Summary
affirming a BTA valuation based on actual sales of individual units not owned by taxpayer, even though taxpayer's appraiser sought aggregate valuation of 175 townhouse units
Summary of this case from Pingue v. Franklin Bd. of RevisionOpinion
No. 89-855
Submitted May 17, 1990 —
Decided September 12, 1990.
Taxation — Real property — Valuation — Fair market value is a fact question for tax authorities — Decision not disturbed by courts, when — Assessment based on most recent sale price — Constitutionality.
APPEAL from the Board of Tax Appeals, No. 87-G-12.
On tax listing day, January 1, 1985, Banbury Village, a residential complex in Warrensville Heights, Cuyahoga County, consisted of three hundred seventy-four townhouse units and seventy-two garage units, of which appellant, Banbury Village, Inc., owned one hundred seventy-five townhouse units and twenty-one garage units ("subject property"). The complex was constructed in 1960 and 1961 as townhouse rental units. In 1972 appellant acquired the complex and converted it to condominium use. Initially appellant held the subject property for sale but discontinued sales efforts in 1976 due to slow sales. Since then appellant has utilized the subject property as townhouse rental units.
During 1982, 1983, and 1984 there were twenty-six sales of Banbury Village units, none of which involved appellant. During the fifteen-month period from June 1985 through September 1986 there were six sales of condominium units, likewise not involving appellant.
The Cuyahoga County Auditor determined that the true value of the subject property for 1985 was $3,546,200. On complaint the Board of Revision of Cuyahoga County agreed with this value.
Before the Board of Tax Appeals ("BTA"), in addition to the statutory transcript, appellant presented the testimony of its real estate appraiser, Richard Van Curen. Van Curen utilized the income approach to valuation and estimated that the true value of the subject property was $2,400,000. In addition, he examined "comparable sales" of similar apartments with complete ownership to verify his valuation.
Van Curen believed that the highest and best use of the subject property was its continued use as rental units, that there was no market for individual sale of such units and that a bulk sale of all one hundred seventy-five units owned by appellant would be at a price less than the total value of the subject property as rental units.
Van Curen did not take into consideration what an individual unit might sell for since the property had been held exclusively as rental property. Furthermore, he was not aware that the six units had been sold in 1985 and 1986.
Van Curen described the history of the complex and the changes that had occurred during appellant's ownership: the tennis court, playground and swimming pool had been abandoned and, following the bankruptcy of the Condominium Owners Association, use of the recreational building had been discontinued.
Appellees relied upon cross-examination of Van Curen, the statutory transcript filed by the board of revision, and the deeds of the six sales in 1985 and 1986.
The BTA stated that Van Curen's income approach was premised upon an incomplete, flawed analysis of highest and best use and refused to accord his testimony much weight. Instead, it relied on actual sales, noting that: "The actual sales and the auditor's appraised values are not inconsistent * * * and, in fact, are mutually supportive." Therefore, the BTA confirmed the $3,546,200 value determined by the auditor.
Fred Siegel Co., L.P.A., Fred Siegel, Karen Bauernschmidt and Todd W. Sleggs, for appellant.
John T. Corrigan, prosecuting attorney, and Timothy J. Kollin, for appellees Cuyahoga County Board of Revision and Auditor.
Armstrong, Gordon, Mitchell Damiani, Timothy J. Armstrong, Michael L. Gordon and Roy F. Hogan, for appellee Warrensville Heights Board of Education.
Appellant alleges that the BTA's decision was unreasonable and unlawful because it was not based upon the highest and best use of the subject property, because the BTA's valuation was based upon actual sales of other property, and because appellant's constitutional rights were not protected.
Appellees argue that the decision of the BTA is supported by substantial probative evidence and is reasonable and lawful, and that appellant's constitutional rights have not been violated. We agree.
The BTA's determination of true value is a question of fact and will not be disturbed by this court except upon an affirmative showing that the decision is unreasonable or unlawful. Bd. of Revision of Cuyahoga Cty. v. Fodor (1968), 15 Ohio St.2d 52, 44 O.O. 2d 30, 239 N.E.2d 25. We will not substitute our judgment for that of the BTA on factual issues, Buckeye Power, Inc. v. Kosydar (1973), 35 Ohio St.2d 137, 64 O.O. 2d 82, 298 N.E.2d 610, and we will not overrule its findings of fact if based upon sufficient probative evidence. Hawthorn Mellody, Inc. v. Lindley (1981), 65 Ohio St.2d 47, 19 O.O. 3d 234, 417 N.E.2d 1257.
Moreover, the BTA is not required to adopt the opinion of any expert but has the authority to determine the facts. Snider v. Limbach (1989), 44 Ohio St.3d 200, 542 N.E.2d 647.
Although the only testimony presented to the BTA was that of appellant's appraiser, it was not necessary for the BTA to accept his approach to value or to agree with his suggested valuation. Appellant's expert witness admitted on cross-examination that he had not relied on sales of units by owners other than appellant within Banbury Village and that he had not attempted to independently appraise any of the separate units. Rather, Van Curen developed total value from the application of his capitalization rate to income received and expenses incurred. He then divided this amount by the number of condominium townhouse units owned by appellant. The result, $13,714, was less than the original sale price of units, which ranged from $18,000 to $22,000. This, according to Van Curen, was an additional indication of the decline in value of the subject property.
The BTA, on the other hand, received evidence of deeds reflecting sale prices between $19,500 and $26,000 per unit. There is no suggestion that the sale prices shown in the deeds related to anything other than arm's-length transactions. During the evidentiary hearing before the BTA, appellant objected to the admission of the latest three of the deeds on the basis that they were for sales too remote in time from tax lien date, January 1, 1985. Without deciding whether these three transactions occurred within a reasonable time of tax lien date we find that all six deeds constitute some evidence of the true value of the subject property.
Appellant's constitutional arguments based upon uniformity of taxation, due process, and the equal protection of the laws are not persuasive.
First, as to uniformity of taxation, the BTA's determination of true value was in compliance with Section 2, Article XII of the Ohio Constitution and R.C. 5713.01. 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.
Next, appellant's argument that its property was taken without due process on the contention that the BTA's assessment was "arbitrarily made and grossly excessive" as advanced in Great Northern Ry. v. Weeks (1936), 297 U.S. 135, fails because the facts here are easily distinguishable. The BTA's determination was neither arbitarily made nor grossly excessive.
Finally, there is no factual or decisional support for appellant's claim of denial of equal protection of the law under the Constitution of the United States. The United States Supreme Court, in Allied Stores of Ohio v. Bowers (1959), 358 U.S. 522, 527, stated:
"* * * [The state] is not required to resort to close distinctions or to maintain a precise, scientific uniformity with reference to composition, use or value. * * * [Citations omitted.] `To hold otherwise would be to subject the essential taxing power of the State to an intolerable supervision, hostile to the basic principles of our Government and wholly beyond the protection which the general clause of the Fourteenth Amendment was intended to assure.' Ohio Oil Co. v. Conway * * * [1930], 281 U.S. [146], at 159." See, also, Meyer v. Cuyahoga Cty. Bd. of Revision (1979), 58 Ohio St.2d 328, 335, 12 O.O. 3d 305, 309, 390 N.E.2d 796, 800.
We find no violation of appellant's constitutional rights and we find that the decision of the BTA is supported by substantial probative evidence, is reasonable and lawful and it is hereby affirmed.
Decision affirmed.
MOYER, C.J., SWEENEY, HOLMES, DOUGLAS, WRIGHT, H. BROWN and RESNICK, JJ., concur.