[Cite as Sugarcreek Twp. v. Centerville, 193 Ohio App.3d 408, 2011-Ohio-1830.]




              IN THE COURT OF APPEALS OF GREENE COUNTY, OHIO

                                                    :
SUGARCREEK TOWNSHIP
    Plaintiff-Appellee                              :     C.A. CASE NO. 2010-CA-52

v.                                                  :     T.C. CASE NO. 2006CV0784

                                                    :     (Civil Appeal from
CITY OF CENTERVILLE                                       Common Pleas Court)
      Defendant-Appellant                :

                                              .........

                                             OPINION

                              Rendered on the 15th day of April, 2011.

                                              .........

Richard C. Brahm and Catherine A. Cunningham, for appellee.

Scott D. Phillips and Joseph W. Walker, for appellant.

Matthew J. DeTemple, for amici curiae the Ohio Township Association and Coalition of
Large Ohio Urban Townships.

                                              .........

        GRADY, Presiding Judge.

        {¶ 1} This appeal concerns a dispute between plaintiff-appellee, Sugarcreek

Township, and defendant-appellant, city of Centerville, regarding land located in Sugarcreek

Township that was annexed by Centerville in 2006 pursuant to R.C. 709.023. This is the

second time this dispute is before us. We issued a decision on September 11, 2009, which

reversed the judgment of the trial court and remanded the cause for further proceedings.
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Sugarcreek Twp. v. Centerville, 184 Ohio App.3d 480, 2009-Ohio-4794 (“Sugarcreek I”).

         {¶ 2} In 2006, Centerville entered into a preannexation agreement with the owner of

two parcels of real property located in Sugarcreek Township.        The annexation was an

expedited type-2 annexation pursuant to R.C. 709.023, in which the annexed land nevertheless

also remains part of the township from which it was annexed.             The terms of the

preannexation agreement required Centerville to enact an ordinance adopting a

tax-increment-financing plan (“TIF plan”) that would apply to the annexed land. On April

20, 2006, prior to the filing of the annexation petitions with the Greene County Board of

Commissioners, Sugarcreek adopted its own TIF plan that encompassed some of the annexed

lands.

         {¶ 3} A TIF plan “is a method of financing that is used to pay for public

improvements. A public entity will sell bonds for public improvements and recoup the

money from the increase in value of property that is enhanced by the public improvements.

The property owners make service payments to a fund in lieu of property taxes, and the public

entity pays the bond obligations with the money in this fund, rather than with the public

entity’s general revenue fund.” Sugarcreek I at ¶ 24. R.C. 5709.40 authorizes a municipality

to adopt an ordinance creating a TIF plan.

         {¶ 4} In late June and early July 2006, Greene County granted Centerville’s

annexation petitions. In September 2006, Sugarcreek commenced an action for declaratory

judgment in the common pleas court. In paragraph 58 of its second amended complaint,

Sugarcreek sought “a declaration that Centerville may not implement a TIF on the Annexed

Land, both because Sugarcreek is entitled to all real property tax receipts from the Annexed
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Land and because Centerville may not adopt a TIF on land that is already covered by

Sugarcreek’s TIF.” Sugarcreek also sought a declaration that Centerville’s annexation of the

two parcels of real property located in Sugarcreek Township was invalid because proper

procedures were not followed in annexing the land.

       {¶ 5} The parties filed motions for summary judgment in the declaratory-judgment

action. The trial court found that Sugarcreek is entitled to all real property taxes collected

from the two parcels of land annexed by Centerville. Therefore, Centerville could not adopt a

TIF plan covering the annexed land. The court reasoned “that Centerville’s commitment in

the Pre-Annexation Agreement, that would result in Centerville’s TIF for the annexed land,

would divert real property taxes from Sugarcreek in violation of R.C. § 709.023(H).” The

trial court granted Sugarcreek a declaratory judgment “that the City of Centerville may not

implement a TIF on the annexed land * * * that would in any way divert real property taxes

for the annexed territory from Sugarcreek Township.” The trial court also found that the

annexations of the two parcels of land were properly petitioned, granted, accepted, and

completed in accordance with the requirements of applicable law.

       {¶ 6} Centerville filed a notice of appeal from the trial court’s judgment, arguing that

Sugarcreek Township neither had standing to challenge the annexation nor had presented a

real case or controversy. Centerville also argued that the trial court had erred in finding that a

municipality may not enact a TIF plan covering property that has been annexed under the

expedited annexation procedure in R.C. 709.023.

       {¶ 7} Based on our review of the record before us, we held that the trial court did not

err in finding that Sugarcreek had standing to bring a declaratory-judgment action and that the
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controversy was ripe for adjudication. Further, we concluded:

        {¶ 8} “[T]he trial court erred in part in holding that Sugarcreek is entitled to all

property tax revenues from the annexed property. The trial court correctly concluded that

Centerville cannot interfere with Sugarcreek’s collection of real property tax revenue levied on

the unimproved and improved value of the real estate that remains in the township. However,

the court failed to recognize that Centerville is also entitled to its own share of the minimum

levies on the property * * * and can therefore enact TIF legislation to the extent that it does

not interfere with Sugarcreek’s right to collect its share of the minimum levies on the property

under the same statutes.” Sugarcreek I at ¶ 4.

        {¶ 9} We reversed the judgment of the trial court and remanded the cause for further

proceedings consistent with our opinion. On remand, the parties could not agree on the

correct application of our judgment to the parties’ motions for summary judgment with regard

to the TIF plan that Centerville had agreed to implement in the preannexation agreements.

Following additional briefing by the parties, the trial court applied our reasoning with regard

to revenue that each entity could receive from the minimum levies (or statutory “inside

millage”), and further found that Centerville and Sugarcreek were entitled to their respective

revenues from additional levies (or voted “outside millage”) imposed by each for the annexed

territory.   Consequently, Centerville could not adopt a TIF plan that would affect

Sugarcreek’s right to its outside millage. The trial court explained:

        {¶ 10} “Centerville’s and Sugarcreek’s shares of the outside millage, are the outside

millage real property taxes voted respectively by the residents of Centerville and Sugarcreek,

including residents of the annexed territory, and applicable to Centerville and Sugarcreek
                                                                                               5

respectively, including the annexed territory. Centerville may enact a TIF Plan to exempt its

own share of the outside millage applicable to the annexed territory. * * * But Centerville may

not enact a TIF Plan to exempt Sugarcreek’s share of the outside millage, i.e., real estate taxes

voted by Sugarcreek on Sugarcreek Township including the annexed territory.               Those

Sugarcreek real estate taxes remain subject to Sugarcreek Township pursuant to O.R.C. §

709.023(H). Otherwise the last phrase of R.C. § 709.023(H) would refer only to inside

millage, a limitation not expressed or implied in the law, and, in the opinion of this Court, a

conclusion not intended by the Court of Appeals’ Opinion on September 11, 2009.”

         {¶ 11} Centerville filed a notice of appeal, raising the following two assignments of

error:

         FIRST ASSIGNMENT OF ERROR

         {¶ 12} “The trial court erred as a matter of law in determining that a municipality

cannot TIF the voted (outside) millage of a township’s real property taxes on territory that has

been annexed utilizing the R.C. 709.023 (expedited type-2) annexation process.”

         SECOND ASSIGNMENT OF ERROR

         {¶ 13} “The trial court erred as a matter of law by re-construing then misapplying R.C.

709.023(H) on remand contrary to this court’s construction and opinion and by adding

language to R.C. 5709.40 that judicially amended the municipal TIF statute.”

         {¶ 14} When reviewing a trial court’s grant of summary judgment, an appellate court

conducts a de novo review. Grafton v. Ohio Edison Co. (1996), 77 Ohio St.3d 102, 105.

“De Novo review means that this court uses the same standard that the trial court should have

used, and we examine the evidence to determine whether as a matter of law no genuine issues
                                                                                            6

exist for trial.” Brewer v. Cleveland City Schools Bd. of Edn. (1997), 122 Ohio App.3d 378,

383, citing Dupler v. Mansfield Journal Co. (1980), 64 Ohio St.2d 116, 119-120. Therefore,

the trial court’s decision is not granted any deference by the reviewing appellate court.

