Desenco, Inc. v. Akron, 98-0162

• Citation: 84 Ohio St.3d 535,706 N.E.2d 323
• Decision Date: 10 March 1999
• Docket Number: No. 98-0162,98-0162
• Parties: DESENCO, INC. et al., Appellants, v. CITY OF AKRON et al., Appellees.
• Court: United States State Supreme Court of Ohio

Page 535

84 Ohio St.3d 535

706 N.E.2d 323

DESENCO, INC. et al., Appellants, v. CITY OF AKRON et al., Appellees.

No. 98-0162.

Supreme Court of Ohio.

Submitted Dec. 15, 1998.

Decided March 10, 1999.

On September 26, 1995, appellants, Desenco, Inc., Lamborn Associates, Inc., and Linruth, Inc., filed in the Summit County Court of Common Pleas a complaint for declaratory judgment, specific performance, and injunctive relief. Appellants also titled their action a "taxpayer's action." Appellants alleged that the statutes allowing for the establishment of joint economic development districts ("JEDDs") and for an income tax within the JEDDs are unconstitutional and thus cannot be enforced against them.

According to the complaint, appellant Desenco, Inc. is a for-profit corporation conducting business in a JEDD located in Coventry Township in Summit County. Appellant Lamborn Associates, Inc. is a for-profit corporation conducting business in a JEDD located in Copley Township in Summit County. Appellant Linruth, Inc. is a for-profit corporation conducting business in a JEDD located in Springfield Township in Summit County. According to the complaint, the boards of directors of each JEDD have assessed an income tax against the appellant corporation within its district. The city of Akron collects this tax from appellants.

In their complaint, appellants named as defendants (appellees herein) the entities and officials of the city of Akron, the Summit County townships of Springfield, Coventry, and Copley, and the Springfield-Akron, the Akron-Coventry, and the Copley-Akron JEDDs. ¹

On January 5, 1996, appellees filed a motion to dismiss and on January 8, 1997, the trial court found the legislation establishing the JEDDs to be constitutional and dismissed the case. On December 10, 1997, the Court of Appeals for Summit County affirmed the trial court's decision.

This cause is now before this court upon the allowance of a discretionary appeal.

Slater & Zurz, and Richard V. Zurz, Jr., Akron, for appellants.

Thompson Hine & Flory, L.L.P., Leslie W. Jacobs, Stephen L. Buescher and Kenneth G. Cole, Cleveland, for appellees city of Akron et al.

Max Rothal, Director of Law, and Cheri Cunningham, Assistant Director of Law, for appellees city of Akron, Donald L. Plusquellic and Richard A. Merolla.

Robert A. Edwards, Akron, for appellee Copley Township.

Goldman & Rosen, Ltd., and Irving B. Sugerman, Akron, for appellees Springfield and Coventry Townships.

ALICE ROBIE RESNICK, Justice.

Appellants challenge the statutes that allow for the establishment of joint economic development districts ("JEDDs") on four constitutional grounds: (1) that the statutes improperly delegate the power to levy taxes, (2) that the statutes violate the Uniformity Clause of the Ohio Constitution, (3) that the statutes deny equal protection as guaranteed by the United States and the Ohio Constitutions, and (4) that the statutes violate due process as guaranteed by both Constitutions.

In 1993, the General Assembly adopted legislation that allowed for the creation of JEDDs in order to facilitate economic development to create or preserve jobs and employment opportunities, and to improve the economic welfare of the people in the state. 144 Ohio Laws, Part IV, 5776; R.C. 715.70(B)(1) and 715.71(B). R.C. 715.70 and 715.71 set forth the requirements and alternative procedures for establishing these districts. One or more townships located within a county that has adopted a charter under Sections 3 and 4, Article X of the Ohio Constitution may contract with one or more municipalities that are similarly located to form a JEDD. R.C. 715.70(A) and (B)(1); 715.71(B). The created district must be located within the territory of one or more of the contracting parties and may consist of all or a portion of that territory. R.C. 715.70(B)(1) and 715.71(B). The contract must set forth or provide for the amount or nature of the contribution of each municipal corporation and township to the development and operation of the district and may provide for the sharing of the costs of the operation of and improvements for the district. R.C. 715.70(D)(1) and 715.71(F). For three years following the filing of the contract establishing the JEDD, no municipality may annex the territory of the JEDD unless each board of township trustees whose territory is included, in whole or part, within the district and the territory proposed to be annexed adopts a resolution consenting to the annexation proceeding. R.C. 715.70(B)(5) and 715.71(H).

The involved municipalities and townships must each give notice of the proposed contract and then hold a public hearing prior to adopting ordinances and resolutions approving the contract. R.C. 715.70(D)(2) and 715.71(C). If the procedure set forth in R.C. 715.70 is used, any such resolution adopted by a township board of trustees shall be subject to a referendum by the electors of the township. R.C. 715.70(D)(3). If the procedure set forth in R.C. 715.71 is used, the voters of each participating township must approve the resolution of its board of trustees approving the JEDD contract. R.C. 715.71(E).

