Ohio Property Tax Update Archive

UPDATED december 2022

House Bill 126’s Effective Date of July 21, 2022 Confirmed by the Board of Tax Appeals, Decision Appealed

On April 21, 2022, Ohio Governor DeWine signed House Bill 126 into law.  H.B. 126 imposed new limitations on when a school district can file a property tax complaint with an Ohio county board of revision (BOR).  The bill became effective July 21, 2022, amending Ohio Revised Code 5715.19, which regulates who may file a tax valuation complaint.  The bill also amended code section 5717.01, which governs appeals from BOR decisions.

The bill, which was introduced and passed relatively quickly, has been subject to scrutiny.  The first matter of contention is whether a political subdivision that has filed a complaint or counter-complaint can appeal a BOR decision issued after July 21, 2022.

The bill’s effective date is July 21, 2022.  Section 3(A) of the bill specifies that the amendment to 5715.19 applies to original complaints and counter complaints filed for tax year 2022 or thereafter, except for division (I) of that section.  Division (I) bars direct payment settlement agreements and became effective immediately on July 21, 2022.  The portion related to Division (I) expressly stated when the amendment was to go into effect.  In contrast, the portions of the Bill amending 5717.01 do not expressly state when they are to go into effect, which has opened the issue up to litigation

In late summer, the Ohio Board of Tax Appeals began asking parties to brief the issue as to whether school boards can appeal a BOR decision from on after the law’s effective date.  Various school boards and property owners responded.

On October 31, 2022, the BTA issued the first of many decisions on the matter, holding in part, “we find that it is clear the revisions to R.C. 5717.01 became effective on July 21, 2022. Therefore, we hold that boards of education now have no appeal rights to this Board unless the board of education owns or leases the property.”  All such appeals initiated by the school boards have since been dismissed.

Boards of Education around the state have taken the next step by appealing these BTA decisions to various Courts of Appeal around Ohio.  Assignments of error are largely reflective of arguments made to the Board of Tax Appeals, the cornerstones being:

• the Legislature intended the provisions of HB 126 with regard to 5717.01 to first become effective with tax year 2022 complaints; and,
• applying the provisions of HB 126 with regard to 5717.01 to tax year 2021 complaints would be retroactive and violate the Ohio Constitution.

Two such appeals involve matters currently litigated by Siegel Jennings.  We will continue to monitor the situation and provide updates through this forum.

Kristopher Nicoloff
Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

UPDATED september 2022

Application of House Bill 126, Effective July 21, 2022, Under Scrutiny

On April 21, 2022, Ohio Governor DeWine signed House Bill 126 into law.  H.B. 126 imposed new limitations on when a school district can file a property tax complaint with an Ohio county board of revision (BOR).  The bill became effective July 21, 2022, amending Ohio Revised Code 5715.19, which regulates who may file a tax valuation complaint.  The bill also amended code section 5717.01, which governs appeals from BOR decisions.

Siegel Jennings anticipated there would be disagreement regarding the interpretation and application of the new law, which was introduced and passed relatively quickly.  The first issue to come to a head is whether a political subdivision that has filed a complaint or counter-complaint can appeal a BOR decision.

The Ohio Board of Tax Appeals has asked parties to brief the issue as to whether school boards can appeal a BOR decision on after the law’s effective date.

The Bill’s effective date is July 21, 2022.  Section 3(A) of the bill specifies that the amendment to 5715.19 applies to original complaints and counter complaints filed for tax year 2022 or thereafter, except for division (I) of that section.  Division (I), which bars direct payment settlement agreements, became effective immediately on July 21, 2022.  The portions of the bill that amend 5717.01 do not expressly state when they are to go into effect.

Tax year 2021 complaints and counter-complaints are in different stages of litigation throughout the state.  Some cases have not yet been heard by the board of revision, some were decided and appealed before July 21, 2022, some were decided and appealed after July 21, 2022, and some have been fully and finally decided. 

Political subdivisions throughout the state have appealed numerous BOR decisions issued after July 21, 2022 for tax year 2021.  In response, the BTA has taken the position that “[s]ince the General Assembly did not include an alternative effective date for amendments to R.C. 5717.01, those amendments appear to take effect on July 21, 2022.”  The BTA has issued show cause orders to parties seeking such appeals filed after July 21st. These orders direct school boards/appellants to submit briefs explaining how they are authorized to file their present appeals.

Boards of Education around the state have responded, arguing:

• the Legislature intended the provisions of HB 126 to first become effective with tax year 2022 complaints; and,
• applying the provisions of HB 126 to tax year 2021 complaints would be retroactive and violate the Ohio Constitution.

Property owners have the opportunity to respond to the BOE briefs.  This firm will continue to monitor the situation and provide updates through this forum.

Kristopher Nicoloff
Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

UPDATED june 2022

Changes to Real Property Tax Procedures on the Horizon as House Bill 126 Passes

On April 21, 2022, Ohio Governor Mike DeWine signed into law House Bill 126.  H.B. 126 imposes new provisions and limitations on the filing of property tax complaints by local school districts with Ohio county boards of revision.  The bill takes effect on July 21, 2022, and amends Ohio Revised Code 5715.19, which regulates who may file a complaint against the valuation of real estate in Ohio, and under what circumstances.

As of July 21, 2022, R.C. 5715.19:

• Limits a political subdivision (the school board, generally) from filing a property tax valuation complaint against property it does not own, unless the property was sold before, but not after, the tax lien date for the tax year for which the complaint is to be filed, and the sale price was at least 10% and $500,000 more than the auditor’s current valuation.

• Requires a political subdivision to pass a resolution authorizing the filing at a public meeting before filing any property tax complaint.

• Removes a requirement that school boards receive notice from a county board of revision (BOR) when certain property tax complaints are filed by the taxpayer.

• Requires a BOR to dismiss an original complaint filed by a political subdivision if the board does not render a decision within one year after the complaint is filed.

• Prohibits a political subdivision that has filed a complaint or counter-complaint from appealing a BOR decision.

• Prohibits a property owner and a political subdivision from entering into a settlement agreement whereby the owner pays the political subdivision to dismiss, not file, or settle a complaint or counter-complaint.

While amended 5715.19 is not yet law, and while the bulk of the changes will not impact Ohio tax challenges until tax year 2022’s filing season (January 1, 2023 through March 31, 2023), both taxpayers and school boards are already preparing for its impact. 

Siegel Jennings does not anticipate these changes will be enacted without scrutiny.  We suspect the legality of prohibiting school board appeals from board of revision decisions could be challenged for denying due process.  We also foresee a challenge of the constitutionality of prohibition against entering direct payment agreements, which could be seen as infringement of parties’ contract rights. 

Updates will follow as this significant change in Ohio law is enacted and begins to be interpreted.

Kristopher Nicoloff, Attorney
Siegel Jennings Co., L.P.A.  
American Property Tax Counsel (APTC)

UPDATED march 2022

House Bill 126 Stalls After Changes by The Ohio Senate

Revised Code 5715.19 regulates who may file a complaint against the valuation of real estate in Ohio.  On December 15, 2021, the Ohio Senate amended and passed House Bill No. 126 (HB 126), which proposes to change 5715.19 in several significant ways.  As passed by the Senate, the Bill would:

• prohibit any person or political subdivision from filing a property tax complaint with respect to property that the person or political subdivision does not own, effectively eliminating the right of school boards to file a property tax valuation complaint;
• allow a school board to file a counter-complaint only if the school board first adopts a formal resolution authorizing the counter-complaint;
• prohibit a school board that has filed a counter-complaint from appealing the decision of a board of revision; and,
• prohibit parties from agreeing to settlements that involve payments directly to the school board, which are generally in exchange for complaint/appeal dismissals, and in lieu of increased valuations.

Because of the Senate’s amendments, the Bill went back to Ohio House of Representatives for a concurrence vote.  The concurrence vote resulted in zero members voting in favor.  Accordingly, HB 126 has been sent to a conference committee where members of both the House and the Senate will attempt to negotiate their differences.

In their communications with committee members, advocates for the Bill are focusing on uniform assessments in Ohio: attempting to have a statute enacted to govern complaints, how decisions are determined, and determination of a common level of assessment.  The newest proposals are modeled after tax code provisions found in both Texas and Illinois that provide relief to property owners from unequal assessments.  The Amendment, as proposed, would:

• Require any person filing a valuation complaint or counterclaim to increase a property’s value with a board of revision (BOR) to submit to the county auditor a list of a reasonable number of comparable properties in the county.
• Require the BOR, the first level of review, to determine whether the property's valuation for tax purposes is less than, more than, or equal to the average valuation of comparable properties in the county for tax purposes for the tax year that is the basis of the complaint.
• Allow the BOR to maintain discretion to determine the average valuation but limit it to using only those properties submitted with the complaint and, if applicable, counterclaim.
• Limit BOR jurisdiction by requiring the BOR to dismiss a complaint or counterclaim filed by any person other than the owner, a tenant, or an individual representing the owner or tenant if the property's valuation is more than or equal to the average valuation of comparable properties in the county.
• Limit the valuation of certain properties for tax purposes by requiring, for a decrease complaint, a BOR to reduce the valuation of the property to a value not exceeding the average valuation of comparable properties in the county if that average valuation is lower.

Updates will follow when the Senate and House conference committee reports progress.

Kristopher Nicoloff
Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

UPDATED december 2021

Ohio Senate Passes House Bill 126

Revised Code 5715.19 regulates who may file a complaint against the valuation of real estate in Ohio.  On December 15, 2021, the Ohio Senate passed House Bill No. 126 (HB 126), which proposes to change 5715.19 in several significant ways.

Ohio is currently one of very few states that permits its local school boards and political subdivisions (board of county commissioners, board of trustees, mayors, etc.) to file complaints challenging the value of real estate in their respective areas of jurisdiction.  After property owners, school boards file the overwhelming majority of valuation complaints in Ohio.  If adopted as law, HB 126 will:

• prohibit any person or political subdivision from filing a property tax complaint with respect to property that the person or political subdivision does not own, effectively eliminating the right of school boards to file a property tax valuation complaint;
• allow a school board to file a counter-complaint only if the school board first adopts a formal resolution authorizing the counter-complaint;
• prohibit a school board that has filed a counter-complaint from appealing the decision of a board of revision; and,
• prohibit parties from agreeing to settlements that involve payments directly to the school board, which are generally in exchange for complaint/appeal dismissals, and in lieu of increased valuations.

