[Cite as Sugarcreek Twp. v. Centerville, 193 Ohio App.3d 408, 2011-Ohio-1830.]
IN THE COURT OF APPEALS OF GREENE COUNTY, OHIO
:
SUGARCREEK TOWNSHIP
Plaintiff-Appellee : C.A. CASE NO. 2010-CA-52
v. : T.C. CASE NO. 2006CV0784
: (Civil Appeal from
CITY OF CENTERVILLE Common Pleas Court)
Defendant-Appellant :
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OPINION
Rendered on the 15th day of April, 2011.
.........
Richard C. Brahm and Catherine A. Cunningham, for appellee.
Scott D. Phillips and Joseph W. Walker, for appellant.
Matthew J. DeTemple, for amici curiae the Ohio Township Association and Coalition of
Large Ohio Urban Townships.
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GRADY, Presiding Judge.
{¶ 1} This appeal concerns a dispute between plaintiff-appellee, Sugarcreek
Township, and defendant-appellant, city of Centerville, regarding land located in Sugarcreek
Township that was annexed by Centerville in 2006 pursuant to R.C. 709.023. This is the
second time this dispute is before us. We issued a decision on September 11, 2009, which
reversed the judgment of the trial court and remanded the cause for further proceedings.
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Sugarcreek Twp. v. Centerville, 184 Ohio App.3d 480, 2009-Ohio-4794 (“Sugarcreek I”).
{¶ 2} In 2006, Centerville entered into a preannexation agreement with the owner of
two parcels of real property located in Sugarcreek Township. The annexation was an
expedited type-2 annexation pursuant to R.C. 709.023, in which the annexed land nevertheless
also remains part of the township from which it was annexed. The terms of the
preannexation agreement required Centerville to enact an ordinance adopting a
tax-increment-financing plan (“TIF plan”) that would apply to the annexed land. On April
20, 2006, prior to the filing of the annexation petitions with the Greene County Board of
Commissioners, Sugarcreek adopted its own TIF plan that encompassed some of the annexed
lands.
{¶ 3} A TIF plan “is a method of financing that is used to pay for public
improvements. A public entity will sell bonds for public improvements and recoup the
money from the increase in value of property that is enhanced by the public improvements.
The property owners make service payments to a fund in lieu of property taxes, and the public
entity pays the bond obligations with the money in this fund, rather than with the public
entity’s general revenue fund.” Sugarcreek I at ¶ 24. R.C. 5709.40 authorizes a municipality
to adopt an ordinance creating a TIF plan.
{¶ 4} In late June and early July 2006, Greene County granted Centerville’s
annexation petitions. In September 2006, Sugarcreek commenced an action for declaratory
judgment in the common pleas court. In paragraph 58 of its second amended complaint,
Sugarcreek sought “a declaration that Centerville may not implement a TIF on the Annexed
Land, both because Sugarcreek is entitled to all real property tax receipts from the Annexed
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Land and because Centerville may not adopt a TIF on land that is already covered by
Sugarcreek’s TIF.” Sugarcreek also sought a declaration that Centerville’s annexation of the
two parcels of real property located in Sugarcreek Township was invalid because proper
procedures were not followed in annexing the land.
{¶ 5} The parties filed motions for summary judgment in the declaratory-judgment
action. The trial court found that Sugarcreek is entitled to all real property taxes collected
from the two parcels of land annexed by Centerville. Therefore, Centerville could not adopt a
TIF plan covering the annexed land. The court reasoned “that Centerville’s commitment in
the Pre-Annexation Agreement, that would result in Centerville’s TIF for the annexed land,
would divert real property taxes from Sugarcreek in violation of R.C. § 709.023(H).” The
trial court granted Sugarcreek a declaratory judgment “that the City of Centerville may not
implement a TIF on the annexed land * * * that would in any way divert real property taxes
for the annexed territory from Sugarcreek Township.” The trial court also found that the
annexations of the two parcels of land were properly petitioned, granted, accepted, and
completed in accordance with the requirements of applicable law.
