In early 2020, downtown Cleveland experienced substantial momentum. The pandemic, however, has undermined the very density on which city centers thrive. With downtown Cleveland’s high concentration of jobs accessible by multiple modes of transportation, regaining that momentum is critical to ensuring an equitable and environmentally sustainable recovery. It is essential to remove the obstacles to accelerating this recovery.
One such obstacle is Ohio’s flawed system for determining property values. The current process traps taxpayers in a vicious circle of costly legal proceedings. The result is an unpredictable fiscal environment that diverts resources from schools and inhibits job-creating investment in the city.
Property owners know how counties determine property values. Every three years, county governments assess properties to set tax values. If you as the owner disagree, you can appeal and provide evidence as to why you think your local government got it wrong. This process allows owners to guard against incorrect overvaluation of their property by their government.
Many landlords don’t realize that other people and government agencies can and do file their own appeals challenging the county’s decision at any time between county triennial assessments. They don’t have to provide their own ratings; in fact, they don’t need to provide much evidence at all. If they lose an appeal, they can simply file another with the Ohio Board of Tax Appeals the next day. This vicious circle, most often pursued by overzealous lawyers representing school districts, selectively targets taxpayers. Ohio is one of the few states that allows this random process.
The Ohio Senate recently passed House Bill 126, which would reform this out-of-control process. It would allow taxpayers to file complaints challenging their own property assessments, while prohibiting third parties from filing complaints. It also protects the interests of the school district by allowing them to file a counter-complaint if a taxpayer requests a decrease in value.
The bill does not diminish the revenue a school district may collect under current or future tax levies. The Ohio House of Representatives passed a different version of this bill. A conference committee was appointed to reconcile the differences.
While a compromise like the Ohio Senate version is desirable, there are other ways to protect taxpayers. Late last year, I testified before the Ohio Senate Ways and Means Committee in support of a model used in Illinois and Texas. This would allow a plaintiff or counter-plaintiff to provide the review board with a reasonable number of comparable properties in the county. The review board would determine whether the county’s assessment is lower, higher or equal to the average assessment of comparable properties in the county. The average of the comparable properties would result in the highest assessment the county could impose.
Using this approach imposes a cap on the assessment but does not preclude schools or taxpayers from protecting their interests. The property would be taxed like its comparable neighboring properties. Like the Ohio Senate’s approach, this would protect the interests of all stakeholders and provide Ohio taxpayers with the consistency and fairness they deserve.
High quality public schools and a level playing field for investment are both essential to the downtown neighborhood our community is building. That’s why Downtown Cleveland Alliance champions the Cleveland Metropolitan School District and initiatives ranging from Say Yes to Education, focused on college readiness, to PACE, aimed at connecting students to job opportunities.
We recognize that school funding remains too dependent on local property taxes. Therefore, DCA supports the full implementation of the Ohio Fair Fundraising Plan, enacted by the Ohio Legislature with bipartisan support in 2020. This plan already reduces reliance on local property taxes for fund public education.
We need to work as a community to move these initiatives and reforms forward. At the same time, Ohio taxpayers need relief from a property assessment process that has gone wild. I urge our Statehouse representatives to seize this opportunity to provide much-needed assistance to the taxpayers of Ohio.
Deemer is President and CEO of Downtown Cleveland Alliance.