Rickenbacker Port Auth. v. Limbach

• Decision Date: 09 September 1992
• Docket Number: No. 91-2327,91-2327
• Citation: 597 N.E.2d 494,64 Ohio St.3d 628
• Parties: RICKENBACKER PORT AUTHORITY, Appellant, v. LIMBACH, Tax Commr., et al., Appellees.
• Court: Ohio Supreme Court

Page 628

64 Ohio St.3d 628

597 N.E.2d 494

RICKENBACKER PORT AUTHORITY, Appellant, v. LIMBACH, Tax Commr., et al., Appellees.

No. 91-2327.

Supreme Court of Ohio.

Submitted June 3, 1992.

Decided Sept. 9, 1992.

In 1979, the United States government announced its plan to close Rickenbacker Air Force Base, but retained the runways and a portion of the land for the Air National Guard. Rickenbacker Port Authority ("RPA"), appellant, is an agency created by the Board of County Commissioners of Franklin County to pursue the transfer of part of Rickenbacker Air Force Base from the federal government to RPA, and to develop commercial enterprises on that property. On March 30, 1984, RPA received approximately 1,642 acres of the four thousand acres of the Rickenbacker Air Force Base from the United States government. Of this land, 1,114.08 acres lie in Franklin County and are the subject of this appeal. Prior to the federal government's deeding of the property to RPA, the property was exempt from real estate taxes as property owned by the United States government.

On September 9, 1985, RPA entered into a master lease with Diversified/Turner ("D/T") to assist in developing the property.

Under the lease, which has a seventy-year term, D/T has " * * * the unrestricted right to determine the nature and manner in which the Project or any part thereof shall be constructed, developed, operated and/or maintained * * * " if the improvement satisfies the criteria set forth in the parties' development agreement, the quitclaim deed from the federal government, and the joint use agreement between RPA and the federal government, and all applicable federal laws. According to Article 4 of the lease, the separate development agreement between the parties shall provide for a development plan allowing D/T to determine: (1) whether the project will be developed in phases, (2) the physical characteristics of any phase of the project, (3) the use and operation of the project, (4) the overall design, (5) who to employ to construct and operate the project, and (6) the business and legal structure of the project.

During the lease term, D/T owns the leasehold improvements, but, at the end of the term, title to the improvements will automatically revert to RPA. D/T pays RPA $1 per acre per year as base rent and fifty percent of any net income derived from the developed property as additional rent. D/T also agrees to pay RPA ten percent of the net sale proceeds of any sale or transfer of the project.

On June 17, 1986, RPA applied to the Tax Commissioner, appellee ("the commissioner"), for an exemption from real estate taxes for this property for the tax year 1986, and for remission of unpaid taxes and penalties for the tax year 1985. The Groveport Madison Local School District Board of Education ("the school board"), appellee, in which district part of the base is located, opposed the applications. The commissioner denied the applications, and RPA appealed to the Board of Tax Appeals ("BTA").

The BTA modified the commissioner's order and affirmed it as modified. The BTA found that RPA could not claim exemption under R.C. 4582.46 because the property was subject to a seventy-year lease, which exceeded the one-year lease limitation contained in R.C. 4582.46. The BTA also applied R.C. 5709.08 and 5709.121, and denied exemption under these statutes because it determined that the property was not "public property used exclusively for a public purpose." The BTA also found that the property in question was leased to a private entity with a view to a profit, and therefore did not meet the exclusive public use criterion as defined in R.C. 5709.121. However, the BTA remitted taxes for 1985 for that portion of the property not under lease on January 1, 1985, including the subject property which RPA had leased on September 9, 1985.

The cause is now before this court upon an appeal as of right.

Baker & Hostetler, Edward J. Bernert and George H. Boerger, Columbus, for appellant.

Lee I. Fisher, Atty. Gen. and James C. Sauer, Columbus, for appellee Tax Com'r.

Teaford, Rich, Coffman & Wheeler, Jeffrey A. Rich and Karol L. Cassell, Columbus, for appellee Groveport Madison Local School Dist. Bd. of Educ.

