Property values in Clermont and Butler counties are set to rise by historic margins next year as the Ohio Department of Taxation is recommending the largest increase in recent history.
The agency recommended a 43% increase in property values in Clermont County and 42% in Butler County. The updates will be reflected in 2024 tax bills, which are sent out early next year and will last for three years until reappraisal.
A tax department spokesperson could not point to another year where the recommended property value increase was higher since 1978, when the agency began conducting triennial updates.
“When I got the letter from the state, it was just shocking,” said Clermont County Auditor Linda Fraley, who learned of the increase a few weeks ago. “I think it’s very clear that Columbus doesn’t care about the impact on Clermont County.”
Every third year, the state tax department performs a triennial review of certain counties using sales data from the past three years to update property values. This year 13 counties are under review: Ashland, Ashtabula, Athens, Butler, Clermont, Fulton, Greene, Knox, Madison, Montgomery, Noble, Summit and Wayne. The average recommended increase is 34%, reflecting much higher values even in rural areas.
County auditors across the state are stunned, Fraley said, “We had never seen anything like this.”
Tax Commissioner Patricia Harris said in a statement: “I am aware of the considerable valuation increases in Butler and other counties, and I am not insensitive to the concerns being expressed by some local officials … That said, our job at the Department of Taxation is to follow the law and the Ohio Constitution to the letter. That is what we’ve done in partnership with the counties who have been part of this update cycle.”
Fraley and Butler County Auditor Nancy Nix both criticized Harris’s office for overvaluing sale prices in 2022 instead of taking an average of sales over the past three years.
A more accurate property value increase in Clermont should be 23%, Fraley said.
Similarly, Nix said a more factual increase in Butler County should be 24% based on her office’s sales data.
“We just feel that they should be a little more open to our arguments and to the hardship that this is causing on taxpayers,” Nix said. “We don’t feel like the market is acting normally.”
Blame the market
Market conditions are to blame for higher property values, said University of Cincinnati economics professor David Brasington.
“Anytime you have a 42% increase in property values, that’s an outlier,” Brasington said. “I’m not that old, but I’ve never seen anything like this. Except for 2005, the housing crisis, the housing bubble.”
But market conditions are different now than in 2005, he said, because there is still a very high demand for housing, a low supply, and a more secure banking system.
“When you reduce the supply of something, you push up the price,” Brasington said. “Housing is probably going to stabilize at these levels … we don’t see any dramatic change in the near future.”
Very low mortgage rates a few years ago drove people to buy more expensive homes. Flippers and out-of-town investors also bought heavily in the Cincinnati area because prices were cheaper than in other parts of the country. That led to more housing sales at much higher prices, Brasington said.
Now that interest rates are higher, people are staying in their homes longer which further reduces the housing supply, Brasington said.
“It’s just kind of a perfect storm of a lot of things in an inflationary environment,” Nix said.
Why have Butler and Clermont in particular seen such high property value increases?
“My thoughts are it's probably suburbanization. It’s more people buying houses, they want new houses, especially people with a lot of income,” Brasington said. “The edges of Cincinnati are where the new housing can be built the most, so that’s where the highest demand is, that’s where they’re putting up the biggest houses, and prices will go up for that reason.”
For example, one-story ranch homes in Clermont County have really increased in value because of the aging population, Fraley said.
The west side of Clermont County is growing with new homes being built in Miami, Pierce, Batavia, Union and Goshen townships, but the east side is still largely agricultural.
In Butler County, Nix said that Hamilton has seen more housing sales because of the Spooky Nook Sports development. Westchester and Liberty townships are always growing, she said, yet even historically depressed areas like Middletown are seeing housing values rise.
“Even the mid-range homes are selling for a lot more than normally,” Nix said. “There are a lot of outside investors coming in from other states, buying up properties. That is taking away properties from local people and driving up prices.”
‘The million-dollar question’
While the state recommends an average property value for a county, it’s up to the auditor to decide which neighborhoods get the highest and lowest values.
“They are telling you countywide that’s what you need to do, but the auditor’s job is to figure out where the balance is — who gets the 50% increase, who gets the 34% increase. Looking at it neighborhood by neighborhood and trying to be fair,” Nix said.
Updated property values won’t be finalized by the state until later this year, Fraley said, so the impact on taxpayers won’t be known until as late as December.
But Fraley’s rule of thumb in prior years is a 10 percent increase in property tax value usually equates to a three percent increase in tax.
How much property taxes will rise depends largely on what school district residents live in.
As property values increase, voted millage rates are decreased so school districts don’t collect more revenue. But Ohio law sets a minimum millage level, which is commonly known as a 20-mill floor. Once a school district hits that floor, millage will not drop any further so higher property values result in higher property taxes and more revenue for schools.
In Clermont, nine of the county’s 14 school districts are at the 20-mill floor: Felicity-Franklin, Bethel-Tate, Clermont Northeastern, Little Miami, West Clermont, Williamsburg, Goshen, Blanchester and Western Brown, according to data from the auditor’s office.
Clermont school districts not at the 20-mill floor that will be least impacted are: Loveland, Forest Hills, Milford, New Richmond, and Batavia, according to data from the auditor’s office.
In Butler County, only Lakota and Fairfield school districts are not at the 20-mill floor, Nix said.
“Eight of our 10 school districts are at the 20-mill floor. Meaning with value increases their tax rates will not go down and they will be paying more in taxes in those districts,” Nix said.
That means the Ross School District will likely get additional funding after all. Voters rejected its levy request in May for the third consecutive time. Instead of pushing for another levy in November, the district announced it will “press pause,” because of looming property value increases.
“Until we are certain what the final property valuation increase will be and what potential revenue it will provide the district, we will not be asking for additional dollars from our community through a levy,” according to a May 5 statement from the district’s board of education.
Worried residents are already contacting Nix’s office to complain about the looming value increases.
“I’m guessing two-thirds of our county would be heavily impacted. We don’t know by what amount, we won’t know until the end of the year,” Nix said. “While it wouldn’t be a 42 percent increase in their tax bill, it would still be a sizable increase in their tax bill.”
Elderly residents and those on a fixed income may be the most impacted by higher property taxes, Nix said, “They’re paying the price for all these other sales that are happening in their neighborhood.”
Nix and Fraley have already contacted their state lawmakers for help. Both want county auditors to have more influence in determining local property values, and for the state to use a consistent three-year average of sales.
“We don’t change our recommendations in response to a county complaint,” Ohio Department of Taxation spokesperson Gary Gudmondson wrote in an email to WCPO. “Those recommended increases are based on actual sales of properties over the previous three years, with sales in the most recent 12 months given the most weight as they’re the most accurate reflection of true or market value.”
Nix also suggested that state lawmakers consider issuing taxpayer credits, modifying the 20-mill floor, reinstating rollback credit for all levies, increasing the homestead exemption, or revising the school funding formula.
“I know Clermont County better than somebody that sits in Columbus and I’m going to fight to have my voice heard,” said Fraley, who has been auditor for 28 years. “I don’t really know how it’s going to end. I’m going to fight it all the way.”
In the meantime, Nix said she will continue to answer questions from taxpayers and explain that in many ways, the auditors’ hands are tied by the state.
“That is the first question when you’re talking to people, ‘Well what’s that going to do to my taxes?’ And that’s the million-dollar question,” said Nix.
