Viola Assocs., L.L.C. v. Lorain Cty. Bd. of Revision

[Cite as Viola Assocs., L.L.C. v. Lorain Cty. Bd. of Revision, 2021-Ohio-991.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF LORAIN )
VIOLA ASSOCIATES, LLC, et al. C.A. Nos. 18CA011386
18CA011387
Appellees
v.
APPEAL FROM JUDGMENT
LORAIN COUNTY BOARD OF ENTERED IN THE
REVISION, et al. OHIO BOARD OF TAX APPEALS
COUNTY OF LORAIN, OHIO
Appellants CASE Nos. 2016-1273, 2016-1274,
2016-1275
DECISION AND JOURNAL ENTRY
Dated: March 29, 2021
TEODOSIO, Presiding Judge.
{¶1} The Firelands Local School District Board of Education (“Firelands BOE”), and
the Lorain County Auditor and the Lorain County Board of Revision (collectively, “Lorain
County”) appeal the decision of the Ohio Board of Tax Appeals. We affirm.
I.
{¶2} Viola Associates, LLC, and Green Circle Growers Inc. (collectively, “Green
Circle”) are the owners of property located in Camden Township, Ohio. The subject property
consists of approximately 186 acres of land and includes a single-family home and facilities
associated with Green Circle’s commercial horticulture business, including large greenhouses. In
2016, Green Circle appealed a decision by the Lorain County Board of Revision assessing the
value of the subject real property to the Ohio Board of Tax Appeals (“BTA”). The primary issue
on appeal was whether the greenhouses located on the subject property should be treated as real
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property and included in the assessment of the real property value, or be treated as personal
property that would be excluded from the subject real property’s value for purposes of ad valorem
taxation.
{¶3} At a hearing before the BTA, Lorain County presented the testimony and written
report of its appraiser, Ronald N. Geer, supporting the theory that the subject greenhouses should
be treated as real property and thereby included in the valuation of the real property. Green Circle
provided the testimony and appraisal of Samuel D. Koon, who concluded that the greenhouses
should be considered personal property and therefore excluded from the valuation of the real
property.
{¶4} The BTA subsequently issued its decision concluding that the greenhouses in
question should be treated as personal property and excluded from the valuation of the subject real
property. In so doing, the BTA concluded that the cost analysis offered by Mr. Koon offered the
most reliable indication of value for the agricultural components and that his sales comparison
approach formed a reliable basis for determining the value of the residential portion of the property.
It is from this decision that the Firelands BOE and Lorain County now appeal, filing separately
their briefs and assignments of error, which are addressed separately below.
II.
A. The Firelands BOE Appeal
We first address the ten assignments of error filed and briefed by the Firelands BOE.
ASSIGNMENT OF ERROR ONE
THE BTA ACTED UNREASONABLY AND UNLAWFULLY, AND ABUSED
ITS DISCRETION IN CONSIDERING THE GREENHOUSES ON THE
SUBJECT PROPERTY EXCLUDED FROM THE SUBJECT’S VALUE FOR
PURPOSES OF AD VALOREM TAXATION AS OPPOSED TO REAL
PROPERTY INCLUDED IN THE ASSESSMENT OF THE SUBJECT’S TOTAL
TRUE VALUE.
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{¶5} In its first assignment of error, the Firelands BOE contends that the BTA erred by
finding the greenhouses at issue to be personal property rather than real property. Under this
assignment of error, the Firelands BOE sets forth the standard of review and generally states their
position that the BTA erred in finding the subject greenhouses to be personal property rather than
real property. It does not, however, make any specific legal argument that would be reviewable
by this Court. Rather, it serves as an introduction to assignments of error that follow.
{¶6} Because it does not constitute an assignment of error, the Firelands BOE’s first
assignment of error is overruled.
ASSIGNMENT OF ERROR TWO
THE BTA ACTED UNREASONABLY AND UNLAWFULLY, AND ABUSED
ITS DISCRETION WHEN IT DETERMINED THAT THE GREENHOUSES ON
THE SUBJECT PROPERTY DESIGNED TO SHELTER PLANTS,
SOPHISTICATED MACHINERY AND EQUIPMENT, AND TO PROTECT
WORKERS ARE NOT BUILDINGS, STRUCTURES OR IMPROVEMENTS AS
DEFINED BY [R.C.] 5701.02.
{¶7} In its second assignment of error, the Firelands BOE argues that the BTA should
have determined that the greenhouses at issue constituted “buildings,” “structures,” or
“improvements” under R.C. 5701.02, and therefore should have been treated as real property. We
disagree.
{¶8} We review BTA decisions only to determine whether they are “reasonable and
lawful.” R.C. 5717.04. This Court will defer to the BTA’s factual findings, including
determinations of a property’s value, as long as they are supported by “reliable and probative”
evidence in the record. Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd. of Revision,
141 Ohio St.3d 243, 2014-Ohio-4723, ¶ 21. “The BTA’s legal determinations, however, are
subject to de novo review.” Id.4
{¶9} R.C. 5701.02 provides the following definitions relating to real property as used in
Title LVII of the Ohio Revised Code:
(A) “Real property,” “realty,” and “land” include land itself, whether laid out in
town lots or otherwise, all growing crops, including deciduous and evergreen trees,
plants, and shrubs, with all things contained therein, and, unless otherwise specified
in this section or section 5701.03 of the Revised Code, all buildings, structures,
improvements, and fixtures of whatever kind on the land, and all rights and
privileges belonging or appertaining thereto. * * *.
(B)(1) “Building” means a permanent fabrication or construction, attached or
affixed to land, consisting of foundations, walls, columns, girders, beams, floors,
and a roof, or some combination of these elemental parts, that is intended as a
habitation or shelter for people or animals or a shelter for tangible personal
property, and that has structural integrity independent of the tangible personal
property, if any, it is designed to shelter. * * *.
***
(C) “Fixture” means an item of tangible personal property that has become
permanently attached or affixed to the land or to a building, structure, or
improvement, and that primarily benefits the realty and not the business, if any,
conducted by the occupant on the premises.
(D) “Improvement” means, with respect to a building or structure, a permanent
addition, enlargement, or alteration that, had it been constructed at the same time
as the building or structure, would have been considered a part of the building or
structure.
(E) “Structure” means a permanent fabrication or construction, other than a
building, that is attached or affixed to land, and that increases or enhances
utilization or enjoyment of the land. “Structure” includes, but is not limited to,
bridges, trestles, dams, storage silos for agricultural products, fences, and walls.
{¶10} Likewise, R.C. 5701.03 sets forth definitions relating to personal property:
(A) “Personal property” includes every tangible thing that is the subject of
ownership, whether animate or inanimate, including a business fixture, and that
does not constitute real property as defined in section 5701.02 of the Revised Code.
“Personal property” also includes every share, portion, right, or interest, either legal
or equitable, in and to every ship, vessel, or boat, used or designed to be used in
business either exclusively or partially in navigating any of the waters within or
bordering on this state, whether such ship, vessel, or boat is within the jurisdiction
of this state or elsewhere. “Personal property” does not include money as defined
in section 5701.04 of the Revised Code, motor vehicles registered by the owner
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thereof, electricity, or, for purposes of any tax levied on personal property, patterns,
jigs, dies, or drawings that are held for use and not for sale in the ordinary course
of business, except to the extent that the value of the electricity, patterns, jigs, dies,
or drawings is included in the valuation of inventory produced for sale.
