MOUNT VERNON — Depressed economic times often create scenarios where individuals and organizations look to collect as much revenue as they can; at the same time, they look to keep more money in their pocket. Such a scenario has been created between the Mount Vernon School District and area taxpayers.
The district has filed complaints on a number of properties, stating the appraised values are not as high as they should be, thus the taxpayer is not paying as much taxes as he or she should be. Although ruled unconstitutional 20 years ago, schools still receive a major portion of their funding through property taxes.
“In 2009 they filed 34 taxpayer complaints on sales,” said Knox County Auditor Jonette Curry. “They elected at that point to pursue these cases. In 2010, they filed again on 19 original complaints.”
“There is a reappraisal [of property] every six years, and a triennial update every three years,” said Barb Donohue, treasurer for the school district. “In between those three years, there are home sales, which drives our district values.”
Donohue, who said the school board supports the filings, said Knox County values are lower than the 95 percent to 100 percent recommended by the state. The money lost by not raising the values, she said, is tax money that is owed to the district.
“I’m just trying to make sure taxpayers pay their fair share,” she said. “The county auditor is supposed to raise the value, but most of the time they don’t because [the value] is already in place. If they don’t raise those properties up, somebody else pays the taxes. I’m just asking the county auditor to do what they’re supposed to do.”
The 2008 triennial update was based on sales for the years 2005-07. The next update will be in 2011, and will be based on sales from 2008-2010.
“These sales are incorporated into our average,” said Curry. “Depending on sales, it could increase values. But because we don’t have the update until 2011, by filing now, the school district can get the money now.”
There are two ways a property value can be contested.
An original complaint is when the school district files a complaint on what is called an arm’s length sale, where there is a willing buyer and a willing seller.
“[The sale] is on the open market,” explained Curry. “You have a set price, and someone comes along willing to pay that price.”
“When someone pays more than the appraised value, when you have a willing buyer and willing seller, that is the best indicator of what the property is worth,” said Donohue.
A countercomplaint is when a taxpayer files documentation stating the property is lower than the appraised value, trying to get a reduction in the value. The auditor’s office is required to notify the school district if a taxpayer complaint is filed. The school district can then file a countercomplaint.
“It allows for checks and balances on countercomplaints,” said Curry. “It allows schools to look at the situation and see what happened — if there was a fire, for example, they’re OK with that — but if it is the taxpayer’s opinion, they will want to make them explain why they think it has a lower value.”
Both types are filed with the county’s Board of Revision, which is comprised of the county auditor, county treasurer and president of the Knox County Board of Commissioners.
Once the Board of Revision has made a determination, said Curry, if the school district is not satisfied, it can file an appeal with the Board of Tax Appeals in Columbus, at no charge, or it can file an appeal with the local common pleas court, which in Knox County has a fee. Mount Vernon filed in Columbus. The 34 cases from 2009 are pending with the BTA.
Curry said that if the BTA looks at the case and determines the sale to be an arm length sale — willing buyer, willing seller — the BTA will rule in favor of the school. This ruling is supported by previous case law.
The BTA’s rulings, however, may take a while.
Curry said the Board of Tax Appeals lost over $1 million in funding, and had its staff cut to seven lawyers. Historically, the board handles 2,000 cases a year. Last year, over 6,100 cases were filed.
“So it could be three to four years before we get a hearing date,” said Curry. “I had two pending from 2007 that just got an appeal date for June.”
Until a ruling is made, Curry said, the value stays at the county value. However, if the ruling is in favor of the school and the value is ultimately increased, payment will be retroactive to the first year the adjustment should have been made.
Donohue said the school expects to generate $200,000 for the three-year period involving the 34 cases; the number is $230,000 when the countercomplaints are included.
Curry said most of the properties the district filed on are commercial. Jay Maners of Ohio Rental is one of the 19 cases the school district is questioning in 2010.
“I am not opposed to paying my fair share of taxes,” said Maners. “My problem is, I don’t think this is the best method.
“Is this the healthiest thing to do for Mount Vernon when we are trying to attract good residents and good businesses?” he asked. “The school board, in essence, is saying the auditor is not doing his or her job.
“When you look at cash flow for a business, you look at the taxes,” he said. “What I am finding is that there are some issues of doing a disclosure, that unfortunately, a lot of people aren’t doing.”
In Maners’ case, when he bought the land, buildings and equipment associated with his business, the selling price was not broken down specific enough as to what amount was for each component. Taxes are based on land and buildings, but not on, for example, vehicles or equipment.
“In hindsight, we should have had better disclosure on the land and the buildings,” he said. “[The school board] simply looks at the numbers in the sale. It’s very difficult to go back and break it down; you have to hire an appraiser, you have to hire an attorney. I don’t think they consider what it does.”
When the school pushes to get money by any means legal, he said, it creates these types of situations, and brings it back to the point that schools are unconstitutionally funded.
“They have an agenda to gain more money; I have an agenda as a homeowner or businessman to save money. That puts us at odds,” said Maners.
“It feels like David and Goliath,” he continued. “When the homeowner gets a letter from the school board, it’s intimidating. I understand the position they are in. I just think it creates hostility in the community.
“It falls back on the Mount Vernon school board to choose not to do it,” he said. “It’s offensive because it’s not working with our local residents and local businesses.”
The current 19 cases are awaiting hearings by the Knox County Board of Revision. Donohue said most of the 19 properties are appraised at 90 percent or 91 percent.
“We will review the property and establish what we think the value should be,” said Curry.
Donohue said if the values are not raised, that is giving the taxpayer a tax exemption.
Curry said the county uses outside legal counsel for the complaints and countercomplaints.
“I will have legal fees involved with cases sitting at the Board of Tax Appeals,” said Curry, adding that her office has a budget of $6,000 for legal counsel. To date, $2,000 has been spent.
Donohue said the district has also filed complaints when it believes the appraised value is too high.