Case Title: Am. Fiber Sys., Inc. v. Levin

Citation: 2010-Ohio-1468

Docket Number: 20081338

State: ohio

Court: Ohio Supreme Court

Date: 2010-04-07T00:00:00Z

Document:
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Am. Fiber Sys., Inc. v. Levin, Slip Opinion No. 2010-Ohio-1468.] 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in 
an advance sheet of the Ohio Official Reports.  Readers are requested 
to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 
65 South Front Street, Columbus, Ohio 43215, of any typographical or 
other formal errors in the opinion, in order that corrections may be 
made before the opinion is published. 
 
SLIP OPINION NO. 2010-OHIO-1468 
AMERICAN FIBER SYSTEMS, INC., APPELLANT, v. LEVIN, 
TAX COMMR., APPELLEE. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Am. Fiber Sys., Inc. v. Levin,  
Slip Opinion No. 2010-Ohio-1468.] 
Taxation — Personal property tax — Interexchange companies — “Used in 
business” pursuant to R.C. 5701.08(A) — Fiber strands and fiber optic 
network equipment are used in business, even when the fiber is unlit, when 
the fiber is held for lease — Taxpayer has the burden of proof — Decision 
affirmed. 
(No. 2008-1338 — Submitted December 15, 2009 — Decided April 7, 2010.) 
APPEAL from the Board of Tax Appeals, No. 2006-B-118. 
__________________ 
 
