[Cite as Ohio Apt. Assn. v. Levin, 127 Ohio St.3d 76, 2010-Ohio-4414.]




OHIO APARTMENT ASSOCIATION ET AL., APPELLANTS AND CROSS-APPELLEES,
           v. LEVIN, TAX COMMR., APPELLEE AND CROSS-APPELLANT.
     [Cite as Ohio Apt. Assn. v. Levin, 127 Ohio St.3d 76, 2010-Ohio-4414.]
Taxation — Real property — Ohio Adm.Code 5703-25-10 and 5703-25-18 —
        Distinction between residential multifamily dwellings based on number of
        families dwelling will accommodate does not violate Uniformity Clause of
        Section 2, Article XII, or Equal Protection Clause of Section 2, Article I,
        Ohio Constitution.
  (No. 2009-0213 — Submitted May 25, 2010 — Decided September 23, 2010.)
  APPEAL and CROSS-APPEAL from the Board of Tax Appeals, No. 2006-A-861.
                                  __________________
        CUPP, J.
        {¶ 1} This matter originated in the Board of Tax Appeals (“BTA”) upon
an application for rule review pursuant to R.C. 5703.14(C). The rule-review
process allows any person who has been or may be injured by any rule adopted
and promulgated by the tax commissioner to ask the BTA to determine whether
the rule is reasonable.
        {¶ 2} The appellants and cross-appellees are Greenwich Apartments,
Ltd., and D&S Properties, owners of several multiunit apartment complexes
including residential rental properties containing four or more units, and the Ohio
Apartment Association, a trade association representing the interests of such
owners (collectively “appellants”). Appellants filed an application with the BTA
to review Ohio Adm.Code 5703-25-18 and 5703-25-10. These administrative
rules incorporate a 2005 amendment to R.C. 319.302, the effect of which is to
limit the 10 percent property-tax reduction to real property that is “not intended
primarily for use in a business activity.” As they affect residential apartments, the
                            SUPREME COURT OF OHIO




statute and administrative rules distinguish between properties improved with
one-, two-, and three-family dwellings and those improved with dwellings for
four or more families: the tax reduction is granted to the former but not to the
latter. See Ohio Adm.Code 5703-25-18(A)(4); 5703-25-10(B)(5).
       {¶ 3} Appellants claimed that the administrative rules were unreasonable
and unconstitutional because their application resulted in disparate treatment of
similarly situated property owners based solely on the number of units contained
on the property. The BTA found that the rules were reasonable. Citing its lack of
jurisdiction, the BTA correctly declined to address appellants’ constitutional
claims. See Cleveland Gear Co. v. Limbach (1988), 35 Ohio St.3d 229, 231, 520
N.E.2d 188; MCI Telecommunications Corp. v. Limbach (1994), 68 Ohio St.3d
195, 198, 625 N.E.2d 597.
       {¶ 4} After review, we agree with the BTA’s decision that the rules are
reasonable. We further find that appellants have not shown that the rules violate
either the Uniformity or the Equal Protection Clause of the Ohio Constitution.
Finally, we find that the tax commissioner’s cross-appeal is without merit.
                            I. Relevant Background
       {¶ 5} In 2005, the General Assembly enacted comprehensive tax reform
generally designed to lessen the burden of taxation on Ohio’s businesses. See
Am.Sub.H.B. No. 66.       For many businesses, the personal property tax and
corporate franchise tax were phased out and replaced by the Commercial Activity
Tax (“CAT”).     See R.C. 5711.22(E) through (G) (phasing out the personal
property tax), 5733.01(G)(1) and (2) (phasing out the corporate franchise tax), and
5751.031 (phasing in the CAT).
       {¶ 6} As part of this legislation, R.C. 319.302(A)(1) was amended as
follows:
       {¶ 7} “Real property that is not intended primarily for use in a business
activity shall qualify for a partial exemption from real property taxation. For




