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Friday 16th of November 2018

Fire Restrictions

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SLFD ~ TVFD: PROPOSED MERGER INFO
A combination of strict property tax levy limits and increasing expenditure pressures has led many fire districts in Arizona to reconsider the manner in which they are providing services. In particular, many are exploring ways to share or merge services with other districts as a means of spreading costs while maintaining (or even enhancing) existing levels of programs and services.
 
The Governing Boards of the Sun Lakes Fire District and the Tonopah Valley Fire District have adopted resolutions declaring that a merger of the Sun Lakes and Tonopah Fire Districts be considered and that public hearings be held on the matter pursuant to Arizona Revised Statutes §48-820 to consider taxpayer comments on the proposed merger.
 
Therefore, the fire district boards will each hold a public hearing to determine if a merger would be in the best interest of the districts.
 
Tonopah Valley Fire District Public Hearing                  
When: December 4, 2018 at 10:00 am
Where: Fire Station 341
36511 W. Salome Highway, Tonopah, Arizona 85354
 
Sun Lakes Fire District Public Hearing
When: December 4, 2018 at 2:00 pm
Where: Fire Station 232
25020 S. Alma School Road, Sun Lakes, Arizona 85248
 
If the governing boards adopt a resolution that the merger would promote public health, comfort, convenience, necessity or welfare and each board reaches unanimous consent, the Boards shall adopt a resolution declaring the two districts merged and joined pursuant to Arizona Revised Statutes (ARS) §48-820.
 
If each of the governing boards do not reach unanimous consent to approve the merger, then the governing boards of each district may consider asking the Maricopa County Board of Supervisors to call for an election to merge the fire districts.
 

General Proposed Merger Area Description:
 
Sun Lakes Fire District
 
Sun Lakes Fire District boundaries include the community of Sun Lakes along with surrounding unincorporated areas within Maricopa County. Its boundaries abut to the City of Chandler and the Gila River Indian Reservation.
 
Tonopah Valley Fire District

Tonopah Valley Fire District serves unincorporated areas within Maricopa County, including federal and state lands. Its boundaries abut to the Buckeye Valley Fire District and the Harquahala Fire District.


Map of the Proposed Merged District Boundaries:
 
(The map below shows the merged district boundaries. No new territory will be added as a result of this proposed merger.)Sun_Lakes_and_Tonopah_Map

Why Consider a Merger?
 
Public safety agencies throughout the nation are continually trying to provide increased levels of service with increased funding constraints. Arizona fire districts are not immune to these challenges and many are analyzing ways to continue to provide the level of service required by the communities they serve while facing continued financial limitations.
 
The notion of a merger is not a new one and has been undertaken in both private and government organizations for many years. Numerous states have experienced a public service budgeting crisis and have turned to the notion of a merger as it may provide an opportunity to deliver similar or increased levels of service within an environment characterized by restricted revenue and increasing expenses. Special taxing districts, such as Tonopah and Sun Lakes, are vulnerable to tax limitation laws and downturns in revenue that limit their ability to finance operations.
 
Due to continued financial difficulties, the Arizona State Legislature has revised the laws governing fire district mergers to encourage fire districts to explore mergers as an option to reduce operational redundancies and expenses in an attempt to achieve financial stability. 
 
In summary, the merger concept is being explored as a potential means to achieve long-term financial efficiency and stability with the ultimate goal of maintaining or enhancing existing levels of emergency services for the citizens of the Sun Lakes and Tonopah Valley Fire Districts. 
 
Click Here to download a Merger Frequently Asked Questions sheet.
 

Arizona Fire District Funding Issues:
 
Historically, Arizona property receives two valuations: full cash value (FCV) and limited property value (LPV). The Arizona Constitution requires that the FCV of all property valued by the County Assessor be reflective of the current market value. Since the FCV fluctuates with the market, there is no limit in the amount it can increase or decrease each year. Through tax year 2014, growth in the LPV was limited to the greater of 10% of the previous year or 25% of the difference between the current year’s FCV and the previous year’s LPV, with the stipulation that LPV could not exceed FCV.
 
The LPV is factored by an assessment ratio set by the legislature to determine the assessed value - which is the taxable value. The assessment ratio for residential properties has been 10% since 1973. The ratio for most centrally valued commercial properties (utilities) was 50% in 1979, gradually dropping to 25% by 1999, to 20% in 2012, and dropping to 18% in 2016 for a total drop of 64%. Commercial properties valued by the county assessor had an assessment ratio of 25% through 2005; dropping to 20% in 2012 and dropping to 18% in 2016 for a total drop of 28%.
 
When the legislature reduces the taxable value of one class of property by lowering the assessment ratio, it shifts the tax burden to other classes, mostly residential. Reducing the limited value of centrally valued commercial properties by 64% and county assessor valued commercial properties by 28% has increased homeowner’s annual taxes by 20‐30%.
 
The amount of tax is determined by the tax rate set by each tax district. The tax rate is calculated by dividing the taxing district’s budget by the total limited assessed value in the district. That rate is applied to the assessed (taxable) value of each property to determine what share of each district’s budget it will pay.
 
