DUBLIN SENIOR COMMUNITY LIMITED PARTNERSHIP, APPELLANT, v. FRANKLIN 

COUNTY BOARD OF REVISION ET AL., APPELLEES. 

[Cite as Dublin Senior Community L.P. v. Franklin Cty. Bd. of Revision (1997), 80 

Ohio St.3d 455.] 

Taxation — Real property valuation — True value of congregate living facility — 

Decision of Board of Tax Appeals must state what evidence it considered 

relevant in reaching its value determinations. 

(No. 97-4 — Submitted August 27, 1997 — Decided December 31, 1997.) 

APPEAL from the Board of Tax Appeals, No. 95-S-390. 

 Appellant, Dublin Senior Community Limited Partnership (“Dublin”), filed 

a real property valuation complaint with the Franklin County Board of Revision 

(“BOR”) for tax year 1993 alleging a true value for its property of $3.4 million. In 

response, the Board of Education of the Dublin City School District filed a 

countercomplaint alleging that the true value of the real property should be $8.5 

million. The Franklin County Auditor valued the real property at $6.68 million. 

 The land portion of the real property consists of 13.7 acres located in 

Dublin, Ohio, on the north side of Post Road, near the northwest corner of the 

intersection of Post Road and Avery Road. Located on the land is a three-story 

congregate living facility containing 134 apartments. 

 Robert D. Thomas, co-owner of the management company operating the 

Dublin facility and a Dublin partner, explained in testimony before the Board of 

Tax Appeals (“BTA”) that a congregate living facility provides senior citizens 

with apartment housing, plus personal services and common areas. The ages of 

the residents of such facilities generally are over seventy-five. The apartments 

contained in such facilities are slightly smaller than typical apartments. The 

apartments are connected by interior hallways to common areas that contain a 
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kitchen, dining, library, exercise, and recreation rooms. Thomas testified that 

congregate living facilities usually provide emergency pull-cords in each of the 

apartments, a twenty-four-hour staff, laundry, housekeeping services, and some 

type of meal program. 

 Indian Run Retirement Limited Partnership (“Indian Run”) built the Dublin 

facility, completing it in late 1990 or early 1991. Estimates of the construction 

cost for the facility range from $8.5 million to $10 million. Indian Run financed 

construction with an $8.675 million construction loan from Mid-America Federal 

Savings and Loan Association. 

 On December 13, 1990, the Director of the Office of Thrift Supervision 

appointed the Resolution Trust Corporation (“RTC”) as receiver for Mid-America 

Federal Savings and Loan Association. The construction loan became in default, 

and a mechanic’s lien foreclosure proceeding was initiated against Indian Run. In 

response to the mechanic’s lien proceeding, the RTC filed an answer, cross-claim, 

and third-party complaint alleging that it was owed $7.6 million plus interest on 

the construction loan and that its mortgage was the first and best lien on the 

property. 

 Prior to the foreclosure sale, the RTC sold the Indian Run note and 

mortgage as part of a package of loans to MIF Realty L.P., a subsidiary of GE 

Capital Corporation. MIF Realty L.P. in turn sold the Indian Run note and 

mortgage to Dublin for $3.78 million. 

 Subsequent to its purchase of the note and mortgage, Dublin purchased the 

property at a sheriff’s foreclosure sale for $5.5 million. Dublin, as a first lien 

holder, used part of its judgment amount against Indian Run for the Indian Run 

property at the sheriff’s sale. The only cash expended by Dublin was for the costs 

and expenses of the foreclosure sale and the transfer fee. 
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 At a hearing before the BOR, Dublin presented the testimony and written 

appraisal of Wayne E. Swift, Jr. Swift appraised the property initially at the 

request of a contractor who had been hired by the RTC to evaluate the property, 

prior to the sale of the note and mortgage. In his appraisal, Swift used the three 

traditional approaches to value. Swift appraised the property as a retirement 

facility, with stabilized occupancy, at $4.1 million and at $3.6 million based on the 

occupancy level as of September 3, 1992. Swift also appraised the project as a 

conventional apartment facility at $4.525 million assuming stabilized occupancy, 

and $3.9 million as if it were vacant. 

 The BOR affirmed the value assessed by the auditor, and Dublin appealed to 

the BTA. 

 At the BTA hearing Dublin presented the testimony of appraiser Bruce E. 

Pickering, who, using the traditional three approaches to value, determined the 

value of the real property to be $3.57 million. 

 For his income approach, Pickering used rental rates based on those of other 

congregate care facilities in the area. Pickering did not make any allocation of the 

monthly rental rate between the charge for the apartment rent and the charges for 

the services and meals provided to the residents. Pickering deducted as expenses 

both the expenses for the real estate and those expenses for services provided to 

the residents. Using his income and expense figures, Pickering projected a yearly 

net income of $907,324 based on an assumed stabilized occupancy rate, which he 

projected would be achieved in four years. Using his estimate of net income and a 

capitalization rate of 13.87 percent, Pickering computed the value of the property 

to be $6.54 million. 

