Court Opinion

ID: 6765422
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:36:15.685218+00
Date Added: 2024-06-11T16:02:41.105614
License: Public Domain

Holmes, J.,
dissenting. I am fully cognizant of the statutory basis upon which the majority has arrived at its conclusion that the Rickenbacker Port Authority (“RPA”) property is taxable. This conclusion is not unreasonable if the statutes authorizing the creation of port authorities and their available tax exemptions are narrowly construed. However, I believe that a broader interpretation of all pertinent sections of law pertaining to these governmental entities will more reasonably carry out the legislative intent, and bring one to the conclusion that the property under consideration here is exempt from real property taxation. Specifically, in this regard, R.C. 4582.59 states that: “Sections 4582.22 to 4582.99 of the Revised Code being necessary for the welfare of the state and its inhabitants shall be liberally construed to effect the purposes thereof.”
It is clear from a reading of the sections of law dealing with port authorities that the legislature created such entities as corporate bodies politic to exercise governmental powers for the benefit of the people of the state. It is also clear that the exercise of such powers is for a public purpose. Accordingly, R.C. Chapter 4582 provides specifically that “[t]he exercise by such port authority of the powers conferred upon it shall be deemed to be essential governmental functions of this state * * R.C. 4582.22(A). Also, in R.C. 4582.46, the legislature specifically provided that the activities of port authori*633ties are for a public purpose and extended to them a special exemption from property taxes.
The port authorities’ public purpose is reflected in the broad powers granted to them by the General Assembly pursuant to R.C. 4582.31. The various divisions of R.C. 4582.31 provide specific, broad powers to port authorities, including the following powers:
(1) To acquire property and to lease or rent from or operate port authority facilities (R.C. 4582.31[D]);
(2) To make available the use or services of the port authority facility to private individuals as well as government agencies (R.C. 4582.31[F]);
(3) To enjoy the same rights, privileges and powers granted municipal corporations (R.C. 4582.31[J]);
(4) To promote, advertise and publicize the port authority and its facilities to shippers and other commercial interests (R.C. 4582.31[M]);
(5) To acquire by gift or purchase, hold, lease and dispose of real and personal property and interests therein in the exercise of its powers (R.C. 4582.31[0]);
(6) To make and enter into all contracts and agreements and execute instruments necessary and incidental to the performance of its duties (R.C. 4582.31[Q]);
(7) To charge, alter and collect rents and other charges for the use or services of the port authority (R.C. 4582.31[V]); and
(8) To do all acts necessary or proper to carry out its powers expressly granted (R.C. 4582.31[X]).
The majority holds that the tax exemption for port authority property set forth in R.C. 4582.46 is the exclusive exemption for property owned by the port authorities, and may not be read in pari materia with other sections of law which exempt government property from taxation. However, the RPA argues here, and I agree, that the exemption provided by R.C. 4582.46 is not exclusive, but may reasonably be read in pari materia with R.C. 5709.08 and 5709.121, statutes which generally exempt government property from taxation. More specifically, R.C. 5709.08 exempts public property used exclusively for a public purpose. R.C. 5709.121(B) defines “exclusively” as “ * * * made available under the direction or control of [the public] institution * * * for use in furtherance of or incidental to its * * * public purposes and not with the view to profit.”
RPA argues that its exercise of its statutory powers is exclusively for public purposes and without a view to profit as to the undeveloped property, and consequently this property is exempt pursuant to R.C. 5709.08 and *6345709.121. RPA further argues that in addition to the public purpose exemption, an extra “safe harbor” from property taxation is provided by R.C. 4582.46 for port authority property subject to leases of one year or less. Thus, argues RPA, R.C. 4582.46 is in addition to the exemption available in R.C. 5709.08 and expands the exemption to port authorities by allowing property involved in profit-making enterprises to remain exempt so long as there is no lease for more than one year. This is not an unreasonable analysis of these sections of law read in pari materia.
The facts of this case are that RPA was established to generate the commercial and/or industrial development of Rickenbacker property deeded by the federal government to RPA, and by so doing to enhance the economic growth of the total surrounding area which had experienced a significant financial loss due to the removal of an annual military and civilian payroll of some $48 million. RPA, in order to carry out its overall governmental plan, enlisted the assistance of a private developer, Diversified Turner (“D/T”). To formalize this planned development relationship, RPA and D/T entered into an agreement in the form of a lease. As argued by RPA, this contractual relationship may be divided into distinct stages with different tax consequences. Stage one is the pre-developmental stage, when RPA received a nominal rental of $1 per acre per year, an amount which is obviously far less than RPA’s expenses related to the ownership of the property. During this period of time when commercial development and tenants are being sought by D/T, the developer, there is, within the meaning of R.C. 5709.121(B), no “view to profit”; at this stage, there is only the developer’s and RPA’s expectation of future profit.
Stage two of the contract of lease commences when commercial development is realized and tenants obtained. Once the property is commercially developed, RPA has the potential to receive additional revenue and a view to profit would exist. At the end of one year’s operation for profit, pursuant to R.C. 4582.46, the developed property becomes subject to real property taxes.
To specifically exemplify how this phasing-in of developed property to the tax rolls should take place under RPA’s lease agreement with D/T, the record here shows that the first commercial development at the airfield was an air cargo hub for Flying Tiger Line, Inc., which occupied approximately ninety-four of the 1,642 acres of RPA’s property, and that parcel remains taxable.
In keeping with the stated legislative policy that the statutes relative to port authorities should be liberally construed in order to carry out the purposes for which these governmental entities were created, the tax consequences of their holdings must be reasonably construed. From its inception through December 31, 1986, over ninety percent of RPA’s funding has been provided by *635taxpayers. It is not a reasonable interpretation of these laws to further burden taxpayers with real estate taxes on unproductive property during the period of its promotion and development. It seems more rational to provide tax exemption for this land held for a public purpose until the tenants have been found, commercial activity begins, and resulting profits are forthcoming.
The overall purposes and objectives of the development of port authorities in Ohio should be considered by this court and, in construing the related laws in a liberal manner, the undeveloped property of RPA should be found to be exempt from taxation.
In that the majority here has not construed the pertinent sections of law liberally and has not construed R.C. 4582.46 in pari materia with R.C. 5709.08 and 5709.121, it is my hope that the General Assembly will revisit this chapter of the Revised Code and make the necessary amendments that would give relief to RPA and other port authorities who may find themselves in such a position.
Wright, J., concurs in the foregoing dissenting opinion.