As you know, Ohio’s LIHTC industry has been combating issues surrounding real estate valuation issues for over a decade (despite successful Ohio Supreme Court rulings). While tremendous progress has been made in combating this issue, we must remain diligent to ensure proper valuations while minimizing the expense associated with the legal challenges to fight an improper valuation.
Auditor valuations that use restricted rents in their evaluation lead to lower valuations and lower real estate taxes. Most auditors have indicated that they will consider rent restrictions when performing valuations (as required by state law under ORC 5713.03) if they are informed of the rent restrictions before valuations are finalized. Many auditors even allow property owners to, through an ‘Informal Value Review’ process, meet with auditor staff before valuations are finalized to present support for reduced valuations.
Regardless of the exact process that may be offered by any particular county auditor though, information regarding valuation concerns must be communicated to county auditors in August or early September to allow the auditor time to address valuation issues in September/October before they finalize tax bills in November/December.
One of the best strategies to combat the valuation question is to proactively communicate with your county auditor up front! The reality is that there is a very good chance that your county Auditor is not aware that your property is involved in the LIHTC program and as such, they are not likely to properly assess its value. You can save an enormous amount of time and expense if you are able to successfully communicate with your county auditor in August or early September…before they finalize their tax valuations.
As a reminder, counties in Ohio engage in a full-blown reappraisal of all parcels every 6 years, and engage in a process every 3 years to perform a simple update. This link provides a listing of the valuation cycles for all Ohio counties between 2018 – 2023. YOU ARE STRONGLY ENCOURAGED TO TAKE ACTION if you have LIHTC properties in any of the following counties, as they are in midst of a full reappraisal process: BELMONT; BROWN; CRAWFORD; CUYAHOGA; ERIE; FAYETTE; HIGHLAND; HURON; JEFFERSON; LAKE; LORAIN; LUCAS; MORGAN; MUSKINGUM; OTTAWA; PORTAGE; STARK; WARREN; and WILLIAMS.
The following counties are in midst of a triennial update: ALLEN; COSHOCTON; GUERNSEY; SANDUSKY; and VINTON.
If you have assets in any of the counties identified above, now is the time to proactively communicate with the county auditor. We have included a sample letter that can be used to help facilitate that communication. (Click here for the sample letter template.)
If rent restriction information is not communicated to the auditors within the next few weeks, property valuations at your LIHTC properties are likely to be calculated on the basis of market rents, resulting in potentially crippling real estate tax burdens. Furthermore, once the valuations are set, they can ONLY be changed through the formal tax appeals process, which typically costs tens of thousands of dollars in attorney’s fees and may take several years to resolve.
If you have questions or need additional assistance, please don’t hesitate to contact your OCCH Asset Manager.