AN IN THE SUPREME COURT OF OHIO CASE NO Ivica Sapina & Katarina Sapina, Appellants, Appeal from the Ohio Board of Tax Appeals. vs.

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1 ^'4 IN THE SUPREME COURT OF OHIO Ivica Sapina & Katarina Sapina, CASE NO Appellants, vs. Appeal from the Ohio Board of Tax Appeals Cuyahoga -County Board of Revision, the Cuyahoga County Auditor, the Euclid City School District Board of Education, and the Tax Commissioner of Ohio, BTA Case Nos K-667 and 2009-K-816 L 1E AN Appellees. i:âourt REPLY BRIEF OF APPELLANTS, IVICA AND KATARINA SAPINA Victor Anselmo ( ) Counsel of Record J. Kieran Jennings ( ) Jason P. Lindholm ( ) Siegel Jennings Co. LPA Commerce Park Drive, Suite 103 Cleveland, OH (216) (216) (fax) vanselmo@siegeltax.com Counsel for Appellants Ivica Sapina & Katarina Sapina Michael Stinn ( ) Britton, Smith, Peters, & Kalail Co., L.P.A. 3 Summit Park Drive, Suite 400, Cleveland, OH (216) (216) (fax) mstinn@ohioedlaw.com Saundra Curtis-Patrick ( ) Cuyahoga County Assistant Prosecutor 1200 Ontario Street, 8th Floor Cleveland, OH (216) (216) scurtispatrick@cuyahogacounty.us Counsel for Appellees Wade Steen, Cuyahoga County Fiscal Officer and Cuyahoga County Board of Revision Michael DeWine ( ) Ohio Attorney General 30 E. Broad Street, 17 th Floor Columbus, OH (614) Counsel for Appellee Counsel for Appellee Euclid City School District Boardof Joseph W. Testa, Tax Education Commissioner of Ohio

2 TABLE OF CONTENTS Description Page TABLE OF AUTHORITIES STATEMENT OF FACTS AND CASE LAW AND ARGUMENT PROPOSITION OF LAW NO. 1: A RECORDED SALE PRICE DOES NOT ESTABLISH VALUE WHERE COMPETENT AND PROBATIVE EVIDENCE ESTABLISHES THAT THE SALE PRICE INCLUDES NON REAL ESTATE ITEMS AND IS NOT REPRESENTATIVE OF THE FAIR MARKET VALUE OF THE REAL PROPERTY IN CONTRAVENTION OF R.C AN APPRAISAL WHICH TAKES INTO CONSIDERATION THE RECENT SALE CONSTITUTES RELIABLE AND PROBATIVE EVIDENCE OF THE APPROPRIATE ALLOCATION OF THE SALE PRICE TO REAL 7 ESTATE. PROPOSITION OF LAW NO. 2: THE BTA ACTS UNLAWFULLY WHEN IT IMPOSES A BURDEN OF "UNEQUIVOCAL PROOF" UPON A PARTY TO ESTABLISH THE VALUE OF PERSONAL PROPERTY INVOLVED IN A SALE WHEN THE ISSUE BEFORE THE BTA IS TO DETERMINE THE PROPER ALLOCATION OF A SALE PRICE TO REAL ESTATE CONCLUSION CERTIFICATE OF SERVICE

3 TABLE OF AUTHORITIES Cases BedfordBd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 2012-Ohio-2844, 132 Ohio St.3d 371, 972 N.E.2d :...: 13,15 Conalco v. Monroe Cty. Bd. ofrevision, 54 Ohio St.2d.330, 376 N.E.2d 959 (1978) Conalco, Inc. v. Monroe Cty. Bd. ofrevision, 50 Ohio St.2d 129, 4 0.O.3d 309, 363 N.E.2d 722 (1977) Consolidated Aluminum Corp., v. Monroe County Bd. of Revision, 66 Ohio St.2d 410, 423 N.E.2d 75 (1981)... : Higbee Co. v. Cuyahoga Cty. Bd. ofrevision, 839 N.E.2d 385, 107 Ohio St.3d 325, 2006-Ohio-2 (Ohio 2006) Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd: of Revision, 2010-Ohio-1040, 125 Ohio St.3d 103, 926 N.E.2d ,.,... 9, 13 St. Bernard Self-Storage, L.L. C. v. Hamilton Cty. Bd. of Revision, 115 Ohio St.3d 365, Ohio-5249, 875 N.E.2d , 12, 14, 15 Statutes R.C :...:... 7, 8, 9 i.

