[Cite as LTC Properties, Inc. v. Licking Cty. Bd. of Revision, 133 Ohio St.3d 111, 2012-Ohio-
3930.]




      LTC PROPERTIES, INC., APPELLANT, v. LICKING COUNTY BOARD OF
                             REVISION ET AL., APPELLEES.
           [Cite as LTC Properties, Inc. v. Licking Cty. Bd. of Revision,
                        133 Ohio St.3d 111, 2012-Ohio-3930.]
Taxation—Valuation—Party challenging board of revision’s valuation of real
        property has burden of showing that valuation was incorrect—Decision
        affirmed.
  (No. 2011-1154—Submitted August 22, 2012—Decided September 6, 2012.)
             APPEAL from the Board of Tax Appeals, No. 2008-A-1010.
                                 __________________
        Per Curiam.
        {¶ 1} LTC Properties, Inc., which owns Chestnut House Assisted Living,
a congregate-care assisted-living facility in Newark, Licking County, contests the
tax-year 2007 valuation of its property as found by the auditor, as retained by the
Licking County Board of Revision (“BOR”), and as affirmed by the Board of Tax
Appeals (“BTA”). On the merits, LTC contends that the auditor overvalued its
property by predicating his cost-based valuation on the cost schedule for nursing
homes and private hospitals rather than on the cost schedule for apartment
buildings with 20 to 39 rental units. LTC hypothesizes that had the auditor used
the cost schedule for apartments as a starting point, his ultimate conclusion of
value would have been lower. In addition, LTC alleges a procedural error in the
BTA’s denial of LTC’s request for a continuance of the evidentiary hearing.
        {¶ 2} Because we disagree with both of LTC’s arguments, we affirm the
decision of the BTA.
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                                          Facts
       {¶ 3} For tax year 2007, the Licking County auditor, an appellee,
assigned a true value of $1,975,000 to Chestnut House Assisted Living, which
consists of 2.43 acres, improved with a 25,824 square-foot building and a paved
parking area.    The auditor’s land value was $307,400, and the value of
improvements was $1,667,600.        The property record card indicates that the
auditor used the “nursing home” cost schedule, which attributed a cost-based
value of $92.50 per square foot for the building. The county also applied a grade-
factor adjustment of 110 percent, to derive a “replacement-cost-new” figure of
$2,627,590. Next, the county applied a 25 percent reduction for obsolescence,
which led to a cost-less-depreciation figure of $1,970,694 for the building.
       {¶ 4} But obsolescence was merely one adjustment. The actual amount
of cost value assigned to the building was $1,653,130 (i.e., $1,667,600 minus the
cost of the paved area, which was $14,470). That number reflects a substantial
reduction from the $1,970,694 figure previously determined to be the cost-less-
depreciation associated with the facility.        Thus, the auditor’s obsolescence
adjustment, together with additional adjustments, lowered the original square-
footage computation by 37 percent—from $2,627,590 to $1,653,130. Indeed, the
valuation of the building represents almost a 31 percent reduction from the figure
derived by multiplying the nursing-home cost figure of $92.50 per square foot by
the 25,824 square feet of the building.
       {¶ 5} Appellant, LTC Properties, Inc., filed a valuation complaint on
March 24, 2008, with the BOR, seeking a reduced value of $1,000,000. The
Newark City Schools Board of Education (“school board”) filed a
countercomplaint on April 28, and the BOR held a hearing on May 20, 2008.




