Thanks to a Portage lobbyist for the alert on this recent article regarding property taxes in the Cincinnati Enquirer.
It illustrates that we can make a difference, but the fight can be long and hard.
Indian Hill school district has to give back tax money
Update, Jan. 8:
Hamilton County Court Judge Steven Martin said Friday that he will approve the settlement between the Indian Hill Exempted Village School District and taxpayers. Martin said during the hearing that Fred Sanborn and his three co-plaintiffs should be “praised for their courage” in fighting the case.
Martin also tipped his hat to the school district for settling. If not, the case could have dragged out even longer, he said.
“They did fight this case,” he said. “They lost, but, ultimately, they acknowledged the legal reality.”
Previous story, published Jan. 7:
Fred Sanborn had no idea what he was getting into when he launched a battle over higher school taxes in Indian Hill. None at all, he said. But he’s glad he kept pushing.
The battle he led redefined the rules for school districts across Ohio.
This is a fight about how and when school districts can raise taxes without a public vote.
It’s a fight that dragged on for more than six years.
And it’s a fight that – after an Ohio Supreme Court decision and a class-action lawsuit – will cost the Indian Hill Exempted Village School District $5.5 million to settle.
“I’m exhausted,” Sanborn, 87, said from the Indian Hill ranch he and his wife proudly call “the ugliest house in the village.”
“… It didn’t have to be this way.”
Sanborn fought the tax with the school board in 2009. He and a group of co-plaintiffs pleaded their case with the Hamilton County Budget Commission and the Ohio Board of Tax Appeals. They lost each time.
It went all the way to the Ohio Supreme Court, which reversed the board of tax appeals’ decision.
At 8:30 a.m. Friday, there’s a fairness hearing in the Hamilton County Courthouse, where the court will determine whether the proposed settlement between taxpayers and the school district is fair. The deal includes $4.6 million for taxpayers, dished out in varying amounts based on what each paid. The district will also pay an additional $900,000 to cover legal fees, including $10,000 awards for Sanborn and each of his three co-plaintiffs.
It’s a “significant bite,” said Indian Hill district treasurer Julia Toth, but “we’re prepared to do that. We want to move forward and go about the business of educating children.” Indian Hll’s annual budget is around $34 million.
Sanborn, too, is ready to move on.
“We’re not nasty old folks who hate schools,” he said. “The issue here is taxpayers having the right to vote on taxes.”
Here’s what happened
In December 2009, the Indian Hill school board voted unanimously to shift its tax collections, moving 1.25 mills to a permanent improvement fund. Ohio tax law is complicated, but the upshot is the shift resulted in higher taxes – or, more specifically, fewer deductions that homeowners otherwise would have gotten.
For the owner of a $500,000 home, it meant paying an extra $220 or so a year, according to estimates provided at the time by the district. In Indian Hill, though, the median home value is $924,000, according to the latest census data.
The law allows districts to make such tax shifts without voter approval – no one disputes that – but there are caveats. One, the district has to show how the permanent improvement money will be used. And two, it has to show that the increased revenue is “clearly required.” That’s important.
School officials said the move was to help offset projected dips in state funding and rising operational costs. It was the height of the Great Recession. The shift would stave off a levy, they said.
“Fiscal stability was the end game,” said Toth, the treasurer. “That was the vision. … We didn’t want to be in an unstable environment financially.”
But Sanborn pointed to Indian Hill’s cash reserves, which at that time were about $24 million. With that much in the bank, Sanborn asked, how could any increase be “clearly required”?
At least a dozen other Greater Cincinnati districts have shifted inside mills, according to Enquirer archives. Hamilton County Auditor Dusty Rhodes, part of the budget commission, said he has seen people fight it before, but never to the extent of the battle in Indian Hill.
Rhodes opposed Indian Hill’s move, calling it a “ruse to avoid going to the taxpayers.” He voted against allowing it, but he lost, 2-1. He knew even then, he said, that his was a symbolic vote.
“I think it’s bad business,” he said. “I think it’s bad policy. And I think it was a mistake for the state to ever allow this.”
Indian Hill is a wealthy community. The median household income tops $200,000, according to census data. The poverty rate is only 2.2 percent. Compare that to Cincinnati, where the poverty rate is higher than 30 percent.
But not everyone in Indian Hill has a ton of money, Sanborn said. And the school district – and thus the taxpayer base – extends past village limits.
“They just cut taxpayers out of the whole cycle,” Sanborn said. “It was deliberate. It’s shameful.”
How much money?
Indian Hill collected the increased tax for four years before the Ohio Supreme Court overturned the board of tax appeals’ decision. Now, homeowners should get back whatever extra they paid plus interest.
But it’s too early to determine how much each taxpayer would receive, said Harvey Rosen, settlement administrator for the class-action suit. Assuming the settlement is approved at Friday’s hearing, the individual calculations will start then, he said.
“It’s not going to be huge,” he said.
Taxpayers can object to the settlement, but as of Tuesday afternoon, none had signed up to do so, Rosen said.
They also have the option to donate their refund back to the Indian Hill Public Schools Foundation. In fact, any checks not cashed within six months of being issued will be automatically donated.
Attorneys argued the case for nearly an hour in front of the Ohio Supreme Court. Maurice Thompson, with the 1851 Center for Constitutional Law, said there must be a “high and firm burden” on the district to prove the tax is necessary. Thompson worked pro bono for Sanborn and his co-plaintiffs.
“Otherwise, they’re just going to increase property taxes without a vote each and every time,” Thompson said. “And that’s the risk that the court runs in this case.
“If Indian Hill can do this, then anybody can do this. And the statute has no meaning.”
More often than not, it seems, Sanborn is telling a joke. Or a travel tale. Or, he’s using a boat horn to illustrate a theory about learning.
He’s a talker; he’ll tell you that upfront. And he’s got stories – “more stories than you have time for,” said his wife, Janet Dieman.
The couple made education their mission, and for about 20 years, they ran a business together to promote individualized learning in the higher education market. It was an “evangelic mission,” they said, to try to change how students are taught.
They donate to educational initiatives, particularly projects surrounding technology. And Janet was a teacher, starting in the fourth grade, ending as a college professor.
Their point: They’re not against schools. They just want to make them better, and they’re frustrated with how the situation in Indian Hill was handled.
Shortly after the 2009 vote, Sanborn and his co-plaintiffs formed the Committee for Responsible School Spending. It still exists – though, there’s only about $5.20 left in the bank account, Sanborn said.
He hopes someone keeps it going. Keeps watching. But he’s got other plans.
“I’ve got books to write,” he said. “…I’ve got opinions on a whole bunch of things.”
Am I part of the class-action lawsuit?
The class-action suit applies to anyone who paid an increased rate of taxation as a result of the Indian Hill Exempted Village School District’s Dec. 2009 decision to move 1.25 mills to a permanent improvement fund.
How much money will I get?
The total settlement amount is for $5.5 million. Of that, $4.6 million will be distributed to relevant taxpayers. Specific amounts will vary based on what each taxpayer paid.
Anyone who wishes may donate his or her refund to the Indian Hill Public Schools Foundation, and any checks not cashed after six months will be automatically donated to the foundation.
What do I need to do?
There is a fairness hearing at 8:30 a.m. Friday in the Hamilton County Courthouse, room 340, but attendance is not required.
However, if you are a taxpayer that has since moved from the Indian Hill district, please send an email to email@example.com with your name, updated address and the parcel number for the property on which you paid Indian Hill school taxes.