How higher home values drive individual property tax bills up and down in Summit County – Akron Beacon Journal

Doug Livingston|Akron Beacon Journal

Moss grows on the shadier side of Sam Dragers roof in Copley.

Along the winding side streets that form a spiders web at the southeast corner of Copley and Jacoby roads, Dragers is the first in a row of modest ranches built 50 years ago nothing like the 4,000-square-foot custom buildsselling for $500,000 or more a few miles away off Medina Road.

Halfway up Dragers 1,320-square-foot house, originalbrick meets original aluminum siding. Gables bookend an unassuming design. Chair lift tracks linethe ceiling inside. Pieces of trims are missing in some places.

And his property value just went up 40%, which will cost him $750 more in taxes this year. Driving up his tax bill are fellow votersin the township, which passedtwo replacement levies that use the new, higher values instead of lower ones in the past.

More: What's your home worth? Complicated formula, 30-month process set new Summit County property values

I think it sucks, quite frankly. Im going to pay more money that I dont have, said Drager, who worked in sales and promotions for the Cleveland Cavaliers. He retired on disability. Acar wreck in 1968 slowly robbed him of the use of his legs. With his fingers now curled into his palm, he manages to tap a computer keyboard with his knuckles.

Dragers neighbors, some of whom are elderly or rent and have no idea whether their landlords will pass along the higher tax bills are in the same boat. At the conclusion of a long reappraisal process, the Summit County Fiscal Office increased the value of homes in this areaby 30% to 40%.

Letters mailed in December notified homeowners of the valuation changes. The new tax bills posted last week on the fiscal office website.

Drager thinks he could get $140,000 for his home. It was appraised at $114,310 in2019, which is $4,000 more than what he paid for it in 1999. The county now says it's worth$160,920.

Its either way over or way under. It never seems to be right where you think it would be, Drager said. I think its terrible, this reevaluation. Why dont they do honest appraisals on these homes?

Thousands of eyeballs are popping across Summit County as property owners get a first glimpse of their new tax bills.

In the first week since the county started taking complaints on Jan. 1, nearly 200 people requested a Zoom hearing with the board of revisions to contest their new values. The county will schedulethe hearings, which can be done by phone for those with technology issues,to take place after the complaint window closes March 31.

In the meantime, penalties could be assessed if the tax bills are unpaid by March 1, even if a hearing gets scheduled.

Numerous factors are pushingup values: strong home sales with low interest rates driven even lower in the pandemic; inflated lumber and labor costs;limited housing stock; recent home improvements (including some completed without a permit); expiring tax bill creditsfor weather damage in 2019; and homeowners who successfully negotiatedlower values with the board of revision in the pastonly to see their values bounce back, and then some.

Chief among the factors is the Ohio tax commissioner's insistence that property values submitted twice by the county were too low. Seeking required approval from the state,the Summit County Fiscal Office originally sought a 7.86% increase for residential values in Copley, for example. The state said notwicethen accepted an average increase of 13.05%, one of the largest swings from start to finish for any community within Summit County.

On average, the fiscal office sought an 8.85% average increase before the state eventually settled at 12%. Of the 41 counties with reappraisals in 2020, the state rejected their first proposals 68% of the time.

Summit Countys request for a one-year extension on adjusting home valuesduring a pandemic-crippled economy was denied.

Ohio law requires reappraisals every three years. It also preventsexisting levies from generating more revenue for local governments just because property values increase overall. Only passing new or replacing old levies can increase property tax revenue.

But because some residents will see higher-than-average percent increases, they will pay a greater share (while others pay less) of the overall property tax burden in their school districts, communitiesor across the county where propertytaxessupport the libraries, children'sservices, the Akron Zoo and more.

So, whos getting higher tax bills this year?

The Beacon Journal requested and received the old 2019 and new 2020 valuesfor all 226,000 residential properties in Summit County. An analysis by neighborhood pointed to Drager's street in Copleyand other areas, like Highland Square, Cuyahoga Falls, North Hill and other pockets, where home prices grew faster than the 12% countywide average.

A second analysis explored the redistribution of property taxes based on the price range of homes. Because property tax levies continue to collect the same amount, fluctuating home values are pushing more of the cost onto homes valued between $55,000 and $125,000 in 2019.

These 71,042homes worth $7.2billion are ideally priced for young families, aging retirees andfirst-time home buyers, real estate agents said. And they will see an average increase of 15.7% in value compared to a 6.6% increase for the 17,059 homes appraised in 2019 at $250,000 or more, which also were worth a combined $7.2 billion in 2019.

The Beacon Journal's analysis controlled for new construction in 2019. The results were the same.

