Opinion
No. 88-451
Submitted June 6, 1989 —
Decided August 9, 1989.
Taxation — Assessment of value of taxable property of public utility — Board of Tax Appeals is granted great latitude in determining weight to be given evidence and credibility of witnesses before it — Board not required to adopt valuation fixed by any expert.
APPEAL from the Board of Tax Appeals, Nos. 85-A-969, 85-A-984, 85-A-1016 and 85-A-1023.
James R. Snider, Auditor of Ottawa County, Richard J. Makowski, Auditor of Geauga County, and Edward J. Zupancic, Auditor of Lake County ("auditors"), appellants, challenge the assessment of the value of the Cleveland Electric Illuminating Company's ("CEI's") taxable tangible personal property for the tax year 1985.
After CEI filed its 1985 Annual Report with the Tax Commissioner, the commissioner valued CEI's personal property at $918,351,200. She determined this by subtracting from CEI's total property and plant costs, $4,125,194,964, the reported value of land, buildings and improvements, rights of way and land rights, costs for licensed motor vehicles, pollution control facilities, construction work in progress, and intangible property. The resulting amount was $1,836,702,373. From this the commissioner subtracted a fifty percent depreciation and obsolescence allowance to arrive at a true value of $918,351,200. The commissioner, since the late 1960s, has regularly applied a fifty percent allowance in eighty-five to ninety percent of valuations of public utility personal property. The auditors appealed this determination to the BTA under Hatchadorian v. Lindley (1983), 3 Ohio St.3d 19, 3 OBR 491, 445 N.E.2d 659 (" Hatchadorian I").
The BTA conducted a lengthy hearing. The auditors presented an appraiser and an economist. Each used several techniques to value the property. The appraiser valued the personal property at $3,000,000,000, and the economist valued the property at $1,372,935,023, as revised before the BTA. CEI presented an appraiser who testified that the true value was $867,000,000. CEI also presented an economist who critiqued all three appraisal opinions.
In a detailed opinion, the BTA reviewed the witnesses' methodologies, approving some and rejecting some. Nevertheless, the BTA declined to rely on the expert opinions because, according to the BTA, they were fatally flawed and could not be mathematically corrected. The BTA ruled that the commissioner's value was reasonable because it was acceptably close to the opinions of the experts. Furthermore, the BTA ruled that the auditors had failed to show that the commissioner's final findings of value were factually incorrect because the BTA was not comfortable in accepting any of the expert opinions as fact. Thus, the BTA affirmed the commissioner's determination.
The cause is now before this court upon an appeal as of right.
Kelley, McCann Livingstone, Fred J. Livingstone, Mark J. Valponi, Daniel S. Strouse and Walter C. Kelley, for appellants.
Anthony J. Celebrezze, Jr., attorney general, and James C. Sauer, for appellee Tax Commissioner.
Squire, Sanders Dempsey, Eben G. Crawford and William H. Lutz, for appellee Cleveland Electric Illuminating Co.
The General Assembly has granted "* * * the exclusive power to value and assess public utility property to the Tax Commissioner." Toledo Edison Co. v. Galvin (1974), 38 Ohio St.2d 210, 212, 67 O.O. 2d 230, 231, 311 N.E.2d 897, 898. In determining the value of the taxable property of a public utility, the commissioner is guided by information contained in the utility's report and such other evidence and rules that will enable her to arrive at true value. R.C. 5727.10.
In Hatchadorian v. Lindley (1986), 21 Ohio St.3d 66, 21 OBR 365, 488 N.E.2d 145 (" Hatchadorian II"), paragraphs one and two of the syllabus, we held:
"1. The Tax Commissioner's findings are presumptively valid, absent a demonstration that those findings are clearly unreasonable or unlawful.
"2. When no competent and probative evidence is developed before the Board of Tax Appeals to show that the Tax Commissioner's determination of the value of property is factually incorrect, it is error for the board to reverse that determination."
We further stated, at 71, 21 OBR at 369, 488 N.E.2d at 149, that when the commissioner's valuation is appealed to the BTA, the appellant has the burden to prove that the commissioner's valuation does not accurately reflect true value. Since, in Hatchadorian II, no evidence was offered to establish a more accurate value or to show the manner and extent of the claimed error, we reversed the BTA's finding that rejected the same valuation method in issue today.
Moreover, it is impractical for the commissioner to personally value all personal property in Ohio; thus, she may resort to a predetermined formula to ascertain value. W.L. Harper Co. v. Peck (1954), 161 Ohio St. 300, 53 O.O. 178, 118 N.E.2d 643. However, the formula must be adjusted when special or unusual circumstances or conditions of use exist or when evidence shows that rigid application would be inappropriate. Monsanto Co. v. Lindley (1978), 56 Ohio St.2d 59, 62, 10 O.O. 3d 113, 114, 381 N.E.2d 939, 941. The burden to show that the commissioner's formula does not ascertain true value is met only if the appellant "* * * introduces competent evidence of probative value of the personal property's true value in money." Alcoa v. Kosydar (1978), 54 Ohio St.2d 477, 481, 8 O.O. 3d 459, 462, 377 N.E.2d 785, 788.
The auditors assert that they have met this burden. The BTA, on the other hand, found that the auditors had not shown that the commissioner's value findings were factually incorrect. The BTA is granted great latitude in determining the weight to be given evidence and the credibility of witnesses before it. It is not required to adopt the valuation fixed by any expert or witness. Value for tax purposes is a question of fact, and this finding is primarily within the province of the taxing authorities. This court will not disturb such a decision unless it affirmatively appears from the record that such decision is unreasonable or unlawful. Cardinal Federal S. L. Assn. v. Bd. of Revision (1975), 44 Ohio St.2d 13, 73 O.O. 2d 83, 336 N.E.2d 433, paragraphs two, three, and four of the syllabus.
We are unable to conclude that the BTA's decision is unreasonable or unlawful. The BTA discussed its reservations regarding each witness's analysis and how it affected their respective opinions. The BTA declared that the evidentiary defects could not be corrected mathematically, but went to the heart of the reliability, credibility, and veracity of each opinion. Thereafter, the BTA observed that it was uncomfortable accepting any of the estimations as fact.
Since it does not affirmatively appear from the record that the BTA's decision is unreasonable or unlawful, it is hereby affirmed.
Decision affirmed.
MOYER, C.J., SWEENEY, HOLMES, DOUGLAS, WRIGHT, H. BROWN and RESNICK, JJ., concur.