IN THE SUPREME COURT OF OHIO

Polaris Amphitheater Concerts, Inc.,Supreme Court Case No. 07-0347

Appellee,

Appeal from the Ohio Board of Tax AppealsB.T.A Case No. 2004-V-1294

Delaware County Bd. of Revision, et al.,

Appellees.

MERIT BRIEF OF APPELLEES BOARD OF EDUCATION OF THEOLENTANGY LOCAL SCHOOL DISTRICT AND DELAWARE

COUNTY AUDITOR AND COUNTY BOARD OF REVISION

Todd W. Sleggs (0040921)COUNSEL OF RECORDSleggs, Danzinger & Gill Co., LPA820 W. Superior Avenue, Suite 400Cleveland, Ohio 44113(216) 771-8990

Attomeys for AppellantPolaris Amphitheater Concerts

5EP 07 My

CLERK OF COURTSUPREME COURT OF OHIO

Jeffrey A. Rich (0017495)COUNSEL OF RECORDMark H. Gillis Esq. (0066908)Rich, Crites & Dittmer, LLC300 East Broad Street, Suite 300Columbus, Ohio 43215(6I4)228-5822

Attorneys for Appellee, Board ofEducation of the Olentangy LocalSchool District

Christopher Betts (0068030)Assistant County ProsecutingAttorneyCOUNSEL OF RECORDDavid Yost (0056290)Prosecuting Attorney140 North Sandusky StreetDelaware, Ohio, 43215(740) 833-2690

Attorney for Appellee DelawareCounty Auditor and Board ofRevision

TABLE OF CONTENTS

......... mTable of Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . : . iii

Statement of the Case and Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Law and Argument .............................................................. 7

Introduction ..................................................................6

Reply to Appellant's Propositions of Law 1:

A Board of Revision Complaint Must Be Filed Against The "Total Valuation" OfA Parcel Of Real Property Under R.C. 5715.19(A)(1)(d). A Complainant CannotContest The True Value Of Just The Land Portion Of An Improved Parcel. .......... 7

R.C.5715.19(A)(1)(d) .......................................................... 7

139 Ohio Laws, Part ll,p.2630 ................................................... 7

American Steel & Wire Co. v. Cuyahoga Cty. Bd. ofRevision (1942), 139 Ohio St. 388 ....... 8

R.C. 5715.20 ................................................................ 9

David and Lydia Neubrander vs. Summit County Board of Revision, et al.(May 13, 2005), BTA Case No. 2003-R-1738, unreported, 2005 Ohio Tax Lexis 652 . 10

R.C.5713.03 ................................................................10

R.C. 5717.03(B) .............................................................. 10

Reply to Appellant's Propositions of Law 2:

Land Improvements Are Part Of The Value Of The Land Under Article XII,Section 2 Of The Ohio Constitution And The Statutes Enacted Thereunder. LandWhich Has Been Improved And Developed Cannot Be Valued As UndevelopedLand . ................................................................11

The Appraisal ofReal Estate, 11th Ed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

The Dictionary ofReal Estate Appraisal ( 1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Administrative Code Rule 5705-3-07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Article XII, Section 2 of the Ohio Constitution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

R.C. 5701.02(A) ..............................................................13

Conclusion .......... ........................................................15

Certificate of Service ..........................................................16

Appendix

R.C.5715.19(A)(1)(d) ................................................... 17R.C. 5717.03(B) ................:.......................................20David and Lydia Neubrander vs. Summit County Board of Revision, et al. .......... 21The Dictionary of Real Estate Appraisal (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27The Appraisal of Real Estate, I lth Ed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29139 Ohio Laws, Part II, p. 2630 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

TABLE OF AUTHORITIES

Cases:

American Steel & Wire Co, v. Cuyahoga Cty. Bd. ofRevision (1942), 139 Ohio St. 388 ....... 9

David and Lydia Neubrander vs. Summit County Board ofRevision, et al.(May 13, 2005), BTA Case No. 2003-R-1738, unreported, 2005 Ohio Tax Lexis 652 . 11

Constitution. Statutes, and Rules:

Article XII, Section 2,of the Ohio Constitution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

R.C. 5701.02(A) .............................................................. 14

R.C.5713.03 ..............................................:.................11

R.C. 5715.19(A)(1)(d) ............................................ .............. 8

R.C. 5715.20 ................................ ................................10

R.C. 5717.03(B) ..............................................................11

139 Ohio Laws, Part II, p. 2630 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Administrative Code Rule 5705-3-07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Other Authorities

The Appraisal ofReal Estate, 11th Ed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

The Dictionary ofReal Estate Appraisal (1984) . . . . . . . . . : . : . .•. . . . : .. ... . . . . . . . . . . . . . . . 13

STATEMENT OF THE CASE AND FACTS

This is an appeal from the Board of Tax Appeals involving the true value in money of the

Polaris Amphitheater for tax year 2003, which is located on Polaris Parkway just off 1-71 in southem

Delaware County (the property is also called the Germain Amphitheater). Appellant does not

challenge the Delaware County Auditor's determination of the total true value of the property for tax

year 2003, which was $20,734,700. The Delaware County Board ofRevision affirmed the Auditor's

valuation of the property, and the BTA did likewise. The parties previously litigated the true value

of the property for tax year 1998, and the BTA determined that the true value of the property was

$18.8 million for 1998. Polaris Amphitheater Concerts, Inc. vs. Delaware County Board of

Revision, et al. (January 12, 2001), BTA Case No. 99-K-1605, unreported, 2001 Ohio Tax Lexis 15.

In this appeal, Appellant illegally seeks to contest only the County Auditor's valuation of-the

90.687 acres of land which comprise the complex. In a fairly novel argument, Appellant claims that

the 90 acres of developed land must be valued for real property tax purposes as if it were vacant,

undeveloped, unimproved, or raw land. This claim is incorrect for a number of reasons, both legal

and factual. From a factual point of view, it is sufficient to say that Appellant's 90 acres of land is

not undeveloped, unimproved, or vacant land; and so it cannot be valued for real property tax

purposes as if it were undeveloped or vacant land. Appellant's own evidence shows that there is at

least $4 million worth of improvements which were made to the land itself (referred as land

improvements or site improvements), which iniust be included in the value of the 90 acres for real

property tax purposes under the Ohio Constitution and statutes enacted thereunder. All of this value

would totallv escape taxation if Appellant's claim would be accepted.

1

The Amphitheater is an outdoor concert facility with a capacity of 20,000 persons, which

consists of 90.687 acres of land, a concert pavilion, additional buildings and structures, and parking

lots (see Koon Appraisal, Appellant's Supp. p. 181). The County Auditor originally appraised the

property for $20,734,700 for tax year 2003. There is no evidence in the record to suggest that the

Auditor's value is incorrect

1. Appellant's Funtime Claim As To The Improvements

Appellant's original claim was that all of the land and site improvements and other

improvernents made to the property to create the amphitheater complex have no value for real

property tax purposes because all such improvements are personal property and not real property

under this Court's decision in Funtime v. Wilkins, 105 Ohio St.3d 74, 2004-Ohio-6890. Because

Appellant claimed that all of the improvements to the land and all of the improvements on the land

had no value, Appellant instructed its appraiser, Robin Lorms, to value the 90 acres of land as if the

land were unimproved, undeveloped, and vacant land. This is what Lorms did.

The BTA rejected the claim that the site improvements, land improvements, and the

buildings and structures on the land were personal property, and Appellant has not appealed that

issue to this Court. When the BTA rejected Appellant's claim that there were no improvements

either to the land or on the land for real property tax purposes, it likewise rejected Appellant's claim

that the 90 acres of land had to be valued as undeveloped and unimproved land. Appellant's claim

can make no sense if the true value of Appellant's land had to be based on the improved value of the

land, which would include the value of the land improvements and site improvements.

The property consists of five tax parcels, three of which are actual parcels and two of which

are paper parcels or TIF accounts created because the City of Columbus has granted tax abatements

to the property under R.C. 5709.41. The two TIF accounts are number 318-442-02-025-918, which

has a land value of $3,224,200; and number 31 S-442-02-025-919, which has a land value of

$5,688,700, and a building value of $1,258,700, for a total value of $6,947,400. The values of the

9] 8 and 919 tax accounts are the value of the "improvements" which are exempt from taxation under

R.C. 5709.41, which can include a land value and improvement value.

2. Lorms' Valuation Of The Land

Appellant relies on the appraisal of its 90 acres of land prepared by its appraiser, Robin

Lorms. Lorms valued only 71.64 acres of the total 90.687 acres of land involved in this appeal (see

Lorms' report, Appellant's Supp, p.17). Lorms concluded that the land was worth $100,000 an acre,

so the 71.64 acres of land was worth $7,164,000 (rounded to $7.2 million) (Lorms' report,

Appellant's Supp. p. 60). Lorms did not value an 8-acre tract of land that was included in

Appellant's complaint (Parcel No. 318-442-02-024-000). The value of this parcel is included in the

BTA's decision. Furthermore, Lorms did not value another 11.5 acres of the land because an

engnieer "estimated" that this acreage was not "usable acreage" (see Lorms' report, Appellant's

Supp. p. 62). There is no evidence to- support this claim. Consequently, Lorms's value of

$7,200,000 for the 90 acres of land cannot be taken to be the true value of the land.

3. Lorms Was Instructed To Value The Improved Land As Unimproved Land

Lorms' opinion cannot be accepted for another reason: which is because of the way Lomis

appraised and valued the land for real property tax purposes. Lorms testified that he did not value

the land as improved, or as the land exists, or as the land was actually being used. because he was

"instructed" by Appellant to value the land "as vacant" and "[a]s it's not being used fo - its current

use" (BTA Tr, p. 180; Appellant's Supp. p. 403). Lomis testified that he was asked not to value the

land as it was currently being used (BTA Tr, p. 19 1; Appellant's Supp. p. 404). Because Lorms was

told to value the land as if vacant, unimproved, and not being used for any purpose, he could not say

whether the land was more valuable based on its current use than it would be based on his value as

vacant and unused land; and he could not say whether the current use was the highest and best use

of the laud or the most valuable use of the land. All Lorms could say was that 71 acres of land was

worth $7.2 million based on its being unimproved, undeveloped, vacant, and not used for any

purpose. Lorms could not testify that the 90 acres of land was actually worth more or less than his

$7.2 million based on its current use or some other use because he had no opinion in that regard.