 After those calculations, Pickering deducted an amount of $2.77 million. 

He described this amount as the present value of the shortfall between the yearly 
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net incomes he projected during his estimated four-year rent-up period and his 

projected yearly net income, at the assumed stabilized occupancy rate. The net 

result was a value for the property as of January 1, 1993 of $3.77 million. From 

this value, Pickering then subtracted $200,000 for the value of the personal 

property to arrive at a final value of $3.57 million for the real property. 

 Pickering next determined a value of $6.25 million for his market 

comparison approach. He again deducted the $2.77 million present value of the 

rent-up shortfall and the $200,000 value of the personal property from his market 

comparison value to arrive at a value of $3.28 million. 

 Utilizing the cost approach, Pickering valued the land at $527,750 and the 

building at $10.01 million. After deducting normal depreciation, external 

obsolescence, the present value of the rent-up shortfall and the value of the 

personal property, Pickering determined a value of $3.74 million. Pickering 

reconciled the values from the three approaches, placing the most emphasis on the 

income approach, to determine a final value of $3.57 million. 

 After analyzing only Pickering’s appraisal, the BTA ruled Dublin’s 

evidence not competent and probative, and found the true value to be the auditor’s 

value of $6.68 million. 

 This cause is now before the court upon an appeal as of right. 

__________________ 

Arter & Hadden and Donald G. Paynter, 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 and Jeffery A. Rich, for appellee Dublin City 

School Board of Education. 
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__________________ 

Per Curiam. Dublin’s first contention is that its purchase of the note and 

mortgage from MIF Realty L.P. was an arm’s-length transaction which established 

the best evidence of true value for the property. Dublin further contends that the 

BTA mischaracterized the transaction and misconstrued R.C. 5713.03 by not 

accepting the purchase of the note and mortgage as a sale that established value. 

We disagree. 

 Despite Dublin’s claims to the contrary, two separate and distinct 

transactions resulted in Dublin’s acquisition of the real property. In the 

transaction between Dublin and MIF Realty L.P., Dublin purchased only the 

Indian Run note and mortgage and associated documents. The transaction 

between MIF Realty L.P. and Dublin did not transfer the fee simple title to any 

tract, lot, or parcel of real property. Admittedly, at the time of the purchase of the 

note and mortgage by Dublin, the mortgage had been declared to be a first priority 

in the pending foreclosure, and the judgment for the unpaid balance of the note 

provided Dublin with a credit towards the purchase price that could be used in 

bidding at the sheriff’s sale. Realistically, however, someone other than Dublin 

could have made the highest bid at the sheriff’s sale and received fee simple title 

to the property. Dublin did not receive fee simple title until it received the 

sheriff’s deed. 

 Likewise, R.C. 5713.03 is not applicable to the transaction between Dublin 

and MIF Realty L.P. R.C. 5713.03 provides that if a “tract, lot, or parcel has been 

the subject of an arm’s length sale between a willing seller and willing buyer 

within a reasonable length of time * * *, the auditor shall consider the sale price * 

* * to be the true value for taxation purposes.” As we have just decided, there was 
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no sale of a “tract, lot, or parcel” until Dublin received the sheriff’s deed for the 

property. 

 Moreover, the price that Dublin paid at the sheriff’s sale is not a relevant 

consideration in establishing true value. R.C. 5713.04 prevents the price paid at 

the sheriff’s sale from establishing the best evidence of true value, stating that 

“[t]he price for which such real property would sell at auction or forced sale shall 

not be taken as the criterion of its value.” 

 Dublin’s second contention is that the real property should be valued at its 

actual occupancy rate on the tax lien date, rather than at an assumed stabilized 

occupancy rate, which would not be achieved until sometime in the future. We 

gree. 

 Swift’s appraisal presented to the BOR and Pickering’s appraisal made 

deductions to compensate for the fact that, on the lien date, the project was a new 

multiunit project in the rent-up phase which had not achieved a stabilized 

occupancy rate. Dublin contended that, until the project achieved a stabilized 

occupancy rate, it should deduct the present value of the yearly shortfalls, 

calculated as the difference between the actual net income and the projected net 

income at the stabilized occupancy rate. 

 In practical terms, Dublin argues that, while a new multiunit project may be 

worth a certain amount once it reaches a stabilized occupancy, it is worth some 

lesser amount when it is new and essentially empty. 

 Dublin cites Ohio Adm.Code 5705-3-03(B) as authority for the concept that 

its property should be valued based on its occupancy rate on the tax lien date, 

rather than at its ultimate stabilized occupancy rate. Ohio Adm.Code 5705-3-

03(B) provides that “[e]ach lot, tract, or parcel of land, and all buildings, 

structures, fixtures, and improvements to land shall be appraised by the county 
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auditor according to true value and money, as it or they existed on tax lien date of 

the year in which the property is appraised.” (Emphasis added.) 

