Following a November 2013 conveyance of a 388,669-square foot, single-tenant office building occupied by JP Morgan Chase under a net lease, the local Board of Education (BOE) filed a complaint challenging the county auditor's valuation of the property. The auditor had assessed the property as having a value of $35.5 million, while the BOE advocated adoption of the $44-5 million sale price.
At the county hearing, the property owner presented an appraisal of the property. The BOE objected to the submission of the appraisal evidence, arguing that it was not admissible as evidence because the owner had not rebutted the presumption that the sale price was the best evidence of the value of the property. The owner, in turn, argued that the appraisal evidence was admissible to establish the unencumbered fee-simple value of the property, which had been sold subject to an existing lease.
The lease on the property resulted from a 2010 sale-leaseback transaction under which the recorded sale price was $32.5 million. The auditor's initial value was based on a subsequent 2010 sale. The November 2013 sale giving rise to the BOE's appeal was part of a portfolio sale of 18 properties in multiple states, and the $44-5 million reported price was an allocation of the aggregate sale price.
The county Board of Review issued a decision indicating a property value equal to the 2013 sale price, which the owner appealed to the state Board of Tax Appeals (BTA). The BTA noted that Ohio law requires that the fee simple estate be valued as if unencumbered, but nonetheless, the BTA adhered to case law that applied to an earlier version of the statute that emphasized the use of the sale price to determine value. That earlier case law provided that "it would never be proper to adjust a recent arm's-length sale price...