Attorney General Opinion Received on Merger Questions

Several weeks ago, the Township Trustees requested an opinion from the Ohio Attorney General's office to address several issues that we felt were unclear with regard to the merger commission. Today, we received Opinion No. 2008-035. Below is a direct copy of their conclusions:

Volume #77, Report #208, Article #12--Monday, October 27, 2008

ATTORNEY GENERAL'S OPINION

No. 2008-035. Requested by Sylvania Township Law Director Truman A. Greenwood. SYLLABUS:

1. If a person is named as a candidate for township representative in a petition for a merger study commission that is submitted to the electors under R.C. 709.45 and, prior to the election, the candidate ceases to be a resident of the unincorporated area of the township, the candidate lacks the residency qualification required to serve in the position of township member of the merger study commission if the creation of the commission is approved by the electors. The board of township trustees has no authority to appoint a replacement candidate prior to the election, but if the creation of a commission is approved by the electors, the election of a township candidate who does not reside in the unincorporated area of the township will automatically create a vacancy on the commission to be filled by the board of township trustees under R.C. 709.46(B).

2. A community improvement corporation that is established under R.C. Chapter 1724 and receives financial support from a municipal corporation and a township does not have authority to contribute funds or other resources to an entity established to support or oppose a ballot issue relating to the proposed merger of the municipal corporation and township.

So, we now know how Mr. Steinman, the commissioner who has been annexed from the township to the city, will be replaced if the commission is approved by voters of the city and township. That helps clarify this process going forward. While many people thought this would be the process for replacement, the law was not clear as to these specific circumstances, so I am glad we asked the opinion and now have clear direction.

For a bit of background on item 2 above, there was a lot of concern among residents and my fellow trustees about the Sylvania Community Improvement Corporation (CIC) making significant contributions to OneSylvania. The CIC is funded in part by membership fees of the city, township and Sylvania schools. While the CIC has been a neutral facilitator and financial supporter during the last few years of 'studying' the potential tax affects and efficiencies of a merger, I raised objections when OneSylvania came to the CIC and requested funding for the campaign itself. But my objections were overruled by a majority of the executive committee and board. Okay, actually, everyone but me supported giving OneSylvania up to $15,000 for the campaign.

Now we have an Attorney General opinion which clearly states that this campaign contribution was not an authorized expenditure of the CIC. The reasoning is pretty logical, in my opinion. Townships are restricted in where and how we can make expenditures; we can only spend money where we have clear authority to do so. We can only contribute money to a CIC to defray the administrative expenses of the CIC. Townships do not have the authority to expend funds to support or oppose a ballot issue pertaining to a merger, and we are not allowed to use the CIC as our agent for this purpose. The AG Opinion concluded that because township funds are commingled with other funds of the CIC, the CIC is unable to use any of its funds for this purpose.

Where does this leave the CIC's $10,000 contribution and OneSylvania? I don't know. I have notified the president of the CIC and the treasurer of OneSylvania of the opinion. Beyond that, I'm not sure how this issue should be addressed at this point in the campaign.

Opposition to Merger Detailed

I said in my last regular post that I would talk more about why I am opposed to the proposed merger commission. I'll take this chance to explain in more detail and depth why I am opposed to continued 'study' of merging the township and city. Some of what I have to say is based on fact and the law, while some is simply my opinion and perception of what I would expect of a merger and its process. This post has turned in to be quite long, so I'll do a summary list and the longer explanations will be below (you may have to click on 'older posts' to get to all of the explanations):

1. Just having the merger commission on the ballot is costing taxpayer dollars.

2. I'm opposed to giving the Merger Commission a blank check to spend taxpayer dollars on more 'study'.

3. No consideration has been given regarding the negative effects of businesses and residents leaving community.

4. Government will spend as much money as we can get our hands on; that doesn't mean we need more in the form of an income tax.

5. Township residents and businesses already pay our 'fair share' of taxes, even without an income tax.

6. Township residents will end up paying a significant portion of debt the city has incurred over the last 20+ years.

7. The new city will assume debt incurred by Lucas County to maintain and repair county roads located in the township.

8. The new city will assume the cost of repairing, plowing and maintaining 110+ miles of heavy-trafficked roads, plus 15 bridges, and expense that could run into the millions annually.

9. The potential to be subjected to an income tax without a vote exists with a city; in a township that is not possible.

10. Pledges that the tax burden of retirees will not increase is not true.

1. What will this vote cost?

Some residents have asked if just taking this to a vote will cost the taxpayers. OneSylvania has responded no, there is no cost just to vote on this issue; I have to disagree. According to the Lucas County Board of Elections, the township will be assessed what is called a 'chargeback', or a fee for the Board of Elections to administer votes in the township. So just voting on this will cost you money.

