Ohio Court: Eminent Domain for Private Pipelines Unconstitutional

Private ethane pipeline to Canada is not a “public use” or “public necessity,” as required by Ohio Constitution

Ruling will protect property rights of Ohio farmers and other rural property owners

utopiaBowling Green, OH – An Ohio court ruled late yesterday that private pipeline companies cannot use eminent domain to forcibly seize Ohioans’ private property for purely private pipeline projects.

The ruling protects the property rights of dozens of Ohioans represented by the 1851 Center for Constitutional Law and others along the pipeline route. However, given the escalation in private pipeline construction throughout Ohio and the nation, the decision is anticipated to have impact well beyond just the immediate parties or the Utopia Pipeline.

In April, Texas pipeline corporation Kinder Morgan, using an arcane Ohio statute, sued the farmers in an attempt to forcibly take their land for the benefit of its private ethane pipeline to Canada. In moving to dismiss the case, the 1851 Center argued that the Utopia Pipeline is not a “public use,” as required by the Ohio Constitution. The 1851 Center explained that the pipeline is, for the sole benefit of one private Canadian corporation, shipping ethane (a by-product of fracking) underground throughout Ohio directly to that corporation’s Canadian factory, where the ethane will be used to manufacture plastic products such as water bottles.

The 1851 Center further argued that taking Ohioans’ land was not a “public necessity,” since the pipeline’s route was not set it stone by government, giving Kinder Morgan the freedom (unlike natural gas pipelines) to build its pipeline around objecting landowners.

In a decision extolling private property rights under the Ohio Constitution, Judge Robert Pollex of the Wood County Court of Common Pleas agreed. The Court explained why such attempted land-grabs by large private corporations, particularly those that are not public utilities or otherwise directly providing services to Ohioans, cannot be sustained:

  • “The fundamental principles in the Bill of Rights in our Constitution declare the inviolability of private property, and Ohio has always considered the right of property to be a fundamental right.”
  • “‘Economic development’ alone is not sufficient to satisfy public use requirements.”
  • “In this case Kinder Morgan is taking the private property for the purpose of transporting by pipeline petroleum products for the use of one private manufacturer. The manufacturer is not even a Unites States business, but rather, a Canadian business . . . there is no anticipated circumstances that would show a benefit to the citizens of Ohio or even for that matter, the United States.”
  • “This project and appropriation is not necessary nor a public use. To the extent that the Ohio statutes authorize a common carrier of Kinder Morgan’s type, the legislation is an unconstitutional infringement upon the property rights of the Defendants.”

“The Court’s ruling is a substantial victory for private property rights across Ohio, but above all else, this outcome safeguards the dignity and respect to which every Ohioan is entitled,” explained Maurice Thompson, Executive Director of the 1851 Center.

“While we fully support the continued development of oil and gas reserves in eastern Ohio, profit margins related to private efforts should not be inflated at the expense of Ohioans’ rights. Just like churches, gas stations, supermarkets, and other important private endeavors, pipeline construction can and must move forward without using the governmental power of eminent domain to redistribute land from average Ohioans to wealthy politically-connected cronies and elites.”

The Court’s ruling draws a distinction between takings for pipelines facilitating home heating or energy independence and pipelines for purely private commercial interests. While public utilities may exercise eminent domain to provide service to Ohioans’ homes, and certain oil and gas pipelines may even possess eminent domain authority, the Utopia Pipeline remains submerged through the entire state, and provides no service to Ohioans. The ruling will not prevent governments or public utilities from acquiring land for legitimately public pipelines.

The ruling is also an important reminder that Ohioans enjoy greater property rights than those protected by the federal constitution, due to a stringent state constitution.

The 1851 Center’s position was supported by an amicus brief from the Ohio Farm Bureau, as well as the efforts of the northwest Ohio law firm of Mayle, Ray & Mayle, LLC.

Read the Court’s Order upholding property rights HERE.

