[Cite as Licking Hts. Local Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 2019-Ohio-5082.]

                              IN THE COURT OF APPEALS OF OHIO

                                   TENTH APPELLATE DISTRICT


Licking Heights Local Schools                        :
Board of Education,
                                                     :
                 Appellant-Appellant,                                  No. 18AP-345
                                                     :              (BTA No. 2016-2685)
v.
                                                     :         (REGULAR CALENDAR)
Franklin County Board of Revision et al.,
                                                     :
                 Appellees-Appellees.
                                                     :




                                          D E C I S I O N

                                   Rendered on December 10, 2019


                 On brief: Rich & Gillis Law Group LLC, Mark H. Gillis, and
                 Kelley A. Gorry, for appellant. Argued: Kelley A. Gorry.

                 On brief: Vorys Sater Seymour and Pease LLP, Nicholas
                 M.J. Ray, Lauren M. Johnson, and Mitchell A. Tobias, for
                 appellee Jefferson Chase OH Partners, LLC. Argued:
                 Lauren M. Johnson.

                           APPEAL from the Ohio Board of Tax Appeals

BROWN, J.
        {¶ 1} Licking Heights Local Schools, Board of Education ("BOE"), appellant,
appeals from a decision and order of the Ohio Board of Tax Appeals ("BTA"), in which the
BTA established the true value and taxable value of real property owned by Jefferson
Chase OH Partners, LLC ("Jefferson Chase"), appellee.
        {¶ 2} The present case concerns a 240-unit apartment complex. The property was
sold in October 2014 as part of a transaction involving several other properties. Jefferson
Chase is the current owner of the property. Prior to Jefferson Chase's ownership, the
No. 18AP-345                                                                            2

property was in bankruptcy receivership. As pertinent here, the Franklin County Auditor
valued the property at $13,253,000, as of the tax lien date January 1, 2015. Jefferson
Chase filed a complaint against valuation regarding the tax year 2015 valuation requesting
a decrease in value to $10,800,000. The BOE filed a counter complaint in favor of the
valuation.
       {¶ 3} A hearing was held before the Franklin County Board of Revision ("BOR").
At the hearing, Jefferson Chase presented evidence in favor of a valuation of $13,014,300
as of the tax lien date. Jefferson Chase also asserted the October 2014 sale was not an
accurate valuation of the property because it was a forced sale, and the BTA had already
found such in unrelated cases involving the other properties. The BOE presented two
appraisals prepared in connection with the October 2014 sale for values of $15,275,000
(the Cushman & Wakefield "C&W" appraisal) and $14,900,000 (the Butler Burgher
Group "BBG" appraisal), as well as the appraisal of Thomas D. Sprout in the amount of
$17,429,000, as of the tax lien date. On December 2, 2016, the BOR issued a decision in
which it found the October 2014 sale of the property, as previously accepted by the BOR
for tax year 2014 was the best evidence of value and found no change in value was
warranted for tax year 2015, thereby retaining the auditor's valuation of $13,253,000. The
BOE appealed.
       {¶ 4} A hearing was held before the BTA. The BOE presented the testimony of
Sprout, who revised his valuation downward to $16,040,000, as of the tax lien date.
Jefferson Chase submitted the appraisal of Melissa Dean Speert, who valued the property
at $11,120,000 as of the tax lien date.
       {¶ 5} On April 17, 2018, the BTA issued a decision and order. The BTA initially
noted that both parties acknowledged the sale of the property in October 2014 was not
reliable as to value, as it was conducted by a receiver and, therefore, a forced sale. The
BTA found Speert's analysis more probative of value on the tax lien date. Therefore, based
on Speert's appraisal, the BTA found the true value of the property as of January 1, 2015
was $11,120,000. The BOE appeals the judgment of the trial court, asserting the following
assignments of error:
              [I.] The BTA abused its discretion in determining that the
              Board of Education's appraiser Mr. Sprout appraised the
              Subject Property as renovated by post-lien date cosmetic
No. 18AP-345                                                                  3

           renovations when the entire record is devoid of any evidence
           whatsoever to support such finding.

