Ohio Tax. Workshop V. Real Property Valuations Issues Involving the Dark Store Theory. Tuesday, January 24, :15 p.m. to 5:15 p.m.

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1 26th Annual Tuesday & Wednesday, January 24 25, 2017 Hya Regency Columbus, Columbus, Ohio Ohio Tax Workshop V Real Property Valuations Issues Involving the Dark Store Theory Tuesday, January 24, :15 p.m. to 5:15 p.m.

2 Biographical Information Mark A. Engel, Partner, Bricker & Eckler LLP 9277 Centre Pointe Drive, Suite 100 West Chester, OH Fax Mark Engel is the partner in charge of Bricker & Eckler s Cincinnati/Dayton office. Mark's practice is taxation, with concentrated experience in all aspects of state and local taxation, including tax planning, compliance, and litigation in sales and use, income, commercial activity, public utility, and property taxation. In addition, Mark works in the areas of economic development, executive compensation, federal personal and corporate taxation, and nonprofit and social enterprise tax issues. He serves as tax counsel to the Ohio Manufacturers' Association and played a key role in helping to design several provisions of Ohio tax reform efforts. Mark has briefed and argued more than 80 cases in the Supreme Court of Ohio, and appeared in every appellate district in Ohio. He successfully litigated several precedent setting cases involving key issues of state taxation in Ohio. In addition, Mark negotiated numerous incentive packages for enterprises looking to expand in Ohio. He served as tax counsel to the electric industry during industry restructuring, including assisting in drafting numerous tax provisions to the restructuring legislation. He also was heavily involved in legislation to reform the taxation of alternative energy production facilities. Mark graduated from the University of Michigan with a B.A. in sociology, and received his J.D. and LLM (Taxation) from Capital University Law School. Mark A. Loyd, Partner and Chair, Tax and Employee Benefits Group Bingham Greenebaum Doll LLP 3500 National City Tower, 101 South Fifth Street, Louisville, KY MLoyd@bgdlegal.com Direct: Fax: Mark A. Loyd, Esq., is a partner and Chair of the Tax and Employee Benefits Group of Bingham Greenebaum Doll LLP, a regional business law firm with offices in Kentucky, Indiana and Ohio. His areas of practice concentration are state, local and federal taxation, tax litigation, tax controversy resolution and tax planning for multistate and multinational companies. He is licensed to practice law in Kentucky, Indiana, Ohio and Tennessee. Prior to joining BGD, Mr. Loyd managed the state and local tax function for a multi-state, multi-billion dollar manufacturing corporation. Mr. Loyd is also a Certified Public Accountant, having begun his career with Coopers & Lybrand, now PricewaterhouseCoopers. Mr. Loyd is the Co-Chair of the ABA/IPT Advanced Property Tax Seminar, Co-Chair of IPT s Basic Income Tax School, Chair of the Kentucky Society of CPA s Taxation Committee, and Chair of the Editorial Board of The Kentucky CPA Journal, among other endeavors. Mr. Loyd also serves as the Chair of the Board of Directors of Park Community Credit Union, an $800 million dollar financial institution. He is a past Chair of the Tax Section of the Kentucky Bar Association, a past Chair of the Tax Section of the Louisville Bar Association, a former member of the KyCPA s Board of Directors, and former Chair of the KyCPA Educational Foundation. Mr. Loyd is the 2015 recipient of the IPT New Member Achievement Award. He has written extensively on tax matters in publications such as State Tax Notes, The Tax Lawyer, the Journal of State Taxation, and The Kentucky CPA Journal. He has been a speaker and panelist on various tax matters at conferences, forums and for groups such as IPT, American Bar Association, the Federation of Tax Administrators, Council on State Taxation, the Ohio Tax Conference and others. He received his J.D. degree, magna cum laude, from the University of Louisville s Louis D. Brandeis School of Law, where he was Class Salutatorian. He also has an M.B.A., with distinction, from the University of Louisville and is a graduate of Bellarmine University where he received his B.A. in Accounting, summa cum laude.

3 Biographical Information David R. Hogan, Senior Managing Director Valbridge Property Advisors, Allgeier Company 9000 Wessex Pl., Suite 306, Louisville, KY ext 236 Fax: Following graduation from Western KY University in 1976, David began his career in real estate valuation as a field agent for the county assessment office in Louisville, KY. In 1980, he joined a local three person firm. By 1990, that firm had grown to be the largest in Louisville, and David left to found his own firm, Valcom Services. In 1990 Valcom merged with Allgeier Company, which subsequently partnered with 41 other companies across the nation to found Valbridge Property Advisors. Over the years, David s experience has spanned the entire spectrum of real property valuation and consultation. Although his core expertise centers on the lodging industry, over the years he has become known regionally for addressing atypical and challenging properties, ranging from bridges across the Ohio River to white water rafting resort operations in WV. His experience with the property tax side of real estate valuation has included active participation on both sides of the table, having established assessments for the assessor s office in the beginning, appealing the assessments of many properties at the county and state level over subsequent years, and, for the last two years, serving on the county board of tax appeals for commercial properties. Gary T. Stedronsky, Shareholder, Ennis Britton Co., L.P.A West Galbraith Road, Cincinnati, OH gstedronsky@ennisbritton.com FAX: Gary is a shareholder with Ennis Britton Co., L.P.A. He served as a law clerk with the firm while attending the University of Cincinnati College of Law. He joined the firm as an attorney upon graduation in 2005 and became a shareholder in Mr. Stedronsky provides counsel to public boards of education on a wide range of education law issues, with an emphasis on employment matters, labor relations, property issues, public finance matters, property valuation, and tax incentives. Mr. Stedronsky has represented boards of education in real property tax valuation matters in many counties throughout Ohio, at the Board of Tax Appeals, and in many courts, including the Ohio Supreme Court. Gary is a member of the Executive Committee of the Ohio Council of School Board Attorneys. He is a frequent presenter on a variety of education law topics throughout Ohio. He was selected as a Super Lawyers Rising Star for 2014, 2015, 2016 and 2017.

4 26th Annual Ohio Tax Conference 1 REAL PROPERTY VALUATION Issues Involving the Dark Store Theory 26 th Annual Ohio Tax Conference Mark Engel Bricker & Ecker LLP Mark Loyd Bingham Greenebaum Doll LLP David Hogan Valbridge Property Advisors Gary Stedronsky Ennis Britton Co., L.P.A.

5 26th Annual Ohio Tax Conference 2 Background Typical situation: Large commercial structure built to specification of first user Owner-occupied, or Leased Structure vacated by initial occupant, currently empty or repurposed Market contains properties of first generation users, properties of second generation users, and vacant properties How does one determine the fair market value of the fee simple estate?

6 26th Annual Ohio Tax Conference 3 Basics What is the dark store theory? Do you see it in your practice? What general issues does it present? Highest and best use Special purpose What are you seeing in opposition to the interests of your client? What is its impact on the general rule that the price paid in a recent arm s-length transaction is the best indicator of the value of the property?

7 26th Annual Ohio Tax Conference 4 Approaches to Value What is the principal impact, if any, on the three approaches to value? Cost Approach Income Approach Market/Sales Approach What is the impact on selection of comparable properties? All first generation? All dark? All second generation? What sorts of adjustments should be made?

8 26th Annual Ohio Tax Conference 5 What do the courts say? Rite Aid of Ohio, Inc Ohio-371 Lowe s Home Centers, Inc Ohio-372 Value in exchange is the standard Normally, information from leased fee properties must be adjusted with respect to unleased properties Exception special purpose properties Meijer Stores Ltd. P ship v. Smith, 926 N.E.2d 1134, 1137 (Ind. Tax Ct. 2010); Stinson v. Trimas Fasteners, Inc., 923 N.E.2d 496, 501 (Ind. Tax Ct. 2010) (rejecting assessor s theory that vacant properties are not comparable to occupied properties ). Lowe s Home Ctrs. v. Twp. Of Marquette, Nos , , 2014 Mich. App. LEXIS 756, at (Ct. App. Apr. 22, 2014) (unpublished).

9 26th Annual Ohio Tax Conference 6 Impact of Leased Fee Sales HIN LLC, 2014-Ohio-423 Property sold subject to a long term lease Owner argued value of lease, an intangible, impacted price paid Appraiser argued that value of lease must be separated in determining value of fee simple estate Court rejected argument sale price was invalid R.C contains no exception for leased fee transactions Distinguished valuation by sale and valuation by appraisal in absence of sale

10 26th Annual Ohio Tax Conference 7 Leased Fee Sales The distinction between fee simple and leased fee is one drawn in the context of appraisal practice. The appraisal industry uses the term fee simple to refer to unencumbered property or to property appraised as if it were unencumbered. This distinction is not one recognized by the law, however. A fee simple may be absolute, conditional, or subject to defeasance, but the mere existence of encumbrances does not affect its status as fee simple. Meijer Stores Ltd. Partnership v. Bd. of Revision, 122 Ohio St. 3d 447, 2009-Ohio-3479, 23, fn.4.

11 26th Annual Ohio Tax Conference 8 Impact of statutory provisions Ohio R.C : The true value of the fee simple estate, as if unencumbered but subject to the effect of any governmental regulation Indiana - Indiana Code (enacted 2015) a limited market or special purpose property that would commonly be regarded as a big box retail building under standard appraisal practices and is at least fifty thousand (50,000) square feet and occupied by the original owner or by a tenant for which the improvement was built and Improvements are not more than 10 years old; then Improvements must be valued using cost approach, less depreciation and obsolescence, under Indiana s property tax regulations. Repealed by H.B (2016)

12 26th Annual Ohio Tax Conference 9 Deed restrictions Many original owners impose deed restrictions on the use by subsequent users. How, if at all, does this impact the issue? What is the impact of deed restrictions on market prices or rents to be used? Looking at two potentially comparable properties, one with restrictions and one without, what implications are presented?

13 26th Annual Ohio Tax Conference 10 Q & A Mark Engel, Partner mengel@bricker.com Mark Loyd, Partner & Chair mloyd@bgdlegal.com David Hogan, MAI, Senior Managing Director dhogan@valbridge.com Gary Stedronsky, Shareholder gstredronsky@ennisbritton.com

14 Search - 1 Result Taxable valuation of real property. Page 1 of 24 ORC Ann Page's Ohio Revised Code Annotated Copyright c Matthew Bender &Company, Inc., a member of the LexisNexis Group. All rights reserved. *** Current with Legislation passed by the 131st General Assembly and filed with the Secretary of State through file 124 (HB Z60). *** Title 57: Taxation Chapter 5713: Assessing Real Estate Go to the Ohio Code Archive Directory ORC Ann (2016) Taxable valuation of real property. 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 accordance with section of the Revised Code, in every district, according to the rules 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 commissianer. 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, or parcel to be the true value for taxation purposes. However, the sale price in an arm's length transaction between a willing seller and a willing buyer shall not be considered the true value of the property sold if subsequent to the sale: (A) The tract, lot, or parcel of real estate loses value due to some casualty; (B) An improvement is added to the property. Nothing in this section or section of the Revised Code and no rule adopted under section of the Revised Code shall require the county auditor to change the true value in money of any property in any year except a year in which the tax commissioner is required to determine under section of the Revised Code whether the property has been assessed as required by law. The county auditor shall adopt and use a real property record approved by the commissioner for each tract, lot, or parcel of real property, setting forth the true and taxable value of land and, in the case of land valued in accordance with section of the Revised Code, its current agricultural use value, the number of acres of arable land, permanent pasture land, woodland, and wasteland in each tract, lot, or parcel. The auditor shall record pertinent information and the true and taxable value of each building, structure, or improvement to land, which value shall be included as a separate part of the total value of each tract, lot, or parcel of real property. HISTORY: RS 2790; S&C 1450; 77 v 130; 87 v 76; GC 5554; 107 v 29; Bureau of Code Revision, ; 127 v 65; 128 v 410 (Eff ); 131 v 1329 (Eff ); 135 v S /16/2016