Read the 1851 Center’s full Motion to Dismiss HERE.

Taking of Ohioans’ Land for Private Pipeline Unconstitutional

15 families unite and move to dismiss corporation’s case attempting to take their land through eminent domain.

farmColumbus, OH – The 1851 Center for Constitutional Law today moved to dismiss 16 separate eminent domain cases filed in Bowling Green, Ohio by Texas pipeline company Kinder Morgan, explaining that purely private pipeline corporations’ taking of land for their own gain violates the Ohio Constitution’s strict protection of private property rights.

The action is filed on behalf of 15 families in eastern Wood County who have owned and farmed the disputed land for generations, and oppose turning it over for the Utopia Pipeline, a private ethane pipeline running underground to a Canadian plastics factory.

Kinder Morgan, a Texas-based corporation amongst the world’s largest pipeline companies, has used the threat of eminent domain as leverage to force Ohioans to sell it desirable land to construct the Utopia across northern Ohio. It claims that it — by itself and without government approval — can take Ohioans’ homes and land pursuant to an arcane Ohio statute now experiencing a revival due to energy development in eastern Ohio.

However, in its Motion for Judgment on the Pleadings, the 1851 Center explains that taking private property from Ohioans and giving to private businesses simply to enhance their profit margins, whether initiated by the state or the private party itself, violates the Ohio Constitution:

  • The Due Process Clause forbids a state from delegating, without any limits whatsoever (as here), the power of eminent domain to a purely private individual or business.
  • The taking of land through eminent domain must be for “public use,” and economic benefits to private interests are not public uses. Here, the public will not own, control, or use the Utopia Pipeline as it journeys underground through Ohio to Canada.
  • The taking of land must be a “public necessity.” But here, ethane, a waste product created by the fracking process, can be shipped by railroad, tanker truck, and barge. Further, the Utopia Pipeline’s route is not set in stone by any regulator, and Kinder Morgan remains free to create a different route by acquiring land from voluntary sellers.
  • Ohio’s constitutional protection of private property rights is significantly greater than that of the federal constitution, requiring that all doubts be strictly construed against those seeking to seize Ohioans’ properties.

“This is redistribution of wealth of the worst sort: taking property from regular Ohioans and giving it to a billion-dollar Texas corporation for its own benefit, under the false pretense of progress,” explained 1851 Center Executive Director Maurice Thompson. “The abuse along the Utopia Pipeline is a prime example of what can happen when legislators attempt to auction off Ohioans’ property rights to the highest bidder. Ultimately, the Ohio Constitution prevents this abuse, and we will prevail in court. But statutes inviting this sort of behavior should be amended or repealed.”

“And while we fully support the continued development of oil and gas reserves in eastern Ohio,” continued Thompson, “the very thing that makes private enterprise possible is respect for private property rights – – the Ohio Constitution does not enable private parties to take Ohioans homes and land, simply to improve their own profit margins.”

The 1851 Center draws a distinction between takings for pipelines facilitating home heating or energy independence and pipelines for purely private commercial interests. While public utilities may exercise eminent domain to provide service to Ohioans homes, and certain oil and gas pipelines may even possess eminent domain authority, the Utopia Pipeline remains submerged through the entire state, and provides no service to Ohioans.

“At minimum, Kinder Morgan is using the false threat of eminent domain to intimidate Ohio property owners into accepting below-market settlements for their land,” added Thompson. “Ohioans should be aware of this ploy.”

Read the 1851 Center’s full Motion to Dismiss HERE.

Federal Court: State Cannot Inspect Ohio Businesses Without a Warrant

Fourth Amendment prohibits state mandate to make business records, property, and inventory available to state agents “at all times” and “upon demand”

recordsColumbus, OH – A federal court late yesterday ruled that State Agencies violate the Fourth Amendment’s protection against unreasonable searches when they, without a warrant or any evidence of wrongdoing, investigate Ohio businesses by simply demanding private business records, property, and inventory.

