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1 IN THE SUPREME COURT STATE OF OHIO APPEAL FROM THE BOARD OF TAX APPEALS ERIE COUNTY BOARD OF REVISION, ERIE COUNTY AUDITOR, AND TAX COMMISSIONER OF THE STATE OF OHIO, SUPREME COURT CASE NUMBER: Appellees, and PERKINS LOCAL SCHOOL DISTRICT BOARD OF EDUCATION, BOARD OF TAX APPEALS CASE NUMBER 2009-K-1509 Appellee, V HAYES, LLC, Appellant. JUL CLEf3k OF +:;UUR7 SUPREME Ctnj4t43' OF OlfiO NOTICE OF APPEAL Kevin J. Baxter, Esq. Erie County Prosecuting Attorney 247 Columbus Avenue, Suite 319 Sandusky, Ohio (419) (419) FAX James R. Gorry, Esq. COUNSEL OF RECORD 1299 Carron Drive Columbus, Ohio (614) (614) Andrew M. Ferris, Esq. ( ) COUNSEL OF RECORD Baker & Hostetler, LLP 65 East State Street, Suite 2100 Columbus, Ohio (614) (614) FAX ATTORNEY FOR APPELLANT, 2509 HAYES, LLC

2 ATTORNEYS FOR APPELLEES, ERIE COUNTY BOARD OF REVISION AND THE ERIE COUNTY AUDITOR Karrie M. Kalail, Esq. COUNSEL OF RECORD Britton, Smith, Peters, & Kalail Co., L.P.A. Three Sumniit Park Drive, Suite 400 Cleveland, Ohio (216) (216) FAX ATTORNEY FOR APPELLEE, PERKINS LOCAL SCHOOL DISTRICT BOARD OF EDUCATION Mike Dewine, Esq. Ohio Attorney General James A. Rhodes State Office Tower 30 East Broad Street, 14th Floor Columbus, Ohio (614) (614) FAX ATTORNEY FOR APPELLEE, TAX COMMISSIONER OF THE STATE OF OHIO

3 IN THE SUPREME COURT STATE OF OHIO APPEAL FROM THE BOARD OF, TAX APPEALS ERIE COUNTY BOARD OF REVISION, ERIE COUNTY AUDITOR; AND TAX COMMISSIONER OF THE STATE OF OHIO, SUPREME COURT CASE NUMBER: Appellees, V. PERKINS LOCAL SCHOOL DISTRICT BOARD OF EDUCATION, V. Appellee, 2509 HAYES, LLC, BOARD OF TAX APPEALS CASE NUMBER 2009-K-1509 NOTICE OF APPEAL TO THE SUPREME COURT OF OHIO PURSUANT TO SECTION OHIO REVISED CODE Appellant. The Appellant, 2509 Hayes, LLC by and through counsel, hereby gives notice of its appeal to the Supreme Court of The State of Ohio, from a Decision and Order of the Ohio Board of Tax Appeals, rendered on the 26h day of June, 2012, a copy of which is attached hereto as "Exhibit A" and which is incorporated herein as through fully rewritten in this Notice of Appeal.

4 The Errors complained of are attached hereto as "Exhibit B," which is incorporated herein by reference. Respectfully submitted,.f^ Andrew M. Ferris, Esq. ( ) COUNSEL OF RECORD Baker & Hostetler LLP 65 East State Street, Suite 2100 Columbus, Ohio (614) (614) FAX ATTORNEY FOR APPELLANT, 2509 HAYES, LLC

