Fawn Lake Apts. v. Cuyahoga Cty. Bd. of Revision

• Citation: 710 N.E.2d 681,85 Ohio St.3d 609
• Decision Date: 16 June 1999
• Docket Number: No. 98-1516,98-1516
• Parties: FAWN LAKE APARTMENTS, Appellee, v. CUYAHOGA COUNTY BOARD OF REVISION; Olmsted Falls Board of Education, Appellant.
• Court: United States State Supreme Court of Ohio

Page 609

85 Ohio St.3d 609

710 N.E.2d 681

FAWN LAKE APARTMENTS, Appellee, v. CUYAHOGA COUNTY BOARD OF REVISION; Olmsted Falls Board of Education, Appellant.

No. 98-1516.

Supreme Court of Ohio.

Submitted March 17, 1999.

Decided June 16, 1999.

This appeal concerns a two hundred eighty-eight unit apartment complex located in Olmsted Falls that consists of two hundred sixty-four garden apartment units and twenty-four townhouse units. The valuation of this property for tax year 1991 was before this court in Fawn Lake Apts. v. Cuyahoga Cty. Bd. of Revision (1996), 75 Ohio St.3d 601, 665 N.E.2d 194.

For tax year 1994, the owner filed a real estate valuation complaint with the Cuyahoga County Board of Revision ("BOR") seeking a reduction in the assessed true value of $8,640,030. The owner claimed a true value of $7,000,000. The Olmsted Falls Board of Education ("BOE") filed a counter-complaint claiming a true value of $9,159,720. The BOR found the value assessed by the auditor to be correct. Fawn Lake filed an appeal with the BTA.

The real property consists of two parcels with a total area of 17.4 acres. In addition to the apartments and townhouses, the site contains a tennis court, a recreation facility with a fitness center, an outdoor swimming pool, and a paved parking area along with eighty-two carport spaces. The complex was constructed in two phases during 1971 and 1972. The only material change made to the property between 1991 and 1994 was an enlargement of the recreation facility.

At the hearing before the BTA, Fawn Lake presented the testimony and appraisal of real estate expert Robert J. Kocinski. His appraisal contained the traditional three approaches to value. Using the cost approach to value, he determined an indicated value of $7,600,000. Under the sales comparison approach to value he determined an indicated value of $7,500,000. Finally, his income approach to value indicated a value of $7,450,000. In his reconciliation of values, Kocinski stated that he felt that the income approach best reflected the motivation of a typical investor. Therefore, he used his income approach as the basis for valuing the real estate at $7,300,000, after deducting $150,000 for personal property.

To rebut Kocinski's valuation, the BOE presented the testimony and appraisal of Sam D. Canitia, also a real estate valuation expert. His appraisal presented only two approaches to value. Using a sales comparison approach, he determined an indicated value of $10,080,000. Using an income approach to value, he determined an indicated value of $10,133,000. Because of the close correlation between his two values, Canitia gave equal weight to each method and determined a value of $10,100,000. After deducting $86,400 for personal property, he determined the value of the real property to be $10,014,000.

The BTA reviewed the elements of each appraisal and found that the sales comparison approach of both appraisers was less reliable than their income approach. The BTA then compared the methods and numbers used by both appraisers for their net income approach. The BTA found the most significant differences between the numbers used by the two appraisers were in the percentage attributed to vacancy and credit loss, the amount of miscellaneous income and expenses, and the capitalization rates. After reviewing the basis for each of the figures used by the appraisers for their income approach, the BTA adopted Kocinski's valuation of $7,300,000 for the property as of January 1, 1994.

The BTA also rejected the BOE's contention that the BTA could not find a value lower than the 1991 valuation.

This cause is now before the court upon an appeal as of right.

Fred Siegel Co., L.P.A., Columbus and Annrita S. Johnson, Cleveland, for appellee.

Kolick & Kondzer, Daniel J. Kolick and John P. Desimone, Westlake, for appellant.

PER CURIAM.

When we reviewed this property for tax year 1991, the same two appraisers presented their estimates of value. For tax year 1991, Kocinski, on behalf of the owner, valued the property at $7,000,000, while Canitia, on behalf of the BOE, valued the property at $9,214,000. For tax year 1991, we affirmed the BTA's determination that the true value of the real property was $8,291,810.

At the hearing before the BTA for tax year 1994, both appraisers testified that the property values in the area had been increasing for the past several years. The increase in property values since 1991 is reflected by the increased valuations made by both appraisers for 1994.

However, because the final valuation determined by the BTA for 1994 was lower than that determined for 1991, the BOE has appealed. The BOE's first contention is that by allowing the BTA to determine a new valuation for tax year 1994, the 1991 valuation is being collaterally attacked. We disagree.

The BOE's contention is similar to that addressed by this court in Freshwater v. Belmont Cty. Bd. of Revision (1997), 80 Ohio St.3d 26, 684 N.E.2d 304. In Freshwater, as in this case, a true value for a prior year had been determined by the BTA. In subsequent years the net income increased by only $7,500. In an appeal for a subsequent year, the BTA substantially increased the valuation. We affirmed the BTA's determination of the increased true value, stating, "When the BTA makes a determination of true value for a given year, such determination is to be based on the evidence presented to it in that case, uncontrolled by the value assessed for prior years." Id. at 29, 684 N.E.2d at 307.

A hearing to determine value for January 1, 1994, is not a collateral attack upon the 1991 valuation. A collateral attack was described by this court as "an attempt to defeat the operation of a judgment, in a proceeding where some new right derived from or through the judgment is involved." Kingsborough v. Tousley (1897), 56 Ohio St. 450, 458, 47 N.E. 541, 542. A hearing to determine value for tax year 1994 is not an attempt to defeat the 19...