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purposes of this partial exemption, ‘business activity’ includes all uses of real
property, except * * * occupying or holding property improved with single-
family, two-family, or three-family dwellings; [and] leasing property improved
with single-family, two-family, or three-family dwellings * * *.”
         {¶ 8} Prior to the amendment, all owners of real property received a 10
percent reduction — or rollback — of their real property tax. See former R.C.
319.302, Am.Sub.H.B. No. 168, 150 Ohio Laws, Part III, 3456-3457. As relevant
to this appeal, the amendment eliminated the 10 percent rollback for taxpayers
who owned real property improved with dwellings for four or more families. See
R.C. 319.302(B) (maintaining the partial exemption at 10 percent).
         {¶ 9} Following the amendment to R.C. 319.302, the tax commissioner
promulgated Ohio Adm.Code 5703-25-18 and amended Ohio Adm.Code 5703-
25-10.    See R.C. 319.302(C) (authorizing the commissioner to adopt rules
governing administration of the partial exemption). Neither of these
administrative rules added anything substantive to R.C. 319.302(A). The relevant
portion of the first rule, Ohio Adm.Code 5703-25-18(A), merely replicated the
language of that statutory provision. Ohio Adm.Code 5703-25-18 also cross-
references Ohio Adm.Code 5703-25-10, which was in existence before the
passage of Am.Sub.H.B. No. 66. Ohio Adm.Code 5703-25-10 sets forth real
property classifications and land-use codes, and the tax commissioner’s 2005
amendment to this rule did nothing to change the classification of “residential”
land, defined then and now as land and improvements “used and occupied by one,
two, or three families.”       Ohio Adm.Code 5703-25-10(B)(5). Cf. former Ohio
Adm.Code 5703-25-10, 2003-2004 Ohio Monthly Record, Part 1, 777, eff. Sept.
18, 2003.1


1. The only change to Ohio Adm.Code 5703-25-10 as a result of Am.Sub.S.B. No. 66 was the
addition of language and land-use codes to identify certain commercial timbered properties that
would not be eligible for the 10 percent rollback.




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        {¶ 10} On July 10, 2006, appellants filed their application for rule review
with the BTA.        The BTA allowed appellants to amend their application on
February 1, 2008. Appellants claimed that Ohio Adm.Code 5703-25-18 and 5703-
25-102 were unreasonable because they violate the Uniformity and Equal
Protection Clauses of the Ohio Constitution. See Section 2 of Article XII and
Section 2 of Article I.
        {¶ 11} The BTA lacked jurisdiction over appellants’ constitutional
challenges, see Cleveland Gear Co. v. Limbach, 35 Ohio St.3d at 231, 520 N.E.2d
188, and reviewed the rules only for reasonableness. The BTA found that the
rules were reasonable because they did not conflict with the legislative directive
to the tax commissioner to promulgate such rules.
        {¶ 12} Appellants filed a notice of appeal to this court, challenging the
BTA’s determination that the rules were reasonable and reasserting their
constitutional arguments. The tax commissioner filed a cross-appeal, raising
several challenges to the BTA’s jurisdiction and its rule-review process. The
commissioner also filed a motion to dismiss.
                                        II. Analysis
                    A. The Tax Commissioner’s Motion to Dismiss
        {¶ 13} On March 30, 2009, the tax commissioner filed a motion to
dismiss that raised four jurisdictional grounds for dismissing appellants’ appeal.
We issued a brief order on July 22, 2009, denying the motion to dismiss. See
Ohio Apt. Assn. v. Levin, 122 Ohio St.3d 1231, 2009-Ohio-3477, 911 N.E.2d 906.
Our decision, however, left unresolved one aspect of that motion.
        {¶ 14} In the fourth proposition of law of his motion to dismiss, the tax
commissioner attacked the sufficiency of appellants’ notice of appeal. According


2. Appellants challenge Ohio Adm.Code 5703-25-10 only to the extent that it serves as a
mechanism by which the commissioner would effect the elimination of the 10 percent rollback for
appellants.




                                              4
                                     January Term, 2010




to the commissioner, the notice of appeal contains only broad challenges to the
constitutionality of the administrative rules and, therefore, fails to satisfy the
standard for specifying error in R.C. 5717.04.
        {¶ 15} On this issue, we previously held that there was no basis for
granting the motion to dismiss because the notice of appeal contained a sufficient
specification of appellants’ challenge to the Uniformity Clause. Ohio Apt. Assn.,
122 Ohio St.3d 1231, 2009-Ohio-3477, 911 N.E.2d 906, ¶ 6. Because the notice
of appeal advanced at least one cognizable claim, we declined to address whether
the scope of the notice of appeal also encompassed appellants’ equal protection
claim. Id.
        {¶ 16} R.C. 5717.04 mandates that a notice of appeal from the BTA to
this court “set forth the decision of the board appealed from and the errors therein
complained of.”       In their notice of appeal, appellants allege that the BTA’s
decision “violates Article I, Section 2 of the Ohio Constitution, which provides
equal protection to Appellants.” The tax commissioner asserts that the notice of
appeal is jurisdictionally deficient because appellants have failed to precisely state
their constitutional challenges pursuant to our decision in Castle Aviation, Inc. v.
Wilkins, 109 Ohio St.3d 290, 2006-Ohio-2420, 847 N.E.2d 420, ¶ 38-41 (finding
that the wording of appellant’s constitutional claim was so general that it could be
used in almost every use-tax case).3
        {¶ 17} We find that appellants’ notice of appeal sufficiently sets forth
their equal protection challenge as required by R.C. 5717.04. In Castle Aviation,
the notice of appeal said nothing more than that the imposition of the tax violated
equal protection. Id. at ¶ 31. In contrast, appellants’ notice of appeal in this case