4 IN THE SUPREME COURT OF OHIO Ivica Sapina & Katarina Sapina, CASE NO Appellants, vs. Cuyahoga County Board of Revision, the Cuyahoga County Auditor, the Euclid City School District Board of Education, and the Tax Commissioner of Ohio, Appeal from the Ohio Board of Tax Appeals - BTA Case Nos K-667 and 2009-K-816 Appellees. REPLY BRIEF OF APPELLANTS, IVICA AND KATARINA SAPINA STATEMENT OF THE FACTS AND CASE This is an appeal from a Decision and Order of the Board of Tax Appeals ("BTA") which reversed a decision of the Cuyahoga County Board of Revision ("BOR") rendered on a Complaint filed by Appellants, Ivica Sapina and Katarina Sapina ("the Sapinas"). The Briefs of the Sapinas and the Euclid City School District Board of Education ("BOE")1 have been filed. This is the Reply of the Sapinas. The Sapinas rely upon the Statement of Facts and Case contained in their initial Brief, which are comprehensive and fully documented in the Record, the BOE premises several of its arguments on statements of fact which are either not in the record at all or are completely distorted; as follows: 1 The Appellee's Brief is titled as being filed on behalf of the BOE and other county appellees, but contains no signature by or on behalf of the county appellees. 1

5 1. The BOE's argument claims that the size of the building on the Subject Property is 8,372 square feet. (Appellee's Brief, p. 5) This is clearly erroneous and is apparently a transposed figure of the land size which is 8,732 square feet. The real property at issue in this appeal consists of 8,732 square feet of land (Supp. 46, 59 ) improved with a two-story buildirig, having a storefront on the first floor and two apartments on the second floor. Total building square footage is 3,952 square feet per the appraisal of Richard Linhart. (Supp. 50) The appraisal of Donald H. Durrah, contained in the Statutory Transeript, also records the total land area for the site at 8,732 square feet (Supp. 139, 141), but records the building size as 3,760 square feet. (Supp. 143) 2 The facts in the Brief of the BOE also describe the building size as 3,952 square feet (Brief of Appellee, p. 2) 2. Repeatedly, the BOE asserts that the sale documents did not include a description of the items of personal property which were included in the Sapina's purchase and suggests that the only document reflecting the purchase of these items was prepared in November of (Appellee's Brief, pp. 3, 4, 9, 11, 13). As recited in the facts in Sapina's Brief, the Purchase Agreement and Bill of Sale clearly delineated the personal property that was included in the sale. The personal property included the carry-out restaurant business, its logos, trade names, records, leases, contract, a non-compete agreement, and business machinery and equipment. The list which is referred to by the BOE is merely an itemization of business machinery and equipment. Admittedly, no values were allocated to the items on that list or the other significant items of personal property, but there were non-realty items that were identified and included in the sale. Z The land size is further corroborated by the parcel map included in the appraisal of Mr. Linhart (Supp. 57) and the legal descriptions of the Subject Property contained in the record (Supp. 111, 123) which record the site dimensions as being 148 feet x 59.1 feet (including portions in the right of way) which amounts to 8,746 square feet. The building size is corroborated by the buildiing sketch provided in the Durrah Appraisal. (Supp ) There is absolutely no evidence in the record that the building size is 8,372 square feet. 2