If signed into law by the Governor, these changes will reshape the practice of real property tax litigation for attorneys representing both school boards and taxpayers alike.  It is anticipated that the bill will be put to a concurrence vote in the Ohio House of Representatives early in the first quarter of 2022 and, if passed, will be put in front of the Governor shortly thereafter.  Our firm anticipates having much more on the subject in its First Quarter 2022 APT submission.

Ohio Tax Year 2021 Property Tax Assessment Review Period Approaching

Ohio counties are currently in the process of certifying property values and will begin mailing out property tax bills for tax year 2021 (pay 2022) soon.  The window to formally challenge these values is open from January 3 through March 31, 2022.  Early analysis by a professional familiar with local assessors, opposing counsel, and relevant assessment law will optimize your chances of obtaining appropriate relief.

Kristopher Nicoloff
Siegel Jennings Co. L.P.A.
American Property Tax Counsel (APTC)

UPDATED september 2021

Supreme Court Further Clarifies “As if Unencumbered”

Ohio Revised Code 5713.03 mandates Ohio real property be valued in the fee simple estate, as if unencumbered.  On August 18, 2021, the Supreme Court of Ohio (“SCO”) issued a decision in Rancho Cincinnati Rivers, L.L.C. v. Warren Cty. Bd. of Revision, 2021-Ohio-2798 and defined this requirement; holding “as if unencumbered” at the time of an appraisal means to value as if free from an encumbrance such as a lease, not that the property is vacant at the time of transfer. 

The Lowe’s at issue was valued by competing appraisals.  The taxpayer appraisal valued under the assumption the property was vacant, and assumed a hypothetical sale.  The opposing board of education appraisal considered first-generation leases, made qualitative adjustments based on the existence of the leases, and inquired into whether the comparable properties were being leased at market value or if further adjustments were necessary.  The Court of Common Please ("CCP") adopted the board of education’s appraisal value.

On appeal, the SCO held the taxpayer created its own rule valuing-at-transfer, which was based in-part on a misinterpretation of the statute.  In response, it held 5713.03 invokes a two-prong market-lease rule.  First: leased fee sale prices remain the best evidence of value, but are subject to rebuttal.  Second: appraisals that account for lease terms that are typical of market may be considered and adopted.

The SCO found the taxpayer’s approach was one possible interpretation of the statutory language, and found property rights adjustments in the taxpayer’s appraisal were neither required nor forbidden.  However, because the CCP was the trier of fact and weighing the veracity of the appraisals was within its discretion, the SCO affirmed the CCP decision.

The SCO confirmed appraisal adjustments should be made based on the appraiser’s expert analysis of the market.  To the extent that the absence of an encumbrance would lead to a higher or lower value, sale comparables must be adjusted accordingly.  The Court further addressed 5713.03’s inclusion of the term “fee simple as if unencumbered” and stated, “by using that phrase, the legislature codified its agreement with the requirement that property should be valued using market rent rather than the actual rent from an existing lease encumbering the property at the time of a sale and transfer.”

Kristopher Nicoloff
Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

UPDATED june 2021

COVID-19 Emergency Tax Measures Enacted

Siegel Jennings’ recent Ohio Property Tax Updates have highlighted our firm’s efforts to ensure fair property taxation for all taxpayers through active involvement in the Ohio legislative process. Recent changes to Ohio law sought were two-fold: 1) an amendment to permit a commercial or industrial tenant who is wholly responsible for the property tax liability of a leased property to file a valuation complaint in its own name instead of in the owner’s name; and, 2) an emergency measure affording Ohio taxpayers the ability to seek relief from the negative economic impacts of COVID-19. Both measures have passed, been enacted, and go into effect on August 3, 2021.
Section 5715.19 of the Ohio Revised Code details the who, what, when, where, and why of real estate valuation complaints in Ohio. Long excluded from the “who” were tenant taxpayers wholly responsible for the property taxes under their lease. Prior to the passage of this statutory amendment, tenants were constrained to file complaints in the name of the property owner, assuming they previously negotiated the authority to do so. This alone often presented a hurdle to tenant taxpayers, further complicated by other seemingly normal aspects of litigation. For example, when the school board’s discovery sought documents from the owner and the owner had less interest in the outcome of the litigation than the tenant who was “on the hook” for the tax payments.
As amended, Section 5715.19 remedies these obstacles; eliminating the burden of owner cooperation and putting full control of the litigation in the hands of the party responsible for the taxes.
Senate Bill 57 (SB 57), a temporary emergency relief measure signed into law by Ohio Governor DeWine on April 27, 2021, provides much needed property tax relief to property owners who have been severely impacted by the COVID 19 pandemic and the government stay-at-home orders.
Available only to those taxpayers who can affirmatively demonstrate a negative economic impact on their property caused by COVID-19, the measures provide relief in three ways. First, the date of valuation for these special complaints moves from January 1, 2020, to October 1, 2020. Without this change, taxpayers would have been limited to tax year 2021 complaints to prove the impacts of COVID-19. Second, taxpayers may now present, and taxing authorities must consider, evidence of how a property’s value has been negatively impacted by COVID for the 2020 tax year. Third, the restriction permitting only one complaint to be filed per triennial has been lifted, allowing affected taxpayers the ability to seek relief because of the pandemic’s impact despite a previous filing within the same three-year cycle.
Under normal circumstances, Ohio complaints must be filed between January 1 and March 31 of the year following the relevant tax year. Accounting for the April 2021 passage of SB 57, the legislature has provided a 30-day window in which to files these special COVID related complaints. Taxpayers seeking relief have from the effective date of the Bill of August 3, 2021 through September 2, 2021 to file their complaints.

Kristopher Nicoloff
Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

UPDATED december 2020

Legislative Efforts to Protect Ohio Taxpayers Continue

In the Summer of 2020, Siegel Jennings’ submission to the APTC for its quarterly property tax update highlighted our firm’s on-going efforts to ensure fair property taxation for Ohio taxpayers through active involvement in the Ohio legislative process.  The focal point of that submission was a proposed amendment to Ohio Revised Code 5715.19(A)(1), which would permit a commercial tenant who is wholly responsible for the property tax liability of a leased property to file a valuation complaint in its own name. 

In May of 2020, Siegel Jennings’ Managing Partner Kieran Jennings appeared before an important Committee in support of the amendment, explaining the benefits of adopting the legislation while answering questions posed by the Committee and members of the audience.  He noted the amendment would clarify language of the statute never intended to exclude a relevant party to the litigation – the tenant taxpayer – while maintaining owner’s rights to participate in Ohio tax litigation matters for their properties.

This proposed amendment has since been approved by the Ohio House of Representatives and subsequently by the Senate.  It has been returned to the House for a concurrence vote and efforts are underway to encourage members of the House to reconvene from their current adjournment.  If passed by concurrence vote, it will be sent to the Governor for final approval.

Also spearheaded by Siegel Jennings is House Bill 38, Amendment 0449-5, Property Pandemic Impact Consideration (HB 38).  HB 38 is the direct result of Mr. Jennings’s letter to Lt. Governor Jon Husted, which proposed means and methods to alleviate strain on Ohio’s economy and provide relief to Ohio taxpayers suffering from the economic repercussions of COVID-19. 

If adopted, HB 38 would temporarily permit a person authorized under existing law to file a property tax complaint alleging a reduction in a property’s valuation due to circumstances related to the COVID-19 pandemic even if that person or entity already filed a complaint for the same property during the current triennial period.  This temporary provision would apply to tax years 2020 through 2023.  HB 38 would also allow factfinders to consider the economic impact of COVID-19 for tax year 2020, and to adjust a property’s valuation based on that impact, if appropriate.

Under existing Ohio law as it applies to tax year 2020, properties are to be valued as of January 1, 2020, as if the pandemic never happened. Thus, under existing law, there would be no recognition of the economic reality businesses and taxpayers currently face.  Adoption of HB 38 would provide the time-sensitive opportunity for these individuals to have the effects of COVID-19 considered, even if a previous complaint was filed in the same triennial, so long as the negative economic circumstance arose after the period for which the prior complaint was filed.

HB 38 will provide much needed fairness to the real property tax valuation process as we continue to navigate this crisis.  Like the proposed amendment to 5715.19(A)(1), HB 38 has been approved by the House and Senate and is currently awaiting a concurrence vote from the House before it can be sent to the Governor for final approval.  Because the filing of complaints for tax year 2020 begins on January 1, 2021, Siegel Jennings is making every effort to ensure a decision is made as quickly as possible.

Kristopher Nicoloff
Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

UPDATED june 2020

Tenant Complaint Filing in Ohio

Siegel Jennings’ efforts to ensure fair property taxation for all Ohio taxpayers include an active role in the Ohio legislative process itself.  On May 12, 2020, Managing Partner Kieran Jennings appeared before the Ohio Ways and Means Committee in support of an amendment to Ohio Revised Code 5715.19(A)(1), which would permit a tenant who is wholly responsible for the property tax liability of a leased property to file a valuation complaint in its own name.

5715.19 regulates who may file a complaint against the valuation of real estate in Ohio.  In its current form, the language of the statute makes it necessary for a tenant to file a valuation complaint in the name of the owner of the property.  However, the owner of a property where a tenant pays 100% of the property taxes often has little interest in committing time to the valuation complaint process. The true litigant in these situations is the tenant.

The current law’s shortcomings are highlighted during the discovery process on appeal.  Once a decision is appealed to the next level of review, the parties can issue and compel discovery.  Often, discovery issued by opposing parties is directed to the owner and includes requests for information not available to the tenant.  These requests do not always seek information relevant to the fee simple as if unencumbered value of the real property.  Should a tenant receive discovery it cannot answer, such as a question about a sale or a recent financing appraisal, its entire litigation position may be jeopardized.  Unanswered discovery may result in motions to compel.  Motions to compel may include monetary penalties, and even more damaging, evidentiary restrictions that handicap the tenant’s ability to pursue its case.  A tenant who is 100% responsible or the property taxes, and is the true litigant, may be denied due process because it is not in the possession of the information requested.

Property owners with tenants 100% responsible for paying property tax bills often have limited knowledge of the day-to-day operations of their properties.  They are often unable to answer condition questions, may not have familiarity with the markets in which their properties are located and frequently cannot offer much information relevant to the fee simple value of their parcels.  They focus more on collecting rent, and frequently do so from locations outside the state or even the country.  Conversely, the tenant has boots on the ground, knows the bulk of information relevant to the property’s value and has a vested interest in all tax implications. 