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        {¶ 6} At the hearing, LTC presented the testimony1 of William
McVeigh, the property tax manager for Assisted Living Concepts, the parent of
LTC. McVeigh asserted that Chestnut House is an assisted-living facility with 39
efficiency-apartments, 38 of which were then occupied. McVeigh offered an
income-capitalization analysis that estimated the facility’s value at $54 per square
foot, for a true value of approximately $1,380,000 for the facility as a whole. The
auditor’s valuation of $1,975,000, by contrast, reflects a valuation of some $76
per square foot. On cross-examination, McVeigh explained that the rent number
was generated by market-driven surveys “for this specific purpose.” McVeigh
also distinguished the $1,200 to $1,800 per month that residents actually pay as
“service fees,” only a portion of which can properly be characterized as rent that
relates to the value of the realty. Additionally, McVeigh contested the propriety
of the auditor’s using the nursing-home and private-hospital category for cost-
valuation purposes.        On cross-examination, McVeigh conceded that he was
neither an employee nor an owner of the taxpayer and that he was not a certified
appraiser.
        {¶ 7} By order dated July 3, 2008, the BOR retained the auditor’s
valuation of the property, and LTC appealed to the BTA on July 10, 2008. On
November 14, 2008, the school board filed a motion to compel discovery of
LTC’s witnesses and exhibits, which recited that the school board had served
interrogatories and document requests on LTC on September 12 and had followed
up with LTC twice. On December 9, 2008, the BTA denied the motion to compel
on the grounds that it had been filed more than 120 days after the filing of the
appeal, which is outside the time limit for seeking the board’s involvement in


1. The BOR hearing was transcribed by a court reporter, and the transcript does not show that
McVeigh was sworn. Nor does the transcript show any objection to his giving unsworn testimony.
We will regard the absence of an objection to the testimony on account of the witness’s not having
been sworn as a waiver of the point. See Stores Realty Co. v. Cleveland, 41 Ohio St.2d 41, 43,
322 N.E.2d 629 (1975).




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discovery pursuant to Ohio Adm.Code 5717-1-11.           But the BTA order also
admonished LTC that ignoring the discovery request could lead to exclusion of its
evidence.
       {¶ 8} The BTA set the case for hearing on April 5, 2010. The county
and the school board filed disclosures of witnesses and/or exhibits on March 19
and 22, 2010, pursuant to Ohio Adm.Code 5717-1-15(I), which requires such
disclosure at least 14 days before the scheduled hearing. LTC made no such
disclosures. Then, on March 26, 2010, 10 days before the scheduled hearing,
LTC sent a letter requesting continuance of the hearing. The letter tersely stated,
“Our appraiser is Richard Racek” and that he was “unavailable on [April 5],”
without offering any reason for the appraiser’s unavailability or for the failure to
disclose the appraiser and his report previously. On March 29, the county filed a
memorandum opposing the continuance, to which LTC responded on March 30.
       {¶ 9} By order dated March 30, 2010, the BTA denied the continuance.
The BTA noted that LTC had ignored discovery and that the school board’s
witness disclosure had objected to any witnesses or exhibits for LTC because of
LTC’s disregard of the discovery requests seeking that very information. The
BTA next noted that LTC was in violation of both the 14-day disclosure rule and
division (C) of Ohio Adm.Code 5717-1-15, which requires a continuance request
to be filed no later than 14 days before the scheduled hearing. Based on the
multiple rule violations and the failure to state good cause, the BTA denied the
continuance. With respect to the request that LTC witnesses and exhibits be
excluded, the BTA deferred judgment.
       {¶ 10} The three parties—LTC, the county, and the school board—
appeared through counsel at the April 5 hearing. Counsel for LTC read aloud
portions of McVeigh’s testimony to the BOR and presented two exhibits, one
showing cost per square foot used by the county for apartments, the other showing
property record cards of other assisted-living facilities. The BTA received the