5 OHIO BOARD OF TAX APPEALS EXHIBIT "A" Perkins Local School District Board of Education, vs. Appellant, ) CASE NO K-1509 (REAL PROPERTY TAX) DECISION AND ORDER Erie County Board of Revision, the Erie County Auditor, and 2509.Hayes, LLC, APPEARANCES: Appellees. For the Appellant - Britton, Smith, Peters & Kalail Co., LPA Karrie M. Kalail Three Summit Park Drive, Suite 400 Cleveland, Ohio For the County - Kevin J. Baxter Appellees Erie County Prosecuting Attorney James. R.Gorry, Esq Carron Drive Columbus, Ohio For the Appellee - Baker & Hostetler, LLP Property Owner Andrew M. Ferris Capitol Square, Suite East State Street Columbus, Ohio Entered M-2{J' LV12 Ms. Margulies, Mr. Johrendt, and Mr. Williamson concur. Appellant challenges a decision issued by the Erie County Board of Revision (`BOR") regarding its valuation of the subject property, i.e., parcel number , for ad valorem tax purposes for tax year We decide this matter upon the transcript certified by the BOR pursuant to R.C and the record of this board's hearing at which the parties were all represented:

6 The subject property is comprised of almost 130 acres of land and is improved with a large manufacturing facility used in the production of wheel bearings for the automotive industry. The Erie County Auditor had originally assessed the property, as of January 1, 2008, as follows: TRUE VALUE TAXABLE VALUE Land $ 849,100 Land $ 297,200 Building $11,136,030 Building Total $11,985,130 Total $4,194,510 Appellant filed a complaint with the BOR pursuant to R.C (A) requesting that the subject's total true value be increased commensurate with a sale which occurred approximately eight months after tax lien date. The property owner, 2509 Hayes LLC, filed a countercomplaint through which it sought a reduction in the subject's total true value to $10,100,000, claiming the aforementioned sale was not arm's length and that the auditor's assessment exceeded the actual fair market value of the property. In support of its complaint, appellant relied upon a conveyance fee statement reflecting the sale of the property by Kyklos Bearing Intemational, Inc. ("KBI") to 2509 Hayes LLC on August 13, 2008 for $25,500,000. The property owner presented the testimony of Jon Anderson, vice president of finance with KBI, who explained that in May 2008, the KBI wheel bearing manufacturing business was purchased from Delphi Automotive System which was itself involved in bankruptcy proceedings. Although admitting he was not involved in the transaction, Anderson testified that KBI subsequently entered into what was tantamount to a financing transaction, i.e., a sale-leaseback arrangement, with 2509 Hayes thereby allowing KBI to secure necessary operating capital. Asserting that the sale price was not indicative of value, KBI presented a written appraisal and testimony of its appraiser, Gordon Vella, who 2

7 estimated value through both the cost and income approaches to value, i.e., $8,900,000 and $8,800,000, respectively. After reconciling the resulting figures to $8,800,000, the appraiser deducted $6,300,000 for deferred maintenance, attributable in part to the replacement of a coalfired heating system, relocation of certain equipment, removal of asbestos, etc., resulting in his ultimate opinion of value, as of tax lien date, of $2,500,000.' Upon consideration of the evidence provided, the BOR effected no change to the subject's value. Thereafter, appellant filed the present appeal, again advocating the August 2008 reported sale price as the best evidence of the subject's value, while the appellee property owner presented the testimony of Diane Keegan, vice president of fmance with KBI, and another appraiser involved in the aforementioned appraisal, Joe Torzewski, asserting the subject's value be reduced to $2,500,000. Before considering the merits of this appeal, we must first address appellant's objection, joined in part by the county appellees, to this board's receipt of testimony from the property owner's witnesses. Because these witnesses did not appear and testify before the BOR, although presumably available, appellant maintain their testimony is precluded by virtue of R.C (G) which provides as follows: "A complainant shall provide to the board of revision all information or evidence within the complainant's knowledge or possession that affects the real property that is the subject of the complaint. A complainant who fails to provide such information or evidence is precluded from introducing it on appeal to the board of tax appeals or the court of common pleas, except that the board of tax appeals or court may admit and consider the evidence if the ' Although the value advocated by the property owner differed from the amount set forth on its complaint, a party is not restricted to the value set forth in its complaint as such pleading "places neither minimum nor maximum limitations on the court's determination of value, and there are none save the judicial requirement that the determination be supported by the evidence." Jones & Laughlin Steel Corp. v. Lucas Cty. Bd of Revision (1974), 40 Ohio St.2d 61, 63. See, also, Cleveland Elec. Lllum. Co. v. Lake Cty. Bd ofrevision (1998), 80 Ohio St.3d 591, 595 ("There is no requirement that the value of the property, as determined by the board of revision, must match the opinion of value set forth in the complaint."). 3

