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Court finds Cincinnati golf courses entitled to property tax exemption

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The Ohio Supreme Court in a unanimous opinion Thursday said Cincinnati’s publicly owned golf courses are entitled to a property tax exemption even though they are managed by a private, for-profit contractor.

The justices rejected an appeal from State Tax Commissioner Joseph Testa.  He contended Cincinnati’s contractual arrangement with a for-profit company to manage and operate the golf courses defeats the tax exemption under Ohio Revised Code on the grounds the golf courses are no longer public property used exclusively for a public purpose.

Cincinnati owns six golf courses, and the city’s recreation commission has had a contract with Billy Casper Golf Management, Inc. since 2003 to manage and operate the courses.

In several complaints from 2009 and 2010, Paul Macke, a private golf-course operator in Hamilton County, challenged the ongoing exemption of the Cincinnati courses as public property used exclusively for a public purpose.

Commissioner Testa reviewed the complaints and determined the exemption should be revoked and the Cincinnati golf courses should be subject to real-property tax.

The city appealed Testa’s ruling to the Ohio Board of Tax Appeals, and that body in March 2014 reversed the tax commissioner’s decision.  Testa then appealed to the Ohio Supreme Court.

Ohio Supreme Court Justice Judith French wrote the opinion.  She affirmed “the BTA’s reasonable and lawful decision.”

French wrote “three elements must be satisfied in order to conclude that the golf courses in this case are used exclusively for a public purpose and are, therefore, entitled to a tax exemption.”

First, they must be “under the direction or control of Cincinnati.”  The BTA found the city has significant authority and supervision of the golf courses.

Second, the property must be “in furtherance of or incidental to public purposes.”  The BTA and the court said the courses continued to be open and available to the general public.

Third, “the property must be made available to others not with a view to profit.”  

From the opinion on this point:

Under the management contract, the City receives all operating revenues, including greens fees and cart rentals fees, which it reinvests into the golf facilities. [Golf Management] only receives a flat management fee, a portion of merchandise and food and beverage sales, and may receive an incentive fee if certain revenue targets are met. This is therefore not a situation where a private enterprise is occupying publicly-owned property and profiting thereby; instead, the fruit of [Golf Management’s] labor is largely reaped by the City. [Golf Management] receives only a portion of the revenue from merchandise and food and beverage sales * * *. Such revenues are incidental and do not violate the “exclusively for a public purpose requirement” of R.C. 5709.08.

French concluded private management of Cincinnati’s golf courses has reduced overhead costs.  

“But the fact remains that by lowering costs, Cincinnati can lower fees and still maintain the viability of its golf operations,” French wrote.  “We cannot accept the theory that those developments are inimical to the public purpose, given that reducing costs enhances public access to the recreational opportunity that Cincinnati is affording.”