Coconino Community v. the Property Tax

── Coconino Community v. the Property Tax ── Case No.: 1 CA-TX 25-0001 Court: Court of Appeals of Arizona Date: March 27, 2026 Category: General IN THE ARIZONA COURT OF APPEALS DIVISION ONE COCONINO COMMUNITY COLLEGE DISTRICT, Plaintiff/Appellee, v. THE PROPERTY TAX OVERSIGHT COMMISSION, Defendant/Appellant. No. 1 CA-TX 25-0001 FILED 03-27-2026 Appeal from the Arizona Tax Court No. TX2024-000143 The Honorable Erik Thorson, Judge AFFIRMED COUNSEL Gust Rosenfeld, P.L.C., Phoenix By Charles W. Wirken, Nathan D. Schott Counsel for Plaintiff/Appellee Bergin, Frakes, Smalley & Oberholtzer, PLLC, Phoenix By Brian M. Bergin, Anthony R. Napolitano Counsel for Defendant/Appellant  COCONINO COMMUNITY v. THE PROPERTY TAX Opinion of the Court OPINION Presiding Judge Andrew J. Becke delivered the opinion of the Court, in which Judge Kent E. Cattani and Chief Judge Randall M. Howe joined. B E C K E, Judge: ¶1 The Property Tax Oversight Commission (“Commission”) appeals the tax court’s decision that the Coconino Community College District (“District”) adopted a primary property tax levy within the legal limit. For reasons that follow, we affirm. FACTUAL AND PROCEDURAL HISTORY ¶2 In May 2022, Coconino County voters approved the District’s request to reset the base levy limit from about $9 million to about $14.7 million beginning in tax year 2022. The ballot language told voters a “YES” vote would reset the levy limit “beginning in tax year 2022,” and that the new amount “shall be the base for determining levy limitations . . . for subsequent years.” By statute, this increase was phased in incrementally over the following three years. See A.R.S. § 42-17056(F)(1)(a)–(c). Specifically, for the first tax year after voter approval, the levy limit equals the original base levy limit plus one-third of the difference between the original base levy limit and the new base levy limit. For the second tax year, the levy limit equals the original levy limit plus two-thirds of the difference between the original levy limit and the new levy limit. Finally, in the third tax year, the base levy limit equals the voter approved amount. ¶3 For tax year 2022, the District phased in one-third of the new base levy limit, and the Commission approved the District’s calculations. For tax year 2023, however, the District phased in another one-third of the new base levy limit, but also included a 2% “growth” increase and a “new construction” increase to reflect the change in property subject to taxation, as required by the Arizona Constitution. Ariz. Const. art. 9, § 19 (1), (4), (6). ¶4 The Commission rejected the District’s calculations for the 2023 levy limit, stating the calculations were incorrect and exceeded the maximum allowable amount, because the District included the 2% “growth” and “new construction” increases. The District objected, 2  COCONINO COMMUNITY v. THE PROPERTY TAX Opinion of the Court petitioned the Commission to reconsider its decision, and requested a hearing. ¶5 After a hearing, the Commission denied the District’s petition to reconsider, relying on the phase-in process language from A.R.S. § 42- 17056(F)(1)(b), (c). Specifically, the Commission concluded that the levy limit for tax year 2023 “must be less than or equal to the [original levy limit] plus two-thirds of the difference” between the original levy limit and the new levy limit, and that the 2024 tax year levy limit “must be less than or equal to the [new levy limit].” Id. ¶6 The District appealed this decision to the tax court, which reversed, finding that the District’s position corre