Case Title: Freshwater v. Belmont Cty. Bd. of Revision

Citation: 1997-Ohio-362

Docket Number: 19962692

State: ohio

Court: Ohio Supreme Court

Date: 1997-10-08T00:00:00Z

Document:
FRESHWATER ET AL., APPELLANTS, v. BELMONT COUNTY BOARD OF REVISION ET 
AL., APPELLEES. 
[Cite as Freshwater v. Belmont Cty. Bd. of Revision (1997), 80 Ohio St.3d 26.] 
Taxation — Real property valuation — BTA’s determination of true value in a 
given year is not controlled by value assessed for prior years — Appraisers’ 
approach to valuation must be based on facts as they existed as of the tax 
lien date. 
(No. 96-2692 — Submitted May 28, 1997 — Decided October 8, 1997.) 
APPEAL from the Board of Tax Appeals, No. 95-T-1213. 
 
On March 9, 1995, appellants, Ralph D. and Mary E. Freshwater 
(“Freshwaters”), filed a real property valuation complaint with the Belmont 
County Board of Revision (“BOR”) for tax year 1994.  The Freshwaters’ 
complaint challenged the county auditor’s valuation of an apartment development 
they own in Shadyside. 
 
The apartment development is located on three parcels totaling 6.7 acres, 
with improvements consisting of four two-story brick buildings, built between 
1971 and 1977, and a paved parking lot.  The four buildings contain a total of fifty 
one- and two-bedroom, one-bath apartments, plus a manager’s apartment, which 
contains an extra bath and bedroom. 
 
The county auditor valued the property at a true value of $810,930.  The 
Freshwaters contend their property should be valued at $524,307.  The BOR, 
however, approved the auditor’s value.  The Freshwaters filed an appeal with the 
Board of Tax Appeals (“BTA”). 
 
At the BTA hearing, the Freshwaters presented two witnesses.  Their first 
witness, appraiser William A. Becker, had prepared two written appraisals.  In his 
appraisal, dated as of April 5, 1996, Becker determined the true value of the 
 
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property to be $585,000.  In another appraisal, dated as of December 30, 1991, 
Becker determined the true value of the property to be $492,000.  For the January 
1, 1994 lien date, Becker estimated a true value of $550,000 for the real property.  
Becker determined the January 1, 1994 value by taking the difference between his 
appraisal values as of December 30, 1991 and April 5, 1996, and adding one half 
of the difference to the December 30, 1991 value and rounding off the result to a 
value of $550,000. 
 
The Freshwaters’ second witness was Brian A. Danaher, an attorney and 
licensed civil engineer.  Danaher testified concerning an “owner’s determination 
of fair market value,” which he had apparently prepared for the BOR hearing.  
Danaher’s estimate of true value, which he prepared using the income approach, 
was $519,250 for 1994. 
 
The county auditor and BOR’s only witness was appraiser Thomas A. 
Schirack, who, like Becker, considered the income approach to be the only 
approach worthy of serious consideration for this property.  Schirack’s estimate of 
true value as of January 1, 1994, was $821,900. 
 
The BTA accepted Schirack’s appraisal, after deducting an amount that 
Schirack had added for excess land.  The true value of the property as determined 
by the BTA was $782,700. 
 
This cause is now before this court upon an appeal as of right. 
__________________ 
 
J. Drew McFarland and Larry G. McQuain, for appellants. 
 
Frank Pierce, Belmont County Prosecuting Attorney, and Robert W. Quirk, 
Assistant Prosecuting Attorney, for appellees Belmont County Auditor and Board 
of Revision. 
 
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Patricia S. Eshman, urging reversal for amicus curiae, Ohio Home Builders 
Association. 
__________________ 
 
Per Curiam.  Appellants first argue that the BTA should not have 
determined the true value of the property to be $782,700 when it previously was 
valued at $463,000 in 1987, noting that the gross annual income from the property 
had increased by only about $7,500 during the period from 1987 to 1994.  We 
disagree.  
 
The appellants would have the BTA determine true value only by taking the 
prior year’s value and then making adjustments to that value based on changes in 
the income.  Appellants’ argument, although not stated as such, is that the prior 
year’s valuation should be deemed to be correct, and changes in the prior year’s 
valuation should be made only in response to changes which have occurred since 
the date of the last valuation.  The appellants do not cite any statutory authority or 
decisions of this court to support their argument. 
 
We see a number of problems with appellants’ proposal.  First, the valuation 
for the prior year, which appellants would deem to be correct and which would 
serve as the base from which the change would be measured, may not be correct.  
Second, a hearing on valuation would change from a determination of true value at 
a given point in time to a determination of the amount of change since the last 
assessment. 
 
