Johnson v. McClain (Slip Opinion)

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Johnson v. McClain, Slip Opinion No. 2021-Ohio-1664.]
NOTICE
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South Front Street, Columbus, Ohio 43215, of any typographical or other
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SLIP OPINION NO. 2021-OHIO-1664JOHNSON, APPELLANT, v. MCCLAIN, TAX COMMR., APPELLEE.
[Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as Johnson v. McClain, Slip Opinion No. 2021-Ohio-1664.]
Taxation—Property tax—Current agricultural use valuation—Property owner
failed to prove that tax commissioner abused his discretion in adopting
land-valuation table—Decision of Board of Tax Appeals affirmed.
(No. 2020-0472—Submitted January 26, 2021—Decided May 18, 2021.)
APPEAL from the Board of Tax Appeals, No. 2016-814.
__________________
Per Curiam.
{¶ 1} Appellant, William S. Johnson, appeals a decision of the Board of Tax
Appeals (“BTA”) affirming the June 22, 2016 journal entry issued by appellee,
Ohio Tax Commissioner Jeffrey McClain. That journal entry adopted a per-acre
valuation table for use by the county auditors in assessing land that qualifies for
“current agricultural use valuation” (“CAUV”). The BTA determined that Johnson
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failed to prove that the tax commissioner abused his discretion in adopting the
valuation table. We agree and therefore affirm the BTA’s decision.
I. COURSE OF PROCEEDINGS
{¶ 2} The journal entry at issue here prescribes the basis for property-tax
valuation of CAUV-qualifying farmland in 23 Ohio counties that conducted either
a reappraisal or a valuation update for tax year 2016. The entry adopts a 58-page
unit-value table that lists soil types along with (1) ratings of each soil type as to
several characteristics, including natural drainage, and (2) per-acre values for each
soil type based on potential income for crops grown in that soil. Each county
auditor consults the unit-value table when calculating the value of farmland in his
or her county and applies the per-acre values from the table to the farmland using
soil maps of the farms in the county. Ohio Adm.Code 5703-25-34(B).
{¶ 3} Johnson owns a farm in Clark County, which is one of the counties
subject to the tax commissioner’s June 2016 journal entry. In Adams v. Testa, 152
Ohio St.3d 207, 2017-Ohio-8853, 94 N.E.3d 539, ¶ 33, we held that a CAUV
journal entry is a “final determination” that is appealable to the BTA pursuant to
R.C. 5717.02 and that a taxpayer who is “subject to” the entry has standing to appeal
it to the BTA. Johnson appealed the tax commissioner’s journal entry to the BTA,
primarily arguing that the unit-value table does not differentiate certain soil types
based on whether they are drained or undrained.
{¶ 4} In its decision, the BTA summarized the structure of the CAUV
program and determined that because “th[e] appeal concerns the propriety of the
commissioner’s actions in adopting the tables, their application to a particular
property (i.e., Mr. Johnson’s farm) is not before us today.” BTA No. 2016-814,
2020 WL 1274335, *2 (Mar. 6, 2020). The BTA then reviewed the tax
commissioner’s decision adopting the CAUV table to determine whether the
commissioner abused his discretion—that is, whether the decision was
unreasonable, arbitrary, or unconscionable. Id. at *4. Specifically, it asked
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“whether the commissioner abused his discretion by adopting a CAUV table
without expressly setting forth a separate rate for somewhat poorly drained, poorly
drained, or very poorly drained soils that lack artificial drainage.” Id.
{¶ 5} For three reasons, the BTA found no abuse of discretion. First, the
administrative code calls for valuation based on normal management practices in
the area, not on the “ ‘management ability or decisions of an individual owner or
operator.’ ” Id. at *4, quoting Ohio Adm.Code 5703-25-33(B). Second, Johnson
failed to rebut testimony at the BTA hearing establishing that for purposes of
developing the unit-value table, the yields for all soil types may include data from
both drained and undrained soil. Id. Finally, because the typical management of
certain soil types includes artificial drainage, even if the commissioner did not
consider data regarding lack of artificial drainage in making his determination,
Johnson did not show an arbitrary or unconscionable attitude on the
commissioner’s part. Id. at *4-5.
{¶ 6} Johnson appealed to this court as of right pursuant to R.C. 5717.04.