3. Although Castle Aviation involved R.C. 5717.02, which sets forth procedures for filing a notice
of appeal from a final determination of the tax commissioner to the BTA, this court has
consistently analyzed notices of appeal under R.C. 5717.04 in light of case law construing R.C.
5717.02. See Lawson Milk Co. v. Bowers (1961), 171 Ohio St. 418, 14 O.O.2d 217, 171 N.E.2d
495; Richter Transfer Co. v. Bowers (1962), 174 Ohio St. 113, 21 O.O.2d 369, 186 N.E.2d 832;
and Deerhake v. Limbach (1989), 47 Ohio St.3d 44, 546 N.E.2d 1327.




                                                5
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specifically sets forth the administrative rules at issue.           Moreover, the
administrative rules on their face create a tax classification of different uses of
property that is alleged to violate equal protection.
       {¶ 18} The assignments of error set forth in the notice of appeal define the
scope of our revisory jurisdiction over BTA decisions. See Polaris Amphitheater
Concerts, Inc. v. Delaware Cty. Bd. of Revision, 118 Ohio St.3d 330, 2008-Ohio-
2454, 889 N.E.2d 103, ¶ 5. Appellants’ assignment of error is not so broad as to
encompass every possible equal protection claim. See Brown v. Levin, 119 Ohio
St.3d 335, 2008-Ohio-4081, 894 N.E.2d 35, ¶ 17 (although the notice of appeal
may create “jurisdiction over one or more issues that have been sufficiently
specified,” the BTA “lacks jurisdiction to grant relief from a final determination
based on other alleged errors that were not sufficiently specified in the notice of
appeal”). Here, appellants argue in their merit brief that the rules discriminate
between different types of real property owners based on an arbitrary and
unreasonable classification of property, an allegation that is within the scope of
the error assigned in the notice of appeal to this court.
       {¶ 19} In sum, the foregoing circumstances establish the sufficiency of
appellants’ notice of appeal and, accordingly, our jurisdiction over their equal
protection challenge.
                     B. The Tax Commissioner’s Cross-Appeal
            1. First and Second Propositions of Law on Cross-Appeal
       {¶ 20} The tax commissioner’s first three propositions of law are in
support of his cross-appeal. The arguments asserted in his first proposition of law
are identical to arguments that he raised in the first and second propositions of law
of his motion to dismiss. Our disposition of the motion to dismiss in effect
disposed of the commissioner’s first proposition of law on cross-appeal. See
Ohio Apt. Assn. v. Levin, 122 Ohio St.3d 1231, 2009-Ohio-3477, 911 N.E.2d 906,
¶ 3 (rejecting argument that a rule-review proceeding before the BTA is quasi-




                                           6
                                January Term, 2010




legislative in character) and ¶ 4 (rejecting argument that appellants may not use
the BTA’s rule-review proceeding to challenge the constitutionality of a rule or
statutory classification).
        {¶ 21} The commissioner’s second proposition of law was also resolved
by our disposition of the motion to dismiss. See Ohio Apt. Assn., 122 Ohio St.3d
1231, 2009-Ohio-3477, 911 N.E.2d 906, ¶ 5 (rejecting argument that rules are not
ripe for review until a statutory classification has been declared unconstitutional).
                   2. Third Proposition of Law on Cross-Appeal
        {¶ 22} In the commissioner’s third proposition of law, he claims that
appellants lack standing to challenge the reasonableness of Ohio Adm.Code 5703-
25-18 through the rule-review process in R.C. 5703.14(C) because the actual or
potential injury to appellants is caused by the enabling statute and not the rule.
The commissioner’s reasoning is as follows: Ohio Adm.Code 5703-25-18(A),
which withholds the 10 percent rollback from appellants, merely replicates R.C.
319.302(A)(1); thus, even if the rule is deemed unconstitutional, R.C. 319.302
remains intact, and so does the injury to appellants.
        {¶ 23} Although standing was not raised in the commissioner’s motion to
dismiss, we find that our decision on that motion forecloses his standing
argument. The commissioner’s standing claim is premised on his continuing
argument – raised in his motion to dismiss and the first two propositions of law of
his merit brief – that a rule-review proceeding cannot be used to attack the
constitutionality of the underlying statute that authorized the rules under review.
But we rejected the argument when we denied the commissioner’s motion to
dismiss. In essence, we held that appellants’ challenges to the administrative
rules inherently implicate the rule’s conformity with the underlying statute, and to
that extent, the statute itself has been placed at issue. Ohio Apt. Assn., 122 Ohio
St.3d 1231, 2009-Ohio-3477, 911 N.E.2d 906, ¶ 4 (rejecting argument that
appellants may not use the BTA’s rule-review proceeding to challenge the



