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

Health Care REIT, Inc. v. Cuyahoga Cty. Bd. of Revision, Slip Opinion No. 2014-Ohio-2574.] 

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. 2014-OHIO-2574 

HEALTH CARE REIT, INC., APPELLEE, v. CUYAHOGA COUNTY BOARD OF 

REVISION ET AL., APPELLEES; BEREA CITY SCHOOL DISTRICT BOARD OF 

EDUCATION, APPELLANT. 

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

it may be cited as Health Care REIT, Inc. v. Cuyahoga Cty. Bd. of Revision,

Slip Opinion No. 2014-Ohio-2574.] 

Taxation—Valuation—It is appropriate for appraisers to compare assisted-living 

facilities to apartment buildings in order to distinguish the property’s 

real-property value from its business-property value—Decision affirmed. 

(No. 2013-0278—Submitted February 4, 2014—Decided June 18, 2014.) 

APPEAL from the Board of Tax Appeals, Nos. 2009-Q-1547, 2009-Q-1615, and 

2009-Q-1616. 

____________________ 

Per Curiam. 

{¶ 1} This case involves a dispute over the tax-year-2007 value of an 

improved 6.415-acre parcel in Cuyahoga County. The property is located in an 
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2

area zoned as a “Senior Residence/Life Care District,” and it is operating as an 

assisted-living facility. 

{¶ 2} In tax year 2007, the county fiscal officer valued the subject 

property at $8,740,000, consistent with its 2004 sale price. The property’s owner, 

appellee Health Care REIT, Inc., sought a reduction to $3,100,000, but appellee 

Cuyahoga County Board of Revision (“BOR”) retained the fiscal officer’s 

valuation. 

{¶ 3} The owner and the appellant, Berea City School District Board of 

Education (“school board”), both appealed to the Board of Tax Appeals (“BTA”), 

where they presented competing appraisals. The owner’s appraiser relied on data 

about apartment buildings as a starting point for valuation and opined a value of 

$3,100,000. By contrast, the school board’s appraiser considered only data about 

assisted-living facilities and opined a value of $5,400,000. The BTA found the 

owner’s appraisal more persuasive and assigned a value of $3,100,000. 

{¶ 4} The school board now appeals, arguing that the BTA’s decision was 

unlawful and unreasonable because, among other things, it relied on an appraisal 

that disregarded city zoning laws. For the reasons explained below, we affirm the 

BTA’s decision. 

Facts 

1. The subject property 

{¶ 5} The subject property, parcel No. 373-26-018, is a 6.415-acre tract of 

land located in the city of Middleburg Heights and in the Berea City School 

District. The property is located in an area zoned as a “Senior Residence/Life 

Care District,” which was established for the housing and living-assistance needs 

of persons 60 years and older. Middleburg Heights Codified Ordinances 1134.01 

and 1134.02. In keeping with that restriction, the parcel was improved in 1998 

with a 48,648-square-foot structure that operates as an assisted-living facility, 

Brookside Estates. 
January Term, 2014 

3 

{¶ 6} In October 2004, Health Care REIT, Inc., purchased the property for 

$8,740,000. The property was leased to and managed by Emeritus Corporation 

both before and after the 2004 sale. 

2. Board of revision proceedings 

{¶ 7} In tax year 2006, the first year of Cuyahoga County’s triennium, the 

school board filed a complaint with the BOR, seeking an increase in property 

value. Health Care REIT did not file a counter-complaint. The BOR increased 

the property’s tax value to $8,740,000 for tax year 2006, consistent with the 2004 

sale price. 

{¶ 8} The county fiscal officer assigned the same value for tax year 2007.1

 

Health Care REIT filed a complaint requesting a reduction to $5,400,000, and it 

later filed an amended complaint seeking a reduction to $3,100,000. The school 

board filed a counter-complaint, supporting the fiscal officer’s valuation. 

{¶ 9} At the BOR hearing, Health Care REIT presented the testimony and 

report of appraiser Richard Racek Jr. Racek used the sales-comparison and 

income approaches to valuation, relying on data about apartment complexes as a 

starting point for his analysis. Ultimately, he opined a value of $3,100,000 for tax 

year 2007. An employee of Emeritus, Scott Marshall, also testified. 

{¶ 10} In response, the school board pointed to the BOR’s decision 

accepting the 2004 sale price as the best evidence of the property’s value for tax 

year 2006 and presented evidence of the 2004 sale and lease to Emeritus and the 

property’s $50,000,000 mortgage. 

{¶ 11} On July 6, 2009, the BOR issued a decision retaining the fiscal 

officer’s valuation of the property—$8,740,000. 

 

 

1

 Each tax year and appeal stands on its own record. Olmsted Falls Bd. of Edn. v. Cuyahoga Cty. 

Bd. of Revision, 122 Ohio St.3d 134, 2009-Ohio-2461, 909 N.E.2d 597. 
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4

3. BTA proceedings 

{¶ 12} Both parties appealed the BOR decision to the BTA and the cases 

were consolidated. 

{¶ 13} At the BTA hearing, Health Care REIT presented a supplemented 

appraisal report from Racek and his testimony. Racek again used the salescomparison and income approaches to valuation, but he supplemented his analysis 

with additional apartment comparables. He also developed a cost-approach 

analysis. As in his initial report, Racek opined a value of $3,100,000. 

{¶ 14} The school board introduced testimony and an appraisal report 

from Charles M. Ritley. Ritley used all three valuation methods. Unlike Racek, 

however, he did not rely on any data about apartment complexes; Ritley used only 

assisted-living facilities as comparables. He also placed significant reliance on 

financial data about the subject property and data from the Marshall Swift 

Valuation Service for Homes for the Elderly. Ultimately, Ritley opined a value of 

$5,400,000. 

