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Mesa property-tax rates

Most SE Valley property-tax rates drop, but not in Mesa


Mesa residents should expect larger city property-tax bills next fall, while most other Southeast Valley residents will pay lower rates as a result of population growth and rebounding home values.

As elected municipal leaders in the region adopt spending packages for a new budget year, they are setting property-tax levies that will be included on bills for hundreds of thousands of homeowners in Chandler, Gilbert, Mesa and Tempe.

Since Arizona municipalities tend to rely more heavily on sales and state income taxes to fund operations, property-tax rates can easily fall out of the public consciousness, especially when the bills are rolled into a homeowner’s mortgage payment.

But rising property values mean that residents could eventually start seeing higher tax bills, although most Southeast Valley communities are staying conservative for fiscal 2015, which begins Monday, July 1.

Overall levies are set to increase across the region, but only slightly in Chandler, Gilbert and Tempe. Many property owners in those communities will actually see smaller bills this fall.

That’s in part because of steady population growth, which brings in new taxpayers to help shoulder the load. And although property values are climbing, the rate at which cities are taxing residents and businesses is falling.

Mesa is an outlier, however, after voters approved $130 million in new bonds for streets and public-safety projects last November.

The city plans to raise its property-tax levy by 51 percent in fiscal 2015, meaning the owner of a $200,000 home likely would pay about $237 in taxes, up from $173 the previous year.

Mesa resident Joe Leal said homeowners with a mortgage typically don’t take the time to break down their payments, so an additional $4 or $5 a month will go unnoticed by most.

Homeowners without a mortgage, however, will likely notice the increase, he said.

“As long as the money is used to better equip the officers and firemen to be the best, then I am OK with it,” Leal said.

Mesa plans to sell the voter-approved bonds this month to finance projects such as a $16 million fire-communications center and to replace aging fire apparatus to the tune of about $15 million. In 2012, voters also authorized $70 million for park improvements, and bonds were last sold in June 2013, officials said.

Chandler last issued general-obligation bonds, funded by a property tax, in 2011, and has no plans to do so again this year.

City officials see fall 2017 as a potential time to issue new bonds for streets and parks but have not identified specific projects.

It has been six years since Gilbert sold general-obligation bonds, which paid for road and park projects, and the town still has $71 million in unissued bonds it can use for near-term street improvements.

A look at how property-tax rates compare among Southeast Valley communities.
Municipality 2015 rate 2014 rate 2015 levy 2014 levy
Mesa $1.19 $0.86 $33.4 million $22.1 million
Chandler $1.18 $1.27 $27.3 million $27.1 million
Gilbert $1.07 $1.15 $19.5 million $18.4 million
Tempe $2.44 $2.49 $38.9 million $37.5 million

Tempe sold $11.7 million in new general-obligation debt last month and typically issues bonds annually to finance capital-improvement projects, officials said.

Property values across metro Phoenix have soared in recent postrecession years, and county-assessed values are now beginning to reflect the increases as they lag the real-time market.

Residential property values are up by about 25 percent in the Southeast Valley for fiscal 2015. Mesa has seen the largest increase, with home values up by nearly 27 percent.

Commercial property values also are increasing, although at a more modest clip. Commercial values are up by 18 percent in Gilbert and 12 percent in Mesa, with Tempe and Chandler falling in between.

Although increased values are a welcome change for city officials after years of decline, new state laws adopted by the Legislature and Arizona voters are limiting the benefit cities can reap. The laws are designed to protect property owners from sudden spikes in their bills.

Proposition 117, which voters approved in 2012, caps the annual increase of a property’s limited cash value — used to calculate the tax assessment — at 5 percent.

Lawmakers last year passed House Bill 2347, which prohibits a city or town from collecting more secondary property-tax revenue than is needed to make that year’s debt payment. The legislation prevents municipalities from stockpiling tax revenue but can also create volatility in the tax rate, which is more likely to change every year.

In Gilbert, for example, the Town Council had maintained a property-tax rate of $1.15 per $100 of assessed value for several years, but the rate is dropping by 8 cents for fiscal 2015. The following year, the rate likely will spike as the town is scheduled to make a much larger debt payment, officials said.

All four major Southeast Valley communities levy a secondary property tax to repay bond debt, but only Tempe and Chandler have primary property taxes to help fund government operations.

Municipal levies comprise only a small portion of a typical property-tax bill, while school districts and the county tend to be bigger collectors.