Bill Text: AZ HB2439 | 2016 | Fifty-second Legislature 2nd Regular | Introduced
Bill Title: Property tax valuation
Spectrum: Partisan Bill (Republican 2-0)
Status: (Introduced - Dead) 2016-02-15 - Referred to House RULES Committee [HB2439 Detail]
Download: Arizona-2016-HB2439-Introduced.html
|
REFERENCE TITLE: property tax valuation |
|
State of Arizona House of Representatives Fifty-second Legislature Second Regular Session 2016
|
|
HB 2439 |
|
|
|
Introduced by Representatives Petersen, Mitchell
|
AN ACT
Amending sections 42-11001, 42-11053, 42-11054, 42-12009, 42-12104, 42-12157, 42-13204, 42-13205, 42-13352, 42-16051, 42-16109, 42-16207, 42-16212, 42‑16213, 42-16215, 42-16251, 42-16252 and 42-19152, Arizona Revised Statutes; relating to property tax.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 42-11001, Arizona Revised Statutes, is amended to read:
42-11001. Definitions
In chapters 11 through 19 of this title, unless the context otherwise requires:
1. "Assessed valuation" means the value derived by applying the applicable percentage prescribed by chapter 15, article 1 of this title to the full cash value or limited property value of the property, as applicable.
2. "Board" or "state board" means the state board of equalization.
3. "County board" means the county board of supervisors sitting as the county board of equalization.
4. "Current usage" means the use to which property is put at the time of valuation by the assessor or the department.
5. "Due date" means the next business day if a due date of any report, claim, return, statement, payment, deposit, petition, notice or other document or filing falls on Saturday, Sunday or a legal holiday.
6. "Full cash value" for property tax purposes means the value determined as prescribed by statute. If no statutory method is prescribed, full cash value is synonymous with market value, which means the estimate of value that is derived annually by using standard appraisal methods and techniques. Full cash value is the basis for assessing, fixing, determining and levying primary and secondary property taxes on property described in section 42‑13304. Full cash value shall not be greater than market value regardless of the method prescribed to determine value for property tax purposes.
7. "Limited property value" means the value determined pursuant to section 42‑13301. Limited property value is the basis for:
(a) Computing levy limitations for counties, cities, towns and community college districts.
(b) Assessing, fixing, determining and levying primary and secondary property taxes on all property except property described in section 42‑13304.
8. "Net assessed value" means the assessed value minus any exempt property.
9. "Person" means a natural person, individual, proprietor, proprietorship, company, corporation, organization, association, joint venture, partner, partnership, trust, estate or limited liability company, the federal or state government, a political subdivision of a state or any other legal entity or combination of entities that owns, controls or has possession of real or personal property.
10. "Personal property" includes property of every kind, both tangible and intangible, that is not included in the term "real estate".
11. "Primary property taxes" means all ad valorem taxes except for secondary property taxes.
12. "Producing mine" or "mining claim" means a mine or mining claim from which coal or any other mineral or mineral substance, except for clay, sand, gravel, building stone or a mineral or mineral substance that is normally processed into artificial stone, has been extracted for commercial purposes at any time during a period of one year before the first Monday in January of the valuation year.
13. "Real estate" includes the ownership of, claim to, possession of or right of possession to lands or patented mines.
14. "Roll" means the assessment and tax roll.
15. "Secondary property taxes" means:
(a) Ad valorem taxes or special property assessments that are used to pay the principal of and the interest and redemption charges on bonded indebtedness or other lawful long‑term obligations that are issued or incurred for a specific capital purpose by a municipality, county or taxing district.
(b) Ad valorem taxes or assessments levied by or for special taxing districts and assessment districts other than school districts and community college districts.
(c) Amounts levied pursuant to an election to exceed a budget, expenditure or tax limitation.
16. "Tax year" for all property means the calendar year in which the taxes are levied.
17. "Valuation" means the full cash value or limited property value that is determined for real or personal property, as applicable.
18. "Valuation date", for the purposes of real property and property valued by the department, means January 1 of the year preceding the year in which taxes are levied.
19. "Valuation year" means:
(a) For real property and property valued by the department, the calendar year preceding the year in which the taxes are levied.
(b) For personal property, the calendar year in which the taxes are levied.
