Court Opinion

ID: 6777425
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:51:47.358359+00
Date Added: 2024-06-11T16:02:49.426739
License: Public Domain

Lundberg Stratton, J.,
dissenting. Because I do not understand how the BTA can insist on taxing these two properties at a combined value of $19,030,000, while agreeing that the true value is $14,500,000, I must strongly dissent from the *301majority’s affirmance of the BTA’s decision. I would find the decision to be arbitrary, unreasonable, and patently unfair.
A long line of cases in Ohio has held that a recent sale of property that is an arm’s-length transaction is the best evidence of the “true value” of the property. Cincinnati School Dist. Bd. of Edn. v. Hamilton Cty. Bd. of Revision (1997), 78 Ohio St.3d 325, 327, 677 N.E.2d 1197, 1199; Conalco v. Monroe Cty. Bd. of Revision (1977), 50 Ohio St.2d 129, 4 O.O.3d 309, 363 N.E.2d 722; State ex rel. Park Investment Co. v. Bd. of Tax Appeals (1964), 175 Ohio St. 410, 25 O.O.2d 432, 195 N.E.2d 908. Here, the BTA concluded that the sale of Corporate Exchange Buildings IV and V was an arm’s-length transaction. The sole reason for the BTA’s rejection of the valuation of Corporate Exchange Buildings IV and V Limited Partnership (“Partnership”) was the claimed failure of the Partnership to present an appraisal that allocated the purchase price between the two buildings. However, the BTA’s position is not supported by the law. To grant Partnership’s request for reduction in the tax valuation of the two buildings, the BTA needed only to confront the issue of allocating the single sale price, presumed to be the true value, between the two buildings. In fact, the BTA had a duty to allocate the sales price once the true value was established so as to reach a fair and consistent tax assessment.
In Conalco, this court held, at the syllabus:
“1. The best evidence of the ‘true value in money’ of real property is an actual, recent sale of the property in an arm’s-length transaction. (State, ex rel. Park Investment Co., v. Bd. of Tax Appeals, 175 Ohio St. 410 [25 O.O.2d 432, 195 N.E.2d 908], approved and followed.)
“2. In valuing real property sold within three days of the tax lien date in an arm’s-length transaction, the best evidence of ‘true value in money’ is the proper allocation of the lump-sum purchase price and not an appraisal ignoring the contemporaneous sale.” (Emphasis added.)
The appellees totally misinterpret Conalco. In Conalco, the allocation issue was not between two pieces of property, but rather between real estate and other assets, such as accounts receivable, related to the same property. In that case, a sale of the property occurred two days after the tax valuation conducted by the appraiser for the county auditor. The BTA ignored the sale and relied only on the appraiser’s value. No appraiser testified for the taxpayer Conalco on allocation of the purchase price. Rather, Conalco relied on accounting principles for allocation. In rejecting the BTA’s position, the court stated:
“The board should have determined, under the specific facts of this case, whether [Conalco’s] allocation resulted in a distorted valuation of the real property.
*302“* * * Apparently, the board adopted the fair market value appraisal made by appellee [county auditor], despite testimony by appellee’s appraiser that he ignored the contemporaneous sale of the property.
«íJí ‡
“The board’s decision in the present case, accepting the appellee’s appraisal, despite an arm’s-length sale within close proximity to the tax: lien date, and rejecting APB 16, thereby avoiding a determination upon [Conalco’s] allocation of the purchase price, is unreasonable and unlawful.” Id., 50 Ohio St.2d at 131-132, 4 0.0.3d at 310-311, 363 N.E.2d at 723-724.
In a subsequent case, also misinterpreted by appellees, this court reaffirmed the best evidence rule of a recent sale:
“We hold that the best evidence of the ‘true value in money’ of tangible personal property is the proper allocation of the purchase price of an actual, recent sale of the property in an arm’s-length transaction.
* *
“* * * The board is required to arrive at its own valuation in an appeal from the valuation assessed by the Tax Commissioner. Clark v. Glander (1949), 151 Ohio St. 229 [39 O.O. 56, 85 N.E.2d 291], paragraph one of the syllabus.” Tele-Media Co. v. Lindley (1982), 70 Ohio St.2d 284, 287-289, 24 O.O.3d 367, 369-370, 436 N.E.2d 1362, 1365.
In Tele-Media, the taxpayer was seeking a valuation lower than the actual sale price. The court found that the book value, properly allocated, is the best evidence of true value. Id. at 286, 24 0.0.3d at 368-369, 436 N.E.2d at 1364. The court placed the burden of allocation on the BTA when a true value was known.
I do not find Elsag-Bailey, Inc. v. Lake Cty. Bd. of Revision (1996), 74 Ohio St.3d 647, 660 N.E.2d 1184, to be on point. Elsag-Bailey dealt with a complicated transaction with two competing appraisals that recommended different appraisal methods but involved no sale. Elsag-Bailey merely states that the BTA could look at both appraisals and make its own determination of the true value.
In this case, the BTA did not fulfill its duty of properly allocating the true value. Instead, it arbitrarily clung to the appraised value and ignored the sale price, contrary to the mandate of Conalco. Had the property sold for more than the appraised value, the appellees certainly would have been the ones appealing and making the same arguments Partnership now makes.