Brown v. Scioto Cty. Bd. of Commrs. (1993), 87 Ohio App.3d 704, 711.

       {¶ 15} Centerville argues that the trial court erred and varied from our mandate in

Sugarcreek I in holding that any TIF plan Centerville may adopt cannot interfere with

Sugarcreek’s right to revenue from the outside millage tax on the two annexed parcels that

Sugarcreek imposed. Because municipal annexations are governed by statute, we necessarily

refer to the sections of the Revised Code implicated by Centerville’s argument.

       {¶ 16} Annexation is governed by R.C. Chapter 709. R.C. 709.02 to 709.11 govern

petitions for annexation filed by a majority of the owners of real property contiguous to a

municipal corporation. Prior to the enactment of S.B. 5 in 2001, once a municipality annexed

contiguous land that was situated in a township, the municipality then had to petition the

county’s board of commissioners to conform the resulting new boundaries of the municipality

and the township pursuant to R.C. 503.07. Sugarcreek I at ¶ 104. If a municipality failed to

so petition, the annexed property became part of the municipal corporation but also remained

part of the township. The taxpayers in the annexed area then resided both in the city and in

the township and were obligated to pay both taxes levied by the township and taxes levied by

the municipality. Id. at ¶ 106. If, however, a municipality successfully petitioned to conform

the boundaries pursuant to R.C. 503.07, the annexed land was no longer a part of the

township, but the municipality then was required to pay the township real property tax on the

annexed area. R.C. 709.19. “This indicates an intent to benefit townships, by allowing
                                                                                              7

payment whenever any taxable property is excluded from the township.” Sugarcreek I at ¶

111.

       {¶ 17} S.B. 5 was enacted in 2001. Among other things, the bill provided for an

expedited type-2 annexation procedure. The section governing that form of annexation is

R.C. 709.023. Sugarcreek I at ¶ 97-98. The section is not analogous to any sections of the

Revised Code enacted prior to 2001. Id. at ¶ 98. R.C. 709.023 provides for an expedited

annexation procedure in which the land annexed may not be excluded from the township

pursuant to the boundary conformity provisions of R.C. 503.07, and therefore remains a part

of the township. R.C. 709.023(A). R.C. 709.023(H) provides:

       {¶ 18} “Notwithstanding anything to the contrary in section 503.07 of the Revised

Code, unless otherwise provided in an annexation agreement entered into pursuant to section

709.192 of the Revised Code or in a cooperative economic development agreement entered

into pursuant to section 701.07 of the Revised Code, territory annexed into a municipal

corporation pursuant to this section shall not at any time be excluded from the township under

section 503.07 of the Revised Code and, thus, remains subject to the township’s real property

taxes.” (Emphasis added.)

       {¶ 19} The issue in the present case is whether R.C. 709.023(H), and particularly its

final clause, precludes Centerville from adopting a TIF plan that diminishes the tax revenue to

which Sugarcreek is entitled from the outside millage that Sugarcreek imposes on land

covered by the proposed Centerville TIF plan. It is undisputed that Centerville’s TIF plan

may not affect Sugarcreek’s right to tax revenue from its share of the statutory inside millage,

per Sugarcreek I.
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       {¶ 20} Townships, like municipalities, are taxing authorities, R.C. 5705.01(A) and

(C), and, like municipalities, townships have authority to tax coextensively within their

borders. R.C. 5705.03; Roderer v. Miami Twp. Bd. of Trustees (1983), 14 Ohio App.3d 155,

158. R.C. 709.023(H) precludes a municipality that annexes land from a township through an

expedited type-2 annexation from petitioning to conform its boundaries pursuant to R.C.

503.07, and further provides that the annexed land “remains subject to the township’s real

property taxes.” Because Sugarcreek may tax coextensively with its borders, Sugarcreek

remains authorized after an expedited type-2 annexation to the revenue from the outside

millage tax that Sugarcreek imposed on the two parcels of land that Centerville annexed.

Consistent with Sugarcreek’s right in that respect, Centerville may not adopt a TIF plan that

diminishes the tax revenue from outside millage that Sugarcreek remains entitled to receive.

