To The Point Blog

Ohio Supreme Court Decision May Affect How Schools Assess the Value of a Property

Apr 24, 2014

A recent Ohio Supreme Court opinion may affect how your school challenges or defends property value in valuation cases. The opinion creates a clear rule for when a property's sale price may be presumed to be the value and also specifies when the sale price is too remote in time such that the sale price will need to be substantiated by evidence.  

In 2009, the Akron City School District filed a complaint regarding the valuation of an Arby's Restaurant.  The County auditor valued the property at $902,310 as of 2008.  The School sought a different valuation: $1,407,000 from the property's 2005 sale.  

The property owner asserted that the market had changed after the sale and that the more recent valuation ($902,310) should be adopted.  The Board of Revision agreed, but the Board of Tax Appeals (BTA) reversed and adopted the 2005 sale price ($1.4 million).  The BTA held that the Owners had not rebutted the presumption that the $1,407,000 value should not be used, and therefore the Revised Code required the sales price to be used.  The Owners appealed to the Ohio Supreme Court alleging that the sale was too "remote".   

The Ohio Supreme Court sought to harmonize two conflicting laws that determine a property's value.  First, R.C. 5713.03 - as it existed at the time - provided that valuation "shall" be the sales price when an arm's length sale occurred "within a reasonable time."1  Second, however, the county auditor is required to reappraise a property every six years and is required to consider all relevant factors in determining a property's value.  This creates a conflict  when the sales price differs from the reappraisal price.  While the law requires the sale price to be used, it only had to be used when the sale occurred "within a reasonable time."  The Court had to determine when the "reasonable time" had passed.   

After acknowledging no clear line existed for when the "reasonable time" had passed, the Court adopted a clear rule for "reasonable time":  

[a] sale that occurred more than 24 months before the lien date...should not be presumed recent when a different value has been determined for the lien date as part of the six-year reappraisal.   

In other words, when a sale occurred more than 24 months before the lien date, the sale will not be presumed recent if a mandated county appraisal occurred after the sale.  

This will affect how schools challenge or defend a property's valuation.  As explained by Justice Pfeifer "[t]he rule that we adopt today prevents a remote sale from controlling over a more recent appraisal." The 24 month clear test will make it clear when a sales value may be presumed "recent" and when the sale value must be proved by evidence.  

If you have any questions about this case, its potential impact, or if you have any other education law questions, please contact Maria L. Markakis, Chair of Day Ketterer's Education Law Practice Group

1 Note that R.C. 5713.03 has since been amended.  R.C. 5713.03 now states that the valuation "may" be determined by the sales price, whereas the section previously stated that it "shall" be determined by the sales price.  The court did not discuss how the case would affect the amended code section.      

If you have any questions regarding the law, please contact us for assistance. This Education Law Update is not intended to present an exhaustive summary of all applicable laws or to take the place of legal advice.

The content of this blog is for informational purposes only and is not intended as legal advice for any purpose. This blog is not intended to present an exhaustive summary of all applicable laws, or to take the place of legal advice.  If you have any questions regarding the law, please contact us for assistance.