15 Get adocument - by Citation Ohio St. 3d 173 Page 1 of Ohio St. 3d 173, *; 2016-Ohio-371, * *; 54 N.E.3d 1177, ***; 2016 Ohio LEXIS z52 RITE AID OF OHIO, INC., APPELLEE, v. WASHINGTON COUNTY BOARD OF REVISION ET AL., APPELLANTS. No SUPREME COURT OF OHIO 146 Ohio St. 3d 173; 2016-Ohio-371; 54 N.E.3d 1177; 2016 Ohio LEXIS 252 August li, 2015, Submitted February 4, 2016, Decided SUBSEQUENT HISTORY: Reconsideration denied by Rite Aid of Ohio, Inc. v. Wash. Cnty. Bd. of Revision, 145 Ohio St. 3d 1447, 2016-Ohio-1596, 2016 Ohio LEXIS 982, 48 N.E.3d 585 (2016) PRIOR HISTORY: APPEAL from the Board of Tax Appeals, No Rite Aid of Ohio Inc. v. Wash. County Bd. of Revision, 2014 Ohio Tax LEXIS 2541 (Ohio B.T.A., Apr. 22, 2014) DISPOSITION: Decision affirmed. CASE SUMMARY: OVERVIEW: HOLDINGS: [1]-A decision of the Ohio Board of Tax Appeals adopting a corporation's appraisal of a drugstore and parking lot was affirmed, as the decision in Meijer Stores Ltd. Partnership v. Franklin Cty. Bd. of Revision did not require the use of the kind of comparables that the county's appraiser relied upon in determining the property's value; [2] -The county's appraisal in the context of the entire record lacked the element that would commend its approach under settled law, namely there was no finding that the property qualified for use valuation under the special-purpose doctrine; moreover, an 11,000-squarefoot drugstore was an unlikely candidate for such treatment. OUTCOME: Decision affirmed. CORE TERMS: valuation, appraisal, lease, drugstore, sale price, appraiser, comparable, special-purpose, rent, per square foot, subject property, leased-fee, retail, current use, adjusted, best use, encumbered, parcel, obsolescence, long-term, auditor, appraisal report, general rule, value of property, property owner, true value, special purpose, build-to-suit, unencumbered, arm's-length LEXISNEXIS(R) HEADNOTES Real Property Law > Property Valuation ~ "f1~ For property valuation, precisely because a lease affects the sale price and value, a lease-fee comparable ought to be adjusted when the subject property has no lease; the adjustment would remove the effect of the lease on the sale price so that the sale can indicate what the unencumbered subject property would sell for. c6c4a1 a &_br... 12/ 16/2016

16 Get adocument - by Citation Ohio St. 3d 173 Page 2 of 9 Tax Law > State &Local Taxes > Real Property Tax > Assessment &Valuation > Valuation Real Property Law > Property Valuation xrvz,~as a general matter, the Ohio Constitution provides that land and improvements thereon shall be taxed by uniform rule according to value. Value in the context of ad valorem taxation of property is defined in terms of the exchange value rather than the current-use value. The general rule is as follows: In the last analysis the value or true value in money of any property is the amount far which that property would sell on the open market by a willing seller to a willing buyer. In essence, the value of property is the amount of money for which it may be exchanged, i.e., the sales price. Two corollaries have been drawn by the Supreme Court of Ohio: first, that a recent, arm's-length sale price will usually determine the monetary value of the property and second, that absent such a sale price, an appraisal indicates value when it determines the amount which such property should bring if sold on the open market. The Supreme Court of Ohio has applied these principles as a constitutional limitation on the legislative power to define property value. Real Property Law > Property Valuation Tax Law > State &Local Taxes > Real Property Tax > Assessment &Valuation > Valuation H^'~~ Since the current use method of evaluation excludes, among other factors, location and speculative value which comprise market value, such current use method cannot be made the basis for valuation of real property for tax assessment purposes. Real Property Law > Property Valuation H~r4:~.One crucial element in determining the value of property in the overall market lies in the concept of "highest and best use." Highest and best use is that use which will generate the highest net return to the property over a reasonable period of time. Valuing a property at its highest and best use means identifying the reasonably probable and legal use of vacant land or an improved property that is legally permissible, physically possible, appropriately supported, financially feasible, and that results in the highest value. Highest and best use of the improvements to the land will usually be expressed in terms of the general type of use to be made of such property. HEADNOTES Taxation Real-property valuation Because along-cerrn lease affects sale price and value, the sale price of a leased-fee comparable should be adjusted when the subject property has no lease Special-purpose doctrine not applicable Decision of the Board of Tax Appeals affirmed. COUNSEL: Stephen Swaim, for appellee. Rich &Gillis Law Group, L.L.C., Kelley A. Gorry, and James R. Gorry, for appellants. JUDGES: O'CONNOR, C.J., and PFEIFER, O'DONNELL, LANZINGER, KENNEDY, FRENCH, and O'NEILL, JJ., concur. OPINION [***1177] [*173] Per Curiam. c6c4al a &_br... 12/16/2016

17 Get adocument - by Citation Ohio St. 3d 173 Page 3 of 9 [**P1] This real-property-valuation case concerns the tax-year-2010 valuation of multiple parcels that together constitute a Rite Aid drugstore and its parking lot in Marietta. In that sexennial reappraisal year, the Washington County Auditor, an appellant here, determined a value of approximately $3,319,000 for the store. Appellee, Rite Aid of Ohio, Inc., filed a complaint before the Washington County Board of Revision ("BOR"), also an appellant here, and presented an opinion seeking a reduction, but the BOR retained the auditor's valuation. On appeal at the Board of Tax Appeals ("BTA"), Rite Aid and the county presented competing appraisals. The BTA adopted Rite Aid's appraisal, and the county has appealed. [**P2] The county argues that our decision in Meijer Stores Ltd. Partnership v. Franklin Cty, Bd. of Revision, 122 Ohio St.3d 447, 2009-Ohio-3479, 912 N.E.2d 560, requires the use of the kind of comparables that the county's appraiser relied upon. We disagree, and we therefore affirm the decision of the BTA. FACTUAL BACKGROUND [**P3] The property at issue consists of 1.13 acres in downtown Marietta that are improved with an 11,OS2-square-foot building constructed in According to Rite Aid's complaint, the auditor determined a total fair-market value for the [***1178] parcels of approximately $3,319,000; Rite Aid sought a reduction to $1,396,920. The BOR held a hearing on May 24, Rite Aid's attorney appeared on behalf of the property owner; the board of education was not represented at the hearing. [**P4] At the BOR hearing, Rite Aid's attorney presented a summary of information developed by a contractor, International Appraisals, for Rite Aid, showing sale comparables and rent comparables in the geographic region. The [*174] attorney explicitly disavowed providing an appraisal in a formal sense and also stated that the contractor was not able to find any drugstore sales in the area considered. The BOR's consultant recommended no change in property value, and the BOR adopted that recommendation on June 15, The competing appraisals and theories at the BTA [**P5] Rite Aid appealed to the BTA, which held a hearing on June 12, At the BTA hearing, Rite Aid presented an appraisal report and testimony by Geoffrey Hatcher, MAI. The county presented its own appraisal report and testimony by Karen Blosser, MAI. [**P6] Both appraisers found the cost approach inapplicable, primarily because the building was already ten years old as of the lien date. Blosser stated as well that she did not have sufficient data to compute the obsolescence deduction in light of the economic recession. [**P7] The competing statements of counsel at the opening of the BTA hearing reflect the different approaches taken by the appraisers in the light of differing understandings of the law of property-tax valuation. The owner's counsel summarized its appraiser's approach as one that evaluated the Rite Aid property by "look[ing] at comparable properties both for sale and for lease in the general geographic area of the subject property," but not just as a drugstore, whereas the county's appraisal "looked at only drugstores for their * * * comparables scattered around the State of Ohio." [**P8] The county's counsel did not contest her opposing counsel's characterization of her own appraiser's evidence; indeed, she countered by stating, "[T]he most competent and probative evidence of value is going to be presented through the appraisal of Karen Blosser, our appraiser, in which she appraises the property as it actually existed on the tax lien date as a Rite Aid." (Emphasis added.) In other words, the county posits a valuation in terms of continued use by Rite Aid even after a putative sale, presumably with the drugstore continuing as lessee under along-term lease. As counsel stated, this does resemble the existing use as of the lien date; but it also differs from the manner in which the property was held on the lien date because this property unlike ali of Blosser's comparables was not subject to a lease. c6c4a1 a &_br... 12/16/2016

18 Get adocument - by Citation Ohio St. 3d 173 Page 4 of 9 [**P9] True to counsel's description, Rite Aid's appraiser, Hatcher, had selected six sale comparables general retail rather than drugstores with three located in Zanesville, one in Nelsonville, one in Parkersburg, West Virginia (just across the Ohio River, near Marietta), and one in Vienna, West Virginia. These stores ranged from $59.87 per square foot to $ per square foot in sale price, and Hatcher settled (after adjustments for building size) on $100 per square foot for the subject property. Hatcher did not completely ignore leased properties: one [* 175] of his comparables was a Family Dollar that was subject to a lease, for which circumstance Hatcher made no adjustment, on account of lack of information. [**P10] By contrast, Blosser selected five sale comparables, all drugstores, all geographically [***1179] distant. Two were Walgreens (one in Canton, one in Medina), one was a former Rite Aid (in Columbus on Bethel Road), and two were Dayton-area stores: a current Rite Aid in Englewood and a CVS in Dayton. Al/ were apparently encumbered by leases at the time of sale in other words, they were sold subject to long-term leases. The leases were said to be "at approximately market terms." The appraisal report then states: "As the subject is being valued based upon market terms, no adjustments were required." (Emphasis added.) [**P11] At the BTA hearing, Hatcher testified that he had looked at sales of drugstores but that "most of them were sale leaseback transactions." And most involved CVS and Walgreens, which were "higher credit rated tenants" than Rite Aid. [**P12] Hatcher also testified to two matters relating to the competing appraisal theories of the parties. First, he testified that nothing about the subject parcel and building made it a special-purpose facility usable only for a retail drugstore and that if it were sold, it would likely go on the market for general retail purposes. Second, he distinguished between the leased-fee market and the market for owner-occupied properties like the subject property. [**P13] Both appraisers also performed an income-approach valuation, for which they utilized rent comparables. In this regard, Hatcher looked at numerous leased properties within the Marietta and Parkersburg area, surveying the general lease market, and obtaining lease information from shopping malls' anchor and in-line stores. Hatcher also collected information on Rite Aid store leases as a reference, but relied on the general retail leases. He selected a rent of $12 per square foot based on its being at the upper end of the general lease market.l After accounting for vacancy and collection loss and expenses and extracting a capitalization rate, Hatcher arrived at an income-approach valuation of $1,180,000. FOOTNOTES i The average rent for the general retail leases was $10.16 per square foot; the average rent for the Rite Aid drugstore leases was $12.62 per square foot. [**P14] For her part, Blosser based her market-rent calculation on her extensive leased-fee study of first-generation drugstores; on that basis, she posited market rent of $21 per square foot (compared to $12 per square foot in Hatchet's appraisal). Based again on the leased-fee analysis, a low 5 percent vacancy and collection loss was applied (compared to 10 percent by Hatcher). Blosser's [*176] capitalization rate was 8.07 percent (compared to Hatchet's 9.5 percent). Blosser's income-approach valuation was $2,600,000. [**P15] Hatcher reconciled his sales comparison approach ($1,115,000) with his income approach ($1,180,000) to arrive at a value of $1,150,000 for the drugstore property at issue. Blosser reconciled her sales-comparison ($2,200,000) and income methods ($2,600,000) to a value of $2,400,000. The disparity of valuations is striking: Blosser's valuation is more than twice that of Hatchet's. com/research/retrieve?_m= a9e51 c6c4a 1 a &_br... 12/ 16/2016

19 Get adocument - by Citation Ohio St. 3d 173 Page 5 of 9 The BTA's decision [**P16] The BTA's analysis of the appraisals is terse. The board drew the contrast between Hatcher's general-market survey versus Blosser's focus on leased drugstores. The BTA found "Hatcher's sale and lease comparables [to be] more comparable to the subject property," with the result that the board found his valuation more persuasive. BTA No. ZO , 2014 WL , *1 (Apr. 22, 2014). In footnotes, the BTA opined that Blosser's [***1180] comparables were drawn from larger urban areas of Ohio and, as a premise for concluding that Hatcher's appraisal was more persuasive, expressed its view that use of leased-fee comparables such as those Blosser relied upon, while potentially appropriate, was not necessary. The BTA adopted the Hatcher appraisal as the value of the property. [**P17] The county has appealed, and we now affirm. AS A GENERAL RULE, THE SALE PRICES OF LEASED-FEE PROPERTIES SHOULD BE ADJUSTED WHEN USED TO DETERMINE THE VALUE OF AN UNLEASED SUBJECT [**P18] The county first emphasizes the doctrine that a sale price of property encumbered with along-term lease constitutes the value of the property without adjustment for the effect of the lease on the price. See Cummins Property Servs., L.L.C. v. Franklin Cty. ed, of Revision, 117 Ohio St.3d 516, 2008-Ohio-1473, 885 N.E.2d 222, ("the arm's-length sale price of a legal fee interest should not be adjusted on account of the mere existence of an encumbrance"); AEI Net Lease Income &Growth Fund v. Erie Cty. Bd, of Revision, 119 Ohio St.3d 563, 2008-Ohio-5203, 895 N.E.2d 830, 17 (elevated sale price attributable to abovemarket lease payments resulting from an earlier sale-leaseback transaction not required to be adjusted).z FOOTNOTES z After amendment in 2012, R.C now makes the use of an arm's-length sale price discretionary and also requires county auditors to value property based on the value of the unencumbered fee simple. See 2012 Am.Sub.H.B. No. 487, further amended by 2012 Am.Sub.H.B. No A different rule therefore applies today, but the rule articulated in Cummins would be applicable to a 2010 valuation. [*177] [**P19] The county uses that case law, which speaks to determining the value of property encumbered by a lease, as support for a very different proposition: that in determining the value of an unencumbered parcel of realty, the sale price of encumbered parce/s should not be adjusted. [**P20] We find this argument to be illogical on its face. "'"11~Precisely because the lease affects the sale price and value, the leased-fee comparable ought to be adjusted when the subject property has no lease; the adjustment would remove the effect of the lease on the sale price so that the sale can indicate what the unencumbered subject property would sell for. Steak 'n Shake, Inc. v. Warren Cty Bd. of Revision, 145 Ohio St.3d 244, 2015-Ohio-4836, 4S N. E.3d 535, 36. [**P21] The rent in a build-to-suit drugstore is often above market, which will elevate its sale price. See, e.g., Rhodes v. Hamilton Cty. Bd, of Revision, 117 Ohio St.3d 532, 2008-Ohio- 1595, 885 N.E.2d 236, 3, 5-6 (sale price of build-to-suit drugstore with admittedly abovemarket rent was found to be the value of the property). To the extent that building costs, by being included in elevated lease payments, have been incorporated into the value of the realty, an adjustment would need to be made to determine the value of a different drugstore property that was not so encumbered. c6c4a1 a &_br... 12/16/2016