In fact, Partnership offered the BTA a reasonable, logical method of allocating the purchase price between the two buildings based upon the rentable square footage of each building. Evidence of the rentable space of each building was before the BTA in the numerous exhibits offered by Partnership related to the *303sale of the properties. No appraisal was necessary to substantiate the value of each building or the method of allocation in light of the recent sale. No expert testimony was necessary to explain or substantiate what amounted to a simple mathematical calculation. As in Conalco, the BTA needed only to apply an accounting principle to determine the allocation.
The BTA made no determination that allocation of value between the buildings was not possible. Further, BTA made no factual finding that Partnership’s proposed method of allocation was improper, unreasonable, or not based upon verifiable information. None of the appellees presented any evidence in rebuttal. No other method of allocation was even suggested. Instead, the BTA summarily rejected Partnership’s proposed method of allocation of value without any legal or factual basis, citing only Partnership’s failure to have “appraisal evidence or testimony.”
Yet the BTA concluded that Partnership did not justify its allocation method, and, therefore, the BTA affirmed the auditor’s valuation of the properties. The auditor’s assessment of value for both parcels totaled $19,030,000. The auditor assessed the value of Building IV at $7,930,000, approximately forty-two percent of the combined values, and assessed the value of Building V at $11,100,000, approximately fifty-eight percent of the combined values.
Partnership’s allocated values closely mirrored those of the auditor. The true value, as evidenced by the recent sale, was $14,500,000 for both parcels. Partnership requested that a value of $6,255,300 be placed on Building IV, approximately forty-three percent of the combined sale price. Partnership requested that a value of $8,244,700 be placed on Building V, approximately fifty-seven percent of the combined sale price.
If the BTA had reason not to adopt the Partnership’s proposed allocation, the BTA had before it sufficient information about each building from which to derive its own allocation of the $14,500,000 sale price it already accepted as the true value. Exhibits revealed similarities about the buildings. They are in close proximity to each other within the same office park. Both are situated on five acres of land. They were built within a few years of each other. Building IV has three stories with 90,891 rentable square feet, with three hundred forty-one parking spaces and a ninety-six percent occupancy1; Building V has four stories with 130,008 rentable square feet, with four hundred fifty-two parking spaces and over ninety-five percent occupancy. Building construction was virtually identical. Commercial tenants were of the same quality. Both were Class A structures with similar rental ranges. The building had been owned and managed by the *304same partnership. These are non-fluctuating, descriptive factors upon which the BTA could have compared and contrasted the two buildings in order to reach its own independent allocation of the $14,500,000 value.
The BTA’s finding that the purchase of Corporate Exchange Buildings IV and V was an arm’s-length transaction reinforces the presumption that the sale price of $14,500,000 was the true value for the two properties. The BTA’s decision to affirm the auditor’s separate assessments of value results in both properties being valued, for tax purposes, at $4,530,000 more than they were valued in an arm’s-length transaction. I fail to see how this can be fair or just. Such a decision, without further justification, is inherently arbitrary, capricious, and unreasonable. The BTA had a duty in light of the unrefuted and voluminous evidence before it to fairly and justly allocate the true value between the two buildings. To arbitrarily ignore the purchase price and blindly adhere to the appraisal because the buildings are “independent” is grossly unfair and flies in the face of Conalco. If the BTA did not accept the Partnership’s allocation, it could perform its own. Yet appellees offer no alternative. It did not matter a great deal if the allocation differed by some percentage, since the Partnership was the same taxpayer. But what the BTA could not do was totally ignore the $14,500,000 value it already recognized, refuse to allocate the price between the two buildings, and impose a value of $19,030,000, a $4,530,000 difference, because the taxpayer did not separately appraise the two buildings. An appraisal is not necessary in light of the best evidence before it which the law required the BTA to consider. I cannot condone such a patently outrageous result.
I believe that Partnership met its burden by establishing the arm’s-length nature of the sale transaction and by proposing a logical, reasonable, and verifiable method of allocating the sale price between the two buildings for tax purposes. The BTA arbitrarily refused to consider Partnership’s allocation or any other allocation. Therefore, I would reverse the decision of the BTA and remand this matter to the BTA with instructions to determine a formula to allocate the $14,500,000 sale price between the two buildings.
Pfeifer, J., concurs in the foregoing dissenting opinion.

. Occupancy of Building IV was reported as seventy-six percent in a March 1993 financial statement; however, sales information dated July 1993 reported occupancy at ninety-six percent.