AI- 9050
.
Special/Executive Session Board of Supervisors Mtg - 9:00 am
- Meeting Date:
- 12/02/2025
- Title:
- Proposed settlement of the Large Tax Appeal in Lowe’s Home Centers, LLC v. Cochise County, TX2025-000234
- Submitted By:
- Lara Loewenheim, Board of Supervisors
- Department:
- Board of Supervisors
Presentation:
No A/V Presentation
Recommendation:
Document Signatures:
# of ORIGINALS
Submitted for Signature:
Submitted for Signature:
NAME
of PRESENTER:
of PRESENTER:
Dylan Hendel/Phil Leiendecker
TITLE
of PRESENTER:
of PRESENTER:
Civil Deputy County Attorney/County Assessor
Mandated Function?:
Source of Mandate
or Basis for Support?:
or Basis for Support?:
Information
Agenda Item Text:
Approve the proposed settlement of the Large Tax Appeal in Lowe’s Home Centers, LLC v. Cochise County, TX2025-000234, now pending in Arizona Tax Court, a division of the Superior Court in and for Maricopa County.
Pursuant to A.R.S. § 38-431.03 (A)(3) and (4), the Board may go into executive session for legal advice with the attorney of the public body and to consider its position and instruct attorneys regarding the public body’s position in pending litigation.
Pursuant to A.R.S. § 38-431.03 (A)(3) and (4), the Board may go into executive session for legal advice with the attorney of the public body and to consider its position and instruct attorneys regarding the public body’s position in pending litigation.
Background:
Plaintiff filed a civil action in the Arizona Tax Court seeking a reduction in assessed value for parcel number 106-46-001E and account number R000027429, concerning Lowe’s Home Center (Store #2663), located at 3700 Martin Luther King Jr. Parkway in Sierra Vista, Arizona, for tax year 2026. For tax year 2026, the Assessor originally valued the property at $13,153,095 ($95 per square foot). The taxpayer initially requested a reduced full cash value of $8,280,000, which the Assessor rejected as unreasonable.
Demographic characteristics specific to Sierra Vista - lower population, lower median household income, and lower spending power were also evaluated and supported a valuation toward the lower end of the statewide Lowe’s stores.
After the County rejected the initial offer, Plaintiff retained an expert appraiser in TX2024-000346, who prepared an appraisal report in support of a lower valuation. The Plaintiff’s expert valued the property at approximately $40 per square foot, based on income and sales analyses ranging from $39.37 to $41.03 per square foot, compared to the Assessor’s original $76 per square foot value.
Following continued discussions, review of Plaintiff’s appraisal materials, and additional analysis by the Assessor, the parties reached a negotiated settlement. The parties agreed to settle at a value of $50.00 per square foot. As a result, the Assessor proposed settlement, and the parties ultimately agreed that the parcel’s full cash value and limited property value for tax year 2026 should be lowered as follows:
• For tax year 2026, a reduction in full cash value from $13,153,095 to $6,950,000.
• For tax year 2026, the limited property value of $11,049,302 shall be calculated in accordance to A.R.S. § 42-13301.
• The assessment ratio shall remain at 16%.
• The legal class shall remain class 1.12 (commercial).
The Assessor will recalculate the 2026 taxes and correct the 2026 tax roll in accordance with A.R.S. § 42-16215 to reflect the agreed-upon valuation. Any refund of excess taxes paid will be issued with statutory interest pursuant to A.R.S. §§ 42-16214 and 42-1123, as ordered in the Stipulated Judgment.
The 2026 tax roll must be updated as required under A.R.S. § 42-16215.
The stipulated value is the result of settlement for tax year 2026 in accordance with the Stipulated Judgment, any reduction in the 2026 full cash and limited property values will require Cochise County to issue a refund of any excess taxes levied, assessed, and paid on the subject property, together with interest at the legal rate from the date of overpayment until paid in full, as provided in A.R.S. §§ 42-16214 and 42-1123. The Cochise County Treasurer will calculate the refund amount, if any, and Cochise County shall pay the refund to the Trust Account of Faegre Drinker Biddle & Reath LLP.
Each party would bear their own attorneys’ fees, expert expenses and costs.
The taxpayer has accepted the settlement offer.
Fiscal Impact & Funding Sources:
No funding sources are required. Fiscal impact is limited to a reduction in the taxable base and potential refund of excess taxes paid, plus statutory interest.
Demographic characteristics specific to Sierra Vista - lower population, lower median household income, and lower spending power were also evaluated and supported a valuation toward the lower end of the statewide Lowe’s stores.
After the County rejected the initial offer, Plaintiff retained an expert appraiser in TX2024-000346, who prepared an appraisal report in support of a lower valuation. The Plaintiff’s expert valued the property at approximately $40 per square foot, based on income and sales analyses ranging from $39.37 to $41.03 per square foot, compared to the Assessor’s original $76 per square foot value.
Following continued discussions, review of Plaintiff’s appraisal materials, and additional analysis by the Assessor, the parties reached a negotiated settlement. The parties agreed to settle at a value of $50.00 per square foot. As a result, the Assessor proposed settlement, and the parties ultimately agreed that the parcel’s full cash value and limited property value for tax year 2026 should be lowered as follows:
• For tax year 2026, a reduction in full cash value from $13,153,095 to $6,950,000.
• For tax year 2026, the limited property value of $11,049,302 shall be calculated in accordance to A.R.S. § 42-13301.
• The assessment ratio shall remain at 16%.
• The legal class shall remain class 1.12 (commercial).
The Assessor will recalculate the 2026 taxes and correct the 2026 tax roll in accordance with A.R.S. § 42-16215 to reflect the agreed-upon valuation. Any refund of excess taxes paid will be issued with statutory interest pursuant to A.R.S. §§ 42-16214 and 42-1123, as ordered in the Stipulated Judgment.
The 2026 tax roll must be updated as required under A.R.S. § 42-16215.
The stipulated value is the result of settlement for tax year 2026 in accordance with the Stipulated Judgment, any reduction in the 2026 full cash and limited property values will require Cochise County to issue a refund of any excess taxes levied, assessed, and paid on the subject property, together with interest at the legal rate from the date of overpayment until paid in full, as provided in A.R.S. §§ 42-16214 and 42-1123. The Cochise County Treasurer will calculate the refund amount, if any, and Cochise County shall pay the refund to the Trust Account of Faegre Drinker Biddle & Reath LLP.
Each party would bear their own attorneys’ fees, expert expenses and costs.
The taxpayer has accepted the settlement offer.
Fiscal Impact & Funding Sources:
No funding sources are required. Fiscal impact is limited to a reduction in the taxable base and potential refund of excess taxes paid, plus statutory interest.
Department's Next Steps (if approved):
Upon approval by the Board, the parties will file the Stipulated Judgment with the Arizona Tax Court disposing of this matter, pursuant to the settlement terms.
Impact of NOT Approving/Alternatives:
Additional expenses, including accruing expert costs for litigation for the County with the risk that the Court may: (1) rule in the Plaintiff’s favor; (2) order a larger reduction in the assessed value of the subject property; and (3) order the County to pay the Plaintiff’s fees, expert expenses and costs.
To BOS Staff: Document Disposition/Follow-Up:
Advise County Attorney's Office - Civil Division upon Board's approval so the Stipulated Judgment may be finalized and filed.