{¶ 15} On January 15, 2013, the BTA issued an opinion assigning a value 

of $3,100,000 for the January 1, 2007 tax-lien date. The BTA rejected the 

October 2004 sale price as the best evidence of the property’s value in tax year 

2007, citing the sale’s remoteness and insufficient record evidence about the 

circumstances of the sale. The BTA then stated that it found Racek’s opinion 

more persuasive than Ritley’s. 

{¶ 16} The school board appealed to this court. Oral argument was held 

before a master commissioner on December 17, 2013. 

Analysis 

{¶ 17} On appeal, the school board advances five propositions of law, 

each arguing that the BTA’s decision was unreasonable and unlawful. At oral 

argument before the master commissioner, the school board clarified that it is 
January Term, 2014 

5 

asking this court “to reverse” the BTA “because there was not sufficient evidence 

to warrant a reduction” in value. 

{¶ 18} Health Care REIT defends the BTA’s decision and asks this court 

to award attorney fees because the school board’s appeal is frivolous. 

1. Standard of review 

{¶ 19} “The fair market value of property for tax purposes is a question of 

fact, the determination of which is primarily within the province of the taxing 

authorities * * *.” Cuyahoga Cty. Bd. of Revision v. Fodor, 15 Ohio St.2d 52, 

239 N.E.2d 25 (1968), at syllabus. When parties present competing appraisals to 

the BTA, “the BTA is vested with wide discretion in determining the weight to be 

given to the evidence and the credibility of the witnesses that come before it.” 

EOP-BP Tower, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 106 Ohio St.3d 1, 

2005-Ohio-3096, 829 N.E.2d 686, ¶ 9. As a result, “this court will not disturb a 

decision of the Board of Tax Appeals with respect to such valuation unless it 

affirmatively appears from the record that such decision is unreasonable or 

unlawful.” Fodor at syllabus; Hilliard City Schools Bd. of Edn. v. Franklin Cty. 

Bd. of Revision, 128 Ohio St.3d 565, 2011-Ohio-2258, 949 N.E.2d 1, ¶ 19. 

2. 2004 sale price is not the best evidence of true value 

{¶ 20} In proposition of law No. IV, the school board argues that the BTA 

acted unreasonably and unlawfully by failing to accept the property’s 2004 sale 

price as the best evidence of its true value for tax year 2007.2

 The school board 

contends that the 2004 sale is recent and that other evidence supports its position 

that the 2004 sale price accurately reflects the value for tax year 2007. 

{¶ 21} We have long held that when determining value, “[t]he best 

evidence of the ‘true value in money’ of real property is an actual, recent sale of 

 

2

 The school board did not press this claim during oral argument before the master commissioner. 

However, it did continue to argue that the BTA lacked sufficient evidence to reduce the county 

fiscal officer’s valuation of $8,740,000, a figure derived from the 2004 sale price. 
SUPREME COURT OF OHIO

6

the property in an arm’s-length transaction.” Conalco, Inc. v. Monroe Cty. Bd. of 

Revision, 50 Ohio St.2d 129, 363 N.E.2d 722 (1977), at paragraph one of the 

syllabus; see also Berea City School Dist. Bd. of Edn. v. Cuyahoga Cty. Bd. of 

Revision, 106 Ohio St.3d 269, 2005-Ohio-4979, 834 N.E.2d 782. If there has 

been a recent arm’s-length transaction, “ ‘the auditor shall consider the sale price 

* * * to be the true value for taxation purposes.’ ” Hilliard City Schools Bd. of 

Edn. at ¶ 18, quoting former R.C. 5713.03, Am.Sub.H.B. No. 260, 140 Ohio 

Laws, Part II, 2665, 2722.3

 A party can rebut this presumption of value only by 

“challenging whether the elements of recency and arm’s-length character between 

a willing seller and a willing buyer are genuinely present for that particular sale.” 

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. 

{¶ 22} As to recency, the sale must have been within a reasonable length 

of time of the tax-lien date. Id. at ¶ 35. And this court has explained that “[t]he 

reasonableness of the length of time * * * encompasses all factors that would, by 

changing with the passage of time, affect the value of the property.” Id. One 

component of recency is the period of time that has elapsed between the sale date 

and the tax-lien date. We have refrained from setting a limit on the amount of 

time that can pass between the two dates before the sale no longer qualifies as 

recent; the length of time a sale remains “recent” “will vary from case to case.” 

New Winchester Gardens, Ltd. v. Franklin Cty. Bd. of Revision, 80 Ohio St.3d 36, 

 

3

 As of September 10, 2012, R.C. 5713.03 reads: 

In determining the true value of any tract, lot, or parcel of real estate 

under this section, if such tract, lot, or parcel has been the subject of an arm’s 

length sale between a willing seller and a willing buyer within a reasonable 

length of time, either before or after the tax lien date, the auditor may consider 

the sale price of such tract, lot, or parcel to be the true value for taxation 

purposes. 

(Emphasis added.) 
January Term, 2014 

7 

44, 684 N.E.2d 312 (1997), overruled in part on other grounds, Cummins.

4

 When 

determining recency in a particular case, the BTA should also consider “general 

developments in the market between the date of sale and the tax-lien date.” 

Cummins at ¶ 35. 

{¶ 23} Here, the BTA’s determination that the 2004 sale of the property 

was “too remote from the tax lien date in this matter” is reasonable because the 

BTA relied on affirmative evidence indicating that the sale should not be regarded 

as recent. BTA Nos. 2009-Q-1547, 2009-Q-1615, and 2009-Q-1616, 2013 WL 

314191, at *2 (Jan. 15, 2013). Compare Zell v. Hamilton Cty. Bd. of Revision, 

BTA No. 94-N-27, 1996 WL 154479, at *3-5 (Mar. 29, 1996), affirmed 78 Ohio 

St.3d 330, 677 N.E.2d 1201 (1997) (determining that a sale that occurred 28 

months after the tax-lien date qualified as recent based on affirmative evidence 

supporting that conclusion). Indeed, we have stated that a presumption, such as 

that of recency, “ ‘is a procedural device which is resorted to only in the absence 

of evidence by the party in whose favor a presumption would otherwise 

operate.’ ” Cincinnati School Dist. Bd. of Edn. v. Hamilton Cty. Bd. of Revision, 

78 Ohio St.3d 325, 328, 677 N.E.2d 1197 (1997), quoting Ayers v. Woodard, 166 

Ohio St. 138, 140 N.E.2d 401 (1957), paragraph three of the syllabus. Here the 

BTA considered the recency of the sale in light of evidence offered by both 

parties. 

