Title: Corporate Exchange Bldgs. IV & V, L.P. v. Franklin Cty. Bd. of Revision

State: ohio

Issuer: Ohio Supreme Court

Document:

CORPORATE EXCHANGE BUILDINGS IV & V, LIMITED PARTNERSHIP, APPELLANT, v. 
FRANKLIN COUNTY BOARD OF REVISION ET AL., APPELLEES. 
[Cite as Corporate Exchange Bldgs. IV & V, L.P. v. Franklin Cty. Bd. of Revision 
(1998), 82 Ohio St.3d 297.] 
Taxation — Real property valuation of office buildings on two nonadjacent 
parcels where purchase price was not allocated at time of sale — Board of 
Tax Appeals may approve board of revision’s valuation of each parcel, 
when. 
(No. 97-996 — Submitted January 27, 1998 — Decided July 1, 1998.) 
APPEAL from the Board of Tax Appeals, No. 95-A-464. 
 
On February 25, 1994, Corporate Exchange Buildings IV & V, Limited 
Partnership (“Partnership”), appellant, filed a real estate valuation complaint for 
tax year 1993 with the Franklin County Board of Revision (“BOR”) for parcel 
number 211627 located in Columbus, Ohio.  The valuation of parcel number 
211627 is the subject of this opinion.  At the same time Partnership also filed a 
separate real estate valuation complaint for parcel number 183730.  While the two 
parcels are in close proximity to each other, they are not adjacent and are taxed 
separately.  In its complaint for parcel number 211627, Partnership requested that 
the true value of the property be reduced from the auditor’s valuation of 
$11,100,000 to $8,244,700.  For parcel number 183730, Partnership requested that 
the true value of the property be reduced from the auditor’s value of $7,930,000 to 
$6,255,300.  Partnership’s claim for a reduction in true value was based on its 
recent purchase of the two parcels. In both cases the Board of Education of the 
Westerville City Schools filed a countercomplaint seeking an increase in value. 
 
Title to both parcels was conveyed to Partnership in a single deed dated 
November 4, 1993.  The conveyance fee statement reported that the consideration 
 
2
for the two parcels was  $14,500,000.  A four-story office building known as 
Corporate Exchange Building V is located on parcel number 211627, consisting of 
5.103 acres.  Corporate Exchange Building V, containing 130,008 net rentable 
square feet, was constructed in 1989.  A three-story office building known as 
Corporate Exchange Building IV is located on parcel number 183730, consisting 
of 5.016 acres.  Corporate Exchange Building IV, containing 90,891 net rentable 
square feet, was constructed in 1987.  No provision was made in the purchase 
contract or elsewhere to allocate the purchase price between the two parcels. 
 
The BOR affirmed the auditor’s assessment in both cases.  Separate appeals 
for the two parcels were filed with the Board of Tax Appeals (“BTA”).  By 
agreement of the parties, the evidence and testimony presented to the BTA for 
parcel number 211627 was stipulated as the testimony and evidence for parcel 
number 183730. 
 
At the BTA, Partnership presented two witnesses.  Partnership’s first 
witness, Michael Balakrishnan, is a Partnership limited partner and a vice-
president 
of 
Partnership’s 
general 
partner, 
Joseph 
Skilken 
Company.  
Balakrishnan described the negotiations that culminated in Partnership’s purchase 
of the two parcels.  Partnership’s second witness, Stephen H. Falor, is a local 
broker, and testified about his involvement in the sale of the properties on behalf 
of the sellers.  Neither witness testified about the allocation of the purchase price 
between the two parcels. 
 
After reviewing the evidence, the BTA found that Partnership “did not 
present sufficient competent and probative evidence to this Board to meet their 
burden of proof of establishing a value other than that found by the county board 
of revision.”  This conclusion was based on the BTA’s finding that “no appraisal 
evidence or testimony was offered to support appellant’s valuation.” 
 
3
 
Partnership filed separate appeals with this court for each parcel.  (See case 
No. 97-997 for parcel number 183730.) 
 
This cause is now before this court upon an appeal as of right. 
__________________ 
 
Wayne E. Petkovic, for appellant. 
 