6 3. The BOE suggests that the conveyance fee statement from the sale is part of the record: It is not. The BOE mailed a copy of the conveyance fee statement to the BTA, but took no steps to introduce it into evidence. It mailed a copy to the BTA by letter dated November 21, 2011, indicating that it "may be submitted into evidence," and then waived its appearance at the hearing by letter dated December 2, In addition, the BOE's Brief did not include any argument challenging the reliability of the appraisal of Rick Linhart, but merely included unsupported criticisms of that appraisal in its Statement of Facts. Mr. Linhart appraised the Subject Property using the income and sales comparison approaches to value. He inspected the property, reviewed the purchase agreement and obtained additional information about the trainsaction and the operations at the Subject Property though independent inquiries to the property owner. Katarina Sapina ("Katarina") provided Mr. Linhart with information as to the actual income of the Subject Property and testified at the hearing before the BTA as to the actual income. Mr. Linhart conducted independent investigation of the neighborhood, market rents and comparable sales in accordance with sound appraisal practices. Based upon those independent investigations, Mr. Linhart concluded that the total transaction price was not representative of the value of the Subject Property and articulated his reasons for that determination at the hearing before the BTA. (Supp. 8-9 (Tr )) Mr. Linhart developed a value via the income approach using market rents and actual verified expenses for the Subject Property. He employed a vacancy rate of 7% and applied a capitalization rate before additur of 10% which was supported by market data and his knowledge of the market. The value derived by Mr. Linhart via the income approach was $93,500.

7 Mr. Linhart used five (5) comparable sales of properties with very similar characteristics to the subject which occurred between 2005 and Four of the sales were in very close proximity to the Subject. He applied and explained appropriate adjustments and derived a value of $26.00 per square foot for the Subject Property. His value via the sales comparison approach was $103,000. He reconciled the values derived by both methodologies to conclude a final value of $100,000 for the Subject Property. The BOE alleges that Mr. Linhart's income approach to value is unreliable but the challenges it asserts are based upon inaccurate descriptions of his findings and methodology. First the BOE alleges that actual income and expense data was not provided to the appraiser. This is incorrect. The appraiser indicated that the data was provided and was verified. (Supp (Tr.-36; 37-38)) Katarina also testified as to the income from the property. (Supp. 6(Tr.19)) The BOE also suggests that the income approach to value was based upon unverified information: This is also incorrect. Mr. Linhart employed a proforma approach to value using market rents documented in his report at page 37 and actual verified expenses. (Supp (Tr )) The BOE also challenges the appraiser's selection of a capitalization rate of 10% based upon the appraiser's conclusion that the Subject Property was located in a "moderately high risk area." To support its challenge in that regard, the BOE selects several statements out of context about the neighborhood made in the appraisal report prepared by Mr. Durrah, who never testified concerning his report. Viewing all of Mr. Durrah's comments about the neighborhood and the Subject Property, his overall observation was "average," as to every factor he considered. (Supp ) It is notable that Mr. Durrah found the area to be in need of "safe and sanitary ' rental units, and -riot some higher standard. (Supp. 139) The BOE totally ignores the statements made 4

8 by Mr. Linhart who did testify at the hearing. Mr. Linhart testified that the city of Euclid was in a declining phase and in need of new economic growth. (Supp (Tr )) Notably, Mr. Linhart _also indicated in his report that the Subject Property was located in a part of the city of Euclid in which: "...there are below average employment opportunities, with an unemployment rate of 9%. Euclid's median income is below the state average; as are also the median values for single family residential properties.... "Several vacant storefronts were observed along the East 222nd corridor" (Page 17, Linhart Appraisal) In its selective use of the Durrah appraisal to support its position, the BOE fails to mention that Mr. Durrah employed a capitalization rate of 9.75% before additur, which if applied to the NOI used by Mr. Linhart, would still have produced a value via the income approach under $100,000. In reality, the two appraisers' observations about the neighborhood market are consistent. The market data relied upon by the appraiser in support of his capitalization rate was also characterized by the BOE as "not recent" when sales were used both before and after tax lien date. These challenges are unsupported. The BOE also suggests that the appraiser was required to make an adjustment to the income approach because one of the units of the Subject Property is used by the Sapinas for their business. This suggestion is simply incorrect because Mr. Linhart employed market rents to derive the gross potential income used in his income analysis. The BOE challenges Mr.Linhart's sales comparison approach to value based upon the fact that he made no adjustment for time of sale. Mr. Linhart adequately explained his reasons for not making an adjustment based upon time of sale, and described this particular area as an "ongoing static market," (Supp.77) which the BOE ignored in its analysis. 5

