Yes. If the property tax deduction was not utilized in 2015, then the refund you received in 2016 is not required to be taxed on your tax return because you received no "tax benefit". Do not include the refund on your tax return for 2016.
Keep all the records in your file (2015 tax return and the income document you received for 2016, as well as the settlement documents) should you have a question about it later.