(B) “Business fixture” means an item of tangible personal property that has become
permanently attached or affixed to the land or to a building, structure, or
improvement, and that primarily benefits the business conducted by the occupant
on the premises and not the realty. “Business fixture” includes, but is not limited
to, machinery, equipment, signs, storage bins and tanks, whether above or below
ground, and broadcasting, transportation, transmission, and distribution systems,
whether above or below ground. “Business fixture” also means those portions of
buildings, structures, and improvements that are specially designed, constructed,
and used for the business conducted in the building, structure, or improvement,
including, but not limited to, foundations and supports for machinery and
equipment. “Business fixture” does not include fixtures that are common to
buildings, including, but not limited to, heating, ventilation, and air conditioning
systems primarily used to control the environment for people or animals, tanks,
towers, and lines for potable water or water for fire control, electrical and
communication lines, and other fixtures that primarily benefit the realty and not the
business conducted by the occupant on the premises.
{¶11} Under this assignment of error, the Firelands BOE argues that the BTA erred when
it determined that the greenhouses at issue were not “buildings,” “structures,” or “improvements”
as defined by R.C. 5701.02. It contends that the greenhouses “have all the statutory characteristics
of a building or structure and should be treated as real property.” The problem with this line of
argument is that even if we were to conclude that it has merit, and that the greenhouses at issue
met the statutory definitions of “buildings” or “structures” under R.C. 5701.02, the outcome of the
BTA’s decision, and our analysis on appeal, would not change. Due to the binding precedent
discussed below, the effect of any such error would be harmless.
{¶12} In Funtime, Inc. v. Wilkins, 105 Ohio St.3d 74, 2004-Ohio-6890, the Supreme Court
of Ohio engaged in an analysis of property for tax purposes under R.C. 5701.02 and R.C. 5701.03.
Funtime, Inc. operated an amusement park, and its appeal involved the tax status of certain rides
located within the amusement park, as well as the station houses for the rides. Id. at ¶ 2. One of
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the rides, given the ominous moniker of “Mind Eraser,” was essentially a roller coaster with a
station house from which patrons could enter and exit the ride. Id. at ¶ 4-5. The tax commissioner
issued an assessment classifying the rides as personal property. Id. at ¶ 7. The BTA affirmed the
assessment, finding that the rides were business fixtures and therefore personal property. Id. at ¶
8.
{¶13} On appeal, Funtime, Inc. argued that the Mind Eraser station house met the
definition of a “building” under R.C. 5701.02, and therefore should be classified as real property.
Id. at ¶ 30-31. This is in essence the same argument the Firelands BOE raises under its second
assignment of error. In its analysis of the argument, the Supreme Court of Ohio stated:
Assuming for the purposes of discussion that the Mind Eraser station house can be
considered separate from the ride itself and can be separately classified as a
building, we must still consider whether it is “otherwise specified.” The definition
of “business fixture” in R.C. 5701.03(B) includes “an item of tangible personal
property that has become permanently attached or affixed to the land * * * and that
primarily benefits the business conducted by the occupant on the premises and not
the realty.” The primary use of the Mind Eraser station house is to provide a way
for patrons to enter and exit Mind Eraser. No use independent of the amusement-
park business was shown for the Mind Eraser station house. Therefore, even if we
assume that the Mind Eraser station house is a building as defined in R.C.
5701.02(B), it is “otherwise specified” in R.C. 5701.03(B) and must be classified
as a business fixture.
Id. at ¶ 46. The Court set forth the process of analysis of R.C. 5701.02 and R.C. 5701.03 as
follows:
Reading the two statutes in pari materia and harmonizing them to give effect to the
language of both statutes, we find that the correct order of application is as follows:
first, determine whether the item meets the requirements of one of the definitions
of real property set forth in R.C. 5701.02. If the item does not, then it is personal
property. If the item fits a definition of real property in R.C. 5701.02, it is real
property unless it is “otherwise specified” in R.C. 5701.03. If an item is “otherwise
specified” under R.C. 5701.03, it is personal property.
Id. at ¶ 33.
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{¶14} In accordance with Funtime, even if we were to agree with the Firelands BOE that
the greenhouses met the definition of “buildings,” “structures,” or “improvements” as defined in
R.C. 5701.02(B), it would not preclude their classification as business fixtures under R.C.
5701.03(B). We note that it is their classification as “business fixtures” that is the subject of our
analysis under the fourth assignment of error.
{¶15} The Firelands BOE’s second assignment of error is overruled.
ASSIGNMENT OF ERROR THREE
THE BTA ACTED UNREASONABLY AND UNLAWFULLY, AND ABUSED
ITS DISCRETION WHEN IT DETERMINED THAT THE GREENHOUSES ON
THE SUBJECT PROPERTY ARE “FIXTURES” AS DEFINED BY [R.C.]
5701.02.
{¶16} In its third assignment of error, the Firelands BOE argues the BTA erred in
determining that the greenhouses were fixtures. We disagree.
{¶17} In its decision, prior to determining that the subject greenhouses were “business
fixtures” and therefore constituted personal property, the BTA determined that the greenhouses
met the definition “fixtures” under R.C. 5701.02. As we discussed above, and in accordance with
the precedent established by Funtime, a determination that property meets the statutory definition
of a “building,” “structure,” “improvement,” or a “fixture” is not determinative of its status as real
property versus personal property because it may be “otherwise specified” in R.C. 5701.03(B). Id.
at ¶ 46. To the extent that the subject greenhouses were classified as “fixtures,” any potential error
in that determination was harmless, as it was their classification as “business fixtures” that
removed them from the category of taxable real property. Indeed, had they only been classified as
“fixtures,” but not as “business fixtures,” the greenhouses would have constituted taxable real
property.
{¶18} The Firelands BOE’s third assignment of error is overruled.
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ASSIGNMENT OF ERROR FOUR
THE BTA ACTED UNREASONABLY AND UNLAWFULLY, AND ABUSED
ITS DISCRETION WHEN IT DETERMINED THAT THE GREENHOUSES ON
THE SUBJECT PROPERTY ARE “BUSINESS FIXTURES” AS DEFINED BY
[R.C.] 5701.03.
{¶19} In its fourth assignment of error, the Firelands BOE argues the BTA erred by
determining that the subject greenhouses were “business fixtures” under R.C. 5701.03. We
disagree.
{¶20} As stated above, R.C. 5701.03(B) defines “business fixture” as “an item of tangible
personal property that has become permanently attached or affixed to the land or to a building,
structure, or improvement, and that primarily benefits the business conducted by the occupant on
the premises and not the realty.” In Funtime, the Supreme Court of Ohio set forth its understanding
of the analysis required by the statutory framework set forth in R.C. 5701.02 and R.C. 5701.03,
stating: “Although we previously abandoned any consideration of the appropriation-to-use test *
* * for classifying property, the General Assembly has reinstated that test for determining whether
a structure is real or personal property.” Funtime at ¶ 36. “The decisive test of appropriation is
whether the chattel under consideration in any case is devoted primarily to the business conducted
on the premises, or whether it is devoted primarily to the use of the land upon which the business
is conducted.” Id. at ¶ 38, quoting Zangerle v. Std. Oil Co. of Ohio, 144 Ohio St. 506 (1945),
paragraph four of the syllabus.