9 The BOE also challenges Mr. Linhart's sales comparison approach based upon its allegation that he used an incorrect building size in applying the price per square foot to determine value. In fact, it is the BOE which used the incorrect size. It appears that the BOE used a partially transposed figure of the land area when it claimed that the correct building size was 8,372 sguare feet. The actual land area is 8,732 square feet, which is supported by all sources available - Mr. Linhart's appraisal, the Donald Durrah appraisal and the parcel maps and legal descriptions included in the record. The building is described by Mr. Linhart as consisting of 3,952 square feet. The Durrah appraisal describes the building as consisting of 3,760 square feet. For purposes of this appeal, the building size of 3,952 square feet determined by Mr. Linhart is the most reliable because we know Mr. Linhart conducted an actual inspection of the property. We are unsure how Mr. Durrah derived his square footage, but the sketch in his appraisal suggests that he did not include the porches. We do know that the 8,372 square foot building size relied upon by the BOE is erroneous. As it did in the income approach, the BOE also attempts to use the Durrah appraisal to challenge Mr. Linhart's sales comparison approach. Mr. Durrah's appraisal was never supported by the testimony of its preparer and opines a value as of January, 2009 and not the tax lien date of January 1, While the Sapinas are not relying on the Durrah appraisal in this proceeding, it is clear that the Durrah value of $120,000 is much closer to the value alleged by the Sapinas than the value claimed by the BOE. Moreover, even though Mr. Durrah did not take into consideration the sales transaction involving the subject property, he did know about it and stated in his report: "Cuyahoga County Auditor's records shows the subject property was purchased on/or about February 27, 2006, from Ivan Cecilija and Milan Kuhar thru a survivorship deed, for a reported $325,000. This purchase seems out of line for this market." (Emphasis added.) (Supp. 142) 6

10 Mr. Linhart reached a similar conclusion upon seeing the recorded transfer price, stating: "There was a sale for $325,000 that was recorded. At the time when we looked at that, we had an inclination that there was something amiss." (Supp. 8 (Tr.-28)) Thus, it is clear that any appraiser familiar with this market need only look at the total sales transaction price to determine that it does not represent the fair market value of the Subject Property. The BOE's efforts to extract snippets from the Durrah appraisal in support of its position of value are completely untenable; and are based upon a total distortion of the findings and conclusion of that report. PROPOSITION OF LAW NO. 1: LAW AND ARGUMENT A RECORDED SALE PRICE DOES NOT ESTABLISH VALUE WHERE COMPETENT AND PROBATIVE EVIDENCE ESTABLISHES THAT THE SALE PRICE INCLUDES NON REAL ESTATE ITEMS AND IS NOT REPRESENTATIVE OF THE FAIR MARKET VALUE OF THE REAL PROPERTY IN CONTRAVENTION OF R.C AN APPRAISAL WHICH TAKES INTO CONSIDERATION THE RECENT SALE CONSTITUTES RELIABLE AND PROBATIVE EVIDENCE OF THE APPROPRIATE ALLOCATION OF THE SALE PRICE TO REAL ESTATE. The BOE essentially avoids addressing this proposition of law by re-writing the first half of the proposition in a manner that reflects its distorted recitation of the facts, and totally ignoring the second half of the proposition, re-stating it as follows: "A recorded sale price does establish value where no competent or probative evidence establishes that the sale price includes non-real estate items or their value and is representative of the fair market value of the real property." All`of the evidence in this matter reflects that the "sale price includes non-real estate items" For the BOE to suggest otherwise is clearly fiction. It is correct that the parties to the 7

