Case Title: Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd. of Revision

Citation: 2010-Ohio-1040

Docket Number: 

State: ohio

Court: Ohio Supreme Court

Date: 2010-03-24T00:00:00Z

Document:
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd. of Revision, Slip Opinion No. 2010-
Ohio-1040.] 
 
 
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-1040 
OLENTANGY LOCAL SCHOOLS BOARD OF EDUCATION, APPELLEE, v . 
DELAWARE COUNTY BOARD OF REVISION ET AL., APPELLEES; 
KNICKERBOCKER PROPERTIES, INC. XLII, APPELLANT. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd. of 
Revision, Slip Opinion No. 2010-Ohio-1040.] 
Taxation — R.C. 5713.03 — School board presented a prima facie case for using 
the sale price to determine value when it presented evidence of a sale that 
appeared on its face to be recent and at arm’s length — Property owner 
did not meet its burden to refute the recency or arm’s-length character of 
the sale. 
(No. 2009-0320 — Submitted February 24, 2010 — Decided March 24, 2010.) 
APPEAL from the Board of Tax Appeals, No. 2006-H-1361. 
__________________ 
Per Curiam. 
{¶ 1} This is an appeal from a decision of the Board of Tax Appeals 
(“BTA”) that found the value of real property.  Appellant, Knickerbocker 
SUPREME COURT OF OHIO 
2 
 
Properties, Inc. XLII (“Knickerbocker”), challenges the BTA’s determination that 
the December 2003 sale price of $27,605,000 constituted the value of the property 
for tax year 2005.  Knickerbocker contends that the evidence shows a change in 
market conditions between the time of the sale and the tax-lien date, January 1, 
2005, and that the change made it improper to use the earlier sale price in valuing 
the property.  Knickerbocker also contends that the BTA should have adopted the 
opinion of its appraiser, who valued all the property sold in December 2003 (both 
real and personal property) at $24,600,000, then allocated $300,000 to the 
personal property, and thereby determined that the value of the real property on 
the lien date for 2005 was $24,300,000. 
{¶ 2} Because 
the 
BTA 
adequately 
addressed 
Knickerbocker’s 
contention that market conditions had changed, we defer to the BTA’s finding 
that no change had been shown.  We also reject Knickerbocker’s contention that 
the BTA erred by not reducing the sale price by the amount allocated to personal 
property that was sold along with the real property.  We therefore affirm the 
decision of the BTA. 
Facts 
{¶ 3} On December 29, 2003, Sentinel Acquisitions Corporation 
purchased a 25-acre parcel plus an adjacent 1.726-acre “easement parcel” on 
Lazelle Road in the city of Columbus for a consideration of $27,605,000, and 
subsequently transferred the property to Knickerbocker.1  The property is 
improved with a garden-apartment complex of 308,944 square feet.  The 300 
apartment units consist of eight different types located within two-story 
structures. 
                                                 
1. Sentinel Acquisitions Corporation, the entity that purchased the property, was an affiliate of 
Sentinel Real Estate Corporation, which arranged for the purchase.   After Sentinel Acquisitions 
purchased the property, it transferred it to Knickerbocker, which is an entity associated with a 
New York pension fund.  Subsequently, Sentinel Real Estate Corporation served as property 
manager on behalf of Knickerbocker as owner. 
January Term, 2010 
3 
 
{¶ 4} The auditor assigned to the parcels a combined value of 
$27,058,900 for tax year 2005.  Knickerbocker filed a complaint that sought to 
reduce the valuation to $19,000,000.2  In response, the Olentangy Local Schools 
Board of Education (“school board”) filed a countercomplaint seeking to retain 
the auditor’s valuation.  The Delaware County Board of Revision (“BOR”) held a 
hearing on August 30, 2006, during which Knickerbocker presented the testimony 
and appraisal report of Samuel Koon.  Koon concluded that the real property 
should be valued at $24,300,000.  The school board appeared through counsel at 
the BOR but presented no evidence and did not argue in favor of valuing the 
property at the December 2003 sale price.  The BOR adopted the value 
determined by Knickerbocker’s appraiser. 
{¶ 5} The school board appealed to the BTA, initially seeking 
reinstatement of the auditor’s valuation.  At the BTA hearing, the school board 
argued for the first time that the BOR should have adopted the December 2003 
sale price as the value of the property, and it offered the conveyance-fee statement 
as evidence of the sale.3  In rebuttal, Knickerbocker presented the testimony of its 
appraiser, Koon, and the testimony of Anita Breslin of Sentinel Real Estate 
Corporation who was involved in the due diligence in connection with the 2003 
                                                                                                                                     