8 complainant shows good cause for the complainant's failure to provide the information or evidence to the board of revision." The thrust of this statute is to require complainants to provide relevant information to county boards of revision so that such tribunals may fulfill their duty to consider initial valuation challenges. In F & R L.P. v. Hamilton Cty. Bd. of Revision (Jan. 12, 1996), BTA No K-1389, unreported, we stated: "Accordingly, a complainant must provide the county board of revision with all pertinent information affecting the property which is within its knowledge or possession. By imposing this requirement upon a complainant, county boards of revision are better able to perform their statutory duties of hearing complaints, determining the value of real property and, when appropriate, revising the assessment of such property for purposes of taxation. See R.C and R.C In order to ensure compliance with the preceding requirement, R.C (G) confinues, stating that if a complainant fails to provide such information to the county board of revision, absent a demonstration of good cause, it is precluded from doing so on subsequent appeal." Id. at 5. See, also, Coventry Towers, Inc. v. Strongsville (1985), 18 Ohio St.3d 120; CASA 94, L.P. v. Franklin Cty. Bd. of Revision (2000), 89 Ohio St.3d 622; WPH Cherry Valley, LLC v. Licking Cty. Bd. of Revision (Oct. 6, 2009), BTA No K-1294, unreported. In this instance, it appears the property owner's intent in presenting the testimony of Keegan and Torzewski on appeal was, in essence, to amplify testimony previously provided before the BOR. While it does not appear that either of these individuals may be considered "unavailable" at the time of the BOR hearing, their presence or testimony was apparently not deemed material to the property owner's valuation challenge given the presence of Anderson and Vella. Indeed, we find such testimony to be generally duplicative of that provided below 4

9 and as such we are inclined to agree it is precluded by R.C (G). Nevertheless, even giving such evidence due consideration, the outcome of this appeal would be unchanged. "When cases are appealed from a board of revision to the BTA, the burden of proof is on the appellant, whether it be a taxpayer or a board of education, to prove its right to an increase [in] or decrease from the value determined by the board of revision." Columbus City School Dist. Ba'. of Edn. v. Franklin Cty. Bd. of Revision (2001), 90 Ohio St.3d 564, 566. As the Supreme Court held in State ex rel. Park Invest. Co. v. Bd. of Tax Appeals (1964), 175 Ohio St. 410, 412, "[t]he best method of determining value, when such information is available, is an actual sale of such property between one who is willing to sell but not compelled to do so and one who is willing to buy but not compelled to do so. This, without question, will usually determine the monetary value of the property." This pronouncement is consistent with R.C , which. indicates that "[i]n determining the true value of any tract, lot, or parcel of real estate under this section, if such tract, lot or parcel has been the subject of an arm's length sale between a willing seller and a willing buyer within a reasonable length of time, either before or after the tax lien date, the auditor shall consider the sale price of such tract, lot, or parcel to be the true value for taxation purposes." See, also, Conalco Inc. v. Monroe Cty. Bd. of Revision (1977), 50 Ohio St.2d 129, paragraph one of the syllabus ("The best evidence of the `true value in money' of real property is an actual, recent sale of the property in an arm's-length transaction."); Berea City School Dist. Bcl. of Edn. v. Cuyahoga Cty. Bd of Revision, 106 Ohio St.3d 269, 2005-Ohio-4979, at 16 ("Pursuant to R.C , the sale price in a recent arm'slength transaction between a willing seller and a willing buyer shall be considered the true value of the property for taxation purposes."). 5

