CORONAVIRUS (COVID-19) RESOURCE CENTER Read More
Add To Favorites

Hotels, shopping plazas, nursing homes among Summit County applicants seeking lower taxes

Akron Beacon Journal - 9/4/2021

At least 29 commercial landlords are asking the county to drop their property values by 10% to 65% to offset revenue lost during the pandemic.

Property owners are filing these special tax complaints with the Summit CountyBoard of Revision, which is already slammed with a record number of homeowners also looking to reduce their property tax bills. The commercial properties — mostly hotels with a few shopping centers, office buildings, department stores and nursing homes — are trying to take advantage of a new state law that took effect last month.

'This is a surge of the unvaccinated': Area hospitals at or over capacity with COVID, other patients

More: Sto-Kent Family Entertainment closes, cites pandemic in Facebook post

The new pandemic law, a provision of Senate Bill 57, allows any property owner with proof that the pandemic crushed their business to request that their property values, and by extension their tax bills, be lowered to cushion revenue losses tied to the government health orders that limited commerce.

As of Thursday, 29 commercial landlords in Summit County are complaining that the $187.4 million in commercial property they collectively own wouldn't have sold for $129.1 million just months into the pandemic. The $58.3 million decrease in property valuation they're seeking would lower their collective property tax bill by $1,748,795, based on an average taxation rate 3% for commercial property owners.

A state law that requires levies to collect as much as they did when passed by voters would force the county to push the tax bill onto other property owners.

The commercial landlords say they lost tenants or couldn't fill storefronts, office space, nursing home beds and hotel rooms. Most paid more for deep cleaning and safety equipment while watching vacancies rise and revenue drop. While the federal government offered forgivable loans to their tenants and rent relief to their customers, a couple of the commercial landlords applying for relief have fallen behind on their property tax bills.

Some of Ohio's largest counties are seeing even more filings than in Summit County, where the fiscal office expects more filings through mid-September as applications sent via certified mail will be considered if postmarked by Wednesday.

By the end of business on Wednesday, Cuyahoga CountyBoard of Revision Administrator Ron O'Leary said land owners there had submitted 139 applications. With the exception of one private homeowner, whose case is a "long shot," O'Leary said the applicants generally lease to or operate hotels, parking garages, shopping plazas or are landlords with vacant retail, office or industrial space.

Cuyahoga is the second most populous county in Ohio. Franklin County, which includes Columbus and is the most populous county, recorded 164 applications a day before the deadline to file. Hamilton County, the third most populous and home to Cincinnati, had 36 owners asking for special tax relief.

While the three largest counties created an e-file system for the special tax complaint forms, Summit County required property owners to deliver them by hand or mail.

If applicants ask for a valuation decrease of $50,000 or more, which is the case on every application so far in Summit County, the local school district in that jurisdiction is notified and given 30 days to object. Some school districts, which rely on voters to approve new local funding, draw from levies that would result in a loss of revenue if property values fall.

After school districts weigh in, the hearing process that homeowners and businesses normally follow to challenge their property valuations will then begin, likely in late September or November.

If successful, the board of revisions would use the value of the property as of Oct. 1, 2020 — eight months into the economy-crushing pandemic — instead of the normal Jan. 1 date to set property values.

SB 57 is silent on how long the relief would last. Some property owners and their lawyers say the lower valuation, and lower annual tax bill, should remain in effect until each county conducts its next reappraisal. That won't cause as much disruption in a county like Cuyahoga, which is reassessing property values this year. But in Summit County, where the fiscal office just reassessed properties in 2020, any lower value could last until after the next three-year reappraisal in 2023, meaning the annual property tax savings for landlords would be tripled.

Lawyers for the property owners say they'll have no problem proving the economic walloping that hospitality and retail businesses and their landlords took with Ohio's stay-at-home order and curfew, the capacity-cutting social distancing rules and other pandemic restrictions lifted by Ohio Gov. Mike DeWine this June.

"For some types of property, COVID and the Ohio shutdown orders didn't really have any effect. For some, it had a dramatic effect," said attorney Steven R. Gill, who's representing six Summit County clients collectively asking that their $46 million in property value be cut by a third. The clients include a shopping center on Howe Road in Chapel Hill, a nursing home in Macedonia and two hotels each in Stow and Akron.

