Harpst Becker Member, Joseph Spoonster, recently argued and won an important decision benefiting commercial property owners in eminent domain cases. The Fifth District Court of Appeals recently ruled that property tax valuations are admissible evidence in an eminent domain case to assist the jury in its sole function – the determination of compensation due the property owner when the government takes property for public use. This decision levels the playing field with public agencies by allowing owners to present all evidence that they feel should be taken into consideration in eminent domain cases, which is especially critical when the government offers compensation that is hundreds of thousands of dollars below the tax value. Previously, there was no controlling precedent in Ohio permitting this evidence in an eminent domain case, and the conventional wisdom was – as the trial court ruled – not to allow it. See, City of North Canton v. Julius Brown, LLC, Case No. 2024CA00030.
In Julius Brown, The City of North Canton put a zero dollar value on the commercial buildings it tore down for a road widening project. The property owner did not agree that their buildings had no value and the case proceeded to trial. The City’s zero dollar value was in stark contrast to the $45 per square foot value opined to by the owner’s expert and the County Auditor’s valuation of the buildings. The difference in tax values of the properties with and without the buildings was significantly different at over $300,000. To establish the value, continued utility of the buildings, and impeach the City’s appraiser on the zero value opinion, the owner sought to introduce testimony and tax records from the County Auditor showing that the buildings had been valued by the County Auditor at significantly higher than zero and collected tax based on that higher value. The owner also sought to cross examine the City’s appraiser with this evidence and the owner sought to testify that he was charged and paid taxes based on the higher building values. The owner’s position seemed logical – if one government entity is going to put a high value on the property for taxation purposes, how can another government entity claim that same property has no value when it comes to the government’s obligation to pay compensation for taking it? At the very least, the jury should be given this information and allowed to consider it. But the trial court refused to admit any of this evidence and the jury came back with an award of zero for the buildings, which wasn’t surprising.
In an eminent domain case, neither party has the burden to prove what property’s value is for appropriation purposes. Instead, the jury is tasked to determine what compensation the government will have to pay the property owner when it takes buildings and land for a public purpose. If a government can keep evidence establishing a high value from the jury, then it is more likely the jury will come back with a low value. In this case, the evidence was that the County Auditor put a value of over $300,000 on the buildings and that the owner paid taxes based on that value. The trial judge said the jury was not allowed to know this, and even worse – the City’s appraiser could tell the jury the buildings added no value without allowing cross examination on the contrary tax values.
If the County Auditor’s valuation is the proper standard by which a property owner should pay money to the County, that same valuation should not be ignored when the owner is called upon to forfeit property for public use. The Court of Appeals agreed and held the trial court committed reversable error by failing to admit the property tax valuation evidence and keeping that information from the jury. The Court of Appeals also ruled that the owner had the right to use that evidence to cross examine the City’s appraiser. With this decision, the Fifth District Court of Appeals now joins the large growing minority of courts that allows tax valuations as reliable and probative evidence of value in eminent domain cases and the owner will be able to present this evidence at a new trial.
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This document is provided for informational purposes only and should not be relied upon as legal or tax advice.