Treasurer Explains Reappraisal Process

In Cuyahoga County, Lakewood had a higher than average percentage of reappraisal increase. The positive is that this means Lakewood is a strong, vibrant community where people want to live and raise their families. The flip side is that when folks receive a notice that the value of their property has increased 20% or even higher, they assume their taxes are going up 20% or more. This is not exactly true.

In 1976 during the high peak of inflation the Ohio General Assembly passed a bill called House Bill 920 (HB920). HB 920 was enacted to reduce increases in property taxes on voted levies for schools during a reappraisal (which is occurring in 2024 in Cuyahoga County) or a triennial update (in Cuyahoga County the last triennial update was in 2021). As property values go up, the effective millage rates of levies go down to effectively bring in the same amount of money.

As previously noted, the reappraisal process happens every six years. In three years (2027) there will be a triennial update, which is when the County Fiscal Office looks at recent sales and provides an average increase to the community. During the reappraisal process, the County Fiscal Office’s internal and external appraisers go out to the communities and look at each and every home and business in order to assign them a value. This is comparable to the process followed when a house is sold and needs to be appraised.

The County Fiscal Office provides an informal process through August 31 for any resident who disagrees with their new appraised value to provide evidence showing the appraisal amount is not correct. After August 31, it is necessary to go through the formal process. The formal process runs January 1 – March 31. A property owner can file a complaint with the Board of Revisions contesting the value of their home. The Lakewood Board of Education does not become involved with the valuation contestation of residential property (homeowners) unless the assigned market value is $250,000 less than the most recent sale price. However, the District does pursue valuation challenges on commercial real estate (businesses and rental properties) as it is important that the District keeps the commercial properties valued at their appropriate rate.

It is also important to understand the difference between market value and assessed value. Market value is the price a property owner feels their home is worth or has been appraised, and an assessed value is the amount the amount upon which the county actually taxes the property. The assessed value of property is 35% of the property’s actual market value. For example, when a property increases by 20%, that is market value. Only 35% of that is considered the assessed value for taxable purposes. Then because of HB 920 any prior voted tax levies would go down the proportionate 20%.

As an example, in May 2020 the Lakewood community approved a new 3.9 mill levy. That levy
generated approximately $3.9 million annually (starting in tax year 2020) for the District. As values have increased the effective rate of the levy has been reduced (HB 920). In 2023 the effective rate of the levy passed in 2020 has been reduced to 3.07 mills, which generates approximately the same $3.9 million annually. It will be further reduced once the 2024 valuations are final. As valuation increases, the effective millage rate goes down so that a voted levy does not bring in any additional dollars.

This explanation makes it sound as if property taxes will not go up at all; and that is not 100% accurate. Every municipality has 10 mills of un-voted inside millage that is assessed to the community to help run the government in whatever manner they decide to dole it out. When Lakewood emerged from Rockport Township, 10 mills were put in place at that time to be divvied up between the city, the county, the library, the schools and other governmental subdivisions. Lakewood City Schools receives 5.03 inside mills. These mills are not subject to HB 920 and the above-mentioned governmental subdivisions (including the Lakewood City Schools) will see an increase in revenue as a result of the valuation changes.

In addition, HB 920 does not impact all levies; almost all millage approved in a city charter is exempt from House Bill 920.  As property value rises, charter city taxes will also rise. A city council may decide whether it will levy all the millage allowed by its charter. 

All the other school voted millages after 1976 have their effective rate decreased in order to bring in the same amount of money. This is why school districts continually go back to the community for additional levies in order to raise additional dollars. The only way a school district can keep up with inflation is to ask the community to support additional operating dollars, which the Lakewood Board did in May 2020 in the amount of a 3.9 mill levy.

Lastly, it is important to know what percentage of your property taxes goes to which governmental subdivisions. As of 2023 the current breakdown is as follows:
Lakewood City School District – 53.99% (down from 55.2% in 2021)
Lakewood City - 20.85%
Lakewood Library – 1.85%
Cuyahoga County – 23.31% (This is further broken down as follows – County Executive – 65.60%,
Metroparks- 12.84%, Tri-C – 21.02%, Port Authority .54%)

These percentages will also change once the 2024 valuations have been finalized.
I hope this article was helpful as you start receiving the notices from Cuyahoga County.

If you have any questions please feel free to reach out to me. My contact information is as follows: Kent R. Zeman, CPA, CFO Lakewood City School District, email: kent.zeman@lakewoodcityschools.org.