An appropriations amendment now before Canal Winchester City Council includes $100,000 for a tax payment to Fairfield County that the city hopes to recoup through an appeal to the State Board of Tax Appeals.
Finance Director Nanisa Osborn said the situation involves taxes for the new Diley Ridge Medical Office Building.
"As you know, we have a tax abatement agreement with Diley Ridge Medical Office Building," Osborn told council's finance committee earlier this month. "When Fairfield County set the value of the structure, they set it at double what it ended up actually costing to construct.
"Therefore, the taxes were significantly higher," she said.
Osborn said the owner of the facility, Canal Winchester MOB LLC, appealed but the (Fairfield County) Board of Review found in favor of the county, so now the case being appealed again to the State Board of Tax Appeals.
"But in the meantime, the taxes are due so we're paying them and hoping to win the appeal so we'll get those back," she said.
Osborn said the city has a 12-year property tax offset agreement with Diley Ridge that is based on the occupancy of the building. It requires the city to reimburse property taxes on the increased value of the property.
Ed Laramee of the Fairfield County Auditor's Office said the appeal is based on whether the building was still under construction or was in use for the 2010 tax year. The county believes that it was in use, and as such, property taxes should be paid based on the improvements for that year, not just on the land, he said.
Osborn said the city has asked the Ohio Department of Taxation to add the medical office building to a previously existing tax increment financing (TIF) agreement. This would also have an effect on the taxes paid, but has not yet been approved by the state, she said.
"We submitted the request 18 months ago and there's a whole process at the Department of Taxation so we just have to wait," Osborn said. "When it occurs, we'll anticipate there will be an adjustment of the taxes."