The state’s board of tax appeals was correct to reject a property appraisal based on the bulk value of 21 condominium units in Dublin, but the board should not have reverted back to the value established by the county auditor, the Supreme Court of Ohio ruled today.

The Supreme Court’s 4-3 decision is a reconsideration of its earlier determination in the case.

Justice Judith L. French wrote in today’s majority opinion that the court’s 2013 decision incorrectly adopted the bulk valuation of the properties made by owner East Bank Condominiums II “without first conducting any analysis as to whether that valuation was accurate. This court can affirmatively accept a particular valuation only if it determines that the record supports that figure.”

The court returned the case to the Ohio Board of Tax Appeals (BTA) to independently determine the taxable values of the 21 properties. 

For tax year 2008, the Franklin County Auditor calculated the value of each of 21 condo units at East Bank separately and assigned a total value of $8.14 million for the units.

East Bank challenged the amount to the Franklin County Board of Revision. An appraiser who testified for East Bank valued the condos as a group at about $6.5 million and then subtracted costs such as commissions, legal fees, and taxes to arrive at a taxable value of $3.1 million. The appraiser indicated that the number represented how much a single investor would pay for the 21 units combined.

The Dublin City Schools Board of Education appealed to the BTA, which decided that the bulk-appraisal method was not proper and reinstated the $8.14 million value made by the auditor.

East Bank appealed to the Ohio Supreme Court. In an October 2013 decision, the court ruled that the BTA erroneously restored the $8.14 million valuation. The majority adopted the only other value in the case record – $ 3.1 million.

“The majority opinion did not, however, consider whether the bulk-valuation approach, which was used by East Bank to arrive at the $3,100,000 figure, was appropriate,” Justice French wrote in today’s opinion.

“A majority of this court reversed the BTA and adopted [the East Bank appraiser’s] valuation,” Justice French continued. “But the majority did so without first determining that the BTA acted unreasonably or unlawfully in rejecting the bulk-sale valuation. … The majority reasoned instead that it ‘need not consider whether the bulk sale approach was appropriate in this instance.’ … Both statute and precedent contradict this approach.”

In reconsidering the BTA’s decision, the court’s majority today agreed with the BTA that the appraisal from East Bank was inappropriate. Ohio law requires taxing authorities to value condominium units as separate properties, even when they are part of the same complex, Justice French explained. East Bank’s $3.1 million appraisal was improperly based on calculating an investment value, rather than the predicted sales prices of the units, she wrote.

However, “[r]ather than adopt the auditor’s valuations, the BTA should have conducted its own analysis and made an independent determination as to the taxable values of the properties,” Justice French concluded. The court has remanded the case to the BTA to conduct that independent valuation.

Justice French’s opinion was joined by Chief Justice Maureen O’Connor and Justices Judith Ann Lanzinger and William M. O’Neill.

Justice Terrence O’Donnell dissented in part in an opinion joined by Justices Paul E. Pfeifer and Sharon L. Kennedy.

In his dissent, Justice O’Donnell wrote: “[I]n my view, we do not need to remand this matter to the BTA, because East Bank provided expert evidence supporting the value of $3,100,000 and the school board had the opportunity—and the burden—to present evidence supporting a different valuation on appeal to the BTA but failed to do so. Considering that the parties had ‘ample opportunity to present evidence,’ they should not be given another chance to present additional evidence on remand.”  

“Moreover, the BTA acted unreasonably and unlawfully in reinstating the auditor’s valuation, because the evidence in the record contradicted that valuation and there was sufficient evidence in the record from which the BTA could independently determine value,” he continued. “The BTA should have conducted an independent determination of value based on the evidence in the record in the first instance, and for that reason I dissent from the majority’s decision to ‘remand this case to the BTA so that it may conduct an independent valuation for the properties in question.’” 

“I would establish the 2008 valuation at $3,100,000 in accordance with the evidence presented in this case,” Justice O’Donnell concluded.

2012-1432. Dublin City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, Slip Opinion No. 2014-Ohio-1940.

View oral argument video of this case.

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