Gahanna-Jefferson Local School Dist. Bd. of Edn. v. Zaino

[This decision has been published in Ohio Official Reports at 93 Ohio St.3d 231.]

BOARD OF EDUCATION OF GAHANNA-JEFFERSON LOCAL SCHOOL DISTRICT,

APPELLANT, v. ZAINO, TAX COMMR., ET AL., APPELLEES.

[Cite as Gahanna-Jefferson Local School Dist. Bd. of Edn. v. Zaino,

2001-Ohio-1335.]

Taxation—Real property—Exemptions—Tax Commissioner has jurisdiction under

R.C. 5715.27(E) to hear a complaint challenging the continued exemption

of property located within a Community Reinvestment Area.

(No. 00-983—Submitted February 28, 2001—Decided September 26, 2001.)

APPEAL from the Board of Tax Appeals, No. 99-K-1562.

__________________

COOK, J.

{¶ 1} R.C. 3735.65 et seq. allows cities and counties to grant tax exemptions

for real property located within a designated Community Reinvestment Area

(“CRA”). This case asks whether the Tax Commissioner (“commissioner”) has

jurisdiction under R.C. 5715.27(E) to hear a complaint challenging the continued

exemption of certain property located in a CRA. The Board of Tax Appeals

(“BTA”) answered this question in the negative. But because nothing in R.C.

3735.65 et seq. necessarily undermines the general authority granted to the

commissioner under R.C. 5715.27(E), we reverse.

I

{¶ 2} Appellee Duke Realty, L.P. (“Duke”) owns real property located

within an area of Columbus, Ohio, designated as a CRA. Appellant Board of

Education of the Gahanna-Jefferson Local School District (“Gahanna-Jefferson”)

filed a complaint with the commissioner under R.C. 5715.27(E), asserting that the

property in question no longer qualified for an exemption granted under R.C.

3735.65 et seq. The commissioner dismissed the complaint for lack of jurisdiction,

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concluding that he lacked the statutory authority to participate in the process of

exempting from taxation property located within a CRA.

{¶ 3} The BTA affirmed the commissioner’s decision, relying almost

exclusively on its recent decision in Vandalia-Butler City School Dist. Bd. of Edn.

v. Tracy (Apr. 14, 2000), B.T.A. Nos. 98-M-358 and 98-M-359, unreported.

Although the BTA acknowledged that Gahanna-Jefferson “ ‘may have a remedy by

appeal to a court of common pleas’ ” under R.C. 3735.70, it found “ ‘no reference

within R.C. 3735.67 et seq. which directs the commissioner to administer the

incentives permitted to CRA’s,’ ” quoting Vandalia-Butler. Accordingly, the BTA

found that the commissioner lacked jurisdiction to hear Gahanna-Jefferson’s

complaint against the continued exemption of Duke’s property.

{¶ 4} The cause is now before this court upon an appeal as of right.

II

{¶ 5} When reviewing an appeal from the BTA, we must ascertain whether

the BTA’s decision is reasonable and lawful. Columbus City School Dist. Bd. of

Edn. v. Zaino (2001), 90 Ohio St.3d 496, 497, 739 N.E.2d 783, 785. Although we

will generally not disturb the BTA’s determinations on the weight of evidence and

credibility of witnesses, we will not hesitate to reverse a BTA decision that is based

on an incorrect legal conclusion. See SFZ Transp., Inc. v. Limbach (1993), 66 Ohio

St.3d 602, 604, 613 N.E.2d 1037, 1039. In this case, we must decide whether the

BTA correctly interpreted R.C. 3735.65 et seq. as depriving the commissioner of

jurisdiction over a complaint filed under R.C. 5715.27(E) that seeks revocation of

a tax exemption for property in a CRA.

R.C. 3735.65 et seq.

{¶ 6} In R.C. 3735.65 et seq., the General Assembly has instituted a

property tax incentive program that promotes the construction and remodeling of

commercial, industrial, and residential structures in CRAs. Before property may

be exempted from taxation under this program, the legislative authority of a

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municipality or county must adopt resolutions designating the boundaries of a

CRA. R.C. 3735.66.1 The legislative authority must also designate a housing

officer to administer the CRA program. Id. New or remodeled residential,

commercial, or industrial property located within a CRA is eligible for a partial or

total tax exemption. Id.

