NEW OHIO LAW DIMINISHES SCHOOL DISTRICTS’ ABILITY TO CHALLENGE PROPERTY VALUES
By: Matt Fitzsimmons, Member, and Ryan Willen, Law Clerk
A new Ohio law substantially alters the process by which school districts can challenge real property tax valuations. The new law limits the rights of districts to seek higher property values at County Boards of Revision while maintaining the existing rights of private property owners to seek lower property valuations.
In summary, the law substantially restricts school districts’ right to both initiate and appeal property tax valuation challenges at County Boards of Revision. In addition, the law prohibits the use of “private payment” agreements between school districts and real property owners — side deals that have often been used to settle property tax disputes under the current law.
Real estate taxes are the primary funding source for school districts. Under the current law, school districts can contest the valuation of any taxable property located within their district. Typically, school districts seek to increase the value of undervalued commercial properties because those properties yield significantly more tax dollars than residential properties. Plus, school districts are reluctant to seek to raise residential values since school districts rely on homeowners to approve local levy campaigns.
The new law restricts school districts from filing increase complaints at County Boards of Revision unless an arms’ length sale – prior to the tax lien date – results in a price that is at least 10% and $500,000 higher than the county’s valuation of the property. Furthermore, school districts must pass a resolution to authorize an attorney to initiate a property value increase complaint at the Board of Revision.
School districts retain the right under the new law to file counter-complaints to seek a higher value if a property owner first files a decrease complaint at the Board of Revision – but only if the owner’s original complaint seeks a decrease in taxable value of $17,500 or more ($50,000 in fair market value).
Under the new law, school districts lose the ability to appeal adverse decisions rendered by County Boards of Revision. On the other hand, property owners retain their right to appeal an adverse decision of the Board of Revision. In addition, Boards of Revision are required to dismiss an original school district complaint if the Board of Revision does not render a decision within one year of the filing of the complaint. Current law requires Boards of Revision to render decisions within 180 days of filing but does not authorize the dismissal of complaints after that time. The new law takes effect on July 19, 2022, and governs complaints filed for tax years 2022 and thereafter.
School districts are fearful that the new law will materially diminish the largest source of their funding. Proponents of the new law believe it will promote commercial development and curtail school districts from targeting commercial properties in their district for substantial increases in their real estate tax bills. Opponents of the law believe it will shift a huge tax burden from commercial property owners to homeowners.
School districts will likely challenge the constitutionality of this new law – particularly on procedural fairness and due process grounds arising out of the elimination of school districts’ right to appeal an adverse decision of a County Board of Revision.