ALICE ROBIE RESNICK, Justice.

We hold that, under R.C. 4582.46, port authority property leased for more than one year does not qualify for exemption from real property taxes.

R.C. 4582.46 states:

"The exercise of the powers granted by sections 4582.22 to 4582.59 of the Revised Code will be for the benefit of the people of the state, for the improvement of their health, safety, convenience, and welfare, and for the enhancement of their residential, agricultural, recreational, economic, commercial, distributional, research, and industrial opportunities and is a public purpose. As the operation and maintenance of port authority facilities will constitute the performance of essential governmental functions, a port authority shall not be required to pay any taxes or assessments upon any port authority facility, upon any property acquired or used by the port authority under sections 4582.22 to 4582.59 of the Revised Code * * * provided, such exemption does not apply to any property belonging to any port authority while a person is a lessee of such property under written lease providing for a tenancy longer than one year. * * * " (Emphasis added.)

RPA does not argue for exemption under R.C. 4582.46, as it had done before the BTA. RPA's assertion to this court is that the property is exempt under R.C. 5709.08 [597 N.E.2d 496] and 5709.121. Specifically, RPA contends that pursuant to the language of R.C. 4582.46, any exercise of the statutory powers set forth in R.C. 4582.22 to 4582.59 is, by definition, for a public purpose. In support, RPA cites the following language in R.C. 4582.46: "The exercise of the powers granted by sections 4582.22 to 4582.59 of the Revised Code will be for the benefit of the people of the state, * * * and is a public purpose. * * * " Consequently, RPA maintains that any activity it undertakes pursuant to R.C. Chapter 4582 satisfies the conditions set forth in R.C. 5709.08 and 5709.121.

To the contrary, the commissioner and the school board contend that this interpretation of R.C. 5709.08 and 5709.121 would effectively negate the limitation contained in R.C. 4582.46 that property subject to a lease in excess of one year is not entitled to a tax exemption. We agree with appellees.

In Toledo Business & Professional Women's Retirement Living, Inc. v. Bd. of Tax Appeals (1971), 27 Ohio St.2d 255, 56 O.O.2d 153, 272 N.E.2d 359, we restricted a statutory tax exemption to property to which the statute specifically applies. At paragraph one of the syllabus, we stated that "[t]he General Assembly has exclusive power to choose the subjects, and to establish the criteria, for exemption from taxation. After the General Assembly has marked a specific use of property for exemption and has established the criteria therefor, the function of the judicial branch is limited to interpreting and applying those criteria."

In Toledo Retirement, the taxpayer owned and operated "low-rent retirement living apartments with attendant facilities for aged occupants." Id. at 256, 56 O.O.2d at 153, 272 N.E.2d at 360. The taxpayer sought a property tax exemption pursuant to case law applying a general statutory exemption for property operated exclusively for charitable purposes to homes for the aged operated by nonprofit corporations. This court upheld the denial of the tax exemption, holding that the intervening enactment of an exemption specifically for homes for the aged limited the judiciary to applying those statutory criteria. Since that taxpayer did not qualify for exemption under the newly enacted statutory criteria, the exemption was unavailable. Nor could the taxpayer qualify for exemption under the charitable use statute, since its general language could no longer be construed as applying to property for which specific criteria had been established. Hence, we essentially held in Toledo Retirement that a property, to be exempt, must qualify under the criteria of the statute specifically applicable to that property. See, also, Summit United Methodist Church v. Kinney (1982), 2 Ohio St.3d 72, 2 OBR 628, 442 N.E.2d 1298 (primarily religious institution could not qualify for exemption under statute exempting property belonging to "charitable" institution).

We interpret R.C. 4582.46 to provide the exclusive exemption for property owned by a port authority. On one hand, R.C. Chapter 4582 grants extensive powers to port authorities to develop their property. Yet, R.C. 4582.46 clearly denies the tax exemption for properties owned by port authorities which are leased for more than one year. If a port authority could exempt its property under a statute other than R.C. 4582.46, the one-year limitation contained...