Opinion
No. 19AP-661 No. 19AP-662 No. 19AP-663 No. 19AP-664
09-29-2020
G&I IX 6840 Pontius LLC, Appellant-Appellant, v. Franklin County, Ohio Board of Revision et al., Appellees-Appellees. G&I IX 7070 Pontius LLC, Appellant-Appellant, v. Franklin County, Ohio Board of Revision et al., Appellees-Appellees. Zeller-401 FX TIC LLC et al., Appellants-Appellants, v. Franklin County, Ohio Board of Revision et al., Appellees-Appellees. Cabot IV-OH1B02, LLC, Appellant-Appellant, v. Franklin County, Ohio Board of Revision et al., Appellees-Appellees.
On brief: Taft, Stettinius & Hollister LLP, and Stephen M. Griffith, Jr., for appellants. On brief: Rich & Gillis Law Group, LLC, Mark H. Gillis, and Karol C. Fox, for appellee Board of Education of the Groveport Madison Local Schools; Ron O'Brien, Prosecuting Attorney, and William J. Stehle, for appellees Franklin County Auditor and Board of Revision.
(C.P.C. No. 18CV-9125) (REGULAR CALENDAR) (C.P.C. No. 18CV-9132) (C.P.C. No. 18CV-9133) (C.P.C. No. 18CV-9131) DECISION On brief: Taft, Stettinius & Hollister LLP, and Stephen M. Griffith, Jr., for appellants. On brief: Rich & Gillis Law Group, LLC, Mark H. Gillis, and Karol C. Fox, for appellee Board of Education of the Groveport Madison Local Schools; Ron O'Brien, Prosecuting Attorney, and William J. Stehle, for appellees Franklin County Auditor and Board of Revision. APPEALS from the Franklin County Court of Common Pleas DORRIAN, J.
{¶ 1} Appellants G&I IX 6840 Pontius LLC ("G&I 6840"), G&I IX 7070 Pontius LLC ("G&I 7070"), Zeller-401 FX TIC LLC ("Zeller-401"), Zeller-FX-TIC LLC ("Zeller"), and Cabot IV-OH1B02, LLC ("Cabot") (collectively, "appellants") appeal from a judgment of the Franklin County Court of Common Pleas affirming orders of appellee Franklin County Board of Revision ("the Board") related to the values of three properties in Franklin County, Ohio. For the following reasons, we affirm.
I. Facts and Procedural History
{¶ 2} These appeals involve the Board's decisions resolving complaints challenging the property values assessed by appellee Franklin County Auditor ("the 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. We begin by summarizing the history of those complaints.
A. Tax Year 2016 Property Valuations
{¶ 3} The Auditor assessed the value of the property located at 6840 Pontius Road for tax year 2016 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 with the Board asserting the total value of 6840 Pontius Road should be increased to $27,964,000 due to a recent arm's-length sale ("BoR Case 16-900662"). G&I 6840 filed a counter-complaint in BoR Case 16-900662 asserting the total property value should not be changed. Appellee John Gelhaus ("Gelhaus") also filed a complaint asserting the total valuation of the property should be increased to $27,963,954 due to a recent arm's-length sale ("BoR Case 16-529"). Groveport Madison filed a counter-complaint in BoR Case 16-529 asserting the total value of the property should be increased to $27,964,000 due to a recent arm's-length sale.
{¶ 4} The Auditor assessed the value of the property located at 7070 Pontius Road for tax year 2016 as $18,700,300. The Auditor allocated this total value as $2,698,300 in land, $518,800 in taxable improvements, and $15,483,200 in improvements exempt from real property taxation. Groveport Madison filed a complaint with the Board asserting the total value of the property should be increased to $25,137,100 due to a recent arm's-length sale ("BoR Case 16-900657"). G&I 7070 filed a counter-complaint in BoR Case 16-900657 asserting the total property value should not be changed. Gelhaus also filed a complaint asserting the total value of the property should be increased to $25,137,026 due to a recent arm's-length sale ("BoR Case 16-530"). Groveport Madison filed a counter-complaint in BoR Case 16-530 asserting the total value of the property should be increased to $25,137,100 due to a recent arm's-length sale.
