cawcd 2011-2012 t ptp roperty taxes · 5/19/2011 · property valuations property valuations used...

CAWCD 2011-2012P t TProperty Taxes

Finance, Audit & Power CommitteeCommitteeMay 19, 2011

Ted CookeAssistant General Manager,Finance & Information Technology

AgendaAgenda

CAWCD Property Tax Authorities

Property Valuations

General Ad Valorem Tax General Ad Valorem Tax

“Water Storage” Tax

CAWCD Property Taxes

Authorized under A.R.S. Title 48, Chapter 22

CAWCD Property Taxes

Authorized under A.R.S. Title 48, Chapter 22 “Multi-County Water Conservation Districts”

Two taxes authorized:• General Ad Valorem Tax not to exceed 10 cents per

$100 of assessed valuation$• Tax “for Water Storage” not to exceed 4 cents per $100

of assessed valuation

CAWCD property taxes are levied on the Full CAWCD property taxes are levied on the Full Cash Value (FCV) or “secondary valuation”

General Ad Valorem Property Tax

General Ad Valorem Tax may be used for any


y yauthorized purpose except as a pledge towards repayment of revenue bonds• U h i l d d ti f• Uses have included creation of reserves,

Operations & Maintenance, Repayment and capital expenditures

Historical General Ad Valorem Tax rates:1987-1988 through 1999-2000 10 cents2000 2001 th h 2002 2003 9 t2000-2001 through 2002-2003 9 cents2003-2004 through 2006-2007 8 cents2007-2008 through 2010-2011 6 cents2007 2008 through 2010 2011 6 cents

Uses of General Ad Valorem Property Tax

POWER &BASIN FUND REPAYMENT

p y

CAPITAL

REVENUESREPAYMENT

CAPITALCHARGES OM&R

RESERVES

PROPERTYTAXES &

INTEREST*

CAPITALWATER

DELIVERY CAPITALDELIVERYCHARGES

*includes other miscellaneous revenues

Property Valuations

Property valuations used for tax purposes have

Property Valuations

Property valuations used for tax purposes have an implicit 2-year lag between the time of the valuation and the collection of the tax• Taxes collected in 2011-2012 will be based on valuations

published in March 2010• Valuations published in March 2010 are based on• Valuations published in March 2010 are based on

property values established during 2009

Property Tax TimelineProperty Tax TimelineTwo-Year Time Lag

Jun Dec DecDecMar Jun Oct MarSepJun2009

Dec2009

Dec2011

Dec2010

2011-2012 Tax Year assessed

valuation

Mar2010

Jun2011

2011-2012Tax Year Rates Set

Oct 2011

Mar2012

Sep2009

Market Valuations

2nd Half2011-2012

Tax Payment Due

valuation published

(based on 2009market values)

1st Half2011-2012

Tax Payment Due

Determined

2011 Calendar Year

Property Valuations

Property valuations increased significantly

Property Valuations

Property valuations increased significantly between 2004 and 2006

Valuations have declined significantly since theng y The “boom-bust” cycle in property values has

been about 6-7 yearsy• Values are expected to “bottom” in 2011 at about 2004

levels• Expected “bottom” for tax purposes will be 2013-2014

tax year

Property Valuations

Value of one cent of tax collection to CAWCD:

Property Valuations

Value of one cent of tax collection to CAWCD:• $4.5 million in 2006-2007• $7.1 million in 2008-2009 and 2009-2010

$• $6.2 million in 2010-2011• $4.9 million in 2011-2012• $4.3 million in 2013-2014 (expected “bottom”)$ ( p )• Not expected to be back to $7 million until at least 2018-2019

At a rate of 6 cents, CAP Ad Valorem tax on a $ $ $$100,000 home is $6.00 per year; tax on a $200,000 home is $12.00 per year

Property ValuationsProperty Valuations

75

80180Impact of Property Valuations on CAP General Ad Valorem Tax Levy

60

65

70160

07 =

100

%)

45

50

55

120

140

$ M

illio

ns

cent

Val

uatio

n (2

006/

0

30

35

40

100

Perc

6 cents (pro forma)

2580

Tax Year (Year Tax Collected)

8 cents 6 cents

2009 Forecast (left axis) 2010 Forecast (left axis)

2011 Forecast (left axis) CAP General Ad Valorem Tax Levy (right axis)


What was reported last year:


What was reported last year:• At a tax rate of 6 cents, in the short term (2011-2016)

the General Ad Valorem Tax will be completely d b th t f A Fi d OM&R d th Aconsumed by the cost of Ag Fixed OM&R and the Ag

Incentive Program• General Fund Reserves in the short term will be

maintained through receipt of ARC revenues and interest income

Ag Settlement Pool Cost ForecastAg Settlement Pool Cost ForecastSlide presented in May 2010