20 Get adocument - by Citation Ohio St. 3d 173 Page 6 of 9 [**P22] That is the general rule. Unless an exception to that rule applies, the rule furnishes a strong reason to affirm the decision of the BTA. UNDER OHIO LAW, EXCHANGE VALUE IS THE RULE AND USE VALUATION IS A LIMITED EXCEPTION TO THE RULE [**P23] The proper analysis of this appeal calls for a recapitulation of the "first principles" of valuing property for tax purposes in this state. [***1181] [**P24] HNz;~As a general matter, the Ohio Constitution provides, "Land and improvements thereon shall be taxed by uniform rule according to value * * *." Value in the context of ad valorem taxation of property is defined in terms of the exchange value rather than the current-use value. The general rule is as follows: In the last analysis the value or true value in money of any property is the amount for which that property would sell on the open market by a willing seller to a willing buyer. In essence, the value of property is the amount of money for which it may be exchanged, i.e., the sales price. State ex rel. Park Invest. Co. v. Bd. of Tax Appeals, 175 Ohio St. 410, 412, 195 N.E.2d 908 (1964). [**P25] Two corollaries were drawn by the court in Park Invest. Co.: first, that a recent, arm's-length sale price "will usually determine the monetary value of [*178] the property" and second, that absent such a sale price, an appraisal indicates value when it "determine[s] the amount which such property should bring if sold on the open market." Id. [**P26] Indeed, we have applied these principles as a constitutional limitation on the legislative power to define property value. State ex re/. Park Invest. Co. v. Bd, of Tax Appeals, 32 Ohio St.2d 28, 32-33, 289 N.E.2d 579 (1972). During the course of litigation following our 1964 Park Invest. Co. opinion, the legislature in 1972 enacted Am.Sub.S.B. No. 455, which amended R.C to impose the following requirement: Such true value shall take into consideration its current use without regard to neighborhood land use of a more intensive nature. The rule to be adopted shall have standards for the determination of true value which will preclude the use of factors or circumstances of a speculative nature. 134 Ohio Laws, Part I, 868. [**P27] In our 1972 Park Invest. Ca, opinion, we rejected "the statutory provision establishing the current use of real property as the basis for valuation pursuant to a uniform tax assessment," predicating our holding on our interpretation of the constitutional term "value" in our 1964 Park Invest. Co. opinion: H"~~~Since the current use method of evaluation excludes, among other factors, location and speculative value which comprise market value, such current use method cannot be made the basis for valuation of real property for tax assessment purposes, and that portion of Amended Substitute Senate Bill No. 455 making provision for such method of valuation is invalid, as being contrary to Section 2, Article XII of the Ohio Constitution, which enjoins that "land and improvements thereon shall be taxed by uniform rule according to value." 32 Ohio St.Zd at [**P28] But the rule of market-exchange valuation is not a rule without exception. For one thing, the state constitution itself expressly permits farmland to be valued for tax purposes according to its current agricultural use rather than according to its highest and best value in com/research/retrieve?_m= a9e51 c6c4a 1 a &_br... 12/ 16/2016

21 Get adocument - by Citation Ohio St. 3d 173 Page 7 of 9 the market. Ohio Constitution, Article II, Section 36; see also, e.g., Maralgate, L.L.C. v. Greene [* * * 1182] Cty. Bd, of Revision, 130 Ohio St.3d 316, 2011-Ohio-5448, 958 N. E.2d 153, 13. [**P29] We have recognized another permissible example of use valuation. The lead case is Dinner Bell Meats, Inc, v. Cuyahoga Cty. Bd. of Revision, 12 Ohio St.3d 270, 1Z Ohio B. 347, [*179] 466 N.E.Zd 909 (1984). In Dinner8e/I Meats, two competing appraisals employed differing cost approaches based on their respective findings that the property was "special purpose" in nature. The court concluded that "in utilizing the 'cost approach' fora 'special purpose' building," the appraiser "simply considered the utility of the properties in conjunction with the highest and best use of the meatpacking facility." Id. at 272. In holding that the approach was a proper cost approach and not a prohibited "current use" appraisal, the court acknowledged the general principle that "'the special purpose exception is applied to a building in good condition being used currently and for the foreseeable future for the unique purpose for which it was built,"' a doctrine necessary to prevent "the owner of a distinctive, but yet highly useful, building" from "escap[ing] full property tax liability." Id., quoting Fed. Res. Bank of Minneapolis v. State, 313 N.W.2d 619, 623 (Minn.1981). [**P30] Later, in Meijer, Inc. v. Montgomery Cty. Bd, of Revision, 75 Ohio St.3d 181, 1996 Ohio 223, 661 N.E.2d 1056 (1996), we affirmed a BTA decision over arguments similar to those advanced and rejected in Dinner Be/! Meats. In the context of resolving a battle of appraisals, the BTA in Meijer, Inc. declined to adopt the larger amount of obsolescence found by the owner's appraiser. The BTA found "nothing about the present property [that was] obsolete or useless to the owner due to changing business conditions." Meijer, Inc. v. Montgomery Cty. Bd. of Revision, BTA Nos. 93-M-731, 93-M-732, and 93-M-733, 1995 WL 59106, *il (Feb. 8, 1995). Indeed, "[t]he owner, by purchasing the land and constructing the building, evidences a market need for such a property. Therefore the costs of purchase and construction evidence that a prospective purchaser was willing to pay at least the costs of the property as newly constructed." Id. at *12; see also Oakwood C/ub v. Cuyahoga Cty. ed. of Revision, 70 Ohio St.3d 241, 1994 Ohio 347, 638 N.E.2d 547 (1994) (invoking Dinner Bel/ Meats to overrule the property owner's contention that the county's appraiser had performed avalue-in-use analysis for its golf-course facility). [**P31] In both Dinner Be!/ Meats and Oakwood Club, we disclaimed that use valuation was being performed. In Dr"nner Be// Meats, we said, "The record supports the conclusion that Kaplan's report was a proper 'cost approach' appraisal, not a 'current use appraisal as proscribed under the Park Investment Co. series of cases." 12 Ohio St.3d at 272. But in 2009, we acknowledged that those earlier cases did embody a type of use valuation. Meijer Stores, 122 Ohio St.3d 447, 2009-Ohio-3479, 912 N.E.2d 560, at 24 ("we have also held that the constitutional prohibition does not bar consideration of current-use value in the context of the 'special-purpose property' doctrine"). [**P32] The county pins its appeal in this case on applying our Meijer Stores opinion from We hold, however, that Meijer Stores has not been shown to be applicable. [*180] THE SPECIAL-PURPOSE DOCTRINE, WHICH WAS APPLIED IN THE METIER STORES CASE, HAS IVOT BEEN SHOWN 70 BE APPLICABLE HERE [**P33] As noted, the county relies on our 2009 Meijer Stores opinion, but that reliance is unavailing on this record. In Meijer Stores, the competing appraisals formed the basis for determining that the [***1183] special-purpose doctrine applied, which in turn justified a use valuation of the property. The present case does not present the same kind of evidence at all. [**P34] HN'~~One crucial element in determining the value of property in the overall market lies in the concept of "highest and best use." "Highest and best use," according to the International Association of Assessing Officers ("IAAO"), "is that use which will generate the highest net return to the property over a reasonable period of time." IAAO, Property c6c4a1 a &_br... 12/16/2016

22 Get adocument - by Citation Ohio St. 3d 173 Page 8 of 9 Assessment Va/uation 31 (2d Ed.1996). Valuing a property at its highest and best use means identifying the "reasonably probable and legal use of vacant land or an improved property that is legally permissible, physically possible, appropriately supported, financially feasible, and that results in the highest value." (Emphasis added.) Appraisal Institute, The Appraisal of Rea! Estate 278 (13th Ed.2008). [**P35] Highest and best use of the improvements to the land will usually be expressed in terms of the general type of use to be made of such property. In this case for example, a "retail store" might be the highest and best use, and since it is currently in that use, the appraisal report might say: "'continued use as a retail store." That is in essence what both appraisal reports say in this case. By contrast, in the special-purpose situation one would expect to see: "continued use by the current occupant in its ongoing business." [**P36] Meijer Stores illustrates the contrast: because purchasers in the real-estate market might not be able to use the massive facility (a 190,000-square-foot store plus other improvements) just recently built by Meijer to its own particular specifications, the building was not highly marketable from a cost valuation standpoint, it suffered immediate economic or external obsolescence. And that was how the property owner's appraiser viewed the property. By contrast, the board of education's appraiser performed a type of use valuation by determining "market rent" by positing Meijer as the continuing tenant, and he used build-to-suit properties subject to leases as part of determining what the market rent should be. [**P37] Quite simply, the 11,000-square-foot drugstore at issue in this case is not a likely candidate for special-purpose treatment (compare the 190,000-square-foot store in Meijer Stores). Indeed, the appraiser, Hatcher, testified against the applicability of the special-purpose doctrine here, and the record supports his assertion. It follows that the BTA was justified in rejecting the Blosser appraisal. [*181] [**P38] In the context of the present record, the county argues that Meijer Stores is applicable but ignores a case decided a mere month and a half earlier: Target Corp, v. Greene Cty. Bd. of Revision, 122 Ohio St.3d 142, 2009-Ohio-2492, 909 N.E.2d 605. In Target, the BTA adopted a value based on the opinion of the owner's appraiser, Lorms the appraiser whose valuation was rejected in Meijer Stores. In Target (in contrast with the Meijer Stores case), the county presented no appraisal in support of its higher valuation at the BTA. [**P39] Without evidence of its own, the county in Target relied an atwo-pronged legal argument. First, that "the BTA should have used data from the first-generation sale prices and rentals rather than second-generation examples." Target at 12. The court affirmed the BTA's rejection of that argument based on the lack of evidence of such first-generation properties. [**P40] Second, the county in Target cited our 1996 Meijer, Inc. opinion as authority that the type of obsolescence found by [***1184] the owner's appraiser should not be accepted as valid as a matter of law. This point is directly relevant here: in Target, we rejected the county's argument because the result in Meijer, Inc. "implicates the special-purpose-property doctrine that we articulated in Dinner ee/1 Meats." Quite simply, the absence of evidence supporting the special-purpose doctrine constituted our reason for affirming the BTA's decision i n Target. [**P41] This appeal is more akin to Target than to Meijer Stores. To be sure, the present case does differ from Target in that here, the county did present an appraisal the Blosser appraisal. But the BTA opted to use the competing appraisal for stated reasons, and the Blosser appraisal in the context of the entire record lacks the element that would commend its approach under settled law: namely, there is no finding that the property qualifies for use valuation under the special-purpose doctrine. Moreover, an 11,000-square-foot drugstore is an unlikely candidate for such treatment. [**P42] Because there is no evidentiary basis upon which to apply the special-purpose c6c4a1 a &_br... 12/16/2016

23 Get adocument - by Citation Ohio St. 3d 173 Page 9 of 9 doctrine and engage in use valuation here, Meijer Stores does not supply a legal reason for reversing the BTA's decision. CONCLUSION [**P43] For the foregoing reasons, we affirm the decision of the BTA. Decision affirmed. O~CONNOR, C.]., and PFEIFER, O~DONNELL, LANZINGER, KENNEDY, FRENCH, and O~NEILL, JJ., concur. Service: Get by LEXSEEO Citation: 146 os3d 173 View: Full Date/Time: Friday, December 16, :34 PM EST * Signal Legend: - Warning: Negative treatment is indicated - Questioned: Validity questioned by citing refs - Caution: Possible negative treatment - Positive treatment is indicated - Citing Refs. With Analysis Available - Citation information available * Click on any Shepard's signal to Shepardize~ that case. ;rte ~~~~~~~~~,~,:~, About LexisNexis ~ Privacy Policy ~ Terms &Conditions ~ ~or:t~ (~~~I (n~~ ~~ Copyright c LexisNexis, a division of Reed Elsevier Inc. ;el ~~ ~-`t-' c6c4a1 a &_br... 12/ 16/2016