{¶ 5} The Board conducted a hearing in Ohio 2017 on BoR Cases 16-900662 and 16-529, relating to 6840 Pontius Road, and BoR Cases 16-900657 and 16-530, relating to 7070 Pontius Road. Following the hearing, the Board issued decisions in each case on July 12, 2017 assessing total values of $27,964,000 for 6840 Pontius Road and $25,137,000 for 7070 Pontius Road for tax year 2016. G&I 6840 and G&I 7070 appealed the Board's July 12, 2017 decisions to the common pleas court. B. Appeals of Board's July 12, 2017 Valuation Decisions
{¶ 6} On appeal to the common pleas court, G&I 6840 and G&I 7070 argued the Board erred by failing to address their counter-complaints, which they alleged sought to have total property values allocated between land and improvements. In Ohio 2018, the common pleas court issued a decision concluding the Board had jurisdiction to allocate the total property values between land and improvements and erred by failing to address the counter-complaints seeking such allocations. The common pleas court declined to make the allocations in the first instance and remanded the matters to the Board. G&I IX 6840 Pontius, LLC v. Franklin Cty. Bd. of Revision, Franklin C.P. No. 17CV-7103 (Jan. 16, 2018). That decision was not appealed to this court.
The appeals of the Board's July 12, 2017 decisions were consolidated by the common pleas court. --------
C. Tax Year 2017 Property Valuations
{¶ 7} The Auditor's assessment of the value of 6840 Pontius Road for tax year 2017 remained unchanged at $14,500,000, allocated as $3,049,200 in land, $560,800 in taxable improvements, and $10,890,000 in improvements exempt from real property taxation. Groveport Madison filed a complaint with the Board asserting the total value of 6840 Pontius Road for tax year 2017 should be increased to $27,964,000 due to a recent arm's-length sale ("BoR Case 17-900554"). Zeller and Zeller 401 also filed a complaint asserting the $560,800 of improvements that were treated as taxable were tax-exempt under a community reinvestment area ("CRA") tax exemption granted by the city of Groveport ("BoR Case 17-4874").
{¶ 8} The Auditor's assessment of the total value of 7070 Pontius Road for tax year 2017 increased to $20,180,000. The Auditor allocated this total value as $2,698,300 in land, $517,400 in taxable improvements, and $16,964,300 in improvements exempt from real property taxation. Groveport Madison filed a complaint with the Board asserting the total value of the property should be increased to $25,137,100 due to a recent arm's-length sale ("BoR Case 17-901320"). G&I 7070 also filed a complaint asserting the $517,400 of improvements that were treated as taxable were tax-exempt under a CRA tax exemption granted by the city of Groveport ("BoR Case 17-4872").
{¶ 9} The Auditor assessed the value of the property located at 6606 Pontius Road for tax year 2017 as $43,370,000. The Auditor allocated this total value as $5,260,700 in land, $668,600 in taxable improvements, and $37,440,700 in improvements exempt from real property taxation. Cabot filed a complaint with the Board asserting the $668,600 of improvements that were treated as taxable were tax-exempt under a CRA tax exemption granted by the city of Groveport ("BoR Case 17-4870").
D. Board Review of Tax Year 2016 Complaints on Remand and Tax Year 2017 Complaints
{¶ 10} The Board considered the tax year 2016 complaints, on remand from the common pleas court, and all the tax year 2017 complaints at a hearing on September 20, 2018, where appellants presented testimony from a certified real estate appraiser, Martin Hunter, regarding the fair market value of the land portion of each property. Appellants provided the Board with copies of appraisal reports prepared by Hunter. Hunter only appraised the land value of each property and did not offer any appraisal of the improved value or the total fair market value of any of the properties. Appellants requested the Board allocate the land portion of the total value of each property in accordance with Hunter's appraisals. Appellants further requested the Board allocate all of the improved value of each property as exempt from real property taxation. At a subsequent meeting on September 25, 2018, the Board voted to increase the total value of 6840 Pontius Road and 7070 Pontius Road for tax years 2016 and 2017, with the increase in value attributed to the tax-exempt improved value of each property. The Board also voted to retain the Auditor's determinations regarding the taxable portions of the improved value of each property. On Ohio 3, 2018, the Board issued decisions setting the values of the properties as follows: $27,964,000 for 6840 Pontius Road for tax year 2016 (BoR Cases 16-529 and 16-900662) and tax year 2017 (BoR Cases 17-4874 and 17-900554), $25,137,000 for 7070 Pontius Road for tax year 2016 (BoR Cases 16-530 and 16-900657) and tax year 2017 (BoR Cases 17-4872 and 17-901320), and $43,370,000 for 6606 Pontius Road for tax year 2017 (BoR Case 17-4870). E. Appeal of Board's Ohio 3, 2018 Valuation Decisions
{¶ 11} Appellants timely appealed the Board's decisions to the common pleas court, and the appeals were consolidated. Appellants argued on appeal the Board erred by holding that a portion of each property's improved value was subject to real property taxation. Appellants requested the court determine that all the improved value of each property was exempt from real property taxation as part of the city of Groveport CRA pursuant to R.C. 3735.67.
