A recent decision from the Ohio Supreme Court ordered the Ohio Board of Tax Appeals to explain its tax valuations for two Grove City senior housing complexes in detail.
In a 6-1 per curiam opinion, the high court vacated the board’s approval of a combined $1.5 million valuation of Lutheran Social Services of Central Ohio Village Housing properties that the Franklin County auditor valued at $2.7 million in 2008.
The Supreme Court remanded the case for a closer examination of the evidence, specifically ordering the board to explain why it rejected challenges raised by an expert hired by South-Western City Schools.
The appeal came from the school’s board of education, which argued that the board failed to consider expert criticism of the lower appraisal values presented by the school district.
The two properties at issue were constructed in the early 2000s as federally subsidized housing developments for the elderly.
For tax year 2008, Franklin County valued the properties at $1.25 million and $1.46 million.
In 2011, the Franklin County Board of Revision held hearings on Lutheran Services’ challenge to the new valuation during which it presented the appraisal reports of expert Donald Miller.
Audio recordings of the proceedings were to be recorded and sent to the Board of Tax Appeals, but one of the discs was blank.
Miller valued both properties at a combined $1.5 million but the Board of Revision rejected his analysis and maintained the Franklin County auditor’s valuation.
At a hearing before the Board of Tax Appeals, Lutheran Services again presented Miller’s appraisals and South-Western Schools presented the valuations of Thomas Sprout, who criticized several aspect’s of Miller’s appraisal.
In 2014, the board issued a brief opinion adopting Miller’s valuations and making no mention of Sprout’s testimony.
In its appeal to the high court, the school district held that the Board of Tax Appeals must consider conflicting evidence when it adopts an appraiser’s opinion of value.
“Although the (Board of Tax Appeals) is not obliged to make formal findings of fact and conclusions of law, we have stated that the (board) must engage in sufficient discussion of the evidence to permit the court on appeal to determine whether (it) acted reasonably and lawfully,” the high court wrote.
“The (board’s) decision need not give explicit consideration to each and every argument raised against its conclusion, but it does need to consider and weigh conflicting evidence in the course of justifying its reliance on certain evidence as opposed to contravening evidence.”
Under the case law, the Supreme Court noted that the board erred by adopting appraisal valuations without explicitly addressing the nature of the negative appraisal review offered by Sprout.
“We therefore vacate the (board’s) decision and remand for further proceedings,” the high court ruled. “On remand, the board should explicitly account for the evidence in reaching its determination of the values of the properties.”
Additionally, the Supreme Court held that it was “unreasonable” for the board to adopt a valuation for one of the properties when the disc containing the hearing evidence for it was missing.
The high court also noted that nothing about Miller’s appraisal constitutes a legal error that would make it inappropriate for the board to ultimately adopt his valuations.
“As for the quality of his comparables and the propriety of his adjustments, that determination lies within the province of the board as the finder of fact,” the high court wrote. “On remand, there is no impediment to the board again adopting the appraisal valuations so long as the board explains why Sprout’s criticisms do not impugn the validity of doing so.”
Justice Terrence O’Donnell was the sole dissent in favor of adopting the decision of the Board of Tax Appeals.
The case is cited Lutheran Social Servs. of Central Ohio Village House., Inc. v. Franklin Cty. Bd. of Revision, Slip Opinion No. 2017-Ohio-900.