           [II.] The BTA abused its discretion in determining that Mr.
           Sprout appraised the Subject Property as renovated by post-
           lien date cosmetic renovations when the record unequivocally
           confirms that Mr. Sprout considered only fire damage
           repaired by the former owner in 2013 approximately one year
           prior to the lien date.

           [III.] The BTA abused its discretion in citing to one sentence
           in the Sprout Appraisal in isolation when the entire appraisal
           and Mr. Sprout's testimony at the hearing confirm that Mr.
           Sprout did not consider the post-lien date cosmetic
           renovations in valuing the Subject Property as of the lien date.

           [IV.] The BTA erred in failing to consider the two financing
           appraisals and Mr. Sprout's testimony thereof pursuant to AP
           Hotels of Illinois, Inc. v. Franklin Cty. Bd. of Revision, 118
           Ohio St.3d 343, 2008-Ohio-2565, 889 N.E.2d 115, and Plain
           Local Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision,
           130 Ohio St.3d 230, 2011-Ohio-3362, 957 N.E.2d 268.

           [V.] The BTA erred in failing to consider the two financing
           appraisals that directly and irrefutably rebutted the owner's
           appraiser's assertions about the Subject Property having any
           alleged deferred maintenance as of the lien date.

           [VI.] The BTA abused its discretion in failing to consider the
           two financing appraisals and Mr. Sprout's testimony thereof
           as additional objective support for the reasonableness of his
           value conclusions as of the lien date.

           [VII.] The BTA abused its discretion in accepting an appraisal
           valuing the Subject Property at $11,120,000 when the four (4)
           other appraisals in the record before it valued the Subject
           Property at $14,900,000, $15,275,000, $16,040,000 and
           $17,429,000.

           [VIII.] The BTA abused its discretion in adopting an appraisal
           for the Subject Property with a proforma net operating
           income that was approximately thirty percent (30%) less than
           the Subject Property's actual net operating income.

           [IX.] The BTA abused its discretion in adopting an appraisal
           for the Subject Property with a market vacancy and collection
No. 18AP-345                                                                              4

              loss higher than the Subject Property has ever experienced
              and unsupported by any market data in the record.

              [X.] The BTA unreasonably and unlawfully determined that
              the Subject Property's true value could be anything less than
              the current owner's purchase price of $13,253,000 in a
              distressed sale a mere fifty-five (55) days prior to the tax lien
              date.

              [XI.] The BTA erred in failing to adequately review the entire
              record replete with valuation evidence and determining a true
              value for the Subject Property nearly twenty percent (20%)
              lower than the recent distressed sale price and in excess of
              thirty percent (30%) lower than the lowest of the other four
              (4) appraisals valuing the Subject Property.

       {¶ 6} Instead of addressing its assignments of error separately, the BOE
addresses them in groups according to common propositions of law. We will address
them in the same manner. Initially, we note that, pursuant to R.C. 5717.04, an appellate
court reviews a BTA decision to determine whether it is " 'reasonable and lawful.' " Dublin
City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 10th Dist. No. 17AP-692, 2018-
Ohio-4621,¶ 18, quoting NWD 300 Spring, L.L.C. v. Franklin Cty. Bd. of Revision, 151
Ohio St.3d 193, 2017-Ohio-7579, ¶ 13. " '[I]f it is both, we must affirm.' " Id.
       {¶ 7} Appellate review of BTA decisions "is guided by the premise that '[t]he fair
market value of property for tax purposes is a question of fact, the determination of which
is primarily within the province of the taxing authorities.' " NWD 300 at ¶ 13, quoting
EOP-BP Tower, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 106 Ohio St.3d 1, 2005-Ohio-
3096, ¶ 17. The BTA's factual findings are entitled to deference as long as they are
supported by reliable and probative evidence in the record. Bd. of Edn. of the Westerville
City Schools v. Franklin Cty Bd. of Revision, 146 Ohio St.3d 412, 2016-Ohio-1506, ¶ 26.
       {¶ 8} Furthermore, "[t]he standard for reviewing the BTA's determination of the
credibility of witnesses and the weight to be given their testimony is abuse of discretion."
NWD 300 at ¶ 14. "Abuse of discretion connotes an unreasonable, arbitrary, or
unconscionable attitude." Renacci v. Testa, Tax Commr., 148 Ohio St.3d 470, 2016-Ohio-
3394, ¶ 32.
       {¶ 9} "The best method of determining value, when such information is available,
is an actual sale of such property between one who is willing to sell but not compelled to
No. 18AP-345                                                                               5

