[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 

Rite Aid of Ohio, Inc. v. Washington Cty. Bd. of Revision, Slip Opinion No. 2016-Ohio-371.] 

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. 2016-OHIO-371

RITE AID OF OHIO, INC., APPELLEE, v. WASHINGTON COUNTY BOARD OF 

REVISION ET AL., APPELLANTS. 

[Until this opinion appears in the Ohio Official Reports advance sheets, it 

may be cited as Rite Aid of Ohio, Inc. v. Washington Cty. Bd. of Revision, 

Slip Opinion No. 2016-Ohio-371.] 

Taxation—Real-property valuation—Because a long-term lease affects sale price 

and value, the sale price of a leased-fee comparable should be adjusted 

when the subject property has no lease—Special-purpose doctrine not 

applicable—Decision of the Board of Tax Appeals affirmed. 

(No. 2014-0828—Submitted August 11, 2015—Decided February 4, 2016.) 

APPEAL from the Board of Tax Appeals, No. 2011-1760. 

____________________ 

Per Curiam. 

{¶ 1} This real-property-valuation case concerns the tax-year-2010 

valuation of multiple parcels that together constitute a Rite Aid drugstore and its 

parking lot in Marietta. In that sexennial reappraisal year, the Washington County 
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Auditor, an appellant here, determined a value of approximately $3,319,000 for 

the store. Appellee, Rite Aid of Ohio, Inc., filed a complaint before the 

Washington County Board of Revision (“BOR”), also an appellant here, and 

presented an opinion seeking a reduction, but the BOR retained the auditor’s 

valuation. On appeal at the Board of Tax Appeals (“BTA”), Rite Aid and the 

county presented competing appraisals. The BTA adopted Rite Aid’s appraisal, 

and the county has appealed. 

{¶ 2} The county argues that our decision in Meijer Stores Ltd. 

Partnership v. Franklin Cty. Bd. of Revision, 122 Ohio St.3d 447, 2009-Ohio3479, 912 N.E.2d 560, requires the use of the kind of comparables that the 

county’s appraiser relied upon. We disagree, and we therefore affirm the decision 

of the BTA. 

FACTUAL BACKGROUND

{¶ 3} The property at issue consists of 1.13 acres in downtown Marietta 

that are improved with an 11,052-square-foot building constructed in 1999. 

According to Rite Aid’s complaint, the auditor determined a total fair-market 

value for the parcels of approximately $3,319,000; Rite Aid sought a reduction to 

$1,396,920. The BOR held a hearing on May 24, 2011. Rite Aid’s attorney 

appeared on behalf of the property owner; the board of education was not 

represented at the hearing. 

{¶ 4} At the BOR hearing, Rite Aid’s attorney presented a summary of 

information developed by a contractor, International Appraisals, for Rite Aid, 

showing sale comparables and rent comparables in the geographic region. The 

attorney explicitly disavowed providing an appraisal in a formal sense and also 

stated that the contractor was not able to find any drugstore sales in the area 

considered. The BOR’s consultant recommended no change in property value, 

and the BOR adopted that recommendation on June 15, 2011. 
January Term, 2016 

3

The competing appraisals and theories at the BTA 

{¶ 5} Rite Aid appealed to the BTA, which held a hearing on June 12, 

2013. At the BTA hearing, Rite Aid presented an appraisal report and testimony 

by Geoffrey Hatcher, MAI. The county presented its own appraisal report and 

testimony by Karen Blosser, MAI. 

{¶ 6} Both appraisers found the cost approach inapplicable, primarily 

because the building was already ten years old as of the lien date. Blosser stated 

as well that she did not have sufficient data to compute the obsolescence 

deduction in light of the economic recession. 

{¶ 7} The competing statements of counsel at the opening of the BTA 

hearing reflect the different approaches taken by the appraisers in the light of 

differing understandings of the law of property-tax valuation. The owner’s 

counsel summarized its appraiser’s approach as one that evaluated the Rite Aid 

property by “look[ing] at comparable properties both for sale and for lease in the 

general geographic area of the subject property,” but not just as a drugstore, 

whereas the county’s appraisal “looked at only drugstores for their * * * 

comparables scattered around the State of Ohio.” 

