11

Yavapai CountyYavapai County Assessor’s Office Assessor’s Office

Pam PearsallPam Pearsall

County Assessor County Assessor

22

Property ValuesProperty Values

in ain a

Changing MarketChanging Market

33

2010 Value Notices were mailed in January 2009.2010 Value Notices were mailed in January 2009.

It is called the “2010 Value” because it will be It is called the “2010 Value” because it will be used to calculate the 2010 tax bill.used to calculate the 2010 tax bill.

It is It is notnot an estimate of the market in 2010. It is an estimate of the market in 2010. It is actually the market value as of 1/1/2009 actually the market value as of 1/1/2009 (statutory valuation date). (statutory valuation date).

Sales for 2010 values were taken from January Sales for 2010 values were taken from January 2007 through June 2008. So the actual date the 2007 through June 2008. So the actual date the value was determined was closer to July 1, 2008.value was determined was closer to July 1, 2008.

44

Timeline For Sales, Valuation Date Timeline For Sales, Valuation Date and Tax Bills:and Tax Bills:

1/1/

2007

1/1/

2008

1/1/

2009

1/1/

2010

1/1/

2011

A sales file is built using sales from 1/1/2007 through

6/30/2008.

These sales are verified

and analyzed for market

trends.

Value set on 1/1/2009. It is a current value but is referred

to as the 2010 Taxable Value.

The appeal process lasts

until 12/15/2009 to allow for all three levels of

appeal.

After appeals, the values are final and the

budget process begins. It

continues until the 3rd week in

August.

Tax Bills are calculated and mailed out in early October, 2010.

55

ASSESSOR’SASSESSOR’S Two Most Commonly Two Most Commonly

Asked QuestionsAsked Questions::

How is the decline in the Yavapai How is the decline in the Yavapai housing market going to effect housing market going to effect my value?my value?

How will this effect my tax bill?How will this effect my tax bill?

66

Comparison Of The Full Cash Value Comparison Of The Full Cash Value And Tax Bill For A Typical PropertyAnd Tax Bill For A Typical Property

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

?

Tax Rates Have not been set for 2009 or 2010

Value

Tax

Red: Full cash Value

Blue: Total Tax Bill

77

The Typical Home In The Typical Home In Yavapai County:Yavapai County:

Typical neighborhood sales price was Typical neighborhood sales price was $216,000.$216,000.(The 2009 average sale price was $246,500, This average (The 2009 average sale price was $246,500, This average sale price represents a 12.4% decrease)sale price represents a 12.4% decrease)

Typical home size is 1510 square feet.Typical home size is 1510 square feet.

Typical home year built is 1991.Typical home year built is 1991.

88

Example Of A Typical Example Of A Typical Yavapai County HomeYavapai County Home

• Sold 11-28-05 for $259,500

• 2008 FCV was 202,100

• 2009 FCV was $185,400 (8.2% decrease)

• 2010 FCV is $153,800 (17% decrease)

99

THE THE VALUATION VALUATION

PROCESSPROCESS

1010

Valuation Begins WithValuation Begins With LandLand

The land value is determined by buyers The land value is determined by buyers and sellers in the market.and sellers in the market.

Land value is influenced by factors such as Land value is influenced by factors such as size, location, and amenities.size, location, and amenities.

The example site is approximately ¼ acre.The example site is approximately ¼ acre.

The example site was valued at $40,900 The example site was valued at $40,900 for 2010. for 2010. (2009 land value was $67,000, a (2009 land value was $67,000, a 38.9% decrease)38.9% decrease)

1111

Adding In TheAdding In The Improvement ValueImprovement Value

The example home is priced using The example home is priced using the Marshall & Swift cost system:the Marshall & Swift cost system:

$136,500$136,500

The cost is then adjusted for The cost is then adjusted for location and age: location and age:

$131,200$131,200

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Adjusting Cost To MarketAdjusting Cost To Market

Study of sales of similar properties in the neighborhood indicate an

adjustment of -14% to the cost is necessary to bring value into compliance with State Guidelines.

