County auditors to discuss options after Green Circle Growers tax appeal decision

With a state appeals court siding with a Camden Township business that argued its greenhouses are not taxable property, school and county officials continue to work out what this means for collecting levy money due to a number of political subdivisions in the future. Lorain County Auditor Craig Snodgrass met with members of the County Auditors Association of Ohio in Dublin on Thursday. The second vice president of the association, Snodgrass said he was planning to discuss the issues surrounding the Green Circle Growers decision made by the 9th Ohio District Court of Appeals on Monday. Attorneys for the county reached out to the attorney for Firelands to continue to discuss their options, he said. "There are still a lot of things we have to go through," Snodgrass said Wednesday. The court ruled 2-1 that for the purposes of taxation under Ohio law, Green Circle Growers' greenhouses are personal property or business fixtures, which lowers the business's tax liability by as much as $4 million, money that was owed the Firelands school district and several other recipients. That means that Green Circle Growers will be taxed on a portion of a $10 million valuation, not the $40 million the Lorain County Auditor's Office and Lorain County Board of Revision originally had estimated. Firelands Schools and Lorain County had argued that a 2018 Ohio Board of Tax Appeals decision in favor of Green Circle Growers, located on U.S. Route 20, was in error when it reached the same conclusion. The county and the schools argued the greenhouses are buildings, structures or improvements, making them subject to more significant property taxes. In a statement provided to The Chronicle-Telegram, Green Circle Growers said the Ohio Board of Tax Appeals and now the 9th District Court of Appeals "have agreed with the company's position that, according to definitions in the Ohio Revised Code, greenhouses on the property constitute 'business fixtures' and therefore are not subject to real estate taxes. By contrast, permanent buildings on Green Circle Growers' property, including the office building and warehouse, are subject to real estate taxes." The company, which said it has 100 acres of indoor growing space, 35 acres of outdoor growing space and 900 employees, "has a significant and positive economic impact on the local community. In addition to the company's share of property taxes, employees pay federal, state and local income taxes. The company and its owners have a history of generously supporting nonprofit organizations in the local community and beyond." Firelands and Snodgrass said this week they are considering taking the matter to the Ohio Supreme Court. Snodgrass said Wednesday that if the case eventually goes Green Circle's way, officials would need to ensure that those who received levy money were not further overpaid if the case continues. One option is to give Firelands Schools just a portion of what the district is due on its emergency levy and bond issues in the coming years "and not the rest." There are also some provisions in state law that give Snodgrass some discretion if he finds there is a hardship created in this situation. When it comes to emergency and bond levies like those that Firelands has, "I have to guarantee they get their money," he said. And there is some precedent for this during his time as auditor, Snodgrass said. In 2013, an Ohio Board of Tax Appeals decision went in favor of the Cleveland Clinic, following a years-long legal challenge by Amherst Schools. The schools ended up owing close to a $1 million refund to the Cleveland Clinic, and the two parties worked out a five-year payment plan so that the schools did not have to make a one-time lump-sum payment to the hospital system, Snodgrass recalled. There also remains some time to adjust payments to Firelands, county departments and other groups receiving support from property tax levies — the Lorain County Board of Developmental Disabilities, the Lorain County Metro Parks and the Central Lorain County Joint Ambulance District among them. It is likely that if the court's ruling stands and it turns out they were overpaid, those entities could simply receive less money than they would normally be due in future disbursements by the Auditor's Office, Snodgrass said. Snodgrass also said he usually meets with his staff before Thanksgiving to determine millage. Levies are passed to raise a specific amount of money — for example, $1 million over the life of the levy — so Snodgrass has to determine "what millage do I need to get to that million dollars?" So "homeowners and other businesses will feel a little bit more of that burden. In Camden Township, 16 or 17 percent of their value is Green Circle, which they will lose. That's pretty substantial," he said. Camden Township doesn't have the tax base of a city like Avon Lake or Elyria. With the township gaining about $3 million in valuation annually, it could take five or six years for the township's property tax rolls to make up for the losses resulting from the court's decision, Snodgrass said. The city of Huron in Erie County, west of Lorain County, has a number of greenhouses that Snodgrass said could end up off the tax rolls as "personal property" as a result of the court decision. Erie County Auditor Richard Jeffrey, with whom Snodgrass said he works closely, has been awaiting the final outcome of the Green Circle case to determine what he will do, Snodgrass said. A message seeking comment was left for Jeffrey on Thursday. Snodgrass said he has reached out to State Rep. Joe Miller, D-Amherst, to make him aware of the situation and see what state legislators can do to close any loopholes in "personal property" tax regulations. A message seeking comment was left for Miller on Thursday. Snodgrass said he hopes his fellow county auditors reach out to their legislators as well "because it affects all of us." "I could see a lot of businesses using this decision to say 'We're personal property, too,' or using other ways to construct things" that would alter their tax liability, Snodgrass said. "It might not be a greenhouse, but some other structure or building and someone will come in and say 'I'm personal property.' This is going to be an issue that is expanding and will take a lot of turns." Contact Dave O'Brien at (440) 329-7129 or dobrien@chroniclet.com. Follow him at @daveobrienCT on Twitter.