Adopting the proposed amendment, as discussed by Mr. Jennings, would clarify language of the statute never intended to exclude a relevant party to the litigation.  It would provide the most interested party – the taxpayer – the ability to fully advocate for and defend its position.  It would ensure due process to tenants already most impacted by the fee simple value of the properties they rent.  Importantly, these changes would not serve to extinguish owner’s rights to participate in Ohio tax litigation matters for their properties but would serve to include the correct parties for properties where the responsibility for taxes is wholly the tenants, who have the most information and are the most impacted by the results.

Kristopher Nicoloff
Siegel Jennings Co. L.P.A.
American Property Tax Counsel (APTC)

UPDATED march 2020

Covid-19

COVID-19 has created unprecedented uncertainty for property owners, tenants, legislators and tax professionals throughout the nation.  Ohio’s response has been swift, but without additional legislative guidance and proactive measures, further statewide economic damage is inevitable.

A state of emergency was declared in Ohio on March 9, 2020 in Executive Order 2020-01D. On March 22, 2020, the Ohio Department of Health gave the official Stay At Home Order for Ohio residents to shelter in place through April 6, 2020 (since extended through May 1, 2020).

Ohio Executive Order 2020-08D, issued April 1, 2020, tolled time limitations for criminal, civil, and administrative proceedings set to expire between March 9, 2020 and July 30, 2020.  Further, and for a term of at least ninety consecutive days:

• landlords are requested to suspend rent payments for small business commercial tenants;
• landlords are requested to provide for a moratorium on evictions of small business commercial tenants; and,
• lenders are requested to provide commercial real estate borrowers with mortgage loans for property in Ohio an opportunity for forbearance.

Recognizing the immediate benefit of these provisions but also the need for additional measures, on April 1, 2020, Kieran Jennings, Managing Partner of Siegel Jennings, dispatched a letter to Lt. Governor Husted to propose the strengthening or enlarging of existing provisions set forth in Ohio law. Similar letters were then sent to the County Auditors’ Association of Ohio, the County Treasurers Association of Ohio, and the auditors and treasurers for Ohio’s larger counties.  Each proposal is made to protect property owners severely impacted by Ohio’s Stay at Home Order while encouraging a quick economic recovery once the emergency passes.  The below proposals have not been adopted as of this writing.

Proposal 1:         Second Half Property Tax Bill Deferral

Payment plans carrying no interest or penalties should be instituted.  Such plans must not impact lender determinations of delinquency and should be established immediately to relieve property owner borrowers from escrow payment obligations currently due.

Proposal 2:         Permitting and Encouraging Telephonic and/or Video Hearings for Tax Boards

In response to COVID-19, many Ohio tax boards have postponed hearings.  The administrative process cannot be slowed at the very time when taxpayers need relief.  Cases need to be resolved and mandatory, telephonic or video mediation and hearings should be implemented.

Proposal 3:         Clarifying that Post-Tax Lien Date Information Related to COVID-19 Be Heard and Considered in Tax Valuation Cases for Tax Year 2020

Ohio law mandates that property be assessed as of January 1 of the tax year in question.  Following this mandate for tax year 2020 would ignore the economic impact of the present pandemic and Stay At Home Order.  Ohio currently permits the filing of Applications for Valuation Deduction for Destroyed or Damaged Real Property for post-tax lien changes in condition.  To effectuate this proposal, Ohio could recognize COVID-19 as an event qualifying for the application thereby providing taxpayers with the ability to show the real economic impact of tenants failing to pay rent because their businesses have closed, among other negative results. 

Ohio tax authorities should be permitted to take into account the damage that occurred due to COVID-19 and the ordered shutdown.  To further encourage efficient yet fair results, property owners should also be permitted to choose to be assessed using a uniformity argument, assessing properties uniformly based on a reasonable number of comparable assessments.

Proposal 4:         Maintain the Board of Tax Appeals’ 2019 Fiscal Year Administrative Budget

The Ohio Board of Tax Appeals (BTA) had a backlog of cases during and after the Great Recession that caused cases to take years to resolve.  This delayed monetary relief to both property owners and school boards alike.  Filings are anticipated to dramatically increase as a result of COVID-19 and the state’s proposed 20% budget cut could disproportionately impact the BTA and further delay economic relief.

Kristopher Nicoloff
Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

UPDATED December 2019

Assisted-Living Facility Valuation - Apartment Comparables vs. Lease-Coverage Analysis

To properly value an assisted-living facility for property tax purposes, an appraiser must separate the facility’s business value from the value of the real estate.  To isolate the value of the real estate, Ohio appraisers have relied on the use of conventional apartment comparables in their approaches to value.  Ohio case law supports this approach but does not require it.

In November of 2018, the Supreme Court of Ohio (SCO) addressed the tax year 2014 valuation of an 89-unit assisted-living facility in HCP EMOH, L.L.C. v. Washington BOR.[1]

Competing appraisals were presented at the Board of Tax Appeals (BTA).  The taxpayer appraiser used apartment comparables in his sales comparison approach.  The county appraiser used an income approach with assisted-living-facility comparables.  The county appraiser’s approach relied on a lease coverage analysis that allocated a portion of each business’ net operating income to the going concern attributed to the real estate.  The BTA rejected the taxpayer appraisal, finding its adjustments inadequate.  The BTA found the county appraiser’s comparables superior to the taxpayer’s apartment comparables because they more closely resembled the living units found in a skilled nursing facility.  It adopted the value concluded by the appraiser for the county.

On appeal, the Court held the BTA erred in adopting the county appraisal value because the leases in the report’s income approach (which relied on a lease-coverage ratio) were all based on the net operating income of the business of each comparable.  Citing Higbee,[2] the Court noted “[i]f it is the real property that is being valued, its valuation cannot be made to vary depending on the success or lack thereof of the business located on the property.” 

The lease-coverage ratio in the county appraiser’s income approach was created using only comparables with net leases based on a percentage of the net operating income of the business operating at the property.  By doing so, the appraiser failed to separate the business value from the realty value.  The Court found, because the ratio was created from flawed inputs (the comparable leases with rents based on income generated by the businesses), any calculations using the ratio were likewise flawed.  Having rejected this analysis, the Court found it did not need to address the use of a lease-coverage analysis to value real property, generally.  The BTA retained the original value on remand, finding no evidence with which to determine value. 

The taxpayer also filed a complaint for the same property for a subsequent tax year.[3]  This time, the taxpayer appraiser broadened his comparables to include assisted-living properties while also adding a cost approach.  The county appraiser’s approach was identical to his analysis in the prior case.  The taxpayer’s appraisal was found to be competent and probative, was noted to be the best indication of value in the record and was adopted.  The BTA remarked that the Court appeared to disfavor the lease-coverage analysis. 

Using apartment comparables to properly value an assisted-living facility is recommended.  The use of such comparables isolates the value of real estate and has been relied upon by taxing authorities in Ohio for decades.  While it may be possible to perform a lease-coverage analysis that successfully separates the business value of a property from its real estate value, no caselaw could be located that assigned value under this approach. 

[1] HCP EMOH, L.L.C. v. Washington Cty. Bd. of Revision, 155 Ohio St.3d 378, 2018-Ohio-4750.

[2] Higbee Co. v. Cuyahoga Cty. Bd. of Revision, 107 Ohio St.3d 325, 2006-Ohio-2

[3] HCP EMOH LLC v. Wash. Cty. Bd. of Revision, 2019 Ohio Tax LEXIS 2437

Kristopher Nicoloff
Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

UPDATED september 2019

Entity Transfer Issue before the Supreme Court of Ohio

Entity transfers, often in the form of LLC transfers, have been the topic of interest to Ohio Boards of Revision, Boards of Education and taxpayers in recent years.  Transferring real estate through an entity transfer, rather than a direct transfer of real estate, requires only the filing of an exempt conveyance form and a deed indicating the exempt transfer.  No consideration is reflected on these documents.

When called into question, the Ohio Board of Tax Appeals (BTA) has treated the transfer of a corporate entity whose sole assets are real estate (or real estate related) as the sale of real estate.  The BTA followed this precedent in Palmer House.[1]  The subject property was an apartment building that transferred from LLC to LLC. The local Board of Education (BOE) relied on the publicly available mortgage related to the transfer, along with the deed and exempt conveyance fee statement.  The BOE filed a complaint based on the mortgage but was unable to establish a sale price at the local Board of Revision level.  On appeal to the BTA, the BOE obtained the purchase agreement, settlement statement and a financing appraisal through discovery.  The BOE submitted these additional documents and argued the entity transfer price was equal to the value of the real property.

Palmer House argued the transfer included assets other than real estate, in addition to potential liabilities.  It submitted its own, non-financing appraisal report and testimony to demonstrate the transfer included more than real estate. 

The BTA found that a sale of real estate, and only real estate, occurred.  The Board held that the use of an entity transfer did not alter the underlying intent of the parties to transfer real estate.

On appeal to the Supreme Court, oral argument was recently presented.  No decision has been issued.

Ohio Boards of Education regularly rely upon real estate sales to establish value increases in entity-transfer cases.  BTA decisions turn primarily on a demonstration that only real estate was transferred.  BOE’s have successfully established the transfer of real estate using corroborating sale documents, such as deeds and conveyance fee statements filed contemporaneous to settlement statements submitted as evidence.  Appraisals submitted in conjunction with these documents have also been shown to support value.  Conversely, BOE’s have lost these cases when relying solely on mortgages, deeds showing a $0 transfer, and exempt conveyance fee statements. Bank financing appraisals, on their own, have also been rejected as conclusive evidence that a transfer of just real property occurred.

The decision issued by the Supreme Court in this case will establish the burden of proof on a party seeking to establish an entity transfer as the value of real estate for taxation in purposes in Ohio. 

[1] Columbus City Schs. Bd. of Educ. v. Franklin Cty. Bd. of Revision, 2018 Ohio Tax LEXIS 1574 (Ohio B.T.A. July 25, 2018).

Kristopher Nicoloff
Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

UPDATED JUNE 2019

Use of purchase of entity interests to set real property value

While a recent arm’s length sale of the unencumbered fee simple interest is the best evidence of real property value for tax purposes in Ohio, the sale of interests in the ownership entity have not been adopted as readily as indicators of value. Eg. Salem Medical Arts & Dev. Corp. v. Columbiana Cty. Bd. of Revision[1]; Gahanna-Jefferson Pub. Schs. Bd. of Edn. v. Franklin Cty. Bd. of Revision[2] (company’s stock price did not equal real property value because of the ownership of other assets and of the going concern; no evidence in record of transfer of real estate for consideration, the sale of partnership interests in dissolution of one entity or from subsidiary to parent ownership entity was personal not real property).