11 sale transaction did not allocate a value between the real estate and personal property transferred in the sale. It is also correct that the Sapinas did not set forth evidence in this case of the value of the personal property involved in the sale. Contrary to the distorted logic of the BOE, these two items do not negate the fact that personal property was included in the sale price - a substantial amount of personal property, both tangible and intangible. Indeed, it was the purchase of the non-real estate, i.e., the business, which was the motivation for the entire transaction. The Sapinas' purchase of the carry-out restaurant and Subject Property was initiated when the Seller first offered to sell them to Mr. Sapina's mother, who had been an employee of the restaurant at the Subject Property for ten to fifteen years. (Supp. 4 (Tr. -11)) Although the elder Mrs. Sapina was not interested in the purchase, she passed the offer on to her son who "wanted to get into that" and the Sapinas "just took a risk and purchased everything." (Supp. 4 (Tr. -11)) This litigation does not concern the determination of the value of personal property. It is a proceeding to determine the value of real property - land and building - which is subject to real estate taxation. R.C , as it existed at the time of the BTA decision in this matter provided: In determining the true value of any tract, lot, or parcel of real estate under this section, if such tract, lot, or parcel has been the subject of an arm's length sale between a willing seller and a willing buyer within a reasonable length of time, either before or after the tax lien date, the auditor shall consider the sale price of such tract, lot, or parcel to be the true value for taxation purposes. (Emphasis added.) R.C has since been amended, in pertinent part, to provide: Sec The county auditor, from the best sources of information available, shall determine, as nearly as practicable, the true value of the fee simple estate, as if unencumbered, but subject to any effects from the exercise of police powers or from other governmental actions, of each separate tract, lot, or parcel of real property and of buildings, structures, and improvements located thereon and the current agricultural.use value of land valued for tax purposes in accorda_n_ce with section of the Revised Code, in every district, according to the rules 8

12 prescribed by this chapter and section of the Revised Code, and in accordance with the uniform rules and methods of valuing and assessing real property as adopted, prescribed, and promulgated by the tax commissioner. The auditor shall determine the taxable value of all real property by reducing its true or current agricultural use value by the percentage ordered by the commissioner. In determining the true value of any tract, lot, or parcel of real estate under this section, if such tract, lot, or parcel has been the subject of an arm's length sale between a willing seller and a willing buyer within a reasonable length of time, either before or after the tax lien date, the auditor may consider the sale price of such tract, lot, oy parcel to be the true value for taxation purposes. This amendment clarifies the intent of the statute to apply a sale price as evidence of value when it reflects the fee simple estate of the real estate being appraised and not other interests which may have also been transferred. It also clarifies that the county assessors have the discretion to make that determination before establishing a sale price as the value of a parcel for tax purposes. It is clear that the intent of R.C , both before and after the amendment, is to employ the sale price as evidence of value insofar as the sale price relates to the "tract, lot or parcel of real estate" which is the subject of the sale. It has never been the intent of R.C to artificially inflate the value of property for real estate tax purposes because a sale includes the pur`chase of personal property. It is also required that, "[t]he business factors and the realproperty factors must be separated when the real property is being valued for tax purposes." Higbee Co. v. Cuyahoga Cty. Bd. ofrevision, 839 N.E.2d 385, 107 Ohio St.3d 325, 2006-Ohio-2 (Ohio 2006), 44. Consistent with the philosophy of R.C , this Court has held that when determining value in cases that come before it involving a sale: "...the BTA must decide not only whether a proffered sale price satisfies the criteria of recency and arm's-length character, but also what amount of the stated sale price pertains to the realty." Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd. ofrevision, 2010-Ohio-1040, 125 Ohio St.3d 103, 926 N.Fa2d 302, { 22}. 9

13 When the Sapinas realized that the inclusion of the value of the business, business assets, contracts, equipment, inventory, and non-compete agreement, into one unallocated sale price resulted in an excessive valuation of their real estate for tax purposes, they knew they had to get the record straight in order to achieve fair taxation of their real estate. They filed a Complaint to obtain a fair valuation of their property and compiled evidence in support of that Complaint. They submitted all of the documents concerning the sale to the BOR and Katarina appeared and testified concerning that sale. She provided documentation and testimony to the BOR showing that they tried to go back to the sellers and negotiate an allocation, but the sellers did not respond to that request. They hired an appraiser to appraise the real estate for use at the BOR hearing, but the appraiser did not determine a value as of tax lien date and did not appear at the hearing. Next, they provided the BOE's attorney with an estimate of the value of the business equipment because the BOE's attorney had suggested that was necessary at the BOR hearing. Finally the Sapinas retained counsel and obtained an appraisal of the Subject Property which allocated a value to the real estate, taking the recent sale into consideration as approved in Conalco, Inc. v. Monroe Cty. Bd. ofrevision, 50 Ohio St.2d 129, 4 0.O.3d 309, 363 N.E.2d 722 (1977), paragraph two of the syllabus ("Conalco I"), Conalco v. Monroe Cty. Bd. ofrevision, 54 Ohio St.2d 330, 376 N.E.2d 959 (1978) ("Conalco II") and Consolidated Aluminum Corp., v. Monroe County Bd. ofrevision; 66 Ohio St.2d 410, 423 N.E.2d 75 (1981) ("Conalco III"). With this record replete of documentation that the sale included the sale of a business, tangible and intangible business assets and a non-compete agreement, the BOE persists in its characterization of this record as one which does not establish that non-real estate items were included in the sale price. There is no doubt that they were. 10

