!71 IN THE SUPREME COURT OF OHIO. Maralgate, LLC, Case No Appellee, Appeal from the Ohio Board of Tax Appeals BTA Case No.

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1 !71 IN THE SUPREME COURT OF OHIO Maralgate, LLC, Appellee, Case No V. Greene County Board of Revision and Greene County Auditor, Appellants, Appeal from the Ohio Board of Tax Appeals BTA Case No M-644 and the Ohio Tax Commissioner, Appellee. MERIT BRIEF OF APPELLANTS GREENE COUNTY AUDITOR AND GREENE COUNTY BOARD OF REVISION James R. Gorry ( ) COUNSEL OF RECORD 1299 Carron Drive Columbus, Ohio (614) j gorry@richgillislawgroup.com Attorney for Appellants Greene County Auditor and County Board of Revision James G. Kordik ( ) COUNSEL OF RECORD Rogers & Greenberg=LLP 2160 Kettering Tower Dayton, Ohio (937) Fax: (937) Attorney for Appellee Maralgate, LLC Mike DeWine Ohio Attorney General 30 East Broad Street, 25th Floor Columbus, Ohio, Attorney for Tax Commissioner

2 TABLE OF CONTENTS Table of Authorities iii Statement of the Case and Facts Law and Argument Proposition of Law No. 1: Under Article II, Section 36 of the Ohio Constitution only land that is devoted exclusively to agricultural purposes can be valued at its current agricultural use value. Under the Constitution and the statutes and administrative code rules adopted thereunder, land qualifies for the current agricultural use valuation on a per-acre basis. There can be no "primary use" test which applies to the granting of a current agricultural use valuation to land under R.C and R.C A. The CAUV Is Granted And Denied On A Per-Acre Basis B. The BTA Misinterpreted The Economic Unit Reference In R.C (A)(2) Proposition of Law No. 2: Woodland does not qualify for the current use valuation provided for in R.C and R.C unless the land is actually used for the growth or production of timber as a crop A. Timber Under The CAUV Statutes Is A Crop B. The Word "Timber" In the CAUV Statutes Does Not Apply To Mere «Woodlands Proposition of Law No. 3: In order for land that is less than ten acres in size to qualify for the CAUV as part of a larger farm the title to the land must be in the same name as the title to the larger farm Conclusion...:...32 Certificate of Service i

3 Appendix Notice of Appeal...34 BTA Decision Article II, Section 36, of the Ohio Constitution R.C R.C R.C R.C R.C R.C Adm. Code Rule

4 TABLE OF AUTHORITIES Cases: Benken v. Porterfield (1969), 18 Ohio St.2d 133, 137, 47 Ohio Op. 2d 287, 247 N.E.2d Columbus Metropolitan HousingAuthoriry v. Thatcher, Aud. (1942), 140 Ohio St. 38; 42 N.E.2d 437; 23 Ohio Op City ofparma Heights v. Wilkins, 105 Ohio St. 3d 463; 2005 Ohio 2818; 828 N.E.2d Dinner Bell Meats Inc. v. Cuyahoga Cty. Bd. of Revision (1984), 12 Ohio St. 3d 270, 12 Ohio B. Rep. 347, 466 N.E.2d Fife v. Greene Cty. Bd of Revision, 120 Ohio St.3d 442, 2008-Ohio Gen. Motors Corp. v. Cuyahoga Cty. Bd. ofrevision (1990), 53 Ohio St.3d 233, 559 N.E.2d Hardy v. Delaware Cty. Bd ofrevision, 106 Ohio St. 3d 359, 2005 Ohio 5319; 835 N.E.2d Hospital Service Association of Toledo v. Evatt, Tax Commr. (1944), 144 Ohio St. 179; 57 N.E.2d Park Ridge Co. v. Franklin Cty. Bd ofrevision (1987), 29 Ohio St. 3d 12, 29 OBR 231, 504 N.E.2d ,20 Renner v. Tuscarawas Cty. Bd of Revision (1991), 59 Ohio St. 3d 142, 145, 572 N.E.2d , 13, 17, 18, 20 Rocky Fork Hunt & Country Club v. Testa (1995), 100 Ohio App.3d 570, 654 N.E.2d Siebenthaler Company v Montgomery County Board of Revision (1991), 74 Ohio App. 3d 103, 598 N.E.2d WetlandRes. Ctr., LLC v. Marion County Auditor, 157 Ohio App. 3d 203, 2004 Ohio 2470, 809 N.E.2d Youngstown Sheet & Tube Co. v. Bd ofrevision (1981), 66 Ohio St. 2d 398, 20 0.O.3d 349, 422 N.E.2d iii

5 Constitution, Statutes, and Rules: Article 11, Section 36, of the Ohio Constitution , 14 R.C R.C R.C (A)(1) and (A)(2) , 23, 26, 29, 30 R.C (A)(4) R.C (B)(3) R.C :...13 R.C (A)(1) R.C Adm. Code Rule (B)(25) , 23, 30 Adm. Code Rule (I) Secondary Sources: Black's Law Dictionary (4th Ed., 1951) Boyce, Real Estate Appraisal Terminology (1975) Encyclopedia ofreal Estate Appraising (3 Ed. 1978) Websters Third New International Dictionary (1976) iv