{¶ 24} In this case, the sale occurred in October 2004, 26 months prior to 

the tax-lien date, January 1, 2007. Moreover, two competing appraisals of the 

property’s January 1, 2007 value have been completed since the beginning of the 

 

4

 We have held that a sale is not presumed to be recent if it occurred more than 24 months before 

the tax-lien date in a reappraisal year and the reappraisal did not rely on that sale. See Akron City 

School Dist. Bd. of Edn. v. Summit Cty. Bd. of Revision, __ Ohio St.3d __, 2014-Ohio-1588, 

__N.E.2d __, ¶ 26-27. The Akron Bd. of Edn. holding does not apply here, however, because the 

sale occurred a mere 14 months before the reappraisal lien date, which was January 1, 2006. 

Moreover, that sale price was adopted as the tax-year-2006 value of the property after the filing of 

a complaint for that year, and the tax year at issue here is 2007. 
SUPREME COURT OF OHIO

8

triennium and neither relied on the 2004 sale price—$8,740,000—as a basis for 

valuing the property. Racek submitted an appraisal on the property on March 23, 

2009 (and a supplemented appraisal on February 17, 2012), arriving at a valuation 

of $3,100,000 each time. Ritley submitted an appraisal of the property on 

September 4, 2012, arriving at a valuation of $5,400,000. Together, the lapse of 

time and the appraisals support the BTA’s decision to reject the sale price as the 

best evidence of value. 

{¶ 25} In addition, the BTA’s finding is supported by record evidence of 

general market changes following the October 2004 sale. During the BTA 

hearing, the school board’s own appraiser stated that the property “suffer[ed] a 

slump in occupancy during the beginning of the housing crash and a little bit into 

it.” He further noted that “[i]n ’07, we were in the significant beginnings of this 

great recession * * *.” As a result, he explained, the property went “through a 

tough period.” 

{¶ 26} Finally, the BTA’s decision not to rely on the 2004 sale price is 

also supported by the testimony of the school board’s appraiser and the property’s 

manager, both of whom informed the BTA that the sale price included real 

property and business property. This makes sense, because the sale price of an 

assisted-living facility may “include elements of business value that relate to the 

provision of ancillary services as opposed to the rental of realty.” LTC Properties, 

Inc. v. Licking Cty. Bd. of Revision, 133 Ohio St.3d 111, 2012-Ohio-3930, 976 

N.E.2d 852, ¶ 21. 

{¶ 27} Under these circumstances, it can hardly be said that the record 

lacks support for the BTA’s conclusion, much less that there is “a total absence of 

evidence” to support its findings. HealthSouth Corp. v. Testa, 132 Ohio St.3d 55, 

2012-Ohio-1871, 969 N.E.2d 232, ¶ 14 (“we will reverse BTA findings only 
January Term, 2014 

9 

when there is a total absence of evidence to support a particular finding”). 

Therefore, we defer to the BTA’s finding that the 2004 sale was not recent.5

3. Relevance of zoning in real-property valuation 

{¶ 28} In proposition of law No. I, the school board argues that the BTA 

“acted unreasonably when it accepted the valuation of an assisted-living facility 

based on comparisons to apartment buildings” even though city zoning did not 

permit use of the property as an apartment building. We disagree. 

{¶ 29} The subject property is located in an area zoned by the city as a 

“Senior Residence/Life Care District.” The city created this district “specifically 

for elderly living and care,” contemplating facilities that would meet the housing 

and assistance needs of persons 60 years or older, “whatever level of attention 

they may require.” Middleburg Heights Codified Ordinances 1134.01 and 

1134.02. Housing in this district is limited to apartments and single-family cluster 

dwelling units designed specifically for the elderly, nursing-care facilities, and 

assisted-living facilities. Id. at 1134.03. Each type of housing must comply with 

a minimum-size-unit requirement. For example, in an assisted-living facility, 

every unit must be at least 250 square feet, and an apartment (with no bedroom) 

must be at least 500 square feet. Id. at 1134.07. 

{¶ 30} The subject property is operating as an assisted-living facility. 

Seventy-five of its 86 units are less than 500 square feet. Accordingly, it could 

not be classified as an apartment building under current zoning law. Even if the 

building were reconfigured to satisfy the size requirements for apartments, those 

units could still be rented only to persons 60 years old or older. To eliminate the 

age restriction would require revision of city zoning laws. 

 

5

 Because there is record support for the BTA’s finding and the parties do not dispute who has the 

burden of proof regarding recency, we need not make a formal determination of which party bore 

that burden here. 
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10

{¶ 31} The school board argues that in light of these zoning restrictions, it 

was unreasonable for the BTA to rely on Racek’s appraisal—which relied on 

comparisons to apartment buildings as a starting point for valuation. There 

appear to be two components to this argument. 

{¶ 32} First, the school board argues that the BTA should not have relied 

on Racek’s appraisal, because Racek mistakenly believed that the property was 

currently in use as an apartment building, not as an assisted-living facility. In his 

appraisal report, Racek did at one point refer to the property’s continued use as an 

apartment building. However, he also clearly stated that the building was being 

operated as “an assisted living facility,” and at the hearing, he explained that the 

property’s “current occupant is using the property as an assisted living facility.” 