10 In Worthington City Schools Bd. of Edn. v. Franklin Cty. Ba'. of Revision, 124 Ohio St.3d 27, 2009-Ohio-5932, the court held that this board is justified in viewing evidence such as that presented by appellant in this case, i.e., a conveyance-fee statement, as constituting a prima facie showing of value. Additionally, in HIN, L.L.C. v. Cuyahoga Cty. Bd. ofrevision, 124 Ohio St.3d 481, 2010-Ohio-687, the court discussed the significance of the disclosures made on conveyance fee statements filed with county officials: "R.C provides that `[n]o deed of absolute conveyance of land *** shall be recorded by the county recorder until *** [t]he conveyance presented to the recorder bears the stamp of the county auditor *** [and s]uch conveyance has been presented to the county auditor, and by the county auditor indorsed "transferred" or "transfer not necessary."' Before the deed may be endorsed by the auditor, however, R.C requires the new owner to submit a real property conveyance fee statement to the auditor declaring the value of the real property, and pursuant to R.C , the auditor must transfer the parcel into the new owner's name on the tax list. The purpose of this statutory scheme is to provide the auditor the necessary information to determine the true value of property based on a property sale in accordance with R.C " Id. at Upon the presentation of such evidence, "a rebuttable presumption exists that the sale has met all the requirements that characterize true value," Cincinnati Bd. of Edn. v. Hamilton Cty. Bd of Revision (1997), 78 Ohio St.3d 325, 327, and typically, "the only rebuttal lies in challenging whether the elements of recency and arm's-length character between a willing seller and a willing buyer are genuinely present for that particular sale." Cummins Property Servs., L.L.C. v. Franklin Cty. Bd. ofrevision, 117 Ohio St.3d 516, 2008-Ohio-1473, at 13. 6

11 No party has suggested that the August 2008 sale is remote from the tax lien date eight months prior.z Instead, the appellee property owner argues that $25,500,000 reported on the conveyance fee is not reflective of the value of the realty transferred, arguing the price paid, in reality, served as a financing mechanism for the continued operation of the business. The property owner also asserts the property itself was never openly marketed for sale. Upon review of the record, we find no basis upon which to disregard the August 2008 sale of the property in determining its value. ln AEI Net Lease Income & Growth Fund v. Erie Cty. Bd. of Revision, 119 Ohio St.3d 563, 2008-Ohio-5203, the Supreme Court considered a situation analogous to the present appeal, ultimately concluding the existence of a sale-leaseback scenario does not necessarily render a subsequent sale price not indicative of true value. In this instance, the conveyance fee statement disclosed that the property transferred for $25,500,000. Both Anderson and Keegan, who testified about the transaction, admitted they were not directly involved in the August 2008 sale of the property or any marketing or negotiations which took place. Further undermining its position that a sale-leaseback situation, such as that asserted to have taken place involving the subject property, is not indicative of value, its own appraiser admitted to having included 2 We aclmowledge that whether a sale is sufficiently "recenf' or too "remote" from tax lien date to qualify as the "best evidence" of value is not decided exclusively upon temporal proximity. Worthington City Schools Bd of Edn., at 32. However, it remains the burden of a party contesting the utility of a sale to rebut the presumptions to be accorded it. See, e.g., Cincinnati Bd. ofedn. v. Hamilton Cty. Bd ofrevision (1997), 78 Ohio St.3d 325. See, generally, HK New Plan Exchange Property Owner Il, L.L.C. v. Hamilton Cty. Bd. of Revision, 122 Ohio St.3d 438, 2009-Ohio-3546 (value based upon sale occurring twenty-four months prior to tax lien date); Lakota Local School Dist. Bd. of Edn. v. Butler Cty. Bd. of Revision, 108 Ohio St.3d 310, 2006-Ohio-1059 (reversing this board's decision and ordering that the property's taxable value as of January 1, 2002 be based upon its sale which occurted in October 2003, twenty-two months after tax lien date). 7

