Case Title: Lakota Local School Dist. Bd. of Edn. v. Butler Cty. Bd. of Revision

Citation: 2006-Ohio-1059

Docket Number: 

State: ohio

Court: Ohio Supreme Court

Date: 2006-03-22T00:00:00Z

Document:
[Cite as Lakota Local School Dist. Bd. of Edn. v. Butler Cty. Bd. of Revision, 108 Ohio St.3d 
310, 2006-Ohio-1059.] 
 
 
LAKOTA LOCAL SCHOOL DISTRICT BOARD OF EDUCATION, APPELLEE, v. 
BUTLER COUNTY BOARD OF REVISION ET AL., APPELLEES;  
BONDO CORPORATION, APPELLANT. 
[Cite as Lakota Local School Dist. Bd. of Edn. v. Butler Cty. Bd. of Revision, 
108 Ohio St.3d 310, 2006-Ohio-1059.] 
Real-property taxation — True value — R.C. 5713.03 — Recent arm’s-length sale 
is best evidence of value — Although it had the burden of proof before the 
board of revision, the board of education failed to present evidence to 
show that recent sale was not an arm’s-length sale.  Thus, the Board of 
Tax Appeals erred in ruling in the board of education’s favor. 
(No. 2005-0090 — Submitted November 30, 2005 — Decided March 22, 2006.) 
APPEAL from the Board of Tax Appeals, No. 2003-A-1840. 
__________________ 
 
