Title: Dublin City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision

State: ohio

Issuer: Ohio Supreme Court

Document:

[Cite as Dublin City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 118 Ohio St.3d 45, 
2008-Ohio-1588.] 
 
 
BOARD OF EDUCATION OF DUBLIN CITY SCHOOLS, APPELLANT, v. FRANKLIN 
COUNTY BOARD OF REVISION ET AL., APPELLEES. 
[Cite as Dublin City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 118 
Ohio St.3d 45, 2008-Ohio-1588.] 
Real estate taxation—Sale price as evidence of value—Effect of easements. 
(No. 2007-0550—Submitted December 11, 2007—Decided April 9, 2008.) 
APPEAL from the Board of Tax Appeals, No. 2005-B-638. 
__________________ 
 
MOYER, C.J. 
{¶ 1} This appeal presents another occasion for this court to decide 
whether the Board of Tax Appeals (“BTA”) properly applied our holding in Berea 
City School Dist. Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 106 Ohio St.3d 
269, 2005-Ohio-4979, 834 N.E.2d 782.  In this case, the property owner contested 
the auditor’s valuation of the property and introduced the sale price as evidence of 
value.  The board of revision adopted the sale price as the value of the property, 
and the BTA did the same. 
{¶ 2} The Board of Education of Dublin City Schools contends that the 
easements encumbering the property depressed the sale price below the actual 
value of the property.  Specifically, the board relies on the doctrine that for 
purposes of taxation, real property should be valued as a fee simple absolute 
without encumbrances imposed by private, voluntary decisions.  Recently, we 
rejected similar arguments in Cummins Property Servs., L.L.C. v. Franklin Cty. 
Bd. of Revision, 117 Ohio St.3d 516, 2008-Ohio-1473, ___ N.E.2d ___.  Applying 
Cummins to this case, we conclude that the BTA acted reasonably and lawfully 
when it adopted the sale price as the measure of the value of the property.  We 
therefore affirm the decision of the BTA. 
SUPREME COURT OF OHIO 
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I 
{¶ 3} The property owner, UA Professional Center, L.L.C. (“UA 
Professional”), filed its complaint in 2003 with the Franklin County Board of 
Revision against the auditor’s valuation of the unimproved property for tax year 
2002.  The complaint sought a reduction from the assessed value of $631,100 to 
$300,000.  The board of education filed a countercomplaint seeking retention of 
the auditor’s determination of value. 
{¶ 4} At issue is a 2.437-acre parcel adjacent to a Giant Eagle 
supermarket at the corner of Bethel and Sawmill Roads.  UA Professional based 
its complaint on the September 2002 sale price of the property.  At two hearings 
before the Franklin County Board of Revision (“BOR”), UA Professional 
presented the deed, the closing statement, and the testimony of Bob Long, a 
principal of Long & Wilcox, a real estate development firm, and the managing 
partner of UA Professional.  According to the testimony, Long & Wilcox 
purchased the property from Continental Eagle II, L.L.C. (“Continental”) and 
transferred it to UA Professional.  Continental had acquired the parcel in order to 
meet the parking needs of the adjacent supermarket, and Long testified that the 
property was encumbered with easements that permitted store parking on the 
parcel.  Long also stated that the city of Upper Arlington had required the 
building of a medical office as a condition on the development of the property.  
Continental designed a building and installed some infrastructure but abandoned 
the project and sold the parcel to Long & Wilcox, which transferred it to UA 
Professional. 
{¶ 5} Long testified that $200,000 of consideration passed from Long & 
Wilcox as purchaser to Continental as seller of the property.  The transfer of the 
property to UA Professional involved $300,000 flowing to Long & Wilcox, but 
Long explained that the latter was not an arm’s-length transaction, but rather a 
planned reorganization of ownership; Long & Wilcox had put together an 
January Term, 2008 
3 
“investment team” for the project, and its members were direct investors in UA 
Professional.  After acquisition, UA Professional completed the building, located 
