[Cite as Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd. of Revision, 125 Ohio St.3d
103, 2010-Ohio-1040.]




      OLENTANGY LOCAL SCHOOLS BOARD OF EDUCATION, APPELLEE, v .
          DELAWARE COUNTY BOARD OF REVISION ET AL., APPELLEES;
              KNICKERBOCKER PROPERTIES, INC. XLII, APPELLANT.
[Cite as Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd. of Revision,
                        125 Ohio St.3d 103, 2010-Ohio-1040.]
Taxation — R.C. 5713.03 — School board presented a prima facie case for using
        the sale price to determine value when it presented evidence of a sale that
        appeared on its face to be recent and at arm’s length — Property owner
        did not meet its burden to refute the recency or arm’s-length character of
        the sale.
 (No. 2009-0320 — Submitted February 24, 2010 — Decided March 24, 2010.)
             APPEAL from the Board of Tax Appeals, No. 2006-H-1361.
                                 __________________
        Per Curiam.
        {¶ 1} This is an appeal from a decision of the Board of Tax Appeals
(“BTA”) that found the value of real property.                Appellant, Knickerbocker
Properties, Inc. XLII (“Knickerbocker”), challenges the BTA’s determination that
the December 2003 sale price of $27,605,000 constituted the value of the property
for tax year 2005. Knickerbocker contends that the evidence shows a change in
market conditions between the time of the sale and the tax-lien date, January 1,
2005, and that the change made it improper to use the earlier sale price in valuing
the property. Knickerbocker also contends that the BTA should have adopted the
opinion of its appraiser, who valued all the property sold in December 2003 (both
real and personal property) at $24,600,000, then allocated $300,000 to the
personal property, and thereby determined that the value of the real property on
the lien date for 2005 was $24,300,000.
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        {¶ 2} Because          the    BTA      adequately      addressed      Knickerbocker’s
contention that market conditions had changed, we defer to the BTA’s finding
that no change had been shown. We also reject Knickerbocker’s contention that
the BTA erred by not reducing the sale price by the amount allocated to personal
property that was sold along with the real property. We therefore affirm the
decision of the BTA.
                                              Facts
        {¶ 3} On December 29, 2003, Sentinel Acquisitions Corporation
purchased a 25-acre parcel plus an adjacent 1.726-acre “easement parcel” on
Lazelle Road in the city of Columbus for a consideration of $27,605,000, and
subsequently transferred the property to Knickerbocker.1                      The property is
improved with a garden-apartment complex of 308,944 square feet. The 300
apartment units consist of eight different types located within two-story
structures.
        {¶ 4} The auditor assigned to the parcels a combined value of
$27,058,900 for tax year 2005. Knickerbocker filed a complaint that sought to
reduce the valuation to $19,000,000.2 In response, the Olentangy Local Schools
Board of Education (“school board”) filed a countercomplaint seeking to retain
the auditor’s valuation. The Delaware County Board of Revision (“BOR”) held a


1. Sentinel Acquisitions Corporation, the entity that purchased the property, was an affiliate of
Sentinel Real Estate Corporation, which arranged for the purchase. After Sentinel Acquisitions
purchased the property, it transferred it to Knickerbocker, which is an entity associated with a
New York pension fund. Subsequently, Sentinel Real Estate Corporation served as property
manager on behalf of Knickerbocker as owner.

2. The Olentangy Local Schools Board of Education had previously filed a valuation complaint
for tax year 2003, asserting that the December 2003 sale established that the value of the property
on January 1, 2003, was $27,605,000. That case ultimately reached this court, which held that the
board of revision had failed to give proper notice of its hearing to Knickerbocker. Knickerbocker
Properties, Inc. XLII v. Delaware Cty. Bd. of Revision, 119 Ohio St.3d 233, 2008-Ohio-3192, 893
N.E.2d 457, ¶ 18. We remanded the cause so that a new hearing could be held at the board of
revision. Id. at ¶ 24.




