In late August, a new not-for-profit commercial real estate trade association was established to reform commercial property taxes in Arizona, which are among the highest in the United States and a key impediment to high wage job creation. The name of the group is Commercial Real-estate Executives for Economic Development or “CREED.”
The group was organized to attract the largest property owners in as many key sectors as possible and therefore be the spearhead of a larger coalition to include numerous other trade associations.
Presently, the group includes on its board, six of the top eight largest industrial warehouse owners in the state; a rep for the larger grocery store owners; a large retailer; a large shopping center owner; and reps from two of the larger utilities – APS and CenturyLink. In total, the group represents a minimum of 70-million square feet under management and more than 5,000 business tenants, most of whom are small businesses.
The chair of the board is Fred Stiles of EJM Development who is a past chairman of NAIOP and presently on the Arizona Chamber of Commerce and Industry Board of Directors. Kevin McCarthy, the president of the Arizona Tax Research Association, is also an ex-officio member.
In a nutshell, the top advocacy priority is to lower the current property tax assessment ratio for most businesses from 18 to 15 percent and to also reduce or abolish the state equalization property tax rate. Defensively, the group will strongly oppose any movement to impose a new statewide property tax unless such a tax were to treat businesses more equitably with other property taxpayers by eliminating a split roll and also curbing future bond/override elections that generate disparities among local taxing jurisdictions.
Finally, CREED will vigorously examine and potentially oppose efforts to further “swiss cheese” the property tax code by creating further fairness disparities with narrow property tax exemptions and unjustified abatements. CREED also will look for vehicles to patch the holes that already exist to treat all taxpayers more equitably.
Below is a more specific synopsis of CREED’s public policy goals at the State Capitol starting in January.
Support and retain property tax reform to make our state more economically competitive
- Support any measure to further cut the property tax burden on commercial property, especially if the measure is applied across all commercial properties such as lowering the assessment ratio from 18 to 15 percent or elimination/suspension of the state equalization rate.
Oppose mandated commercial real estate cost increases
- Fight any measure that increases existing property tax costs to the commercial real estate industry.
- Also, ofconcern is the imposition of a new statewide property tax especially if it does not include a reduction in the assessment ratio or reductions in inequitable K-12 secondary taxes.
- Oppose measures to shift valuation increases to commercial properties, to further rifle-shot a 5-percent assessment ratio to selected taxpayers, or to enact property tax increment financing (TIF) that all favor some taxpayers over others while shifting property taxes to the rest of the commercial real estate community.
Support property tax simplification and transparency
- Support any measure to bolster “Truth in Taxation,” which keeps public pressure on all taxing units to keep their levies in line by publicly disclosing the specific burden of each entity upon all taxpayers.
- Support regulatory reform measures to streamline and create more accountability for bonding election processes and to further simplify the valuation or property tax appeal processes for the county assessors.
Tim Lawless is the president of Commercial Real-estate Executives for Economic Development (CREED).