Last month marked the three-year anniversary of Governor DeWine’s signing into law Am.Sub. H.B. No. 126 of the 134th General Assembly—“H.B. 126” for short, which aimed to reform real property tax procedures. How have those reforms fared since they took effect on July 21, 2022? We have previously addressed H.B. 126 reforms here, here, here, and here. Last September, we also discussed the Ohio Supreme Court decision in Marysville Exempted Village Schools Bd. of Edn. v. Union Cty. Bd. of Revision, 2024-Ohio-3323 here. This buzz will consider additional issues raised in H.B. 126 litigation, and will also take a look at pending legislation that would strengthen H.B. 126 reforms.
H.B. 126 In Context
Under pre-H.B. 126 law, not only could the owner of property file a complaint to decrease the valuation of the property for tax purposes, but two other categories of complainant could file complaints seeking to increase the value of some else’s property:
- certain political subdivisions (most importantly school boards), and
- private owners of other taxable property in the county (“third party complainants”).
Three of the principal reforms enacted by H.B. 126 consisted of (1) limiting the filing of valuation complaints by school boards and by third party complainants to situations where the property had sold in an arm’s-length transaction, (2) requiring school boards to specifically authorize the filing of an original complaint at a public meeting, and (3) prohibiting school boards from taking an appeal from board of revision decisions to the Board of Tax Appeals (“BTA”), if the school district did not own or lease the property at issue.
Intended to reduce school-board initiated complaints, H.B. 126 has in fact spawned new litigation over its constitutionality and meaning.
Constitutional Challenge Rejected
Because school boards and other political subdivisions have limited constitutional rights[1], the constitutional challenges have prominently featured “straw persons”: private property owners who act for the local school board’s interests by filing third party complaints to increase the value of other peoples’ property. Straw persons have even included school board tax attorneys who file increase complaints that are based on their personal ownership of property.
In Gillis v. Delaware Cty. Bd. of Revision, 2024-Ohio-5669, the straw person (who was also a school-board tax attorney) argued that the restrictions on filing original complaints violate the Ohio constitutional requirement that property be taxed by uniform rule according to value. Gillis also contended that the restrictions infringe on a third party complainant’s rights under both the due process and equal protection guarantees of the Ohio and U.S. Constitutions. The Fifth District Court of Appeals rejected those arguments, and on April 1, 2025, the Ohio Supreme Court declined to accept jurisdiction of Gillis’s appeal from the appellate court decision. 2025-Ohio-1090.[2]
Twelfth District Court of Appeals To Address An Entity-Transfer Issue
Property owners have also jousted with school boards concerning the scope of the H.B. 126 restriction on the filing of original complaints. Property owners have argued that H.B. 126 limits original complaints by school boards and third party complainants to increase claims based on a deed sale, in which the seller conveys title by deed, and a conveyance fee statement documents the transaction and the sale price. Under this argument, H.B. 126 does not permit a school board to file an original complaint based on the assertion that the sale of the property was effectuated through the transfer of an entity rather than through a deed from the seller to the buyer. See Columbus City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 2020-Ohio-353 (affirming the BTA’s decision that the sale price of an apartment complex furnished its presumptive value, even though the sale was effected by transferring the ownership of the entity that owned the apartment complex).
To date, the Board of Tax Appeals has rejected the property owners’ jurisdictional arguments, and has permitted jurisdiction in the entity transfer situation. See Snider Crossing LLC v. Warren Cty. Bd. of Revision, BTA No. 2023-1195, 2023 Ohio Tax LEXIS 2172 (Dec. 18, 2023) [Interim Order]; Snider Crossing LLC v. Warren Cty. Bd. of Revision, 2024 Ohio Tax LEXIS 2656 ((Dec. 17, 2024) [Final Decision]. The Snider Crossing final decision is now on appeal to the Warren County Court of Appeals, 12th Appellate District, Case No. 2025-01-005—at this writing, the appeal has been briefed, and the entity transfer issue has been raised in the appeal.