The ruling, made by Judge Watson of the Columbus division of the Southern District of Ohio, addressed regulations governing those purchasing gold, silver, and other precious metals under the Precious Metals Dealers Act (“PMDA”).

However, its impact is likely to far exceed just the PMDA. Many Ohio businesses, particularly those requiring government licensing, face materially identical mandates. Accordingly, the ruling paves the way for Ohio businesses, even if heavily licensed and regulated, to refuse government demands to search private records, property, and inventory, especially when such demands are made on-the-spot and without a warrant.

The 1851 Center for Constitutional Law took up the case in 2012 on behalf of Liberty Coins, a coin dealer of Delaware, Ohio, and Worthington Jewelers, a retail jeweler in Worthington, Ohio. Each balked at the prospect of, without any evidence of wrongdoing, losing their business licenses and being fined and prosecuted for refusing to turn over cell phones, laptops, paper records, and even inventory such as jewelry and rare coins simply “upon demand” of state enforcement agents.

In his 35 page decision, Judge Watson, enjoined four state requirements:

  • A statute declaring that “all books, forms, and records, and all other sources of information with regard to the business shall at all times be available for inspection.”
  • A statute demanding “free access to the books and papers and other sources of information with regard to the business.”
  • A requirement that private business records be “open to the inspection of the police upon demand.”
  • A mandate that businesses, at the end of each business day, fax descriptions of every item purchased that day to local police.

The Court explained as follows: “The Inspection Provisions give the government and law enforcement the right to inspect a licensee’s records without any opportunity for the licensee to seek neutral, precompliance review. The PMDA specifically provides that failure to comply with a search request is a crime. . . . The PMDA’s Inspection Provisions violate the Fourth Amendment’s protection against unreasonable searches and seizures.”

“Acts like this treat Ohio entrepreneurs as public utilities at best, and criminals at worst, irrespective of whether they have done harm. No entrepreneur deserves to be arrested for questioning the authority of a state agent to show up at his business unannounced, without any evidence of wrongdoing, and confiscate or filter through his papers, computers, cell phones, and even his business’s inventory.” said Maurice Thompson, Executive Director of the 1851 Center.

Thompson added “we brought this case to invalidate the constant invasions confronting not just precious metal dealers, but all of the other businesses that face similar inspection requirements. Our expectation is that this precedent will invalidate these kinds of searches in all industries. Ohio businesses are free to decline invasive and costly government searches – – they cannot lose their business licenses or be prosecuted, fined, or disciplined simply for saying ‘no’.”

The Supreme Court has continuously reaffirmed that the Fourth Amendment applies to businesses and business property just as it does to individuals and private homes.

Read the Court’s Order Granting the Motion for Summary Judgment of Liberty Coins and Worthington Jewelers HERE.

Read the Plaintiffs’ Motion for Summary Judgment HERE.

Ohio Cities’ Pre-Sale Home Inspections Unconstitutional

Legal Center moves to protect Ohioans’ property rights from unlawful searches and fees statewide

uncle-sam-point-of-saleColumbus, OH – The 1851 Center for Constitutional Law today moved in federal court to immediately enjoin Ohio cities, and the Cities of Bedford and Oakwood in particular, from enforcing “point of sale” and “presale” programs that require citizens to endure and pass arbitrary and warrantless government inspections before they can sell their homes to even the most informed and willing buyers.

Such municipal ordinances, in addition to restricting Ohioans’ property rights, subject homeowners to open-ended warrantless searches of every interior and exterior space of a home, violating the Fourth Amendment to the United States Constitution and Section 14, Article I of the Ohio Constitution.

The legal action against Bedford is filed on behalf of area landlord Ken Pund, who is forbidden from selling to his daughter a home that he owns and she already resides in, and John Diezic, who was prohibited from selling his Bedford home due to minor cracks in the asphalt of his driveway. In Oakwood, Plaintiff Jason Thompson was forced to pay for and undergo an inspection simply after making an alteration to the title of his property.