Lorms testified that he had no opinion of the value of the land as it currently existed or as it

was currently being used:

"Q. You did not appraise and would have no opinion of value of the 89 acres of land as part of an

operating amphitheater?

A. That's correct." (BTA Tr, p. 173; Appellants' Supp. p. 402)

Lorms testified that he did not know whether the highest and best use of the land was as an

amphitheater site or for some other use (BTA Tr, p. 180; Appellant's Supp. p. 403). He

acknowledged that the highest and best use of the land might be its current use: he could not tell

because he did not appraise or value the land based on its current use (BTA Tr, p. 182; Appellant's,o-;

Supp. p. 404). Lorms testified that he did not know whether the land was more valuable as part of

the amphitlieater site than if it were used for some other purpose, such as offices (BTA Tr, p. 177;

Appellant's Supp. p. 403).

It is obviously possible that the land is more valuable as it is actually being used by Appellant

than the $80,000 per-acre value that Lorms put on the land as if it were vacant and undeveloped

4

(Lorms' land value of $7.2 million divided by 90 acres). Lorms acknowledges that the land has very

extensive and very costly land improvements or site improvements which were made to create the

amphitheater bowl and to mound or embank the sides of the 6.5-acre amphitheater site and complex.

It appears from the hand-drawn construction cost data given to the BTA (see Appellant's Exhibit 21;

Appellant's Supp. pp. 339-342) that at least $3,000,000 was originally spent in 1994 in land

improvements, which include grading, drainage, and utilities (not including the paving). Other

significant costs, including soft costs, would be attributed to these items. Lorms acknowledged that

the property owner would have to "move *** about 650,000 cubic yards of dirt" to fill in the

amphitheater site and that the cost to do so would be $3,250,000 or $500,000 per acre (for the six

acre site of the amphitheater), and Lorms felt that it would take about $4 million in total to re-grade

the property to restore it to its original condition (BTA Tr, p. 140, 142, and 143; Appellant's Supp.

p. 393 and 394). Lorms acknowledged that a substantial sum of money was spent to "build the

theater, the bowl" and Lorms testified that these items were "site improvement costs [that were]

specific to an amphitheater use" (BTA Tr, p. 174 and 175; Appellant's Supp. p. 402).

When Lonns valued the 90 acres of land as if vacant, unimproved, and undeveloped, he

failed to value any of these existing land improvements and site improvements which had been made

to the land. These items are part of the true value of the land for real property tax purposes. It was

impossible, of course, for Lorms to conclude or claim that these land improvements did not increase

the value of the land above and beyond his $7.2 million dollars because, as he admitted, he did not

value the land as it was currently being used and he had no opinion of the value of the land based

on its current use or its current condition.

5

LAW AND ARGUMENT

Introduction

The County Auditor valued Appellant's property for tax year 2003 for $20,734,700.

Appellant does not claim that this total value is incorrect. The Delaware County Board of Revision

affirmed the Auditor's valuation of the property, and the Board of Tax Appeals affirmed the decision

of the Board of Revision. There is no evidence in this appeal to suggest that Appellant is entitled

to a reduction in the total valuation of its proper[y for real property tax purposes.

Appellant claims that the BTA erred in affirming the County Auditor's determination of the

"land" value portion of its property. Appellant notes that the Delaware County Auditor determined

that the "land" portion of its property had a value of $13.8 million; while it claims that its appraiser,

Robin Lorms, was of the opinion that the value of Appellant's 90 acres would be $7.2 million if the

Iand were valued as undeveloped and unimproved land.

There was no error made by the County Auditor in the valuation of Appellant's land.

Appellant's 90 acres of land is not undeveloped and unimproved land, and it cannot be valued as

such for real property tax purposes. The comparable sales used by Lorms to value Appellant's land

were unimproved and undeveloped land, which is not comparable to Appellant's land for real

property tax purposes.

Furthermore, Appellant-is notpermitted by R.C. 5715.19(A)(1)(d) to contest the value ofjust

the land portion of its improved property. Appellant is not entitled to any reduction in the true value

of its property because it failed to produce any evidence to suggest that the total true value of its

property ($20,734,700) was incorrect in any manner.

6

Replv to Appellant's Propositions of Law 1:

A Board of Revision Complaint Must Be Filed Against The "Total Valuation" Of AParcel Of Real Property Under R.C. 5715.19(A)(1)(d). A Complainant CannotContest The True Value Of Just The Land Portion Of An Improved Parcel.

R.C. 5715.19(A)(1)(d) was specifically written to prevent a property owner from claiming

that the county auditor's determination of the land value of an improved parcel is incorrect for real

property tax purposes, unless the property owner proves that the total valuation of the property is

thereby made incorrect. This provision requires a complaint to be filed against the "total valuation

or assessment of any parcel." R.C. 5715.19(A)(1)(d) reads as follows:

"(1) Subject to division (A)(2) of this section, a complaint against any of the following

determinations for the current tax year shall be filed with the county auditor on or before the

thirty-first day of March of the ensuing tax year:

(d) The determination of the total valuation or assessment of any parcel that appears on the tax list,

except parcels assessed by the tax commissioner pursuant to section 5727.06 of the Revised Code;"

This language is the result of amendments made in 1982 by Amended Substitute House Bill

379, effective 12/1/82 (139 Ohio Laws, Part II, p. 2630), which were as follows:

"(d) 74ny THE DETERMINATION OF THE TOTAL valuation or assessment OF ANY PARCEL

that appears on the tax list ***;" [the same amendment was made to R.C. 5715.19(A)(1)(e) - the

deleted language is stricken through and the inserted language is capitalized]

The prior version of this section had been interpreted to allow a complaint to be frled against

just the land value of an improved parcel because a land value is a value that "appears on the tax list"

along with the improvernent value and a total value for each improved parcel. This Court had

previously stated that a board of revision complaint could be filed against "the valuation of either the

7

lands or improvements or both" (American Steel & Wire Co. v. Cuyahoga Cty. Bd. of Revision

(1942),139 Ohio St. 388,390; 40 N.E.2d 426; 22 Ohio Op. 445). In line with this, the BTA had held

on several occasions over the years that a property owner could obtain a reduction in value by

claiming that the county auditor's valuation of just the land portion or just the improvements portion

of an improved parcel was incorrect, even if the auditor's "total valuation" of the property was

correct. This makes no sense at all, and this is why R.C. 5715.19(A)(1)(d) was amended in 1982.

By deleting the provision that allowed a complaint to be filed against "any'° valuation that appears

on the tax list and by requiring the complaint to be filed against the "total valuation" of the parcel,

the amendments prevent a complaint from being filed against just the land value portion of an

improved parcel.

The determination of the value of the land portion of an improvedparcel is typically based

on an administrative allocation of the entire value of the property, wliich has no legal consequences

of any kind. The allocation, for instance, does not impact the amount of real estate taxes that are paid

on the property. The allocation is administrative because there are no statutes or rules that determine

how the value of substantial land improvements and site improvements are to be allocated to the land

value or the improvement value portion of an improved parcel. Indeed, this allocation commonly

differs for various types of real property and often depends upon the historical practice of a particular

county auditor's office. It is particularly important to pay attention to this when the property in

question has very substantial land improvements, like the Polaris Amphitheater. One of the

substantial costs involved in the construction of the amphitheater was moving massive amounts of

earth to and from the 6.5-acre amphitheater site to create the earthen mounds and embankments

around the site and to excavate the bowl in which the theater pavilion was constructed. Thevalue

8

added to the property because of these land improvements are included in the value of the "land" for

real property tax purposes. However, when private appraisers value the land as if it were

undeveloped, unimproved, vacant, and unused land, they fail to pick up the substantial value added

to the.land by the land improvements.

Consistent with the requirement of R.C. 5715.19(A)(1)(d) that a complaint must be filed

against the "total valuation" of a property, Appellant's board of revision complaint challenged only

the total valuation of its property (see the complaint at Appellant's Supp., p. 1). The Delaware

County Board of Revision determined only the total value of each of the five parcels, and not the

valuation of the land portion or the improvements portion of the property (see the BOR's decision

at Appellant's Supp., p. 7). R.C. 5715.20 requires a board of revision to render "a decision of a

complaint filed under section 5715.19 ***." R.C. 5717.03(B) requires the BTA to "determine the

taxable value of the property whose valuation or assessment by the county board of revision is

complained of ***." As only the "total valuation" of each of the five parcels was "complained of"

and then determined by the Board ofRevision, only the "total valuation" of each was before the BTA,

and the BTA was required to determine the "total valuation" of each parcel. The only instance in

which a reference was made to the land value and the improvement value portion of the true value

of Appellant's property was in the BTA decision, which incorporated the land value, building value,

and total value of Appellant's property, as previously determined by the County Auditor.

Appellant may claim that R.C. 5715.19(A)(1)(d) only relates to the contents of a board of

revision complaint and not to the jurisdiction of the board of revision or the BTA. In other words,

Appellant may claim that the BTA is required to determine or can determine the land value portion

of an improved parcel and Appellant can appeal that decision to this Court. However, by determining

9

what a property owner may complain of or what a complaint may be filed against, R.C.

5715.19(A)(1)(d) determines the jurisdiction of the board of revision and the BTA.

The BTA has rejected the claim that it can determine the value of just the land portion of an

improved property. In David and Lydia Neubrander vs. Summit County Board of Revision, et al.

(May 13,2005), BTA Case No. 2003-R-1738, unreported, 2005 Ohio Tax Lexis 652, the BTA stated

the following:

"Based upon the 2001 sales price of a vacant lot in his neighborhood, Mr. Neubrander claims that

the land value of his property is overvalued. Real property is generally valued for tax purposes as

a whole, allocating between land and buildings. R.C. 5713.03 requires the county auditor to

determine `the true value of each separate tract, lot, or parcel of real property and of buildings,

structures, and improvements located thereon.' The Ohio General Assembly has also directed boards

of revision to hear and to render decisions on complaints (R.C. 5715.19(C)) that may be filed against

`the determination of total valuation or assessment of any parcel that appears on the tax list' (R.C.

5715.19(A)(1)(d)), (Emphasis added.) Finally, R.C. 5717.03(B) requires that this board determine

`the taxable value of the property whose valuation or assessment by the county board of revision is

complained of.' This board has addressed the piecemeal approach to valuing real property and

rej ected it. "

While Appellant claims that the land value portion of its property is incorrect, it has failed

to prove that the total valuation of the property is incorrect in any nianner. The only apparent issue

involves how certain values are to be allocated between the land value and the improvement value.