{¶ 8} The county’s counsel did not contest her opposing counsel’s 

characterization of her own appraiser’s evidence; indeed, she countered by 

stating, “[T]he most competent and probative evidence of value is going to be 

presented through the appraisal of Karen Blosser, our appraiser, in which she 

appraises the property as it actually existed on the tax lien date as a Rite Aid.” 

(Emphasis added.) In other words, the county posits a valuation in terms of 

continued use by Rite Aid even after a putative sale, presumably with the 

drugstore continuing as lessee under a long-term lease. As counsel stated, this 

does resemble the existing use as of the lien date; but it also differs from the 

manner in which the property was held on the lien date because this property—

unlike all of Blosser’s comparables—was not subject to a lease. 
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{¶ 9} True to counsel’s description, Rite Aid’s appraiser, Hatcher, had 

selected six sale comparables—general retail rather than drugstores—with three 

located in Zanesville, one in Nelsonville, one in Parkersburg, West Virginia (just 

across the Ohio River, near Marietta), and one in Vienna, West Virginia. These 

stores ranged from $59.87 per square foot to $103.26 per square foot in sale price, 

and Hatcher settled (after adjustments for building size) on $100 per square foot 

for the subject property. Hatcher did not completely ignore leased properties: one 

of his comparables was a Family Dollar that was subject to a lease, for which 

circumstance Hatcher made no adjustment, on account of lack of information. 

{¶ 10} By contrast, Blosser selected five sale comparables, all drugstores, 

all geographically distant. Two were Walgreens (one in Canton, one in Medina), 

one was a former Rite Aid (in Columbus on Bethel Road), and two were Daytonarea stores: a current Rite Aid in Englewood and a CVS in Dayton. All were 

apparently encumbered by leases at the time of sale—in other words, they were 

sold subject to long-term leases. The leases were said to be “at approximately 

market terms.” The appraisal report then states: “As the subject is being valued 

based upon market terms, no adjustments were required.” (Emphasis added.) 

{¶ 11} At the BTA hearing, Hatcher testified that he had looked at sales of 

drugstores but that “most of them were sale leaseback transactions.” And most 

involved CVS and Walgreens, which were “higher credit rated tenants” than Rite 

Aid. 

{¶ 12} Hatcher also testified to two matters relating to the competing 

appraisal theories of the parties. First, he testified that nothing about the subject 

parcel and building made it a special-purpose facility usable only for a retail 

drugstore and that if it were sold, it would likely go on the market for general 

retail purposes. Second, he distinguished between the leased-fee market and the 

market for owner-occupied properties like the subject property. 
January Term, 2016 

5

{¶ 13} Both appraisers also performed an income-approach valuation, for 

which they utilized rent comparables. In this regard, Hatcher looked at numerous 

leased properties within the Marietta and Parkersburg area, surveying the general 

lease market, and obtaining lease information from shopping malls’ anchor and 

in-line stores. Hatcher also collected information on Rite Aid store leases as a 

reference, but relied on the general retail leases. He selected a rent of $12 per 

square foot based on its being at the upper end of the general lease market.1

 After 

accounting for vacancy and collection loss and expenses and extracting a 

capitalization rate, Hatcher arrived at an income-approach valuation of 

$1,180,000. 

{¶ 14} For her part, Blosser based her market-rent calculation on her 

extensive leased-fee study of first-generation drugstores; on that basis, she posited 

market rent of $21 per square foot (compared to $12 per square foot in Hatcher’s 

appraisal). Based again on the leased-fee analysis, a low 5 percent vacancy and 

collection loss was applied (compared to 10 percent by Hatcher). Blosser’s 

capitalization rate was 8.07 percent (compared to Hatcher’s 9.5 percent). 

Blosser’s income-approach valuation was $2,600,000. 

