Court Opinion

ID: 4157111
Source: CourtListenerOpinion
Date Created: 2017-03-31 17:15:18.200312+00
Date Added: 2024-06-11T14:50:15.607437
License: Public Domain

[Cite as Hiznay v. Boardman Twp., 2017-Ohio-1212.]

                          STATE OF OHIO, MAHONING COUNTY
                                IN THE COURT OF APPEALS
                                      SEVENTH DISTRICT

WILLIAM HIZNAY                                       )
                                                     )
        PLAINTIFF-APPELLANT                          )
                                                     )            CASE NO. 15 MA 0122
VS.                                                  )
                                                     )                   OPINION
BOARDMAN TOWNSHIP                                    )
                                                     )
        DEFENDANT-APPELLEE                           )

CHARACTER OF PROCEEDINGS:                            Civil Appeal from the Court of Common
                                                     Pleas of Mahoning County, Ohio
                                                     Case No. 2014 CV 02949

JUDGMENT:                                            Affirmed.

APPEARANCES:
For Plaintiff-Appellant                              Attorney Joshua Hiznay
                                                     1040 South Commons Place, Suite 202
                                                     Youngstown, Ohio 44514

For Defendant-Appellee                               Attorney Matthew Vansuch
                                                     6550 Seville Drive, Suite B
                                                     Canfield, Ohio 44406

JUDGES:

Hon. Mary DeGenaro
Hon. Gene Donofrio
Hon. Cheryl L. Waite

                                                     Dated: March 29, 2017
[Cite as Hiznay v. Boardman Twp., 2017-Ohio-1212.]
DeGENARO, J.

        {¶1}    Plaintiff-Appellant, William Hiznay, appeals the trial court's judgment
upholding Boardman Township's rental property registration program as imposing a
lawful fee rather than imposing a tax. As the Township's Resolution was proper, the
judgment of the trial court is affirmed.
                               Facts and Procedural History
        {¶2}    Hiznay is the owner of a two-family residential rental unit in Boardman
Township. On November 10, 2014, the Board of Trustees adopted Resolution 14-01
titled "Enacting a codified home rule resolution for Boardman Township regarding
landlord registration and rental unit standards." Hiznay filed a complaint for
declaratory judgment asking that the Resolution be declared illegal.
        {¶3}    Two months after Hiznay filed his complaint, the Trustees adopted
Resolution 15-01 titled "Amending Home Rule Resolution 14-01 for Boardman
Township regarding landlord registration and rental unit maintenance standards."
This Resolution amended parts of 14-01, but still required owners of rental units in
the Township to register their units and pay an annual fee. The Resolution also
authorized inspections and required that rental units conform to certain building
standards. The following evidence was adduced at a bench trial, as recounted in the
trial court's findings of facts:
        {¶4}    Boardman is the twelfth largest township in Ohio with a population over
40,000. It is nearly fully developed, with a mix of residential and commercial areas.
More than two-thirds of the residential properties were built between 1940 and 1980.
Of the 19,000 dwelling units in the Township, between 4,000 and 5,000 are not
owner-occupied. Of those units nearly 40% are owned by entities or individuals living
outside Boardman.
        {¶5}    In some neighborhoods in the northern section of the Township, 95% of
the residences were built before 1980. Several of these neighborhoods have seen
single-family, owner occupied residences being converted to duplexes and multi-
family units. Further, in the course of enforcing its exterior maintenance code,
building inspectors have discerned a pattern that problem properties are those where
                                                                              -2-

