Tag Archives: PROPERTY TAX

golf

Closing golf course may create steep tax bill

A statute intended to support Arizona golf courses could take its toll on Ahwatukee Lakes Golf Course owner Wilson Gee in the first situation of its kind by requiring him to pay 10 years of back taxes on the closed course, said David Boisvert, chief appraiser for the Maricopa County Assessor’s Office.

Under the golf statute, 42-13154, land that is classified as a golf course is valued at only $500 per acre, keeping the property tax relatively low, Boisvert said. But because Gee closed the golf course in May 2013, the land was reclassified as vacant land. Gee will now owe back taxes for the last 10 years plus interest and penalties, adding up to an estimated $1.6 million, Boisvert said.

“This is the first golf course that this has happened to that I know of in Maricopa County,” Boisvert said. “There are a number of others that potentially could go down the same path, but as of right now they’re the first ones that will be receiving the penalty for taking it out of golf.”

When a tax resolution is sent to a property owner they have 95 days to pay it, even if the owner has to pay back 10 years worth of taxes, said Charlotte Stevens from the Maricopa County Treasurer’s Office. Stevens said that she was unaware the statute even existed.

“We have a lot of golf courses, and the market for golf is just not like it used to be in the ‘70s, ‘80s and ‘90s and early 2000s,” Boisvert said.

Gee has not received a tax bill yet, Boisvert said. Gee was taxed on the value of the land as a golf course, but needs to be re-taxed on the balance he did not pay, he said.

“The assessor would have to send us a resolution increasing the taxes,” Stevens said. “We haven’t gotten that.”

Property owners can pay the total amount in full by the end of the year, or split it into two payments, said Cathy Sanchez, who also works in the treasurer’s office. Regardless of classification, the taxes follow the land, she said.

“And that’s the reason why it’s so important that when somebody exchanges property they understand who’s going to be paying what,” Sanchez said.

Pulte Homes, a residential development company headquartered in Atlanta, is planning to purchase the land from Gee, who owns four other golf courses in Ahwatukee. Both Gee and Pulte Homes were aware of the tax statute all along, said Jacque Petroulakis, who works in corporate communications for PulteGroup Inc. in Arizona.

According to the Pulte Ahwatukee website, the company plans to build no more than 250 single-family homes on the site. The neighborhood would also include landscaped open space on 38 percent of the property and buffer zones between existing homes and the new community.

“We’re providing owners with what we believe is a much better alternative than the current site, which will only continue to decline,” Petroulakis said.

In order to proceed with the development, Pulte Homes must meet the requirements of covenants, conditions and restrictions policy, Petroulakis said. CC&Rs allow for changes to take place with a majority consent in unforeseeable situations such as this one, she said.

“We’re seeking the approval of 50 percent of Ahwatukee homeowners before we would even proceed with zoning efforts,” Petroulakis said.

Community members opposed to the new development have formed a nonprofit group called Save the Lakes Inc. The group discourages Ahwatukee homeowners from complying with Pulte’s plans, which may make it difficult for Pulte Homes to get the signatures required to go ahead with the project.

According to the Save the Lakes website, “The proposed development will affect not only those people living directly on the course, but the community as a whole.”

Petroulakis said she thinks Pulte’s development plan is the best option for the community because Gee is prepared to sell the site no matter what. If the plans go through, Pulte Homes will donate an additional $1 million to the nearby Ahwatukee Country Club, another golf course owned by Gee, to help ensure the community that Gee is committed to keeping that course operating and thriving, she said.

“I think one thing that’s important to understand is that we would not be proposing this development if the golf course was not closed, the property were not for sale, and we did not believe our plan was a better option than the current deteriorating condition of the closed golf course,” Petroulakis said.

economic development - 8 honored

$2.2 billion Maricopa County budget advances

The Maricopa County Board of Supervisors has advanced a $2.2 billion budget proposal that would lower spending, reduce taxes and increase employee pay.

Arizona’s most populous county plans to decrease its spending by $82.4 million next year. The proposed budget also includes the first employee pay increase in five years. The county employs about 13,000 people.

County officials say the budget will likely result in a modest property tax decrease for local homeowners.

The largest share of the budget will continue to go toward Sheriff Joe Arpaio.

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A look at the 9 measures on Arizona ballot

Here are the nine voter initiative and legislative referendum measures on Arizona’s Nov. 6 general election ballot:

SALES TAX INCREASE — Proposition 204 would replace a penny-on-the-dollar temporary sales tax increase set to expire in mid-2013 with a permanent increase of the same size. Revenue would have to be used for education, construction projects and social services. Initiative.

PRIMARY ELECTION — Proposition 121 would revamp the state’s primary election system. The two top finishers in the primary election would advance to the general election regardless of party affiliation. And voters, regardless of party affiliation, could vote for any candidate. Initiative.

STATE SOVEREIGNTY — Proposition 120 would have Arizona declare that the state has exclusive authority over all land within its borders. American Indian reservations and military bases would be exempt. Referendum.

PICKING JUDGES — Proposition 115 would give governors more say over judicial appointments. The governor would generally get at least eight nominations for each appointment, up from at least three now. Also, her appointments of attorney members of the nominating commission would not have to come off a list of lawyers recommended by the State Bar of Arizona. Referendum.

