Senate Bill 57 Offers Valuable COVID-19 Relief for Property Tax Valuations

Real Estate
May 13, 2021
 

Owners of Ohio property who believe their 2020 real property taxes should be reduced as a result of the COVID-19 pandemic now have a short window of opportunity to file a complaint to contest the valuation. In Ohio, property owners are annually assessed property taxes based on the value of their property as of January 1 of that year. For example, 2020 property taxes were assessed based on the value of property as of January 1, 2020, while bills for those 2020 taxes are payable in 2021. This created a problem for many taxpayers who believed their assessed value for 2020 was too high due to the impacts on their properties of the COVID-19 pandemic. Because the tax valuation date for 2020 was January 1, 2020 – months before the pandemic impacted Ohio businesses – property owners lacked a legal avenue to argue that their 2020 property taxes should be reduced because of the pandemic. Senate Bill 57, which Governor DeWine recently signed into law, attempts to solve that problem.

Under Senate Bill 57, property owners (and, potentially, tenants) may file a complaint with their county auditor asking that their property valuation be determined as of October 1, 2020. The valuation complaint must describe specifically how the COVID-19 pandemic or a state COVID-19 order reduced the true value of the property between January 1, 2020 and October 1, 2020. A complaint that “merely alleges a general decline in economic or market conditions in the area or region” will be dismissed by the Board of Revision (BOR). Instead, a complaint must show how the pandemic or a COVID-19 order issued by the State of Ohio diminished the value of the taxpayer’s property as of October 1, 2020. The BOR will adjust the property’s true value for 2020 to reflect the diminished valuation as of October 1, 2020, if the BOR is satisfied with the property owner’s evidence. Property owners should consider whether obtaining appraisal evidence specific to October 1, 2020, would be helpful to carry their burden of proof.

COVID-19 complaints also may be filed by certain tenants of properties used for commercial or industrial purposes, if the tenant has both the tax burden and the right to contest taxes under the tenant's lease agreement.

A complaint must be filed no later than 30 days after the effective date of Senate Bill 57, which has led to some confusion. Because Governor DeWine signed Senate Bill 57 into law on April 27, 2021, some have stated that the effective date is July 26 and the last date to file a complaint is August 25. However, Article II, § 1c, of the Ohio Constitution provides that a law of the State shall not go into effect until 90 days after it shall have been filed by the governor in the office of the secretary of state, and Senate Bill 57 was filed with the Ohio secretary of state on May 5, 2021. This makes August 3, 2021 the effective date and September 2, 2021 the last date to file a complaint. To avoid any risk, property owners should file in the window between August 3 and August 25, 2021.

Each Ohio county determines property valuations for tax purposes every six years, with an adjustment in year three. Each three-year period is called an “interim period.” Prior to Senate Bill 57, property tax complaints could be filed only once during each interim period. Senate Bill 57 allows a property owner to file a second complaint for tax year 2020 even if the owner has already filed an earlier complaint in the same interim period. Moreover, a property owner may file a COVID-19-based complaint for tax year 2021 or 2022, regardless of whether it filed in a preceding year of the interim period.

Calfee believes Senate Bill 57 provides a unique opportunity for high consumer spending properties, such as properties in the restaurant and hospitality industry, retail businesses, certain commercial spaces, and multi-tenant properties experiencing significant increases in vacancy rates. 


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