Alliance Management Group Tax Year 2012 Update 1

Part I: Overview 2

How is Your Real Property Valued?  The Assessor is mandated by Arizona State Statute to value property at its Full Cash (Market) Value. Full Cash Value is the basis for assessing, fixing, determining and levying secondary property taxes.

Sales Comparison  It is also known as Market. This method compares your property to other similar properties that have recently been sold. This method is used mostly for homes and land.

Income  The Income Method is based on the income potential of the property. Using operating Income and Expense Data supplied by the owner, the value is determined by capitalizing the potential net income. This valuation method is primarily used on commercial properties.

How is Your Real Property Taxed?  Tax Rates are set by all budget authorities and are separated into two types.  Primary Rates are set by governmental entities such as counties and cities and towns. They are applied to the “limited value” to determine taxes due. These taxes are used for the basic expenses of government and schools  Secondary Rates are set by special districts, fire districts, and bond issues. Usually taxpayers vote for these districts and bonds, so the rates are applied to the Full Cash Value to determine taxes due.

Estimate a Tax Bill  Limited Value (statutory calculation) used for primary tax rates  $100,000 x 10% = $10,000 assessed value  $10,000 value x $ tax rate = $ (primary tax)  Full Cash Value (market value) used for secondary tax rates  $100,000 x 10% = $10,000 assessed value  $10,000 value x $ tax rate = $ (secondary tax) Total taxes due = $1,005.36

Notice of Value Information

When Do I File an Appeal?  If you believe the Full Cash Value on your Notice of Valuation is higher than actual Market Value or the Legal Class is incorrect according to current use, you will want to file a “Petition for Review,” DOR  The Notice of Valuation is mailed prior to March 1 st. This valuation is used for the next calendar year’s tax computations.

Statutory Appeal Process  Level 1 Appeal to Assessor  Property Owner may make a request to meet with the Assessor informally  Level 2 Appeal to the BOE  Level 3 Appeal to Tax Court

Overview: Flagstaff Area Valuation Trend Data *Projected 11

Overview: Flagstaff Area Valuation Trend Data Limited Property Values Increased by 82% between FY04 and FY11 Value Increases & New Construction Projected Total 26% decline FY11-FY14 Full Cash Values Increased by 97% between FY04 and FY10 Value Increases & New Construction Projected Total 31% decline FY10-FY14 Limited Property and Full Cash Values are within 1% of each other for FY13 & FY14 12

Overview: Sample Tax Bill 13

Part 2: Agency Information CCC FUSD City of Flagstaff Coconino County Summit Fire District Highlands Fire District 14

Coconino Community College 15

Coconino Community College: Primary Property Taxes General Fund Levy for College Programs (Instruction, Academic Support, Student Services, Institutional Support, and Facilities) Levy is capped at 2% growth + new construction Coconino Community College has the lowest primary property tax rate of all Community Colleges in the State of Arizona 16

Coconino Community College: Secondary Property Taxes $25 Million Debt Service for 20-year bonds used for the construction of Lone Tree and Williams buildings and expansion of Page Campus Debt Services complete in FY 19 17

For all properties in the City of Flagstaff, the average change for Community College property taxes is a levy increase of $.9465 or 8% Coconino Community College: Property Tax Summary *Average Taxpayer Impact on owner occupied residential (class 3) properties only 18

Flagstaff Unified School District 19

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City of Flagstaff 25

City of Flagstaff: Primary Property Taxes General Fund Levy for City Services (including: Police, Fire, Parks, Recreation, City Court, Administration, Management Services…) Levy is capped at 2% growth + new construction Council decision to keep Levy flat. Increase due to new construction 26

City of Flagstaff: Secondary Property Taxes Debt Service Obligations –Water, Sewer, Lighting, Open Spaces, Recreation, and Fire Facilities (20%) –Other General Obligation Debt (6%) 27

For owner occupied residential properties in the City of Flagstaff, the average change for City property taxes is a levy decrease of $3.98, or -1.1% based on average property values. City of Flagstaff: Property Tax Summary *Average Taxpayer Impact on owner occupied residential (class 3) properties only 28

