[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Kinnear Rd. Redevelopment, L.L.C. v. Testa, Slip Opinion No. 2017-Ohio-8816.]




                                        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. 2017-OHIO-8816
KINNEAR ROAD REDEVELOPMENT, L.L.C., APPELLEE, v. TESTA, TAX COMMR.,
                                      APPELLANT.
  [Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as Kinnear Rd. Redevelopment, L.L.C. v. Testa, Slip Opinion No.
                                   2017-Ohio-8816.]
Taxation—Real property—Exemptions—R.C.5709.87—Exemption for increase in
        value of real property subject to environmental cleanup—Exemption
        applies both to increase in value of land and to increase in value of
        improvements, buildings, fixtures, or structures situated on the land that
        were newly constructed after remediation.
  (No. 2015-0976―Submitted October 17, 2017―Decided December 6, 2017.)
              APPEAL from the Board of Tax Appeals, No. 2013-1407.
                                     ____________
                             SUPREME COURT OF OHIO




       Per Curiam.
                                      I. SUMMARY
       {¶ 1} This case concerns a partial tax exemption under R.C. 5709.87 for
real property that has undergone or is undergoing environmental cleanup. The
exemption―commonly referred to as the “brownfield exemption”―encourages
developers to remediate properties contaminated with hazardous materials by
granting a ten-year exemption from taxation of the increased value of the property
resulting from the cleanup. See R.C. 5709.87(C)(1)(a).
       {¶ 2} Appellee, Kinnear Road Redevelopment, L.L.C. (“Kinnear”), owned
the property in question until it was transferred to Lennox Flats Apartments, L.L.C.,
on December 20, 2013. On the January 1, 2012 tax-lien date, the property had an
assessed value of $478,000. The land was vacant at that time, so the assessed value
was composed solely of land value. Kinnear remediated the property and improved
it with apartment buildings in 2012. On January 1, 2013, the assessed value of the
land had increased to $874,000. As for the newly built apartments, the auditor
assessed their value at $4,076,000.
       {¶ 3} On March 25, 2013, appellant, the tax commissioner, granted an
exemption of $396,000 for the increase in the assessed value of the land. The tax
commissioner, however, found that the apartment buildings did not qualify for an
exemption under R.C. 5709.87.
       {¶ 4} Kinnear appealed to the Board of Tax Appeals (“BTA”). The BTA
reversed the tax commissioner’s determination, finding that Kinnear was entitled
to a tax exemption for the assessed value of the apartment buildings under R.C.
5709.87.
       {¶ 5} The tax commissioner challenges the BTA’s decision on appeal,
raising one proposition of law consisting of several arguments.             The tax
commissioner has waived his main argument and one other issue by failing to raise




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                               January Term, 2017




them first at the BTA. The remaining arguments lack merit. Therefore, we affirm
the BTA’s order.
                     II. FACTS AND PROCEDURAL HISTORY
          A. Remediation, New Construction, and EPA Certification
        {¶ 6} The property is a 2.39-acre parcel located on Kinnear Road in
Franklin County, identified as parcel number 420-290066. From 1965 to 2007, the
property was used for the manufacture and repair of industrial magnets, and
chemicals from the manufacturing process contaminated the soil and groundwater.
        {¶ 7} In 2012, Kinnear undertook action to remove the hazardous materials
from the soil and groundwater and redevelop the land with residential apartments.
Both the remediation and the construction of the apartments were completed in
2012.
        {¶ 8} On February 26, 2013, the director of the Ohio Environmental
Protection Agency (“EPA”) issued a covenant not to sue pursuant to R.C. 3746.12,
verifying that Kinnear had remediated the land in compliance with applicable
environmental standards and releasing Kinnear from civil liability. On the same
day, the EPA director certified the covenant not to sue to the tax commissioner for
further action relating to the exemption, as required by R.C. 5709.87(B).
        {¶ 9} The following chart reflects the auditor’s assessed increase in value
from the January 1, 2012 tax-lien date (before remediation and construction) to the
January 1, 2013 tax-lien date (after remediation and construction):


           January 1, 2012 Tax-Lien Date
           Land:                                            $478,000
           Building/Improvements:                           $0
           Total:                                           $478,000
           January 1, 2013 Tax-Lien Date
           Land:                                            $874,000