More recently, tribunals and courts have adopted the sale of ownership interests as reflective of value of the real estate more eagerly[3].  Recent examples are the Ohio Board of Tax Appeals (BTA) decisions in Columbus City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision[4] (“Palmer House”) and Orange City Schools Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision (“Corporate Circles”)[5].

In Palmer House, the buyer purchased the membership interests of the LLC that owned a 264 unit apartment building.  The buyer entity was created solely for the purpose of owning the subject property.  Evidence in the record included a settlement statement, recorded mortgage, financing appraisal, and purchase agreement.  The BTA concluded based on these factors that the transaction was, fundamentally, the transfer of real property. This case has been appealed and is pending at the Ohio Supreme Court.

The facts are similar in the Corporate Circles decision.  The record included the closing statement, purchase agreement, and financing appraisal.  The taxpayer argued that the transfer was the sale of member interests in the ownership LLC and therefore, was the exchange of personal, not real property.  The BTA determined this transfer did represent real property value. The only purpose of the ownership entity was to own the subject real property, and the entity had no other assets or other going concern business value.  It also had no other liabilities other than the note and mortgage connected to the ownership of the real estate.  The Eighth District Court of Appeals affirmed the BTA’s decision agreeing that the documents and testimony demonstrated that the sale was of real property and not a truly a membership transfer.  This case is also pending at the Ohio Supreme Court with proceedings stayed until the Court rules in Palmer House. 

Potential legislation

About a year ago, there was a potential change to the current property transfer tax law circulating among county auditors.  The legislation has not been formally introduced, but the Ohio Legislative Service Commission analysis can be found here.  In short, the law would remove the current exemption to paying the property transfer tax when the transfer of ownership is effectuated through the transfer of the interest in the ownership entity (eg, LLC, partnership, corporation) instead of a direct conveyance of title.

[1] 82 Ohio St.3d 193, 1998-Ohio-248.

[2] 89 Ohio St.3d 450, 2000-Ohio-216.

[3] Parkland Assoc. v. Mayfield Hts School Dist. Bd. of Edn. (June 25,2014), BTA No. 2011-3893, 4060 (function of owner partnership was solely to own subject property with no other going concern value).

[4] (July 25, 2018), BTA No. 2016-2365.

[5] (April 23, 2018), BTA No. 2017-127.

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Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

UPDATED MARCH 2019

BTA extends "special purpose" property value-in-use exception to big box retail

In a recent decision, the Ohio Board of Tax Appeals (BTA) found a 135,000 square foot, big box retail property, owner occupied by Lowe’s and 16 years old as of the valuation date to be a special purpose property, allowing the tax valuation to represent value-in-use instead of the typically mandated value-in-exchange. Lowe’s Home Centers, LLC v. Cuyahoga Cty. Bd. of Revision (Feb. 16, 2019), BTA No. 2017-39.

Ohio case law recognizes an exception to the requirement of valuation-in-exchange for real property tax purposes for “special purpose” properties which have a limited market because of unique characteristics limiting their functional utility to the uses for which they were originally built.[i]  For these properties, the tax valuation can be based on the value of its present use to its current user.

The BTA has mistakenly extended this exception to a big box retail property by adopting the school district appraiser’s report, valuing the property at almost $90 per square foot, an increase from the original assessment of $70 per square foot. 

The school district’s appraiser did the following:

• Defined the property’s highest and best use to be “for continued use by current occupant for its ongoing business.” The BTA bases its finding that the special purpose exception applies largely on this determination.
• Relied on lease renewals that were almost exclusively renewals with no exposure to market.
• Relied on leased fee comparable sales without appropriate property rights adjustments.
• Concentrated on Lowe’s continued occupancy of the property since its construction.
• Concluded to the lowest of her three approaches to value in the value developed by the cost approach

Throughout its discussion, the BTA debates the merits of using “first” generation” or “second” generation leases or sales as more comparable to the subject.  While it is understandable that such terms became shorthand, the “first” or “second” generation description can be misleading.  The BTA references definitions of both from prior case law: “A ‘second-generation space’ is a ‘building or space used by a tenant other than the original tenant.’ Appraisal Institute, The Dictionary of Real Estate Appraisal 210 (6th Ed.2015), whereas a ‘first-generation’ space is a ‘building or space designed to be functionally and economically efficient for the original tenant or a similar class of tenants over a period of time, during which the space retains its original utility and desirability.’ id at 92”[ii]

As the definitions used by the BTA itself demonstrate, whether a comparable is “first” or “second” generation cannot be the end of the inquiry. Neither is a description of whether it reflects market conditions.  Whether the lease of the property is to its first user or to a subsequent user, whether the property sells occupied by that first user, or a subsequent user; neither is a measure of market conditions.  The important consideration is whether or not that lease or sale had sufficient market exposure to be considered a market transaction.  In light of this decision, it is even more imperative to properly define the highest and best use, and to use appropriate market data to measure the value-in-exchange that is required by Ohio real property taxation law.

[i] Appraisal Institute, The Appraisal of Real Estate 28 (13th Ed.2008).

[ii] Lowe’s Home Centers, Inc. v. Washington Cty. Bd. of Revision, 154 Ohio St.3d 463, 2018-Ohio-1974.

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Siegel Jennings Co, LPA
American Property Tax Counsel (APTC)

UPDATED december 2018

The Supreme Court of Ohio (SCO) affirmed in its recent Westerville [1] and GC Net Lease [2] cases that all evidence relevant to the value of a property’s unencumbered fee simple estate must be considered for real estate tax purposes, even when there has been a recent sale.

Real property in Ohio must be valued in the fee simple estate, as if unencumbered, according to Revised Code 5713.03.  Properly following this methodology permits the uniform valuation of real estate across the spectrum of property types while including consideration of non-market leases, credit-worthy tenants and other non-sale-price evidence.

The SCO applied this methodology when it found a recent, arm’s-length sale no longer conclusively determines a property’s value as it did under prior law in landmark case Terraza.[3]  It followed to find appraisal evidence must be considered when such evidence is relevant to the value of the unencumbered fee-simple estate in Bronx Park.[4] 

In Westerville, a city school board sought to increase the value of a single tenant office building based on a sale, submitting the relevant deed and conveyance fee statement.  The taxpayer defended against the increase by offering an appraisal and related testimony.  In addition to providing his own conclusion of value, the appraiser testified the sale was part of a larger bulk sale and the sale price was an allocation.

The relevant Board of Revision adopted the sale price as value.  On appeal, the BTA also adopted the sale price while applying caselaw created prior to the controlling and most recent version of 5713.03; caselaw that emphasized the use of a sale price to determine value.

Finding error in the BTA’s decision, the Supreme Court vacated and remanded.  In its decision, the BTA stated the only way to rebut a sale was with respect to its voluntariness, recency, or if a relationship between the parties was demonstrated, which the SCO found was incorrect.  The BTA relied on caselaw that claimed it would never be proper to adjust a recent arm’s-length sale because of an encumbrance, which the Court found was improper.  Finally, the SCO in Westerville found that sale price evidence remains the best evidence of value, but not the only evidence of value.  The Court held that appraisal evidence is admissible and competent evidence of value alongside a sale price and that the fact-finder has a duty to consider whether the appraisal constitutes a more accurate valuation of the property than the sale price. 

Once again applying decisions in Terraza and Bronx Park, the Court reached the same conclusion in GC Net Lease.  The primary difference between the underlying BTA decisions was that here,  the Board claimed to have considered the lease but found any adjustment improper because the evidence suggested the lease rate was commensurate with market rents.  The SCO found this claim to be insufficient consideration of the evidence and that the amount of rent charged under a lease must be considered in the context of at least two other factors: the creditworthiness of the tenant and whether the lease at issue is a net lease.

Ohio Tax Year 2018 Property Tax Assessment Review Period Approaching 

Ohio counties are currently in the process of certifying property values and will begin mailing out property tax bills for tax year 2018 (pay 2019) soon.  The window to formally challenge these values is open from January 2 through March 31, 2019.  Early analysis by a professional familiar with local assessors, opposing counsel, and relevant assessment law will optimize your chances of obtaining appropriate relief.

Siegel Jennings Co. L.P.A.
American Property Tax Counsel (APTC)

[1] Westerville City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, Slip Opinion No. 2018-Ohio-3855
[2] GC Net Lease @ (3) (Westerville) Investors, L.L.C. v. Franklin Cty. Bd. of Revision, 154 Ohio St.3d 121, 2018-Ohio-3856
[3] Terraza 8, L.L.C. v. Franklin Cty. Bd. of Revision, 150 Ohio St.3d 527, 2017-Ohio-4415
[4] Bronx Park S. III Lancaster, L.L.C. v. Fairfield Cty. Bd. of Revision, 153 Ohio St.3d 550, 2018-Ohio-1589

UPDATED September 2018

Supreme Court of Ohio addresses the valuation of retail property lacking its own parking lot but permitted use of an adjacent lot by way of an easement in recent Worthington case.

Ohio Revised Code 5713.03 mandates that real property be valued in the fee simple estate, as if unencumbered.  This methodology permits uniform valuation of any property type and circumstance and resolves questions related to the treatment of above and below market leases, credit-worthy tenants, and the effects of easements, among others.

In Worthington, a taxpayer, Kroger, filed a complaint to decrease its property’s value (parcel of land improved with a supermarket) and had an appraisal performed in support.  Because the land was unusually small compared to similar retail properties, the Kroger owned parcel did not have its own parking lot.  However, patrons were permitted to park on an adjacent property through an easement. 

The taxpayer appraiser valued the property by using both the sales-comparison approach to value and the income-capitalization approach.  Upon reaching values under each approach, he found it necessary to make an adjustment to account for the parcel size.  While the subject occupied 1.699 acres, Kroger’s appraiser determined the average size of comparable properties was 5.801 acres.  He then multiplied the land value per acre from his analysis by the 4.102-acre difference between the subject and the average comparable size and deducted this amount from his conclusions to adjust for the unusually small size of the subject property.