II. ANALYSIS
A. Agricultural-use valuation
{¶ 7} Generally, Ohio taxes real estate by determining, as a first step, the
property’s fair market value at its highest and best use; such a value is the “true
value” as that term is used in R.C. 5713.01(B). “ ‘[T]he value or true value in
money of real property’ refers to ‘the amount for which that property would sell on
the open market by a willing seller to a willing buyer * * *, i.e., the sales price.’ ”
(Brackets and ellipsis added in Terraza 8, L.L.C.) Terraza 8, L.L.C. v. Franklin
Cty. Bd. of Revision, 150 Ohio St.3d 527, 2017-Ohio-4415, 83 N.E.3d 916, ¶ 8-9,
quoting State ex rel. Park Invest. Co. v. Bd. of Tax Appeals, 175 Ohio St. 410, 412,
195 N.E.2d 908 (1964); see also Rite Aid of Ohio, Inc. v. Washington Cty. Bd. of
Revision, 146 Ohio St.3d 173, 2016-Ohio-371, 54 N.E.3d 1177, ¶ 34. But under
Article II, Section 36 of the Ohio Constitution and the statutes implementing that
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provision, property that qualifies for CAUV treatment is assessed not on the basis
of its highest and best use, but on the basis of its “current agricultural use”—a
valuation that typically is lower than a highest-and-best-use valuation for the same
land. Johnson v. Clark Cty. Bd. of Revision, 155 Ohio St.3d 264, 2018-Ohio-4390,
120 N.E.3d 823, ¶ 10-12. This tax break is available to owners who prove that their
property is “devoted exclusively to agricultural use,” R.C. 5713.30(A)(1), 5713.31,
and 5715.01(A).
{¶ 8} The tax commissioner prescribes the basis for determining CAUV
pursuant to administrative rules promulgated under R.C. 5715.01.1 Ohio
Adm.Code Chapter 5703-25, Sections 30 through 36, govern the CAUV process
and Ohio Adm.Code 5703-25-33(A) prescribes a potential-income approach for
developing CAUV tables. The prescribed approach relies on determining “typical
net income before real property and income taxes from agricultural products
assuming typical management, cropping and land use patterns and yields for a given
type of soil.” To ensure uniformity, the commissioner must annually “adopt a
proposed entry setting forth the necessary modifications and values to be used in
establishing the current agricultural use value of land in counties completing a
sexennial reappraisal or [completing a triennial update].” Ohio Adm.Code 5703-
25-31(D).
{¶ 9} In preparing the journal entry, the commissioner must consult with an
“agricultural advisory committee,” id., that consists of representatives from “farm
related organizations and public agencies having knowledge in this field,” Ohio
Adm.Code 5703-25-32(A). Through the journal entry, the commissioner adopts a
1. Ohio’s 2017 budget bill, 2017 Am.Sub.H.B. No. 49, amended R.C. 5715.01 to add specific
requirements concerning the CAUV methodology. Those amendments were not in effect in June
2016 when the tax commissioner adopted and Johnson contested the unit-value table at issue here.
Accordingly, we refer in this opinion to the version of R.C. 5715.01 in effect for tax year 2016 as
“former R.C. 5715.01.”
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CAUV table listing soil types and the per-acre values for each soil type. Ohio
Adm.Code 5703-25-33. We have explained that process as follows:
The commissioner compiles this table by first calculating the
typical net income from agricultural products for each soil type. * *
* Next, the commissioner capitalizes the incomes expected to be
derived from each soil type by a rate that he has previously
determined. Finally, he lists the unit values per acre so determined
in the table and distributes the table to the auditors.
Renner v. Tuscarawas Cty. Bd. of Revision, 59 Ohio St.3d 142, 145, 572 N.E.2d 56(1991).
{¶ 10} When the commissioner lists soil types in the unit-value table, he or
she relies on “Bulletin 685” for guidance. The bulletin is a 1980s publication
reflecting the input of the Ohio State University’s Cooperative Extension Service,
the Ohio State University’s Ohio Agricultural Research and Development Center,
the Division of Soil and Water Conservation of the Ohio Department of Natural
Resources, and the United States Department of Agriculture’s (“USDA”) Soil
Conservation Service (now known as the National Resource Conservation Service).
When the USDA adds soil types and data to its taxonomy of soils, those findings
are presented to the tax commissioner’s agricultural advisory committee for
inclusion in the unit-value tables.
{¶ 11} Using the CAUV journal entry, a county auditor determines the
agricultural-use value of each qualifying property in his or her county, and those
valuations “will be accepted as prima-facie correct valuation for parcels or tracts of
land devoted exclusively to agricultural use where the parcel and tract of land has
a ‘true’ or ‘market’ value reflecting a higher and better use than agricultural [use].”