Ronald J. O’Brien, Franklin County Prosecuting Attorney, and Matthew H. 
Chafin, Assistant Prosecuting Attorney, for appellees Franklin County Board of 
Revision and Franklin County Auditor. 
 
Teaford, Rich & Wheeler, Jeffrey A. Rich and Karol Cassell Fox, for 
appellee Board of Education of the Westerville City Schools. 
__________________ 
 
Per Curiam.  Partnership contends that the BTA erred in not allocating the 
purchase price between the two parcels.  We disagree. 
 
The amount that the Partnership paid for the two parcels containing 
Corporate Exchange Buildings IV and V is not in dispute.  In addition, the BTA 
determined that the sale to Partnership was an arm’s-length sale;  presumably then, 
the sale price reflects true value.  Walters v. Knox Cty. Bd. of Revision (1989), 47 
Ohio St.3d 23, 24, 546 N.E.2d 932, 934.  However, the arm’s-length sale price was 
paid for two separate properties. 
 
The two parcels are not identical.  While the amount of land contained in 
each parcel is about the same, the buildings located on the parcels are different in 
size and age.  Partnership set forth an allocation of the purchase price in the 
complaints it filed with the BOR.  However, as the appellant before the BTA, 
Partnership needed to show that its allocation of the purchase price between the 
two parcels represented the true value of each parcel.  See Cincinnati School Dist. 
 
4
Bd. of Edn. v. Hamilton Cty. Bd. of Revision (1997), 78 Ohio St.3d 325, 677 
N.E.2d 1197. 
 
Partnership’s two witnesses, however, testified only about their involvement 
with the negotiations that culminated in the purchase of the two parcels.  In 
addition, the voluminous amount of documents presented by Partnership related 
only to the negotiations, purchase, and transfer of the two parcels. 
 
After hearing this testimony and reviewing these documents, the BTA 
correctly refused to accept the allocation of the purchase price made by 
Partnership.  The BTA concluded that it could find no basis to “justify reliance 
upon appellant’s suggested valuation allocation.” 
 
Partnership argues that the BTA had testimony before it to allocate the 
purchase price based on rentable square feet.  Partnership quotes from the BTA’s 
decision.  That quote, however, was taken from the brief Partnership filed with the 
BTA.  Partnership cites no source in the record for the statement. 
 
Moreover, the only reference in the BTA record as to how the allocation 
could be made is contained in the opening statement of counsel for Partnership.  
He stated  that the purchase price was allocated based on square footage and that 
he “believe[d] there will be testimony that this is also a reasonable way in this type 
of property to apportion.”  However, statements of counsel are not evidence.  In 
State v. Green (1998), 81 Ohio St.3d 100, 104, 689 N.E.2d 556, 559, we stated 
that a “statement of facts by a prosecutor does not constitute evidence.”  This 
premise is adopted in VI Wigmore, Evidence (Chadbourn Rev.1976) 349, Section 
1806, wherein it is stated that in an argument to the jury by counsel, any 
representation of fact “must be based solely upon those matters of fact of which 
evidence has already been introduced or of which no evidence need ever be 
introduced because of the notoriety as judicially noticed facts.” 
 
5
 
Partnership further contends that Youngstown Sheet & Tube Co. v. 
Mahoning Cty. Bd. of Revision (1981), 66 Ohio St.2d 398, 20 O.O.3d 349, 422 
N.E.2d 846, requires the BTA to allocate the purchase price.  In Youngstown, the 
BTA adopted a total valuation for a steel production complex situated on 
approximately four hundred sixteen acres containing some two hundred major 
structures.  The property consisted of fourteen individual parcels located in three 
taxing districts.  We required the BTA, on remand, to break down its aggregate 
valuation into individual parcel values before certifying its decision and order to 
the county auditor. The Youngstown record, however, contained opinions and 
documentation from multiple appraisers from each side on which the BTA could 
base an allocation of total value.  Thus, in Youngstown, the BTA had before it 
evidence of value which it could use to allocate the total true value. 
 
In Coventry Towers, Inc. v. Strongsville (1985), 18 Ohio St.3d 120, 18 OBR 
151, 480 N.E.2d 412, we acknowledged the authority of the BTA to exercise 
independent judgment in determining the true value of property.  However, such 
independent judgment must be based upon the evidence presented to it. We have 
consistently required that the BTA’s decisions be supported by sufficient 
probative evidence.  Hawthorn Mellody, Inc. v. Lindley (1981), 65 Ohio St.2d 47, 
19 O.O.3d 234, 417 N.E.2d 1257.  Here, the BTA received no evidence on which 
it independently could allocate the purchase price. 
 
