Summary
finding no due process violation, even though BOR may have acted discourteously and hastily in issuing a decision one day after the taxpayer's brief was due
Summary of this case from Park Place Prop. v. Board, RevisionOpinion
No. 89-1860
Submitted September 27, 1990 —
Decided January 16, 1991.
Taxation — Best evidence of true value of real property — Actual recent sale in arm's-length transaction — BTA has wide discretion in determining weight of evidence — BTA decision rendered one day following the filing of a brief does not constitute lack of due process or due course of law.
APPEAL from the Board of Tax Appeals, No. 88-J-612.
The appellee, W.S. Tyler Company, filed a complaint with the Board of Revision of Lake County contesting the auditor's valuation of real estate appellee owned in Lake County for tax year 1987. Appellee contended that the fair market value of the subject property, consisting of approximately ninety-two acres of real estate improved with a 600,000 square foot building, was $3,077,819. The board of revision found the fair market value to be $7,861,230.
On appeal before the Board of Tax Appeals ("BTA"), appellee offered the testimony of the manager of the real estate contract services department of Combustion Engineering Co., an affiliated company, and the October 30, 1987 purchase agreement by which appellee contracted to sell the subject property, plus some machinery and equipment, to Mentor Industrial Park Limited Partnership.
Appellee's real estate manager testified that (1) the financing arrangement for the October 30, 1987 sale was "comparable to other terms we have offered other buyers"; (2) the allocation among land ($494,400), building ($2,100,000), and machinery and equipment ($617,600), resulted from negotiations between the buyer and the seller; (3) the buyers were not officers or directors of appellee, or its affiliated companies; (4) no other financial dealings or relationships existed between buyer and seller; and (5) no one pressured the seller to sell. He stated that the property had been listed for two years, no other offers had been made, and the market was "reflective of this offer." Appellee conceded that no appraisal of the property was made.
Appellant presented the testimony of Roger D. Ritley, a professional appraiser, who, after inspection of the subject property and analysis of the three principal appraisal approaches, determined the fair market value to be $5,700,000. He conceded a great deal of depreciation and obsolescence. He expressed the opinion that the sales transaction was not arm's length because three brokers dealing in real estate in the Cleveland metropolitan area had formed Mentor Industrial Park Limited Partnership, thus eliminating competition among buyers and concomitantly depressing the price. He said this was not an arm's-length sale because of the very high rate of financing involved, namely, a note for $2,900,000 of the $3,212,000 purchase price. Finally, he said that the land alone was worth $2,300,000 or $25,000 per acre.
At the conclusion of the hearing, the hearing examiner announced a schedule for filing briefs to the BTA. The school board, being the appellee before the BTA, filed its brief on September 28, 1989. The BTA announced its decision on September 29, 1989.
The BTA found that, on October 30, 1987, the plant and 46.51 acres of land were sold for $2,594,400. It found that, contrary to the contention of the school board, the sale was not in the nature of a distress sale. The BTA noted that the school board disputed the allocation of the sale price of $3,212,000 among land, building, machinery and equipment, but the BTA did not comment further. The BTA also noted Ritley's contentions that the sale was not at arm's length, that there was a high rate of financing, substantial obsolescence, and a small market for properties such as the subject property, but concluded that none of those factors established that the sale was not at arm's length. The BTA then observed that the board of revision submitted no evidence to support its contention that the true value of the property was $7,861,230, and that once a party presents evidence that a property's value is different from that determined by the board of revision, the burden shifts to the board to rebut that evidence. The BTA concluded that the board of revision had not sustained this burden. The BTA found the true value of the subject property, as of January 1, 1987, to be $3,077,819, the amount set forth by appellee.
The cause is before this court upon an appeal as of right.
Malitz Barker, Lawrence R. Barker and M. Jayne H. Geneva, for appellee.
Donald M. Robiner and Dale M. Hartman, for appellant.
Appellant contends that the decision of the BTA was unreasonable and unlawful and argues: (1) the sale price should not be used as a gauge of true value because the sale, being on October 30, 1987, was not timely relative to the tax lien date of January 1, 1987; (2) the sale was not an arm's-length transaction; (3) appellant was denied due process and due course of law because the BTA decision was rendered one day following the filing of the school board's brief and appellant was, therefore, denied a meaningful right to be heard; (4) the allocation of the sale price between real estate and machinery and equipment distorts the true value of the subject property; and (5) the BTA misapplied Mentor Exempted Village Bd. of Edn. v. Lake Cty. Bd. of Revision (1988), 37 Ohio St.3d 318, 526 N.E.2d 64.
We find that the decision of the BTA was not unreasonable or unlawful and affirm it.
We hold that the sale was within a reasonable time of tax lien date and that the sale price was reflective of true value. Hilliard City School Dist. Bd. of Edn. v. Franklin Cty. Bd. of Revision (1990), 53 Ohio St.3d 57, 558 N.E.2d 1170.
The BTA was correct in finding that there was insufficient evidence that the transaction of October 30, 1987 was other than an arm's-length transaction.
It may be true that appellant was denied a meaningful consideration of its brief before the BTA. It may also be true that the action of the BTA, as appellant charged in oral argument, was discourteous and done in haste. We hold those aspects of the BTA's conduct, in and of themselves, do not constitute lack of due process or due course of law. We will not reverse findings of fact by the BTA unless they are determined to be unreasonable or unlawful. Hatchadorian v. Lindley (1986), 21 Ohio St.3d 66, 21 OBR 365, 488 N.E.2d 145, paragraph one of the syllabus. We hold that the BTA decision is supported by sufficient probative evidence. Hawthorne Mellody, Inc. v. Lindley (1981), 65 Ohio St.2d 47, 19 O.O. 3d 234, 417 N.E.2d 1257, syllabus.
There were no facts before the BTA to indicate that the allocation among land, building, machinery and equipment was improper. The allocation was based upon negotiations between the parties, and did not distort the true value of the subject property.
Finally, we find no indication that the BTA's use of the Mentor decision was inappropriate or incorrect. In real property valuation cases it is fundamental that the BTA has wide discretion in determining the weight to be given to evidence and whether to accept or reject testimony presented to it. Cuyahoga Cty. Bd. of Revision v. Fodor (1968), 15 Ohio St.2d 52, 44 O.O. 2d 30, 239 N.E.2d 25; Cardinal Fed. S. L. Assn. v. Cuyahoga Cty. Bd. of Revision (1975), 44 Ohio St.2d 13, 73 O.O. 2d 83, 336 N.E.2d 433.
The decision of the BTA is neither unreasonable nor unlawful and it is hereby affirmed.
Decision affirmed.
MOYER, C.J., SWEENEY, HOLMES, DOUGLAS, WRIGHT, H. BROWN and RESNICK, JJ., concur.