Strongsville Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision - Ohio Supreme Court Opinion - Ohio Supreme Court Decision

	ROMINGER LEGAL
		Ohio Court Cases and Opinions - Ohio Legal Research
					Need Legal Help?
					Need Legal Help?
LEGAL RESEARCH CENTER
LEGAL RESEARCH CENTER			LEGAL HEADLINES - CASE LAW - LEGAL FORMS	NOT FINDING WHAT YOU NEED? -RESEARCH

This court case was taken from the web sites of the Ohio Courts. Search our site for more cases - CLICK HERE

LEGAL RESEARCH

COURT REPORTERS

PRIVATE INVESTIGATORS

PROCESS SERVERS

DOCUMENT RETRIEVERS

EXPERT WITNESSES

Find a Private Investigator

Find an Expert Witness

Find a Process Server

Case Law - save on Lexis / WestLaw.

Legal News - Legal Headlines

1 Strongsville Board of Education et al., Appellants, v. Cuyahoga County
2 Board of Revision; Schurmer Investment Company, Appellee.
3 [Cite as Strongsville Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision (1997),
4 _____ Ohio St.3d ____.]
5 Taxation -- Real property valuation of multi-building neighborhood
6
shopping center -- Board of Tax Appeals' valuation of property
7
reasonable and lawful, when.
8
(No. 95-2625 - - Submitted September 19, 1996 -- Decided February
9 5, 1997.)
10
APPEAL from the Board of Tax Appeals, Nos. 94-P-409, 94-P-410 and
11 94-P-421.
12
Schurmer Investment Company, appellee, owns the Strongsville
13 Towne Centre, a multi-building neighborhood shopping center located at
14 Pearl and Schurmer Roads in Strongsville. (See Appendix.) Towne Centre
15 includes two main buildings to the rear of the property, a smaller strip center
16 to the front of the property, and two sit-down restaurants, also to the front of
17 the property. Each of the main buildings is irregular in shape, and a cross-
18 walk connects them. A grocery store anchors the South building, and a drug
19 store anchors the North building. The front strip center contains five tenant

1 spaces and has its own parking area. The two restaurant buildings are on
2 outlots to the front of the property: one in the center and one on the corner
3 opposite the strip center. Towne Centre does not contain basement space.
4
The property has three entrances. The main, central entrance is on
5 Pearl Road where Lunn Road terminates. A driveway running from this
6 entrance passes the center, free-standing restaurant and continues between
7 the two main buildings. The property has another entrance off Pearl Road;
8 the driveway from this entrance passes the front strip center and continues
9 into the main parking area. The third entrance is off Schurmer Road, and
10 the driveway from this entrance passes the other free-standing restaurant
11 and continues into the main parking area. The main parking area services
12 the entire Towne Centre.
13
For the tax year 1991, the Cuyahoga County Auditor valued the
14 property at $7,328,910. Schurmer filed a complaint with the Cuyahoga
15 County Board of Revision ("BOR") claiming the value to be $6,175,000,
16 and the city of Strongsville and the Strongsville Board of Education
17 ("Strongsville"), appellants, filed a counter-complaint, claiming the value to
18 be $9,000,000. The BOR determined the value to be $6,526,770. Schurmer

2

1 and Strongsville each appealed this decision to the Board of Tax Appeals
2 ("BTA").
3
Strongsville presented the expert real estate appraisal testimony and
4 report of Sam D. Canitia to the BTA. He testified that the highest and best
5 use of the property was the existing use. He claimed that each building
6 could be sold separately. Canitia, thus, valued each building as a separate
7 economic unit, comparing each unit with smaller comparable properties in
8 the income and market-data approaches. This analysis resulted in a higher
9 per-square-foot value for the property and higher total value. Canitia,
10 consequently, concluded that the true value of the property was $9,000,000.
11
Schurmer presented the testimony and report of expert real estate
12 appraiser Wesley Baker. Baker testified that the fair market value of the
13 property was $6,800,000. Contrary to Canitia's theory, Baker treated the
14 front strip center and the two main buildings as a single economic unit.
15 Accordingly, he examined larger shopping complexes in his market-data
16 approach. This resulted in a lower per unit value and a lower total value
17 than Canitia's. Baker testified that each building could be sold separately;
18 however, he did not think that such sales would be likely or feasible.

