The Ohio Supreme Court issued an important decision today clarifying the proper method under Ohio law to value big box stores—in this case, a Lowe’s store.
The Ohio Supreme Court rejected the property owner’s argument that an appraiser should presume that the property is vacant when appraising the property. Instead, the Court agreed with the school board and county that a property should be valued using market rent rather than the actual rent from an existing lease encumbering the property at the time of the sale and transfer.
The Court was called upon to interpret somewhat recent changes to R.C. 5713.03, which requires county auditors to value property based upon the value of the “fee simple estate, as if unencumbered.” Rejecting the property owner’s argument, the Court clarified that this statute invokes a market-lease rule, rather than a vacant-at-transfer rule. This decision, commonly referred to as Rancho Cincinnati, is the latest in a series of decisions in Ohio that affect the valuation of big box stores. The Court’s decision will be perceived as more favorable to political subdivisions and taxing authorities; in contrast, the Court’s decision will diminish the salience of appraisals that use a “go-dark” value of big box stores.
The Rancho Cincinnati decision was issued by the Ohio Supreme Court on August 18, 2021 and may be cited as Rancho Cincinnati Rivers, LLC v. Warren County Board of Revision, et al., slip opinion no. 2021-Ohio-2798.
If you have questions about how this case impacts the valuation of properties located in your school district, please contact your legal counsel.