24 Get adocument - by Citation Ohio St. 3d 375 Page 1 of Ohio St. 3d 375; 2016-Ohio-372, *; 49 N. E.3d 1266, * *; 2016 Ohio LEXIS 251, LOWE'S HOME CENTERS, INC., APPELLANT, v. WASHINGTON COUNTY BOARD OF REVISION ET AL., APPELLEES. No SUPREME COURT OF OHIO 145 Ohio St. 3d 375; 2016-Ohio-372; 49 N.E.3d 1266; 2016 Ohio LEXIS 251 August 11, 2015, Submitted February 4, 2016, Decided SUBSEQUENT HISTORY: Tax value determined by, On remand at, Remanded by Lowe's Home Ctrs., Inc. v. Wash. Cnty. Bd. of Revision, 2016 Ohio Tax LEXIS 1270 (Ohio B.T.A., June 10, 2016) PRIOR HISTORY: [***1] APPEAL from the Board of Tax Appeals, No Lowe's Home Ctrs., Inc. v. Wash. County Bd. of Revision, 2014 Ohio Tax LEXIS 2542 (Ohio B.T.A., Apr. 22, 2014) DISPOSITION: Decision vacated, and cause remanded. CASE SUMMARY: OVERVIEW: HOLDINGS: [1]-The Board of Tax Appeals (BTA) erred in adopting the county board of revision's appraisal of the taxpayer's big box store because it failed to address whether the evidence justified applying the special-purpose doctrine, which was applied to a building in good condition being used currently and for the foreseeable future for the unique purpose for which it was built; [2]-If the BTA determined on remand that the specialpurpose doctrine applied, the taxpayer could appropriately be treated differently than the taxpayer in Rite Aid of Ohio, Inc. v. Washington Cty. Bd. of Revision, which held that if that doctrine did not apply, leased comparables typically needed to be adjusted in determining the value of a property that was itself unencumbered by such a lease. OUTCOME: Decision vacated and cause remanded. CORE TERMS: appraisal, comparable, special-purpose, appraiser, lease, unencumbered, leased, subject property, credibility, built, property owner's, fee simple, constructed, yielded, valued, valuation, square feet, special purpose, long-term, situated, vacate, case law, general rule, county auditors, board of education, income approach, sale price, general principle, comparable properties, own decision LEXISNEXIS(R) HEADNOTES Tax Law > State &Local Taxes > Administration &Proceedings > Judicial Review Evidence > Procedural Considerations > Weight &Sufficiency Evidence > Testimony > Credibility Administrative Law > Agency Adjudication > Review of Initial Decisions HNZ,,i. com/research/retrieve?_m=0e59dcobdda312c70d 175 Se0b29d 177b&_b... 12/ 16/2016

25 Get adocument - by Citation Ohio St. 3d 375 Page 2 of 8 The weighing of evidence and the assessment of credibility as regards appraisals are the statutory job of the Ohio Board of Tax Appeals (BTA). Moreover, absent a showing of an abuse of discretion, the BTA's determination as to the credibility of witnesses and the weight to be given to their testimony will not be reversed by the reviewing court. Administrative Law > Agency Adjudication > Review of Initial Decisions Tax Law > State &Local Taxes > Administration &Proceedings > Judicial Review HNz~.An appellate court will not hesitate to reverse a decision of the Ohio Board of Tax Appeals based on an incorrect legal conclusion. Tax Law > State &Local Taxes > Real Property Tax > Assessment &Valuation > Valuation ~N3±With respect to the valuation of real property for purposes of tax assessment, as a general rule, leased comparables will typically need to be adjusted in determining the value of a subject property that is itself unencumbered by such a lease. Tax Law > State &Local Taxes > Real Property Tax > Assessment &Valuation > Valuation N^f4+With respect to the valuation of real property for purposes of tax assessment, it is not true that the Ohio Supreme Court has rejected the need for adjustments made by an appraiser when considering the value of properties encumbered with abovemarket rental rates. This statement is incorrect as a general rule, with the exception that adjustments may not be necessary when the special-purpose doctrine applies. Constitutional Law > Equal Protection > Scope of Protection Constitutional Law > Congressional Duties &Powers > Spending &Taxation H^'s~ While legislative tax classifications must not have the effect of treating differently persons who are in all relevant respects alike, the Equal Protection Clause does not require things which are different in fact to be treated in law as though they were the same. Tax Law > State &Local Taxes > Real Property Tax > Assessment &Valuation > Valuation NN~~ With respect to the valuation of real property for purposes of tax assessment, as a general principle, the special purpose exception is applied to a building in good condition being used currently and for the foreseeable future for the unique purpose for which it was built, a doctrine necessary to prevent the owner of a distinctive, but yet highly useful, building from escaping full property tax liability. Tax Law > State &Local Taxes > Real Property Tax > Assessment &Valuation > Valuation NN~~ With respect to appraisals, industry standards do not establish the legal parameters of real-property assessment for taxation purposes. HEADNOTES Taxation Real-property valuation Differential treatment of taxpayers maybe justified by a finding that they are differently situated Decision vacated and remanded to the BTA for a determination of whether the special-purpose doctrine applies. COUNSEL: The Gibbs Firm, L.P.A., Ryan J. Gibbs, and Geoffrey N. Byrne, for appellant. Rich &Gillis Law Group, L.L.C., Kelley A. Gorry, and James R. Gorry, for appellees. JUDGES: O'CONNOR, C.J., and PFEIFER, O'DONNELL, LANZINGER, KENNEDY, FRENCH, and 12/16/2016

26 Get adocument - by Citation Ohio St. 3d 375 Page 3 of 8 O'NEILL, JJ., concur. OPINION [**1267] Per Curiam. [*P1] This real-property-valuation case concerns the tax-year-2010 valuation of a Lowe's Home Center store in Marietta. In that sexennial reappraisal year, the Washington County Auditor, an appellee here, determined a value of $9,091,000 for the store. Appellant, Lowe's Home Centers, Inc., filed a complaint before the Washington County Board of Revision ("BOR"), also an appellee here, and presented an opinion seeking a reduction to $3,600,000, but the BOR retained the auditor's valuation. On appeal at the Board of Tax Appeals ("BTA"), Lowe's and the county presented competing appraisals. The BTA adopted [***2] the county's appraisal, and Lowe's has appealed. [*P2] Lowe's argues that the BTA misapplied our decision in Meijer Stores Ltd. Partnership v. Franklin Cty, Bd. of Revision, 122 Ohio St.3d 447, 2009-Ohio-3479, 912 N.E.2d 560, by adopting the very type of appraisal in this case that the BTA correctly rejected in Rite Aid of Ohio, Inc. v. Washington Cty. Bd, of Revision, BTA No , 2014 WL (Apr. 22, 2014), which the BTA decided the same day as this case. [*P3] Our decision in the Rite Aid appeal, issued today, Ohio St.3d, 2016-Ohio-371, N.E.3d,explains the significance of Meijer Stores, and reading the BTA decision here in light of that explanation pinpoints a significant omission in the BTA's analysis. Namely, the BTA adopted the county's appraisal in this case without addressing whether the evidence justified applying the special-purpose doctrine that was the basis for our holding in Meijer Stores. We therefore vacate the BTA's decision and remand the cause for further proceedings. FACTUALBACKGROUND [*P4] The property at issue consists of six parcels (five actual tracts of land plus a tax increment financing ("TIF") parcel.) The property amounts to acres in Marietta improved with a 142,446-square-foot building constructed in According to the complaint, the auditor valued the property at $9,091,000, and Lowe's sought a reduction to $3,600,000. Lowe's made a presentation at the BOR hearing in support of its requested valuation; [***3] the report consisted mainly of a comparable-sale study that was well short of an appraisal. The BOR's consultant recommended no change, and the BOR adopted that recommendation on June 15, [ * * 1268] The competing appraisals and theories at the BTA [*P5] Lowe's appealed to the BTA, which held a hearing on April 2, Both Lowe's and the county presented appraisals. Lowe's presented the appraisal and testimony of Patricia Costello of the Robert Weiler Company, who arrived at a value of $5,700,000 by reconciling an income approach that yielded a value of $5,295,000 with asales-comparison approach that yielded a value of $5,700,000. [*P6] The county presented the appraisal report and testimony of Karen Blosser, MAI, of U.S. Realty Consultants, Inc. (the same appraiser who testified for the county at the BTA hearing in Rite Aid, BTA No , 2014 WL ). Blosser arrived at a value of $7,200,000 based on reconciling an income approach that yielded a value of $7,200,000 with a salescomparison approach that yielded a value of $7,100,000. [*P7] The differences in the two appraisals stem in significant part from competing assumptions. More than once, Costello, the property owner's appraiser, testified that she was valuing the property as if Lowe's [***4] were to leave the property in connection with a sale e0b29d 177b&_b... 12/ 16/2016

27 Get adocument - by Citation Ohio St. 3d 375 Page 4 of 8 She stated that "in general, if a property like this, fee simple, basically it would be vacant if it were transferring. This property is not under lease." The county's appraiser, Blosser, testified that her assumptions were the exact opposite. When asked, "So let's say this wasn't owner occupied January 1, 2010, who's the most likely occupant of the property," Blosser responded, "Lowe's would be." [*P8] The selection and treatment of comparables reflected these differing approaches. Blosser placed primary reliance on "big box" store rent comparables from remote parts of the state, making adjustments for market conditions and the location, size, and age of the building.l For sale comparables, Blosser selected six comps from throughout the state involving retail stores from 62,000 square feet up to approximately 129,000 square feet. Three are "leased fee" sales and three are "fee simple" sales, by which the appraiser means that three of the properties were subject to a lease at the time of the sale and three were not. Although certain adjustments were made, no adjustments were made to the leased-fee sales to account for the fact that the [***5] subject was owner-occupied as of the lien date. FOOTNOTES i The Blosser appraisal does adduce information about the local Marietta rental market, but the information was primarily gathered by Blosser's assistant, and its validity is heavily contested by Lowe's. [*P9] The Costello appraisal also assembled lease comparables throughout the state, although Costello focused on "second-generation" properties where the initial user was no longer occupying the premises. Thus, Costello's lease comparables were built in 1962 (a 20,000-square-foot portion of a former Value City converted to multitenant use, this portion now leased to a furniture store), 1992 (a 35,650-square-foot craft center in a multitenant shopping center), 1997 (a 36,000-square-foot current Value City), 1988 (a 51,282-square-foot J.C. Penney anchoring a mall), and 1990 (an 81,548-square-foot leased portion of a strip mall). By contrast, Blosser's lease comparables were constructed in 2006 (a WalMart), 1988 (a Sam's Club), 1994 (another Lowe's), and 2008 (a Giant Eagle). [*P10] The sale comparables in the Costello appraisal are two former WalMarts built in 1994 and 1995, another Lowe's built in 1993, and a Garden Ridge build in [**1269] The BTA's decision [***6] [*P11] As in Rite Aid, the BTA's analysis of the appraisals is terse. The leading point of contention is the propriety of using "first-generation user-occupied comparable properties" and "long-term leased built-to-suit properties." BTA No , 2014 Ohio Tax LEXIS 2542, 2014 WL , *2 (Apr. 22, 2014). Citing our decision in the Meijer Stores case and its own decision in Target Corp. v. Lake Cty. Bd. of Revision, BTA No M-1088, 2011 Ohio lax LEXIS 2660, 2011 WL (Dec. 20, 2011), the BTA opined that "by intentionally excluding first-generation users and long-term leased build-to-suit properties within her two approaches, Costello has not properly analyzed the market * * *." BTA No , 2014 Ohio Tax LEXIS 2542, 2014 WL , *Z (Apr. 2Z, 2014). By contrast, the BTA found that Blosser's comparables "were more appropriate given that Lowe's occupied the property as of the tax-lien date, as well as Blosser's testimony that the subject is located in ahigh-trafficked [sic] area which draws from a regional market." Id. [*P12] Lowe's has appealed and claims that it is entitled to be treated similarly to the taxpayer in Rite Ard, Ohio St.3d, 2016-Ohio-371 N.E.3d DIFFERENTIAL TREATMENT OF TAXPAYERS MAY BE JUSTIFIED BY A FINDING THAT THEY ARE DIFFERENTLY SITUATED-A FINDING THAT IS MISSING HERE m=0e59dcobdda312c70d1755e0b29d177b&_b... 12/16/2016