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hearing on August 30, 2006, during which Knickerbocker presented the testimony
and appraisal report of Samuel Koon. Koon concluded that the real property
should be valued at $24,300,000. The school board appeared through counsel at
the BOR but presented no evidence and did not argue in favor of valuing the
property at the December 2003 sale price.                   The BOR adopted the value
determined by Knickerbocker’s appraiser.
        {¶ 5} The school board appealed to the BTA, initially seeking
reinstatement of the auditor’s valuation. At the BTA hearing, the school board
argued for the first time that the BOR should have adopted the December 2003
sale price as the value of the property, and it offered the conveyance-fee statement
as evidence of the sale.3 In rebuttal, Knickerbocker presented the testimony of its
appraiser, Koon, and the testimony of Anita Breslin of Sentinel Real Estate
Corporation, who was involved in the due diligence in connection with the 2003
purchase. The purpose of their testimony was not only to validate the appraisal,
but also to establish a change in circumstances between the December 2003 sale
and the tax-lien date, January 1, 2005. That change would justify rejecting the
school board’s argument that the sale price should be used to value the property.
        {¶ 6} Koon testified that both “nationally” and “in the Columbus
market,” a large number of tenants were “leaving apartment and rental
communities to buy houses” between December 2003 and January 2005, because
lenders were requiring very little down payment and relaxing the standards for
purchasers to qualify for mortgage loans. The result was “a significant downward

3. R.C. 5715.19(G) generally precludes a complainant from introducing evidence at the BTA that
it failed to introduce at the board of revision, if that evidence was previously available. In this
case, the school board was a countercomplainant at the board of revision and did not introduce any
evidence at that level. When the school board offered the conveyance-fee statement at the BTA,
Knickerbocker’s counsel explicitly stated that he did not object to that document’s being
introduced, because counsel regarded the statement as duplicative of information concerning the
sale that Knickerbocker had submitted to the BOR as part of its appraisal. Because there was no
objection to the conveyance-fee statement, the effect of R.C. 5715.19(G) is not at issue in this
appeal.




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impact on the occupancy rates of apartment communities.” Koon testified that the
performance of the property over 2004 and 2005 fell short of the projections that
Knickerbocker had made in a pro forma document that had been prepared in
connection with the 2003 purchase.
        {¶ 7} Koon’s appraisal report used the 2003 sale as one of the
“comparable sales” and stated that the anticipated potential to increase rents “did
not materialize due to the soft rental market.” The appraisal also asserted that
“[c]ompared to other transfers which occurred at that time, it appears the buyer
overpaid for the property, indicating a downward adjustment” for the 2005 tax-
lien date.
        {¶ 8} In his appraisal report, however, Koon made adjustments that are
not consistent with the theory of a declining market. With respect to two other
comparable properties that sold during 2003, the appraisal made an upward
adjustment to account for the time that had lapsed between the sales and the tax-
lien date. Conversely, two comparables that sold during 2005 – after the lien date
– were subjected to a downward adjustment.
        {¶ 9} In her testimony, Breslin confirmed the property’s poor rent
performance in 2004. She stated that 2004 was a “particularly difficult period”
because “interest rates were low and kept dropping for home mortgages,” with the
result that tenants were leaving units like those at issue. The losses were great
“particularly at this property, because they’re large units, three-bedroom units and
two-bedroom units,” thereby comparable to the residential living space of a
single-family home. The exodus adversely affected rental income for 2004. The
manager also testified that the appraisal’s effective-gross-income computation
exceeded the property’s actual experience for 2004 and 2005.
        {¶ 10} In its decision, the BTA first held that the school board had
established its prima facie case for valuing the property at $27,605,000 by
presenting evidence that the property had sold for that amount in December 2003,




