Maricopa County Assessor Eddie Cook and team explain office's role in property taxes
From left: Maricopa County Assessor Eddie Cook, Chief Deputy Assessor Dawn Marie Buckland and Chief of Staff Alejandra Larios spoke to Community Impact Newspaper about how the assessor's office does property valuations and how those affect property taxes. (Courtesy Maricopa County Assessor's Office)
What does the assessor's office do?
Cook: Well, it's a constitutional position. So in the Arizona Constitution, it describes exactly what the assessor does: to fairly and equitably and impartially value all taxable property. That's it; it's very simple.
How do you do that?
Cook: We have a team about 300 full-time employees that basically manage 1.8 million [real and personal] parcels of property [and accounts]. Obviously, Maricopa [County] is kind of land locked, but there are properties that will split. Farmers are selling their lands, and they'll go from one big parcel to several hundred to make homes or something or apartment complexes. So our team will receive a permit of construction that will happen in Gilbert. We get notified that this is going to have some construction, and there's all these new parcels. Our team will basically assess all that and put value on all those new parcels and so forth. And we look at the fair market value in that area, the type of property it is, and we'll go through our analysis, using our tools to come up with that fair, equitable, impartial calculation.
Recently, everybody in the county got their little card from you that said what those values are. Explain that card. What does it mean? What should be people be looking at?
Buckland: That card is going have a couple of different numbers on there. One is going to be your full value. One is going be your limited property value. It actually shows last year's valuations compared to this year's valuations. So the full cash value is an approximation of market value. And we have certain standards to make sure that we stay lower than the market value. So you might say, "well, the house across the street sold for more than that." That's OK. We want to make sure statutorily that we're below that market value. So full cash value on average for residential property is about 82% of market value. But the key here is your limited property value because that's what the tax basis is. So your full cash value is great information. Your limited property value is going back [to 2012’s Proposition 117], ... where your limited property value is only getting to increase by 5% each year ... unless something major occurs. So a vacant parcel of land that you now develop, that's going to reset that limited property value because you've now changed that use or increased the value by more than 15%.
How does this affect my property taxes?
Buckland: So your property taxes are going to be affected by that limited property value, and the really, really important thing, if we take nothing else away from this, is that you have 60 days to appeal that value. And there may be something that you know of that you could correct with our office. If for whatever reason we have a value that's too high, we want you to notify our office. ... After that 60 days, by statute, we can't accept that [appeal] anymore. And then your taxes are going be calculated based on that limited property value.
What kind of circumstances would bring about that appeal?
Buckland: If we had an error, right? So if there was a square footage or something along those lines. ... Another example of appeal would be you're looking at this value and you're like, "this doesn't make sense to me." And you pull up some some comparable properties. And you're like, look at these comparable properties that have similar square footages to mine, similar bedrooms, whether I have or have not a pool, I look at these and these are pretty similar, and this is where they are. And for some reason, my property's reflecting differently. You can provide us with those comps, and we can look at that and we can say, ‘That's a good business case, and we can support that.’
Larios: Other options that could be your square footage actually decreased. Let's say you decided to shrink your property. [It] doesn't happen so often; usually people grow out. But if you decided to knock down that extra room that wasn't used and make that into a patio instead, [and] we weren't aware of it because either you didn't get a permit, or you did get a permit, and it just hasn't made it through the cycle. Alternatively, you added square footage, and you want to make sure that we do have record of it because pretty soon you're looking to sell your home, and you want make sure that it reflects the correct square footage, the correct property value, so that when you sell it, the new homeowners are seeing the potential future taxes on it. So those are common ones.
Why do property taxes always seem to be going up?
