[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as GC
Net Lease @ (3) (Westerville) Investors, L.L.C. v. Franklin Cty. Bd. of Revision, Slip Opinion
No. 2018-Ohio-3856.]




                                         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. 2018-OHIO-3856
   GC NET LEASE @ (3) (WESTERVILLE) INVESTORS, L.L.C., APPELLANT, v.
           FRANKLIN COUNTY BOARD OF REVISION ET AL., APPELLEES.
  [Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as GC Net Lease @ (3) (Westerville) Investors, L.L.C. v. Franklin
             Cty. Bd. of Revision, Slip Opinion No. 2018-Ohio-3856.]
Real-property valuation—R.C. 5713.03—Board of Tax Appeals’ decision vacated
        and cause remanded based on reasoning in Westerville City Schools Bd.
        of Edn. v. Franklin Cty. Bd. of Revision.
   (No. 2017-0792—Submitted June 12, 2018—Decided September 26, 2018.)
               APPEAL from the Board of Tax Appeals, No. 2016-540.
                                ____________________
        Per Curiam.
        {¶ 1} At issue in this real-property tax case is the tax-year-2014 value of a
single-tenant office building occupied by J.P. Morgan Chase under a net lease.
Under R.C. 5713.03, the fee-simple estate must be valued as if unencumbered. The
question presented is whether the Board of Tax Appeals (“BTA”) acted reasonably
                                SUPREME COURT OF OHIO




and lawfully by adopting the property’s sale price without giving full consideration
to the appraisal offered by the property owner.
        {¶ 2} In Westerville City Schools Bd. of Edn. v. Franklin Cty. Bd. of
Revision, __ Ohio St.3d __, 2018-Ohio-3855, __ N.E.3d __, we considered the
same issue with regard to the valuation of the same property for tax year 2013. In
that case, we applied Terraza 8, L.L.C. v. Franklin Cty. Bd. of Revision, 150 Ohio
St.3d 527, 2017-Ohio-4415, 83 N.E.3d 916, and held that the BTA had not properly
performed its fact-finding duties, and we vacated the BTA’s decision and remanded
the cause for further proceedings. Because we draw the same conclusion here, we
vacate the BTA’s decision in this case and remand the cause for further
proceedings.
                                      I. Background
        {¶ 3} On March 31, 2015, appellant, GC Net Lease @ (3) (Westerville)
Investors, L.L.C., the property owner, filed a complaint challenging the auditor’s
value of $35,500,000 and seeking a reduction to a value of $28,000,000 for tax year
2014.
        {¶ 4} Appellee Franklin County Board of Revision (“BOR”) held a hearing
at which GC Net Lease presented the appraisal report and testimony of Samuel D.
Koon, a member of the Appraisal Institute. By reconciling his valuations under an
income approach and a sales-comparison approach, Koon arrived at an opinion of
value of $28,500,000 as of January 1, 2014. At the hearing, appellee Westerville
City Schools Board of Education (“BOE”) presented the deed, conveyance-fee
statement, and purchase agreement relating to a November 2013 sale of the property
for $44,500,000. The BOR noted the appraisal but adopted the sale price of
$44,500,000 as the property value for 2014 and 2015.1



1
  In its decision, the BTA vacated the BOR’s determination of value for 2015, given that that
determination was issued on March 9, 2016, before the period for filing a complaint against 2015




                                               2
                                January Term, 2018




       {¶ 5} GC Net Lease appealed, and at the BTA hearing, the property owner
again presented Koon’s testimony and introduced his appraisal report and the BOE
again introduced the conveyance-fee statement and deed for the November 2013
sale. In support of its decision, the BTA cited Berea-era caselaw. See Berea City
School Dist. Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 106 Ohio St.3d 269,
2005-Ohio-4979, 834 N.E.2d 782. In particular, it quoted the pronouncement that
“ ‘it would never be proper to adjust a recent arm’s-length sale price because of an
encumbrance.’ ” BTA No. 2016-540, 2017 WL 2269667, *4 (May 17, 2017),
quoting HIN, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 138 Ohio St.3d 223, 2014-
Ohio-523, 5 N.E.3d 637, ¶ 24, citing 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,
¶ 25-26. Later in its decision, the BTA said that because the sale price is the best
evidence of value, it would not consider Koon’s appraisal report. As it had in
Westerville City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, BTA Nos.
2015-828 and 2015-1165, 2016 WL 3401901 (May 19, 2016), the BTA cited
Pingue v. Franklin Cty. Bd. of Revision, 87 Ohio St.3d 62, 64, 717 N.E.2d 293
(1999), in support of this statement.
       {¶ 6} But as the BOE points out, there is a notable difference between the
BTA decision on appeal in this case and the BTA decision on appeal in Westerville
City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, __ Ohio St.3d __, 2018-
Ohio-3855, __ N.E.3d __. In the decision on appeal in this case, the BTA indicated
that it took the appraisal evidence into account when it stated, “[I]t would be
improper to adjust the $44,500,000 sale price because of the lease, particularly in
this instance when the evidence suggested that the underlying lease was at, or
below, market rents.” 2017 WL 2269667 at *4.