14 In many cases involving a sale which includes both real and personal property, the value of the real property can be deduced by removing the value of the personal property, if it can be determined. That was not possible in this case. The question in this appeal is how to determine the value of the real estate. Clearly, the sale price was not representative of the value of the real estate. Clearly, the non-real estate items that were transferred were more than the list of equipment that the BOE mentions in its brief. The only authority relied upon by the BOE are cases in which the allocation of value to the real property could have been determined by a deduction for the value of incidental tangible personal property. Those cases are simply irrelevant here. In this case the record includes the opinion of two appraisers who looked at the transfer price and the Subject Property and concluded that the sale price was not representative of the value of the real estate. In fact, both appraisers found the sale price to be almost three times more than the value of the real estate. Without articulating it specifically, the BOE argues in this appeal that the only way to establish the value of real estate which sold in a bulk transaction is to first determine the value of personal property and then deduct it from the sale price. There is simply no precedent for this unwarranted interpretation. In the case at bar, appraisal evidence was submitted which offers reliable evidence in support of an allocation of the recent sale price to realty only in the amount of $100,000. The appraisal of Mr. Linhart was performed with due consideration given to the actual sale. This appraisal meets the qualifications established in the three Conalco decisions. It is also in compliance with the guidelines set forth in St. Bernard Self-Storage, L.L. C. v. Hamilton Cty. Bd. ofrevision, 115 Ohio St.3d 365, 2007-Ohio-5249, 875 N.E.2d 8 5, which requires convincing 11

15 independent evidence of the proper allocation of the sale price for real estate tax purposes. In St. Bernard, the Court specifically rejected a claim that an allocation negotiated by the parties to the sale must be accepted for purposes of real estate taxation, stating at 17: " In bulk sale cases, we typically look for corroborating indicia to ensure that the allocation reflects the true value of the property. Where attendant evidence shows reason to doubt such a correspondence, we decline to use the allocation to establish true value." Both the BTA and this Court in St. Bernard accepted the consideration of such an appraisal as an appropriate methodology for determining a proper allocation. Ultimately, in St. Bernard, the appraisal rendering an opinion as to the allocation of the sale price was rejected because the BTA found that it was based upon unsound appraisal principles and was not credible. In the within matter, the appraisal of Mr. Linhart is based on sound appraisal practices and is credible. The BTA acted unreasonably and unlawfully in failing to take into consideration and adopt as evidence of value, appraisal evidence which established the proper allocation of the purchase price to real estate in the amount of $100,000. PROPOSITION OF LAW NO. 2: THE BTA ACTS UNLAWFULLY WHEN IT IMPOSES A BURDEN OF "UNEQUIVOCAL PROOF" UPON A PARTY TO ESTABLISH THE VALUE OF PERSONAL PROPERTY INVOLVED IN A SALE WHEN THE ISSUE BEFORE THE BTA IS TO DETERMINE THE PROPER ALLOCATION OF A SALE PRICE TO REAL ESTATE. The BOE's response to this proposition of law also ignores all of the arguments set forth by the Sapinas by saying: "The BTA did not impose a burden of "unequivocal proof upon Appellants. The BTA simply required Appellants to provide competent and probative evidence of the value of the items they sought to deduct from the sale price and found that they had not done so." Again, the unspoken premise to this argument by the BOE and the BTA's action is that the only way to aliocate the value of real estate in transaction concerning both real and personal 12

