County Auditor hopes Ohio Supreme Court will review greenhouse tax case

The Lorain County Auditor’s Office hopes to take the fight to the Ohio Supreme Court to determine if greenhouses should be counted for property taxes.

On April 28, Lorain County Commissioners Michelle Hung, David J. Moore and Matt Lundy voted 3-0 to authorize legal expenses for county Auditor Craig Snodgrass.

The Auditor’s Office will hire outside legal counsel to assist with its request for the state Supreme Court to consider an appeals court verdict in the legal fight over how greenhouses should be taxed.

The case stems from the property tax dispute involving Green Circle Growers, which has argued the greenhouses are personal property not subject to property taxes on its 186-acre site at 51051 U.S. Route 20 in Camden Township.

Firelands Local Schools and Snodgrass have argued the greenhouses are legal “buildings” and “structures” that should be included in the company’s property valuation for property taxes.

In March, judges of Ohio’s Ninth District Court of Appeals ruled 2-1 that the structures were real property.

Snodgrass will ask the state Supreme Court to review that ruling, but he noted the High Court is not obligated to hear the case.

Meet the grower

The appeals court decision affirmed a 2018 ruling by the Ohio Board of Tax Appeals in favor of Green Circle Growers, reducing the amount of property tax the company owed for tax years 2015 and 2016, said Columbus attorney Jonathan T. Brollier, who represented the company.

“The (Board of Tax Appeals) and now the 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,” Brollier said in a statement after the court ruling. “By contrast, permanent buildings on Green Circle Growers’ property, including the office building and warehouse, are subject to real estate taxes.

“With its 900 employees, Green Circle Growers 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.”

Ohio tax law

The issue may seem arcane, but Snodgrass said it has far-reaching effects in Ohio tax law if business owners begin arguing various structures are personal property that should not be counted for property taxes paid to school districts and local governments.

“We can think of other businesses that are going to raise the same type of arguments,” he said.

Snodgrass cited car washes and storage units as other examples.

Lorain County Assistant Prosecutor Dan Petticord gave the example of golf courses and their sprinkler systems, and the Ninth District Court of Appeals cited an earlier High Court ruling about the tax status of an amusement park roller coaster.

County claims

Green Circle Growers is in the top 10 largest greenhouses in the country, Snodgrass said.

If the company prevails in court, Green Circle Growers would be due refunds of taxes paid — possibly $400,000 from Lorain County and about $2.2 million from Firelands Schools, he said.

Lorain County JVS, Camden Township, Kipton Village, Lorain County Public Health and the local joint ambulance district are other political subdivisions that would be affected, Snodgrass said.

Then, going forward, other businesses and property owners will have to pay more because the tax burden shifts to them, he said.

“It’s not necessarily against the business, but it’s for the taxpayers,” Snodgrass said. “We’re trying to protect the tax base, that everybody pays their fair share.”

The county commissioners authorized $35,000 in expenses for the appeal to the Ohio Supreme Court.

If accepted, the Auditor’s Office will spend up to $150,000 for the court case.

Snodgrass will use his office’s real estate assessment funds to pay for the legal counsel.

It is not general fund money and Snodgrass acknowledged it’s a substantial amount of money that his office has saved through its internal operations.

The county Auditor’s Office aims to hire the firm Tucker Ellis LLP, Petticord said.

The county Prosecutor’s Office does not have the skill or resources to specialize in that work, he said.

“I think this is exactly why we go to outside counsel,” Petticord said.

“Craig is right,” he said. “The consequences of this decision long-term are going to be significant.

“In my opinion, it’s a fight worth having, and it’s a fight putting the right people in place to have it.”

Lundy noted Lorain County officials are not targeting a specific business.

But, they are arguing Ohio’s tax law is not correct, he said.

“It’s just important that everybody pay their fair share,” Lundy said.