Cook: So think about to the year 2007, 2008, the market crashes. Now all the properties are just crashing. So shortly after about 2008, 2009, 2010, we're recovering financially in the country here in Arizona, especially Maricopa County, employment is going really well. Investors are buying properties, and things are beginning to ramp up really nice. Well now with the old law, the old way of doing things, you're seeing property full cash value really going through the roof. And of course, as city councils or town councils, board of supervisors, school boards, all those governing agencies that have authority to do property tax rates and so forth are making decisions that look like you're paying a lot of property tax now. So there was here in Arizona this feeling, ‘wow, our property taxes are really going through the roof.’ There doesn't seem to be much control at all on these different governing bodies that have authority. So Proposition 117 came alive. ... The thought was ... if a homeowner or property owner knows that the property taxes couldn't increase, let's say, more than 5%, just keep it consistent, that would be an easier way for property owners to not complain about property taxes. Because it's consistent as an owner. You know, I knew my valuation, my home was going through the roof, but I knew that the property taxes would be at 5% every year. Now my home in Gilbert, I'm not sure I could afford it today because full cash value on Zillow and all that, it's like four times higher than what I paid for it back in the 1990s. But if I had to pay property taxes based upon the current value, I would not be happy with that. So that was kind of the gist of that. Part of [Proposition] 117 was they redrew the line in the sand for all properties in Arizona in 2014. So in the 2015 property tax cycle, that new line would then say your LPV can't go more than 5% each year maximum. And the goal of the LPV was to catch the full cash value. But the problem is the gap between the full cash value and LPV is huge in most properties. And in fact, in Maricopa County, 92% of all properties automatically got a 5% increase. We see that regularly now because all properties are increasing in value really nicely. As a property owner, I'm thrilled to have that type of investment really look good, but from a property tax perspective, I like that low LPV. So I should tell people if you want bigger property, don't build onto your own home. Because if you build a an addition to your home, that's greater than 15% of livable space where our team comes in [and] reassesses your property to the current market value. And there's a good chance that your LPV is going to bump up.
Buckland: But for an older property where it's been 5%, 5%, 5%, 5%, and last year we saw 30% increases in values, right? But you only have 5%. Well, that's a big gap right there in the differences. So for a property that has incrementally [increased], what happens then [for reassessment] in that situation is we look at the average of the LP and FCV ratio for that year. So you would be reset to that average from where you are. So if you were at a really low number, now you get reset to the average of what everybody's paying in accounting. Now, if you have that steady 5%, 5%, 5%, you can your taxes next year. But if your agencies do approve that your taxes increase, then you'll see the 5% difference, plus the increase in tax rate. Those are the two parts of the formulas, your value and your rate. Now, even if your rate stays the same, if your property tax rate stays the same, you're still going see that 5% increase based on your own [property value increase].
Cook: So there could be a brand-new neighborhood across the street from your house. Your house was built before the 2014 time frame. Let's just say it got that LPV and it's just been slowly increased. Well, across the street, they may pay higher, but the square footage may be somewhat comparable. So that's kind of the iniquities in what Prop 117 could have done in some areas. So I try not to recommend anyone buy any new homes [laughs]. So that's a lot of education from our office that we believe the public should know. And we're creating through [Communications Director Devoro Bogart’s] team videos that are very creative to help the public understand this in a way that they can consume it. So that's really a very important part of our office is the public education of what Prop 117 has done. For me an important aspect of our business is to be extremely transparent, to provide full disclosure of all of our activities here and be able to create a wonderful customer experience, even during the process of appeals, when a property owner comes to us and says, "Eddie, you made an error with your calculation of my property." And the way we like to approach it is, "Please bring us a reasonable explanation of why you feel we're wrong" because we're not always perfect with our tools and the things that we've been doing for years. We’re obviously trying to do what's right and be as accurate as possible, but a property owner will come to us and share their perspective and their viewpoint. And the way I look at it is if the property owner makes a reasonable business case within the boundaries of our limits, and let's say, they've able to show that it really is lower, and we'll look at it and go, "You know what? We can agree to that. And we're not going to fight you in that." And that's our approach because to me, the amount of change that they receive compared to the global view of all properties is like in the noise. Why do I want to fight a property owner? If they get a couple hundred dollars back, to me, if we can come to a win-win, I'm all for that.
Buckland: And we're trying to get as accurate as possible. Another example that I was just thinking of, we have the tools that we have, but we're not actually going into most homes. We don't want government coming into our house for our assessments. So we're basing it on all the information that we have available to us while we've had some homeowners that have come to us and said, "Look, I understand that my neighborhood has gone up, and you're basing these on these sales, but I wanted to bring to your attention that these sales had all had significant upgrades. My house was built in 1961, for example, ... and, you know, we've tried to maintain it, but we haven't done anything major. And you're comparing us to these homes that have done complete kitchen renovations and things like that." We didn't know that. That's not information that we had available. And they're able to bring that in. And we can say, "You know what, you make a really good point based on that. We can see that these properties that sold have been renovated and that yours was not. And therefore your value shouldn't go up the same amount as those did that were renovated."
What else would you like the public to know?