If a reduction in the value of Appellant's land is in order, then a corresponding increase in the value

of the improvements would be proper. The total true value would remain unchanged.

10

Reply to Appellant's Propositions of Law 2:

Land Improvements Are Part Of The Value Of The Land Under Article XII, Section2 Of The Ohio Constitution And The Statutes Enacted Thereunder. Land Which HasBeen Improved And Developed Cannot Be Valued As Undeveloped Land.

Rarely does anyone have to pay attention to how land improvements are treated for real

property tax purposes. Land improvements are improvements made to the land itself by grading,

excavation, movement of earth, embanlrnzent, and the construction of utilities in the land. The term

"site improvements" is typically usedto describe land improvements, butthis also includes pavement

and sidewalks; which could be considered to be improvements on the land, rather improvements

made to the land. In this sense, a distinction is made between "improvements" to the land itself and

"improvements" on the land. Improvements to the land are part of the land and the value of land

improvements or site improvements are part of the true value of the land.

Appellant claims that the true value of its 90 acres of land is $7.2 million based on Lorms'

valuation of the land as vacant, undeveloped, and unimproved land. In fact, the correct method to

use to determine the true value of Appellant's land is to add the value of all of the existing land

improvements to be found in the 90 acres of land to Lorms' value of $7.2 million for the undeveloped

and unimproved land (Appellees also believe that Lorms substantially undervalued the land as

unimproved, vacant, undeveloped land). In this respect, Sam Koons' value for the 90 acres of larid

of $8,600,000 is closer to the mark. As indicated in the Facts section of this brief, Appellant's cost

data show that at least $4 million or so in land improvements and site improvements were made to

the land: this produces a value of $12 million to $13 million for the land for real property tax

purposes. This approximation or rough estimate confirms that the County Auditor's value of

$13,681,900 is a good figure for the true value of the 90 acres of land. Appellant did not present the

11

BTA with the actual site improvement and land improvement cost data, so it is actually impossible

for Appellant to argue that the County Auditor's land value is incorrect. Obviously Appellant cannot

benefit from the fact that it failed to present all of the data to the BTA.

The development or improvement of the land to make it a useable site is referred to in

appraisal practice as "site development" and the improvements made to the land are typically called

"site improvements." "Site improvements" are defined to be "improvements that malce the land

ready for its intended use or development" (The Appraisal of Real Estate, 11th Ed., p. 235). Site

improvements are also defined by The Dictionary ofReal Estate Appraisal (1984), published by the

American Institute of Real Estate Appraisers, as follows:

"Site Improvements - Improvements on and off a site that make it suitable for its intended use or

development. On-site improvements include grading, landscaping, paving, and utility hookups;

off-site improvements include streets, curbs, sidewalks, drains, and connecting utility lines."

The Dictionary also defines "site development costs" to be the "[d]irect and indirect costs

incurred in preparing a site for use; e.g. costs of clearing, grading, installing public utilities" (p. 279).

The appraisal text states that "[a]n appraiser begins the valuation of a parcel of land by identifying

*** the available utilities and site improvements" (The Appraisal ofReal Estate, I lth Ed., p. 331).

Site improvements add value to the land because improved land is typically more valuable

than unimproved land. As The Appraisal ofReal Estate (11th Ed., p. 323) states, "site improvements

affect land use and value." For instance, the clearing, grading, excavation, and finish of raw land,

and the addition of drainage and irrigation systems to such land, in order use theland for any specific

purpose,will typically increase and enhance the value of the land itself. This is why Administrative

12

Code Rule 5705 -1-07, which is a rule goveming the appraisal of real property for tax purposes, and

adopted by the Tax Commissioner under R.C. 5715.01, states the following:

"(A) General - All land shall be appraised at its true value in money as of tax lien date of the vear

in which the appraisal or update of values is made.

(B) All relevant facts tending to influence the marlcet value of land should be considered, including,

but not limited to, size, shape, topographv, soil and subsoil, drainage, utility connections, street or

road, land pattern, neighborhood type and trend, amenities, zoning, restrictions, easements, hazards,

etc."

Article XII, Section 2 ofthe Ohio Constitution provides that "Land and improvements thereon

shall be taxed by uniform rule according to value." For purposes of this provision, improvements

made to the land itself are considered part of the "land," while "improvements" made on the land are

considered to be "improvements thereon" and are part of the improvement value. Consistent with

this, R.C. 5701.02(A) defines "land" to include land improvements and other site improvements.

This provision reads, in part, as follows:

"As used in Title LVII [57] of the Revised Code:

(A) `Real property,' `realty,' and `land' include land itself, whether laid out in town lots or

otherwise, all growing crops, including deciduous and evergreen trees, plants, and shrubs, with all

things contained therein *** "

Under this provision, "land" includes "land itself, whether laid out in town lots or otherwise."

Land which is laid out as town lots is generally improved land: with grading. excavation, utilities,

and such. This is whv platted lots, for instance, are valued as pure land without an improvement

1=

value because the site improvements are part of the land value. The reference to "all things contained

therein" or within the land includes utilities and other improvements made to the land.

Robin Lonns, Appellant's appraiser, relied on the sales of 4 tracts of vacant undeveloped and

unimproved land, which were either farm land or land that had not been cleared and was in woods

and scrub. The sales ranged from $100,000 to $129,000 per acre (Lorms' appraisal, Appellant's

Supp., p. 52). None of this land was comparable to the Appellants acreage because the Polaris land

was developed and improved, and Lorms did not account for the value of these improvements.

The Board of Education's appraiser, Sam Koon, valued Appellant's property using a cost

approach. Koon testified that he wanted to use "at least one or two other approaches to check [his]

conclusion under the cost approach" (BTA (Tr, p. p. 46, Appellant's Supp. p. 480), but he did not

have sufficient data to do so and the property owner, Appellant, did not cooperate with Koon (BTA

(Tr, p. 47; Appellant's Supp. p. 480). As part of his cost approach, Koon estimated the value of the

90 acres of land as undeveloped and unimproved land at $95,000 per acre, for a value of $8,600,000

(Koon report, Appellant's Supp. p. 228). Koon relied on cost data given to him during the course

of the 1998 litigation over the value of Appellant's property, to estimate the replacement cost and

depreciated cost of the improvements. Koon simply did not add the value of the land improvements

or site improvements to the value of the land, because that was not necessary for his purposes. To

arrive at the true value of the 90 acres for real property tax purposes, the value of the site

improvements and land improvements would be added to Koon's value of $8,600,000 for the land

as undeveloped and unimproved. This would increase the resulting land value and decrease the

improvement value by the same amount. This process is simply a reallocation of the value of the site

improvements from the "improvement" value back to the "land" value. Koon's total value still

14

remains at $21,000,000, which provides clear support for the County Auditor's value of $20,734,700.

In its decision, the BTA noted that Koon's value provides support for the County Auditor's value

(Decision, p. 18).

Appellant has failed altogether to prove that the County Auditor overvalued its 90 acres of

land. Appellant had the burden of proof and it failed to carry that burden. Appellant failed to prove

that the BTA decision as to the land value was incorrect in any respect.

CONCLUSION

For the reasons set forth herein, this Court is respectfully requested to affirm the decision of

the Ohio Board of Tax Appeals.

Respectfully submitted,

^

e£frey A. Rich (0017495)Mark H. Gillis (0066908)Rich, Crites & Dittmer, LLC300 East Broad Street, Suite 300Columbus, Ohio 43215(614) 228-5822

Attorneys for Appellee Board of Educationof the Olentangy Local School District

15

CL_ w :'K*-xChristopher Bett(0068030) ^y )Assistant County Prosecuting Attorney ^I^ Vr)David Yost (0056290) ^ VzvProsecuting Attorney of Delaware County140 North Sandusky StreetDelaware, Ohio, 43215(740) 833-2690

Attorneys for Appellee Delaware CountyAuditor and Board of Revision

CERTIFICATE OF SERVICE

I hereby certify that a true and complete copy of the foregoing brief was served upon ToddSlegges, 820 West Superior Avenue, Suite 400, Cleveland, Ohio 44113, by regular U.S. mail, postageprepaid, this 7th day of September, 2007.

16

§ 5715.19, Complaints; tender of tax; determination of common level of assessment

(A) As used in this section, "member" has the same meaning as in section 1705.01 of the Revised Code.

(1) Subject to division (A)(2) of this section, a complaint against any of the following determinations for thecurrent tax year shall be filed with the county auditor on or before the thirty-first day of March of the ensuingtax year or the date of closing of the collection for the first half of real and public utility property taxes for thecurrent tax year, whichever is later:

(a) Any classification made under section 5713_041.j57_13_04 11 _ofthe Revised Code;

(b) Any determination made under section__5713.32 or 5713.35 of theRevised Code;

(c) Any recoupment charge levied under section5713.35 oftheRevised Code;

(d) The determination of the total valuation or assessment of any parcel that appears on the tax list,except parcels assessed by the tax commissioner pursuant to section. 5727.06_of the Revised Code;

(e) The determination of the total valuation of any parcel that appears on the agricultural land tax list,except parcels assessed by the tax commissioner pursuant to section5727.06.of the Revised Code;

(f) Any determination made under division (A) of se_ction_319.302_[319._3_0 2] of theRevised Co_de.

Any person owning taxable real property in the county or in a taxing district with territory in the county;such a person's spouse; an individual who is retained by such a person and who holds a designation from aprofessional assessment organization, such as the institute for professionals in taxation, the national councilof property taxation, or the international association of assessing officers; a public accountant who holds apermit under section 4701_10_of the Revised Code, a general or residential real estate appraiser licensed orcertified under Chapter 4763. of the Revised Code, or a real estate broker licensed under Chapter 4735. ofthe Revised Code, who is retained by such a person; if the person is a firm, company, association,partnership, limited liability company, or corporation, an officer, a salaried employee, a partner, or a memberof that person; if the person is a trust, a trustee of the trust; the board of county commissioners; theprosecuting attorney or treasurer of the county; the board of township trustees of any township with territorywithin the county; the board of education of any school district with any territory in the county; or the mayoror legislative authority of any municipal corporation with any territory in the county may file such a complaintregarding any such determination affecting any real property in the county, except that a person owningtaxable real property in another county may file such a complaint only with regard to any such determinationaffecting real property in the county that is located in the same taxing district as that person's real propertyis located. The county auditor shall present to the county board of revision all complaints filed with theauditor.

