Homegrown Legislation Results in Lower Property Tax

Residential property owners who reside on more than an acre of land will be relieved to know that there may be some relief in sight from the overwhelming increase in taxes due to rising land values. That is, if HB 2434 becomes law.

This bill clarifies that residential-zoned property owners who own multiple acreage, reside on their property and use their land for no other purpose can be taxed at the residential property tax rate. Sounds reasonable enough, but some county assessors, including Maricopa, routinely assess parcels over 1 acre at the vacant land rate of 16%, rather than at the residential rate of10%.

Assessors defend this practice based upon a Department of Revenue guideline inferring that residents only need about an acre of land to accommodate a residence. Such a reading of the guideline amounts to arbitrary and unjust taxation. Why is the D.O.R. telling county assessors how many acres a property owner ‘needs’ for a residence?

A District 7 constituent, Jerry Freeman, brought this situation to my attention. Jerry had purchased 25 acres in Cave Creek for his retirement while living in Scottsdale. When he and his wife, Janice, built a home and moved onto their Cave Creek property, what he didn’t expect was the huge assessment and high valuations to impact his tax bill so dramatically because all but one of his 25 acres were assessed at the high vacant land tax rate.

Freeman noted, “My property taxes are high enough already and increases in my assessed value are causing them to skyrocket! My property tax bill is now more than my mortgage! ”

The clarification in the statute will allow homeowners like Jerry Freeman to keep their horses and enjoy the residential property rate on their acreage rather than at the vacant land rate. Freeman notes, “I'm not from California, I'm not rich. I have 3 horses that I ride for pleasure and occasionally show when I can. The point is that my residential property does not produce any kind of income...only some forage for the horses when it rains in the spring. And that doesn't make it worth 60% more than any other residence. Even apartment houses are taxed at the residential rate...yet they are income property and mine is not. ”

A secondary benefit is the protection of open space. When property owners are taxed at the vacant land rate, it is no wonder the land is being developed. The higher tax rate, in effect, penalizes property owners for conserving land and the unintended consequence is decreased open space and accelerated development.

Prospects for HB 2434 look promising, having passed the House 53-2 and the Senate 22-6 with bi-partisan support. The bill appears to be headed for the Governor’s desk where, hopefully, it will be signed.

Jerry Freeman is an excellent example of how representative government works. His advocacy and committee testimony enabled us to produce a bill that will directly benefit property owners and protect open space.

Nancy Barto
State Representative
District 7