Zeller-401 FX TIC, L.L.C. v. Franklin Cty. Bd. of Revision , 2021 Ohio 1504 ( 2021 )

[Cite as Zeller-401 FX TIC, L.L.C. v. Franklin Cty. Bd. of Revision, 2021-Ohio-1504.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Zeller-401 FX TIC LLC et al., :
Appellants-Appellants, : No. 20AP-334
(C.P.C. No. 19CV-7408)
v. :
(REGULAR CALENDAR)
Franklin County, Ohio :
Board of Revision et al.,
:
Appellees-Appellees.
:
D E C I S I O N
Rendered on April 29, 2021
On brief: Taft, Stettinius & Hollister LLP, and Stephen M.
Griffith, Jr., for appellants. Argued: Stephen M. Griffith, Jr.
On brief: [G. Gary Tyack], Prosecuting Attorney, and
William J. Stehle, for appellee Franklin County Auditor and
Board of Revision; Rich & Gillis Law Group, LLC, and
Karol C. Fox, for appellee Board of Education of the
Groveport Madison Local Schools. Argued: Karol C. Fox.
APPEAL from the Franklin County Court of Common Pleas
DORRIAN, P.J.
{¶ 1} Appellants, Zeller-401 FX TIC LLC and Zeller-FX TIC LLC, appeal from the
June 1, 2020 decision and entry from the Franklin County Court of Common Pleas
affirming the August 14, 20191 decision from appellee Franklin County Board of Revision
("Board") related to the valuation for real property tax purposes of a parcel of real estate
1 The notice of appeal in this case indicates it is appealing the August 14, 2019 decision of the Franklin County
Board of Revision. The record of this case contains the August 14, 2019 decision of the Board; however, the
common pleas court's June 1, 2020 decision and entry indicates that the matter before the court is the appeal
of a January 31, 2018 decision of the Board.
No. 20AP-334 2
located at 6840 Pontius Road, Groveport, Ohio in Franklin County, Ohio. For the following
reasons, we affirm.
I. Facts and Procedural History
{¶ 2} The property located at 6840 Pontius Road and at issue herein was the
subject of a recent decision rendered by this court on September 29, 2020 involving the
Board's decisions resolving complaints challenging the property values assessed by
appellee, Franklin County Auditor ("Auditor"), for tax years 2016 and 2017 for the
properties located at 6840 Pontius Road and 7070 Pontius Road and for tax year 2017 for
the property located at 6606 Pontius Road. G&I IX 6840 Pontius, L.L.C. v. Franklin Cty.
Bd. of Revision, 10th Dist. No. 19AP-661, 2020-Ohio-4660. Briefs in the instant matter
were filed prior the decision in G&I IX 6840 Pontius, however a notice of supplemental
authority was filed with this court on December 7, 2020 noticing the authority of G&I IX
6840 Pontius. The holding of G&I IX 6840 Pontius and applicability to the instant matter
will be discussed as it applies within the relevant assignment of error. The tax year at issue
before us now is 2018.
{¶ 3} The Auditor assessed the total value of the 6840 Pontius Road property for
tax year 2018 as $14,500,000. The Auditor allocated this total value as $3,049,200 in land,
$560,800 in taxable improvements, and $10,890,000 in improvements exempt from real
property taxation. Appellee Board of Education of the Groveport Madison Local Schools
("Groveport Madison") filed a complaint on March 21, 2019 with the Board, BoR No. 18-
900760, asserting the total value of 6840 Pontius Road should be increased to $31,600,000
due to a recent arm's-length sale of the property on March 8, 2018.
{¶ 4} Appellants filed a counter-complaint on May 28, 2018 seeking to establish
the fair market value of the land as $2,422,000, rather than the Auditor's assessed value of
$3,049,200, a proposed decrease of $627,200. Appellants further cross complained that
the Auditor's assessed taxable improvements of $560,000 should be considered tax
exempt. In support, appellants argued that all improvements should be deemed tax exempt
pursuant to a community reinvestment area ("CRA") real property tax exemption granted
by the city of Groveport.