 
2.  The Olentangy Local Schools Board of Education had previously filed a valuation complaint 
for tax year 2003, asserting that the December 2003 sale established that the value of the property 
on January 1, 2003, was $27,605,000.  That case ultimately reached this court, which held that the 
board of revision had failed to give proper notice of its hearing to Knickerbocker.  Knickerbocker 
Properties, Inc. XLII v. Delaware Cty. Bd. of Revision, 119 Ohio St.3d 233, 2008-Ohio-3192, 893 
N.E.2d 457, ¶  18.  We remanded the cause so that a new hearing could be held at the board of 
revision.  Id. at  ¶ 24. 
 
3. R.C. 5715.19(G) generally precludes a complainant from introducing evidence at the BTA that 
it failed to introduce at the board of revision, if that evidence was previously available.  In this 
case, the school board was a countercomplainant at the board of revision and did not introduce any 
evidence at that level.  When the school board offered the conveyance-fee statement at the BTA, 
Knickerbocker’s counsel explicitly stated that he did not object to that document being introduced, 
because counsel regarded the statement as duplicative of information concerning the sale that 
SUPREME COURT OF OHIO 
4 
 
purchase.  The purpose of their testimony was not only to validate the appraisal, 
but also to establish a change in circumstances between the December 2003 sale 
and the tax-lien date, January 1, 2005.  That change would justify rejecting the 
school board’s argument that the sale price should be used to value the property. 
{¶ 6} Koon testified that both “nationally” and “in the Columbus 
market,” a large number of tenants were “leaving apartment and rental 
communities to buy houses” between December 2003 and January 2005, because 
lenders were requiring very little down payment and relaxing the standards for 
purchasers to qualify for mortgage loans.  The result was “a significant downward 
impact on the occupancy rates of apartment communities.”  Koon testified that the 
performance of the property over 2004 and 2005 fell short of the projections 
Knickerbocker made in a pro forma document that was prepared in connection 
with the 2003 purchase. 
{¶ 7} Koon’s appraisal report used the 2003 sale as one of the 
“comparable sales” and stated that the anticipated potential to increase rents “did 
not materialize due to the soft rental market.”  The appraisal also asserted that 
“[c]ompared to other transfers which occurred at that time, it appears the buyer 
overpaid for the property, indicating a downward adjustment” for the 2005 tax-
lien date. 
{¶ 8} In his appraisal report, however, Koon made adjustments that are 
not consistent with the theory of a declining market.  With respect to two other 
comparable properties that sold during 2003, the appraisal made an upward 
adjustment to account for the time that had lapsed between the sales and the tax-
lien date.  Conversely, two comparables that sold during 2005 – after the lien date 
– were subjected to a downward adjustment. 
                                                                                                                                     
Knickerbocker had submitted to the BOR as part of its appraisal.  Because there was no objection 
to the conveyance-fee statement, the effect of R.C. 5715.19(G) is not at issue in this appeal. 
January Term, 2010 
5 
 
{¶ 9} In her testimony, Breslin confirmed the property’s poor rent 
performance in 2004.  She stated that 2004 was a “particularly difficult period” 
because “interest rates were low and kept dropping for home mortgages,” with the 
result tenants were leaving units like those at issue.  The losses were great 
“particularly at this property, because they’re large units, three-bedroom units and 
two-bedroom units,” thereby comparable to the residential living space of a 
single-family home.  The exodus adversely affected rental income for 2004.  The 
manager also testified that the appraisal’s effective-gross-income computation 
exceeded the property’s actual experience for 2004 and 2005. 
{¶ 10} In its decision, the BTA first held that the school board established 
its prima facie case for valuing the property at $27,605,000 by presenting 
evidence that the property sold for that amount in December 2003, one year and 
two days before the tax-lien date.  Olentangy Local Schools Bd. of Edn. v. 
Delaware Cty. Bd. of Revision (Jan. 13, 2009), BTA No. 2006-H-1361, at 5.  
Next, the BTA considered whether Knickerbocker’s evidence rebutted the 
presumptive recency of the 2003 sale.  Id. at 6-8.  The board concluded that the 
owner had failed in its rebuttal for two main reasons:  the appraisal did not use 
“paired sales,” which might have demonstrated a change in market conditions, 
and various statements in the appraisal report itself created ambiguity as to 
whether market conditions had changed.  Id. at 7-8.  As for testimony regarding 
declining occupancy rates on the property, the BTA observed that the decline did 
not necessarily indicate a change in market conditions because “other factors, 
such as management practices, may also impact a vacancy rate.”  Id. at 8.  Finally, 
the BTA found that the testimony established that the rates began dropping before 
the December 2003 purchase and therefore would have been taken into account in 
arriving at the purchase price for the property. 
SUPREME COURT OF OHIO 
6 
 