LUNDBERG STRATTON, J. 
{¶ 1} Appellant, Bondo Corporation, challenges the value assigned to its 
real property by the Board of Tax Appeals (“BTA”) for tax year 2002.  The 
property — identified in the Butler County Auditor’s records as parcel numbers 
M5620-183-000-002, M5620-183-000-003, and M5620-183-000-004 — contains 
an industrial and warehouse facility and covers approximately five acres of land 
on Devitt Drive in West Chester Township. 
{¶ 2} For tax year 2002, the county auditor fixed the true value of the 
property at $1,878,740.  Bondo asked the Butler County Board of Revision to 
reduce that valuation, arguing that the property was worth only $950,000 that 
year.  The Board of Education of the Lakota Local School District in turn asked 
the board of revision to leave the auditor’s valuation unchanged. 
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{¶ 3} The board of revision determined that the true value of the 
property was $1,134,000, which prompted the board of education to file an appeal 
under R.C. 5717.01 with the BTA.  The board of education urged the BTA in a 
written brief to set the value of the property at the $1,878,740 amount originally 
set by the county auditor, while Bondo asked the BTA to set the property’s value 
at $950,000, citing the October 2003 sale of the property for that price.  The 
parties agreed to waive a hearing before the BTA. 
{¶ 4} The BTA concluded that insufficient evidence had been presented 
by Bondo to justify the reduction in value ordered by the board of revision, and 
the BTA therefore reversed the decision of the board of revision and directed the 
county auditor to again set the value of the property at $1,878,740. 
{¶ 5} Bondo has now appealed to this court.  For the reasons that follow, 
we reverse the BTA’s decision. 
{¶ 6} “When cases are appealed from a board of revision to the BTA, the 
burden of proof is on the appellant, whether it be a taxpayer or a board of 
education, to prove its right to an increase [in] or decrease from the value 
determined by the board of revision.”  Columbus City School Dist. Bd. of Edn. v. 
Franklin Cty. Bd. of Revision (2001), 90 Ohio St.3d 564, 566, 740 N.E.2d 276. 
{¶ 7} At the hearing before the board of revision, Bondo Corporation 
presented evidence of a recent arm’s-length sale as best evidence of value, 
pursuant to R.C. 5713.03. 
{¶ 8} That evidence included a limited-warranty deed, a seller’s closing 
statement, and the first four pages of the real-property purchase agreement.  
Bondo also presented evidence that the sale was seller-financed.  The submitted 
pages of the purchase agreement state: 
{¶ 9} “Article 2 – Purchase Price 
{¶ 10} “Buyer shall pay the sum of One Million One Hundred Thirty-Four 
Thousand Dollars ($1,134,000.00) (the ‘Purchase Price’) allocating Nine Hundred 
January Term, 2006 
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Fifty Thousand Dollars ($950,000) to the value of the Real Property and One 
Hundred Eighty-Four Thousand Dollars ($184,000) to interest charges and 
carrying costs for the Seller provided financing in accordance with the terms of 
this Agreement, which Purchase Price Shall be payable to Seller for the Real 
Property * * * .” 
{¶ 11} The seller’s closing statement also listed $1,134,000 as the 
“Combined Purchase Price.” 
{¶ 12} A review of the transcript of the board of revision hearing 
demonstrates that the board of revision also examined other factors to determine 
whether the sale was an arm’s-length transaction.  The board of revision 
determined that the real estate commission was five percent.  Board of revision 
member Fred Bounds stated:  “There is a real estate commission paid, so that 
indicates there was some kind of a meaningful transaction.” 
{¶ 13} None of this evidence was contested or refuted by the board of 
education.  The documents were accepted without objection.  The board of 
education presented no evidence that the “Combined Purchase Price” of 
$1,134,000 was not the result of an arm’s-length transaction between a willing 
buyer and a willing seller.  There was no evidence presented about any side deals 
or other relationships between the buyer and the seller.  The only questionable 
characteristic about this sale was that the sale was seller-financed, but the board of 
education presented no evidence that such financing resulted in anything other 
than an arm’s-length transaction.  The record reflects no objections – based on 
authenticity, competency of the witness, completeness of the record, or otherwise 
– by the board of education.  Board of revision member Bounds even invited the 
parties to bring up anything further before closing the hearing.  Neither side did. 
{¶ 14} The BTA acknowledged that the board of education – the appellant 
before the BTA – bore the burden of proving a value different from the one set by 
the board of revision and also acknowledged that the “best evidence of true value 
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is the actual sale of the property in an arm’s-length transaction.”  Conalco, Inc. v. 
Monroe Cty. Bd. of Revision (1977), 50 Ohio St.2d 129, 130, 4 O.O.3d 309, 363 
N.E.2d 722.  However, based upon speculation only, the BTA reversed the board 
of revision.  The BTA questioned whether the sale price was a result of a true 
arm’s-length transaction, noting that part of the price had been allocated to the 
purchase of the property and part to the financing charges. 
{¶ 15} While acknowledging that the burden of proof was on the board of 
education, the BTA actually shifted that burden back to Bondo by questioning the 
details of the seller financing, even though the board of education had not 
challenged that evidence at the board of revision hearing, nor had it presented any 
new evidence that the seller financing in any way resulted in anything other than 
an arm’s-length transaction.  If the board of education suspected that a side 