No. 20AP-334 3
{¶ 5} The complaints were heard before the Board on July 30, 2019. At the
hearing, appellants agreed that the total value of the property is $31,600,000, but disputed
how to allocate that value to the land. In support of their position, appellants presented
testimony and an appraisal report from certified real estate appraiser Martin Hunter
regarding the fair market value of the land portion of the property. Hunter testified his
"assignment was to appraise the land vacant and free and clear and ready for development
as vacant land." (Tr. at 14.) Thus, Hunter appraised the land value of the property only and
did so as if the land was vacant and concluded that the value of the land for the 2018 tax
year was the same as Hunter provided for the 2017 tax year. Hunter did not offer any
appraisal of the value of improvements or the total fair market value of the property.
Appellants requested the Board allocate the land portion of the total value of the property
in accordance with Hunter's appraisal. Appellants further requested the Board determine
all the improvements to be exempt from real property taxation.
{¶ 6} In a session on August 9, 2019, the Board rendered a decision stating "[w]e
do not find the appraisal to reallocate the land based on the sale to lower the land and
increase the abated amount a reasonable cause." (Tr. at 29.) The Board furthered: "that
being said, the Auditor would recommend the sale price of 31,600,000, with the land
allocated as it was originally, and the improvements, the increase will go to the
improvements, and the 560,800 will remain taxable." (Tr. at 29-30.) Representatives for
the Franklin County Auditor, Franklin County Commissioner, and Franklin County
Treasurer agreed. Notice of the decision was sent by letter dated August 14, 2019.
{¶ 7} Appellants filed a timely notice of appeal on September 11, 2019 in the
common pleas court pursuant to R.C. 5717.05. In the common pleas court, appellants
conceded the Board's increase in the total value of the land to $31,600,000, but requested
the court determine the fair market value of the land to be $2,422,000 and the remaining
$29,178,000 be allocated to improvements. Appellants argued that the total $29,178,000
should be exempt from real property taxation as part of the city of Groveport CRA pursuant
to R.C. 3735.67. By e-mail dated May 22, 2020, the parties informed the common pleas
court they would stipulate to the admissibility of two documents and there was no need to
submit additional evidence. The stipulated admissible evidence included a certified
No. 20AP-334 4
property record from the Auditor and "Certification by City of Groveport, Ohio of the
project at 6840 Pontius Road meets the requirements of the community reinvestment
program in the City of Groveport." (Stip. of Admissible Evid. at 1.)
{¶ 8} On June 1, 2020, the common pleas court affirmed the decision of the Board
agreeing with Groveport Madison's arguments. Appellants have filed a timely notice of
appeal.
II. Assignments of Error
{¶ 9} Appellants assign the following two assignments of error for our review:
[I.] THE TRIAL COURT ERRED BY DETERMINING THAT
APPELLANTS HAD NOT DEMONSTRATED THAT THE
FAIR MARKET VALUE OF THE LAND AT ISSUE IN THIS
CASE WAS LESS THAN SUCH LAND'S ASSESSED VALUE.
[II.] THE TRIAL COURT ERRED BY DETERMINING THAT
THE AUDITOR COULD ASSESS AS TAXABLE
IMPROVEMENTS THAT A HOUSING OFFICER HAD
DETERMINED WERE EXEMPT UNDER REVISED CODE
SECTION 3735.67.
III. Analysis
A. Standard of Review
{¶ 10} Under R.C. 5717.05, a party may appeal a decision from a county Board of
revision directly to the common pleas court. In an appeal pursuant to R.C. 5717.05, " '[t]he
court of common pleas should consider the evidence heard by the board of revision, any
additional evidence heard at the court's discretion, and apply its independent judgment to
determine the taxable value of the subject property.' " 6800 Avery Rd., L.L.C. v. Franklin
Cty. Bd. of Revision, 10th Dist. No. 17AP-363, 2018-Ohio-822, ¶ 10, quoting Kaiser v.