Under the R.C. 715.70 procedure, the involved municipalities and townships then must file a petition with the legislative authority of each county within which a party to the contract is located. R.C. 715.70(C)(1). The county legislative authority must hold a public hearing and then certify the adequacy of the petition. Id. If the county takes no action within a certain time period, the petition is deemed approved and the contract goes into effect no sooner than thirty days after that approval. Id. See, also, Meck & Pearlman, Ohio Planning and Zoning Law (1998) 648, Section 15.34. Under the procedure of R.C. 715.71, the involved municipalities and townships must file with the county the documents listed in that division. The resolution of the board of township trustees is then submitted to the electors of the township for approval. R.C. 715.71(E).

Once created, the district is governed by a board of directors established by the contract; the members of the board must be appointed from among the elected members of the legislative authorities and the elected chief executive officers of the contracting parties. R.C. 715.70(E) and 715.71(A). The contract shall set forth the duties, powers, and functions of the board and may also grant to the board the power to adopt a resolution to levy an income tax within the district "for the purposes of the district and for the purposes of the contracting municipal corporations and townships pursuant to the contract." R.C. 715.70(F) and 715.71(G). This income tax may be no greater than the highest rate levied by a municipality that is party to the contract. Id. If the JEDD was created pursuant to R.C. 715.70, the tax is subject to a referendum or initiative by the electors of the district. R.C. 715.70(F)(1) and (2). If the alternative procedure set forth in R.C. 715.71 was used to create the JEDD, then no vote is required by the electors residing in the district. R.C. 715.71(G).

In 1995, the General Assembly enacted R.C. 715.72 through 715.81, adding more alternative procedures and requirements to those set forth in R.C. 715.70 and 715.71. 146 Ohio Laws, Part II, 3219, 3229-3239. These newer provisions do not affect our decision and opinion today.

I

In Vail v. Plain Dealer Publishing Co. (1995), 72 Ohio St.3d 279, 280, 649 N.E.2d 182, 184, we set forth the proper standard of review for a case that was dismissed pursuant to Civ.R. 12(B)(6):

"The factual allegations of the complaint and items properly incorporated therein must be accepted as true. Furthermore, the plaintiff must be afforded all reasonable inferences possibly derived therefrom. Mitchell v. Lawson Milk Co. (1988), 40 Ohio St.3d 190, 192, 532 N.E.2d 753, 756. It must appear beyond doubt that plaintiff can prove no set of facts entitling her to relief. O'Brien v. Univ. Community Tenants Union, Inc. (1975), 42 Ohio St.2d 242, 71 O.O.2d 223, 327 N.E.2d 753, syllabus."

When reviewing the constitutionality of legislation, this court must presume the statutes to be constitutional. Hughes v. Ohio Bur. of Motor Vehicles (1997), 79 Ohio St.3d 305, 307, 681 N.E.2d 430, 432, citing State ex rel. Dickman v. Defenbacher (1955), 164 Ohio St. 142, 57 O.O. 134, 128 N.E.2d 59. In Hughes, we continued:

"In reviewing a statute, a court, if possible, will uphold its constitutionality. Winslow-Spacarb, Inc. v. Evatt (1945), 144 Ohio St. 471, 475, 30 O.O. 97, 99, 59 N.E.2d 924, 926. All reasonable doubts as to the constitutionality of a statute must be resolved in its favor. Dickman. Courts have a duty to liberally construe statutes in order to save them from constitutional infirmities. Wilson v. Kennedy (1949), 151 Ohio St. 485, 492, 39 O.O. 301, 304, 86 N.E.2d 722, 725." Hughes, 79 Ohio St.3d at 307, 681 N.E.2d at 432.

Before we can declare a statute unconstitutional, " 'it must appear beyond a reasonable doubt that the legislation and constitutional provisions are clearly incompatible.' " Doyle v. Ohio Bur. of Motor Vehicles (1990), 51 Ohio St.3d 46, 47, 554 N.E.2d 97, 98, quoting Dickman at paragraph one of the syllabus.

II

In appellants' first challenge to the statutes establishing JEDDs, they assert that the statutes unconstitutionally delegate the General Assembly's power to levy taxes. The General Assembly's power to legislate is limited solely by the state and federal Constitutions. State ex rel. Swetland v. Kinney (1982), 69 Ohio St.2d 567, 573, 23 O.O.3d 479, 483, 433 N.E.2d 217, 222; Angell v. Toledo (1950), 153 Ohio St. 179, 181, 41 O.O. 217, 218, 91 N.E.2d 250, 251. This plenary power includes the power to levy taxes. Weed v. Franklin Cty. Bd. of Revision (1978), 53 Ohio St.2d 20, 21, 7 O.O.3d 63, 64, 372 N.E.2d 338, 338; Saviers v. Smith (1920), 101 Ohio St. 132, 128 N.E. 269, paragraph one of the syllabus.

This court has repeatedly held...