do so and one who is willing to buy but not compelled to do so." State ex rel. Park Invest.
Co. v. Bd. of Tax Appeals, 175 Ohio St. 410, 412 (1964). Although, in the present case, the
property was sold in October 2014, only a few months before the tax lien date of
January 1, 2015, the sale of the property was conducted by a receiver and, thus, a forced
sale under R.C. 5713.03. In the absence of a recent arm's-length sale, "an appraisal
becomes necessary." Schutz v. Cuyahoga Cty. Bd. of Revision, 153 Ohio St.3d 23, 2018-
Ohio-1588, ¶ 11.
       {¶ 10} Here, the BOE relied on appraisal evidence from Sprout, and Jefferson
Chase relied on appraisal evidence from Speert. With regard to its first, second, and third
assignments of error, the BOE argues the BTA's determination that Sprout appraised the
subject property by taking into account post-tax lien date cosmetic renovations is not
supported by any evidence or testimony in the record. The BOE claims the sole reason the
BTA rejected Sprout's appraisal was that it believed Sprout valued the property as if the
post-tax lien date cosmetic renovations were complete as of the tax lien date. With regard
to the evidence in the record, the BOE points out portions of Sprout's appraisal recognized
that post-tax lien date improvements had occurred, and he took those into consideration
in arriving at his appraisal. The BOE contends that, although Sprout assumed the roofs
and mechanicals were in good repair as of the tax lien date, and the general condition of
the property at the time of the viewing was reasonably similar to that as of the tax lien
date, Sprout qualified such by acknowledging that, during his property visit, management
informed him that the property had undergone interior and exterior renovations
subsequent to its purchase in October 2014. The BOE also points out Sprout
acknowledged a renovation had occurred post-tax lien date and specified that he was only
relying on the interior finishes in place as of the tax lien date. The BOE further points out
that Sprout noted many of the appliances in the units were replaced post-tax lien date, so
he valued the furniture, fixtures, and equipment ("FF&E") as mostly depreciated. The
BOE contends that Sprout specifically estimated the market rent for each unit based on
the physical condition of the property as of the tax lien date.
       {¶ 11} With regard to the testimony in the record, the BOE argues Sprout's
testimony does not support the BTA's determination that he appraised the subject
property as renovated by post-tax lien date cosmetic renovations. The BOE asserts his
No. 18AP-345                                                                             6