6 STATEMENT OF THE CASE AND FACTS This is an appeal from a decision of the Ohio Board of Tax Appeals (BTA) in which the BTA granted a current agricultural use valuation (CAUV) to a acre tract of land for tax year The ultimate error made by the BTA was in holding that "the entire parcel qualifies for CAUV status" (BTA Decision and Order, p. 8), when only six or so acres of land that were being farmed for tax year 2007 might have qualified for the CAUV. The remaining 64 acres of land were clearly not entitled to the CAUV for tax year The acre tract of land is an abandoned gravel quarry (BOR Tr. p. 14; Appellant's Supp, p. 12), located on Gravel Pit Road, in Greene County, which was being used as a solid waste landfill and a small part of which was being farmed in connection with several adjacent farm parcels. The 70-acre quarry was abandoned at some previous point in time, and the four large gravel pits have filled with water. At the BOR hearing, the County Auditor stated that her on-site inspection of the property revealed that it was a "gravel pit" and a "deep quarry," with only a "little corner" of the land actually being farmed (BOR Tr. p. 14; Appellant's Supp. p. 12). By way of introduction, the BTA made the following errors in its decision, which will be addressed in the Facts section of this Brief: (1) The BTA erred in granting the CAUV to land that was an abandoned "quarry" and to land used as a "landfill", both of which were clearly not used for any "agricultural" purpose as required by Article II, Section 36, of the Ohio Constitution and by R.C (A). The BTA erred in granting the CAUV to these areas under a "primary use" test it has now developed for the CAUV, but which is directly contrary to the Ohio Constitution and CAUV statutes; 1

7 (2) The BTA erred in granting the CAUV to acres of "woodlands" when not a single fact in the record established that the land was being used for the growth of timber and when, in fact, the property owner never claimed that any part of the woodland was used for the growth of timber. 1. Denial of CAUV Application For Tax Year 2007 Appellee Maralgate, LLC, acquired the property from the Turner Family Partnership in July, The Turner Family Partnership had acquired the property from the previous owner at a public auction held in March, 2005 (BTA Tr. 9; Supp. p. 1). According to the only witness Appellee presented to the BOR and to the BTA, Albert J. Turner, III, the Turner Family Partnership then created Maralgate, LLC, and transferred title to the entire 70-acre tract to Maralgate order to protect itself from any "liability" that might arise because the 70-acre tract was being used as a landfill and because it contains four large abandoned quarry pits that have filled with water (Turner, BTA Tr. p. 11 and 27; Supp. p. 2 and 6). Maralgate filed an application for the CAUV for tax year 2007 on the entire 70-acre tract. The Greene County Auditor denied the CAUV application for tax year 2007 under R.C and R.C , because no part of the land qualified as "land devoted exclusively to agricultural use." Appellee filed a complaint with the Board of Revision (BOR) and the BOR affirmed the denial of the CAUV application for tax year Appellee appealed to the BTA, which then granted the CAUV to the entire tract in a decision dated September 21, The Greene County Auditor appealed to this Court on October 14,

8 2. The Property Is An Abandoned Gravel Ouarry That Is Being Used As A Landfill. The County Auditor's aerial photograph of the property for tax year 2007 is the only evidence in the record that shows with any accuracy how the property was being used for tax year 200V Appellee's only witness, Mr. Turner, testified that the 2007 aerial photograph was substantially correct. He testified that he believed that only two small additional areas of the 70-acre tract had been cleared during 2007, which were "a little bit" of land "on the east side" of the 70-acre tract of "maybe 20 feet" of additional land, and a small area of land (no further description was given) along the southern part of the 70-acre tract. Mr. Turner did not actually say that any of this additional land had been farmed in 2007, just that it had been "cleared." Consequently, there is no concrete evidence in the record to show that the 2007 aerial photograph is not accurate as to proving how the 70-acre tract was being farmed on "the first Monday in June" of 2007, which is the date that the "determination" was to be made under R.C as to whether any part of the "land" qualified for the CAUV for tax year The County Auditor's aerial photograph of the property for tax year 2007 shows that the 70- acre tract was used for, or consisted of, the following for tax year 2007: (1) Large Ouarry Pits - Four large abandoned quarry pits that have filled with water occupy about 15 acres of the 70-acre tract of land. The two largest quarry pits take up most of the western '. In preparing this Brief, counsel for Appellants has referred to nine separate sections or parts of the 70-acre tract involved in this appeal (four gravel pits; the landfill area; and three small sections of farm land; and the woods surrounding the actual quarry sites). Merely to identify the nine separate areas being discussed in this brief, these areas are outlined on the 2007 aerial photograph which is in evidence, and this sketch is attached hereto. The figures shown on the sketch with the designation "Ac" are not part of the evidence and are to be used only to identify each portion of the property. This document is attached hereto simply to identify what areas counsel is referring to in this Brief. A copy of the aerial photograph is included at Supp. p. 18 and 19. 3

9 half of the property; a third pit is loca.ted just to the northeast of the second large pit; and a fourth pit, almost an acre in size, is located at the very southeast corner of the tract. Appellee's witness, Mr. Turner, testified that the quarry pits occupied "approximately 12 to 15 acres of water" (BOR Tr. p. 17; Supp. p. 15). However, at the BTA Mr. Turner stated that "I've been told that it's between 10 and 20 acres by the auctioneer" who sold the property to Turner Family Partnership (BTA Tr. p. 26; Supp. p. 5). The BTA somehow concluded that the quarry pits were "approximately 10 acres" in size (BTA Decision and Order, p. 9). (2) The Quarry Staginp Areas Used As A Landfill - The northeast part of the tract along Gravel Pit Road (identified on the sketch with the figure 7.04 Ac) consists of the quarry entrance and staging areas, roads into the quarry, several abandoned structures used in the quarry operations, and several landfill dump sites. Mr. Turner testified that this part of the land is used as a "landfill" by the County Engineers' office (BTA Tr, p. 26; Supp. p. 6). He testified that this area is used to "dump gravel and concrete and stuff like that" (BOR Tr. p. 15; Supp. p. 13), and he described it as being used as a dump for "hard fill, meaning concrete, clay, that kind of thing, wood" (BTA Tr, p. 26; Supp. p. 6). This landfill use existed under the prior owner of the land and Mr. Turner testified that "we went ahead and continued that relationship" (BTA Tr, pp ; Supp. p. 6). The land is fenced in and the County Engineer's staff has a key to the gate and they use the land as a dump whenever they wish (BOR Tr. pp ; Supp. pp ). Mr. Turner also testified that the landfill use of the 70-acre tract prevented the "woodland" from being used for an agricultural purpose. According to Mr. Tuner, "one of the reasons why we do not take advantage of using the woodland area is because" of the "landfill area" (BTA Tr. p. 26; Supp. p. 6). He also stated that part of the 70-acre tract would be "a perfect spot for a cow-calf 4