CRIME VICTIMS — Proposition 114 would provide a new legal shield to crime victims. A crime victim would not be liable for damages suffered by a person engaged in a felony or fleeing from a situation involving a felony. Referendum.

BUSINESS EQUIPMENT TAX— Proposition 116 would provide tax savings for smaller businesses. The exemption on value of equipment and machinery subject to property tax would increase from the current inflation-adjusted amount of $68,079 to $2.4 million for newly acquired equipment and machinery. Referendum.

PROPERTY TAX — Proposition 117 would impose a cap on property tax increases. Increases could not exceed 5 percent over the value for the previous year, beginning with the 2015 tax year. Referendum.

EDUCATION FUNDING — Proposition 118 would set a minimum amount for funding for schools and other designated beneficiaries of income from the state trust land fund for the next nine fiscal years. There is currently no minimum requirement on using the fund’s income. Referendum.

TRUST LAND SWAPS — Proposition 119 would allow swaps of state trust land under certain conditions. Trust land could be exchanged with other public land in Arizona to protect military installations from encroaching development or to convert trust land to public use. Referendum.

Tim Lawless Discusses HB 2001 - AZRE Magazine September/October 2011

Q&A With NAIOP-AZ President Tim Lawless: The Impact Of HB 2001

Q&A with NAIOP-AZ President Tim Lawless who discusses HB 2001,  commercial property tax and how the commercial real estate industry is affected by these tax cuts

Recently, the Arizona State Legislature passed the most sweeping economic development/job recovery bill in years (HB 2001). It included a number of phased tax cuts and tax credits for businesses along with a deal-closing fund to attract high wage firms to Arizona.

Q: WHAT WERE THE SPECIFICS?

Specifically, the corporate assessment ratio used to calculate commercial property taxes will be reduced from 20% to 19.5% in 2013, 19% in 2014, 18.5% in 2015, and 18% in 2016. Moreover, the current corporate income tax rate of 6.968% will be reduced over four years to 4.9%. The $25M “deal-closing fund” (the Arizona Competes Fund) partially derived from lottery revenues will also give the privatized Arizona Commerce Authority (ACA) a key tool in landing firms that may need a nudge in deciding between finalist states for relocation or regional expansion decisions.

Q: WHAT DOES IT MEAN FOR THE COMMERCIAL REAL ESTATE INDUSTRY?

Significantly, NAIOP-AZ’s top three priorities to: 1) reform our uncompetitive commercial property tax system; 2) to lower our corporate income tax rate; and 3) to enact a deal-closing fund to attract new firms to the state are all contained in the law. This is a remarkable turn of events for our industry. NAIOP-AZ helped lead the fight six years ago to begin lowering the property tax assessment ratio from 25% to 20%, which resulted in more than a billion dollars in property tax savings to businesses over this time. More needs to be done but we have successfully addressed the single biggest impediment to job creation in our state — high uncompetitive property taxes for commercial real estate.

Q: WHERE WILL WE RANK NOW COMPARED TO OTHER STATES?

The corporate income tax rate reduction down to 4.9% will bring us more in line with our Western state competitors (some of whom who do not have a corporate income tax) and give us the fifth lowest rate in the nation. We also are now seeing the fruits of our labor as we have moved from having among the top five worst business property tax burdens in the U.S. to currently 15th and with these changes we expect to move to the middle of the pack by 2016, which is more where we should have been all along.

Q: WON’T THE DECREASE IN BUSINESS PROPERTY TAXES BE SHIFTED TO HOMEOWNERS?

No, this was not the intent of the legislation. In order to address the issue of perceived shifts in taxation to residents, legislators agreed to toggle the “Homeowners Rebate” upward in the future per calculations from the Dept. of Revenue and to help finance this impact to the State General Fund by reforming the Homeowners Rebate for those that illegally take it on multiple homes that are not their primary residence and those homes that are vacant and in foreclosure. In short, those who are most deserving get a bump and those that are abusing the credit get dumped.

Q: WHAT BIG ISSUES ARE ON THE HORIZON FOR COMMERCIAL REAL ESTATE?”

The eventual sunset of the recent sales tax increase will exacerbate a structural budget deficit for our state should it prove politically untenable to cut base spending levels more than they have already. As a result, the spending lobby will be looking to raise almost a billion dollars, especially for K-12 education, at the ballot next year. Initial ideas are to either make permanent the temporary sales tax rate increase; to increase the sales tax to currently exempt goods and services; and/or to institute a new statewide property tax. Because commercial property tax rates are still considerably more than what residents pay, NAIOP-AZ would certainly fight the specific alternative to raise a new statewide property tax. This would erase all the progress we have made the last six years in making our state more competitive for job creation. The proposed expansion of the sales tax base to exempt goods and services would also bear close watching as some proposals may make commercial lease sales subject to state taxation again which would be a hindrance to economic recovery for our industry and in turn for the state.

Q: HOW WOULD YOU SUM UP THE ACCOMPLISHMENTS THIS SESSION?

Hopefully, the measures passed in the recent “Jobs Bill” will give your readers, our members and businesses in general the confidence that Arizona is a great state to locate, invest, and expand.

AZRE Magazine September/October 2011