28 Get adocument - by Citation Ohio St. 3d 375 Page 5 of 8 The BTA's reliance on its 201 Target decision is legal error [*P13] In challenging the BTA's decision in this case, Lowe's emphasizes the board's "inconsistent [***7] and discriminatory" application of R.C , the property-valuation statute, along with the board's "abuse of discretion" in accepting the very type of appraisal it rejected in Rite Ard, BTA No , 2014 WL In our decision of the county's appeal in the Rite Aid case, we discussed the significance of Meijer Stores and the specialpurpose doctrine, and we affirmed the BTA's decision in that case on the grounds that the special-purpose doctrine had not been shown to be applicable to the subject property, with the result that the BTA's adoption of the property owner's appraisal was neither unreasonable nor unlawful. In the present case, the BTA went in the opposite direction from its determination in Rite Aid by adopting the appraisal prepared by Karen Blosser for the county. [*P14] It is well settled that w"'~~"[t]he weighing of evidence and the assessment of credibility as regards both of the appraisals are the statutory job of the BTA." EOP-BP Tower, L. L. C, v. Cuyahoga Cty. Bd. of Revision, 106 Ohio St.3d 1, 2005-Ohio-3096, 829 N.E.Zd 686, 9. Moreover, "[a]bsent a showing of an abuse of discretion, the BTA's determination as to the credibility of witnesses and the weight to be given to their testimony will not be reversed by this court." Id. at 14. [*P15] On the other hand, HN~~"we will not hesitate to reverse a BTA decision based on an incorrect legal conclusion." [***8] Gahanna-Jefferson Loca/School Dist. ed, ofedn, v. Zaino, 93 Ohio St.3d 231, 232, 2001 Ohio 1335, 754 N.E.2d 789 (2001). Here, we find legal error primarily because of the BTA's reliance on Meijer Stores in conjunction with its own decision in Target Corp., BTA No M-1088, 2011 Ohio Tax LEXIS 2660, 2011 WL [*P16] The BTA's Target decision is contrary to part of our holding in Rite Aid. In Rite Aid, we discussed thehn + general rule that leased comparables will typically need to be adjusted in determining the value of a subject property that is itself unencumbered by such a lease. Ohio St.3d, 2016-Ohio-371 N.E.3d ;see also Steak 'n Shake, Inc. v. Warren Cty. Bd. of Revision, Ohio St.3d, 2015-Ohio-4836, 48 N.E.3d 535, 36. In this [**1270] case, the BTA stated that the Blosser appraisal, which did "not exclude first generation user-occupied comparable properties" and "long-term leased built-to-suit properties," was "more appropriate," relying in principal part on its Target decision. [*P17] In its 2011 Target decision, the BTA rejected the property owner's appraisal and adopted an appraisal offered by the board of education that had been prepared by Karen Blosser. The BTA specifically faulted the owner's appraisal for "ma[king] significant adjustments to bring that [comparable] sale to what he believed the property would have sold for if it were garnering a market rent." 2011 Ohio Tax LEXIS 2660, [WL] at *3. The BTA then stated its view that H"'~"the Ohio Supreme Court has rejected the need for adjustments made by the appraiser when considering [***9] the value of properties encumbered with such abovemarket rental rates." Id. [*P18] In Rite Aid, we explained why this statement is incorrect as a general rule, with the exception that adjustments may not be necessary when the special-purpose doctrine applies. Rite Aid at The BTA's application of it here, in the absence of any finding concerning the special-purpose doctrine, is erroneous under Rite Aid. To correct the error, we find it necessary to vacate the decision below and remand for further proceedings. If the BTA determines that the special-purpose doctrine applies, Lowe's may appropriately be treated differently than Rite Aid [*P19] Lowe's invokes the guarantees of due process and equal protection, but its argument lacks merit unless it can establish that it is situated similarly to the taxpayer in Rite Aid. See e0b29d 177b&_b... 12/ 16/2016

29 Get adocument - by Citation Ohio St. 3d 375 Page 6 of 8 GTE North, Inc. v. Zaino, 96 Ohio St.3d 9, 2002-Ohio-2984, 770 N.E.2d 65, ZZ (H"'~ while legislative tax classifications must not have the effect of treating differently persons who are in all relevant respects alike, the Equal Protection Clause "'does not require things which are different in fact * * * to be treated in law as though they were the same"'), quoting Tigner v. Texas, 310 U.S. 141, 147, 60 S.Ct. 879, 84 L.Ed (1940). The relevant question relating to the potential difference here is whether the special-purpose doctrine can [***10] properly be applied when appraising the Lowe's store, a determination that has not yet been made. [*P20] The case law furnishes guidance for the BTA to make the special-purpose determination on remand. In Meijer Stores, we had no trouble affirming the BTA's reliance on the board of education's appraisal based on the special-purpose doctrine. Several factors were significant: The property was brand new on the lien date, having been recently constructed at the cost of millions. The property was being put to apparently successful business use for the purpose for which it had been built. The facility was massive at 193,000 square feet, thereby raising the inference that it might not be easy to market for general retail use an inference supported by the property owner's appraiser, who testified as to the immediate external obsolescence given the property's adaptation to Meijer's particular business use. See Meijer Stores, 122 Ohio St.3d 447, 2009-Ohio-3479, 912 N.E.Zd 560, at 4, 7, 26. [*P21] Similarly, in an earlier case involving a Meijer store, the BTA had declined to adopt the larger amount of obsolescence found by the owner's appraiser. The BTA found that there was "nothing about the * * *property [that was] obsolete or useless to the owner due to changing business conditions." [***li] Meijer, Inc. v. [**1271] Montgomery Cty. Bd, of Revision, BTA Nos. 93-M-731, 93-M-732, and 93-M-733, 1995 Ohio Tax LEXIS 249, 1995 WL 59106, *11 (Feb. 8, 1995). Indeed, "[t]he owner, by purchasing the land and constructing the building, evidences a market need for such a property. Therefore the costs of purchase and construction evidence that a prospective purchaser was willing to pay at least the costs of the property as newly constructed." 1995 Ohio Tax LEXIS 249, [WL] at *12. [*P22] In Dinner Be!l Meats, Inc. v, Cuyahoga Cty. Bd. of Revision, 12 Ohio St.3d 270, 12 Ohio B. 347, 466 N.E.2d 909 (1984), two competing appraisals employed differing cost approaches based on their respective findings that the property was "special purpose" in nature. Id. at 271. The court concluded that "in utilizing the 'cost approach' fora 'special purpose' building," the appraiser "simply considered the utility of the properties in conjunction with the highest and best use of the meatpacking facility." Id. at X72. In so holding, we acknowledged the HN6~general principle that "'the special purpose exception is applied to a building in good condition being used currently and for the foreseeable future for the unique purpose for which it was built,"' a doctrine necessary to prevent "the owner of a distinctive, but yet highly useful, building" from "escap[ing] full property tax liability." Id., quoting Fed. Res. Bank of Minneapolis v. State, 313 N.W.2d 619, 623 (Minn.1981). [*P23] Where the present case fits in with this case law has not [***12] yet been determined. It will be the responsibility of the BTA as the finder of fact to make that determination on remand. UNDER FORMER R.C , THE FEE SIMPLE OF THE SUBJECT PROPERTY SHOULD BE VALUED AS IT IS, ENCUMBERED OR UNENCUMBERED [*P24] In this appeal, Lowe's asserts that the fee simple of the subject property must be valued as if unencumbered. It is true that current R.C , as later amended, does call for com/research/retrieve?_m=0e59dcobdda312c70d e0b29d 177b&_b... 12/ 16/2016

30 Get adocument - by Citation Ohio St. 3d 375 Page 7 of 8 the county auditors to value property "as if unencumbered." 2012 Am.Sub.H.B. No. 487, further amended by 2012 Am.Sub.H.B. No But the revisions introducing the words "as if unencumbered" were enacted during 2012, and accordingly were not in effect as of the tax-lien date for the tax year at issue, Moreover, nothing in the 2012 legislation made the new language retroactive to tax year The "as if unencumbered" language is therefore not applicable here. Sapina v. Cuyahoga Cty. Bd. of Revision, 136 Ohio St.3d 188, 2013-Ohio-3028, 992 N.E.2d 1117, 20, fn. 1. It is clear under the version of R.C that was applicable in 2010 that the effects of any encumbrances on a sale price were not to be removed when determining property value. Am.Sub.H.6. No. 260, 140 Ohio Laws, Part II, 2722; see also Cummins Property Servs., L.L.C. v. Franklin Cty. Bd, of Revision, 117 Ohio St.3d 516, Ohio-1473, 885 N.E.2d 222, 18. [*P25] It is, however, true that the present property should be valued as if unencumbered by a lease, but [***13] that is because it was in fact unencumbered by a lease, not because of a general principle applicable in 2010 mandating that adjustments be made to eliminate the effect of encumbrances on the sale price of the subject property. If the special-purpose doctrine does not apply, the value of any comparables that were subject to leases should be adjusted to achieve a true comparable for this subject property. Steak 'n Shake, Ohio St.3d, Z015- Ohio-4836, 48 N.E.3d 535, at 36. On the other hand, if the special-purpose doctrine does apply, it may be appropriate to use such comparables without adjustment. [**1272] ON REMAND, THE B7A SHOULD DETERMINE WHETHER DEPARTURES FROM UNIFORM STANDARDS IMPAIR THE CREDIBILITY OF THE BLOSSER APPRAISAL [*P26] Lowe's separately contends that the Blosser appraisal failed to abide by the Uniform Standards of Professional Appraisal Practice ("USPAP"). Specifically, Lowe's maintains that the Blosser appraisal violates USPAP Standards Rule 1-1(c), which prohibits an appraiser from "render[ing] appraisal services in a careless or negligent manner" such as "making a series of errors that, although individually might not significantly affect the results of an appraisal, in the aggregate affects the credibility of those results." Lowe's focuses on the interviews designed [***14] to obtain information on the local real-estate market that were performed by Blasser's assistant rather than Blosser; Lowe's also points out that the interviewees were not currently in possession of broker or real-estate-sales licenses. [*P27] The bare fact of such violations does not by itself make it unlawful to adopt a particular appraisal. See Dublin City Schools Bd, of Edn, v. Franklin Cty. Bd. of Revision, 139 Ohio St.3d Z12, 2014-Ohio-1940, 11 N.E.3d 222, 28 (~N "Industry standards do not establish the legal parameters of real-property assessment for taxation purposes"). That said, the matters raised by Lowe's could be found to affect the credibility of the appraisal under all the circumstances of the case, and it is the duty of the BTA as the finder of fact to make those determinations. The BTA should give consideration to these matters on remand. CONCLUSION [*P28] For the foregoing reasons, we vacate the decision of the BTA and remand for further proceedings consistent with this opinion. Decision vacated, and cause remanded. O~CONNOR, C.]., and PFEIFER, O~DONNELL, LANZINGER, KENNEDY, FRENCH, and O~NEILL, ]]., concur. Service: Get by LEXSEEO Citation: 145 os3d 375 View: Full Date/Time: Friday, December 16, :33 PM EST * Signal Legend: - Warning: Negative treatment is indicated e0b29d 177b&_b... 12/ 16/2016

31 Get adocument - by Citation Ohio St. 3d 375 Page 8 of 8 C1 - Questioned: Validity questioned by citing refs - Caution: Possible negative treatment - Positive treatment is indicated Q - Citing Refs. With Analysis Available ~ - Citation information available * Click on any Shepard's signal to Shepardize~ that case. ~ E~ About LexisNexis ~ Privacy Policy ~ Terms &Conditions ~ ~ ort~ f~'i~ T~ ~~~«~~~~ Copyright O 2016 LexisNexis, a division of Reed Elsevier li~c.`af~ fi ~~CNh' com/research/retrieve?_m=0e5 9dcObdda312c70d e0b29d 177b&_b... 12/ 16/2016