{¶ 11} Accordingly, the BTA reversed the BOR and adopted the 
December 2003 sale price as the value of the property for tax year 2005.  
Knickerbocker has appealed to this court. 
Analysis 
Knickerbocker failed to rebut the prima facie recency of the December 2003 sale 
{¶ 12} R.C. 5713.03 states that the auditor “shall consider the sale price of 
[any] tract, lot, or parcel to be the true value for taxation purposes” if the sale was 
at arm’s length and occurred “within a reasonable length of time, either before or 
after the tax lien date.”  We have held that the “reasonableness of the length of 
time – sometimes expressed as whether the sale was ‘recent’ relative to the tax 
lien date – encompasses all factors that would, by changing with the passage of 
time, affect the value of the property.”  Cummins Property Servs., L.L.C. v. 
Franklin Cty. Bd. of Revision, 117 Ohio St.3d 516, 2008-Ohio-1473, 885 N.E.2d 
222, ¶ 35.  One factor is “consideration of changes that have occurred in the 
market” between the date of sale and the tax-lien date.  Id., quoting New 
Winchester Gardens, Ltd. v. Franklin Cty. Bd. of Revision (1997), 80 Ohio St.3d 
36, 44, 684 N.E.2d 312. 
{¶ 13} In its first proposition of law, Knickerbocker contends that a sale 
qualifies as “recent” under R.C. 5713.03 only when evidence in the record 
“support[s] a finding that the market or conditions at the property have not 
changed between the date of the sale and January 1 of the tax year at issue.”  The 
proposition reflects Knickerbocker’s position that as the appellant before the 
BTA, the school board had the burden to “show that the market and value of the 
property did not change between December of 2003 and January 1, 2005.”  
Contrary to Knickerbocker’s position, the BTA held that the school board had 
made a prima facie showing by presenting the conveyance-fee statement showing 
the December 2003 sale price.  As a result, the burden rested on Knickerbocker to 
refute the recency or arm’s-length character of the sale. 
January Term, 2010 
7 
 
{¶ 14} We agree with the BTA’s disposition of this point.  In Cummins, 
we held that the “initial burden on a party presenting evidence of a sale is not a 
heavy one, where the sale on its face appears to be recent and at arm’s length.”  
Cummins, 2008-Ohio-1473, ¶ 41.  Indeed, we have repeatedly acknowledged that 
a school board presents a prima facie case for using a sale price to determine 
value when it presents evidence of a sale that appears on its face to be recent and 
at arm’s length.  Worthington City Schools Bd. of Edn. v. Franklin Cty. Bd. of 
Revision, 124 Ohio St.3d 27, 2009-Ohio-5932, 918 N.E.2d 972, ¶ 28; Columbus 
Bd. of Edn. v. Franklin Cty. Bd. of Revision (1996), 76 Ohio St.3d 13, 16, 665 
N.E.2d 1098. 
{¶ 15} Therefore, the question before us is whether the BTA acted 
reasonably and lawfully when it held that Knickerbocker had failed to rebut the 
prima facie recency of the sale price.  The BTA is responsible for determining 
factual issues and, if the record contains reliable and probative support for the 
BTA’s determinations, this court will affirm them.  Satullo v. Wilkins, 111 Ohio 
St.3d 399, 2006-Ohio-5856, 856 N.E.2d 954, ¶ 14.  More specifically, we “ ‘will 
not reverse the BTA’s determination on credibility of witnesses and weight given 
to their testimony unless we find an abuse of * * * discretion.’ ”  Strongsville Bd. 
of Edn. v. Cuyahoga Cty. Bd. of Revision, 112 Ohio St. 309, 2007-Ohio-6, 859 
N.E.2d 540, ¶ 15, quoting Natl. Church Residences v. Licking Cty. Bd. of Revision 
(1995), 73 Ohio St.3d 397, 398, 653 N.E.2d 240. 
{¶ 16} In the present case, the evidence furnishes reliable and probative 
support for the BTA’s conclusion.  The record consists of the conveyance-fee 
statement, the 2003 purchase agreement, the appraisal report, the testimony of 
Koon before the BOR and then again before the BTA, the testimony of Sentinel 
Real Estate Corporation’s employee Anita Breslin, and several additional 
SUPREME COURT OF OHIO 
8 
 