{¶ 12} The common pleas court issued a judgment affirming the Board's decisions. The court found the Board performed separate allocations for the value of each property and expressly determined the increase in the total market value for 6840 Pontius Road and 7070 Pontius Road would be attributed to the tax-exempt CRA portion of the improvements. The court further held that appellants' evidence was insufficient to prove the decreases in land value they sought. The court also found appellants failed to meet the burden of showing the Auditor erred by determining that part of each property's improved value was subject to real property taxation.
III. Assignments of Error
{¶ 13} Appellants appeal and assign the following three assignments of error for our review:
[I.] THE TRIAL COURT ERRED BY DETERMINING THAT THE BOARD OF REVISION'S DECISIONS IN THESE CASES ALLOCATED THE ASSESSED PROPERTY VALUE BETWEEN LAND AND IMPROVEMENTS.
[II.] THE TRIAL COURT ERRED BY DETERMINING THAT NO APPELLANT HAD DEMONSTRATED THAT THE FAIR MARKET VALUE OF ITS PARCEL OF THE LAND AT ISSUE IN THESE CASES WAS LESS THAN SUCH PARCEL'S ASSESSED VALUE.
[III.] 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.
IV. Analysis
A. Standard of Review
{¶ 14} 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., LLC 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. 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 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 v. Bd. of Revision of Cuyahoga Cty., 16 Ohio St.3d 11, 14 (1985) ("The independent judgment of the trial court should not be disturbed absent a showing of abuse of discretion.").
{¶ 15} 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, LLP 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. Common Pleas Court's Determination that Board Allocated Property Value Between Land and Improvements
{¶ 16} Appellants argue in their first assignment of error that the common pleas court erred by determining the Board allocated the total value of each property between land and improvements. Appellants assert that because the Board's decision letters did not specify the portions of the total property value allocated to land and to improvements, the decisions do not comply with R.C. 5715.20. That statute provides, in relevant part, that "[w]henever a county board of revision renders a decision on a complaint * * *, it shall give notice of its action to the person in whose name the property is listed or sought to be listed and, if the complainant or applicant is not the person in whose name the property is listed or sought to be listed, to the complainant or applicant." R.C. 5715.20(A). Appellants argue that if a notice of decision does not provide an allocation of value between land and improvements in a case where that question is at issue, it is not a complete and accurate notice.
{¶ 17} Generally, arguments or issues raised for the first time on appeal that could have been asserted earlier are deemed to have been waived or forfeited. See Premiere Radio Networks, Inc. v. Sandblast, L.P., 10th Dist. No. 18AP-736, 2019-Ohio-4015, ¶ 7. In this case, appellants did not raise the argument that the Board failed to comply with R.C. 5715.20 in their appeal to the common pleas court; therefore, appellants have forfeited this argument on appeal to this court. See Columbus City School Bd. of Edn. v. Franklin Cty. Bd. of Revision, 144 Ohio St.3d 549, 2015-Ohio-4837, ¶ 12-15 (holding board of education waived argument by failing to raise it on appeal to the board of tax appeals); RNG Properties, Ltd. v. Summit Cty. Bd. of Revision, 140 Ohio St.3d 455, 2014-Ohio-4036, ¶ 33 (holding that omission of an argument from a party's brief before the board of tax appeals may be deemed to waive the argument); Republic Steel Corp. v. Bd. of Revision of Cuyahoga Cty., 175 Ohio St. 179, 184 (1963) ("At no time in the proceedings before the Board of Revision or the Board of Tax Appeals was the relevancy of ascertaining the proper 1941-1942 trend factor percentage challenged. It is now too late for appellants in their brief to change or modify their theory and to question the contract of 1959 and the procedure therein provided to be used in determining the value of the buildings and improvements here."); Fairlawn Assocs., Ltd. v. Summit Cty. Bd. of Revision, 9th Dist. No. 22238, 2005-Ohio-1951, ¶ 8 (holding appellant waived argument that valuation method was unconstitutional by failing to raise it before the board of revision or common pleas court).