10 operation" but "I don't run my cattle in there" because of the landfill and quarry pits and because "we're worried about possible injury and/or leaving - because they [the County Engineer's office] have left the gate open before" (BTA Tr. pp ; Supp. p. 6). In its decision, the BTA described the landfill area as "a small landfill of less than one acre" (BTA Decision and Order, p. 9). The County Auditor's 2007 aerial photograph shows that this description was incorrect. The landfill area and the adjacent quarry entrance areas occupy far more land than the three- acre farm field in the northwest corner of the 70-acre site (the size of which was identified), so the landfill area cannot be one acre in size. In fact, Mr. Turner actually testified that he did not know how much land was being used as a landfill: "Q. Do you know how much landfill area this land takes up? A. No, I don't, ma-am." (BTA Tr, p. 27; Supp. p. 6) 3. Only Three Small Areas On The Fringes Of The 70-Acre Tract Were Being Farmed In The BTA misinterpreted all of the testimony given by the property owner's only witness, Albert J. Turner, as to the amount of land that was being farmed on the 70-acre tract for tax year The BTA mistakenly concluded that "19-20 acres that have been and continue to be planted each year" which implies that 19 to 20 acres of farm land were on the 70-acre parcel for tax year There is not a single fact in the record to show that 19 to 20 acres of land were being farmed, or were even capable of being farmed, at any time during The County Auditor's aerial photograph for tax year 2007 (aerial photographs are typically taken in the early spring when the trees are not out in full) shows that only three small areas on the fringes of the 70-acre tract were farmed during 2007 (or at least were plowed in the spring of 2007). These three areas are as follows: 5

11 Three-Acre Farm Field - The first farm field is located in the northwest corner of the 70-acre tract on Gravel Pit Road. Mr. Turner testified that this field was a "small 2. some acre field out by the driveway" and that it was a "2.2 acre" field (BTA Tr. p. 14 and 15; Supp. p. 3), and he later testified that some additional parts of the land around this field had been cleared and the field was now (as of October 15, 2009) "close to three acres" in size (BTA Tr. pp ; Supp. p. 5). The County Auditor informed the BTA that this field was 2.73 acres in size (BTA Decision and Order, p. 6). The size of the other areas on the 70-acre tract can be roughly determined by comparing them to this three-acre farm field. Fields On East Side Of Tract - The second field runs along the east side of the 70-acre tract to the southeast corner of the tract (identified on the sketch as the 2.77 Ac section of farm land). Mr. Turner did never state how large this area was, but described it as "a little bit" of land "on the east side" of the 70-acre tract (BTA Tr. p. 14; Supp. p. 3). Mr. Turner testified that he had cleared "maybe 20 feet" of additional land on the eastern boundary of the 70-acre tract during 2007 (BTA Tr. p. 21; Supp. p. 4), and that a total of "about 40 feet" of land may have been cleared by October 15, 2009 (BTA Tr. p. 22 and 23; Supp. p. 5). Field On South Side Of Tract - Mr. Turner also testified that he was farming a field on the south side of the tract where the parcel line makes a "z" (identified on the sketch with the notation 0.56Ac). He also appears to have said that by late 2009 he had cleared a larger section of land running along the south side of the 70-acre tract up to the gravel pit pond (identified as the 0.76 Ac pond) (BTA Tr. p. 23; Supp. p. 5). As indicated above, Mr. Turner confirmed that the County Auditor's aerial photograph for tax year 2007 was essentially correct, and this aerial photograph shows that only six or so acres of 6

12 land were plowed for use as farm land in the spring of Mr. Turner testified that after Turner Family Partnership acquired the property in 2005, he began to make some small "gradual" clearings along the edges of the fields that were being farmed on the 70-acre tract, which were the clearings made on the east and south side of the parcel (BTA Tr. pp ; Supp. p. 5). Mr. Turner testified that he had been "slowly clearing the edges" of these fields after 2005 (BTA Tr. p. 20 and 24). He testified that the edges of the farm fields shown on the 2007 aerial photograph had been moved "back a little farther" during 2007: "Q. Okay. You were asked about the picture [aerial photograph] and whether it's accurately portrayed the amount of land that's been cleared, and you said it didn't, at least presently [as of October 15, 2009]. Do you know as of for 2007, is it accurate for, as of 2007? A. No, I don't believe so. Q. And in what way do you think it's not accurate? A. Well, because as I believe I stated earlier, we were clearing so much every year, and back on the south and southeastern side, I believe we have that back [the edges of the fields being farmed] a little farther, essentially on the south side before it jogs back it. Q. Sure. It was back farther for 2007, but no so far as it is now? A. That's right." (BTA Tr. p. 38; Supp. p. 9). Mr. Turner was asked at the BTA hearing held on October 15, 2009, "how much agricultural land is on" the 70-acre tract and he testified that "I believe it's around 20 acres" (BTA Tr. p. 12 and 15; Supp. p. 2). This figure clearly includes the additional land that was cleared by Mr. Tucner after 2007, as well as the existing 6 acres or so of farm land on the parcel during It appears most likely that Mr. Turner took the 20- acre figure for farm land off the County Auditor's property record 7

