The Maricopa County Community College District is preparing to sue its own county over a property tax dispute and said it could be forced to raise tuition or cut programs.
“It’s certainly not our preferred choice,” said the board’s president Susan Bitter Smith. “We spent a lot of time attempting to get information and trying to work with the county.”
But when that didn’t work, Bitter Smith said the Maricopa Community Colleges made a difficult decision.
“We have filed a notice of claim against the county to see if we can resolve this issue,” she said.
The college district is trying to resolve a $45 million tax bill it now owes, with interest, stemming from a 2016 lawsuit and property tax error it didn’t cause.
“Which is a very significant amount for the community college district,” Bitter Smith said.
A notice of claim is the precursor to a lawsuit and the county has 60 days to respond before further legal action can be taken.
Court decision at the center of property tax dispute
This all stems from a 2016 lawsuit, Qasimyar v. Maricopa County. A tax court ruled in favor of property owners who sued the county, alleging they were improperly and erroneously assessed when their properties went from a primary resident to a rental or secondary home or vice versa. And therefore, should have seen lower property tax bills because of what’s known as a “change of use.”
The Arizona Court of Appeals upheld the ruling and agreed some property owners were overtaxed. This forced hundreds of thousands of homes to be reassessed and resulted in property tax refunds from 2015 to 2021.
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The Maricopa County Assessor and Treasurer both have websites now dedicated to the far-reaching impacts of the court decision.
Property taxes are a large portion of the college district’s budget.
“The county, unfortunately, failed to notify us until after the judgment was issued and our budget was approved,” Bitter Smith said.
She said the county’s failure to notify MCCCD has left the district with few options, and she said the county has now started taking the money they owe out of the college district’s bank account.
“Extremely frustrating. There’s been a great deal of angst, a great deal of fear on the board’s part,” she said.
Other fire districts, taxing authorities also impacted
As ABC15 has previously reported, it’s not only one taxing district having to come up with millions of dollars in tax refunds in a single year.
In all, the county treasurer estimates it will have to pay back $329 million in property tax refunds. Hundreds of millions of dollars from all county taxing districts, including school districts, fire districts, cities and towns are on the hook to repay.
The county said 164,000 property owners will receive refunds from that bucket of more than $300 million.
Maricopa County Assessor inherited lawsuits impact
Maricopa County Assessor Eddie Cook, who was not in office when the lawsuit was filed, he said he was sympathetic to the concerns from fire districts but does not agree with the judge’s decision.
“The county assessor, in my opinion, did not make a mistake in the 2016 timeframe. I believe the judge was incorrect in the ruling,” Cook said during a June interview with ABC15.
When asked if the county did everything it could to fight the lawsuit and judge’s ruling Cook said:
“I wasn’t here when it happened. I believe that we could have been better.”
Despite his opinion, it doesn’t change the millions of dollars Maricopa Community Colleges and other taxing districts are having to pay back.
“Clearly, the last thing we want to do is to raise tuition. Our goal here is to provide affordable educational services for our constituents,” Bitter Smith said.
MCCCD’s notice of claim
According to MCCCD’s eight-page notice of claim, it says the way the county is recouping these funds is “fundamentally unfair” and describes “immense frustration resulting from the unauthorized taking of district funds.”
“I’m hopeful that our board and their board can work together to come up with a great answer,” Bitter Smith said.
ABC15 reached out to Maricopa County for comment. The county said it doesn’t comment on potential litigation.
Back in August, the Board of Supervisors approved funding that will help certain taxing districts cover their tax bill stemming from the lawsuit.
The county said $10 million will go to fire districts that respond to emergencies. The other $4 million will go to lighting districts and maintenance improvement districts not associated with a city or town, but also impacted by the court decision.
The Board of Supervisors said funding was only approved for taxing districts with no available source of revenue other than property taxes, and no other governing body to seek assistance.
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