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exhibits over objection of the county and the school board. The BTA then
entertained briefs from the parties.
       {¶ 11} On June 7, 2011, the BTA issued its decision. As for McVeigh’s
presentation to the BOR, the BTA declined to adopt his conclusions because
“there is no data included to support the conclusions reached.” LTC Properties,
Inc. v. Licking Cty. Bd. of Revision, BTA No. 2008-A-1010, 2011 WL 2306065,
*2 (June 7, 2011). With respect to LTC’s contention that the auditor should have
used the apartment cost schedules as the starting point, the BTA held that
although it had in the past “adopted, at least in part, many appraisals of assisted
living facilities that have relied upon comparisons of the subject facilities to
apartment complexes, there is no requirement that such comparisons be made.”
Id., *4. Acknowledging that “the particular code that a county assigns to a
property may impact its valuation, it is clearly not the only factor that determines
the valuation to be assigned,” and as a result, “any appraisal of an assisted living
facility that is based on rates attributable to an alternative code may require
adjustments, which it appears were made by the county herein.” Id., *5. The
BTA found that LTC had “failed to demonstrate that the value which it seeks has
a basis in the market, as of the tax lien date in question” and that the taxpayer had
thereby not satisfied its burden of proof. Id. Accordingly, the BTA retained the
county’s valuation. Id. We now affirm.
                                       Analysis
       {¶ 12} Because the true value of property is a “question of fact, the
determination of which is primarily within the province of the taxing authorities,”
we have held that we will “not disturb a decision of the Board of Tax Appeals
with respect to such valuation unless it affirmatively appears from the record that
such decision is unreasonable or unlawful.” Cuyahoga Cty. Bd. of Revision v.
Fodor, 15 Ohio St.2d 52, 239 N.E.2d 25 (1968), syllabus. Moreover, because the
BTA as the finder of fact has “wide discretion in granting weight to evidence and



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credibility to witnesses,” we will not reverse the BTA’s determination of
evidentiary weight and credibility “unless we find an abuse of this discretion.”
Natl. Church Residence v. Licking Cty. Bd. of Revision, 73 Ohio St.3d 397, 398,
653 N.E.2d 240 (1995).
                   1. The BTA did not abuse its discretion when it
                        denied LTC’s request for continuance
        {¶ 13} With respect to its contention that the BTA ought to have granted
its request for a continuance of the April 5, 2010 hearing, the case law establishes
and LTC agrees that the standard for our review is abuse of discretion. Coats v.
Limbach, 47 Ohio St.3d 114, 116, 548 N.E.2d 917 (1989), quoting Akron v. Pub.
Util. Comm., 5 Ohio St.2d 237, 241, 215 N.E.2d 366 (1966). As a result, we will
not reverse the BTA’s determination without a showing that the board’s “attitude
is unreasonable, arbitrary or unconscionable.” See J.M. Smucker, L.L.C. v. Levin,
113 Ohio St.3d 337, 2007-Ohio-2073, 865 N.E.2d 866, ¶ 16. Did the BTA abuse
its discretion in this instance?
        {¶ 14} We acknowledge at the outset the established principle that “courts
liberally continue cases because denying a continuance would deny a litigant his
day in court.” Coats at 116, citing State ex rel. Buck v. McCabe, 140 Ohio St.
535, 538, 45 N.E.2d 763 (1942).           Nonetheless, we hold that under the
circumstances presented, the BTA was well justified in denying a continuance,
even if the BTA indulges (as LTC suggests) in a common practice of granting a
first continuance. In so holding, we focus on the requirement that an application
for continuance be “made in good faith,” one of the enumerated criteria for
evaluating such motions. Id.
        {¶ 15} The BTA’s denial is justified because LTC’s request for
continuance arises in the context of its violation of the BTA’s procedural rules in
three pertinent respects. First, LTC violated Ohio Adm.Code 5717-1-11, which
authorizes discovery, by willfully ignoring discovery requests that it disclose its