13 card, which lists "tillable" acreage of acres (BTA Tr. p. 17; Supp. p. 3). As will be shown below, the County Auditor's "tillable" acreage has nothing to do with the amount of acreage that is being farmed, but rather is based solely on the soil type and land capability class of the underlying land. In any event, Mr. Turner did not personally know how much land was actually being farmed in 2009, or as of tax year 2007 (the tax year in question). Mr. Turner testified that he had not surveyed or measured the amount of land that was being farmed (BTA Tr, p.28): "Q. And have you had opportunity to measure that you're farming in order to verify whether or not the auditor's, or the records of the county are correct, as far as the 19 acres [of tillable land shown on the property record card]? A. No ma'am. I haven't gone out and hired any surveyors or anything to measure it." (BTA Tr. p. 28; Supp. p. 6) Mr. Turner testified that he got his figure of acres for the amount of farm land from the USDA (BTA Tr. p. 37; Supp. p. 8), and he did not know where the USDA got its figure. He testified as follows on this point: "Q. Just to be clear. Mr. Turner, when you filled out that application, how did you arrive at that 19 acres [of land being farmed]? Did you take it from the county records? A. Actually, I believe it was from the United States Department of Agricultural Farm Service Agency. Q. And do you know how they determinated that number [19 acres of farm land]? A. No, I don't ma'am." (BTA Tr. pp ; Supp. pp. 8-9). The County Auditor stated at the BOR hearing that the BOR members "were out to this and there is definitely no acreage there, there is no 19 acres to be farmed" (BOR Tr. p. 14; Supp. p. 12). 8

14 Mr. Turner never claimed that 20 acres was actually being farmed at any time during Furthermore, Mr. Turner had a hard time identifying the clearings that were made on the 70-acre tract beyond what was shown on the aerial photograph because he acknowledged that it was "tough to delineate where the 70 acres starts and the rest of the farm starts. We don't have any stakes or anything" (BTA Tr. p. 15; Supp. p. 3). What is clear from these facts is that there is no possibility that Mr. Turner's testimony could show that 19 to 20 acres of land was being farmed for tax year Mr. Turner never identified the amount of acreage being farmed in 2007 and it is clear that he did not, in fact, know how much land was capable of being farmed in His description of the newly cleared land of 20 feet on the east side of the 70-acre tract and the "little" bit of additional land on the southeast corner of the 70-acre tract could not amount to an additional 14 acres or so of land, in addition to the six or so acres shown as being farmed on the aerial photograph. At the very least, there is no evidence of any kind in the record to show that 10 acres of land were being farmed as required by R.C (A)(1), or were even capable ofbeingfarmed, during 2007; and from Mr. Turner's testimony it is impossible to conclude that 19 to 20 acres of land were being farmed in Despite this evidence and lack of evidence, the BTA erroneously held that 19 to 20 acres of land were being farmed in This is factually incorrect and there is certainly no evidence in the record to support that claim. According to the aerial photograph and Mr. Turner's own testimony, only 6 acres to 8 acres of land were even capable of being farmed in The Wooded Areas On The 70-Acre Tract Are Not Used For the Growth of Timber Mr. Turner was asked at the BOR hearing if any "timber" was being grown on the 70-acre tract and he stated that the only "agricultural production" taking place on the land were three fields 9

15 that were being farmed. (BOR Tr. p. 14; Supp. p. 12). When he was asked what the "agricultural land" on the 70-acre was used for, he answered that the land was used for "[c]rops, soy beans and corn" (BTA Tr. p. 12; Supp. p. 2). Mr. Turner never claimed either at the BOR hearing or at the BTA that any "timber" was being grown on the land. At the BTA he was asked if the woodland was being used for "conunercial purposes" and he testified that it was not (BTA Tr. p. 26; Supp. p. 6). This is the only evidence in the record concerning the use of the wooded areas located on the 70-acre tract. As indicated above, the quarry area, including most of the wooded area, is apparently fenced in and Mr. Turner testified that the "woodland area" was not used for any purpose because of the landfill site and the fact that the County Engineer leaves the gate open which is used to access the site. Based solely on this evidence, however, the BTA concluded that the wooded areas were entitled to the CAUV because "non-commercial timber is grown" on the land (BTA Decision and Order, p. 8). There is not a single fact in the record to support the BTA's claim that "timber" is being grown on the tract or that any timber is being used for or grown for a "non-commercial" purpose. 10

16

17 LAW AND ARGUMENT PROPOSITION OF LAW NO. 1: Under Article II, Section 36 of the Ohio Constitution only land that is devoted exclusively to agricultural purposes can be valued at its current agricultural use value. Under the Constitution and the statutes and administrative code rules adopted thereunder, land qualifies for the current agricultural use valuation on a per-acre basis. There can be no "primary use" test which applies to the granting of a current agricultural use valuation to land under R.C and R.C The BTA erred in granting the CAUV to what, by the BTA's own but incorrect count, amounted to eleven acres of land that even the BTA recognized were not used for any "agricultural" purpose under Article II, Section 36, of the Ohio Constitution or for any such purpose under R.C (A). According to the BTA, this part of the land, 11 acres in size, was used as "a solid waste landfill" and the other part was the abandoned "quarry" pits. Quames, whether in operation or abandoned, and landfills, are not used for an "agricultural" purpose. However, the BTA granted the CAUV to this land simply because this acreage was part of a larger parcel that was, according to the BTA, "devoted primarily to agricultural use" (BTA Decision and Order, p. 7). There is no "primary use" test incorporated into the CAUV statutes and the BTA had no constitutional or statutory basis for granting the CAUV to any part of this land. In this regard, the BTA also erred in its interpretation of an "economic unit" test referred to by this Court in Renner v. Tuscarawas Cty. Bc1 of Revision (1991), 59 Ohio St. 3d 142, 145, 572 N.E.2d 56, and codified by the General Assembly in R.C (A)(2). The CAUV was authorized by an amendment to Article II, Section 36, of the Ohio Constitution in 1973, which allows the General Assembly to pass laws that provide a substantial tax exemption for "land devoted exclusively to agricultural use." The amendment reads as follows: 11

