OHIO LEGISLATIVE SERVICE COMMISSION
Office of Research Legislative Budget
www.lsc.ohio.gov and Drafting Office
S.B. 57 Final Analysis
134th General Assembly
Click here for S.B. 57’s Fiscal Note
Version: As Passed by the General Assembly
Primary Sponsors: Sens. Hackett and Antonio
Effective date: August 3, 2021
Michael Hinel, Attorney SECOND UPDATED VERSION
SUMMARY
Authorizes a property tax exemption for certain housing used by individuals diagnosed
with mental illness or substance use disorder.
Authorizes commercial or industrial tenants to file a property valuation complaint if
their lease requires them to pay the property taxes charged against the property and
the lease or their landlord authorizes them to file the complaint.
Authorizes a county board of revision, pursuant to a valuation complaint filed for tax
year 2020, to value a property for tax purposes as of October 1, 2020, instead of
January 1, 2020, if its value is reduced due to COVID-19-related circumstances or state
orders.
Waives the rule barring multiple valuation complaints from being filed in the same
triennial valuation period for these tax year 2020 COVID-19-related complaints and
complaints filed for tax year 2021 or 2022 that only allege a value reduction due to
COVID-19-related circumstances or orders.
Specifies that tax increment financing (TIF) service payment obligation agreements
between a property owner and a local government are enforceable against subsequent
property owners.
This version corrects a typographical error in a citation and reflects a section number change by the
LSC Director (PDF) under R.C. 103.131. The Director has codified Section 6 of the act as R.C. 5709.915.
The codification is posted among the documents for S.B. 57 on the General Assembly’s website,
legislature.ohio.gov, via the link, “Codification Number Change.”
February 7, 2022
Office of Research and Drafting LSC Legislative Budget Office
DETAILED ANALYSIS
Property tax exemption for supportive housing
The act authorizes a property tax exemption for housing used by individuals diagnosed
with mental illness or substance use disorder and their families. To qualify:
1. The owner of the property must be a tax-exempt 501(c)(3) organization, or a pass-
through entity whose controlling member either is a 501(c)(3) organization or is owned
by one or more 501(c)(3) organizations, for which providing such housing is a primary
purpose.
2. At least one of those 501(c)(3) organizations must receive some of its funding from the
Department of Mental Health and Addiction Services; a county board of alcohol, drug
addiction, and mental health services; or a local continuum of care—a regional or local
planning body that coordinates housing and services funding for homeless families and
qualifies for federal funding from the U.S. Department of Housing and Urban
Development.
In addition, the property owner must either (a) use the property to provide such
housing, (b) lease the property to individuals with mental illness or substance use disorder and
make supportive service available to such individuals, or (c) lease the property to a charitable
institution that uses the property for charitable purposes.1
Under continuing law, property owned by a charitable organization and used exclusively
for charitable purposes is exempt from taxation. Courts have generally not favored extending
the charitable use exemption to residential properties. In fact, in May 2020, the Board of Tax
Appeals (BTA) reversed an exemption for a property that would meet the act’s requirements.
The BTA found that, based on Supreme Court precedent, the use of the property primarily for
private residential purposes could not be considered a charitable use.2
Based on this precedent, nonprofit residential properties must generally be specifically
exempted in the Revised Code. Indeed, in 2018, the legislature authorized an exemption similar
to that allowed in the act for nonprofit housing for individuals with developmental disabilities. 3
The act’s exemption for supportive housing applies to tax year 2021 and thereafter, as
well as to exemption applications or appeals pending on August 3, 2021, the act’s effective
date.4
1 R.C. 5709.121(F).
2 Columbus City Schools Dis. Bd. of Edn. v. McClain, et al. (May 28, 2020), BTA No. 2018-649.
3 R.C. 5709.121(E).
4 Section 5.
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As Passed by the General Assembly
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Property tax complaints
The act makes three modifications – one permanent and two temporary – to the
manner by which an administrative complaint may be filed and resolved against a property’s
assessed tax valuation or classification with a county board of revision (BOR) – a quasi-judicial
body comprised of the county treasurer, the county auditor, and a county commissioner and
established to hear property tax complaints and revise tax assessments. First, the act makes
certain commercial and industrial tenants eligible to file complaints. Second, it authorizes a
county BOR, pursuant to a special complaint filed for tax year 2020, to value a property as of
October 1, 2020, if its value is reduced due to COVID-19-related circumstances or state orders.
Third, it waives the rule barring multiple complaints from being filed in the same triennial
valuation period for such COVID-19-related complaints and complaints filed for tax year 2021 or
2022 that only allege a value reduction due to COVID-19-related circumstances or orders.
Tenant complaints
Property tax complaints may be initiated, under continuing law, by property owners, an
owner’s spouse, certain agents of the owner or spouse, a county treasurer or prosecuting
attorney, the mayor of a municipal corporation, a school board, or the legislative authority of a
county, township, or municipal corporation. In addition, a property owner, their spouse or
agents, or, in some cases, a school district may file a counterclaim in response to a complaint
initiated by another party.
