Title: Ohio Apt. Assn. v. Levin

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Ohio Apt. Assn. v. Levin, Slip Opinion No. 2010-Ohio-4414.] 
 
 
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-4414 
OHIO APARTMENT ASSOCIATION ET AL., APPELLANTS AND CROSS-APPELLEES, 
v. LEVIN, TAX COMMR., APPELLEE AND CROSS-APPELLANT. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Ohio Apt. Assn. v. Levin, Slip Opinion No. 2010-Ohio-4414.] 
Taxation — Real property — Ohio Adm.Code 5703-25-10 and 5703-25-18 — 
Distinction between residential multifamily dwellings based on number of 
families dwelling will accommodate does not violate Uniformity Clause of 
Section 2, Article XII, or Equal Protection Clause of Section 2, Article I, 
Ohio Constitution. 
(No. 2009-0213 — Submitted May 25, 2010 — Decided September 23, 2010.) 
APPEAL and CROSS-APPEAL from the Board of Tax Appeals, No. 2006-A-861. 
__________________ 
 
CUPP, J. 
{¶ 1} This matter originated in the Board of Tax Appeals (“BTA”) upon 
an application for rule review pursuant to R.C. 5703.14(C).  The rule-review 
process allows any person who has been or may be injured by any rule adopted 
SUPREME COURT OF OHIO 
2 
 
and promulgated by the Tax Commissioner to ask the BTA to determine whether 
the rule is reasonable. 
{¶ 2} The appellants and cross-appellees are Greenwich Apartments, 
Ltd., and D&S Properties, owners of several multiunit apartment complexes 
including residential rental properties containing four or more units, and the Ohio 
Apartment Association, a trade association representing the interests of such 
owners (collectively “appellants”). Appellants filed an application with the BTA 
to review Ohio Adm.Code 5703-25-18 and 5703-25-10.  These administrative 
rules incorporate a 2005 amendment to R.C. 319.302, the effect of which is to 
limit the ten percent property-tax reduction to real property that is “not intended 
primarily for use in a business activity.”  As they affect residential apartments, the 
statute and administrative rules distinguish between properties improved with 
one-, two-, and three-family dwellings and those improved with dwellings for 
four or more families: the tax reduction is granted to the former but not to the 
latter. See Ohio Adm.Code 5703-25-18(A)(4); 5703-25-10(B)(5). 
{¶ 3} Appellants claimed that the administrative rules were unreasonable 
and unconstitutional because their application resulted in a disparate treatment of 
similarly situated property owners based solely on the number of units contained 
on the property.  The BTA found that the rules were reasonable.  Citing its lack of 
jurisdiction, the BTA correctly declined to address appellants’ constitutional 
claims.  See Cleveland Gear Co. v. Limbach (1988), 35 Ohio St.3d 229, 231, 520 
N.E.2d 188; MCI Telecommunications Corp. v. Limbach (1994), 68 Ohio St.3d 
195, 198, 625 N.E.2d 597. 
{¶ 4} After review, we agree with the BTA’s decision that the rules are 
reasonable.  We further find that appellants have not shown that the rules violate 
either the Uniformity or the Equal Protection Clause of the Ohio Constitution.  
Finally, we find that the Tax Commissioner’s cross-appeal is without merit. 
I.  Relevant Background 
January Term, 2010 
3 
 
{¶ 5} In 2005, the General Assembly enacted comprehensive tax reform 
generally designed to lessen the burden of taxation on Ohio’s businesses.  See 
Am.Sub.H.B. No. 66.  For many businesses, the personal property tax and 
corporate franchise tax were phased out and replaced by the Commercial Activity 
Tax (“CAT”).  See R.C. 5711.22(E) through (G) (phasing out the personal 
property tax); 5733.01(G)(1) and (2) (phasing out the corporate franchise tax), 
and 5751.031 (phasing in the CAT). 
{¶ 6} As part of this legislation, R.C. 319.302(A)(1) was amended as 
follows: 
{¶ 7} “Real property that is not intended primarily for use in a business 
activity shall qualify for a partial exemption from real property taxation.  For 
purposes of this partial exemption, ‘business activity’ includes all uses of real 
property, except * * * occupying or holding property improved with single-
family, two-family, or three-family dwellings; [and] leasing property improved 
with single-family, two-family, or three-family dwellings * * *.” 
{¶ 8} Prior to the amendment, all owners of real property received a ten 
percent reduction – or rollback – of their real property tax.  See former R.C. 
319.302, Am.Sub.H.B. No. 168, 150 Ohio Laws, Part III, 3456-3457.  As relevant 
to this appeal, the amendment eliminated the ten percent rollback for taxpayers 
who owned real property improved with dwellings for four or more families.  See 
R.C. 319.302(B) (maintaining the partial exemption at ten percent). 
{¶ 9} Following the amendment to R.C. 319.302, the tax commissioner 
promulgated Ohio Adm.Code 5703-25-18 and amended Ohio Adm.Code 5703-
25-10.  See R.C. 319.302(C) (authorizing the commissioner to adopt rules 
governing administration of the partial exemption). Neither of these 
administrative rules added anything substantive to R.C. 319.302(A).  The relevant 
portion of the first rule, Ohio Adm.Code 5703-25-18(A), merely replicated the 
language of that statutory provision.  Ohio Adm.Code 5703-25-18 also cross-
SUPREME COURT OF OHIO 
4 
 