{¶ 7} To obtain an exemption for new or remodeled property located in a

CRA, the owner must file an application with the housing officer designated by the

legislative authority. R.C. 3735.67. If the property is commercial or industrial, the

legislative authority and the owner must also enter into a written agreement before

new construction begins. R.C. 3735.67(A) and 3735.671(A). Unless certain

conditions in R.C. 3735.671(A)(2) or (A)(3) apply, the school board must be

notified of the exemption and, in the case of commercial or industrial property,

must approve the written agreement between the legislative authority and the

owner. R.C. 3735.67(A) and 3735.671(A)(1). After the housing officer has

determined that all the requirements for an exemption have been met, he or she

forwards the application to the county auditor with information regarding the

percentage and duration of the exemption. R.C. 3735.67(C).

{¶ 8} Besides the authority granted by R.C. 3735.67, the housing officer

also has the power to revoke a CRA exemption after the first year if “the housing

officer finds that the property has not been properly maintained or repaired due to

the neglect of the owner.” R.C. 3735.68. In addition, if the property is commercial

or industrial, the legislative authority of the county or municipality may revoke the

exemption if it finds that (1) the owner “has materially failed to fulfill its

1. The area designated as a CRA must be “one in which housing facilities or structures of historical

significance are located and new housing construction and repair of existing facilities or structures

are discouraged.” R.C. 3735.65(B).

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obligations” under the written agreement entered into pursuant to section R.C.

3735.671 or (2) the owner violated R.C. 3735.671(E).2 Id.

{¶ 9} The CRA statutory scheme also contains an appeals process. R.C.

3735.70 allows “[a]ny person aggrieved under sections 3735.65 to 3735.69 of the

Revised Code” to appeal to the CRA housing council, an administrative body

appointed by local authorities under R.C. 3735.69. R.C. 3735.70 also provides for

further appeals “from a decision of the council to the court of common pleas of the

county where the area is located.”

R.C. 5715.27

{¶ 10} In contrast to R.C. 3735.65 et seq.’s specific applicability to tax

exemptions for property in a CRA, R.C. 5715.27 is a general statute relating to the

granting and revoking of exemptions from real property taxes. The statute allows

property owners to file applications for tax exemption with the commissioner, who

must then notify the boards of education of these applications if requested to do so.

See R.C. 5715.27(A) and (B). A board of education may then “file a statement with

the commissioner * * * indicating its intent to submit evidence and participate in

any hearing on the application.” R.C. 5715.27(C). The commissioner may not act

on the application for exemption before the board of education’s deadline for

submitting this statement unless certain statutory exceptions apply. R.C.

5715.27(D).

{¶ 11} One of these exceptions in R.C. 5715.27(D) expressly refers to a

CRA exemption statute. At the property owner’s request, the commissioner may

act upon an exemption application prior to the date specified in R.C. 5715.27(C)

“in the case of exemptions authorized by section 725.02, 1728.10, 3735.67,

2. Under R.C. 3735.671(E), a person (or that person’s “successor or related member”) may not

enter into any agreement with a legislative authority under R.C. 3735.671 if, within the last five

years, that person (1) was a party to an agreement granting a CRA exemption and (2) discontinued

operations at the structure to which the exemption applied prior to the expiration of the term of the

R.C. 3735.671 agreement.

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5709.41, 5709.62, or 5709.63 of the Revised Code.” (Emphasis added.) R.C.

5715.27(D). Thus, even though R.C. 3735.65 et seq. does not mention the

commissioner, R.C. 5715.27(D) contemplates some involvement by the

commissioner in the process of exempting CRA property from taxation.

{¶ 12} R.C. 5715.27 also contemplates commissioner involvement in a

decision to revoke a property tax exemption. R.C. 5715.27(E) provides that “[a]

complaint may also be filed with the commissioner by any person, board, or officer

authorized by section 5715.19 of the Revised Code to file complaints with the

county board of revision against the continued exception of any property.”