 On the other hand, the appellees contend that in this case the occupancy of 

the project was a function of the business practices of past management and 

should not be a factor in the valuation for tax purposes. 

 In State ex rel Park Invest. Co. v. Bd. of Tax Appeals (1964), 175 Ohio St. 

410, 412, 25 O.O.2d 432, 434, 195 N.E.2d 908, 910, we stated that when an actual 

sale is not available “an appraisal becomes necessary. It is in this appraisal that 

the various methods of evaluation, such as income yield or reproduction costs, 

come into action. Yet, no matter what method of evaluation is used, the ultimate 

result of such an appraisal must be to determine the amount which such property 

should bring if sold on the open market.” Because no arm’s-length sale occurred 

in this case the only evidence upon which the BTA could base its decision was the 

appraisals presented to it by Dublin. However, the BTA rejected the proposition 

contained in the appraisals presented by Dublin that it was entitled to a reduction 

in value during the rent-up period. The BTA stated that there was no theoretical 

support in either the testimony or Dublin’s brief that would justify the deduction, 

nor was it aware of any appraisal theory supporting this deduction. 

 Pickering provided the theory for such a deduction when he stated in his 

appraisal report that “[i]n instances where there is a time lag between the valuation 

date and the point in time when the property is projected to reach its ‘stabilized’ 

operating level, a discounting process is necessary to account for the difference 

between the actual net income and the stabilized net income during the rent-up 

period.” Support for Pickering’s concept can be found in The Appraisal of Real 

Estate, American Institute of Real Estate Appraisers (11 Ed.1996) 590, which 

states that “[t]he appraiser should account for the impact of the rent lost while the 
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building is moving towards stabilized occupancy.” Likewise in Wallery, 

Assessing Congregate Care Facilities: A Unique Problem in Valuation, Journal of 

Property Tax Management (Fall 1991) 11, 13, the author states that congregate 

care centers often “take five years or more to be absorbed into the market.” As a 

result of the long absorption period the author states that “[a] prudent purchaser 

would likely require a discount from the construction cost because lease-up or 

sellout is uncertain * * *.” Id. at 13. 

 The ultimate result of an appraisal is to determine the amount that the 

property would bring if sold on the open market on the tax lien date. It must be 

evaluated as it existed on that lien date. The BTA acted unreasonably and 

unlawfully in refusing to consider a reduction in valuation for a new multiunit 

property that was essentially empty on tax lien day. As pointed out in The 

Appraisal of Real Estate, at 590, several ways exist to estimate the amount of the 

deduction that should be taken to reach the true value of a new project prior to rent 

up. Upon remand, the BTA must evaluate Dublin’s evidence to determine whether 

the appraisal methods and factual evidence presented by Dublin’s appraisers were 

proper and sufficient to prove the amount of the deduction. 

 In its third proposition of law, Dublin contends that the BTA erred in not 

considering the Pickering appraisal because he failed to separate real estate 

income from service income. We disagree. 

 The property being valued is a congregate care center that comprises a 

combination of real estate and business activities. Dublin charges for such 

services as food and housekeeping; these are business activities. It also charges 

rental for the apartments; that is a real estate activity. Each activity has separate 

expenses. In a valuation of only the real estate, the two activities must be kept 

separate. The separation of the income and expenses is important not only when 
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determining net income, but also when considering a comparison of the sale prices 

of comparable facilities. See Wallery at 19. While this separation may be 

difficult, Pickering made no effort to do so. 

 Dublin presents two arguments to justify Pickering’s failure to separate the 

income and expenses for the two activities. First, it contends that this separation 

was not always possible. Second, it contends that inclusion of the business net 

income will result in a value equal to or greater than a value based on the real 

estate net income alone. 

 The answer that it is difficult to accurately separate the income and 

expenses between business and real estate activities is not a sufficient reason not 

to separate them; it must be done, because we tax real estate in this case. 

 Moreover, while the use of net income figures that include both the business 

and the real estate net income may result in a value which equals or exceeds the 

value determined on the basis of the real estate net income alone, such procedure 

would not be proper. We are valuing real estate; the addition or subtraction of 

business income and expenses may distort the valuation of the real estate, and such 

income and expenses must be deleted. 

 Dublin contends that by leaving the auditor’s valuation intact, the BTA 

adopted a valuation that exceeds Dublin’s valuation that includes both the 

business and real estate values. Thus, Dublin argues that no value could be 

approved by the BTA that was higher than Dublin’s value. We disagree. 

 First, as explained above, a valuation which includes business income and 

expenses is not acceptable for real estate valuation purposes. Second, the burden 

at the BTA was on Dublin to prove its right to the reduction in value it sought. 