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           Building/Improvements:                            $4,076,000
           Total:                                            $4,950,000


                                B. Tax Proceedings
       {¶ 10} R.C. 5709.87(C)(1)(a) provides for a tax exemption of “the increase
in the assessed value of land constituting property that is described in the
certification” of the covenant not to sue. Upon receipt of the certification, the tax
commissioner issued a final determination on March 25, 2013, granting Kinnear a
ten-year tax exemption for the land that was subject to remediation. The amount
of the exemption for the 2013 tax year was $396,000.
       {¶ 11} R.C. 5709.87(C)(1)(a) also allows a tax exemption for “the increase
in the assessed value of improvements, buildings, fixtures, and structures that are
situated on that [remediated] land on the tax lien date of the year in which the
remedial activities began.”    But at all times relevant to this case, this latter
exemption was limited to those improvements, buildings, fixtures, and structures
that were “situated on that land at the time the [tax commissioner’s exemption]
order is issued as indicated on the current tax lists.” Former R.C. 5709.87(C)(1)(a),
151 Ohio Laws, Part V, 8511. The tax commissioner, however, refused to grant
Kinnear an exemption for the apartment buildings constructed in 2012, which the
auditor had valued at $4,076,000 as of the January 1, 2013 tax-lien date. According
to the tax commissioner, the exemption under R.C. 5709.87 did not apply to “any
new improvements, buildings, fixtures and structures added to the property after
January 1, 2012.”
       {¶ 12} Kinnear appealed to the BTA, challenging the tax commissioner’s
refusal to include the increased value of the apartment buildings in the exemption.
The BTA reversed the tax commissioner’s determination, finding that Kinnear was
entitled to an exemption for the assessed value of the apartment buildings under the
plain language of R.C. 5709.87. According to the BTA, the phrase “situated on




                                         4
                                January Term, 2017




that land at the time the order is issued” plainly allows an exemption for
improvements added after the prior year’s tax-lien date (here January 1, 2012). The
BTA determined that the apartment buildings qualified for the tax exemption
because they were (1) situated on the land when the tax commissioner issued his
order on March 25, 2013, and (2) listed on the current (2013) tax list.
       {¶ 13} Thereafter, the tax commissioner appealed to this court.
                                 III. DISCUSSION
                              A. Standard of Review
       {¶ 14} This court must affirm the BTA’s decision if it was “reasonable and
lawful.” Columbus City School Dist. Bd. of Edn. v. Zaino, 90 Ohio St.3d 496, 497,
739 N.E.2d 783 (2001). In making this determination, we must consider legal
issues 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. But we defer to the
BTA’s findings concerning the weight of the evidence so long as they are supported
by the record. Olmsted Falls Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 122
Ohio St.3d 134, 2009-Ohio-2461, 909 N.E.2d 597, ¶ 27.
                                    B. Analysis
       {¶ 15} The tax commissioner raises a single proposition of law with two
subparts, each containing several arguments. As mentioned previously, two of
these arguments have been waived. As to the remaining arguments, the tax
commissioner fails to demonstrate reversible error on appeal. Therefore, we affirm
the BTA’s decision.
1. Issue presented: Whether the tax exemption under R.C. 5709.87 is limited
to land and real-property improvements that were the subject of a voluntary
                    cleanup action under R.C. Chapter 3746
       {¶ 16} The tax commissioner first argues that the plain meaning of the
relevant statutes limits the scope of the tax exemption and thereby defeats Kinnear’s
exemption claim. The tax commissioner also argues, in the alternative, that any