testimony undoubtedly refers to the repair of previous fire damage as the only repairs or
renovations Sprout considered. The BOE points out Sprout specifically acknowledged the
property had been renovated after Jefferson Chase took over the property, as units came
up for turnovers, and the condition of the renovated units on the date of his inspection
were better than they were as of the tax lien date. The BOE also contends Sprout testified
that, after reviewing the two mortgage reports that were completed just prior to the tax
lien date, he saw there were 16 or 17 units that were damaged by fire that were going to be
refurbished and completed by January 1, 2014. The BOE maintains the BTA incorrectly
stated that Sprout believed the two financial appraisals indicated all of the general
cosmetic renovations would be completed prior to the tax lien date, when it was clear
from the testimony that Sprout only believed the renovations relating to the fire damaged
units would be completed prior to the tax lien date.
       {¶ 12} In its decision, the BTA summarized Sprout's appraisal using the income
approach to valuation as follows:
              Mr. Sprout estimated the gross potential income of the subject
              property by looking to four rent comparables near the subject;
              he determined a market rent of $650 for the 48 1-bedroom/1-
              bath units, $750 for the 100 2-bedroom/1.5 bath units, $950
              for the 44 3-bedroom/2 bath units, and $1,025 for the 48 3-
              bedroom/2.5 bath townhome units. He additionally added
              $50/month income for the 94 garages at the property to
              conclude to a gross potential rent of $2,422,800. From this,
              he deducted 6% for vacancy and collection loss, added
              $450/unit for water reimbursement and $600/unit for other
              income, to conclude to a net effective gross income of
              $2,529,432. He estimated expenses at $4,207 per unit,
              including a $300/unit reserve for replacement, to conclude to
              a net operating income ("NOI") of $1,519,855. He then
              capitalized the NOI at 9.44%, including tax additur, to
              determine a value of $16,100,000 as of tax lien date. After
              deducting $60,000, or $250/unit, for personal property, he
              arrived at a final value conclusion of $16,040,000 for the
              subject real property.

       {¶ 13} In its analysis of Sprout's appraisal, the BTA found the following:
              It is [the appraisers'] differing premises about the condition of
              the property on tax lien date that is at the center of the
              appraisers' differing opinions of value. Mr. Sprout's analysis
              was premised on renovations already being made at the
No. 18AP-345                                                                             7

             property as of tax lien date, allowing the property to garner
             higher rental rates, as indicated in his appraisal report: "It is
             assumed the roofs and mechanical systems were in good
             repair as of the tax lien date. It is also assumed the general
             condition of the property at the time of viewing [i.e., May 5,
             2017] was reasonably similar to that as of the tax lien date."
             * * * During his testimony, Mr. Sprout indicated that the two
             financing appraisals submitted to the BOR indicated that
             renovations on the property would be completed prior to tax
             lien date.

      {¶ 14} The BTA then concluded the following:
             Upon review of the record, we find Ms. Speert's analysis more
             probative based on her assumptions about the condition of
             the property on tax lien date. While we find no error in Mr.
             Sprout's analysis per se, his opinion of value is based on the
             assumption that renovations were in progress or complete on
             tax lien date.

      {¶ 15} Upon review, we cannot determine whether the BTA's factual finding
regarding "renovations" is supported by reliable and probative evidence in the record. By
"renovations" the BTA may have meant all general updates to the rooms, buildings, and
grounds, or it may have meant repairs to the fire damaged units, since the BTA referenced
Sprout's testimony regarding the two financial appraisals, which assumed the fire
damaged apartments were going to be completed by December 2013.
      {¶ 16} Sprout's appraisal and testimony distinguished between the general
"renovations" completed after the tax lien date and the repairs to the fire damaged units
completed before the tax lien date. With regard to the May 5, 2017 appraisal, Sprout
stated that he "assumed the roofs and mechanical systems were in good repair as of the
tax lien date," and "assumed the general condition of the property at the time of viewing
was reasonably similar to that as of the tax lien date." He then qualified these statements
in the next sentence, stating that "it was brought to our attention by management during
our May 5, 2017 property visit that the property had undergone interior and exterior
renovations subsequent to its purchase (October 2014)." Likewise, later in the appraisal,
Sprout stated, "[p]lease note many of the interior improvements within the units (as well
as the exterior of the property) have been renovated subsequent to the tax lien date." He
also acknowledged in the appraisal that "at the time of the viewing, a significant amount
No. 18AP-345                                                                                8