Sec. 2. Section 42-11053, Arizona Revised Statutes, is amended to read:
42-11053. Investigating property valuations
A. The department shall investigate property valuations and any matters relating to property taxes and shall require the production of any private or public record relating to those valuations or property taxes.
B. The director or the director's agent may:
1. Enter on and examine any property in this state to determine its full cash value. If the owner or possessor of property refuses entrance to the director or the director's agent, the director may estimate the valuation full cash value of the property.
2. Require any officer whose duties relate to assessing or collecting taxes to report to the director at the time and in the manner that the director prescribes.
Sec. 3. Section 42-11054, Arizona Revised Statutes, is amended to read:
42-11054. Standard appraisal methods and techniques
A. Subject to subsection B of this section, the department shall:
1. Prescribe guidelines for applying standard appraisal methods and techniques that shall be used by the department and county assessors in determining the valuation full cash value of property.
2. Prepare and maintain manuals and other necessary guidelines, consistent with this section, reflecting the standard methods and techniques to perpetuate a current inventory of taxable property and the valuation full cash value of that property.
B. Before they are adopted, the department shall submit each substantive proposed guideline, table and manual that is developed, amended or otherwise modified from and after December 31, 2006 to the joint legislative oversight committee on property tax assessment and appeals. The department shall not finally adopt, amend or otherwise modify a substantive guideline, table or manual for at least thirty days after submitting the measure to the committee. The committee may hold one or more informational hearings on the proposed measure within thirty days after submission. In adopting, amending or modifying the measure the department shall consider the committee's comments. If the committee fails to hold a hearing within thirty days after submission, the department may adopt, amend or modify the measure without further consideration.
C. In applying prescribed standard appraisal methods and techniques:
1. Current usage shall be included in the formula for reaching a determination of full cash value.
2. Solar energy devices, as defined in section 44-1761, grid‑tied photovoltaic systems and any other device or system designed for the production of solar energy primarily for on-site consumption are considered to have no value and to add no value to the property on which such device or system is installed.
3. Energy efficient building components, renewable energy equipment and combined heat and power systems are considered to add no value to the property, if the property owner provides the county assessor with documentation of all elements that qualify pursuant to this paragraph, including documents showing actual acquisition and installation costs. The documentation must be submitted to the county assessor no later than six months before the notice of full cash value is issued for the initial evaluation year pursuant to section 42‑15101 or, if the component is added after September 30 of the preceding year, no later than March 31 of the initial valuation year. For the purposes of this paragraph:
(a) "Combined heat and power system" means a system that generates electricity or mechanical power and useful thermal energy in a single, integrated system such that the useful power output of the facility plus one‑half the useful thermal output during any twelve-month period is no less than 42.5 per cent percent of the total energy input of fuel to the facility.
(b) "Energy efficient building components" means high performance sustainable building components installed so that the buildings or building components meet or exceed the energy efficiencies prescribed by the United States environmental protection agency energy star program or by a leadership in energy and environmental design green building rating standard developed by the United States green building council, or an equivalent green building standard, or that are at least fifteen per cent percent more energy efficient than the international energy conservation code in effect at the time of building permit issuance.
(c) "Renewable energy equipment" means equipment that is used to produce energy primarily for on-site consumption from renewable resources, including wind, forest thinnings, agricultural waste, biogas, biomass, geothermal, low-impact hydropower and solar energy not included under paragraph 2 of this subsection.
D. If the methods and techniques prescribe using market data as an indication of market value, the price paid for future anticipated property value increments shall be excluded.
E. For purposes of determining full cash value the department and county assessors shall use and apply the ratio standard guidelines issued by the department for tax year 1993 in the same manner as they were applied in tax year 1993. This subsection does not apply to property that is valued according to prescribed statutory methods or to property for which values are determined in the year after an appeal pursuant to section 42‑16002.
Sec. 4. Section 42-12009, Arizona Revised Statutes, is amended to read:
42-12009. Class nine property
A. For purposes of taxation, class nine is established consisting of:
1. Improvements that are located on federal, state, county or municipal property and owned by the lessee of the property if:
(a) The improvements are required to become the property of the federal, state, county or municipal owner of the property on termination of the leasehold interest in the property.