PFEIFER, J. 
{¶ 1} This is an appeal as of right by appellant, American Fiber Systems, 
Inc. (“AFS”), from a decision of the Board of Tax Appeals (“BTA”).  The BTA’s 
order affirmed the Tax Commissioner’s final determination denying AFS’s 
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petition for reassessment and affirming a personal-property-tax assessment for tax 
year 2004. 
{¶ 2} AFS is an “interexchange telecommunications company” as 
defined in R.C. 5727.01(H).  All interexchange companies must pay an annual ad 
valorem tax on their personal property.  See R.C. 5727.06(A)(1)(c)(i), 
5727.111(F)(1), and 5709.01(B)(1).  Unless otherwise exempted, all personal 
property of an interexchange company located in Ohio and used in business is 
subject to taxation.  R.C. 5727.06 and 5709.01(B)(1).  In this case, AFS seeks a 
reduction in the assessed value of its taxable personal property by the percentage 
of the property that AFS claims is not used in business. 
Facts and Procedural History 
{¶ 3} AFS constructed, owns, and operates a 41-mile fiber optic 
telecommunications network or “loop” in Cuyahoga County.  The network 
consists of fiber optic cable, conduit pipes, above-ground poles, and computer-
monitoring equipment.  The cable itself contains 288 strands of fiber that are 
bundled together in a sheath.  The bundled fiber runs through one conduit pipe 
throughout the 41-mile loop.  In addition, AFS constructed two additional conduit 
pipes that run through the municipality of Shaker Heights, Ohio.  Shaker Heights 
apparently required AFS to build the extra conduits in order to comply with a city 
ordinance.  These additional conduits do not contain any fiber. 
{¶ 4} AFS does not use its fiber optic network to provide 
telecommunications services directly to its customers.  Instead, AFS leases the 
fiber to telecommunications carriers and other businesses, which provide 
telecommunications services to their customers.  AFS built the fiber network, in 
part, based on an agreement with Cable and Wireless, a telecommunications-
services provider.  AFS has an indefeasible right-of-use agreement in which Cable 
and Wireless agreed to lease some of the fiber.  AFS also constructed its network 
with the view of leasing fiber to local-exchange carriers and other 
January Term, 2010 
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telecommunications providers to serve the excess-capacity needs of these 
businesses.  AFS has been able to lease only 36 of the 288 strands of fiber.  The 
remaining 252 strands have never been “lit,” i.e., used to provide 
telecommunications services. 
{¶ 5} On March 31, 2004, AFS filed its annual personal-property-tax 
report for the 2004 tax year.  The Tax Commissioner subsequently determined the 
total true value of AFS’s taxable personal property to be $4,925,514, the same 
amount reported by AFS.  The Tax Commissioner then assessed the $4,925,514 
true-value amount at the statutory assessment rate of 25 percent to derive a total 
taxable value of $1,231,380 for AFS’s personal property pursuant to R.C. 
5727.111(F)(1). 
{¶ 6} AFS filed a petition for reassessment, asserting that the total 
taxable value of its property should be reduced from $1,231,380 to $156,200.  
AFS noted that 252 of its 288 strands of fiber – or 87.5 percent – have never been 
lit.  Thus, AFS requested that 87.5 percent of the value of its fiber be reduced, 
arguing that this unlit or “dark fiber” is not "used in business" pursuant to R.C. 
5701.08(A).  AFS also requested the same 87.5 percent reduction in value for its 
conduit pipes, above-ground poles, computer-monitoring equipment, and make-
ready fees based on the same “not used in business” argument. 
{¶ 7} The Tax Commissioner denied AFS’s petition for reassessment.  
The commissioner found that AFS’s unlit fiber is used in business pursuant to 
R.C. 5701.08(A) because AFS built its fiber optic network to lease fiber to third 
parties, and the unlit fiber is held for lease, a business use. 
{¶ 8} The commissioner also rejected AFS’s argument regarding its 
other equipment.  The commissioner found that the conduit, poles, and monitoring 
equipment were fully taxable because AFS uses this equipment in conjunction 
with the fiber strands that are lit.  In addition, the commissioner denied AFS’s 
request to exempt the make-ready costs, rejecting AFS’s contention that these 
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costs were not incurred to build the fiber loop.  The commissioner also found that 
AFS provided only a “rough estimate” of its make-ready costs, and “[s]uch 
approximations of value are not probative evidence for a deduction from taxable 
personal property.” 
{¶ 9} AFS appealed the commissioner’s final determination to the BTA.  
The primary basis of AFS’s appeal was that the doctrine of collateral estoppel 
barred the Tax Commissioner’s decision to deny AFS a reduction in value for the 
2004 tax year.  The Tax Commissioner had granted AFS a reduction in value for 
the unlit fiber for the 2003 tax year, and AFS argued that the BTA’s decision in 
case No. 2004-K-1222 – which affirmed the 2003 tax year final determination – 
estopped the commissioner from making a different determination for the 2004 
tax year.  The BTA rejected the collateral-estoppel claim on two grounds.  First, 
the BTA held that it was precluded from considering the claim because AFS had 
failed to raise collateral estoppel as an issue in its petition for reassessment.  
Second, the BTA rejected the collateral-estoppel claim on the merits, finding that 
collateral estoppel did not apply in this case to the issue of the taxable value of the 
dark fiber. 
{¶ 10} As to whether AFS’s personal property was used in business 
pursuant to R.C. 5701.08(A), the BTA agreed with the Tax Commissioner.  
According to the BTA, AFS offered no compelling evidence that its dark fiber 
and other equipment were not used in business.  The BTA further noted that AFS 
waived its hearing before the BTA.  As a result, the BTA concluded that it had no 
evidence before it to determine the proper allocation of costs regarding AFS’s 
request to exempt its unlit fiber and other equipment. 
{¶ 11} AFS filed a notice of appeal to this court, raising three propositions 
of law. 
Standard of Review 
January Term, 2010 
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{¶ 12} In reviewing a decision of the BTA, this court determines whether 
it is “reasonable and lawful.”  Summit United Methodist Church v. Kinney (1983), 
7 Ohio St.3d 13, 15, 7 OBR 406, 455 N.E.2d 669.  We defer to BTA 
determinations when the record contains reliable and probative evidence to 
support the BTA’s findings, Blatt v. Hamilton Cty. Bd. of Revision, 123 Ohio 
St.3d 428, 2009-Ohio-5260, 916 N.E.2d 1065, ¶ 14, but we “will not hesitate to 
reverse a BTA decision that is based on an incorrect legal conclusion.”  Gahanna-
Jefferson Local School Dist. Bd. of Edn. v. Zaino (2001), 93 Ohio St.3d 231, 232, 
754 N.E.2d 789.  The burden rests on the taxpayer “ ‘to show in what manner and 
to what extent * * * ‘the commissioner’s * * * findings and assessments * * * 
were faulty and incorrect.”  Federated Dept. Stores, Inc., Rike-Kumler Div. v. 
Lindley (1983), 5 Ohio St.3d 213, 215, 5 OBR 455, 450 N.E.2d 687. 
Analysis 
{¶ 13} AFS raises three primary arguments on appeal.  First, AFS claims 
that collateral estoppel barred the Tax Commissioner’s determination in this case.  
Second, AFS argues that its unlit fiber should not be taxed because it is not used 
in business pursuant to R.C. 5701.08(A).  Finally, AFS contends that it is entitled 
to a reduction in value on its other equipment based on the percentage of fiber that 
is not in use.  We reject each of these arguments for the following reasons. 
Collateral Estoppel 
{¶ 14} AFS asserts that the BTA erred when it failed to apply the doctrine 
of collateral estoppel, forcing AFS to relitigate issues in this case that had already 
been decided by the BTA.  In the prior case, the BTA had affirmed the Tax 
Commissioner’s final determination on AFS’s property for the 2003 tax year.  See 
Am. Fiber Sys., Inc. v. Wilkins (Sept. 16, 2005), BTA No. 2004-K-1222, 2005 WL 
2319882.  The Tax Commissioner had reduced the taxable value of AFS’s unlit 
fiber for the 2003 tax year, a determination that was not appealed, but he had 
refused to grant the same reduction for tax year 2004.  AFS argues that the BTA’s 
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decision affirming the 2003 tax-year assessment barred the Tax Commissioner 
from making a different determination on AFS’s unlit fiber for 2004. 
{¶ 15} A taxpayer wishing to challenge a public-utility property-tax 
assessment by the Tax Commissioner must file a petition for reassessment that 
“shall indicate” the taxpayer’s “objections” to the assessment.  R.C. 5727.47(A).  
We have held that the failure to raise an issue in a petition for reassessment 
precludes the BTA from taking jurisdiction over that issue – even if the issue was 
raised in the notice of appeal to the BTA.  CNG Dev. Co. v. Limbach (1992), 63 
Ohio St.3d 28, 32, 584 N.E.2d 1180.  See Ohio Bell Tel. Co. v. Levin, 124 Ohio 
St.3d 211, 2009-Ohio-6189, 921 N.E.2d 212, ¶ 28 (specifications of error must be 
explicit and precise and tie the facts of the case to the alleged error by explaining 
how the commissioner erred in valuing the property). 
{¶ 16} For its part, AFS contends that it preserved the collateral-estoppel 
issue for appeal by attaching to its petition for reassessment the notice of appeal 
of the 2003 tax year final determination, case No. 2004-K-1222, and the final 
determination by the Tax Commissioner for the 2003 tax year. 
{¶ 17} To invoke the right to review of a particular error, the taxpayer 
must set forth that error with specificity in the petition for reassessment.  CNG 
Dev. Co., 63 Ohio St.3d at 32, 584 N.E.2d 1180.  We conclude that the specificity 
requirement was not met in this case. 
{¶ 18} First, AFS did not mention the doctrine of collateral estoppel 
anywhere in its petition for reassessment.  In fact, AFS made no claim or 
argument in its petition that a prior decision by the BTA barred the commissioner 
from issuing a different assessment for the following tax year. 
{¶ 19} Second, AFS’s act of attaching the notice of appeal in the earlier 
case, No. 2004-K-1222, to the reassessment petition did not preserve the 
collateral-estoppel issue for appeal.  R.C. 5727.47(A) provides that “additional 
objections [to an assessment by the commissioner] may be raised in writing if 
January Term, 2010 
7 
 
