The Ohio Board of Tax Appeals recently ruled in favor of Avon Lake and three other Lorain County cities seeking to reclaim taxes they felt the county incorrectly distributed to them in 2003. The cities will divide a lump sum of $150,000.
The tax board, however, decided the cities still fell under the new allocation method for the subsequent years. Now the cities of Avon Lake, North Ridgeville, Elyria and Amherst Township will have to decide whether to pursue another appeal against the Lorain County Budget Commission.
Avon Lake Law Director Bill Kerner said he’s reviewing the decision and will meet with the law directors of the other cities. He expects a decision within a week or two.
“We have to review this further for the various political subdivisions,” he said. “I’m not sure what the answer to that is going to be.”
North Ridgeville Mayor Dave Gillock said he wants to pursue the taxes for the other years, so long as it’s cost effective.
“We’re not happy with the decision, although it indicates we won,” he said. “It says we won one year and lost the rest, which makes absolutely no sense.”
According to the tax board decision, the city of Lorain challenged the amount the Lorain County Budget Commission allocated to the city for distribution in 2003. In settling that claim, both sides agreed Lorain would receive a lump-sum payment of $500,000 for 2003, and there would be a new formula for 2004 that would adjust the apportionment percentages. The new formula increased the amount Lorain received and decreased the amount the other cities received.
In the settlement, Lorain County agreed to pay for half of the $500,000, leaving the other half to be paid for out of the 2004 undivided local government fund (ULGF) and the undivided local government revenue assistance fund (ULGRAF).
The cities who opposed this new formula claimed the amounts due to them in 2003 could not be changed in subsequent years because the change was part of a settlement in which they didn’t participate.
Though the tax board initially rejected the cities’ claim, the board reversed its decision, in part, after the Ohio Supreme Court returned the matter to the board in 2008. The tax board later agreed with the cities about the amount distributed for 2003. It also decided the 2004 formula must be amended for Elyria, Avon Lake, North Ridgeville and Amherst Township to remove the reimbursement of their pro-rata share of the settlement of the 2002 appeal. Though the tax board remanded the matter to the county budget commission for reallocating the 2004 distribution year, it upheld the formulas for 2005 and 2006.
The board found the new formula for the 2004 distribution to be valid because a majority taxing subdivisions other than the appealing cities approved the formula. The cities argued again the new formula was created as a part of a settlement they were not parties to, but the board disagreed.
“There is no requirement that an alternative formula be approved by all taxing subdivisions within a county,” the board wrote in its decision. “Therefore, it may always be the case that an individual taxing subdivision may not wish to have its allocation adjusted. Nevertheless, the legislature has concluded that a county, the most populous city in that county, and a majority of other taxing subdivisions have the power to make allocation adjustments, relying upon any factor considered appropriate and reliable. ”
The $150,000 will be distributed to each city. Kerner said Avon Lake would likely receive $30,000 to 40,000. North Ridgeville will receive $60,000 to 80,000, according to Gillock.
Contact Bryan Wroten at firstname.lastname@example.org