Appeals court to Mason: Pay up

March 12, 2013 By Rachel Richardson
Cincinnati Enquirer

The city of Mason owes Deerfield Township $1.6 million in back taxes, an Ohio appellate court has ruled.

The Ohio 12th District Court of Appeals upheld a decision this month by a Warren County Court of Common Pleas judge in the case, which stems from a 1995 battle over tax-rich township land between the neighboring Warren County communities.

“Deerfield is very pleased with the court of appeals’ decision,” said Deerfield Township Law Director Tom Swope.

Deerfield filed the suit against Mason in July 2010, saying the city underpaid taxes owed in accordance with a 1995 reparation agreement reached when the city annexed 262 acres along Mason-Montgomery Road, where Cincinnati-based Procter & Gamble built its $300 million health-care research facility.

In that agreement, Deerfield agreed not to contest the annexation so long as Mason agreed to fully compensate the township for lost real estate and personal property taxes it would have generated had Mason not annexed the property.

In turn, P&G employees would pay Mason’s 1 percent earnings tax, a figure that’s now estimated to bring in about $2 million annually to the city’s coffers, according to Swope.

The disagreement stems from changes in taxes from parks and fire levies that went into effect in in Deerfield in 1999, as well as a new statewide commercial activity tax approved by the Ohio legislature in 2005.

Calls to Mason’s law director were not returned, but court documents show Mason officials claimed the levies and changes in state law were not intended to be part of payments. The city also argued that the trial judge erred in awarding prejudgment interest to Deerfield from each annual payment Mason should have made to the township.

The three-judge appellate court disagreed in a decision issued on March 4, saying “reasonable minds” conclude that Mason is required to reimburse Deerfield taxes it would have received but for the annexation, and that prejudgment interest is mandatory in cases like this.

Swope says the $1.6 million judgment represents a “sizeable amount” for a township with an annual budget of about $22 million.

“We’re getting the money we should have gotten the past 16 years,” he said. “We think we’re entitled to it under the agreement and now four judges have agreed. We hope (Mason) will pay it.”