18 "Notwithstanding Yhe provisions of section 2 of Article XII [the `uniform rule' of valuation], laws may be passed to provide that land devoted exclusively to agricultural use be valued for real property tax purposes at the current value such land has for such agricultural use." The "land" that qualifies for the CAUV under Article II, Section 36, of the Constitution is measured by, and the CAUV is granted and denied on, a "per acre" basis under the CAUV statutes and the administrative code rules adopted under R.C No single acre of "land" is entitled to the CAUV simply because it is part of a larger parcel of which some part may be used for "agricultural" purposes, and under no circumstances was any of the land used as "a solid waste landfill" or that was part of an abandoned "quarry" entitled to the CAUV. The BTA's "primary use" test constitutes an unconstitutional expansion of the CAUV, and under that interpretation thousands of acres of land that are not devoted to any agricultural use might be granted the CAUV simply because such land happens to be part of some larger parcel which might "primarily" be used for an agricultural purpose. The statutes enacted to implement Article II, Section 36, of the Constitution must be "read in light of the Constitution." See Hospital Service Association of Toledo v. Evatt, Tax Commr. (1944), 144 Ohio St. 179; 57 N.E.2d 928; and Columbus Metropolitan Housing Authority v. Thatcher, Aud. (1942), 140 Ohio St. 38; 42 N.E.2d 437; 23 Ohio Op The current agricultural use valuation is a substantial real property tax exemption, which reduces the value of an acre of fann land by roughly seventy-five percent to ninety-five percent of its true value in money. This Court has noted many times that "[a]ny statutes exempting property from taxation `must be strictly construed. "' City ofparma Heights v. Wilkins, 105 Ohio St. 3d 463; 2005 Ohio 2818; 828 N.E.2d 998 [P10]. 12

19 In Renner v. Tuscarawas Cty. Bd. ofrevision (1991), 59 Ohio St. 3d 142, 145, 572 N.E.2d 56, the Court stated that a property owner who seeks to regain the CAUV for land that was removed from the program by a county auditor "has the duty to prove his right to a reduction in value" under the CAUV statutes and that a property owner seeking to continue the CAUV on its land has the "burden to prove *** what part [of the land] continues to qualify for CAUV." The same thing was said more recently in Hardy v. Delaware Cty. Bd. ofrevision, 106 Ohio St. 3d 359,2005 Ohio 5319; 835 N.E.2d 348. These principles were summarized in Second District Court of Appeals in Siebenthaler Company v Montgomery County Board ofrevision (1991), 74 Ohio App. 3d 103,108, 598 N.E.2d 78, and more recently by the Third District Court of Appeals in Wetland Res. Ctr., LLC v. Marion CounryAuditor, 157 Ohio App. 3d 203, 207; 2004 Ohio 2470; 809 N.E.2d 1202, 1205, at [P13], as follows: "CAUV is a tax exception allowing land to be taxed at its agricultural use rather than its highest and best use. Statutes relating to exception from taxation are to be strictly construed. National Tube Co. v. Glander (1952),157 Ohio St. 407, 105 N.E.2d 648, at paragraph two of the syllabus. Because the reduction in taxes depends on legislative grace, the statue must clearly express the exception." A. The CAUV Is Granted And Denied On A Per-Acre Basis. The BTA acknowledged that the 70 acres in question contained land that was used as "a solid waste landfill" and another part was an abandoned "quarry" and neither the BTA nor the property owner claimed that any part of this land was used for "agricultural" purposes as set forth in R.C (A). As shown in the Statement of Facts, the BTA erred in describing the size of these two areas; but even if the BTA was correct in its description of the size of these two sections of the land, 13

20 no part of this acreage could be granted the CAUV under the Constitution and the statutes and rules enacted and adopted thereunder. There is no such thing as a"primary use" test for the CAUV, and no part or "portion" of any parcel is entitled to the CAUV simply because it is part of some larger parcel that is "primarily" used for CAUV purposes. The CAUV is applied for and is granted or denied on annual basis and is determined on a per-acre basis. R.C requires a property owner to file an annual application for the CAUV (an initial or a renewal application) "requesting the auditor to value the land for real property tax purposes at the current value such land has for agricultural use, in accordance with rules adopted by the commissioner for the valuation of such land." R.C also provides that the county auditor shall determine "as of the first Monday of June, annually, that the land is land devoted exclusively to agricultural use ***" and it states that the county auditor "shall, prior to the first Monday in June, view or cause to be viewed the land described in the application and determine whether the land is land devoted exclusively to agricultural use." Under this section, it is "land" that qualifies for the CAUV. Thus, what qualifies for the CAUV under Article II, Section 36, of the Constitution, and under R.C , is "land" and not whole or entire "tracts, lots or parcels" of land. While R.C (A) may define an "agricultural" use of"land" in introductory terms of "tracts, lots or parcels of land" the words "tracts, lots or parcels" are superfluous. R.C (A) states that for the purposes of Title 57 (which includes the CAUV statutes) "land include[s] land itself, whether laid out in town lots or otherwise." Therefore, whether Appellee's 70-acre tract of land is laid out as single tax parcel or "otherwise" is irrelevant, and all parts of the "land" must qualify for the CAUV on a per-acre basis. Furthermore, the word "tract" is not defined by the statutes. The three farm 14