(2) As used in division (A)(2) of this section, "interim period" means, for each county, the tax year to whichsectign 5715.24 of the Revised Code applies and each subsequent tax year until the tax year in which thatsection applies again.

No person, board, or officer shall file a complaint against the valuation or assessment of any parcel thatappears on the tax list if it filed a complaint against the valuation or assessment of that parcel for any priortax year in the same interim period, unless theperson, board, orofficer alleges that the valuation orassessment should be changed due to one or more of the following circumstances that occurred after the taxlien date for the tax year for which the prior complaint was filed and that the circumstances were not takeninto consideration with respect to the prior complaint:

(a) The property was sold in an arm's length transaction, as described in section5713.03 of theRevisedCode;

(b) The property lost value due to some casualty;

(c) Substantial improvement was added to the property;

(d) An increase or decrease of at least fifteenper cent in the property's occupancy has had a substantialeconomic impact on the property.

(3) If a county board of revision, the board of tax appeals, or any court dismisses a complaint filed underthis section or section5715.13 of the RevisedCode for the reason that the act of filing the complaint was the

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unauthorized practice of law or the person filing the complaint was engaged in the unauthorized practice oflaw, the party affected by a decrease in valuation or the party's agent, or the person owning taxable realproperty in the county or in a taxing district with territory in the county, may refile the complaint,notwithstanding division (A)(2) of this section.

(B) Within thirty days after the last date such complaints may be filed, the auditor shall give notice of eachcomplaint in which the stated amount of overvaluation, undervaluation, discriminatory valuation, illegalvaluation, or incorrect determination is at least seventeen thousand five hundred dollars to each propertyowner whose property is the subject of the complaint, if the complaint was not filed by the owner or theowner's spouse, and to each board of education whose school district may be affected by the complaint.Within thirty days after receiving such notice, a board of education; a property owner; the owner's spouse;an individual who is retained by such an owner and who holds a designation from a professional assessmentorganization, such as the institute for professionals in taxation, the national council of property taxation, orthe international association of assessing officers; a public accountant who holds a permit under section4701.10ofthe Revised Code, a general or residential real estate appraiser licensed or certified under Chapter4763. of the Revised Code, or a real estate broker licensed under Chapter 4735. of the Revised Code, who isretained by such a person; or, if the property owner is a firm, company, association, partnership, limitedliability company, corporation, or trust, an officer, a salaried employee, a partner, a member, or trustee ofthat property owner, may file a complaint in support of or objecting to the amount of alleged overvaluation,undervaluation, discriminatory valuation, illegal valuation, or incorrect determination stated in a previouslyfiled complaint or objecting to the current valuation. Upon the filing of a complaint under this division, theboard of education or the property owner shall be made a party to the action.

(C) Each board of revision shall notify any complainant and also the property owner, if the property owner'saddress is known, when a complaint is filed by one other than the property owner, by certified mail, not lessthan ten days prior to the hearing, of the time and place the same will be heard. The board of revision shallhear and render its decision on a complaint within ninety days after the filing thereof with the board, exceptthat if a complaint is fiied within thirty days after receiving notice from the auditor as provided in division (B)of this section, the board shall hear and render its decision within ninety days after such filing.

(D) The determination of any such complaint shall relate back to the date when the lien for taxes orrecoupment charges for the current year attached or the date as of which liability for such year wasdetermined. Liability for taxes and recoupment charges for such year and each succeeding year until thecomplaint is finally determined and for any penalty and interest for nonpayment thereof within the timerequired by law shall be based upon the determination, valuation, or assessment as finally determined. Eachcomplaint shall state the amount of overvaluation, undervaluation, discriminatory valuation, illegal valuation,or incorrect classification or determination upon which the complaint is based. The treasurer shall accept anyamount tendered as taxes or recoupment charge upon property concerning which a complaint is thenpending, computed upon the claimed valuation as set forth in the complaint. If a complaint filed under thissection for the current year is not determined by the board within the time prescribed for such determination,the complaint and any proceedings in relation thereto shall be continued by the board as a valid complaint forany ensuing year until such complaint is finally determined by the board or upon any appeal from a decisionof the board. In such case, the original complaint shall continue in effect without further filing by the originaltaxpayer, the original taxpayer's assignee, or any other person or entity authorized to file a complaint underthis section.

(E) If a taxpayer files a complaint as to the classification, valuation, assessment, or any determinationaffecting the taxpayer's own property and tenders less than the full amount oftaxes or recoupment chargesas finally determined, an interest charge shall accrue as follows:

(1) If the amount finally determined is less than the amount billed but more than the amount tendered, thetaxpayer shall pay interest at the rate per annum prescribed by section 5703.47of theRevised Code,computed from the date that the taxes were due on the difference between the amount finally determinedand the amount tendered. This interest charge shall be inlieu of any penalty or interest charge under section323,121[323_12.1]. o_f_the Re_visedCode unless the taxpayer failed to file a complaint and tender an amountas taxes or recoupment charges within the time required by this section, in which case section_321121[323.12..1] oftheRevised,Code applies.

(2) If the amount of taxes finally determined is equal to or greater than the amount billed and more thanthe amount tendered, the taxpayer shall pay interest at the rate prescribed by section 5703.47 of theRevisedCode from the date the taxes were due on the difference between the amount finally determined andthe amount tendered, such interest to be in lieu of any interest charge but in addition to any penaltyprescribed by section323.121[323,12.1] of the Revised Code.

(F) Upon request of a complainant, the tax commissioner shall determine the common level of assessment of

(l^http://w^vvti'.lexis.com/researcliiretrieve?_ni=50884daa5419e5afa368e456b608f70f&csvc=to... 9/7,i2007

real property in the county for the year stated in the request that is not valued under section 5713.31 of theRevised Code, which common level of assessment shall be expressed as a percentage of true value and thecommon level of assessment of lands valued under such section, which common level of assessment shallalso be expressed as a percentage of the current agricultural use value of such lands. Such determinationshall be made on the basis of the most recent available sales ratio studies of the commissioner and suchother factual data as the commissioner deems pertinent.

(G) A complainant shall provide to the board of revision all information or evidence within the complainant'sknowledge or possession that affects the real property that is the subject of the complaint. A complainantwho fails to provide such information or evidence is precluded from introducing it on appeal to the board oftax appeals or the court of common pleas, except that the board of tax appeals or court may admit andconsider the evidence if the complainant shows good cause for the complainant's failure to provide theinformation or evidence to the board of revision.

(H) In case of the pendency of any proceeding in court based upon an alleged excessive, discriminatory, orillegal valuation or incorrect classification or determination, the taxpayer may tender to the treasurer anamount as taxes upon property computed upon the claimed valuation as set forth in the complaint to thecourt. The treasurer may accept the tender. If the tender is not accepted, no penalty shall be assessedbecause of the nonpayment of the full taxes assessed.

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§ 5717.03. Decision of the board of tax appeals; certification effect

(A) A decision of the board of tax appeals on an appeal filed with it pursuant to section 5717.01, 5717.0115717.01_1]., or 57_17.02 of the Revised Code shall be entered of record on the journal together with the date

when the order is fiied with the secretary for journalization.

( B) In case of an appeal from a decision of a county board of revision, the board of tax appeals shalldetermine the taxable value of the property whose valuation or assessment by the county board of revision iscomplained of, or in the event the complaint and appeal is against a discriminatory valuation, shall determinea valuation which shall correct such discrimination, and shall determine the liability of the property fortaxation, if that question is in issue, and the board of tax appeals's decision and the date when it was filedwith the secretary for journalization shall be certified by the board by certified mail to all persons who wereparties to the appeal before the board, to the person in whose name the property is listed, or sought to belisted, if such person is not a party to the appeal, to the county auditor of the county in which the propertyinvolved in the appeal is located, and to the tax commissioner.

In correcting a discriminatory valuation, the board of tax appeals shall increase or decrease the value of theproperty whose valuation or assessment by the county board of revision is complained of by a per cent oramount which will cause such property to be listedand valued for taxation by an equal and uniform rule.

(C) In the case of an appeal from a review, redetermination, or correction of a tax assessment, valuation,determination, finding, computation, or order of the tax commissioner, the order of the board of tax appealsand the date of the entry thereof upon its journal shall be certified by the board by certified mail to allpersons who were parties to the appeal before the board, the person in whose name the property is listed orsought to be listed, if the decision determines the valuation or liability of property for taxation and if suchperson is not a party to the appeal, the taxpayer or other person to whom notice of the tax assessment,valuation, determination, finding, computation, or order, or correction or redetermination thereof, by the taxcommissioner was by law required to be given, the director of budget and management, if the revenuesaffected by such decision would accrue primarily to the state treasury, and the county auditors of thecounties to the undivided general tax funds of which the revenues affected by such decision would primarilyaccrue.

(D) In the case of an appeal from a municipal board of appeal created under section 718.11 of the Rev_isedCode, the order of the board of tax appeals and the date of the entry thereof upon the board's journal shallbe certified by the board by certified mail to all persons who were parties to the appeal before the board.

(E) In the case of all other appeals or applications filed with and determined by the board , the board's orderand the date when the order was filed by the secretary for journalization shall be certified by the board bycertified mail to the person who is a party to such appeal or application, to such persons as the law requires,and to such other persons as the board deems proper.

(F) The orders of the board may affirm, reverse, vacate, modify, or remand the tax assessments, valuations,determinations, findings, computations, or orders complained of in the appeals determined by the board, andthe board's decision shall become finai and conclusive for the current year uniess reversed, vacated, ormodified as provided in section_5717.04_of_t_he Re_vised Code. When an order of the board becomes final thetax commissioner and all officers to whom such decision has been certifiedshall make the changes in theirtax lists or other records which the decision requires.

(G) If the board finds that issues not raised on the appeaf are important to a determination of a controversy,the board may remand the cause for an administrative determination and the issuance of a new taxassessment, valuation, determination, finding, computation, or order, unless the parties stipulate to thedetermination of such other issues without remand. An order remanding the cause is a final order . If theorder relates to any issue other than a municipal income tax matter appealed under sections 718.11 and5717.011 f5717,01 1]ofthe_Revised _Code, the order may be appealed to the court of appeals in Franklincounty. If the order relates to a municipal income tax matter appealed under sections 718.11 and 5717,011of theRevised_Code, the order may be appealed to the court of appeals for the county in which the municipalcorporation in which the dispute arose is primarily situated.

