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| Special Inserts: | AZ Hospital & Healthcare Association | Building Owners & Managers Assoc. | |
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| AzBOMA |  By Kerry Duff |
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| Building owners and managers alliance pays off | |||||||||||
 ver the past five years, the Building Owners and Managers Association has become more aggressive in pursing legislative action—and for a good reason. The size and influence of Arizona BOMA (AzBOMA), an alliance between BOMA Greater Phoenix and the Tucson chapter, make it a commanding force for the commercial real estate industry. AzBOMA represents more than 550 commercial property owners and managers that collectively manage over one million square feet of commercial space in Arizona, pay over $72 million in property taxes and $300,000 in city rental taxes. |
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| “AzBOMA has a significant impact on the state budget from a funding standpoint,” says Mark Covington, executive director of BOMA Greater Phoenix. “So it is essential that AzBOMA continue to be a combined voice at the state capital to guarantee that Arizona policymakers are aware of our industry concerns.” On BOMA’s radar during this year’s state legislative session are issues ranging from development fees and zoning, to property tax reform. AzBOMA opposes property tax reform measures that further shift the net tax burden to the commercial sector. Arizona has one of the most complicated property tax systems among all 50 states. One example of the complexity is Arizona’s nine different property classifications where each class has an assessment ratio used to shift tax burdens from one type of property to another. For example, the largest classes are business (class 1), which is taxed at 24.5 percent of value (tax year 2006) and residential (class 3), which is taxed at 10 percent of value. Thus the tax burden is shifted, so that dollar for dollar, business pays approximately 2.5 times more than residential. “This is a fairness issue and we believe it is unfair for one class of taxpayer to subsidize another,” says Covington. “It needs to become more equitable.” AzBOMA is also interested in accelerating the reduction of the assessment ratio for commercial property taxes from a 10-year phased reduction to six years. Beginning in tax year 2008, the assessment ratio will drop from 23.5 percent to 23 percent and will continue to drop one percent per year until 2011 when the assessment ratio becomes 20 percent. BOMA’s belief is that accelerating the reduction of the assessment ratio for business will give the economy a shot in the arm and help make the state more competitive in attracting jobs. Permanently suspending the State Equalization Property Tax Rate, which is roughly 43 cents per $100 of assessed value, is also a concern of AzBOMA, says Garth Bacigalupi, chairman of BOMA Greater Phoenix Government Affairs Committee and a principle of Sage Tax Group in Phoenix. “The state legislature last year put this equalization tax on hold for 2006, 2007 and 2008, so allowing it to return from its three-year moratorium will lead to the single largest property tax increase in state history,” he says. “It will mean an additional $200 million in property taxes that residents and businesses have to pay, so we want it permanently removed.” The last issue AzBOMA is focusing on this year is municipal impact fee reform. The commercial real estate group supports efforts to reform the impact fee process and create regulations for imposing the fees. “Current rules for impact fees are very loose,” says Bacigalupi. “Some jurisdictions are collecting impact fees for stated reasons and do not spend the money or they spend it on other issues. And we’re talking about considerable amounts of money here—millions at a time—to pay for things like a park or library and yet the improvements are never made. This legislation would make the jurisdiction levying the impact fees responsible for using them for the issue stated and in a timely manner.” www.bomaphoenix.org |
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BOMA would also like to see the following provisions considered: • A 90-day minimum before a fee can be imposed. |
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