                                         5
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doubts about the applicability of the tax exemption should be strictly construed
against the exemption claim. The tax commissioner raises several arguments in
conjunction with each claim. We address the arguments out of order for ease of
discussion.
a. Should the tax exemption under R.C. 5709.87 be construed strictly against the
                                     taxpayer?
       {¶ 17} The tax commissioner argues that the statutory language of R.C.
5709.87 should be resolved strictly against Kinnear’s exemption claim. The tax
commissioner states that because the onus is on the taxpayer to establish the
exemption, this court is required to resolve any doubt concerning the law and the
facts by narrowly construing R.C. 5709.87 against the claim of exemption. And
according to the commissioner, doubt is created by R.C. 5709.88, the very next
statute in the Revised Code chapter, which the commissioner claims applies to
Kinnear’s exemption claim. The tax commissioner’s theory is that Kinnear cannot
obtain a tax exemption for its apartment buildings under R.C. 5709.87, because the
General Assembly separately enacted R.C. 5709.88 to apply to newly constructed
real-property improvements. This argument fails for the following reasons.
       {¶ 18} First, the tax commissioner points to no language in R.C. 5709.88 to
support his claim and cites no other relevant legal authority. This alone suffices to
invalidate the argument. See Navistar, Inc. v. Testa, 143 Ohio St.3d 460, 2015-
Ohio-3283, 39 N.E.3d 509, ¶ 39.
       {¶ 19} Second, the plain language of former R.C. 5709.87(C)(1)(a) does not
support the tax commissioner. The former version of this statute stated:


               Upon receipt by the tax commissioner of a certification for
       property under division (B) of this section, the commissioner shall
       issue an order granting an exemption from real property taxation of
       the increase in the assessed value of land constituting property that




                                         6
                                 January Term, 2017




        is described in the certification, and of the increase in the assessed
        value of improvements, buildings, fixtures, and structures situated
        on that land at the time the order is issued as indicated on the current
        tax lists.


(Emphasis added.) 151 Ohio Laws, Part V, 8511.
        {¶ 20} This provision separates the components of real property that qualify
for the tax exemption into two distinct categories: one for “land constituting
property” and a second for “improvements, buildings, fixtures, and structures.”
Under the first category, a property owner would be entitled to an exemption based
on the increase in the assessed value of “land constituting property that is described
in the [EPA’s] certification.” Under the second category, the property owner can
also exempt “improvements, buildings, fixtures, and structures” from taxation, the
only criteria being that the improvement be “situated on that land [described in the
EPA certification] at the time the order is issued as indicated on the current tax list.”
Nothing in R.C. 5709.87, however, can be read to exclude improvements from
exemption merely because they did not exist during remediation.
        {¶ 21} R.C. 5709.87 is unambiguous and must be applied as written, and
there is no need to construe the language strictly against Kinnear’s exemption
claim. Newfield Publications, Inc. v. Tracy, 87 Ohio St.3d 150, 153, 718 N.E.2d
420 (1999) (“We read exemption statutes strictly, * * * but we will not require more
qualifications for an exemption than the General Assembly does”). In the end, the
plain language of R.C. 5709.87(C)(1)(a) supports the BTA’s decision here.
Therefore, we reject the tax commissioner’s argument that the exemption should
be strictly construed against Kinnear.




                                           7
                             SUPREME COURT OF OHIO




 b. Did the BTA err in finding that the apartment buildings increased in assessed
                                       value?
       {¶ 22} The tax commissioner also argues that the BTA’s determination
“violate[s] the plain meaning of the phrase ‘increase in the assessed value of
improvements’ ” as set forth in R.C. 5709.87(C)(1)(a). According to the tax
commissioner, the apartment buildings did not undergo any “increase” in “assessed
value” before the 2013 tax year, because the buildings came into existence only
after January 1, 2012. As the tax commissioner sees it, there could be no “increase
in the assessed value” of the apartment buildings under a proper reading of that
phrase, because the buildings were nonexistent and thus had no value to assess on
January 1, 2012 (the prior year’s tax-lien date).
       {¶ 23} Under R.C. 5709.87(C)(1)(a), the amount of the tax exemption is
determined by “the increase in the assessed value of land constituting property” and
“the increase in the assessed value of improvements, buildings, fixtures, and
structures.” In this case, the BTA calculated the exemption for improvements by
comparing the assessed value of the improvements as of January 1, 2012 (referred
to as the base value) and the value of the improvements on March 25, 2013―the
date of the tax commissioner’s order―as required by R.C. 5709.87(C)(1)(a).
       {¶ 24} As to the tax commissioner’s claim that the apartment buildings had
no assessed value on January 1, 2012, this is not an accurate statement. The tax
commissioner overlooks the fact that his counsel stipulated that the Franklin
County auditor had certified that the assessed value for “[i]mprovements” on the
January 1, 2012 tax-lien date was zero dollars. And as Kinnear aptly notes, zero is
a numeric value that can increase. To be sure, counsel could have stipulated that
there was no assessed value for improvements in 2012 or even that there were no
improvements to be valued in 2012. But because counsel stipulated to a “$0” value,
the tax commissioner is now precluded from arguing that the apartment buildings
has no assessed value for the 2012 tax year.




