Are Your Property Taxes Rising, While Your Land Values Continue to Decrease?

Calvin J. Platten Jr.

There is an interesting phenomenon out there in the Arizona real estate market and it is striking vacant land throughout the state, whether the vacant land is located in Maricopa County, Pinal County or any of the other various counties. That phenomenon is the ever increasing tax valuations for vacant land when, in today’s market, as many of you can attest to yourself, the value of real estate, and specifically vacant land has decreased dramatically. In fact, in some rural areas of Arizona there have been reports that vacant land value has decreased by over seventy five percent.

     As an example of this phenomenon, I offer you an anecdote from my own practice. I have a client who has owned approximately ten acres of raw undeveloped land in a rural area of Pinal County for about fifteen years. He bought the land to eventually either sell it to fund a portion of his retirement or to build a home on it to retire. During this past real estate boom, of course the land increased in value as did the property taxes, which is justifiable considering the actual increased value of the land. The land rose to about $10,000.00 per acre in value, making the total property worth about $100,000.00 and the assessed valuation was approximately the same. However, during the past three years the land has decreased significantly in value down to $3,000.00 per acre. During the entire time of the decrease, for some unknown reason, however, Pinal County determined over the last three years that his land increased in value by over one hundred percent. The final tax valuation for the total acreage for 2010 was $212,000.00. Sounds unbelievable, I know, but it is absolutely true and is not that different from many of the stories I have heard from other clients and other attorneys.

     You may ask yourself why the counties would do this or what basis they have for dramatically increasing the valuation of property, especially vacant land, in these tough economic times. Well, there are many conspiracy theories regarding this issue. One such theory is that “the counties are going broke, so they are trying to raise their tax base” or “because the counties are laying people off, they can not take the time to properly value the rural areas, therefore they are just arbitrarily increasing the assessed valuations of the land.” Every theory has its plausibility and its detractors, but I am not going to weigh in on the merits of any theory. That is for a different article, the purpose of this article is not to criticize the counties’ methods for valuing your land, but to provide you with guidelines on how to challenge a county’s valuation of your property to get it back in line with the actual value of your property.

     Challenging the valuation of your property can not be done by a simple letter or phone call to the applicable county assessor’s office. In order to challenge the assessed valuation of your property, you have to file a formal administrative appeal with the applicable county assessor and if the county assessor’s decision is not satisfactory an appeal to the county court can be made within sixty days of the assessor’s decision. The other manner for challenging the assessor’s valuation is the filing of a formal lawsuit in Maricopa County Superior Court, naming the county where the property that is the subject of your challenge is located as defendant. This in my opinion is the best route for challenging the assessed valuation because most administrative challenges fall on deaf ears.

     While I maintain that filing a complaint in Maricopa County Superior Court is still the best way to challenge the assessed valuation of your property, there are some common pitfalls that you must avoid to maintain your challenge. The complaint needs to be in a very particular form to avoid a technical dismissal of your challenge. It must cite the correct statutory authority and it must be in the proper pleading format. It does not matter if the merits of your claim are just and correct, if you fail to follow the correct procedures, your appeal of the assessed valuation will be dismissed before the court even addresses the merits of your challenge.

     In addition to complying with the formalities of the complaint itself, the timing of an appeal is a very critical issue. It is important to remember that the tax valuations for a property are released by the county assessor during the year preceding the valuation year. In other words, the tax valuation for your property for 2010 would have been provided to you by mail sometime in early to mid 2009. As a result, a formal challenge to the 2010 valuation for your property would have had to have been made by December 15, 2009. The formal challenge is started by the filing of the above discussed complaint in the Maricopa County Superior Court. Should you fail to file your formal complaint on or before December 15 of the year preceding the valuation year that you wish to challenge, your appeal will be dismissed automatically. The December 15th deadline is a statute of limitations clearly set forth by the legislature in Arizona Revised Statute section 42-16201 and the court does not have the discretion to alter the date. Simply put, if you file your complaint challenging the valuation of your property for next year after December 15 of this year it will be dismissed by the court.

     Now, after you jump through the hurdles of properly drafting your complaint and filing it on time pursuant to Arizona Revised Statute section 42-16201, there is the issue of proving your claim. A formal appraisal of the value of your property or at the very least comparatives showing the amount that like properties in the area have sold for must be attached to your complaint to justify your challenge to the assessor’s valuation of your property. For example, if your property is incorrectly assessed for $200,000.00 and you believe that it is only worth $100,000.00, you need to clearly state in your complaint that you allege that the property is only worth $100,000.00 and attach support for that allegation to the complaint. Unsupported challenges will not be looked upon fondly by the court.

     I am sure you are wondering at this point what happens if you complete all of the above steps appropriately. Well, that depends. It depends on how significant a drop in the valuation you are claiming and/or if the applicable county assessor is willing to negotiate. Most cases wind up with the assessor and the property owner agreeing to a valuation in between the assessor’s proposed valuation and the property owner’s requested valuation. However, should you wish to take the matter all the way to trial that is well within your rights.