{¶ 15} Hatcher reconciled his sales comparison approach ($1,115,000) 

with his income approach ($1,180,000) to arrive at a value of $1,150,000 for the 

drugstore property at issue. Blosser reconciled her sales-comparison ($2,200,000) 

and income methods ($2,600,000) to a value of $2,400,000. The disparity of 

valuations is striking: Blosser’s valuation is more than twice that of Hatcher’s. 

The BTA’s decision 

{¶ 16} The BTA’s analysis of the appraisals is terse. The board drew the 

contrast between Hatcher’s general-market survey versus Blosser’s focus on 

leased drugstores. The BTA found “Hatcher’s sale and lease comparables [to be] 

 

1

 The average rent for the general retail leases was $10.16 per square foot; the average rent for the 

Rite Aid drugstore leases was $12.62 per square foot. 
SUPREME COURT OF OHIO

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more comparable to the subject property,” with the result that the board found his 

valuation more persuasive. BTA No. 2011-1760, 2014 WL 2708165, *1 (Apr. 22, 

2014). In footnotes, the BTA opined that Blosser’s comparables were drawn from 

larger urban areas of Ohio and, as a premise for concluding that Hatcher’s 

appraisal was more persuasive, expressed its view that use of leased-fee 

comparables such as those Blosser relied upon, while potentially appropriate, was 

not necessary. The BTA adopted the Hatcher appraisal as the value of the 

property. 

{¶ 17} The county has appealed, and we now affirm. 

AS A GENERAL RULE, THE SALE PRICES OF LEASED-FEE PROPERTIES SHOULD BE 

ADJUSTED WHEN USED TO DETERMINE THE VALUE OF AN UNLEASED SUBJECT

{¶ 18} The county first emphasizes the doctrine that a sale price of 

property encumbered with a long-term lease constitutes the value of the property 

without adjustment for the effect of the lease on the price. See Cummins Property 

Servs., L.L.C. v. Franklin Cty. Bd. of Revision, 117 Ohio St.3d 516, 2008-Ohio1473, 885 N.E.2d 222, ¶ 16-18 (“the arm’s-length sale price of a legal fee interest 

should not be adjusted on account of the mere existence of an encumbrance”); 

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, ¶ 17 (elevated sale price attributable 

to above-market lease payments resulting from an earlier sale-leaseback 

transaction not required to be adjusted).2

{¶ 19} The county uses that case law, which speaks to determining the 

value of property encumbered by a lease, as support for a very different 

 

2

 After amendment in 2012, R.C. 5713.03 now makes the use of an arm’s-length sale price 

discretionary and also requires county auditors to value property based on the value of the 

unencumbered fee simple. See 2012 Am.Sub.H.B. No. 487, further amended by 2012 

Am.Sub.H.B. No. 510. A different rule therefore applies today, but the rule articulated in 

Cummins would be applicable to a 2010 valuation. 
January Term, 2016 

7

proposition: that in determining the value of an unencumbered parcel of realty, 

the sale price of encumbered parcels should not be adjusted. 

{¶ 20} We find this argument to be illogical on its face. Precisely because 

the lease affects the sale price and value, the leased-fee comparable ought to be 

adjusted when the subject property has no lease; the adjustment would remove the 

effect of the lease on the sale price so that the sale can indicate what the 

unencumbered subject property would sell for. Steak ‘n Shake, Inc. v. Warren Cty 

Bd. of Revision, ___ Ohio St.3d ___, 2015-Ohio-4836, ___ N.E.3d ___, ¶ 36. 

{¶ 21} The rent in a build-to-suit drugstore is often above market, which 

will elevate its sale price. See, e.g., Rhodes v. Hamilton Cty. Bd. of Revision, 117 

Ohio St.3d 532, 2008-Ohio-1595, 885 N.E.2d 236, ¶ 3, 5-6 (sale price of build-tosuit drugstore with admittedly above-market rent was found to be the value of the 

property). To the extent that building costs, by being included in elevated lease 

payments, have been incorporated into the value of the realty, an adjustment 

would need to be made to determine the value of a different drugstore property 

that was not so encumbered. 