21 fields located on Appellee's 70-acre tract of land are three separate tracts of land for purposes of the CAUV. R.C (A)(4) also makes it clear that "portions" of any tract, lot, or parcel of land may qualify or not qualify for the CAUV. This provision is also part of the definition of an "agricultural" use of land and includes, in part, the following: "Tracts, lots, or parcels of land, or portions thereof which, during the previous three consecutive calendar years have been designated as land devoted exclusively to agricultural use, but such land has been lying idle or fallow for up to one year ***." Thus, a "portion" of a tract, lot, or parcel can qualify for the CAUV and any "portion thereof' can be denied CAUV. The Tax Commissioner's administrative code rules that govem the CAUV also make it clear that the CAUV is to be determined on a per-acre basis and that any "distinct portions or pieces of land" may be granted or denied the CAUV. R.C states "[t]he commissioner shall adopt, prescribe, and promulgate rules *** for the determination ofthe current agricultural use value of land devoted exclusively to agricultural use." Consistent with the use of the word "land" in Article II, Section 36, of the Ohio Constitution and R.C , the Rules specifically define "tracts, lots or parcels" of land for purposes of the CAUV as any "distinct portions or pieces of land." Adm. Code Rule (13)(25) reads as follows: "(25) `Tracts, lots or parcels' - Tracts, lots or parcels will mean all distinct portions or pieces of land (not necessarily contiguous) where the title is held by one owner, as listed on the tax list and duplicate of the county, which are actively farmed as a unit if together the total acreage meets the requirements of section (A)(1) or (A)(2), of the Revised Code." 15

22 This definition, alone, is sufficient to dispose of the BTA's primary use test. Under this definition of "tracts, lots or parcels", which is binding on the BTA, each distinct portion or piece of land is to be granted the CAUV or denied the CAUV based on the use of such land for an "agricultural" purpose under R.C (A). The Adm. Code Rules further specific that the portion or piece of land, or the unit of land, upon which the CAUV is based is the acre. The CAUV is determined and calculated on a per-acre basis. The Tax Commissioner's CAUV rules specifically recognize that any single acre of land that is not used for a CAUV purpose must be split-off and denied CAUV. For instance, Adm. Code Rule (I) provides that "[o]ne acre for each residence on a parcel shall be valued as a homesite in the same manner as similar homesites in the area on a market value basis." What applies to a homesite would, of course, equally apply to a landfill or an abandoned quarry, none of which are used for an agricultural purpose. R.C and R.C also make it clear and any "portion" of any "land" that previously qualified for the CAUV can be deemed to have been converted to a non-cauv use, which results in the levy of the recoupment charge provided for in R.C and R.C R.C (B)(3) defines a "[c]onversion of land devoted exclusively to agricultural use" to be "[t]he failure of such land or portion thereof to qualify as land devoted exclusively to agricultural use for the current calendar year as requested by an application filed under such section." Thus, any "portion" of any land can be deemed to have been converted to a non-cauv use. R.C (A)(1) likewise refers to a conversion of a`portion" of a parcel in the following manner: "Upon the conversion of all or any portion of a tract, lot, or parcel of land devoted exclusively to agricultural use a portion of the tax savings upon such converted land shall be recouped ***." 16

23 This Court has specifically held that a "portion" of a parcel could be denied the CAUV in Renner v. Tuscarawas Cty. Bd. ofrevision, supra. According to this Court, any single real property tax parcel, such as Appellee's 70-acre parcel, can be divided into the part or "portion" of the land that is being "actively farmed" and the part or "portion" of the land that is not being farmed for purposes of both initially granting the CAUV and for purposes of determining whether a conversion of land has taken place because the land fails to qualify for the CAUV for the current tax year. Furthermore, as this Court held in Renner, supra, a property owner seeking to continue the CAUV on its property has the "burden to prove *** what part [of the property] continues to qualify for CAUV." In other words, any parcel can be split-listed for CAUV purposes, with the actual acreage or "part" that is farmed being granted the CAUV and the actual acreage or "part" that is not used for any agricultural purpose being denied the CAUV. In Renner, supra, this Court also cited the CAUV rules adopted by the Tax Commissioner which make it clear that the CAUV is to be determined on a per-acre basis (which were then Adm. Code Rules (F) and (D), and are now Adm. Code Rules (F) and (D)) for the principle that "the auditor must know which acreage is farmed and its underlying soil type to calculate the land's value." According to this Court: "To value land at its current agricultural use, the auditor reviews county survey maps and determines the land's soil type and its consequent land capability class from the classes listed in Ohio Adm. Code (F). Ohio Adm. Code (D). The auditor then learns the unit value per acre for the property from the `current agricultural use value of land table or tables' prescribed by the Tax Commissioner for the given tax year, pursuant to Ohio Adm. Code * * * After extracting the unit value per acre from this table, the auditor multiplies it by the acreage stated on the 17