The relevant board of revision relied on the taxpayer appraiser’s conclusions and adopted his value.  The Board of Tax Appeals likewise found the appraisal reliable but rejected the adjustment for the parking lot acreage because it found it both an improper removal of the benefit of the easement and a blanket deduction for a cost to cure.

The Supreme Court held the Board of Tax Appeals decision to be in error and found the appraiser’s adjustments to be the best method of valuing the property appropriately, in the fee simple estate.  The Court ruled the deduction to account for the acreage of the subject was completely consistent with R.C. 5713.03 and was a discount related not to the value of access to parking but rather to the extraordinarily small lot size of the parcel in comparison to like properties.  The appraiser valuation of only the property owned by the Taxpayer, while ignoring any effects of encumbrances, was found to be appropriate.

Ohio Tax Year 2018 Property Tax Assessment Review Period Approaching 

Ohio counties will begin mailing out property tax bills for tax year 2018 (pay 2019) soon.  The window to formally challenge these values is open from January 2 through March 31, 2019.  Early analysis by a professional familiar with local assessors, opposing counsel, and relevant assessment law will optimize your chances of obtaining appropriate relief.

Worthington City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, Slip Opinion No. 2018-Ohio-2909

Kristopher Nicoloff
Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

UPDATED june 2018

Ohio’s high court affirms taxing authorities must consider not just the sale price of real property, but any other evidence presented relevant to the value of the unencumbered fee-simple estate

Important Ohio Supreme Court Property Tax decision announced recently in Bronx Park III Lancaster[1] case argued by Victor Anselmo of APTC member firm Siegel Jennings on behalf of Walgreens.  The Supreme Court made it clear that the Ohio Board of Tax Appeals and Ohio courts cannot simply rely upon a sale price to set value for a property tax assessment. Ohio courts and tax tribunals must consider any evidence the parties present relevant to the value of the unencumbered fee simple estate, including evidence of above market lease rates, above market credit worthy tenants, and a longer remaining lease period. 

[1] Bronx Park S. III Lancaster, LLC v. Fairfield Cty. Bd. of Revision, Slip Opinion No. 2018-Ohio-1589.

Ohio 2018 Tax Year Informal Assessment Review Period Approaching for many counties including Cuyahoga (Cleveland), Lake, Lorain, and Lucas (Toledo) Counties

Cuyahoga, Lake, Lorain, and Lucas counties, among others, will be conducting their sexennial reappraisal of real property assessments for tax year 2018 (payable 2019).  Many of these counties will have an informal review period, prior to certifying the values for the tax bills, where taxpayers can provide input. Taxpayers should be on the lookout for proposed value notices in August – September.  Participating in an informal review should be made on case by case basis, and the window for the informal review process is typically short.  Early analysis with a professional familiar with local assessors, opposing counsel, and procedures will optimize your chances of obtaining appropriate relief. 

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Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

UPDATED march 2018

Deficient Evidence and the “Bedford Rule”

The Supreme Court of Ohio reversed two Franklin County Board of Revision (BOR) decisions in March, finding the evidence accepted by the Board for each to be lacking.  In both cases, the Court found the evidence to be so deficient that it amounted to a legal error to rely on it.

In the first case, South-Western City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision[1], a taxpayer offered the testimony of an appraiser at the BOR in support of its requested reduction.  Evidence of a sheriff sale and appraisal created for the sheriff’s sale with a valuation date six months from tax lien date were also in the record. The BOR adopted the sheriff’s sale appraisal value.  On appeal from the BOR to the Ohio Board of Tax Appeals (BTA), the BTA found the evidence insufficient to determine value but enough to show the original value was incorrect.  It sent the case back to the BOR to make a finding of value based on competent evidence.

Similarly, in South-Western City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision[2], the Supreme Court found the evidence offered to be so inadequate that relying on it was legal error.  Here, the deficient evidence offered by the taxpayer at the BOR was a printout containing information about one comparable sale marked with the notation “not arm’s length.” It was the only evidence submitted.  No appraiser appeared, and no appraisal was submitted.   In this case, the BTA felt there was sufficient evidence to show that the original value was too high, and that reduction granted by the BOR reduction was supported by the record.

Under Ohio case law (Bedford rule)[3], once a BOR has granted an owner’s requested reduction based on competent and “minimally plausible” evidence, an opposing party who appeals must prove the value they are seeking rather than relying on the reinstatement of the auditor’s original value.  However, this rule does not apply if the evidence relied upon by the BOR was deficient to the extent found in these two cases.  Relying on such incompetent evidence in each case resulted in legal error.

The Supreme Court reversed the BTA decisions in both cases. It was legal error for the BOR to rely on deficient evidence and further error for the BTA to find such evidence met the threshold of minimal competence that would require application of the Bedford rule.

[1] Slip Opinion No. 2018-Ohio-919

[2] Slip Opinion No. 2018-Ohio-918

[3] Bedford Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, (2007-Ohio-5237)

J. Kieran Jennings, CRE
Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

UPDATED December 2017

Sale prices used to set property tax assessments in Ohio must reflect the price of the real estate only

In a case brought to the Ohio Supreme Court by Siegel Jennings on behalf a local business owner and property owner, the Court reaffirmed that sale prices used to set real property tax assessments should not include the value of non-real estate assets (Orange City School District Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, Slip Opinion No. 2017-Ohio-8817).  The case involved a retail property that was purchased by the tenant exercising its lease’s option to purchase.  The local school district filed an increase complaint based on a recorded sale price of $951,776. This amount was labeled the "purchase price" in the written purchase agreement, however $51,776 of that amount was payment for past due rent including past rent concessions owed by the tenant.  The Ohio Supreme Court rejected the school district's argument that parol evidence rule of contract interpretation prohibited considering evidence to allocate the portion of the price paid for non-real estate items.  Instead, the Court affirmed that the amount to be taxed is real property alone, a concept that Siegel Jennings has long been advocating: "The 'sale price' for tax-valuation purposes is the amount paid for property-title transfer -- not amounts paid for other assets."

Ohio 2017 Tax Year Property Tax Assessment Review Period Approaching

Ohio's 2017 tax year property tax valuation review period has begun. The deadline to contest your 2017 tax assessment is March 31, 2018.   Early analysis with a professional familiar with local assessors, opposing counsel, and procedures will optimize your chances of obtaining appropriate relief. 

Cecilia J. Hyun
Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

UPDATED JULY 2017

Change to allow tenants standing to file Ohio real estate tax complaints in their own name

Single Tenant Net Lease occupants have been under fire in Ohio.  Boards of Education that have routinely sought to increase the taxes on net lease tenants are now trying to deny tenants the ability to be involved in the proceedings. Schools have been raising the issue as a means of a threat in negotiations and have been attempting to gather facts to pursue a case that would deny tenants the ability to participate in tax hearings, even when such claims are meritless. 

This issue recently was brought forward in a case now pending at the Ohio Supreme Court, where a multitenant shopping center was at issue.  Kohl’s department store was the tenant on one of parcels and responsible for all the real estate taxes for that parcel.  The Ohio Board of Tax Appeals held that Kohl’s was not a proper complainant under Ohio Revised Code Section 5715.19 and therefore lacked standing and dismissed them as a party. Beavercreek Towne Station LLC v. Greene Cty. Bd. of Revision, BTA No. 2015-1488, et al., 2016 Ohio Tax LEXIS 2222 (Oct. 25, 2016). 

R.C. 5715.19 determines which individuals are permitted to file. In addition to the property owner, this includes people like an owner’s spouse, or other various people acting for the owner, such as a person who holds a designation from a professional assessment organization, a licensed real estate broker; or a trustee of the trust. 

Not included on this list are tenants, even when the tenant is solely responsible for paying the real estate taxes. A tenant can act as an agent in the owner’s name, as any agent can, but a tenant does not have standing to contest the tax assessment in her own name, unless the tenant also owns other taxable real property in the same county.  This can lead to inequitable results when a tenant responsible for all the real estate taxes assessed on a property tries to file a decrease in its own right and gets dismissed, leaving the taxpayer with no recourse to contest an unfair assessment. 

In an effort to correct this inequity, Siegel Jennings has been working on a legislative amendment currently in the Ohio Senate to correct this result.  The amendment would allow a tenant to file a complaint where the tenant is responsible for paying the full amount of taxes charged against the property.  That would allow tenants who are bearing 100% of the taxes an avenue to context those taxes when they are based on an inaccurate assessment.  It would also reduce instances where tenants who are responsible to bear the entire amount of taxes are left with no way to redress an unfair based on a technical issue instead of on the merits of their case.  

Cecilia J. Hyun
Kieran Jennings
Siegel Jennings Co, LPA
American Property Tax Counsel (APTC)

 

UPDATED MARCH 2017

Two recent Ohio Supreme Court decisions affirm that condominium units are to be separately assessed as individual parcels and not as a single economic unit for real estate tax purposes even when majority of units are unsold or unfinished

Office condominiums
The taxpayer sought a decrease in the value of 14 of 16 office condominiums, all which were unfinished shell space. Its appraiser valued the unsold units as single economic unit, noting that the relevant absorption rate indicated a marketing period of over ten years.  The appraiser concluded the highest and best use, as improved, was a multi-tenant, office property for rent until the remaining units could be sold. The Ohio Supreme Court held that the appraisal of the unsold units as a single economic unit violated the statutory provision that requires each unit of a condominium property to be a separate parcel for “all purposes of taxation and assessment of real property.” ORC 5311.11.   Olentangy Local Schools Bd. of Ed. v. Delaware Cty. Bd. of Revision, Slip Opinion No. 2016-Ohio-8332.

Residential condominiums
Similarly, the taxpayer sought a decrease in the value of 16 of 20 residential condominium units that were operated as an apartment complex.  Its appraiser valued the unsold units as a single economic unit, testifying that the economic crisis had “fractured” or “stalled” the subject condo development. The appraiser found the highest and best use to be as a “market-rate multi-family” property.  Again, the Court held this approach violated the statutory requirements of ORC 5311.11, even though the taxpayer argued that the properties being parceled as condominiums did not mean that condominium use was the highest and best use of the property. The Court held that valuing the condo units as a single economic unit created an assemblage of parcels for valuation purposes and that such an assemblage was prohibited by the language of the statute. Columbus City Schools Bd. of Ed. v. Franklin Cty. Bd. of Revision, Slip Opinion No. 2016-Ohio-8375.