Partnership also cites Zazworsky v. Licking Cty. Bd. of Revision (1991), 61 
Ohio St.3d 604, 575 N.E.2d 842, as a case where this court ordered the BTA to 
apply a sale price as true value.  In Zazworsky, the taxpayer was required to 
purchase a parcel of real property containing a warehouse he did not want  in order 
to acquire a sublease on a building he did want.  He paid $100,000 for both the 
 
6
building and the sublease.  The only question before the BTA was the value of the 
purchased warehouse. 
 
The BTA affirmed the board of revision’s valuation of $184,500 for the 
purchased warehouse, stating that the sale occurred “under peculiar 
circumstances.”  We reversed and ordered the BTA to enter a valuation of 
$100,000, holding that no evidence supported the BTA’s decision. 
 
Zazworsky differs from this case.  Only one piece of real property was at 
issue in Zazworsky, and we did not need to allocate a purchase price between two 
pieces of real property.  Indeed, Zazworsky himself maintained that the true value 
of the purchased warehouse was $100,000. 
 
Since Partnership has failed to produce sufficient competent and probative 
evidence to meet its burden of proof and has not presented evidence to support an 
independent valuation by the BTA, the BTA may approve the board of revision’s 
valuation.  Simmons v. Cuyahoga Cty. Bd. of Revision (1998), 81 Ohio St.3d 47, 
49, 689 N.E.2d 22, 24. 
 
For all the foregoing reasons, the decision of the BTA is reasonable and 
lawful and it is affirmed. 
Decision affirmed. 
 
MOYER, C.J., DOUGLAS, RESNICK, F.E. SWEENEY and COOK, JJ., concur. 
 
PFEIFER and LUNDBERG STRATTON, JJ., dissent. 
__________________ 
 
LUNDBERG STRATTON, J., dissenting.  Because I do not understand how the 
BTA can insist on taxing these two properties at a combined value of $19,030,000, 
while agreeing that the true value is $14,500,000, I must strongly dissent from the 
majority’s affirmance of the BTA’s decision.  I would find the decision to be 
arbitrary, unreasonable, and patently unfair. 
 
7
 
A long line of cases in Ohio has held that a recent sale of property that is an 
arm’s-length transaction is the best evidence of the “true value” of the property. 
Cincinnati School Dist. Bd. of Edn. v. Hamilton Cty. Bd. of Revision (1997), 78 
Ohio St.3d 325, 327, 677 N.E.2d 1197, 1199; Conalco v. Monroe Cty. Bd. of 
Revision (1977), 50 Ohio St.2d 129, 4 O.O.3d 309, 363 N.E.2d 722; State ex rel. 
Park Investment Co. v. Bd. of Tax Appeals (1964), 175 Ohio St. 410, 25 O.O.2d 
432, 195 N.E.2d 908.  Here, the BTA concluded that the sale of Corporate 
Exchange Buildings IV and V was an arm’s-length transaction.  The sole reason 
for the BTA’s rejection of the valuation of Corporate Exchange Buildings IV and 
V Limited Partnership (“Partnership”) was the claimed failure of the Partnership to 
present an appraisal that allocated the purchase price between the two buildings.  
However, the BTA’s position is not supported by the law.  To grant Partnership’s 
request for reduction in the tax valuation of the two buildings, the BTA needed 
only to confront the issue of allocating the single sale price, presumed to be the 
true value, between the two buildings.  In fact, the BTA had a duty to allocate the 
sales price once the true value was established so as to reach a fair and consistent 
tax assessment. 
 
In Conalco, this court held, at the syllabus: 
 
“1.  The best evidence of the ‘true value in money’ of real property is an 
actual, recent sale of the property in an arm’s-length transaction.  (State, ex rel. 
Park Investment Co., v. Bd. of Tax Appeals, 175 Ohio St. 410 [25 O.O.2d 432, 195 
N.E.2d 908], approved and followed.) 
 
