| Akron Beacon Journal
Moss grows on the shadier side of Sam Drager’s roof in Copley.
Along the winding side streets that form a spider’s web at the southeast corner of Copley and Jacoby roads, Drager’s is the first in a row of modest ranches built 50 years ago — nothing like the 4,000-square-foot custom builds selling for $500,000 or more a few miles away off Medina Road.
Halfway up Drager’s 1,320-square-foot house, original brick meets original aluminum siding. Gables bookend an unassuming design. Chair lift tracks line the 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 voters in the township, which passed two 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. I’m going to pay more money that I don’t have,” said Drager, who worked in sales and promotions for the Cleveland Cavaliers. He retired on disability. A car 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.
Drager’s 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 area by 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 in 2019, which is $4,000 more than what he paid for it in 1999. The county now says it’s worth $160,920.
“It’s either way over or way under. It never seems to be right where you think it would be,” Drager said. “I think it’s terrible, this reevaluation. Why don’t 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 schedule the 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 pushing up 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 credits for weather damage in 2019; and homeowners who successfully negotiated lower values with the board of revision in the past only 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 no — twice — then 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 County’s request for a one-year extension on adjusting home values during a pandemic-crippled economy was denied.
Redistribution of taxes
Ohio law requires reappraisals every three years. It also prevents existing 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, communities or across the county where property taxes support the libraries, children’s services, the Akron Zoo and more.
So, who’s getting higher tax bills this year?
The Beacon Journal requested and received the old 2019 and new 2020 values for all 226,000 residential properties in Summit County. An analysis by neighborhood pointed to Drager’s street in Copley and 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 71,042 homes worth $7.2 billion are ideally priced for young families, aging retirees and first-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 president for Berkshire Hathaway Home Services, former president for the Akron Cleveland Association of Realtors and 2020 chairman for the Multiple Listing Service, a home price index — heard 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 done the math. They see rising rents are nearly as much as a mortgage payment, so they’re 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 that learned a tough lesson in the 2008 housing crisis and are “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, especially without a down payment in the tens of thousands of dollars.
Falling trees and soaring prices
It was as if the remodeling gods blew the old oak through Pam and Tom Gensel’s roof.
Before the windstorm ripped through the Akron area in February 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 makeover worthy 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 tax abatement 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 they’ve 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.
Rising property values don’t mean more tax revenue
“That’s a pleasant surprise,” Michael Polovick said when he heard how much he’ll 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 Akron’s upscale High Hampton neighborhood, went up $9,310 but 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 taxes to support Woodridge Schools, the Akron Zoo, the county library system, the city of Akron, Summit County Children Services and so on went 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.
Here’s how it works.
Let’s say a community has $1 billion in taxable property, of which $350 million (or 35% of $1 billion) is the “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 reality there are exemptions and credits, like a discount for owner-occupant households or an income-eligible tax credit for seniors or the 15-year property tax abatement in Akron on new residential construction. But for the sake of simplicity, let’s assume none of these apply in our hypothetical community.
What happens 20 years later when the community’s property doubles in value from $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 community’s taxation.
Owners with below-average property value growth pay less. Those with above-average growth pay more. But the 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 Schools with stronger property value growth, Polovick says, “Tell them I appreciate it.”
Reach reporter Doug Livingston at firstname.lastname@example.org or 330-996-3792.