Finally, and most important, the burden of proof before the BOR in a case 
like this would shift from the property owner to the county auditor.  This shift 
would occur when the value determined by the auditor was different from the 
value of the prior year’s assessment.  Thus, when a taxpayer files a complaint, it 
would be the auditor, not the taxpayer, who would have to defend the change, 
 
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because the prior assessment would be deemed to be correct.  However, the 
procedure before a board of revision operates differently — the burden of proof 
before a board of revision is not on the auditor, it is on the party seeking to change 
or affirm the auditor’s assessment.  B.F. Keith Columbus Co. v. Franklin Cty. Bd. 
of Revision (1947), 148 Ohio St. 253, 269, 35 O.O. 244, 251, 74 N.E.2d 359, 366.  
 
Although we have not previously answered the exact argument posed, we 
considered a similar question in Std. Oil Co. v. Zangerle (1943), 141 Ohio St. 505, 
26 O.O. 82, 49 N.E.2d 406.  That question was whether a classification of property 
as real or personal, made for a prior tax year, was res judicata for a subsequent 
year.  In holding that the classification was not res judicata, we analyzed the 
appeal statutes and concluded that the prior decision and classification “remained 
final and conclusive for the current year only.”  Id. at 516, 26 O.O. at 86, 49 
N.E.2d at 411.  See, also, Swetland Co. v. Evatt (1941), 139 Ohio St. 6, 19, 21 
O.O. 511, 516, 37 N.E.2d 601, 607, wherein we stated, “A correction by either the 
county board of revision or the Board of Tax Appeals merely substitutes for the 
then current year complained of a valuation which is binding only for the year in 
question.”  In Fiddler v. Bd. of Tax Appeals (1942), 140 Ohio St. 34, 23 O.O. 232, 
42 N.E.2d 151, the taxing authorities claimed that they had been reducing the 
appraisal for the land in question as values in the area declined.  In response to 
that argument we stated, “The question, however, is not how much of a lowering 
in tax valuation has been made but, rather, what is the true value in money of the 
property for the year of the assessment.”  140 Ohio St. at 37, 23 O.O. at 233, 42 
N.E.2d at 152.  See, also, Zindle v. Summit Cty. Bd. of Revision (1989), 44 Ohio 
St.3d 202, 203-204, 542 N.E.2d 650, 651.  When the BTA makes a determination 
of true value for a given year, such determination is to be based on the evidence 
presented to it in that case, uncontrolled by the value assessed for prior years. 
 
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Appellants also claim that the BTA erred in rejecting the valuation of their 
appraiser, William Becker.  The BTA did so because his appraisals were not made 
as of the tax lien date.  We disagree with appellants. 
 
Becker submitted two written appraisals to the BTA, neither of which 
pertained to the tax lien date, January 1, 1994.  To arrive at a value as of the tax 
lien date, Becker states that he split the difference between the December 30, 1991 
and April 5, 1996 appraisal values, added one half of the difference to his 1991 
appraisal value, and rounded off the total. 
 
The BTA rejected Becker’s procedure and refused to assign any weight to 
his opinion of true value.  The BTA stated that “[t]he mere fact that the tax lien 
date is approximately midway between the two appraisal dates does not mean that 
the 1994 value must also be midway between the two appraisals.” 
 
In rejecting Becker’s opinion of true value, the BTA cited a passage from 
The Appraisal of Real Estate (10 Ed.1992) 75, which states that because market 
forces are constantly changing, “an estimate of value is considered valid only for 
the exact date specified.” 
 
R.C. 5715.19(D) requires that the determination of a complaint filed for a 
particular tax year “shall relate back to the date when the lien for taxes * * * for 
the current year attached.”  R.C. 323.11 provides that the lien for real estate taxes 
is the first day of January.  Likewise, R.C. 5715.01, which authorizes the Tax 
Commissioner to direct and supervise the assessment for taxation of all real 
property, provides that “[t]he commissioner shall neither adopt nor enforce any 
rule that requires true value for any tax year to be any value other than the true 
value in money on the tax lien date of such tax year * * *.”  Thus, the first day of 
January of the tax year in question is the crucial valuation date for tax assessment 
 
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purposes.  Olmsted Falls Village Assn. v. Cuyahoga Cty. Bd. of Revision (1996), 
75 Ohio St.3d 552, 664 N.E.2d 922. 
 