tenants, and sold the parcel in May 2003 for $1,995,000. 
{¶ 6} In spite of the $200,000 sale price from Continental to Long & 
Wilcox, the deed recited that the conveyance fee was paid on the basis of a 
$300,000 sale price, rather than $200,000.  No explanation was offered for this 
discrepancy, but at the second hearing, UA Professional requested that the value 
be reduced to $200,000, the figure that the evidence showed was the arm’s-length 
sale price of the property.  The BOR agreed, determining that the value of the 
property as of January 1, 2002, was the $200,000 sale price. 
{¶ 7} The board of education appealed to the BTA, which determined 
that the sale price of $200,000 reflected a recent, arm’s-length transaction and 
affirmed the BOR’s adoption of the sale price on the authority of Berea City 
School Dist. Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 106 Ohio St.3d 269, 
2005-Ohio-4979, 834 N.E.2d 782. 
II 
{¶ 8} In Berea, we held that “when the property has been the subject of a 
recent, arm’s-length sale between a willing seller and a willing buyer, the sale 
price of the property shall be ‘the true value for taxation purposes.’ ”  Berea at ¶ 
13, quoting R.C. 5713.03.  At the very heart of Berea lies the rejection of 
appraisal evidence of the value of the property  whenever a recent, arm’s-length 
sale price has been offered as evidence of value. Thus, if the BTA correctly found 
that the sale by which Long & Wilcox acquired the property constituted a recent, 
arm’s-length sale, it follows that the value equals the sale price.  Under Berea, 
such a sale price is deemed to be the value of the property, and the only rebuttal 
lies in challenging whether the sale was sufficiently recent and genuinely at arm’s 
length between a willing buyer and a willing seller. 
SUPREME COURT OF OHIO 
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{¶ 9} In this case, the BTA found that “it is uncontroverted that the 
parties are unrelated, that the sale was recent, that they acted in their self-interest 
and without compulsion and duress.”  On that basis, the BTA held that “the sale 
was an arm’s-length transaction.”  The notice of appeal to this court does not 
contest the basic findings and holding of the BTA in this regard.  It follows that, 
in order to prevail, the board of education must establish that the general rule of 
Berea does not apply to the present case. 
{¶ 10} The board of education argues that this case resembles others in 
which an actual sale price would not reflect value because of “peculiar 
circumstances,” but those cases involved allegations of compulsion, which is a 
challenge to the arm’s-length character of the sale.  See Strongsville Bd. of Edn. v. 
Cuyahoga Cty. Bd. of Revision, 112 Ohio St.3d 309, 2007-Ohio-6, 859 N.E.2d 
540, ¶ 13–15.  Because the notice of appeal to the court does not challenge the 
arm’s-length character of the sale, we have no jurisdiction to consider an 
argument based on peculiar circumstances.  Dayton-Montgomery Cty. Port Auth. 
v. Montgomery Cty. Bd. of Revision, 113 Ohio St.3d 281, 2007-Ohio-1948, 865 
N.E.2d 22, ¶ 32. 
III 
{¶ 11} The board of education contends that the existence of the voluntary 
easement by which customers of the adjacent supermarket were permitted to park 
on the property takes this case outside the holding of Berea.  The board of 
education asserts that the interest to be valued is “the entire fee simple interest,” 
with the result that the property “must be appraised and taxed on the basis of its 
fee simple interest without regard to any restrictions or easements on the 
property,” citing Alliance Towers, Ltd. v. Stark Cty. Bd. of Revision (1988), 37 
Ohio St.3d 16, 523 N.E.2d 826, Knowlton Realty Co. v. Darke Cty. Bd. of 
Revision (1997), 77 Ohio St.3d 438, 674 N.E.2d 1374, and Muirfield Assn. v. 
Franklin Cty. Bd. of Revision (1995), 73 Ohio St.3d 710, 654 N.E.2d 110. 
January Term, 2008 
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{¶ 12} Recently, we addressed and rejected an argument closely related to 
the argument here—that a voluntary deed restriction made a sale price 
unreflective of value.  Cummins Property Servs., L.L.C. v. Franklin Cty. Bd. of 