the owner cannot be found or is out of state with no local contact. Moreover, every
house the Township had recently demolished for being a nuisance and unfit for
human habitation was the result of interior conditions—mold, deterioration from
extensive water damage and excessive accumulation of trash—that caused the
houses to be condemned. Accordingly, the Township began tracking complaints and
discovered that most issues were from neighborhoods with more single-family rental
units than in other neighborhoods.
       {¶6}   The Township also conducted a study regarding the impact of rental
units on property values in specific neighborhoods and compared them to township-
wide and county-wide property values. The result of the study revealed that there
was a greater than 10% disparity in the decline of property values in the
neighborhoods with high duplex/multi-family units compared to the decline
throughout Boardman Township and Mahoning County.
       {¶7}   First, the Township began rezoning thousands of residential parcels
from R-2, which allows duplexes or multi-family units, to R-1, which only allows single
family homes. Second, the Township adopted the Resolution to enact a landlord
registration program and establish rental unit standards in order to protect the
property values of the rental units, the adjacent properties and the entire
neighborhood. The Township deemed this to be necessary for the general health,
safety and welfare of the general public. The Township further believed staff would
be successful in addressing violations by maintaining updated contact information for
landlords or their property managers, which would be obtained through the
application and certification process.
       {¶8}   The Resolution requires the owner to obtain an annual rental unit
certification. An annual fee is set based upon the number of units owned to
correspond with the actual time spent on each parcel. For example, an owner of a
single rental duplex would pay $40 per unit, whereas an owner of an apartment
building with more than six rental units would pay $150 plus $15 for each unit.
Further, the fee is set to not exceed the Township's anticipated actual costs to
                                                                                 -3-

administer the program, coverning nearly 5,000 rental unit owners. Anticipated costs
include distribution and processing the annual applications, conducting inspections
pursuant to complaints, filing abatement and enforcement actions and paying
associated attorney fees. To that end, the Township will review the fees after the first
three years of the program and every five years thereafter. The proceeds generated
by the annual fees are to be deposited into a restricted fund established by the
Township; the sole purpose of which is to pay the expenses and costs related to the
program.
       {¶9}   The Resolution sets minimum standards for residential units. It also
imposes separate, specific obligations upon the owner-landlord and occupant-tenant
so that the interior of the unit ultimately remains in a safe and sanitary condition. Both
owners and occupants can be cited for violations. Regarding enforcement, the
Resolution sets a fine structure. Regarding inspections, the program is complaint
based and authorizes the zoning inspector to enter a unit at a reasonable time if the
occupant grants permission. If permission is not or otherwise cannot be obtained, the
Resolution authorizes the Township to apply for an administrative search warrant.
       {¶10} The trial court first noted that as a matter of law Ohio courts recognize
the distinction between owner occupied versus rented residential property, the latter
requiring greater health and safety regulation, and the governmental interest in
protecting the community from unsafe housing is more critical with rental property.
The trial court found Hiznay failed to demonstrate by clear and convincing evidence
that the Resolution does not bear a real and substantial relation to the public health,
safety, morals or general welfare of the public, and that the Township presented
evidence demonstrating the Resolution was not arbitrarily enacted. Accordingly, the
trial court concluded that the Resolution was a proper exercise of the Township's
police power, and entered judgment in favor of the Township. For clarity of analysis
we will address Hiznay's assignments of error out of order.

                                  Building Standards
                                                                              -4-

      {¶11} In his second of three assignments of error, Hiznay asserts:

      The trial court erred as a matter of law by finding that Boardman
      Township did not adopt impermissible building standards.

      {¶12} "In Ohio, 'townships are creatures of the law and have only such
authority as is conferred on them by law.'" Drees Co. v. Hamilton Twp, 132 Ohio
St.3d 186, 2012-Ohio-2370, 970 N.E.2d 916, ¶ 13. Pursuant to Revised Code
Chapter 504, Boardman Township is a limited home rule township and may

      (A)(1) Exercise all powers of local self-government within the
      unincorporated area of the township, other than powers that are in
      conflict with general laws * * *
         (2) Adopt and enforce within the unincorporated area of the township
      local police, sanitary, and other similar regulations that are not in
      conflict with general laws or otherwise prohibited by division (B) of this
      section
      * * *
      (B) No resolution adopted pursuant to this chapter shall do any of the
      following:
      ***
      (4) Establish or revise building standards, building codes, and other
      standard codes except as provided in section 504.13 of the Revised
      Code[.]