2. A Blank Check:

Would you approve a situation where the government was handing over to some entity a blank check? This merger vote would do exactly that. Under Ohio Revised Code (ORC) §709.46(C), "The costs of the commission shall be divided among the participating political subdivisions in proportion to the population that each participating political subdivision bears to the total population of the territory proposed to be merged."

There are no restrictions to how much money the merger commission can spend; we have no ability to limit it, make sure that it is being spent wisely, or set reasonable guidelines. The merger commission has free rein to hire attorneys, accountants, engineers, planners, consultants, etc. You name it, they can do it. How much will this cost? I have no idea, but the township will bear the majority of that burden. Interesting, it is township residents and businesses that will bear the brunt of the tax increase, and it is the township property owners that will bear the brunt of studying how to make the township residents and businesses pay more taxes. I don't like the way that works.

3. How many will leave?

Many proponents of a merger have said that the study done by the University of Toledo Urban Affairs Center (UAC) in 2007 was very 'comprehensive'. Well, it was a comprehensive look at where money could come from and where it would be spent (although I didn't necessarily agree with the assumptions and conclusions that were made). But it didn't even touch on some very important issues, one of which is analyzing how many residents or businesses may leave if the township becomes part of a city or if there is even a study. Certainly some of our large businesses have invested too much capital to up and move, but there are many, many more small businesses that are mobile and can easily be moved.

So while the UAC study projects an additional $12 million in income, will that figure hold out if there is a mass exodus of township businesses and residents? And what will happen to our property values as people flee the income tax? Values have already declined considerably due to the mortgage meltdown and economic slowdown.

Finally, what will happen to economic development in the next few years if the merger commission is formed? Would you move or start a business in a community where you don't know what form of government there will be in a few years, or who will be running it? While the Sylvania Community Improvement Corporation says this merger idea is all about providing a sound tax base to support the schools, I think we would see some very stagnate development trends for 3-5 years if this process continues.

4. Taxing Non-Residents:

According to the UAC study, imposing an income tax on those who live and work in the township would increase tax revenue by $12 million. Mind you, this is really nothing more than a wild guess, because they acknowledge that certain information is not available to determine the accuracy of the income tax impact on the township. But the study specifically says "This shift would transfer costs of city services from property owners, primarily residents, to employed persons, primarily nonresidents, and decrease reliance on a static financing source." The UAC study estimates that 80% of the people who work in Sylvania Township live outside our community, in Toledo, other parts of Lucas County or Michigan.

There are two arguments to taxing non-residents. The first argument is that these workers don't pay for the services that they use while working in our community. They use our roads, our police, our fire, etc., but they aren't paying for it. So why shouldn't we make them pay for those services via an income tax. This argument ignores the fact that their employers pay property tax, which in turn supports our services. Not only is commercial property typically assessed at a higher value than residential property, but commercial property tax rates are higher than residential rates under Ohio law. So, we are being paid to provide services to these 'visitors' to our community, visitors who provide valuable services, goods and knowledge that help our community thrive and grow.

The other argument in favor of imposing an income tax on non-residents is really almost offensive: "They don't vote for us, so why shouldn't we tax them?" Wow, what a statement. And yes, I have heard that exact statement verbalized by more than one city elected official and merger proponent. So, should we tax people just because we can and they can't stop us? I don't think so. Do we really need more money to operate our township government and services? I don't think so. Quite honestly, governments will spend as much money as they can get their hands on. We don't need more just because we can get it. Unless government is constrained in the amount of money it has available, we will find reason after reason to spend what we have.

Bottom line, Government should not tax beyond what is needed to provide services. I don't think we should tax non-residents just because we can or because there is no political fall-out from imposing such a tax.

5. Paying Our 'Fair' Share:

Now, if taxing people because they don't vote for you isn't bad enough, the next justification for considering imposing an income tax on township residents is worse. On several occasions when I have been talking to pro-merger people (making logical points as to why a merger is not a good idea) the ultimate response that I get is "it's not fair that township residents don't pay an income tax." Fair? It's not fair that we don't pay an income tax? I just really don't understand the logic of that. Who gets to decide what is fair? Is it 'fair' for city residents to decide what is 'fair' for the township residents?

I really don't even know how to respond to this assertion. Township residents pay the level of taxes that we need to in order to continue to provide police, fire, schools, parks, recreation, etc., to our community, on a level that we feel is necessary and appropriate. If that can be done in a way that excludes the necessity of an income tax, than that is the choice of township residents.

6. Who Pays The City's Debt?

According to the city's 2007 financial report, they owe approximately $18 million on bonds, note and other obligations. Some of this debt goes back to 1986 and $4.5 million was borrowed in 2007 for projects. If the two communities merge, who pays this debt? Most of it is general obligation debt, so it must be paid out of any general revenue and is not restricted to certain levy or revenue source.

