Cincinnati City Sch. Dist. Bd. of Educ. v. Testa
| Decision Date | 23 October 2014 |
| Docket Number | No. 2013–1426.,2013–1426. |
| Court | Ohio Supreme Court |
| Parties | CINCINNATI CITY SCHOOL DISTRICT BOARD OF EDUCATION, Appellant, v. TESTA, Tax Commr., et al., Appellees. |
Frost Brown Todd, L.L.C., David C. Olson, and Matthew C. Blickensderfer, Cincinnati; and Daniel J. Hoying, Cincinnati School District Assistant General Counsel, for appellant.
Michael DeWine, Attorney General, and Daniel W. Fausey, Assistant Attorney General, for appellee tax commissioner.
Bricker & Eckler, L.L.P., Richard S. Lovering, and Jonathan T. Brollier, Columbus, for appellee city of Cincinnati.
{¶ 1} This appeal involves appellee the city of Cincinnati's application for exemption from real-property tax for property that constitutes part of the city's convention center, the Duke Energy Center. Initially, the tax commissioner considered the application under the law that existed in 2006, the year the application was filed, and granted the exemption for 2006 but denied it for 2007 and the years thereafter. The city appealed to the Board of Tax Appeals ("BTA"), and during the appeal, new legislation was enacted that provided for an exemption in the present situation. On joint motion of the tax commissioner and the city, the BTA remanded the case to the tax commissioner.
{¶ 2} After the BTA remanded, appellant, the Cincinnati City School District Board of Education ("school board"), attempted to intervene as a party in order to argue before the tax commissioner that the newly enacted legislation was unconstitutional. The tax commissioner denied intervention and, applying the newly enacted legislation, granted the exemption for 2007 and later years. The school board appealed to the BTA, but the BTA dismissed the appeal on the grounds that the school board lacked standing to appeal under R.C. 5717.02.
{¶ 3} On appeal before this court, the school board contends that the particular circumstances of this case justify its belated attempt to participate in the proceedings. We disagree, and we therefore affirm the decision of the BTA.
{¶ 4} On September 14, 2006, the city of Cincinnati filed its application to exempt the property at issue, a 1.76–acre parcel that had recently been improved with a building that was to become part of the city's existing convention center. The city's application sought exemption under R.C. 5709.08, which provides for exemption of "public property used exclusively for a public purpose."
{¶ 5} When the application was filed, the school board did not have a request on file to be notified of exemption applications per R.C. 5715.27(B), nor did the school board make any effort to participate in the proceedings at that time.
{¶ 6} On March 22, 2011, more than four and a half years after the application was filed, the tax commissioner issued his final determination. The final determination granted the exemption for tax year 2006 along with the remission of taxes and penalties for tax year 2005, but exemption for tax years 2007 through 2011 was denied.1 The final determination found, "Until 2006, it appears that the City of Cincinnati managed the center using its own employees." Grounds for the denial of exemption for the later years lay in the contract between the city and a private management company, Global Spectrum, L.P., an independent contractor that operated the property in the pursuit of profit, with the result that the property was no longer used exclusively for a public purpose. According to the commissioner,
{¶ 7} Meanwhile, the city of Cincinnati was active on another front: the General Assembly. In the 2011 budget bill, the legislature added language to R.C. 5709.084 ; the amendment consisted of an exemption that was carefully tailored to apply to the Duke Energy Center:
Real and personal property comprising a convention center owned by the largest city in a county having a population greater than seven hundred thousand but less than nine hundred thousand according to the most recent federal decennial census is exempt from taxation, regardless of whether the property is leased to or otherwise operated or managed by a person other than the city.
{¶ 8} The new statutory provision became effective on September 29, 2011, and uncodified law declared it to be "remedial" and provides as follows:
Section 5709.084 of the Revised Code, as amended by this act, is remedial in nature and applies to the tax years at issue in any application for exemption from taxation or any appeal from such an application pending before the Tax Commissioner, the Board of Tax Appeals, any Court of Appeals, or the Supreme Court on the effective date of this act and to the property that is the subject of any such application or appeal.