{¶ 22} That is the general rule. Unless an exception to that rule applies, 

the rule furnishes a strong reason to affirm the decision of the BTA. 

UNDER OHIO LAW, EXCHANGE VALUE IS THE RULE AND USE VALUATION IS A 

LIMITED EXCEPTION TO THE RULE

{¶ 23} The proper analysis of this appeal calls for a recapitulation of the 

“first principles” of valuing property for tax purposes in this state. 

{¶ 24} As a general matter, the Ohio Constitution provides, “Land and 

improvements thereon shall be taxed by uniform rule according to value * * *.” 

Value in the context of ad valorem taxation of property is defined in terms of the 

exchange value rather than the current-use value. The general rule is as follows: 
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In the last analysis the value or true value in money of any 

property is the amount for which that property would sell on the 

open market by a willing seller to a willing buyer. In essence, the 

value of property is the amount of money for which it may be 

exchanged, i.e., the sales price. 

State ex rel. Park Invest. Co. v. Bd. of Tax Appeals, 175 Ohio St. 410, 412, 195 

N.E.2d 908 (1964). 

{¶ 25} Two corollaries were drawn by the court in Park Invest. Co.: first, 

that a recent, arm’s-length sale price “will usually determine the monetary value 

of the property” and second, that absent such a sale price, an appraisal indicates 

value when it “determine[s] the amount which such property should bring if sold 

on the open market.” Id.

{¶ 26} Indeed, we have applied these principles as a constitutional 

limitation on the legislative power to define property value. State ex rel. Park 

Invest. Co. v. Bd. of Tax Appeals, 32 Ohio St.2d 28, 32-33, 289 N.E.2d 579 

(1972). During the course of litigation following our 1964 Park Invest. Co.

opinion, the legislature in 1972 enacted Am.Sub.S.B. No. 455, which amended 

R.C. 5715.01 to impose the following requirement:

Such true value shall take into consideration its current use 

without regard to neighborhood land use of a more intensive 

nature. The rule to be adopted shall have standards for the 

determination of true value which will preclude the use of factors 

or circumstances of a speculative nature. 

134 Ohio Laws, Part I, 868. 
January Term, 2016 

9

{¶ 27} In our 1972 Park Invest. Co. opinion, we rejected “the statutory 

provision establishing the current use of real property as the basis for valuation 

pursuant to a uniform tax assessment,” predicating our holding on our 

interpretation of the constitutional term “value” in our 1964 Park Invest. Co. 

opinion: 

Since the current use method of evaluation excludes, 

among other factors, location and speculative value which 

comprise market value, such current use method cannot be made 

the basis for valuation of real property for tax assessment purposes, 

and that portion of Amended Substitute Senate Bill No. 455 

making provision for such method of valuation is invalid, as being 

contrary to Section 2, Article XII of the Ohio Constitution, which 

enjoins that “land and improvements thereon shall be taxed by 

uniform rule according to value.” 

32 Ohio St.2d at 32-33. 

{¶ 28} But the rule of market-exchange valuation is not a rule without 

exception. For one thing, the state constitution itself expressly permits farmland 

to be valued for tax purposes according to its current agricultural use rather than 

according to its highest and best value in the market. Ohio Constitution, Article 

II, Section 36; see also, e.g., Maralgate, L.L.C. v. Greene Cty. Bd. of Revision, 

130 Ohio St.3d 316, 2011-Ohio-5448, 958 N.E.2d 153, ¶ 13. 

{¶ 29} We have recognized another permissible example of use valuation. 

The lead case is Dinner Bell Meats, Inc. v. Cuyahoga Cty. Bd. of Revision, 12 

Ohio St.3d 270, 466 N.E.2d 909 (1984). In Dinner Bell Meats, two competing 

appraisals employed differing cost approaches based on their respective findings 

that the property was “special purpose” in nature. The court concluded that “in 
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utilizing the ‘cost approach’ for a ‘special purpose’ building,” the appraiser 

“simply considered the utility of the properties in conjunction with the highest and 

best use of the meatpacking facility.” Id. at 272. In holding that the approach 

was a proper cost approach and not a prohibited “current use” appraisal, the court 

acknowledged the general principle that “ ‘the special purpose exception is 

applied to a building in good condition being used currently and for the 

foreseeable future for the unique purpose for which it was built,’ ” a doctrine 

necessary to prevent “the owner of a distinctive, but yet highly useful, building” 

from “escap[ing] full property tax liability.” Id., quoting Fed. Res. Bank of 

Minneapolis v. State, 313 N.W.2d 619, 623 (Minn.1981). 