(The adjustment for 2009 was -9%)

This is referred to as the Market Adjustment: $112,900

1313

Full Cash ValueFull Cash Value

Improvement value: Improvement value: $112,900$112,900 Land Value Land Value $40,900$40,900 2009 Total Full Cash Value: 2009 Total Full Cash Value: $153,800$153,800

(2010 Full Cash Value was (2010 Full Cash Value was $185,400)$185,400)

Percent change: -17%Percent change: -17%

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How is the decline in the Yavapai How is the decline in the Yavapai housing market going to effect my housing market going to effect my

valuevalue?? Statute defines Full Cash Value as synonymous Statute defines Full Cash Value as synonymous

with Market Value and requires the Assessor to with Market Value and requires the Assessor to value property at market value. value property at market value.

Department of Revenue requires that the Department of Revenue requires that the AverageAverage Full Cash Value fall between 74% and Full Cash Value fall between 74% and 90% of Market Value. 90% of Market Value.

Sales for 2010 values were taken from January Sales for 2010 values were taken from January

2007 through June 2008.2007 through June 2008.

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100000

120000

140000

160000

180000

200000

220000

240000

260000

280000

2004 2005 2006 2007 2008 2009 2010

Red: Sales Price

Blue: FCV

Gray: Valuation Guidelines

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How is the decline in the Yavapai How is the decline in the Yavapai housing market going to effect my housing market going to effect my

valuevalue??

2010 Value Notices were mailed in January 2009.2010 Value Notices were mailed in January 2009.

It is called the “2010 Value” because it will be It is called the “2010 Value” because it will be used to calculate the 2010 tax bill.used to calculate the 2010 tax bill.

It is It is notnot an estimate of the market in 2010. It is an estimate of the market in 2010. It is actually the market value as of 1/1/2009. actually the market value as of 1/1/2009.

1717

How is the decline in Yavapai How is the decline in Yavapai County’s housing market going to County’s housing market going to effect my property taxeseffect my property taxes??

1818

Tax History For Tax History For Example PropertyExample Property

YearYear FCVFCV LPVLPV Tax BillTax Bill % Change% Change

20012001 $95,600$95,600 $95,600$95,600 $1,023$1,023

20022002 $102,100$102,100 $102,100$102,100 $1,109$1,109 8%8%

20032003 $98,900$98,900 $98,900$98,900 $1,004$1,004 -9%-9%

20042004 $109,300$109,300 $108,800$108,800 $1,089$1,089 8%8%

20052005 $133,200$133,200 $119,700$119,700 $1,186$1,186 9%9%

20062006 $137,100$137,100 $131,700$131,700 $1,156$1,156 -2%-2%

20072007 $162,300$162,300 $144,800$144,800 $1,297$1,297 12%12%

20082008 $202,100$202,100 $159,300$159,300 $1,305$1,305 1%1%

20092009 $185,400$185,400 $175,200$175,200 ?? ??

20102010 $153,800$153,800 $153,800$153,800 ???? ????

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Changes between 2007 and 2008 Tax Bills Changes between 2007 and 2008 Tax Bills for Example Property:for Example Property:

Tax YearTax Year 20072007 20082008 % change % changeTotal taxesTotal taxes $1296$1296 $1305 $1305 +1%+1%

JurisdictionJurisdictionSchool DistrictSchool District $487$487 $467 -4%$467 -4%Fire DeptFire Dept $307$307 $331 +8%$331 +8%CollegeCollege $224$224 $219 -2%$219 -2%CountyCounty $221$221 $218$218 -3% -3%FloodFlood $28 $28 $35 +21% $35 +21%LibraryLibrary $16 $16 $21 $21 +31% +31%Fire DistrictFire District $13 $13 $15 +15% $15 +15%

Assistance FundAssistance Fund

2020

Will My Tax Bill Decrease Since Will My Tax Bill Decrease Since My Value Has Decreased?My Value Has Decreased?

There is not a direct relationship There is not a direct relationship between changes in market value between changes in market value and the tax bill.and the tax bill.

Historically, a change in property Historically, a change in property value (up or down) does not value (up or down) does not necessarily cause a change in necessarily cause a change in property taxes.property taxes.

