The Ohio Supreme Court today reduced the assessed property tax value of a Worthington Kroger store connected to an outdoor shopping mall by $1.56 million.

The Worthington City Schools Board of Education had contested Kroger’s efforts to reduce the store’s property tax.

In a unanimous opinion the Supreme Court reversed the Board of Tax Appeals’ (BTA) $3.95 million assessment of the property located at the Shops of Worthington for the 2014 tax year. The Court agreed with Kroger’s argument that the BTA unjustly attributed $1.56 million of the value to an easement the store has that allows shoppers to use the mall’s parking lot. Writing for the Court, Justice Judith L. French stated that Kroger’s appraiser followed the law by determining the value of the store, and adjusting the price downward based on the lack of ownership of a parking lot.

School Board Challenged Land Value
During Franklin County’s three-year tax update, the county auditor valued the Kroger store, which sits on 1.7 acres of land, at $3 million. Kroger filed a complaint with the Franklin County Board of Revision, seeking to reduce the value to $2 million.

Kroger hired appraiser Curtis Hannah to conduct a property valuation. He told the board he valued the property at $3.95 million, in part by comparing it to five other similar retail stores that had parking on their own property. The Worthington Kroger does not own parking space, but has an easement with the mall that provides parking to its customers. Hannah determined the Worthington Kroger is about 4.1 acres smaller than the average size store with parking, and he determined the value should be reduced by about $1.56 million to about $2.4 million.

An appraiser hired by the school projected the store’s value at $4.9 million to $5 million. The board of revision adopted Hannah’s value, and Worthington schools appealed to the BTA.

The BTA favored Hannah’s assessment over the school’s expert, but rejected the adjustment as an improper removal of the benefit of the parking easement. Kroger appealed to the Supreme Court, which at the time was required to hear the case.

Court Examines Adjustment
The Court wrote that the property valuation is determined by R.C. 5713.03, which requires the county auditor to use the “best sources of information available” to determine the “true value of the fee simple estate, as if unencumbered.”

The opinion noted that Hannah evaluated the store as if it sat on 5.8 acres of land and had its own 4.1 acres of parking. He then adjusted the price downward to reflect the property that Kroger actually owns, which is the fee simple estate, the Court concluded.

“Hannah valued the parcel in accordance with the statutory scheme — that is, he determined the true value of the fee simple estate,” the Court wrote. “And in accordance with the statute, he made the adjustment because Kroger did not own the parking-lot property in fee simple.”

The Court reinstated the value determined by the county board of revision.

2017-0003. Worthington City Schools Bd. of Edn. v. Franklin County Bd. of Revision, Slip Opinion No. 2018-Ohio-2909.

View oral argument video of this case.

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