12 similar transfers as sales considered and relied upon in developing an opinion of value through the sales comparison approach.3 Although the property owner suggests the lack of marketing provides another ground for disregarding the August 2008 transfer, "merely because a property is not listed on the open market *** does not, per se, mandate the rejection of a sale." Bd of Edn. of the Columbus City Schools v. Franklin Cty. Bd. of Revision (Mar. 23, 2010), BTA No K-202, unreported, at 8. The same observation was made by the court in N. Royalton City School Dist. Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 129 Ohio St.3d 172, Ohio-3092, at 30, when it commented that "[a]ithough the presence of open-market elements defmitely militates in favor of finding a transaction to have been at arm's length, the BTA decisions establish that their absence does not necessarily negate the arm's-length character of the transaction." Accordingly, as we find the August 2008 sale constitutes an a.rrn's-length transaction, recent to the 2008 tax lien date, it is inappropriate to consider the alternative evidence of value offered. See, generally, Pingue v. Franklin Cty. Bd. of Revision (1999), 87 Ohio St.3d 62, 64 ("It is only when the purchase price does not reflect the true value that a review of independent appraisals based upon other factors is appropriate."). Accordingly, we fmd the best evidence of the subject's value as of January 1, 2008, to be the price for which it transferred eight months later, allocated as follows:' 3 While we do not reach the probative value of the property owner's appraisal, we note the appraiser's admission that he had not inspected all the properties cited as comparable to the subject. See, generally, Rimax, Inc. v. Cuyahoga Bd of Revision (Jan. 4, 2008), BTA No K-962, unreported. ^ In the absence of information which would allow for a more accurate allocation of the sale price between the land and improvements thereon, we have utilized the percentages reflected by the auditor's original assessment of the property. Cf. FirstCal Industrial 2 Acquisition LLC v. Franklin Cty. Bd. ofrevision, 125 Ohio St.3d 485, 2010-Ohio-1921, at 31 ("Although not rising to the level of a presumptively correct valuation, pursuant to Colonial Village, [Ltd v. Washington Cty. Bd of Revision, 123 Ohio St.3d 268, 2009-Ohio-4975,] the auditor's 8

13 TRUE VALUE TAXABLE VALUE Land $ 1,785,000 Land $ 624,750 Building $23,715,030 Building $8,300,250 Total $25,500,000 Total $8,925,000 It is the order of this board that the Erie County Auditor list and assess the subject property in conformity with our decision as announced herein and that such values be carried forward according to law. ohiosearchkeybta I hereby certify the foregoing to be a true and complete copy of the action taken by the Board of Tax Appeals of the State of Ohio and entered upon its journal this day, with respect to:t.he captioned matter. Sally F. atz'?yleter, Board S6c.retary Footnote contd. initial determination of value for a given tax year possesses an increment of prima-facie probative force, and the percentages derived from those valuations are 'corroborating' in the absence of better evidence. As a result, the proportion of each parcel's assigned value to the aggregate value of the parcels possesses the same increment of prima facie probative force."). 9

14 EXHIBIT "B" ASSIGNMENT OF ERRORS ASSIGNMENT OF ERRORNO.1: The Board of Tax Appeals' Decision and Order rejecting the unrebutted evidence of the property owner is unreasonable and unlawful. ASSIGNMENT OF ERROR NO. 2: The Board of Tax Appeals' Decision and Order excluding the testimony of the property owner's expert witness and employee is unreasonable, unlawful and arbitrary and fails to consider the basis and circumstances of their appearance and testimony before the Board of Tax Appeals. ASSIGNMENT OF ERROR NO. 3: The Board of Tax Appeals' Decision and Order adopting the sale of price of the property as its fair market value is unreasonable, unlawful and arbitrary because it is inconsistent with the Ohio Supreme Court's decisions that sale-leaseback financing transactions are not reflective of the fee simple value of real property. ASSIGNMENT OF ERROR NO. 4: -The Board of Tax Appeals' Decision and Order is unreasonable and unlawful because it fails to provide an adequate legal or factual basis for its conclusion that the sale price as reflected on the conveyance fee statement is the best evidence of the fair market value of the property. ASSIGNMENT OF ERROR NO. 5: The Board of Tax Appeals' Decision and Order is unreasonable and unlawful because the Board of Education failed to provide any evidence to carry its burden of persuasion that the sale price as reflected on the conveyance fee statement is the best evidence of the fair market value of the property. ASSIGNMENT OF ERROR NO. 6: The Board of Tax Appeals' Decision and Order erroneously relied upon a sale-leaseback financing transaction to value the subject property when no other evidence was introduced to establish that such transaction reflected the fair market value of the property. ASSIGNMENT OF ERROR NO. 7: The Board of Tax Appeals' Decision and Order erroneously found that the property owner did not provide sufficient evidence to rebut the presumption that the sale price recorded on the conveyance fee statement was the best evidence of value.