(b) Both the improvements and the property are used exclusively for convention activities or athletic, recreational, entertainment, artistic or cultural facilities.
2. Improvements that are located on federal, state, county or municipal property and owned by the lessee of the property if:
(a) The improvements are required to become the property of the federal, state, county or municipal owner of the property on termination of the leasehold interest in the property.
(b) Both the improvements and the property are:
(i) Used for or in connection with aviation, including hangars, tie‑downs, aircraft maintenance, sales of aviation‑related items, charter and rental activities, parking facilities and restaurants, stores and other services located in a terminal.
(ii) Located on a state, county, city or town airport or a public airport operating pursuant to sections 28‑8423, 28‑8424 and 28‑8425.
3. Property that is defined as "contractor-acquired property" or "government-furnished property" in the federal acquisition regulations (48 Code of Federal Regulations section 45.101) and that is leased to or acquired by the government and used to perform a government contract.
4. Property of a corporation that is organized by or at the direction of this state or a county, city or town to develop, construct, improve, repair, replace or own any property, improvement, building or other facility to be used for public purposes that the state, county, city or town pledges to lease or lease-purchase with state, county or municipal special or general revenues and that is not otherwise exempt under chapter 11, article 3 of this title.
5. Real property and improvements, including land, buildings, furniture and equipment, regardless of ownership, that are leased for the entire valuation year to, and used exclusively by, a nonprofit organization that is recognized under section 501(c)(3) of the internal revenue code and that operates on the premises as a charter school pursuant to section 15‑183 or that are leased for the entire valuation year to, and used exclusively by, a nonprofit church, religious assembly or religious institution. If only part of a parcel of real property or improvements to real property is leased for operation of a charter school or a church, religious assembly or religious institution as provided by this paragraph, only the portion so leased qualifies for classification under this section. A property owner who leases property to a charter school or a church, religious assembly or religious institution as provided by this paragraph shall file an affidavit with the county assessor stating that the charter school or church, religious assembly or religious institution shall be the sole beneficiary of the change in property tax classification pursuant to this section and that the lease rate that is charged to the charter school or church, religious assembly or religious institution is consistent with the lease rates that are charged to other tenants of the property or a fair market rate.
B. Improvements that are located in an area defined as a research park pursuant to section 35‑701 may not be classified under this section.
C. All property classified as class nine is subject to valuation valued at full cash value.
Sec. 5. Section 42-12104, Arizona Revised Statutes, is amended to read:
42-12104. Valuation and assessment
A. The county assessor shall determine the assessed valuation of historic property as provided by chapter 15, article 1 of this title. Each year that the property is classified and assessed as historic property the assessor shall enter on the rolls that the property is so assessed and may be subject to additional taxes under section 42-12107 by adding the notation "historic property (potential additional tax)".
B. The assessor shall determine the valuation full cash value of commercial historic property that is classified as class seven under section 42‑12007 or class eight under section 42‑12008 by using the market approach to valuation as described in section 42‑16051, subsection B, paragraph 2 or by using the cost approach to valuation as described in section 42-16051, subsection B, paragraph 3, using the year of application as the base year.
Sec. 6. Section 42-12157, Arizona Revised Statutes, is amended to read:
42-12157. Recapture and penalty for false information or failure to notify of change in use
If an owner of property or the owner's agent intentionally provides false information on an application form, or fails to provide the notice required under section 42‑12156:
1. The property shall be reclassified immediately as being used for a nonagricultural use and shall be valued at its nonagricultural full cash value valuation.
2. The owner is liable for the additional taxes on the difference between the nonagricultural full cash value valuation and the full cash value valuation of the property for all of the tax years in which the property was classified based on the false information.
3. The owner shall also pay a penalty equal to twenty‑five per cent percent of the additional taxes computed under paragraph 2 of this section. The assessor may abate this penalty for good cause. Twenty per cent percent of the penalty shall be deposited in the state general fund, and eighty per cent percent of the penalty shall be deposited with the county treasurer to be used by the county assessor's office.
Sec. 7. Section 42-13204, Arizona Revised Statutes, is amended to read:
42-13204. Election to use income method of valuation initially
In lieu of valuation full cash value under section 42-13203, the owner of a shopping center may elect to have the valuation full cash value of the shopping center determined by the income method commonly known as the straight line building residual method if the owner submits all reasonably necessary income and expense information for the owner's three most recent fiscal years to the county assessor before September 1 of the year immediately preceding the year for which the property will be valued.