In both cases, the Court relied on is prior decision in Dublin City Schools Bd of Edn. v. Franklin Cty. Bd. of Revision, 139 Ohio St.3d 212, 2014-Ohio-1940, where it held that a “bulk-appraisal” valuation of 21 of 28 units in a condominium complex treating the 21 units as a single economic unit, was improper and ran afoul of the language of ORC 5311.11.

In both cases, the taxpayers had prevailed before the county boards of revision, the first level of review.   

Cecilia J. Hyun
Siegel Jennings Co., L.P.A.
American Property Tax Counsel (APTC)

 

Updated December 2016

Year End Ohio Legislative Updates & Critical Filing Deadline

Two real property tax related bills are making their way through the Ohio legislature:

1. HB 231, introduced in May 2015, has been referred to the House Local Government committee.  This bill would amend Ohio Revised Code 5715.19(A) to require counties, municipal corporations, townships, and school boards that file complaints to change the real estate tax assessment of property they do not own to pass a resolution approving the complaint and specifying the compensation paid to any person retained to represent the county, municipal corporation, township, or school board in the matter of the complaint. 

2. SB 235 has passed both the House and Senate.  It would exempt from property tax the increased value of property on which industrial or commercial development is planned until construction of new commercial or industrial facilities at the property commences.

Ohio Property Tax Appeal Period Approaching - Review Your 2016 Tax Year Ohio Property Assessments Now

Ohio taxpayers should have received or will receive shortly their first half 2016 tax bills. Review these bills to determine if assessments are excessive. The deadline to contest these assessments is March 31, 2017. Once this deadline has passed, the ability to appeal the 2016 valuation is gone.  Assessments for properties located in counties that have undergone a reappraisal or statistical update for tax year 2017 should be examined particularly carefully because these values will be the basis of your property taxes for the next three years. 

Cecilia J. Hyun
Siegel Jennings Co, LPA
American Property Tax Counsel (APTC)

 

Updated September 2016

Appraisal testimony and report can be relied upon to overcome the presumption that recent sale price represents the best evidence of value for real estate tax purposes

In a case decided in 2016, the Ohio Supreme Court affirmed the lower tribunal’s rejection of the use of a January 2007 sale price when determining the 2009 tax year value of the subject hotel, based on the appraiser’s testimony and appraisal report.  The lower tribunal and Supreme Court found that the appraiser’s report and testimony overcame the presumption that the sale was a recent arm’s length sale representing the best evidence of value based in part on the following factors:

• Appraiser testified regarding the substantial and continuous declining income stream at the property since the sale
• Appraiser testified regarding general decline in economy since the sale
• Appraiser’s testimony indicated that market conditions and conditions of sale adjustments that would be required to use the sale as a comparable would decrease its reliability
• Appraisal report included data and reports showing the decline for the real estate market and the general decline in lodging industry since the sale, including paired sales showing evidence of market decline
• Appraiser’s testimony supported conclusion that buyer was not acting as fully knowledgeable, typically motivated market participant

The fact that an appraiser opines to a value different than the sale price is not sufficient to overcome the presumption of a sale price; there must be specific evidence rebutting the indicia that are generally present in a recent, arm’s length transaction.

Columbus City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, Slip Opinion No. 2016-Ohio-757.

Cecilia J. Hyun, Esq.
Siegel Jennings Co, LPA
American Property Tax Counsel (APTC)

 

Updated June 2016

Ohio's Special Purpose Doctrine:  Value In Use

Rite Aid of Ohio, Inc. v. Wash. County Bd. of Revision, 2016-Ohio-371 (Ohio Feb. 4, 2016), the Ohio Supreme Court found that it was improper for an appraiser to engage in a use valuation of a Rite-Aid drug store because the special-purpose doctrine did not apply. The special-purpose doctrine is an exception to the general rule in Ohio property tax valuation of determining the value-in-exchange rather than value of the current use.

On appeal to the Ohio Supreme Court, the county argued that prior case law required that the Rite-Aid be valued in use as it presented a “special purpose” situation. The county presented an appraisal that valued the property on tax lien date as a Rite-Aid drugstore and posited a valuation in terms of continued use as a Rite Aid even after a sale, presumably with Rite-Aid continuing as lessee under a long term-lease. In her appraisal, the county’s appraiser selected five sale comparables, all of them drugstores. In contrast, Rite Aid submitted a competing appraisal, which contained six sale comparables—general retail rather than drugstores—valuing the property for its “highest and best use” as a general retail store.

The Court illustrated the difference in valuing a property for its “highest and best” use versus a “special-purpose” use situation. The Court stated that the highest and best use of the improvements to the land will usually be expressed in terms of the general type of use to be made of such property. For instance, a retail store might be the highest and best use, and if currently in that use, an appraisal report might say: "continued use as a retail store." By contrast, in the special-purpose situation, one would expect to see: "continued use by the current occupant in its ongoing business."

The Court contrasted the subject Rite Aid to a prior property, owned by Meijer Stores where the Court had applied the special purpose doctrine. With the Meijer Stores facility (a 190,000-square-foot store plus other improvements), the purchasers in the real-estate market might not be able to use the massive facility just recently built by Meijer to its own particular specifications. Additionally, the building suffered immediate economic or external obsolescence. By comparison, the Court found that the older, 11,000-square foot Rite Aid drugstore did not meet similar characteristics as the property in the Meijer case and therefore did not qualify for use valuation under the special-purpose doctrine.

Because there was no evidentiary basis upon which to apply the special-purpose doctrine and engage in use valuation, the Ohio Supreme Court affirmed the decision below, which adopted the Taxpayer’s appraisal value based on the value-in-exchange.

Jared Steinberg
Siegel Jennings Co, LPA
American Property Tax Counsel (APTC)

 

Updated March 2016

Ohio Property Owners Should Watch for Cases to Increase Their Property Tax Assessments Filed by Local School Boards

Ohio is one of the few places where the local school district can initiate an action to increase your real estate taxes by increasing the property tax assessment. Usually, the school district will be prompted by a recent sale price that is higher than the current tax assessment; however, there is no requirement that a recent sale be the basis. A school district can file an increase complaint simply because it feels a property is under assessed. The deadline to file increase complaints is March 31, 2016. Property owners will get notice by the end of April if a complaint has been filed against one of their properties. Where appropriate, the taxpayer may file a counter-complaint. The deadline to file a counter-complaint is 30 days from notice of the original complaint, so it is important to respond to such notices promptly. In all increase cases, but especially where there has been a recent sale, formulating a defense strategy early will maximize the chances of curtailing any property tax increase. If taxpayers do not introduce certain evidence at the first county level hearing, they may not be allowed to introduce it later in the proceedings.

Cecilia J. Hyun
Siegel Jennings Co, LPA
American Property Tax Counsel (APTC)

 

Updated June 2015

Publicly owned golf courses operated by private, for profit managers may still be eligible for property tax exemption in Ohio.

The Ohio Supreme Court recently affirmed the grant of a real estate tax exemption for city owned golf courses operated by a private, for-profit manager.  City of Cincinnati v. Testa, Slip Opinion No. 015-Ohio-1775.  The Court analyzed the exemption under Ohio Revised Code Section 5709.08, which allows exemptions for public property used exclusively for a public purpose.  

The city owned courses were managed by a private operator who was paid a flat management fee.  All operating revenues and proceeds including green fees and cart rental fees were received by the city.  A percentage of proceeds from the sale of food, beverages, merchandise, and golf lessons went to the management company.

Because the City of Cincinnati retained direction and control over the golf courses, the Court held that the situation was not the functional equivalent of a lease, where a private company leases and occupies publicly owned property and profits from it.  Instead, the management company was paid a flat management fee and there was no right of exclusive possession granted to the management company.  The City set the golf courses' hours, rates, and conducted frequent physical inspections.  These inspections did not require the prior permission of the management company to enter the golf courses. 

The Court also held that percentage of food, beverage, merchandise, and lesson revenue that went to the private management company did not make the golf courses ineligible for the tax exemption.  This revenue, which did not go the City, did not violate the "exclusive for a public purpose requirement" of the statute.  Instead, they were found to be "incidental" to the stated public purpose of making golf courses available to the general public as part of the City's mission to provide recreational and cultural activities to enhance the health and wellness its residents and residents of the surrounding areas.

The amount of direction and control retained by the public owner as opposed to the private manager, and the lack of a lease or grant of possessory rights to the manager were important factors in determining whether these golf courses qualified for a property tax exemption. 

Cecilia Hyun
Siegel Jennings Co, LPA
American Property Tax Counsel (APTC)

 

Updated March 2015

Sale Documents must be prepared with attention to real estate tax consequences, especially when a bulk purchase or larger asset purchase is involved

Like many jurisdictions, Ohio tax assessors and courts privilege arm's length sale prices as indicators of property value for property tax purposes. However, the Ohio Supreme Court recently refused to implement a contractual allocation of an asset purchase price which included multiple parcels of real estate as well as a warehousing business. The Court concluded that the particular record in the case was insufficient to permit use of allocated sale prices to set value.

Relevant to their conclusion were the following facts:

• The valuation contest had at issue some parcels which were not included in the sale.
• Deeds for the sales included parcels that were not part of the valuation contest.
• The asset purchase agreement did contain an allocation of total asset contract price for real estate for two properties.
• The total sale price on the settlement statement equaled the sum of the 2 real estate price allocations in the asset purchase agreement but did not specify the properties included in transfer either by street number or parcel number.
• The purchase included a warehousing business as well as multiple parcels of real estate.

Additional clarity regarding the allocation in the asset purchase agreement, conveyance fee documents, or in the evidence presented to the local reviewing board or tax appeals board may have led to the adoption of the sale prices to determine the value for tax purposes. Therefore, whether you are buying or selling a property (or a business and the real estate in which it is housed), it is important that you consult with professionals regarding the real estate tax implications of purchase price allocations and the manner in which they are documented and recorded.

Cecilia Hyun
Siegel Jennings Co, LPA
American Property Tax Counsel (APTC)

 

Updated December 2014

Auction sales may be considered when setting property value for real estate tax purposes in Ohio

The Ohio Supreme Court recently confirmed (Olentangy Local School Bd. of Edn. v. Delaware Cty. Bd. of Revision, Slip Opinion 2014-Ohio 4723) that a property's sale price from an auction may be used as evidence of property value in the right circumstances. The school board, opposing use of the sale price, had argued that an auction sale categorically prohibits its use in determining value. The Supreme Court disagreed.