15 ASSIGNMENT OF ERROR NO. S: The Board of Tax Appeals' Decision and Order erroneously rejected the finding of the Erie County Board of Revision that the property owner had rebutted the presumption that the sale price as reflected by the conveyance fee statement was the best evidence of fair market value. ASSIGNMENT OF ERROR NO. 9: The Board of Tax Appeals' Decision and Order erroneously found that the Board of Education sustained their burden of proof even though the Board of Education failed to present any evidence before the Board of Revision or the Board of Tax Appeals to rebut the property owner's evidence that the transfer of the property as reflected on the conveyance fee statement was a saleleaseback financing transaction entered into to provide the property owner with working capital. ASSIGNMENT OF ERROR NO. 10: The Board of Tax Appeals' Decision and Order erroneously found that the Board of Education sustained their burden of proof even though the Board of Education failed to present any evidence before the Board of Revision or the Board of Tax Appeals to rebut the property owner's evidence that the property was never listed or otherwise advertised for sale on the open market. ASSIGNMENT OF ERROR NO. 11: The Board of Tax Appeals' Decision and Order adopting the sale price of the sale-leaseback financing transaction as the fair market value of the property is unreasonable, unlawful and arbitrary because it rejected the expert testimony and evidence regarding the nature and circumstances of the sale. ASSIGNMENT OF ERROR NO. 12: The Board of Tax Appeals' Decision and Order adopting the sale price of the sale-leaseback financing transaction is unreasonable, unlawful and arbitrary because it ignores the competent and probative evidence provided by the property owner's appraiser concerning the fee simple value of the property. ASSIGNMENT OF ERROR NO. 13: The Board of Tax Appeals' vague and incomplete analysis and weighing of the evidence in the record divests the Ohio Supreme Court of the ability. to review this case on appeal and as a result violates the property owner's right to due process and equal protection under the United States and Ohio Constitutions. ASSIGNMENT OF ERROR NO. 14: The Board of Tax Appeals' Decision and Order violates Article XII, Section 2 of the Ohio Constitution which requires that property must be taxed by uniform rule according to value.

16 CERTIFTCATE OF SERVICE This is to certify that a copy of the foregoing NOTICE OF APPEAL was mailed via Certified United States Mail, postage prepaid, to Kevin J. Baxter, Esq., Erie County Prosecuting Attorney, 247 Columbus, Avenue, Suite 319, Sandusky, Ohio and James R. Gorry, Esq Carron Drive, Columbus, Ohio 43220, Attorneys for Appellees Erie County Board of Revision and Erie County Auditor, Karrie M. Kalail, Esq. Britton, Sniith, Peters & Kalail, Co, L.P.A., Three Summit Park Drive, Suite 400, Cleveland, Ohio 44131, Attorney for Appellee Perkins Local School District Board of Education, and Mike Dewine, Esq., Attorney General State of Ohio, James A. Rhodes State Office Tower, 30 East Broad Street, 14th Floor, Columbus, Ohio 43215, Attorney for Appellee Tax Commissioner of the State of Ohio, this 24"s day of July, Andrew M. Ferris ( )