Youngstown Sheet & Tube Co. v. Mahoning County Bd. of Revision

• Decision Date: 17 June 1981
• Docket Number: No. 80-1361,80-1361
• Citation: 66 Ohio St.2d 398,422 N.E.2d 846,20 O.O.3d 349
• Parties: , 20 O.O.3d 349 YOUNGSTOWN SHEET & TUBE COMPANY, Appellant and Cross-Appellee, v. MAHONING COUNTY BOARD OF REVISION et al., Appellees and Cross-Appellants.
• Court: Ohio Supreme Court

Page 398

66 Ohio St.2d 398

422 N.E.2d 846, 20 O.O.3d 349

YOUNGSTOWN SHEET & TUBE COMPANY, Appellant and Cross-Appellee, v. MAHONING COUNTY BOARD OF REVISION et al., Appellees and Cross-Appellants.

No. 80-1361.

Supreme Court of Ohio.

June 17, 1981.

Syllabus by the Court

1. The Board of Tax Appeals is not required to adopt the appraisal methodology espoused by any expert or witness.

2. The Board of Tax Appeals may consider pre- and post-tax lien date factors that affect the true value of the taxpayer's property on the tax lien date.

3. The Board of Tax Appeals must break down aggregate multi-parcel valuations into individualized parcel values before certifying its order to the county auditor.

In this cause appellant and cross-appellee, Youngstown Sheet & Tube Company (hereinafter "Youngstown"), appeals from a decision of the Board of Tax Appeals (hereinafter "BTA") that established the true value of Youngstown's Mahoning County steel production complex as of January 1, 1977, the tax lien date for the tax year in question, 1977. Appellees and cross-appellants, Mahoning County Board of Revision (hereinafter "MCBR") and the county auditor, also challenge the BTA's valuation of Youngstown's property.

The subject property consists of approximately 416 acres of land on which are situated some 200 major structures and numerous minor structures. The area under roof exceeds 6.2 million square feet. As of the January 1, 1977 tax lien date, most but not all of the afore-described property was devoted to steel production. In September 1977, however, Youngstown announced imminent plant closings. Youngstown's decision to shut down the Mahoning County steel works was based on the following factors: (1) Several consecutive years of unprofitable operations; (2) the advanced age and technological obsolescence of the physical facilitites; (3) Youngstown's unwillingness to finance a necessarily massive modernization program; (4) intense foreign competition; and (5) the imposition of stringent environmental protection standards. ¹

This case began in 1978 when Youngstown filed complaints with the MCBR. Youngstown contended that the 1977 real estate valuations of its steelmaking facilities were excessive and sought a downward adjustment in valuation. The MCBR refused to grant Youngstown a reduction in value. Thereupon Youngstown appealed to the BTA. After viewing the subject properties and conducting five days of hearings wherein expert testimony and extensive documentation were presented, the BTA determined that as of January 1, 1977, the true value of the subject property was $17,774,000. The BTA then ordered a copy of its decision and order certified to the county auditor.

In reaching the $17,774,000 valuation, the BTA declined to adopt the opinions regarding true value expressed by the appraisers of the respective parties. The BTA valuation substantially exceeded the $9,070,000 value placed on the subject property by Youngstown's appraisers, but the BTA figure represented an amount considerably less than the $27,898,700 value placed on the property by the county's appraisers. The wide divergence of the parties' appraisals of true value derived from the use of different appraisal premises. Youngstown's appraisal firm predicated its valuation on a "market value" standard ² that assumed that steelworking was no longer the highest and best use of the subject property. ³ MCBR's appraisers utilized a "cost" standard ⁴ of valuation which was premised on the continued use of the property for steel production. Each side argued that the BTA was bound to adopt its preferred appraisal method, and hence its appraised value, as the exclusive basis of valuation, but, as noted, the BTA declined to adopt either proposed methodology or valuation.

The cause is now before this court pursuant to an appeal and cross-appeal as of right.

Porter, Wright, Morris & Arthur and Roger F. Day, Columbus, for appellant and cross-appellee.

Miller & Noga, Ronald B. Noga, Terry M. Miller, Columbus, Vicent E. Gilmartin and Christopher Varley, Youngstown, for appellees and cross-appellants.

SWEENEY, Justice.

The sole question presented is whether the decision of the BTA was unreasonable or unlawful. R.C. 5717.04. We do not sit either as a "super" Board of Tax Appeals or as a trier of fact de novo. 3535 Salem Corp. v. Lindley (1979), 58 Ohio St.2d 210, 212, 389 N.E.2d 508.