{¶ 6} Centerville filed a notice of appeal from the trial court’s judgment, arguing that
Sugarcreek Township neither had standing to challenge the annexation nor had presented a
real case or controversy. Centerville also argued that the trial court had erred in finding that a
municipality may not enact a TIF plan covering property that has been annexed under the
expedited annexation procedure in R.C. 709.023.
{¶ 7} Based on our review of the record before us, we held that the trial court did not
err in finding that Sugarcreek had standing to bring a declaratory-judgment action and that the
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controversy was ripe for adjudication. Further, we concluded:
{¶ 8} “[T]he trial court erred in part in holding that Sugarcreek is entitled to all
property tax revenues from the annexed property. The trial court correctly concluded that
Centerville cannot interfere with Sugarcreek’s collection of real property tax revenue levied on
the unimproved and improved value of the real estate that remains in the township. However,
the court failed to recognize that Centerville is also entitled to its own share of the minimum
levies on the property * * * and can therefore enact TIF legislation to the extent that it does
not interfere with Sugarcreek’s right to collect its share of the minimum levies on the property
under the same statutes.” Sugarcreek I at ¶ 4.
{¶ 9} We reversed the judgment of the trial court and remanded the cause for further
proceedings consistent with our opinion. On remand, the parties could not agree on the
correct application of our judgment to the parties’ motions for summary judgment with regard
to the TIF plan that Centerville had agreed to implement in the preannexation agreements.
Following additional briefing by the parties, the trial court applied our reasoning with regard
to revenue that each entity could receive from the minimum levies (or statutory “inside
millage”), and further found that Centerville and Sugarcreek were entitled to their respective
revenues from additional levies (or voted “outside millage”) imposed by each for the annexed
territory. Consequently, Centerville could not adopt a TIF plan that would affect
Sugarcreek’s right to its outside millage. The trial court explained:
{¶ 10} “Centerville’s and Sugarcreek’s shares of the outside millage, are the outside
millage real property taxes voted respectively by the residents of Centerville and Sugarcreek,
including residents of the annexed territory, and applicable to Centerville and Sugarcreek
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respectively, including the annexed territory. Centerville may enact a TIF Plan to exempt its
own share of the outside millage applicable to the annexed territory. * * * But Centerville may
not enact a TIF Plan to exempt Sugarcreek’s share of the outside millage, i.e., real estate taxes
voted by Sugarcreek on Sugarcreek Township including the annexed territory. Those
Sugarcreek real estate taxes remain subject to Sugarcreek Township pursuant to O.R.C. §
709.023(H). Otherwise the last phrase of R.C. § 709.023(H) would refer only to inside
millage, a limitation not expressed or implied in the law, and, in the opinion of this Court, a
conclusion not intended by the Court of Appeals’ Opinion on September 11, 2009.”
{¶ 11} Centerville filed a notice of appeal, raising the following two assignments of
error:
FIRST ASSIGNMENT OF ERROR
{¶ 12} “The trial court erred as a matter of law in determining that a municipality
cannot TIF the voted (outside) millage of a township’s real property taxes on territory that has
been annexed utilizing the R.C. 709.023 (expedited type-2) annexation process.”
SECOND ASSIGNMENT OF ERROR
{¶ 13} “The trial court erred as a matter of law by re-construing then misapplying R.C.
709.023(H) on remand contrary to this court’s construction and opinion and by adding
language to R.C. 5709.40 that judicially amended the municipal TIF statute.”
{¶ 14} When reviewing a trial court’s grant of summary judgment, an appellate court
conducts a de novo review. Grafton v. Ohio Edison Co. (1996), 77 Ohio St.3d 102, 105.
“De Novo review means that this court uses the same standard that the trial court should have
used, and we examine the evidence to determine whether as a matter of law no genuine issues
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exist for trial.” Brewer v. Cleveland City Schools Bd. of Edn. (1997), 122 Ohio App.3d 378,
383, citing Dupler v. Mansfield Journal Co. (1980), 64 Ohio St.2d 116, 119-120. Therefore,
the trial court’s decision is not granted any deference by the reviewing appellate court.
Brown v. Scioto Cty. Bd. of Commrs. (1993), 87 Ohio App.3d 704, 711.