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constitutionality of a statutory classification) and ¶ 5 (rejecting argument that a
rule-review proceeding is not ripe until a statutory classification has been declared
unconstitutional).
       {¶ 24} R.C. 5703.14(C) also cuts against the commissioner’s standing
argument. This provision specifies that an applicant for rule review must be a
person “who has been or may be injured by the operation of the rule.” The injury
requirement ensures that rule review at the BTA involves a genuine case or
controversy. And although the commissioner argues that appellants have not
demonstrated any injury from Ohio Adm.Code 5703-25-18 independent of R.C.
319.302, he does not dispute or otherwise challenge appellants’ contention that
they have suffered economic injury from the loss of the 10 percent property-tax
rollback.
       {¶ 25} We hold that the tax commissioner has not demonstrated that
appellants lack standing under R.C. 5703.14(C) to prosecute this matter.
Therefore, we reject the commissioner’s third proposition of law.
                          3. Conclusion — Cross-Appeal
       {¶ 26} Based on the foregoing, we hold that none of the arguments raised
on cross-appeal has merit. Accordingly, the tax commissioner’s cross-appeal is
overruled.
                              C. Appellants’ Appeal
      1. Application of Galatis to Appellants’ Uniformity-Clause Challenge
       {¶ 27} Appellants contend that Ohio Adm.Code 5703-25-18 and 5703-25-
10 contravene the requirement of Section 2, Article XII of the Ohio Constitution
that all real property be taxed uniformly.
       {¶ 28} Appellants’ constitutional challenge hinges on their request that we
overrule State ex rel. Swetland v. Kinney (1980), 62 Ohio St.2d 23, 16 O.O.3d 14,




                                             8
                                      January Term, 2010




402 N.E.2d 542.4 In Swetland, this court upheld the constitutionality of a 2.5
percent real-property-tax exemption that was applicable only to “homesteads.”
Id. at paragraph one of the syllabus. In so holding, this court rejected challenges –
largely identical to those raised by appellants here – that the provisions
authorizing the partial exemption violated the Uniformity Clause of the Ohio
Constitution.
         {¶ 29} Appellants, apparently conceding that Swetland is dispositive of
their Uniformity Clause challenge, want us to overturn that decision. They argue
that the majority’s decision in Swetland “flowed from a series of missteps, which,
when examined further and without the backdrop of the specific economic
pressures that led to that decision, reveal that the Constitution requires complete
uniformity in tax rates.”
         {¶ 30} In Westfield Ins. Co. v. Galatis, 100 Ohio St.3d 216, 2003-Ohio-
5849, 797 N.E.2d 1256, we established a three-part test for overruling precedent.
“A prior decision of the Supreme Court may be overruled where (1) the decision
was wrongly decided at that time, or changes in circumstances no longer justify
continued adherence to the decision, (2) the decision defies practical workability,
and (3) abandoning the precedent would not create an undue hardship for those
who have relied upon it.” Id. at paragraph one of the syllabus.
         {¶ 31} Appellants do not cite Galatis. They do argue that Swetland was
wrongly decided, echoing Galatis’s first requirement. Galatis, however, contains
three requirements that must be satisfied, and appellants do not contend that the
other two requirements have been met. Because appellants’ Uniformity Clause
challenge rests entirely on overruling Swetland, we reject this proposition of law
based on appellants’ failure to address all three prongs of the Galatis test. See


4. Throughout their briefs, appellants refer to Swetland as “Park V.” But this is a misnomer.
Swetland is not a progeny of the Park Investment line of cases. See State ex rel. Park Invest. Co. v.
Bd. of Tax Appeals (1964), 175 Ohio St. 410, 25 O.O.2d 432, 195 N.E.2d 908.




