Title: CCleveland OH Realty I, L.L.C. v. Cuyahoga Cty. Bd. of Revision

State: ohio

Issuer: Ohio Supreme Court

Document:

[Cite as CCleveland OH Realty I, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 121 Ohio St.3d 253, 
2009-Ohio-757.] 
 
 
 
CCLEVELAND OH REALTY I, L.L.C., ET AL., APPELLANTS, v. CUYAHOGA 
COUNTY BOARD OF REVISION ET AL., APPELLEES. 
[Cite as CCleveland OH Realty I, L.L.C. v. Cuyahoga Cty. Bd. of Revision,  
121 Ohio St.3d 253, 2009-Ohio-757.] 
Real property taxation—Property subject to long-term lease—Recent sale price 
upheld as basis for valuation. 
(No. 2008-0636 — Submitted February 18, 2009 — Decided February 25, 2009.) 
APPEAL from the Board of Tax Appeals Nos. 2006-A-331,  
2006-A-333, and 2006-A-345. 
__________________ 
Per Curiam. 
{¶ 1} Appellants, CCleveland OH Realty I, L.L.C., and CCleveland OH 
Realty II, L.L.C. (collectively, “CCleveland”), appeal from a decision of the 
Board of Tax Appeals (“BTA”) for tax year 2004 that adopted as the true value of 
certain property its  June 26, 2004 sale price of  $4,084,750.  CCleveland had 
argued at the board of revision and at the BTA that the price did not reflect true 
value because the property was encumbered with a long-term lease that (1) 
stemmed from an earlier sale-leaseback and (2) furnished a stream of rent in 
excess of market rent.  We recently rejected similar arguments in AEI Net Lease 
Income & Growth Fund v. Erie Cty. Bd. of Revision, 119 Ohio St.3d 563, 2008-
Ohio-5203, 895 N.E.2d 830.  In addition, CCleveland advances ancillary 
arguments that did not form the subject of any of the assignments of error set 
forth in its notice of appeal.  Because we have no jurisdiction to grant relief on 
grounds not stated in the notice of appeal to the court, we must disregard the 
ancillary arguments.  Accordingly, we affirm the decision of the BTA. 
Facts 
SUPREME COURT OF OHIO 
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{¶ 2} On March 31, 2005, the Board of Education of the Cleveland 
Municipal School District (“school board”) filed a complaint against the county 
auditor’s $2,040,000 valuation of the 1.75-acre parcel, located at West Boulevard 
and Lorain Avenue in Cleveland.  The property is improved with a CVS drugstore 
with “net rentable area” of 10,125 square feet. Revco Discount Drug Centers, 
Inc., had acquired the property on November 15, 1999, and Revco had sold it 
together with a number of other properties as part of a sale-leaseback transaction 
in 2000.  That purchase contract obligated the parties to enter into a long-term 
leaseback, with an initial 23-year term with up to ten renewals.  The documents 
submitted to the board of revision did not reveal the amount of rent to be paid 
under the lease. 
{¶ 3} CCleveland purchased the property on June 26, 2004, in an arm’s-
length sale from a successor of Revco.  That event led the school board to initiate 
the complaint in this case, seeking to increase the property’s value to $4,084,750, 
the purchase price.  CCleveland filed a countercomplaint, seeking to decrease the 
property’s value to $2,000,000, the November 15, 1999 price that Revco had 
initially paid for the property.  The board of revision declined to change the value 
determined by the auditor, and both the school board and CCleveland appealed.  
The appeals were consolidated by the BTA for hearing and decision. 
{¶ 4} At the BTA hearing, CCleveland presented the appraisal report and 
testimony of Richard Racek.  Racek valued the “fee simple interest, disregarding 
the current contract rent in [sic] the property.”  Racek opined that based on rent 
comparisons that he had undertaken, the contract rent of $31.20 per square foot 
greatly exceeded market rents in the area, which ranged from $3.75 to $12.87 per 
square foot.  Racek utilized a market rent figure of $9.50 per square foot as a basis 
for his income approach and specifically identified comparison properties that 
would “show how an investor would look at an income producing property that 
isn’t necessarily tied into the specific tenant in building [sic].”  For sales 
January Term, 2009 
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comparisons, Racek selected large stores that were no longer occupied by the 
original tenant or owner.  Racek ultimately reconciled his approaches, valuing the 
property at $865,000 as of January 1, 2004. 
{¶ 5} The BTA issued its decision in the consolidated cases on March 7, 
2008.  Noting that the school board had presented the conveyance fee statement 
and deed showing the sale of the property on June 26, 2004, for $4,084,752, the 
BTA found that this constituted the best evidence of the property’s value as of 
January 1, 2004.  The BTA relied on case law to reject CCleveland’s theory that 
the sale did not indicate true value because it constituted a sale of the leased fee, 
rather than the fee simple. 
Analysis 
{¶ 6} In its brief CCleveland asserts two propositions of law.  Both 
challenge the use of the 2004 sale price by arguing that (1) the long-term lease 
entered into pursuant to the 2000 sale-leaseback elevated that price and (2) the 
lease was not itself at arm’s length, so that the price could not be regarded as 
indicating true value.  In so arguing, CCleveland relies on Cummins Property 
Servs., L.L.C. v. Franklin Cty. Bd. of Revision, 117 Ohio St.3d 516, 2008-Ohio-
1473, 885 N.E.2d 222, ¶ 30, fn. 4. 
{¶ 7} We have already fully considered and rejected this argument in 
AEI Net Lease Income & Growth Fund v. Erie Cty. Bd. of Revision, 119 Ohio 
St.3d 563, 2008-Ohio-5203, 895 N.E.2d 830, ¶ 19, 20.1  In that case, we stated 
that the “concern associated with sale-leaseback transactions lies in collusion 
                                                 