R.C. 504.04
      {¶13} Hiznay argues that the Township, through its resolution, is attempting to
create or modify building standards which is something specifically prohibited
pursuant to R.C. 504.13. In the trial court proceedings, Hiznay conceded the
Township did not create a building code by enacting the Resolution, but rather
creates impermissible building maintenance standards. On appeal, Hiznay argues
                                                                               -5-

that since the county has adopted building codes for plumbing, electrical, heating,
and cooling systems, the Township is prohibited from adopting the resolution in
question because it attempts to regulate those same subjects.
        {¶14} The Resolution does not establish a building code but instead sets
property maintenance standards. As the trial court aptly pointed out, the Resolution
merely requires rental properties to be maintained, which removes it from the realm
of building codes; property maintenance codes are substantively different from
building codes. See Village of Ottawa Hills v. Boice, 6th Dist. No. L-12-1301, 2014-
Ohio-1992. The trial court correctly determined that the Resolution does not regulate
any of the areas prohibited by R.C. 504.13. Further, as Hiznay makes this assertion
without offering any county codes or standards into evidence we are unable to
determine whether an actual conflict exists. Accordingly, Hiznay's second assignment
of error is meritless.
                              Conflict with General Laws
        {¶15} In his third of three assignments of error, Hiznay asserts:

        The trial court erred as a matter of law by failing to find that Boardman
        Township's rental property registration program is in conflict with the
        general laws of the State of Ohio.

        {¶16} The trial court considered alleged conflicts between the Resolution and
three Revised Code Chapters: Chapter 4112, containing Ohio's civil rights statutes;
Chapter 5321, Ohio's Landlord-Tenant Act; and Chapter 5323, which sets forth
statutes governing Owner Information Requirements for Residential Rental Property.
The Township additionally contends that Hiznay argues the Resolution conflicts with
Chapter 1923, Ohio's forcible entry and detainer statute. Each will be discussed in
turn.
        {¶17} First, regarding Chapter 4112, the trial court concluded, "[t]here is no
merit to this argument, as HR-01 does not interfere with the anti-discrimination
practices outlined therein." Second, the trial court held that there was no conflict
                                                                                  -6-

between the Resolution and Chapter 5323. However, after referencing both of these
statutory chapters in his brief, Hiznay makes no further legal argument regarding
either. This Court cannot create an argument for an appellant as that would be
inherently unjust to the other parties. Presidential Estate Condo Assn. v. Slabochova,
7th Dist. No. 99-C.A-126, 2001 WL 315325, *2 (Mar. 28, 2001).
      {¶18} Third, Hiznay argues that the Resolution conflicts with R.C. Chapter
5321 explicitly and implicitly. Regarding the alleged conflict by implication, the trial
court found none. Regarding an explicit conflict, the trial court found one regarding
the responsible party for trash receptacles. Hiznay contends that since there is a
Revised Code Chapter dealing with landlord/tenant relations, the Township is
precluded from addressing this area. The First District rejected a similar argument:

      The association relies upon R.C. 5321.19, which provides in part, "No
      municipal corporation may adopt or continue in existence any ordinance
      * * * that is in conflict with this chapter, or that regulates the rights and
      obligations of parties to a rental agreement that are regulated by this
      chapter." But the statute goes on to state, "This chapter does not
      preempt any housing, building, health or safety code * * *." The
      provisions of R.C. Chapter 5321 "are intended to be preventative and
      supplemental to other remedial measures." They do not limit a court's
      power and duty to enforce all applicable building, housing, health, and
      safety codes.

      State laws only preempt local ordinances to the extent that that are
      utterly inconsistent with local law, or when the legislature has
      expressed a clear intention to override local law. The ordinance in this
      case is consistent with R.C. Chapter 5321, and therefore it is not
      preempted.      Consequently,    we   overrule    the   association's    first
      assignment of error.
                                                                                 -7-

Mariemont Apartment Assn. v. Village of Mariemont, 1st Dist. No. C-050986, 2007-
Ohio-173, ¶ 12-13.
       {¶19} The same rationale applies here. The Resolution was not utterly
inconsistent with Chapter 5321 except for R.C. 5321.04(A)(5) regarding trash
receptacles which the trial court severed from the Resolution.
       {¶20} Finally, R.C. Chapter 1923 was not mentioned or analyzed by the trial
court. Generally, errors not raised in the trial court cannot be raised for the first time
on appeal. State v. Carroll, 7th Dist. No. 95–C–9, 1996 WL 331113, *3 (June 13,
1996). However, an appellate court may still review the record for plain error. State v.
Ferrara, 7th Dist. No. 14 MA 4, 2015–Ohio–3822, ¶ 23. Again, Hiznay makes no
further legal argument on appeal beyond referencing Chapter 1923. Thus we need
not address this issue. Presidential Estate Condo Assn.
                                    Tax versus Fee
       {¶21} In his first and final of three assignments of error, Hiznay asserts:

       The trial court erred as a matter of law by finding the assessment
       charged by Boardman Township was a permissible fee and not an
       illegal tax.