{¶ 18} Accordingly, we overrule appellants' first assignment of error.
C. Common Pleas Court's Determination that Appellants' Evidence was Insufficient to Support Reduction in Land Value
{¶ 19} In their second assignment of error, appellants assert the common pleas court erred by concluding appellants failed to demonstrate that the land value of each property was less than the land value assessed by the Auditor. Hunter appraised the land value of 6840 Pontius Road as $2,422,000 ($627,200 less than the Auditor's land valuation), the land value of 7070 Pontius Road as $2,664,000 ($34,300 less than the Auditor's land valuation), and the land value of 6606 Pontius Road as $4,180,000 ($1,080,700 less than the Auditor's land valuation). Although Hunter acknowledged the properties contained improvements, he only appraised the value of the land portion of each property, treating the land as if vacant and available for development. The Hunter appraisals did not provide a total fair market value for the properties including improvements. Appellants argue the Hunter appraisals were 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 by relying on the Board's reasoning in rejecting the Hunter appraisals because the Board failed to adequately explain why it disregarded the Hunter appraisals.
{¶ 20} 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, ¶ 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.
{¶ 21} At the September 25th hearing, a member of the Board stated that with regard to the cases involving 6840 Pontius Road and 7070 Pontius Road, "the first recommendation is that we are going to not place weight on the separate land appraisals that were presented on behalf of the property owner. We will retain the current allocations with an increase in value to the sale price going to the CRA portion of the -- of each of these parcels in each of these complaints." (Sept. 25, 2018 Tr. at 4.) Similarly, with respect to the case involving 6606 Pontius Road, the same Board member stated, "[w]e were, again, presented an appraisal report only for the land component of this property. We were not, unfortunately, given an overall valuation opinion by the appraiser on behalf of the property owner. So the recommendation in these cases would be to not change the current value of this property with the current value grain of $43,370,000." (Sept. 25, 2018 Tr. at 4.) This Board member's statements appear to indicate the Board was not persuaded by the Hunter appraisals because they did not put the appraised land value in context of the total value of the property.
{¶ 22} In the appeal to the common pleas court, Groveport Madison asserted 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 because the appraisals only assessed the value of the land portion of each property.
{¶ 23} In its judgment affirming the Board's decisions, the common pleas court addressed Hunter's testimony and appraisals:
The Court has independently reviewed Mr. Hunter's testimony and retrospective appraisal reports. The Court agrees with the reasoning set forth by the Board of Revision and Groveport and hereby finds that the evidence is not sufficient to prove the decrease in the land values sought by Appellants.(Decision and Entry at 7.) By referring to the reasoning offered by the Board and Groveport Madison, the common pleas court appears to have concluded the land values contained in the Hunter appraisals were insufficient to refute the Auditor's allocations of the total value of each property between land and improvements.
{¶ 24} 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. 6800 Avery at ¶ 11. See also CABOT III-OH1M02, LLC 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'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 review is limited to determining whether the common pleas court abused its discretion in making that determination. Id. Contrary to appellants' claim, the record in this appeal indicates the common pleas court considered Hunter's testimony and appraisals, as well as the Board's conclusions and the arguments proffered by Groveport Madison. Based on this consideration, the common pleas court found appellants' evidence insufficient to prove that reductions in the land values of the properties were warranted. 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.
{¶ 25} Accordingly, we overrule appellants' second assignment of error.
D. Common Pleas Court's Determination that Appellants' Evidence was Insufficient to Establish that all Improved Value was Tax-Exempt
{¶ 26} In their third assignment of error, appellants argue the common pleas court erred by affirming the Board's property value determinations because the Auditor classified some of the improvements to the properties as taxable when the city of Groveport had certified new construction on the properties as tax-exempt under its CRA program. Appellants claim there is no legal basis for treating improvements different from other structures for purposes of determining eligibility for tax exemption within a municipal CRA. Appellants further argue the common pleas court erred by finding there was insufficient evidence to determine which improvements to the properties qualified as tax-exempt.
{¶ 27} 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, the eligibility of a property located within a CRA for tax exemption may depend on the terms of the resolution defining the CRA.
{¶ 28} 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 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.
{¶ 29} Accordingly, we overrule appellants' third assignment of error.
V. Conclusion
{¶ 30} For the foregoing reasons, we overrule appellants' three assignments of error and affirm the judgment of the Franklin County Court of Common Pleas.
Judgment affirmed.