received by the commissioner prior to the date shown on the final determination.”  
The BTA rendered its decision in case No. 2004-K-1222 over two months before 
the commissioner rendered his final determination in this matter on November 30, 
2005.  Thus, AFS had ample time to specify its estoppel issue with the Tax 
Commissioner.  Simply attaching a document without explaining its significance 
– as AFS did here – does not give the Tax Commissioner notice of the claimed 
error. 
{¶ 20} AFS’s attachment of the commissioner’s 2003 final determination 
does not meet the specificity requirement.  At best, this document represents 
nothing beyond AFS’s request that it receive the same tax treatment from one 
year to the next.  The burden of pleading and proving the identity of the issues 
currently presented and the issues previously decided rests on the party asserting 
the estoppel.  Goodson v. McDonough Power Equip., Inc. (1983), 2 Ohio St.3d 
193, 198, 2 OBR 732, 443 N.E.2d 978.  Here, AFS cannot prove an identity of the 
issues because the BTA never considered the issue of whether the unlit fiber was 
“used in business” in case No. 2004-K-1222.  The Tax Commissioner had already 
granted AFS a reduction in the taxable value of the unlit fiber for the 2003 tax 
year.  Consequently, AFS had no reason to present that issue to the BTA in case 
No. 2004-K-1222.  See Am. Fiber Sys., Inc. v. Wilkins, BTA No. 2004-K-1222, 
2005 WL 2319882, *1.  Thus, even if AFS had preserved the collateral-estoppel 
issue, the issues involved in the two proceedings were not identical, and the 
BTA’s decision in that earlier case would not preclude the Tax Commissioner 
from rendering a different assessment as to AFS’s unlit fiber for the 2004 tax 
year. 
{¶ 21} AFS also argues that the collateral-estoppel issue was preserved in 
a letter dated May 11, 2005, in which it specifically requested that the Tax 
Commissioner reduce its “fiber cost by the 87.5% figure previously approved by 
the Tax Commissioner.”  The May 11 letter additionally requested that the Tax 
SUPREME COURT OF OHIO 
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Commissioner extend the 2003 reduction in value of the unlit fiber to all of AFS’s 
assets for the 2004 tax year.  AFS mentioned the May 11 letter for the first time in 
its reply brief to this court.  AFS is forbidden, however, to raise new arguments in 
its reply brief.  State ex rel. Colvin v. Brunner, 120 Ohio St.3d 110, 2008-Ohio-
5041, 896 N.E.2d 979, ¶ 61. 
{¶ 22} To meet the specificity requirement for reassessment petitions in 
this case, AFS needed to do more than attach copies of the commissioner’s final 
determination from a prior tax year and a notice of appeal to the BTA of that 
determination; it had to affirmatively claim that collateral estoppel applied to bar 
the commissioner’s assessment.  Because AFS did not plead that error with 
specificity in its petition for reassessment, the BTA did not err in finding that it 
lacked jurisdiction over the collateral-estoppel issue.  Consistent with CNG Dev. 
Co., 63 Ohio St.3d 28, 584 N.E.2d 1180, the commissioner, the BTA, and this 
court have no jurisdiction over the collateral-estoppel issue. 
Is AFS’s unlit fiber “used in business”? 
{¶ 23} AFS maintains that the Tax Commissioner erred when he assessed 
the unlit fiber as “inventory.”  The Tax Commissioner determined that because 
AFS held the unlit fiber as property available for lease by other businesses rather 
than using it in its own right, the unlit fiber “has the character of a type of 
inventory that is used in business by being held for use by other entities.” 
{¶ 24} AFS argues that the commissioner’s characterization of the unlit 
fiber as inventory has no basis in law because “inventory” is not specifically 
identified in R.C. 5727.06(A)(1)(c) or defined in R.C. 5701.03.  The absence of a 
statutory definition does not undermine the commissioner’s determination; it is 
well settled that "any term left undefined by statute is to be accorded its common, 
everyday meaning."  State v. Dorso (1983), 4 Ohio St.3d 60, 62, 4 OBR 150, 446 
N.E.2d 449.  AFS has offered no compelling argument or evidence that the 
January Term, 2010 
9 
 