{¶ 15} Centerville argues that the trial court erred and varied from our mandate in
Sugarcreek I in holding that any TIF plan Centerville may adopt cannot interfere with
Sugarcreek’s right to revenue from the outside millage tax on the two annexed parcels that
Sugarcreek imposed. Because municipal annexations are governed by statute, we necessarily
refer to the sections of the Revised Code implicated by Centerville’s argument.
{¶ 16} Annexation is governed by R.C. Chapter 709. R.C. 709.02 to 709.11 govern
petitions for annexation filed by a majority of the owners of real property contiguous to a
municipal corporation. Prior to the enactment of S.B. 5 in 2001, once a municipality annexed
contiguous land that was situated in a township, the municipality then had to petition the
county’s board of commissioners to conform the resulting new boundaries of the municipality
and the township pursuant to R.C. 503.07. Sugarcreek I at ¶ 104. If a municipality failed to
so petition, the annexed property became part of the municipal corporation but also remained
part of the township. The taxpayers in the annexed area then resided both in the city and in
the township and were obligated to pay both taxes levied by the township and taxes levied by
the municipality. Id. at ¶ 106. If, however, a municipality successfully petitioned to conform
the boundaries pursuant to R.C. 503.07, the annexed land was no longer a part of the
township, but the municipality then was required to pay the township real property tax on the
annexed area. R.C. 709.19. “This indicates an intent to benefit townships, by allowing
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payment whenever any taxable property is excluded from the township.” Sugarcreek I at ¶
111.
{¶ 17} S.B. 5 was enacted in 2001. Among other things, the bill provided for an
expedited type-2 annexation procedure. The section governing that form of annexation is
R.C. 709.023. Sugarcreek I at ¶ 97-98. The section is not analogous to any sections of the
Revised Code enacted prior to 2001. Id. at ¶ 98. R.C. 709.023 provides for an expedited
annexation procedure in which the land annexed may not be excluded from the township
pursuant to the boundary conformity provisions of R.C. 503.07, and therefore remains a part
of the township. R.C. 709.023(A). R.C. 709.023(H) provides:
{¶ 18} “Notwithstanding anything to the contrary in section 503.07 of the Revised
Code, unless otherwise provided in an annexation agreement entered into pursuant to section
709.192 of the Revised Code or in a cooperative economic development agreement entered
into pursuant to section 701.07 of the Revised Code, territory annexed into a municipal
corporation pursuant to this section shall not at any time be excluded from the township under
section 503.07 of the Revised Code and, thus, remains subject to the township’s real property
taxes.” (Emphasis added.)
{¶ 19} The issue in the present case is whether R.C. 709.023(H), and particularly its
final clause, precludes Centerville from adopting a TIF plan that diminishes the tax revenue to
which Sugarcreek is entitled from the outside millage that Sugarcreek imposes on land
covered by the proposed Centerville TIF plan. It is undisputed that Centerville’s TIF plan
may not affect Sugarcreek’s right to tax revenue from its share of the statutory inside millage,
per Sugarcreek I.
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{¶ 20} Townships, like municipalities, are taxing authorities, R.C. 5705.01(A) and
(C), and, like municipalities, townships have authority to tax coextensively within their
borders. R.C. 5705.03; Roderer v. Miami Twp. Bd. of Trustees (1983), 14 Ohio App.3d 155,
158. R.C. 709.023(H) precludes a municipality that annexes land from a township through an
expedited type-2 annexation from petitioning to conform its boundaries pursuant to R.C.
503.07, and further provides that the annexed land “remains subject to the township’s real
property taxes.” Because Sugarcreek may tax coextensively with its borders, Sugarcreek
remains authorized after an expedited type-2 annexation to the revenue from the outside
millage tax that Sugarcreek imposed on the two parcels of land that Centerville annexed.
Consistent with Sugarcreek’s right in that respect, Centerville may not adopt a TIF plan that
diminishes the tax revenue from outside millage that Sugarcreek remains entitled to receive.