exhibits.4  Knickerbocker relies on particular statements that it elicited from Koon 
and Breslin that show unusually high vacancy and low income for 2004, and 
Knickerbocker contends that this evidence shows a change in market conditions 
between the December 2003 sale and the 2005 tax-lien date.  The BTA addressed 
this argument and determined that, in light of certain passages in the appraisal 
report and the testimony of the witnesses, the evidence as a whole was at most 
ambiguous on the issue of recency. 
{¶ 17} The evidence supports the BTA’s conclusion.  The BTA points out 
that a study of “paired sales,” i.e., a comparison of the sale prices of similar 
properties that sold both in 2003 and 2005, might constitute probative 
documentation of a change in value.  Knickerbocker’s appraiser, Koon, agreed 
that such a study would constitute an acceptable process for an appraiser to use to 
show a change in the market, and admitted that he had not performed such an 
analysis in this case.  The BTA also pointed out that although Koon opined in his 
appraisal report that “[l]ow interest rates and a continuation in single-family 
housing development in the outer suburbs have placed increasing pressure on the 
apartment market to maintain a viable population for tenants,” the appraiser did 
conclude that “continued population growth in the Columbus area” provided a 
“supplement to those apartment tenants displaced into the single-family-housing 
market.”  This statement contradicts Knickerbocker’s current position that a 
market depression for garden apartments afflicted Columbus as of January 1, 
2005. 
{¶ 18} Koon’s appraisal report tends to contradict Knickerbocker’s 
current theory of market change in one other respect.  Had Koon concluded in 
                                                 
4.  In its brief, the school board points out that it objected to the purchase agreement’s being made 
an exhibit and argues that the exhibit should be disregarded.  It is true that the school board 
objected, but the BTA examiner overruled the objection and admitted the document.  In light of 
our disposition of the appeal in the school board’s favor, any alleged error in the BTA’s ruling was 
harmless. 
January Term, 2010 
9 
 
preparing the appraisal that the market had changed between December 2003 and 
January 1, 2005, he would not have performed certain adjustments to his 
comparable sales.  Koon subjected comparable sales that occurred during 2003 to 
an “adjustment upward for time” in order “to reflect the difference between the 
sale date and the appraisal date,” while comparable sales that occurred during 
2005 – i.e., after the tax-lien date – were subjected to an “adjustment downward 
for time” in order “to reflect the difference between the sale date and the appraisal 
date.”  Both those adjustments are consistent with the view that properties like the 
subject property have tended to increase in value with the passage of time.  
Moreover, the upward adjustment for 2003 sales cannot be reconciled with the 
current assertion of a general downward market trend between 2003 and 2005. 
{¶ 19} Finally, the BTA relied on Breslin’s testimony that mortgage-
interest rates were dropping during 2003 to conclude that “any alleged change in 
the 2004 market was simply a continuation of the same conditions occurring in 
2003.”  Olentangy Local Schools, BTA No. 2006-H-1361, at 8.  At oral argument, 
Knickerbocker asserted that the BTA misunderstood the testimony.  The BTA 
assumed that Breslin was talking about the decline in mortgage rates for single-
family homes when, according to Knickerbocker, Breslin was actually referring to 
mortgage rates paid by entities that purchased apartment complexes in order to 
become landlords.  Breslin believed that the mortgage rates for purchasing 
apartment complexes continued to decline during the general period but, as her 
other testimony unequivocally establishes, she believed that the rates “kept 
dropping for home mortgages” during 2004 and thereby generated (in her view) 
an abnormally high vacancy. 
{¶ 20} Ultimately, however, the alleged misunderstanding of the 
testimony is immaterial.  Even if the BTA made such a mistake, the record simply 
does not document a change in mortgage rates that, together with other factors, 
SUPREME COURT OF OHIO 
10 
 