commissioner’s use of the word “inventory” to describe the unlit fiber was 
unreasonable. 
{¶ 25} AFS also complains that inventory is not addressed in the 
“Guidelines for Filing Ohio Public Utility Tax Reports” or in the forms for 
reporting assets for an interexchange telecommunications company.  AFS appears 
to contend that the commissioner exceeded his authority by characterizing AFS’s 
unlit fiber as inventory.  AFS has, however, offered no legal authority for this 
proposition. 
{¶ 26} AFS further claims that it did not report any assets as inventory 
and that the Tax Commissioner did not classify any of AFS’s assets as inventory 
in his initial assessment.  It is beyond cavil that the commissioner is not bound by 
the taxpayer’s listing of personal property in its annual tax reports.  The 
commissioner is not bound by any determinations made in his initial assessments.  
Lang, Fisher & Stashower Advertising, Inc. v. Collins (1976), 46 Ohio St.2d 285, 
286, 75 O.O.2d 230, 347 N.E.2d 538. 
{¶ 27} In any case, AFS’s focus on the Tax Commissioner’s “inventory” 
reference overlooks that his final determination did not turn on whether the unlit 
fiber was inventory.  Rather, the primary basis for the Tax Commissioner’s 
determination was that the unlit fiber was “used in business” as that term is 
defined in R.C. 5701.08(A)(1). 
{¶ 28} R.C. 5701.08(A) designates four separate classes of personal 
property considered to be "used in business":  (1) “when  employed or utilized in 
connection with ordinary or special operations,” (2) “when acquired or held as 
means or instruments for carrying on the business,” (3) “when kept and 
maintained as a part of a plant capable of operation, whether actually in operation 
or not,” and (4) “when stored or kept on hand as material, parts, products, or 
merchandise.” 
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{¶ 29} The Tax Commissioner found that AFS’s unlit fiber fell into three 
of the four classes of personal property considered to be used in business under 
R.C. 5701.08(A).  First, the commissioner found that AFS held the unlit fiber for 
lease.  Thus, according to the commissioner, the unlit fiber was used in AFS’s 
“ordinary operations” as personal property available for lease.  Second, the 
commissioner determined that the unlit fiber was “held as means or instruments 
for carrying on [AFS’s leasing] business.”  And third, the commissioner stated 
that the unlit fiber was “stored or kept on hand as material, parts, products, or 
merchandise.” 
{¶ 30} The only authority offered by AFS on this issue is United Tel. Co. 
of Ohio v. Tracy (1999), 84 Ohio St.3d 506, 705 N.E.2d 679, but AFS failed to 
include any argument or legal analysis.  AFS presumably believes that it is 
entitled to the same tax treatment as United Telephone, but AFS overlooks the 
fact that United Tel. involved a different kind of business.  United Telephone was 
a public utility engaged in the business of providing telephone service to 
businesses and residential customers.  See United Tel. Co. of Ohio v. Tracy 
(1999), 71 Ohio St.3d 369, 643 N.E.2d 1129.  In contrast, AFS does not provide 
telecommunications services directly to its customers.  Rather, AFS leases fiber 
optic cable to telecommunications carriers and other businesses.  Thus, contrary 
to AFS’s assertion, the unlit fiber in this case was being used in the business for 
which it was acquired pursuant to R.C. 5701.08(A).  That is, although the unlit 
fiber was not currently leased and used to provide telecommunications service, 
AFS was using the unlit fiber in the business for which AFS had acquired it, 
holding it out for lease by other companies. 
{¶ 31} In addition, we conclude that the following evidence supports the 
Tax Commissioner’s determination that the unlit fiber was used in business 
pursuant to R.C. 5701.08(A).  AFS completed construction of its Cuyahoga 
County fiber optic telecommunications system, consisting of fiber, conduit pipes, 
January Term, 2010 
11 
 