Sec. 8. Section 42-13205, Arizona Revised Statutes, is amended to read:
42-13205. Valuation method applied on appeal
On appeal of a valuation in which the full cash value was determined by the income method pursuant to section 42-13204 or an appeal in which the owner has elected the income method pursuant to section 42-13203, subsection D, the valuation full cash value of a shopping center shall be determined by whichever one of the following valuation methods most closely approximates fair market value:
1. The income method commonly known as the straight line building residual method pursuant to section 42-13203, subsection D. If the reviewing body finds that other information that is customarily analyzed under the income method must be used to properly apply the income method to the property, it may use the other information to supplement information provided by the owner if:
(a) The credible and accurate information provided by the owner remains the primary basis for the valuation full cash value under the income method.
(b) The supplementary information is credible, is derived from properties or circumstances that are substantially comparable to the property and is valid under the income method.
(c) The reviewing body specifies in its written order what other information was considered, the manner in which it was applied and the change in the valuation full cash value under the income method, if any, resulting from the use of the supplementary information.
2. The replacement cost less depreciation method pursuant to section 42-13203.
3. The market comparison method, if a sale of the subject property occurred within two years before the date of valuation date and no material change to the property, its lease terms, tenants or occupancy rates or any other material fact has occurred since the sale. If the market comparison method is applicable, the reviewing body may consider information on sales of other properties that occurred within two years before the date of valuation date and that are determined to be comparable to the subject property by clear and convincing evidence.
Sec. 9. Section 42-13352, Arizona Revised Statutes, is amended to read:
42-13352. Determining valuation of property of manufacturers, assemblers or fabricators
A. The county assessor shall determine the valuation of both real and personal property valued under this article.
B. For purposes of determining the valuation full cash value of property valued under this article, the county assessor shall use standard appraisal methods and techniques as provided in section 42‑11001, paragraph 6 and section 42‑11054, except as otherwise provided in this article.
C. The taxable value of personal property is the result of acquisition costs less any appropriate depreciation as prescribed by the department. The taxable value shall not exceed the market value.
Sec. 10. Section 42-16051, Arizona Revised Statutes, is amended to read:
42-16051. Petition for assessor review of improper valuation or classification
A. An owner of property that in the owner's opinion has been valued too high or otherwise improperly valued or listed on the roll may file a petition with the assessor on a written form prescribed by the department.
B. The petition shall state the owner's opinion of the full cash value valuation of the property and substantial information that justifies that opinion of value for the assessor to consider for purposes of basing a change in classification or correction of the valuation. For purposes of this subsection, the owner provides substantial information to justify the opinion of value by stating the method or methods of valuation on which the opinion is based and:
1. Under the income approach, including the information required in section 42‑16052.
2. Under the market approach, including the full cash value valuation of at least one comparable property in the same geographic area or the sale of the subject property.
3. Under the cost approach, including the cost to build or rebuild the property plus the land value.
C. The petition may include more than one parcel of property if they are part of the same economic unit according to department guidelines or if they are owned by the same owner, have the same use, are appealed on the same basis and are located in the same geographic area, as determined pursuant to department guidelines, and are on a form prescribed by the department.
D. The petition shall be filed within sixty days after the date the assessor mailed the notice of valuation or the amended notice of valuation under section 42‑15101. United States postal service postmark dates are evidence of the date petitions were filed for purposes of this subsection.
E. The petition for review form for property that is listed as class three pursuant to section 42‑12003 shall contain simplified instructions and shall be separate from the petition forms used for other classes of property.
Sec. 11. Section 42-16109, Arizona Revised Statutes, is amended to read:
42-16109. Corrections and changes to tax roll
A. The county board may correct any error or mistake in the assessor's valuation or legal classification under the law when the county board considers it necessary to list the property on the roll at its full cash value correct valuation.
B. The county board shall require the assessor to place on the roll and determine the valuation or legal classification of any property that is subject to taxation but that is not on the roll. In the absence of the assessor, the county board shall determine the valuation or legal classification of the omitted property and transmit the proposed valuation or legal classification to the department as provided by section 42‑11056.