Franklin Cty. Auditor, 10th Dist. No. 10AP-909, 2012-Ohio-820, ¶ 9, citing Black v. Bd. of
Revision of Cuyahoga Cty., 16 Ohio St.3d 11, 14 (1985); see also Tall Pines Holdings, Ltd.
v. Testa, 10th Dist. No. 04AP-372, 2005-Ohio-2963, ¶ 18 ("[A] trial court's analysis of the
evidence should be thorough and comprehensive. This review ensures that a court's final
determination is not a mere rubber stamping of the Board of Revision's determination, but
rather an independent investigation and complete reevaluation of a Board of Revision's
value determination."). " 'Upon further appeal to this court, our review is limited to a
No. 20AP-334 5
determination of whether the court of common pleas abused its discretion in determining
the matter.' " 6800 Avery at ¶ 10, quoting Kaiser at ¶ 9; see also Black at 14 ("The
independent judgment of the trial court should not be disturbed absent a showing of abuse
of discretion.").
{¶ 11} An abuse of discretion occurs where a decision is unreasonable, arbitrary, or
unconscionable. Blakemore v. Blakemore, 5 Ohio St.3d 217, 219 (1983). "A decision is
unreasonable if there is no sound reasoning process that would support that decision."
AAAA Ents., Inc. v. River Place Community Urban Redevelopment Corp., 50 Ohio St.3d
157, 161 (1990). An arbitrary decision is one that lacks adequate determining principle and
is not governed by any fixed rules or standard. Porter, Wright, Morris & Arthur, L.L.P. v.
Frutta Del Mondo, Ltd., 10th Dist. No. 08AP-69, 2008-Ohio-3567, ¶ 11. An unconscionable
decision may be defined as one that affronts the sense of justice, decency, or
reasonableness. Id.B. First Assignment of Error: Appellants Failed to Present Competent and
Probative Evidence to Support Appellants' Requested Reduction in Land
Value
{¶ 12} In their first assignment of error, appellants assert the common pleas court
erred when it determined that appellants had not demonstrated the fair market value of the
land at issue in this case was less than the land's assessed value.
{¶ 13} Before the Board, appellants sought a reduction in the land value of the
property located at 6840 Pontius Road. In support of its position before the Board,
appellants presented the testimony of Hunter, a certified general appraiser with the state
of Ohio. Hunter testified the land value of the property was $2,422,000, rather than the
assessed land value as determined by the Auditor, $3,049,200. Hunter's testimony was
based on his retrospective appraisal report. Prior to the start of testimony, counsel for
appellants noted Hunter's appraisal report was the same report submitted for the 2017 case
and Hunter was present before the Board to provide an update to his report. Hunter
clarified that although his report was dated January 1, 2017, he performed the appraisal for
the 2017 lien date in 2018. The record reflects Hunter's report was provided to appellants'
counsel on July 11, 2018. Ultimately, Hunter's opinion of the land value for the 2018 lien
date was the same opinion he had provided for the 2017 lien date.
No. 20AP-334 6
{¶ 14} Hunter's report did not provide a total fair market value of the property for
the tax year in question or value as to the land as it then existed. Upon questioning from
the Board, Hunter admitted he was not familiar with the recent sale of the property in
March 2018. Regarding his appraisal, Hunter testified he was asked to "appraise the land
[as if it were] vacant and free and clear and ready for development as vacant land." (Tr. at
14.) In doing so, Hunter appraised what he determined to be the useable land, assigning
no value to what was deemed by Hunter as unusable land. A board member noted the land
in question had improvements and asked Hunter about the value those improvements
would have to the land. Hunter declined to answer, stating that when asking an appraiser
to value land, the appraiser values the raw land that will support the improvements.
However, Hunter acknowledged that according to his appraisal report, he determined the
highest and best use of the property to be as improved.
{¶ 15} Appellants argue Hunter's appraisal was consistent with the standards for
determining the value of land under Ohio Adm.Code 5703-25-11. Appellants assert the
common pleas court acted unreasonably in the following ways: disregarding Hunter's
appraisal testimony and evidence, adopting the arguments presented by Groveport
Madison that were unsupported by evidence or authority, and by not providing the
evidence that was considered in reaching its value determination. Finally, appellants argue:
Because (i) neither the BOR nor the BOE advanced reasons
grounded in applicable law or the evidence before the BOR for
disregarding Zeller's appraisal testimony and evidence, and (ii)
the Trial Court adopted the BOE's arguments that are not
supported by any evidence or authority in order to conclude
Zeller's appraisal testimony and evidence is insufficient to
prove the decrease in land value that Zeller seeks, the Trial
Court's decision regarding that issue is unreasonable. The Trial
Court also did not state what evidence it considered relevant in
reaching its value determinations other than citing the BOE's
arguments.