above-ground poles, and computer monitoring equipment, and placed it in service 
in 2002.  AFS installed additional fiber capacity in Cuyahoga County based on the 
needs of the market at that time.  AFS decided to build a “robust” fiber optic 
network so that local-exchange carriers and other telecommunication carriers in 
need of extra fiber capacity would not have to build their own fiber network. 
{¶ 32} Testimony revealed that AFS constructed its fiber optic system to 
lease dark-fiber capacity to local exchange carriers and other telecommunications 
companies.  Gary Azzolina, the Director of Project Management for AFS, 
testified that the Cuyahoga County project was “undertaken primarily to provide * 
* * dark fiber service,” i.e., make unlit fiber available for lease.  AFS holds the 
dark fiber for the purpose of allowing others to use it.  AFS’s “business motto is 
[to] provide dark fiber” to customers who are then not required to build their own 
fiber optic network.  AFS owns the network and leases dark fiber “product” or 
“usage” over those fiber strands to other companies, and the customer can lease 
only what is necessary to carry out its own services. 
{¶ 33} Likewise, in a letter to the Department of Taxation, Martin 
Constable, AFS’s Director of Finance, stated that AFS’s “revenue comes from 
leasing dark fiber optic strands.”  In another letter, Constable stated that when the 
network was built in Ohio, AFS was “expecting to acquire many new customers 
and achieve a certain sales volume.”  In addition, AFS’s counsel sent a letter to 
the tax department referencing the “36 strands that [AFS has] leased to others,” 
stating, “[O]nce we lease the fiber strands to a company we do not monitor the 
use that they make of the fiber strands that they lease.” 
{¶ 34} The commissioner’s final determination that the unlit fiber was 
“used in business” as that term is defined in R.C. 5701.08 is consistent with our 
case law and is supported by the record.  We conclude that AFS has not met its 
burden of showing that the Tax Commissioner’s final determination was clearly 
unreasonable or unlawful. 
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Is AFS’s other equipment “used in business”? 
{¶ 35} AFS raises several evidentiary challenges to the commissioner’s 
determination that AFS’s other equipment was used in business pursuant to R.C. 
5701.08(A).  Having waived the evidentiary hearing before the BTA in this case, 
AFS relies on the testimony of Azzolina, its project-management director, which 
was submitted at the BTA hearing in the 2003 tax-year case. 
{¶ 36} Shaker Heights conduit pipes.  AFS argues that it should not have 
to pay tax on the two empty conduit pipes running through the municipality of 
Shaker Heights, Ohio because the evidence supports a deduction for them.  
According to AFS, it does not own these conduits, did not want or need to install 
them, and cannot use them. 
{¶ 37} AFS’s claims are not supported by the record.  AFS reported the 
Shaker Heights conduit pipes on its 2004 annual report.  If AFS does not own 
these sections of conduit pipe, then it should not have reported them as personal 
property subject to taxation.  Moreover, Azzolina testified that AFS owns and 
controls the two empty Shaker Heights conduit pipes.  Azzolina stated that AFS 
installed the two additional Shaker Heights conduits at its own cost to obtain a 
permit to install the loop through Shaker Heights.  Azzolina additionally stated 
that AFS – not Shaker Heights – had the authority to sell the vacant conduit pipe 
running through Shaker Heights. 
{¶ 38} Although AFS owns these conduits, two of the three conduit pipes 
that run through Shaker Heights are empty and have never held fiber.  Thus, it 
does not appear that these two conduits are currently being used in AFS’s fiber-
leasing business, i.e., held out for lease to others.  Nevertheless, we have held that 
when an assessment is contested, the burden is on the taxpayer to show in what 
manner and to what extent the commissioner’s findings and assessments were 
faulty and incorrect.  Federated Dept. Stores, 5 Ohio St.3d at 215, 5 OBR 455, 
450 N.E.2d 687, citing Midwest Transfer Co. v. Porterfield (1968), 13 Ohio St.2d 
January Term, 2010 
13 
 