In addition, Racek’s appraisal reports indicate that “improvements on the subject 

property comprise a one story, assisted living facility.” Thus, the BTA had a 

sufficient evidentiary basis for disregarding Racek’s erroneous reference to the 

property’s operation as an apartment building. 

{¶ 33} Second, the school board “submits that it is unreasonable for the 

BTA to rely on an appraisal report and testimony from an appraiser who 

disregards current zoning ordinances.” It is true that an appraiser cannot simply 

ignore zoning restrictions. Indeed, standard assessment practices and this court’s 

case law establish that the effect of zoning on a property’s market price must be 

taken into account for valuation purposes. See International Association of 

Assessing Officers, Property Assessment Valuation 11, 32, 54-59, 61-62 (2d 

Ed.1996); Woda Ivy Glen Ltd. Partnership v. Fayette Cty. Bd. of Revision, 121 

Ohio St.3d 175, 2009-Ohio-762, 902 N.E.2d 984, ¶ 23. 

{¶ 34} Racek did not ignore the zoning ordinances, however. Instead, he 

opined, as did the school board’s expert, that the highest and best use of the 
January Term, 2014 

11 

building was its current use—as an assisted-living facility.6 Racek then stated 

that the best way to calculate the property’s value was by way of comparison to 

apartment buildings. 

{¶ 35} Nevertheless, the school board claims that Racek improperly 

disregarded zoning laws, citing two cases to support its argument. First, the 

school board says Porter v. Cuyahoga Cty. Bd. of Revision, 50 Ohio St.2d 307, 

364 N.E.2d 261 (1977), requires record support for any anticipated zoning 

changes before they can be factored into an appraisal. In Porter, this court 

considered how to value real property when it is not zoned for its highest and best 

use. The property at issue was “zoned for less profitable uses as compared with 

neighboring lands zoned for more profitable uses,” id. at 310, yet the BTA had 

relied on an appraisal that “treated the property in question as if it were already 

zoned for its highest and best use,” id. at 312. We reversed, holding that “[i]n 

determining the value of property for tax assessment purposes, the taxing 

authority may not consider an appraisal of property in which the appraiser, 

believing the property to be more valuable than its permitted uses under current 

zoning laws indicate, values the property as if it were already zoned for its most 

profitable use.” Id. at syllabus. This accords with the generally accepted 

principle that a highest and best use must be one that is legally permissible in 

order to qualify as the basis for assessing the property. Property Assessment 

Valuation at 32. 

{¶ 36} Unlike in Porter, here the BTA did not rely on an appraisal that 

valued the property based on a different use. Racek did not state that the property 

 

6

 “Highest and best use” of a property means “ ‘ “[t]hat reasonable and probable use that will 

support the highest present value” ’ ” as of the appraisal date. Youngstown Sheet & Tube Co. v. 

Mahoning Cty. Bd. of Revision, 66 Ohio St.2d 398, 422 N.E.2d 846 (1981), fn. 3, quoting 

Encyclopedia of Real Estate Appraising 8 (3d Ed.1978), quoting Boyce, Real Estate Appraisal 

Terminology 107 (1980). Alternatively, it is “ ‘ “that use, from among reasonably probable and 

legal alternative uses, found to be physically possible, appropriately supported, financially 

feasible, and which results in highest land value.” ’ ” Id.
SUPREME COURT OF OHIO

12

would be more highly valued as an apartment building than as an assisted-living 

facility, and he did not disregard existing zoning restrictions to evaluate the 

property for a use not presently permitted by law. Indeed, Racek and Ritley 

agreed that the highest and best use of this property was its current use—as an 

assisted-living facility. To the extent Racek relied on data about apartment 

buildings, it was not for the purpose of showing that this property’s highest and 

best use would be as an apartment building. Instead, as discussed below, he relied 

on information about apartment buildings as a way to isolate the property’s real 

estate value from its business value. Accordingly, the BTA’s decision to credit 

Racek’s appraisal does not implicate Porter problems. 

{¶ 37} The school board also quotes Park Place Properties, L.L.C. v. 

Miami Cty. Bd. of Revision, 2d Dist. Miami No. 2001-CA-35, 2002 WL 242707, 

*11 (Feb. 15, 2002), for the proposition that evidence of value for a use prohibited 

by ordinance may be considered only when there is evidence showing that the 

ordinance is likely to be changed in the near future. As in Porter, the appraiser in 

Park Place found that the highest and best use of the property was warehousing, 

even though the property’s current zoning did not permit that use. Id. at *9. The 

trial court’s determination of value reflected the possibility that the property 

would be used for warehousing. However, the court of appeals rejected that 

valuation because “no evidence [had been] presented to support the reasonable 

probability of a zoning change in the near future.” Id. at *11. 

{¶ 38} The facts here differ from those in Porter and Park Place because 

both appraisers agree that the property’s highest and best use is as an assistedliving facility, a use permitted by existing zoning laws. Their dispute is about 

how to best calculate the property’s value for that use. Accordingly, current 

zoning restrictions did not require the BTA to discount Racek’s appraisal. We 

therefore reject the school board’s first proposition of law. 

 
January Term, 2014 

13 

4. BTA’s decision to accept Racek’s appraisal over Ritley’s 

was not unreasonable or unlawful 

{¶ 39} In proposition of law Nos. II and III, the school board argues that 

the BTA acted unreasonably and unlawfully by accepting a valuation for an 

assisted-living facility that relied on comparisons to apartment buildings (Racek’s 

appraisal) and rejecting a valuation that compared the assisted-living facility to 

other assisted-living facilities (Ritley’s appraisal). Throughout these arguments, 

the school board levies additional criticisms of Racek’s appraisal and argues that 

Ritley’s appraisal is superior. 

a. Appraisals of assisted-living facilities 

{¶ 40} “[I]n the absence of a current sale of property, true value in money 

may be determined by appraisal, utilizing the market approach to value [salescomparison approach], the income approach or the cost approach.” Springfield 

Local Bd. of Ed. v. Summit Cty. Bd. of Revision, 68 Ohio St.3d 493, 494, 628 

N.E.2d 1365 (1994); see Ohio Adm.Code 5703-25-07. The school board argues 

that under any of these three approaches, an appraiser may not rely on 

comparisons to apartment buildings when valuing an assisted-living facility. 

