Sunset Square Ltd. v. Miami County Bd. of Revision

• Decision Date: 28 March 1990
• Docket Number: 88-2011,Nos. 88-1751,s. 88-1751
• Citation: 552 N.E.2d 632,50 Ohio St.3d 42
• Parties: SUNSET SQUARE LTD., Appellee, v. MIAMI COUNTY BOARD OF REVISION, Appellant. (Two Cases.)
• Court: Ohio Supreme Court

Page 42

50 Ohio St.3d 42

552 N.E.2d 632

SUNSET SQUARE LTD., Appellee, v. MIAMI COUNTY BOARD OF REVISION, Appellant. (Two Cases.)

Nos. 88-1751, 88-2011.

Supreme Court of Ohio.

Submitted March 13, 1990.

Decided March 28, 1990.

Fred Siegel Co., L.P.A., Fred Siegel, Cleveland, Karen H. Bauernschmidt and Todd W. Sleggs, for appellee.

Teaford, Rich, Belskis, Coffman & Wheeler and Jeffrey A. Rich, Columbus, for appellant.

PER CURIAM.

These consolidated appeals present two issues: first, the proper valuation of the property and second, the propriety of the BTA's refusal to accept additional testimony in this matter upon remand.

In Alliance Towers, supra, we stated that:

"[T]hese appeals present us with the opportunity to clarify the test to be used to determine the true value of federally subsidized housing under R.C. 5713.03. For the reasons set forth below, we conclude that the decision of the BTA in each case is unreasonable and unlawful." (Emphasis added.) Id. at 20-21, 523 N.E.2d at 830.

"True value" was described in State, ex rel. Park Investment Co. v. Bd. of Tax Appeals (1964), 175 Ohio St 410, 25 O.O.2d 432, 195 N.E.2d 908, as follows:

"The best method of determining value, when such information is available, is an actual sale of such property between one who is willing to sell but not compelled to do so and one who is willing to buy but not compelled to do so. * * * However, such information is not ususally available, and thus an appraisal becomes necessary. It is in this appraisal that the various methods of evaluation, such as income yield or reproduction cost, come into action. Yet, no matter what method of evaluation is used, the ultimate result of such an appraisal must be to determine the amount which such property should bring if sold on the open market.

"Therefore, the value, or true value in money of property for the purpose of taxation, is that amount which should result from a sale of such property on the open market. * * * " Id. at 412, 25 O.O.2d at 434, 195 N.E.2d at 910.

In our earlier consideration of Alliance Towers, supra, we discussed the significance of encumbrances in determining fair market value. We stated that "[t]hese tax and eminent domain cases demonstrate the decision by this court to view the fair market value of real property as uncomplicated by encumbrances. It is the fair market value of the property in its unrestricted form of title which is to be valued. It is to be valued free of the ownerships of lesser estates such as leasehold interests, deed restrictions, and restrictive contracts with the government. For real property tax purposes, the fee simple estate is to be valued as if it were unencumbered.

"We do not retreat from our decision in Canton Towers, Ltd. v. Bd. of Revision, supra [ (1983), 3 Ohio St.3d 4, 3 OBR 302, 444 N.E.2d 1027]. We observed in Canton Towers that the actual cost of construction, the 'controlled' contract rent, and the actual mortgage rate did not indicate the true value of the property." Id. at 23, 523 N.E.2d at 832.

We reiterated the standards to guide boards of revision, the Tax Commissioner and the BTA in considering encumbrances when making valuations:

"1. For real property tax purposes, the fee simple estate is to be valued as if it were unencumbered. (Wynwood Apartments, Inc. v. Bd. of Revision [1979], 59 Ohio St.2d 34, 13 O.O.3d 19, 391 N.E.2d 346, approved and followed.)

"2. An apartment property built and operated under the auspices of the Department of Housing and Urban Development is to be valued, for real property tax purposes, with due regard for market rent and current returns on mortgages and equities." Alliance Towers, supra, syllabus.

This was also the effect of the Canton Towers decision where, in...