Posted: 7:00 a.m.Sunday, Feb. 15, 2015

FOCUS ON TAXES

Half of Butler Countyschool districts see drop in property values

By Rick McCrabb

Staff Writer

BUTLER COUNTY — 

    Half of the Butler Countypublic school districts saw a drop in their appraised property values lastyear, and now the districts will have to deal with a substantial loss of taxrevenue.

    The value of the property last year,compared to 2013, dropped $66.3 million, or .89 percent, said JulieJoyce-Smith, real estate manager for the Butler County Auditor’s Office. Fivedistricts experienced these losses even though the value of the county’sagricultural land rose nearly $48 million, or 27 percent.

    Joyce-Smith said she’s “cautiouslyoptimistic” that the property values in the county will increase next yearbecause she’s seeing a rise in county building permits and hopes that’s a signconstruction is bouncing back.

    School districts receive tax revenue fromagricultural, residential, industrial and commercial properties and publicutilities. Values from 2014 will be billed this year, the auditor’s officesaid.

    Of the 10 public schools districts in thecounty, Hamilton and Middletownexperienced the largest drop in property values, particularly in residential.

    In Hamilton,the district’s property values last year dropped $51.9 million, or 6.4 percent,from 2013. Hamilton’sresidential values dropped $48 million from 2013 to last year.

    Bob Hancock, the district’s treasurer, saidthe financial impact on the general fund is “insignificant” because theeffective tax rate will be increased to counter the decrease in taxable valueand the district will collect approximately the same amount of taxes.

    He said the permanent improvement fund,which has 3.5 mills that flow into it, will experience a reduction as a resultof the valuation decrease. The annual loss in revenue for the permanentimprovement funds will be $181,000. The annual revenue into the permanentimprovement funds from local taxes is approximately $2.6 million.

    He said the loss of $181,000 won’t have “animmediate impact” on the district.

Decreasesin valuation can also make the district look poorer in the state fundingcalculation and that generally leads to additional state funding, Hancock said.        Determining exactly what that translatesinto in terms of state funding is dependent upon how assessed valuation is usedin the calculation going forward and Hamiltonis likely to be receiving a capped amount, he said.

    Meanwhile in Middletown, values dropped $52 million, or7.39 percent, from 2013 to last year. The values in residential properties in Middletown fell $50million from 2013 to 2014.

    The two largest gains were seen in heavilyagricultural districts, Talawanda and Ross. Talawanda property values rose $20million, or 3 percent, while Ross jumped $9 million, or 2.4 percent, accordingto the county.

    The drop in property values is a trend in Middletown. DistrictTreasurer Randy Bertram said for the sixth consecutive year, and eight out ofthe last nine years, property values in the district fell.

    He said that means the district willreceive $1.3 million less in property tax revenue over the next two years —$500,000 less during the current fiscal year that ends June 30, 2015 and anestimated $800,000 less in property tax revenue the following fiscal year, hesaid.

    “Money is tight,” he said, “and we arewatching it closely.”

Tohelp offset the loss of tax revenue, Bertram said the district isn’t replacingstaff with full-time employees, but long-term substitutes for the remainder ofthe school year. The district also is assessing its staffing to determine theneeds for next year.

    He said the district also is reviewingcurrent purchased services and deciding if the service is needed, can bereduced, and looking for alternatives to reduce the contract costs.

    Now, Bertram said, the district’s five-yearforecast will be updated, and the district will take any “necessary actions”for this and the next fiscal year. He said the district may have to makeadjustments to assure it ends the fiscal year in the black.

    Just 10 years ago, Bertram said, theproperty values in the city exceeded $1 billion.     Since then, there have been fivesignificant drops: 6.62 percent in 2007; 11.94 percent in 2009; 8.22 percent in2010; 7.89 percent in 2011 and 7.39 percent last year, he said.

Overall,since 2005, the district has seen a drop of 39.4 percent in property taxes,Bertram said.

    “I can only hope that we are at the bottom,”he said.

    Bertram said Middletown is $15 million under funded by thestate, according to the formula. He said the state is considering raising thecap districts can receive. He said if the state raises the cap by 5 percent,the Middletowndistrict would receive $1.7 million more for fiscal year 2016.

    “We certainly are hopeful,” Bertram saidabout the state possibly increasing school funding.

    Even if that occurs, Bertram said, the Middletown district wouldbe under funded in 2019.

    Madisonsaw a drop off about $483,120 in its property taxes, which will cost thedistrict about $12,000 to its general funds. Treasurer Rich Natiello said thatwas not “a material amount” of money.

    He said Madison, and all districts throughout thestate, are eagerly anticipating the state budget, expected to be released inJune.

    In the six categories, agricultural saw thelargest increase in property value. The value of farm land in the county wentfrom $175.8 million in 2013 to $223.8 million last year.      Onlythe Fairfielddistrict saw a drop in the value of its agricultural land.

    Property taxes on farmland are skyrocketingbecause a combination of economic and crop-price conditions have affected statecalculations designed to keep working farms from being taxed as possible subdivisions,according to the Ohio Department of Taxes.     Theso-called Current Agricultural Use Value (CAUV) formula, which was adopted inthe mid-’70s, has historically kept appraised values on cropland at a smallfraction of its market value.

    Active cropland in the county was appraisedat an average of about a quarter of its market value from 1996 through 2013,data from the Ohio Department of Taxation shows.

    Now the CAUV will set the farmland value attwo-thirds of market value.

    Ten years ago, the average property valueof an acre of farmland was $123, said     Shelley Wilson from the Ohio Department ofTaxes. Now, she said, it’s $1,668. She said the value of farmland is getting“caught up” after years of being undervalued.

    The sharp rise, according to experts, is aresult of high crop prices during recent years and continued historically lowinterest rates. Both result in higher CAUV values, and thus higher property taxbills, officials said.

    As for residential values, local Realtorshad a difficult time explaining the sharp drop in values.

    Michael Combs, manager of Coldwell BankOyer Inc., said he was surprised by the drop of property values in the county,particularly in Middletown.He said prices of homes have “gone up a couple of ticks.” He said business is strongand Realtors and homeowners are “happy and proud” of real estate sales, andthat wasn’t the case two or three years ago.

    Paul Renwick, president of the recentlyformed board of Realtors from Butlerand Warren counties, said there is “good stock” of homes in the area. He saidproperty values have “dipped a little” and he doesn’t know why that happened.