(Appellants' Brief at 9-10.)
{¶ 16} The complaint process under R.C. 5715.19 "invokes a board of revision's
jurisdiction over the entire valuation and assessment of [a] parcel." Licking Hts. Local
Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 154 Ohio St.3d 157, 2018-Ohio-3255,
No. 20AP-334 7
¶ 19. The Board is not required to confine its determination to the value of land or the value
of improvements at the request of a complaining party. Id.{¶ 17} The Board rendered a decision in a session on August 9, 2019, finding:
This case was heard July 30th at [sic] 2019. The Board of
Education filed the original complaint on the basis of a sale in
the amount of $31,600,000 that occurred in close proximity to
tax lien date.
An attorney on behalf of the owner, as well as Mr. Martin
Hunter, a certified general appraiser, were here on behalf of the
ownership.
They testified that the highest and best of this really is as
vacant. They felt that the land value was too high, and they also
felt that the improvement value of 560,800 should be abated.
Mr. [Hunter] did an appraisal on the land as it stood; however,
we explained, first of all, that the improvements, or OBY,
paving, and fencing, et cetera, the 560,800, does not qualify to
be abated, therefore it will remain taxable.
We do not find the appraisal to reallocate the land based on the
sale to lower the land and increase the abated amount a
reasonable cause.
With that being said, the Auditor would recommend the sale
price of 31,600,000, with the land allocated as it was originally,
and the improvements, the increase will go to the
improvements, and the 560,800 will remain taxable.
(Tr. at 29-30.)
{¶ 18} Groveport Madison argues Hunter's testimony and appraisals were
insufficient to satisfy the burden of proving that the Auditor's allocations of the total
property values were incorrect. Groveport Madison supports its argument by pointing out
that Hunter's appraisal only assessed the value of the land portion of each property and was
not sufficiently reliable because the appraisal was not as of the tax lien date and was based
on sales of vacant, unimproved land that were not truly comparable to the subject property.
{¶ 19} The common pleas court stated in its recitation of facts:
The Appellants offered the testimony of their expert
concerning value. The Appellants actually do not take issue
No. 20AP-334 8
with the 31 million-dollar value. They merely believe that the
allocation of the value should be made in a way that minimizes
their taxable obligation. The record of the hearing noted that
the same property had been the subject of a prior 2016 hearing
wherein the Appellants had requested that the Board allocate a
value to the land separate and apart from the total value of the
property. (Tr.Hr., p. 6[)]
At the hearing Mr. Hunter, on behalf of the Appellants, testified
that the land value of the Property- based on his usable acreage
theory - was $2,422,000.00 as of January 1, 2017 and 2018.
(Hr.Tr., p. 12) The value of the improvements and whether the
improvements were in fact taxable was debated. However, Mr.
Hunter acknowledged that his comparable sales were vacant
land sales. (Hr.Tr., p. 13, line 22 - 24.)
(Decision and Entry at 2-3.)
{¶ 20} The common pleas court then acknowledged the arguments made by
appellants before the Board and before the court as to the value of the land portion of the
property and as to the tax exempt nature of the improvements portion of the property. The
court also quoted Ohio Adm.Code 5703-25-07 on which appellants rely to support their
argument that land and improvements should be valued separately and the method for
appraising true value.
