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Property Owner Protection from Tax Valuation Challenges

New legislation provides significant new protections for commercial property owners against challenges to valuation primarily by local school boards and prohibiting side agreements to avoid tax valuation changes.  The Ohio Legislature has approved House Bill 126 which will go into effect July 2022 but will effectively apply to the 2023 tax valuation year. 

Prior to the legislation, a property owner or another party, normally the local school board, could file a complaint contesting a valuation for properties for the coming tax year.  The usual situation would be where a property has sold, the price exceeds the prior year’s tax valuation, and the school board seeks to have the real estate tax values be increased to the sale price.  The appeals are frequently filed seeking to increase the tax value on a retroactive basis.  For example, a property sold in mid-year at an increased price could be faced with a request to increase the rate of tax back to the first of the year.  Real Estate taxes in Ohio are assessed and paid in arrears such that taxes for year 2022 are paid in 2023. 

While valuation complaints are filed on behalf of the school board, in many counties, decisions whether or not to file tax appeals are handled administratively either by members of the board of education staff or in some cases by outside parties such as engaged consultants to review records and file complaints whenever a sale with an increase in price occurs.  In many circumstances, the elected representatives or members of the school board have no prior knowledge that a complaint was going to be filed or the impact that it may have on the property owner or businesses in their community.  In these instances, decisions regarding the dispute are in practice property owner versus staff as opposed to the elected representatives.  Further, the appeals are filed without prior notice to the property owner.  The owner in many jurisdictions in Ohio is not even provided with a copy of the complaint filed by the school board, but simply receives a notice that a hearing is going to be held on a contested valuation on short notice, leaving it up to the property owner to go exploring to obtain a copy of the complaint and prepare to defend their valuation. 

In some parts of Ohio, these processes became abusive, or were perceived as either abusive or lacked due process to the property owners and did not adequately balance the rights of property owners to contest taxation or provide for school boards to seek increased tax payments for the benefit of the school board in a fair and open manner.  

House Bill 126 significantly changes the procedural process for these types of complaints on valuation.  The new statute requires that decisions to challenge valuation by a “legislative authority”, which includes county commissioners, township trustees, boards of education,  mayors, or legislative authority of a city, are first required to actually give notice to a property owner that the legislative authority will consider at a public meeting a potential complaint regarding property valuation and the reason for that consideration.  The notice must be sent by certified mail to the tax mailing address of the record owner of the property.  There are some limited alternate address options, but the tax mailing address will generally be the place where notices are sent. 

Further, the legislative authority by resolution in public session are required to make a formal decision to file a complaint.  This means that the elected officials must be making decisions in public whether to file, not staff members or potential outside consultants engaged to do so.  

There are also new limitations placed on the values of properties against which complaints can be filed.  Currently, the legislative authority (primarily boards of education) can file on any increase in valuation however large or small it may be.  The statute expressly provides that the board cannot file a complaint unless the board claims that the property value has increased by at least 10% over the prior year’s tax value and the value of the property involved must be greater than $500,000.  The statute also provides that the $500,000 is to be adjusted annually and requires the Ohio Tax Commissioner to adjust that threshold based upon changes in certain indexes of the United States Department of Commerce for the prior year.  If the change in value is smaller than 10%, or the property value is less than $500,000, then there is prohibition against filing an original complaint to contest value. 

The rules are different however if a property owner initiates a valuation complaint.  If the property owner or their agent initiates a complaint seeking to reduce the value, the board of education may file a counterclaim, either in support of the change or requesting a different number, but even in those settings may do so if the amount in controversy exceeds $17,500 in taxable value. 

The statute also includes some provisions streamlining the obligation of time periods in which decisions must be made by the county board of revision or its equivalent and any failure to get complaints resolved within a year requires a business of the complaint.

The statute addresses and now prohibits “private payment agreements”.  In some jurisdictions, representatives of school boards would approach property owners indicating they will file a complaint seeking to challenge valuation on property, or would actually file a complaint, but then would agree either to not file or withdraw the complaint if the property owner made a private payment to the school board.  In these settings, the argument is that the school board says it will contest the value which might result in $30,000 of additional taxes, but if you pay the school board $20,000, they will not contest the difference.  In essence, the school board would get more money directly because the real estate taxes are not shared with other government agencies in the county. 

