The attorney for Spire Institute said he plans to appeal the decision of Joseph W. Testa, tax commissioner of Ohio, who ruled that the Harpersfield Township sporting complex should not be exempt from real estate taxes.

Stuart Cordell, attorney for Roni Lee, LLC, owner of the sprawling complex, said he plans to file the appeal today with the Board of Tax Appeals in Columbus. Cordell said a hearing would be set at the convenience of the board and he has no idea when a decision will come down.

The application for exemption was filed in April 2010. Spire sought exemption of real property from taxation, based upon the facility’s status as charitable organization under the 501(c)(3) section of the Internal Revenue Service Code.

The tax commissioner, however, questioned the non-profit status of the complex.

According to the tax commissioner’s final determination, Roni Lee granted a 99-year ground lease to the Geneva Area Recreational, Educational and Athletic Trust (GaREAT) on March 31, 2009. The rent payment is $1 annually. Ronald Clutter is the primary owner/manager of Roni Lee, LLC, and his wife, Tracy, is the minority owner/member.

The    tax    commissioner noted that “in spite of the $1.00 per year rent, the owner, Roni Lee, LLC, benefits from the extensive improvements being made to the land by the lessee, particularly should the property revert to Roni Lee, LLC and/or be sold.”

Testa noted that adjacent property owned by Roni Lee, LLC also stands to benefit from development and appreciation of the Spire site.

The decision further argues that an IRS determination of federal tax exemption under section 501(c)(3) of the IRS code is “irrelevant to determining whether or not property owned by a for-profit limited liability company and leased to a non-profit corporation (is) entitled to exemption from real estate taxes.”

The denial also makes reference to numerous for-profit entities that are involved in Spire, including Compass Group North America, whose subsidiary operates Spire Fuel. Seeds Orthopaedics & Sports Medicine, All-Star Physical Therapy & Wellness and MJ Performance, operated by former Olympic track athlete Michael Johnson, are cited as other for-profit tenants.

The tax commissioner stated that “the evidence demonstrates that the owner’s primary use of the subject property is leasing it for development of an elite sports training facility to develop Olympic and professional caliber athletes, together with the appreciation and development of the surrounding property controlled by the owner and not subject to the lease. Further, there is no evidence that the applicant is engaged in charitable activity in any substantial way, even though it is a non-profit entity.

“Accordingly, the subject property is not entitled to exemption from taxation under R.C. 5709.12 and R.C. 5709.121,” concluded Testa.

A sizable amount of real estate tax revenue is at stake for Geneva Area City Schools and the county. Taxes per half year on the $20 million complex are nearly $200,000. However, the valuation does not include the recent aquatics building and other improvements added since the 2011 taxes were calculated.

Spire has not paid its 2011 taxes and accumulated $337,730 in unpaid taxes from prior years. Cordell said the Ohio Revised Code states that an entity is not obligated to pay real estate taxes when there is an exemption or appeal to a denial of exemption pending.

Cordell said their appeal will contain 21 arguments addressing what Spire feels are erroneous interpretations by the tax commissioner. He said that, among other issues, the denial made “erroneous assumptions about how the property is used.”

Since October 2011, more than $14 million in mechanics liens have been filed against the Spire Institute property for unpaid work and materials on the aquatics building. While the liens total more than $14 million, there appears to be duplication of claims because Hughes-Roller, the contractor for the job, included many of the subcontractors’ claims in its $8.5 million lien. Contractors familiar with the project say there are possibly millions in additional unpaid bills to contractors and vendors who have not filed liens.

Spire officials said last week that financing for the project dried up, creating a cash-flow crunch, but they are working daily on finding a source of funding so the contractors can be paid. While work on the project has stopped, Spire Institute is open.