Mellon Bank, N.A. v. Franklin Cty. Bd. of Revision
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1 Mellon Bank, NA, Trustee, Appellant, v. Franklin County Board of 2 Revision et al., Appellees. 3 [Cite as Mellon Bank, N.A. v. Franklin Cty. Bd. of Revision (1996), _____ 4 Ohio St.3d _____.] 5 Taxation -- Real property valuation -- Board of revision s dismissal 6 of complaint seeking reduction in taxable value of property 7 reasonable 8 5715.19(A)(2). 9 (No. 95-80--Submitted October 26, 1995--Decided March 1, 1996.) and lawful when complaint violates R.C. 10 Appeal from the Board of Tax Appeals, No. 93-B-1157. 11 On March 31, 1992, appellant, Mellon Bank, NA, Trustee ( Mellon 12 Bank ), filed a complaint for tax year 1991 with the Franklin County Board 13 of Revision ( BOR ) seeking a reduction in the taxable value of two parcels 14 of property (Nos. 610-199537 and 610-201408) located in the Columbus- 15 Worthington City School District. The property, known as Three 16 Crosswoods Center, is a low-rise office building consisting of 17 approximately 115,238 leasable square feet of office space, situated on 18 6.028 acres of land. 1 Mellon Bank previously had filed complaints with the BOR regarding 2 the same property for tax years 1989 and 1990. For tax year 1989, the BOR 3 adopted a stipulated fair market value for the property of $11,100,000. For 4 tax year 1990, the BOR adopted the same value for the property as it had for 5 1989. No appeal was taken from the 1990 BOR decision. 6 Mellon Bank s complaint for tax year 1991 alleged that the fair 7 market value of the property was $9,200,000. The Worthington City School 8 District Board of Education ( Worthington ) filed a countercomplaint 9 alleging that the fair market value of the property should remain at the 10 11 assessed value of $11,100,000. For Franklin County, tax year 1990 was the first year of the triennial 12 interim period. At the BOR, Worthington contended that the complaint 13 filed by Mellon Bank for tax year 1991 violated R.C. 5715.19(A)(2), 14 because it was the second complaint filed in the interim period, and 15 consequently, should be dismissed. The BOR dismissed Mellon s 16 complaint, finding that it violated R.C. 5715.19 (A)(2). 17 18 The BOR found that, during all the relevant time periods, the property in question was fully occupied by Nationwide Mutual Insurance Company 2 1 ( Nationwide ). On or about July 31, 1991, Nationwide and Mellon Bank 2 entered into an amendment of their lease which extended the term for forty- 3 six months, thereby changing the lease expiration date from September 30, 4 1992 to July 31,1996. In addition the base rental under the lease was 5 reduced from $12.75 per square foot to $6.75 per square foot for the period 6 August 1, 1991 to July 31, 1992; then increased to $8.75 per square foot for 7 the period August 1, 1991 to July 31, 1995; and finally, increased to $10.75 8 per square foot for the period August 1, 1995 to July 31, 1996. 9 10 The Board of Tax Appeals ( BTA ) affirmed the BOR s dismissal of Mellon Bank s complaint. 11 This cause is now before the court upon an appeal as of right. 12 Wayne E. Petkovic, for appellant. 13 Michael Miller, Franklin County Prosecuting Attorney, and James R. 14 Gorry, Assistant County Prosecuting Attorney, for appellees Franklin 15 County Auditor and Franklin County Board of Revision. 16 17 18 Baker & Hostetler and George H. Boerger, for appellee Worthington City School District Board of Education. Per Curiam. R.C. 5715.19(A)(2), provides: 3 1 As used in division (A)(2) of this section, interim period means, for 2 each county, the tax year to which section 5715.24 of the Revised Code 3 applies and each subsequent tax year until the tax year in which that section 4 applies again. 5 No person, board, or officer shall file a complaint against the 6 valuation or assessment of any parcel that appears on the tax list if it filed a 7 complaint against the valuation or assessment of that parcel for any prior tax 8 year in the same interim period, unless the person, board, or officer alleges 9 that the valuation or assessment should be changed due to one or more of 10 the following circumstances that occurred after the tax lien date for the tax 11 year for which the prior complaint was filed and that the circumstances were 12 not taken into consideration with respect to the prior complaint: 13 14 (a) The property was sold in an arm s length transaction, as described in section 5713.03 of the Revised Code; 15 (b) The property lost value due to some casualty; 16 (c) Substantial improvement was added to the property; 4 1 (d) An increase or decrease of at least fifteen percent in the 2 property s occupancy has had a substantial economic impact on the 3 property. (Emphasis added.) 4 It is undisputed that, by filing for both tax years 1990 and 1991, 5 Mellon Bank filed two complaints in the same interim period. Mellon Bank 6 contends that R.C. 5715.19(A)(2)(d) applies to this case because the lease 7 amendment that it entered into with Nationwide created a new occupancy, 8 and the lease rental received under the amended lease will result in a 9 reduction in rental income of more than fifteen percent. We disagree. 10 The sole occupant of the entire property, both before and after the 11 amendment, was Nationwide. The only changes that occurred as a result of 12 the amendment were an extension of the term of the lease and a reduction in 13 the rental payments made to Mellon. Nevertheless, Mellon Bank contends 14 that the execution of a new lease must necessarily involve the creation of a 15 new tenancy and, concomitantly, a new occupancy. 16 A reading of R.C. 5715.19(A)(2)(d) shows that there are two elements 17 which must be satisfied for it to be applicable. First, there must have been 18 an increase or decrease of at least fifteen percent in the property s 5 1 occupancy, and second, that increase or decrease in the property s 2 occupancy must have had a substantial economic impact on the property. 3 (Emphasis added.) Although the term occupancy is used numerous times 4 throughout the Revised Code, it is only defined in R.C. 5722.01(F) which 5 states: 6 Occupancy means the actual, continuous, and exclusive use and 7 possession of a parcel by a person having a lawful right to such use and 8 possession. 9 The statutory definition of occupancy set forth in R. C. 5722.01(F) 10 comports with that found in Black s Law Dictionary (6 Ed. 1990) 1078, 11 which states that occupancy is: 12 Taking possession of property and use of the same; said e.g. of a 13 tenant s use of leased premises. Period during which person owns, rents, 14 and otherwise occupies real property or premises. *** 15 The relevant criteria used in the above definitions of occupancy are 16 use and possession. For leased property, an increase or decrease in 17 occupancy is measured by how much of the property is used and possessed 18 by the tenants. For example, if one tenant possesses the entire property and 6 1 later the entire property is occupied by five tenants, the occupancy of the 2 property has not increased or decreased, only the number of occupants has 3 changed. Furthermore, the rent received for a property does not measure the 4 amount of use and possession of the property. 5 In this case the amendment of the lease did not increase or decrease 6 the amount of square footage occupied by Nationwide. Therefore, there was 7 no change in the property s occupancy and R.C. 5715.19(A)(2)(d) was not 8 applicable to Mellon Bank s second complaint filed in the same interim 9 period. 10 11 We affirm the decision of the BTA, dismissing the complaint, as being reasonable and lawful. 12 13 14 Decision affirmed. MOYER, C.J., DOUGLAS, WRIGHT, RESNICK, F.E. SWEENEY, PFEIFER and COOK, JJ., concur. 15 7
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