Zindle v. Summit Cty. Bd. of Revision (1989), 44 Ohio St.3d 202, 203, 542 N.E.2d 

650, 651. However the BTA found that Dublin’s evidence was not competent and 
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probative and that Dublin did not meet its burden to establish a value other than 

that set by the auditor. The BTA may approve a board of revision value if the 

appellant does not prove a right to a reduction in value. Westlake Med. Investors, 

L.P. v. Cuyahoga Cty. Bd. of Revision (1996), 74 Ohio St.3d 547, 549, 660 N.E.2d 

467, 468. 

 Dublin’s last contention is that it was unreasonable and unlawful for the 

BTA to ignore the Swift appraisal. We agree. 

 R.C. 5715.08 provides that the county board of revision “shall take full 

minutes of all evidence given before the board” and the secretary of the board 

“shall preserve * * * records of all minutes and documentary evidence offered on 

each complaint.” R.C. 5717.01 provides upon the filing of an appeal to the BTA, 

the board of revision “shall thereupon certify to the board of tax appeals a 

transcript of the record of the proceedings of the county board of revision 

pertaining to the original complaint, and all evidence offered in connection 

therewith.” R.C. 5715.19(G) provides that “[a] complainant shall provide to the 

board of revision all information or evidence within his knowledge or possession 

that affects the real property that is the subject of his complaint. A complainant 

who fails to provide such information or evidence is precluded from introducing it 

on appeal to the board of tax appeals or the court of common pleas, except that the 

board of tax appeals or court may admit and consider the evidence if the 

complainant shows good cause * * *.” Finally, R.C. 5717.04 requires that when 

an appeal is filed with this court from the BTA, the BTA is to file “a certified 

transcript of the record of the proceedings of the board pertaining to the decision 

complained of and the evidence considered by the board in making such decision.” 

 A review of the foregoing statutes shows a comprehensive procedure for 

preserving evidence and presenting it to the BTA. In fact, the evidence contained 
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in the record to the BTA from the board of revision may be used as the sole basis 

for deciding the appeal. R.C. 5717.01 permits the BTA to “order the appeal to be 

heard on the record and the evidence certified to it by the county board of 

revision.” 

 The statutory transcript that was sent from the BOR to the BTA in this case 

contained the written appraisal report and the taped, but untranscribed, testimony 

of appraiser Wayne Swift. Swift’s appraisal report and testimony became part of 

the evidence Dublin presented to the BTA to support its position. 

 In its brief to the BTA, Dublin reviewed the Swift appraisal for the BTA’s 

consideration. In fact, Dublin spent more space in its brief to the BTA discussing 

the Swift appraisal than it did the Pickering appraisal. However, a review of the 

BTA’s opinion fails to disclose any recognition or consideration by it of the Swift 

appraisal. In Ridgeview Ctr., Inc. v. Lorain Cty. Bd. of Revision (1989), 42 Ohio 

St.3d 30, 536 N.E.2d 1157, 1158, we quoted the BTA’s opinion in the Ridgeview 

case as stating, “ ‘This board should and has considered the administrative record 

(statutory transcript) which the county board of revision is required to file with 

this Board, giving the record whatever weight this board deems appropriate, even 

though additional evidence may be and in this case was accepted.’ ” The BTA 

should have followed the procedure it outlined in Ridgeview and given the record 

that same consideration in this case. However, we do not know what the BTA 

thought of the Swift appraisal because its decision is silent on the subject. 

 If the BTA considered, but did not accept, Swift’s appraisal, it should have 

set forth that fact in its decision, along with its reasons for not accepting the 

appraisal. In Howard v. Cuyahoga Cty. Bd. of Revision (1988), 37 Ohio St.3d 

195, 197, 524 N.E.2d 887, 889, we stated, “This court is unable to perform its 

appellate duty when it does not know which facts the BTA selected in rendering 
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its decision. We now require it to state what evidence it considered relevant in 

reaching its value determinations.” Before we can rule on the BTA’s decision 

concerning Swift’s appraisal, the BTA must set forth its determination thereon. 

On remand, the BTA must analyze the Swift appraisal and set forth its reasons for 

accepting or rejecting it. 

 Therefore, the decision of the BTA is reversed, and the cause is remanded 

for reconsideration in conformity with this opinion. 

Decision reversed 

and cause remanded. 

 MOYER, C.J., F.E. SWEENEY, PFEIFER and LUNDBERG STRATTON,JJ., concur. 

 DOUGLAS, RESNICK and COOK,JJ., dissent. 

__________________ 

 Alice Robie Resnick, J., dissenting. I would affirm the decision of the 

Board of Tax Appeals. 

 DOUGLAS and COOK,JJ., concur in the foregoing dissenting opinion.