                                                 9
                              SUPREME COURT OF OHIO




State ex rel. Grimes Aerospace Co., Inc. v. Indus. Comm., 112 Ohio St.3d 85,
2006-Ohio-6504, 858 N.E.2d 351, ¶ 6.
                   2. Appellants’ Equal Protection Arguments
       {¶ 32} Appellants contend that Ohio Adm.Code 5703-25-18 and 5703-25-
10 violate the Equal Protection Clause of the Ohio Constitution because rules that
treat residential rental property that contains four or more units differently than
property containing three or fewer units are arbitrary and unreasonable.
       {¶ 33} “The limitations placed upon governmental action by the federal
and state Equal Protection Clauses are essentially the same.” McCrone v. Bank
One Corp., 107 Ohio St.3d 272, 2005-Ohio-6505, 839 N.E.2d 1, ¶ 7. The Equal
Protection Clauses require that all similarly situated individuals be treated in a
similar manner. Id. at ¶ 6.
       {¶ 34} A statutory classification that involves neither a suspect class nor a
fundamental right, as here, does not violate the Equal Protection Clauses if it
bears a rational relationship to a legitimate governmental interest. Menefee v.
Queen City Metro (1990), 49 Ohio St.3d 27, 29, 550 N.E.2d 181. Under the
rational-basis standard, a state has no obligation to produce evidence to sustain
the rationality of a statutory classification. Am. Assn. of Univ. Professors, Cent.
State Univ. Chapter v. Cent. State Univ. (1999), 87 Ohio St.3d 55, 58, and 60, 717
N.E.2d 286. Rather, a taxpayer challenging the constitutionality of a taxation
statute bears the burden of negating every conceivable basis that might support
the legislation. Id. at 58. See also Lyons v. Limbach (1988), 40 Ohio St.3d 92,
94, 532 N.E.2d 106.
       {¶ 35} The rational-basis standard requires a high degree of judicial
deference to legislative enactments. Id. at 93. Moreover, it is well settled that
assessment of taxes is fundamentally a legislative responsibility, and “[t]his
already deferential standard ‘is especially deferential’ in the context of
classifications arising out of complex taxation law.” Park Corp. v. Brook Park,




                                        10
                                January Term, 2010




102 Ohio St.3d 166, 2004-Ohio-2237, 807 N.E.2d 913, ¶ 23, quoting Nordlinger
v. Hahn (1992), 505 U.S. 1, 11, 112 S.Ct. 2326, 120 L.Ed.2d 1. States have broad
leeway in making classifications and drawing lines that in their judgment produce
reasonable systems of taxation. Nordlinger at 11.
   a. Do the rules discriminate between different types of residential property?
       {¶ 36} Appellants first contend that the administrative rules violate equal
protection because they discriminate between different types of residential
properties. Ohio Adm.Code 5703-25-18(A) provides that real property that is not
intended primarily for use in a business activity shall qualify for a partial
exemption (10 percent rollback) from real property taxation. Leasing property
improved with one-, two-, and three-family dwellings is specifically defined as
not involving a “business activity.” It therefore qualifies for the exemption, Ohio
Adm.Code 5703-25-18(A)(4), and properties improved with four or more
dwellings do not. Appellants argue that this discriminatory treatment of apartment
renters is arbitrary because, regardless of the number of units, rental property is
“residential.”
       {¶ 37} Appellants’ equal protection arguments contain several flaws.
First, though appellants allege that the rules discriminate against apartment renters
by applying a higher tax rate, appellants – apartment owners and their trade
association – have not shown that they have standing to assert the equal protection
rights of renters. Generally, a litigant must assert its own rights, not the claims of
third parties. See Util. Serv. Partners, Inc. v. Pub. Util. Comm., 124 Ohio St.3d
284, 2009-Ohio-6764, 921 N.E.2d 1038, ¶ 49-50; N. Canton v. Canton, 114 Ohio
St.3d 253, 2007-Ohio-4005, 871 N.E.2d 586, ¶ 14. And while a limited exception
exists, E. Liverpool v. Columbiana Cty. Budget Comm., 114 Ohio St.3d 133,
2007-Ohio-3759, 870 N.E.2d 705, ¶ 22, appellants have not shown that they fall
within the exception. Renters would have an interest in their landlords’ tax rate
only if the landlords are both willing and able to pass through tax increases and