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one year and two days before the tax-lien date. Olentangy Local Schools Bd. of
Edn. v. Delaware Cty. Bd. of Revision (Jan. 13, 2009), BTA No. 2006-H-1361,
2009 WL 110177, *2.         Next, the BTA considered whether Knickerbocker’s
evidence rebutted the presumptive recency of the 2003 sale. Id. at *3-4. The
board concluded that the owner had failed in its rebuttal for two main reasons:
the appraisal did not use “paired sales,” which might have demonstrated a change
in market conditions, and various statements in the appraisal report itself created
ambiguity as to whether market conditions had changed. Id. at *3-4. As for
testimony regarding declining occupancy rates on the property, the BTA observed
that the decline did not necessarily indicate a change in market conditions because
“other factors, such as management practices, may also impact a vacancy rate.”
Id. at *4. Finally, the BTA found that the testimony established that the rates
began dropping before the December 2003 purchase and therefore would have
been taken into account in arriving at the purchase price for the property. Id.
       {¶ 11} Accordingly, the BTA reversed the BOR and adopted the
December 2003 sale price as the value of the property for tax year 2005. Id.
Knickerbocker has appealed to this court.
                                      Analysis
Knickerbocker failed to rebut the prima facie recency of the December 2003 sale
       {¶ 12} R.C. 5713.03 states that the auditor “shall consider the sale price of
[any] tract, lot, or parcel to be the true value for taxation purposes” if the sale was
at arm’s length and occurred “within a reasonable length of time, either before or
after the tax lien date.” We have held that the “reasonableness of the length of
time – sometimes expressed as whether the sale was ‘recent’ relative to the tax
lien date – encompasses all factors that would, by changing with the passage of
time, affect the value of the property.” Cummins Property Servs., L.L.C. v.
Franklin Cty. Bd. of Revision, 117 Ohio St.3d 516, 2008-Ohio-1473, 885 N.E.2d
222, ¶ 35. One factor is “consideration of changes that have occurred in the



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market” between the date of sale and the tax-lien date.        Id., quoting New
Winchester Gardens, Ltd. v. Franklin Cty. Bd. of Revision (1997), 80 Ohio St.3d
36, 44, 684 N.E.2d 312.
       {¶ 13} In its first proposition of law, Knickerbocker contends that a sale
qualifies as “recent” under R.C. 5713.03 only when evidence in the record
“support[s] a finding that the market or conditions at the property have not
changed between the date of the sale and January 1 of the tax year at issue.” The
proposition reflects Knickerbocker’s position that as the appellant before the
BTA, the school board had the burden to “show that the market and value of the
property did not change between December of 2003 and January 1, 2005.”
Contrary to Knickerbocker’s position, the BTA held that the school board had
made a prima facie showing by presenting the conveyance-fee statement showing
the December 2003 sale price. Olentangy Local Schools, BTA No. 2006-H-1361,
2009 WL 110177, *2. As a result, the burden rested on Knickerbocker to refute
the recency or arm’s-length character of the sale.
       {¶ 14} We agree with the BTA’s disposition of this point. In Cummins,
we held that the “initial burden on a party presenting evidence of a sale is not a
heavy one, where the sale on its face appears to be recent and at arm’s length.”
Cummins, 117 Ohio St.3d 516, 2008-Ohio-1473, 885 N.E.2d 222, ¶ 41. Indeed,
we have repeatedly acknowledged that a school board presents a prima facie case
for using a sale price to determine value when it presents evidence of a sale that
appears on its face to be recent and at arm’s length. Worthington City Schools Bd.
of Edn. v. Franklin Cty. Bd. of Revision, 124 Ohio St.3d 27, 2009-Ohio-5932, 918
N.E.2d 972, ¶ 28; Columbus Bd. of Edn. v. Franklin Cty. Bd. of Revision (1996),
76 Ohio St.3d 13, 16, 665 N.E.2d 1098.
       {¶ 15} Therefore, the question before us is whether the BTA acted
reasonably and lawfully when it held that Knickerbocker had failed to rebut the
prima facie recency of the sale price. The BTA is responsible for determining




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factual issues, and if the record contains reliable and probative support for the
BTA’s determinations, this court will affirm them. Satullo v. Wilkins, 111 Ohio
St.3d 399, 2006-Ohio-5856, 856 N.E.2d 954, ¶ 14. More specifically, we “ ‘will
not reverse the BTA’s determination on credibility of witnesses and weight given
to their testimony unless we find an abuse of * * * discretion.’ ” Strongsville Bd.
of Edn. v. Cuyahoga Cty. Bd. of Revision, 112 Ohio St.3d 309, 2007-Ohio-6, 859
N.E.2d 540, ¶ 15, quoting Natl. Church Residence v. Licking Cty. Bd. of Revision
(1995), 73 Ohio St.3d 397, 398, 653 N.E.2d 240.
         {¶ 16} In the present case, the evidence furnishes reliable and probative
support for the BTA’s conclusion. The record consists of the conveyance-fee
statement, the 2003 purchase agreement, the appraisal report, the testimony of
Koon before the BOR and then again before the BTA, the testimony of Sentinel
Real Estate Corporation’s employee Anita Breslin, and several additional
exhibits.4 Knickerbocker relies on particular statements that it elicited from Koon
and Breslin that show unusually high vacancy and low income for 2004, and
Knickerbocker contends that this evidence shows a change in market conditions
between the December 2003 sale and the 2005 tax-lien date. The BTA addressed
this argument and determined that in light of certain passages in the appraisal
report and the testimony of the witnesses, the evidence as a whole was at most
ambiguous on the issue of recency.
         {¶ 17} The evidence supports the BTA’s conclusion. The BTA points out
that a study of “paired sales,” i.e., a comparison of the sale prices of similar
properties that sold both in 2003 and 2005, might constitute probative
documentation of a change in value. Olentangy Local Schools, BTA No. 2006-H-