(Emphasis added.) R.C. 5715.27(F) empowers the commissioner to decide the

issue and to certify his or her findings to the county auditor.

Reconciling the Statutes

{¶ 13} There is no dispute that Gahanna-Jefferson is a “board” that is

authorized by R.C. 5715.27(E) to file a complaint against the continued exemption

of property. And because R.C. 5715.27(E) allows a complaint to be filed against

the continued exemption of any property, Gahanna-Jefferson argues that it may file

a complaint under this provision against property within a CRA that is exempted

under R.C. 3735.65 et seq. Conversely, the appellees contend that R.C. 5715.27(E)

is inapplicable because R.C. 3735.65 et seq. provides specific and exclusive

procedures for revoking an exemption previously granted to property within a

CRA. And because these specific provisions in R.C. 3735.65 et seq. make no

mention of commissioner involvement, the appellees contend that R.C. 5715.27(E)

cannot grant jurisdiction to the commissioner over Gahanna-Jefferson’s complaint.

{¶ 14} The relevant starting point for our analysis is R.C. 1.51, which states:

“If a general provision conflicts with a special or local provision, they shall

be construed, if possible, so that effect is given to both. If the conflict between the

provisions is irreconcilable, the special or local provision prevails as an exception

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to the general provision, unless the general provision is the later adoption and the

manifest intent is that the general provision prevail.”

{¶ 15} When two statutory provisions are alleged to be in conflict, R.C. 1.51

requires us to construe them, where possible, to give effect to both. Schindler

Elevator Corp. v. Tracy (1999), 84 Ohio St.3d 496, 499, 705 N.E.2d 672, 674.

“Only where the conflict is deemed irreconcilable does R.C. 1.51 mandate that one

provision shall prevail over the other.” (Emphasis added.) United Tel. Co. of Ohio

v. Limbach (1994), 71 Ohio St.3d 369, 372, 643 N.E.2d 1129, 1131. Our

comparison of R.C. 3735.65 et seq. and 5715.27(E) fails to convince us that these

statutes are irreconcilable.

{¶ 16} As noted above, R.C. 3735.68 explains the circumstances under

which a housing officer or local legislative authority may revoke a CRA exemption.

The statute does not, however, contain a provision authorizing a board of education

to commence proceedings seeking to revoke a CRA exemption. The appellees view

this omission as evidence of the General Assembly’s “clear intent” to have R.C.

3735.68 act as the “exclusive means” for revoking tax exemptions previously

granted to property in a CRA. But it is just as likely that R.C. 5715.27(E) remains

available to parties like Gahanna-Jefferson as a means to seek revocation of the

CRA exemption. The General Assembly did not expressly preclude all

commissioner involvement in the CRA exemption revocation process, though it

could have done so within R.C. 3735.68 or anywhere else within R.C. 3735.65 et

seq.

{¶ 17} The lack of an explicit preclusion of commissioner involvement

makes R.C. 3735.65 et seq.’s procedure for revoking CRA exemptions easily

reconcilable with R.C. 5715.27(E). On the one hand, we may give effect to R.C.

3735.68’s enumeration of specific methods of revoking CRA exemptions. That is,

R.C. 3735.68 expressly allows housing officers and local legislative authorities to

revoke CRA exemptions in the specific situations stated in the statute. If the party

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January Term, 2001

seeking to revoke a CRA exemption is a housing officer or local legislative

authority, R.C. 3735.68 is the appropriate statute governing the revocation. On the

other hand, R.C. 5715.27(E) provides a means for revoking a CRA exemption—

via a complaint filed with the commissioner—for parties other than a housing

officer or a local legislative authority. By its express terms, R.C. 5715.27(E)

provides for commissioner jurisdiction over complaints filed by specified persons

and entities against the continued exception of any property. This general grant of

authority does not irreconcilably conflict with the specific scheme of R.C. 3735.65

et seq. And without an irreconcilable conflict, R.C. 1.51 requires us to give effect

to both R.C. 5715.27(E) and 3735.65 et seq.