{¶21} In concluding that the amusement park rides were business fixtures, the Supreme
Court of Ohio stated:
The evidence presented to the BTA showed that the rides in question were installed
to attract customers for the amusement-park business. The fact that the customers
enjoy the rides has nothing to do with whether the rides benefit the land. There was
no evidence that the rides would be of any benefit to a buyer of the land who
engaged in a different business. Grizzly Run and Mind Eraser do not meet the
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definition of “structure” set forth in R.C. 5701.02(E) but do meet the definition of
“business fixture” set forth in R.C. 5701.03(B) because they primarily benefit the
business conducted by the occupant on the premises and not the realty.
Id. at ¶ 41. Regardless of whether the subject greenhouses are classified as “fixtures” under R.C.
5701.02 as the BTA concluded, or whether they should be classified as “buildings” or “structures”
under R.C. 5701.02 as the Firelands BOE argues, the determinative issue is whether they are
“otherwise specified” in R.C. 5701.03 and are classifiable as “business fixtures.”
{¶22} In its decision, the BTA stated:
There is no dispute that the subject greenhouses are used for Green Circle Growers’
commercial horticulture business. The greenhouses are outfitted with computer
systems, shade cloths, irrigation systems, retractable roofs, and a number of other
components that are specific to the sophisticated operation taking place at the
property. Neither of the appellee parties has pointed to an alternative use for any
of these items that would benefit the land or any other occupant of the property that
was not engaged in a commercial horticulture business. Thus, at the very least,
these items should be excluded from the value of the real property, though they
were included in Geer’s conclusion of value.
The remaining physical components that join to form the walls and roof of the
greenhouse are also business fixtures and should be excluded from the value of the
real property. The county appellees have suggested that a greenhouse may have an
alternative use beyond horticulture, such as shelter for a box of tools or a boat.
There has been no evidence to show that these hypothetical alternative uses occur
in practice. Green Circle Growers, on the other hand, presented testimony from
multiple individuals to demonstrate that the greenhouses in question were designed
especially for growing plants, and that in their experience, even a second-hand
greenhouse would be used only for horticulture. Accordingly, we find that the
greenhouses primarily benefit Green Circle Growers’ horticulture business and
would provide little value, if any, to another occupant of the land who was not
engaged in the same or very similar business. We conclude, therefore, that the
greenhouses are business fixtures and should be excluded from the value of the real
property.
{¶23} In support of its argument, the Firelands BOE relies upon an administrative decision
from the Board of Tax Appeals: Polaris Amphitheater Concerts, Inc. v. Delaware Cty. Bd. of
Revision, BTA No. 2004-V-1294 (Jan. 26, 2007), rev’d on other grounds, 118 Ohio St.3d 330,
2008-Ohio-2454, and likewise points to other cases following the analysis set forth in Polaris. See
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SSN II, Ltd. v. Warren Cty. Bd. of Revision, 12th Dist. Warren No. CA2012-04-037, 2013-Ohio-
1112; Palace Hotels, LLC v. Testa, BTA No. 2016-1300 (Mar. 5, 2018). In Polaris, the BTA
determined that the subject amphitheater stage and facilities constituted buildings, improvements,
or structures as defined by R.C. 5701.02 and were therefore real property. Polaris at *6. Once
this determination was made, the Polaris decision concluded it was not necessary for the BTA to
further engage in an analysis of whether the subject property was “otherwise specified” as a
“business fixture” under R.C. 5701.03. Id. Thus, under the Polaris approach, if the subject
greenhouses meet any of the definitions of real property under R.C. 5701.02, they cannot constitute
“fixtures” or “business fixtures” and it is therefore irrelevant whether they primarily benefit the
business conducted by the occupant. Id.{¶24} The Firelands BOE likewise argues that once such a determination was made, it
was not necessary for the BTA to further engage in an analysis of whether the subject property
was “otherwise specified” R.C. 5701.03. This conclusion, however, is inconsistent with the
approach elaborated by the Supreme Court of Ohio in Funtime: “If the item fits a definition of real
property in R.C. 5701.02, it is real property unless it is ‘otherwise specified’ in R.C. 5701.03. If
an item is ‘otherwise specified’ under R.C. 5701.03, it is personal property.” Funtime at ¶ 33. We
note that in its Funtime decision, the Supreme Court of Ohio directly addressed and rejected the
argument set forth in Polaris and now adopted by the Firelands BOE:
Under Funtime's interpretation, if an item meets the definition of “building” set
forth in what is now R.C. 5701.02(B)(1), the analysis goes no further; the item
would be classified as real property. As a result, the words “unless otherwise
specified” in R.C. 5701.02 would be totally ignored if the property meets one of
the definitions in R.C. 5701.02. The consequence of Funtime's interpretation would
be to return to the analysis the General Assembly was apparently trying to change
by enacting Sub.S.B. No. 272. Funtime's interpretation requires classifying an
entity defined as real property under R.C. 5701.02 as real property even if it is
“otherwise specified” as being personal property in R.C. 5701.03.
11
***
Following Funtime's proposed procedure for applying R.C. 5701.02 and 5701.03
would not produce the result intended by the General Assembly when it amended
R.C. 5701.02 and 5701.03.
Id. at ¶ 31-33. Under Funtime, it is thus apparent that a determination that the subject property is
real property under R.C. 5701.02 is not conclusive; the property may yet be found to be “otherwise
specified” under R.C. 5701.03.
{¶25} We further note that we share the concern expressed by the Board of Tax Appeals
in Polaris that is a potential consequence of the Funtime decision:
If we were to accept [this] argument, the definition of business fixture would
necessarily eclipse all the definitions of real property found in R.C. 5701.02 and
require that all buildings, structures and improvements (e.g., car washes, office
buildings, retail stores, banks, gas stations, indoor and outdoor arenas) be classified
as personal property solely because they are all used for a commercial purpose. We
fail to read the statutory enactments and the court’s holdings to produce this result.
Polaris at *6. We fail to see, however, any adequate path that would allow us to reconcile the
Polaris decision with the analysis set forth in Funtime. Even if this Court were to agree with the
analysis offered by Polaris, to the extent that it is in conflict with Funtime, we are bound to follow
the precedent of the Supreme Court of Ohio.
{¶26} The Firelands BOE’s fourth assignment of error is therefore overruled.
ASSIGNMENT OF ERROR FIVE
THE BTA ACTED UNREASONABLY AND UNLAWFULLY, AND ABUSED
ITS DISCRETION BY FAILING TO RECOGNIZE THE GREENHOUSES ON
THE SUBJECT PROPERTY TO BE STRUCTURES ERECTED ON THE LAND
AND ATTACHED TO THE REALTY AS WAS PREVIOUSLY DETERMINED
IN GREEN CIRCLE GROWERS, INC. V. LORAIN CTY. BD. OF REVISION *
* *.
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{¶27} In its fifth assignment of error, the Firelands BOE argues the BTA erred by failing
to recognize greenhouses as structures defined as real property as determined in Green Circle
Growers, Inc. v. Lorain Cty. Bd. of Revision, 35 Ohio St.3d 38 (1988). We disagree.