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Comparison Of The Full Cash Value Comparison Of The Full Cash Value And Tax Bill For A Typical PropertyAnd Tax Bill For A Typical Property

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

?

Tax Rates Have not been set for 2008 or 2009

Value

Tax

Red: Full cash Value

Blue: Total Tax Bill

2222

Definitions:Definitions:

Limited Property Value: Limited Property Value: GGrowth is limited to the greater of (1) 10% more rowth is limited to the greater of (1) 10% more than prior year’s limited value or (2) 25% of the than prior year’s limited value or (2) 25% of the difference between the prior year’s limited value difference between the prior year’s limited value and the current year’s Full Cash Value.and the current year’s Full Cash Value.Refer to A. R. S. §42-13301.Refer to A. R. S. §42-13301.

Limited Assessed ValueLimited Assessed Value::Limited Property Value multiplied against a Limited Property Value multiplied against a statutory rate/assessment ratio equals the Limited statutory rate/assessment ratio equals the Limited Assessed Value. Assessed Value.

Funds the maintenance and operational budgetsFunds the maintenance and operational budgets of State and Local Governmentsof State and Local Governments

2323

Definitions:Definitions: Full Cash Value – Full Cash Value –

Full Cash Value is synonymous with market Full Cash Value is synonymous with market value. Full Cash Value shall be used as the value. Full Cash Value shall be used as the basis for levying secondary property taxes.basis for levying secondary property taxes.Refer to A. R. S. §42-11001.Refer to A. R. S. §42-11001.

Assessed Full Cash Value Assessed Full Cash Value Full Cash Value multiplied against a statutory Full Cash Value multiplied against a statutory rate/assessment ratio equals the Full Cash rate/assessment ratio equals the Full Cash Assessed Value. Assessed Value.

Funds Voter Approved Services such as Funds Voter Approved Services such as Bonds, Special Districts, etc…Bonds, Special Districts, etc…

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Definitions cont.Definitions cont.

Assessment Ratio - A percent Assessment Ratio - A percent multiplier applied to the Full Cash multiplier applied to the Full Cash Value and the Limited Property Value Value and the Limited Property Value determines the Assessed Values. determines the Assessed Values.

2525

Arizona Classification SystemArizona Classification SystemAssessment RatiosAssessment Ratios

Arizona’s property tax system classifies property according Arizona’s property tax system classifies property according to its use. Each class of property is assigned an to its use. Each class of property is assigned an assessment ratio. assessment ratio. (The percentages are determined by the State Legislature). (The percentages are determined by the State Legislature).

The most commonly used classifications are:The most commonly used classifications are:

Class 1: Class 1: Commercial (2010)Commercial (2010) 21% ratio21% ratioClass 2: Class 2: Vacant Land Vacant Land 16%16% ratioratioClass 3: Class 3: ResidentialResidential 10% 10% ratioratioClass 4: Class 4: Residential RentalResidential Rental 10%10% ratio ratio (rental does not receive state aide to education tax credit)(rental does not receive state aide to education tax credit)

2626

SECONDARY TAX SECONDARY TAX CALCULATIONCALCULATION

Levied against the Full Cash Assessed Levied against the Full Cash Assessed Value.Value.

Example Property: Example Property: Full Cash Value $185,000 x 0.10 (ratio)= Full Cash Value $185,000 x 0.10 (ratio)= $18,500 Assessed Full Cash Value.$18,500 Assessed Full Cash Value.

$18,500/100 x *secondary tax rate* = Tax $18,500/100 x *secondary tax rate* = Tax Amount (secondary only).Amount (secondary only).

Funds Voter Approved Services Funds Voter Approved Services such as Bonds, Special District, etc…such as Bonds, Special District, etc…

2727

PRIMARY TAXPRIMARY TAXCALCULATIONCALCULATION

Levied against the Limited Assessed Value. Levied against the Limited Assessed Value.

Example Property:Example Property:Limited Value $175,000 x 0.10 (ratio) = Limited Value $175,000 x 0.10 (ratio) = $17,500 Limited Assessed Value.$17,500 Limited Assessed Value.

