Ohio: Home rule authority can’t save Avon’s new lodging tax

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In October of 2014, the city of Avon, Ohio passed Ordinance 113-14, which intended to create a convention and visitors' bureau, and designate it the recipient of a new 3 percent excise tax on hotel accommodations. The law cited provisions of the Ohio Revised Code that permit municipalities, townships, and counties to enact a permissive excise tax on lodging of up to 3 percent. The Code limited the time in which this could be done, providing that a county could enact a lodging tax after July 1, 1980, only if no municipality or township that is wholly or partially located within that county had yet enacted its own lodging tax. 

On April 29, 1983, Lorain County enacted a 3 percent lodging tax, which was possible because at that time, no municipality or township within it had yet adopted its own lodging tax. 

On June 28, 1999, Avon adopted its own 3 percent excise tax on all hotel and motel lodging within the city. However, in 2015, after Avon’s adoption of Ordinance 113-14, the vice president and general counsel of the Craig Group, which represents the Ohio Association of Convention and Visitors Bureaus, filed a lawsuit seeking a declaration that the new 3 percent lodging tax violates Ohio law, and asking the court to stop Avon from collecting it. The trial court agreed. 

The City of Avon appealed to the Ninth District Court of Appeals, which recently released its opinion in the case Evans v. Avon, affirming the trial court’s conclusion. 

The Court’s rationale

Avon’s arguments focused, in part, on statutory interpretation; it asserted that the trial court had simply misconstrued the law, and that it should be permitted to levy the new tax. The appellate court determined that legislators had intended the statutory scheme to preclude double taxation, such that “each transaction by which lodging is furnished to a transient guest is to be taxed no more than once…” This, the court concluded, renders Ordinance 113-14 unlawful because “the General Assembly intended for only one political entity to levy a lodging tax...” 

The other piece of Avon’s argument concerned home rule authority, a concept that was built into the state’s constitution in 1912 as the Home Rule Amendment. Under this provision, “[m]unicipalities shall have authority to exercise all powers of local self-government and to adopt and enforce within their limits such local police, sanitary and other similar regulations, as are not in conflict with general laws.” 

In 1919, in the case Zielonka v. Carrel, the Ohio Supreme Court determined that this municipal authority includes the power of taxation, which the high court affirmed in 1998, in the case Cincinnati Bell Tel. Co. v. Cincinnati. ...” But the Cincinnati Bell court also noted that that General Assembly can limit municipal governments’ taxing power. 

On this and related authority, the Evans court reasoned that Ordinance 113-14 is preempted by Ohio Revised Code provisions precluding double taxation. Ultimately, the Ninth District in Evans declared that the “General Assembly has forbidden corporate municipalities and townships from levying a lodging tax under the 1980 Law once the county has already done so.”

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