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witnesses and exhibits. Second, LTC violated Ohio Adm.Code 5717-1-15(I) by
failing to make disclosure of its witnesses and exhibits 14 days or more before the
scheduled hearing. Third, LTC failed to comply with the requirement of Ohio
Adm.Code 5717-1-15(C) that a request for continuance be filed 14 days or more
before the scheduled hearing.
       {¶ 16} In addition, LTC’s request for continuance states no cause other
than the vague “unavailability” of the named appraiser. Nor does it advance any
reason why LTC should be excused from the operation of the rules it transgressed.
Finally, it is not wholly irrelevant that the better part of two years had already
elapsed since the filing of the appeal. Under all these circumstances, the BTA
could reasonably have concluded within the exercise of its discretion that the
request lacked good faith.
       {¶ 17} This situation contrasts starkly with the facts in Coats, 47 Ohio
St.3d 114, 548 N.E.2d 917, and Strongsville Bd. of Edn. v. Cuyahoga Cty. Bd. of
Revision, 53 Ohio St.3d 254, 559 N.E.2d 1351 (1990), two cases in which we did
find an abuse of discretion.       In Coats, the BTA declined to convene a
supplemental hearing for the purpose of hearing the testimony of an accountant,
where the appellant had herself appeared at the first hearing and had explained
that the accountant was ill. In finding an abuse of discretion, we noted that (1) the
record corroborated the claim of the witness’s ill health, (2) the witness’s
testimony was critical to the taxpayer’s case, (3) the request was made in good
faith, (4) the witness would likely have attended a future hearing, and (5) appellee
had not objected to the continuance. Id. at 117. Similarly in Strongsville, we held
that the Strongsville Board of Education had “proceeded with diligence when
advised of the unavailability of his witness” in several enumerated respects. Id. at
256.
       {¶ 18} Quite simply, the conduct of LTC here presents the very antithesis
of diligence: a series of refusals to disclose its evidence that culminated in a



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failure to offer a good-cause explanation for the rule violations or to give any
actual reasons for the witness’s absence. While the BTA could have decided to
grant the continuance, we hold that under these circumstances, the board did not
abuse its discretion in deciding not to.
  2. Using the nursing-home/private-hospital cost schedules as a starting point
       for valuing an assisted-living facility was not an abuse of discretion
       {¶ 19} We turn now to the issue of the auditor’s use of cost schedules in
valuing LTC’s property. Here, LTC acknowledges that its facility does not neatly
fit into any of the rule-prescribed classifications set forth in Ohio Adm.Code
5703-25-10, so that some degree of improvisation on the auditor’s part is
necessary.    But LTC asserts that the auditor’s discretion in this regard is
constrained by the principle that “the valuation of the realty portion of congregate
care facilities in comparison to conventional apartment buildings has been the
standard since Chippewa Place [Dev. Co. v. Cuyahoga Cty. Bd. of Revision, BTA
No. 91-P-245, 1993 WL 384198 (Sept. 24, 1993)].” Karrington of Kenwood, Ltd.
v. Hamilton Cty. Bd. of Revision, BTA No. 2006-M-2329, 2009 WL 4015361, *4
(Nov. 10, 2009). Under LTC’s theory, this passage means that assisted-living
facilities must be treated as apartment buildings for purposes of determining
which cost schedule to use. We disagree for two reasons.
       {¶ 20} First, the principle that LTC cites and relies on would appear to
have little or no application to the cost approach.       Karrington of Kenwood
demonstrates the point. In that case, “the board accord[ed] the cost approach very
little weight.” Id., *5, fn. 1. More significant were the income and comparable-
sale approaches, and the issue was whether to compare the subject property with
other congregate-care facilities or with apartment buildings. The proper choice
was apartment buildings, because under the comparable-sale approach, the
comparison to other congregate-care facilities “did not accurately capture the
value of the subject property” on account of “the sales [being] too remote in time




