On July 1, 2022, a new Ohio law goes into effect which will establish restrictions on a board of education’s ability to file complaints in real estate tax valuation cases, and it will apply to complaints filed for tax year 2022 and thereafter. Below is a summary of the law’s key restrictions:
I. Limitation on Complaints by a Board of Education; Recent Sale
A board of education may file an original complaint seeking to increase the taxable value of another’s property only if: (a) the property was sold in an arm’s-length transaction before the tax year for which the complaint is filed, and (b) the sales price is an amount that is both 10% greater and at least $500,000 more than the auditor’s currently assessed market value.
II. Limitation on Complaints Submitted by a Board of Education; Required Resolution
Before filing a complaint, a board of education must adopt a formal resolution at a public meeting to authorize the complaint. The board of education must also send written notice to the affected property owner, no fewer than seven (7) days before the public hearing, indicating (a) its intent to adopt the resolution, (b) the proposed date of adoption, and (c) the basis for the proposed complaint.
III. One-Year Rule; Dismissal
If a board of revision does not make a final decision on a board of education’s original complaint within one year after the date it was filed, the complaint is deemed dismissed.
IV. Counter-complaints by a Board of Education: Prohibitions on Minimum Claims
A board of education may file a counter-complaint in response to a property owner’s complaint seeking to reduce market value, but only if the reduction claimed is $50,000 or more.
V. Counter-complaints by the Board of Education: Deadline
Previously, a board of education could file a counter-complaint within 30 days after receiving notice of an original complaint, and county auditors were required to provide notice of any original complaints to school districts. Such notice no longer is required, and the time for a board of education to file a counter-complaint is limited to 30 days after the original complaint is filed.
VI. Appeals by the Board of Education
A board of education may not appeal a board of revision’s decision of an original complaint or of a counter-complaint.
VII. No Private Payment Agreements
A board of education may not enter into a “private payment agreement,” which is defined as an agreement by which a property owner pays a certain monetary sum to a board of education in exchange for the board either dismissing or not filing a complaint.
Historically, Ohio boards of education have used the real property tax challenge process, as outlined in Ohio Revised Code Chapter 5715, very aggressively to drag property owners into protracted litigation and, in many cases, to artificially inflate property values, thereby generating more revenue for the school districts they serve. On April 21, 2022, Governor DeWine signed House Bill 126 into law, which will likely materially curtail that practice. In doing so, the governor intends to reassure property owners and those seeking to invest in Ohio that they will be charged reasonable, market-based property taxes, and that they will not be required to respond to annual complaints and engage in ongoing litigation over property valuations.