Over the BORderline: How HB 126 Will Negatively Impact Your Ability to Protect Your Tax Base

Written by: Samantha A. Vajskop, Esq. and Christian M. Williams, Esq.

Say goodbye to property valuation complaints as you know them, Treasurers. Thanks to House Bill 126, which was signed by the Governor on April 21, 2022, school districts will be limited in how they challenge property tax values and will need to jump through new hoops to preserve their property tax base.

Traditionally, Ohio law has permitted boards of education to file complaints with the county board of revision challenging the taxable value of real property. If a property owner files a complaint seeking to reduce that taxable value, boards of education have been permitted to file counter-complaints against the reduction. Additionally, the county auditor has been required to notify boards of education any time a complaint is filed stating a difference of $17,500 in taxable value (i.e., a $50,000 change in full market value). That notice started the clock for boards of education to file counter-complaints.

House Bill 126, which will become effective in July of 2022, overhauls this process and makes it more difficult for boards of education to participate in the tax valuation process. Beginning with complaints for tax year 2022:

1. Limited ability to file original complaints. Boards are prohibited from filing original complaints with respect to any property it does not own or lease unless three conditions are met:

a. The property was sold in an arm’s length transaction before (not after) the tax lien date; and
b. The sale price exceeds the true value of the property appearing on the tax list by both 10% and $500,000 (for tax year 2022; in tax years 2023 and beyond, this threshold is recalculated by the Tax Commissioner); and,
c. The board first adopts a resolution* at a public meeting authorizing the filing of an original complaint.

*The resolution required by part 1(c) must contain a host of specific information (e.g., parcel number and street address, record owner name, legal basis for complaint, tax year at issue [and no future tax years allowed]). Additionally, the board must pass a separate resolution for each individual parcel; the resolution cannot list more than one parcel unless the parcels have the same owner.

2. Prior notice to owners. Before boards of education rush to the voting table, they need to plan ahead. Specifically, boards also need to mail written notice to at least one record owner at least seven calendar days before they adopt the resolution mentioned in 1(c). The notice must state the board’s intent to adopt the resolution, the proposed date of the adoption, and the basis for the complaint relative to each parcel. The notice must be sent by certified mail, or it can be sent by e-mail and regular mail if the board has record of such an e-mail address.

If the board fails to follow these steps, then the board of revision will not have jurisdiction to consider the complaint.

3. Hamstringing the counter-complaint process. Boards of education can file counter-complaints without first passing board resolutions. But here’s the rub: the county auditor no longer sends any notice to school boards that a complaint was filed in the first place. Nevertheless, boards must file their counter-complaints within 30 days after the original complaint is filed. This will present a practical challenge to boards, which are tasked with discovering the existence of a complaint in time to meet the counter-complaint deadline. In other words, the clock might start ticking without the board’s knowledge.

4. Appeal prohibited. Boards of education are prohibited from appealing a board of revision’s decision. The only exception is where the board of education owns or leases the property at issue.

5. No private pay agreements. After the effective date of the bill, boards cannot enter into “private pay agreements,” where the owner pays some amount to the board in exchange for the board agreeing to dismiss, not file, or settle a complaint or counter-complaint. However, settlement agreements where the parties agree to a new valuation for the property are permitted.

Even though the changes are significant, boards of education can plan ahead, exercise diligence, and attempt to put processes and procedures in place early in the tax valuation season so that they can still try to protect their tax bases.