{¶ 41} We have squarely rejected the school board’s argument in earlier 

decisions. See LTC Properties, 133 Ohio St.3d 111, 2012-Ohio-3930, 976 N.E.2d 

852, at ¶ 21; see also Dublin Senior Community Ltd. Partnership v. Franklin Cty. 

Bd. of Revision, 80 Ohio St.3d 455, 460, 687 N.E.2d 426 (1997) (explaining the 

importance of deleting business income and expenses, which “may distort the 

valuation of the real estate”). “[I]n order to properly value [an assisted-living 

facility], business operations must be separated from the real property.” Harbor 

Court Ltd. Partnership v. Cuyahoga Cty. Bd. of Revision, BTA No. 92-T-1054, at 

17 (June 10, 1994). The valuation of the realty portion of congregate-care 

facilities by comparison to conventional apartment buildings has been common 

practice for over 20 years. See Chippewa Place Dev. Co. v. Cuyahoga Cty. Bd. of 
SUPREME COURT OF OHIO

14

Revision, BTA No. 91-P-245, 1993 WL 384198 (Sept. 24, 1993).7

 As recently as 

2012, we confirmed that it is appropriate for appraisers to compare assisted-living 

facilities to apartment buildings in order to distinguish the property’s realproperty value from its business-property value. LTC Properties at ¶ 21. 

{¶ 42} LTC Properties then articulated the rationale for comparing 

assisted-living facilities to apartment buildings. Two considerations “militate 

toward using apartment buildings as a point of comparison when valuing the real 

property of a congregate-care facility under the sales-comparison or incomecapitalization approaches.” Id. First, “the sale price of a congregate-care facility 

may include elements of business value that relate to the provision of ancillary 

services as opposed to the rental of realty.” Id.; see also Dublin Senior 

Community at 460 (“a congregate care center * * * comprises a combination of 

real estate and business activities,” such as food and housekeeping). Second, “the 

income of a congregate-care facility must be analyzed into its rental and servicefee components in order to determine that portion of income that relates to realty.” 

LTC Properties at ¶ 21. 

{¶ 43} The same concerns do not apply in the context of the cost approach 

to valuation. Id. ¶ 19-22. When using this approach, an appraiser may choose to 

rely on apartment-building cost schedules as the starting point for comparison to 

an assisted-living facility. However, as we have expressly recognized, an 

appraiser may also choose to rely on cost schedules for nursing homes, rather than 

apartment buildings, as the initial point of comparison. Id., ¶ 20-24. 

{¶ 44} In short, an appraiser may rely on apartment comparables when 

valuing an assisted-living facility. We therefore reject the school board’s claim 

 

7

 The school board contends that the holding of Chippewa Place, permitting comparison of a 

congregate-care facility to traditional apartments, does not extend to assisted-living facilities, 

because the former allow for more independent living than the latter. This court did not 

distinguish between these types of facilities in LTC Properties, however. 
January Term, 2014 

15 

that the BTA improperly relied on Racek’s appraisal because “[a]partment 

buildings are not comparable to assisted living facilities.” 

b. The BTA’s decision in Elm St. is not determinative of this case 

{¶ 45} The school board also argues that we must reverse the BTA’s 

decision because it contradicts the BTA’s prior holding in Elm St., Inc. v. 

Cuyahoga Cty. Bd. of Revision, BTA No. 2008-A-1095, 2011 WL 2446195 (June 

14, 2011). 

{¶ 46} In Elm St., a property owner challenged the Cuyahoga County 

Board of Revision’s valuation of an assisted-living facility at $3,393,500. The 

property owner sought a reduction to $2,150,000. In support, it presented Racek’s 

opinion of value, which the BTA rejected. 

{¶ 47} In rejecting Racek’s appraisal, the BTA critiqued his use of 

apartment comparables to value the Elm St. property. The BTA initially 

acknowledged that in determining the real-property valuation of congregate-care 

facilities, it had routinely relied upon appraisal information utilizing a comparison 

to conventional apartment buildings since its decision in Chippewa Place. Elm St. 

at *5. However, the BTA then found that the apartment comparables selected by 

Racek were “significantly dissimilar to the subject [property].” Id. (citing 

differences in the size and number of units, amenities, etc.). The BTA explained 

that “adjustments could have been made to account for the aforementioned drastic 

differences” but that it was unclear from the record whether Racek had made the 

necessary adjustments. Id. at *6. The BTA also questioned Racek’s valuation 

because he had used the same rent rate to calculate the property’s entire square 

footage, including common areas. Id. Ultimately, the BTA concluded that 

Racek’s resulting valuation was unreliable. 

{¶ 48} The school board now contends that because the BTA rejected 

Racek’s appraisal in Elm St., stare decisis required the BTA to also reject Racek’s 

appraisal in this case. The subject properties in Elm St. and this case are located 
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near each other and have similar features. And Racek’s appraisals of the two 

properties have many similarities: his sales-approach valuation in this appraisal 

used the same four apartment comparables from the Elm St. appraisal (but 

included four additional comparables); he relied on the same expense information 

and comparable sales to establish a capitalization rate in both appraisals; he used 

the same cost method and depreciation rate in both appraisals; and he applied the 

same methodology for determining a depreciation rate in the cost approach for 

both properties. 