32 Get adocument - by Citation Ohio St. 3d 244 Page 1 of Ohio St. 3d 244, *; 2015-Ohio-4836, **; 48 N.E.3d 535, ***; 2015 Ohio LEXIS 3145 STEAK 'N SHAKE, INC., N.K.A. STEAK 'N SHAKE OPERATIONS, INC., APPELLANT, v. WARREN COUNTY BOARD OF REVISION ET AL., APPELLEES. No SUPREME COURT OF OHIO 145 Ohio St. 3d 244; 2015-Ohio-4836; 48 N.E.3d 535; 2015 Ohio LEXIS 3145 July 7, 2015, Submitted November 25, 2015, Decided SUBSEQUENT HISTORY: Reported at Steak 'n Shake, Inc. v. Warren Cnty. Bd. of Revision, 2015-Ohio-4862, 2015 Ohio LEXIS 3150 (Ohio, Nov. 25, 2015) Request granted, On remand at Steak N Shake, Inc. v. Warren Cnty. Bd. of Revision, 2015 Ohio Tax LEXIS 4348 (Ohio B.T.A., Dec. 24, 2015) Tax value determined by, On remand at Steak N Shake v. Warren County Bd. of Revision, 2016 Ohio Tax LEXIS 485 (Ohio B.T.A., Mar. 7, 2016) PRIOR HISTORY: APPEAL from the Board of Tax Appeals, No Steak N Shake, Inc. v. Warren County Bd. of Revision, 2014 Ohio Tax LEXIS 2425 (Ohio B.T.A., Apr. 15, 2014) DISPOSITION: Decision reversed and cause remanded. CASE SUMMARY: OVERVIEW: HOLDINGS: [1]-In a challenge to the Board of Tax Appeals (BTA) adoption of a county's valuation of a restaurant's real property, the county's appraiser was competent, as he was an experienced appraiser and his credibility and qualifications were within the BTA's determination; [2]-As the county's appraiser was timely identified and his report was timely disclosed, his supplemental testimony on the highest-and-best-use at the hearing did not violate any rules and there was no legal basis to exclude it; [3]-However, the BTA's acceptance of the appraiser's reliance on encumbered comparable properties was error for determining the value of the restaurant's property because it was unencumbered by a longterm lease and the special-purpose doctrine was inapplicable. OUTCOME: Decision of BTA reversed; matter remanded for further proceedings, including determination of value. CORE TERMS: appraisal, comparable properties, lease, sale prices, valuation, appraiser, subject property, rent, property owner, restaurant, auditor's, comparable, encumbered, highest-and-best-use, discovery, leased, built', per square foot, consultant, unadjusted, adjusted, capitalization rate, property value, income approach, plain error, written reports, special-purpose, competency, amicus, curiae LEXISNEXIS(R) HEADNOTES Evidence > Testimony > Experts > Qualifications 182ff701 e 11 fb255fe 174a3a&_bro... 12/16/2016

33 Get adocument - by Citation Ohio St. 3d 244 Page 2 of 10 Tax Law > State &Local Taxes > Real Property Tax > Assessment &Valuation > Valuation Evidence > Competency Administrative Law > Judicial Review > Reviewability > Factual Determinations HNC+Ordinarily, testimony as to property value is not competent and admissible unless it is the professional opinion of an expert. Courts have regarded the proper use of expert opinions as lying within the sound discretion of the Board of Tax Appeals (BTA). The Supreme Court of Ohio defers to the BTA's determination of the competency as well as to the board's determination of the credibility of the evidence presented to it. An individual may testify before the BTA about the appraisal of real estate without being certified under R.C. Chapter 4763 if he is otherwise quaiified, as determined by the BTA. Administrative Law > Judicial Review > Reviewability > Factual Determinations Evidence > Testimony > Credibility Tax Law > State &Local Taxes > Real Property Tax > Assessment &Valuation > Valuation HNz+As for whether an appraiser must be independent of the interests of the parties, courts have treated the matter as within the Board of Tax Appeal's (BTA) discretion as fact-finder. The BTA has general discretion to determine a witness's credibility. Tax Law > State &Local Taxes > Administration &Proceedings > Judicial Review Administrative Law > Judicial Review > Standards of Review H^'3+When an objection to evidence could have been made before the tax tribunals but was not, aplain-error standard applies on appeal. Evidence > Testimony > Experts > Credibility Tax Law > State &Local Taxes > Real Property Tax ~ Assessment &Valuation > Valuation H^'4,~Although compliance with appraisal-industry standards may in other contexts be mandatory, nothing makes it mandatory before the Board of Tax Appeals - compliance with those standards goes to the weight and probative character to be ascribed to the appraisal. Tax Law > State &Local Taxes > Real Property Tax > Assessment &Valuation > Valuation Tax Law > State &Local Taxes > Real Property Tax > Assessment &Valuation > Assessment Methods &Timing Evidence > Testimony > Experts Administrative Law > Agency Adjudication > Prehearing Activity H^ s~.the Board of Tax Appeal's rules required generally that witnesses and exhibits be identified 14 days before the hearing. Former Ohio Admin. Code (I) (effective Feb. 1, 2009). This requirement was made specifically applicable to expert witnesses and their written reports. Former Ohio Admin. Code (A)(5). The rules also provided that discovery be conducted in accordance with the Civil Rules to the extent that they are not inconsistent with other board rules (A). Tax Law > State &Local Taxes > Real Property Tax > Assessment &Valuation > Valuation Tax Law > State &Local Taxes > Real Property Tax > Assessment &Valuation > Assessment Methods &Timing HN6~ Precisely because encumbrances affect sale price, and precisely because the difference in sales price is a difference in value for tax purposes, an appraiser is required to adjust the sale prices for his comparable properties to reflect the fact that the subject property was not encumbered and would therefore likely sell for less for purposes of tax valuation. Tax Law > State &Local Taxes > Real Property Tax > Assessment &Valuation > Valuation H"`~±The present use of a property may be considered when a building in good condition is being used currently and for the foreseeable future for the unique purpose for 182ff701 e 11 fb255fe 174a3a&_bro... 12/16/2016

34 Get adocument - by Citation Ohio St. 3d 244 Page 3 of 10 which it was built; otherwise, the owner of a distinctive, but yet highly useful, building would be able to escape full property tax liability. Tax Law > State &Local Taxes > Real Property Tax > Assessment &Valuation > Valuation "'A18+The value or true value in money of any property is the amount for which that property would sell on the open market by a willing seller to a willing buyer, and the goal of an appraisal is to determine the amount which such property should bring if sold on the open market. HEADNOTES Taxation Rea! property valuation Sale prices of leased properties generally must be adjusted when determining the value of comparable unleased properties. COUNSEL: Karen H. Bauernschmidt Co., L.P.A., Karen H. Bauernschmidt, and Stephen M. Nowak, for appellant. David P. Fornshell, Warren County Prosecuting Attorney, and Christopher A. Watkins, Kathryn M. Horvath, and Michael Greer, Assistant Prosecuting Attorneys, for appellees Warren County Board of Revision and Warren County Auditor. David C. DiMuzio, Inc., and David C. DiMuzio, for appellee Mason City School District Board of Education. Rich &Gillis Law Group, L.L.C., and Kelley A. Gorry, urging affirmance for amicus curiae, County Auditors' Association of Ohio. JUDGES: O'CONNOR, C.J., and PFEIFER, O'DONNELL, LANZINGER, KENNEDY, FRENCH, and O'NEILL, JJ., concur. OPINION [***536] [*244] Per Curiam. [**P1] This real-property-valuation case concerns the proper valuation for tax year 2009 of a Steak 'n Shake restaurant located in Warren County. Appellant, Steak 'n Shake, Inc., n.k.a. Steak 'n Shake Operations, Inc., filed a complaint [*245] seeking a reduction of the value assigned to its property; appellee Warren County Board of Revision ("BOR") retained appellee auditor`s original valuation for the property. At the hearing before the Board of Tax Appeals ("BTA"), the property owner presented an appraisal report and testimony from an appraiser, while the county presented an appraisal prepared by an employee of the county's valuation consultant. The BTA adopted the county's valuation, and Steak 'n Shake has appealed, challenging both the competency and the probative force of the county's valuation of the property. [**P2] Under the circumstances, we must reject Steak 'n Shake's competency arguments. We do, however, agree with Steak 'n Shake that the BTA erred in its uncritical acceptance of the county appraiser's reliance on encumbered comparable properties in determining the value of the subject property, which is occupied by its owner. We therefore reverse the decision of the BTA, and we remand for a determination of value based on the property owner's appraisal and/ar any other evidence in the record ff701 e 11 fb255fe 174a3 a&_bro... 12/ 16/2016

35 Get adocument - by Citation Ohio St. 3d 244 Page 4 of 10 FACTUAL BACKGROUND [**P3] At issue is a 1.5-acre parcel improved with a 3,496-square-foot restaurant, a Steak 'n Shake, visible from I-71 on the northern outskirts of Cincinnati. It was built in 1995 and is occupied by the owner-operator. An additional improvement is the parking lot with space for 66 cars. [***537] The BOR proceedings [**P4] On March 17, 2010, Steak 'n Shake filed a complaint seeking a reduction for tax year 2009 from the auditor's valuation of $1,259,590 to $832,000. The Mason City School District Board of Education ("school board") filed a countercomplaint on April 8, seeking retention of the auditor's valuation. [**P5] On October 19, 2010, the BOR held a hearing at which Steak 'n Shake presented an owner's opinion of value. The owner's opinion consisted of an income approach arriving at a valuation of $778,00 and asales-comparison approach concluding a value of $822,000; the owner suggested a reconciliation value of $800,000. Counsel explained the opinion at the BOR hearing without testimony from the owner. [**P6] At the hearing, the auditor's consultant, Ed Rinck, offered his opinion that a different capitalization rate ought to be used under the income approach: he arrived at a value of $1,082,790, which the board adopted. [**P7] Steak 'n Shake appealed to the BTA. At the BTA hearing on February 19, 2013, Steak 'n Shake and the county both presented appraisal reports along with testimony of the appraisers. [*246] The property owner's appraisal [**P8] Steak 'n Shake presented the appraisal report and testimony of commercial real estate appraiser W. Shaun Wilkins, a longtime state-certified appraiser and member of the Appraisal Institute with extensive experience appraising commercial properties, including some in Warren County. [**P9] Wilkins determined that "[t]he restaurant building is concluded to be the highest and best use" of the property as improved. Deciding that the cost approach was not applicable because of the size and age of the property, Wilkins proceeded to evaluate four comparable sales in the Cincinnati area while confining his analysis to sales before the lien date on the theory that such information would be within the knowledge of market participants on the lien date. Wilkins adjusted the sale prices of the comparable properties and adopted the average, $180 per square foot, to determine the value for the subject property under the salescomparison approach: $629,000. [**P10] Under the income approach, Wilkins identified seven comparable properties in the Cincinnati area, all of which were leased, and examined the leases and premises; four of the leased comparable properties were Steak 'n Shakes. Rents ranged from $14.73 to $24.93 per square foot, and Wilkins located the property at issue in the upper part of the range at $22 per square foot, with a potential gross income of $76,912 for the subject property. [**P11] Wilkins then allowed deductions for loss because of vacancy and for minor expenses on the assumption of leasing on a net basis. At the end, net income was calculated to be $66,692. Using both market-comparison and band-of-investment methods, Wilkins derived a capitalization rate of 9.11 percent. When the income, $66,692, was divided by the capitalization rate,.0911, the value of the property was calculated to be $732,075, which Wilkins rounded to $732, m=6db8880b182ff701e11fu255fe174a3a& bro... 12/16/2016

36 Get adocument - by Citation Ohio St. 3d 244 Page 5 of 10 [**P12] Finally, Wilkins reconciled the two approaches by averaging the two values to $680,500, rounded to $680,000. The county's appraisal [**P13] The Warren County auditor and the BOR presented the report and testimony of Edward Rinck, an employee of Ward &Associates, the firm hired by Warren County to perform mass-appraisal services for the auditor. Rinck had prepared a report that looked to three properties [***538] allegedly comparable for both sale and rent values. Each of the properties was a restaurant subject to lease that had sold: an Arby's in Lebanon built in 1987 that sold in October 2010 for $775,000; a Kentucky Fried Chicken in Middletown built in 1985 that sold in June 2012 for $760,000; and an Applebee's in the same township as the subject property built in 1997 that sold in September 2010 for $1,473,742. [*247] [**P14] Rinck made some adjustments for the size and quality of the construction of the properties; no adjustments were made for the time of the sales (during recovery from a recession as opposed to the January 1, 2009 lien date for the subject property) or for the fact that they were subject to a lease, which could affect the sale price and rent. Rinck derived a value of $996,000 from the sales comparison. [**P15] All three comparable properties were subject to long-term leases, and Rinck used the lease values for the income method. The Arby's transaction in 2010 was asale-leaseback with rent at $27.66 per square foot; the Kentucky Fried Chicken was sold subject to a lease that ran from January 2007 to October 2016 with rent at $19.36 per square foot; and the Applebee's was sold subject to a lease that began September 2010 with rent at $24.42 per square foot. [**P16] Rinck made adjustments to the lease rates, then applied a capitalization rate of 8.75 percent, which he apparently extracted from the values used for the three comparable properties, that is, he divided the income by the sale price to obtain the capitalization rate for each property, then averaged them to 8.75 percent for the property at issue. [**P17] Under the sales-comparison method, Rinck derived a value of $996,000, and under the income method, Rinck derived a value of $998,000. He also averaged the two figures as his method of reconciliation: he concluded the property value was $997,000. The BTA's decision [**P18] On April 15, 2014, the BTA issued its decision. The board began by noting that the two appraisals stood in conflict concerning ~~ the proper elements to be considered in the income approach and the proximity of the transfers of the sale comparable to the tax lien date." BTA No , 2014 Ohio Tax LEXIS 2425, *4-5 (Apr. 15, 2014). Evaluating those conflicts, the board stated: "[W]e find that Rinck's report more accurately reflects the nature of the subject property and its optimal location in [a] highly visible and trafficked area." Id. at *5. By contrast, the BTA found that Wilkins's comparable properties were less reliable, given that the earlier owners had stopped doing business at those locations, that the properties had had extended stays on the market, and that they currently "were in a second generation use." Id. In a footnote, the BTA brushed aside Steak 'n Shake's objections to Rinck's qualifications to testify, finding that he was ~~ competent to provide testimony as to the valuation of the subject property." Id. at *4, fn. 2. Accordingly, the board adopted Rinck's valuation, $997,000, as the property value for tax year Steak 'n Shake then appealed. [*248] STEAK 'N SHAKE'S OB]ECTIONS TO THE COMPETENCY AND LACK OF INDEPENDENCE OF RINCK'S APPRAISAL ARE REJECTED [**P19] Steak 'n Shake impugns Rinck's qualifications to have offered an opinion at the BTA. m=6db8880b182ff701e11fu255fe174a3a&_bro... 12/16/2016