The Court found that the auction sale was voluntary, at arm's length, and between willing parties acting in their own self interests, based in part on the following facts:

• Property was listed for sale on MLS during which time the listing price was once reduced, prior to being put up for auction.
• Advertisements regarding an auction to sell the property were placed in the newspaper and online.
• Interested buyers were allowed to inspect the property both before and on the day of auction before bidding.
• Approximately 75-85 people were present at the auction in person and an additional 50 participated online.
• The seller had the right to reject the highest bid.
• There were multiple bids before the highest bid was accepted and the property was sold.

However, the Court did rule that there is a presumption based on statute that an auction sale price is NOT evidence of a property's value. That presumption may be rebutted by the proponent of the sale showing that the sale was, nevertheless, an arm's length transaction between typically motivated parties that should be regarded as the best evidence of value.

Cecilia Hyun, Esq.
Siegel Jennings L.P.A.
American Property Tax Counsel (APTC)

 

Updated September 2014

Ohio's period to review 2014 property tax valuations is approaching

Ohio property owners have already or soon will be receiving new 2014 proposed value notices in their mailboxes. Certain counties afford property owners a preliminary review process before the proposed values become finalized. For such counties, it is imperative that property owners contact a professional familiar with the review process to determine whether participation in the informal process is worthwhile. Please note that any information provided to the county may end up in a file that could be used against the property owner at a formal hearing. For taxpayers unsatisfied with the informal process or if no informal meeting has been offered, the formal appeal process begins in January with a deadline of March 31, 2015. Values determined during a reappraisal period can potentially carry forward up to six years.

Additionally, 2014 has brought with it the Ohio court system’s much anticipated application of the newly amended statute, R.C. 5713.03. The statute now requires that true value for real estate assessment be based on the “fee simple estate, as if unencumbered” and also provides that where there is a recent arm’s length sale, the auditor may, rather than must, consider the sale as true value.

Jared A. Steinberg, Esq.
Siegel Jennings L.P.A.
American Property Tax Counsel

 

Updated June 2014

Ohio Supreme Court affirms appraisal of assisted living properties for property tax purposes must separate business value from real estate value

For many years, Ohio law has been settled that valuation of assisted living facilities for real estate tax purposes must separate real estate value from business value. Therefore, rent and sales comparables of apartment buildings were used in comparison in order to capture the real estate value only.

The Ohio Supreme Court recently heard a challenge to this methodology where a school board's appraisal used sales of other assisted living properties and income from other assisted living facilities for comparison. Because the business components were not adequately separated from the real estate components of the sales; and similarly, the income approach used rent that included both lease of real estate and additional services, the school board's appraisal was not considered reliable. When using a cost approach to value the assisted living property, either apartment building cost schedules or nursing homes schedules may be used as the initial point of comparison, as long as appropriate adjustments are made.

Health Care REIT, Inc. v. Cuyahoga Cty. Board of Revision, Slip Opinion No. 2014-Ohio-2574.

Cecilia Hyun
Siegel Jennings L.P.A.
American Property Tax Counsel (APTC)

 

Updated December 2013

Ohio Property Tax Appeal Period Approaches

Ohio property owners will be receiving their first half 2013 tax bills shortly. Owners should review these bills carefully to determine if assessments are excessive. If you could not sell the property in January 2013 for the assessor's value, the assessment is likely too high. The deadline to contest these assessments is March 31, 2014. Once this deadline has passed, the ability to appeal the 2013 valuation is forever gone. Although the complaint form is short and does not require a large amount of information, completing it incorrectly can get your appeal dismissed. Beware if you have purchased property in the last year at a higher price than the assessment; it is likely the school district will file an increase complaint to get your assessment increased to the purchase price. Where appropriate these increase complaints should be vigorously defended to minimize any increase in your tax liability.

Cecilia Hyun
Siegel Jennings L.P.A.
American Property Tax Counsel (APTC)

 

Updated September 2013

Ohio Recognizes Short Sales and Bank Sale Prices

An Ohio Court of Appeals, the Ohio Board of Tax Appeals (BTA) and the Ohio Supreme Court recently reaffirmed that a bank sale subsequent to a sheriff sale or a short sale may represent the market value of the property for tax purposes, depending on the factual specifics of the transaction.

In the Cattell case, the Lake County Court of Appeals held that a bank sale was not a distressed sale since the property was listed on the open market for some time, and was generally available to any qualified purchaser. In the Massillon case , Ohio BTA refers to the Cattell case and its prior cases to reaffirm that a property purchased from a bank where the bank/seller "acquired the property through prior foreclosure proceedings" does not, by itself, make subsequent transfers by the bank unreliable in determining value.

In the Columbus case, the Supreme Court of Ohio held that a short sale may often, but does not necessarily, reflect a distress sale. Although the property owner was in a distressed situation; the seller in the transaction, the lender, acted freely in negotiating the sale. The Court found the lender as seller, was not distressed and acted as any typically motivated seller would do.

All three cases again emphasize that a sale of Ohio property has to be examined on its individual facts to determine whether the sale is indicative of market value, which involves more than just a determination of whether the parties are acting at arm's length.

1. Cattell v. Lake Cty. Bd. of Revision, 11th Dist. No. 2009-L-191, 2010-Ohio-4426.
2. Massillon City School Dist. Bd. of Edn. v. Stark Cty. Bd. of Revision, BTA No. 2011-L-2700 (May 31, 2013).
3. Columbus City School Dist. Bd. of Edn. v. Franklin Cty. Bd. of Revision, 134 Ohio St.3d 529, 2012-Ohio-5680.

 

Updated March 2013

New Developments Related to Major Changes in Ohio Tax Law

On the footsteps of the last Ohio Property Tax Update that described major changes in Ohio tax law, some significant developments have taken place related to implementation of the law and changes to the law. In December 2012, following the June 2012 initial passage of the landmark legislation, Governor John Kasich signed a bill modifying when the revisions to Ohio Revised Code 5713.03 apply. This is a very positive development as the application of the newly-enacted revisions has been accelerated. The change assists in providing uniformity and setting a much shorter overall timeframe for the law to take effect as opposed to the prior legislation. Previously, according to the language in the June 2012 legislation, Ohio counties only had to make the revisions effective once the next 3-year revaluation cycle took place. This meant that some counties would not apply the changes until as late as 2015. The revisions now take effect as of the effective date of the bill. The attorneys at Siegel Jennings continue to advocate for an immediate application of the new law to all pending cases, but in the event that Ohio courts follow a strict reading of the effective date language, this change moves that date forward considerably.

Additionally, language was added to R.C. 5713.03 to protect owners of certain types of multi-family properties from over-assessment. The statute specifically addresses properties that participate in the federal program that utilizes low income housing tax credits. In a 2009 Ohio Supreme Court case, Woda Ivy Glen Ltd. Partnership v. Fayette Cty. Bd. of Revision, the Ohio Supreme Court decided that the use restrictions imposed by these federal tax credits should be taken into account for valuation purposes. With the recent changes to the statute, the decision in the Woda case is further strengthened, and owners of this property type have been provided with additional protection against arbitrary assessments by local officials.

The central portions of the legislation, which relate to valuation standards and how sales are considered, will have massive implications state-wide. The attorneys at Siegel Jennings expect many more important developments to follow as the new law is reviewed and considered all the way from the local level to the Ohio Supreme Court.

J. Kieran Jennings, Esq.
Siegel Jennings L.P.A.
American Property Tax Counsel (APTC)

 

Updated June 2012

Major Change in Ohio Law

The attorneys at Siegel Siegel Johnson and Jennings (Siegel Jennings) are happy to report a major change in Ohio law which helps property owners by bringing back consistency and uniformity in assessments. After a series of unfavorable court decisions starting from 2005, Siegel Jennings lawyers teed the issue up with the state legislature and worked to return Ohio to a jurisdiction that provides an even playing field to commercial property owners, specifically concerning the weight to be afforded sales of commercial real estate. On June 11, 2012 Governor Kasich signed into law a statute that states that true value for real estate assessment is based on the "fee simple estate, as if unencumbered." To understand why and how that is so important, it is useful to look back over developments in Ohio law over the past decade.

Ohio law provided that assessments shall be made based on "true value" and that "the auditor shall consider the sale price ... to be the true value for taxation."

Prior to 2005, Ohio courts interpreted that law to allow the County Auditor as the assessor (as well as the BTA and Common Pleas Courts) to consider whether a sale actually represented the market value. Under that law, appraisal evidence, lease studies, or comparable sales were utilized to determine if a sale was reflective of market value. Moreover, only sales that reflected market value or those which were adjusted to reflect market value were appropriate to use as comparable sales. Rent comparables also were required to be reflective of market value as of the tax lien date rather than the date of inception.

That changed in 2005, when the Ohio Supreme Court interpreted the statutory language that states that "the auditor shall consider the sale price ... to be the true value for taxation" to mean that there is no further evidence necessary to prove true value. Later, the Supreme Court expanded the ruling by stating that leased fee sales were also acceptable. Even worse, later cases expanded the law to include leased fee sales as comparable sales even when appraising fee simple owner-occupied properties. And, finally, other cases set law that severely limited the County Auditor, the BTA, or Common Pleas Courts from taking into consideration circumstances which indicated that the sale was not representative of market value.

The attorneys at Siegel Jennings noticed that in oral arguments the Ohio Supreme Court stated that the language of the statute was clear. Accordingly, Siegel Jennings lawyers set out to further clarify the statute through the legislative process. The new statute clearly states that true value is to reflect the "fee simple estate, as if unencumbered." The new statute further provides that where there is a recent arm's length sale, the auditor may consider the sale to be true value. Read together, in order for the auditor to consider the sale to be true value, that sale has to reflect the fee simple estate, as if unencumbered. This change will bring all Ohio taxpayers to a point where they will be taxed in a fair and uniform manner.

J. Kieran Jennings, Esq.
Siegel Jennings L.P.A.
American Property Tax Counsel (APTC)

 

Updated December 2011

An Opportunity for Taxpayers

Taxpayers may have a small window of opportunity in order to have their property taxes reviewed informally with the county before the tax rolls are certified.

Certain counties in Ohio afford property owners the ability to have their revaluations preliminarily reviewed before those values are certified and finalized for the next three-year cycle.  Currently, properties located in and around large metropolitan areas such as Columbus (Franklin County), Cincinnati (Hamilton County), Akron (Summit County), and Dayton (Montgomery County), are subject to either reappraisals or valuation updates because of the counties where those properties are located.  For these counties and certain others in Ohio where this situation applies, it is imperative that property owners immediately contact a professional familiar with the review process to determine whether the county should be contacted to discuss property’s current valuation.  There are many advantages to participating in the early review process, but time is quickly running out because of state-imposed deadlines to finalize values.