       {¶22} There is no bright-line rule that distinguishes a tax from a fee, and each
case must be analyzed individually based on its own unique facts and circumstances.
State, ex rel. Petroleum Underground Storage Tank Release Comp. Bd. v. Withrow,
62 Ohio St. 3d 111, 115, 579 N.E.2d 705 (1991). Both parties agree that Drees Co. v.
Hamilton Twp., supra, is the controlling precedent. However, they disagree as to the
ultimate conclusion after applying the law to the facts of the present matter. Hiznay
argues that the rental fees imposed by the Township are an impermissible tax. The
Township acknowledges that it does not have the statutory authority to enact a tax,
but asserts townships are empowered to charge fees in return for a service provided
by the township.
       {¶23} In Drees, Hamilton Township imposed fees upon applicants for zoning
                                                                                -8-

certificates   for   new   construction   or   redevelopment   within   the   township's
unincorporated areas. Id. ¶ 3. The resolution included four fees: a road-impact fee, a
fire-protection-impact fee, a police-protection-impact fee, and a park-impact fee. Id.
The Ohio Supreme Court analyzed factors from two cases in reaching their holding
that the fees imposed by Hamilton Township were an improper tax not authorized by
general law. Id. ¶ 1.
       {¶24} The Drees Court stressed that a reviewing court must analyze the
substance of the assessments and not just their form. Id. ¶ 15. In doing so the Court
applied four factors from Withrow, where the Ohio Supreme Court held that the
assessments collected from owners and operators of underground storage tanks
constituted a fee rather than tax, and thus could be used to pay principal and interest
on revenue bonds issued to capitalize funds established by the state to assure
cleanup of underground storage tank leaks. Withrow, 116-117.
       {¶25} The four Withrow factors to apply when resolving whether the
assessment is a fee or a tax is to evaluate whether the assessment: 1) was imposed
to further regulatory measures to address a specified issue; 2) was used only for the
narrow and specified purpose and not placed in the general fund; 3) was imposed by
a government in return for a service it provides; and 4) was calculated and adjusted
so that the amount of funds generated were in an amount sufficient to cover the
expenses. Drees, ¶17-20; citing Withrow, at 113, 116-117.
       {¶26} First, the Drees Court found it significant that the fees imposed in
Withrow furthered regulatory measures designed to address environmental problems
caused by leaking underground storage tanks. The fees paid by the owners and
operators of the underground tanks went into a separate fund that assisted these
individuals in paying for corrective actions and damages. Drees, ¶ 17.
       {¶27} Second, the Withrow Court looked to see where the fees were
deposited: the general fund versus a specific fund. The assessments in Withrow were
never placed in the general fund and were to be used only "for narrow and specific
purposes, all directly related to UST problems." Withrow, 116-117.
                                                                               -9-

       {¶28} Third, in Withrow the Court concluded that a service was provided in
exchange for the fee, noting that "[a] fee is a charge imposed by a government in
return for a service it provides." Id. at 113. In exchange for the fee in Withrow, the
underground tank owners and operators received protection that resembled
insurance.
       {¶29} Lastly, the Withrow Court was persuaded by the fact that when the
unobligated balance in the fund exceeded a certain amount, there would be no
assessment for that year. Further, if the fund dipped below a certain amount, the
assessing authority was permitted to charge a supplemental assessment. "Thus, the
assessment appears to function more as a fee than as a tax, because a specific
charge in return for a service is involved." Withrow, 117.
       {¶30} The     Drees     Court    also   reviewed      Am.   Landfill,   Inc.   v.
Stark/Tuscarawas/Wayne Joint Solid Waste Mgt. Dist., 166 F.3d 835 (6th Cir.1999),
Bidart Bros. v. California Apple Comm., 73 F.3d 925 (9th Cir.1996), and San Juan
Cellular Tel. Co. v. Pub. Serv. Comm. Of Puerto Rico, 967 F.2d 683 (1st Cir. 1992).
The three-factor test discussed by these circuit courts was dubbed by the Ohio
Supreme Court as the Am. Landfill analysis; and when evaluating whether an
assessment is a fee or tax, a court should consider: "(1) the entity that imposes the
assessment; (2) the parties upon whom the assessment is imposed; and (3) whether
the assessment is expended for general public purposes, or used for the regulation
or benefit of the parties upon whom the assessment is imposed." Drees, ¶27 (internal
citations omitted.) The Drees Court elaborated:

