State says county must raise property values

Required 13 percent increase nearly double what originally proposed

Staff report

DAYTON — The Ohio Department of Taxation has approved tentative new property values for Montgomery County, but the approved values aren’t the ones the county initially proposed.

Montgomery County Auditor Karl Keith announced on December 3 that countywide property values will increase 13 percent – nearly double the increase originally proposed by the county – after the Ohio Tax Commissioner objected to the county’s initial values.

Keith said this increase remains preliminary as his office continues working to finalize property values by the end of the year.

On July 9, following nearly two years of work on the county’s 2020 Property Reappraisal, Keith submitted his office’s proposed tentative property values to the Department of Taxation. Nearly two months later, on August 31, the Auditor’s Office received notice from the tax commissioner that its proposed values had been rejected.

The Department of Taxation approved the Auditor’s proposed 6 percent increase on commercial values in the county, but rejected the proposed 7.4 percent increase on residential values. Although the initial proposal already represented the highest increase in property value since 2005, the state informed Auditor Keith that it expected to see an 18 percent increase in residential values.

“We felt an increase of 18 percent was way out of line based on the work my team had performed reviewing properties in the field and analyzing real estate sales,” said Keith.

Keith says this disconnect prompted the Auditor’s Office to engage in a series of discussions and reviews with the Department of Taxation as it worked to comply with the state’s requirements. After nearly two months of negotiations, the county and the state agreed upon an average 15 percent increase in residential values – more than double the increase the county initially proposed.

“Never before in my time in the Auditor’s Office have we had difficulty in reaching an agreement with the Department of Taxation on property values,” said Keith.

Montgomery County is not the only county where proposed values were rejected by the Department of Taxation. Keith reports that the state rejected the initial submission of values from at least 25 counties, requiring a larger increase in each instance. Six of those counties had their values rejected multiple times.

As a result, other Southwest Ohio counties with property value updates this year will see residential increases similar to those in Montgomery County. Preble County’s residential values are set to increase by 17.5 percent. Darke County will experience a 16 percent increase, while Greene County will see a 15 percent increase. Franklin and Hamilton Counties submitted 20 percent and 14 percent increases, respectively.

Keith says the discrepancy between county’s proposed values and the state’s required values is a result of a difference in assessment methodology. When completing its reappraisal, the Auditor’s Office took into consideration the past three years of real estate data. This is the same practice that the county, as well as the Ohio Department of Taxation, used during past reassessments.

However, this year the state relied only on the most recent year of sales date when analyzing the real estate market. According to Keith, this resulted in a more aggressive approach to establishing values, since the local real estate market has rapidly appreciated in each of the past three years.

“My office remains committed to working with property owners to help make sense of this process,” says Keith. “Further, we are committed to ensuring that property owners are afforded the opportunity to challenge these new values.”

Property owners who wish to contest their tentative new property values are invited to file a formal appeal with the Montgomery County Board of Revision. This quasi-judicial board has the authority to hear complaints and adjust property values. The Board of Revision filing period opens on January 1 and ends on March 31.

Under Ohio law, the tax commissioner is granted the responsibility of overseeing the appraisal work done by county auditors. After a county auditor completes a property value update, they submit the new values to the Department of Taxation for approval. The tax commissioner can then approve those values or order changes.

This is not the first notice of rejection the county auditor has received this year from the Department of Taxation. Earlier this year, Keith submitted an unprecedented request to the tax commissioner to delay the state-mandated reappraisal of property values by one year.

This delay would have allowed the county more time to respond to the effects of the COVID-19 pandemic on the local real estate market. However, the state rejected this request and the 2020 property reappraisal took place as scheduled.