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2005 Ohio Tax LEXIS 652, *

Pages: 7

David and Lydia Neubrander, Appellants, vs. Summit County Board of Revision, and Summit County Auditor,Appellees.

CASE NO. 2003-R-1738 (REAL PROPERTY TAX)

STATE OF OHIO -- BOARD OF TAX APPEALS

2005 Ohio Tax LEXIS 652

May 13, 2005, Entered

[*i]

APPEARANCES:

For the Appellants -- David Neubrander, pro se, 1480 Hunting Hollow Drive, Hudson, OH 44236

For the County Appellees -- Sherri Bevan Walsh, Summit County Prosecuting Attorney, Marvin D. Evans,Assistant Prosecuting Attorney, 220 South Balch Street, Suite 118, Akron, OH 44302-1606

OPINION:DECISION AND ORDER

Ms. Margulies, Mr. Eberhart, and Mr. Dunlap concur.

The Board of Tax Appeals considers this matter pursuant to a notice of appeal filed by David and LydiaNeubrander. Mr. and Mrs. Neubrander appeal from a decision of the Summit County Board of Revision("BOR"), in which the BOR determined the taxable value of the subject property for tax year 2002.

The Summit County Auditor determined that the true and taxable values for the subject property for 2002should be as follows:PARCEL TAXABLE TRUENUMBER VALUES VALUES

30-06275

Land $ 30,710 $ 87,730Building $ 79,600 $ 227,420

Total $ 110,310 $ 315,150

• . ..

The BOR, however, determined that the true and taxable values of the subject property for 2002 should bereduced as follows:PARCELNUMBER

TAXABLEVALUES

TRUEVALUES

30-06275

Land $ 26,230 $ 74,940

Building $ 79,600 $ 227,420

Total $ 105,830 $ 302,360

Dossier! History Total L tigator

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Print I Download I Fax I Email I Text Onlv

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ithttp://www.lexis.eomirescarclv'retrieve?_m=5e4d1 e34605f01 f6d4fc2f387646b976&csvc=le... 9/7!2007

According to their notice of appeal, the Neubranders contend that the 2002 taxable and true values of theirproperty should be further reduced to:PARCEL TAXABLE TRUENUMBER VALUES VALUES

3D-06275

Land $ 16,800 $ 48,000

Building $ 69,310 $ 198,000

Total $ 86,110 $ 246,000

The subject property consists of approximately two acres, which is improved with a single-family house. Thestructure, built in 1992, has eight rooms, including four bedrooms, two and a half baths, and a fireplace. Thehouse consists of approximately 3,400 total square feet of gross living space, according to the propertyrecord card. See S.T. The property is located at 1480 Hunting Hollow Drive, Hudson, Summit County, Ohio, inthe Hudson City, Hudson City Schools taxing district. According to the property record card, the appellantspurchased the subject property in July 1993 for $ 230,000.

The matter is submitted to the Board of Tax Appeals upon the notice of appeal, the statutory transcript("S.T.") certified to this board by the BOR, and the record of the evidentiary hearing ("H.R.") before thisboard, including exhibits. At the hearing, Mr. Neubrander testified on his own behalf. Despite due [*3]notice, the county appellees did not appear.

We begin our review of this matter by noting that a party who asserts a right to an increase or a decrease inthe value of real property has the burden to prove its right to the value asserted. Cleveland Bd. of,Edn_ v.,Cuvahoga Ct.Bd. ofRevrsion11990^ 50 Ohio St 3d 55; Mentor Exempted ViUac^e Bd. of Edn. v. Lake Cty_.Bd. of Revrsion_(1.988), 37 Ohio St.3d 318. Consequently, it is incumbent upon an appellant challenging thedecision of a board of revision to come forward and offer evidence that demonstrates its right to the valuesought. ClevelandBd,ofEdn,. supra;. Springfi_el_dLo_cal_Bd. ofEdn. v. Summit_Cty_Bd. of Revision^t994), 68Ohio St.3d 493.

It is not enough, however, to simply come forward with some evidence of value. Neither is it sufficient togrant the requested increase or decrease merely because no evidence is adduced in contradiction to theclaim. Western IndustriesInc.v.Hamilton Cty__Bd_ofRevision 1960),170OhioSt. 340_ In short, there is aburden of persuasion [*4] that rests with the appellant to convince this board that the appellant is entitledto the value that it seeks. Crncinnati School_8d_ofEdn. v._Hamilton CtyBd. of Revision_(1997) 78_OhioSt.3d 325. See, also, Amsdel! v C^ahoga Cty_._ Bd.of Revision (1994165 Ohio St 3d 572 573.

Accordingly, this board must proceed to examine the available record and to determine value based upon theevidence before it. Coventrv Towers,_Inc. v.__Strony_sviAe^1985^, 18 Ohio_St,3d 120; Clark v. G(ander_(194F^,151 Ohio St. 229. In so doing, we will determine the weight and credibility to be accorded to the evidencepresented. Car_dinal Fed. S_& L_ASSn y_ Cuyahoga Cty, Bd of Revision 197D,_44 Ohio St.2d 13.

R.C. 5713.03 directs that:

"The auditor shall assess all the real estate situated in the county *** atits true value in money***

"In determining the true value of any tract, lot, or parcel of real estate under this section, if suchtract, lot, or parcel has been the subject of an arm's length [*5] sale between a willing sellerand a willing buyer within a reasonable length of time, either before or after the tax lien date, theauditor shall consider the sale price *** to be the true value for taxation purposes."

Case law indicates that an arm's-length sale generally represents the best evidence of true value. See Stateex rel. Park Investment Co_v_Bd. ofTax Appeals (1964),_175 Ohio_St.410, InRe Estateof Sears (19_77),172 Ohio St 443; Conalco v. Bd. of Revisron.(1977), 50 Ohio St 2d 129; and Reynolds6urg8d of Edn. V.Licking Cty. Bd.of Revfsion_(1997),78 Ohio St. 3d 543. However, where there is no recent arm's-length sale,

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then a review of other evidence, such as an independent appraisal or appraisal-type evidence, is appropriate.See Ratnerv.Stark Cty. Bd.of Revision I1986),23_OhioSt.3d 5% and Cincinnati v. Hamilton Cty. Bd. ofRevision (Nov. 13, 1992), BTA No. 1990-R-1264, unreported.

In the matter before us, Mr. Neubrander states that his house and backyard are located right next to theOhio Turnpike. [*6] The property is also affected by the presence of high tension wires, various easements,and a railroad crossing about one-third mile away. Because of these circumstances, the windows in the backof his house shake, and he and his family are unable to enjoy the use of the backyard because of the noise.Further, the fireplace is crooked, and the hardwood floors are warped. In addition, Mr. Neubrander points outthat when he initially purchased this property in 1992, it was the least expensive house in the neighborhood.

Mr. Neubrander testified that assessments by the county of properties in his neighborhood, including his own,have been consistently overvalued based upon his comparison of the assessed values with the sales prices ofthose properties. However, assessed values do not present competent evidence of the subject property'svalue. WJJK Investments_Inc. v. LickingCty_ Bd. of Revision 1996),76_Ohio St. 3d 29; Sherman v.Cuyahoga Cty. Bd. of Revision (Mar, 17,2000), Cuyahoga App. No. 75971, unreported. Similarly, in Benit v.Delaware Cty. Bd. of Revision (Mar. 18, 1994), BTA No. 1993-B-722, unreported, this board concluded thattaxable [*7] values reflected on other properties provide little insight into the value of the property at issue:

"The appellant has attempted to show a lower value than that assessed by the BOR. However,appellant's presentation of evidence fails to carry the burden of proof as to what the property isactually worth. The appellant has submitted a comparative analysis of the tax valuation of certainneighboring land. However, we have often stated that such information is not particularly helpful.Tax valuations are not sales, and a comparative analysis thereof is always subject to theobjection that the tax valuations of the compared properties are not themselves market value.Henry W. Haydu v. Portage Cty. Bd. of Revision (June 18, 1993), BTA No. 1992-H-576,unreported." Id. at 6.

Therefore, the fact that the county may have placed values on parcels of real estate in excess of the parcels'sales prices is irrelevant to this board's duty to determine the true value of the subject property as of the taxlien date.

Based upon the 2001 sales price of a vacant lot in his neighborhood, Mr. Neubrander claims that the landvalue of his property is overvalued. Real property is generally valued [*8] for tax purposes as a whole,allocating between land and buildings. R.C. 5713.03 requires the county auditor to determine "the true valueof each separate tract, lot, or parcel of real property and of buildings, structures, and improvements locatedthereon," The Ohio General Assembly has also directed boards of revision to hear and to render decisions oncomplaints (R.C. 5715.19(C)) that may be filed against "the determination of total valuation or assessment ofany parcel that appears on the tax list" (R.C. 5715.19(A)(1)(d)). (Emphasis added.) Finally, R.C. 5717.03(B)requires that this board determine "the taxable value of the property whose valuation or assessment by thecounty board of revision is complained of."

This board has addressed the piecemeal approach to valuing real property and rejected it. See North OlmstedBd. of Edn. v. Cuyahoga Cty. Bd, of Revision (July 21, 1995), BTA Nos. 1993-X-92 and 1993-X-93,unreported. In Amsdell, Trustee v. Cuyahoga Cty. Bd. ofRevision (Interim Order, Nov. 14, 1994), BTA No.1993-M-1336, unreported, the board held:

"While the appellant may wish to limit testimony to only the land valuation of a subject property,upon complaint [*9] to the BOR, he placed the total valuation of the subject property in issue.Once the total valuation was placed into issue and appealed to this board, this board has theobligation to fulfill its statutory duty. We are obligated to determine the market value of a subjectproperty -- not the market value of only the land or only the buildings thereon. While someproperties may be properly valued in part, and therefore, the board would determine a change inonly the land or building portion of the valuation, our broad investigatory powers as well as ourlegislative mandate lead us to conclude that we have a duty to consider the total property in ourvaluation findings." Id. at 8-9.