references Ohio Adm.Code 5703-25-10, which was in existence before the 
passage of Am.Sub.H.B. No. 66.  Ohio Adm.Code 5703-25-10 sets forth real 
property classifications and land-use codes, and the tax commissioner’s 2005 
amendment to this rule did nothing to change the classification of “residential” 
land, defined then and now as land and improvements “used and occupied by one, 
two, or three families.”   Ohio Adm.Code 5703-25-10(B)(5).  Cf. former Ohio 
Adm.Code 5703-25-10, 2003-2004 Ohio Monthly Record, Part 1, 777, eff. Sept. 
18, 2003.1   
{¶ 10} On July 10, 2006, appellants filed their application for rule review 
with the BTA.  The BTA allowed the appellants to amend their application on 
February 1, 2008. Appellants claimed that Ohio Adm.Code 5703-25-18 and 5703-
25-102 were unreasonable because they violate the Uniformity and Equal 
Protection Clauses of the Ohio Constitution.  See Section 2 of Article XII and 
Section 2 of Article I. 
{¶ 11} The BTA lacked jurisdiction over appellants’ constitutional 
challenges, see Cleveland Gear Co. v. Limbach, 35 Ohio St.3d at 231, 520 N.E.2d 
188, and reviewed the rules only for reasonableness.  The BTA found that the 
rules were reasonable because they did not conflict with the legislative directive 
to the tax commissioner to promulgate such rules. 
{¶ 12} Appellants filed a notice of appeal to this court, challenging the 
BTA’s determination that the rules were reasonable and reasserting their 
constitutional arguments.  The tax commissioner filed a cross-appeal, raising 
                                                 
1.  The only change to Ohio Adm.Code 5703-25-10 as a result of Am.Sub.S.B. No. 66 was the 
addition of language and land-use codes to identify certain commercial timbered properties that 
would not be eligible for the ten percent rollback.  
 
2.  Appellants challenge Ohio Adm.Code 5703-25-10 only to the extent that it serves as a 
mechanism by which the commissioner would effect the elimination of the ten percent rollback for 
appellants. 
January Term, 2010 
5 
 
several challenges to the BTA’s jurisdiction and its rule-review process.  The 
commissioner also filed a motion to dismiss. 
II.  Analysis 
A.  The Tax Commissioner’s Motion to Dismiss 
{¶ 13} On March 30, 2009, the tax commissioner filed a motion to 
dismiss that raised four jurisdictional grounds for dismissing the appellants’ 
appeal.  We issued a brief order on July 22, 2009, denying the motion to dismiss.  
See Ohio Apt. Assn. v. Levin, 122 Ohio St.3d 1231, 2009-Ohio-3477, 911 N.E.2d 
906.  Our decision, however, left unresolved one aspect of that motion. 
{¶ 14} In the fourth proposition of law of his motion to dismiss, the tax 
commissioner attacked the sufficiency of appellants’ notice of appeal.  According 
to the commissioner, the notice of appeal contains only broad challenges to the 
constitutionality of the administrative rules and, therefore, fails to satisfy the 
standard for specifying error in R.C. 5717.04. 
{¶ 15} On this issue we previously held that there was no basis for 
granting the motion to dismiss because the notice of appeal contained a sufficient 
specification of appellants’ challenge to the Uniformity Clause.  Ohio Apt. Assn., 
122 Ohio St.3d 1231, 2009-Ohio-3477, 911 N.E.2d 906, ¶ 6.  Because the notice 
of appeal advanced at least one cognizable claim, we declined to address whether 
the scope of the notice of appeal also encompassed appellants’ equal protection 
claim.  Id. 
{¶ 16} R.C. 5717.04 mandates that a notice of appeal from the BTA to 
this court “set forth the decision of the board appealed from and the errors therein 
complained of.”  In their notice of appeal, the appellants allege that the BTA’s 
decision “violates Article I, Section 2 of the Ohio Constitution, which provides 
equal protection to Appellants.”  The tax commissioner asserts that the notice of 
appeal is jurisdictionally deficient because appellants have failed to precisely state 
their constitutional challenges pursuant to our decision in Castle Aviation, Inc. v. 
SUPREME COURT OF OHIO 
6 
 