16 property is to establish the value of the personal property and deduct it from the sale price. This premise is untenable. The Sapinas provided competent and probative evidence that the sale price was not representative of the value of the real estate and then offered competent and probative evidence of the value of the real estate which is subject to real estate taxation. The BOE's characterization of the burden imposed upon the Sapina's by the BTA also completely ignores the BTA Decision and Order which states: "While we do not question Ms. Sapina's veracity or that items of personal property may have also been acquired as part of the sale, we fmd the evidence offered insufficient to `uneguivocally establish' a basis for allocating a portion of the sale price to the personal property that was transferred."' (Emphasis added.) Appx. to Appellant's Brief-13. By ignoring the clear language in the BTA Decision and Order, the BOE avoids addressing the inappropriate standard which was applied by the BTA. It avoids addressing the distorted manner in which the BTA interpreted Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd. ofrevision, 2010-Ohio-1040, 125 Ohio St.3d 103, 926 N.E.2d 302 which was set forth in the Sapina's Brief. It also avoids addressing the appropriate standard for review which was set forth recently by this Court in Bedford Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 2012-Ohio- 2844, 132 Ohio St.3d 371, 972 N.E.2d 559, { 36}: "As an owner who " seeks an allocation of the sale price in order to reduce the valuation below the full sale price,' Alexander Road " bears the burden of showing the propriety of allocating some portion of that reported price to other assets." Hilliard City Schools Bd. ofedn., 128 Ohio St.3d 565, 2011-Ohio-2258, 949 N.E.2d 1, 18. We have clarified that this burden is not a heavy one, as our discussion in St. Bernard Self-Storage, 115 Ohio St.3d 365, 2007-Ohio-5249, 875 N.E.2d 85, 14, 17, suggests: all that is required is some additional increment of corroborating evidence beyond the bare fact of allocation in the conveyance-fee statement itself. Indeed, in Hilliard City Schools Bd. of Edn., we held that an allocation of $280,000 to personal property was justified on the basis of a written app-raisal report prepared for a lender in conjunction with the asset sale, and we did so in spite of the absence of testimony by the appraiser. Id. at " 13

17 Here, the "propriety of allocating some portion of that reported price to other assets" has been firmly demonstrated by the uncontroverted evidence that the sale included the sale of a business. The fact that the business was included in the sale was accepted by the BTA when it indicated in its Decision and Order that it believed the testimony of Katarina and recognized that personal property was included in the sale. Those uncontested facts were corroborated by appraisal evidence which took into consideration the recent sale and concluded that the value of the real estate is significantly less than the reported sale price. Moreover, the BTA decision improperly eliminates any burden upon the BOE to establish a presumption that the sale price is evidence of value. The BOE in this case did not admit into evidence, either at the BOR or before the BTA, a deed or conveyance fee statement. It mailed a copy to the BTA by letter dated November 21, 2011, indicating that it "may be submitted into evidence," and then waived its appearance at the hearing by letter dated December 2, The BTA imposed no burden on the BOE to properly admit a documents into evidence. Not any document, but the one document which both the BTA and BOE argue creates a presumption which requires "irrefutable evidence" to overcome. Appx. to Appellant's Brief-11. It has been clearly established that the 2006 sale involving the Subject Property was a sale involving "... the sale of all the assets of a business, whereby a parcel of real property constitutes one of many business assets sold at the same time for an aggregate sale price," as described by St. Bernard Self-Storage, L.L. C. v. Hamilton Cty. Bd. of Revision, 115 Ohio St.3d 365, 2007-Ohio-5249, 875 N.E.2d 85 { 15}. The Court described the duty of the BTA in these circumstances as follows: "In all such cases, a question arises beyond the basic pronouncement of Berea: whether the proffered allocation of bulk sale price to the particular parcel of real 14