The essence of an assessment is that it fixes the value based upon facts as 
they exist at a certain point in time.  Becker’s approach to valuation was not based 
upon the facts as they existed as of January 1, 1994, the tax lien date.  Becker’s 
appraisals were based upon facts as they existed on December 30, 1991 and April 
5, 1996, the dates of his appraisals.  Evidence of the valuation as of these two 
dates is not evidence of the valuation as of January 1, 1994.  The real estate market 
may rise, fall, or stay constant between any two dates, and the assumption that a 
change in valuation between two given dates is constant and uniform, without 
proof, may properly be rejected by the finder of fact.  The BTA may accept all, 
part, or none of the testimony presented to it by an expert.  Witt Co. v. Hamilton 
Cty. Bd. of Revision (1991), 61 Ohio St.3d 155, 573 N.E.2d 661.  In this case, the 
BTA chose not to accept Becker’s valuation, and we agree. 
 
Appellants also argue that the BTA erred in accepting the testimony of 
appellees’ appraiser concerning commercial lending rates.  Appellants claim he 
did not introduce written confirmation of the rates.  Appellees’ appraiser testified 
that he talked with three different bankers, whom he named, concerning their 
interest rates as of January 1, 1994.  In addition, the appellees’ appraiser consulted 
a national mortgage commitment survey to check the figures he obtained from the 
local lenders.  Appellants now claim the BTA erred in accepting the capitalization 
rate calculated by using these interest rates.  We disagree with appellants. 
 
First, it should be pointed out that the BTA did not rely on the interest rates 
cited by the appellees’ appraiser.  The BTA relied on the opinion of value 
expressed by appellees’ appraiser.  The interest rates cited by appellees’ appraiser 
were presented only to show the basis for the appraiser’s opinion.  An expert’s 
 
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opinion of value in a tax valuation case is of little help to the trier of fact if the 
expert does not explain the basis for the opinion. 
 
If appellants believed the interest rates used by appellees’ appraiser were 
erroneous, then they should have developed the errors through cross-examination.  
However, the appellants did not object to the appellees’ appraiser’s testimony on 
interest rates, and their cross-examination on the subject merely asked whether the 
appraiser had any reports from the bankers.  The source of the background 
material that the appraiser uses in arriving at his opinion of value is one of the 
factors that the BTA weighs in determining the credibility of an appraiser’s 
opinion of true value. 
 
Appellants’ next argument is that the BTA erred in accepting the higher 
gross income amount used by appellees’ appraiser to the extent that it included a 
rental amount for a unit that is being used as a lounge.  We disagree. 
 
During his testimony, appellees’ appraiser stated that his valuation was 
based upon fifty-one units, rather than the fifty units used by appellants’ appraiser.  
The difference is due to a one-bedroom unit that has had a wall removed so it can 
be used a lounge.  Residents can reserve the lounge for parties. 
 
The BTA accepted appellees’ appraisal with only a minor deduction for 
excess-land valuation.  When the BTA accepted appellees’ appraisal, it accepted 
the appraiser’s assertion that the current lounge area should be counted as a 
potential revenue-producing unit for purposes of determining gross income.  As 
we stated above, the BTA may accept or reject all, part, or none of an expert’s 
testimony.  In this case, the BTA has accepted as a factual matter that in 
calculating potential gross income, there are potentially fifty-one revenue-
producing units.  We “will not overrule BTA findings of fact that are based upon 
 
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sufficient probative evidence.”  R.R.Z. Assoc. v. Cuyahoga Cty. Bd. of Revision 
(1988), 38 Ohio St.3d 198, 201, 527 N.E.2d 874, 877. 
 
Next, the appellants argue that the BTA should not have disregarded the 
testimony of Brian Danaher.  The primary basis for the appellants’ argument is 
that because Danaher testified before the BTA in a prior case concerning this 
property, his testimony should have been accepted as that of an expert in this case.  
We disagree. 
 
The BTA found that Danaher was a practicing attorney with experience in 
the engineering field.  Danaher himself admitted, “I don’t consider myself an 
appraiser.”  The BTA found that Danaher did not qualify as an expert appraiser of 
real property.  The mere fact that Danaher testified before the BTA in a prior case 
does not make him an expert real estate appraiser.  One of the requirements of an 
expert witness, as set forth in Evid.R. 702(B), is that “[t]he witness is qualified as 
an expert by specialized knowledge, skill, experience, training, or education 
regarding the subject matter of the testimony.”  In this case, Danaher did not 
exhibit any “specialized knowledge, skill, experience, training, or education” in 
appraising real property. 
 
Finally, the appellants argue that the BTA erred in disregarding Danaher’s 
testimony because it mistakenly believed he had not provided information 
concerning land value.  In light of our ruling concerning Danaher’s testimony, the 
BTA did not err in disregarding his testimony on true value. 
 
For the reasons set forth above, the decision of the BTA, being supported by 
probative evidence of record, is reasonable and lawful, and is therefore affirmed. 
Decision affirmed. 
 
MOYER, C.J., DOUGLAS, RESNICK, F.E. SWEENEY, PFEIFER, COOK and 
LUNDBERG STRATTON, JJ., concur.