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Ohio Property Tax Updates

UPDATED September 2018

Supreme Court of Ohio addresses the valuation of retail property lacking its own parking lot but permitted use of an adjacent lot by way of an easement in recent Worthington case.

Ohio Revised Code 5713.03 mandates that real property be valued in the fee simple estate, as if unencumbered.  This methodology permits uniform valuation of any property type and circumstance and resolves questions related to the treatment of above and below market leases, credit-worthy tenants, and the effects of easements, among others.

In Worthington, a taxpayer, Kroger, filed a complaint to decrease its property’s value (parcel of land improved with a supermarket) and had an appraisal performed in support.  Because the land was unusually small compared to similar retail properties, the Kroger owned parcel did not have its own parking lot.  However, patrons were permitted to park on an adjacent property through an easement. 

The taxpayer appraiser valued the property by using both the sales-comparison approach to value and the income-capitalization approach.  Upon reaching values under each approach, he found it necessary to make an adjustment to account for the parcel size.  While the subject occupied 1.699 acres, Kroger’s appraiser determined the average size of comparable properties was 5.801 acres.  He then multiplied the land value per acre from his analysis by the 4.102-acre difference between the subject and the average comparable size and deducted this amount from his conclusions to adjust for the unusually small size of the subject property.

The relevant board of revision relied on the taxpayer appraiser’s conclusions and adopted his value.  The Board of Tax Appeals likewise found the appraisal reliable but rejected the adjustment for the parking lot acreage because it found it both an improper removal of the benefit of the easement and a blanket deduction for a cost to cure.

The Supreme Court held the Board of Tax Appeals decision to be in error and found the appraiser’s adjustments to be the best method of valuing the property appropriately, in the fee simple estate.  The Court ruled the deduction to account for the acreage of the subject was completely consistent with R.C. 5713.03 and was a discount related not to the value of access to parking but rather to the extraordinarily small lot size of the parcel in comparison to like properties.  The appraiser valuation of only the property owned by the Taxpayer, while ignoring any effects of encumbrances, was found to be appropriate.

Ohio Tax Year 2018 Property Tax Assessment Review Period Approaching 

Ohio counties will begin mailing out property tax bills for tax year 2018 (pay 2019) soon.  The window to formally challenge these values is open from January 2 through March 31, 2019.  Early analysis by a professional familiar with local assessors, opposing counsel, and relevant assessment law will optimize your chances of obtaining appropriate relief.

Worthington City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, Slip Opinion No. 2018-Ohio-2909


Kristopher Nicoloff
Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

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