18 property is "proper," which is the same as asking whether the amount allocated reflects the true value of the parcel for tax purposes. "(Emphasis added.) Accordingly, it was the Sapina's burden to establish the proper allocation of the sale price. They have done so through the appraisal and testimony of Mr. Linhart, who made a determination of value taking into consideration the recent sale. Having done so, the BOE has the burden of meeting the evidence regarding the proper allocation, and may not merely rely on the deed, purchase contract and conveyance fee statement to establish the value of the Subject Property for tax purposes. This is particularly so when the BOE did not even submit into evidence the deed or conveyance fee statement and the purchase contract itself refutes the fact that the price was for real property only. St. Bernard made this clear when it stated at 19: { 19} In the area of real property valuation, we have not hesitated to authorize a departurefvom a recent sale price when a bulk sale price cannot properly be allocated. [footnote omitted] In all of those cases, value was determined without reference to a sale price because no convincing allocation of the sale price was offered. Cf. Pingue v. Franklin Cty. Bd. of Revision (1999), 87 Ohio St.3d 62, 717 N.E.2d 293. (Emphasis added.) This holding was repeated in this Court's recent decision in Bedford, supra, { 19}: "But the validity of using the allocated sale price depends upon the propriety of the allocation; if the BTA finds that an allocation is not proper, or that a proper one is not possible based on the evidence before it, then the sale price is not determinative of value. Consol. Aluminum Corp. v. Monroe Cty. Bd. of Revision, 66 Ohio St.2d 410, 414, 423 N.E.2d 75 (1981); compare W.S. Tyler Co. v. Lake Cty. Bd. of Revision, 57 Ohio St.3d 47, 49, 565 N.E.2d 826 (1991) (use of allocated sale price to value real property was affirmed the BTA indicated an " improper" allocation that would [Page 375] the subject property" )." (Emphasis added.) where " no facts" before " distort the true value of Accordingly, the burden upon the BOE in this case is to produce reliable and credible evidence in support of the proper allocation of the sale price. The only reliable, credible evidence in support of a proper allocation in this case is the evidence submitted by the Sapinas. The only 15

19 reliable, credible evidence of value produced by any means in this case is the evidence submitted by the Sapinas. That evidence establishes that the sale price is not reflective of market value and that the fair market value of the Subject Property as of tax lien date is $100,000. CONCLUSION The Sapinas acquired the Subject Property in a sale transaction centered upon the purchase of a carry-out restaurant business. The issue to be decided in this case is the proper allocation of the total sale price to the Subject Property. The Sapinas have met that burden through the expert opinion and testimony of Richard Linhart, the purchase agreement and bill of sale involved in the transaction, and the supporting testimony of Katarina as to the conditions of sale. Other evidence of record, although less probative of value, supports these conclusions. No evidence in this record supports the conclusion that the recent sale price was representative of the value of the Subject Property. The BTA's decision adopting the recorded sales price as the final value was unreasonable and unlawful for its failure to consider reliable, probative evidence of the proper allocation of the sale price to real estate and for the unlawful placement of an unacceptable burden of proof upon the Sapinas. The reliable, probative and credible evidence of record supports a finding that the fair market value of the Subject Property as of January 1, 2007 is $100,000. For all of the foregoing reasons, the Decision and Order of the BTA should be reversed 16

20 and the cause remanded with instructions to adopt a valuation of $100,000 for the Subject Property as of tax lien date. Respectfully submitted, SIEGEL,JENNINGS Vic Ansel ) Counsel of Record J. eran Je 'ngs o ( ) ' 7( ) Ja on P. Lin holm Commerce Park Drive, Suite 103 Cleveland, OH (216) Counsel for Appellants Ivica Sapina & Katarina Sapina 17

21 CERXFICATE OF SERVICE This is to certify that on thist day of January, 2013, a copy of the Brief of Appellants was sent via Federal Express, prepaid to: Karrie M. Kalail Michael Stinn Britton, Smith, Peters, & Kalail Co., L.P.A. 3 Summit Park Drive, Suite 400, Cleveland, OH Saundra Curtis-Patrick Cuyahoga County Assistant Prosecutor 1200 Ontario Street, 8th Floor Cleveland, OH Michael DeWine Ohio Attorney General 30 E. Broad Street, 17th Floor Columbus, OH Vict Ansel ( ) Counsel of Record J. ran Je ngs ( ) Ja ^ n P. Li holm ( ) 18