County lawsuit may prompt higher fire district taxes in Sun City West

The Qasimyar versus Maricopa County tax court case recently settled and will result in tax refunds for specific residential property taxpayers throughout the county while others may see tax increases as a result.

Fire districts in the county collectively will be required to refund more than $10 million.

The Arizona Fire & Medical Authority Deputy Chief Kane Nixon said this court case will have a significantly negative impact on the Authority.

“Financially, it equals approximately $5.9 million, which must be paid within one year. This will rattle our financial stability and require the Authority to take drastic measures,” he explained.

Nixon explained Authority officials have two options. The first is to take the $5.9 million from the capital reserve fund, which would nearly deplete it and restrict Authority official’s ability to purchase and maintain critical operational infrastructure, delaying maintenance and emergency vehicle purchases. This will impact the residents in Sun City West and other communities the Authority serves.

Nixon said the other option is to take the $5.9 million from the annual operating budget.

“Resulting in a 10% overall reduction and eliminating staff, firefighters, and EMS personnel, seriously reducing the 9-1-1 services to the communities we serve,” he added.

The outcome is out of the control of Authority officials and Nixon said unfortunately other agencies are also effected across Maricopa County. This will result in draconian fund reductions, undoubtedly harming Authority official’s ability to provide emergency services, Nixon said.

For the Sun City Fire District, it will be close to $1.4 million. Therefore, tax refunds may be offset or eliminated in the balance.

Fire districts are seeking assistance from the county Board of Supervisors and the Arizona Legislature to mitigate the financial impact of the Qasimyar tax refund order on the county’s fire districts. Financial assistance from Maricopa County or the Legislature will ensure there is no short-term or long-term disruption or diminishment in public safety service delivery, said Sun City Fire District Chief Rob Schmitz.

The tax refunds are slated to be collected from taxing agencies in Maricopa County in FY25 for reimbursement to the taxpayers. This may have a substantial impact on FY25 budgets for fire districts located in Maricopa County. The county has indicated that they will take back the years of overpayment on July 1, the first day of the FY25, he said.

Other special taxing districts, such as school districts and community college districts, are also feeling the pinch. The property assessment error spans 2015 to 2023 and the resulting tax refunds to be paid in FY25 are approximately $330 million dollars county-wide with additional interest at eight percent annually.

The SCFD board of directors passed a tentative FY25 budget May 28 of $21 million. That budget, however, did not include a $1.4 million payout to the county to reimburse it for the district’s portion of the lawsuit. Maricopa County fire districts total portion of the court judgment amounts to $10.6 million dollars, plus the interest.

“We don’t have it in the proposed budget at all,” Schmitz said. “I want the community to know that the county made an error and we have to pay this back, which will cause more financial strain.”

Under Arizona Revised Statute 42-16212, taxing districts, such as SCFD, may raise taxes over the prescribed limit for one-time repayment of monies owed to the county deriving from a judgment. According to the statute, “The affected taxing jurisdictions shall include in their budgets for the next fiscal year the proportional amount of the judgment for which each is liable. Any increase in the budget because of the portion of the judgment being included is not subject to any budget limitation that may be prescribed by law.”

“We don’t want to go down that road, but Plan B is that we use the statute to go back to the budget and raise the taxes,” Schmitz said.

In the meantime, fire chiefs are submitting letters to the Legislature arguing against placing their clients under financial strain for a county mistake, he said. Many of Maricopa County’s fire districts protect vulnerable senior populations such as Sun City, Sun City West, Sun Lakes, Rio Verde and Anthem and the residents of these vulnerable communities are on fixed incomes and cannot afford to pay for Maricopa County’s error, he said.

“Any diminishment of fire district services will significantly impact the senior population, as they have increased vulnerability to injury or death in residential fires and rely on prompt and efficient emergency medical and ambulance services for their survival,” according to the letter.

The judgment results from a lawsuit known as Qasimyar v. Maricopa County, which challenged how certain property taxes were billed by county officials. A tax court initially ruled the county needed to recalculate the assessed value of the plaintiffs’ homes. In 2021, an appeals court upheld that decision.

In Arizona, the amount of property taxes a resident owes is calculated using the property’s “assessed value,” which relates to the property’s Limited Property Value (“LPV”) and classification. Statutorily, a property’s LPV goes up by no more than 5% each year (Rule A) unless there is a significant change to the property or a “change in use.” If the property’s use has changed from the previous tax year, the LPV is determined by comparing the property to similar properties (Rule B).

In Qasimyar v. Maricopa County, the legal issue was whether a change in classification between Class 3 (owner-occupied residential home) and Class 4 (rental home, non-primary residence, or a non-primary residence leased to lodgers) is a “change in use.” The case was filed by Ahmad Zaky Qasimyar.

The Tax Court ruled that reclassifying a property from Class 3 to Class 4 or vice versa is a change in use and required recalculation of the property’s LPV using Rule B. This ruling was ultimately upheld by the Court of Appeals in 2021, according to the Maricopa County Assessor’s Office.

A homeowner may be impacted in one of two ways if the residential property was reclassified from Class 3 to Class 4 or vice versa during tax years 2015 to 2023. If the legal class of the property changed between Classes 3 and 4 in tax years 2015-2021, they may be a class member in the ongoing class action lawsuit (Maricopa County Superior Court, case number TX2016-000882). A homeowner may be entitled to a reduction in LPV and tax refund. Eligible owners should have received a Notice of Class Action from the Assessor in July 2023. Also, if the legal class of the property changed between classes 3 and 4 in tax years 2022 or 2023, the Assessor must follow the law set by the Court of Appeals in Qasimyar. The Assessor’s Office will issue Notices of Proposed Correction recalculating the LPV for all properties that have now received a Rule B for 2022 or 2023. These tax roll corrections must be made, regardless of whether the change will increase or decrease the owner’s LPV, according to the Assessor’s Office.

Soon after the 2021 Court of Appeals rulings in Qasimyar, Senate Bill 1267 was introduced, asking the Arizona Legislature to clarify whether changes between Classes 3 and 4 were intended to trigger the application of Rule B. Statutory changes now make clear that a property moving between Classes 3 and 4 does not constitute a “change in use,” based on ARS 42-13302. These changes took effect on the general effective date, Sept. 24, 2022, for the 2023 tax year.

If the Class Action or a Notice of Proposed Correction causes a change to the homeowner’s LPV for a given year, their LPV will automatically be recalculated and updated by the Assessor for subsequent tax years. This can trigger refunds for some if the LPV and corresponding property tax bill decreased. No additional tax payments for previous tax years will be owed. The cumulative effect of an increased LPV will be reflected in the 2025 tax bill that will be issued by the Treasurer’s Office in September 2025.

Reporter Jennifer Jimenez contributed to this article.