{¶ 49} In spite of these similarities, Elm St. does not mandate any 

particular outcome in this case. We have firmly rejected arguments that the BTA 

must act consistently when evaluating evidence of value, even when the evidence 

goes to value of the same property in different tax years. See Olmstead Falls Bd. 

of Edn. v. Cuyahoga Cty. Bd. of Revision, 122 Ohio St.3d 134, 2009-Ohio-2461, 

909 N.E.2d 597, ¶ 24-25. Although “consistency in the manner of evaluating 

evidence is desirable,” “the concern for consistency is overridden by the 

imperative that the BTA correctly determine value in the case before it.” Id. at 

¶ 25. 

{¶ 50} Here, nothing in the record indicates that the BTA was 

unreasonable in finding Racek’s valuation more credible than Ritley’s in this 

case. The BTA’s identification of certain problems with Racek’s analysis in Elm 

St. arguably does highlight flaws in Racek’s present appraisal. But the BTA did 

not cite the same problems with Racek’s adjustments in this case that it identified 

in Elm St. Accordingly, we cannot conclude that Elm St. required the BTA to 

reach a different outcome here. 

c. The BTA’s decision to rely on Racek’s appraisal is supported by the record 

{¶ 51} Throughout proposition of law Nos. II and III, the school board 

suggests a variety of other reasons why this court should conclude that Ritley’s 
January Term, 2014 

17 

appraisal is more persuasive than Racek’s. In essence, these arguments invite this 

court to disregard the deference we owe to the BTA. 

{¶ 52} We have long recognized the BTA’s “wide discretion to determine 

the weight given to evidence and the credibility of witnesses before it” when 

making a decision about the valuation of property. Meijer, Inc. v. Montgomery 

Cty. Bd. of Revision, 75 Ohio St.3d 181, 185, 661 N.E.2d 1056 (1996). The BTA 

“is not required to adopt the appraisal methodology espoused by any expert or 

witness” in arriving at a valuation. Hotel Statler v. Cuyahoga Cty. Bd. of 

Revision, 79 Ohio St.3d 299, 303, 681 N.E.2d 425 (1997). 

{¶ 53} When we review a determination of valuation by the BTA, we do 

not reevaluate the evidence considered by the BTA or “substitute [our] judgment 

on factual issues for that of the Board of Tax Appeals.” Citizens Fin. Corp. v. 

Porterfield, 25 Ohio St.2d 53, 57, 266 N.E.2d 828 (1971). Instead, we must defer 

to the BTA’s decision as long as it is lawful and supported by the record. See

Throckmorton v. Hamilton Cty. Bd. of Revision, 75 Ohio St.3d 227, 229, 661 

N.E.2d 1095 (1996). Here, the school board is unable to overcome that heavy 

measure of deference. 

i. Racek’s sales-comparison approach

{¶ 54} The school board argues that the BTA erroneously credited 

Racek’s valuation because his sales-comparison analysis relied on data from eight 

apartment complexes that are not comparable to the property. 

{¶ 55} As explained above, it is permissible—indeed, preferable—for an 

appraiser to rely on apartment comparables as a starting point for valuing an 

assisted-living facility under the sales-comparison approach. LTC Properties, 133 

Ohio St.3d 111, 2012-Ohio-3930, 976 N.E.2d 852, at ¶ 21. Here, the BTA 

concluded that the comparables used in Racek’s appraisal supported his valuation. 

{¶ 56} The school board contends otherwise, citing significant differences 

between Racek’s comparables and the subject property, including differences in 
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overall square footage, unit square footage, value, amenities, and age. But the 

BTA was aware of these differences and reasonably concluded that Racek had 

made adequate “adjustments to each of the sale and rent comparables used to 

account for the differences in amenities and size of the units.” 2013 WL 314191 

at *4. In addition, the BTA specifically noted that Racek “considered the 

‘relatively small size and number of residential units’ within the subject property, 

‘as well as the significant amount of common areas’ in estimating operating 

expenses.” Id., quoting Racek’s appraisal report. 

{¶ 57} The school board also claims that Racek’s appraisal lacks 

credibility because Racek did not adjust his final valuation after adding three 

comparables in his supplemented report. In his initial report, presented to the 

BOR, Racek considered five apartment-complex comparables. After the BTA 

issued its decision in Elm St., 2011 WL 2446195, Racek supplemented his report 

to include three additional apartment-complex comparables (and two additional 

rent comparables in his income-approach analysis). The new comparables had a 

lower value than the original comparables. But in spite of that lower value, 

Racek’s opinion of value remained the same: $3,100,000. 

{¶ 58} Racek’s unchanged valuation is somewhat perplexing, but even so, 

the school board cannot meet the heavy burden of proving that the BTA acted 

unreasonably by accepting Racek’s appraisal over Ritley’s. The BTA explained 

that Racek’s valuation was more persuasive than Ritley’s because even though 

Ritley used assisted-living-facility sales comparables, he did not adequately 

distinguish the business components from real-property components in the sale 

prices. 2013 WL 314191 at *4. Indeed, the BTA quoted Ritley’s own appraisal 

report, which states, “[I]t was * * * difficult to understand what is included in the 

sale price relative to the large business value component of many sales” when 

using assisted-living-facility comparables. Id. Ritley also acknowledged that his 
January Term, 2014 

19 

comparables offered different levels and types of service than the subject 

property. 

{¶ 59} Under the circumstances, the BTA reasonably concluded that 

“Racek’s opinion of value [was] more persuasive”; his appraisal did not conflate 

the value associated with business components with real-property value. Id. 

ii. Racek’s income approach 

{¶ 60} The school board also argues that the BTA erred by crediting 

Racek’s valuation because his “income approach is not a good indicator of value.” 

According to the school board, Racek treated the subject property as an apartment 

complex without making adjustments for the property’s resident-age restriction or 

the income and expenses specific to elder-care properties. 

{¶ 61} As explained above, Racek permissibly relied on apartmentbuilding rent comparables as a starting point for his income-approach analysis. 