3

1 Finally, he treated the two restaurants as individual economic units and
2 valued them separately, as had Canitia.
3
The BTA recognized the significance of delineating the economic
4 units composing the property. It pointed out that "[i]f the separate economic
5 units comprising this tract are not correctly defined they will be improperly
6 compared to other non-like kind properties. *** Unless the separate
7 economic units from this tract are properly segregated, the resulting
8 comparison will likely lead to an aberration in the final opinion of value."
9 After reviewing Park Ridge Co. v. Franklin Cty. Bd. of Revision (1987), 29
10 Ohio St.3d 12, 29 OBR 231, 504 N.E.2d 1116, and American Institute of
11 Real Estate Appraisers, The Appraisal of Real Estate (10 Ed. 1992), the
12 BTA ruled that the two restaurants should be valued separately, a point on
13 which the appraisers had agreed.
14
The BTA then valued the two main buildings as one shopping center.
15 It found:
16
"*** The fact that they sit upon separate tax parcels does not effect
17 the unity of purpose. Nor does the fact that they are separated by a service
18 drive. Virtually all such shopping centers require a service drive, and the

4

1 fact that in this case it happens to bisect the two buildings is of little
2 consequence to the utility of these properties operating as a single shopping
3 center unit. The two buildings are connected by a common walkway. The
4 drug store anchor tenant in one building complements the food store anchor
5 tenant in the other. The parking lot and driveway areas are coordinated in
6 the same manner as any other unified shopping center. We believe these
7 two buildings would be treated as a separate economic unit in the market
8 place by those investors likely to purchase them."
9
Since Baker had treated these buildings in this manner, and Canitia,
10 who had selected much smaller properties for a comparison, had not, the
11 BTA agreed with Baker. The BTA criticized other elements of Canitia's
12 report, concluding that he had not supported his vacancy rate with market
13 data and that he had not derived his capitalization rate from comparable
14 transactions.
15
However, the BTA found that the front strip center was not a part of
16 the economic unit composed of the two larger buildings. The BTA found
17 that this center was a separate economic unit or a sub-market of the larger
18 unit. According to Baker's testimony, the smaller building had been

5

1 operated under separate ownership until 1988 when Schurmer purchased it.
2 Furthermore, it has a self-contained parking area, and its physical
3 appearance and positioning sets it apart from the larger retail center. For
4 these reasons, the BTA found Canitia's approach to be more credible but
5 adopted the 1988 unit sale price in valuing the front strip center.
6
As for the two restaurant buildings, the BTA gave Baker's valuations
7 more credibility. The BTA grounded this conclusion on Baker's efforts to
8 verify and confirm the market-approach results with a more detailed
9 income-approach analysis.
10
Consequently, the BTA adopted Baker's valuations for these
11 restaurants. It determined the true value of Towne Centre to be, as of
12 January 1, 1991:

Large shopping center
$5,276,350

Strip center
$ 610,650

Corner restaurant
$ 450,000

Center restaurant
$ 650,000

Total
$6,987,000.
13
The cause is now before this court upon an appeal as of right.

6

1
Kolick & Kondzer, Daniel J. Kolick and John P. Desimone, for
2 appellants.
3
Fred Siegel Co., L.P.A., and Annrita S. Johnson, for appellee.
4
Per Curiam. Strongsville, first, argues that the BTA should have
5 valued the two main shopping buildings as individual shopping centers. It
6 claims that each building is an economic unit and that the BTA should have
7 sought the highest possible value for the complex. We disagree.
8 In
Park Ridge Co. v. Franklin Cty. Bd. of Revision, supra, paragraph
9 two of the syllabus, we stated:
10
"The true value for real property may well depend on its potential use
11 as an economic unit. That unit may include multiple parcels, or it may be a
12 part of a larger parcel, on the auditor's records. The boundaries of that unit
13 may change with time and circumstances. Thus, a separate tract for
14 valuation purposes need not correspond with a numbered parcel. For tax
15 valuation purposes, property with a single owner, for which the highest and
16 best use is a single unit, constitutes a tract, lot, or parcel."
17
Park Ridge concluded that "whether the property serves its highest
18 and best use as a single unit or as multiple units is generally a factual issue."

7

1 Id. at 16, 29 OBR at 234, 584 N.E.2d at 1120. Park Ridge continued to
2 state that these factual questions rest within the sound discretion of the
3 BTA. However, we have since clarified the BTA's role as to its findings
4 and our appellate review of such findings. In Witt Co. v. Hamilton Cty. Bd.
5 of Revision (1991), 61 Ohio St.3d 155, 157, 573 N.E.2d 661, 662-663, we
6 stated:
7
"This court has consistently held that `[t]he BTA need not adopt any
8 expert's valuation. It has wide discretion to determine the weight given to
9 evidence and the credibility of witnesses before it. Its true value decision is
10 a question of fact which will be disturbed by this court only when it
11 affirmatively appears from the record that such decision is unreasonable or
12 unlawful. ***' (Citation omitted.) R.R.Z. Assoc. v. Cuyahoga Cty. Bd. of
13 Revision (1988), 38 Ohio St.3d 198, 201, 557 N.E.2d 874, 877. See, also,
14 Cardinal Federal S. & L. Assn. v. Cuyahoga Cty. Bd. of Revision (1975), 44
15 Ohio St.2d 13, 73 O.O. 2d 83, 336 N.E. 2d 433, at paragraphs three and four
16 of the syllabus; Crow v. Cuyahoga Cty. Bd. of Revision (1990), 50 Ohio
17 St.3d 55, 57, 552 N.E. 892, 893-894. Moreover, this court `will not