For taxpayers unsatisfied with the informal process or where the county does not offer an informal meeting, there is a formal appeal process that begins in January and ends March 31, 2012.  Values determined during a reappraisal period can potentially carry forward for up to six years, as in many instances significant changes are not made during the three-year period between reappraisals

Jason P. Lindholm, Esq.
Siegel Jennings L.P.A.
American Property Tax Counsel (APTC)

 

Updated September 2011

An Opportunity for Taxpayers

Taxpayers may have a small window of opportunity in order to have their property taxes reviewed informally with the county before the tax rolls are certified.

Certain counties in Ohio afford property owners the ability to have their revaluations preliminarily reviewed before those values are certified and finalized for the next three-year cycle. Currently, properties located in and around large metropolitan areas such as Columbus (Franklin County), Cincinnati (Hamilton County), Akron (Summit County), and Dayton (Montgomery County), are subject to either reappraisals or valuation updates because of the counties where those properties are located. For these counties and certain others in Ohio where this situation applies, it is imperative that property owners immediately contact a professional familiar with the review process to determine whether the county should be contacted to discuss property's current valuation. There are many advantages to participating in the early review process, but time is quickly running out because of state-imposed deadlines to finalize values.

For taxpayers unsatisfied with the informal process or where the county does not offer an informal meeting, there is a formal appeal process that begins in January and ends March 31, 2012. Values determined during a reappraisal period can potentially carry forward for up to six years, as in many instances significant changes are not made during the three-year period between reappraisals.

 

Updated March 2011

Ohio Courts Focus Upon Changes in Market Conditions

Most commercial property owners are painfully aware of the impact the recession has had upon property values.  The Ohio Supreme Court and the Ohio Board of Tax Appeals have recently focused upon the impact that changes in market conditions have upon property values for tax purposes.  In Worthington City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 124 Ohio St.3d 27, 2009-Ohio-5932, the Ohio Supreme Court emphasized the duty of a reviewing court to consider evidence related to changes in market conditions in a property tax matter, in addition to considering changes in the property itself.  This case was remanded back to the Ohio Board of Tax Appeals, where it was appealed yet again to the Ohio Supreme Court.  A decision is now pending at the Supreme Court. 

Taxpayers need to be aware of the necessary requirements to prove how changes in market conditions have negatively impacted their property values.  Evidence such as appraisals must contain the required information to prove to the reviewing court that changes existed and how such changes impacted the value of the property.  Taxpayers also need to be aware of changes in market conditions near the time of the date of sale of real property, and how that may affect the strength of their case in challenging the assessor’s value.

 

Updated December 2010

Time to Consider Challenging Your 2010 Ohio Property Tax Liability

As 2010 quickly draws to an end, taxpayers that wish to challenge their Ohio property tax liability need to be aware of Ohio's filing deadline and associated requirements. Ohio requires that valuation complaints be filed by March 31 of the year following the tax year being challenged. Any 2010 complaint against a taxpayer's property tax liability MUST be filed by

March 31, 2011. Ohio law offers no exceptions to this statutory deadline. In the event that a taxpayer files on April 1 or later, that complaint will be dismissed, with the result being that the taxpayer will have to wait an entire year before filing another complaint.

Every three years Ohio counties will reappraise all properties in their jurisdictions, or apply percentage updates to the county's assessed values. Ohio affords taxpayers the opportunity to file valuation complaints once in a given three-year period, subject to limited exceptions, which include:

-The sale of the property in arm's-length transaction

-Improvements were added to the property

-A casualty occurred to the property

-The property had a minimum 15% change in occupancy that exerted a substantial economic impact upon the property

 

Updated September 2010

Cuyahoga County Scandal Adds Distress to Already Troubling Conditions

Ohio and in particularly Cuyahoga County has been rocked by a countywide scandal that has ended with the arrest of its auditor (assessor) and one of its county commissioners. The allegations are wide spread and have caused great concern as county valuations were called into question. The auditor, among others in the county, has been accused of tampering with assessments. The local boards of revision have seen members fired or transferred.

The county has a back log of cases several years deep and is increasing the number of boards hearing cases. The state board of tax appeals which hears cases after they are appealed from the local level has seen an increase in filing at the same time that the staff and examiners were reduced for appellate cases.

The length of time from filing an appeal until it is finally decided could be as long as four years. The time delay is note worthy not just due to the inordinate amount of time it takes to resolve a case but, because in Ohio there are reassessments every three years and there is a continuing complaint provision. Taxpayers will then be required to argue assessments for the various years and valuation changes that have occurred during these turbulent years.

What is can taxpayers do to protect against excessive taxation? Taxpayers need to keep in contact with their tax attorneys and remain open to ideas that may shift as the procedures and personalities change across the state.

 

Updated March 2010

Time is Not the Only Measurement in Determining if a Sale is Recent

Like many states, the sale price in a recent, arm's length transaction is strong evidence of property value for real estate tax purposes. The Ohio Supreme Court recently held that in properly deciding whether a sale is recent, more than just the proximity in time must be considered. In Worthington, the sale occurred eighth months from tax lien date. Although not adopted at the board of revision level, upon appeal the Board of Tax Appeals determined the value of the property to be the sale price. The Supreme Court vacated and remanded the case, holding that the BTA had not properly considered other factors relevant to recency, such as an immediate loss of tenants after purchase, the subsequent failure to sell, and lower values that were reflected in later appraisals.

Berea City School District Bd. of Edn. v. Manlaw Investment Co, Ltd. (2005), 106 Ohio St.3d 269, 2005-Ohio-4979.
2 Worthington City Schools Bd. of Edn v. Franklin Cty. Bd. of Revision (2009), 124 Ohio St.3d. 27, 2009-Ohio-5932.

 

Updated March 2009

Critical Filing Deadline - March 31, 2009 Marks the Deadline for Filing Tax Complaints in Ohio

With the economy in its current state taxpayers must be diligent in minimizing expenses. Contesting over assessed property taxes should be foremost on the list of ways to reduce costs. In order to contest the 2008 taxes payable in 2009 taxpayers must file with the county board of revision no later than March 31, 2009. Complaints must be received by the county by the deadline as such it is wise to have the complaint time stamped to prove that the complaint was timely filed.

Furthermore, taxpayers need to be aware that a tax complaint may have been filed against them by their local school district. Ohio is one of the few states where school districts will file a complaint with the county auditor (assessor) seeking to increase the taxes on properties within their jurisdiction. Although unwanted and expensive as well as potentially inequitable, it is well settled law that permits school districts to file tax cases.

Finally, Ohio tax law is full of pitfalls. Prior to filing taxpayers should seek counsel to ensure that the filing that they intend to make is meritorious as well as properly filed.

 

Updated September 2008

Credit Crisis Response

Taxing authorities in Ohio are responding to the credit crisis and the housing meltdown in a way that may not benefit taxpayers. Several counties have approached the state tax director seeking approval to not increase assessments due to the housing crisis. The State has responded that the counties are required to show that in whole the assessments of the county are supported by the market place. Some County auditors are trying to hold on to values and spin the reassessment into benevolently not raising assessments.

As taxpayers we must be diligent in our pursuit of fair assessments and make certain that although values may not change during reassessment, that our properties are actually fairly assessed. The fall marks the period of certification of tax rolls in Ohio. The period in which taxpayers can file claims begins in January. Watch out for assessments that do not fall with the market.

 

Updated March 2008

Beware of Third Party Tax Increase Cases in Ohio

March 31, 2008 marks the deadline for filing tax complaints in Ohio. For many taxpayers this may bring trouble. Taxpayers need to be aware that a tax complaint may have been filed against them by their local school district. Ohio is one of the few states where school districts will file a complaint with the county auditor (assessor) seeking to increase the taxes on properties within their jurisdiction. Although unwanted and expensive as well as potentially inequitable, it is well settled law that permits school districts to file tax cases.

Taxpayers must be careful how they respond to a tax complaint. Many the cases are brought based upon a recent purchase while others may simply be "fishing expeditions". There are a number of different courses of action that vary depending on the unique circumstances of a given case, one of which starts by filing a counter-complaint within 30 days of receipt of the original complaint. In any event, before engaging in any correspondence with anyone seeking to increase your taxes, consult with a real estate tax attorney. Ohio law is full of pitfalls for both tax payers and school boards that file tax complaints.

 

Updated December 2007

Deadlines are Approaching

Now is the time to act upon the well intentioned tax plans envisioned in the past year. Property owners in Ohio have recently or will be shortly receiving their tax bills for 2007. Between January and March 31, 2008 taxpayers have the right to contest their tax assessments.

However, care must be taken in determining whether to file. Tax law varies from state to state and what constitutes a reliable approach in one state may not apply in Ohio. Furthermore, a properly assessed property in one state may be over assessed in Ohio. Taxpayers should also be aware that when a complaint is filed in Ohio there will inevitably be a counter appeal made by the local school district. And it is because of the school district is involved that extra care must be taken.

If a complaint is filed and the property is under assessed then the school district may argue to the county board that the value should be increased. Furthermore, if the complaint is not prepared correctly the school district can and likely will argue that he complaint should be dismissed which can have the effect of prohibiting an appeal of the taxes for up to three years.

Therefore taxpayers should act quickly to ascertain the reasonableness of an appeal and take due care in the filing of the complaint.

 

Updated September 2007

Separating Business Fixtures from Real Estate

Ohio is in the process of phasing out the personal property tax along with its franchise tax. These taxes are being replaced by a broad Commercial Activities Tax (CAT). However, with change comes "growing pains". Tax payers that have or should remove business fixtures from real estate values will find resistance from assessors in agreeing to reductions from real estate assessments for business fixtures. Business fixtures are those fixtures that are for the benefit of the business and do not benefit the real estate although they are affixed and may be permanent.

Ohio law has determined that business fixtures are personal property and are taxed as such. In the past a determination that an item was a business fixture was not welcomed by taxing authorities, however the fixture did not escape taxation completely. If a property were excluded from the real estate rolls it would be picked up on the personal property tax return. Now that the personal property tax is nearly phased out taxing authorities have been reluctant to classify business fixtures as personal property. However, diligent pursuit of fair taxation can lead to lower taxes in Ohio.