Summary
In Franklin Cty. v. Lockbourne Manor, Inc. (1958), 168 Ohio St. 286, 6 O.O.2d 489, 154 N.E.2d 147, the United States leased land on the Lockbourne Air Force Base to a lessee who was to build housing to be rented to military and government contractors personnel.
Summary of this case from Visicon, Inc. v. Tracy (1998)Opinion
No. 35597
Decided November 19, 1958.
Taxation — Leasehold interest in property owned by United States — Not taxable in Ohio.
APPEAL from the Board of Tax Appeals.
The United States of America, owner in fee of the land contained in the Lockbourne Air Force Base, Franklin County, leased the parcel of land in question, located entirely within the limits of such base, to Lockbourne Manor, Inc., an Ohio corporation. The lease is for a term of 75 years, subject to the lessor's option to terminate the lease after 50 years and six months. Under the provisions of the lease the lessee is to erect, maintain and operate a housing project of approximately 500 units on such leased property, such units to be rented to military and air-base personnel, including government contractors' employees, assigned to duty at the installation and designated by the commanding officer of the base. The buildings and other improvements, constituting the housing project, when erected by the lessee are to become real estate and part of the property of the United States, leased to Lockbourne Manor, Inc. The lease provides further that the lessee shall pay all taxes, assessments and similar charges which may be imposed upon the United States or lessee with respect to the leased property, and that, "in the event any taxes * * * are imposed with the consent of the Congress * * * upon the interest of the government in the leased premises (as opposed to the leasehold interest of the lessee therein), this lease shall be renegotiated." The lessee neither has nor claims any interest in the realty or improvements thereon other than the leasehold above described.
The project was completed prior to 1956, and the units are now rented to the personnel authorized by the lease. The county auditor put the property described in the lease on the real property tax duplicate for 1956.
Lockbourne Manor, Inc., filed an application for exemption of the property from taxation for the year 1957 and for remission of taxes and penalties assessed thereon for the year 1956, under authority of Section 5709.08, Revised Code.
The Board of Tax Appeals found that the land and buildings are entitled to tax exemption for the tax year 1957 and to tax and penalty remission for the tax year 1956, and that the taxes assessed upon the leasehold interest of the lessee have been illegally assessed, and ordered "that these taxes be removed from the duplicate."
An appeal from the decision of the Board of Tax Appeals, under authority of Section 5717.04, Revised Code, brings the cause to this court for review.
Mr. Samuel L. Devine, prosecuting attorney, and Mr. Ralph H. Heller, for appellant.
Mr. George H. Chamblin and Mr. Paul O. Hunsinger, for appellee.
The issue presented is whether the leasehold interest herein is taxable under Ohio law, where the owner and lessor of the property is the United States of America.
The United States cannot be sued without its consent. The act under which the Lockbourne housing project was constructed does give permission to impose state and local taxes on lessees' interests created by leases under the act. Offutt Housing Co. v. County of Sarpy, 351 U.S. 253, 100 L. Ed., 1151, 76 S. Ct., 814; Squantum Gardens, Inc., v. Assessors of Quincy, 335 Mass. 440, 140 N.E.2d 482. Therefore, in states which tax leaseholds the government has consented to such a tax.
However, it remains self-evident that, unless the laws of a state provide for a tax upon such leasehold interests in property owned by the United States, no tax may be levied on such property or any leasehold interest therein.
The United States has consented only to a tax on leaseholds. The present law of Ohio does not provide for a tax on leaseholds.
The Board of Tax Appeals was correct in refusing to allow the tax on the property in question, and its decision is therefore affirmed.
Decision affirmed.
WEYGANDT, C.J., ZIMMERMAN, STEWART, TAFT, MATTHIAS, BELL and HERBERT, JJ., concur.