[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Bronx Park S. III Lancaster, L.L.C. v. Fairfield Cty. Bd. of Revision, Slip Opinion No. 2018-
Ohio-1589.]




                                         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-1589
    BRONX PARK S OUTH III LANCASTER, L.L.C., ET AL., APPELLANTS, v.
          FAIRFIELD COUNTY BOARD OF REVISION ET AL., APPELLEES.
  [Until this opinion appears in the Ohio Official Reports advance sheets, it
  may be cited as Bronx Park S. III Lancaster, L.L.C. v. Fairfield Cty. Bd. of
                   Revision, Slip Opinion No. 2018-Ohio-1589.]
Taxation—Real-property valuation—Board of Tax Appeals failed to consider
        property owners’ appraisal evidence—Decision vacated and cause
        remanded for Board of Tax Appeals to weigh and address the evidence
        presented below, including the appraisal evidence.
    (No. 2016-1468—Submitted January 25, 2018—Decided April 25, 2018.)
               APPEAL from the Board of Tax Appeals, No. 2015-973.
                              _______________________
        O’CONNOR, C.J.
        {¶ 1} This case involves the real-property valuation of a Walgreens
drugstore in Lancaster for tax year 2014. The facts and procedural history of this
case largely mirror those of Terraza 8, L.L.C. v. Franklin Cty. Bd. of Revision, 150
                             SUPREME COURT OF OHIO




Ohio St.3d 527, 2017-Ohio-4415, 83 N.E.3d 916. As in Terraza, a school board
seeks to have real property valued according to a recent arm’s-length sale price,
while the property owners, relying on appraisal evidence, contend that under R.C.
5713.03 as amended by 2012 Am.Sub.H.B. No. 487 (“H.B. 487”), a lease
encumbrance precludes use of the sale price to value the property. The Board of
Tax Appeals (“BTA”) disregarded the owners’ appraisal and valued the property
according to the sale price. As in Terraza, we vacate the BTA’s decision and
remand the case for the BTA to weigh and address the appraisal evidence. See
Terraza at ¶ 39.
                          Facts and Procedural History
       {¶ 2} The subject property is a 13,650-square-foot drugstore situated on
approximately 1.2 acres in Lancaster and owned by appellants, Bronx Park South
III Lancaster, L.L.C., and Fairmont Lancaster, L.L.C. (collectively, “Bronx Park”).
The building was constructed in 2004 and is leased to the Walgreen Company. The
lease term, which began in 2004, is 75 years, the first 25 of which are fixed; every
five years thereafter, the tenant has the option to terminate the lease. The tenant is
responsible for all expenses, and the rental rate is fixed for the life of the lease at
$27,500 per month ($24.18 per square foot).
       {¶ 3} The Fairfield County auditor assessed the property at $1,084,660 for
tax year 2014. Appellee Lancaster City School District Board of Education (“the
BOE”) complained to appellee Fairfield County Board of Revision (“the BOR”)
that the property should have been valued at $5,641,100, because that is what Bronx
Park paid for it in July 2014. The BOR agreed and increased the property’s
valuation to $5,641,100. Bronx Park appealed to the BTA.
       {¶ 4} At the BTA hearing, Bronx Park introduced the testimony and
appraisal of Sara H. Coers, a member of the Appraisal Institute, who concluded that
the sale price represented the value of the “leased fee,” not the unencumbered fee-
simple estate. Based on her interview of the attorney who represented Bronx Park