So who will pay for this debt in a merged city? We all do. That’s right - it is assumed by the new city, such that everyone in the new city will be paying this debt, debt that was incurred to provide streets, infrastructure and other projects in the city. Is it really fair that township residents be forced to pay for these improvements when city residents were the main beneficiary of them? Township residents and businesses would end up paying $12 million in liabilities that we really didn’t benefit from and we had no representation in deciding to incur that debt.

7. OPWC Debt Owed by Lucas County.

Let me start this subject with an explanation of who takes care of roads, including repaving, plowing, salting, mowing, etc. In a city, the city takes care of all roads - subdivision roads and main arterial roads. In a township, the township is responsible for taking care of subdivision roads, the county takes care of county roads (Sylvania Ave., McCord Road, King Road, Whiteford Road, Monroe St.,) and the state takes care of state roads (Central Ave., 475).

Ohio Public Works Commission (OPWC) loans are made available to communities in Ohio to help finance necessary infrastructure work. They are typically 10 year loans without interest. Sylvania Township has taken out several of these loans for township road projects in the township. Lucas County has also taken out several of these loans for county road projects located in the township (ex. King Road, McCord Road, Sylvania Ave., Monroe St.) I'm not sure of the extent of this debt, but I do know they plan on taking out more OPWC loans in the near future.

Here is the surprising part: these loans were secured by the county at a time when the county was obligated to provide road work on certain county roads in the township. But if we merge and become a city, we have already been told that the county will stop paying on these loans and the new city will have to pay them off.

This debt was incurred by the county, at a time when the county was receiving various tax revenues from township sources (gas tax, etc.) that pays for the infrastructure projects. But since the roads become the new city's responsibility after merger, the county cuts lose not only maintenance of the road, but the past debt they incurred to do that maintenance. This information was not taken in to consideration when the University of Toledo did their study.

Merger Commission Not Supported by Trustees

On October 1, 2008, the township trustees held a public forum so that we could hear from you, our constituents, what they felt about the proposed merger commission. We gave ample opportunity for everyone there to speak, listening to both those who were in favor of continued study and those who were opposed to any further talk of merging the township and city.

Some in favor of the merger encouraged the trustees not to politicize this issue, asked us not to become involved, and told us we should not try to influence the discussion. I found this extremely disturbing because several city councilmen have either become directly involved or have stated that the city has a vested interest in this process. Why should elected officials from the city be involved but not the township? Numerous township residents asked the township trustees to become involved, to oppose the merger, and to even provide funding for an opposition group. Both city and township residents are our constituents, so where should my focus lie? Hands off or vocally opposed?

On one hand, I respect those who believe this is a valuable process and potentially beneficially to our community. Some have put hours of time in to OneSylvania, and I appreciate the time they are willing to commit to Sylvania. However, I can't help but be firm in my opinion that this is not the right thing for the township to do for a variety of reasons. And after our public forum, I am convinced that I not only have a right to speak out about this issue, but residents are expecting me to speak out on this issue.

Today, the Sylvania Township Board of Trustees took unanimous action not to support the merger commission. We based this decision on two issues.

First, the merger commission as it will be voted on by the residents is not balanced. Under Ohio Revised Code §709.45(A), the merger commission is required to have 5 members from the city and 5 members from the unincorporated township. Unfortunately, one of the township commissioners was annexed in to the city and is no longer a valid elector for the township - but remains on the township ballot. The township requested that the issue be removed from the ballot, but the protest was denied. How, who or when this commissioner would be replaced is unclear despite our efforts to seek advice from the Secretary of State and Attorney General.

Second, we heard loud and clear the view of the vast majority of residents who attended our public hearing. What we heard was:

1. There was a lack of interest in any further exploration of merging the city and the township;
   
2. Residents expressed their favor for and love of the qualities of life unique to township living;
3. Residents expressed their skepticism of promises to reduce residents' local tax burden;
   
4. Rejection of a tax structure where some township residents and businesses would bear a heavier tax burden in order to finance a tax cut for other residents, including city residents; and
   
5. Residents expressed satisfaction with the responsive and cost-effective nature of township government.

There are more reasons beyond the above why I oppose the merger, but there are some other topics that I want to update you on today, so I will be sure to discuss those other reasons at a later date but certainly before the election.

Merger Petition Protested by Township Trustees

For decades, our community has played with the topic of merging the city and township. Unfortunately, this issue is greatly polarizing among our residents - some believe it is an issue that should be explored; others are adamantly opposed to any idea of merging the two governments. Today, Sylvania Township was forced to take action to protect the integrity of the legal process of merger, and thus stepped squarely in to the middle of this issue.