138, 141, 42 O.O.2d 365, 235 N.E.2d 511.  Here, AFS has offered no probative 
evidence of the actual costs incurred to construct the two additional conduits in 
Shaker Heights.  Instead, AFS offered only general estimates of its additional 
construction costs.  We conclude that AFS has failed to show that the Tax 
Commissioner’s assessment regarding the Shaker Heights conduits is unsupported 
by the record or contrary to law. 
{¶ 39} Make-ready costs.  AFS argues that the evidence supports a 
deduction for make-ready costs.  Make-ready costs are the costs incurred to move 
other lines and equipment on above-ground poles that are not owned by AFS so 
that AFS can attach fiber optic cable or other equipment to the pole.  Make-ready 
costs would also include the costs to install a new pole if an existing pole could 
not accommodate additional connections.  AFS argues that make-ready costs are 
not costs to build the fiber loop, but instead constitute improvements to the 
property of others. 
{¶ 40} The Tax Commissioner rejected AFS’s request to deduct make-
ready costs from the assessment for two reasons.  First, citing Gruen Watch Co. v. 
Evatt (1944), 143 Ohio St. 461, 28 O.O.2d 393, 55 N.E.2d 794, the commissioner 
determined that the make-ready costs at issue here are “installation and relocation 
costs,” which are part of the cost of the equipment for valuation purposes.  The 
commissioner noted that under fundamental and generally accepted accounting 
principles, all normal and reasonable costs that are incurred to get a fixed asset in 
place and ready for use are part of the cost of the asset for valuation purposes.  
Thus, the commissioner found that AFS’s make-ready costs are properly included 
costs of the fiber loop network and, as such, are taxable. 
{¶ 41} Second, the commissioner concluded that AFS had failed to 
present sufficient probative evidence to establish the actual value of the make-
ready costs.  AFS requested a deduction of $406,000 in make-ready costs but, 
SUPREME COURT OF OHIO 
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according to the commissioner, offered only a “crude approximation” of these 
costs. 
{¶ 42} In its appeal to this court, AFS has offered no evidence or legal 
authority establishing that these make-ready costs constitute improvements to the 
property of others.  Nor has AFS pointed to any specific legal or factual error in 
the commissioner’s determination that make-ready costs were taxable as 
“installation and relocation” costs.  AFS refers only to the testimony of Azzolina, 
who estimated that make-ready costs incurred during the construction of the fiber 
loop amounted to $25,000 per mile, or $4.78 per foot.  These bare estimates are 
not probative evidence of actual value.  Absent a demonstration that the Tax 
Commissioner’s findings are clearly unreasonable and unlawful, those findings 
are presumptively valid.  Hatchadorian v. Lindley (1986), 21 Ohio St.3d 66, 21 
OBR 365, 488 N.E.2d 145, paragraph one of the syllabus. 
{¶ 43} AFS’s alternative argument.  AFS contends alternatively that the 
conduit pipes, above-ground poles, computer-monitoring equipment, and make-
ready costs are entitled to the same 87.5 percent reduction that the Tax 
Commissioner granted to AFS’s unlit fiber in his final determination for the 2003 
tax year. 
{¶ 44} For both the 2003 and 2004 tax years, the Tax Commissioner 
rejected the argument that this other network equipment should receive the same 
reduction that the unlit fiber received for tax year 2003.  The commissioner found 
that the use of the conduit, poles, and monitoring equipment with those fibers that 
were lit made these items used in business under R.C. 5701.08. 
{¶ 45} AFS offers two arguments in support of this claim.  First, AFS 
argues that the Tax Commissioner did not submit any testimony in the appeal to 
the BTA and offered only the Guidelines for Filing Ohio Public Utility Tax 
Reports as an exhibit.  Yet when cases are appealed to the BTA, the burden of 
proof is on the appellant.  That burden requires the appellant to present competent 
January Term, 2010 
15 
 