Wilkins, 109 Ohio St.3d 290, 2006-Ohio-2420, 847 N.E.2d 420, ¶ 38-41 (finding 
that the wording of appellant’s constitutional claim was so general that it could be 
used in almost every use-tax case).3 
{¶ 17} We find that the appellants’ notice of appeal sufficiently sets forth 
their equal protection challenge as required by R.C. 5717.04.  In Castle Aviation, 
the notice of appeal said nothing more than that the imposition of the tax violated 
equal protection.  Id. at ¶ 31.  In contrast, appellants’ notice of appeal in this case 
specifically sets forth the administrative rules at issue.  Moreover, the 
administrative rules on their face create a tax classification of different uses of 
property that is alleged to violate equal protection. 
{¶ 18} The assignments of error set forth in the notice of appeal define the 
scope of our revisory jurisdiction over BTA decisions.  See Polaris Amphitheater 
Concerts, Inc. v. Delaware Cty. Bd. of Revision, 118 Ohio St.3d 330, 2008-Ohio-
2454, 889 N.E.2d 103, ¶ 5.  Appellants’ assignment of error is not so broad as to 
encompass every possible equal protection claim.  See Brown v. Levin, 119 Ohio 
St.3d 335, 2008-Ohio-4081, 894 N.E.2d 35, ¶ 17 (although the notice of appeal 
may create “jurisdiction over one or more issues that have been sufficiently 
specified,” the BTA “lacks jurisdiction to grant relief based on other alleged 
errors that were not sufficiently specified in the notice of appeal”).  Here, 
appellants argue in their merit brief that the rules discriminate between different 
types of real property owners based on an arbitrary and unreasonable 
classification of property, an allegation that is within the scope of the error 
assigned in the notice of appeal to this court. 
                                                 
3.  Although Castle Aviation involved R.C. 5717.02, which sets forth procedures for filing a notice 
of appeal from a final determination of the tax commissioner to the BTA, this court has 
consistently analyzed notices of appeal under R.C. 5717.04 in light of case law construing R.C. 
5717.02.  See Lawson Milk Co. v. Bowers (1961), 171 Ohio St. 418, 14 O.O.2d 217, 171 N.E.2d 
495; Richter Transfer Co. v. Bowers (1962), 174 Ohio St. 113, 21 O.O.2d 369, 186 N.E.2d 832; 
and Deerhake v. Limbach (1989), 47 Ohio St.3d 44, 546 N.E.2d 1327. 
January Term, 2010 
7 
 
{¶ 19} In sum, the foregoing circumstances establish the sufficiency of the 
appellants’ notice of appeal and, accordingly, our jurisdiction over their equal 
protection challenge. 
B.  The Tax Commissioner’s Cross-Appeal 
1.  First and Second Propositions of Law on Cross-Appeal 
{¶ 20} The tax commissioner’s first three propositions of law are in 
support of his cross-appeal.  The arguments asserted in his first proposition of law 
are identical to arguments that he raised in the first and second propositions of law 
of his motion to dismiss.  Our disposition of the motion to dismiss in effect 
disposed of the commissioner’s first proposition of law on cross-appeal.  See 
Ohio Apt. Assn. v. Levin, 122 Ohio St.3d 1231, 2009-Ohio-3477, 911 N.E.2d 906, 
¶ 3 (rejecting argument that a rule-review proceeding before the BTA is quasi-
legislative in character), and ¶ 4 (rejecting argument that appellants may not use 
the BTA’s rule-review proceeding to challenge the constitutionality of a rule or 
statutory classification). 
{¶ 21} The commissioner’s second proposition of law was also resolved 
by our disposition of the motion to dismiss.  See Ohio Apt. Assn., 122 Ohio St.3d 
1231, ¶ 5 (rejecting argument that rules are not ripe for review until a statutory 
classification has been declared unconstitutional). 
2.  Third Proposition of Law on Cross-Appeal 
{¶ 22} In the commissioner’s third proposition of law, he claims that 
appellants lack standing to challenge the reasonableness of Ohio Adm.Code 5703-
25-18 through the rule-review process in R.C. 5703.14(C) because the actual or 
potential injury to appellants is caused by the enabling statute and not the rule.  
The commissioner’s reasoning is as follows:  Ohio Adm.Code 5703-25-18(A), 
which withholds the ten percent rollback from appellants, merely replicates R.C. 
319.302(A)(1); thus, even if the rule is deemed unconstitutional, R.C. 319.302 
remains intact, and so does the injury to appellants. 
SUPREME COURT OF OHIO 
8 
 