4. In its brief, the school board points out that it objected to the purchase agreement’s being made
an exhibit and argues that the exhibit should be disregarded. It is true that the school board
objected, but the BTA examiner overruled the objection and admitted the document. In light of
our disposition of the appeal in the school board’s favor, any alleged error in the BTA’s ruling was
harmless.




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1361, 2009 WL 110177, *3.4. Knickerbocker’s appraiser, Koon, agreed that such
a study would constitute an acceptable process for an appraiser to use to show a
change in the market and admitted that he had not performed such an analysis in
this case. Id. The BTA also pointed out that although Koon opined in his
appraisal report that “[l]ow interest rates and a continuation in single-family
housing development in the outer suburbs have placed increasing pressure on the
apartment market to maintain a viable population for tenants,” the appraiser did
conclude that “continued population growth in the Columbus area” provided a
“supplement to those apartment tenants displaced into the single-family-housing
market.” Id. at 3. This statement contradicts Knickerbocker’s current position
that a market depression for garden apartments afflicted Columbus as of January
1, 2005.
       {¶ 18} Koon’s appraisal report tends to contradict Knickerbocker’s
current theory of market change in one other respect. Had Koon concluded in
preparing the appraisal that the market had changed between December 2003 and
January 1, 2005, he would not have performed certain adjustments to his
comparable sales. Koon subjected comparable sales that occurred during 2003 to
an “adjustment upward for time” in order “to reflect the difference between the
sale date and the appraisal date,” while comparable sales that occurred during
2005 – i.e., after the tax-lien date – were subjected to an “adjustment downward
for time” in order “to reflect the difference between the sale date and the appraisal
date.” Both those adjustments are consistent with the view that properties like the
subject property have tended to increase in value with the passage of time.
Moreover, the upward adjustment for 2003 sales cannot be reconciled with the
current assertion of a general downward market trend between 2003 and 2005.
       {¶ 19} Finally, the BTA relied on Breslin’s testimony that mortgage-
interest rates were dropping during 2003 to conclude that “any alleged change in
the 2004 market was simply a continuation of the same conditions occurring in




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2003.” Olentangy Local Schools, BTA No. 2006-H-1361, 2009 WL 110177, *4.
At oral argument, Knickerbocker asserted that the BTA misunderstood the
testimony. The BTA assumed that Breslin was talking about the decline in
mortgage rates for single-family homes when, according to Knickerbocker,
Breslin was actually referring to mortgage rates paid by entities that purchased
apartment complexes in order to become landlords. Breslin believed that the
mortgage rates for purchasing apartment complexes continued to decline during
the general period but, as her other testimony unequivocally establishes, she
believed that the rates “kept dropping for home mortgages” during 2004 and
thereby generated (in her view) an abnormally high vacancy.
       {¶ 20} Ultimately, however, the alleged misunderstanding of the
testimony is immaterial. Even if the BTA made such a mistake, the record simply
does not document a change in mortgage rates that, together with other factors,
would suffice to rebut the presumptive recency of the December 2003 sale. This
circumstance makes any dispute about Breslin’s testimony moot.
The BTA had no legal duty to reduce the December 2003 sale price by an amount
                   attributable to the value of personal property
       {¶ 21} Knickerbocker advances an alternative argument: if the December
2003 sale price is used to value the property for tax year 2005, the price should be
reduced by the $300,000 allocable to personal property that constituted part of the
sale. We hold that the BTA did not have a legal duty to grant such a reduction for
two reasons: (1) the record does not clearly establish the propriety of such an
adjustment and (2) Knickerbocker, the party that had the burden of proving its
entitlement to the adjustment, failed to request it at the BTA.
       {¶ 22} When a board of revision’s decision is appealed to the BTA, the
BTA’s duty is to “determine the taxable value of the property whose valuation or
assessment by the county board of revision is complained of.” R.C. 5717.03(B).
In making that determination, the BTA must decide not only whether a proffered