Over the past year, volunteers have circulated petitions in the township and city collecting signatures in order to place the issue of forming a merger commission on the November ballot. These volunteers spent countless hours working on an issue that they are passionate about, and I respect them for that. The petition includes five specifically named township electors and five specifically named city electors. These electors are often referred to as merger commissioners and, if a commission is formed, are charged with drawing up the statement of conditions for merger (i.e., how we would become one entity). The merger petition was filed with the Board of Elections and was certified to the ballot in August.

Unfortunately, separate action by a small group of township residents including one of the township merger commissioners has put in jeopardy the effort to allow residents to vote on the merger commission this November. On September 3, 2008, the City of Sylvania accepted a request to annex property at the corner of King and Brint known as Country Commons Walk, an annexation effort that was started in November 2007 by the residents of that subdivision.

When the city accepted the annexation request, it annexed in to the city the residence of one of the township's merger commissioners who had signed the annexation petition in November 2007. For at least eight months while One Sylvania was gathering signatures, they were aware that one of their township commissioners had requested to be annexed in to the city. Despite encouragement early on to replace this commissioner with another township resident, a step that would admittedly have made them start over with the petition drive, One Sylvania chose not to do so and continued to collect signatures.

Now that the annexation has been approved by the city, only four of the 10 merger commissioners slated to be voted on are township residents, which does not meet the minimum requirements of Ohio Revised Code ("ORC") § 709.45. Thus the integrity of the merger process has been compromised.

I know that some are going to criticize the township for spending taxpayer money on for this protest. But I believe that as township trustees we have an obligation to our constituents - township and city residents - to raise questions if the legal process for such an important community issue has not been followed and in fact may place township residents at a disadvantage if merger discussions proceed. Statements by merger proponents that "they believe" we can appoint a replacement for this commission but that the law is ambiguous is not reassuring that we will be facing a balanced merger commission if the issue passes in November.

But 2,500 voters signed the merger petitions, so doesn't that mean we are ignoring the will of voters by taking this action? What really undermines the will of the voter is misrepresenting that the township had equal representation among the named merger commissioners when One Sylvania knew one of the commissioners was likely to be annexed in to the city prior to the November election and in fact work edwith members of Sylvania City Council to ensure that the annexation would take place after the merger petitions were filed.

It is not the Township Trustees who are prohibiting the residents from making an informed decision with regard to a merger. It was One Sylvania that I believe failed to meet the legal requirements of the law and has placed the township trustees in the position of having to protect the integrity of the merger process as well as the representation of the voters of the unincorporated township. We should not allow the law to be subverted by a rush to the polls despite clearly failing to meet the requirements of the Ohio Revised Code.

Sincerely,

DeeDee Liedel

Sylvania Township Trustee

Should we become one city?

As you may have heard in local media, petitions have been filed and accepted by the Lucas County Board of Elections in order to put a proposed merger commission on the November ballot. What exactly does this mean?

Proponents of the merger commission are quick to tell me that 'this is not a merger, this is not a tax'. In other words, what we will be voting on in November will be whether or not the community wishes to further discuss the idea of a merger between Sylvania Township and the City of Sylvania; we are not voting on an actual merger or income tax. If the merger commission is approved by a majority in both the township and the city, the commission will then be in charge making a proposal of how the two governments could merge including how the government would be funded. The time line for this process is quite long, and could take several years if this merger commission is approved.

While this may just be a discussion of if and how we would want to merge, the argument that we would not be voting on a tax is a bit specious. First, all of the studies that have been done that 'support' a merger include the incorporation of an income tax. In fact, it is the income tax which they point to which will allow the new potential city to reduce our property taxes. In addition it is within Ohio law itself that says any municipality may impose an income tax of up to 1% without voter approval. So even if the proposed structure doesn't include an income tax, the new city can impose one at its option without going to the voters as is typical of any tax increase.

Many have asked what am I, as a township trustee, going to do to oppose the merger. First, be clear that this is a citizen movement - neither the township nor the city have taken an active or official role in this process, though individual elected officials may have been involved. It is for the citizens to decide at this point.

For me personally, I am not convinced that becoming part of a city is the right thing for Sylvania Township. There are advantages to living in a township that will disappear if we become a city. At the same time, there are limitations to the township form of government that cities do not struggle with. So far, I think the benefits of living in a township outweigh the negatives.

But according to a recent email from Pam Haynam on the subject of merger: "It is a unique opportunity for Sylvania to decide its future." I certainly hope that if the township declines the merger commission, the vote will indeed be interpreted as a decision about the township's future and not simply disregarded as indecision or lack of understanding.