Trauth: When a fee is a tax

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Joseph L. Trauth, a land use attorney with Keating Muething & Klekamp in Cincinnati, recently gave us some insight into a case that's been five years in the making, and ended in late May with a unanimous state Supreme Court ruling in favor of his clients.

In 2007, rapidly growing Hamilton Township imposed a new impact fee on development projects to pay for services such as police, fire protection and roads. The Home Builders Association of Greater Cincinnati and other builders sued, contending that the fee was not really a fee at all, but a tax. Townships, which have limited governing authority, under Ohio law are not allowed to enact taxes "other than those authorized by general law."

The trial and appeals courts both sided with the township, but Trauth and his team pressed on to the higher court. Despite the two unfavorable lower rulings, Trauth says he was not surprised by the unanimity of the state Supreme Court justices in his clients' favor.

"The law is clear, in my opinion," says Trauth, an Ohio Super Lawyers listee. "We had no choice, on an issue as important as this, to take the issue to the Supreme Court. ... The 1,309 townships in Ohio and the 88 counties were all watching this case as a potential new revenue source."

The state's high court called the fees "a revenue-generating measure designed to support infrastructure improvements benefitting the entire township." Fees, on the other hand, should benefit only those paying them, the court said.

Trauth believes the ruling will have far-reaching effects: "It was a correct decision for the taxpayers of Ohio, and also has national implications."