As the owner of two houses in Scottsdale and one in Glendale, Walter Juessen probably knows more than most about real estate in Maricopa County.
Even so, he finds himself surprised by a property-tax system that seems to him at odds with common sense.
Two years ago, Juessen appealed the valuation of his Glendale house after finding that taxes on that property were proportionately higher than in Scottsdale.
In some ways, his experience reflects that of many others who challenge their property valuation in the county: He lost his appeal.
Fewer than 1 percent of Maricopa County homeowners have challenged their residential valuations in recent years, records show. Those who did appeal typically lived in pricier homes and usually lost.
The handful who won may have saved less than they had hoped, according to an Arizona Republic analysis of county-assessor data.
The appeals process is one more frustrating component of Maricopa County’s property-tax system, which has vexed homeowners over the past five years as tax bills for most people failed to drop at the same pace as their home values.
From 2008 to 2012, overall property taxes declined 16percent on average while property values plummeted 49 percent, according to an Arizona Republic analysis of county tax and property records.
The county’s decentralized tax system allows each of the more than 1,500 taxing districts across the county to manage its own costs and makes growing areas essentially pay for their own infrastructure. That means individual tax bills can vary considerably. But with the differing tax treatment and the uneven declines in recent years, only a few, like Juessen, tried to appeal.
In 2012, about 2,200 residential homeowners appealed their valuations to the county assessor in an area of approximately 1.2 million houses. There were 321 successful appeals, or less than 15 percent of cases. In 2011, there were 3,900 appeals, with 21 percent winning reduced valuations.
For those who won reductions in 2012, the median decline was about $33,000, or 11 percent of the original value. One person who appealed saw his house’s valuation revised upward.
In Juessen’s 2011 case, his Glendale home value remained unchanged. His property-tax bill ticked upward 6 percent.
“I own a home in Scottsdale that is worth $200,000 more than the Glendale home, but my taxes on the Scottsdale house are only $190 more a year,” he said.
“I don’t get it. Is Glendale now a better location than Scottsdale?”
Although the appeals process is open to all who want to challenge their home’s valuation, many of the cases come from a small swath of neighborhoods.
In 2012, 32 percent of all appeals involved Scottsdale and Paradise Valley addresses. Another one-quarter of the appeals involved other Valley neighborhoods where U.S. census data shows an estimated 5 percent or more of families earn $200,000 or more a year.
A winning appeal of a property valuation can have a dramatic effect on a tax bill.
Chandler residents Arnaldo and Rosamaria Burgos won a reduction of $1.3 million off their house’s $3.5 million assessed value in 2011. The 38percent reduction in valuation cut their tax bill 36 percent, a savings of nearly $13,000.
The Burgoses could not be reached for comment.
But successful appeals don’t always lead to significantly smaller tax bills because of the complex way the bills are constructed.
There are actually two types of valuations used for each tax bill. One is the full cash valuation, which typically represents 80 to 90 percent of the value of what the owner could sell the property for in current market conditions. Full cash value is used to figure taxes for items such as bonds of all types, school overrides and special districts.
The other type is the limited cash value, a value established by the Legislature based on a formula that limits the valuation increase in any given year. Limited cash value is typically less than the full cash value. In recent years, the numbers usually were identical because of the housing bust, but the two figures are expected to diverge as home prices rise again. Limited cash value is used to figure taxes for cities and school districts.
Adding to the complexity, each taxing jurisdiction sets its own tax rate. Unlike property assessments, tax bills cannot be appealed.
Because of the sometimes separate values for full and limited cash value, it is possible for one to fall and the other to rise, skewing the eventual tax bill.
That’s what happened to Goodyear residents Philip Smith and Nancy Wilson.
In 2011, they succeeded on appeal in reducing the full cash value of their house from $421,000 to $390,000. This lowered the taxes tied to that figure. But the limited cash value rose from $352,000 to $390,000, raising the taxes based on that figure.
With the appeal, their house’s valuation fell 7 percent, but their final tax bill fell 1 percent. For their efforts, the couple saved $62.
Smith and Wilson could not be reached for comment.
For most property owners, the time and trouble of an appeal yielded no savings at all. Valuations didn’t budge for nearly 2,800 properties, or 71 percent, of those appealed in 2011. Only 17 percent of all appeals that year resulted in valuations cut at least 10 percent.
No savings for many
Homeowners can appeal in two ways. They can make their case directly to the Maricopa County Assessor’s Office, where the house will get a more detailed review than the cursory one used for the initial assessment.
If homeowners still aren’t satisfied with their valuation, they can appeal to the State Board of Equalization for a new assessment from scratch.
The other avenue is to take the case to court, a path the assessor discourages. Property owners can file a case in small-claims court or go to the Arizona Tax Court. These appeals entail at least a $140 filing fee and often the cost of a lawyer.
One Phoenix resident successfully appealed his house’s $166,000 valuation in 2011. The 7.5 percent reduction in his valuation and tax bill, made by the Assessor’s Office, saved him $138. If he had won the case in court, he still would have lost money.
Some got their tax relief through the appeal to the State Board of Equalization. About one-half of the 739 appeals there in 2011 led to lower valuations.
The median home value for property owners that took this extra step was about $430,000. For those who were successful, the median reduction was $34,713. Nearly half of the winners cut their values 10 percent or less.
There were two clear losers before the state board in 2011: Two homeowners who had won reductions by appealing to the assessor lost their further appeal to the state board, which raised the home values to the original, higher figure.
That outcome is rare. More often, appeals fizzle without any change either from the assessor or the state board.
In 2012, for example, there were 75 properties worth $1 million or more that failed to lower their valuation.
Three homeowners on East Reflecting Mountain Way, a winding stretch of road with desert views just outside the Tonto National Forest in north Scottsdale, challenged valuations on their million-dollar properties last year. All lost.
The county’s biggest denial in 2012 involved a $12.3 million Scottsdale mansion owned by Kevin P. Knight, CEO of the Phoenix-based trucking company Knight Transportation Inc. The news wasn’t all bad on his property taxes, however. Knight’s annual tax bill still fell from $148,000 in 2011 to $121,000 in 2012 because rates declined that year for every taxing district to which he owed money.
Knight could not be reached for comment.