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sale price satisfies the criteria of recency and arm’s-length character, but also
what amount of the stated sale price pertains to the realty. Thus, if the record
clearly establishes that a portion of a sale price pertains to personal property, the
BTA should subtract that portion from the stated sale price to arrive at the amount
of consideration paid for the realty. The latter figure will then constitute the true
value of the realty.
         {¶ 23} The present case does not fall within the rule just stated, because
the record does not unequivocally establish a basis for allocating a portion of the
sale price to the personal property that was transferred. The December 2003
purchase agreement does set forth a schedule of personal property that constituted
part of the sale (basically room furnishings and some office equipment), but the
agreement explicitly recites that no portion of the sale price was being paid for the
intangible or tangible personalty that was transferred along with the apartment
complex. Consistent with the contract itself, the conveyance-fee statement did
not allocate any portion of the sale price to personal property. And although
Knickerbocker’s appraiser characterized the personal property as “appliance
packages within each unit” and set the value of each package at $1,000, for a total
of $300,000 ($1,000 per unit for 300 units), the appraisal contains no underlying
analysis to validate that procedure.
         {¶ 24} We have held that when real property is the subject of a sale and
the sale involves an incidental transfer of tangible or intangible personal property,
the proponent of allocating a portion of the sale price to assets other than the
realty “bears an initial burden of showing the propriety of the allocation.” St.
Bernard Self-Storage, L.L.C. v. Hamilton Cty. Bd. of Revision, 115 Ohio St.3d
365, 2007-Ohio-5249, 875 N.E.2d 85, ¶ 14.5 Although Knickerbocker has argued


5. In St. Bernard Self-Storage, the evidence did not suffice to support an allocation of $950,000 of
the $1,950,000 sale price to “goodwill” that had been allegedly transferred as part of the sale. By
contrast, the court and the BTA affirmed an allocation of $25,000 of the sale price to tangible




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both in its notice of appeal and in its second proposition of law that the sale price
should be reduced by an amount attributable to personal property, Knickerbocker
failed to make that argument to the BTA. Instead, Knickerbocker confined its
BTA brief to arguing that the BTA should not use the sale price to determine the
value of the property at all. The BTA had no duty to reduce the sale price on
account of the transfer of personal property because Knickerbocker did not ask for
the reduction and because the record did not unequivocally establish the propriety
of making such an allocation.
                                         Conclusion
          {¶ 25} The BTA reviewed the evidence and concluded that Knickerbocker
had not satisfied its burden to show that the December 2003 sale was not recent.
That finding is supported by the record and merits our deference. Accordingly,
we affirm the decision of the BTA.
                                                                          Decision affirmed.
          MOYER, C.J., and LUNDBERG STRATTON, O’DONNELL, and CUPP, JJ.,
concur.
          PFEIFER, O’CONNOR, and LANZINGER, JJ., concur in part and dissent in
part.
                                  __________________
          PFEIFER, J., concurring in part and dissenting in part.
          {¶ 26} I concur in the bulk of the majority opinion, but I dissent from its
treatment of personal property as realty.
          {¶ 27} It is undisputed that the sales price included personal property,
primarily appliances.        The property owner's appraiser presented unrebutted
testimony that the personal property was valued at $1,000 per unit. Because there


personal property that was transferred with the real estate. Id. at ¶ 4. The BTA and the court
allowed that allocation because it constituted a minimal portion of the sale price and was never
contested by any party to the proceeding.




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is no evidence to the contrary in the record, I would defer to the appraiser's
valuation of the personal property. I conclude that the valuation of the property
should be reduced by $300,000, $1,000 per unit times 300 units. Accordingly, I
concur in part and dissent in part.
       O’CONNOR and LANZINGER, JJ., concur in the foregoing opinion.
                               __________________
       Rich & Gillis Law Group, L.L.C., and Mark H. Gillis, for appellee
Olentangy Local Schools Board of Education.
       Sleggs, Danzinger & Gill Co., L.P.A., and Todd W. Sleggs, for appellant.
                            ______________________




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