Ohio Significantly Changes Real Property Tax Valuation Procedures, Curtailing Local Governments' Abilities to Initiate, Appeal, and Settle Tax Valuation Cases

A new Ohio law substantially changes the landscape for real property tax valuation challenges in the state. In general, it substantially curtails school districts’ rights to initiate and appeal property tax valuation challenges. Governor DeWine signed the bill on April 21, 2022. It will become effective on July 19, 2022, and will affect valuation complaints that relate to tax year 2022 valuations.

The following bullet points summarize the law’s significant changes. Each situation is different and may vary based on a variety of factors. We encourage each reader to contact their real property tax attorney to seek advice on their particular circumstances.

• House Bill 126 significantly limits school boards’ ability to initiate original complaints against property valuation. Under prior law, school boards could contest the valuation of any taxable property located within their districts. Under the new law, school boards and other political subdivisions may only file increase complaints where:
  • The property was sold in a recent arm’s length sale that took place before January 1 of the tax year to which the complaint relates;
  • The sale price exceeds the auditor’s valuation of the property by at least 10% and $500,000.00; and
  • The board or subdivision adopts a resolution that authorizes the complaint and the board or subdivision provided notice to the property owner at least seven days before the board or subdivision adopted the resolution to authorize the filing of the complaint.
• Once effective, Amended Substitute House Bill Number 126 will prohibit private pay settlement agreements, commonly called “direct pays,” as a means of resolving school-initiated valuation appeals. Under prior law, the property owner and the school board could agree to resolve a tax valuation case with the owner paying the school board a sum of money; in exchange, the school board would dismiss its valuation complaint or any appeal relating to the property’s valuation.

The effect of this practice was to benefit the property owners and school boards who were parties to these cases and agreements, while excluding other taxing districts from enjoying increases in revenue resulting from school-initiated valuation complaints. The law’s terms that abolish direct pay agreements would apply to agreements entered into on or after the bill’s effective date, which is July 19, 2022.

• The new law will also prohibit school boards and other political subdivisions from appealing county board of revision (“BOR”) decisions to the Ohio Board of Tax Appeals (“BTA”). It is not yet clear what effect the bill would have on an attempt by a school board or other subdivision to appear as an appellee in a BTA case initiated by a property owner, assuming that the school board has filed a counter complaint in response to the owner’s original complaint, or in the situation of a school board-initiated increase complaint that resulted in an owner-initiated BTA appeal.
• The law also makes a variety of other procedural changes, including removing the current requirement that county auditors notify school boards of certain owner-initiated complaints, changing the deadline by which school boards may file counter complaints in response to owner-initiated complaints, and requiring county BORs to dismiss government-filed valuation complaints that the BOR does not resolve within a year of filing. The law applies to property tax complaints and counter complaints fixed for tax year 2022 (which would typically be filed between January 1 and March 31, 2023).

Please contact Jonathan T. Brollier, Esq., of Epstein Becker Green, with further questions regarding Ohio real property tax valuation and exemption.