New Law Will Radically Change Ohio Property Tax Appeals

Under a new Ohio law, school boards, governmental bodies, and other third parties will be prohibited from filing complaints to increase the value of others’ Ohio real property for tax purposes, except under certain limited conditions.

Am. Sub. H.B. 126 is expected to largely eliminate the practice of retroactive tax increases as a result of complaints filed based on a sale in the year currently subject to appeal. When it takes effect on July 21, 2022, the law will also prohibit private payment agreements entered into between property owners or authorized tenants and school boards or other governmental entities to settle property tax disputes. Because the impact of the law will vary depending on your particular circumstances, you should contact your lawyer at Dinsmore if you have questions about its implications for you, your property, and any pending property tax appeals.

Ohio Governor Mike DeWine signed Am. Sub. H.B. 126 on April 21, 2022. The law will dramatically limit the ability of legislative authorities, such as boards of education and other third-party complainants, from filing complaints against the valuation of property they do not own or lease unless:

• • The property was sold in an arm’s length transaction before, and not after, the tax lien date for the year for which the complaint is being filed; and
  • The sale price exceeds the auditor’s true value of the property by both: (i) 10% and (ii) a threshold of $500,000, which is subject to annual adjustment based on inflation.

Other noteworthy aspects of the law include the following:

An original complaint filed by a legislative authority (including a board of education) or mayor of a municipality must be authorized by a resolution of the jurisdiction’s legislative body at a public meeting before it is filed. The law contains detailed rules for the content of the authorizing resolution, how it must be adopted, and how notice of proposed adoption of the resolution must be provided to the property owner and confirmed with the board of revision.

Am. Sub. H.B. 126 eliminates the requirement that boards of education be provided notice of complaints seeking a reduction of more than $17,500 in taxable value, but it requires them to file counter-complaints within 30 days of the filing of the original complaint. Other entities required to receive this notice must file counter-complaints within 30 days of receiving the notice. Boards of education are prohibited from filing a counter-complaint unless the asserted change in valuation is at least $17,500 in taxable value.

If a board of education or other subdivision files an original or counter-complaint with respect to property it does not own or lease, it may not appeal a board of revision’s decision to the Ohio Board of Tax Appeals. It is not clear whether subdivisions may join Board of Tax Appeals proceedings as an appellee if a property owner or lessee appeals the board of revision decision. In effect, it appears the board of revision hearing may be the subdivision’s only opportunity to contest the valuation. The law also limits boards of revision to one year after the filing date to render a decision on an original complaint filed by a legislative authority, mayor, or third-party complainant.

On its effective date, Am. Sub. H.B. 126 will also prohibit legislative authorities from entering into private payment agreements, and render such agreements void and unenforceable. These agreements are generally defined in the law as any agreement by which a property owner or authorized tenant, or anyone acting on their behalf, agrees to make a payment to a subdivision in exchange for the legislative authority of that subdivision: (1) refraining from filing a complaint or counter-complaint; (2) dismissing a complaint or counter-complaint; or (3) resolving a claim under Ohio Revised Code section 5715.19 by settlement agreement. However agreements approved by the county auditor and for which the valuation is reflected on the tax list are allowed, provided the agreement does not require any of the prohibited payments. There is a limited window for private payment agreements to resolve pending complaints before the effective date of Am. Sub. H.B. 126 on July 21, 2022.

If you have questions about Am. Sub. H.B. 126, or how it may affect you or your property, please contact Kelvin Lawrence or your lawyer at Dinsmore.