See, also, Heskett v. Ross Cty. Bd, of Revision (Oct. 17, 2003), BTA No. 2002-M-2107, unreported; MidlandFood Services, LLC v. Cuyahoga Cty. Bd. of Revision (May 3, 2002), BTA No. 2001-G-1S1, unreported. But,compare American Steel & Wire Co. v. Bd. ofRevision of Cuyahoga Cty. (1942), 139OhioSt,388, 390

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("Such complaints [filed under the former General Code provisions] may relate to the valuation of either thelands or improvements or both.").

Additionally, [*10] based upon the sales of eight properties in his neighborhood, Mr. Neubrander maintainsthat his property continues to be overvalued. See Appellant's Ex. B.

Of the eight sales presented by Mr. Neubrander on Ex. B, three sales, 1, 3, and 8, were remote in time as tothe tax lien date, and therefore not recent enough to provide a meaningful indication of value for the subjectproperty. See Dublin-Sawmi7l Propertiesv. Franklin Ctv. Bd.of Revision C1993), 67 Ohio St.3d 575;. NewWinchester Gardns Ltd. v. FCanklin Cty_. Bd. of Rewsion1997) 80 Ohio St.3d 36•_ Columbus City Schools8d. of Edn. v. Franklin Cty. Bd. of Revision (June 23, 2000), BTA No. 1997-G-1216, unreported. Furthermore,Mr. Neubrander testified that sales 4, 5, 7 and 8 were not comparable to the subject property.

The property that was the most comparable to his own, in Mr. Neubrander's opinion, was sale number 6,located at 1607 Hunting Hollow Drive. This property sold in January 2002 n1 for $ 285,000. Mr. Neubranderbelieved it was the result of an arm's-length transaction, having talked with the buyers of the property. Thiscomparable, however, was a[*11] little nicer than the subject property, in Mr. Neubrander's opinion. It costapproximately $ 5,500 more than the subject property when initially purchased a year and a half before thesubject property was purchased by the appellant. It is architecturally more interesting, with varying rooflines, and has more landscaping than the subject. It is also located across and down the street, so it is notsitused next to the turnpike or affected by the high tension lines. This is the basis for Mr. Neubrander'sopinion that the subject property should be valued at $ 246,000 as of the tax lien date, January 1, 2002. n2

ni Although Appellant's Ex. B states that this property last sold in January of 2001, Mr. Neubrander correctedthis through his testimony, stating that the comparable sold in January 2002.n2 Mr. Neubrander submits that he spoke with Becky Glinsik, who is apparently employed by the SummitCounty Auditor's office, regarding the value of his property prior to filing the complaint for 2002. He assertsthat based upon this comparable, Ms. Glinsik orally agreed that the subject property should be valued at $246,000. However, when the tax bill arrived, a higher value was assessed. Unfortunately, estoppel does notapply against the state even where employees make misleading or confusing statements. Loveland Park

Baptist Church v. Kinney (May 25, 1983), Warren App. No. 126, unreported. See, also, Harper v. Tracy (Apr.29, 1994), BTA No. 1992-S-1446, unreported, at 4, fn. 2; Hazelwood v. Tracy (Dec. 13, 1996), BTA Nos.1996-K-34, et seq., unreported, at 9-10; Stateex rel._Cooker Restaurant Corp_v. Mon»r^omervCty.Bd. of

Elections 1997),_80 Ohio St.3d 302, 30^ Reynolds Avenue Transfer Station v. Franklin Cty. 6d. of Revision(Nov. 30, 2001), BTA No. 2001-S-217, unreported: [*12]

In reviewing Mr. Neubrander's list of comparable properties and based upon Mr. Neubrander's testimonyregarding these comparables, the board finds only the January 2002 sale of the property located at 1607Hunting Hollow Drive for $ 285,000 to be comparable to the subject. As the testimony supports, thatcomparable was superior in grade and condition to that of the subject. Therefore, this board is left with theowner's opinion of value for the subject property. "As an exception to the general rule, an owner is permittedto testify concerning the value of his property without being qualified as anexpert, because he is presumedto be familiar with it from having purchased or dealt with it." Tokles &-So%Inc._ v,_Midwestern Indem.Co._(19nJ 65 Ohio St.3d 621, paragraph two of the syllabus. Although the BOR was given the opportunity tochallenge Mr. Neubrander's evidence and provide additional evidence of its own, it failed to do so.

The record before us is not perfect. However, this board must nrujke a determination of true value for thesubject property, based upon the existing record. Therefore, basecl iapon the ezisting record, this board findsthat [*13] the subject property has a true value of $ 246,000.

Applying the approximate percentages to land and building as the BOR did, the Board of Tax Appeals findsthe true and taxable values of the subject property as of January 1, 2002 to be as follows:

PARCEL TAXABLE TRUENUMBER VALUES VALUES

30-06275

Land $ 21,520 $ 61,500

Building $ 64,580 $ 184,500

Total $ 86,100 $ 246,000

Accordingly, it is the order of the Board of Tax Appeals that the Auditor of Summit County list and assess thesubject property in conformity with this decision and order. It is further ordered that this value be carriedforward in accordance with the law.

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BOARD OF TAX APPEALS

RESULT OF YES NO DATEVOTE

Ms. Margulies 5/1/05

Mr. Eberhart 5-12-05

Mr. Dunlap 5-12-05

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The

Dictionaryof

Real EstateAppraisal

'iiAmerican Inscicuce of Real Esrate Appraisers

430 Norfi Michigan Avem¢ • Chicago, lllinois

siding1. Finish lumber used on exterior walls; e.g., bevel siding, boards and

barcens, shingles.2. An auxiliary railroad track used for meeting and passing crains,

storing cars, loading and unloading, and other designated pur

poses; connects at both ends w'ich che maincrack.

sight line. A line or area of unobstructed visibiliry; usually indicates the

diseance from which a business property or commercial site is visible to -

approaching vehicular traffic,

sight line easement. A. easement gianted to procect a sight line; usually

prohibits conscruccionor natural growch rhat might obscatct a prop-

ertys visibility to approaching vehicular traffic.

silage. See ensilage.

I. Franiing lumber placed atop and around a foundation to serve as a-

level base for exterioc wall studs and the ends of ffloor joists.

2. The lowest piece on which a window or excerior door rests; usually

slanted downward slighcly to provide for rainwater runoff.

silo. A structure of wood, concrete, or steel that is used to smre fodder for

conversion into silage; a smrage bin for grain; a gnin elevator. [71

silt. Sn-all mineral soil grains with particles rlrat range in diaineter from

0.050 tn0.020 millimeters.

silt clay loam. A soil composed of moderate amounts of finegrades of sand

and of clay, but more than 50% silt and clay, with more clay than silt

loam; cloddy when dry; tends to ribbon when wet soil is squeezed

berween finger and thuinb.

silt loam. A soil made up of modemte amounts of fine grades of sand, small

amounts of clay, and at least 50% silr, appears cloddy when dry; is -

smooth when wet and will not ribbon when squeezed.

simple interest. Interest that ispaid only on the original principal, nor on

any interest accmed.

simulation. The use of an gxperimental model that is designed toapproximate actual conditions.

single-family house. A dwelling that is designed for occupancy by unrfamily.

single-pitch roof. A single-plane roof'with a pitdi of inore than 20 degrees.

sinking fund. A fund in which periodic deposits of equal amounts of moncycare accumulated ro pay a debt or replace assets; usually designed mreceive equal annual or monchly deposits chat will accumulate, wiiheompound interest, m a predetermined sum ar the end of a sraredperiod of cime.

sinking fund factor (11S.,). The compound interest factor that indicatesthe amount per period thar will grow, winc compound interes't, m$ 1,

sinking fund rable. A mbulation of aniounts rhat will accumulace to a

desired sum at a specified dare in che fumre if invested annually in acompound interest-bearing account at a srnted rate.

siphon. A bent tube that carries water from an irrigation ditch to a field.

SIRo. See Society of Industria! REALTORSx

site. Lartd chat is improved so Ihat it is ready to be used fur a specificpurpose.

site development costs. Direct and indirect costs incurred in preparing asite for use; e.g., costs for clearing, grading, insnlling public utilities,

site orientation. The relarionship between a structure and its surroundings.

situs. In real estate, rhe physical location of a property; in personal property,the taxable location, because personal property may be moved from oneplace to another.[10]

six functions of $1. The six, related compounci interest functions used inche machematics of finance and shown in standard compound interesrtables. They are: the amount of .$1, the amoont of $1 per period, the

The Appraisal of Real Estate

Eleventh Edition

AReaders of this text niay be interested inAp7nuisuag Resa.derztial Proper'ties, second edition,and Tlae Dictdomi6wj of Re.at E'state Appraisal, tlurd editioa

flor a catalog of dppaisal fnstitute puhlications, contsct the PHA4arketing Departnient of fhe

Appraisal Institute, 8 i6 N. Miclugsn Avenue, Clticago, Illinois 60611-1980

APPRAISAL ,INSTITUTE`

875 North MicluguiAvenueChicago, Illinois 60611-1980

APPRA[SFL-OF REAL ESTATE

CombinationApartment-Rooming House Use

Single-FamilyOccupancy Use

Gross income $9,600 $6,900

Vacancy or coltection losses (10%) -960 -69Effective gross income $8,640 $6,210

Expenses =2 0 Q

NOI $6,640 $6,210

Overall capitalization rate' 10p1o 10%n

Value $66,400 $62,100

oversu aNtarieation rates era dlsufved in n^apter z9.

The figures suggest that the blghest and best use of the property as iniproved wonld be a

cotnbination apartment-roomung house.

Example 2. Capital Expenditure Required

A warehouse propeL'ty can be rented for $75,000 total net to the ow-ners. However, tlteowners are considering converting some of the warehouse space into office space and

increasing the rent. The conversien would cost approximately $125,000 and wonld

probably add to the nraticet value of the property, wluch is eurrently $600,000. Pvi

appraiser estimates that ivith the new office space the annual rent could be nrceased to$85 000, even though the amount of warehouse space woWd be reduced. The calculationsused for the highest and best use analvysis are shown below.

Warehouse Use Only Warehouse with Office Space

N07 $75,000 $85,000

OveralL capitalization rate 12.5Wo 12.5%

Capitalized NOI $600,000 $680,000

Conversion cost 0 -125,0 0Property value $600,000 $555,000

The warehouse without offices is the 1>lghest and best use of the property as improved.