{¶ 23} Although standing was not raised in the commissioner’s motion to 
dismiss, we find that our decision on that motion forecloses his standing 
argument.  The commissioner’s standing claim is premised on his continuing 
argument – raised in his motion to dismiss and the first two propositions of law of 
his merit brief – that a rule-review proceeding cannot be used to attack the 
constitutionality of the underlying statute that authorized the rules under review.  
But we rejected the argument when we denied the commissioner’s motion to 
dismiss.  In essence, we held that appellants’ challenges to the administrative 
rules inherently implicate the rule’s conformity with the underlying statute, and to 
that extent, the statute itself has been placed at issue.  Ohio Apt. Assn., 122 Ohio 
St.3d 1231, 2009-Ohio-3477, 911 N.E.2d 906, ¶ 4 (rejecting argument that 
appellants may not use the BTA’s rule-review proceeding to challenge the 
constitutionality of a statutory classification), and ¶ 5 (rejecting argument that a 
rule-review proceeding is not ripe until a statutory classification has been declared 
unconstitutional). 
{¶ 24} R.C. 5703.14(C) also cuts against the commissioner’s standing 
argument.  This provision specifies that an applicant for rule review must be a 
person “who has been or may be injured by the operation of the rule.”  The injury 
requirement assures that rule review at the BTA involves a genuine case or 
controversy.  And though the commissioner argues that appellants have not 
demonstrated any injury from Ohio Adm.Code 5703-25-18 independent of R.C. 
319.302, he does not dispute or otherwise challenge appellants’ contention that 
they have suffered economic injury from the loss of the ten percent property tax 
rollback. 
{¶ 25} We find that the tax commissioner has not demonstrated that 
appellants lack standing under R.C. 5703.14(C) to prosecute this matter.  
Therefore, we reject the commissioner’s third proposition of law. 
3.  Conclusion — Cross-Appeal 
January Term, 2010 
9 
 
{¶ 26} Based on the foregoing, we find that none of the arguments raised 
on cross-appeal has merit.  Accordingly, the tax commissioner’s cross-appeal is 
overruled. 
C.  Appellants’ Appeal 
1.  Application of Galatis to Appellants’ Uniformity-Clause Challenge 
{¶ 27} The appellants contend that Ohio Adm.Code 5703-25-18 and 
5703-25-10 contravene the requirement of Section 2, Article XII of the Ohio 
Constitution that all real property be taxed uniformly. 
{¶ 28} Appellants’ constitutional challenge hinges on their request that we 
overrule State ex rel. Swetland v. Kinney (1980), 62 Ohio St.2d 23, 16 O.O.3d 14, 
402 N.E.2d 542.4  In Swetland, this court upheld the constitutionality of a two-
and-one-half percent real-property-tax exemption that was applicable only to 
“homesteads.”  Id. at paragraph one of the syllabus.  In so holding, this court 
rejected challenges – largely identical to those raised by appellants here – that the 
provisions authorizing the partial exemption violated the Uniformity Clause of the 
Ohio Constitution. 
{¶ 29} Appellants, apparently conceding that Swetland is dispositive of 
their Uniformity Clause challenge, want us to overturn that decision.  They argue 
that the majority’s decision in Swetland “flowed from a series of missteps, which, 
when examined further and without the backdrop of the specific economic 
pressures that led to that decision, reveal that the Constitution requires complete 
uniformity in tax rates.” 
{¶ 30} In Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216, 2003-Ohio-
5849, 797 N.E.2d 1256, we established a three-part test for overruling precedent.  
“A prior decision of the Supreme Court may be overruled where (1) the decision 
                                                 
4.  Throughout their briefs, appellants refer to Swetland as “Park V.”  But this is a misnomer. 
Swetland is not a progeny of the Park Investment line of cases. See State ex rel. Park Invest. Co. v. 
Bd. of Tax Appeals (1964), 175 Ohio St. 410, 25 O.O.2d 432, 195 N.E.2d 908.   
SUPREME COURT OF OHIO 
10 
 
