More specifically, the corporate assessment ratio used to calculate commercial property taxes will be reduced from 20% to 19.5% in 2013, 19% in 2014, 18.5% in 2015, and 18% in 2016.  As you may recall, NAIOP-AZ helped lead the fight six years ago to begin lowering this assessment ratio from 25% to 20% which resulted in more than a billion dollars in property tax savings to businesses over this time.  We are now seeing the fruits of our labor as we have moved from having among the top 5 worst business property tax burdens in the U.S. to currently 15th and with these changes we expect to move to the middle of the pack by 2016 which is more where we should have been all along.  More needs to be done but we have successfully addressed the single biggest impediment to job creation in our state.

In order to address the issue of perceived shifts in taxation to residents, the parties have agreed to toggle the “Homeowners Rebate” upward in the future per calculations from the Dept. of Revenue and to help finance this impact to the State General Fund by reforming the Homeowners Rebate for those that illegally take it on multiple homes that are not their primary residence and those homes that are vacant and in foreclosure.  In short, those that are most deserving get a bump and those that are abusing the credit get dumped.

Regarding the current corporate income tax rate of 6.968%, this will be reduced over four years down to 4.9% which will bring us more in-line with our western state competitors (some of whom who do not have a corporate income tax) and give us the 5th lowest rate in the nation.  The $25 million “deal-closing fund” (called “Arizona Competes Fund’) partially derived from lottery revenues will also give the privatized department of commerce, now called the Arizona Commerce Authority (ACA), a key tool in landing firms that may need a nudge in deciding between finalist states for relocation or regional expansion decisions.

None of these key job creation accomplishments would have been possible had the NAIOP-AZ Board not decided six years ago to aggressively make lowering our corporate property tax burden a priority for reform.  Credit also goes to the NAIOP Public Policy Committee who recently decided to add advocacy for lowering the corporate income tax rate and enacting a deal closing fund last summer.  Key credit also goes to our coalition partners the Arizona Chamber of Commerce and the Arizona Tax Research Assn. (ATRA) who spearheaded our advocacy efforts in tandem with our able contract lobbyists from Veridus.

Finally, this historic bill of course would not have been possible without the leadership of the Speaker of the House, Kirk Adams (R-Mesa) who initiated this Jobs crusade last year, the Senate President, Russell Pearce (R-Mesa) who was adamant that the policies enacted be broad for as many firms as possible (like our assessment ratio reduction), and Governor Jan Brewer and her staff who were willing to compromise and who used the bully pulpit to get this enacted quickly.

Hopefully, these measures will give you, your tenants, clients, and business partners the confidence that Arizona is a great state to locate, invest, and expand.  Please e-mail me if you would like a synopsis fact sheet of all the provisions along with a recent article link that analyzes the provisions.  Thank you for your support as your corporate sponsorship and membership dues have helped underwrite our successful efforts at the State Capitol on behalf of our industry.  -- TL

Tim Lawless
President
NAIOP-AZ
1702 E Highland Ave Ste 401
Phoenix AZ 85016
602.230.1645 office
602.230.1643 fax
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www.naiop-az.org