ZHF Observation: In Snider Crossing, the school board attached a CoStar report to its complaint setting forth details of a sale of the property, and the school board obtained and relied on a purchase agreement and a settlement statement, along with the testimony of an appraiser who had familiarized himself with the sale. Snider Crossing, Final Decision at 2. By contrast, in many cases the school board’s original complaint alleges a sale without any documentary support. In those cases, a school board relies on mere speculation that a sale has occurred through an entity transfer—and in fact, very often no such transaction has occurred, and the property sometimes has not changed ownership at all. Accordingly, we think that even if the appellate court upholds jurisdiction in Snider Crossing, that case’s distinctive facts may make its holding not decisive in other cases whose circumstances differ.
Ohio Supreme Court To Address Alternative Appeal Path for School Boards
Because H.B. 126 prohibited subdivisions such as school boards that do not own or lease the property at issue from taking an appeal to the Board of Tax Appeals, school boards have blazed a different appeal pathway: they attempt to appeal an adverse board of revision decision to the county common pleas court, citing as authority a statute that generally provides for appeals from the administrative decisions of political subdivisions, R.C. 2506.01. Perhaps most familiar is the use of that statute to take appeals from zoning decisions of local zoning boards and planning commissions.
Courts have rejected this asserted right of appeal on various grounds, and the issue is now pending before the Ohio Supreme Court, case numbers 2024-814 and 2024-815. Oral argument in those consolidated cases will be held before the high court on June 3, 2025.
Corrective Legislation
H.B. 496 of the 135th General Assembly
At the end of 2024, the General Assembly passed Sub.H.B. No. 496, which became effective on April 9. The bill contains two changes to H.B. 126 reforms, both of which will become applicable for complaints filed in 2026 that address the assessments for tax year 2025.
First, H.B. 496 amended R.C. 5715.19(B) to extend a school board’s deadline for filing a counter-complaint. H.B. 126 had eliminated the notice the auditor formerly gave to school boards of the filing of complaints placing $50,000 or more of true value at issue, and then required the school board to file its counter-complaint within 30 days of the filing of the original complaint (even though the school board now received no notice of that filing). H.B. 496 gives the school board 30 days from either the filing of the original complaint or from the deadline for filing an original complaint (usually March 31 of the tax year following the tax year at issue). This amendment will afford school boards a fair chance to ascertain the filing of an original complaint and file their own counter-complaint on time.
Second, H.B. 496 amends R.C. 5715.19(C) in an important respect. H.B. 126 stated that a board of revision would lose jurisdiction over a complaint by a political subdivision such as a school board, or a third party complainant, if the board had not rendered its decision within one year after the filing of the complaint. Under H.B. 496, the jurisdictional language is deleted and the board of revision “may,” rather than “shall,” dismiss.
Current Proposals: Am.Sub.H.B. No. 96 and H.B. 232
To strengthen H.B. 126’s basic intent to stem the tide of school board complaints against property owners, various legislative measures have been proposed. Currently a number of proposals are included in Am.Sub. H.B. No. 96, the House’s version of the budget bill that passed the House on April 9, as well as in H.B. No. 232, which is pending in committee. Among other changes, these bills would clarify that original complaints by school boards and straw persons would have to be based on a deed sale evidenced by a conveyance-fee statement, and would enact additional measures to limit the extent to which school boards can act through straw persons.
Conclusion
Although H.B. 126 aimed to reduce the burden to property owners of excessive tax appeals initiated by school boards, the legislation has spawned its own spate of litigation. New legislative initiatives, however, may shore up H.B. 126 and come closer to fulfilling the promise of its reforms.
If you would like to further discuss H.B. 126, please reach out to Robert Maier, Stephen Hall, or any of our ZHF professionals.
[1] See Avon Lake City School Dist. v. Limbach, 35 Ohio St.3d 118 (1988); Toledo City School Dist. Bd. of Edn. v. State Bd. of Edn., 2016-Ohio-2806.
[2] In Franklin County, several school boards and a “straw person” raise similar constitutional challenges to H.B. 126 restrictions. Common Pleas Case No. 23CV-1706. The common pleas court has taken no action on the motion to dismiss filed in that case, nor has the case progressed toward a trial of the issues.