© 2024 Ideastream Public Media

1375 Euclid Avenue, Cleveland, Ohio 44115
(216) 916-6100 | (877) 399-3307

WKSU is a public media service licensed to Kent State University and operated by Ideastream Public Media.
Play Live Radio
Next Up:
0:00
0:00
0:00 0:00
Available On Air Stations
News
To contact us with news tips, story ideas or other related information, e-mail newsstaff@ideastream.org.

How A Poorly Worded Tax Rule Nearly Bankrupted Ohio's Oldest Company

CEO Jeff Baldassari at Taylor's Factory in Bedford, OH
CEO Jeff Baldassari at Taylor's Factory in Bedford, OH

Jeff Baldassari thought he was doing everything right.

BALDASSARI: I was asked from the governor’s office on down, don’t leave Ohio.

Baldassari is the CEO of the Taylor Companies, which has been making furniture in the city of Bedford since 1816. And in 2004, the firm needed a new factory and headquarters and considered moving to cheap land in Mississippi.

BALDASSARI: We’re the oldest business in Ohio, and I was begged: don’t leave. We don’t need that black eye.

Baldassari didn’t want to leave. Taylor has a lot of history in Northeast Ohio.
But he says the only land here that fit its needs was a polluted eyesore—a brownfield. To move there, Taylor would have to do some serious environmental clean-up. As it happens, the state offers a number of incentives to encourage businesses to restore brownfields. One that caught Baldassari’s eye was the prospect of a ten-year property tax abatement.

BALDASSARI: We did our homework on the front end, talking to folks at EPA, doing our legal research, checking with county officials, making sure all the I’s were dotted, T’s were crossed.

Despite Baldassari’s due diligence, things didn’t go the way he expected. He thought he followed the required procedure and filed the right paperwork with the Ohio Environmental Protection Agency and the Department of Taxation, and the company eventually got a tax abatement. But when Baldassari got the letter from the tax commissioner, his jaw dropped.

BALDASSARI:. I read the final determination letter. And it’s one of those anti-climactic moments after you spent all that time, we finally got it, you put it down, and then I read it again.

Baldassari says that letter nearly bankrupted his company. The abatement was 87% less than what he expected. See, Taylor’s lawyers interpreted the state statute to mean that the tax exemption would cover the increase in value from before they did any clean-up to the new value after the company built and moved into its nice new building on what had been a brownfield. But Shelley Wilson of the Ohio Department of Taxation says they were wrong.

WILSON: Taxpayers believe that the increase in value that’s caused by the remediation should automatically be identified and automatically captured by this exemption.

Translation: instead of comparing the value of the land from its polluted days to its clean state…which seems most logical, tax officials compare the value of the land from one year before the tax abatement to its value after the improvements were made. The problem is that cleaning up the land and constructing a building may take longer than that narrow one-year time-frame. In Taylor’s case, he had already made most of the improvements by the time the tax commissioner made his assessment of the change in the land’s value. Shelley Wilson of the office of taxation concedes Taylor’s reading of the statute was probably the intent of the law.

WILSON: In concept, is that what the general assembly was going for? Arguably, yes. But that’s not how the statute is written.

The law’s poor wording has hurt other developers too. One in Cincinnati lost millions after the Ohio EPA simply forgot to send its paperwork to the tax commissioner for a matter of years. Joe Koncelik is the former head of the Ohio EPA and an environmental lawyer.

KONCELIK: That person missed out on a huge tax abatement purely because government failed to do what it was supposed to do in a timely basis.

And, until the law is clarified and rewritten, Koncelik says it makes Ohio less friendly to business.

KONCELIK: You should not have laws written so vaguely that someone in the determination of, am I going to move my company or not, reads it one way, and has their lawyers telling them I think that’s the right reading, and then finds out way down in the process that they’re completely wrong and then puts their business in jeopardy. That’s definitely not how we want to do business in the state.

For the Taylor Companies, it was the city of Bedford and its local school board that came to its rescue. They worked out an abatement that, while not as much as Taylor expected from the state, was enough to keep the company in business. Now, Baldassari is speaking out about his experience, hoping others don’t run into the same problems.

BALDASSARI: Because we do need companies to clean up brownfields. Cleveland needs it. All the major cities need it. We can’t keep going to the green fields or leaving Ohio. Ohio’s lost enough jobs. And if we’re going to turn the ship around, we need people to start cleaning up brownfields.

We presented the problems with this tax abatement to a number of state lawmakers, including Republican Senator Tom Patton and Democratic senator Nina Turner, whose district includes the Taylor headquarters. Those two say they’re interested in partnering to fix this law. They’ll spend the next few weeks investigating the issue, and could introduce legislation as early as the end of the month.