{¶ 18} The fact that R.C. 3735.70 provides an avenue for appeals relating

to CRA exemptions does not undermine our reconciliation of R.C. 3735.65 et seq.

with R.C. 5715.27(E). Although R.C. 3735.70 allows an appeal to the housing

council by “[a]ny person aggrieved,” it is not obvious that a party such as Gahanna-

Jefferson could invoke this provision. Assuming that a school board qualifies as a

“person aggrieved” within the meaning of R.C. 3735.70, the statute vests authority

in the housing council only to “overrule any decision of a housing officer.”

(Emphasis added.) But if a housing officer simply takes no action to revoke a CRA

exemption, there has been no formal “decision” from which to appeal. Further,

R.C. 3735.70’s language provides no vehicle by which anyone, let alone a school

board, may challenge a legislative authority’s “decision” not to revoke a CRA

exemption. In light of these inherent limitations in the process outlined in R.C.

3735.70, we cannot conclude that this statute evidences a legislative intent to

supersede the commissioner’s authority to entertain complaints filed under R.C.

5715.27(E).

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III

{¶ 19} Reading the relevant statutes together and giving effect to both R.C.

5715.27(E) and 3735.65 et seq., we hold that the commissioner has jurisdiction

over Gahanna-Jefferson’s complaint against the continued exemption of the

property at issue. The BTA’s decision to the contrary was unreasonable and

unlawful. We accordingly reverse the decision of the BTA and remand this cause

to the commissioner for proceedings not inconsistent with this opinion.

Decision reversed

and cause remanded.

DOUGLAS, RESNICK and PFEIFER, JJ., concur.

MOYER, C.J., F.E. SWEENEY and LUNDBERG STRATTON, JJ., dissent.

__________________

MOYER, C.J., dissenting.

{¶ 20} The majority today holds that as R.C. 5715.27(E) can be reconciled

with R.C. 3735.65 et seq., “R.C. 5715.27(E) remains available to parties like

Gahanna-Jefferson as a means to seek revocation of the CRA exemption.” I believe

R.C. 5715.27(E) and R.C. 3735.65 et seq. are irreconcilable; therefore, I

respectfully dissent.

{¶ 21} The relevant starting point for our inquiry is R.C. 1.51. Pursuant to

R.C. 1.51:

“If a general provision conflicts with a special or local provision, they shall

be construed, if possible, so that effect is given to both. If the conflict between the

provisions is irreconcilable, the special or local provision prevails as an exception

to the general provision, unless the general provision is the later adoption and the

manifest intent is that the general provision prevail.”

{¶ 22} In Johnson’s Markets, Inc. v. New Carlisle Dept. of Health (1991),

58 Ohio St.3d 28, 567 N.E.2d 1018, we were presented with the issue of whether

the Ohio Department of Agriculture had exclusive authority to regulate sanitary

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conditions of food establishments or whether local boards of health could also

regulate in this area. We compared the local and state sanitary regulations and

determined that “[i]f the above comparisons, or others within these regulations,

result in a determination that a conflict exists, the standards of construction found

in R.C. 1.51 pertain.” Id. at 37, 567 N.E.2d at 1027.

{¶ 23} Similarly, in Schindler Elevator Corp., we compared R.C. 5703.37,

a general provision mandating service requirements for the Department of

Taxation, with R.C. 5739.13, a special provision pertaining to the service of notices

of sales tax assessments. Schindler Elevator Corp. v. Tracy (1999), 84 Ohio St.3d

496, 499, 705 N.E.2d 672, 674. After determining that there was a conflict between

the two provisions, we noted that “ ‘[w]here there is no manifest legislative intent

that a general provision of the Revised Code prevail over a special provision, the

special provision takes precedence.’ ” Id., 84 Ohio St.3d at 499, 705 N.E.2d at 674,

quoting State v. Frost (1979), 57 Ohio St.2d 121, 11 O.O.3d 294, 387 N.E.2d 235,

paragraph one of the syllabus.