and probative evidence to make its case.  And the appellant is not entitled to a 
reduction in valuation merely because no contrary evidence is presented.  See 
Alcan Aluminum Corp. v. Limbach (1989), 42 Ohio St.3d 121, 123-124, 537 
N.E.2d 1302. 
{¶ 46} Second, AFS argues that because there was no change in the law 
between tax years 2003 and 2004, it is entitled to the same reduction of value for 
the conduit pipes, above-ground poles and support equipment, and computer-
monitoring system that the Tax Commissioner allowed for the unlit fiber for the 
2003 tax year.  AFS also notes that the Tax Commissioner found in this case that 
AFS’s “assets and business have not materially changed” since the 2003 tax year. 
{¶ 47} AFS apparently believes that the Tax Commissioner’s decision to 
reduce the taxable value of the unlit fiber for the 2003 tax year requires him to 
render the same determination for all of AFS’s personal property for the following 
tax year.  The Tax Commissioner, however, is not bound by the value assessed to 
property in a prior tax year.  Freshwater v. Belmont Cty. Bd. of Revision (1997), 
80 Ohio St.3d 26, 28-29, 684 N.E.2d 304.  AFS cannot satisfy its burden of 
proving its proposed value simply by relying on evidence that the state of the 
property has not changed since the earlier tax year.  See Fogg-Akron Assoc., L.P., 
v. Summit Cty. Bd. of Revision, 124 Ohio St.3d 112, 2009-Ohio-6412, 919 N.E.2d 
730, at ¶ 15-16. 
Conclusion 
{¶ 48} Based on the foregoing, AFS has not met its burden of showing in 
what manner and to what extent the commissioner’s findings and assessments 
were faulty and incorrect.  Federated Dept. Stores, Inc., 5 Ohio St.3d at 215, 5 
OBR 455, 450 N.E.2d 687.  We affirm the BTA’s decision. 
Decision affirmed. 
SUPREME COURT OF OHIO 
16 
 
 
MOYER, C.J.,1 and LUNDBERG STRATTON, O’CONNOR, O’DONNELL, 
LANZINGER, and CUPP, JJ., concur. 
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Sleggs, Danzinger & Gill Co., L.P.A., and Todd W. Sleggs, for appellant. 
Richard Cordray, Attorney General, and Barton A. Hubbard, Assistant 
Attorney General, for appellee. 
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1.  The late Chief Justice Thomas J. Moyer participated in the deliberations in, and the final 
resolution of, this case prior to his death.