We certainly expect there will be litigation concerning the implementation of the statutory revisions, but at least this is a good step to provide those decisions on valuation complaints have to be made by elected officials, that complaints are to be limited to properties with larger values, and that increases have to be material in order to file a complaint.  This new legislation does not impact the triannual valuation process of the County Auditor. 

Please call should you have any questions or would like a copy of the statute.  If we could be of any assistance if you have tax valuation issues, please contact Scott Sandrock at 330-253-4367, spsandrock@bmdllc.com.

Explosive Growth in Pot of Gold Opportunity for Bank (and Other) Cannabis Lenders Driving Erosion of the Barriers

Our original article on bank lending to the cannabis industry anticipated that the convergence of interest between banks and the cannabis industry would draw more and larger banks to the industry. Banks were awash in liquidity with limited deployment options, while bankable cannabis businesses had rapidly growing needs for more and lower cost credit. Since then, the pot of gold opportunity for banks to lend into the cannabis industry has grown exponentially due to a combination of market constraints on equity causing a dramatic shift to debt and the ever-increasing capital needs of one of the country’s fastest growing industries. At the same time, hurdles to entry of new banks are being systematically cleared as the yellow brick road to the cannabis industry’s access to the financial markets is being paved, brick by brick, by the progressively increasing number and size of banks that are now entering the market.

2021 EEOC Charge Statistics: Retaliation & Impact of Remote Work

The U.S. Equal Employment Opportunity Commission (EEOC) released its detailed information on workplace discrimination charges it received in 2021. Unsurprisingly, for the second year in a row, the total number of charges decreased as COVID-19 either shut down workplaces or disconnected employees from each other. In 2021, the agency received a total of approximately 61,000 workplace discrimination charges - the fewest in 25 years by a wide margin. For reference, the agency received over 67,000 charges in 2020, and averaged almost 90,000 charges per year over the previous 10 years.

Ohio’s Managed Care Overhaul Delayed – New Implementation Timeline

At the direction of Governor Mike DeWine, the Ohio Department of Medicaid (ODM) launched the Medicaid Managed Care Procurement process in 2019. ODM’s stated vision for the procurement was to focus on people and not just the business of managed care. This is the first structural change to Ohio’s managed care system since the Centers for Medicare & Medicaid Services' (CMS) approval of Ohio’s Medicaid program in 2005. Initially, all of the new managed care programs were supposed to be implemented starting on July 1, 2022. However, ODM Director Maureen Corcoran recently confirmed that this date will be pushed back for several managed care-related programs.

Laboratory Specimen Collection Arrangements with Contract Hospitals - OIG Advisory Opinion 22-09

On April 28, 2022, the Department of Health and Human Services, Office of Inspector General (“OIG”) published an Advisory Opinion[1] in which it evaluated a proposed arrangement where a network of clinical laboratories (the “Requestor”) would compensate hospitals (each a “Contract Hospital”) for specimen collection, processing, and handling services (“Collection Services”) for laboratory tests furnished by the Requestor (the “Proposed Arrangement”). The OIG concluded that the Proposed Arrangement would generate prohibited remuneration under the federal Anti-Kickback Statute (“AKS”) if the requisite intent were present. This is due to both the possibility that the proposed per-patient-encounter fee would be used to induce or reward referrals to Requestor and the associated risk of improperly steering patients to Requestor.

No Surprises Act Update: The IDR Portal is Open

The No Surprises Act (“NSA”) became effective January 1, 2022, and has been the subject of lawsuits and criticisms since its inception. The goals of the No Surprises Act are to shield patients from surprise medical bills, provide to uninsured and self-pay patients good faith estimates of charges, and create a process to resolve payment disputes over surprise bills, which arise most typically in emergency care settings. We have written about Part I and Part II of the NSA previously. This update concerns the Independent Dispute Resolution (“IDR”) procedure created by Part II but applicable to claims covered by Part I. The Centers for Medicare & Medicaid Services (“CMS”) finally opened the Portal for providers to submit disputes to the IDR process following some updated guidance regarding the arbitration process itself.