Title: Ohio Apt. Assn. v. Levin

State: ohio

Issuer: Ohio Supreme Court

Document:

[Cite as Ohio Apt. Assn. v. Levin, 122 Ohio St.3d 1231, 2009-Ohio-3477.] 
 
 
OHIO APARTMENT ASSOCIATION ET AL., APPELLANTS, v. LEVIN,  
TAX COMMR., APPELLEE. 
[Cite as Ohio Apt. Assn. v. Levin, 122 Ohio St.3d 1231, 2009-Ohio-3477.] 
Taxation — Real property — Ohio Adm.Code 5703-25-10 and 5703-25-18 —
Zangerle v. Evatt superseded by statute — Motion to dismiss denied. 
(No. 2009-0213 — Submitted June 2, 2009 — Decided July 22, 2009.) 
APPEAL from the Board of Tax Appeals, No. 2006-A-861. 
ON MOTION TO DISMISS. 
__________________ 
{¶ 1} This cause is pending before the court as an appeal from a decision 
of the Board of Tax Appeals (“BTA”) issued in a rule-review proceeding brought 
pursuant to R.C. 5703.14(C).  The appellants challenge the constitutionality of a 
classification of uses of real property set forth in Ohio Adm.Code 5703-25-18 and 
5703-25-10.  In adopting that classification, those rules incorporate an amendment 
enacted by the General Assembly as part of comprehensive tax reform in 2005.  
Am.Sub.H.B. No. 66, 126th General Assembly. Specifically, R.C. 319.302 as 
amended limits the ten percent property-tax reduction to property that is “not 
intended primarily for use in a business activity.”  As they affect residential 
apartments, the statute and the administrative rules distinguish between properties 
improved with one- to three-family dwellings and properties improved with 
dwellings for four or more families:  the former enjoy the tax reduction, the latter 
do not.  The appellants allege that this distinction violates tax uniformity pursuant 
to Section 2, Article XII of the Ohio Constitution and/or the Ohio Constitution’s 
equal protection guarantee at Section 2, Article I. 
SUPREME COURT OF OHIO 
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{¶ 2} The Tax Commissioner has filed a motion to dismiss, which raises 
four grounds for dismissing the appeal.  We reject each contention and deny the 
motion. 
{¶ 3} First, the commissioner relies on Zangerle v. Evatt (1942), 139 
Ohio St. 563, 23 O.O. 52, 41 N.E.2d 369, to argue that the BTA’s decision may 
not be appealed pursuant to R.C. 5717.04, because the BTA’s rule review is 
quasi-legislative rather than quasi-judicial in character.  We disagree.  Although 
the commissioner correctly recites the holding of Zangerle, he ignores the 
amendments enacted by the General Assembly in 1976 that changed the nature of 
rule review.  Am.Sub.H.B. No. 920, 136 Ohio Laws, Part II, 3182.  H.B. 920 
superseded the holding of Zangerle because that bill (1) made the BTA a separate 
state agency from the Tax Commissioner and the Department of Taxation, see 
former R.C. 5703.02, id. at 3215-3216; (2) removed the former duties of property-
tax administration from the BTA, id. at 3215-3217, and vested them in a new 
Department of Tax Equalization, see former R.C. 5715.01 et seq., id. at 3251-
3264; and (3) amended what is now R.C. 5703.14(C) to require that the party who 
challenges the rule show injury and bear the burden of proving the rule to be 
unreasonable.  Id. at 3222.  See Roosevelt Properties Co. v. Kinney (1984), 12 
Ohio St.3d 7, 12 OBR 6, 465 N.E.2d 421 (entertaining an appeal from a BTA 
decision in a rule-review proceeding without objection from the state).  Because 
Zangerle has been superseded by statute, it does not furnish grounds for dismissal. 
{¶ 4} Second, the commissioner contends that a claimant may not use 
the rule-review proceeding at the BTA to challenge the constitutionality of a 
statutory classification, particularly where no other claim is presented.  That 
contention is mistaken because an unconstitutional classification in an 
administrative rule makes that rule unreasonable. See Roosevelt Properties, 12 
Ohio St.3d at 12-13, 12 OBR 6, 465 N.E.2d 421.  We reject the commissioner’s 
attempt to distinguish Roosevelt Properties, because we decline to endorse the 
January Term, 2009 
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view that an administrative rule could be constitutionally unreasonable but still 
qualify as reasonable for purposes of R.C. 5703.14(C). 
{¶ 5} Third, the commissioner argues that a rule-review proceeding is 
not ripe until a statutory classification has already been declared unconstitutional.  
This contention is premised on the view that the constitutional issue itself may not 
properly be the subject of the rule-review proceeding.  We have just decided the 
contrary, and that disposition forecloses the ripeness argument. 
{¶ 6} Fourth, the commissioner urges that the notice of appeal to this 
court does not satisfy the standard for specifying constitutional error.  See Castle 
Aviation, Inc. v. Wilkins, 109 Ohio St.3d 290, 2006-Ohio-2420, 847 N.E.2d 420, ¶ 
33–41.  We disagree.  Unlike the notice in Castle Aviation, the notice of appeal in 
this case explicitly identifies Ohio Adm.Code 5703-25-18 and 5703-25-10 as the 
subject of its challenge and identifies the relevant provisions of the Ohio 
Constitution by citing the article and section.  Moreover, Ohio Adm.Code 5703-
25-18 explicitly sets forth the classification which is the subject of challenge 
under both the Uniformity and Equal Protection Clauses.  We hold that the notice 
contains a sufficient specification of the uniformity claim, and accordingly there 
is no basis for dismissing the appeal for failure to specify error.  Because the 
notice advances at least one cognizable claim, we need not decide at this time 
whether the scope of the appeal encompasses equal protection claims as well. 
{¶ 7} For the reasons set forth, we deny the Tax Commissioner’s motion 
to dismiss. 
 
MOYER, 
C.J., 
and 
PFEIFER, 
LUNDBERG 
STRATTON, 
O’CONNOR, 
O’DONNELL, LANZINGER, and CUPP, JJ., concur. 
__________________ 
 
Calfee, Halter & Griswold, L.L.P., Mark I. Wallach, James F. Lang, and 
Laura C. McBride, for appellants. 
SUPREME COURT OF OHIO 
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Richard Cordray, Attorney General, and Lawrence D. Pratt and Alan P. 
Schwepe, Assistant Attorneys General, for appellee. 
______________________