was wrongly decided at that time, or changes in circumstances no longer justify 
continued adherence to the decision, (2) the decision defies practical workability, 
and (3) abandoning the precedent would not create an undue hardship for those 
who have relied upon it.”  Id. at paragraph one of the syllabus. 
{¶ 31} Appellants do not cite Galatis.  They do argue that Swetland was 
wrongly decided, echoing Galatis’s first requirement.  Galatis, however, contains 
three requirements that must be satisfied, and appellants do not contend that the 
other two requirements have been met.  Because appellants’ Uniformity Clause 
challenge rests entirely on overruling Swetland, we reject this proposition of law 
based on appellants’ failure to address all three prongs of the Galatis test.  See 
State ex rel. Grimes Aerospace Co., Inc. v. Indus. Comm., 112 Ohio St.3d 85, 
2006-Ohio-6504, 858 N.E.2d 351, ¶ 6. 
2.  Appellants’ Equal Protection Arguments 
{¶ 32} Appellants contend that Ohio Adm.Code 5703-25-18 and 5703-25-
10 violate the Equal Protection Clause of the Ohio Constitution because rules that 
treat residential rental property that contains four or more units differently than 
property containing three or fewer units are arbitrary and unreasonable. 
{¶ 33} “The limitations placed upon governmental action by the federal 
and state Equal Protection Clauses are essentially the same.”  McCrone v. Bank 
One Corp., 107 Ohio St.3d 272, 2005-Ohio-6505, 839 N.E.2d 1, ¶ 7.  The Equal 
Protection Clauses require that all similarly situated individuals be treated in a 
similar manner.  Id. at ¶ 6. 
{¶ 34} A statutory classification that involves neither a suspect class nor a 
fundamental right, as here, does not violate the Equal Protection Clauses if it 
bears a rational relationship to a legitimate governmental interest.  Menefee v. 
Queen City Metro (1990), 49 Ohio St.3d 27, 29, 550 N.E.2d 181.  Under the 
rational-basis standard, a state has no obligation to produce evidence to sustain 
the rationality of a statutory classification.  Am. Assn. of Univ. Professors, Cent. 
January Term, 2010 
11 
 
State Univ. Chapter v. Cent. State Univ. (1999), 87 Ohio St.3d 55, 58, and 60, 717 
N.E.2d 286.  Rather, a taxpayer challenging the constitutionality of a taxation 
statute bears the burden of negating every conceivable basis that might support 
the legislation.  Id. at 58.  See also Lyons v. Limbach (1988), 40 Ohio St.3d 92, 
94, 532 N.E.2d 106. 
{¶ 35} The rational basis standard requires a high degree of judicial 
deference to legislative enactments.  Id. at 93.  Moreover, it is well settled that 
assessment of taxes is fundamentally a legislative responsibility, and “[t]his 
already deferential standard ‘is especially deferential’ in the context of 
classifications arising out of complex taxation law.”   Park Corp. v. Brook Park, 
102 Ohio St.3d 166, 2004-Ohio-2237, 807 N.E.2d 913, ¶ 23, quoting Nordlinger 
v. Hahn (1992), 505 U.S. 1, 11, 112 S.Ct. 2326, 120 L.Ed.2d 1.  States have broad 
leeway in making classifications and drawing lines that in their judgment produce 
reasonable systems of taxation.  Nordlinger, id. 
a.  Do the rules discriminate between different types of residential property? 
{¶ 36} Appellants first contend that the administrative rules violate equal 
protection because they discriminate between different types of residential 
properties. Ohio Adm.Code 5703-25-18(A) provides that real property that is not 
intended primarily for use in a business activity shall qualify for a partial 
exemption (ten percent rollback) from real property taxation.  Leasing property 
improved with one-, two-, and three-family dwellings is specifically defined as 
not involving a “business activity.” It therefore qualifies for the exemption, Ohio 
Adm.Code 5703-25-18(A)(4), and properties improved with four or more 
dwellings do not. Appellants argue that this discriminatory treatment of apartment 
renters is arbitrary because, regardless of the number of units, rental property is 
“residential.” 
{¶ 37} Appellants’ equal protection arguments contain several flaws.  
First, though appellants allege that the rules discriminate against apartment renters 
SUPREME COURT OF OHIO 
12 
 
