By Dawn Hatfield
COLUMBUS — On Thursday, April 21, Governor Mike DeWine signed into law the Ohio Senate’s final version of House Bill 126 (HB 126), which, after receiving significant amendments from the Senate’s Ways and Means Committee, significantly limits school districts’ abilities to participate in the property valuation process.
Karrie Kalail, member of both the Ohio State Bar Association and the Ohio School Boards Association’s Ohio Council of School Board Attorneys who serves as the coordinating director of her firm’s ad valorem taxation section, is an attorney whose practice is dedicated exclusively to the representation of school boards. Kalail summarized some of the most impactful changes of HB 126 on OhioEdLaw.com:
— Boards of education may not file complaints against the valuation of real property unless the subject property sells for 10 percent and at least $500,000 more than the county auditor’s full market value.
According to Kalail, “This provision significantly limits boards of education and prevents them from filing complaints on all but a handful of sales in a given tax year. The vast majority of properties within a school district are valued significantly lower than $500,000 to begin with; meaning most properties, by nature, will never approach the filing threshold of an increase of $500,000.”
— Boards of education must adopt resolutions authorizing a complaint, and are required to notify property owners prior to the board meeting at which such action is taken.
Kalail explains, “Given the bill’s other elements, this provision is relatively benign. In fact, this portion was essentially the focus of the bill when it was first introduced in the House and before the more crippling restrictions were added in committee.”
— Boards of revision will no longer be required to notify school districts when a property owner has filed a complaint seeking a reduction in value of over $50,000.
“While the bill requires boards of education to notify property owners of an impending complaint, the reciprocal requirement that a board of education be notified when a property owner seeks a reduction in value is being removed from the existing statutory scheme. Without notice, boards of education will effectively be rendered powerless to file counter-complaints to protect their existing tax bases,” says Kalail.
— Boards of education will be prohibited from appealing decisions of a board of revision.
Kalail asserts, “This provision strips district boards of due process and appeal rights if a board of revision arrives at an incorrect decision.”
— A board of revision must dismiss a complaint filed by a board of education if it has not rendered a decision within one year.
“This is perhaps the most egregious provision of the entire bill,” argues Kalail, “as the bill contains no provisions requiring a board of revision to hear a complaint within a year, nor does it provide for any penalties for boards of revision failing to do so.”
— Boards of education will not have the ability to challenge residential/agricultural valuation complaints.
“[Prior to HB 126], there was no restriction on the type of property valuation complaints that a board of education can participate in,” concludes Kalail.
Cleveland.com reported Dan Tierney, spokesman for DeWine, said the bill will go into effect in mid-to-late July.
While property taxes are a top source of revenue for Ohio public schools, most of the cases before boards of revision have involved commercial properties, many of which have higher values than homes. HB 126 now constricts the rights school districts have been afforded since 1976 to initiate complaints at county boards of revision when they think a property value is too low.
Supporters of HB 126 said districts were too aggressive against business owners, while opponents say the new law is a tax shift that blocks due process for local governments.
In recent years, large-scale developers and commercial property owners have been pushing for change, complaining Ohio’s system inhibits economic growth. On April 21, the commercial developers and property owners scored a win.
”Ohio Chamber of Commerce is grateful DeWine signed the bill,” said its President and CEO Steve Stivers to Cleveland.com.
Closer to home, Arcanum-Butler Superintendent John Stephens shared his thoughts, saying, “Regarding HB 126….In the 10 years that I have been superintendent at Arcanum-Butler, we have never challenged or appealed a property tax evaluation. On average we may receive notification of two to three annual challenges by property owners that, when investigated, are reasonable challenges based on the actual value of the properties. The property evaluations typically appealed by districts across the state are commercial and not residential and agricultural.”
Greenville City Schools Superintendent Doug Fries agreed, “In the past we have not had too much of an issue with these concerns.”
Stephens concluded, “Generally speaking, I believe that both property owners and school districts should have procedures and mechanisms in place to allow for a reasonable challenge to undervalued properties. We value and appreciate the taxes already received from our residential property owners and farmers, so chasing after possible undervalued properties is not something we do. If we had more of a commercial tax base it would likely be more of an issue for us. I’m typically in favor of less legislation and more local control, and HB 126 seems to take that away from the school districts, but based on the history in our school district, HB 126 will have little to no impact on our district financially.”
DeWine is a Republican who is up for reelection in the May 3 primary.
House Bill 126 may be read at https://search-prod.lis.state.oh.us/solarapi/v1/general_assembly_134/bills/hb126/EN/07/hb126_07_EN?format=pdf.
Contact Daily Advocate Reporter Dawn Hatfield at dhatfield@aimmediamidwest or 937-569-0066.