had expired. BTA No. 2016-540, 2017 WL 2269667 (May 17, 2017). That ruling has not been
challenged on appeal.




                                          3
                             SUPREME COURT OF OHIO




       {¶ 7} GC Net Lease appeals from the BTA’s adoption of the $44,500,000
sale price as the tax-year-2014 value of the property.
                                    II. Analysis
       {¶ 8} The issue in the present appeal was also presented in Westerville City
Schools, __ Ohio St.3d __, 2018-Ohio-3855, __ N.E.3d __, and we rely on the
reasoning in that opinion in vacating the BTA’s decision in this case and remanding
the cause to the BTA.
       {¶ 9} The BOE contends that, unlike its decision in Westerville City
Schools, the BTA’s decision in this case complied with Terraza 8 by considering
the appraisal evidence. We disagree. The BTA’s finding that the “lease was at, or
below, market rents,” 2017 WL 2269667 at *4, in no way constitutes a full
consideration of the appraisal evidence as contemplated by Terraza 8. For one
thing, the brief statement appears between pronouncements that indicate that the
appraisal is not relevant and will not be considered.
       {¶ 10} More importantly, the difference between actual rent and market rent
is only one factor that might make an existing lease affect the sale price. To be
sure, the amount a building tenant pays in rent generally affects what a potential
purchaser would pay to own the building. But the amount of rent charged under a
lease has to be considered in the context of at least two other factors: the
creditworthiness of the tenant and whether the lease at issue is a net lease, under
which the tenant defrays the expenses relating to the real estate. Here, the appraisal
indicates that the November 2013 purchase price of $44,500,000 relates to a
property occupied by J.P. Morgan Chase, as tenant under a 15-year net lease, paying
rent that is at or below a market rate. The convergence of these circumstances could
affect the price a buyer would pay for the property, possibly elevating it above what
the same buyer would pay for the unencumbered fee-simple estate.
       {¶ 11} Finally, in Westerville City Schools, __ Ohio St.3d __, 2018-Ohio-
3855, __ N.E.3d __, we held that the 2012 Am.Sub.H.B. No. 487 amendments to




                                          4
                                January Term, 2018




R.C. 5713.03 made appraisal evidence admissible and competent alongside sale-
price evidence in determining a property’s value. A cursory mention of one aspect
of the appraisal does not constitute a full consideration of the evidentiary value of
the appraisal.
                                 III. Conclusion
       {¶ 12} For the foregoing reasons, we vacate the decision of the BTA and
remand the cause for further proceedings. On remand, the BTA must consider the
appraisal evidence alongside the sale price as evidence of the property’s value and
give due consideration to whether the sale price reflects the value of the
unencumbered fee-simple estate. The BTA must decide the cause on the existing
record, Bronx Park S. III Lancaster, L.L.C. v. Fairfield Cty. Bd. of Revision, ___
Ohio St.3d ___, 2018-Ohio-1589, ___ N.E.3d ___, ¶ 13, but must consider any
timely objections that were previously advanced by the BOE against the appraisal
evidence.
                                                                   Decision vacated
                                                               and cause remanded.
       O’CONNOR, C.J., and O’DONNELL, FRENCH, FISCHER, DEWINE, and
DEGENARO, JJ., concur.
       KENNEDY, J., concurs in judgment only.
                               _________________
       Sleggs, Danzinger & Gill, Co., L.P.A., and Todd W. Sleggs, for appellant.
       Rich & Gillis Law Group, L.L.C., and Kimberly G. Allison, for appellee
Westerville City Schools Board of Education.
                               _________________




                                         5
