Both chambers of the Ohio General Assembly unanimously passed legislation that would exempt providers of affordable housing for people with substance abuse or mental health disorders from property taxes.
Senate Bill 57 comes in response to two rulings from the Ohio Board of Tax Appeals. The board recently sided with Columbus City Schools, which argued permanent supportive housing providers should be required to pay taxes on their property.
The bill’s sponsors said this reverses a decades-long precedent of exempting housing providers from property taxes.
Permanent supportive housing is a long-term, affordable place to live, often for people with histories of substance abuse and mental health disorders that form a barrier to safe and stable housing. Providers often take in the chronically homeless and pair them with case management and support services.
Community Housing Network, a Columbus nonprofit, manages the two properties involved in the BTA cases and acts as a liaison connecting tenants to primary care, mental health care, substance abuse care, and other wraparound services.
CHN is one of more than 30 nonprofits sponsored by the Franklin County Alcohol, Drug and Mental Health Board to provide services to people with chronic mental illness and addiction, court documents state.
CEO Samantha Shuler said tenants pay 30% of their monthly income toward rent, with the rest subsidized via federal funds. CHN’s tenants’ average annual income is between $5,000 and $10,000.
In 2018, Columbus City Schools filed two cases with the Ohio Board of Tax Appeals, a quasi-judicial administrative court, challenging two tax exemptions granted by the state tax commissioner to CHN’s properties.
Ohio law offers a tax exemption for property used for “charitable purposes.” The BTA ruled that a property used for a residential purpose does not qualify for the exemption, even if it’s provided at a discount to poor tenants. Providing wraparound services doesn’t cut it either.
“While the supportive housing provided may be part of a larger network of services provided to those individuals, the primary use of the subject property is as a private residence for the tenants living there,” the BTA wrote.
“We find, however, that the court’s subsequent decisions have made clear that where a property is used primarily for a private residential purpose, it cannot qualify for exemption based on a charitable use, despite the circumstances of the residents.”
The matter is now before the Ohio Supreme Court.
Columbus City Schools declined to comment or answer why it chose to take legal action against providers of affordable housing.
Two state senators — Nickie Antonio, D-Lakewood, and Bob Hackett, R-London — flanked by a sweeping and bipartisan list of bicameral state lawmakers, introduced legislation that would explicitly broaden the tax code to allow exemptions for housing for “individuals diagnosed with mental illness or substance abuse disorder.”
Antonio said between the public funds that flow into affordable housing and the population it serves, there’s no question providers should be treated as tax-exempt.
“It is shocking to me that someone would try to — do we tax food stamps? Do we tax relief checks for people?” she said.
The House and Senate both passed slightly different versions of the bill. The two chambers still must agree on a final version before sending it to Gov. Mike DeWine for a signature or veto. Antonio said she doesn’t expect any issue getting the bill to DeWine’s desk.
Paying property taxes would be a “devastating” hit, Shuler said, likely increasing expenses by as much as 10% for a single year.
CHN operates about 1,400 permanent supportive housing units in Franklin County, Shuler said. The tenants aren’t just poor, but they have long histories of underserved health issues.
“It’s a path to stability that keeps people out of hospitals, off the streets and out of institutions,” she said.
Shuler estimated about 50 providers offer some 6,000 permanent supportive housing units statewide.
Affordable housing advocates lauded the legislation.
“Overcoming mental illness and addiction is hard for anybody, but it’s practically impossible when you’re living in a homeless camp or under a bridge,” said Bill Faith, executive director of COHHIO, in a letter to members.
“Permanent supportive housing provides people a stable place to live with access to services they need to get healthy and put their lives back together. It’s truly heartwarming to see the entire legislature unite to ensure these critical homeless programs can remain viable and affordable.”
Hackett could not be reached for comment.
“Permanent Supportive Housing is a lynchpin in Ohio’s fight to end homelessness and to secure affordable housing so individuals can live stable, independent and healthy lives,” he said in a news release. “The bottom line is PSH has always been exempt from real property tax, and I am proud to join my colleagues to ensure that continues to be the standard moving forward.”