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                                January Term, 2018




during the sale, Coers reported that Bronx Park “was motivated by the
cap[italization] rate for which the property could be acquired, including the quality
of the tenant and the length of the lease in place.”
       {¶ 5} Coers also reported that the sale was a like-kind exchange under 26
U.S.C. 1031 and that representatives of Bronx Park had never been to the subject
property or to Lancaster. She noted that Walgreens is a high-quality tenant, that
the lease provides for a rental rate that is more than double the market rent, and that
the term exceeds what is generally available in the market. She noted that “[t]he
real property would not command this price if it were vacant, leased at market levels
after exposure of the market, or occupied by a less creditworthy tenant or a tenant
with a shorter remaining lease term.”
       {¶ 6} Using the cost, income, and sales-comparison approaches, Coers
appraised the value of the “fee-simple interest as if unencumbered” at $1,660,000
as of January 1, 2014.
       {¶ 7} The BTA refused to address the merits of the appraisal and retained
the BOR’s valuation of $5,641,100. Bronx Park appealed to this court.
                                      Analysis
                                 Standard of review
       {¶ 8} We must affirm the BTA’s decision if it is “reasonable and lawful.”
R.C. 5717.04. Because this appeal presents only legal issues, our review is de novo.
Akron City School Dist. Bd. of Edn. v. Summit Cty. Bd. of Revision, 139 Ohio St.3d
92, 2014-Ohio-1588, 9 N.E.3d 1004, ¶ 10-11.
                                Constitutional issue
       {¶ 9} Before examining the BTA’s decision, we first must address the
BOE’s suggestion that the H.B. 487 amendments to R.C. 5713.03, which require
the fee-simple estate to be valued “as if unencumbered,” are unconstitutional.
       {¶ 10} The BOE did not challenge the constitutionality of the amended
statute until its appeal to this court, and its argument here is undeveloped. Although




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                             SUPREME COURT OF OHIO




the BOE refers to the “Constitutional requirements” of valuation arising under
Article XII, Section 2 of the Ohio Constitution, the BOE fails to articulate precisely
how it believes R.C. 5713.03 violates that provision. When given an opportunity
to explain its constitutional challenge at oral argument, the BOE’s counsel referred
only generally to a “constitutional definition” of “true value” that, the BOE says,
requires reliance on a sale price. The BOE has not formulated a clear argument,
and “[w]hile there may be exceptions, it is not generally the proper role of this court
to develop a party’s arguments,” In re Application of Columbus S. Power Co., 129
Ohio St.3d 271, 2011-Ohio-2638, 951 N.E.2d 751, ¶ 19.
       {¶ 11} Under these circumstances, we decline to decide in this case whether
R.C. 5713.03 as amended by H.B. 487 violates Article XII, Section 2 of the Ohio
Constitution.
                Remand for consideration of the appraisal evidence
       {¶ 12} In Terraza, we held that “a recent arm’s-length sale price is not
conclusive evidence of the true value of property under R.C. 5713.03, as amended
by H.B. 487.” 150 Ohio St.3d 527, 2017-Ohio-4415, 83 N.E.3d 916, at ¶ 30.
Accordingly, 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. See id. at ¶ 31-37.
       {¶ 13} The parties do not dispute that the H.B. 487 amendments to the
statute apply here, so this appeal presents a straightforward application of Terraza:
the July 2014 sale presumptively represents the value of the unencumbered fee-
simple estate, but the BTA must also weigh Bronx Park’s appraisal evidence. See
Terraza at ¶ 31-37. Because the BTA did not consider the appraisal evidence, we
vacate the BTA’s decision and remand the case for the BTA to weigh and address
the evidence that was presented below, including the appraisal evidence. See id. at
¶ 39. The BTA should not permit the parties to submit new evidence on remand.



                                          4
                              January Term, 2018




                                                                Decision vacated
                                                            and cause remanded.
       O’DONNELL, FRENCH, MOCK, FISCHER, and DEWINE, JJ., concur.
       KENNEDY, J., concurs in judgment only.
       RUSSELL J. MOCK, J., of the First District Court of Appeals, sitting for
O’NEILL, J.
                              _________________
       Siegel Jennings Co., L.P.A., Victor Anselmo, J. Kieran Jennings, and Jason
Lindholm, for appellants.
       Rich & Gillis Law Group, L.L.C., Mark Gillis, Karol C. Fox, and Kelley A.
Gorry, for appellee Lancaster City School District Board of Education.
                              _________________




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