On April 21, 2022, Ohio Governor Mike DeWine signed House Bill 126 (HB126), a major effect of which is to limit the ability of Ohio school districts to dispute and appeal the valuation of real property for tax purposes. The enactment of HB126 represents a victory for commercial property developers and owners, who, together with the Ohio Chamber of Commerce, championed its passage. The new law will take effect on July 21, 2022.
The stated purpose of HB126 is to amend Ohio Revised Code Sections 4503.06, 5715.19, and 5717.01 to modify the law governing property tax complaints. However, the specific impact of the new law is to significantly reduce the school districts’ rights to challenge valuations and appeal unfavorable rulings.
Ohio’s current statutory scheme enables school districts to file complaints against property valuation with the county boards of revision. In proceedings before the boards of revision, school districts may present arguments and evidence in favor of a higher property valuation. Under current law, school districts are also free to file complaints to intervene in dispute valuations initiated by property owners who have filed complaints seeking to reduce their assessed property value.
However, under HB126, the board of education for a school district shall not file an original complaint with respect to property it does not own or lease unless both of the following conditions are met:
- (i) the property was sold in an arm’s-length transaction before the tax lien date for the relevant tax year, and (ii) the sale price exceeds the property value for the relevant tax year by both 10% and a statutory minimum filing threshold ($500,000 for tax year 2022, subject to statutory calculation for tax years 2023 and beyond);
- the board of education for the school district must first adopt a resolution authorizing the filing of the original complaint at a public meeting of such board.
The school district’s resolution must contain the statutory requirements and, prior to adoption of the resolution, the school district must give the required notice to the record owner of the property. Furthermore, HB126 prohibits the school district from adopting a bulk resolution containing multiple parcels of property, unless the multiple parcels are all owned by the same record owner(s).
HB126 also limits a school district’s ability to intervene in a dispute initiated by the property owner. Under the new law, a board of education may file a counter-complaint only if the original complaint alleges an overvaluation, undervaluation, discriminatory valuation, illegal valuation, or incorrect determination of at least $17,500 in taxable value.
In addition, HB126 applies a time limitation for the adjudication of a complaint filed by a school district. If a board of education files an original complaint, and the board of revision has not rendered its decision within one year after the date of filing, then the board loses jurisdiction to hear such complaint and must dismiss it.
Furthermore, HB 126 prohibits a board of education from entering into private payment agreements with respect to any complaint for valuation. In particular, a school district may not enter into any type of settlement agreement with a property owner whereby such owner agrees to make payment in exchange for the school district dismissing or refraining from filing a complaint or counter-complaint or otherwise resolving a claim under R.C. 5715.19.
Finally, HB126 eliminates certain appeal rights that the school districts previously enjoyed. If a board of education files an original complaint or counter-complaint against valuation under R.C. 5715.19, the board of education may not appeal the decision of the board of revision on such complaint. Accordingly, while the school district may still appeal an unfavorable ruling against the valuation of land that it owns or leases, the school district can no longer appeal the board’s decision regarding the property of another owner.
House Bill 126 makes significant changes to the substance and procedure of existing law concerning property tax disputes in the State of Ohio. Should you have any questions regarding this change, the attorneys at Brouse McDowell are skilled in the practice of real estate and construction law and can assist you with your business’s needs. Please contact our Real Estate and Construction Practice Group for more information.