City leaders are poised to enter into an agreement to settle back taxes owed to the city and Upper Arlington Schools, stemming from a legal battle with Tree of Life Christian Schools.
On May 13, the U.S. Supreme Court effectively ended Tree of Life’s nearly nine-year fight to operate a school at the largest professional office building in Upper Arlington, 5000 Arlington Centre Blvd., when the court denied the school’s petition to hear its case.
Now the final reverberations of the ruling are being felt, as disputed tax dollars over the property appear set to trickle in to both the district and city.
As a result of mediation ordered by the Supreme Court, Tree of Life has agreed to pay $855,000 in outstanding taxes for 2012 to 2018.
According to a staff report to Upper Arlington City Council from city attorney Jeanine Hummer and assistant city attorney Jesse Armstrong, that amount is approximately 75% of the roughly $1.14 million in back taxes Tree of Life owes after it unsuccessfully sought tax-exempt status as a religious school.
Tree of Life effectively lost its claim to tax-exempt status when the Supreme Court refused to hear its case because the U.S. Court of Appeals for the Sixth Circuit in Cincinnati ruled in September 2018 that Upper Arlington didn't discriminate against the Christian school system when it refused Tree of Life's request to open a school at the 254,000-square-foot office.
Throughout the legal battle, which started after Tree of Life bought the office building for $6.5 million in August 2010, the city maintained schools are permitted in 95% of the city but not at 5000 Arlington Centre Blvd., which was part of a complex zoned specifically for commercial offices that generate "substantial" commercial tax revenue. Tree of Life still owns the building.
No representatives from Tree of Life could be reached Nov. 11. Upper Arlington City Council was scheduled to hold a special meeting Nov. 12 at the Municipal Services Center, 3600 Tremont Road.
Included on the agenda was an ordinance to accept the settlement with Tree of Life.
According to staff report from Hummer and Armstrong, the city will receive $60,000 to $68,000 of the back property taxes. The balance will go to the school district.
"Based on the interest in finally concluding the long-standing litigation over this property, and to avoid any further time, expense and uncertainty which would accompany continued litigation, the city attorney respectfully recommends that city council approve this settlement and authorize the city manager to enter a settlement agreement, under the terms and conditions described, above, to settle this litigation," the report said.
According to Upper Arlington Schools communications director Karen Truett, the district is still "working through" the settlement agreement "but the projection is that the schools will receive approximately $600,000."
Truett said the Upper Arlington school board is expected to take action on the proposed agreement Nov. 19.
Reached Nov. 8, Hummer said the settlement would eliminate any further attempts to collect taxes from Tree of Life.
"The parties reached a proposed settlement under which Tree of Life would pay a total of $855,000 in outstanding taxes for tax years 2012 to 2018, and would withdraw pending tax exemption and valuation applications filed in 2018, and would agree to not file any further applications for exempt status for this property in the future," Hummer said. "The city's share is approximately 8% of the total amount of the settlement.
"A total payment of $855,000 would result in real property tax proceeds to the city of approximately $60,000-$68,000. The 8% is what the city is entitled to by law."