Case Title: Lutheran Social Services of Central Ohio Village Housing, Inc. v. Franklin County Board of Revision

Citation: 2017-Ohio-900

Docket Number: 2014-1032

State: ohio

Court: Ohio Supreme Court

Date: 2017-03-16T00:00:00Z

Document:
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Lutheran Social Servs. of Cent. Ohio Village Hous., Inc. v. Franklin Cty. Bd. of Revision, Slip 
Opinion No. 2017-Ohio-900.] 
 
 
 
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. 2017-OHIO-900 
LUTHERAN SOCIAL SERVICES OF CENTRAL OHIO VILLAGE HOUSING, INC., 
APPELLEE, v. FRANKLIN COUNTY BOARD OF REVISION ET AL., APPELLEES; 
SOUTH-WESTERN CITY SCHOOLS BOARD OF EDUCATION, APPELLANT. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Lutheran Social Servs. of Cent. Ohio Village Hous., Inc. v. 
Franklin Cty. Bd. of Revision, Slip Opinion No. 2017-Ohio-900.] 
Taxation—Real-property valuation—Board of Tax Appeals must engage in 
sufficient discussion of the evidence to permit court on appeal to determine 
whether BTA acted reasonably and lawfully—BTA erred by adopting 
property owner’s appraisal valuations without explicitly addressing 
negative appraisal review offered by board of education’s appraiser—BTA 
erred by adopting appraisal valuation in the absence of a hearing record 
certified by the board of revision, without exercising its statutory power to 
recover the missing hearing record or otherwise adduce pertinent 
evidence—Cause remanded to BTA. 
(No. 2014-1032—Submitted January 10, 2017—Decided March 16, 2017.) 
SUPREME COURT OF OHIO 
 
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APPEAL from the Board of Tax Appeals, Nos. 2012-386 and 2012-387. 
____________________ 
Per Curiam. 
{¶ 1} This appeal from the Board of Tax Appeals (“BTA”) concerns the 
proper valuations for tax year 2008 of two government-subsidized housing 
complexes in Franklin County.  For each complex, the Franklin County Board of 
Revision (“BOR”) rejected the appraisal evidence that the property owner 
presented in support of a claimed reduction, but the BTA reversed and adopted the 
owner’s appraisal valuations in a brief, cursory decision.  The South-Western City 
Schools Board of Education (“BOE”) appealed to this court, arguing that the 
appraisal evidence is not probative as a matter of law or, in the alternative, that the 
BTA erred by failing to consider the expert criticism of the appraisals presented by 
the BOE at the BTA hearing.  We decline the BOE’s invitation to determine the 
probative character of the appraisals, which is a matter that lies primarily within the 
discretion of the BTA.  We do agree, however, that the BTA erred by failing to give 
any consideration to the contravening evidence presented by the BOE at the BTA 
hearing. 
The Subject Properties and the Assessments 
{¶ 2} The first property at issue, Village Place, is a 44-unit apartment 
complex that is located on a 3.339-acre site.  The second property at issue, Stratford 
Place, is a 46-unit apartment complex located on a 3.938-acre site.  Both complexes 
were constructed in the early 2000s as federally subsidized housing developments 
for the elderly, and both were in good condition on the tax-lien date.  For tax year 
2008, an update year in Franklin County, the auditor valued Village Place at 
$1,250,000, and Stratford Place at $1,456,400. 
 
 
January Term, 2017 
 
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Course of Proceedings 
1. The BOR 
{¶ 3} For each of the two properties, the property owner, appellee Lutheran 
Social Services of Central Ohio Village Housing, Inc. (“Lutheran Services”), filed 
a complaint challenging the auditor’s 2008 valuations; in each case, the BOE filed 
a countercomplaint seeking retention of the auditor’s values. 
{¶ 4} In November and December 2011, the BOR held hearings at which 
Lutheran Services presented the appraisal reports and testimony of appraiser 
Donald Miller, a member of the Appraisal Institute.  The BOR certified to the BTA 
compact discs containing audio recordings of the hearings, but the CD that should 
record the hearing on the Stratford Place property is blank.  When it transmitted the 
CD to this court, the BTA included a note stating that the CD was blank, but the 
BTA’s decision does not mention the defect in the record. 
{¶ 5} Miller used an income approach and a sales-comparison approach to 
determine values for each property.  In his income-approach analysis, for Village 
Place, Miller relied on six rent comparables, most built between 1961 and 1975, 
with one built in 1995; for Stratford Place, he relied on five rent comparables, all 
different from those he compared to Village Place, and all built between 1974 and 
1989.  Miller explained that because “[t]he subject receives HUD [federal low-
income housing] subsidies,” the “historic and in place rent is not considered to be 
indicative of market,” and “[m]arket rent, market vacancy, and market operating 
expenses as of the date of valuation are used in accordance with appraisal practices 
and methodology to develop the value.”  For Village Place, Miller arrived at an 
income-approach valuation of $810,000, while for Stratford Place the valuation was 
$730,000. 
{¶ 6} The sales-comparison analysis in each appraisal relied on the same 
five sales of apartment complexes.  Notably, they were constructed in 1963, 1964, 
1968, 1972, and 1973.  This approach, after adjustments for differences in the 
SUPREME COURT OF OHIO 
 