“2.  In valuing real property sold within three days of the tax lien date in an 
arm’s-length transaction, the best evidence of ‘true value in money’ is the proper 
allocation of the lump-sum purchase price and not an appraisal ignoring the 
contemporaneous sale.”  (Emphasis added.) 
 
8
 
The appellees totally misinterpret Conalco.  In Conalco, the allocation issue 
was not between two pieces of property, but rather between real estate and other 
assets, such as accounts receivable, related to the same property.  In that case, a 
sale of the property occurred two days after the tax valuation conducted by the 
appraiser for the county auditor.  The BTA ignored the sale and relied only on the 
appraiser’s value.  No appraiser testified for the taxpayer Conalco on allocation of 
the purchase price.  Rather, Conalco relied on accounting principles for allocation.  
In rejecting the BTA’s position, the court stated: 
 
“The board should have determined, under the specific facts of this case, 
whether [Conalco’s] allocation resulted in a distorted valuation of the real 
property. 
 
“ * * * Apparently, the board adopted the fair market value appraisal made 
by appellee [county auditor], despite testimony by appellee’s appraiser that he 
ignored the contemporaneous sale of the property. 
 
“ * * *  
 
“The board’s decision in the present case, accepting the appellee’s appraisal, 
despite an arm’s-length sale within close proximity to the tax lien date, and 
rejecting APB 16, thereby avoiding a determination upon [Conalco’s] allocation of 
the purchase price, is unreasonable and unlawful.”  Id., 50 Ohio St.2d at 131-132, 
4 O.O.3d at 310-311, 363 N.E.2d at 723-724. 
 
In a subsequent case, also misinterpreted by appellees, this court reaffirmed 
the best evidence rule of a recent sale: 
 
“We hold that the best evidence of the ‘true value in money’ of tangible 
personal property is the proper allocation of the purchase price of an actual, recent 
sale of the property in an arm’s-length transaction. 
 
“ * * *  
 
9
 
“ * * * The board is required to arrive at its own valuation in an appeal from 
the valuation assessed by the Tax Commissioner.  Clark v. Glander (1949), 151 
Ohio St. 229 [39 O.O. 56, 85 N.E.2d 291], paragraph one of the syllabus.”  Tele-
Media Co. v. Lindley (1982), 70 Ohio St.2d 284, 287-289, 24 O.O.3d 367, 369-
370, 436 N.E.2d 1362, 1365. 
 
In Tele-Media, the taxpayer was seeking a valuation lower than the actual 
sale price.  The court found that the book value, properly allocated, is the best 
evidence of true value.  Id. at 286, 24 O.O.3d at 368-369, 436 N.E.2d at 1364.  
The court placed the burden of allocation on the BTA when a true value was 
known. 
 
I do not find Elsag-Bailey, Inc. v. Lake Cty. Bd. of Revision (1996), 74 Ohio 
St.3d 647,  660 N.E.2d 1184, to be on point.  Elsag-Bailey dealt with a 
complicated transaction with two competing appraisals that recommended 
different appraisal methods but involved no sale.  Elsag-Bailey merely states that 
the BTA could look at both appraisals and make its own determination of the true 
value. 
 
In this case, the BTA did not fulfill its duty of properly allocating the true 
value.  Instead, it arbitrarily clung to the appraised value and ignored the sale 
price, contrary to the mandate of Conalco.  Had the property sold for more than 
the appraised value, the appellees certainly would have been the ones appealing 
and making the same arguments Partnership now makes. 
 
In fact, Partnership offered the BTA a reasonable, logical method of 
allocating the purchase price between the two buildings based upon the rentable 
square footage of each building.  Evidence of the rentable space of each building 
was before the BTA in the numerous exhibits offered by Partnership related to the 
sale of the properties.  No appraisal was necessary to substantiate the value of each 
 
10
building or the method of allocation in light of the recent sale.  No expert 
testimony was necessary to explain or substantiate what amounted to a simple 
mathematical calculation.  As in Conalco, the BTA needed only to apply an 
accounting principle to determine the allocation. 
 