arrangement existed or that the financing terms were not market-based, it should 
have challenged the evidence, asked for a full copy of the purchase agreement, 
and/or presented its own expert as to the inequities.  Mere speculation is not 
evidence. 
{¶ 16} Bondo contends that the BTA should not have ruled in the board of 
education’s favor, given that the board of education, as the appellant before the 
BTA, had the burden of proof and yet presented no witnesses or other evidence.  
We agree with Bondo that the board of education did not meet its burden of proof 
before the BTA and that therefore the BTA erred when it ruled in the board of 
education’s favor. 
{¶ 17} In addition, our recent decision in Berea City School Dist. Bd. of 
Edn. v. Cuyahoga Cty. Bd. of Revision, 106 Ohio St.3d 269, 2005-Ohio-4979, 834 
N.E.2d 782, requires a reversal of the BTA decision, which was reached on 
December 17, 2004, almost ten months before Berea was decided. 
{¶ 18} In Berea, the court overruled two earlier decisions that had allowed 
boards of revision and the BTA to consider evidence rebutting the presumption 
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that the arm’s-length sale price reflected true value.  Id. at ¶ 13.  In interpreting 
R.C. 5713.03, the court stated: 
{¶ 19} “In State ex rel. Park Invest. Co. v. Bd. of Tax Appeals (1964), 175 
Ohio St. 410, 412, 25 O.O.2d 432, 195 N.E.2d 908, we concluded:  ‘The best 
method of determining value, when such information is available, is an actual sale 
of such property between one who is willing to sell but not compelled to do so 
and one who is willing to buy but not compelled to do so.  This, without question, 
will usually determine the monetary value of the property.’ ”  Berea, 106 Ohio 
St.3d 269, 2005-Ohio-4979, 834 N.E.2d 782, ¶ 9. 
{¶ 20} The court then discussed Ratner v. Stark Cty. Bd. of Revision 
(1986), 23 Ohio St.3d 59, 23 OBR 192, 491 N.E.2d 680 (“Ratner I”), in which 
the court held: 
{¶ 21} “In determining true value for property, the board of revision and 
the BTA must at least consider and review evidence presented by independent 
real estate appraisers that adjusts the contract sale price to reflect both the price 
paid for real estate and the price paid for favorable financing.”  Id. at 62, 23 OBR 
192, 491 N.E.2d 680. 
{¶ 22} In reassessing the plain language of R.C. 5713.03, the court 
determined in Berea that Ratner I had strayed from the statutory mandate, and 
therefore we overruled Ratner I: 
{¶ 23} “In accordance with the plain language of R.C. 5713.03 and our 
decision in [Columbus Bd. of Edn. v. Fountain Square Assoc. Ltd. (1984), 9 Ohio 
St.3d 218, 9 OBR 528, 459 N.E.2d 894], today we overrule Ratner I and [Ratner 
v. Stark Cty. Bd. of Revision (1988), 35 Ohio St.3d 26, 517 N.E.2d 915 (‘Ratner 
II’)] to the extent that they direct the board of revision and the BTA to ‘consider 
and review evidence presented by independent real estate appraisers that adjusts 
the contract sale price to reflect both the price paid for real estate and the price 
paid for favorable financing,’  Ratner I, 23 Ohio St.3d at 62, 23 OBR 192, 491 
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N.E.2d 680, and hold that when the property has been the subject of a recent 
arm’s-length sale between a willing seller and a willing buyer, the sale price of 
the property shall be ‘the true value for taxation purposes.’  R.C. 5713.03.  
Accordingly, because the property at issue in this case had been recently sold in 
an arm’s-length transaction for $2,600,000, the law requires that sale price to be 
the true value of that property for the tax year 1997.”  Berea, 106 Ohio St.3d 269, 
2005-Ohio-4979, 834 N.E.2d 782, ¶ 13. 
{¶ 24} Ratner I’s reasoning for rejecting the sale price as the true value 
was virtually identical to the BTA’s reasoning in this case.  The BTA based its 
reversal on what it believed was a lack of evidence on the financing of the sale.  
Even if the BTA had determined that there was insufficient evidence on 
financing, under Berea, that evidence is immaterial.  The BTA wanted evidence 
on whether the financing terms were market-based.  In reversing Ratner I, Berea 
held that evidence of financing was not to be considered if the property had 
recently been sold in an arm’s-length transaction. 
{¶ 25} Here, Bondo presented evidence of an arm’s-length transaction.  
The board of education did not refute that evidence or present contrary evidence.  
The documents presented clearly what the “Combined Purchase Price” was, 
$1,134,000, allocated between the value of the property and carrying charges.  
According to Berea, that sale price establishes true value. 
{¶ 26} Therefore, we reverse the decision of the BTA and reinstate the 
decision of the board of revision. 
Decision reversed. 
 
O’CONNOR, O’DONNELL and LANZINGER, JJ., concur. 
 
PFEIFER, J., concurs in judgment only. 
 
MOYER, C.J., and RESNICK, J., dissent. 
__________________ 
 
PFEIFER, J., concurring in judgment only. 
January Term, 2006 
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{¶ 27} I concur in judgment. 
{¶ 28} Nevertheless, I disagree with the majority’s decision to endorse, 
once again, an unnecessarily rigid approach to the valuation of real property.  See 
Berea City School Dist. Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 106 Ohio 
St.3d 269, 2005-Ohio-4979, 834 N.E.2d 782, ¶17 (Pfeifer, J., concurring in 
judgment only).  In doing so, the majority ignores R.C. 5715.01 and prohibits tax 
authorities from following that statute’s mandate to consider “all facts and 
circumstances relating to the value of the property.”  Accordingly, I concur in 
judgment only. 
__________________ 
 
Ennis, Roberts & Fischer and C. Bronston McCord III, for appellee Board 
of Education of the Lakota Local School District. 
 
Siegel, Siegel, Johnson & Jennings Co., L.P.A., Erin K. Rooney, and J. 
Kieran Jennings, for appellant. 
______________________