Youngstown contends that the BTA's valuation of the subject property was, under the circumstances of this case, unreasonable and unlawful because said valuation was not ascertained by determining true value in terms of the probable selling price of the property in an arm's length transaction between a willing buyer and willing seller. See State, ex rel. Park Investment Co. v. Bd. of Tax Appeals (1964), 175 Ohio St. 410, 412, 195 N.E.2d 908. Appellees and cross-appellants contend that the BTA's valuation was unlawful and unreasonable because the BTA did not find that the highest and best use of the subject property on the tax lien date was as a steelmaking facility. Appellees and cross-appellants contend further that the BTA erred in considering events subsequent to the January 1, 1977 tax lien date in reaching its valuation. The final issue raised by appellees and cross-appellants is whether the BTA must allocate value according to parcel number.

I.

Cardinal Federal S. & L. Ass'n. v. Bd of Revision (1975), 44 Ohio St.2d 13, 336 N.E.2d 433, paragraphs two, three and four of the syllabus, set forth three basic propositions that are relevant to this cause:

"The Board of Tax Appeals is not required to adopt the valuation fixed by any expert or witness. (Hibschman v. Bd. of Tax Appeals, 142 Ohio St. 47, 49 N.E.2d 949; Benedict v. Bd. of Revision, 170 Ohio St. 62, 162 N.E.2d 479; Shaker Square Co. v. Bd. of Revision, 170 Ohio St. 369, 165 N.E.2d 431, approved and followed.)

"The Board of Tax Appeals is vested with wide discretion in determining the weight to be given to evidence and the credibility of witnesses which come before the board. (American Steel & Wire Co. of New Jersey v. Bd. of Revision, 139 Ohio St. 388, 40 N.E.2d 426; Shaker Square Co. v. Bd of Revision, 170 Ohio St. 369, 165 N.E.2d 431; Benedict v. Bd. of Revision, 170 Ohio St. 62, 162 N.E.2d 479, approved and followed.)

"The fair market value of property for tax purposes is a question of fact, the determination of which is primarily within the province of the taxing authorities, and this court 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. (Bd. of Revision v. Fodor, 15 Ohio St.2d 52, 239 N.E.2d 25, approved and followed.)"

Youngstown structures its argument to avoid a direct collision with the Cardinal principles by controverting the precise method used by the BTA to determine value instead of directly disputing the end result of the methodology which is, of course, a dollar amount valuation. Youngstown summarizes its position in this manner:

" * * * (T)he 'market' approach is the only appraisal method applicable for determining the fair market value (true value) of the old, outmoded Youngstown plants. No other appraisal technique can possibly indicate the approximate amount of money that a perspective (sic) purchaser would have paid for the plants in 1977. * * * (o)nly the American Appraisal (Youngstown's appraiser) Reports introduced at trial valued all the Youngstown properties by the 'market approach.' * * * Since there was no other acceptable evidence of true value whatever before the Board from which it could ascertain fair market value, the Board should have adopted the American Appraisal Valuations." (Emphasis deleted.)

Even though Youngstown couches its argument in methodological terms, this argument taken to its logical conclusion would require the BTA to adopt the valuation fixed by Youngstown's experts. Such a requirement would be contrary to the rules expressed in paragraphs two and three of the syllabus in Cardinal, supra. We decline to bind the BTA to a particular method of valuation because the imposition of rigid methodological strictures would necessarily impinge upon the BTA's wide discretion to weigh evidence and assess the credibility of witnesses.

The BTA did not specifically state whether it based its valuation of the subject property on the "market" or the "cost" approach to valuation; nor was it required to do so. In American Steel & Wire Co. v. Bd. of Revision (1942), 139 Ohio St. 388, 40 N.E.2d 426, this court, at page 391, 40 N.E.2d 426, stated that:

"With respect to these (valuation) methods it should be observed that, while reproduction cost, depreciation, opinions as to market value, and income may be given proper consideration, true value is a question of fact to be determined by the taxing authorities. It does not appear from the record that the Board of Tax Appeals applied any particular method exclusively but merely determined the true value of the buildings on each parcel from all the evidence. This course was in conformity to law."

The BTA made its true value determination "(a)fter carefully considering the entire record," which is in essence the same standard this court approved in American Steel & Wire Co., supra. This approach is reasonable and lawful; Youngstown's contentions to the contrary are without merit.

In short, the Board of Tax Appeals is not required to adopt the appraisal methodology espoused by any expert or witness.

II A.

Appellees and cross-appellants' first and third propositions of law call into question the factual underpinnings of the BTA valuation. ⁵ MCBR contends that "it was the responsibility of the Board of Tax Appeals * * * to place itself in the center of the Youngstown Sheet & Tube complex as of January 1, 1977; to determine the highest and best use of the property as of that date; and to value the...