{¶ 21} The common pleas court then summarized the applicable law. The court
noted the burden of proof is on the party requiring the increase or decrease in the property
value. (Decision and Entry at 3, citing Cleveland Bd. of Edn. v. Cuyahoga Cty. Bd. of
Revision, 68 Ohio St.3d 336 (1994).) The court quoted R.C. 5717.05 and the standard of
review the court must apply pursuant thereto; that R.C. 5717.05 contemplates a decision de
novo and a thorough and comprehensive analysis of the evidence. The court finally noted
that the property owner must establish by probative and competent evidence that the
Board's decision was in error. The court noted that "within [this] framework" it would
address the issues raised on appeal. (Decision and Entry at 6, citing Cincinnati v. Hamilton
Cty. Bd. of Revision, 69 Ohio St.3d 301, 303 (1994).)
{¶ 22} After providing the legal framework, the common pleas court addressed the
issues presented by appellants. First, the court acknowledged the Board was within its right
to reject the value of the land which was presented by Hunter as undeveloped land and
No. 20AP-334 9
valued at $2,422,000. Next, the court countered appellants contention that appellants
were the only party to present evidence as to the value of the property by recognizing that
Groveport Madison presented the best evidence of value through a recent arms-length
transaction. It appears the court agreed with Groveport Madison's position that appellants
bore the burden to prove the Auditor's original value was not only incorrect, but if incorrect,
what was the right amount. The common pleas court found appellants presented value as
to the land only and found this to be insufficient. Lastly, the court noted the burden was
always on appellants and observed that Hunter never gave testimony as to the value of the
land as it existed during the relevant tax year. The legal analysis employed by the common
pleas court makes clear that the court views Hunter's testimony and evidence as flawed and
appellants failed to provide argument on appeal that would convince the court otherwise.
{¶ 23} The court concluded:
This Court – after a review of the arguments, stipulations and
certified record – agrees with Groveport and AFFIRMS the
Board's decision.
This Court, after a thorough, independent and comprehensive
review of the evidence and arguments of the parties,
AFFIRMS the [Board's decision].
(Emphasis sic.) (Decision and Entry at 7.)
{¶ 24} We observed in G&I IX 6840 Pontius that a party appealing a board of
revision's decision bears the burden of proving its right to the change in value sought and
must present competent and probative evidence supporting the value asserted. G&I IX
6840 Pontius at ¶ 24, citing 6800 Avery at ¶ 11. See also CABOT III-OH1M02, L.L.C. v.
Franklin Cty. Bd. of Revision, 10th Dist. No. 13AP-232, 2013-Ohio-5301, ¶ 26 ("When a
party appeals a board of revision's decision, the appellant, whether a taxpayer or a board of
education, bears the burden of proving its right to a reduction or increase in the board of
revision's determination of value. To prevail on appeal, the appellant must present
competent and probative evidence supporting the value the appellant asserts."). (Internal
citations omitted.) As explained above, the common pleas court must apply its independent
judgment to the evidence considered by the Board, and any additional evidence accepted
by the court, and determine the taxable value of the property. 6800 Avery at ¶ 10. Our
No. 20AP-334 10
review is limited to determining whether the common pleas court abused its discretion in
making that determination. Id.{¶ 25} In this case, the common pleas court's recitation of facts, acknowledgment of
both parties' arguments, summary of applicable law and legal analysis reflect that the court
considered the testimony of Hunter and the appraisal. We do not find that references to
Groveport Madison's arguments within the court's legal analysis reflect a lack of de novo
review. The common pleas court addressed Hunter's testimony and appraisals, stated that
it independently reviewed Hunter's testimony and appraisal report, however, the court
agreed with the arguments of Groveport Madison and found the evidence was not sufficient
to prove appellants' requested decrease in land value. G&I IX 6840 Pontius at ¶ 23. Thus,
the common pleas court fulfilled its statutory duty to independently consider and weigh the
record evidence and apply its independent judgment. Under these circumstances, we
cannot find an abuse of discretion by the common pleas court. See CABOT III-OH1M02 at
¶ 29-31.
{¶ 26} Accordingly, we overrule appellants' first assignment of error.
C. Second Assignment of Error: Appellants Failed to Present Sufficient
Evidence to Establish that all Improved Land was Tax Exempt
{¶ 27} In their second assignment of error, appellants argue the common pleas court
erred by determining that the Auditor could assess as taxable improvements those
improvements that a housing officer had determined were exempt under R.C. 3735.67.