                                          8
                               January Term, 2017




   c. Does Columbus City School Dist. Bd. of Edn. v. Wilkins support the tax
                                 commissioner?
       {¶ 25} The tax commissioner argues that the BTA’s decision to grant the
exemption for the newly constructed apartments is contrary to Columbus City
School Dist. Bd. of Edn. v. Wilkins, 101 Ohio St.3d 112, 2004-Ohio-296, 802
N.E.2d 637. The tax commissioner maintains that Columbus City School Dist. held
that only real-property improvements already in existence during the environmental
cleanup qualify for the tax exemption under R.C. 5709.87. Because Kinnear’s
apartment buildings were constructed after remediation took place, the tax
commissioner asserts that Columbus City School Dist. dictates that the apartments
are not entitled to exemption under R.C. 5709.87(C). We find that this argument
has no merit.
       {¶ 26} First, Columbus City School Dist. is not controlling, because the
issue we confront here was not presented in that case. The issue in Columbus City
School Dist. was whether the requested exemption applied to the increase in value
of both the remediated land and the nonremedial improvements to property that
included an already existing hotel. But the specific question raised here―whether
buildings that were newly constructed after remediation qualify for the exemption
under R.C. 5709.87―was not raised in Columbus City School Dist.
       {¶ 27} Second, the reasoning of Columbus City School Dist. favors
Kinnear. In that case, both the tax commissioner and the BTA had found that the
exemption under R.C. 5709.87 included the increase in value of the property
stemming from both the environmental remediation and the nonremedial
improvements. Columbus City School Dist., 101 Ohio St.3d 112, 2004-Ohio-296,
802 N.E.2d 637, at ¶ 9-11. On appeal, the board of education argued that the tax
exemption in R.C. 5709.87 applied only to increases in value tied directly to the
environmental remediation. Id. at ¶ 23, 3-6. The tax commissioner overlooks this
court’s express rejection of that argument. We held that the exemption under R.C.




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5709.87 is not limited solely to property that was subject to environmental
remediation: “There is no language in R.C. 5709.87 that would limit the exemption
to the increase in value of the specific item of property that was subject to
environmental remediation.” Id. at ¶ 34.
       {¶ 28} Finally, the tax commissioner maintains that Columbus City School
Dist. expressly refutes the BTA’s holding that R.C. 5709.87 allows a taxpayer to
exempt newly constructed improvements to land as long as they are situated on the
land at the time of the tax commissioner’s exemption order. The tax commissioner
cites Columbus City School Dist. at ¶ 34, in which the court held that “R.C. 5709.87
would not exempt the assessed value of improvements, buildings, fixtures, or
structures added after January first of the current tax year.” This paragraph does
not help the tax commissioner in this case, because Kinnear’s apartments were
added before January 1 of the current tax year.
d. Does the definition of “property” in R.C. 3746.01(M) limit the scope of the tax
                         exemption under R.C. 5709.87?
       {¶ 29} The tax commissioner also argues that Kinnear’s apartment
buildings cannot qualify for the exemption under R.C. 5709.87, because they do
not meet the definition of “property” in R.C. 3746.01(M).
(1) The tax commissioner has waived his argument on the definition of “property”
       {¶ 30} As Kinnear argues, this issue has been waived because the tax
commissioner did not make this argument to the BTA. The Chapel v. Testa, 129
Ohio St.3d 21, 2011-Ohio-545, 950 N.E.2d 142, ¶ 26-27; Oak View Properties,
L.L.C. v. Franklin Cty. Bd. of Revision, 146 Ohio St.3d 478, 2016-Ohio-786, 58
N.E.3d 1133, ¶ 9.