       The court in San Juan described the classic versions of a tax and a fee:

              The classic "tax" is imposed by a legislature upon many,
              or all, citizens. It raises money, contributed to a general
              fund, and spent for the benefit of the entire community. * *
              * The classic "regulatory fee" is imposed by an agency
              upon those subject to its regulation. * * * It may serve
                                                                       - 10 -

      regulatory purposes directly by, for example, deliberately
      discouraging particular conduct by making it more
      expensive. * * * Or, it may serve such purposes indirectly
      by, for example, raising money placed in a special fund to
      help defray the agency's regulation-related expenses.

San Juan at 685.

In regard to the first two factors—the entity that imposes the
assessment and the entity that must pay the assessment—"[a]n
assessment imposed directly by the legislature is more likely to be a tax
than an assessment imposed by an administrative agency" and "[a]n
assessment imposed upon a broad class of parties is more likely to be
a tax than an assessment imposed upon a narrow class." Bidart, 73
F.3d at 931, citing San Juan, 967 F.2d at 685.

Most assessments fall somewhere near the middle of the spectrum
between a fee and a tax; in such cases, the use of the funds becomes
the predominant factor in making the ultimate determination:

      Both San Juan and Bidart indicate that for cases where
      the assessment falls near the middle of the spectrum
      between a regulatory fee and a classic tax, the
      predominant factor is the revenue's ultimate use. See San
      Juan, 967 F.2d at 685; Bidart, 73 F.3d at 932. When the
      ultimate use is to provide a general public benefit, the
      assessment is likely a tax, while an assessment that
      provides a more narrow benefit to the regulated
      companies is likely a fee. See id.

      Am. Landfill, 166 F.3d at 837–838.
                                                                               - 11 -

Drees, ¶ 28-30.
      {¶31} The Drees Court analyzed the use of the funds generated by the impact
fees in that case, concluding:

      Here, the assessment results in no direct service to the landowner,
      other than the issuance of a zoning certificate, for which there is already
      a separate $200 fee. When the amount of the fee exceeds the cost and
      expense of the service, the fee constitutes a tax. Granzow v.
      Montgomery Cty. Bur. of Support, 54 Ohio St. 3d 35, 38, 560 N.E.2d
1307 (1990). The impact fees are a revenue-generating measure
      designed to support infrastructure improvements benefiting the entire
      township. "Taxation refers to those general burdens imposed for the
      purpose of supporting the government, and more especially the method
      of providing the revenues which are expended for the equal benefit of
      all the people." Cincinnati v. Roettinger, 105 Ohio St. 145, 153–154,
      137 N.E. 6 (1922).

Drees, ¶ 40.
      {¶32} After analyzing the substance of the assessments, the Drees Court
concluded that the impact fees charged by Hamilton Township constituted taxes, and
since those taxes were not authorized by general law, the township was not
authorized to impose them pursuant to R.C. 504.04(A)(1).
      {¶33} We now turn to applying the Withrow and Am.Landfill factors to this
appeal to determine whether the Resolution imposed a fee or a tax.
      {¶34} Regarding the first Withrow factor—whether the assessment was
imposed to further regulatory measures to address a specified issue—this weighs in
favor of a fee. Albeit not a fee as definitively as in Withrow, nonetheless this factor
does not weigh heavily in favor of a tax as in Drees. The Township was facing the
problem of aging, depreciated properties that once were owner occupied, but have
since been converted to rental properties. The problem was compounded by 40% of
                                                                                 - 12 -

