[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Spirit Master Funding IX, L.L.C. v. Cuyahoga Cty. Bd. of Revision, Slip Opinion No. 2018-Ohio-
4302.]




                                         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. 2018-OHIO-4302
  SPIRIT MASTER FUNDING IX, L.L.C., APPELLANT, v. CUYAHOGA COUNTY
                       BOARD OF REVISION ET AL., APPELLEES.
  [Until this opinion appears in the Ohio Official Reports advance sheets, it
   may be cited as Spirit Master Funding IX, L.L.C. v. Cuyahoga Cty. Bd. of
                    Revision, Slip Opinion No. 2018-Ohio-4302.]
Taxation—Real-property valuation—Board of Tax Appeals failed to consider
        property owner’s appraisal evidence—Decision of Board of Tax Appeals
        vacated and cause remanded.
     (No. 2016-1423—Submitted July 17, 2018—Decided October 25, 2018.)
     APPEAL from the Board of Tax Appeals, Nos. 2015-2188 and 2015-2195.
                                  __________________
        Per Curiam.
        {¶ 1} This case involves the real-property valuation of a Red Lobster
restaurant in the village of Orange for tax year 2014. This case is similar to Terraza
8, L.L.C. v. Franklin Cty. Bd. of Revision, 150 Ohio St.3d 527, 2017-Ohio-4415, 83
N.E.3d 916, and Bronx Park S. III Lancaster, L.L.C. v. Fairfield Cty. Bd. of Revision,
                             SUPREME COURT OF OHIO




___ Ohio St.3d ___, 2018-Ohio-1589, ___ N.E.3d ___. In each case, a school board
has argued that a parcel of real property should be valued based on a recent arm’s-
length sale price and a property owner has relied on appraisal evidence to support a
lower valuation. The Board of Tax Appeals (“BTA”) valued the property in each
case according to the sale price, disregarding the appraisal evidence. As we did in
Terraza and in Bronx Park, based on the changes to R.C. 5713.03 made by 2012
Am.Sub.H.B. No. 487, we vacate the BTA’s decision and we remand the case for the
BTA to weigh and address the appraisal evidence.
                          Facts and Procedural History
       {¶ 2} The subject property is a 7,534-square-foot restaurant situated on 2.26
acres and owned by appellant, Spirit Master Funding IX, L.L.C. In August 2014,
N and D Restaurants, Inc., sold the property to Red Lobster Hospitality, L.L.C., for
$2,925,880. In December 2014, Red Lobster Hospitality sold it to Spirit Master for
$3,439,029.
       {¶ 3} The Cuyahoga County auditor initially assessed the property at
$2,016,400 for tax year 2014. The Orange City School District Board of Education
(“school board”) initially complained to the Cuyahoga County Board of Revision
(“BOR”) that the property should have a higher valuation based on the latter of the
2014 sales. Because the August 2014 sale was closer to the tax-lien date, the school
board later conceded that that sale was the one to use for valuation purposes, so
long as the BOR determined that it had occurred at arm’s length.
       {¶ 4} The school board presented to the BOR deeds and conveyance-fee
statements demonstrating both sales. For its part at the BOR hearing, Spirit Master
introduced the testimony and appraisal of Richard G. Racek Jr. According to
Racek, the August 2014 sale of the subject property was part of the sale of the entire
Red Lobster restaurant chain for $2.1 billion. Racek stated that $2,925,880—the
amount reported on the August 2014 conveyance-fee statement—was allocated to
the sale of the subject property. The conveyance-fee statement reports that no part