LTC Properties, 133 Ohio St.3d 111, 2012-Ohio-3930, 976 N.E.2d 852, at ¶ 21. 

Moreover, the BTA reasonably concluded that Racek had made adjustments to 

account for differences in amenities and size. 2013 WL 314191 at *4. He 

considered the relatively small size and number of residential units in the subject 

property, as well as the significant amount of common areas, when estimating 

operating expenses. Id. 

{¶ 62} The BTA found that Racek’s valuation was more credible than 

Ritley’s because, as with his sales comparables, Ritley’s rent comparables 

reflected the income value of both real property and services. In addition, Ritley 

acknowledged that his comparables offered different levels and types of service. 

Yet even so, Ritley “simply compared the subject’s actual 2012 rental rates to the 

rents charged by the comparables.” Id. 

{¶ 63} Under the circumstances, it was reasonable for the BTA to assign 

greater weight to Racek’s valuation. 

 
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iii. Racek’s cost approach 

{¶ 64} Finally, the school board argues that the BTA erred by relying on 

Racek’s valuation under the cost approach because he used Marshall Swift 

Valuation Service’s information about apartments rather than that service’s 

information about homes for the elderly to determine total replacement cost and 

depreciation for the building on the property. The school board claims that 

Ritley’s cost valuation is more credible because he used the Marshall Swift 

Valuation Service for Homes for the Elderly. 

{¶ 65} As with its other critiques of Racek’s appraisal, the school board’s 

objections to Racek’s cost analysis are rooted in his reliance on information about 

apartment buildings. But as explained above, LTC Properties permits an 

appraiser to rely on cost schedules for either apartment buildings or assistedliving facilities as the starting point for analysis under the cost approach. 

Accordingly, the BTA did not err by failing to reject Racek’s appraisal for this 

reason. Indeed, this is a quintessential fact-finding determination, to which we 

must defer. 

iv. Conclusion regarding proposition of law Nos. I and II 

{¶ 66} In short, the school board did not show that the BTA’s acceptance 

of Racek’s valuation was unlawful or unreasonable. Our role does not include 

reevaluating the evidence considered by the BTA. And because the record 

supports the BTA’s decision, we reject the school board’s second and third 

propositions of law. 

5. Clarity of the BTA decision 

{¶ 67} In proposition of law No. V, the school board argues that the 

BTA’s decision is unreasonable and unlawful because it does not set forth 

findings, state what evidence the BTA deemed relevant to determine value, or 

explain why the BTA rejected other evidence. 
January Term, 2014 

21 

{¶ 68} We have expressly held that the BTA is not required to set forth 

formal findings of fact and conclusions of law. See Wolf v. Cuyahoga Cty. Bd. of 

Revision, 11 Ohio St.3d 205, 206, 465 N.E.2d 50 (1984). However, the BTA does 

have “the duty to state what evidence it considered relevant in reaching its 

determination.” HealthSouth Corp. v. Levin, 121 Ohio St.3d 282, 2009-Ohio-584, 

903 N.E.2d 1179, ¶ 34. 

{¶ 69} As a practical matter, it can be impossible for this court to perform 

its appellate duty if a BTA decision fails to state what evidence it considered 

relevant in reaching its value determinations. For example, in Howard v. 

Cuyahoga Cty. Bd. of Revision, 37 Ohio St.3d 195, 524 N.E.2d 887 (1988), the 

BTA heard evidence of three possible property values. The BTA set the value at 

a figure that no one had advocated and offered no explanation of how it reached 

that figure. We were unable to review the BTA’s decision to determine whether it 

was unlawful or unreasonable because the BTA had not explained its reasoning. 

Similarly, in Gen. Motors Corp. v. Cuyahoga Cty. Bd. of Revision, 53 Ohio St.3d 

233, 559 N.E.2d 1328 (1990), we remanded to the BTA to specify reasons for its 

determination. We reiterated that “[w]e can perform our duty to affirm 

reasonable, and to reverse unreasonable, determinations only when the BTA sets 

forth its findings and the basis therefore.” Id. at 235. 

{¶ 70} Despite the school board’s protestations, here the BTA did set forth 

the basis for its decision: “we find Mr. Racek’s opinion of value more 

persuasive.” 2013 WL 314191 at *4. As a result, the BTA found the value of the 

subject property as of January 1, 2007, to be $3,100,000. Id. The BTA could 

have explained additional aspects of its reasoning, but its failure to do so does not 

necessitate reversal. The record is clear as to which evidence the BTA found 

more persuasive, so we are able review the BTA’s decision without remanding for 

additional explanation. 

{¶ 71} We therefore reject the school board’s fifth proposition of law. 
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6. Attorney fees 

{¶ 72} Finally, Health Care REIT asks this court to award attorney fees 

because the school board’s appeal is frivolous. According to Health Care REIT, 

the school board’s appeal “is not reasonably well-grounded in fact or warranted 

by existing law or a good-faith argument for the extension, modification, or 

reversal of existing law.” See S.Ct.Prac.R. 4.03 (setting forth when an appeal is 

considered frivolous). 

{¶ 73} This court has awarded attorney fees under the frivolous-appeal 

rule under limited circumstances. For example, we ordered sanctions against an 

appellant in a frivolous appeal when he had a history of filing similar frivolous 

actions. State ex rel. Howard v. Doneghy, 102 Ohio St.3d 355, 2004-Ohio-3207, 

810 N.E.2d 958, ¶ 10-11. Sanctions are also appropriate when a party files an 

action for no reason other than harassment. State ex rel. Grendell v. Davidson, 

86 Ohio St.3d 629, 716 N.E.2d 704 (1999). 

{¶ 74} This is not the sort of action that warrants an award of attorney 

fees. As the school board notes, there is an appeal as of right from decisions of 

the BTA to this court. See R.C. 5717.04. In the past, we have been willing to 

reverse the BTA’s findings upon finding that they lack evidentiary support in the 

record. See, e.g., Cincinnati School Dist. Bd. of Edn. v. Hamilton Cty. Bd. of 

Revision, 127 Ohio St.3d 63, 2010-Ohio-4907, 936 N.E.2d 489, ¶ 24, 35. Here, 

the school board’s objections to Racek’s appraisal provided a reasonable basis for 

arguing that the BTA’s findings lacked evidentiary support. In addition, the 

school board also identified a possible conflict between the BTA’s decisions in 

this case and in Elm St., 2011 WL 2446195. Accordingly, there was a reasonable 

basis for the school board to advocate reversal in this case. 