8

1 overrule BTA findings of fact that are based upon sufficient probative
2 evidence.' R.R.Z. Assoc., supra, 38 Ohio St.3d at 201, 527 N.E.2d at 877."
3
We will reverse BTA decisions on ultimate factual conclusions
4 because these conclusions are legal in nature. SFZ Transp., Inc. v. Limbach
5 (1993), 66 Ohio St.3d 602, 613 N.E. 2d 1037; Olmsted Falls Village Assn.
6 v. Cuyahoga Cty. Bd. of Revision (1966), 75 Ohio St.3d 552, 664 N.E.2d
7 922.
8
Consequently, we affirm the BTA's basic factual findings if
9 sufficient, probative evidence of record supports these findings. We also
10 affirm the BTA's rulings on credibility of witnesses and weight attributed to
11 evidence if the BTA has exercised sound discretion in rendering these
12 rulings. Finally, we affirm the BTA's findings on ultimate facts, i.e., factual
13 conclusions derived from given basic facts, Ace Steel Baling, Inc. v.
14 Porterfield (1969), 19 Ohio St.2d 137, 142, 48 O.O.2d 169, 171-172, 249
15 N.E.2d 892, 895-896, if the evidence the BTA relies on meets these above
16 conditions, and our analysis of the evidence and reading of the statutes and
17 case law confirm its conclusion. After meeting all these prerequisites, the

9

1 BTA's decision would, thus, be reasonable and lawful, pursuant to R.C.
2 5717.04.
3
After our analysis of the evidence here, we agree with the BTA's
4 finding that the two main buildings are one economic unit, which is an
5 ultimate fact. Baker appraised the two buildings as one economic unit. He
6 testified that the type of buildings and tenants and the cash flow the
7 buildings generated caused them to be one unit. Thus, sufficient, probative
8 evidence supports the basic facts. Further, we agree with the BTA's logic in
9 reaching its finding on this ultimate fact. Schurmer operates the main
10 buildings as a balance for each other because the drugstore, anchor tenant in
11 one building, complements the grocery, anchor tenant in the other. The
12 parking lot and driveway areas serve both buildings, which are connected by
13 a crosswalk. Further, we note a single owner operates the two buildings
14 conjunctively. Thus, the BTA correctly decided this fact.
15
Next, Strongsville argues that the rents the BTA adopted were not
16 market rents because they were the actual rents paid under out-of-date
17 leases. Again, we disagree with Strongsville.
10

1
Baker had employed actual rents as market rents to process his
2 income approach. He concluded that Towne Centre was a properly
3 managed shopping center receiving market rents, and the BTA approved of
4 this. The record supports the BTA's conclusion. Baker, an expert real
5 estate appraiser, testified that, despite the leases having some age, the step
6 increases rendered the actual rents to be economic rents. This reliable and
7 probative evidence supports the BTA's finding of basic facts, and logic
8 supports the ultimate fact that the rents this properly managed shopping
9 center received were market rents.
10
Finally, Strongsville claims that the BTA's decision is not based upon
11 probative and credible evidence. It then recites a litany of errors it alleges
12 the BTA committed.
13
What we said in Wolf v. Cuyahoga Cty. Bd. of Revision (1984), 11
14 Ohio St.3d 205, 207, 11 OBR 523, 524, 465 N.E.2d 50, 52, applies equally
15 here:
16
"A great deal of appellants' argument is devoted to the rebuttal of
17 appellees' expert's testimony. Ultimately they conclude that none of his
18 conclusions is credible enough to be relied on by the BTA. However, such
11

1 a determination is precisely the kind of factual matter to be decided by the
2 BTA. It is clear from the record that the BTA's final determination
3 represented a compromise between the conflicting positions of the two
4 experts. *** There is no indication on the face of the record of any abuse of
5 discretion, nor have appellants proven any violation by the BTA, which
6 would render the decision unreasonable or unlawful." See, also, Fawn Lake
7 Apts. v. Cuyahoga Cty. Bd. of Revision (1996), 75 Ohio St.3d 601, 603, 665
8 N.E.2d 194, 196.
9
Accordingly, we affirm the BTA's decision because it is reasonable
10 and lawful.
11

Decision affirmed.
12
MOYER, C.J., DOUGLAS, RESNICK, F.E. SWEENEY, PFEIFER, COOK
13 and LUNDBERG STRATTON, JJ., concur.
14
12