The Journal Gazette
Saturday, February 15, 2020 1:00 am

Appeals court sides with city on tax issue

Rules FWFD deserves annexed areas' revenue

MATTHEW LEBLANC | The Journal Gazette

The Indiana Court of Appeals has sided with the city in a long-running dispute about tax money.

At issue are more than a dozen areas the city annexed in 1987 that were served by the Southwest Allen County Fire Protection District. City firefighters began serving those areas, but former county Auditor Tera Klutz continued to direct tax dollars to the district.

City officials sued in 2016, and the case has made its way through trial and appeals courts.

In a 25-page decision Friday, appeals court judges ruled the city is entitled to future tax revenues from the annexed areas, citing a portion of state law that says “when a municipality annexes areas that are part of a fire protection district, and then provides fire services in the annexed areas, the fire protection district ceases to exist in those areas.”

“We conclude that upon annexation and provision of the fire protection services to the Annexed Territories, the city was entitled to receive the assessed tax revenue associated with the Annexed Territories,” the ruling authored by Judge Patricia A. Riley says.

Judges Cale Bradford and Nancy Vaidik agreed, though Vaidik issued a separate dissent questioning whether the case should have been considered by the Indiana Tax Court.

That doesn't mean a windfall for the city, however, because the appeals court's ruling bars the city from seeking “past tax levies that have already been allocated and distributed.”

The city might be able to secure tax money given to the fire district from May 2016 to February 2019, but its lawyers will have to persuade a lower court judge it appealed the tax revenues during that time in a timely manner. That question will be decided in Allen Superior Court.

It is not clear how much the city could seek to recoup, but city spokesman John Perlich said in 2018 Fort Wayne lost more than $600,000 each year after the areas were annexed. 

“We are happy with the decision by the Court of Appeals,” he said in an email Friday. “It is supported by the law, and it is also fair, because it reflects the fact that the (Fort Wayne Fire Department) has been providing the bulk of fire protection services to the affected areas for years and will continue to do so. The FWFD looks forward to working with the Southwest Fire Protection District as it always has in the interest of public safety.”

Fire district officials could not be reached, as of late Friday afternoon. 

The case has bounced around the state's judiciary since 2016.

Allen Superior Court Judge Craig Bobay threw out the city's lawsuit months after it was filed, saying his court did not have jurisdiction. The city appealed, and the Court of Appeals later sided with city officials and sent the case back to Allen Superior Court. The state Supreme Court in 2018 denied transfer, which kept the case in local court.

The trial court ruled in favor of the city last year, and the Court of Appeals again took up the case. 

“In line with our decision in the first issue, we agree with the trial court's conclusion that the city is entitled to receive all future property taxes attributable to fire protection services in the Annexed Territories,” the ruling says.

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