{¶ 28} In addition to seeking a lower land value, appellants cross-complained to the
Board that the Auditor's assessed taxable improvements of $560,000 should be considered
tax exempt under the CRA real property tax exemption with the city of Groveport.
{¶ 29} Appellants argue the Auditor assessed certain improvements as taxable that
were determined to be exempt by the housing officer of the city of Groveport. Appellants
refer to the application for tax exemption submitted to the city of Groveport, stipulated by
the parties as admissible evidence, to support their position that the improvements taxed
by the Auditor are actually exempt under the CRA. Citing to R.C. 3735.67, appellants claim
there is no legal basis for treating differently improvements from other structures for
purposes of determining eligibility for tax exemption within a municipal CRA.
No. 20AP-334 11
{¶ 30} Under R.C. 3735.67(A), the owner of real property located in a CRA and
eligible for tax exemption under a municipal resolution describing the CRA may apply for
exemption from real property taxation for a percentage of the value of a new structure or
the increased value of a remodeled structure. The municipal resolution defining the CRA
may limit the type of construction or renovation that will qualify for tax-exempt treatment:
The legislative authority may stipulate in the resolution that
only new structures or remodeling classified as to use as
commercial, industrial, or residential, or some combination
thereof, and otherwise satisfying the requirements of section
3735.67 of the Revised Code are eligible for exemption from
taxation under that section. If the resolution does not include
such a stipulation, all new structures and remodeling satisfying
the requirements of section 3735.67 of the Revised Code are
eligible for exemption from taxation regardless of
classification.
R.C. 3735.66. Thus, as we noted in G&I IX 6840 Pontius, the eligibility of a property located
within a CRA for tax exemption may depend on the terms of the resolution defining the
CRA. G&I IX 6840 Pontius at ¶ 26-28.
{¶ 31} In G&I IX 6840 Pontius, this court held:
In this case, appellants submitted a copy of the application for
tax exemption under the CRA program for each property,
showing approval by the city administrator for the city of
Groveport. Appellants argue that because the city
administrator certified new construction on the properties as
tax exempt under the CRA program, the Auditor had no
authority to classify a portion of the improvements to the
property as taxable. The Board's valuation decision for each
property adopted the Auditor's determination that a portion of
the property's improved value was taxable. Appellants bore the
burden of demonstrating to the common pleas court that they
were entitled to the value change requested—i.e., having the
entire improved value of each property treated as tax exempt.
6800 Avery at ¶ 11. As set forth above, under R.C. 3735.66, the
municipal resolution defining a CRA may limit what types of
structures are eligible for tax exemption under a CRA program.
Appellants did not submit copies of the municipal resolution
describing the CRA where the properties were located;
therefore, the common pleas court was unable to review that
resolution and independently assess the Auditor's
determination that some portion of the improvements to the
No. 20AP-334 12
properties were subject to taxation. Under these
circumstances, we cannot conclude that the common pleas
court abused its discretion by finding appellants failed to
present sufficient evidence to establish the changes in value
they sought.
Id. at ¶ 28.
{¶ 32} This court's holding in G&I IX 6840 Pontius applies here as well. Because
appellants' failed to present the municipal resolution describing the CRA where the
property is located, the common pleas court was unable to review the resolution and
independently assess the Auditor's determination that some portion of the improvements
to the property were subject to taxation.2 Id.
{¶ 33} Accordingly, we overrule appellants' second assignment of error.
IV. Conclusion
{¶ 34} For the foregoing reasons, we overrule appellants' two assignments of error
and affirm the judgment of the Franklin County Court of Common Pleas.
Judgment affirmed.
BEATTY BLUNT and BROGAN, JJ., concur.
BROGAN, J., retired, formerly of the Second Appellate District,
Assigned to active duty under authority of the Ohio
Constitution, Article IV, Section 6(C).
2The court notes that the Auditor's representative, board member Ms. Holdreith, reviewed the municipality
agreement during the Board hearing; however, the agreement was not presented as evidence and was not
available for review by the common pleas court. The record reflects there was some question by appellants'
counsel as to the existence of the improvements on the property as it currently exists.