would suffice to rebut the presumptive recency of the December 2003 sale.  This 
circumstance makes any dispute about Breslin’s testimony moot. 
The BTA had no legal duty to reduce the December 2003 sale price by an amount 
attributable to the value of personal property 
{¶ 21} Knickerbocker advances an alternative argument:  if the December 
2003 sale price is used to value the property for tax year 2005, the price should be 
reduced by $300,000 allocable to personal property that constituted part of the 
sale.  We hold that the BTA did not have a legal duty to grant such a reduction for 
two reasons:  (1) the record does not clearly establish the propriety of such an 
adjustment and (2) Knickerbocker, the party that had the burden of proving its 
entitlement to the adjustment, failed to request it at the BTA. 
{¶ 22} When a board of revision’s decision is appealed to the BTA, the 
BTA’s duty is to “determine the taxable value of the property whose valuation or 
assessment by the county board of revision is complained of.”  R.C. 5717.03(B).  
In making that determination, the BTA must decide not only whether a proffered 
sale price satisfies the criteria of recency and arm’s-length character, but also 
what amount of the stated sale price pertains to the realty.  Thus, if the record 
clearly establishes that a portion of a sale price pertains to personal property, the 
BTA should subtract that portion from the stated sale price to arrive at the amount 
of consideration paid for the realty.  The latter figure will then constitute the true 
value of the realty. 
{¶ 23} The present case does not fall within the rule just stated, because 
the record does not unequivocally establish a basis for allocating a portion of the 
sale price to the personal property that was transferred.  The December 2003 
purchase agreement does set forth a schedule of personal property that constituted 
part of the sale (basically room furnishings and some office equipment), but the 
agreement explicitly recites that no portion of the sale price was being paid for the 
intangible or tangible personalty that was transferred along with the apartment 
January Term, 2010 
11 
 
complex.  Consistent with the contract itself, the conveyance-fee statement did 
not allocate any portion of the sale price to personal property.  And although 
Knickerbocker’s appraiser characterized the personal property as “appliance 
packages within each unit” and set the value of each package at $1,000, for a total 
of $300,000 ($1,000 per unit for 300 units), the appraisal contains no underlying 
analysis to validate that procedure. 
{¶ 24} We have held that when real property is the subject of a sale and 
the sale involves an incidental transfer of tangible or intangible personal property, 
the proponent of allocating a portion of the sale price to assets other than the 
realty “bears an initial burden of showing the propriety of the allocation.”  St. 
Bernard Self-Storage, L.L.C. v. Hamilton Cty. Bd. of Revision, 115 Ohio St.3d 
365, 2007-Ohio-5249, 875 N.E.2d 85, ¶ 14.5  Although Knickerbocker has argued 
both in its notice of appeal and in its second proposition of law that the sale price 
should be reduced by an amount attributable to personal property, Knickerbocker 
failed to make that argument to the BTA.  Instead, Knickerbocker confined its 
BTA brief to arguing that the BTA should not use the sale price to determine the 
value of the property at all.  The BTA had no duty to reduce the sale price on 
account of the transfer of personal property because Knickerbocker did not ask for 
the reduction and because the record did not unequivocally establish the propriety 
of making such an allocation. 
Conclusion 
{¶ 25} The BTA reviewed the evidence and concluded that Knickerbocker 
had not satisfied its burden to show that the December 2003 sale was not recent.  
                                                 
5.  In St. Bernard Self Storage, the evidence did not suffice to support an allocation of $950,000 of 
the $1,950,000 sale price to “goodwill” that was allegedly transferred as part of the sale.  By 
contrast, the court and the BTA affirmed an allocation of $25,000 of the sale price to tangible 
personal property that was transferred with the real estate.  Id. at ¶ 4.  The BTA and the court 
allowed that  allocation because it constituted a minimal portion of the sale price and was never 
contested by any party to the proceeding. 
SUPREME COURT OF OHIO 
12 
 
That finding is supported by the record and merits our deference.  Accordingly, 
we affirm the decision of the BTA. 
Decision affirmed. 
 
MOYER, C.J., and LUNDBERG STRATTON, O’DONNELL, and CUPP, JJ., 
concur. 
 
PFEIFER, O’CONNOR, and LANZINGER, JJ., concur in part and dissent in 
part. 
__________________ 
 
PFEIFER, J., concurring in part and dissenting in part. 
{¶ 26} I concur in the bulk of the majority opinion, but I dissent from its 
treatment of personal property as realty. 
{¶ 27} It is undisputed that the sales price included personal property, 
primarily appliances.  The property owner's appraiser presented unrebutted 
testimony that the personal property was valued at $1,000 per unit.  Because there 
is no evidence to the contrary in the record, I would defer to the appraiser's 
valuation of the personal property.  I conclude that the valuation of the property 
should be reduced by $300,000, $1,000 per unit times 300 units.  Accordingly, I 
concur in part and dissent in part. 
 
O’CONNOR and LANZINGER, JJ., concur in the foregoing opinion. 
__________________ 
 
Rich & Gillis Law Group, L.L.C., and Mark H. Gillis, for appellee 
Olentangy Local Schools Board of Education. 
 
Sleggs, Danzinger & Gill Co., L.P.A., and Todd W. Sleggs, for appellant. 
______________________