by applying a higher tax rate, appellants – apartment owners and their trade 
association – have not shown that they have standing to assert the equal protection 
rights of renters.  Generally, a litigant must assert its own rights, not the claims of 
third parties.  See Util. Serv. Partners, Inc. v. Pub. Util. Comm., 124 Ohio St.3d 
284, 2009-Ohio-6764, 921 N.E.2d 1038, ¶ 49-50; N. Canton v. Canton, 114 Ohio 
St.3d 253, 2007-Ohio-4005, 871 N.E.2d 586, ¶ 14.  And while a limited exception 
exists, E. Liverpool v. Columbiana Cty. Budget Comm., 114 Ohio St.3d 133, 
2007-Ohio-3759, 870 N.E.2d 705, ¶ 22, appellants have not shown that they fall 
within the exception.  Renters would have an interest in their landlords’ tax rate 
only if the landlords are both willing and able to pass through tax increases and 
decreases in the form of higher or lower rent.  But David Fisher, general partner 
of appellant D&S Properties, testified that he was not able to increase rental 
charges for his properties after those properties became ineligible for the ten 
percent rollback. 
{¶ 38} Second, appellants have not shown that they are situated similarly 
to owners of one-, two-, and three-family dwellings.  Equal protection requires 
that similarly situated persons be treated alike, unless a rational basis justifies 
treating them differently.  “But the Equal Protection Clause ‘does not require 
things which are different in fact * * * to be treated in law as though they were the 
same.’ ”) (Ellipsis sic.) GTE North, Inc. v. Zaino, 96 Ohio St.3d 9, 2002-Ohio-
2984, 770 N.E.2d 65, ¶ 22, quoting Tigner v. Texas (1940), 310 U.S. 141, 147, 60 
S.Ct. 879, 84 L.Ed. 1124.  Thus, a “comparison of only similarly situated entities 
is integral” to determining whether the administrative rules deprive the appellants 
of equal protection.  GTE North at ¶ 22-23. 
{¶ 39} Appellants’ primary argument in this regard is that all real property 
subject to classification in this case, whether a single-family home or a 100-unit 
apartment, is “residential.”  According to appellants, the administrative rules 
“unconstitutionally discriminate between different types of residential property” 
January Term, 2010 
13 
 
and place “a disproportionate burden on rental properties with four or more units 
as compared to all other residential property.” Appellants, however, have placed 
undue emphasis on the differing treatment of property.  The Equal Protection 
Clause protects people, not property.  See Park Corp. v. Brook Park, 102 Ohio 
St.3d 166, 2004-Ohio-2237, 807 N.E.2d 913, ¶ 19, quoting Nordlinger, 505 U.S. 
at 10, 112 S.Ct. 2326, 120 L.Ed.2d 1 (the Equal Protection Clause prevents 
government “ ‘from treating differently persons who are in all relevant respects 
alike’ ”).  (Emphasis added.)  Because the Equal Protection Clause protects 
people, the proper analysis focuses on the classification of property owners. 
{¶ 40} To the extent that appellants’ claim relates to classification of 
property owners, we rejected a virtually identical argument in Roosevelt 
Properties Co. v. Kinney (1984), 12 Ohio St.3d 7, 12 OBR 6, 465 N.E.2d 421, a 
case involving a rule-review appeal nearly identical to this case.  The Roosevelt 
appellants, owners of multiunit apartment complexes and smaller rental 
properties, challenged an administrative rule adopted by the tax commissioner 
that governed the calculation of tax-reduction factors under Section 2a, Article 
XII of the Ohio Constitution.  The tax-reduction factors in Roosevelt were 
designed to reduce the effect of inflation on the tax liability of residential- and 
agricultural-property owners, and were available only to those owners.  Under the 
administrative rule in Roosevelt, residential property was defined as a dwelling 
consisting of four or fewer units.  Id. at 8.5   
{¶ 41} The Roosevelt appellants asserted that the administrative rule 
violated equal protection because the rule excluded rental properties consisting of 
five and more units from the benefit of the tax-reduction factors.  Appellants 
argued that the classification should be predicated on the tenant’s use of the 
                                                 
5.  Before the administrative rule was enacted, the tax-reduction factor was applied to residential 
property consisting of three units or less.  See Roosevelt Properties v. Kinney (1984), 12 Ohio 
St.3d 7, 10, 12 OBR 6, 465 N.E.2d 421. 
SUPREME COURT OF OHIO 
14 
 