Buckland: We've got different availability of programs for different situations, but for our seniors who are in fixed incomes, the state actually offers a senior value protection, and they can apply for that. And if they are eligible for it, then that value is actually frozen for three years. And then they can reapply again in three years and make sure that they're still eligible for it at that point in time. But that really helps some of our seniors to take advantage of some of the state's legal programs that are in place to help reduce that burden. It's a statewide program, but that's something that if they go to our website, we have a page all about our exemptions. I think we have some educational materials out there as well. So there's some great programs out there to help. There's a personal exemption program, and senior value protection is a great example of that. There are some other organizational exemptions as well, so some not-for-profits, some of the churches, some of those types of situations. We want people to take a look at those pages and see if there's anything that you're eligible for because they're legitimate programs. We want to make sure that people have the ability to not pay more in taxes than what they actually owe.
Cook: Being in the office for the two years, what has become more apparent to me versus being on the [Gilbert Town] Council has been how complex our property tax code in Arizona is. In fact, it's probably the most complex in the country. And what I've been seeing for the last couple of years is that I like to see good policy that's fair across everybody. And what we're seeing at the Legislature is bills that get passed that are so narrow in focus that has more complex processes that we have to execute on. Now, we're not a policy-making organization. We just execute on good and bad tax policies. So this year we're making a good attempt to run two bills to help simplify, provide technical correction and even deregulation as a way to help property owners in the future. So we're making good attempts at that right now to do that. ... I would say overall, they have been [receptive]. It's been a very interesting kind of collaboration, dialogue with the team we have. Senator [David] Livingston [R-Peoria] is running our two bills right now. And in general, I would say it's going really well, but it's really interesting to see the dynamics of this.
Buckland: And I know our team has really appreciated [Cook's] leadership in those because we implement state law. That's what we do. And there are a couple of examples where state law requires someone to appear in person for say, a disability exemption. Well, by state law, you're required to appear in person or submit it through certified mail. I guess it's to make sure that there's a receipt that that was received. But if you think about it, and particularly in today's day and age, asking someone with a disability to appear in person to be able to attest that they have a disability might not be the best possible option. So one of those bills that Assessor Cook has put forward that Sen. Livingston is running for us actually includes in there another viable option. If we can make something available online in a secure fashion, that they would be able to submit it that way as well.
Cook: One of the things, when I first came on board was I asked the team—like in every business, there should be a strategic plan. That's a common term used in the town of Gilbert, but any business—small, medium, large—the team comes up with a strategic business plan about their business. Well, that was the first thing I asked for when I showed up because the assessor was gone. ... I had nothing to really go on. I asked, "Is there such a thing as a strategic plan that I could see how the office was running?" And there wasn't. So part of our initiative for the last two years was to develop the Maricopa County assessor's strategic plan for the next five years. ... I couldn't be more proud of the collaborative effort of the leadership of our team to come up with this five-year strategic plan so that for the public, if they wanted to understand and have full disclosure what the assessor's office is, it's right here. ... We're trying to run a high-performance team that's very efficient and very effective at the lowest cost to the taxpayer, but we have a plan, and we want to create this "one team" culture. That's a positive collaborative environment so that each of the team members feels from me that I value them as a valuable team member, but I value their families because whatever their personal goals with their families, I want our team to support that because, in turn, they'll become a better team member for us, because they would like to work here and love to work here.
How are rank and file receiving that?
Buckland: I will say, first of all, any kind of change is sometimes uncomfortable. So there was a time to soak all of that in, but because the assessor's been so consistent on that, it's very credible. It's very believable. They're actually seeing it in action, and I get emails all the time. We'll send out a notice about something, and I'll have people that maybe I don't get an opportunity to talk to very often will send me an email and say, "Hey, I just wanted you to thank you. And I wanted to thank the assessor for this. Really appreciate it. We feel like you guys care and you hear us." Not just about the family, but when you do a job every single day, you know what works well, you know what doesn't work well. And they feel like they're empowered now to make it the very best that they can make it. And they like that, too.
Larios: I've seen growth and opportunity, and like Dawn Marie said with change, there's always that uncomfortable feeling. But it's change for growth, not just for the sake of change. So once the team is seeing that, they realize, "Oh, that was a good change, and it's long lasting." And with that, there's opportunity.
Buckland: And it's becoming pervasive throughout the county. I love It. You'll hear the supervisors or other elected officials referring to "one team," and we really should be. We're all separate legal entities, but the customer doesn't need to know that. They just need to know that they're dealing with the county and that the county's going to take care of them, whether that's the assessor's office, the treasurer's office, the recorder's office.