2011 Am.Sub.H.B. No. 153, Section 757.95.
{¶ 9} At the time the legislature amended R.C. 5709.084, Cincinnati's appeal from the commissioner's final determination was pending at the BTA. On August 11, 2011, the city and the commissioner filed a joint motion for remand at the BTA, which the BTA granted on August 23.
{¶ 10} With the 2006 exemption application once more pending before the tax commissioner, the school board for the first time attempted to intervene. Through its assistant general counsel, the school board filed a request for notification under R.C. 5715.27(B) so that it will be notified when future applications for tax exemption are filed, and it also filed a document titled "Cincinnati City School District's Statement of Its Intention to Intervene and Oppose the City of Cincinnati's Application for a Tax Exemption" in the pending case. The statement expressed the school board's opposition to the retroactive application of the newly enacted language of R.C. 5709.084. In January 2012, the school board formally moved to intervene.
{¶ 11} A few months before the school board sought to intervene before the tax commissioner in this case, it filed a declaratory-judgment action in the Franklin County Court of Common Pleas against the city, the tax commissioner, and the county auditor, challenging the constitutionality of the 2011 legislation. Franklin C.P. case No. 11 CVH 09–12158. By order dated December 29, 2011, Judge Frye invoked the doctrine of primary jurisdiction and stayed the declaratory-judgment case pending the outcome of the proceedings that are now before us.
{¶ 12} On February 21, 2012, the tax commissioner issued his final determination after remand from the BTA—it was the second final determination to address Cincinnati's exemption application. The decision granted the exemption pursuant to amended R.C. 5709.084. The decision also denied the school board's motion to intervene, on the authority of Strongsville Bd. of Edn. v. Zaino, 92 Ohio St.3d 488, 751 N.E.2d 996 (2001).
{¶ 13} On April 10, 2012, the school board appealed to the BTA. On motion by the tax commissioner, the BTA dismissed the school board's appeal on August 9, 2013. Citing the settled doctrine that "[w]here a statute confers the right of appeal, adherence to the conditions thereby imposed is essential to the enjoyment of the right conferred," Am. Restaurant & Lunch Co. v. Glander, 147 Ohio St. 147, 70 N.E.2d 93 (1946), paragraph one of the syllabus, as well as the corollary precept that in administrative proceedings, one must satisfy the standing requirements prescribed by statute, the BTA concluded that "the [board of education] failed to meet the statutory prerequisites of R.C. 5715.27(C) and therefore cannot invoke this board's jurisdiction on appeal." BTA No. 2012–Q–1047, 2013 WL 4508935, *2–3 (Aug. 9, 2013). The BTA therefore dismissed the appeal, and the school board appealed.
{¶ 14} The school board advances two propositions of law as follows:
{¶ 15} We review BTA decisions to determine whether they are reasonable and lawful. R.C. 5717.04 ; Satullo v. Wilkins, 111 Ohio St.3d 399, 2006-Ohio-5856, 856 N.E.2d 954, ¶ 14, citing Columbus City School Dist. Bd. of Edn. v. Zaino, 90 Ohio St.3d 496, 497, 739 N.E.2d 783 (2001). Although we defer to the BTA with respect to its determination of factual issues, we " ‘will not hesitate to reverse a BTA decision that is based on an incorrect legal conclusion.’ " Id ., quoting Gahanna–Jefferson Local School Dist. Bd. of Edn. v. Zaino, 93 Ohio St.3d 231, 232, 754 N.E.2d 789 (2001).
{¶ 16} This case presents a question of law, because it involves an issue of the BTA's jurisdiction, which turns on the proper application of the enabling statutes. See Akron Centre Plaza, L.L.C. v. Summit Cty. Bd. of Revision, 128 Ohio St.3d 145, 2010-Ohio-5035, 942 N.E.2d 1054, ¶ 10. Accordingly, our standard of review in this appeal is de novo. Id .
{¶ 17} R.C. 5717.02 provides generally for appeals from determinations of the tax commissioner, including determinations whether property is exempt from taxation. It identifies who may appeal and defines the procedure for perfecting such appeals. The section specifically addresses the circumstances under which a board of education may appeal a determination of tax-exempt status:
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