The Ohio attorney general recently published an opinion that addressed several questions regarding property valuation settlements when property owners and boards of education contest an auditor’s value (O.A.G. No. 2018-011).
A party such as a board of education or a property owner who contests an auditor’s property valuation will begin by filing a complaint with the board of revision. A party who disagrees with the requested valuation may file a counter-complaint. While the complaint is pending before the board of revision, the complaining parties may enter into a settlement agreement, either dismissing the complaint or stipulating to an agreed property valuation, both of which options may be accompanied with a payment from the property owner to the board of education.
The attorney general’s opinion answered four questions raised by the Stark County prosecuting attorney, all of which used the same hypothetical property valuations:
- The county auditor values a property at $400,000.
- The local board of education files a complaint to increase the property valuation to $550,000.
- The property owner files a counter-complaint to reduce the valuation to $350,000.
In the scenario in the first two questions, the board of education dismisses the complaint in exchange for a one-time payment of $5,000. In their simplest form, the questions arising from this scenario are as follows:
- Is this scenario permissible?
- If so, may a board of revision require disclosure or approval of the settlement agreement as a condition for the board of education to dismiss the complaint?
The short answer to question 1 is yes, this is permissible. The attorney general explained that a board of education may voluntarily dismiss a pending complaint. Furthermore, a board of education has the authority to enter into a settlement agreement. This includes the terms of the settlement – in this scenario, receiving a payment in exchange for dismissing the complaint.
In answer to question 2, the attorney general noted that a board of revision has no authority to require a party to disclose the settlement agreement, nor to require the board of revision’s approval of the settlement agreement, as a condition for the board of education to dismiss the complaint.
In the scenario in the final two questions, the board of education and the property owner agree to a property value of $450,000, which is halfway between the differing valuations of the board of education ($550,000) and the property owner ($350,000). Provided the board of revision agrees to the stipulated value, the property owner will then pay the board of education a one-time payment of $2,500. The questions arising from this scenario are as follows:
- Is this scenario permissible?
- If so, prior to the board of revision’s approving the stipulated value, may a board of revision require disclosure of the payment arrangement and consider that arrangement when determining whether to approve or reject the stipulated value?
Again, the short answer to question 3 is yes. A board of education may agree to accept payment from a property owner in exchange for stipulating to a certain property value. Stipulations are common tools that litigating parties employ. However, only the county auditor and board of revision have the authority to determine a property’s valuation. Therefore, although a board of education and a property owner may stipulate to a particular valuation, the board of revision must approve the valuation.
Question 4 is whether the board of revision may require disclosure of the payment arrangement and consider that arrangement when deciding whether to approve the stipulated property value. To determine the property value, the auditor considers not only the land and the improvements to the land, but also the present use of the land and the best probable use of the land. These factors include such things as supply and demand, financing, time and cost of development, and many others – all of which are physical and geographic characteristics. These considerations do not include any agreed payment amount between a board of education and a property owner. Therefore, a board of revision may neither require the disclosure of any such payment nor consider such payment in making a decision on the stipulated property valuation.
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