R. Douglas Miller
AGO 2017-24
No. 2017-024
Ohio Attorney General Opinions
Ohio Attorney General
July 26, 2017
R.
Douglas Miller
Sycamore
Township Law Director
8540
Kenwood Road
Sycamore
Township, Ohio 45236-2010
SYLLABUS:
1. A
board of township trustees may adopt a resolution pursuant to
R.C. 5709.73(B) exempting from real property taxation a
percentage of further improvements to a parcel of real
property that is already subject to a tax exemption under
R.C. 5709.73(B).
2. A
board of township trustees of a limited home rule township
may not enter into an agreement with an owner of a parcel of
real property that is exempt from real property taxation
pursuant to R.C. 5709.73(B), whereby the owner makes payments
to the township in lieu of taxes under terms that differ from
the provisions of R.C. 5709.74 and R.C. 5709.75.
Dear
Law Director Miller:
We have
received your opinion request regarding the authority of a
board of township trustees of a limited home rule township to
exempt from taxation improvements made to a parcel of real
property located within the unincorporated area of the
township pursuant to R.C. 5709.73(B). R.C. 5709.73(B)
provides that "[a] board of township trustees may, by
unanimous vote, adopt a resolution that declares to be a
public purpose any public infrastructure improvements made
that are necessary for the development of certain parcels of
land located in the unincorporated area of the
township."
1 R.C. 5709.73(B) authorizes the board
of township trustees to "exempt from real property
taxation not more than seventy-five per cent of further
improvements to a parcel of land that directly benefits from
the public infrastructure improvements, for a period of not
more than ten years."
2 "'Further
improvements' or 'improvements' means the
increase in the assessed value of real property that would
first appear on the tax list and duplicate of real and public
utility property after the effective date of a resolution
adopted under [R.C. 5709.73] were it not for the exemption
granted by that resolution."
3 R.C. 5709.73(A)(2);
see generally R.C. 319.28(A) (requiring a county
auditor to compile a general tax list and duplicate). A board
of township trustees "that has declared an improvement
to be a public purpose under [R.C. 5709.73] may require the
owner of the parcel to make annual service payments in lieu
of taxes," as set forth in R.C. 5709.74. R.C.
5709.74(A).
The
board of trustees of Sycamore Township has adopted a limited
home rule government pursuant to R.C. 504.01.
[4] The board of
township trustees desires to adopt a resolution pursuant to
R.C. 5709.73(B) that declares to be a public purpose public
infrastructure improvements made that are necessary for the
development of a parcel of real property located in the
unincorporated portion of the township.
5 The resolution will
exempt a percentage of further improvements to the parcel
from real property taxation. Rather than following the
procedures set forth in R.C. 5709.74, the board of township
trustees desires to enter into an agreement with the owner of
the parcel whereby the owner will make payments to the board
pursuant to the terms of the agreement. A portion of the
increased value of the parcel is already exempt from real
property taxation under R.C. 5709.73(B) pursuant to a
previous resolution adopted by the board of township
trustees.
You ask
several questions regarding the authority of the board of
township trustees to accomplish the foregoing objectives. For
ease of discussion, we have rephrased and renumbered your
questions as follows:
1. May a board of township trustees of a limited home rule
township adopt a resolution pursuant to R.C. 5709.73(B)
exempting from real property taxation a percentage of further
improvements to a parcel of real property that is already
subject to a tax exemption under R.C. 5709.73(B)?
2. May a board of township trustees of a limited home rule
township, rather than following the procedures set forth in
R.C. 5709.74, enter into an agreement with an owner of real
property, the improvements to which are exempt from real
property taxation pursuant to R.C. 5709.73(B), whereby the
owner agrees to make payments to the township in lieu of
taxes? If so, may the board of township trustees deposit the
payments made by the owner into the township general fund?
R.C. 5709.73-.75 are part of a series of laws enacted by the
General Assembly "to promote economic development in
Ohio." Sugarcreek Twp. v. City of Centerville,
133 Ohio St.3d 467, 2012-Ohio-4649, 979 N.E.2d 261, at
¶6 (analyzing the tax increment financing scheme
available to municipal corporations pursuant to R.C.
5709.40); see also R.C. 5709.671 ("the General
Assembly expresses its policy of encouraging political
subdivisions of this state to exercise the authority granted
under … [R.C. 5709.73-.75] … for the purposes
stated therein, and for the purposes of retaining existing or
creating new employment opportunities within the political
subdivision to the extent the exercise of such authority is
necessary to result in a net increase in employment in this
state above that which would prevail in the absence of the
use of such authority"). The authority and procedures
set forth in R.C. 5709.73-.75 "'permit [a township]
to engage in providing needed public improvements'"
in unincorporated areas of the township and to fund the
improvements through "'tax increment
financing.'" 1991 Op. Att'y Gen. No. 91-066, at
2-315 (quoting 1987-1988 Ohio Laws, Part II, 3539 (Sub. H.B.
390, eff. Oct. 20, 1987) (preamble)); see also 1989
Op. Att'y Gen. No. 89-079, at 2-367 ("R.C. 5709.73
provides a financing method that a township may use to pay
for public improvements that are needed for the development
of land in the unincorporated area of the township").
"Tax increment financing (TIF) is an economic
development tool that enables … townships … to
apply the increase in taxes resulting from an increase in the
assessed value of a developed parcel of land toward payment
of public improvements that directly benefit that
parcel." Ohio Legislative Service Comm'n, Final Bill
Analysis, Am. Sub. H.B. 405 (2001).
To create a TIF, [a township] (1) designates a parcel as
exempt from taxation on the increased valuation due to
improvements for a specified period of time, not to exceed 30
years, (2) generally requires the owner of the parcel to make
service payments in the amount of the exempted taxes, and (3)
applies those service payments towards financing public
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