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and distance.” The same was true under the income approach, because “the
income earned by an individual comparable” was found to be “too closely tied to
the operating business of eldercare to be indicative of the value of the real
property.” Id., *3. See also Dublin Senior Community L.P. v. Franklin Cty. Bd.
of Revision, 80 Ohio St.3d 455, 460, 687 N.E.2d 426 (1997) (because a
congregate-care center “comprises a combination of real estate and business
activities,” charging as it does both rental for the apartments and fees for ancillary
services, “the two activities must be kept separate” when the real estate is being
valued).     These considerations led the board to conclude that “the use of
congregate care facilities to compare either sale prices or income earned” would
contravene the requirement “to base value for ad valorem tax purposes on value in
exchange and not value in use.” Karrington, *3.
        {¶ 21} We do not think that these concerns directly apply in the cost-
valuation context. When sale prices are compared, the sale price of a congregate-
care facility may include elements of business value that relate to the provision of
ancillary services as opposed to the rental of realty; likewise, when income is
capitalized to determine value, the income of a congregate-care facility must be
analyzed into its rental and service-fee components in order to determine that
portion of income that relates to realty. Both these considerations militate toward
using apartment buildings as a point of comparison when valuing the real property
of a congregate-care facility under the sales-comparison or income-capitalization
approaches.
        {¶ 22} By contrast, the application of cost schedules to a particular facility
inherently relates to the realty:    the items being “costed” are elements of a
permanent improvement to the land that qualifies as part of the real-property tax
base.      See R.C. 5701.02 (defining real property to include “all buildings,
structures, improvements, and fixtures of whatever kind on the land, and all rights
and privileges belonging or appertaining thereto”). Under this definition, Ohio



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tax law regards as real property “any property attached to land” unless the statutes
otherwise establish the item to constitute personal property. Thomas Steel Strip
Corp. v. Limbach, 61 Ohio St.3d 340, 341, 575 N.E.2d 114 (1991); compare
Funtime, Inc. v. Wilkins, 105 Ohio St.3d 74, 2004-Ohio-6890, 822 N.E.2d 781,
¶ 14-16. Moreover, the distinction between the cost schedules for the nursing-
home/private-hospital category and that for “apartments—20 to 39 rental units” in
no way relates to a distinction between real property value and business value, but
to the costs of different kinds of structures adapted for particular purposes. As a
result, the decision of which cost category to employ does not appear to correlate
with the issue of segregating business value from real property value, and LTC
has cited no authority indicating that it does.
       {¶ 23} Our second area of disagreement with LTC’s argument relates to
the potential dissimilarities between assisted-living facilities and ordinary
apartments on the one hand, together with similarities between assisted-living
facilities and nursing homes from the design standpoint.          Unlike ordinary
apartments, assisted-living units typically lack full kitchens in the apartments and
instead have congregate dining areas, and the bathrooms and hallways have
handrails for support and are extra wide to permit the passage of wheelchairs. See
Karrington, BTA No. 2006-M-2329, 2009 WL 4015361, *2. These features,
which add expense and are likely to be encountered in nursing homes and private
hospitals as well, indicate the relevance of nursing-home/private-hospital costs in
valuing assisted-living facilities.    Accord Harbor Court Ltd. Partnership v.
Cuyahoga Cty. Bd. of Revision, BTA No. 92-T-1054, 1994 WL 269639 (June 10,
1994), *10 (an appraisal’s cost approach correctly used the cost manual’s “homes
for the elderly” category as opposed to the “conventional apartment buildings”
category, given the similarity of structural characteristics).
       {¶ 24} The similarity of the amenities incorporated into an assisted-living
facility to those incorporated into a nursing home or private hospital makes it