{¶ 30} Later, in Meijer, Inc. v. Montgomery Cty. Bd. of Revision, 75 Ohio 

St.3d 181, 661 N.E.2d 1056 (1996), we affirmed a BTA decision over arguments 

similar to those advanced and rejected in Dinner Bell Meats. In the context of 

resolving a battle of appraisals, the BTA in Meijer, Inc. declined to adopt the 

larger amount of obsolescence found by the owner’s appraiser. The BTA found 

“nothing about the present property [that was] obsolete or useless to the owner 

due to changing business conditions.” Meijer, Inc. v. Montgomery Cty. Bd. of 

Revision, BTA Nos. 93-M-731, 93-M-732, and 93-M-733, 1995 WL 59106, *11 

(Feb. 8, 1995). Indeed, “[t]he owner, by purchasing the land and constructing the 

building, evidences a market need for such a property. Therefore the costs of 

purchase and construction evidence that a prospective purchaser was willing to 

pay at least the costs of the property as newly constructed.” Id. at *12; see also 

Oakwood Club v. Cuyahoga Cty. Bd. of Revision, 70 Ohio St.3d 241, 638 N.E.2d 

547 (1994) (invoking Dinner Bell Meats to overrule the property owner’s 

contention that the county’s appraiser had performed a value-in-use analysis for 

its golf-course facility). 

{¶ 31} In both Dinner Bell Meats and Oakwood Club, we disclaimed that 

use valuation was being performed. In Dinner Bell Meats, we said, “The record 
January Term, 2016 

11 

supports the conclusion that Kaplan’s report was a proper ‘cost approach’ 

appraisal, not a ‘current use appraisal as proscribed under the Park Investment Co. 

series of cases.” 12 Ohio St.2d at 272. But in 2009, we acknowledged that those 

earlier cases did embody a type of use valuation. Meijer Stores, 122 Ohio St.3d 

447, 2009-Ohio-3479, 912 N.E.2d 560, at ¶ 24 (“we have also held that the 

constitutional prohibition does not bar consideration of current-use value in the 

context of the ‘special-purpose property’ doctrine”). 

{¶ 32} The county pins its appeal in this case on applying our Meijer 

Stores opinion from 2009. We hold, however, that Meijer Stores has not been 

shown to be applicable. 

THE SPECIAL-PURPOSE DOCTRINE, WHICH WAS APPLIED IN THE MEIJER STORES

CASE, HAS NOT BEEN SHOWN TO BE APPLICABLE HERE

{¶ 33} As noted, the county relies on our 2009 Meijer Stores opinion, but 

that reliance is unavailing on this record. In Meijer Stores, the competing 

appraisals formed the basis for determining that the special-purpose doctrine 

applied, which in turn justified a use valuation of the property. The present case 

does not present the same kind of evidence at all. 

{¶ 34} One crucial element in determining the value of property in the 

overall market lies in the concept of “highest and best use.” “Highest and best 

use,” according to the International Association of Assessing Officers (“IAAO”), 

“is that use which will generate the highest net return to the property over a 

reasonable period of time.” IAAO, Property Assessment Valuation 31 (2d 

Ed.1996). Valuing a property at its highest and best use means identifying the 

“reasonably probable and legal use of vacant land or an improved property that is 

legally permissible, physically possible, appropriately supported, financially 

feasible, and that results in the highest value.” (Emphasis added.) Appraisal 

Institute, The Appraisal of Real Estate 278 (13th Ed.2008). 
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{¶ 35} Highest and best use of the improvements to the land will usually 

be expressed in terms of the general type of use to be made of such property. In 

this case for example, a “retail store” might be the highest and best use, and since 

it is currently in that use, the appraisal report might say: “continued use as a retail 

store.” That is in essence what both appraisal reports say in this case. By 

contrast, in the special-purpose situation one would expect to see: “continued use 

by the current occupant in its ongoing business.” 