Revision 117 Ohio St.3d 516, 2008-Ohio-1473, ___ N.E.2d ___.  In doing so, we 
pointed out that Berea itself directly rejected the contention that the encumbrance 
of property with long-term, below-market leases made a sale price not indicative 
of value.  Under the authority of Berea and Cummins, we reject the board of 
education’s primary argument in this case as well. 
{¶ 13} In this case, the board of education emphasizes Knowlton Realty.  
In that case, the property owner urged that the parcel at issue – a 19.244-acre 
parcel improved with a house and three buildings used in a manufacturing 
business – was worth $25,000 based on the cash payment called for under a 
purchase agreement.  The agreement also required the purchaser to indemnify the 
seller and others against the costs of environmental cleanup.  Id., 77 Ohio St.3d at 
439–440, 674 N.E.2d 1374.  The BTA adopted an appraiser’s opinion that the 
property was worth $471,800 rather than the $25,000 cash payment advocated by 
the owner, and we affirmed.  Although we stated as one ground for our decision 
that “ ‘the fee simple estate is to be valued as if it were unencumbered,’ ” the 
central difficulty in that case was not the use of the sale price to determine value, 
but the determination of what the sale price was.  Id. at 441, quoting Alliance 
Towers, Ltd. v. Stark Cty. Bd. of Revision (1988), 37 Ohio St.3d 16, 523 N.E.2d 
826, paragraph one of the syllabus.  We noted that the owner had made “no 
attempt to account for the value of the indemnity agreement,” and on that basis 
agreed with the BTA that “the cash price paid for the property in this case did not 
represent the best evidence of the true value of the property.”  Id. at 442.  The 
issue in Knowlton is simply not the issue in this case. 
{¶ 14} In its second proposition of law, the board of education restates its 
position as one that is compelled by the constitutional requirement that property 
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be taxed according to “uniform rule.”  Section 2, Article XII, Ohio Constitution.  
We devoted extensive discussion to the same constitutional argument in 
Cummins, and under the authority of Cummins, we reject that argument in this 
case as well. 
{¶ 15} At oral argument, the board of education’s counsel contended that 
our recent decision in 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, dictates that UA 
Professional shoulder the burden of proof in this case.  We find no merit in that 
contention.  In St. Bernard, a real estate contract purported to allocate about half 
the purchase price of real property to goodwill.  In the present case, the owner 
presents an entire sale price as proof of value, not an allocated portion of the sale 
price.  St. Bernard is simply not apposite. 
{¶ 16} Finally, Cummins points to another circumstance in which the sale 
price might not indicate value.  If the encumbrances were not themselves created 
at arm’s length and in good faith, that circumstance might constitute a reason for 
disregarding the sale price.  But in this case, there is no evidence of any collusion 
in creating the easements.  In Cincinnati Bd. of Edn. v. Hamilton Cty. Bd. of 
Revision (1997), 78 Ohio St.3d 325, 327, 677 N.E.2d 1197, we held that “a 
rebuttable presumption exists that the sale has met all the requirements that 
characterize true value.”  Accordingly, the burden lies upon the party who 
opposes the use of the sale price to show that the encumbrances on the property 
constitute a reason to disregard the sale price as an indicator of value, and no such 
evidence has been presented in this case. 
IV 
{¶ 17} For the reasons set forth in this opinion, we conclude that the BTA 
acted reasonably and lawfully in using the sale price as the value of the parcel of 
real estate at issue.  We therefore affirm the decision of the BTA. 
Decision affirmed. 
January Term, 2008 
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LUNDBERG STRATTON, O’CONNOR, O’DONNELL, LANZINGER, and CUPP, 
JJ., concur. 
 
PFEIFER, J., concurs in judgment only. 
__________________ 
 
Rich, Crites & Dittmer, Mark H. Gillis, and Jeffrey A. Rich, for appellant 
Board of Education of Dublin City Schools. 
______________________