Gov. Mike DeWine signs property tax dispute bill that could result in millions lost to

COLUMBUS, Ohio — Gov. Mike DeWine sided with commercial property developers and owners by signing a bill that blunts school districts’ ability to challenge undervalued properties at county boards of revision.

In the Cleveland Metropolitan School District, House Bill 126 could result in an 80% reduction from what it on average has recently won in property tax disputes at the Cuyahoga County Board of Revision, according to estimates from the district.

School districts warned there could be an increased tax burden on homeowners and commercial property owners with fairly established valuations.

DeWine’s spokesman Dan Tierney said Thursday morning the governor signed the bill. It will go into effect in mid-to-late-July.

Since 1976, school districts have been allowed to initiate complaints at county boards of revision when they think a property value is too low. They also have been allowed to intervene when property owners ask boards of revision to reduce their property value.

Property taxes are a top source of revenue for Ohio public schools, but most of the cases before boards of revision have involved commercial properties, many of which have higher values than homes.

But in recent years, large-scale developers and commercial property owners — including the Ohio REALTORS, Doug Price of Northeast Ohio developer K&D Group, the Ohio Chamber of Commerce and a group called the Coalition for Fair Property Tax Valuations — have been pushing for a change. They testified to the legislature that school districts hire overzealous outside attorneys, paying them by the hour to file cases, which incentivizes the attorneys to file as many cases as they can and appeal to the Ohio Board of Tax Appeals when they don’t win at the county level.

On Thursday, the commercial developers and property owners scored a win. DeWine is a Republican who is up for re-election in the May 3 primary.

Commercial developers complain Ohio’s system inhibits economic development.

Ohio Chamber of Commerce is grateful DeWine signed the bill, said its CEO Steve Stivers.

“House Bill 126 is one of the priority bills for the Ohio Chamber of Commerce because it will reclaim the tax appeals process for the people for whom it should be available; the taxpayers,” he said in a statement. “We are pleased to see Ohio move into the mainstream of property tax administration and no longer allow school districts to challenge the decisions of local government officials to squeeze additional government funding from real property owners.”

Among the changes in HB 126:

• School districts can initiate complaints on properties they believe are undervalued only when there’s been a recent sale and the price was at least 10% and $500,000 more than the county auditor’s value of the property.

• School boards will have to adopt a resolution to allow an attorney to initiate a property value complaint at the board of revision.

• Districts could no longer appeal unfavorable decisions to the Ohio Board of Tax Appeals. However, property owners could still be allowed to appeal to the BTA.

• School districts wouldn’t be allowed to enter into settlements with property owners, a practice that bothered both Republicans and Democrats in the legislature. The agreements were private and never seemed to permanently settle a dispute over property value. Some school districts brought up the same complaint a couple years after the settlement expired.

• Boards of revision will have to dismiss an original school district complaint a year after it was filed if there isn’t a decision by then. Current law requires boards to render decisions within 180 days but doesn’t authorize complaints to be dismissed after that time.

In addition to the property developers who likely had the governor’s ear, public school advocates had also reached out to DeWine, asking for a veto.

That included the Ohio 8, a group of superintendents and teacher union presidents from eight urban school districts that includes Cleveland Metropolitan School District CEO Eric Gordon and Cleveland Teachers Union President Shari Obrenski.

The bill “would make it more difficult to defend challenges to existing revenue and our districts will be unable to offset the loss from filing increase complaints,” according to the Ohio 8′s letter. “Additionally, the changes could likely result in the annual loss of million dollars and an increased tax burden on both homeowners and those commercial property owners whose valuation is fairly established.”

CSMD employees ran the numbers and provided the following estimates:

• The district has challenged or defended the values of $43.1 million in property from 2015 to 2020, an average of $7.2 million a year, at the Cuyahoga County Board of Revision.

• If HB 126 would have been law, the district would have been able to gain or retain only $7.3 million in values, or an average of $1.2 million a year.

Separately, cleveland.com/The Plain Dealer submitted a records request to the CMSD, asking how much it paid in attorneys fees in the past three years for property valuation work. The district paid the law firm Brindza McIntyre & Seed LLP:

• 2019: $243,948.02

• 2020: $383,351.34

• 2021: $315,188.90

Much of the work billed was for cases at the Board of Revision or the Board of Tax Appeals. However, attorney David Seed performed related tax work for CMSD, including serving on a study committee that looked at tax abatements.