In each case, the City threatened to criminally prosecute and even imprison these homeowners if they sold their homes without first submitting to and passing city inspections.

Both the United States and Ohio Supreme Court have invalidated warrantless inspections of houses, absent consent or an emergency. Nevertheless, Ohio cities have vigorously sought to collect inspection fees and impose fines, and the point of sale inspection requirements are the lynchpin to this revenue stream – – homeowners, irrespective of whether they want or need the inspection, pay a $100 fee to fund the inspections, and then additional fees for “follow-up” inspections.

The lawsuit seeks to restore both Ohio homeowners’ and small business owners’ freedom from warrantless searches without probable cause. In doing so, the 1851 Center’s Complaint explains the following:

  • Government inspection of homes, even when for sale, requires a warrant, and these expansive warrantless searches, as “unreasonable searches” of “houses,” violate Ohioans’ Fourth Amendment rights.
  • The Warrant Requirement is a significant protection for property owners, because a warrant can only be issued in light of serious and credible complaints about the property.
  • Fees that are charged to fund these unconstitutional inspections are also unconstitutional; cities cannot require their payment, and must return past payments.
  • In a prior 1851 Center victory, Baker v. Portsmouth, federal courts declared warrantless inspections of rental homes unconstitutional. The Fourth Amendment’s protections should extend to inspections triggered by the marketing or sale of a home, just as they apply to inspections triggered by renting a home.

“Local government agents do not have unlimited authority to force entry into Ohioans’ homes or businesses. To the contrary ‘houses’ are one of the types of property specifically mentioned by the Fourth Amendment; and Ohioans have a moral and constitutional right to exclude others, even government agents, from their property. Entry requires either a warrant or an emergency, and neither is present with respect to these suspicionless inspections,” said Maurice Thompson, Executive Director of the 1851 Center.

Watch Director Maurice Thompson explain the challenge to point of sale requirements

Watch Director Maurice Thompson explain the challenge to point of sale requirements

“The right to own property in Ohio has little value if local governments can continuously chip away at one’s right to actually make use of that property, requiring government permission slips for basic arrangements such as the sale of one’s home to a willing buyer.”

In Bedford, the City maintains the power to block sales on account of “architectural style and detail,” “color,” and lack of “orderly appearance.” In Oakwood, the City concedes “the inspection will seldom, if ever, reveal latent defects or violations of the Property Maintenance Code which are not readily apparent. Neither should owners nor prospective owners or occupants rely entirely upon our inspection regarding the house or accessory structures or fixtures.”

Read the Property Owners’ Complaint HERE

Read the Property Owners’ Motion for Preliminary Injunction HERE

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This lawsuit is brought in partnership with the Ohio Real Estate Investors Association (“OREIA”), the Finney Law Firm in Cincinnati, and the law firm of Berns, Ockner & Greenberger in Cleveland.

Ohio Court: Cities Cannot Immediately Seize Private Property When Not For Roads

Court’s ruling places important limits on “quick-take” eminent domain power

Columbus, OH – An Ohio Court ruled late yesterday that the City of Perrysburg’s attempt to immediately seize the land of eleven local homeowners exceeds its power, given the Ohio Constitution’s protection of private property rights.

The 1851 Center’s victory curtails the abuse of a practice known as “quick-take,” where governments claim to immediately own private property upon the filing of a Complaint, before any hearing or trial. While the Ohio Constitution sanctions this immense power for “making or repairing of roads,” local governments have increasingly sought to use quick-take for many other purposes.

In striking down the City’s attempt to use quick-take here, Judge Woessner of the Wood County Probate Court concurred that the practice cannot be expanded beyond roads, holding as follows:

  • “[T]he proposed appropriations are for . . . ‘other municipal purposes,’ as well as references to ‘installing pedestrian walkways and sidewalks’ as well as ‘for providing for public utilities.’ This Court finds that if the legislature intended for ‘quick-take’ procedures to extend to other areas, those other areas would have accordingly been referenced somewhere . . . They are not.”
  • “The Court further finds that expanding ‘quick take’ immediate possession of private property . . . beyond the clearly stated purpose of ‘making or repairing roads’ is not appropriate as a matter of law in appropriation/eminent domain cases. . .”