                                         11
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decreases in the form of higher or lower rent. But David Fisher, general partner
of appellant D&S Properties, testified that he was not able to increase rental
charges for his properties after those properties became ineligible for the 10
percent rollback.
       {¶ 38} Second, appellants have not shown that they are situated similarly
to owners of one-, two-, and three-family dwellings. Equal protection requires
that similarly situated persons be treated alike, unless a rational basis justifies
treating them differently. “But the Equal Protection Clause ‘does not require
things which are different in fact * * * to be treated in law as though they were the
same.’ ” (Ellipsis sic.) GTE North, Inc. v. Zaino, 96 Ohio St.3d 9, 2002-Ohio-
2984, 770 N.E.2d 65, ¶ 22, quoting Tigner v. Texas (1940), 310 U.S. 141, 147, 60
S.Ct. 879, 84 L.Ed. 1124. Thus, a “comparison of only similarly situated entities
is integral” to determining whether the administrative rules deprive the appellants
of equal protection. GTE North at ¶ 22-23.
       {¶ 39} Appellants’ primary argument in this regard is that all real property
subject to classification in this case, whether a single-family home or a 100-unit
apartment, is “residential.”    According to appellants, the administrative rules
“unconstitutionally discriminate between different types of residential property”
and place “a disproportionate burden on rental properties with four or more units
as compared to all other residential property.” Appellants, however, have placed
undue emphasis on the differing treatment of property. The Equal Protection
Clause protects people, not property. See Park Corp. v. Brook Park, 102 Ohio
St.3d 166, 2004-Ohio-2237, 807 N.E.2d 913, ¶ 19, quoting Nordlinger, 505 U.S.
at 10, 112 S.Ct. 2326, 120 L.Ed.2d 1 (the Equal Protection Clause prevents
government “ ‘from treating differently persons who are in all relevant respects
alike’ ”).   (Emphasis added.)     Because the Equal Protection Clause protects
people, the proper analysis focuses on the classification of property owners.




                                         12
                                     January Term, 2010




        {¶ 40} To the extent that appellants’ claim relates to classification of
property owners, we rejected a virtually identical argument in Roosevelt
Properties Co. v. Kinney (1984), 12 Ohio St.3d 7, 12 OBR 6, 465 N.E.2d 421, a
case involving a rule-review appeal nearly identical to this case. The Roosevelt
appellants, owners of multiunit apartment complexes and smaller rental
properties, challenged an administrative rule adopted by the tax commissioner
that governed the calculation of tax-reduction factors under Section 2a, Article
XII of the Ohio Constitution.            The tax-reduction factors in Roosevelt were
designed to reduce the effect of inflation on the tax liability of residential- and
agricultural-property owners, and were available only to those owners. Under the
administrative rule in Roosevelt, residential property was defined as a dwelling
consisting of four or fewer units. Id. at 8.5
        {¶ 41} The Roosevelt appellants asserted that the administrative rule
violated equal protection because the rule excluded rental properties consisting of
five and more units from the benefit of the tax-reduction factors. Appellants
argued that the classification should be predicated on the tenant’s use of the
property instead of the owner’s use. Id. at 10. We rejected that argument, finding
that the apartment complexes at issue were not residential but were, instead,
“singularly commercial in nature” because “[s]uch properties are accompanied by
commercial expectations not otherwise associated with properties occupied by
‘homeowners.’ ” Id. at 12.
        {¶ 42} In this case, appellants’ argument that the rules discriminate
“between persons who choose to live in an apartment building and those who live
in a single-family home” is predicated upon its assertion that the property should
be classified based on the tenant’s use of the property instead of the owner’s use,


5. Before the administrative rule was enacted, the tax-reduction factor was applied to residential
property consisting of three units or fewer. See Roosevelt Properties v. Kinney (1984), 12 Ohio
St.3d 7, 10, 12 OBR 6, 465 N.E.2d 421.




