One Reason for Oro Valley’s “Higher Cost of Doing Business” Reputation: High Pima County Property Valuations

Oro Valley's perceived higher cost of doing business
In the October study session on new taxes, Vice Mayor Melanie Barrett asked why Oro Valley is perceived as a more expensive place to do business than neighboring communities, especially since the proposed taxes would only align the Town with what nearby municipalities already charge.

Is caused by several factor
Finance Director David Gephart said several factors, not higher tax rates, drive the perception. He said that Oro Valley’s property values are higher than surrounding areas. So, given the same Pima County tax rate, Oro Valley Property tax bills are larger in dollar terms. In addition, he noted, commercial rents and construction costs also tend to be higher, reflecting limited available land and strong demand for quality space.

One of which is the reality of higher property value tax assessments
We checked the one factor we could independently verify: Net assessed property values. That is the taxable value of property after applying the assessment ratio and any applicable exemptions. It is the portion of a property’s market (or “full cash”) value that is taxed. 

We found that Gephart is right

In 2025, Oro Valley’s commercial parcels (tax class 01) have the highest average value per parcel in Pima County, with Marana a close second. [see panel right] 

The same pattern holds for residential parcels (tax class 03). The average 2025 assessed value of the Town’s roughly15,921 residential parcels is also the highest among jurisdictions in the county. [See panel below, left]. The same is also true of Oro Valley's commercial residential properties (tax class 04).  

In other words, Oro Valley real estate is simply valued by the county as being the most expensive in the county, regardless of what is the land use.

State rules guide the valuation methodology while local demand drives Oro Valley’s higher values
Property values in Pima County are determined under state-mandated methods that the County Assessor applies locally. The Assessor uses recent sales, property characteristics, and market data, following valuation procedures set by the Arizona Department of Revenue, to estimate fair cash value. In Oro Valley, strong demand driven by location, amenities, schools, and neighborhood desirability often results in higher market and assessed values than in most other parts of the county.

Bottom line for Oro Valley taxpayers: We pay more
Because assessments are higher, Oro Valley property owners pay more in county property taxes even though the tax rate is the same. In short, the community’s desirability shows up in higher valuations, which helps explain the “higher cost” of doing business perception.

When the the taxes paid on all three main property types (residential property, commercial residential, and commercial) are aggregated. Oro Valley owners pay to the county $2,149 per parcel for each of the 21,972  parcels assessed. The total dollars paid ($47.2 million) equals $961 for each of the 49,156 residents. These amounts are far above thc cost per resident of the other jurisdictions. 

It is indeed ironic that we have built a lovely, desirable community, one that now results in greatest county property taxes each year.
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Note: The source of assessment information is the State and County 2025 Abstract of the Assessment Roll, pages 171-173. The document was prepared by the Arizona Department of Revenue.

Bits and Pieces

Kneaders says "Thanks for your support"

The parent company and operator of the Kneaders Restaurant located in the El Corredor Center on Oracle Road has permanently closed this location. According to the owner, the store did not meet its operating objective. We will miss it since we conducted the majority of our interviews there.

This, from Kneaders management: "We thank our loyal guests for their continued support and apologize for the inconvenience of our recent store closing in Oro Valley. We are dedicated to success in every market and this particular site did not meet the anticipated expectation in the region. We remain committed to offering the best service possible to our guests. While we know our next closest location is a ways away, we would love to see our faithful guests visit our other Arizona locations when they are in the area." (Source: Kneaders email to LOVE)

Classical Music Sunday at Riverfront Park

"The Town of Oro Valley and the Southern Arizona Arts and Cultural Alliance have partnered to bring classical music to residents since 1997. The Oro Valley Riverfront Park Classical Concert Series supports some of the finest classically trained musicians with the opportunity to perform monthly in the community’s largest outdoor amphitheater.” The next concert is Sunday from 4-5:30 pm at Riverfront Park. Bring chairs and blankets. There will be a food truck. (Source: Town of Oro Valley Economic Development March Report)

Colorado River reservoirs at 34% capacity

The Arizona Department of Water Resources has posted a dashboard of information regarding Colorado Water. We have added a link in the right panel for it. Another source of future river water status is the amount of snowfall in Grand Lake Colorado. (See our report on this).  Good news: "22/23 snowfall [in Grand Lake] is 11% higher than the historical average this far into the winter." That should improve the rather bleak current situation [panel right].

Oro Valley housing growth continues to slow… should impact construction sales tax revenues

The town issued one permit for a single-family residence (SFR) in February. This continues a the three year downward trend in SFR permits issued that we noted in February. The most recent decrease in SFR permitting activity is not unique to Oro Valley. Oro Valley’s permit issuance results mirror the slowdown in new home growth nationally. Economic “experts” tell us that the slowdown is the result of increased mortgage interest rates. The baseline interest rate is being increased by the Federal Reserve in an attempt to combat rising inflation (caused by increased government spending).  An increase in this base rate increases all interest rates. Experts expect the Federal Reserve to increase the base rate quarterly for at least another year, thus further increasing mortgage lending rates; which, in turn, will depress new home buying. That will result in a decrease in an important piece of Oro Valley’s continuing income, construction sales tax revenues.