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                                January Term, 2017




  (2) The tax commissioner’s arguments that waiver does not apply are not well
                                        taken
       {¶ 31} On reply, the tax commissioner disputes that he waived his property-
definition argument.        After review, we find that the commissioner’s
counterarguments are not persuasive.
       {¶ 32} First, the tax commissioner does not claim that he raised this
argument before the BTA. Instead, the tax commissioner asserts that he was not
required to present the issue to the BTA, because this court’s case law “directly
refute[s]” Kinnear’s waiver claim. The commissioner cites Toledo Business &
Professional Women’s Retirement Living, Inc. v. Bd. of Tax Appeals, 27 Ohio St.2d
255, 272 N.E.2d 359 (1971), for the proposition that the “specific statutory
exemption criteria imposed by the General Assembly cannot be ‘waived’ by the
Tax Commissioner or by this Court.” The tax commissioner’s reliance on this case
is unavailing. We held in Toledo Business that the General Assembly has the
exclusive power to decide what property is exempt from taxation and to establish
the criteria for exemption. Id. at paragraph one of the syllabus. But we did not
even imply, let alone hold, that the tax commissioner can never waive a particular
reason for denying an exemption by failing to raise it in his final determination or
before the BTA.
       {¶ 33} Second, in a related argument, the tax commissioner claims that
“ ‘ignorance of the law’ is no excuse, [and] Kinnear is charged with knowledge of
the express requirements of statutory exemptions enacted by the General Assembly,
regardless of whether or not the Commissioner expressly advises Kinnear of those
criteria in his briefing or otherwise.” As the tax commissioner sees it, this principle
means that waiver does not apply, because Kinnear cannot claim to have relied to
its detriment on the commissioner’s failure to notify Kinnear that it had to establish
its apartment buildings as qualifying property under R.C. 3746.01(M) and 5709.87.
We disagree.




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                              SUPREME COURT OF OHIO




         {¶ 34} While “taxpayers are charged with a knowledge of the law, they are
not charged with knowledge of what theory of liability the tax commissioner is
relying upon, apart from being informed of that theory by the commissioner
himself.” Krehnbrink v. Testa, 148 Ohio St.3d 129, 2016-Ohio-3391, 69 N.E.3d
656, at ¶ 24. As a result of his omission, the tax commissioner, not Kinnear, is
bound by waiver. The Chapel, 129 Ohio St.3d 21, 2011-Ohio-545, 950 N.E.2d 142,
¶ 28.
         {¶ 35} Finally, the tax commissioner points out that his brief was not filed
until after the BTA hearing, and he claims that it was Kinnear’s responsibility to
develop the factual record at the BTA to refute the tax commissioner’s final
determination.     But the issue raised by the commissioner here―whether the
statutory definition of “property” limits the scope of the exemption under R.C.
5709.87―is a question of law, not fact. So Kinnear’s alleged failure to develop a
factual record on this issue is immaterial.
         {¶ 36} In sum, by failing to mention this issue at the BTA, the tax
commissioner failed to put Kinnear on notice of his reliance on this basis for
denying the exemption and thereby waived the argument. The Chapel at ¶ 27-28.
Therefore, we disregard this argument as a basis for granting relief to the tax
commissioner on appeal.
    e. Does R.C. 5709.87(C)(1)(a) exempt only the “improvements, buildings,
        fixtures, and structures” that are described in the EPA’s certification?
         {¶ 37} The tax commissioner argues that to be exempt from taxation under
R.C. 5709.87(C)(1)(a), the property must be described in the EPA’s certification of
the covenant not to sue. See R.C. 5709.87(B) (requiring the EPA director to certify
to the tax commissioner the covenant not to sue, which certification shall include a
description of the property). The tax commissioner also waived this argument when
he failed to raise the issue before the BTA. Therefore, the commissioner cannot




                                          12
                              January Term, 2017




possibly show error in the BTA’s decision. See The Chapel at ¶ 26-27; Oak View
Properties, 146 Ohio St.3d 478, 2016-Ohio-786, 58 N.E.3d 1133, at ¶ 9.
                               IV. CONCLUSION
       {¶ 38} For the foregoing reasons, we reject the tax commissioner’s
contentions on appeal and affirm the decision of the BTA.
                                                             Decision affirmed.
       O’CONNOR, C.J., and O’DONNELL, KENNEDY, FRENCH, O’NEILL, FISCHER,
and DEWINE, JJ., concur.
                              _________________
       Dinsmore & Shohl, L.L.P., Brian C. Close, and Alan H. Abes, for appellee.
       Michael DeWine, Attorney General, and Sophia Hussain and Barton A.
Hubbard, Assistant Attorneys General, for appellant.
                              _________________




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