Opinion
No. 89-689
Submitted March 29, 1990 —
Decided August 29, 1990.
Taxation — Real property valuation determined, how — Board of Tax Appeals must specify reasons for its determinations.
APPEAL from the Board of Tax Appeals, Nos. 85-G-440, 85-A-441, 85-B-442 and 85-C-443.
During tax years 1982, 1983, and 1984, appellant, General Motors Corporation ("GM"), owned 294.5 acres of improved real estate located at the intersection of Brookpark Road and Chevrolet Boulevard in the city of Parma, Cuyahoga County, Ohio. The main plant was situated on a 269-acre tract and consisted of the 2,057,000 square foot production and assembly building, the 567,000-square-foot prop shaft building, the 101,000-square-foot marshalling building, and eight or nine auxilliary buildings. Across Chevrolet Blvd. was a 25.5-acre tract used as a parking lot.
Construction of the buildings making up the Parma plant began in 1948 and extended through 1979. In the main plant, GM manufactured component parts, assembled some transmissions and shipped some transmission parts for assembly at other GM plants. The main plant also contained three cafeterias, locker rooms and offices. In addition to the manufacturing area, the complex of buildings included the boilerhouse, the waste treatment building, and the marshalling or warehouse building. Over the years certain problems were apparent, including roof leaks and damage to the wood block floors.
The Cuyahoga County Auditor valued the subject property for tax year 1982 at $55,292,940. Upon complaint the Cuyahoga County Board of Revision reduced the fair market value of the subject property for tax year 1982 to $52,242,680.
The board of revision had continuing jurisdiction to determine the fair market value of the subject property for tax years 1983 and 1984. R.C. 5715.19(D).
The matter was appealed to the Board of Tax Appeals ("BTA") and certain witnesses testified on behalf of the appellant, GM, and the appellee, the Parma Board of Education. Appellant's appraiser estimated the fair market value of the property for tax year 1982 at $24,000,000, for 1983 at $25,600,000 and for 1984 at $25,400,000. He felt that the highest and best use of the subject property was as a single-user manufacturing plant. He rejected the income approach to valuation and chose to pursue the cost approach and the market-data approach.
Real estate such as the subject property was not widely rented as investments in the market and, thus, the income approach could not be used. Comparative sales were scarce, and took place in other states, as well as in Ohio. Appellant's appraiser also testified about the deterioration of the property, which required a decrease in valuation. In addition, he discussed the percentage of depreciation due to the obsolescence of the plant.
Appellee's appraiser agreed that the highest and best use was for a single tenant in a major manufacturing complex. This appraiser also agreed with the inapplicability of the income approach and felt that the cost approach or the market-data (comparative sales) approach would be the most reliable method for determining the true value of the subject property. His estimates of fair market value, after combining the cost approach and the market-data, comparative approach were: 1982, $48,500,000; 1983, $50,000,000; 1984, $52,000,000.
The BTA, after reviewing the evidence, including all aspects of depreciation, found that the replacement and site building costs utilized by appellee's expert were the most accurate and reliable starting point in valuing the property, but it also considered appellant's evidence, indicating that the subject property suffered from substantially more deterioration and obsolescence. The BTA then found that the fair market value for 1982 was $41,374,000; for 1983, $42,730,000; and for 1984, $44,493,000.
The cause is before this court upon an appeal as of right.
Jones, Day, Reavis Pogue, Roger F. Day and John C. Duffy, Jr., for appellant.
John T. Corrigan, prosecuting attorney, William J. Day and Steven J. Celebrezze, for appellees Cuyahoga County Auditor and Cuyahoga County Board of Revision.
Armstrong, Gordon, Mitchell Damiani, Michael L. Gordon and William F. Mitchell, for appellee Parma Board of Education.
The issue in this case is the fair market value of the subject property for tax years 1982, 1983, and 1984.
R.C. 5713.03 provides in part:
"The county auditor * * * shall determine as nearly as practicable, the true value of each separate tract, lot, or parcel of real property and of buildings, structures and improvements located thereon * * * in accordance with the uniform rules and methods of valuing and assessing real property as adopted, prescribed, and promulgated by the tax commissioner."
"The 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, and this court will not disturb a decision of the Board of Tax Appeals with respect to such valuation unless it affirmatively appears from the record that such decision is unreasonable or unlawful. * * *" Cardinal Federal S. L. Assn. v. Cuyahoga Cty. Bd. of Revision (1975), 44 Ohio St.2d 13, 73 O.O. 2d 83, 336 N.E.2d 433, paragraph four of the syllabus.
In Wolf v. Cuyahoga Cty. Bd. of Revision (1984), 11 Ohio St.3d 205, 207, 11 OBR 523, 524, 465 N.E.2d 50, 52, we stated:
"This court has consistently held that the BTA is not obligated to adopt the valuation by any expert or witness. * * * Moreover, the BTA possesses wide discretion in evaluating the weight of evidence and credibility of witnesses which come before it. * * *
"A great deal of appellants' argument is devoted to the rebuttal of appellees' expert's testimony. Ultimately they conclude that none of his conclusions is credible enough to be relied on by the BTA. However, such a determination is precisely the kind of factual matter to be decided by the BTA. It is clear from the record that the BTA's final determination represented a compromise between the conflicting positions of the two experts. * * *" (Citations omitted and emphasis added.)
Appellant contends that the BTA erred in not following the mandate of paragraph one of the syllabus of Beckett Ridge Assn. v. Bd. of Revision (1982), 1 Ohio St.3d 40, 1 OBR 74, 437 N.E.2d 601, which requires a consideration of all relevant factors specified in R.C. 5713.03 and Ohio Adm. Code 5705-3-07 in making its determination of value.
After referring to the four principal methods of valuation of real estate, we noted in Beckett Ridge that: "It is incumbent upon the Board of Tax Appeals to consider all the factors referred to in the statute and administrative code for assigning a proper value to appellant's * * * [real estate]. The Board of Tax Appeals with its expertise is the appropriate agency to develop a viable standard to be used in applying the parameters defined by statute and rule to the facts in each case * * *." Id. at 43, 1 OBR at 76-77, 437 N.E.2d at 604.
In Alliance Towers, Ltd. v. Stark Cty. Bd. of Revision (1988), 37 Ohio St.3d 16, 523 N.E.2d 826, we reversed the BTA's decision with regard to certain property, in part because the BTA did not state specific reasons for reversing its initial valuation upon reconsideration. We held that it was "not enough for the BTA to simply state that its additional study" compelled its conclusion. Id. at 25, 523 N.E.2d at 834.
We can perform our duty to affirm reasonable, and to reverse unreasonable, determinations only when the BTA sets forth its findings and the basis therefor. Howard v. Cuyahoga Cty. Bd. of Revision (1988), 37 Ohio St.3d 195, 197, 524 N.E.2d 887, 889. We do not suggest that the true value determinations of the BTA were inappropriate; rather that, in the absence of clarification, we are unable to decide whether the decision of the BTA was reasonable and lawful.
Since the BTA failed to specify the reasons for its determinations, its decision is reversed and the cause is remanded to the BTA for further consideration in conformity with this opinion.
Decision reversed and cause remanded.
MOYER, C.J., SWEENEY, HOLMES, DOUGLAS, WRIGHT, H. BROWN and R RESNICK, JJ., concur.