Delayed property value appeal problematic for local taxpayers

The Butler County Auditor’s Office appealed an average 20% property value hike mandated by the state tax commissioner 18 months ago and officials say the delayed decision is problematic for taxpayers on many fronts.

Butler County Auditor Roger Reynolds appealed a state-mandated property value hike in Fairfield Twp., Fairfield, Hamilton and West Chester Twp. to the state Board of Tax Appeals in January 2021 and is still waiting for a decision. The state BTA could not give an update on when a decision will be rendered.

As the matter drags on he and his staff say taxpayers’ rights to appeal value increases have likely disappeared, among other issues.

“Where there is an impact is we have not closed the books on 2020 and that means we have it on appeal out there and nothing has been finalized until that appeal process is completed, that’s where we’re standing,” Reynolds said. “Now we’re in limbo and the longer it goes the bigger impact it has on the property owner.”

Following the 2020 reevaluation Reynolds maintained property values should increase as follows: Fairfield Twp. (16.2%), Fairfield (18%), Hamilton (15.5%) and West Chester Twp. (14.7%). Those value hikes — which make up more than 50% of the county’s residential tax base — have been in place pending the appeal. The state said the value in Fairfield Twp. should jump 23% and 20% in the other three.

Warren County Auditor Matt Nolan, who is also an attorney, said Reynolds is the first county auditor to challenge the state in this way so knowing what will happen is hard to predict. But if the state tax commissioner prevails, taxpayers in those communities will get hit with big tax bills, because he believes the increases will have to be applied retroactively.

“If they make it retroactive then what they’ll do is go back and say this is the amount you should have paid in taxes those years and they’ll put it on the next tax bill,” Nolan said. “Which would be a significant, not even the regular tax increase, which would be large in and of itself, it would be that times two or three to catch up.”

Generally, increased property values do not always translate to huge tax bill hikes unless a jurisdiction alters an existing levy or asks voters to approve a new levy, among other factors.

In West Chester Twp. property taxes make up 80.2% of the township’s revenues. Finance Director Ken Keim said their police and fire levies — they passed new levies for each in 2020 — won’t produce more than the voters approved, but inside millage that fuels the general fund and revenues for roads and bridges will increase if the state prevails.

He estimated if the state wins, they will collect an extra $367,000 combined for the 2021 and 2022 calendar years for those two funds. The total property taxes for those funds totaled $3.7 million in 2021.

Another issue with the prolonged appeals process is if the state’s increases are upheld, the delayed decision will foreclose rights of property owners to issue a challenge. Property owners have until March 31 the following year to contest their reassessment. If the values go up to the 20% increase level retroactively back to 2020, the window to appeal closed in March 2021.

Disgruntled home owners can appeal to the county’s Board of Revisions — a panel consisting of representatives from the auditor, commissioners’ and treasurer’s offices — and after the last reappraisal 765 people filed in 2018 and 889 issued challenges in 2021 to the 2020 valuation review. Some of those however were businesses who were able to seek relief due to COVID-19.

In years where the values weren’t readjusted there were 289, 178 and 90 appellants in 2019, 2020 and this year respectively.

Reynolds said they need direction on how to protect the rights of taxpayers who could see a value jump, “we want to see some rights extended to the property owners so that they can appeal.”

Nolan said there is a provision in state law that if someone has an appeal pending with the state BTA — he said the appeals process is always very lengthy — you can appeal the impact of the decision. But “all of this is unprecedented” so he’s not sure that would apply to people who haven’t gone through the Board of Revisions and state BTA.

Mike Gildea, an appraiser in Reynolds’ office said there is also an issue when someone buys a new home in one of these areas, they will be responsible for the increased taxes and likely can’t appeal it because they weren’t the owner of record when the value jumped. There have been 7,468 property transfers in the four areas under appeal since January 2021.

“Those are always the angriest people we get, are the people that buy their property right before or during a reveal process normally,” Nolan said. “And these are going to be people even beyond that.”

Reynolds was mandated to reassess all 165,000 Butler County parcels in 2020 and increases varied by neighborhood according to recent sales data. He first asked to delay the reassessment because of the pandemic but that was denied. When Reynolds submitted his reappraisal numbers, he proposed an aggregate 13% property value increase, the state tax commissioner rejected the numbers for Fairfield, Hamilton, Monroe, Trenton and Fairfield, Liberty and West Chester townships.

He sent State Tax Commissioner Jeffrey McClain revised numbers with an aggregate 14.5% increase after he reexamined some areas where the tax commissioner thought his numbers were “soft,” and those numbers were denied.

“The commissioner finds that the values on the final abstract is not in compliance with the requirement that real property be valued at its true value in real money,” the letter from McClain read.

Reynolds’ problem with the state’s values are they relied heavily on sales figures from 2019, instead of considering three years as has been the practice and is mandated by law.

Gary Gudmundson, spokesman for the Ohio Department of Taxation told the Journal-News they stand by their assessments.

“Property values have been increasing across the state over the last few years. Increases in property value are related to arm’s length, open market transactions which Ohio law and real estate appraisal theory hold as the best and fairest way to determine value,” he said. “A 20% increase in value does not equate to a 20% increase in property tax liability.”

Reynolds said he believes the reason the tax commissioner is pushing the value increases is to save the state money on school funding.

“If there’s less money being collected at the local level there’s more money the state has to contribute to the school funding formula. I think people can put two and two together and realize the state wants to see more dollars coming from the local level,” Reynolds said.

“That is the really big issue here the big issue is why is the state pushing for such a large property value increase and it seems to be different than what they’ve done in the past. They may argue it isn’t different but our numbers hold true, that same process that we performed every six years to calculate valuation, the state simply wanted to use the last 12 months of valuation which happened to be highest.”

When the Journal-News asked about Reynolds’ assertion Gudmundson said “that’s simply not true.”

“The law requires values to be at market level, and values are one of the factors the Department of Education uses in determining school funding,” Gudmundson said. “The Department of Taxation uses sales data to determine what ‘market level’ is. The law then requires us to certify those values to Education.”

Bob Hancock, treasurer of the Hamilton City Schools, said normally a property valuation adjustment wouldn’t show up in the state funding formula for two years, but this year they instituted the Fair School Funding formula “which changed everything” so it is hard to tell what the 15.5% value hike in 2020 did.

“That’s certainly has been true in the past and I don’t think that that has really changed,” Hancock said. “How much it impacts that anymore and from school to school that all varies. Like this district I don’t think it’s going to have any impact on that particular year. But in future years if that formula is working and if valuations increase yes it reduces the amount the state pays.”

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