“The Court’s ruling is a victory for private property rights across Ohio,” explained Maurice Thompson, Executive Director of the 1851 Center. “Governments have increasingly been using quick-take for anything and everything, rather than just for roads, intimidating Ohioans and stripping them of their right to mount any legal objection in court. This ruling helps ensure that meritorious arguments against eminent domain will now be heard – – and that in turn means that many more eminent domain abuses will be stopped.”

The City had sought to immediately seize property for sidewalks, a bike path, and what it cryptically referred to as “other municipal purposes.” Ohio cities may still acquire property for such purposes; however the Court’s ruling clarifies that they must attempt to negotiate and agree with homeowners, rather than exercising force as a first option.

Read the Homeowners’ Motion for Judgment on the Pleadings HERE

Read the Court’s Order HERE

Ohio Cities May Not Immediately Seize Rural Township Properties

Eminent Domain Abuse Continues as Cities Attempt to Seize Land Beyond Their Borders, Overuse “Quick-Take”

farmColumbus, OH – The 1851 Center for Constitutional Law has moved to counter the aggressive legal tactics taken by the City of Perrysburg, Ohio to immediately seize the land of eleven Ohio homeowners, including property well beyond city limits.

The homeowners’ defense take aim at abusive eminent domain practices used with increasing frequency as Ohio legislators have flooded the state with extra public funds for all types of road and transportation projects.

The first practice, extra-territorial takings, occurs when a city attempts to forcibly seize land beyond city limits, typically in a township. The second, known as “quick-take,” occurs when local governments seize homeowners’ land immediately, prior to any trial or defense.

To counter these tactics, the 1851 Center has moved for a ruling in favor of the Perrysburg homeowners, who were in late September sued by the City, asserting the following:

  • Ohio cities lack constitutional authority to use eminent domain to seize property located in an Ohio township, particularly for non-essential “urbanization” projects such as sidewalks and bike paths.
  • Ohio cities lack constitutional authority to immediately seize property through quick-take, prior to any trial or hearing, when the public project is for something other than “making or repairing roads.”
  • Ohio’s constitutional protection of private property rights is significantly greater than that of the federal constitution, requiring that all doubts be strictly construed against governments seeking to seize Ohioans’ properties.

In response to the 1851 Center’s Motion, the Wood County Probate Court Judge David Woessner on October 16 ruled “plaintiff shall not take immediate possession of defendants’ property nor begin any construction on defendants’ property pending this Court’s rulings on the issues raised in the October 14 Motion for Judgment on the Pleadings.”

“Ohioans living in rural townships would never contemplate a city government seizing their property overnight, to ‘urbanize’ and ‘update’ it, particularly when those township residents have no right to vote for or against the city officials doing the taking; there is simply no democratic accountability,” explained Maurice Thompson, Executive Director of the 1851 Center. “This practice is essentially indistinguishable from having one’s land forcibly taken by Canada, Mexico, or even worse, Michigan.”

“Likewise, situations where Ohioans’ land is taken overnight, prior to any trial, hearing, or compensation, must be minimized to the most urgent circumstances only – – not expanded as is the case here.”

Read the Homeowners’ Motion for Judgment on the Pleadings HERE.

Federal Court: Cities’ Rental Licensing and Inspection Requirements Unconstitutional

Fourth Amendment secures property rights of landlords from unlawful searches and occupational licensing regulations in Ohio and nationwide

forrentColumbus, OH – The Southern District of Ohio today ruled that the City of Portsmouth’s occupational licensing requirements imposed upon landlords – – rental property inspections and licensing fees – – violates the Fourth Amendment to the United State Constitution.

The 1851 Center for Constitutional Law’s victory on behalf of Portsmouth rental property owners Ron Baker, Nancy Ross, Thomas Howard, and Darren Oliver means that indiscriminate and warrantless government inspections of rental properties are unconstitutional nationwide, and that unlawfully-extracted “rental inspection fees” must be returned to the rental property owners who paid them.

These property owners had long rented their property in Portsmouth without license or inspections, and their properties had never been the subject of complaint by tenants, neighbors, or others. However, the City threatened to criminally prosecute and even imprison these landlords if they continued to rent their homes without first submitting to an unconstitutional warrantless search of the entire interior and exterior of these homes.

Judge Susan Dlott, of the Western Division of the Southern District of Ohio, held as follows:

  • “[T]he Court finds that the Portsmouth [Rental Dwelling Code] violates the Fourth Amendment insofar as it authorizes warrantless administrative inspections. It is undisputed that the [Rental Dwelling Code] affords no warrant procedure or other mechanism for precompliance review . . . the owners and/or tenants of rental properties in Portsmouth are thus faced with the choice of consenting to the warrantless inspection or facing criminal charges, a result the Supreme Court has expressly disavowed under the Fourth Amendment.”
  • “The inspections are also significantly intrusive. As the Supreme Court has noted, the ‘physical entry of the home is the chief evil against which the wording of the Fourth Amendment is directed.’”
  • “The search inspection sheet details eighty items to be inspected throughout the entirety of the rental property. The Court thus concludes that the intrusion is significant.”
  • “Taking into account the above factors—the significant expectation of privacy, the substantial intrusion into the home, and the inefficacy of the warrantless inspections on the proffered special need—the Court finds the warrantless inspections are unreasonable.”
  • “Having determined that the Code is not saved by special needs or the closely regulated industry exceptions, the Court concludes that the Code’s failure to include a warrant provision violates the Fourth Amendment.”

Both the United States and Ohio Supreme Court have invalidated warrantless inspections of rental property, and repeatedly held that warrantless administrative inspections of business property are generally invalid, absent exigent circumstances.

Nevertheless, Ohio cities had vigorously sought to collect licensing fees from area landlords, and the warrantless searches served as the lynchpin to each of these goals. Ordinances such as Portsmouth’s Rental Dwelling Code established an absolute prohibition on renting out property within a community – – even though the landlord may have long done so and even though his or her property may be in pristine condition – – without a government-approved license that cannot be acquired without first paying a $100 annual fee per rental home and submitting to an open-ended warrantless search of every area of the property, inside and out.

“The Federal Court’s ruling yesterday is a victory for all property owners and tenants. Local government agents do not have unlimited authority to force entry into Ohioans’ homes or businesses. To the contrary ‘houses’ are one of the types of property specifically mentioned by the Fourth Amendment; and Ohioans have a moral and constitutional right to exclude others, even government agents, from their property. Entry requires either a warrant or an emergency, and neither is present with respect to these suspicion-less rental inspections,” said Maurice Thompson, Executive Director of the 1851 Center.

“Government inspections of one’s home frequently results in arbitrary orders to make thousands of dollars worth of untenable improvements to even the most well-maintained properties. These enactments were nothing more than a set of back-door tactics to collect revenue on the backs of Ohio property owners, while attempting to chase ‘the wrong type of owners’ out of town.”

Read the Federal Court’s Order HERE
 

October 4, 2015: Columbus Dispatch: Rental inspections ruled unconstitutional

October 2, 2015: WDTN-TV 2: Federal judge rules Ohio city’s warrantless rental property inspections are unconstitutional

October 1, 2015: Portsmouth Daily Times: The original Portsmouth licensing fee declared unconstitutional

Ohio High Court Rebukes School District Tax Increase

Taxpayers cheated by Indian Hill School District’s “Inside Millage Move”, by raising taxes without public vote

school bus picking up kidsCincinnati – Indian Hill School District’s property tax increase without voter permission violated state law, according to unanimous ruling late yesterday from the Supreme Court of Ohio.

