A bill to help a Phoenix real-estate investor avoid paying $146,100 in county fees was rejected for a second time Wednesday by the Arizona House of Representatives.
The House voted 28-31 against Senate Bill 1071, a measure that would ensure lawyer and real-estate investor Wayne Howard would be charged no more than $500 for recording certain deeds.
The bill, which the House first struck down in a vote last week, was brought back Wednesday for reconsideration.
County treasurers in Arizona who opposed the bill said they were relieved by the outcome, saying its passage would have left taxpayers footing the bill for legislation they called “Howard’s Bill.”
Their relief might be short-lived. By Thursday morning, county officials said some lawmakers were discussing bringing the bill back a third time by attaching it as an amendment to another bill before the end of the legislative session.
“I was relieved last night but a little discouraged this morning,” Pinal County Treasurer Dolores “Dodie” Doolittle said Thursday. “Is the bill truly dead, dead? Or is it going to be resurrected? These are the kinds of things that happen when special interests go in and get laws changed for an individual or a group.”
SB 1071 deals with the purchase of county tax liens. Liens are placed on properties when owners fail to pay property taxes. A lien that goes unpaid for more than two years can be bought by a third party and the property foreclosed upon.
Under state law, county treasurers are required to charge $50 for transferring deeds from the former owner of a foreclosed property to the buyer.
Records show Howard’s company paid $865,000 for tax liens on 2,922 parcels, for an average of $296 per parcel. The parcels were part of a failed subdivision called Desert Carmel, found west of Casa Grande. The subdivision is next to the Francisco Grande Hotel and Golf Resort and was planned around the site of the San Francisco Giants’ old spring-training facility.
Doolittle said Howard sought a waiver of the $50-per-parcel charge and requested Pinal County bill him a total of $50 for all 2,922 parcels. When the county rejected Howard’s request, Doolittle said he promised he would try to get the fee reduced by changing the law.
SB 1071 is opposed by county treasurers in Apache, Cochise, Coconino, Mojave, Pima, Pinal and Yuma counties. It is supported by Howard’s company, southern and central Arizona homebuilders associations and the Arizona Association of Realtors.
Howard has not responded to interview requests.
Legislators on Wednesday debated whether Howard was getting a special break or whether the law should recognize his investment in the county.
“The people who are going to get stuck with this bill if this is enacted are the taxpayers of Pinal County,” said Rep. Bruce Wheeler, D-Tucson.
Rep. Rebecca Rios, D-Phoenix, said taxpayers were being “taken on this piece of legislation.”
She said as an experienced developer, Howard knew the fees when he agreed to buy the tax liens and should not expect special consideration now. She said the bill is an example that if you have money, you can create legislation to address your needs.
Rep. Bob Thorpe, R-Flagstaff, defended the bill, saying Howard “has really done a great service for the county” by purchasing liens and paying taxes on properties and investing.
“What we’re creating is an exception I would hope a lot of investors would take advantage of,” Thorpe said.
Rep. Sonny Borrelli, R-Lake Havasu City, said Howard was spending “millions of dollars to make the county whole.” He said Pinal County officials should not focus on raking in large fees and instead do their jobs.
“What a sin,” Borrelli said. “Wow. County workers will have something to do. It’s called work.”
Rep. Ken Clark, D-Phoenix, and a Realtor, voted against the bill but said he hoped to see it recrafted in a more equitable way before the end of the session. He said the $500 cap was too low and the $146,100 fee was too high.
Jen Marson, executive director of the Arizona Association of Counties, which lobbies on behalf of county governments, said they attempted to negotiate a $25,000 compromise that was rejected by the bill’s originators.
“I’m very pleased that legislators took the same vote this week that they took last week to prevent this special-interest bill,” Marson said Thursday. “It is one of those things that just didn’t pass the smell test.”
Marson said SB 1071 contains a retroactive clause to cover anyone who already has obtained foreclosure judgments and has not yet obtained a treasurer’s deed. That precisely fits Howard’s circumstances, she said.
SB 1071 passed the Senate in February and moved to the House, where it faced little opposition until last week. A story in The Arizona Republic and on azcentral.com generated anger among some taxpayers who said lawmakers appeared to be rewarding a wealthy constituent.
Rep. Mark Finchem, R-Oro Valley, a real estate broker, asked that SB 1071 be reconsidered a day after he voted against it. He said in a statement this week that the bill was not written to help one individual.
He said the bill addresses inefficiencies in county operations that didn’t exist when the $50 fee was established in 2004. Finchem said the savings realized by county treasurers for upgrading computer systems should be “pushed back to the public — in this case, the investor.”
In a House committee hearing this month, the senator sponsoring the bill and a lobbyist hired by Howard’s company, Sonoran Land Fund LLC., detailed how Howard sought legislative changes after being faced with the $146,100 fee.
Sen. Steve Smith, R-Maricopa, called the fee egregious and said it appeared the county was punishing him for trying to help the county.
Smith, who has not responded to phone calls from The Republic about the bill, told the House Government and Higher Education Committee that situations involving similar investors are rare in Arizona and that the bill sought to address a unique circumstance in Pinal County.
Smith also said Howard was seeking a single deed rather than 2,922 separate ones.
Doolittle said the county goes through a standard process for recording each deed. She said the county is required to process the 2,922 deeds separately. Doolittle said the county will spend as much as $283,434 to process Howard’s 2,922 deeds, at a cost of about $97 each.
Phoenix lawyer Barry Dale, who has been involved in tax-lien purchases, disputed the county’s costs for processing deeds associated with tax liens. He said the county should be able to bundle the liens into a single deed, and the work required to process multiple parcels was minimal.
“As long as there is a judgment against one owner pertaining to lots in one subdivision … there should be no material increase in the amount of work the county is required to do,” he said.
Dale acknowledged state law currently requires the county to charge $50 per parcel. He said the fees “ought to be proportionate to the number of parcels” and suggested charging $50 for the first one and $10 for each additional parcel.
Dale also said he was opposed to changing the law for one person.
“They shouldn’t be creating legislation to benefit a specific individual,” he said.
Includes information from reporter Ronald J. Hansen. Reach the reporter at [email protected]
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