{¶ 24} 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,

the taxpayer sought a property tax exemption pursuant to a general statutory

exemption for property operated exclusively for charitable purposes, i.e., homes for

the aged operated by nonprofit corporations. We denied the exemption, holding

that the enactment of an intervening exemption specifically for homes for the aged

limited us to applying specific criteria. Specifically, we stated that the power to

grant tax exceptions “is lodged exclusively in the General Assembly, and once it

has chosen a specific subject for tax exemption, and defined the criteria, the

function of the executive and judicial branches is limited to applying those criteria

to a particular case, or to interpreting them if necessary. Any other interpretation

of Section 2 of Article X of our Constitution would constitute an usurpation of the

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power thereby granted in favor of, and co-sharing of that power by, those other

branches.” Id. at 258, 56 O.O.2d at 154, 272 N.E.2d at 361-362.

{¶ 25} In Rickenbacker, we explained that Toledo requires that “a property,

to be exempt, must qualify under the criteria of the statute specifically applicable

to that property.” Rickenbacker Port Auth. v. Limbach (1992), 64 Ohio St.3d 628,

631, 597 N.E.2d 494, 496. Rickenbacker involved a conflict between R.C. 4582.46,

a specific exemption statute, and R.C. 5709.08 and 5709.121, two general

exemption statutes. Id. at 631, 597 N.E.2d at 496. R.C. 4582.46 granted an

exemption to property belonging to port authority facilities, provided that the

property at issue was not leased for more than one year. Rickenbacker had entered

into a multiyear lease on the property at issue and argued that since the property

was operated for a public purpose, it should be exempted under the general

exemption statutes, R.C. 5709.08 and 5709.121. Id. at 630-631, 597 N.E.2d at 496.

{¶ 26} We held that “[i]f a port authority could exempt its property under a

statute other than R.C. 4582.46, the one-year limitation contained therein would

have no effect.” Id., 64 Ohio St.3d at 632, 597 N.E.2d at 496. Accordingly, we

held that the specific statute, R.C. 4582.46, applied and that Rickenbacker did not

qualify for an exemption pursuant to it, as Rickenbacker had failed to meet its

criteria with respect to a lease of no more than one year. Id. at 632, 597 N.E.2d at

496-497.

{¶ 27} I believe that the instant case presents a conflict between R.C.

3735.65 et seq. and R.C. 5715.27. Whereas housing officers and other local

officials control exemption determinations under R.C. 3735.67, R.C. 5715.27

involves the Tax Commissioner in all phases of the exemption process. R.C.

5715.27(A) allows property owners to file an application for exemption with the

Tax Commissioner, while R.C. 5715.27(B) directs the Tax Commissioner to notify

the board of education of applications for exemption if requested to do so. The

board of education may participate in the hearing by the Tax Commissioner upon

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January Term, 2001

request to the Tax Commissioner. R.C. 5715.27(C) and (D). Additionally, R.C.

5715.27(E) and 5715.27(F) allow complaints against a continued exemption to be

filed with the Tax Commissioner, who is empowered to consider such complaints

and certify his or her findings to the auditor. Finally, the Board of Tax Appeals

hears appeals from decisions under R.C. 5715.27. R.C. 5717.02.

{¶ 28} It is true that R.C. 5715.27 specifically refers to R.C. 3735.67. R.C.

5715.27(D) gives the Tax Commissioner the authority to “act upon an application

at any time prior to that date upon receipt of a written waiver from each such board

of education, or, in the case of exemptions authorized by section 725.02, 1728.10,

3735.67, 5709.41, 5709.62, or 5709.63 of the Revised Code, upon the request of

the property owner.” (Emphasis added.) However, the procedure for revocation

of an exemption granted pursuant to R.C. 3735.65 et seq. conspicuously lacks any

involvement on the part of the Tax Commissioner. While R.C. 5715.27(D) directs

the Tax Commissioner to act upon a request for exemption by a property owner

pursuant to R.C. 3735.67, there are no words in R.C. 3735.65 et seq. that authorize

the Tax Commissioner to grant or revoke an exemption. A review of the other

statutes cited in R.C. 5715.27(D) reveals that although all provide for property tax

exemption incentives, only R.C. 3735.65 et seq. provides a comprehensive

procedure for the granting and revocation of exemptions. In addition, R.C. 3735.70

gives an aggrieved party the right to appeal a decision of a housing officer to the

court of common pleas of the county in which the subject property is located, rather

than providing an avenue of review through the Tax Commissioner and ultimately

the Board of Tax Appeals, as is authorized by R.C. 5715.27(E) and 5717.02. Thus,

a conflict regarding the authority of the Tax Commissioner exists between R.C.