{¶28} Although Green Circle held “that a greenhouse attached to metal pipes which are
imbedded in concrete is a structure and therefore defined as real property,” the decision predates
the amendments made to R.C. 5701.02 and R.C. 5701.03. Id. at 40. As noted by the Supreme
Court of Ohio in Metamora Elevator Co. v. Fulton Cty. Bd. of Revision, the General Assembly
amended the definitions of “real property” and “personal property” in 1992. 143 Ohio St.3d 359,
2015-Ohio-2807, ¶ 21. These amendments included definitions for “building,” “fixture,”
“improvement,” “structure,” and “business fixture” that were specifically added by Sub.S.B. No.
272. Because these definitions are essential to the matter before us for review and were added
subsequent to the Green Circle decision, the analysis by the Green Circle Court offers us little in
the way of guidance. As addressed in Metamora Elevator, the distinction between real property
and personal property had become elusive within the line of cases examining that distinction, and
of which Green Circle was a part. Id. at ¶ 20. In 1992 the General Assembly amended the
definitions of “real property” and “personal property” in a manner that resolved the issue and
harmonized the definition of “real property” in R.C. 5701.02 with the definition of “personal
property” in R.C. 5701.03. Id. at ¶ 21. Because these definitions create a new framework for the
analysis of the distinction between real property and personal property, they have superseded the
analysis performed in Green Circle.
{¶29} The Firelands BOE’s fifth assignment of error is overruled.
ASSIGNMENT OF ERROR SIX
THE BTA ABUSED ITS DISCRETION AND ACTED UNREASONABLY,
UNLAWFULLY AND ARBITRARILY IN FAILING TO CONSIDER A
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“SPECIAL PURPOSE EXCEPTION” TO THE PROHIBITION AGAINST
VALUATION BASED ONLY ON CURRENT USE.
{¶30} In its sixth assignment of error, the Firelands BOE argues the BTA erred by not
analyzing the greenhouses as “special purpose” property. We disagree.
{¶31} Under this assignment of error, the Firelands BOE provides caselaw describing and
referencing the “special purpose” doctrine of property valuation, followed by the generalized
statement that the greenhouses fit the definition of “special purpose” property and should have
been analyzed as such.
{¶32} As we determined above, the BTA did not err in finding the subject greenhouses to
constitute personal property. Because the Firelands BOE’s proposed application of the “special
purpose” doctrine applies to real property valuation, and not personal property, we find this
argument inapplicable. Therefore, the BTA did not err, as it was not required to examine what it
had already determined to be personal property under a doctrine reserved for real property
valuation.
{¶33} The Firelands BOE’s sixth assignment of error is overruled.
ASSIGNMENT OF ERROR SEVEN
THE BTA ACTED UNREASONABLY AND UNLAWFULLY, AND ABUSED
ITS DISCRETION, BY FINDING THE APPRAISAL SUBMITTED BY
APPELLEE VIOLA ASSOCIATES, INC. AND GREEN CIRCLE GROWERS,
INC., TO BE MORE COMPETENT AND PROBATIVE EVIDENCE OF THE
SUBJECT PROPERTY’S FAIR MARKET VALUE THAN THE APPRAISAL
ANALYSIS PROFFERED BY APPELLANT LORAIN COUNTY BOARD OF
REVISION.
{¶34} In its seventh assignment of error, the Firelands BOE argues the BTA erred by
finding the appraisal offered by Green Circle Growers to be more competent and probative
evidence of fair market value that the appraisal offered by the Lorain County BOR. We disagree.
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{¶35} With respect to the valuation of real property, it is the “BTA’s task * * * to
determine the fair market value of the property[,]” and that issue is “a question of fact, the
determination of which is primarily within the province of the taxing authorities.” DAK, PLL v.
Franklin Cty. Bd. of Revision, 105 Ohio St.3d 84, 2005-Ohio-573, ¶ 14. In reviewing the BTA’s
disposition of the factual issues in a property valuation case, “[t]his court does not sit either as a
super BTA or as a trier of fact de novo.” Id. at ¶ 16.
{¶36} Where the parties present competing appraisals, the BTA is vested with wide
discretion in determining the credibility of the witnesses and weighing the evidence before it.
Westerville City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 146 Ohio St.3d 412, 2016-
Ohio-1506, ¶ 28. The BTA’s decision to find one appraisal more probative than another appraisal
and to adopt a land value in one appraisal over the land value in another appraisal is reviewed for
an abuse of discretion. Id. at ¶ 27. An abuse of discretion connotes an unreasonable, arbitrary, or
unconscionable attitude. Olentangy Local Schools Bd. of Edn. v. Delaware Cty. Bd. of Revision,
153 Ohio St.3d 241, 2017-Ohio-8385, ¶ 7.
{¶37} Ronald Geer provided the appraisal of the subject property on behalf of Lorain
County, while Samuel Koon provided an appraisal on behalf of Green Circle Growers. In choosing
Mr. Koon’s appraisal over Mr. Geer’s, the BTA stated:
In the present appeal, the difference between the approaches of the appraisers relate
to their underlying perspectives on the characterization of the greenhouses.
Although both performed the cost and sales-comparison approaches to value, Koon
did not give any contributory value to the greenhouses situated on the subject
property. Geer, on the other hand, considered not only the value of the structural
components of the greenhouse (i.e., walls, roof, etc.), but also “agricultural extras,”
such as shades, irrigation, fertilization, and computer systems. Because we find
that the greenhouses in question qualify as personal property and should be
excluded from the value of real property, we find that Koon’s appraisal provides
the most reliable evidence of the proper value of the subject property as of the tax
lien date.
15
The BTA further concluded:
Because Geer included the greenhouses as real property in his analysis, we
disregard his appraisal in its entirety. Even if we were to remove the value assigned
to the greenhouses in his cost approach, we find it would produce an unreliable
result as it underestimates the functional obsolescence created by the unique
configuration of the real property. Additionally, due to this unique configuration
and considerable amount of concrete, we find that a cost analysis is most reliable
for the agricultural portion of the property, recognizing that Koon’s sales-
comparison approach played a role in determining the appropriate effect of
functional and external obsolescence.
{¶38} In support of its argument that the BTA erred in choosing Mr. Koon’s appraisal
over that of Mr. Geer, Firelands BOE states that Mr. Geer had “unparalleled experience appraising
greenhouses[,]” had “superior experience and knowledge of the greenhouse market[,]” and had
“personal knowledge of at least three greenhouses.” Firelands BOE further states that “[d]espite
his 45 years of experience appraising greenhouses and his reputation as one of the nation’s leading
experts in this area, Mr. Geer’s opinion was summarily dismissed by the BTA with no analysis.”
{¶39} We find no abuse of discretion in the BTA’s decision to disregard Mr. Geer’s
appraisal due to its reliance upon treating the subject greenhouses as real property. Because the
BTA had made the determination to categorize the greenhouses as personal property, it was not
unreasonable for it to conclude that Mr. Geer’s appraisal was less reliable than Mr. Koon’s
appraisal because Mr. Geer’s valuation included the greenhouses. Likewise, we do not find it
unreasonable for the BTA to have concluded that even if it were to have removed the value
assigned to the greenhouses in Mr. Geer’s valuation, it would have produced an unreliable result
because it underestimated the functional obsolescence created by the unique configuration of the
real property. The valuation of property is committed to the BTA’s authority, and the BTA did
not abuse its discretion in choosing one appraisal over another. See Strongsville Bd. of Edn. v.
Cuyahoga Cty. Bd. of Revision, 112 Ohio St.3d 309, 2007-Ohio-6, ¶ 27.
16
{¶40} The Firelands BOE’s seventh assignment of error is overruled.
