“Once again we find ourselves in an unprecedented situation,” Keith said, noting that this is the longest its taken his office to reach an agreement with the department. “Never in my time in the auditor’s office have we announced the approval of our tentative abstract this late in the year. Never have we had difficulty in reaching an agreement with the Department of Taxation on property values.”
The 15% increase in residential property value was the result of several weeks of discussions and analysis between members of the county’s revaluation project team and staff in the tax commissioner’s office.
Almost two months after its initial 7.4% proposal, on Aug. 31, the auditor’s office received notice from the Department of Taxation that it accepted a proposed 6% increase for commercial property, but rejected the 7.4% increase for residential, saying it instead expected an 18% increase, Keith said.
Keith said his team felt an 18% increase was “out of line” based on the work they had performed reviewing properties in the field and analyzing real estate sales.
“We felt the values we submitted in July were in keeping with past practices and well within industry standards,” he said.
Because of the wide gap in what the county and state proposed, the auditor’s office went back to look at how the state reached their number. The auditor’s office looked at the last three years in sale when coming up with its proposal, the same method it has used in the past, Keith said.
“This has been the standard practice, and we expected the Department of Taxation to use this approach in reviewing our results,” he said. “However, this year, the state focused only on the most recent year of sales — sales from 2019 — in conducting its review resulting in a more aggressive approach in establishing values due to the strength and record-setting growth in the real estate market that occurred in 2019.”
That “disconnect” prompted a series of follow-up discussions, resubmissions and reviews between the auditor’s office and the Department of Taxation throughout September and October as it worked to comply with the state’s requirements. It reached an agreement with the tax commissioner’s office on a residential increase of 15%.
“The Ohio Department of Taxation is obligated to follow the Ohio Constitution and state law and did so in arriving at the most appropriate values for real property in Montgomery and all other counties in Ohio that updated values in this most recent cycle,” Gary Gudmundson, spokesman for the Ohio Department of Taxation, said in response to Keith’s remarks. “Our approach to this responsibility and our practice this year is the same as it has always been.”
The new rate does not mean a owner’s taxes will go up 15%, he added. Some homeowners could see an increase or even decrease in taxes.
“It really won’t be able to be clear to people until tax bills go out in January,” Keith said. “We’ll be prepared to deal with people when that happens. If they think that their value is too high or too low ... there is an appeal process between January and March of every year and we’ll help them navigate that process.”
Keith said 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, Keith said
Montgomery County is not the only area that struggled to determine values that the Department of Taxation finds acceptable this year, Keith noted.
“Including Montgomery, there are 41 counties in Ohio that are scheduled to complete either a revaluation or a triennial update in 2020,” he said. “At least 25 counties of those 41 ... have indicated that the state rejected their initial submission of updated values just like our and, as far as we know, six counties indicated that the state rejected their values multiple times.”
The 15% residential increase in Montgomery County is comparable to other area counties performing updates in 2020 including some of our neighboring counties, Keith said. Preble County is reporting a 17.5% increase, with Darke County a 16% increase and Greene County a 15% increase.
“This experience this year has exposed what I believe are weaknesses in the manner in which property values are determined in Ohio,” Keith said. “Moving forward there are issues of transparency, consistency and uniformity to consider and address. Communication between county auditors and the Department of Taxation needs to improve. Further, advances in technology that may enhance this process at both the state and local level need to be pursued.”
For now, the county’s approved tentative value is still preliminary, Keith said. Property owners should expect to see final notices of value in the mail by the end of the year.
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