Carryover of Prior-Year Tax Board Ruling Does Not Trump Auditor's Sexennial Reappraisal of Property

AERC Saw Mill Village, Inc. v. Franklin Cty. Bd. of Revision, Slip Opinion No. 2010-Ohio-4468.
Board of Tax Appeals, Nos. 2007-A-764 and 2008-A-157. Decision of the Board of Tax Appeals reversed and cause remanded.
Brown, C.J., and Pfeifer, Lundberg Stratton, O'Connor, and Cupp, JJ., concur.
O'Donnell, J., concurs in reversing the decision of the Board of Tax Appeals but would not remand the cause.
Lanzinger, J., concurs in judgment only.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2010/2010-Ohio-4468.pdf

(Sept. 28, 2010) The Supreme Court of Ohio held today that R.C. 5715.19(D), a state law requiring that a tax valuation of property established by a ruling of the State Board of Tax Appeals (BTA) must be “carried over” to subsequent tax years, does not supersede a different statute that requires county auditors to reappraise all real property within their county and establish a new tax valuation for each parcel every six years.

Applying that analysis to a Franklin County case, the Court ruled that the 2005 and 2006 property taxes assessed on a Columbus apartment complex should have been based on the county auditor’s 2005 sexennial reappraisal of that property at $17.9 million, rather than on a carryover of the $20.1 million valuation of the property established by the BTA for the 2002 tax year.

The Court’s decision was authored by Chief Justice Eric Brown.

The case involved the Sawmill Village Apartments, a 340-unit residential complex in northwest Columbus. The owners of the complex appealed the appraised value of the property set by the Franklin County auditor for the 2002 tax year. In 2005, while the owners’ 2002 valuation appeal was still pending before the BTA, the Franklin County Auditor conducted a required sexennial reappraisal of real property within the county and set a new appraised value of the Sawmill Village complex at $17.9 million.

The 2002 appeal was not finally resolved until September 2006, at which time the BTA approved a joint stipulation between the property owners and the Dublin City School District setting the true value of the complex as of Jan. 1, 2002 at $20.1 million. In its order approving the stipulated 2002 valuation of the property, the BTA directed the county auditor to carry the 2002 valuation forward and apply it to succeeding tax years “according to law.” In December 2006, after receiving notice of the BTA ruling, the county auditor’s office not only amended the tax rolls to reflect the value of the complex as $20.1 million for the 2002, 2003 and 2004 tax years, but also increased to $20.1 million the valuation of the property that had been entered on the tax list for the 2005 and 2006 tax years based on the auditor’s 2005 reappraisal of $17.9 million.

The owners appealed the increased valuation for the 2005 and 2006 tax years to the Franklin County Board of Revision (BOR). The Dublin City School District filed objections urging affirmance of the auditor’s valuation. The BOR upheld the auditor’s valuation. The property owners then appealed the BOR ruling to the BTA. The appeals board held that the $20.1 million valuation set by the county auditor based on the “carry forward” provision of R.C. 5715.19(D) was the correct valuation of the property for 2005 and 2006. The owners exercised their right to appeal the BTA’s ruling to the Supreme Court.

In today’s decision, Chief Justice Brown wrote: “According to the school board, because the tax-year-2002 complaint was not ‘finally determined’ until the BTA decision in September 2006, the tax officials acted properly in carrying the stipulated 2002 value of $20,100,000 over to tax years 2005 and 2006. In response, AERC does not question the school board’s reading of the statute but instead points to the auditor’s duties under other statutes – duties that stand in potential conflict with the mandate that the redetermined value for an earlier tax year be carried over to the next year. As the county’s tax assessor, the county auditor is required to value and assess property tax against the taxable property in the county. ... Specifically, the auditor must reappraise property values once every six years and update the values at the interim three-year point.”

“In this case, the auditor encountered potentially conflicting duties. Having carried out his statutory duty to reappraise the property at issue for tax year 2005, the auditor would have been led by the statutes to use and retain that value for 2005 and 2006. But instead, the auditor treated the 2006 stipulation of value for tax year 2002 as retroactively superseding the 2005 reappraisal value. AERC argues that this conflict in the auditor’s duties under different statutes calls for a harmonizing construction that gives effect to the various statutes while avoiding absurd and unintended outcomes.”

“We agree. To give full literal effect to the carryover provision and allow it to supersede the auditor’s ongoing duty to value and revalue real property leads to the absurd result the assessor arrived at in the present case. Here, a revaluation of the property for tax year 2005 was displaced by a different value stipulated for January 1, 2002, that no one had determined or agreed constituted the value on January 1, 2005, or January 1, 2006. To be sure, the carryover does properly apply to a subsequent year in which the auditor has not performed a new valuation of the property pursuant to his statutory duties. But to allow the carryover to displace a new valuation both defeats the purposes of the valuation statutes and thwarts the constitutional mandate that ‘[l]and and improvements thereon’ be ‘taxed by uniform rule according to value.’”

In support of that conclusion, Chief Justice Brown cited the Supreme Court of Ohio’s 1996 decision in Cincinnati School Dist. Bd. of Edn. v. Hamilton Cty. Bd. of Revision. He wrote: “Just as the school board in the present case argues that the carryover provision trumps the 2005 sexennial appraisal, the board of education in Cincinnati contended that the plain language of the carryover provision trumped the board of revision’s duty to hear the fresh complaint for the new triennium. We rejected that contention, finding that the owner’s right to file a complaint for the new triennium potentially conflicted with the carryover and continuing-complaint provisions. That conflict necessitated a harmonizing construction, under which the fresh complaint prevailed against the carryover. By the same logic, the carryover provision should not have displaced the statutory reappraisal in this case.”

Chief Justice Brown’s opinion was joined by Justices Paul E. Pfeifer, Evelyn Lundberg Stratton, Maureen O’Connor and Robert R. Cupp. Justice Terrence O’Donnell concurred with the majority’s reversal of the Board of Tax Appeals’ ruling, but indicated that he would not remand the case for further proceedings. Justice Judith Ann Lanzinger concurred in judgment only.

Contacts
J. Kieran Jennings, 216.763.1004, for AERC Saw Mill Village Inc.

Mark H. Gillis, 614.228.5822, for the Dublin City Schools Board of Education.

Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion released by the Court, but only for those cases considered noteworthy or of great public interest. Opinion summaries are not to be considered as official headnotes or syllabi of Court opinions. The full text of this and other Court opinions from 1992 to the present are available online from the Reporter of Decisions. In the Full Text search box, enter the eight-digit case number at the top of this summary and click "Submit."