On April 21, 2022, Ohio Governor Mike DeWine signed House Bill 126 (HB126), one of the main effects of which is to limit the ability of Ohio school districts to challenge and appeal valuation of real estate for tax purposes. The enactment of HB126 represents a victory for commercial real estate developers and landlords, who, along with the Ohio Chamber of Commerce, have championed its passage. The new law will come into force on July 21, 2022.

The stated purpose of HB126 is to amend sections 4503.06, 5715.19, and 5717.01 of the Ohio Revised Code to change the law governing property tax complaints. However, the specific impact of the new law is to significantly reduce the rights of school districts to challenge assessments and appeal unfavorable decisions.

Ohio’s current statutory scheme allows school districts to file property assessment complaints with county boards of review. In proceedings before Boards of Review, school districts can present arguments and evidence in favor of a higher property assessment. Under current law, school districts are also free to file complaints to intervene in dispute assessments initiated by property owners who have filed complaints seeking to reduce their estimated property value.

However, under HB126, a school district’s school board must not file an original complaint about property it does not own or lease unless both of the following conditions are met:

  • (i) the property was sold in an arm’s length transaction prior to the date of the tax lien for the relevant tax year, and (ii) the sale price exceeds the value of the property to the relevant tax year both 10% and a statutory minimum reporting threshold ($500,000 for tax year 2022, subject to statutory calculation for tax years 2023 and beyond) ;
  • the school district’s school board must first pass a resolution authorizing the filing of the original complaint at a public meeting of that board.

The school district’s resolution must contain the legal requirements, and prior to passing the resolution, the school district must give the required notice to the owner of the property record. Further, HB126 prohibits the school district from passing a comprehensive resolution containing multiple parcels of ownership, unless the multiple parcels all belong to the same record owner(s).

HB126 also limits a school district’s ability to intervene in landlord-initiated litigation. Under the new law, a school board can only file a counter-complaint if the original complaint alleges overvaluation, undervaluation, discriminatory evaluation, illegal evaluation or incorrect determination of at least $17,500 in assessed value.

In addition, HB126 enforces a time limit for the resolution of a complaint filed by a school district. If a school board files an initial complaint and the review board has not rendered its decision within one year of the date it was filed, the board loses jurisdiction to hear the complaint and must dismiss it.

Further, HB 126 prohibits a school board from entering into private payment agreements with respect to any appraisal claim. In particular, a school district may not enter into any type of settlement agreement with a landlord whereby that landlord agrees to make payment in exchange for the school district’s rejection or failure to file a claim or counterclaim. complaint or otherwise resolve a claim under the RC. 5715.19.

Finally, HB126 eliminates certain appeal rights previously enjoyed by school districts. If a school board files an initial complaint or counter-complaint against the evaluation under RC 5715.19, the school board cannot appeal the review board’s decision on that complaint. Therefore, while the school district can still appeal an unfavorable assessment of land it owns or leases, the school district can no longer appeal the board’s decision regarding the owned by another owner.

House Bill 126 makes significant changes to the substance and procedure of existing law regarding property tax disputes in the State of Ohio. If you have any questions regarding this change, the attorneys at Brouse McDowell are knowledgeable in the practice of real estate and construction law and can help you meet your business needs. Please contact our Real Estate and Construction Practice Group for more information.

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