Property Taxes: Pima County Sends out "Notice of Value" with massive FCV increased.. but property tax base up much less

If you a home in Oro Valley, you should have received a "Notice of Value" from Pima County. The notice gives you the county's determination of your property value for 2024. The full cash home value (FCV) for one neighborhood increased 27%. It increased 20% last year. We suspect that it's the same throughout the county. For many years prior to that, the FCV had increased from 2 to 3%.  The good news is that property taxes are based on the limited cash value (LCV) which is also shown on the notice. By law, the LCV can not increase by more than 5% per year.  Want to see the FCV and LCV for others in your neighborhood? Visit this link.

 

La Cañada Drive asphalt replacement project begins March 13, drivers should expect delays 

"Construction on La Cañada Drive between Tangerine and Moore Roads will begin March 13, with contractor Sunland Asphalt removing and replacing the existing top two inches of asphalt. Road restrictions will be in place on La Cañada Drive with speed reduced to 25 mph. Drivers should expect delays. Please see details below. The majority of the work and delays will be through March 17 to align with Leman Academy’s spring break, so as to lessen construction impact on motorists. After March 17, ancillary work will continue until April 17 with minimal disruption to traffic." (Source: Oro Valley Media Release)

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Two Amphi School District Seats on Ballot as Superintendent Updates Council

Jaeger updates Council

Todd Jaeger, Superintendent of the Amphi School District ("Amphi"), updated the Oro Valley town Council last Wednesday. His message was three-fold: First thank you so much, Oro Valley, for providing the School Resource Officers to our schools.  Second: Amphi doesn't have enough money. Third: Student academic performance is better than the State of Arizona average. Jaeger concluded remarks by saying “…how proud we are of serving the community of Oro Valley.”

SRO program is a shining light

LOVE has written about the school resource officer program. It is a shining light in our community. It is most certainly something that the Town of Oro Valley will continue to provide. Amphi can not get independent funding for school resource officers so the fact that Oro Valley is providing is that great bonus.

Pressure to spend spend where there are few added funds

The Amphi School gets half of its funding from the local property tax assessment. That assessment has been greater than allowed by the State because local taxpayers have voted to override the State aggregate expenditure limit. That override must be voter approved every five years. 

According to Jaeger, the biggest problem caused by lack of funding is the inability to fill open positions. Most of these positions are for support personnel.  Attracting employees, as Jaeger noted, is a general problem that’s happening today’s economy, whether in the public or private sector.

Spending has also increased because the District provides all day kindergarten programs and preschool programs. These programs require funding and essentially result in the District raising our children. This is a daunting challenge.

The District has a budget of approximately $106 million.  This is $9,200 per year per student.  35% of these students receive free or reduced lunch cost.

Student academic performance better than State average... but that standard is very low

The Superintendent espoused the fact that District students test scores are better than some other school districts and better than the state average when it comes to academic performance. 

Whether it be in math or English, that performance is below any reasonable standard. Less than of half the students can profess proficiency at grade level in math or english. Jaeger refereed to political signs that have been posted regarding the inability of Amphi students to read at grade level. Those signs say that only 40% of students can read at their grade level. The number Jaeger reported was 46%. Not much difference.

Jaeger attributes the low scores to his contention that the District has a diverse population. For example, it has 741 english learners of its more than 11,500 student body. Of these, 2,166 are gifted enrollment. Total enrollment is declining as parents find other options using Charter Schools. Oro Valley has several of these options. Jaegar also noted that the District has the capacity for enrollment growth.

Oro Valley is a major funding source for the District

The Amphi School District is in accident of history. It was established years ago before Oro Valley was truly the kind of community it is today. Oro Valley is the bulwark of funding for the Amphi School District. Oro Valley taxpayers pay a large cost of the District because Oro Valley property values are higher than in the rest of the District. In addition, Oro Valley has a very high proportion of retired people who do not burden the system with students.

Two of the five Amphi Governing Board Seats are on the ballot

The Amphi Governing Board has five seats. Two on the ballot. Mona Gibson and Jeff Utsch are challenging two incumbents. Both Gibson and Utsch are focussed on bringing greater parental input into the school system. According to Utsch: "We need to put the children first and help elevate the teachers."

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About Todd Jaeger

Todd Jaeger joined is now in his sixth year as Superintendent of the the Amphi School District. He was the TUSD legal council prior to that.

Bits and Pieces

Settler's Day Tomorrow At Steam Pump Ranch

Last week we posted about Oro Valley's Settler's Days. It's tomorrow from 9am-3pm at Steam Pump Ranch. It is going to be a good time for the entire family.There is a kid's zone with a Petting zoo, Pony ring, Bugs and Snakes with the Olson Brothers, and Baby goats. And food trucks.
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Bill (HB 2450) Requiring Town Clerks To Enter Serial Numbers Awaits Governor's Signature

A bill that requires town clerks to put the serial numbers on referndum forms has passed both the Arizona House and Senate. The bill was sponsored by Oro Valley resident and state representative Mark Finchem.