ASSIGNMENT OF ERROR EIGHT
THE BTA ACTED UNREASONABLY AND UNLAWFULLY, AND ABUSED
ITS DISCRETION, BY ACCEPTING THE HIGHEST AND BEST USE
ANALYSIS CONTAINED IN THE APPRAISAL SUBMITTED BY APPELLEE
VIOLA ASSOCIATES, INC. AND GREEN CIRCLE GROWERS.
{¶41} In its eighth assignment of error, the Firelands BOE argues that the BTA erred in
accepting the highest and best use analysis of Mr. Koon’s appraisal. We disagree.
{¶42} We again note that in reviewing the BTA’s disposition of the factual issues in a
property valuation case, “[t]his court does not sit either as a super BTA or as a trier of fact de
novo.” DAK, PLL at ¶ 16. Where the parties present competing appraisals, the BTA has wide
discretion in determining the credibility of the witnesses and weighing the evidence before it.
Westerville City Schools Bd. of Edn. at ¶ 28. Its decision to find one appraisal more probative than
another is reviewed for an abuse of discretion. Id. at ¶ 27.
{¶43} The “highest and best use” of a property is “[o]ne crucial element in determining
the value of property in the overall market * * *.” Rite Aid of Ohio, Inc. v. Washington Cty. Bd. of
Revision, 146 Ohio St.3d 173, 2016-Ohio-371, ¶ 34. 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.” Id., quoting Appraisal Institute, The Appraisal of Real Estate
278 (13th Ed.2008). The appraiser’s determination of the highest and best use of a subject property
typically influences the appraiser’s subsequent choice of comparable properties in formulating an
opinion of the market-exchange value of a property. Id. at ¶ 24-27, 34-35.
{¶44} Under this assignment of error, the Firelands BOE point to the fact that Mr. Koon’s
analysis concluded an alternate highest and best use of the property different from its current usage.
17
They argue that as a consequence, the physical possibility and maximum productivity of the
subject property is “troubling.”
{¶45} We again note that in choosing Mr. Koon’s appraisal over Mr. Geer’s, the BTA
stated that because it had concluded that the subject greenhouses qualified as personal property to
be excluded from the value of the real property, it found Mr. Koon’s appraisal provided the more
reliable evidence of the proper value of the subject property. We find no abuse of discretion in
that determination. Because the greenhouses were determined to be personal property, Mr. Koon’s
appraisal specifically addressed the function of the property without their presence. Consequently,
Mr. Koon’s highest and best use analysis was necessarily different from the property’s current
usage. Although the Firelands BOE may disagree with Mr. Koon’s analysis, they have failed to
show the BTA committed error by using his appraisal. We therefore conclude that the BTA did
not abuse its discretion. See Strongsville Bd. of Edn. at ¶ 27.
{¶46} The Firelands BOE’s eighth assignment of error is overruled.
ASSIGNMENT OF ERROR NINE
THE DECISION OF THE BTA IS UNREASONABLE AND UNLAWFUL AND
IT ABUSED ITS DISCRETION BY DISREGARDING THE TAX
COMMISSIONER’S UNIFORM PROPERTY CLASSIFICATION SYSTEM
GUIDANCE ON THE CLASSIFICATION OF GREENHOUSES THAT ARE
AFFIXED TO PERMANENT FOUNDATIONS.
{¶47} In its ninth assignment of error, the Firelands BOE argues the BTA erred because
it disregarded guidance provided in the Tax Commissioner’s information releases and the Ohio
Administrative Code’s coding system for real property. We disagree.
{¶48} The Firelands BOE directs us to an information release by the Tax Commissioner
captioned: “PP 2007-01 and RP 2007-01 - Classification of Certain Business Assets as Real or
Personal Property - Issued September 2007; Revised January 2008.” The release identifies its
18
purpose as “to provide guidance regarding the proper classification of certain business assets.” It
goes on to enumerate types of property to be classified as either personal property or as real
property, and states that “[g]reenhouses attached to permanent foundations” should be classified
as real property.
{¶49} Although we agree that this information release would seemingly apply to the
greenhouses at issues, it offers little, if any, precedential value in the analysis. See Renacci v.
Testa, 148 Ohio St.3d 470, 2016-Ohio-3394, ¶ 3, ¶ 37 (stating that a tax commissioner’s
information releases have “no force of law” and do “not create legal obligations by [their] own
force”). Rather, we are bound to follow the precedent set by the Supreme Court of Ohio in its
application of the applicable statutory sections in Funtime. Furthermore, “[a]n information
release is not a final determination of the Tax Commissioner, as it may be subject to revision or
the application of new factual scenarios producing different results.” Brown v. Levin, 10th Dist.
Franklin No. 11AP-349, 2012-Ohio-5768, ¶ 38.
{¶50} The Firelands BOE’s ninth assignment of error is overruled.
ASSIGNMENT OF ERROR TEN
THE BTA ABUSED ITS DISCRETION AND ACTED UNREASONABLY,
UNLAWFULLY AND ARBITRARILY IN DETERMINING GREENHOUSES
TO BE PERSONAL PROPERTY AS ITS DECISION ALLOWS PROPERTY
OWNERS OF DISTINCT, BUT HIGHLY USEFUL BUILDINGS TO ESCAPE
TAX LIABILITY.
{¶51} In its tenth assignment of error, the Firelands BOE argues that the BTA erred in
treating the subject greenhouses as personal property because such a precedent will allow owners
of distinct but highly useful buildings to escape tax liability. We disagree.
{¶52} Although the Firelands BOE speculates that this precedent of this case will allow
property owners to escape tax liability in a manner not intended by the General Assembly, it has
19
not developed any argument nor offered any authority or evidence to support its opinion that such
speculative consequences were not contemplated or intended by the General Assembly. The
Firelands BOE has therefore failed to show any error by the BTA under this assignment of error.
{¶53} The tenth assignment of error is overruled.
B. The Lorain County Appeal
{¶54} “The rules governing appellate procedure mandate that the appellant’s brief must
contain a statement of the assignments of error.” Easterwood v. Easterwood, 9th Dist. Medina
No. 09CA0043–M, 2010–Ohio–2149, ¶ 10, citing App.R. 16(A)(3) and Loc.R. 7(B)(3). “The
appellant must then separately argue each assignment of error, including supporting authority and
citations to the record.” Id., citing App.R. 16(A)(7) and Loc.R. 7(B)(7).
{¶55} At the outset, this Court recognizes Lorain County’s failure to comply with App.R.
16(A)(7) and this Court’s Loc.R. 7(B)(7). Lorain County’s brief to this Court begins with a list of
ten assignments of error, followed by a statement of facts. In the argument section of the brief,
however, Lorain County has failed to identify and separately discuss each assignment of error as
required; rather, this section is divided into three parts captioned as “Propositions of Law.” In a
footnote, the first Proposition of Law purports to address the first three assignments of error.
Likewise, the second Proposition of Law purports to address the fourth assignment of error, while
the third Proposition of Law, though consisting of a single paragraph, purports to address the fifth
through tenth assignments of error.
{¶56} It is well-established that pursuant to App.R. 12(A), an appellate court may
disregard an assignment of error if the party raising it fails to argue the assignment separately in
the brief, as required under App.R. 16(A). See, e.g., Ohio Edison Co. v. Williams, 9th Dist. Summit
No. 23530, 2007–Ohio–5028, ¶ 10; App.R. 12(A)(2). At times, however, this Court elected to
20
consider assignments of error that were not separately argued in accordance with App.R. 16(A)(7).