       {¶ 21} Centerville argues that the plain language of R.C. 709.023(H) merely precludes

Centerville from conforming the boundaries of Centerville and Sugarcreek under R.C. 503.07,

and does not preclude Centerville from adopting a TIF ordinance under R.C. 5709.40 that

limits Sugarcreek’s ability to collect property taxes on the annexed property.         As we

explained in our prior opinion, however, “R.C. 709.023(H) is not quite as narrow as

Centerville contends. R.C. 709.023(H) does not merely indicate that boundaries may not be

conformed; it also clearly states that [as a consequence of that prohibition,] the annexed

property ‘remains subject to the township’s real property taxes.’” Sugarcreek I at ¶ 134. We

believe that the plain language of R.C. 709.023(H) precludes Centerville from enacting a TIF

plan that would prevent Sugarcreek from collecting the property taxes, whether in the form of

inside millage or outside millage, to which it is entitled.
                                                                                              9

       {¶ 22} Centerville argues that it should be able to adopt a TIF plan that affects

Sugarcreek’s voted outside millage because the legislature could have amended R.C.

5709.40(F) to prevent such a result, but it did not. R.C. 5709.40(C)(1) provides:

       {¶ 23} “The legislative authority of a municipal corporation may adopt an ordinance

creating an incentive district and declaring improvements to parcels within the district to be a

public purpose and, except as provided in division (F) of this section, exempt from taxation as

provided in this section * * *.”

       {¶ 24} R.C. 5709.40(F)(1) through (12) identifies 12 local tax levies that are excepted

from the TIF plan tax exemption authorized by R.C. 5709.40(C)(1). Township real property

taxes are not included among the 12 exceptions. According to Centerville, the failure of the

legislature to include an exception for township real property taxes in R.C. 5709.40(F)

demonstrates that the legislature did not intend to preclude municipalities from enacting TIF

plans that interfere with the township’s authority to tax property within its borders. We do

not agree.

       {¶ 25} In matters of statutory interpretation, expression of one thing generally suggests

exclusion of others. The 12 exceptions in R.C. 5709.40(F) were not added until well after the

passage of S.B. 5, authorizing expedited type-2 annexation. However, it was not necessary to

include an exception for expedited type-2 annexations in R.C. 5709.40(F) because the saving

clause in R.C. 709.023(H), specifying that land thus annexed “remains subject to the

township’s real property taxes,” served the same purpose. The expression of legislative intent

is the same under either alternative.

       {¶ 26} Further, our interpretation of R.C. 709.023(H) is consistent with the
                                                                                              10

legislature’s intent to benefit townships. For example, pursuant to R.C. 709.19(C)(2), a

municipality that conforms      boundaries under R.C. 503.07 must continue to make tax

payments to a township even after the municipality has exempted the annexed property from

the township’s real property taxes through a TIF plan adopted pursuant to R.C. 5709.40.

Sugarcreek I at ¶ 115-116; R.C. 709.19(C)(2). It would be an absurd result to then permit

municipalities that are precluded by R.C. 709.023(H) from conforming boundaries to adopt a

TIF plan that limits a township’s ability to impose taxes on and receive tax payments for

property within its borders.

       {¶ 27} Centerville also argues that, being a special provision, R.C. 5709.40(F) prevails

over R.C. 709.023(H), which is the more general provision, pursuant to R.C. 1.51. However,

R.C. 1.51 applies only when a “conflict between the provisions is irreconcilable.”            Id.

Otherwise, the provisions “shall be construed, if possible, so that effect is given to both.” Id.

That outcome is readily available here.

       {¶ 28} R.C. 709.023(H) and 5709.40 should be read in pari materia to permit a

municipal corporation to adopt a TIF ordinance affecting real property located within the

municipality pursuant to R.C. 5709.40, except to the extent that the real property “remains

subject to the real property taxes,” R.C. 709.023(H), of a township in which the real property

likewise remains located following a type-2 annexation.          Therefore, the TIF plan that

Centerville enacts cannot diminish the outside millage taxes on the real property at issue

imposed by Sugarcreek Township or the revenue therefrom to which the township is entitled.



       {¶ 29} The assignments of error are overruled. The judgment of the trial court is
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affirmed.

                                                       Judgement affirmed.

       FAIN and FROELICH, JJ., concur.

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