C. The county assessor shall make the necessary changes in the tax roll and records to reflect the county board's determination.
D. The department has the right to intervene and be heard in any proceeding pursuant to this section.
Sec. 12. Section 42-16207, Arizona Revised Statutes, is amended to read:
42-16207. Commencement of appeal; notice
A. A court appeal relating to valuation or classification of property is commenced by filing a notice of appeal with either the tax court or the superior court pursuant to section 12-163, subsection B.
B. The notice of appeal shall contain a statement of the reasons why the valuation or classification is excessive or erroneous.
C. If the department or the county requests an increase in full cash value valuation, the response filed shall contain a statement of the reasons why the valuation or classification is insufficient or erroneous.
Sec. 13. Section 42-16212, Arizona Revised Statutes, is amended to read:
42-16212. Hearing
A. If two or more actions have been filed under this article for the same taxable year with respect to the same property, the actions shall be consolidated for the purpose of the hearing.
B. At the hearing both parties may present evidence of any matters that relate to the classification or to the full cash value valuation of the property in question as of the date of its assessment. The valuation or classification as approved by the appropriate state or county authority is presumed to be correct and lawful.
C. For appeals from the state board relating to equalization orders issued by the department, the court shall hear the appeal and render its decision by September 1 of the year in which the appeal is filed.
Sec. 14. Section 42-16213, Arizona Revised Statutes, is amended to read:
42-16213. Findings and judgment
A. If the court finds that the valuation is excessive or insufficient, it shall find the property's full cash value. The court may find a full cash value that is higher or lower than the full cash value valuation that was appealed regardless of which party filed the appeal.
B. If the court finds that the valuation is:
1. Excessive, the court shall render judgment for the taxpayer and against the state or county, whichever is appropriate, in an amount equal to the excess in taxes levied and assessed together with the costs of the appeal.
2. Correct, the court shall dismiss the action with costs against the plaintiff except in appeals taken pursuant to section 42‑16206.
3. Insufficient, the judgment shall be for the state or county, whichever is appropriate, and against the taxpayer for the costs of the appeal and the taxes due on the property in excess of the amount originally levied and assessed. The judgment is a lien on the appellant's real and personal property as though the assessment had originally been in the amount of the judgment.
C. If the court finds that the classification is in error, it shall determine the correct classification. The taxes due on the property shall be determined using the classification determined by the court regardless of whether the department filed an appeal pursuant to section 42‑16206.
Sec. 15. Section 42-16215, Arizona Revised Statutes, is amended to read:
42-16215. Transmitting judgment to county or department; correcting tax rolls
A. The clerk of the court shall transmit the judgment to the clerk of the board of supervisors or to the department, whichever is appropriate, and to the county treasurer.
B. Unless an appeal is taken according to the rules of civil procedure, the board of supervisors, county assessor, county treasurer or department, whichever is appropriate, shall correct the rolls within fifteen days according to the judgment.
C. The full cash value found by the court shall be used to determine the valuation to be entered on the tax roll, and that valuation shall be used to determine the taxes due on the property.
Sec. 16. Section 42-16251, Arizona Revised Statutes, is amended to read:
42-16251. Definitions
In this article, unless the context otherwise requires:
1. "Board" means the county board of equalization or the state board of equalization, as appropriate.
2. "Court" means either the superior court or tax court.
3. "Error" means any mistake in assessing or collecting property taxes resulting from:
(a) An imposition of an incorrect, erroneous or illegal tax rate that resulted in assessing or collecting excessive taxes.
(b) An incorrect designation or description of the use or occupancy of property or its classification pursuant to chapter 12, article 1 of this title.
(c) Applying the incorrect assessment ratio percentages prescribed by chapter 15, article 1 of this title.
(d) Misreporting or failing to report property if a statutory duty exists to report the property.
(e) Subject to the requirements of section 42‑16255, subsection B, a valuation full cash value or legal classification that is based on an error that is exclusively factual in nature or due to a specific legal restriction that affects the subject property and that is objectively verifiable without the exercise of discretion, opinion or judgment and that is demonstrated by clear and convincing evidence, such as:
(i) A mistake in the description of the size, use or ownership of land, improvements or personal property.
(ii) Clerical or typographical errors in reporting or entering data that was used directly to establish valuation full cash value.