property instead of the owner’s use.  Id. at 10.  We rejected that argument, finding 
that the apartment complexes at issue were not residential but were, instead, 
“singularly commercial in nature” because “[s]uch properties are accompanied by 
commercial expectations not otherwise associated with properties occupied by 
‘homeowners.’ ”  Id. at 12. 
{¶ 42} In this case, appellants’ argument that the rules discriminate 
“between persons who choose to live in an apartment building and those who live 
in a single-family home” is predicated upon its assertion that the property should 
be classified based on the tenant’s use of the property instead of the owner’s use, 
the same argument rejected in Roosevelt.  Like the appellants in Roosevelt, the 
apartment owners in this case have failed to demonstrate that their properties are 
not primarily used for business or commercial purposes. 
{¶ 43} On this issue, appellants’ evidence consists of only two references 
to the statutory transcript.  First, they cite testimony that equates owning 
residential rental property to owning a home because both share similar 
maintenance issues such as “carpeting, furnaces, air conditioners, roof, [and] lawn 
maintenance.”  But on cross-examination, this witness testified that owners of 
residential rental properties qualify for tax deductions for expenses associated 
with maintenance and repairs that are not available to homeowners. 
{¶ 44} Second, appellants refer to testimony stating that a “renter can be 
anybody.  It can be [the witness].  It can be the hearing officer, the court reporter, 
anybody.  In many instances, a residential renter resident has made a lifestyle 
choice to rent.”  It is not clear to us, however, how this demonstrates that 
appellants’ rental properties are not primarily used in a business or commercial 
activity. 
{¶ 45} The burden is on the appellants to show that they are situated 
similarly to persons receiving the ten percent tax reduction.  Yet appellants have 
failed to show that owners of single-family homes, duplexes, and triplexes are 
January Term, 2010 
15 
 
situated similarly to owners of property containing four or more dwellings.  
Likewise, even assuming appellants have standing to assert the claim, appellants 
have not shown that apartment renters and single-family homeowners are 
similarly situated. 
{¶ 46} Appellants attempt to distinguish Roosevelt Properties.  According 
to appellants, the “critical distinguishing factor” is that the residential 
classification upheld by Roosevelt was authorized by a constitutional amendment 
that is limited in application to the tax-reduction factor. 
{¶ 47} Once again, the import of appellants’ argument is not clear.  To the 
extent that appellants are claiming that the constitutional amendment in Roosevelt 
was dispositive of the equal protection question, that claim is without merit.  The 
equal protection claim in Roosevelt failed not because of a constitutional 
amendment, but because the appellants failed to demonstrate that no reasonable 
basis existed for the residential classification at issue in that case.  See Roosevelt, 
12 Ohio St.3d at 13. 
b.  Do the rules discriminate between residential rental properties? 
{¶ 48} Appellants also contend that the administrative rules violate the 
Equal Protection Clause because rental properties containing three units receive 
the ten percent rollback but four-unit rental properties do not.  According to 
appellants, this distinction by number of units is illusory, and there is no evidence 
of any other reasonable basis for distinguishing between rental properties. 
{¶ 49} We rejected exactly this argument in Roosevelt Properties.  12 
Ohio St.3d at 13-15.  In analyzing the reasonableness of a classification that 
distinguished between four-unit properties and five-unit properties, we were 
persuaded by  Hegenes v. State (Minn.1983), 328 N.W.2d 719.  At issue in 
Hegenes was a state statute that created two tax classifications for residential 
rental property:  residential rental property containing three or fewer units was 
taxed at a lower rate than rental property containing four or more units.  Id. at 
SUPREME COURT OF OHIO 
16 
 
720.  The Hegenes court found that when it comes to drawing legal classifications 
under the rational-basis standard, the line drawn need not be perfect for 
constitutional purposes.  “ ‘When a legal distinction is determined, as no one 
doubts that it may be, * * * a point has to be fixed or a line has to be drawn * * * 
to mark where the change takes place.  Looked at by itself without regard to the 
necessity behind it the line or point seems arbitrary.  It might as well or nearly as 
well be a little more to one side or the other.  But when it is seen that a line or 
point there must be, and that there is no mathematical or logical way of fixing it 
precisely, the decision of the Legislature must be accepted unless we can say that 
it is very wide of any reasonable mark.’ ”  Hegenes, at 722, quoting  Justice 
Holmes’s dissent in Louisville Gas & Elec. Co. v. Coleman (1928), 277 U.S. 32, 
41, 48 S.Ct. 423, 72 L.Ed. 770. 
{¶ 50} Hegenes observed that genuine distinctions exist between small 
rental properties and large multiunit apartment complexes.  Moreover, the 
Hegenes court rejected the contention – the same contention raised by appellants 
here – that the classification became arbitrary and unreasonable for equal 
protection purposes solely because the differences between small and larger rental 
properties diminish when comparing triplexes to four-unit properties.  Hegenes, at 
722. 
{¶ 51} In Roosevelt Properties, we agreed with the line of reasoning in 
Hegenes: the fact that these differences diminish when comparing four-unit 
properties to five-unit properties becomes a question of legislative line drawing.  
We held that “since the Equal Protection Clause does not impose an ‘iron rule of 
equality,’ ” the line drawn between four- and five-unit properties was reasonable.  
Roosevelt Properties, 12 Ohio St.3d at 15, quoting Allied Stores of Ohio, Inc. v. 
Bowers (1959), 358 U.S. 522, 526, 79 S.Ct. 437, 3 L.Ed.2d 480.  These same 
principles are directly applicable to this case. 
January Term, 2010 
17 
 