of renovations had occurred that were not in place as of the tax lien date." With regard to
the interior finishes, Sprout noted that his description was "as of the tax lien date." In his
summary, he acknowledged again that "most of [the] units have had their appliance
packages replaced subsequent to the tax lien date."
       {¶ 17} Furthermore, Sprout testified that "[d]uring the course of my viewing, a lot
of the improvements had gone through renovation. It's my understanding * * * that was
completed subsequent to them taking over the property." He then stated that
management indicated to him on the date of his inspection that there was "remodeling
that was done to the units" and "the project was continuing to be remodeled." He also
recognized that one of the units he viewed during the inspection had been renovated and
those renovated units would have been "better than what they were." Sprout reiterated
what he had indicated in his appraisal regarding the appliances that were replaced after
the tax lien date: "Considering that, I believe, a lot of the appliances in the project were
replaced subsequent to the tax lien date, I provided a minimal amount of $250 per unit
for 240 units or $60,000." Therefore, Sprout's testimony and appraisal make clear that he
recognized the general renovations were undertaken after the tax lien date, and he never
indicated they were complete as of the tax lien date.
       {¶ 18} Sprout's testimony regarding the fire damage was the following:
              It was also after reviewing the two mortgage reports
              that there were 16 or 17 units that were damaged by
              fire that were going to be refurbished and brought
              back into the fold for market. Both reports which -- the
              property inspections were done prior to 2015. Since those
              appraisers saw the property as it was prior to the tax lien date
              -- just prior to the tax lien date -- both indicated that those
              repairs were going to be completed prior to 1/1/1[4]. So all
              240 units were available and in service based on those two
              appraisals.

(Emphasis added.) Sprout's later testimony on the subject of the repair of the fire
damaged apartments was as follows:
              I'm going to start with the BBG appraisal * * *.

              They indicated in their report that the -- there was 16 down
              units, and they believed they were going to be ready for
              occupancy as of December 20, 2013. I think I said 2014 in my
              previous testimony. It's 2013.
No. 18AP-345                                                                              9

       {¶ 19} In light of Sprout's testimony and appraisal, if by "renovations" the BTA
meant renovation of the fire damaged properties, then this would not be a valid reason to
reject Sprout's report, because the fire damaged properties were, in fact, complete by the
tax lien date, according to the record. In the end analysis, we are not certain what the BTA
meant by "renovations." Therefore, we find the BTA's analysis was unclear, and we cannot
determine whether it was reasonable and supported by reliable evidence. However, we
note that, perhaps, the relevant issue is whether Sprout's opinion should have been given
any weight whatsoever, given his assumptions were based on the two financing appraisals
the BTA rejected. Regardless, the BTA cited three general reasons for rejecting Sprout's
appraisal, and we are unable to determine whether one of those reasons is supported by
reliable, probative evidence due to the BTA's ambiguous use of "renovation." Based on the
uncertainty outlined above, and on the unique facts of this case, we must sustain the
BOE's first, second, and third assignments of error. After review upon remand, the BTA
may still find Speert's appraisal to be more probative and the proper evidence upon which
to rely, but the ambiguity in the current judgment renders the judgment unreasonable
and unlawful. See Dublin City Schools Bd. of Edn. at ¶ 18 (an appellate court reviews a
BTA decision to determine whether it is reasonable and lawful).
       {¶ 20} Given our treatment of the BOE's first, second, and third assignments of
error and our need to remand the matter for reconsideration, we find the BOE's fourth,
fifth, sixth, seventh, eighth, nine, tenth, and eleventh assignments of error are moot, and
we decline to address them.
       {¶ 21} Accordingly, we sustain the BOE's first, second, and third assignments of
error and render the BOE's fourth, fifth, sixth, seventh, eighth, nine, tenth, and eleventh
assignments of error moot. We reverse the Ohio Board of Tax Appeals' decision and order
with regard to the matters addressed in the first, second, and third assignments of error,
and remand the matter to the BTA for further proceedings and clarification as it deems
necessary, at its sole discretion.
                                                                           Order reversed;
                                                                          cause remanded.

                            SADLER and BRUNNER, JJ., concur.

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