶ 12} “An increase or decrease of at least fifteen percent in the property's occupancy has had a substantial economic impact on the property.” R.C. 5715.19(A)(2)(d).

{¶ 13} Akron Centre presented as part of its claim for reduction for tax year 2006 a letter from its principal tenant, indicating that the tenant would vacate in October 2006. Akron Centre argued that the public knowledge of the tenant's expression of intent would tend to reduce the property value as of January 1, 2006. This reduction in value would probably occur even though the tenant had not yet left and might decide not to leave, and even though Akron Centre might have avoided the decrease in occupancy by reletting the premises during 2006.

{¶ 14} The parties do not dispute that this argument was “taken into consideration” by the BOR for tax year 2006, even though the BOR ordered no decrease in value for that tax year. Instead, the parties disagree whether consideration of the prospect of the principal tenant's departure as of January 1, 2006, should be deemed equivalent to taking into consideration the effect of the tenant's actual departure (coupled with a failure to relet the space) as of January 1, 2007.

{¶ 15} We conclude that the circumstance that Akron Centre had...