{¶ 21} Centerville argues that the plain language of R.C. 709.023(H) merely precludes
Centerville from conforming the boundaries of Centerville and Sugarcreek under R.C. 503.07,
and does not preclude Centerville from adopting a TIF ordinance under R.C. 5709.40 that
limits Sugarcreek’s ability to collect property taxes on the annexed property. As we
explained in our prior opinion, however, “R.C. 709.023(H) is not quite as narrow as
Centerville contends. R.C. 709.023(H) does not merely indicate that boundaries may not be
conformed; it also clearly states that [as a consequence of that prohibition,] the annexed
property ‘remains subject to the township’s real property taxes.’” Sugarcreek I at ¶ 134. We
believe that the plain language of R.C. 709.023(H) precludes Centerville from enacting a TIF
plan that would prevent Sugarcreek from collecting the property taxes, whether in the form of
inside millage or outside millage, to which it is entitled.
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{¶ 22} Centerville argues that it should be able to adopt a TIF plan that affects
Sugarcreek’s voted outside millage because the legislature could have amended R.C.
5709.40(F) to prevent such a result, but it did not. R.C. 5709.40(C)(1) provides:
{¶ 23} “The legislative authority of a municipal corporation may adopt an ordinance
creating an incentive district and declaring improvements to parcels within the district to be a
public purpose and, except as provided in division (F) of this section, exempt from taxation as
provided in this section * * *.”
{¶ 24} R.C. 5709.40(F)(1) through (12) identifies 12 local tax levies that are excepted
from the TIF plan tax exemption authorized by R.C. 5709.40(C)(1). Township real property
taxes are not included among the 12 exceptions. According to Centerville, the failure of the
legislature to include an exception for township real property taxes in R.C. 5709.40(F)
demonstrates that the legislature did not intend to preclude municipalities from enacting TIF
plans that interfere with the township’s authority to tax property within its borders. We do
not agree.
{¶ 25} In matters of statutory interpretation, expression of one thing generally suggests
exclusion of others. The 12 exceptions in R.C. 5709.40(F) were not added until well after the
passage of S.B. 5, authorizing expedited type-2 annexation. However, it was not necessary to
include an exception for expedited type-2 annexations in R.C. 5709.40(F) because the saving
clause in R.C. 709.023(H), specifying that land thus annexed “remains subject to the
township’s real property taxes,” served the same purpose. The expression of legislative intent
is the same under either alternative.
{¶ 26} Further, our interpretation of R.C. 709.023(H) is consistent with the
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legislature’s intent to benefit townships. For example, pursuant to R.C. 709.19(C)(2), a
municipality that conforms boundaries under R.C. 503.07 must continue to make tax
payments to a township even after the municipality has exempted the annexed property from
the township’s real property taxes through a TIF plan adopted pursuant to R.C. 5709.40.
Sugarcreek I at ¶ 115-116; R.C. 709.19(C)(2). It would be an absurd result to then permit
municipalities that are precluded by R.C. 709.023(H) from conforming boundaries to adopt a
TIF plan that limits a township’s ability to impose taxes on and receive tax payments for
property within its borders.
{¶ 27} Centerville also argues that, being a special provision, R.C. 5709.40(F) prevails
over R.C. 709.023(H), which is the more general provision, pursuant to R.C. 1.51. However,
R.C. 1.51 applies only when a “conflict between the provisions is irreconcilable.” Id.
Otherwise, the provisions “shall be construed, if possible, so that effect is given to both.” Id.
That outcome is readily available here.
{¶ 28} R.C. 709.023(H) and 5709.40 should be read in pari materia to permit a
municipal corporation to adopt a TIF ordinance affecting real property located within the
municipality pursuant to R.C. 5709.40, except to the extent that the real property “remains
subject to the real property taxes,” R.C. 709.023(H), of a township in which the real property
likewise remains located following a type-2 annexation. Therefore, the TIF plan that
Centerville enacts cannot diminish the outside millage taxes on the real property at issue
imposed by Sugarcreek Township or the revenue therefrom to which the township is entitled.
{¶ 29} The assignments of error are overruled. The judgment of the trial court is
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affirmed.
Judgement affirmed.
FAIN and FROELICH, JJ., concur.
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