{¶ 36} Meijer Stores illustrates the contrast: because purchasers in the 

real-estate market might not be able to use the massive facility (a 190,000-squarefoot store plus other improvements) just recently built by Meijer to its own 

particular specifications, the building was not highly marketable—from a cost 

valuation standpoint, it suffered immediate economic or external obsolescence. 

And that was how the property owner’s appraiser viewed the property. By 

contrast, the board of education’s appraiser performed a type of use valuation by 

determining “market rent” by positing Meijer as the continuing tenant, and he 

used build-to-suit properties subject to leases as part of determining what the 

market rent should be. 

{¶ 37} Quite simply, the 11,000-square-foot drugstore at issue in this case 

is not a likely candidate for special-purpose treatment (compare the 190,000-

square-foot store in Meijer Stores). Indeed, the appraiser, Hatcher, testified 

against the applicability of the special-purpose doctrine here, and the record 

supports his assertion. It follows that the BTA was justified in rejecting the 

Blosser appraisal. 

{¶ 38} In the context of the present record, the county argues that Meijer 

Stores is applicable but ignores a case decided a mere month and a half earlier: 

Target Corp. v. Greene Cty. Bd. of Revision, 122 Ohio St.3d 142, 2009-Ohio2492, 909 N.E.2d 605. In Target, the BTA adopted a value based on the opinion 

of the owner’s appraiser, Lorms—the appraiser whose valuation was rejected in 
January Term, 2016 

13 

Meijer Stores. In Target (in contrast with the Meijer Stores case), the county 

presented no appraisal in support of its higher valuation at the BTA. 

{¶ 39} Without evidence of its own, the county in Target relied on a twopronged legal argument. First, that “the BTA should have used data from the 

first-generation sale prices and rentals rather than second-generation examples.” 

Target at ¶ 12. The court affirmed the BTA’s rejection of that argument based on 

the lack of evidence of such first-generation properties. 

{¶ 40} Second, the county in Target cited our 1996 Meijer, Inc. opinion as 

authority that the type of obsolescence found by the owner’s appraiser should not 

be accepted as valid as a matter of law. This point is directly relevant here: in 

Target, we rejected the county’s argument because the result in Meijer, Inc.

“implicates the special-purpose-property doctrine that we articulated in Dinner 

Bell Meats.” Quite simply, the absence of evidence supporting the specialpurpose doctrine constituted our reason for affirming the BTA’s decision in 

Target. 

{¶ 41} This appeal is more akin to Target than to Meijer Stores. To be 

sure, the present case does differ from Target in that here, the county did present 

an appraisal—the Blosser appraisal. But the BTA opted to use the competing 

appraisal for stated reasons, and the Blosser appraisal in the context of the entire 

record lacks the element that would commend its approach under settled law: 

namely, there is no finding that the property qualifies for use valuation under the 

special-purpose doctrine. Moreover, an 11,000-square-foot drugstore is an 

unlikely candidate for such treatment. 

{¶ 42} Because there is no evidentiary basis upon which to apply the 

special-purpose doctrine and engage in use valuation here, Meijer Stores does not 

supply a legal reason for reversing the BTA’s decision. 

CONCLUSION

{¶ 43} For the foregoing reasons, we affirm the decision of the BTA. 
SUPREME COURT OF OHIO

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Decision affirmed. 

O’CONNOR, C.J., and PFEIFER, O’DONNELL, LANZINGER, KENNEDY,

FRENCH, and O’NEILL, JJ., concur. 

_________________ 

 Stephen Swaim, for appellee. 

 Rich & Gillis Law Group, L.L.C., Kelley A. Gorry, and James R. Gorry, 

for appellants. 

_________________