Below is a brief summary of the legislation that currently affects Arizona fire districts’ revenue streams:
  • Arizona Revised Statutes §48807 – Capped at the maximum tax rate of $3.25 per $100 of assessed property value. The fire district tax rate cap was first established in 1992 at $3.00. In 2005, the tax rate cap was adjusted to $3.25 to offset the change in commercial property assessments from 25% to 20% (primarily transferring the tax burden to residential / homeowners). If the $3.25 tax rate cap had been adjusted annually for inflation, today’s fire district tax rate cap would be greater than $5.15.
  • Senate Bill 1421 – Passed in 2009, limited the increase in total tax levy for fire districts to no more than 8% over the prior year’s actual levy.
  • House Bill 2001 (Jobs Bill) – Passed in 2011, reduced tax assessment of Class One (commercial) and centrally valued properties (utilities) from 20% to 16% further transferring the tax burden to homeowners (with no additional tax rate cap adjustments).
  • Proposition 117 – In the 2012 general election, voters passed Proposition 117 which amended the Arizona Constitution by setting a limit on the annual percentage increase in property values used to determine property taxes to be no more than 5% above the previous year. This established a single LPV as the basis for determining all property taxes on real property starting in Fiscal Year 2015‐2016.

Proposed Merger Feasibility Analysis Process:
 
The fire districts are taking the following steps to determine the feasibility of the proposed merger:
  • Both fire districts commissioned a comprehensive merger feasibility analysis and an economist valuation and growth study; each of which were conducted by an independent third party (see links below).
  • Both fire chiefs and their respective staffs found the proposed merger best serves the Tonopah Valley and Sun Lakes Fire Districts and that the proposed merger would promote public health, comfort, convenience, necessity or welfare; and recommended to each of their fire district governing boards to consider the proposed merger of the districts.
  • Both fire districts have held public meetings regarding the proposed merger and are planning to hold public hearings on December 4, 2018 (details above) to allow for additional taxpayer comments on the proposed merger.

 Consultant Reports (click on links below):
 
Benefits and Injuries of the Proposed Merger:
 
Benefits:
  • Tonopah Valley tax rate reduction
  • Overall pension cost reductions
  • Cost savings and increased efficiencies
  • Greater purchasing power
  • Reduction of duplicative efforts
  • Greater administrative/support service staff flexibility and capability – increased depth of service
  • Increased operational staffing flexibility and capability – increased depth of service
  • A larger pool of employees for career development, promotions and back-fill to cover vacancies
  • Improved prevention and code enforcement services
  • Enhanced focus on information technology systems
  • Balanced demands for increased services
  • Unified service delivery
  • Improved ability to absorb financial crisis
Injuries:
  • Change of District name(s)
  • Reduction in the amount of future Fire District Assistance Tax (FDAT) revenue due to state mandated cap
  • Transition complexities

Merger Financial Impact:
 
The proposed merged fire district is estimated to levy $8,167,760 in direct property taxes in fiscal year 2018 [fiscal year (FY) beginning July 1, 2018 and ending June 30,2019]. The estimated tax rate for the proposed consolidated fire district is $3.20 per one hundred dollars of limited property value (FY 2019). Note: There is no change in the property tax levy or property tax rate in the current fiscal year (FY 2018) for either district as those levies and rates have already been established.
 
The estimated assessed value of the proposed merged fire district is $253,284,209 for fiscal year 2018 (July 1, 2018 – June 30, 2019). The estimated levy of the proposed merged fire district is $8,167,760 for fiscal year 2018.
 
The following table shows the current tax rates of each district and the estimated tax rate of the proposed merged fire district.
 

Fire District

2018 Current Tax Rate

2019 Merged Tax Rate

Change

Sun Lakes

$3.2000

$3.2000

$ 0.00

Tonopah

$3.5000

$3.2000

$ -0.30

The estimated change in annual property tax liability for a typical resident of each fire district is provided in the following table. This table illustrates the SAMPLE tax liability for a residential property owner of either district whose home has a limited property value of one hundred and twenty-five thousand dollars ($125,000).

Fire District

Current 2018 Tax Liability

Merged 2019 Tax Liability

Change

Sun Lakes

$400.00

$400.00

$ 0.00

Tonopah

$437.50

$400.00

$ -37.50

Note: To determine your home’s specific property tax liability for the proposed merged fire district, use the following formula:

Limited Property Value (LPV) divided by one hundred equals sum to be multiplied by proposed tax rate. (LPV / 100 X 3.200)


 Fire District Merger Statute:  Arizona Revised Statutes 48-820

 
For more information or if you have any questions, please contact:
 
Sun Lakes Fire District
Assistant Chief Mary Dalton
Arizona Fire & Medical Authority Administration: (623) 544-5400
 
Tonopah Valley Fire District
Chief John Teixeira
Fire Station 341: (623) 393-0105
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Secondary Document Links:
 
Last Updated on Friday, 26 October 2018 09:22
 

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