37 Get adocument - by Citation Ohio St. 3d 244 Page 6 of 10 Additionally, Steak 'n Shake argues that because Rinck is an employee of the county's massappraisal consultant, he lacks the independence necessary to qualify to give expert testimony before the BTA. [***539] Admissibility issues lie within the BTA's discretion as fact-finder [**P20] HNI ~`~~Ordinarily, testimony as to property value is not competent and admissible unless it is the professional opinion of an expert." Worthington City Schools Bd, of Edn, v. Franklin Cty. Bd. of Revision, 140 Ohio St.3d 248, 2014-Ohio-3620, 17 N.E.3d 537, ~ 18. We have regarded the proper use of expert opinions as lying within the sound discretion of the BTA. We defer to the BTA's determination of the competency as well as to the board's determination of the credibility of the evidence presented to it. [**P21] Thus, when confronted with the contention that a witness could not qualify as an expert because he was not astate-certified appraiser, we consulted the certification statute and concluded that "an individual may testify before the BTA about the appraisal of real estate without being certified under R.C. Chapter 4763 if he is otherwise qualified, as determined by the BTA." N. Olmsted Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 75 Ohio St.3d 595, 597, 1996 Ohio 452, 664 N.E.2d 1285 (1996). [**P22] H"'a+As for whether the appraiser must be independent of the interests of the parties, we have treated the matter as within the BTA's discretion as fact-finder. In Witt Co. v. Hamilton Cty. Bd. of Revision, 61 Ohio St.3d 155, 158, 573 N.E.2d 661 (1991), an employee of the property owner's consultant, which was entitled to a fee only if a reduction was ordered, presented an appraisal that the BTA rejected on the grounds that it was not independent. On appeal, this court affirmed the BTA's disposition not based on an analysis of the independence of the appraisal evidence but instead on the ground that the decision to exclude the appraisal fell within the BTA's general discretion to determine a witness's credibility. Similarly, in Loveland Pines v. Hamilton Cty. Bd, of Revision, 66 Ohio St.3d 387, 388, 613 N.E.2d 191 (1993), we affirmed the BTA's reliance on an appraisal by an employee of the county auditor's office, which the property owner objected to because of the employee's "lack of education and outside experience." We stated, "'All these facts bear on the witness' credibility, which is within the sound discretion of the BTA."' Id., quoting Witt Co. at 158. No objection was lodged to the admissibility of Rinck's opinion, and the BTA's consideration of it did not constitute plain error [**P23] We have also held that HN3; ~when an objection to evidence could have been made before the tax tribunals but was not, aplain-error standard applies on [*249] appeal. See Plain Local Schools ed, of Edn, v. Franklin Cty. Bd. of Revision, 130 Ohio St.3d 230, 2011-Ohio- 336Z, 957 N.E.2d Z68, 20-21; Sapina v. Cuyahoga Cty. Bd. of Revision, 136 Ohio St.3d 158, 2013-Ohio-3028, 992 N.E.2d 1117, 17. We conclude that there is no basis for a finding of plain error as to any of the waived objections here. [**P24] Rinck is an experienced appraiser who had been in the profession for 36 years at the time of hearing and who was employed by the consultant used by Warren County. His testimony has been accepted in other contexts, as the county argued. Specifically, he has testified several times before the BTA, and one court of appeals has noted that he had been providing appraisals for years; that same court also found that the board of revision and the common pleas court acted within their discretion in finding his testimony to be credible. Eastbrook Farms, Inc. v. Warren Cty. Bd. of Revision, 194 Ohio App.3d 193, 2011-Ohio-2103, 955 N.E.Zd 418, 26 (12th Dist.). [**P25] Rinck's background suffices to establish that there was no plain error in [***540] the BTA's considering his report and his testimony as evidence of value. [**P26] Nor is Rinck's alleged noncompliance with Uniform Standards of Professional 182ff701 e 11 fb255fe 174a3a&_bro... 12/16/2016

38 Get adocument - by Citation Ohio St. 3d 244 Page 7 of 10 Appraisal Practice plain error upon which we may predicate reversal. H"'a~Although compliance with appraisal-industry standards may in other contexts be mandatory, nothing makes it mandatory before the BTA compliance with those standards goes to the weight and probative character to be ascribed to the appraisal. RINCK'S SUPPLEMENTAL TESTIMONY CONCERNING HIGHEST-AND-BEST-USE WAS ADMISSIBLE [**P27] Counsel for Steak 'n Shake did object to Rinck testifying as to the highest-and-bestuse and location analyses, neither of which was discussed in Rinck's appraisal report. Steak 'n Shake argues in its brief that the testimony violated discovery rules as well as the BTA's own rules regarding disclosure of expert reports: because the report was skimpy and fleshed out only at the hearing, counsel did not properly have the opportunity to prepare. But the BTA's rules, the Civil Rules, and the case law did not establish a legal right to have the testimony excluded. [**P28] At the time the BTA conducted its hearing in this matter, HNs ~the BTA's rules required generally that witnesses and exhibits be identified 14 days before the hearing. Former Ohio Adm.Code (I), Ohio Monthly Record , effective Feb. 1, This requirement was made specifically applicable to expert witnesses and their written reports. Former Ohio Admin.Code i1(A)(5), id. The rules also provided that discovery be conducted in [*250] accordance with the Civil Rules to the extent that they are not inconsistent with other board rules. Former Ohio Adm.Code (A), id, at [**P29] These cited provisions furnish no grounds for Steak 'n Shake to establish a legal right to have had Rinck's testimony excluded. It appears that Rinck was timely identified and that Rinck's report was timely disclosed. The supplemental testimony at the hearing does not violate the rules, and remedying any secondary violation of their letter or spirit lay within the BTA's sound discretion. Moreover, the availability of discovery afforded Steak 'n Shake the right to depose Rinck to question him about the extent of his testimony. [**P30] Steak 'n Shake fares no better under the case law cited in its brief. It cites Shumaker v, Oliver B. Cannon &Sons, Inc., 28 Ohfo St.3d 367, 370, 28 Ohio B. 429, 504 N.E.2d 44 (1986), abrogated on other grounds by State v. D'Ambrosio, 67 Ohio St.3d 185, 191, 1993 Ohio 170, 616 N.E.2d 909 (1993), for the general proposition that timely discovery of expert testimony is important to preserve the right of effective cross-examination but nothing in the case supports the legal right, as asserted by the property owner here, to exclude certain testimony. In Shumaker, allowing the expert testimony was an abuse of discretion because no notice had been given that Shumaker claimed that he had cancer. The cancer diagnosis was not made until after he had filed an action claiming that his pulmonary and respiratory illnesses were linked to chemicals in his workplace. That situation is not present here, since Rinck's report, though less than complete under usual standards, plainly gives notice of the substantive nature of his opinion. [**P31] Steak 'n Shake argues that because highest-and-best-use testimony is an essential part of appraising the market value of real property, the county had a duty to supplement discovery to notify it of Rinck's opinions. This claim fails because there is nothing particularly surprising about Rinck's highest-and-best-use testimony [***541] in light of his written report. Rinck's highest-and-best-use testimony consisted of his affirmative answer to the following question: "In your opinion, is the use as a restaurant the highest and best use of the subject property?" Given Rinck's use in the written report of sales and rent for three comparable properties that were all identified as restaurant properties, Steak 'n Shake cannot legitimately claim to be surprised. The testimony was reasonably implied by Rinck's choice of comparable properties. Because there is no ambush present here, there is insufficient ground to exclude the testimony on the theory that a discovery violation occurred. Compare Shumaker at 371 (reversing judgment when undisclosed physician testimony had been admitted because "[t] here appears to be an element of 'ambush' in the present case") ff701 e 11 fb255fe 174a3 a&_bro... 12/ 16/2016

39 Get adocument - by Citation Ohio St. 3d 244 Page 8 of 10 [**P32] Although Rinck's written report may fall short of the standard for matters that ought to be addressed in such a report, we conclude that Steak 'n [*251] Shake has not demonstrated reversible error based on its objection to Rinck's highest-and-best-use testimony. RINCK'S RELIANCE ON UNADJUSTED SALE PRICES OF ENCUMBERED COMPARABLE PROPERTIES WAS IMPROPER, SINCE THE SPECIAL-PURPOSE DOCTRINE DOES NOT APPLY [**P33] Although we reject its procedural objections, Steak 'n Shake does advance a valid objection to the Rinck appraisal on substantive grounds. Quite simply, Rinck's appraisal failed to adjust the sales prices of the comparable properties to remove the effect that long-term leases would have had on those prices. Since the property at issue was unencumbered by a lease, it would likely have sold for less. [**P34] The county and amicus curiae, the County Auditors' Association of Ohio, rely on Meijer Stores Ltd. Partnership v. Franklin Cty. Bd. of Revision, 122 Ohio St.3d 447, 2009-Ohia- 3479, 912 N.E.2d 560, to oppose this point. By doing so, they underscore the value-in-use issue, because Meijer's analysis depended upon the fact that one of the competing appraisals recognized that the special adaptation of the property to Meijer's use affected its value. Id. at No special adaptation has been established here. Because the encumbrance of a lease may affect market value, sale prices of leased properties generally must be adjusted when determining the value of comparable unleased properties [**P35] Amicus curiae points out that "this Court has repeatedly held that sales do not need to be adjusted to reflect beneficial lease terms." Amicus curiae then cites a parade of cases: Cummins Property Servs., L.L.C. v. Franklin Cty. ed, of Revision, 117 Ohio St.3d 516, Ohio-1473, 885 N.E.2d 2Z2; AEI Net Lease Income &Growth Fund v. Eire Cty. Bd. of Revision, 119 Ohio St.3d 563, 2008-Ohio-5203, 895 N.E.2d 830; and most recently, HIN, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 138 Ohio St.3d 223, 2014-Ohio-523, 5 N.E.3d 637, ("HIN claims that the 2004 sales price represents the value of the leased fee, not the unencumbered fee simple. It argues that we must value property in its unencumbered state. We have rejected this argument numerous times"). (**P36] Amicus curiae argues that because sale prices do not need to be adjusted for the effect of long-term leases, Rinck did not need to adjust the sale prices for the encumbered properties he used as comparable properties in this case. That is, however, mistaken, Hnrs Precise/y because the encumbrances affect sale price, and precisely because the difference in sales price is a difference in value for tax purposes, Rinck was required to adjust the sale prices for his comparable properties [***542] to reflect the fact that the subject property was not encumbered and would therefore likely sell for less. [*252] Meijer is inapposite because Steak 'n Shake has not been shown to come within the special-purpose doctrine [**P37] The next step in the defense of the Rinck appraisal relies on Meijer, 122 Ohio St.3d 447, 2009-Ohio-3479, 912 N.E.2d 560. Because the use of unadjusted sales of leased properties could be appropriate in the context of the Meijer case, the county argues that Rinck's reliance on unadjusted sales of encumbered properties is proper here. That also is mistaken, for two reasons. [**P38] First, in Meijer the appraisal adopted by the BTA did not place exclusive reliance on unadjusted encumbered sales, as Rinck did in his appraisal in this case. To the contrary, in Meijer, the appraisal adopted by the BTA reflected the appraiser's conviction that the "market rent applicable to the property at issue 'is considered to lie somewhere between the ranges indicated by the first and second generation comparables, with a strong bias towards those 182ff701 e 11 fb25 Sfe 174a3 a&_bro... 12/ 16/2016