For demonstration purposes only. Impact on a $100,000 home valued in 2012 with comparisons to change in proposed rates and home value changes. City of Flagstaff: Property Tax Summary *Average Taxpayer Impact on owner occupied residential (class 3) properties only 29

Coconino County 30

Coconino County

Property Tax Disbursement  The Coconino County Treasurer is responsible for collecting taxes on behalf of all taxing jurisdictions in the County. Pie chart is based on FY12 levy data

Coconino County: Primary Property Taxes  General Fund Levy for County Services (Sheriff, Parks and Recreation, Superior Court, County Attorney, Public Defender, Probation)  Levy is capped at 2% growth + new construction Coconino County has the second lowest primary property tax rate of all Counties in the State of Arizona Average Impact = $0.26 increase per $100,000 of FY12 Value

Coconino County: Secondary Property Taxes  Library District  County-wide, funds library operations  No rate or levy restrictions Average Impact = $1.04 decrease per $100,000 of FY12 Value

Coconino County: Secondary Property Taxes  Public Health Services District  County-wide, funds public health services  $0.25 rate limit Average Impact = $1.09 decrease per $100,000 of FY12 Value

Coconino County: Secondary Property Taxes  Flood Control District  Excludes incorporated Flagstaff, Page, Fredonia  $0.50 rate limit Average Impact = $2.49 decrease per $100,000 of FY12 Value

Coconino County: Property Tax Summary  For all properties in the City of Flagstaff, the average change for County property taxes is a levy increase of $0.66, or.2%  For properties in other incorporated and unincorporated areas, the average change for County property taxes is a levy decrease of $7.14, or -3%

Other Taxing Jurisdictions Property Tax Summary FDAT State required formula, dependent upon Fire District levies County-wide Maximum rate = $0.10 Expect slight drop in levy State Equalization State required rate 11% rate increase for FY13 JTEDs Statutory rate of $0.05 Expect drop in levy = drop in property value 38

State Aid to Education (Homeowner’s Rebate) Owner Occupied Residential Properties (Class 3) Credit of up to $600 (tax reduction) Formula to determine credit rate FY12 formula = Lesser of 40% of School District Primary Tax Rate or 40% QTR up to $600 credit FY13 formula = Lesser of 40% of School District Primary Tax Rate or 40% QTR up to $600 credit Estimated Rebate = For a house appraised at $100,000 ($10,000 Assessed Valuation) the homeowner would receive a $ tax credit reduction for FUSD’s Primary Tax Levy 39

State Aid to Education (Homeowner’s Rebate) HB2001 (Special Session) Changes which homeowners qualify for State Aid to Education beginning tax year 2012 Properties no longer receiving State Aid to Education Bank owned and corporate owned Secondary Residences (vacation homes) Properties that will receive State Aid to Education Primary Residences as declared by homeowner Residences occupied by immediate family members per ARS Loss of State Aid to Education homeowners will increase their total tax bill to the same amount of a property that is residential rental City of Flagstaff $360; Summit FD $394; Forest Highlands FD $427 See examples at the end for tax increase detail Creates multiple new mailing and filing requirements and additional appeal rights for the homeowner Additional time and resources will be required by the Assessor to administer 40

Part 3: Property Tax Projections For properties located in the following taxing areas: City of Flagstaff Highlands Fire District Summit Fire District 41

Tax Rates by Taxing Area The following slides show sample tax assessments based on the typical property by taxing area. The average value changes by taxing area. The chart below shows the tax rates that would apply in each Flagstaff area jurisdiction. 42

Tax Levy by Taxing Area Assessed values changed by area as well. The chart below shows the average change in total tax levy for a home that was valued at $200,0000 in FY12 by various location. The net tax levy will change for each property based on change in value and change in area tax rates Excludes State Aid to Education Homeowner’s Rebate which would result in a $ reduction for a home value of $200,000/ 43

Tax Year 2012 (FY2013) Property Tax Projection: Property Located in the City of Flagstaff 44

Tax Year 2012 (FY2013) Property Tax Projection: Residential Property Located in the Highlands Fire District 45

Tax Year 2012 (FY2013) Property Tax Projection: Owner Property Located in the Summit Fire District 46