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respective properties, arrived at a valuation of $780,000 for Village Place and 
$740,000 for Stratford Place.  For each complex, Miller reconciled the two 
approaches by adopting the income-approach figure as the property value. 
{¶ 7} In each case, the BOR decision adopted the auditor’s original 
valuation:  $1,250,000 for Village Place and $1,456,400 for Stratford Place.  
Lutheran Services appealed to the BTA. 
2. The BTA 
{¶ 8} At the consolidated BTA hearing, Lutheran Services relied on the 
appraisal reports and testimony presented to the BOR.  The BOE presented the 
testimony of Thomas Sprout, who performed a review of both appraisals, criticizing 
several aspects of them.  Although Sprout was neither formally stipulated to nor 
qualified as an expert through testimony, Lutheran Services did not object to his 
testimony, and Sprout has testified as an expert before the BTA on previous 
occasions, see, e.g., Westerville City Schools Bd. of Edn. v. Franklin Cty. Bd. of 
Revision, 146 Ohio St.3d 412, 2016-Ohio-1506, 57 N.E.3d 1126, ¶ 14. 
{¶ 9} For both Village Place and Stratford Place, Sprout challenged the rent 
comparables in Miller’s appraisal report.  Sprout identified rent comparables that 
were closer in age to the subject properties and that indicated a higher rent for the 
subject properties than did the older rent comparables that Miller had selected.  
Sprout also opined that the capitalization rate used by Miller’s income approach 
was above market. 
{¶ 10} On May 23, 2014, the BTA issued a brief decision summarily 
adopting Miller’s opinions of value.  The BTA stated nothing more than the 
conclusory finding that the appraisals were probative.  The BTA made no mention 
of Sprout’s contrary testimony at the BTA hearing.  The BOE appealed. 
Analysis 
{¶ 11} The BOE’s propositions of law may be distilled to two main points.  
First, the BOE argues that the BTA had the duty to consider and weigh the evidence 
January Term, 2017 
 
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that Sprout presented that tended to contravene the appraisal reports and the 
testimony offered by the Lutheran Services.  Second, the BOE contends that the 
appraisal reports are inherently devoid of probative value and that therefore, the 
BTA had to reject them and reinstate the auditor’s original valuations.  Although 
we reject the latter contention, we agree with the BOE on the first point, and we 
therefore vacate the BTA’s decision and remand for further proceedings. 
1. The BTA must consider conflicting evidence when it adopts an appraiser’s 
opinion of value 
{¶ 12} Although the BTA is not obliged to make formal findings of fact and 
conclusions of law, we have stated that the BTA must engage in sufficient 
discussion of the evidence to permit the court on appeal to determine whether the 
BTA acted reasonably and lawfully.  See HealthSouth Corp. v. Levin, 121 Ohio 
St.3d 282, 2009-Ohio-584, 903 N.E.2d 1179, ¶ 34, citing Howard v. Cuyahoga Cty. 
Bd. of Revision, 37 Ohio St.3d 195, 197, 524 N.E.2d 887 (1988) (“This court is 
unable to perform its appellate duty when it does not know which facts the BTA 
selected in rendering its decision”).  Compare Sears, Roebuck & Co. v. Franklin 
Cty. Bd. of Revision, 144 Ohio St.3d 421, 2015-Ohio-4522, 44 N.E.3d 274, ¶ 17.  
The Sears, Roebuck decision draws the distinction between “mere contentions” and 
conflicting evidence; the BTA’s decision need not give explicit consideration to 
each and every argument raised against its conclusion, but it does need to consider 
and weigh conflicting evidence in the course of justifying its reliance on certain 
evidence as opposed to contravening evidence.  See id. at ¶ 20. 
{¶ 13} Under this case law, the BTA erred by adopting the appraisal 
valuations in this case without explicitly addressing the BTA testimony, in the 
nature of a negative appraisal review, offered by Sprout, the BOE’s appraiser.  We 
therefore vacate the BTA’s decision and remand for further proceedings.  On 
remand, the BTA should explicitly account for the evidence in reaching its 
determination of the values of the properties. 
SUPREME COURT OF OHIO 
 