24 application, deducts and lists separately the value of any residential acreage, and enters the result as the agricultural use land value. Ohio Adm. Code (K). Thus, the auditor must know which acreage is farmed and its underlying soil type to calculate the land's value." [59 Ohio St. 3d, at p. 145, 572 N.E.2d, at p. 59] All of this precedent makes it clear that each distinct portion or piece of land qualifies for the CAUV and that the CAUV is to be granted or denied on a per-acre basis. This is consistent with the constitutional reference to "land" and not to entire tracts, lots, or parcels of land as the basis of the CAUV. Consequently, there is no such thing as a "primary use" test for purposes of the CAUV, and not a single acre of land can be granted the CAUV merely because it is part of a larger tract of land. B. The BTA Misinterpreted The Economic Unit Reference In R.C (A)(2). R.C (B), R.C , and R.C , and the Tax Commissioner's administrative code rules make it clear that the county auditor can grant and deny the CAUV to any "portion" of any land or to any "portion thereof' or to "any portion of a tract, lot, or parcel of land." However, in Renner, supra, this Court also cited the "economic unit" valuation rule previously referred to in paragraph two of the syllabus of Park Ridge Co. v. Franklin Cty. Bd ofrevision (1987), 29 Ohio St. 3d 12, 29 OBR 231, 504 N.E. 2d 116, as an analogy to the CAUV's per-acre rule. According to the Court: "The true value for real property may well depend on its potential use as an economic unit. That unit may include multiple parcels, or it may be part of a larger parcel, on the auditor's records. The boundaries of that unit may change with time and circumstances. Thus, a separate tract for valuation 18

25 purposes need not correspond with a numbered parcel. For tax valuation purposes, property with a single owner, for which the highest and best use is a single unit, constitutes a tract, lot or parcel." Therefore, the auditor can divide the numbered parcel into the economic units contained within a parcel's borders and value each segment individually." This Court's reference to the "economic unit" analysis in Renner, supra, was merely an amplification of the language already set forth in the CAUV statutes that allow a county auditor to grant or deny the CAUV to any "portion" of any land on a per-acre basis and to the Adm. Code Rule (B)(25) which defines "tracts, lots or parcels" as "distinct portions or pieces of land." The General Assembly subsequently codified the "economic unit" reference made in Renner, supra, into R.C (A)(2) (146 Ohio Law, HB 516, effective ), which reads as follows: "Upon the conversion of an adequately described portion of a tract, lot, or parcel of land, the county auditor shall divide any numbered permanent parcel into economic units and value each unit individually for the purpose of levying the charge under division (A)(1) of this section against only the converted portion." First, this language applies to a "conversion" of land on the prior year's CAUV agricultural land tax list referred to in R.C , and upon conversion a property owner must repay the tax savings resulting from the CAUV for the three prior years under R.C and R.C This language does not apply to the annual granting or denying of a CAUV application to any "land" under R.C , which is to be done on a per-acre basis. Thus, even if the BTA's interpretation of the "economic unit" test were correct, this has nothing to do with the granting or denying of an annual CAUV application under R.C , which is the issue in the present appeal. Second, the General Assembly's use of the words "economic unit" was superfluous. The first clause of this 19

26 provision refers to the conversion of an "adequately described portion of a tract, lot, or parcel" and the last phrase to the "the converted portion" of the land. The words "economic unit" are nothing more than an additional reference to the "adequately described portion of a tract, lot, or parcel" that was converted to a non-agricultural use. However, the BTA apparently used the "economic unit" language as support for its "primary use" test expansion of the CAUV statutes. The BTA held that the "landfill area" and the abandoned gravel quarry pits on Appellee's land, while not claimed to be used for any "agricultural" purpose, were entitled to the CAUV because they did not constitute an "economic unit" under Renner, supra, and thus could not be split off and denied the CAUV under R.C The BTA's holding was based on the fact that Maralgate apparently does not charge the County for using the land as a landfill and makes no other income from the land other than from the sale of the commercial crops grown in the three farm fields. According to the BTA: "In the present case, however, the subject property has not been divided into separate economic units. No income, other than farm income, devolves from any portion of the property. In contrast, in both Renner and Furbay, the property owners seeking exemption had leased a portion oftheir land for strip-mining purposes." (BTA Decision and Order, p. 7-8). In both Renner and ParkRidge, supra, this Court noted that the "economic unit" analysis was tied to the "highest and best use" of each separate unit: that is, an "economic unit" is any part of a single tax parcel that has a different "highest and best use" than another part of the same parcel. The "economic unit" and "highest and best use" analyses have nothing to do with whether the land is actually being used for income producing purposes or not. For this reason, the BTA erred in holding that there were no separate "economic units" on Appellee's 70-acre tract, as this determination 20

27 clearly had nothing to do, for instance, with whether the property owner charges a fee for the use of the landfill areas on the 70-acre tract. This Court defined the "highest and best use" of real property in Youngstown Sheet & Tube Co. v. Bd. ofrevision (1981), 66 Ohio St. 2d 398, , footnote 3, 20 0.O.3d 349, 422 N.E.2d 846, as "[t]hat reasonable and probable use that will support the highest present value * * * as of the effective date of the appraisal." This same definition was given in Dinner Bell Meats Inc. v. Cuyahoga Cty. Bd. ofrevision (1984),12 Ohio St. 3d 270, 272,12 Ohio B. Rep. 347, 466 N.E.2d 909, 911, citing from the Encyclopedia of Real Estate Appraising (3 Ed. 1978) 65, quoting Boyce, Real Estate Appraisal Terminology (1975), at 53, as follows: "`Highest and best use' has been defined as: `That reasonable and probable use that will support the highest present value *** as of the effective date ofthe appraisal.' `Alternatively, that use, from among reasonably probable and legal alternative uses, found to be physically possible, appropriately supported, financially feasible, and which results in highest land value.' Encyclopedia qf Real Estate Appraising, supra, at 8, quoting from Boyce, supra, at 107." In the case of Appellee's 70-acre tract, the several parts thereof have entirely different "highest and best uses" in that the highest and best use of the farm fields is probably for commercial agricultural purposes (such as "the production for a commercial purpose of *** field crops" as set forth in R.C (A)), while the highest and best use of the rest of the 70-acre parcel is probably not for commercial agricultural purposes, and the current use of this part of the land as a landfill area, for instance, is probably as good as any use that could be made of the land. For these reasons, Appellee's 70-acre tract clearly does consist of different "economic units" and the BTA's analysis was simply incorrect and unreasonable. Furthermore, because the CAUV is granted, denied, and 21