The act extends the authority to file a complaint or counterclaim to tenants of
commercial or industrial property if the tenant is required under the lease agreement to pay
the entire amount of taxes charged against the property and if the landlord, either through the
lease or otherwise, authorizes the tenant to file the complaint or counterclaim. This authority
also extends to officers, employees, or certain other agents of the tenant.5
These parties may file complaints or counterclaims beginning for tax year 2021.6
2020 COVID-19-related valuation complaint
In general, BOR complaints challenge the value of the property as of January 1 of the tax
year for which it is being filed (the “tax lien date”) and are filed at the beginning of the
following tax year; e.g., a tax year 2020 complaint is filed at the beginning of 2021 and
evaluates the property’s value as of January 1, 2020. The deadline to file complaints is either
March 31 or the deadline to pay the first half of property taxes for the prior tax year, whichever
occurs later. Any change in a property’s value pursuant to a BOR complaint generally applies to
all subsequent tax years within the three-year period between a sexennial reappraisal and an
assessment update in the third year of that cycle (the “interim period”).7
5 R.C. 5715.19(A) and (B).
6 Section 5.
7 R.C. 5715.19.
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As Passed by the General Assembly
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The act authorizes an eligible party to file a special BOR complaint requesting that a
property’s tax valuation for tax year 2020 be determined as of October 1, 2020, instead of the
tax lien date for that year (January 1, 2020), if the property’s value between those dates has
been reduced due to circumstances related to the COVID-19 pandemic or a COVID-19-related
order issued by the Governor or a state agency. Such a complaint must be filed with the county
auditor by September 2, 2021 (30 days after the act’s effective date) and must state with
particularity how the COVID-19-related circumstance or order resulted in that reduced value.
The BOR must dismiss a complaint that only alleges a general decline in market conditions in
the area where the property is located. Upon receiving a complaint, the county BOR may
consider the circumstances and set the property’s value for tax purposes as of October 1, 2020,
accordingly.8 Without the act’s modifications for tax year 2020, the owner could not raise the
circumstances or orders that caused a reduction in the property’s value in a BOR challenge until
tax year 2021, filed at the beginning of 2022.
Temporary triennial filing rule waiver
Generally, an eligible party may initiate a BOR complaint with respect to a particular
parcel only once in each interim period, unless certain events occur in the meantime, such as
the property having been sold.9 The act waives this rule for the tax year 2020 COVID-19-related
complaints described above.10 It also waives this rule for valuation complaints filed for tax year
2021 or 2022 that only allege a reduction in a property’s value due to circumstances related to
the COVID-19 pandemic or state COVID-19 orders.
An eligible party seeking to take advantage of this waiver for tax year 2021 or 2022
must, similar to the special tax year 2020 complaint, allege with particularity in the complaint
how the circumstance or order caused a reduction in the property’s value. If the complaint
merely alleges a general decline in value or market conditions in the area where the property is
located or some other factor unrelated to COVID-19 circumstances or orders, the county BOR
may not grant the waiver.11
Tax increment financing (TIF) service payments
TIF background
Continuing law allows municipalities, townships, and counties to create a tax increment
financing (TIF) arrangement to finance public infrastructure improvements. Through a TIF, the
subdivision grants a real property tax exemption with respect to the incremental increase in the
assessed value of designated parcels that are part of a development project. The owners of the
parcels make payments in lieu of taxes to the subdivision equal to the amount of taxes that
would otherwise have been paid with respect to the exempted improvements (“service
8 Section 3(A) to (D).
9 R.C. 5715.19(A)(2).
10 Section 3(E).
11 Section 4.
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As Passed by the General Assembly
Office of Research and Drafting LSC Legislative Budget Office
payments”). TIFs thereby create a flow of revenue back to the subdivision that created the TIF,
which generally uses those service payments to pay the public infrastructure costs necessitated
by the development project.
Service payment enforceability
Continuing law provides that service payments are to be considered property taxes for
all purposes, including for lien priority and collection, but does not specifically provide that the
payments are a covenant running with the land. Statutorily prescribed TIF service payment
obligations are generally subordinate to other real property tax exemptions.12 In other words, if
the property is exempted for any non-TIF reason (charitable use, for example), that exemption
generally extinguishes the service payment obligation. In practice, however, some property
owners contract with local governments to guarantee future TIF service payment obligations
against subsequent property tax exemptions.
The act specifies that TIF service payment obligations arising from an agreement
between the property owner and a local government guaranteeing future TIF service payment
obligations against subsequent property tax exemptions are enforceable against subsequent
property owners. Once a subdivision records a TIF service payment agreement with the county
recorder, the covenant is fully binding against the property owner and any person subsequently
acquiring an interest in the land. If a service payment is not paid, the subdivision can place a
lien on the property and collect the payment in the same manner as other delinquent taxes
(e.g., through foreclosure).13
This change applies to any proceedings commenced after, or pending on, August 3,
2021, the act’s effective date, and any instruments recorded on, before, or after that date.14
HISTORY
Action Date
Introduced 02-09-21
Reported, S. Ways & Means 02-23-21
Passed Senate (31-0) 02-24-21
Reported, H. Ways & Means 03-24-21
Passed House (95-0) 03-25-21
Senate concurred in House amendments (33-0) 04-21-21
21-SB57-2NDUPDATE-134/ks
12 R.C. 5709.911, not in the act.
13 R.C. 5709.91.
14 R.C. 5709.915.
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As Passed by the General Assembly
Statutes affected: As Introduced: 5709.121
As Reported By Senate Committee: 5709.121
As Passed By Senate: 5709.121
As Reported By House Committee: 5709.121, 5709.91, 5715.19, 5709.12
As Passed By House: 5709.121, 5709.91, 5715.19, 5709.12
As Enrolled: 5709.121, 5709.91, 5715.19