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2. The absence of the BOR record testimony in the Stratford Place appeal 
furnishes an additional reason to remand 
{¶ 14} In Cannata v. Cuyahoga Cty. Bd. of Revision, 147 Ohio St.3d 129, 
2016-Ohio-1094, 62 N.E.3d 144, we remanded to the BTA for further proceedings 
in the context of the BTA’s adoption of an appraisal valuation that the board of 
revision had rejected, when the board of revision had not certified the testimony at 
its hearing as part of the record to the BTA: “Here the reliable and probative 
character of the owner’s appraisal was called into question by the fact that the BOR 
rejected it based upon a record that was not preserved and made available to the 
BTA.”  Id. at ¶ 20.  Under the circumstances, the BTA had the duty to exercise its 
“ample statutory authority to address the problems presented.”  Id. at ¶ 21. 
{¶ 15} As was true in Cannata, the BOE in this case actively participated 
below, advancing its arguments and objections against the owner’s claims for 
reduced valuations.  Under these circumstances, the BTA was not entitled assume 
that it would not encounter grounds for rejecting Miller’s appraisal in the BOR 
record addressing the value of Stratford Place.  Indeed, the BOR’s rejection of that 
appraisal indicates that such grounds might be present in the record.  Accordingly, 
it was unreasonable for the BTA to adopt the Stratford Place appraisal in this case 
in the absence of a hearing record certified by the BOR, without exercising its 
statutory power to recover the missing hearing record or otherwise adduce pertinent 
evidence. 
3. The Miller appraisals are appropriate for consideration, with due regard for 
Sprout’s critique, in determining the values of the properties 
{¶ 16} The BOE also insists that the BTA, as a matter of law, had to reject 
the Miller appraisals as lacking probative value.  The overriding objection is the 
alleged lack of comparability of the rent and sale comparables to the subject 
properties on account of age and amenities.  In particular, the comparables lack the 
common spaces that presumably make the subject properties more valuable. 
January Term, 2017 
 
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{¶ 17} But the determination of value is “ ‘a question of fact, the 
determination of which is primarily within the province of the taxing  
authorities.’ ”  Sapina v. Cuyahoga Cty. Bd. of Revision, 136 Ohio St.3d 188, 2013-
Ohio-3028, 992 N.E.2d 1117, ¶ 15, quoting Cuyahoga Cty. Bd. of Revision v. 
Fodor, 15 Ohio St.2d 52, 239 N.E.2d 25 (1968), syllabus.  Moreover, “[t]he 
weighing of evidence and the assessment of credibility as regards both of the 
appraisals are the statutory job of the BTA.”  EOP-BP Tower, L.L.C. v. Cuyahoga 
Cty. Bd. of Revision, 106 Ohio St.3d 1, 2005-Ohio-3096, 829 N.E.2d 686, ¶ 9. 
{¶ 18} We see nothing about Miller’s appraisals that constitutes the kind of 
legal error that would, as a matter of law, make it inappropriate for the BTA to 
adopt Miller’s opinions of value.  Compare Dublin City Schools Bd. of Edn. v. 
Franklin Cty. Bd. of Revision, 139 Ohio St.3d 212, 2014-Ohio-1940, 11 N.E.3d 
222, ¶ 16-18 (appraisal valuing multiple condominiums as a single economic unit 
conflicted with R.C. 5311.11 and was inappropriate as a matter of law).  In 
particular, Miller appears to have complied with our case law regarding the 
valuation of government-subsidized properties by using market rent and expenses 
in his income approach.  See Delhi Estates, Ltd. v. Hamilton Cty. Bd. of Revision, 
68 Ohio St.3d 192, 194, 625 N.E.2d 594 (1994) (“in valuing property involved in 
a government housing assistance program, in order to give due regard to market 
rent and current returns on mortgages and equities, we require that market or 
conventional rentals and expenses be utilized to the exclusion of contract or actual 
rentals and expenses”).  As for the quality of his comparables and the propriety of 
his adjustments, that determination lies within the province of the BTA as the finder 
of fact.  On remand, there is no impediment to the BTA again adopting the appraisal 
valuations so long as the BTA explains why Sprout’s criticisms do not impugn the 
validity of doing so. 
 
 
SUPREME COURT OF OHIO 
 
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Conclusion 
{¶ 19} For the foregoing reasons, we vacate the decision of the BTA and 
remand for further proceedings consistent with this opinion. 
Decision vacated 
and cause remanded. 
O’CONNOR, C.J., and KENNEDY, FRENCH, O’NEILL, FISCHER, and DEWINE, 
JJ., concur. 
O’DONNELL, J., dissents and would affirm the decision of the Board of Tax 
Appeals. 
_________________ 
 
Timothy A. Pirtle, for appellee Lutheran Social Services of Central Ohio 
Village Housing, Inc. 
 
Rich & Gillis Law Group, L.L.C., Mark Gillis, and Kimberly G. Allison, 
for appellant. 
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