We do so here with regard to Lorain County’s first four assignments of error. Concerning the first
three assignment of error discussed under the first Proposition of Law, we find that the arguments
contained therein are structured in such a way that allows for reasonable analysis. Because the
second Proposition of Law discusses only the fourth assignment of error, it is essentially argued
separately. We further conclude, however, that the failure to argue any of the fifth through tenth
assignments of error separately is fatal to those assignments. With regard to the fifth through tenth
assignments of error, because Lorain County has failed to comply with the applicable rules, it has
failed to meet its burden on appeal and we decline to further address those assignments of error.
{¶57} We have reordered the assignments of error for the purposes of our analysis.
ASSIGNMENT OF ERROR TWO
THE BOARD OF TAX APPEALS’ DECISION IS UNREASONABLE AND
UNLAWFUL BECAUSE IT HELD THAT THE GREENHOUSES, WHICH
WERE PERMANENTLY CONSTRUCTED ON AND AFFIXED TO THE LAND
FOR ENHANCED UTILIZATION, ARE NOT BUILDINGS, STRUCTURES,
OR IMPROVEMENTS AS DEFINED BY [R.C.] 5701.02.
{¶58} In its second assignment of error, Lorain County argues the BTA erred in
concluding that the subject greenhouses are not “buildings” or “structures” pursuant to R.C.
5701.02. Lorain County’s first assignment of error is analogous to the Firelands BOE’s second
assignment or error, raising essentially the same argument. We therefore reiterate our previous
determinations.
{¶59} In Funtime, the Supreme Court of Ohio set forth the process of analysis of R.C.
5701.02 and R.C. 5701.03 as follows:
Reading the two statutes in pari materia and harmonizing them to give effect to the
language of both statutes, we find that the correct order of application is as follows:
first, determine whether the item meets the requirements of one of the definitions
of real property set forth in R.C. 5701.02. If the item does not, then it is personal
21
property. If the item fits a definition of real property in R.C. 5701.02, it is real
property unless it is “otherwise specified” in R.C. 5701.03. If an item is “otherwise
specified” under R.C. 5701.03, it is personal property.
Funtime at ¶ 33. Accordingly, it concluded: “[E]ven if we assume that the Mind Eraser station
house is a building as defined in R.C. 5701.02(B), it is ‘otherwise specified’ in R.C. 5701.03(B)
and must be classified as a business fixture.” Id. at ¶ 46.
{¶60} As we noted above, in accordance with Funtime, even if we were to agree with
Lorain County that the greenhouses met the definition of “buildings,” “structures,” or
“improvements” as defined in R.C. 5701.02(B), it would not preclude their classification as
business fixtures under R.C. 5701.03(B).
{¶61} Lorain County’s second assignment of error is overruled.
ASSIGNMENT OF ERROR ONE
THE BOARD OF TAX APPELAS’ DECISION IS UNREASONABLE AND
UNLAWFUL BECAUSE IT HELD THAT THE GREENHOUSE BUILDINGS
LOCATED ON THE SUBJECT PROPERTY ARE NOT PERMANENT
FABRICATIONS OR CONSTRUCTIONS PURSUANT TO [R.C.] 5701.02.
{¶62} In its first assignment of error, Lorain County argues the BTA erred because it
determined that the subject greenhouses were not permanent fabrications or constructions pursuant
to R.C. 5701.02. We disagree.
{¶63} Under the definitions set forth in R.C. 5701.02(B)(1), a “building” means:
a permanent fabrication or construction, attached or affixed to land, consisting of
foundations, walls, columns, girders, beams, floors, and a roof, or some
combination of these elemental parts, that is intended as a habitation or shelter for
people or animals or a shelter for tangible personal property, and that has structural
integrity independent of the tangible personal property, if any, it is designed to
shelter.
(Emphasis added.) Likewise, under R.C. 5701.02(E):
“Structure” means a permanent fabrication or construction, other than a building,
that is attached or affixed to land, and that increases or enhances utilization or
22
enjoyment of the land. “Structure” includes, but is not limited to, bridges, trestles,
dams, storage silos for agricultural products, fences, and walls.
(Emphasis added.)
{¶64} It is as a part of these two definitions that the phrase “a permanent fabrication or
construction” appears. The significance of the phrase is thus in its application to these definitions,
and in determining whether the subject greenhouses meet these definitions. As we have repeatedly
stated above, in accordance with Funtime, even if the subject greenhouses met the definition of
“buildings” or “structure” under R.C. 5701.02(B), it would not preclude their classification as
business fixtures under R.C. 5701.03(B).
{¶65} Lorain County’s first assignment of error is therefore overruled.
ASSIGNMENT OF ERROR THREE
THE BOARD OF TAX APPEALS’ DECISION IS UNREASONABLE AND
UNLAWFUL BECAUSE IT HELD THAT THE GREENHOUSE BUILDINGS
LOCATED ON THE SUBJECT PROPERTY ARE NOT REAL PROPERTY, AS
DEFINED BY [R.C.] 5701.02, IN DIRECT CONTRAVENTION OF THE OHIO
SUPREME COURT’S DETERMINATION IN GREEN CIRCLE GROWERS, INC.
V. LORAIN CTY. BD. OF REVISION, 35 OHIO ST.3D 38 (1988).
{¶66} In its third assignment of error, Lorain County argues the BTA erred in finding the
subject greenhouses were not real property in contravention of the Supreme Court of Ohio’s
determination in Green Circle Growers, Inc. v. Lorain Cty. Bd. of Revision, 35 Ohio St.3d 38(1988). We disagree.
{¶67} Lorain County’s argument in its third assignment of error is analogous to the
argument presented in the Firelands BOE’s fifth assignment of error, and our analysis remains the
same. Although Green Circle held “that a greenhouse attached to metal pipes which are imbedded
in concrete is a structure and therefore defined as real property[,]” the decision predates the
amendments made to the definitions provided under R.C. 5701.02 and R.C. 5701.03. Id. at 40.
23
Because these definitions are essential to this review and were added subsequent to the Green
Circle decision, the analysis by the Green Circle Court offers us little guidance. The amended
definitions create a new framework for the analysis of the distinction between real property and
personal property and have essentially superseded the analysis performed in Green Circle.
{¶68} Lorain County’s third assignment of error is overruled.
ASSIGNMENT OF ERROR FOUR
THE BOARD OF TAX APPEALS’ DECISION IS UNREASONABLE AND
UNLAWFUL BECAUSE IT HELD THAT THE GREENHOUSE BUILDINGS
LOCATED ON THE SUBJECT PROPERTY ARE BUSINESS FIXTURES, AS
DEFINED BY [R.C.] 5701.03, WHICH ARE EXCLUDED FROM THE VALUE
OF REAL PROPERTY TAXATION.
{¶69} In its fourth assignment of error, Lorain County argues the BTA erred in
determining that the subject greenhouses were “business fixtures.” We disagree.