$17,500/100 x *primary tax rate* = Tax $17,500/100 x *primary tax rate* = Tax Amount (primary only).Amount (primary only).

Funds the maintenance and operational Funds the maintenance and operational budgets of State and Local Governments.budgets of State and Local Governments.

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Total Tax Bill for our typical Total Tax Bill for our typical property:property:

Primary Tax……………..$957Primary Tax……………..$957

LessLess state aid to education state aid to education…-$194…-$194

Secondary TaxSecondary Tax………….$533………….$533

Total Tax…………..…..$1,296Total Tax…………..…..$1,296

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Arizona’s Property Tax SystemArizona’s Property Tax System

3030

ARIZONAARIZONAPROPERTY TAXPROPERTY TAXPROTECTIONSPROTECTIONS

3131

Property Tax ProtectionsProperty Tax Protections

Valuation LimitationsValuation Limitations

Limited Property Value – Growth is limited Limited Property Value – Growth is limited to the greater of (1) 10% more than the to the greater of (1) 10% more than the prior year’s limited value or (2) 25% of the prior year’s limited value or (2) 25% of the difference between the prior year’s limited difference between the prior year’s limited value and the current year’s full cash value and the current year’s full cash value.value.

3232

Full Cash Value/Limited Property ValueFull Cash Value/Limited Property Value

0

50000

100000

150000

200000

250000

FCV

LPV

The FCV The FCV (blue (blue line)line) shows shows both the run-up both the run-up and rapid and rapid decline in the decline in the actual market.actual market.

The The red linered line shows how the shows how the LPV rises slowly LPV rises slowly year to year in year to year in a increasing a increasing market, but in a market, but in a declining declining market the LPV market the LPV lags behind the lags behind the FCV.FCV.

3333

Property Tax ProtectionsProperty Tax ProtectionsValuation LimitationsValuation Limitations cont cont..

Valuation Protection for Seniors Valuation Protection for Seniors (Senior Freeze)- Homeowners that are 65 (Senior Freeze)- Homeowners that are 65 years or older and whose income is below years or older and whose income is below a certain level can freeze their full cash a certain level can freeze their full cash value for 3 years.value for 3 years.

Must reapply every 3 yearsMust reapply every 3 years

3434

Property Tax ProtectionsProperty Tax Protections

Rate LimitationsRate Limitations

Homeowner Rebate (residential) – The Homeowner Rebate (residential) – The state currently pays 39% of each state currently pays 39% of each homeowner’s primary school taxes, up to homeowner’s primary school taxes, up to $580 (for 2009).$580 (for 2009).

1% Primary Property Tax Limit (residential) 1% Primary Property Tax Limit (residential) – Total primary property taxes for owner-– Total primary property taxes for owner-occupied residential property cannot occupied residential property cannot exceed 1% of the limited value of the exceed 1% of the limited value of the property.property.

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Property Tax ProtectionsProperty Tax ProtectionsRate LimitationsRate Limitations cont. cont.

School District Qualifying Tax Rate – Any increase over a School District Qualifying Tax Rate – Any increase over a “truth in taxation” level requires a truth in taxation hearing “truth in taxation” level requires a truth in taxation hearing and a 2/3 majority vote to pass.and a 2/3 majority vote to pass.

Primary Property Tax Levy Limits – The amount of total Primary Property Tax Levy Limits – The amount of total primary property taxes that counties, cities and community primary property taxes that counties, cities and community college districts can levy is limited to 2% each year, plus college districts can levy is limited to 2% each year, plus new construction.new construction.

Secondary Property Tax Voter Approvals – Secondary taxes Secondary Property Tax Voter Approvals – Secondary taxes that counties, cities, community colleges, school districts that counties, cities, community colleges, school districts and many special districts levy are first subject to voter and many special districts levy are first subject to voter approval, and limited as such.approval, and limited as such.

