The Ohio Court of Appeals has upheld a ruling that allows the City of Oxford to impose a short-term rental tax on property owners. This decision affects local rental businesses, particularly those like the Prows family, who operate short-term rentals through platforms like Airbnb. The court's ruling confirms the city's authority to levy such taxes and use the revenue for its affordable housing fund.
The case, known as Prows v. Oxford, was filed under docket number CA2026-01-015 and reached the appeals court after Tate David Prows, representing himself, appealed a decision from the Butler County Court of Common Pleas. The ruling is significant as it clarifies the legal framework surrounding municipal taxation and the use of tax revenues in Ohio.
The dispute began when the City of Oxford adopted a new ordinance on August 3, 2021, which imposed a 3% lodging excise tax on hotels and short-term rentals. The Prows family, who own and operate a family-run short-term rental business, filed a complaint in June 2025, arguing that the tax was unconstitutional. They claimed that the Ohio Constitution did not permit such a tax and that the revenue could not be used for the city’s affordable housing fund.
The Prowses sought a declaratory judgment to declare the tax unconstitutional, a permanent injunction against its enforcement, and restitution for the taxes they had already paid. They argued that the ordinance violated Article VIII, Section 16 of the Ohio Constitution, which outlines the use of funds for housing assistance.
In response, the City of Oxford filed a motion for judgment on the pleadings, asserting its right to levy taxes under the Home Rule Amendment of the Ohio Constitution. The common pleas court agreed with the city, ruling on January 23, 2026, that the short-term rental tax was constitutional and enforceable.
In the court's opinion, Judge Matthew R. Byrne stated, "The Court finds that Oxford Cod. Ord. 183 is constitutional and enforceable against [the Prowses]." The court emphasized that municipalities have the authority to impose taxes as part of their local self-government powers. It also ruled that the city could legally deposit funds from the short-term rental tax into its affordable housing fund.
On January 30, 2026, Tate Prows filed an appeal, raising two assignments of error. He challenged the trial court's conclusion that municipal taxation falls within the powers of local self-government and questioned the constitutionality of diverting tax revenue to the affordable housing fund.
The court ruled that the authority to levy taxes is well established in Ohio law. Citing previous rulings, the court stated, "The municipal taxing power is one of the 'powers of local self-government' expressly delegated by the people of the state to the people of municipalities." The court also noted that the use of tax revenue for affordable housing was permissible under the Ohio Constitution.
In addressing the second assignment of error, the court explained that Article VIII, Section 16 of the Ohio Constitution allows municipalities to provide or assist in providing affordable housing through various means, including the passage of ordinances that establish taxes. The court concluded that the city’s actions did not violate the constitutional provision.
The court affirmed the common pleas court's decision, effectively dismissing the Prowses' claims. This ruling sets a precedent for how municipalities in Ohio can impose taxes on short-term rentals and use the revenue generated.
The implications of this ruling extend beyond the Prows family, impacting other short-term rental operators in the City of Oxford and potentially other municipalities in Ohio. It clarifies the legal standing of local governments to levy taxes and utilize those funds for housing initiatives.
Looking ahead, the Prows family has the option to appeal the ruling to the Ohio Supreme Court. However, it remains uncertain if they will pursue this route. There are currently no related cases pending that could influence this decision.