Opinion
Nos. 30938 and 30939
Decided July 30, 1947.
Taxation — Municipally owned and operated rapid transit system — Real and personal property not exempt from taxation — Section 5351, General Code — Only Board of Tax Appeals may exempt property from taxation — Section 5570-1, General Code.
APPEALS from the Board of Tax Appeals.
It appears from the records before this court that on July 10, 1944, the council of the city of Shaker Heights enacted an ordinance providing for the purchasing, owning and operating of a rapid transit system extending southeasterly and easterly from the Cleveland Union Terminal in the city of Cleveland to a junction at Shaker Square, where the transit system divides into two branches each continuing through the city of Shaker Heights, a municipality adjacent to the city of Cleveland. Another ordinance of the city of Shaker Heights provided for the issuance and sale of $1,300,000 of first mortgage revenue bonds, under authority of Section 12, Article XVIII of the Constitution of Ohio, for the purpose of purchasing the rapid transit system. Bonds were subsequently issued and sold, the property was purchased and on September 6, 1944, the city of Shaker Heights took possession of the rapid transit system and commenced to operate it.
In April 1945, the city filed with the auditor of Cuyahoga county an application to exempt from taxation for the tax year 1945 the lands, buildings and personal property of the rapid transit system, for the reason that the property was public property used for a public purpose within the meaning of Section 5351, General Code. The county auditor found that the property was not entitled to exemption from taxation, and on July 7, 1945, the city of Shaker Heights filed with the Board of Tax Appeals a complaint as to that determination by the county auditor.
On June 12, 1945, a copy of the application for exemption was filed with the Board of Tax Appeals, which considered the complaint and application together and the Board of Education of the Cleveland City School District was made a party to the proceedings before the Board of Tax Appeals.
The Board of Tax Appeals denied consent to exemption of the real and personal property of the applicant and an appeal from the decision of the board so far as it denied exemption was perfected to this court as cause No. 30938.
The complaint was dismissed by the Board of Tax Appeals on the ground that it has exclusive authority to declare property exempt ( State, ex rel. Methodist Book Concern, v. Guckenberger, Aud., 133 Ohio St. 27, 10 N.E.2d 1001) and, therefore, the county auditor was correct in denying the application which the city made to him. Appeal from that part of the decision of the board dismissing the complaint was perfected to this court as cause No. 30939.
Mr. Ralph W. Jones, director of law, for appellant.
Mr. Frank T. Cullitan, prosecuting attorney, and Mr. A.M. Braun, for appellee John A. Zangerle, county auditor.
Messrs. Squire, Sanders Dempsey and Mr. Robert F. Denison, for appellee Board of Education of the Cleveland City School District.
Counsel for appellant in his brief insists that this court reconsider the case of Zangerle, Aud., v. City of Cleveland, 145 Ohio St. 347, 61 N.E.2d 720, and he contends in this court that the Shaker Heights Rapid Transit System is not in the field of private business, competitive business or business for profit.
The Board of Tax Appeals in its journal entry found that the rapid transit system provides the only practical and rapid transportation between Shaker Heights and Cleveland; that facilities of the system are used also by residents of University Heights, Cleveland Heights and Cleveland; that most of the transportation afforded by the rapid transit system is between Shaker Heights and Cleveland, although such system furnishes intracity transportation; that lines of the Cleveland Transit System run from the southeast and northwest corners of Shaker Heights to downtown Cleveland but transportation so afforded is much slower; and that there was no more actual competition in the case of Zangerle v. City of Cleveland, supra, than there was in the instant case and, therefore, the board could not distinguish the two cases.
In the journal entry of the Board of Tax Appeals it was found also that for the period from January 1 to October 31, 1945, the operating revenue of the Shaker Heights Rapid Transit System was $728,546.63, out of which were paid all operating expenses and interest on bonds, $2,851.10 was allocated to the city of Shaker Heights and its city school district in lieu of taxes, $20,833.30 was set aside for bonded debt service and $143,525.80 was placed as earned surplus in the replacement fund for new equipment.
The Board of Tax Appeals was of the opinion, in view of what this court said in the Cleveland case, that the extent of profit was immaterial, since this court held, in effect, in that case that the operation of a transit system is a type of business which is designed primarily for profit.
A majority of this court adheres to the law pronounced in the cases of State, ex rel. Methodist Book Concern, v. Guckenberger, Aud., and Zangerle, Aud., v. City of Cleveland, supra, and the decision of the Board of Tax Appeals is in the present proceedings, therefore, affirmed.
Decision affirmed.
WEYGANDT, C.J., TURNER, MATTHIAS, HART, SOHNGEN and STEWART, JJ., concur.
Dissents for the reason stated in the dissenting opinion in Zangerle, Aud. v. City of Cleveland, 145 Ohio St. 347, 361, 61 N.E.2d 720.