(iii) A failure to timely capture on the tax roll a change in value or legal classification caused by new construction, the destruction or demolition of improvements, the splitting of one parcel of real property into two or more new parcels or the consolidating of two or more parcels of real property into one new parcel existing on the valuation date.
(iv) The existence or nonexistence of the property on the valuation date.
(v) Property that is destroyed after the lien date.
(vi) Any other objectively verifiable error that does not require the exercise of discretion, opinion or judgment.
Error does not include a correction that results from a change in the law as a result of a final nonappealable ruling by a court of competent jurisdiction in a case that does not involve the property for which a correction is claimed.
4. "Tax officer" means the department, county assessor or county treasurer, as applicable.
5. "Taxpayer" means the owner of real or personal property that is liable for tax.
Sec. 17. Section 42-16252, Arizona Revised Statutes, is amended to read:
42-16252. Notice of proposed correction; response; petition for review; appeal
A. Subject to the limitations and conditions prescribed by this article, if a tax officer determines that any real or personal property has been assessed improperly as a result of a property tax error, the tax officer shall send the taxpayer a notice of proposed correction at the taxpayer's last known address by:
1. Certified mail, return receipt requested, if correction of the error results in an increase in the full cash value valuation or change in legal classification of the property.
2. First class mail or, at the taxpayer's written request, delivery by common carrier or electronic transmittal, if correction of the error does not result in an increase in the valuation of the property.
B. The notice shall:
1. Be in a form prescribed by the department.
2. Clearly identify the subject property by tax parcel number or tax roll number and the year or years for which the correction is proposed.
3. Explain the error, the reasons for the error and the proposed correction of the error.
4. Inform the taxpayer of the procedure and deadlines for appealing all or part of the proposed determination before the tax roll is corrected.
C. Within thirty days after receiving a notice of proposed correction, the taxpayer may file a written response to the tax officer that sent the notice to either consent to or dispute the proposed correction of the error and to state the grounds for disputing the correction. A failure to file a written response within thirty days constitutes consent to the proposed correction. A taxpayer may file a request for an extension of time within thirty days after receiving the notice of proposed correction. The extension of time may not exceed thirty days. If an extension is granted, any response that is not filed within the extended due date constitutes consent to the proposed correction.
D. The taxpayer may appeal any valuation or legal classification issue that arises from the proposed correction as provided in this section.
E. If the taxpayer consents to the proposed correction, or consents to the proposed correction but disputes the proposed valuation or legal classification as provided on the form prescribed by the department, the tax roll shall be promptly corrected to allow property taxes to be levied and collected in all subsequent tax years, but no additional tax, interest or penalty may be imposed for the current tax year or any tax year preceding the date of the notice of proposed correction.
F. If the taxpayer disputes the proposed correction or the proposed valuation or legal classification, the tax officer shall meet with the taxpayer or the taxpayer's representative in any case in which the taxpayer has timely filed a written response to discuss the proposed correction. If after the meeting the tax officer and the taxpayer reach an agreement on all or part of the proposed correction, the tax officer and the taxpayer shall each sign an agreement and the tax roll must be promptly corrected to the extent agreed on.
G. If after the meeting the parties fail to agree on all or part of the proposed correction, the tax officer shall serve a notice on the taxpayer by certified mail within thirty days after the meeting date advising the taxpayer that the tax roll will be corrected to the extent agreed on. The taxpayer may file a petition on a form prescribed by the department with the board of equalization within thirty days after the date of the notice or it is barred. On receiving the petition, the board shall hold a hearing on the disputed issues in the proposed correction within thirty days and shall issue a written decision pursuant to the board's rules.
H. A party that is dissatisfied with the decision of the board may appeal the decision to court within sixty days after the date the board's decision is mailed, but any additional taxes that are determined to be due must be timely paid before delinquency for the court to retain jurisdiction of the matter.
Sec. 18. Section 42-19152, Arizona Revised Statutes, is amended to read:
42-19152. Taxation of mobile homes
A. Each mobile home is subject to ad valorem property tax to be assessed and collected in the same manner and at the same time as other personal property that is taxable under this chapter.
B. The department shall establish the method of determining the valuation full cash value of mobile homes that are taxable under this chapter to be set by the county assessor.