                                               13
                              SUPREME COURT OF OHIO




the same argument rejected in Roosevelt. Like the appellants in Roosevelt, the
apartment owners in this case have failed to demonstrate that their properties are
not primarily used for business or commercial purposes.
        {¶ 43} On this issue, appellants’ evidence consists of only two references
to the statutory transcript.     First, they cite testimony that equates owning
residential rental property to owning a home because both share similar
maintenance issues such as “carpeting, furnaces, air conditioners, roof, [and] lawn
maintenance.” But on cross-examination, this witness testified that owners of
residential rental properties qualify for tax deductions for expenses associated
with maintenance and repairs that are not available to homeowners.
        {¶ 44} Second, appellants refer to testimony stating that a “renter can be
anybody. It can be [the witness]. It can be the hearing officer, the court reporter,
anybody. In many instances, a residential renter resident has made a lifestyle
choice to rent.”    It is not clear to us, however, how this demonstrates that
appellants’ rental properties are not primarily used in a business or commercial
activity.
        {¶ 45} The burden is on appellants to show that they are situated similarly
to persons receiving the 10 percent tax reduction. Yet appellants have failed to
show that owners of single-family homes, duplexes, and triplexes are situated
similarly to owners of property containing four or more dwellings. Likewise,
even assuming appellants have standing to assert the claim, appellants have not
shown that apartment renters and single-family homeowners are similarly
situated.
        {¶ 46} Appellants attempt to distinguish Roosevelt Properties. According
to appellants, the “critical distinguishing factor” is that the residential
classification upheld by Roosevelt was authorized by a constitutional amendment
that is limited in application to the tax-reduction factor.




                                          14
                                January Term, 2010




       {¶ 47} Once again, the import of appellants’ argument is not clear. To the
extent that appellants are claiming that the constitutional amendment in Roosevelt
was dispositive of the equal protection question, that claim is without merit. The
equal protection claim in Roosevelt failed not because of a constitutional
amendment, but because the appellants failed to demonstrate that no reasonable
basis existed for the residential classification at issue in that case. See Roosevelt,
12 Ohio St.3d at 13, 12 OBR 6, 465 N.E.2d 421.
       b. Do the rules discriminate between residential rental properties?
       {¶ 48} Appellants also contend that the administrative rules violate the
Equal Protection Clause because rental properties containing three units receive
the 10 percent rollback but four-unit rental properties do not. According to
appellants, this distinction by number of units is illusory, and there is no evidence
of any other reasonable basis for distinguishing between rental properties.
       {¶ 49} We rejected exactly this argument in Roosevelt Properties. 12
Ohio St.3d at 13-15, 12 OBR 6, 465 N.E.2d 421. In analyzing the reasonableness
of a classification that distinguished between four-unit properties and five-unit
properties, we were persuaded by Hegenes v. State (Minn.1983), 328 N.W.2d
719. At issue in Hegenes was a state statute that created two tax classifications
for residential rental property: residential rental property containing three or
fewer units was taxed at a lower rate than rental property containing four or more
units. Id. at 720. The Hegenes court found that when it comes to drawing legal
classifications under the rational-basis standard, the line drawn need not be
perfect for constitutional purposes. “ ‘When a legal distinction is determined, as
no one doubts that it may be, * * * a point has to be fixed or a line has to be
drawn * * * to mark where the change takes place. Looked at by itself without
regard to the necessity behind it the line or point seems arbitrary. It might as well
or nearly as well be a little more to one side or the other. But when it is seen that
a line or point there must be, and that there is no mathematical or logical way of



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fixing it precisely, the decision of the Legislature must be accepted unless we can
say that it is very wide of any reasonable mark.’ ” Hegenes, at 722, quoting
Justice Holmes’s dissent in Louisville Gas & Elec. Co. v. Coleman (1928), 277
U.S. 32, 41, 48 S.Ct. 423, 72 L.Ed. 770.
       {¶ 50} Hegenes observed that genuine distinctions exist between small
rental properties and large multiunit apartment complexes.           Moreover, the
Hegenes court rejected the contention — the same contention raised by appellants
here — that the classification became arbitrary and unreasonable for equal
protection purposes solely because the differences between small and larger rental
properties diminish when comparing triplexes to four-unit properties. Hegenes, at
722.
       {¶ 51} In Roosevelt Properties, we agreed with the line of reasoning in
Hegenes: the fact that these differences diminish when comparing four-unit
properties to five-unit properties becomes a question of legislative line drawing.
We held that “since the Equal Protection Clause does not impose an ‘iron rule of
equality,’ ” the line drawn between four- and five-unit properties was reasonable.
Roosevelt Properties, 12 Ohio St.3d at 15, 12 OBR 6, 465 N.E.2d 421, quoting
Allied Stores of Ohio, Inc. v. Bowers (1959), 358 U.S. 522, 526, 79 S.Ct. 437, 3
L.Ed.2d 480. These same principles are directly applicable to this case.
       {¶ 52} As to appellants’ claim that no evidence exists of any relevant
distinction between three- and four-unit rental properties, that claim overlooks the
following evidence. Testimony before the BTA indicated that the line was drawn
between three- and four-unit properties because properties with three or fewer
units were more characteristic of residential property, and properties with four or
more units more closely resembled commercial property. Other testimony
reflected that from 1993 to 2007, single-family homes, duplexes, and triplexes
appreciated in value at very similar rates. In contrast, the rate of appreciation for
rental properties of four or more units was 25 to 30 percent less over the same