No attorney is representing more commercial properties in Summit County, though Gill said he could only speak about any of his individual client's cases.

"Imagine if you were a nursing home operator and you lost a big percentage of your tenancy," said Gill, "and you were not able to replace them due to COVID. And you also have additional expenses" associated with state-required cleaning and sanitizing protocols and the purchase or personal protective equipment.

"Imagine if you have a hotel," Gill continued. "Hotels are measured on three metrics: occupancy, average daily room rate and ... revenue per available room. Ask yourself, how many people were staying in hotels between January and Oct. 1? There was little business or personal travel, and many hotels were lucky to stay in business.

"Same thing for restaurants and other retailers who struggled greatly," he said.

An analysis of the Summit County tax complaints, which list the current and requested valuations, shows that 16 hotels are looking to pay 34% less in property taxes on average. The others, which include three shopping centers, two department stores, two apartment complexes, two nursing homes, two restaurants, an office building and an empty pharmacy, are asking on average for a 25% reduction.

The applications include confidential revenue statements and hotel occupancy rates that offer a rare, unvarnished glimpse at the economic impact of COVID-19 and the public health orders meant to curb its spread.

Dine Global Brands, which franchises International House of Pancakes and Applebee's locations, disclosed a 23% dip in revenue, or nearly a half a million dollars in sales, for the IHOP on Arlington Road off I-77 in Green.

In the first nine months of 2021, revenue fell 59% and occupancy 52% at the Courtyard by Marriott in downtown Akron'sNorthside District. The Hilton Garden Inn in Twinsburg saw revenue and occupancy tumble 53% and 44%, respectively. The Holiday Inn off state Route 18 in Montrose lost 57% revenue with bookings down 46%.

The BLU-Tique Hotel, which opened in downtown Akron shortly before the pandemic began, still isn't taking reservations for overnight stays.

When 2020 began, a sign at the entrance of Sagamore Square Shopping Center advertised 15 businesses. Only five remained at the plaza on state Route 82 in Northfield by October. One shuttered store that sold party supplies was still on the sign with its name flipped upside down.

The loss of tenants had "a substantial economic impact on the value of the property now and as an ongoing concern," according to the property owner's claim for tax relief.

Howe Road was also "drastically affected" by virus-wary consumers and health orders. The owner of more than $9 million of plaza space, including the PetSmart store and the Starbucks/Verizon/Chipotle building, said rent collections suffered as tenants struggled.

Despite the bleak account, there are signs of hope today. All the tenants in question are still in business. Customers streamed in and out on Thursday. And construction workers in the plaza are readying a book store that closed before the pandemic for its new tenant: Harbor Freight Tools.

When the University of Akron emptied its dorms and went online, the demand for off-campus student housing plummeted. Brownstone Apartments, which is seeking about a 30% property tax break, had no students calling for a place to stay.

Low-income apartments at Channelwood Village also suffered, according to a complaint seeking a 10.7% reduction in the property value. Thomas Fuller, the former executive director of the community nonprofit developer Alpha Phi Alpha Homes, said a "minority" of tenants misunderstood federal eviction moratoriums to mean that they no longer needed to pay rent.

Though Akron Municipal Court has continued to process evictions throughout the pandemic and no longer adheres to the moratorium since a federal judge in Cleveland struck it down, the 274 affordable apartments where rents have not increased in the past year have accumulated $120,000 in back rent.

Some tenants won't avail themselves of federal rental assistance administered by Summit County and local nonprofit agencies, Fuller said. The request to lower the property's value by $594,000, if successful, would result in about $18,815 less in annual property taxes, according to a Beacon Journal review of county tax records for the property.

But those savings, which may last for three years, won't cover all the revenue losses, not to mention the additional cost of setting up employees to work from home or more robust cleaning and safety procedures, Fuller said.

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

©2021 www.beaconjournal.com. Visit beaconjournal.com. Distributed by Tribune Content Agency, LLC.

Nationwide News