When Jim Fox vice presidentfor Berkshire Hathaway Home Services, formerpresident for the Akron Cleveland Association of Realtors and 2020 chairman for the Multiple Listing Service, a home price indexheard that the values of middle-income homes were climbing 2.4 times faster than the wealthiest homes, he wasn't entirely surprised. In this general "bidding war" for homes, first-time homebuyers have donethe math. Theyseerising rents are nearly as much as a mortgage payment, so theyre go home-shopping.

The homes they're after, including many that eclipsed $150,000 in the 2020 reappraisal, are "going like hotcakes. You can't keep them on the shelf," said Fox.

While rising home prices bode well for personal investments, equity and sellers, Fox said buyers are struggling with traditional lenders thatlearned a tough lesson in the 2008 housing crisis andare "short-appraising" properties as the market heats up. Loan applicants, he said,can't get banks to appraise homes high enough to convince them to lend enough, especiallywithouta down payment in the tens of thousands of dollars.

It was as if the remodeling gods blew the old oakthrough Pam and Tom Gensel's roof.

Before the windstorm ripped through the Akron area inFebruary 2018, Tom thought about remodeling portions of their ranch on the scenic edge of Sand Run Metro Park in Northwest Akron.

"I've heard of people fantasizing about this situation," the crane operator told Tom as he lifted the tree off their home.

Adding a second floor and cathedral ceilings to the entryway and living room overlooking a ravine out back made as much financial sense as simply replacing the roof with the insurance money, Tom said. So they hired Tim Englert Construction Co.for a home makeoverworthy of a reality television show: iron stair railings, high ceilings covered in natural wood grain, glass paneled banisters and significantly more living space.

The Gensels got a temporary discount on their 2019 tax bill due to the weather damage and, because of Akron's residential taxabatement program, won't pay property taxes on the improvements for 15 years.

During construction, they rented a home across the street from where Michael Rauh had just moved in last month with his wife and daughter.

We put an offer in the day we saw it. It might have been listed only for a day, said Rauh, who learned from selling their home in Columbus over the course of a weekend to act fast.

With parents and family in their hometown of Akron, the Rauhs listed their Columbus house, got 14 offers in a day and moved home, where theyve not missed a beat with work and enrolled their daughter in Our Lady of the Elms.

I was already working remotely, because of COVID, so it became a no-brainer, said Rauh, who works in technical consulting.

Thats a pleasant surprise, Michael Polovick said when he heard how much hell be paying in property taxes this year.

Like every property owner in Summit County, Polovick got a letter following the countywide reappraisal. The value of his four-bedroom ranch, situated with five other big homes on a private road in Akrons upscale High Hampton neighborhood, went up $9,310but his annual property tax bill went down $378.20.

Polovick lives in Akron with a Cuyahoga Falls mailing address. The value of his home increased by only 3% well below the 11% average increase in Akron,13% in the Falls or 12% countywide. As a result, his property taxesto support Woodridge Schools, the Akron Zoo, the county library system, the city of Akron, Summit County Children Servicesand so onwent down 5%.

The reason is House Bill 920. Passed in 1976, this tax credit ensures that a levy will never collect a penny more than it would have when voters approved it. Instead, the only way to raise more would be to pass an additional levy or a replacement levy, which uses current property values instead of values frozen in time by HB 920.

Heres how it works.

Let's say acommunity has $1 billion in taxable property, of which$350 million (or 35% of $1 billion) isthe "assessed value" used for tax purposes.

And, for a 1-mill levy, property owners pay$1 per $1,000 of assessed value.

So, our hypothetical community generates $350,000 in property taxes on its 1-mill levy.

In realitythere are exemptions and credits, like a discount for owner-occupant householdsor anincome-eligible tax credit for seniors orthe 15-year property tax abatement in Akron on new residential construction. But for the sake of simplicity, lets assume none of these apply in our hypothetical community.

What happens 20 years later whenthe communitys property doublesin valuefrom $1 billion to $2 billion?

Instead of letting the levy collect twice as much, HB 920 chops the rate on that 20-year-old levy in half. The result is an "effective rate" of 0.5 mills, which would collect the same amount as when voters first approved the levy.

This is why new and replacement levies, not necessarily state-mandated property reappraisals, generate more revenue for government. The reappraisal simply shifts the burden of a communitys taxation.

Owners with below-average property value growthpay less. Thosewith above-average growthpay more. Butthe community on the whole pays the same as it always has until voters decide otherwise.

This is also why, speaking to neighbors in Akron and Woodridge Schoolswith stronger property value growth, Polovick says,Tell them I appreciate it.

Reach reporter Doug Livingston at dlivingston@thebeaconjournal.com or 330-996-3792.

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How higher home values drive individual property tax bills up and down in Summit County - Akron Beacon Journal