School Law Alerts

H.B. 126 Severely Limits School Districts’ Ability to Participate in Property Valuation Process

Posted by Karrie M. Kalail | Apr 22, 2022 | 0 Comments

On Thursday, April 21, Governor DeWine signed into law the Ohio Senate's final version of House Bill 126 that received significant amendments from the Senate's Ways and Means Committee.  In its final form, H.B. 126 all but excludes district boards of education from participating in the property valuation appeals process.  The law takes full effect beginning in the Tax Year 2022 valuation cycle (calendar year 2023), but currently pending complaints and appeals for Tax Year 2021 and earlier will proceed as normal.  The key aspects of the bill are summarized below:

  • Boards of education may not file complaints against the valuation of real property unless the subject property sells for 10% and at least $500,000 more than the county auditor's full market value. 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.  Under the new law, district boards will most likely be relegated to filing complaints only on the sales of multimillion-dollar properties, which generally represent a small portion of distinct properties within a district's geographic boundaries.  However, the additional “10%” requirement will restrict districts even further.  For example, if a property valued at $6M sells for $6.5M, the board of education of the district in which the property is located would not be able to file on the sale, as the total increase would not be in excess of 10% of the current total value of the property.  This seemingly absurd technicality will undoubtedly crop up from time to time, and deprive districts of already scarce opportunities to increase property tax revenues on otherwise qualifying sales.  Further still, the $500,000 threshold is indexed to inflation and will increase to a higher dollar figure in future tax years.

  • 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. 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.  In the rare event that a sale of property within a district is eligible for a complaint to be filed on, a board must pass a resolution authorizing the contemplated complaint and provide the property owner with notice at least seven days prior to the board meeting.  Given the fact that board meetings are subject to the Open Meetings Act, this provision will likely encourage property owners or their representatives to attend such meetings and attempt to litigate their positions even before a complaint is filed with a board of revision.

  • 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.  This provision will require boards of education to vigilantly monitor publicly-available board of revision dockets (if they are fortunate enough to be located in a county that maintains such an accessible database).  If such information is not readily-accessible in a board of education's county, the onus is placed on boards to strategically place public records requests seeking such information with their county board of revision.  Even then, there is no guarantee that district boards will be able to obtain notice that a valuation complaint has been filed within the thirty-day window to file a counter-complaint.

  • Boards of education will be prohibited from appealing decisions of a board of revision. This provision strips district boards of due process and appeal rights if a board of revision arrives at an incorrect decision.  With opportunities to file complaints already dramatically limited by the $500,000 increase threshold, this provision places paramount importance on county boards of revision to accept a sale price and arrive at the correct valuation.  Under the law, boards of education will have just one shot to persuade a board of revision that a property's value should be increased.  It is unclear whether boards of education will still be parties to appeals initiated by property owners.

  • A board of revision must dismiss a complaint filed by a board of education if it has not rendered a decision within one year. To make matters worse for boards of education, a board of revision must dismiss a board of education's complaint if it does not render a decision within one year of filing.  This is perhaps the most egregious provision of the entire bill, 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.  Essentially, nothing except a sense of duty will prevent a board of revision from sitting on a board of education's complaint for over a year, at which time the complaint will simply go away, and the board of education will be left with no recourse without appeal rights.  It may be possible to file a mandamus action against a board of revision dragging its feet – however, as such action is unprecedented, it remains unclear how a reviewing court would rule.  

  • Boards of education will not have the ability to challenge residential/agricultural valuation complaints. Presently, there is no restriction on the type of property valuation complaints that a board of education can participate in.  Granted, most boards of education focus on commercial properties in this process.  However, for districts where a large portion of real estate tax valuation is generated from residential property, this provision results in a significant restriction.

  • Prohibits private payment agreements on or after the effective date of the bill. Private payments have been used, on occasion, and have been a valuable tool to resolve disputes with taxpayers.  School districts have accepted a monetary contribution from taxpayers in lieu of a change in value.  These direct payments will no longer be available as a means of resolution.

If you have questions regarding House Bill 126's impact on your district, please feel free to contact Karrie Kalail.

About the Author

Karrie M. Kalail

Karrie Kalail's practice is dedicated exclusively to the representation of school boards, primarily in labor relations, real property matters, school funding, tax levies, election issues, a variety of school construction issues, and general school law matters. Karrie serves as the coordinating director of the firm's ad valorem taxation section, where she practices before numerous county boards of revision and the Ohio Board of Tax Appeals. She regularly presents on topics related to school finance and ad valorem taxation.


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