Ohio Adm.Code 5703-25-31(E).
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B. Basis of the controversy
{¶ 12} Through four claims of error, Johnson presents a narrow challenge
to the CAUV unit-value table adopted in the tax commissioner’s June 2016 journal
entry. Specifically, he faults the table for not listing separate values for drained and
undrained Crosby, Kokomo, and Patton soils, given that it does list separate values
for drained and undrained Adrian, Carlisle, and Linwood soils. By arguing for a
lower unit value for the Crosby, Kokomo, and Patton soil types, which are present
but undrained on his farmland, Johnson seeks to reduce the prima facie agricultural-
use value of the land, which would reduce his property-tax liability.
C. Ohio Adm.Code 5703-25-34(E) furnishes no basis for challenging the
CAUV journal entry
{¶ 13} Johnson predicates his first claim of error on Ohio Adm.Code 5703-
25-34(E), which requires a county auditor, “[i]f a particular soil type is not included
in the ‘current agricultural use value of land table or tables’ prescribed by the tax
commissioner for the given year,” to “contact the tax commissioner to secure the
per acre unit value for the soil type.” The commissioner “shall then compute a use
value [for that soil type] * * *.” Id.{¶ 14} Johnson argues that this provision compels the tax commissioner to
recognize undrained versions of specified soil types on the unit-value table. By
challenging the BTA’s determination that Ohio Adm.Code 5703-25-34(E) does not
apply to his challenge to the CAUV journal entry, Johnson raises an issue of law
that we review de novo. See Kinnear Rd. Redevelopment, L.L.C. v. Testa, 151 Ohio
St.3d 540, 2017-Ohio-8816, 90 N.E.3d 926, ¶ 14.
{¶ 15} As a starting point, we note that “unless the [commissioner’s] rule is
unreasonable or contrary to law, the Tax Commissioner must apply it as
formulated.” Kroger Grocery & Baking Co. v. Glander, 149 Ohio St. 120, 126, 77
N.E.2d 921 (1948), overruled on other grounds, Fichtel & Sachs Industries, Inc. v.
Wilkins, 108 Ohio St.3d 106, 2006-Ohio-246, 841 N.E.2d 284. We agree with the
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BTA’s conclusion that Ohio Adm.Code 5703-25-34(E) does not support Johnson’s
claim of error.
{¶ 16} By their own terms, the provisions of Ohio Adm.Code 5703-25-34
apply to a county auditor’s use of the unit-value table, not to the commissioner’s
adoption of the table. Division (A) of the rule addresses the auditor’s determination
as to whether property qualifies for CAUV treatment, and divisions (B), (C), and
(D) prescribe the initial steps for appraising CAUV property using the unit-value
table. County soil-survey maps are to be used to develop soil maps for each farm
to be assessed. Ohio Adm.Code 5703-25-34(B). And as the BTA correctly
recognized below, the division of labor between the tax commissioner and the
auditor reflects “two distinct aspects” of “the process by which the value of land
qualifying for CAUV is established.” BTA No. 2016-814, 2020 WL 1274335, at
*2. Generally, the tax commissioner’s duty is to “direct and supervise the
assessment for taxation of all real property” in the state, former R.C. 5715.01(A),
whereas a county auditor’s duty is to serve as the “assessor of all the real estate in
the auditor’s county for purposes of taxation,” R.C. 5713.01(A).
{¶ 17} Ohio Adm.Code 5703-25-34(E) clearly applies to the auditor’s
duties in making an assessment: it requires the auditor to contact the commissioner
when “a particular soil type is not included” in the unit-value table, and then the
commissioner may take further action. Accordingly, Ohio Adm.Code 5703-25-
34(E) addresses a county auditor’s duties when assessing CAUV property—not the
duties of the tax commissioner—and the auditor’s determinations may be reviewed
by the county’s board of revision if the affected taxpayer contests the assessment
by filing a complaint under R.C. 5715.19(A).2
2. In his merit brief, Johnson details the factual background of his efforts to obtain relief through
the county auditor. Those matters lie outside the record before us and, as the BTA correctly
observed, the county auditor’s assessment of the soil on Johnson’s farmland lies beyond the scope
of review in this case. Previously, Johnson raised arguments relating to soil drainage in connection
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{¶ 18} We affirm the BTA’s conclusion that Ohio Adm.Code 5703-25-
34(E) does not apply in the context of Johnson’s claim against the tax
commissioner.
