Court rules county can't appeal taxes on Oakhill complex

By Peter H. Milliken

Expect to pay the $421,000, the county auditor and treasurer say.

COLUMBUS — Mahoning County lacks the authority to appeal some $421,000 in real estate taxes that accumulated on Oakhill Renaissance Place before the county bought the complex in U.S. Bankruptcy Court in July 2006, the Ohio Supreme Court ruled Wednesday.

The county bought Oakhill for $75,000 after its former owner, Southside Community Development Corp., filed for Chapter 7 liquidation bankruptcy. At that time, the county agreed to be responsible for more than $900,000 worth of mortgages and liens on the property — including the tax bill if the tax appeal was unsuccessful.

The state tax commissioner rejected the nonprofit SCDC’s application for tax exemption for the property, and bankruptcy trustee Andrew Suhar appealed that rejection to the state’s Board of Tax Appeals.

The board denied the county’s motion to intervene in the tax appeal, and the county appealed that denial to the state’s top court. The high court ruled that the county can’t intervene or step into SCDC’s shoes because it didn’t own the property during the tax dispute.

“A later owner may not, through its own litigation, obtain the tax benefit of exemption for a prior year when it did not own the property,” according to the 4-3 decision’s majority opinion, written by Justice Judith Ann Lanzinger.

“The county, as current owner of the property, is subject to the tax lien of prior years and must make sure that back taxes are paid to enjoy continued ownership and possession of the property,” Lanzinger wrote.

Because the county knew about the real estate taxes owed when it bought the property, “It has no constitutional due process right to challenge those tax liabilities now,” Lanzinger wrote.

Located at 345 Oak Hill Ave., the Oakhill complex is the former Forum Health Southside Medical Center. Among other occupants, it houses the county’s Department of Job and Family Services and coroner’s office and the city health department.

Other county agencies, including the Veteran’s Service Commission, Green Team, auto title department and board of elections are scheduled to move there from the county’s South Side Annex.

Because of the closeness of the top court’s decision, Mahoning County Prosecutor Paul J. Gains, who represents the county commissioners, said he is considering asking the top court to reconsider the matter. Gains added that the county is also considering other legal remedies he declined to discuss.

To force the county to pay the taxes, Gains said county Treasurer Lisa Antonini could foreclose on the county-owned property. He observed, however, “It would be the county foreclosing on itself ... I think it would be absurd.”

During foreclosure proceedings, the county administration could enter into a tax payment agreement with its treasurer, Gains said.

To acquire the property in foreclosure, a buyer would have to bid at least two-thirds of Oakhill’s $3.6 million appraised value, and such a bid from a qualified buyer is unlikely, Gains said.

Had Oakhill been abandoned, the taxes would never be paid, and the city would likely have had to incur the high cost of removing asbestos and demolishing the building, Gains said.

“It means that we’re one step closer to being on the hook for the money,” Michael Sciortino, county auditor, said of the top court decision. The case now goes back to the state’s Board of Tax Appeals, which can now hear SCDC’s appeal, Sciortino said. It appears the county will eventually have to pay the taxes, he added.

“The taxes are not going away,” Antonini said. About 65 percent of the tax due would go to the city schools, she said.

“I wouldn’t want to foreclose on Oakhill. I mean, if I had to, I would. But I would hope that the county would do right and get on a payment plan with the county treasurer’s office to pay the taxes,” said Antonini, adding that she’d also consider selling the tax lien on Oakhill.

Suhar said he called Gains Wednesday and left a message, wanting to discuss whether there is anything Suhar can do concerning the tax issue without delaying the administration of the bankruptcy case, which is in its final stages.

Anthony T. Traficanti, chairman of the commissioners, did not respond to a request to comment.

Justice Lanzinger was joined by Chief Justice Thomas J. Moyer and Justices Terrence O’Donnell and Robert R. Cupp in the majority opinion.

In a tax appeal, state law says: “The owner of real property has standing to intervene and to litigate a pending appeal filed by the prior owner,” Justice Evelyn Lundberg Stratton wrote in her dissenting opinion. Denying the county the right to intervene in the tax appeal “violates fundamental fairness,” she added.

Lundberg Stratton was joined in her dissent by Justices Paul E. Pfeifer and Maureen O’Connor.

milliken@vindy.com