1.  At oral argument, CCleveland attempted to distinguish the present case from AEI by stating 
that the BTA rejected the probative value of the owner’s evidence in AEI, but not in this case.  We 
disagree.  In both cases, the BTA properly disregarded the appraisal evidence because a recent 
arm’s-length-sale price established the value of the property.  See AEI, ¶ 22, fn. 1 (“appraisal 
evidence may not be considered in valuing the property when there is a recent, arm’s-length sale 
price”); Cummins Property Servs., L.L.C. v. Franklin Cty. Bd. of Revision, 117 Ohio St.3d 516, 
2008-Ohio-1473, 885 N.E.2d 222, ¶ 13 (case law mandates “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”).  
SUPREME COURT OF OHIO 
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between the parties to depress property value for tax purposes.” Id., ¶ 20.  Nothing 
in the record of this case raises this concern; indeed, CCleveland’s central 
objection arises because the parties to the sale-leaseback succeeded in maximizing 
the value of the realty:  the seller received an elevated sale price and, as 
consideration, committed to paying the purchaser a stream of elevated lease 
payments, which in turn allowed the purchaser to fetch a greater sale price later 
on.  That was also the situation in AEI, and it furnishes an equally sound basis for 
rejecting CCleveland’s position in this case.  Id.  at ¶ 21, 25. 
{¶ 8} Perhaps realizing that AEI has foreclosed the line of argument it 
had previously pursued, CCleveland now focuses on two ancillary points.  
CCleveland contends first that the board of revision’s decision on a valuation 
complaint filed by the school board as to tax year 2000 established that the 2000 
sale-leaseback could not form the basis for valuing the property.  Second, 
CCleveland asserts that the record does not support the BTA’s allocation of value 
to the land. 
{¶ 9} We do not reach the merits of either contention, because 
CCleveland did not assert either argument as an assignment of error in its notice 
of appeal.  As a result, we lack jurisdiction to consider either contention as a basis 
for granting relief to the appellant.  See Newman v. Levin, 120 Ohio St.3d 127, 
2008-Ohio-5202, 896 N.E.2d 995, ¶ 28 (“when a litigant fails to raise a particular 
argument in the notice of appeal to the court, the court ‘do[es] not have 
jurisdiction to consider the argument’ ”), quoting Norandex, Inc. v. Limbach 
(1994), 69 Ohio St.3d 26, 31, 630 N.E.2d 329, fn. 1. 
Conclusion 
{¶ 10} For all the foregoing reasons, the BTA reasonably and lawfully 
concluded that the June 26, 2004 sale furnished a recent, arm’s-length sale price 
that constituted the value of the property.  We therefore affirm the BTA’s 
decision. 
January Term, 2009 
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Decision affirmed. 
 
MOYER, 
C.J., 
and 
PFEIFER, 
LUNDBERG 
STRATTON, 
O’CONNOR, 
O’DONNELL, LANZINGER, and CUPP, JJ., concur. 
__________________ 
 
Sleggs, Danzinger & Gill Co., L.P.A., and Todd W. Sleggs, for appellant. 
 
Brindza, McIntyre & Seed, L.L.P., Robert A. Brindza, Daniel M. 
McIntyre, David H. Seed, David A. Rose, and Jennifer A. Hoehnen, for appellee 
Board of Education of the Cleveland Municipal School District. 
______________________