D. The BTA correctly determined that the tax commissioner did not abuse
his discretion
{¶ 19} In his second, third, and fourth claims of error, Johnson renews his
argument, which was rejected by the BTA, that the tax commissioner abused his
discretion by not adopting separate per-acre values for undrained versions of
Crosby, Kokomo, and Patton soils. The BTA applied the abuse-of-discretion
standard based on our holding in Adams that the rules vest discretionary authority
in the tax commissioner in adopting CAUV tables and that such actions are not
merely ministerial. BTA No. 2016-814, 2020 WL 1274335, at *3-4, citing Adams,
152 Ohio St.3d 207, 2017-Ohio-8853, 94 N.E.3d 539, at ¶ 28. Indeed, in analogous
circumstances we have acknowledged the tax commissioner’s “high degree of
official judgment or discretion” in determining the manner in which he discharges
his assigned duties. Ashland Cty. Commrs. v. Ohio Dept. of Taxation, 63 Ohio
St.3d 648, 656, 590 N.E.2d 730 (1992); see also State ex rel. Delaware Joint
Vocational School Dist. Bd. of Edn. v. Testa, 149 Ohio St.3d 634, 2017-Ohio-796,
76 N.E.3d 1190, ¶ 13. And when the BTA reviews a determination of the tax
commissioner that involves the commissioner’s exercise of a discretionary power
conferred by statute, the BTA must apply the abuse-of-discretion standard. See
J.M. Smucker, L.L.C. v. Levin, 113 Ohio St.3d 337, 2007-Ohio-2073, 865 N.E.2d
866, ¶ 16.
{¶ 20} Two well-settled principles apply to our review in this context. First,
“it is not the role of this court to substitute its judgment for that” of the
commissioner, absent a finding of “unreasonableness, arbitrariness, or
with the tax-year-2010 assessment of his farmland. See Johnson v. Clark Cty. Bd. of Revision, 2d
Dist. Clark No. 2013 CA 32, 2014-Ohio-329.
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unconscionability.” Valentine v. Conrad, 110 Ohio St.3d 42, 2006-Ohio-3561, 850
N.E.2d 683, ¶ 9; see also Renacci v. Testa, 148 Ohio St.3d 470, 2016-Ohio-3394,
71 N.E.3d 962, ¶ 32 (“Abuse of discretion connotes an unreasonable, arbitrary, or
unconscionable attitude”). Second, the tax commissioner’s determinations when
adopting a unit-value table are “presumed, in the absence of proof to the contrary,
to be valid and to have been done in good faith and in the exercise of sound
judgment.” Wheeling Steel Corp. v. Evatt, 143 Ohio St. 71, 54 N.E.2d 132 (1944),
paragraph seven of the syllabus.
{¶ 21} At the hearing before the BTA, the tax commissioner’s assistant
administrator in charge of the CAUV program, Gloria Gardner, testified that the
2016 unit-value table generally follows the USDA’s taxonomy of soils and that the
taxonomy does not include drained and undrained Crosby, Kokomo, and Patton
soils as separate soil types.
{¶ 22} Johnson contends that the tax commissioner abused his discretion by
selectively departing from the USDA’s taxonomy of soils. He bases that assertion
on his cross-examination of Gardner, in which she conceded that Bulletin 685,
which provides yield data for particular soils used to develop the unit-value tables,
does not have separate listings for drained and undrained Adrian, Carlisle, and
Linwood soils—and yet the 2016 unit-value table does distinguish between drained
and undrained versions of those soils.
{¶ 23} We reject Johnson’s argument for two reasons. First, the tax
commissioner’s admitted departure from the bulletin does not prove that the
commissioner departed from the USDA’s soil taxonomy. That is so because
Gardner’s testimony indicates that the soil types in the bulletin have been updated
and that updating might account for any differential treatment of soil types—
including drained and undrained variants—in the current unit-value table. Second,
even if the CAUV journal entry did depart from the USDA’s soil taxonomy, we
must presume that the commissioner’s decision to do so reflects his exercise of
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sound judgment following his consultation with the agricultural advisory
committee.
{¶ 24} Johnson further argues that the tax commissioner “excluded data for
land lacking artificial drainage” with respect to Crosby, Kokomo, and Patton soil
types. Johnson bases this argument on the drainage characterizations for those soil
types set forth in the unit-value table and the explanation of drainage set forth in
Bulletin 685. In the unit-value table, Crosby soil in its natural state is rated
“somewhat poorly drained,” Kokomo soil in its natural state is rated “very poorly
drained,” and Patton soil in its natural state is rated “poorly drained.” The bulletin
explains that with respect to soil types with “poorly drained” or “very poorly
drained” ratings, “most crops cannot be grown” without artificial drainage.