{¶70} Lorain County’s argument under its fourth assignment of error is analogous to the
argument presented under the Firelands BOE’s fourth assignment of error. The argument rests on
the proposition that the greenhouses are not items of tangible personal property and therefore
cannot qualify as business fixtures. Lorain County points us to the BTA’s administrative decision
in Polaris, along with a Twelfth District Court of Appeals case applying the analysis set forth in
Polaris, in support of its argument that the subject greenhouses are buildings or structures, and
therefore do not constitute an item of tangible personal property. Polaris Amphitheater Concerts,
Inc. v. Delaware Cty. Bd. of Revision, BTA No. 2004-V-1294 (Jan. 26, 2007), rev’d on other
grounds, 118 Ohio St.3d 330, 2008-Ohio-2454; SSN II, Ltd. v. Warren Cty. Bd. of Revision, 12th
Dist. Warren No. CA2012-04-037, 2013-Ohio-1112.
{¶71} In Polaris, the BTA determined that the subject amphitheater stage and facilities
constituted buildings, improvements, or structures as defined by R.C. 5701.02 and were therefore
24
real property. Id. at *6. Once this determination was made, the Polaris decision concluded it was
not necessary for the BTA to further engage in an analysis of whether the subject property was
“otherwise specified” as a “business fixture” under R.C. 5701.03. Id. Thus, under the Polaris
approach, if the subject greenhouses meet any of the definitions of real property under R.C.
5701.02, they cannot constitute “fixtures” or “business fixtures” and it is therefore irrelevant
whether they primarily benefit the business conducted by the occupant. Id.
{¶72} As we have previously stated, this conclusion is inconsistent with the approach
elaborated by the Supreme Court of Ohio in Funtime: “If the item fits a definition of real property
in R.C. 5701.02, it is real property unless it is ‘otherwise specified’ in R.C. 5701.03. If an item is
‘otherwise specified’ under R.C. 5701.03, it is personal property.” Funtime at ¶ 33. Under
Funtime, a determination that the subject property is real property under R.C. 5701.02 is not
conclusive; the property may yet be found to be “otherwise specified” under R.C. 5701.03. We
are bound to follow this precedent.
{¶73} Lorain County’s fourth assignment of error is overruled.
ASSIGNMENT OF ERROR FIVE
THE BOARD OF TAX APPEALS’ DECISION IS UNREASONABLE AND
UNLAWFUL BECAUSE IT FOUND THAT THE PROPERTY OWNER’S
APPRAISAL EVIDENCE WAS RELIABLE AND PROPER DESPITE A
MULTITUDE OF ERRORS, INCONSISTENCIES, AND UNSUPPORTED
ASSUMPTIONS.
ASSIGNMENT OF ERROR SIX
THE BOARD OF TAX APPEALS’ DECISION IS UNREASONABLE AND
UNLAWFUL BECAUSE IT ADOPTED THE ANALYSIS AND
CALCULATIONS OF FUNCTIONAL AND EXTERNAL OBSOLESCENCE OF
THE PROPERTY OWNER’S APPRAISER.
25
ASSIGNMENT OF ERROR SEVEN
THE BOARD OF TAX APPEALS’ DECISION IS UNREASONABLE AND
UNLAWFUL BECAUSE IT ADOPTED THE PROPERTY OWNER’S
APPRAISAL REPORT, WHICH UTILIZED PROPERTIES THAT WERE
COMPLETELY INCONSISTENT WITH THE PROPERTY’S HIGHEST AND
BEST USE ANALYSIS.
ASSIGNMENT OF ERROR EIGHT
THE BOARD OF TAX APPEALS’ DECISION IS UNREASONABLE AND
UNLAWFUL BECAUSE IT DISREGARDED THE TESTIMONY OF THE
CHIEF APPRAISER FOR THE LORAIN COUNTY AUDITOR.
ASSIGNMENT OF ERROR NINE
THE BOARD OF TAX APPEALS’ DECISION IS UNREASONABLE AND
UNLAWFUL BECAUSE IT DISREGARDED THE APPRAISAL EVIDENCE
OF APPELLANT’S EXPERT WITNESS, RONALD N. GEER, IN ITS
ENTIRETY WITHOUT PROPERLY CONSIDERING IT.
ASSIGNMENT OF ERROR TEN
THE BOARD OF TAX APPEALS’ DECISION IS UNREASONABLE AND
UNLAWFUL BECAUSE ITS FINDINGS OF FACT AND CONCLUSIONS OF
LAW ARE AGAINST THE MANIFEST WEIGHT OF THE EVIDENCE.
{¶74} As we stated above, an appellant must “separately argue each assignment of error,
including supporting authority and citations to the record.” Easterwood v. Easterwood, 9th Dist.
Medina No. 09CA0043–M, 2010–Ohio–2149, ¶ 10, citing App.R. 16(A)(7) and Loc.R. 7(B)(7).
Lorain County has failed to comply with App.R. 16(A)(7) and this Court’s Loc.R. 7(B)(7) because
it has failed to identify and separately discuss each assignment of error as required. Lorain
County’s brief to this Court begins with a list of ten assignments of error, followed by a statement
of facts. The argument section is divided into three sections captioned as “Propositions of Law.”
Under the third Proposition of Law, Lorain County purports to address the fifth through tenth
assignments of error in a single paragraph.
26
{¶75} It is well-established that pursuant to App.R. 12(A), an appellate court may
disregard an assignment of error if the party raising it fails to argue the assignment separately in
the brief, as required under App.R. 16(A). See, e.g., Ohio Edison Co. v. Williams, 9th Dist. Summit
No. 23530, 2007–Ohio–5028, ¶ 10; App.R. 12(A)(2). Lorain County’s failure to argue the fifth
through the tenth assignments of error separately is fatal to those assignments. Because Lorain
County has failed to comply with the applicable rules, we conclude it has failed to meet its burden
on appeal and decline to further address the fifth through tenth assignments of error.
{¶76} Lorain County’s fifth, sixth, seventh, eighth, ninth, and tenth assignments of error
are therefore overruled.
III.
{¶77} The Firelands BOE’s assignments of error are overruled. Lorain County’s
assignments of error are overruled. The decision of the Ohio Board of Tax Appeals is affirmed.
Judgment affirmed.
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Ohio Board of Tax
Appeals, County of Lorain, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the period
for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is instructed to
27
mail a notice of entry of this judgment to the parties and to make a notation of the mailing in the
docket, pursuant to App.R. 30.
Costs taxed to Appellants.
THOMAS A. TEODOSIO
FOR THE COURT
CALLAHAN, J.
CONCURS.
CARR, J.
DISSENTING.
{¶78} I respectfully dissent from the judgment of the majority as I would conclude that
the BTA erred in its classification of the greenhouses as business fixtures. Given that conclusion,
I would remand the matter to the BTA for it to examine the appraisal evidence in light of that
determination.
{¶79} Despite the numerous assignments of error before the Court, the matter centers on
two issues: the characterization of the greenhouses as either real or personal property and their
appraised value.
{¶80} Pursuant to R.C. 5701.02(A),
“Real property,” “realty,” and “land” include land itself, whether laid out in town
lots or otherwise, all growing crops, including deciduous and evergreen trees,
plants, and shrubs, with all things contained therein, and, unless otherwise specified
in this section or section 5701.03 of the Revised Code, all buildings, structures,
improvements, and fixtures of whatever kind on the land, and all rights and
privileges belonging or appertaining thereto.