40 Get adocument - by Citation Ohio St. 3d 244 Page 9 of 10 rents indicated by the first generation lease comparables."' Meijer, 11, quoting the appraiser's testimony. [**P39] Second and more significantly, the use of unadjusted sales prices for encumbered comparable properties was more appropriate in Meijer because that case involved the proper application of the "special-purpose doctrine." Namely, in Meijer unlike in the present case the BTA evaluated and rejected the owner's appraisal, which looked straightforwardly at what Meijer could realistically sell the brand-new facility for, given that it was an outsize building adapted for Meijer's type of comprehensive retail business. See Meijer, 7 ("[The property owner's appraiser] looked at the big-box store as adding only modest market value because the structure would not be easily adaptable to the needs of a potential buyer, a factor that he opined would impair the property's marketability" [emphasis added]). In other words, the property owner wanted to appraise the property as though it were a shuttered Kmart yet Meijer had just recently built the 193,000 square-foot store and was operating it with apparent success. Under these circumstances, we held that the BTA acted reasonably and lawfully by preferring the competing appraisal, which considered the value of the property in its use by Meijer itself: [W]e acknowledged [in Dinner Bell Meats] that H"~'~the present use of a property may be considered when "'a building in good condition [is] being used currently and for the foreseeable future for the unique purpose for which it was built"'; otherwise, "the owner of a distinctive, but yet highly useful, building [would be able] to escape full property tax liability." [*253] (Brackets sic.) Meijer, 25, quoting Dinner Bell Meats, Inc. v. Cuyahoga Cty. Bd. of Revision, 12 Ohio St.3d 270, 272, 1Z Ohio B. 347, 466 N.E.2d 909 (1984), quoting Fed. Res. Bank ofmrnneapolis v. State, 313 N.W.2d 619, 623 (Minn.1981). [**P40] In stark contrast with Meijer, there is no indication in the present case, let alone any finding, that the restaurant in question satisfies the threshold criterion for "special-purpose" treatment. Namely, no evidence in this case suggests that the construction of the restaurant involved an "improvement of the property" that "enhanced its utility to the business that occupied the property while not greatly increasing its marketability." Meijer, 27. To the contrary, buildings of such size and configuration were apparently readily saleable [***543] in the broader market for commercial properties. [**P41] That means that the general rule of market-exchange valuation applies. See State ex rel. Park Invest. Co. v. Bd, of Tax Appeals, 175 Ohio St. 410, 412, 195 N.E.2d 908 (1964) (in the last analysis, HfVBt"the value or true value in money of any property is the amount for which that property would sell on the open market by a willing seller to a willing buyer," and the goal of an appraisal is "to determine the amount which such property should bring if sold on the open market"). CONCLUSION [**P42] For the foregoing reasons, we reverse the decision of the BTA, and we remand for further proceedings. On remand, the BTA should determine the property value considering the Wilkins appraisal and any other evidence in the record. Decision reversed and cause remanded. O~CONNOR, C.7., and PFEIFER, O~DONNELL, LANZINGER, KENNEDY, FRENCH, and O~NEILL, ]]., concur. Service: Get by LEXSEEO Citation: 145 os3d 244 View: Full Date/Time: Friday, December 16, :37 PM EST 182ff701 e 11 fb255fe 174a3a&_bro... 12/16/2016

41 OHIO BOARD OF TAX APPEALS JACKSON LOCAL SCHOOLS BOARD OF CASE NO(S) EDUCATION, (et. al.), Appellant(s), ~~ (REAL PROPERTY TAX) DECISION AND ORDER STARK COUNTY BOARD OF REVISION, (et. al.), Appellee(s). APPEARANCES: For the Appellants) -JACKSON LOCAL SCHOOLS BOARD OF EDUCATION Represented by: ROBERT M. MORROW LANE ALTON & HORST, LLC TWO MIRANOVA PLACE, SUITE 220 COLUMBUS, OH For the Appellees) -STARK COUNTY BOARD OF REVISION Represented by: STEPHAN P. BABIK ASSISTANT PROSECUTING ATTORNEY STARK COUNTY 110 CENTRAL PLAZA SOUTH, SUITE 510 CANTON, OH Entered Monday, August 8, 2016 FIDC XVII, LLC Represented by: SCOTT ZURAKOWSKI KRUGLIAK, WILKINS, GRIFFITHS & DOUGHERTY CO., LPA 4775 MUNSON STREET N.W. P.O. BOX CANTON, OH Mr. Williamson, Ms. Clements, and Mr. Harbarger concur. Jackson Locals Schools Board of Education ("BOE") appeals a decision of the board of revision ("BOR") which determined the value of the subject real property, parcel number , for tax year This matter is now considered upon the notice of appeal, the transcript certified by the BOR pursuant to R.C , the record developed at this board's hearing, and any written argument submitted by the parties. The subject property, a commercial property with office and retail space, was initially assessed a true value of $4,600,000. The property owner, FIDC XVII, LLC ("FIDC"), filed a complaint with the BOR, which requested that the subject property be revalued to $1,190,200. The BOE filed acounter-complaint, which objected to the request. At the BOR hearing, both parties appeared, through counsel, to submit argument -1-

42 and/or evidence in support of their respective positions. FIDC submitted the report and testimony of appraiser Charles Snyder, MAI, who opined the value of the subject property to be $2,750,000 as of January 1, Snyder acknowledged that the subject property was the subject of a recent, $4,600,000 transfer; however, he testified that the sale price reflected the leased-fee interest. As a result, Snyder testified, an appraisal was required to determine the fee-simple interest. Relying upon the evidence submitted, FIDC amended its opinion of value to $2,750,000, consistent with Snyder's report, and requested that the subject property's value be reduced to said value. The BOE cross examined Snyder about the data and methodologies underpinning his opinion of value. It also submitted a conveyance fee statement, which demonstrated the $4,600,000 transfer of the subject property to FIDC from 4385 Everhard Road, LLC in August Relying upon the evidence it submitted, the BOE argued FIDC failed to rebut the presumptions of the August 2012 sale and, as a result, the value should remain at the initially assessed value of $4,600,000. The BOR voted to reduce the subject property's value to $2,750,000, consistent with Snyder's report and testimony, and this appeal ensued. Before this board, the parties supplemented the record with oral and written argument in support of their respective positions. The BOE asserted that FIDC failed to rebut the presumptions accorded to the sale of August 2012 and, because of such failure, the BOR erroneously reduced the subject property's value. FIDC conversely argued that Snyder's report and testimony was competent and probative evidence of the subject property's value and that the BOR properly relied upon such evidence. It has long been held by the Supreme Court that "the best evidence of'true value in money' of real property is an actual, recent sale of the property in an arm's-length transaction." Conalco v. Bd. of Revision 50 Ohio St.2d 129 (1977). The existence of a facially qualifying sale may be confirmed through a variety of means, e.g., purchase agreement, deed, conveyance fee statement, property record card. See, e.g., Worthington City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 124 Ohio St.3d 27, 2009-Ohio-5932; Mason City School Dist. Bd. of Edn. v. Warren Cty. Bd. of Revision, 138 Ohio St.3d 153, 2014-Ohio-104. Once the existence of a sale is established, "a sale price is deemed to be the value of the property, and the only rebuttal lies in challenging whether the elements of recency and arm's-length character between a willing seller and a willing buyer are genuinely present for that particular sale." Cummins Property Servs., LLC v. Franklin Cty. Bd. of Revision, 117 Ohio St.3d 516, 2008-Ohio-1473, at 13. The court reaffirmed its position in HIN, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 138 Ohio St.3d 223, 2014-Ohio-523, 14, stating "[t]he only way a party can show that a sale price is not representative of value is to show that the sale was either not recent or not an arm's-length transaction." (Emphasis sic.) Accordingly, the affirmative burden clearly rests with the opponent of using a reported sale price to demonstrate why it does not reflect the property's value. Cincinnati Bd. of Edn. v. Hamilton Cty. Bd. of Revision (1997), 78 Ohio St.3d 325, 327. We begin our analysis with. the $4,600,000 transfer of the subject property to FIDC from 4385 Everhard Road, LLC in August Neither party disputed the arm's-length nature or recency of the sale. However, as previously noted, FIDC argued that the purchase price reflected on the conveyance fee statement was reflective of the leased fee interest, not the fee simple interest. We disagree with FIDC's argument and conclude that the price reflected on the conveyance fee statement reflected the fee simple interest. "The total range of private ownership interests in real property is called the bundle of rights, "which - includes "the right to sell an interest[;] the right to lease an interest[;] the right to occu PY the P ro P ert Y~;~ the ri g ht to mort g a g e an interest G and 1 the ri g ht to g ive an interest awa Y~ ~ " (Emphasis in original.) The Appraisal of Real Estate 5 (14th Ed. 2013). Fee simple ownership of real property includes the entire bundle of rights. The record is void of any evidence that the subject sale transferred anything less than fee simple ownership to FIDC or that the seller retained a reversionary interest in the subject property. Although we acknowledge that FIDC has given up "the right to occupy the property," i.e., the subject property is encumbered by a lease, in exchange for rental payments, such right is only one of the bundle of rights of fee simple ownership. The court has recognized "'[a] fee simple' may be -2-

43 absolute, conditional, or subject to defeasance, but the mere existence of encumbrances does not affect its status as fee simple. Black's Law Dictionary (8th Ed.2004) " Meijer Stores L.P. v. Franklin County Bd. of Revision, 122 Ohio St.3d 447, 2009-Ohio-3479, 23, fn. 4. In so doing, in Meijer, the court held: "[T]he possibility of encumbering a property like the one at issue here constitutes -- as a purely factual matter -- one method of realizing the value of legal ownership of the property. See Cummins Property Servs., L.L.C. v. Franklin Cty. Bd. of Revision, 117 Ohio St.3d 516, 2008-Ohio-1473, ***, 27 ('encumbering property typically represents an owner's attempt to realize the full value of the property'); AEI Net Lease Income &Growth Fund [v. Erie Cty. Bd. of Revision], 119 Ohio St.3d 563, 2008-Ohio-5203, ***, 21 (sale-leaseback, in its totality, constituted an arm's-length transaction in which seller/lessee and buyer/lessor each pursued the objective to realize value of the realty)." (Parallel citations omitted.) Id. at 23. Moreover, in HIN, LLC v. Cuyahoga County Bd. of Revision, 138 Ohio St. 3d 223, 2014-Ohio-523, the court held: "Additionally, HIN relies on Alliance Towers, Ltd. v. Stark Cty. Bd. of Revision, 37 Ohio St.3d 16 *** (1988), in support of its position that we must value the property as if unencumbered by the U.S. Bank lease. In Alliance Towers, we stated that'[fjor real property tax purposes, the fee simple estate is to be valued as if it were unencumbered.' Id. at paragraph one of the syllabus. In Cummins, however, we distinguished Alliance Towers because it involved a valuation by appraisal, not the validity of a sale price. Cummins, 117 Ohio St.3d 516, 2008-Ohio-1473, ***, at 15. We found Alliance Towers to be inapposite and affirmed that it would never be proper to adjust a recent arm's-length sale price because of an encumbrance." (Emphasis added.) (Parallel citations omitted.) Id. at 24. Likewise, we find that it would be improper to adjust the subject sale because of the lease. See, also Cummins, supra, at 18 ("the arm's-length sale price of a legal fee interest should not be adjusted on account of the mere existence of an encumbrance"). In addition, we do not find the Supreme Court's recent decisions in Steak 'n Shake v. Warren Cty. Bd. of Revision, Slip Opinion 2015-Ohio-4836, and Rite Aid of Ohio, Inc. v. Washington Cty. Bd. of Revision, Slip Opinion 2016-Ohio-371, applicable. In those cases, the court specifically discussed the appropriateness of adjusting comparable sales of the leased fee interest to reflect the market in which a property unencumbered by a lease would compete, in the context of an appraisal. See, also Lowe's Home Ctrs., Inc. v. Washington Cry. Bd. of Revision, Slip Opinion No Ohio-372. The court did not hold that arm's-length transactions should be reduced based upon the existence of a lease encumbrance at the time of a sale, or shortly thereafter. Thus, we conclude that the value provided on the conveyance-fee statemen reflected the value of the fee simple interest. We note that Snyder asserted that the subject sale included fixtures and/or personal property. The conveyance fee statement contradicts that assertion and provided that no portion of the sale price was allocated to personal property. See, HIN, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 124 Ohio St.3d 481, 2010-Ohio-687; Bedford Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 132 Ohio St.3d 371, 2012-Ohio-2844; Sapina v. Cuyahoga Cty. Bd. of Revision, 136 Ohio St.3d 188, 2013-Ohio In reviewing this matter, we are mindful of our duty to independently determine the subject property's value. Columbus Bd. of Edn. v. Franklin Cty. Bd. of Revision, 76 Ohio St.3d 13, 15 (1996) (BTA must reach its "own independent judgment based on its weighing of the evidence contained in [the BOR] transcript"). In doing so, we find FIDC failed to rebut the presumptions accorded to the $4,600,000 transaction of August FIDC failed to submit any evidence that challenged the arm's-length nature or recency of the subject sale. Absent an affirmative demonstration that such sale was not a qualifying sale for tax valuation purposes, we find that it was a recent, arm's-length sale upon which we rely to determine the -3-