3636

Property Tax ProtectionsProperty Tax Protections

Expenditure LimitationsExpenditure Limitations

Expenditure Limits – The ability of Expenditure Limits – The ability of counties, cities, community colleges is counties, cities, community colleges is limited by the 2% levy limit plus new limited by the 2% levy limit plus new constructionconstruction

School district ability to spend tax-School district ability to spend tax-

generated funds is limited to annual generated funds is limited to annual increases in inflation and student increases in inflation and student population.population.

3737

Property Tax ProtectionsProperty Tax Protections

Proposition 101Proposition 101November 2006, voters approved November 2006, voters approved proposition 101 proposition 101

This proposition limits the amount of This proposition limits the amount of taxes that local government can taxes that local government can raise. Proposition 101 uses the limit raise. Proposition 101 uses the limit from 2005 as the basis for these from 2005 as the basis for these restrictions. Increases to the 2005 restrictions. Increases to the 2005 levy are limited to 2% per year, plus levy are limited to 2% per year, plus new construction.new construction.

3838

Proposition 101Proposition 101

Proposition 101 places very specific Proposition 101 places very specific restrictions restrictions on the Primary taxes onlyon the Primary taxes only

It affects the following Yavapai County It affects the following Yavapai County entities: entities:

Yavapai County GovernmentYavapai County GovernmentYavapai CollegeYavapai CollegeCity of PrescottCity of PrescottTown of Clarkdale Town of Clarkdale Town of Jerome Town of Jerome

3939

Proposition 101Proposition 101

Does not freeze or limit the value of Does not freeze or limit the value of your property.your property.

Does not freeze or limit increases in Does not freeze or limit increases in your tax bill.your tax bill.

4040

OPTIONSOPTIONS FOR ARIZONA FOR ARIZONA PROPERTY TAX PROPERTY TAX

PAYERSPAYERS

4141

Options For Arizona Options For Arizona Property Tax PayersProperty Tax Payers

Exemptions are available for Exemptions are available for qualified Widow/Widowers, qualified Widow/Widowers, Disabled Persons, Churches and Disabled Persons, Churches and some Non-Profit Organizations. some Non-Profit Organizations.

Applications are accepted Applications are accepted January January 22ndnd through last day business through last day business day day in February.in February.

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Options for Arizona Options for Arizona Property Tax Payers contProperty Tax Payers cont..

Persons over the age of 65 may apply for Persons over the age of 65 may apply for the Senior Valuation Freeze. If they meet the Senior Valuation Freeze. If they meet the qualifications, their Full Cash Value the qualifications, their Full Cash Value will be frozen for three years. They must will be frozen for three years. They must re-apply after three years. re-apply after three years.

Applications for the Senior Freeze are Applications for the Senior Freeze are accepted from January 2accepted from January 2ndnd through through September 1September 1stst. .

4343

Property Tax ExplanationProperty Tax Explanation

4444

Property Tax ExplanationProperty Tax Explanation

The best way to explain Yavapai County’s property tax The best way to explain Yavapai County’s property tax system is with some simple illustrations.system is with some simple illustrations.

Imagine a little city that consists of four homes, each Imagine a little city that consists of four homes, each exactly the same, and each appraised by the Assessor at exactly the same, and each appraised by the Assessor at $100,000. Let’s also say that the annual city budget for our $100,000. Let’s also say that the annual city budget for our imaginary city is $1,000. To raise the amount of the budget, imaginary city is $1,000. To raise the amount of the budget, each homeowner must pay $250. Four homes each paying each homeowner must pay $250. Four homes each paying $250 raises $1000. Our property tax system is budget $250 raises $1000. Our property tax system is budget based. We tax enough to raise the amount in the budget. based. We tax enough to raise the amount in the budget. No more.No more.

   $1000 Budget$1000 Budget  

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$1,000 Budget $1,000 Budget

$100,000 Value

$250 tax bill

$100,000 Value

$250 tax bill

$100,000 Value

$250 tax bill

$100,000 Value

$250 tax bill

4646

Let’s say next year’s budget remains Let’s say next year’s budget remains at $1000, but the Assessor doubles at $1000, but the Assessor doubles the full cash assessed value of all the the full cash assessed value of all the homes to $200,000 each. Do the homes to $200,000 each. Do the taxes on each of the homes change? taxes on each of the homes change? No. To raise the budgeted amount, No. To raise the budgeted amount, each must still pay $250. In this each must still pay $250. In this example, the full cash assessed example, the full cash assessed value of each home doubled, but the value of each home doubled, but the tax didn’t change.tax didn’t change.

