Dublin City Sch. Bd. of Educ. v. Franklin Cnty. Bd. of Revision

• Decision Date: 15 May 2014
• Docket Number: No. 2012–1432.,2012–1432.
• Citation: 11 N.E.3d 222,139 Ohio St.3d 212
• Parties: DUBLIN CITY SCHOOLS BOARD OF EDUCATION, Appellee, v. FRANKLIN COUNTY BOARD OF REVISION et al., Appellees; East Bank Condominiums II, L.L.C., Appellant.
• Court: Ohio Supreme Court

139 Ohio St.3d 212

11 N.E.3d 222

DUBLIN CITY SCHOOLS BOARD OF EDUCATION, Appellee,

v.FRANKLIN COUNTY BOARD OF REVISION et al., Appellees; East Bank Condominiums II, L.L.C., Appellant.

No. 2012–1432.

Supreme Court of Ohio.

Submitted Jan. 7, 2014.

Decided May 15, 2014.

Rich & Gillis Law Group, L.L.C., Mark H. Gillis, Jeffrey A. Rich, and Karol C. Fox, Dublin, for appellee Dublin City Schools Board of Education.

Zeiger, Tigges & Little, L.L.P., Marion H. Little Jr., and Matthew S. Zeiger, Columbus, for appellant.

FRENCH, J.

{¶ 1} East Bank Condominiums II, L.L.C. (“East Bank”), appeals the decision of the Board of Tax Appeals (“BTA”), which reinstated the county auditor's valuations for 21 condominium units owned by East Bank. Originally, a majority of this court rejected the auditor's valuations and accepted the bulk-appraisal valuation East Bank submitted. Dublin City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 139 Ohio St.3d 193, 2013-Ohio-4543, 11 N.E.3d 206 (“ Dublin City Schools I ”), ¶ 27. Today we grant, in part, the Dublin City Schools Board of Education's motion for reconsideration of our prior decision. We conclude that the BTA was correct in rejecting East Bank's bulk-appraisal valuation for the units, but was incorrect in adopting the auditor's valuations. Accordingly, we remand this matter to the BTA for an independent determination of value.

Facts

{¶ 2} This case concerns the valuation of 21 units in East Bank's 28–unit condominium complex. As of tax-lien date January 1, 2008, the 21 units were still under construction and unsold. The Franklin County Auditor valued each unit as a separate parcel. The aggregate value of the 21 units amounted to $8,139,300. The property-record cards do not indicate, however, whether the auditor properly took into account the unfinished state of the units when determining their values, as required by Ohio Adm.Code 5703–25–06(G).

{¶ 3} East Bank filed valuation complaints, challenging the auditor's assessments for each of the 21 units. The school board filed countercomplaints, seeking to retain the auditor's valuations.

{¶ 4} At the board of revision (“BOR”) hearing, East Bank presented a report and testimony from appraiser Thomas Horner. After deducting the cost of finishing the units, Horner opined that the condominiums would yield “gross sale proceeds” of $6,492,294. Horner further determined that he had to value the units in bulk, because, in his view, all 21 condominiums were a “single economic unit.” Accordingly, Horner discounted his figure to arrive at a “net present-value” of $3,100,000, which is less than 48 percent of the predicted gross sale proceeds. According to Horner, this number represented what a single investor would pay for all 21 condominiums. The BOR adopted Horner's $3,100,000 bulk valuation.

{¶ 5} The school board appealed to the BTA. The school board argued for adoption of the auditor's valuations, or, in the alternative, for adoption of Horner's “gross sale proceeds” value of $6,492,294. At the BTA hearing, the school board did not put on any witnesses or evidence. Instead, it focused solely on attacking the validity of Horner's appraisal.

{¶ 6} The BTA found that Horner's bulk-appraisal method was improper. Dublin City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, BTA Nos. 2009–Q–1282 through 2009–Q–1301 and 2009–Q–1408, 2012 WL 3166815, *5 (July 24, 2012). It subsequently ordered reinstatement of the auditor's valuations, which totaled $8,139,300 for the 21 units. Id. at *6.

{¶ 7} East Bank appealed the BTA's decision to this court. East Bank argued in part that the BTA erred by rejecting Horner's bulk-discount methodology and by not valuing the condominiums as a single economic unit.

{¶ 8} On October 16, 2013, this court issued its original decision in this matter, reversing the BTA. Dublin City Schools I, 139 Ohio St.3d 193, 2013-Ohio-4543, 11 N.E.3d 206. We held that the BTA erred in reverting to the auditor's determinations of value. Id. at ¶ 27. The majority opinion then concluded by “adopt[ing] the only evidence of valuation contained in the record presented by East Bank through its expert, resulting in a valuation of $3,100,000.” Id. The majority opinion did not, however, consider whether the bulk-valuation approach, which was used by East Bank to arrive at the $3,100,000 figure, was appropriate. Id. at ¶ 27, fn. 1.