28
A building is defined as “a permanent fabrication or construction, attached or affixed to land,
consisting of foundations, walls, columns, girders, beams, floors, and a roof, or some combination
of these elemental parts, that is intended as a habitation or shelter for people or animals or a shelter
for tangible personal property, and that has structural integrity independent of the tangible personal
property, if any, it is designed to shelter.” R.C. 5701.02(B)(1). Whereas a fixture “means an item
of tangible personal property that has become permanently attached or affixed to the land or to a
building, structure, or improvement, and that primarily benefits the realty and not the business, if
any, conducted by the occupant on the premises.” R.C. 5701.02(C). A structure is defined as “a
permanent fabrication or construction, other than a building, that is attached or affixed to land, and
that increases or enhances utilization or enjoyment of the land. ‘Structure’ includes, but is not
limited to, bridges, trestles, dams, storage silos for agricultural products, fences, and walls.” R.C.
5701.02(E). Thus, “[t]he definition of ‘structure’ set forth in R.C. 5701.02(E) requires (1) a
permanent fabrication or construction other than a building that is attached or affixed to land and
(2) increased utilization or enjoyment of the land as a result.” Funtime, Inc. v. Wilkins, 105 Ohio
St.3d 74, 2004-Ohio-6890, ¶ 34.
{¶81} Whereas personal property
includes every tangible thing that is the subject of ownership, whether animate or
inanimate, including a business fixture, and that does not constitute real property as
defined in section 5701.02 of the Revised Code. “Personal property” also includes
every share, portion, right, or interest, either legal or equitable, in and to every ship,
vessel, or boat, used or designed to be used in business either exclusively or
partially in navigating any of the waters within or bordering on this state, whether
such ship, vessel, or boat is within the jurisdiction of this state or elsewhere.
“Personal property” does not include money as defined in section 5701.04 of the
Revised Code, motor vehicles registered by the owner thereof, electricity, or, for
purposes of any tax levied on personal property, patterns, jigs, dies, or drawings
that are held for use and not for sale in the ordinary course of business, except to
the extent that the value of the electricity, patterns, jigs, dies, or drawings is
included in the valuation of inventory produced for sale.
29
R.C. 5701.03(A).
{¶82} A business fixture
means an item of tangible personal property that has become permanently attached
or affixed to the land or to a building, structure, or improvement, and that primarily
benefits the business conducted by the occupant on the premises and not the realty.
“Business fixture” includes, but is not limited to, machinery, equipment, signs,
storage bins and tanks, whether above or below ground, and broadcasting,
transportation, transmission, and distribution systems, whether above or below
ground. “Business fixture” also means those portions of buildings, structures, and
improvements that are specially designed, constructed, and used for the business
conducted in the building, structure, or improvement, including, but not limited to,
foundations and supports for machinery and equipment. “Business fixture” does
not include fixtures that are common to buildings, including, but not limited to,
heating, ventilation, and air conditioning systems primarily used to control the
environment for people or animals, tanks, towers, and lines for potable water or
water for fire control, electrical and communication lines, and other fixtures that
primarily benefit the realty and not the business conducted by the occupant on the
premises.
R.C. 5701.03(B).
{¶83} The Supreme Court analyzed these provisions in Funtime, Inc. The Supreme Court
concluded that, in “[r]eading the two statutes in pari materia and harmonizing them to give effect
to the language of both statutes, * * * the correct order of application is as follows: first, determine
whether the item meets the requirements of one of the definitions of real property set forth in R.C.
5701.02. If the item does not, then it is personal property. If the item fits a definition of real
property in R.C. 5701.02, it is real property unless it is ‘otherwise specified’ in R.C. 5701.03. If
an item is ‘otherwise specified’ under R.C. 5701.03, it is personal property.” Id. at ¶ 33.
{¶84} The BTA examined the issues raised in Funtime, Inc. in Polaris Amphitheater
Concerts, Inc. v. Delaware Cty. Bd. of Revision, BTA No. 2004-V-1294, 2007 WL 283010 (Jan.
26, 2007), rev’d on other grounds, 118 Ohio St.3d 330, 2008-Ohio-2454. In concluding that the
buildings, improvements, and structures on the property at issue should not be classified as
business fixtures, the BTA noted that they failed to constitute items of personal property under
30
R.C. 5701.03(B). See id. at *5-6. In addition, the BTA observed that “[t]he distinction between
real property and personal property does not hinge upon the singular distinction of whether
property is used in business or a commercial venture. Rather, only the distinction of whether an
item of personal property constitutes a ‘fixture’ under R.C. 5701.02(C) and is therefore defined as
real property, or whether an item of personal property constitutes a ‘business fixture’ under R.C.
5701.03(B) and is therefore defined as personal property does hinge upon the determination of
whether the item of personal property is used in business.” Id. at *6.
{¶85} The facts before this Court support the conclusion that the greenhouses are
structures or buildings. The greenhouses are massive units that together span over 100 acres of
land. They are used year-round. The greenhouses are attached by steel support posts connected
to footers that are embedded in concrete foundations. The completed greenhouses consist of walls,
doors, windows, support posts, insulation, concrete floors, and a roof. The greenhouses include
heating and air conditioning systems. The newer greenhouses include lighting, electricity,
plumbing, ventilation, drainage, and an irrigation system. Some of the greenhouses were
constructed over 40 years ago and continue to be maintained and used. Accordingly, routine
maintenance and repairs are performed on the greenhouses. The greenhouses are enmeshed in the
land as they are interwoven with other building such as warehouses and office buildings.
Moreover, the greenhouses also undoubtedly increase utilization or enjoyment of the land. R.C.
5701.02(E).
{¶78} Because a building or structure by definition cannot be personal property, see R.C.
5701.02-.03, and a business fixture is personal property, see R.C. 5701.03(B), it is unclear why
the Supreme Court in Funtime, Inc. indicated that, even if property is classified as a building or
structure under R.C. 5701.02, it still must be reviewed to determine whether it qualifies as a
31
business fixture under R.C. 5701.03(B). See Funtime, Inc., 105 Ohio St.3d 74, 2004-Ohio-6890,
at ¶ 31-33. Nonetheless, because Funtime, Inc. is controlling precedent, it is necessary to examine
whether the greenhouses qualify as business fixtures under R.C. 5701.03(B).
{¶79} The greenhouses do not qualify as business fixtures. First, the greenhouses are not
personal property as discussed above. See R.C. 5701.03(A). This is so because they are real
property, as they are structures or buildings. See R.C. 5701.02(A), (B)(1), (E). However, even if
it were to be assumed that the greenhouses were personal property, the greenhouses primarily
benefit the land/realty, and, thus, are not business fixtures. See R.C. 5701.03(B). The overall use
of the land is for commercial agriculture and the use of the greenhouses extends the growing season
thereby benefiting the land. Further, there are tax benefits associated with the agricultural use of
the land which is increased by the use of the greenhouses.
{¶80} Accordingly, I would conclude that the BTA erred in concluding that the
greenhouses were business fixtures, and, thus, personal property. In light of this determination, I
would remand the matter to the BTA for it to reevaluate the appraisals given that the greenhouses
are structures or buildings and therefore real property.
APPEARANCES:
J. D. TOMLINSON, Prosecuting Attorney, and CARA M. FINNEGAN, Assistant Prosecuting
Attorney, for Appellants.
KELLY A. GORRY, Attorney at Law, for Appellants.
KARRIE M. KALAIL, Attorney at Law, for Appellant.
JONATHAN T. BROLIER, BRYAN M. SMEENK, and TESS G. TANNEHILL, Attorneys at
Law, for Appellees.