AI- 8542
1.
Special/Executive Session Board of Supervisors Mtg -10:30 am
- Meeting Date:
- 06/10/2025
- Title:
- Proposed Settlement of Large Tax Appeal
- 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:
Paul Correa
TITLE
of PRESENTER:
of PRESENTER:
Chief Civil Deputy County Attorney
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 Michael E. Pieper v. Cochise County, TX2024-000356 now pending in Arizona Tax Court, a division of the Superior Court in and for Maricopa County.
Background:
Taxpayer filed a civil action in Arizona Tax Court, seeking a reduction in assessed value and requested reclassification of the properties as agricultural land for the three (3) following parcel numbers: 404-11-124D2 (account number R000105247), 404-11-124C3 (account number R000105246), and 405-02-00701 (account number R000106086) for tax year 2025. The three (3) parcels of vacant land northwest of Douglas, AZ, were purchased in 2017 and later developed with irrigation pivots for farming. However, no Agricultural Land Use Form was provided by Plaintiff as required for change of ownership pursuant to ARS § 42-12153(B). The subject properties remained on AG classification in error until the 2023 tax year when upon an inspection, it was discovered that the properties were not used as grazing, but the use to be irrigated farmland. These subject parcels were re-assessed as irrigated cropland, and the appropriate market value was applied by the Assessor. However, during the litigation process in this matter, Plaintiff submitted a proposed settlement offer on March 26, 2025, with the following proper documentation that was previously requested and needed: an Agricultural Land Use Application, an Agricultural Land Lease Abstract, and an Agricultural Farm Lease Agreement.
Upon review of the submitted proper documentation, the subject properties meet the statutory classification and valuation for Agricultural Property Classification pursuant to Title 42 Article 4 Chapter 12 and Article 3 Chapter 13 of the Arizona Revised Statues.
The Assessor recommends settling the case and reclassifying the parcels as agricultural land. The revised Full Cash Value (“FCV”) is based on statutory agricultural valuation methods using lease data, pursuant to A.R.S. § 42-13101 (regarding agricultural land valuation) and A.R.S. § 42-13302 (regarding Limited Property Value or “LPV”).
The Assessor’s recommended settlement offer for the 2025 tax values to reflect significant reductions for both the FCVs and LPVs, due to granting agricultural status of the subject properties as follows:
Parcel FCV From FCV To LPV From LPV To:
1. 404-11-124D $734,040 $293,616 $658,995 $55,762
2. 404-11-124C $733,725 $293,490 $658,712 $55,739
3. 405-02-007 $809,280 $323,712 $726,543 $61,478
The reduced FCVs for tax year 2025 for the Subject Properties as determined by the Stipulated Judgment, shall roll over and be the FCVs for the 2026 tax year, unless the FCV determined for tax year 2026 is lower, in which the lower value will be the FCV.
Based upon the reduction in full cash and limited property values of the Subject Properties for the 2025 tax year, the Treasurer’s Office will calculate the refund owed, plus any interest at the legal rate pursuant to A.R.S. § 42-16214(A)(3) paid to the Trust Account for Plaintiff’s attorney: Mooney, Wright, Moore & Wilhoit, PLLC.
Each party would bear their own attorneys’ fees and costs including expert witness expenses.
The taxpayer has accepted the settlement offer.
Upon review of the submitted proper documentation, the subject properties meet the statutory classification and valuation for Agricultural Property Classification pursuant to Title 42 Article 4 Chapter 12 and Article 3 Chapter 13 of the Arizona Revised Statues.
The Assessor recommends settling the case and reclassifying the parcels as agricultural land. The revised Full Cash Value (“FCV”) is based on statutory agricultural valuation methods using lease data, pursuant to A.R.S. § 42-13101 (regarding agricultural land valuation) and A.R.S. § 42-13302 (regarding Limited Property Value or “LPV”).
The Assessor’s recommended settlement offer for the 2025 tax values to reflect significant reductions for both the FCVs and LPVs, due to granting agricultural status of the subject properties as follows:
Parcel FCV From FCV To LPV From LPV To:
1. 404-11-124D $734,040 $293,616 $658,995 $55,762
2. 404-11-124C $733,725 $293,490 $658,712 $55,739
3. 405-02-007 $809,280 $323,712 $726,543 $61,478
- For Subject Property #1, 404-11-124D, regarding tax year 2025, a reduction in FCV from $734,040 to $293,616; and a reduction in LPV from $658,995 to $55,762.
- For Subject Property #2, 404-11-124C, regarding tax year 2025, a reduction in FCV from $733,725 to $293,490; and a reduction in LPV from $658,712 to $55,739.
- For Subject Property #3, 405-02-007, regarding tax year 2025, a reduction in FCV from $809,280 to $323,712; and a reduction in LPV from $726,543 to $61,478.
- The parcels to have an assessment ratio of 15% (one entry lists 16% in error for one parcel but likely should also be 15%)
- Each parcel to retain Legal Classification 2 (Agricultural)
The reduced FCVs for tax year 2025 for the Subject Properties as determined by the Stipulated Judgment, shall roll over and be the FCVs for the 2026 tax year, unless the FCV determined for tax year 2026 is lower, in which the lower value will be the FCV.
Based upon the reduction in full cash and limited property values of the Subject Properties for the 2025 tax year, the Treasurer’s Office will calculate the refund owed, plus any interest at the legal rate pursuant to A.R.S. § 42-16214(A)(3) paid to the Trust Account for Plaintiff’s attorney: Mooney, Wright, Moore & Wilhoit, PLLC.
Each party would bear their own attorneys’ fees and costs including expert witness expenses.
The taxpayer has accepted the settlement offer.
Department's Next Steps (if approved):
Upon approval by the Board, the parties will file the stipulated judgment and stipulation for entry of judgment with the Arizona Tax Court disposing of this matter, pursuant to the settlement terms.
Impact of NOT Approving/Alternatives:
Additional litigation for the County with the risk that the Court may: (1) rule in the taxpayers’ favor; (2) order a larger reduction in the assessed value of the subject properties; and (3) order the County to pay the Plaintiff’s attorneys fees and costs.
To BOS Staff: Document Disposition/Follow-Up:
Advise County Attorney's Office - Civil Division upon Board's approval.