{¶ 75} For these reasons, we decline to award attorney fees under 

S.Ct.Prac.R. 4.03. 

 
January Term, 2014 

23 

Conclusion 

{¶ 76} For the foregoing reasons, we affirm the BTA’s decision and deny 

Health Care REIT’s request for sanctions. 

Judgment accordingly. 

PFEIFER, O’DONNELL, and KENNEDY, JJ., concur. 

FRENCH, J., concurs in judgment only. 

O’CONNOR, C.J., and LANZINGER and O’NEILL, JJ., dissent. 

____________________ 

O’NEILL, J., dissenting. 

{¶ 77} I respectfully dissent from the decision to affirm the BTA’s 

determination of real-property value in this case. The BTA, and now the 

majority, have essentially decided that the value of an assisted-living facility is 

better determined by comparison to apartment buildings than by comparison to 

other assisted-living facilities. I cannot stand behind that logic, even under a 

posture of deference to the BTA. 

{¶ 78} The subject property is located in an area zoned “Senior 

Residence/Life Care District,” which is intended to meet the housing and 

assistance needs of persons 60 years or older. An assisted-living facility, 

Brookside Estates, was constructed on the parcel in 1998. The facility includes 

fewer than 100 units, the vast majority of which are 254-square-foot studios. The 

building includes four lounges, a commercial kitchen, a dining room, a craft 

room, a television room, and a small beauty shop. Bathrooms are handicapped 

accessible, hallways are wide enough to allow for the passage of wheelchairs and 

medical carts, and the front driveway is curved to allow easy access for 

emergency vehicles. 

{¶ 79} In short, this is an assisted-living facility; it is not an apartment 

building. Indeed, as the school board’s appraiser testified before the BTA, “[i]t 
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would take a massive amount of reconfiguration” to operate this property as an 

apartment building. 

{¶ 80} This basic distinction between an assisted-living facility and an 

apartment building compels me to conclude that the BTA acted unreasonably 

when it determined this property’s value by reference to data about apartment 

buildings. As the majority explains, two appraisals were presented to the BTA. 

The property owner’s appraiser relied exclusively on data about apartment 

buildings and opined a value of $3,100,000. By contrast, the school board’s 

appraiser considered only data about assisted-living facilities and arrived at a 

value of $5,400,000. Both appraisals assigned a value significantly lower than the 

property’s most recent sale price, $8,740,000. It was an assisted-living facility 

then, and it is an assisted-living facility now. To value it based upon a 

deteriorating apartment market is disingenuous. To follow the logic of the 

majority and the BTA, why not bring in comparables from abandoned car 

dealerships and factories of similar square footage? Surely that would bring the 

tax value even lower. 

{¶ 81} For reasons I find unpersuasive, the BTA decided to credit the 

owner’s appraisal. The BTA essentially found that data about apartment 

buildings was better evidence of an assisted-living facility’s value than data about 

other assisted-living facilities. In doing so, the BTA concluded that the property 

had lost $5,640,000 in value since its 2004 sale, just 27 months earlier. There is 

simply no evidence in this record to support such a conclusion. Has the 

population of senior citizens dropped so precipitously that the owners would sell 

this asset for a $5.6 million loss a little over two years after purchasing it? This 

result is clearly unreasonable, and thus I cannot defer. 

{¶ 82} I recognize that in the past, the BTA and this court have permitted 

comparisons to apartment buildings as a starting point for determining the value 

of an assisted-living facility. See, e.g., LTC Properties, Inc. v. Licking Cty. Bd. of 
January Term, 2014 

25 

Revision, 133 Ohio St.3d 111, 2012-Ohio-3930, 976 N.E.2d 852, ¶ 21; Dublin 

Senior Community Ltd. Partnership v. Franklin Cty. Bd. of Revision, 80 Ohio 

St.3d 455, 460, 687 N.E.2d 426 (1997). Admittedly, relying on apartment 

comparables can facilitate the distinction between the real-property value of an 

assisted-living facility and its business value. See Harbor Court Ltd. Partnership 

v. Cuyahoga Cty. Bd. of Revision, BTA No. 92-T-1054, 1994 WL 269639, *7-8 

(June 10, 1994). But that does not mean that conventional apartment complexes 

make the best comparable properties in all cases. Id. at *11. 

{¶ 83} Moreover, we have not previously been squarely presented with the 

question whether the BTA can reasonably conclude that an appraisal based on 

apartment comparables is the best evidence of an assisted-living facility’s value 

even when it is simultaneously presented with a credible appraisal based on 

assisted-living-facility comparables. For the reasons explained above, I would 

now hold that it cannot. 

{¶ 84} Accordingly, I would reverse the BTA and would find the 

property’s value to be $5,400,000, which is the value reached by the appraisal that 

relied on data about other assisted-living facilities to determine the value of this 

assisted-living facility. 

O’CONNOR, C.J., and LANZINGER, J., concur in the foregoing opinion. 

____________________ 

Sleggs, Danzinger & Gill Co., L.P.A., and Todd W. Sleggs, for appellee 

Health Care REIT, Inc. 

 Kadish, Hinkel & Weibel, Kevin M. Hinkel, and Rita M. Jarrett, for 

appellant. 

_________________________