According to Finchem:

"My statement on this is intended to be neutral on the golf course matter per se, but focused specifically on government controls imposed on citizens attempting to use the political system (the ballot box) to put a matter to a -vote of the people.  

When voters feel they have been disenfranchised it is a responsibility of the appropriate body to provide relief, if needed. In this case, it was clear the issue would have been a non-issue had the number been placed on the first petition in the series. 

In my short time at the Arizona Legislature I have confirmed my suspicion that statues and ordinances are most often the result of a perceived “bad act” by someone, and they seek only to prevent another happenstance, a repeat of the bad act by another." 

The bill is awaiting the Governor's signature.
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Oro Valley Youth Advisory Council Sponsors BBQ Field Day Event for Oro Valley High School Students Tomorrow

Oro Valley, Arizona (April 1, 2015) - All Oro Valley high school students (grades 9-12) are invited to the annual BBQ Field Day on Saturday, April 11, from 5 to 8 p.m. at the Riverfront Park lower field, 551 W. Lambert Lane.

This FREE event, which is hosted by the Oro Valley Youth Advisory Council, will feature music, volleyball, capture the flag and free food. No RSVP necessary; just show up and join the fun! To view photos from last year's event or learn more about the Youth Advisory Council, visit www.orovalleyyouth.com." (Source: Oro Valley Press Release)
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Watch The Naranja Park Grand Opening

The Town Of Oro Valley has posted a video of the Naranja Park grand opening. This took place in March. You can watch it here.
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From Our Web Mail

From Ben.:
"Speaking of Snakes The first rattler of the year just came out of the snake freeway put in by the town and called gabion baskets. It would take a flame thrower to get the snakes out of these things."
Those are some sturdy baskets!

AK sent us a link on why golf has lost popularity in the US.

Anonyous wrote: "I saw another blogger mention that maybe OV should annex property further south. My question is- what is the northern boundary of Tucson? How far can OV go? I think Ina West of Oracle is county. Is that a place to start?."
The northern boundary of Tucson is just north of River Road. (Tucson Boundary Map)

CF Asked: "Did the Supreme Court take up the case regarding the purchase of El Con golf courses?'
The Court has not yet ruled on whether or not they will hear the case.
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Pima County Assessor Data: Oro Valley/Catalina House Sale Median Values Rank Third In County

"Economic Districts are a grouping of neighborhoods that have similar economic forces or geographic location. Pima County has 22 such areas." Oro-Valley and Catalina are combined into one of these districts.

The median value of a home used in the 2016 valuation in assessing home in this region was almost $270,000. This ranks third behind homes in the Catalina Foothills ($416,500) and the Northeast ($275,000).

This is a drop from a second raking last year, when Oro Valley values ranked ahead of the Northeast district.

(Source)

Oro Valley: Pima County's Cash Cow

You just received your property tax bill. You're amazed. The value of your property, according to the assessment, is up 2%, 5%, 8% or maybe 10% plus. You're reading the month Long Realty Oro Valley housing report. You see that the median price of houses sold has increased only 2% in the past year.

What gives, you ask?

Welcome to "Bizarro World." In Bizarro World, Pima County assessment values and the changes in these values have no discernable relationship to the real world.

The only piece of good news you can fall back on is that, thanks to a voter referendum you approved last summer, property taxes for residential and rentals are based on limited value, starting in 2015. Limited value is restricted to 5 percent increase per year.

"Hallelulah?" you say. Until you realize that a 5% in just in just 5 short years, is actually a 27% increase over today's value.

Feeling a bit stressed?

The county is not done with you yet.

It is likely that this coming August, when the county sets the 2016 property tax rate, they will jack it up double digits. After all, County Supervisor Huckleberry is whining about how the State (you pay for this too) is not giving the county as much money as the county wants.  Stay tuned as the county begins its 2015-16 budget hearings next week.

There's precedent for big increases in the tax rate. Last August the Pima County Board of Supervisors set the county’s combined tax rate for 2015 at $5.76 per $100 of the assessed valuation, an increase of about 12 percent from the prior year. The tax rate increase for the primary rate was 16.17%, Oro Valley's supervisor representative Ally Miller voted against the tax rate increases.

In summary: The county raises the limited value of your property, but not more than 5% by law. Then the county jacks up the primary tax rate by double digits: say 16.17 %, like last year. The result? Your property taxes go up 22%.

The only limit on the amount of the primary tax rate is the vote of your county supervisor.

The county's "tax and spend" philosophy hits Oro Valley property owners hard in Oro Valley because Oro Valley property values are higher per square foot than those in the rest of the county.  As we pointed out in a February posting: "Oro Valley's population is 4% of the county's population but its property values are almost 9% of the county's assessed property values."

Aren't we the lucky ones.

You have until April 28th to submit a petition if think that you value is off. The Assessor's office phone number is (520) 724-8630. The website to visit is here.