This decision rebuffs Ohio school districts’ efforts to take advantage of a legal loophole created in 1998, which appeared to allow such tax increases in limited circumstances, though not to collect tax revenue that the districts do not need or use, as they run considerable budget surpluses and stockpile cash reserves.

The 1851 Center for Constitutional Law asserted, on behalf of the taxpayers and homeowners of the Indian Hill School District, that the District violated state law in 2009 when it raised property taxes by 1.25 mills ($400 per year, on average, for Indian Hill households), without voter permission, while already, without the tax increase, running multi-million dollar budget surpluses and maintaining a free and clear cash reserve of over $25 million.

The case centered around Ohio Revised Code Section 5705.341, which provides “no tax rate shall be levied above that necessary to produce the revenue needed by the taxing district or political subdivision for the ensuing fiscal year,” and “Nothing . . . shall permit . . . the levying of any rate of taxation . . . unless such rate of taxation for the ensuing fiscal year is clearly required by a budget of the taxing district.”

The case also drew upon Section 2, Article XII of the Ohio Constitution, which forbids property taxation “in excess of one per cent of its true value in money for all state and local purposes,” except by approval of the voters.

Indian Hill raised taxes despite carrying an unencumbered surplus of over $25 million in its bank account at the time.

The Court’s decision, authored by Justice O’Neill, explains “far from defraying current operating expenses, the increased revenue from the outside mills padded the district’s surplus. To permit a tax increase that performs no function other than to increase the amount of budget surplus would deprive the ‘clearly required’ standard of all meaning.”

“The Court’s decision means that already-wealthy Ohio school districts cannot continue to use public budgeting gimmicks to raise property taxes without a vote. This decision protects taxpayers here and also in many other districts,” said Maurice Thompson, Executive Director of the 1851 Center for Constitutional Law.

“While running exorbitant budget surpluses and maintaining a thick bank account may echo fiscal responsibility to some, this means the school district is taking from taxpayers money that it does not need – – over-taxing them rather than allowing them to keep and use their own money for their families’ betterment.”

The 1851 Center will now litigate to recoup for the taxpayers the roughly six million dollars that Indian Hill School District wrongfully charged them between 2010 and 2014.

The Court’s Decision can be found HERE.

Oral Arguments from the case can be viewed HERE.

 


March 12, 2015: Cincinnati.com: Indian Hill Board stonewalls refund of inside millage tax

December 14, 2014: Sandusky Register: Court: Some schools’ inside millage moves could be illegal

December 4, 2014: Cincinnati.com: Court ruling could reduce property taxes in Indian Hill

Ohio Supreme Court Argument: Can School Districts Raise Your Taxes Without a Vote?

1851 Center argues that Indian Hill School District violated state law by raising property taxes without a vote, while already running huge budget surpluses and maintaining extravagant cash on hand

supremecourtColumbus, OH – The Supreme Court of Ohio on Tuesday heard oral arguments on whether Ohio school districts need voter permission to raise property taxes that collect tax revenue that the districts do not need or use, even as they run considerable budget surpluses and stockpile cash reserves.

The 1851 Center asserts, on behalf of the taxpayers of the Indian Hill School District, that the District violated state law in 2009 when it raised property taxes by 1.25 mills ($400 per year, on average, for Indian Hill households), without voter permission, while already, without the tax increase, running multi-million dollar budget surpluses and maintaining a free and clear cash reserve of over $25 million.

The case centers around Ohio Revised Code Section 5705.341, which provides “no tax rate shall be levied above that necessary to produce the revenue needed by the taxing district or political subdivision for the ensuing fiscal year,” and “Nothing . . . shall permit . . . the levying of any rate of taxation . . . unless such rate of taxation for the ensuing fiscal year is clearly required by a budget of the taxing district.”