Highest and Best Use Statements

AII appraisal reports should contam statements that describe the appraiser's analyses and

conclusions pertaining to the highest and best use oPthe land or site as thouglt vacant orof the property as improved; both ntust be described in market value assignments wherea separate site valuation is always included. As a general rule, the higlLest and best usestatentent shoLdd summarize the discussion Uiat precedes it and follow the sequence of

the four tests. A logically struct.ured review of the four tests forms a foundation for theopinion of value.

WLen the highest and best use conclusion is the printary objective of a consulting

included. If au appraiser couchrdes thall the highest. and best use of an improved property

is different from its eaisting use, justification for this conclLUion should be included in themarket value appraisal report: When Ute highest and best nse conclusSnns are based on

techniques applied to iclentify the highest and best use anrong two or tnore potential

Lrses, the full arralysts is usually inCluded in the appraisal report.When a separate eatimate of land valne is presented ht an apptaisal, it is appropri-

ate for the report to discnss Ute highestand best use of Uie land as though vacant as w'e11

as the hlghest and best use of the property as itnproved a If a separate estimate of land

vahte is not presented and Ute appraisal is condltioned on continueduse of t.he property

as iniproved, the appraiser usualty discusses only Ihe highest and best use of tlre prop

erty as improved. In such cases the existing improvements may not represent the highestand hest use of the site, but they are expected to continue in use and thns add value to

ihe site.Each parcel of real estate may have a lughest and best use ot' the land or site as

though vacant and a different ttighest and best use of bhe property as iLnproved If an

appraiser coLnments on botlrthe highest and best use of the land as though vacant andthe property as improved, eacb liighest and best use nrost he iclentified separately Lt the

ltighest and best use section of the appraisal report. 77re hPghest and best use of tbe land

or sit,e is presented first, witha statementthat the determination was made under the

theoretical preswnption CILat the tand is vacant and available for development.'Chel the

highest aod best useof the property as improved is given with a statement that thedetermination was based on the Nture potential of the land aud the existing improve-

n ents.If the land is already inrpmved to its highest atrd best use, the two statements may

be combured. Nevertheless, the report should specifically sram that the determurntion is

the same for botlt the land as though vacant and the propeLty as improved, or that tlle

land is improved to its highet and best use.' An appraisal report should atso identify the Irighest and best. nses er the compa-

rable sale p'opertles, both as thmLgh vacaLtt and as unproved. If tlre finprnved comparnbleproperties have different highest and best uses of the land as though vacant and uf t,heproperty as iniproved, Uds must also be explained. The differeuce could affect valuc,

especially in tlie sales coinparison approach.

Special Situations in Highest and Best UseAnalysis

The premises of highest and best use analysis are fuudanrental to all studies of tl le uses

to which vacant land or improved properties can be put. In idenCifying and testing highest

and best uses, however, special considerations are reqnirecl to address single uses,

interim uses, legaUy nonconfotnring uses, uses that are not Irighest and best, multiple

uses, special-pnrpose uses, speculative uses, and excess land.

6. StanaaNs aules 1dts) and 1-4(1) d uSGAP vhiah a2 spenft guidelioe nrder Nzn hmsng rawlrementS adcise zppalsem

in doveloping a eal propalTy apwaisal ta'remgn@e thxt Iznd is apprelsed zs tl,oogb vacant and zrallable !or deaetapenr toies higheit and beat um and tM1at rne appoisrt oL Impmvements is haseE on the{r, aetual mntriEUHOn tu 91e sltef" and to"value the sit¢ ky in appmpnate xpp20at meNeC or Getl,nipue."

THE APPpA[5Rt 01 REAL fSrATE

322

When prices clrop sufficiently, supply will contract because existing uses will be retained.

\N7ren ptices rise, a new supply may be created tluough rezoning, annexation, or aban-donment of existing uses.

Although the supply of and demand for sites tend toward ultimate equltibrium, this

principle may not apply in the short rim. If one type of site is very scarce in a particular

location, the pressure of intense market competition may uicrease the value of such sites

beyond the level indicated by their profitability. For example, the rents that can be

obtamed for office space in a particular location may notjustify the high pLices being paid

for office sites. Similarly, the prices that can be obtained for improved residential

pvperties may notjusCGfy the high prices paid for the 1aSt few lots in a popular location.

Nevertheless, market value is genemlly the most probable ptice the market can sustain.

Eventually, the equilib'ium among prices and land values will be reestablished; if all other

factors'remain constant, values will rise or prices will fall.

Land value is substantially affected by the interplay of supply and demand, but it isthe econonric use of a site that deter-mines its value in a parGcular market. For example,

the price that a developer can afford to pay for a warehousesite is determfned by the net

income that the warehouse will earn ancl the cost of constructing it. Intense competition

fm' clioice sites or for the last remaining sites in a particular location can cause prospec-

tive owners or owner-occupants to pay ntore for a particular site than is indicated by thebroad spectrmn of market activity and the highest and best use of the site.

The principle of substituGon, which holds that a buyer will not pay more for onesite than for another that is similar or equal, applies to land values and indicates that tlle

greatest demand will be generated for the lowest-priced sites. The principle of balance isalso apphcable to land values. When the various elements of a particular economic mix ora specific environment are in a state of equilibrium, value is sustained; when the balanceis upset, values change. If, for example, a district has too much industrially zoned land,property values will probably fall. Because prices are usually quoted in inflated, notconstant, dollars, prices may appear to be increasing when they are actually falling orremaining level.

Property Rights and Public Controls

The appraisal of land focuses on valuing the property rights attached to the land. These

include the rights to develop the land within certain lirnits, to lease it to others, to farm it,

to mine it, to alter its topograply, to subdivide it, to assemble it, and to use it for wastedisposal. O3henever possible, an appraiser should consult pulilic records to identifyeasements, rights-of-way, and private or public restrictionsthat affect the subjectproperty.

Because the supply of land cannot keep pace with the demand for it, governmentsregulate how land can be used and developed. Most municipalities and counties have

some form of zoning tliat specifies how a parcel of land can be developed. In addition tozoNng, many jurisdictions now have master plans that specify long-tem development

goals. Developers frequently must provide public amenities such as open space, streets,and adjacent or oH-site public improvements to acquire development nghts. Sometimesdevelopers can proceecl with development only after they submit approved site plans. In

LANO OR SITE YALVFr[ON

323

some areas citizen groups may protest a development they do not like, and their wlshes

frequently influence the type of development that is finally approved.

Through the power of eminent domain, tbe government can remove land B'mn

private use to augment the supply of public land or modify land use through urban

renewal programs. In some ruraljunsdictions land use is influenced by govenunent-

sponsored transferable development rights (TDRs), which compensate farmers for

retaia "g land'ut agricultural use and shift the cost of development to developers. l.ower

ad valorem taxes on agncultural land also affect rural laud use; this forni of tax subsidy

tends to extend the duration of agricultural nses.

A significant amount of land'ui the United States has been encunrbered with openspace or conservation easements in perpetuity- These petmanent encumbrances limit orprohibit the subdivision of land to prevent fmther development, l.and subject tn per

petual open space or consetvation easements is usually restricted to its existing use, asspecified'ui the deed of easement. These deeds are vested in preservation or cooserva-

tion trusts. Other encumbrances prohihit the demolition or altemtion of historic struc-tttres. - `

Physical Characteristics and Site Improvements

The physical charactetistics of hmd, the utihfies available, and site improvements affect

land use and value. The physical characteristics of a parcel of landthat an appraiser mustconsider include size and shape, frontage, topography, location, view, and topograptticalcharacteristics such as contour, grade, and dminage.

The avallability of utilities-i.e., water, sewers, electricity, natural gas, ancl

telephone service-also influences the use and development potential of a parcel of land.

Utilities may be provicled by off-site faciGties sudh as public water mains, sewers, and

ponver lines or by on-site facilities such as spring basins, drilled doniestic wells, and septicta.nks.

A parcet of land becomes a sdte when it is improved and ready to be used fnr aspecific purpose. A site may have both on-site and off-site tmprovements that Lnake itsuitable for its intended use or development. Necessary onsiue improvements include

grading, landscaping, paving, and utility hookups for water, gas, electricity, and tele-

phone. Essential off-site improvements include streets, curbs, sidewalks, drains, and

connecting utility lines. Off-site intprevements are typically considered with site value;

only rarely are they valued with other property itnprovements. l.,ike buildings and other

structures, on-site Improvements are subject to physical deterloration and functionalobsolescence.

Highest and Best Use

Land value must always be considered in temts of Irighest artd best Lise. Even if Che site

Iws improvements, the value of the land is based on its highest and best use as though

vacant and available for development to its most eeonon»c use. Consideratinn of t.lle land

as thougli vacant is a commonly accepted procedure which facilitates the orderly analysis

and solution of appraisal problenrs that require land to be valued separately Land 1Las

first claim to any income generated by the property and priority over any recurn on the

THE APPRAISAL OF REAL ESTATE

330

• Entreprenewial or developer's pro5t (shown in the example as a"below-the-line"expense)' equal to 15% of the gross sale price

• Construction costs, including all soft costs, of $10,500 per lot, or a total cost of

$504,000 (spread over Periods 1, 2, and 4).

The DCF analysis assumes that sale prices and all expenses will remain constant

over the 30-month projection. The 12% discolmt rate to be applied is based on market

conditions. The DCF analysis shown in Table 14.1 results in a value indication of $612,000

for the parcel of vacant land.