the owners of residential rental properties living outside the Township, and officials
lacking contact information in order to correct unsafe/unsanitary conditions before
properties needed to be condemned.
       {¶35} To address these problems, the Resolution set up a mechanism to
obtain and annually maintain current contact information for owner-landlords. The
Resolution additionally sets minimum maintenance standards for residential units and
imposes separate, specific, detailed obligations upon the owner-landlord and
occupant-tenant; particularly focusing on the interior of the unit, so that it ultimately
remains in a safe and sanitary condition. Both owners and occupants can be cited
for violations. The Resolution creates a program to reduce the accelerated rate of
property value depreciation of this segment of the Township's housing market, which
has had a documented negative impact on the value of those rental properties,
adjacent properties and the local neighborhood, when contrasted with the Township
as a whole and the county.
       {¶36} The second Withrow factor—whether the assessment will be used only
for the narrow and specified purpose and not placed in the general fund—weighs in
favor of a fee. The fee is assessed to finance the extra costs of creating and
maintaining annually thereafter a list of all residential rental property owners—which
involve 4,000-5,000 units—as well as managing all complaints, especially interior
violations in this segment of the Township housing market. Finally, the fees are
maintained in a separate account to pay the costs, for example, of condemnation and
attendant attorney fees; they are not included in the Township's general fund.
       {¶37} The third Withrow factor—whether the assessment was imposed by a
government in return for a service it provides—weighs in the middle of the fee or tax
spectrum. These are services provided by the Township for a particular property
owner demographic to address issues unique to residential rentals, and to ultimately
preserve those property values to the benefit of the owners.
       {¶38} At first blush the services outlined in the Resolution may appear to be
services typically provided as in Drees. However, the assessment in Drees was for
                                                                               - 13 -

government services provided to all residents; there were no special, separate or
additional services provided to those paying the impact fees. Conversely, this case
involves two distinct types of residential property: owner occupied versus rental. The
latter requires greater health and safety regulation and the governmental interest in
protecting the community from unsafe housing is more critical with rental property.
As such the requirements of the Resolution fall within the Township's police powers.
The assessment provides the Township with the additional financial resources to
enforce the maintenance requirements being adopted and to do so in order to reduce
complaints, the majority of which were in neighborhoods with more single-family
rental units than elsewhere in the Township, which also have a 10% disparate
decrease in property values. Thus, this factor tends towards the fee end of the
spectrum when compared to the assessment permitted in Withrow.
       {¶39} The fourth and final Withrow factor—whether the assessment is
calculated and adjusted so that the funds generated were in an amount sufficient to
cover the expenses—weighs in favor of a fee. Here, the fee was set to not exceed
the Township's anticipated actual costs to administer the program. To that end, the
Township would review the fees after the first three years of the program and every
five years thereafter. This is akin to the facts in Withrow, which provided for an
adjustment of the assessment in that case. Conversely, in Drees, there was no
adjustment to the assessment.
       {¶40} We next turn to the Am. Landfill factors, which somewhat overlap those
from Withrow, and apply them to the assessment imposed by the Township's
Resolution. The first factor is identifying the entity imposing the assessment, and
here a township as opposed to a regulatory agency is imposing the assessment.
Thus, this factor is more in the nature of a tax as contemplated by Am. Landfill.
       {¶41} The second factor is ascertaining the parties who are being assessed.
Here, the Township is imposing the assessment only upon the owners of residential
rental units. Thus this factor is more in the nature of a fee as contemplated by Am.
Landfill.
                                                                                 - 14 -

       {¶42} The third and final factor is whether the assessment benefits the
general public or the parties upon whom it is imposed, and here the answer is the
latter. As contemplated in San Juan, the assessments are placed in a special fund to
help defray the regulation-related expenses, including abatement or condemnation
actions and the related attorney fees incurred by the Township. Finally, complaints
under this Resolution program can only be made and enforced against residential
rental units; they cannot be applied to, for example, owner-occupied residences or
commercial property. Thus, on balance, the three Am. Landfill factors weigh in favor
of a fee.
       {¶43} Here, the stated purpose of the resolution was to "protect the integrity
of our neighborhoods through the registration of landlords and establishment of rental
unit standards, which is necessary for the general health, safety and welfare of the
general public." Coupled with a majority of the Withrow and American Landfill factors,
the assessment imposed by the Township is a fee. As a matter of law there is a
distinction between owner occupied versus rented residential property, the latter
requiring greater health and safety regulation, and the governmental interest in
protecting the community from unsafe housing is more critical with rental property.
Accordingly, for all these reasons, Hiznay's first assignment of error is meritless.
       {¶44} In sum, Hiznay's three assignments of error are meritless as the
Township's Resolution was proper. Accordingly, the judgment of the trial court is
affirmed.

Donofrio, J., concurs.

Waite, J., concurs.