Additionally, the bulletin states that regarding “somewhat poorly drained” soils,
“[w]etness markedly restricts the growth of crops unless artificial drainage is
provided.”
{¶ 25} Johnson’s point may be illustrated by comparing the table’s
treatment of two soil types: Adrian and Kokomo. In the 2016 unit-value table,
Adrian soil and Kokomo soil are both rated “very poorly drained,” but only Adrian
soil has separate unit-value entries based on drainage: $1,160 per acre for drained,
and the minimum agricultural value of $350 per acre for undrained. By contrast,
Kokomo soil has values of $3,970 and $3,690 per acre and the table does not
distinguish between drained and undrained variants of the soil. Johnson maintains
that the commissioner should recognize a value for undrained Kokomo soil—and
he makes the same argument regarding two other soil types on his farmland—
Crosby soil and Patton soil.
{¶ 26} Although those soil types in their natural states are rated as being
somewhat poorly drained, poorly drained, or very poorly drained, and although
relatively high per-acre values are assigned to those soil types through the 2016
CAUV journal entry, Gardner testified that the data regarding crop yields from the
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soil types may have included yields from both drained and undrained soil types.
The BTA found that this testimony was unrebutted, BTA No. 2016-814, 2020 WL
1274335, at *4, and we affirm the BTA’s determination that the inferences Johnson
draws from the differing drainage ratings, though perhaps plausible, do not rebut
Gardner’s testimony.3
{¶ 27} Furthermore, we question whether proof that the tax commissioner
did not consider data regarding the soils from farmland lacking artificial drainage
would establish an abuse of discretion. At the hearing before the BTA, Johnson
admitted that the installation of artificial drainage on farmland is the norm—
according to him, “probably 95 percent of the farms” in his county that have the
Patton soil type have artificial drainage. Because Ohio Adm.Code 5703-25-33(A)
calls for the commissioner to base the CAUV journal entry on “typical net income
* * * assuming typical management, cropping and land use patterns and yields for
a given type of soil” (emphasis added), the commissioner is justified in according
little weight to atypical practices when preparing the journal entry.
{¶ 28} Finally, Johnson argues more broadly that by listing some soil types
with drained and undrained variants, while listing other soil types without such
variants, the tax commissioner abused his discretion. Johnson contends that the
difference between artificially drained and undrained soil cannot be viewed as a
question of differing management practices, and separate entries in the unit-value
table are required for them because installing drainage tile involves additional
capital investment.
3. At the hearing before the BTA, Johnson stated that he had subpoenaed a USDA soil specialist,
but the specialist did not attend the hearing. According to Johnson, the specialist would have
testified that “all of the somewhat poorly drained, poorly drained, and very poorly drained [soils]
contained in the OSU bulletin report are for drained soils.” Johnson has not set forth as error any
alleged nonenforcement of his subpoena, and we do not consider the proffered evidence here. See
E. Liverpool v. Columbiana Cty. Budget Comm., 116 Ohio St.3d 1201, 2007-Ohio-5505, 876 N.E.2d
575, ¶ 9 (argument “never pressed” in the appellant’s briefs deemed abandoned).
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{¶ 29} We reject this argument. To repeat: the differential treatment of soil
types reflects the exercise of judgment by the commissioner, which we presume to
be sound. The possibility that the tax commissioner may have considered the
investment required for artificial drainage for some soil types, but not for others,
does not by itself prove that the commissioner abused his discretion.
{¶ 30} The record does not disclose the rationale for every consideration
underlying the unit-value table, but it was not the commissioner’s burden to
demonstrate the reasonableness of the CAUV journal entry—it was Johnson’s
burden to show an arbitrary or unconscionable attitude on the part of the
commissioner. He has not done so.
III. CONCLUSION
{¶ 31} For the foregoing reasons, we affirm the decision of the BTA.
Decision affirmed.
O’CONNOR, C.J., and KENNEDY, FISCHER, DEWINE, DONNELLY, STEWART,
and BRUNNER, JJ., concur.
_________________
William S. Johnson, pro se.
Dave Yost, Attorney General, and Raina Nahra Boulos and Kimberly
Allison, Assistant Attorneys General, for appellee.
_________________
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