Table14.1[DCFAnalysLg(SuhAivisionDevetopmentelnalyals)

Semiannuai Periods1 2 3 4 5 Tqtat

Beginning inventory oflots 0 48 36 24 12

Number of developed tots 48 0 0 0 0

Number of lots sold 0 12 12 12 12 48Ending inventory of lots 48 36 24 12 0 0Cumulative no. of lots sold 0 12 24 36 48 48Average pnce perlot $40,000 $40,000 $40,600 $40,000 $40,000

Gross lotsales income 0 $480,000 $480,000 $480,000 $480,000 $1,920,000

Expenses

Marketing costs 0 $33,600 $33,600 $33,600 $33,600 $134,400

Legal/clasing costs 0 9,600 9,600 9,600 9,600 38,400

Reat estate taxes 1,300 8,400 6,000 3,600 1,200 20,500

Overhead/maintenance 4,800 4,200 3,000 1,800 600 14,400

Coordinatian/supervision 20,000 20,000 30000 20.00 20,900 10000

Totat $26,100 $75,800 $72,200 $68,600 $55,000 $307,700

Oeveloper's profit 0 72,000 72,000 72,000 72,000 288,000

Development cqsts 8^4,000 95000 0 25,000 0 504000Net cash flow ($410,100) $237,200 $335,800 $314,400 $343,000 $820,300

PresentvaWe ($386,887) $211,107 $281,944 $249,034 $256,310 $611,508

Indication ofland vatue $611,508

$612,000 (rounded)

1.Thetlming ofdevetnpelepmfitis uont,oversial,5ome appraisersfeelitis an e<pense Matthe develop¢rM1as alreadyin nedupun ompletlon of tlle pmjeR and thus sMuW be deducted as zn `abovetbe-line" enpen -1e, before the ralculatlpnnfannuelntlmszla p,nm¢ds nrcaah nuws.otherpractinoners beuevethatthedeveloperdoesnotearn the prnat bysimplvpUttiy and mnstruRing Meinfmstruc[ure ofasubdieisfon;thedeveloper<an expectmmpensafion nnly aher<nmpletlngthedevetopment and selling orleaaing tM ympertyasimpmszd.These apyratsen deduatdeveteya,s proatas a'below-the-line"eapense. u the developNs pro9t is deducted es an 3buve-tAe-rin¢" ecpema [he ,ate seleuted tn diemunt the cash aows WabeImverthanthe ate Chosen;ftbe deuebpers profitis deductaE as a'bebw-Ne-one" eepense.fprfurtberdismssinn,scen.a.Aaa n I-wn aM RnhwrS.VaMn,SuEdiv4inn aevelnomenlfChicaoa:AUorzisallnstitu[e 1993)and Chuck Mlunsan,

IANO OR s1?L vM1LUAiIoN

331

The use of subdivision development analysis to value vacant land is nlost appllcable

in cases where sales data on vacant tracts of land are inadequate but marl:et data are

available on the probable sale prices of developed lots and the demand for sucl) lots.'rTlis

applicxtion of DCF analysis is also useful as a method of checking the reasonableness of

value indications derived from other methods of estimating the value of vscant land with

development potential. Comparing the value indication derived from DCF analysis Hdth a

value indication derived from sales comparison allows an appraiser to test the feasibility

of a proposed project. If the value indication from the DCF analyrsis is less than the value

indication from the sales compadson approach, the proposed project may be judged to be

unfeasible.

Key Concepts

• An appraiser begins the valuation of a parcel of land by identifying the real estate

and property rights to be valued, any enclmbrances on those property rights (e.g.,

easements, rights-of-way, use restrictions in deeds or zoning ordinances), the site's

physical characteristics, and the available utiliLies and site improvements. Compa-

rable data on similauparcels are collected and the highest and best use of t71esubject site is analyeed.

• Sales conlparison is'the most cornmonly used and preferred method of valuing

land. Data on salesofsinular parcels of land are ana(yzed, compared, and adjustedfor their dissimllarify'to the subject property.

• The allqcation metiiod is based oo typical ratios of land value to improvement valuefor specific categories of real estate in specific loc:at.inns. Allocation is useful when

transactional data on colnparable sites are not available.

•'Po apply the extraction nletlrod, an estlmate of t'he depreciated cost of the

improvement(s) is deducted &oni the total sale price of the property to arrive at

the land valne. Extraction is used W estimate the land value of unproved properues

in rural areas and properties in which the improvements contribute little to total

property value.

• Three income capitalization procedures are applicable W land vahlation. T\vo ofthese-land residual and gromid rent capitalization-are direct capitalizatlon

techniques. Subdivision development analysis is a}deld capitalizaGon technique.

• In the land residnal niethod, the net operating income (NOl) attributable W theland (i.e., the amount that remains after the NO[ attlibutab)e to the improven)ent

is deducted hrom total NO!) is capitalized to produce an indication of land vahle.Several larianis of the land residual method may be used. Land residual is appliedwhen sales data on similar parcels are not available.

• Ground renk capitaGzation is used a3ren ground rent corresponds to the olvrler's

interest in the land, i.e., the leased fee interest. h9zrket-derived capitalization ratesare used to convertground rent into an indication of land value.

• Subdivision development analysis is applled when subdivision and development

represent the highest and best use of the lard and sates data on fwished lots areavailalJo TFo nnmhc^ ond aim nf tTe FnieFCA lnrc Poefitlhplv calc o,irx rhN

_ iNE ApeqqISFL.OF REAL ESTATE

234

rHgure 10.71Fioodplain Map

fe4eral Eme^genry Management Agency (FEMA)

-_._Figure So8 VPeUands Map

-_ LANO aASIIE os5csL4Tlan

235

that are available to the appraised site. The exact size, location, and capacity of the

utilities should be detennined- It is not sufficient sintply to establish which utilities are

available. Any lilrutations resulting from a lack of utilities are important in highest and

best use analysis, and all possible, altemative sourees of ntiiity selvlce must be 1nCesti-gated.

1'he retes for utility service and the burden of any bonded indebtedness or otLer

special utility costs should aLso be considered. Of particular concern to conunercial anci

industrial users are the qnality and quantity of waterand its cost; the costs and depend-

ability of energy sources; the aclequacy of sewer facilities; and any special utllity eosts m-slqcharges that might apply to certain businesses.

Accurate infmmatfon on pubGc uti âties c,an be obtained front local utility cnmpa-nies or agencies, local public works departments, and providers of on-site water andsewage disposal systems.

Site Improvements

In a site descrlption an appraiser describes off-site, as well as olrsite, inlprovenlevs thatmake the site ready for its intended use or development.'rhen the appraiser analyzes

how the site improvements affect value. The quality, conditiou, and adequacy of setnerand drainage lines, utilit.yXlookups, access roads, and othes off-site imp'ovements

influence a site's use and ualue. TILe appraiser also clescribes and analyzes on-site

intprovements such as gadhtg, landsc.aping, fences, curbs, paving, and walks. The i•alne

of off-siCe site improvemepts is typically considered with site value:

The location of existing bnilclings on a site nlust also be descsibed anrl analyzed_

Many appraisers make plot plans, which show a0 major buildings lu relation to lot lines.

Land-to-build'ulg ratios are usually qnite s'igrtiticaut In a residential areu ^oltere a typical

building covers one-half of the lot, a four-to-onebuilding-to-land ratio may dhninish a

property's value. Tlte space allotted for parking influences a site's value for business andcommercial use, so the parking space-to-bulding eatio in a colnmercial property mu.st bc

analyzed.

The appraiser also notes on-site unprovements tllat add to or detract from aproperty's probable optimmn use. For example; a lot zoned for residential apartmentsmay be improved with an 18-unit aparttnent building that is too valuable to demolish. IfI.he lot could acconunodate a 24-nnit building, but Ilhe present structnre blocks access to

the potential location of additfonal nnits, the appraiser ntay conclude that the site isunderimproved and not being put to its higlrest and best use.

Accessibility

Site analysis focuses on the time<listance relationships between the site and common

origins and desGli<itions. Arr appraiser describes and analyzes all fomis of access to and

fromthe property and the neighborhood. In most cases, adequate parking area and I.he

location and condiLion of streets, alleys, connector roads, freeways, and ttighways are

irnportant to land use. Indnstrial properties are itrflueticed by fail and freeivay access and

the proxintity of docking facilities. Industrial, commercial, and residential areas are all

afferfnd hv thc Inralinn nfaiiron+4s freewavc nuM1llr rmnenmYatinn and railr-l cannrn

Aa. Sub. P. B. No. 379 2630

section shall be allocated aaong and paid into its various fundsin the saae proportion that the real property taxes levied duringthe preceding tax year that are requized to be paid° into each -fund bear to t6e total real property taxes levied during suchyear.

Sec. 5715.19. (A) Acoaplaint a9ainst any of the followingdeterainations for the current tax year shall be filed with thecounty auditor on or before the 3tst THIRTY-FIRST day of9ecvbesr or on or bafeze ths tiae i*aitad for peyet of taxesor scvopark e17a:4es fer the fizst he3f 9aasr e%tendsd enda•rsectien 323-+1? of {ite Ravise<) @ode dARCH OF THE ENSUING TAX YEAR=

(1) Any classification aade under section 5713.041 of theRevised Code;

C2) Any dataraination fade under swction5713.32 or 5713.35of the Revised Code;

(3) Any recoupaent charge levied under section 5713.35 ofthe Revised Code;

(4)- *ny THE DETERMINATION OF THE TOTAL valuation orassessaent OF ANY PARCEL that appears on the tax list;

(5) ierty THE DETERMINATION OF THE TOTAL valuation OF ANYPARCEL that appears on the agricultural land tax list.

Any taxpayez nay file such a coaplaint as to theclassification, valuation, or assesaaent of or adeterainationaffecting his- own or anothsr's real property, and the board ofcounty coaaissioners, the prosacuting attozney, or the tzeasurerof any county, any board of toumship trustees, any board ofeducation, oz the aayor or ltigislative authority of any aunicipalcorporation in any county aay filesuch a coaplaint. The countyauditor shall present to the county board of revision allcoaplaints filed with hia.

(8) Within thirty days after the last date such eoaplaintsaay be filed, the auditor shall give notice of each coaplaint inwhich the stated aaount of overvaluation, undervaluation.discriainatory valuation, illegal valuation, or incorrectdeteraination is at least seventeen thousand five hundred dollarsto each property ouner uhoas property is the sub )'ect of thecoaplaint IF THE COMPLAIHT WAS NOT FILED BY SUCH OWNERI, and to•ach boar^ of education uhose school district aay be affected bythe coaplaint. Within thirty days after reeeiving such notice, aboard of education or a property owner aay file n coaplaint insupport of or objecting to tha aaount of alleged overvaluation.undervaluation, discriainatory valuation, illegal valuation, orincorrect dateraination stated in n previously filedcoaplaint orobjecting to the ouYrent valuation. Upon the filin^ of eceaplaint under this division, the board of education or theproperty ouner shallbe aade a party to the action.

(C) Each board of revision shall notify any coaplainant andalso the property owner, if his address is known, when acoaplaint is filed by one ethez than the property owner, bycertified aail, not less than tan days pzioz to the hearingo ofthe tiae and place the sase will be heard. The board of revisionshall bear and render its decision on a coaplaint within ninetydays after the filing thezaof uith the board. except that if aeoaplaint is filed within thirty days after zeceivinq notica i.oatbe auditor as provided in division CB) of this sectaon the boardshall hear and render its decision within ninety days after suchfiling.