4747

$1,000 Budget $1,000 Budget

$200,000 Value

$250 tax bill

$200,000 Value

$250 tax bill

$200,000 Value

$250 tax bill

$200,000 Value

$250 tax bill

4848

Now let’s get a bit more realistic and say that the values on Now let’s get a bit more realistic and say that the values on the homes change differently. Suppose one home goes the homes change differently. Suppose one home goes from $100,000 to $150,000. Two homes double in value to from $100,000 to $150,000. Two homes double in value to $200,000 and the last home jumps up to a whopping $200,000 and the last home jumps up to a whopping $250,000! Now what happens to the taxes? Well, the $250,000! Now what happens to the taxes? Well, the average value of the four homes is still $200,000. So the average value of the four homes is still $200,000. So the taxes on the two homes that go to $200,000 are taxes on the two homes that go to $200,000 are unchanged. They are at the average and they each still pay unchanged. They are at the average and they each still pay $250. The lowest valued home sees its tax go down to $250. The lowest valued home sees its tax go down to $187.50, even though the assessed value goes up 50%! $187.50, even though the assessed value goes up 50%! The home that jumped 150% to $250,000 in value sees its The home that jumped 150% to $250,000 in value sees its property tax go up to $312.50, a 25% increase. In the end, property tax go up to $312.50, a 25% increase. In the end, we still only raise $1000 total to meet the budget. we still only raise $1000 total to meet the budget. Interesting right?Interesting right?

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$1,000 Budget $1,000 Budget

$150,000 Value

$187.50 tax bill

$200,000 Value

$250 tax bill$200,000 Value

$250 tax bill

$250,000 Value

$312.50 tax bill

5050

But wait. Normally budgets don’t stay the same; they go up, right? But wait. Normally budgets don’t stay the same; they go up, right? Currently, constitutional restrictions limit Arizona’s primary property tax Currently, constitutional restrictions limit Arizona’s primary property tax levies to a 2% increase each year plus any revenue from new construction, levies to a 2% increase each year plus any revenue from new construction, but do not subject secondary tax districts to these levy limitations. In our but do not subject secondary tax districts to these levy limitations. In our imaginary city, the $1000 budget can only increase 2% to $1020 the imaginary city, the $1000 budget can only increase 2% to $1020 the following year unless the voters who live in the city approve a higher following year unless the voters who live in the city approve a higher increase (we won’t consider secondary taxing districts at this time).increase (we won’t consider secondary taxing districts at this time).

Our imaginary city gives simple illustrations of our property tax Our imaginary city gives simple illustrations of our property tax system.system.

In reality, it’s not so simple. In Yavapai County, there are about 160,000 In reality, it’s not so simple. In Yavapai County, there are about 160,000 properties (all different from each other). We have 230 taxing authorities. properties (all different from each other). We have 230 taxing authorities. Although each property is in one tax area code, each property has a Although each property is in one tax area code, each property has a number of tax authorities because tax authorities overlap. For instance, number of tax authorities because tax authorities overlap. For instance, your next door neighbor could be in a different fire district or school your next door neighbor could be in a different fire district or school district, etc. The result is that even though you live right next to each other, district, etc. The result is that even though you live right next to each other, you could be in different tax area codes, and have totally different tax you could be in different tax area codes, and have totally different tax rates. The 230 tax authorities in Yavapai County are comprised of the state, rates. The 230 tax authorities in Yavapai County are comprised of the state, county, cities, schools, colleges, roads, fire districts, emergency service county, cities, schools, colleges, roads, fire districts, emergency service districts, library, sewer and water districts. Each taxing authority has an districts, library, sewer and water districts. Each taxing authority has an annual budget. annual budget.

  

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THANK YOUFor further information,

please call the Assessor’s Office

928-771-3220 (Prescott)

928-639-8121 (Cottonwood)