The BTA made no determination that allocation of value between the 
buildings was not possible.  Further, BTA made no factual finding that 
Partnership’s proposed method of allocation was improper, unreasonable, or not 
based upon verifiable information.  None of the appellees presented any evidence 
in rebuttal.  No other method of allocation was even suggested. Instead, the BTA 
summarily rejected Partnership’s proposed method of allocation of value without 
any legal or factual basis, citing only Partnership’s failure to have “appraisal 
evidence or testimony.” 
 
Yet the BTA concluded that Partnership did not justify its allocation 
method, and, therefore, the BTA affirmed the auditor’s valuation of the properties.  
The auditor’s assessment of value for both parcels totaled $19,030,000.  The 
auditor assessed the value of Building IV at $7,930,000, approximately forty-two 
percent of the combined values, and assessed the value of Building V at 
$11,100,000, approximately fifty-eight percent of the combined values. 
 
Partnership’s allocated values closely mirrored those of the auditor.  The 
true value, as evidenced by the recent sale, was $14,500,000 for both parcels.  
Partnership requested that a value of $6,255,300 be placed on Building IV, 
approximately forty-three percent of the combined sale price.  Partnership 
requested that a value of $8,244,700 be placed on Building V, approximately fifty-
seven percent of the combined sale price. 
 
If the BTA had reason not to adopt the Partnership’s proposed allocation, 
the BTA had before it sufficient information about each building from which to 
 
11
derive its own allocation of the $14,500,000 sale price it already accepted as the 
true value.  Exhibits revealed similarities about the buildings.  They are in close 
proximity to each other within the same office park.  Both are situated on five 
acres of land.  They were built within a few years of each other.  Building IV has 
three stories with 90,891 rentable square feet, with three hundred forty-one 
parking spaces and a ninety-six percent occupancy1; Building V has four stories 
with 130,008 rentable square feet, with four hundred fifty-two parking spaces and 
over ninety-five percent occupancy.  Building construction was virtually identical.  
Commercial tenants were of the same quality.  Both were Class A structures with 
similar rental ranges.  The building had been owned and managed by the same 
partnership.  These are non-fluctuating, descriptive factors upon which the BTA 
could have compared and contrasted the two buildings in order to reach its own 
independent allocation of the $14,500,000 value. 
 
The BTA’s finding that the purchase of Corporate Exchange Buildings IV 
and V was an arm’s-length transaction reinforces the presumption that the sale 
price of $14,500,000 was the true value for the two properties.  The BTA’s 
decision to affirm the auditor’s separate assessments of value results in both 
properties being valued, for tax purposes, at $4,530,000 more than they were 
valued in an arm’s-length transaction.  I fail to see how this can be fair or just.  
Such a decision, without further justification, is inherently arbitrary, capricious, 
and unreasonable.  The BTA had a duty in light of the unrefuted and voluminous 
evidence before it to fairly and justly allocate the true value between the two 
buildings.  To arbitrarily ignore the purchase price and blindly adhere to the 
appraisal because the buildings are “independent” is grossly unfair and flies in the 
face of Conalco.  If the BTA did not accept the Partnership’s allocation, it could 
perform its own.  Yet appellees offer no alternative.  It did not matter a great deal 
 
12
if the allocation differed by some percentage, since the Partnership was the same 
taxpayer.  But what the BTA could not do was totally ignore the $14,500,000 
value it already recognized, refuse to allocate the price between the two buildings, 
and impose a value of $19,030,000, a $4,530,000 difference, because the taxpayer 
did not separately appraise the two buildings. An appraisal is not necessary in light 
of the best evidence before it which the law required the BTA to consider.  I 
cannot condone such a patently outrageous result. 
 
I believe that Partnership met its burden by establishing the arm’s-length 
nature of the sale transaction and by proposing a logical, reasonable, and verifiable 
method of allocating the sale price between the two buildings for tax purposes.  
The BTA arbitrarily refused to consider Partnership’s allocation or any other 
allocation.  Therefore, I would reverse the decision of the BTA and remand this 
matter to the BTA with instructions to determine a formula to allocate the 
$14,500,000 sale price between the two buildings. 
 
PFEIFER, J., concurs in the foregoing dissenting opinion. 
FOOTNOTE: 
1. 
Occupancy of Building IV was reported as seventy-six percent in a March 
1993 financial statement; however, sales information dated July 1993 reported 
occupancy at ninety-six percent.