{¶ 52} As to appellants’ claim that no evidence exists of any relevant 
distinction between three- and four-unit rental properties, that claim overlooks the 
following evidence.  Testimony before the BTA indicated that the line was drawn 
between three- and four-unit properties because properties with three or fewer 
units were more characteristic of residential property, and properties with four or 
more units more closely resembled commercial property. Other testimony 
reflected that from 1993 to 2007, single-family homes, duplexes, and triplexes 
appreciated in value at very similar rates.  In contrast, the rate of appreciation for 
rental properties of four or more units was 25 to 30 percent less over the same 
period.  And property that is classified as residential continues to appreciate at a 
higher rate than commercial property, thereby justifying the different tax 
treatment. 
{¶ 53} In response, appellants quote testimony that “[t]he scope [of the 
two categories of rental properties] may be different based on the size of the 
business entity that owns the residential rental property, but it is still residential 
rental property.”   Appellants also claim that there are no differences between 
people who rent units in large complexes and those who rent in smaller properties. 
But these claims merely rehash appellants’ argument that all rental property is 
“residential.” 
{¶ 54} Appellants further contend that three-unit owners and four-unit 
owners (1) have the same responsibilities (e.g., maintenance and “peaceful 
enjoyment”), (2) are treated the same for tax purposes, and (3) may own rental 
properties of both sizes. But this evidence does not rebut the tax commissioner’s 
evidence that properties with four or more units (1) are generally more 
commercial in nature and (2) appreciate at a lower rate than single-family homes, 
duplexes, and triplexes. 
{¶ 55} Our job is simply to determine, with great deference, whether there 
is a rational basis for the General Assembly’s taxation decisions.  See Park Corp. 
SUPREME COURT OF OHIO 
18 
 
v. Brook Park, 102 Ohio St.3d 166, 2004-Ohio-2237, 807 N.E.2d 913, ¶ 36.  We 
find that providing tax relief to property owners whose property values are 
increasing at a higher rate than appellants’ properties constitutes a rational basis 
for the different classifications.  As appellants have failed to negate that basis, 
their claim here is denied. 
III.  Conclusion 
{¶ 56} We have held that enactments of the General Assembly are 
constitutional unless they are clearly unconstitutional beyond a reasonable doubt.  
State ex rel. Dickman v. Defenbacher (1955), 164 Ohio St. 142, 57 O.O. 134, 128 
N.E.2d 59, paragraph one of the syllabus.  Accord Cincinnati City School Dist. 
Bd. of Edn. v. Walter (1979), 58 Ohio St.2d 368, 376, 12 O.O.3d 327, 390 N.E.2d 
813.  This principle applies equally to administrative regulations.  See Roosevelt 
Properties, 12 Ohio St.3d at 13. 
{¶ 57} Appellants have failed to meet their burden of proving that the 
administrative rules violate the Ohio Equal Protection Clause beyond a reasonable 
doubt.  As to appellants’ assertion that the rules violate the Uniformity Clause of 
the Ohio Constitution, that claim is rejected on appellants’ failure to satisfy the 
test set forth in Galatis for overruling our precedents. 
{¶ 58} Accordingly, appellants’ appeal is rejected and we affirm the 
decision of the BTA. 
Decision affirmed and 
cross-appeal overruled. 
 
BROWN, C.J., and LUNDBERG STRATTON, O’CONNOR, O’DONNELL, and 
LANZINGER, JJ., concur. 
 
PFEIFER, J., dissents. 
__________________ 
 
PFEIFER, J., dissenting. 
January Term, 2010 
19 
 
{¶ 59} Section 2, Article XII of the Ohio Constitution states that “[l]and 
and improvements thereon shall be taxed by uniform rule according to value * * 
*.”  The tax in this case is not uniform, because a ten percent rollback provision 
applies to apartment buildings with three or fewer units but does not apply to 
apartment buildings with four or more units.  See 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 (“It is clear that under the Ohio law all real property, regardless of its nature 
or use, may be assessed and taxed only by a uniform rule on the basis of value”).  
I would reverse the decision of the Board of Tax Appeals.  I dissent. 
__________________ 
 
Calfee, Halter & Griswold, L.L.P., Mark I. Wallach, James F. Lang, and 
Laura C. McBride, for appellants and cross-appellees. 
 
Richard Cordray, Attorney General, and Lawrence D. Pratt and Alan 
Schwepe, Assistant Attorneys General, for appellee and cross-appellant. 
_____________________