3735.65 et seq. and R.C. 5715.27.

{¶ 29} The board argues that, notwithstanding these specific procedures

granting jurisdiction to the housing officer designated by the legislative authority,

the Tax Commissioner has concurrent jurisdiction to revoke exemptions under R.C.

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3735.67. The board relies on State ex rel. Methodist Book Concern v.

Guckenberger (1937), 133 Ohio St. 27, 9 O.O. 432, 10 N.E.2d 1001, and Society of

Precious Blood v. Bd. of Tax Appeals (1948), 149 Ohio St. 62, 65, 36 O.O. 403,

405, 77 N.E.2d 459, 461, which reaffirmed Methodist Book. However, those cases

involved the authority of the county auditor to strike property from the exempt list

and are not relevant to determining the issue at bar. For example, Methodist Book

was an action in prohibition that held that although G.C. 5570-1 gave the Tax

Commission exclusive authority to declare property exempt, the county auditor had

authority in any year thereafter to strike property from the exempt list precisely

because the function performed by the auditor was ministerial and not quasi-

judicial. Methodist Book, 133 Ohio St. 27, 9 O.O. 432, 10 N.E.2d 1001, paragraphs

one and two of the syllabus. In addition, the court found that an aggrieved party

had the right to appeal to the Tax Commission pursuant to G.C. 5616. Id. at

paragraph two of the syllabus. However, unlike the conspicuous lack of any

mention of the Tax Commissioner in R.C. 3735.65 et seq., G.C. 5616 expressly

permitted “[a]ny person, board or officer authorized by this act to file complaints

with the county board of revision [to] complain to the Tax Commission of Ohio.”

Methodist Book, 133 Ohio St. at 28, 9 O.O. at 433, 10 N.E.2d at 1001. Society of

Precious Blood merely reaffirmed Methodist Book in recognizing the authority of

the auditor to reenter property on the taxable list. Society of Precious Blood, 149

Ohio St. at 65, 36 O.O. at 405, 77 N.E.2d at 461. Thus, neither Methodist Book nor

Society of Precious Blood stands for the proposition that the auditor and Tax

Commissioner have concurrent jurisdiction and are inapposite to this case.

{¶ 30} Appellant board also cites Fid. S. & L. Co. v. Strabala (May 1, 1986),

Columbiana App. No. 84-C-36, unreported, 1986 WL 5284, for the proposition that

the auditor and housing officer have concurrent jurisdiction to remove properties.

However, Fidelity does not stand for this proposition, holding only that the removal

of property from the exempt list by the county auditor is a ministerial act required

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by R.C. 5713.08. Thus, case law cited by the board is inapplicable to the issue at

bar and does not persuade us that the General Assembly intended R.C. 5715.27 to

prevail over R.C. 3735.65 et seq.

{¶ 31} In conclusion, I would find that R.C. 3735.65 et seq. provides

detailed, specific procedures for the application, administration, and revocation of

tax exemptions for property in a CRA. Given the lack of manifest intent that the

General Assembly meant R.C. 5715.27 to prevail and the clear intent of the General

Assembly to have R.C. 3735.65 et seq. act as a self-contained program administered

on a local level, I would conclude that R.C. 3735.65 et seq., the specific statutes,

outline the exclusive procedure for the granting and revocation of exemptions.

Accordingly, I would agree with the Tax Commissioner that he lacks jurisdiction

to consider a complaint against an exemption that is granted pursuant to R.C.

3735.65 et seq.

{¶ 32} For the foregoing reasons, I would affirm the decision of the Board

of Tax Appeals.

F.E. SWEENEY and LUNDBERG STRATTON, JJ., concur in the foregoing

dissenting opinion.

Green & Hughes Co., L.P.A., and Martin J. Hughes III, for appellant.

Betty D. Montgomery, Attorney General, and Phyllis J. Shambaugh,

Assistant Attorney General, for appellee Tax Commissioner.

Thompson, Hine & Flory, L.L.P., and Peter D. Welin, for appellee Duke

Realty, Inc.

__________________

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