Questions Presented

{¶ 9} The school board has moved for reconsideration. Under S.Ct.Prac.R. 18.02, we use our reconsideration authority to “correct decisions which, upon reflection, are deemed to have been made in error.” State ex rel. Huebner v. W. Jefferson Village Council, 75 Ohio St.3d 381, 383, 662 N.E.2d 339 (1995). We will not, however, grant reconsideration when a movant seeks merely to reargue the case at hand. S.Ct.Prac.R. 18.02(B).

{¶ 10} The school board raises three grounds for reconsideration. First, it argues that this court erred in holding that the school board had to offer additional evidence of value in order to meet its burden of proof at the BTA hearing. This court already thoroughly considered the burden-of-proof issue in our first decision. Dublin City Schools I at ¶ 14–16. The issue was the subject of much discussion and debate in this court's competing opinions. See id. at ¶ 55–59. And all seven justices agreed, albeit for different reasons, that the school board needed to offer additional proof to the BTA. Id. at ¶ 16, 58–59. Therefore, the school board's first argument does not call our attention either to an obvious error or an issue that this court did not consider. Accordingly, we decline to reconsider our opinion as to the school board's first claim.

{¶ 11} Second, the school board contends that this court erred factually in holding that the school board did not produce any evidence of its proposed value at the BTA hearing. Specifically, the school board claims that it produced evidence when it made an alternative argument to the BTA in support of Horner's $6,492,294 “gross sale proceeds” figure. In other words, it contends that East Bank's appraisal evidence was the school board's valuation evidence.

{¶ 12} We are not persuaded. Regardless of what the school board said to the BTA, the school board specifically argued against the $6,492,294 figure in its merit brief to this court. The school board supported only the auditor's valuations. The school board cannot argue against the validity of the $6,492,294 figure, and then claim that this court should have considered that figure as evidence of value. We therefore decline reconsideration as to the school board's second claim.

{¶ 13} Finally, the school board argues that the majority erred when it summarily accepted East Bank's $3,100,000 bulk-sale valuation without considering the validity of that valuation. The school board contends that we should have remanded this case to the BTA for an independent determination of value. We agree. Our prior decision erred when it adopted East Bank's bulk valuation without first conducting any analysis as to whether that valuation was accurate. This court can affirmatively accept a particular valuation only if it determines that the record supports that figure. Bedford Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 115 Ohio St.3d 449, 2007-Ohio-5237, 875 N.E.2d 913, ¶ 15.

{¶ 14} Similarly, this court cannot reverse the BTA without first analyzing whether the BTA's decision was correct. R.C. 5717.04. Our appellate power over the BTA is statutorily based. Id. We may reverse a decision of the BTA only upon determining “that such decision of the board is unreasonable or unlawful.” Id. In this case, the BTA explicitly rejected East Bank's $3,100,000 valuation on the grounds that Horner's bulk-sale appraisal was legally improper. 2012 WL 3166815 at *5. A majority of this court reversed the BTA and adopted Horner's valuation. Dublin City Schools I, 139 Ohio St.3d 193, 2013-Ohio-4543, 11 N.E.3d 206, at ¶ 27. But the majority did so without first determining that the BTA acted unreasonably or unlawfully in rejecting the bulk-sale valuation. Id. The majority reasoned instead that it “need not consider whether the bulk sale approach was appropriate in this instance.” Id. at ¶ 27, fn. 1. Both statute and precedent contradict this approach.

{¶ 15} Accordingly, we grant the school board's motion for reconsideration in part. We now consider whether the BTA erred in rejecting the bulk-sale valuation and whether remand would be appropriate.

Analysis

A. Horner's Bulk–Value Appraisal Was Inappropriate

{¶ 16} Taxing authorities must value condominium units as separate parcels, even when those units are contained in a single complex. R.C. 5311.11 (“Each unit of a condominium property * * * is deemed a separate parcel for all purposes of taxation and assessment of real property.”) (Emphasis added.) Horner's appraisal violates this legal mandate by valuing all 21 individual parcels in bulk as if they were “a single economic unit.”

{¶ 17} In Eastcreek Corp. v. Cuyahoga Cty. Bd. of Revision, 8th Dist. Cuyahoga Nos. 53150–53156, 1988 WL 1544 (Jan. 7, 1988), the Eighth District Court of Appeals relied on R.C. 5311.11 in considering and invalidating a similar bulk appraisal. In Eastcreek, the appellee owned 30 units in a condominium complex. The owner presented evidence from an appraiser who applied “a forty percent discount to each unit because all of them were owned by one entity.” Id. at *1. “The rationale for this discount was that the condominiums could not be sold individually because of market conditions” and could only be sold in bulk. Id. The court found that this bulk-discounting method violated R.C. 5311.11. As the court explained:

Under the plain language of [R.C. 5311.11], each condominium unit is “deemed to be a separate parcel for all purposes of taxation and assessment of real property.” The board's use of a volume discount was based on the likelihood that all of the appellee's...