The case also draws upon Section 2, Article XII of the Ohio Constitution, which forbids property taxation “in excess of one per cent of its true value in money for all state and local purposes,” except by approval of the voters.

“If Indian Hill – – Ohio’s wealthiest school district – – can use public budgeting gimmicks to raise property taxes without a vote, then any school district in Ohio will be able to follow suit. A victory in this case is important to protecting taxpayers here and also in many other school districts,” said Maurice Thompson, Executive Director of the 1851 Center for Constitutional Law.

“Running exorbitant budget surpluses and maintaining a thick bank account may echo fiscal responsibility to some; however, this means the school district is taking from taxpayers money that it does not need- – over-taxing them rather than allowing them to keep and use their own money for their families’ betterment.”

Watch the oral argument HERE.

The Ohio Supreme Court previews the argument HERE.

Legal Center to High Court: Cleveland-Area Stormwater Tax Unconstitutional

Northeast Ohio Sewer District tax on “impervious surfaces” is without legislative authorization, and is a property tax without the required voter approval

stormwaterColumbus, OH – The 1851 Center for Constitutional Law late yesterday submitted to the Ohio Supreme Court its Merit Brief asserting that the Northeast Ohio Regional Sewer District, a Cleveland-Akron area administrative agency, lacks authority to regulate property in response to rainwater, which is not sewage, and even if it has such authority, may not impose a stormwater-related tax without a vote.

The Sewer District seeks to levy a tax on “impervious surfaces” on hundreds of thousands of Northeast Ohio residential and business property owners. These surfaces include roofs, patios, driveways, and parking lots, and are taxes levied based upon the square footage of each. The District maintains that this is a means of addressing rain-related erosion, run-off, and flooding.

Although such districts’ authorities often claim that settlement agreements with the federal EPA mandate such programs, such settlements mandate no particular course of action and do not permit agencies to transgress the Ohio Constitution.

Joining the 1851 Center on the Brief is the Ohio Real Estate Investors Association. Objecting to the taxes and regulations are several Cleveland-area municipalities, as well as numerous property-owner and business organizations, including the Ohio Council of Retail Merchants, Greater Cleveland Association of Building Owners and Managers, and the Cleveland Automobile Dealers Association.

The 1851 Center’s amicus brief argues that a sewer district, as an administrative agency of defined and limited powers, has no authority to impose taxes and regulations related to rainwater falling from the sky, i.e. something other than sewage. The brief further maintains that even if the agency had power to address rainwater, it may not tax property owners because the Ohio Constitution prohibits the raising of property taxes without voter approval through a tax levy election.

The 1851 Center’s brief asserts the following:

 

  • Pursuant to the Ohio Constitution, the General Assembly can only confer administrative power on an agency, and such agencies may not make policy.

 

  • The Northeast Ohio Regional Sewer District seeks to manage stormwater – – rain, essentially. The legislature, however, fully aware that it rains and snows in Cleveland, gave the Sewer District no such authority.

 

  • The Sewer District maintains no power to levy a tax without voter approval.

 

  • Although labeled a “fee,” the stormwater fee meets the legal standards of a tax because it is levied without regard to use, on certain property owners who gain no particular benefit from paying it, to advance goals that benefit the general public.

 

“Agencies like this are entirely unaccountable to the public, and this case stands for the principles that such agencies cannot take control of every facet of our lives, down to rainwater and the size of our patios, while taxing development in a manner that punishes and discourages it, with no regard to economic factors or public approval,” said Maurice Thompson, Executive Director of the 1851 Center for Constitutional Law.

“The Sewer District’s tax on impervious surfaces, including nearly every patio, rooftop, and driveway in Northeast Ohio, bares a far closer resemblance to sewage than does rainwater, and the District must consider less invasive methods to dealing with rain, which we have managed to deal with without taxation for all of human civilization.”

Oral arguments will likely take place in the fall.

Read the Amicus Brief here.