                                          10
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appropriate, under the cost approach, to include the cost elements that relate to
those amenities in the valuation of the property. That is so because the cost
approach is driven by the “principle of substitution, which states that a rational,
informed purchaser will pay no more for a property than the cost of acquiring an
acceptable substitute with like utility.” International Association of Assessing
Officers, Property Assessment Valuation 127 (2d Ed.1996). Indeed, given that
the goal of the cost valuation is to establish the high-end cap for what a buyer
would be willing to pay for a facility with the same utility, it makes sense that the
county auditor in this case would have used nursing-home costs as a starting point
and adjusted downward to determine the value of LTC’s facility. See Dayton-
Montgomery Cty. Port Auth. v. Montgomery Cty. Bd. of Revision, 113 Ohio St.3d
281, 2007-Ohio-1948, 865 N.E.2d 22, ¶ 12 (“By determining the cost to replace
existing improvements, the auditor establishes an upper limit to the amount a
buyer would be willing to pay for an existing structure”), citing Dinner Bell
Meats, Inc. v. Cuyahoga Cty. Bd. of Revision, 12 Ohio St.3d 270, 272, 466 N.E.2d
909 (1984); Meijer, Inc. v. Montgomery Cty. Bd. of Revision, 75 Ohio St.3d 181,
187, 661 N.E.2d 1056 (1996).
       {¶ 25} Finally, we note that LTC characterizes the county’s 25 percent
reduction for obsolescence (plus the additional downward adjustment) as a “fudge
factor” that does not justify using the nursing-home/private-hospital cost
schedule. It is true that the basis for these reductions has not been explained by
the county, but under the case law, the county does not bear the burden of offering
such an explanation.     See Colonial Village, Ltd. v. Washington Cty. Bd. of
Revision, 123 Ohio St.3d 268, 2009-Ohio-4975, 915 N.E.2d 1196, ¶ 30 (“we
reiterate that the county does not have the affirmative burden to establish as a
general matter the accuracy of any appraisals that underlie its valuation of the
property” [emphasis sic]). In this regard, LTC’s citation of Dayton-Montgomery
Cty. Port Auth., 113 Ohio St.3d 281, 2007-Ohio-1948, 865 N.E.2d 22 (“Port



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Auth.”) is unavailing. As we explained in Colonial Village, Port Auth. presented
an exception to the usual rule because “the developed record before the BTA
negated the validity of the county’s valuation of the property.” Colonial Village,
¶ 24. Specifically, the taxpayer in Port Auth. had presented actual-cost evidence
that negated the application of a 1.6 grade-factor adjustment to the cost figure
from the schedules. Port Auth., ¶ 7, 14, 16. By contrast, LTC’s evidence does
not rise to the level of placing the burden on the county to explain its
computation.
                                     Conclusion
       {¶ 26} For the foregoing reasons, we hold that the BTA’s decision to
affirm the county’s use of the nursing-home/private-hospital cost schedule as a
starting point in performing a cost valuation of LTC’s assisted-living facility was
neither unreasonable nor unlawful and that the BTA did not abuse its discretion
by denying a continuance. We therefore affirm the decision of the BTA.
                                                                Decision affirmed.
       O’CONNOR, C.J., and PFEIFER, LUNDBERG STRATTON, O’DONNELL,
LANZINGER, CUPP, and MCGEE BROWN, JJ., concur.
                               __________________
       PFEIFER, J., concurring.
       {¶ 27} I concur in whole with the majority opinion. I write separately as a
cautionary tale for practitioners.
       {¶ 28} All property owners and their counsel know that they have a heavy
burden to overcome when challenging a valuation. So why, as in this case, make
the situation worse by ignoring simple and obvious requirements? Continuances
are routinely granted in tax cases, but not when the party seeking the continuance
disregards well-established procedure, such as requesting the continuance in a
timely fashion and disclosing its witnesses and exhibits. And if a corporate entity
wants to challenge a valuation, it should send a certified appraiser or other




                                         12
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qualified expert, not an employee, however experienced. It is well known that the
only nonexperts competent to testify as to valuation are owners. Finally, the best
way to challenge a valuation is with a proper appraisal, which was not submitted
in this case. Little wonder that the property owner was unable to establish that the
board of revision abused its discretion.
       {¶ 29} I am sympathetic to the property owner in this case. The valuation
method used by the auditor to determine the value of a congregate-care assisted-
living facility is questionable. It seems more reasonable to base the cost on that of
an apartment complex than on a nursing home or hospital. But for a variety of
reasons, the corporate property owner was not able to adequately prove its case.
                              __________________
       Wayne E. Petkovic, for appellant.
       Kenneth W. Oswalt, Licking County Prosecuting Attorney, and Dennis E.
Dove, Assistant Prosecuting Attorney, for appellees Licking County Board of
Revision and Licking County Auditor.
       Means, Bichimer, Burkholder & Baker Co., L.P.A., and Robert M.
Morrow, for appellee Newark City Schools Board of Education.
                            ______________________




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