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period. And property that is classified as residential continues to appreciate at a
higher rate than commercial property, thereby justifying the different tax
treatment.
       {¶ 53} In response, appellants quote testimony that “[t]he scope [of the
two categories of rental properties] may be different based on the size of the
business entity that owns the residential rental property, but it is still residential
rental property.”   Appellants also claim that there are no differences between
people who rent units in large complexes and those who rent in smaller properties.
But these claims merely rehash appellants’ argument that all rental property is
“residential.”
       {¶ 54} Appellants further contend that three-unit owners and four-unit
owners (1) have the same responsibilities (e.g., maintenance and “peaceful
enjoyment”), (2) are treated the same for tax purposes, and (3) may own rental
properties of both sizes. But this evidence does not rebut the tax commissioner’s
evidence that properties with four or more units (1) are generally more
commercial in nature and (2) appreciate at a lower rate than single-family homes,
duplexes, and triplexes.
       {¶ 55} Our job is simply to determine, with great deference, whether there
is a rational basis for the General Assembly’s taxation decisions. See Park Corp.
v. Brook Park, 102 Ohio St.3d 166, 2004-Ohio-2237, 807 N.E.2d 913, ¶ 36. We
find that providing tax relief to property owners whose property values are
increasing at a higher rate than appellants’ properties constitutes a rational basis
for the different classifications. As appellants have failed to negate that basis,
their claim here is denied.
                                  III. Conclusion
       {¶ 56} We have held that enactments of the General Assembly are
constitutional unless they are clearly unconstitutional beyond a reasonable doubt.
State ex rel. Dickman v. Defenbacher (1955), 164 Ohio St. 142, 57 O.O. 134, 128



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N.E.2d 59, paragraph one of the syllabus. Accord Cincinnati City School Dist.
Bd. of Edn. v. Walter (1979), 58 Ohio St.2d 368, 376, 12 O.O.3d 327, 390 N.E.2d
813. This principle applies equally to administrative regulations. See Roosevelt
Properties, 12 Ohio St.3d at 13, 12 OBR 6, 465 N.E.2d 421.
       {¶ 57} Appellants have failed to meet their burden of proving that the
administrative rules violate the Ohio Equal Protection Clause beyond a reasonable
doubt. As to appellants’ assertion that the rules violate the Uniformity Clause of
the Ohio Constitution, that claim is rejected on appellants’ failure to satisfy the
test set forth in Galatis for overruling our precedents.
       {¶ 58} Accordingly, appellants’ appeal is rejected and we affirm the
decision of the BTA.
                                                             Decision affirmed and
                                                            cross-appeal overruled.
       BROWN, C.J., and LUNDBERG STRATTON, O’CONNOR, O’DONNELL, and
LANZINGER, JJ., concur.
       PFEIFER, J., dissents.
                                 __________________
       PFEIFER, J., dissenting.
       {¶ 59} Section 2, Article XII of the Ohio Constitution states that “[l]and
and improvements thereon shall be taxed by uniform rule according to value * *
*.” The tax in this case is not uniform, because a 10 percent rollback provision
applies to apartment buildings with three or fewer units but does not apply to
apartment buildings with four or more units. See State ex rel. Park Invest. Co. v.
Bd. of Tax Appeals (1964), 175 Ohio St. 410, 412, 25 O.O.2d 432, 195 N.E.2d
908 (“It is clear that under the Ohio law all real property, regardless of its nature
or use, may be assessed and taxed only by a uniform rule on the basis of value”).
I would reverse the decision of the Board of Tax Appeals. I dissent.
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       Calfee, Halter & Griswold, L.L.P., Mark I. Wallach, James F. Lang, and
Laura C. McBride, for appellants and cross-appellees.
       Richard Cordray, Attorney General, and Lawrence D. Pratt and Alan
Schwepe, Assistant Attorneys General, for appellee and cross-appellant.
                           _____________________




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