2 0 2.8 2.8 2.4 3.0

39.4

33.5 29.7

29.3 30.5 32.5 34.7 35

40

45

3.6 4.4 2.2 2.0 2.8 3.0 29.7

20

25

30

$ M

illio

n

27.6 27.6 29.2 30.4 31.2 32.4 33.2

5

10

15

02010 2011 2012 2013 2014 2015 2016

Ag Fixed OM&R Ag Energy SO2 Credits 6¢ ad valorem tax


The current situation:


The current situation:• At the current rate (6 cents), property tax revenues

through 2016 will decline an additional $17 million from l t ’ f tlast year’s forecast

• The “upside down” situation with Ag delivery costs is temporary, since the Ag pool will be reduced from p y, g p400,000 acre-feet to 300,000 acre-feet in 2017

Ag Settlement Pool Cost ForecastAg Settlement Pool Cost ForecastAg Pool reduced from 400,000 a-f

to 300,000 a-f in 2017

4.5 2.2 1.8 1.4 2.6 2.6 33.6

35.1 30

35

40

32 4 33 2

4.5 1.9 28.6

26.7 26.4 27.6 30.3

20

25

$ M

illio

n

27.6 29.2 30.4 31.2 32.4 33.225.8

5

10

15

02011 2012 2013 2014 2015 2016 2017

Axis TitleAg Fixed OM&R Ag Energy ad valorem tax @ 6¢




The current situation:• Staff expects improvements in other areas to offset the

property tax decline:• 2010 Strategic Reserve ending balance is $8 million higher due

to favorable capital spending and basin fund activity• Interest earnings are improving due to higher reserve levels and

hi h i t t i ldhigher investment yields

• Current projections indicate that Strategic Reserves will be able to be maintained at or above target levels through 2016 without increasing taxes

• Pressure on property tax revenues is expected to be relieved somewhat in 2017 when Ag Pool is reducedrelieved somewhat in 2017 when Ag Pool is reduced


CAP Reserve Trend AnalysisGeneral Fund Strategic Reserves


350

400

General Fund Strategic Reserves

$214 $233 $227 $231 $225 $219

$206 $216 250

300

s

$166

$177

100

150

200

$Mill

ion

0

50

100




• No immediate tax increase is required since reserves are expected to remain at Board-established target levels

• Current projections indicate that no tax increase isCurrent projections indicate that no tax increase is anticipated to be needed prior to improvements in the sources and uses of tax• Reduction in Ag Settlement Pool and commensurate costsReduction in Ag Settlement Pool and commensurate costs• Uptick in property values

Staff recommendation: maintain ad valorem tax rate at 6 cents

Caveat (same as last year) – any new subsidy or reserve will require a new revenue sourcereserve will require a new revenue source

“Water Storage” Property Tax

The current tax was authorized beginning in

Water Storage Property Tax

The current tax was authorized beginning in 1996 and sunsets in 2016• A previous tax was collected to fund State

Demonstration Recharge Projects (1991-1996)

CAWCD must levy only a single “Water Storage” t t th h t th di t i ttax rate throughout the district

Historical “Water Storage” Tax rates:1996 1997 th h 2010 2011 4 t1996-1997 through 2010-2011 4 cents


The statute requires CAWCD, by Board


The statute requires CAWCD, by Board resolution, to determine how much, if any, of the “Water Storage” tax levy is to be reserved for repayment or OM&R

The remainder (if any) is to be deposited with the State Treasurer in the Arizona Water Banking Fund


All “Water Storage” taxes collected through the


g g2002-2003 tax year were deposited in the Arizona Water Banking FundB i i i 2003 2004 h B d d ll Beginning in 2003-2004, the Board reserved all “Water Storage” tax collections for OM&R, and has continued to use those tax proceeds for thehas continued to use those tax proceeds for the same purpose (M&I firming)

This approach allowed CAWCD to retain and protect “Water Storage” tax proceeds in its own account


There is a dilemma presented by the single “Water


There is a dilemma presented by the single Water Storage” tax rate and the differences in firming needs and revenues available among the three

ticounties• All of the “Water Storage” tax collected in Pima and

Pinal counties is needed to help meet M&I firming needsPinal counties is needed to help meet M&I firming needs and, by itself, will not be sufficient to do so

• The “Water Storage” tax collected in Maricopa County d th d f M&I fi i d h lt d iexceeds the need for M&I firming and has resulted in a

substantial unused balance


A concept has been presented for further discussion that


p pwould allow some flexibility (under existing law and with no new taxes) in the use of AWBA withdrawal fees and water storage tax collected by CAWCD to fulfill both M&Iwater storage tax collected by CAWCD to fulfill both M&I firming goals and Indian firming obligations


Staff Recommendations:


Staff Recommendations:• Maintain the “Water Storage” tax rate at 4 cents per

$100 of assessed valuation• Continue the practice of reserving the “Water Storage”

tax to defray annual operations, maintenance and replacement costsp

Questions???Questions???

cawcd 2011-2012 t ptp roperty taxes · 5/19/2011 · property valuations property valuations used...

Documents