A business located in a proposed joint economic development zone in Licking County is suing to keep the JEDZ off an Aug. 5 special election ballot.
In a lawsuit filed May 27 in Franklin County Common Pleas Court, the Ascena Retail Group claims that both Reynoldsburg City Council and Etna Township trustees -- partners in the proposed taxing district -- met either privately or in executive session in violation of Ohio's open-meetings law before they voted May 5 to approve the JEDZ contract and its placement on the Aug. 5 special election ballot.
Ohio law states that any action that a public body takes following an unauthorized executive session is invalid. The complaint also names the Licking County Board of Elections as a defendant.
Reynoldsburg City Council members went behind closed doors to discuss the lawsuit after a special council meeting Monday, June 2. Council President Doug Joseph said he had "no comment" on the lawsuit or on state legislation limiting JEDZ agreements.
No action was taken after Monday's executive session.
The Etna Township JEDZ proposal is one of about 10 in Ohio seeking approval on either the August or November ballots. But a bill approved last month by the Ohio House and Senate would impose tougher standards that likely would kill those pending proposals before they could get to the ballot.
The legislation outlaws the creation of any new JEDZs after Jan. 1. And that legislation was approved with an emergency clause attached, meaning it becomes law as soon as Gov. John Kasich signs it.
The bill was delivered to him May 30 and awaits his signature.
The plan agreed to by Reynoldsburg and Etna Township would, if approved by township voters, generate about $400,000 annually by imposing a 1.5-percent income tax on anyone working in the zone and a 1.5-percent tax on the net profits of any business operating in the zone over the next 99 years.
The zone includes 58 parcels covering about 1,500 acres.
The proposal states that 70 percent of the revenue would go to Etna Township, while another 20 percent would go to Reynoldsburg "for any lawful purposes" city officials deem fit. The final 10 percent would be earmarked for the JEDZ Board improvement account.
The lawsuit filed by Ascena claims the state JEDZ legislation mandates that a valid JEDZ contract "must provide that all the income tax imposed under the JEDZ will be used exclusively for new, expanded, or additional services, facilities or improvements within the zone." The suit says the contract between Etna Township and Reynoldsburg "fails to meet this mandatory requirement."
The lawsuit also claims the Etna Township JEDZ proposal violates state and federal due process protections in that those taxed, including Ascena's employees, have no vote. Only township residents may vote on the proposal, and the JEDZ contract specifically excludes any residents living within the proposed zone.
Attorney John Zeiger, representing Ascena, said at a May 5 public hearing in Reynoldsburg that the JEDZ proposal as written leaves the city vulnerable for expensive legal fees.
"Reynoldsburg has contractually obligated itself to assume 100 percent of the legal expenses arising from any challenge that is brought to the creation of the JEDZ," Zeiger said. "This could create a legal cost exposure of hundreds of thousands of dollars. And Etna, which potentially receives 70 percent of the tax monies for its general fund, never pays a dime."
ThisWeek staff writer Pamela Willis contributed to this story.