28 measured on a per-acre basis, an "economic unit" for the purposes of the CAUV is simply each acre of land that a property owner seeks to annually qualify for the CAUV under the Constitution and R.C In the sense used in R.C (A)(2), an "economic unit" is simply a separate unit, which is always an acre of land, or any "portion" of the land, that must be granted the CAUV or denied the CAUV according to whether it is being used for an "agricultural" purpose as defined in R.C (A). Under the BTA's new and somewhat radical holding, land that is admittedly not used for any agricultural purpose is now entitled to the CAUV if it is not leased or otherwise used for an income producing purpose. This holding is in direct conflict with both Article II, Section 36, of the Ohio Constitution and the CAUV statutes, which require land to be "devoted exclusively to agricultural use" in order to qualify for the CAUV. PROPOSITION OF LAW NO. 2: Woodland does not qualify for the current use valuation provided for in R.C and R.C unless the land is actually used for the growth of timber as a crop. This issue involves the BTA's continual expansion of the CAUV to the point where mere woodland or woods are now held to be used for an "agricultural" purpose under R.C and R.C , even when there is no evidence of any kind to indicate that the trees in the woods are being used for the growth or production of "timber" and when there is no evidence to indicate that even a single tree has been cut down or will be cut down for the purpose of producing "timber." The BTA erred in two respects in granting the CAUV to the woodlands located on Appellee's 70-acre tract. First, it erred in holding that a single square inch of Appellee's 70-acre tract was being used for the "growth of timber" simply because there is not a single fact in the record to show that 22

29 any timber was being grown on the land in question. The BTA in its decision cited no evidence of any kind to support its holding that timber was being grown on Appellee's land. Mr. Turner, Appellee's only witness, never testified that any timber was being grown on the land. There are no documents in evidence that show that any timber is being grown on the land. The BTA's decision in this regard is unreasonable and unlawful because the BTA did not cite a single fact in the record to support its claim that timber was being grown on the land. In Gen. Motors Corp. v. Cuyahoga Cty. Bd. ofrevision (1990), 53 Ohio St.3d 233, 235, 559 N.E.2d 1328, 1330, this Court stated that "[w]e can perform our duty to affirm reasonable, and to reverse unreasonable, determinations only when the BTA sets forth its findings and the basis therefor." In City of Elyria v. Lorain County Budget Comm'n,117 Ohio St. 3d 403, Ohio 940, 884 N.E.2d 553, 560, at 26, this Court stated that "[w]hen litigants present their contentions to the BTA, the law requires the BTA to apply its expertise and present its findings and the basis therefore." Second, the BTA erred in holding that mere "woodlands" constituted "timber" for purposes of R.C (A)(1) and (A)(2). "Woodlands" are not entitled to the CAUV because woodlands are not used for any "agricultural" purpose as required by Article II, Section 36, of the Ohio Constitution or for any such purpose set forth in R.C (A). R.C (A)(1) and (A)(2) provide the CAUV for land that is used for "the production for a commercial purpose of timber * * * or the growth of timber for a noncommercial purpose, if the land on which the timber is grown is contiguous to or part of a parcel of land under common ownership that is otherwise devoted exclusively to agricultural use ***." In the present appeal, the BTA granted the CAUV to 40 acres of "woodlands" on the sole grounds that the "woodlands" were "contiguous to parcels of land under common ownership" that 23

30 were being farmed. The BTA has now equated the word "woodlands" with the word "timber" for purposes of the CAUV. The CAUV statutes do not, however, use the word "woodlands" and mere woodlands do not qualify for the CAUV. The BTA's decision on this point reads as follows: "The vast majority of the parcel is comprised of woodlands, acres of the total acreage of The second greatest portion, the tillable land, comprises 19 acres. Taken together, these two areas comprise 85 percent of the total acreage. R.C (A)(1) provides exemption for both of these areas. As to the woodlands, which Maralgate admits are not devoted to the commercial production of timber, R.C (A)(1) provides that land containing the growth of timber for non-commercial purposes qualifies for CAUV status if `the land on which the timber is grown is contiguous to or a part of a parcel of land under common ownership that is otherwise devoted exclusively to agricultural use.' "The woodlands are owned by Maralgate, a wholly owned subsidiary of The Turner Family Partnership. A wholly owned subsidiary, by definition, has common ownership with its owner. The Turner Family Partnership owns the land to the north, east, and south of the subject property. S.T., Map. Therefore the land on which the non-commercial timber is grown is contiguous to parcels of land under common ownership." The BTA's reference to the number of acres in the woodlands and tillable land was taken from the County Auditor's property record card. Under R.C , rural land in Ohio is classified on the county auditor's property record cards as "arable land, permanent pasture land, woodland, and wasteland." The County Auditor's property record for Appellee's 70-acre tract classifies the land as having acres of "tillable" land and 50.0 acres of "woodland", and acres of road right-of-way (Appellant's Supp. p. 17). As this Court noted in Renner, supra, these classes are based 24