What you should know about Scottsdale, Arizona
Scottsdale has more than 100 art galleries and tourism is the largest employer. Scottsdale is also home to the Waste Management Phoenix Open and is home to spring training for the San Francisco Giants.
The Republic
After rejecting a resolution in June, the Scottsdale Unified School District board has now approved a solution to help the district pay the $23.7 million it owes due to a court ruling on property taxes.
School districts across Maricopa County must collectively pay millions in property tax refunds after an appeals court upheld a 2016 ruling in Qasimyar v. Maricopa County.
In the lawsuit, a group of property owners claimed they were wrongfully taxed. The owners argued that their properties should have been reassessed because the classification of the properties had changed from a home to a rental or second home, or vice versa. The Maricopa County Assessor’s Office had not considered this a change in use because the properties were still used for residential purposes.
However, the owners said they received lower tax bills when their homes were reassessed. A tax court ruled in favor of the owners, and an appeals court upheld that decision in 2021.
In total, school districts, fire districts, cities and other taxing districts will have to raise more than $333 million to fund the property tax refund, according to the latest estimates from the Maricopa County Treasurer’s Office. Those estimates include interest through June 2024.
Board initially rejects proposed solution
Scottsdale Unified has the most debt of any K-12 school district in the county: $23,749,224, according to the latest estimates. (The district’s debt load was originally estimated at around $27.6 million.) But it has only about $10 million in excess cash.
In June, the Scottsdale Unified board was presented with an option to finance the remaining balance – selling tax prepayment certificates to the Maricopa County Treasurer’s Office. This would have essentially allowed the county to borrow money from the Treasurer’s Office that could be repaid with future tax revenue.
The tax prepayment certificates were presented to the board as a way to save the district on interest costs. If the district began collecting the funds when the district did not have enough money, the district would have to use a line of credit at the prime rate of about 8%, district spokeswoman Kristine Harrington said.
In contrast, the interest rate on the tax prepayment certificates would likely have been between 3.5 and 6 percent, says Erika Coombs, a member of the district’s financial advisory team who works for the investment bank Piper Sandler.
Coombs also told the panel that selling tax prepayment certificates would be less costly than issuing municipal bonds, another option proposed by the Maricopa County Treasurer’s Office that would also rely on taxpayers.
An emergency law signed by Gov. Katie Hobbs in June also extended the deadline for school districts to repay their tax prepayment certificates to up to four years, said Jim Giel, an attorney at Gust Rosenfeld. Normally, they would have had to be repaid within 13 months.
But in June, board members voted 2-2 to reject a motion to authorize the possible sale of up to $25 million worth of tax prepayment certificates.
Amy Carney and Carine Werner voted against it. Werner, who is currently running for Senate as a Republican, said she wanted to see a better solution, while Carney wanted a solution that would not burden taxpayers.
Giel said during the June meeting that he was not aware of a better option.
The same proposal was approved weeks later
On Tuesday, six weeks later, the board unanimously approved the sale of tax anticipation notes, this time with a maximum amount of $10 million.
Werner justified the decision by citing the panel’s ability to “find common ground and forge consensus” to ultimately “respect our taxpayers.” Panel President Libby Hart-Wells noted that it was “the same solution, just a different cap.”
The $10 million in tax prepayments, along with the district’s $10 million in cash, won’t cover the entire amount Scottsdale Unified owes. But they will “provide the necessary buffer depending on how quickly the district releases the funds,” said Harrington, the district spokeswoman. The rest will be recouped through tax rate adjustments over the next few years, she said.
Harrington said there is no indication the county has begun collecting the money, and the county’s budget has not yet been affected. In a July 23 letter, the Maricopa County Tax Office informed tax authorities that it will begin processing the resolutions in August.
Reach the reporter at [email protected]. Republic reporter Sasha Hupka contributed to this report.