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of the $2,925,880 consideration was allocable to assets other than the real property.
Racek acknowledged that the property was not encumbered by a lease at the time
of the August 2014 sale, but he stated that it was encumbered by a 20-year lease
that took effect around the time of the December 2014 sale. He used the income
and sales-comparison approaches to reach a valuation of $1,535,000 as of January
1, 2014.
       {¶ 5} The BOR valued the property at $2,925,900 based on the August 2014
sale. Spirit Master appealed to the BTA, arguing that Racek’s appraisal—rather than
either of the 2014 sale prices—reflected the true value of the property. The BTA
declined to consider Racek’s appraisal and retained the BOR’s valuation. Relying
on 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, the BTA “reject[ed] Spirit Master’s
argument that changes to the language of R.C. 5713.03 grant discretion to this board
to determine whether to adopt sales to determine the value of real property.” BTA
Nos. 2015-2188 and 2015-2195, 2016 Ohio Tax LEXIS 1873, *11 (Sept. 1, 2016).
Spirit Master appealed to this court.
                                        Analysis
       {¶ 6} The parties do not dispute that the August 2014 sale was at arm’s
length and recent to the tax-lien date. Under amended R.C. 5713.03, the price of
that sale is not “conclusive evidence” of the subject property’s value. Terraza, 150
Ohio St.3d 527, 2017-Ohio-4415, 83 N.E.3d 916, at ¶ 30.             Rather, it only
“presumptively represents the value of the unencumbered fee-simple estate.”
Bronx Park, ___ Ohio St.3d ___, 2018-Ohio-1589, ___ N.E.3d ___, at ¶ 13. Thus,
the BTA needed “to consider not just the sale price but also any other evidence the
parties present[ed] that is relevant to the value of the unencumbered fee-simple
estate.” Id. at ¶ 12. Because the BTA did not consider Spirit Master’s appraisal
evidence, we must vacate the BTA’s decision and remand the case for the BTA to
weigh and address that evidence. See Terraza at ¶ 39; Bronx Park at ¶ 13.




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       {¶ 7} The school board argues that we need not vacate the BTA’s decision
and remand for the BTA to weigh and address the appraisal evidence, because,
according to the school board, the record does not support Racek’s determination
of a value that was significantly lower than the August 2014 sale price. The school
board emphasizes that there is no evidence that the property was encumbered by a
lease—let alone an above-market lease—in August 2014. It also notes, quoting the
BTA’s decision, that the BTA found “ ‘Racek’s testimony about the sales to be
unreliable hearsay.’ ” 2016 Ohio Tax LEXIS 1873 at *14.
       {¶ 8} The school board is correct in pointing out that the property was not
encumbered by a lease at the time of the August 2014 sale. In that respect, this case
differs from Terraza and Bronx Park, both of which involved properties that were
sold with above-market leases in place. See Terraza at ¶ 4; Bronx Park at ¶ 4. But
despite this difference, we reject the school board’s argument.
       {¶ 9} The school board reads Terraza too narrowly. In Terraza, we held
that R.C. 5713.03 permits taxing authorities to consider non-sale-price evidence.
Terraza at ¶ 27. Later, in Bronx Park, we further explained that “when property
was the subject of a recent arm’s-length sale, the General Assembly has directed
taxing authorities to consider not just the sale price but also any other evidence the
parties present that is relevant to the value of the unencumbered fee-simple estate.”
Id. at ¶ 12. The school board’s argument ignores the fact that appraisal evidence
can both attack a sale price as evidence of true value and provide affirmative
evidence of value in its own right. See Westerville City Schools Bd. of Edn. v.
Franklin Cty. Bd. of Revision, ___ Ohio St.3d ___, 2018-Ohio-3855, ___ N.E.3d
___, ¶ 14. By showing that the subject property was not encumbered by an above-
market lease at the time of the sale, the school board addresses only one aspect of
Racek’s appraisal. It fails to recognize that Racek’s valuation may have some
evidentiary value as an independent matter apart from that concern. Because




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Racek’s appraisal is relevant evidence, the BTA should have considered and
weighed it.
                                    Conclusion
       {¶ 10} Because the BTA did not consider Spirit Master’s appraisal
evidence, we vacate the BTA’s decision and remand the cause for the BTA to weigh
and address that evidence in the first instance. The BTA shall not permit the parties
to submit new evidence on remand. See Bronx Park, ___ Ohio St.3d ___, 2018-
Ohio-1589, ___ N.E.3d ___, at ¶ 13.
                                                                   Decision vacated
                                                               and cause remanded.
       O’CONNOR, C.J., and O’DONNELL, KENNEDY, FRENCH, FISCHER, DEWINE,
and DEGENARO, JJ., concur.
                               _________________
       Sleggs, Danzinger & Gill Co., L.P.A., and Todd W. Sleggs, for appellant.
       Kadish, Hinkel & Weibel, Kevin M. Hinkel, and John P. Desimone, for
appellee Orange City School District Board of Education.
                               _________________




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