The city of Mason owes Deerfield Twp. more than $1 million now that the 12th District Court of Appeals has ruled on a lawsuit the township filed in 2010.

When property where Procter & Gamble is located on Mason-Montgomery Road was annexed 17 years ago, Mason agreed to pay the township monies it would lose when it was taken off the tax bill.

The township has since passed two additional tax levies, one for parks and most recently for fire services. Those levies haven’t been figured into the bill the city pays the township, so the township sued the city in Warren County Common Pleas Court. Former Judge Neal Bronson ruled in favor of the township in 2011 and the city appealed.

Mason contended that the words “due to new levies” were stricken from the contract and replaced with “change in tax rates” before the document was ratified and therefore the city shouldn’t be responsible for the additional $776,703. The city also questioned a change in the law regarding tangible personal property taxes that would require it to pay Deerfield $343,301.

The 12th District Court of Appeals sided with the township.

“The plain meaning of the term ‘tax rate’ can include new levies, which was the intent of the parties in this case when looking within the four corners of the agreement,” Judge Robert Ringland wrote for the unanimous court decision.

City Manager Eric Hansen said because this was a contract dispute, the city’s liability insurance will not cover the $1.1 million bill, as is usually the case when governments are sued.

“This isn’t a mistake, or an omission or a liability situation as far as risk management goes,” he said. “It’s a dispute over a bill.”

Hansen said they are obviously disappointed by the ruling but they haven’t decided yet whether to appeal to the Ohio Supreme Court. If they let the matter stand he said he isn’t sure where the money will come from, except the taxpayers will ultimately pay the price.

Township Administrator Bill Becker said he isn’t sure if perhaps the township might let the city make payments — if they asked. But the money will go into the general fund for operating expenses. He said they are happy with the result.

“It was a disagreement about a contract,” he said. “The township felt all a long that we were interpreting the contract correctly and Mason felt we weren’t. Now the court has ruled that we were.”