United States: Ohio Supreme Court Holds Implied Use Restriction In Property Tax Exemption For Schools No Longer Exists

The Ohio Supreme Court unanimously has held that real property owned by a public school district's board of education was exempt from property tax, regardless of how the property was used, reversing the Ohio Board of Tax Appeals (BTA).1 This decision allows schools to lease unused property without losing the tax-exempt status of that property. The decision was based on a 2010 amendment to a long-standing tax exemption for property owned by a municipal board of education.


In March and April 2009, the Talawanda City School District Board of Education (BOE) acquired five parcels of land totaling approximately 154 acres to build a new high school scheduled to be opened in August 2011. The BOE leased 34 acres of the property to a local farmer for the purposes of private farming. The lease contained an early termination clause. On January 26, 2010, the BOE filed its application to exempt all 154 acres of the property. The Tax Commissioner granted the exemption for approximately 120 acres, excluding the 34 acres that were leased for private farming, reasoning that it was not used for an exempt purpose, i.e., used for school purposes. The BTA affirmed the Tax Commissioner's decision and denied the exemption for the portion of the property subject to the leasehold interest. The BOE appealed this decision to the Ohio Supreme Court.

Property Owned by BOE Exempt Regardless of Use

In reversing the BTA, the Ohio Supreme Court held that the exemption applied to the entire property due to the BOE's ownership of the property. The Court considered a statute which provided a property tax exemption for real or personal property owned by a board of education and the implications of its 2010 amendment. The original statute, which was enacted in 1873, provided that "[r]eal or personal property vested in any board of education shall be exempt from taxation and from sale on execution or other writ or order in the nature of an execution."2 However, the statute was amended in 2010 to provide, in relevant part, that "[r]eal or personal property owned by or leased to any board of education for a lease term of at least fifty years shall be exempt from taxation."3 Although the language used in both versions of the statute is similar, there was a basis for an implied use restriction that existed in the original statute that was removed by the amendment. The original statute enacted in 1873 was limited by the state's Constitution to only exempt public school houses and other property owned by the school used exclusively for public purposes; school property used for non-public purposes was not exempt.4 However, the Court determined that the 2010 amendment served to broaden the scope of the exemption to include school property leased for non-school purposes.

In 1931, Ohio's Constitution was amended to give the legislature the power to determine exemptions. However, this amendment did not expand the scope of previously enacted exemptions.5 Therefore, the scope of the exemption was limited to the use restrictions in place at the time the statute was enacted in 1873. When the statute was amended in 2010, the legislature had the broad power to enact exemptions, regardless of the use of the property. The Court explained that when the legislature amended the exemption and failed to include a use restriction in the statutory language, there was no longer a reason to read a use restriction into the exemption statute.

Amended Statute Applied to BOE

The Court determined that the amended version of the statute applied to the BOE's property. This determination was important because the application of the original statute would lead to a different answer than the application of the amended statute. In determining whether the original language or the amended language applied in this case, the Court considered an uncodified section of the legislation that provided "[this amendment] is remedial in nature and applies to tax years at issue in any application for exemption from taxation pending before the Tax Commissioner, Ohio Board of Tax Appeals, any Court of Appeals, or the Supreme Court on the effective date of this act and to be property that is the subject of the application."6 The effective date of the amendment was September 13, 2010. However, the BOE's exemption application was filed January 26, 2010 and was still pending as of the effective date of the statute. Therefore, because the application was pending on the effective date of the amendment, the Tax Commissioner was required to apply the amended version of the exemption statute to the BOE's exemption application. Because the amended version did not include a use restriction, the BOE's property was considered exempt, regardless of the use of the property.

Exemption Not Conditioned on BOE's Compliance with Statutory Powers

The Tax Commissioner unsuccessfully argued that the BOE should be denied an exemption because it acted outside the corporate powers granted to it by Ohio law.7 This argument was based on a previous Ohio Supreme Court decision holding that state boards of education are "without authority or power to purchase [property] for any other purpose than a public use."8 The Tax Commissioner argued that this holding limited the scope of the tax exemption for school property. The Court disagreed and explained that because the school property exemption statute did not condition the exemption on compliance with the statute providing the powers of a board of education, the Court did not need to decide whether the leasing of the property for commercial purposes exceeded the BOE's authority.


This decision requires the state of Ohio to grant a tax exemption for all property owned by or leased to any board of education for at least 50 years, regardless of the property's current use. Retroactively, if any school or school board had an application to exempt property pending on or after September 13, 2010, it should be entitled to a tax exemption even if the property is not being used for a public purpose.9 Prospectively, any school or school board that owns property that is not currently used by the school or for a public purpose can claim an exemption for the entire property. A school or school board should not be deterred from granting future leaseholds for non-school purposes because it will not eliminate the exemption status. In addition, since the statute affords the property tax exemption to real or personal property either owned by or leased to a board of education, any taxpayer with a leasehold interest in real or personal property owned by any board of education is also exempt from taxation with respect to that property, and a tax refund should be filed for any property tax paid on this property since September 13, 2010.

Further, the limitations in the statute that provides the corporate powers to school boards do not actually limit the board's ability to receive the school property exemption. Therefore, any school or school board may lease unused property for commercial purposes and utilize the exemption. This decision also implies that any property tax exemption amended after 1931 is not limited to any previous restriction in the Ohio Constitution, unless it was subsequently included by the legislature.


1 Talawanda City School Dist. Bd. of Edn. v. Testa, Ohio Supreme Court, No. 2014-1798, Dec. 30, 2015.

2 Prior OHIO REV. CODE ANN. § 3313.44.

3 OHIO REV. CODE ANN. § 3313.44, as amended by S.B. 181, Laws 2010.

4 Prior OHIO CONST., art. XII, § 2.

5 Dennison Univ. v. Board of Tax Appeals, 205 N.E.2d 896 (Ohio 1965).

6 S.B. 181, Laws 2010, § 5.

7 OHIO REV. CODE ANN. § 3313.17. This statute provides the corporate powers of school boards:

"The board of education of each school district shall be a body politic and corporate, and, as such, capable of suing and being sued, contracting and being contracted with, acquiring, holding, possessing, and disposing of real and personal property, and taking and holding in trust for the use and benefit of such district, any grant or devise of land and any donation or bequest of money or other personal property."

8 Cincinnati City School Dist. Bd. of Edn. v. Board of Tax Appeals, 80 N.E.2d 156 (Ohio 1948).

9 Because the statute of limitations for a real property tax exemption for publicly owned property is three years in Ohio, a refund application must be filed within three years of the date of the payment to be a valid claim. OHIO REV. CODE ANN. § 5713.081.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions