County treasurers across Arizona say a Phoenix real-estate investor is behind an attempt to change state law to avoid paying a $146,100 fee.
Senate Bill 1071, which would cap how much counties can charge for recording certain property deeds, is moving quickly through the state Legislature.
In hearings, supporters of the bill have said it would protect future buyers of tax liens from excessive fees.
But according to the Pinal County treasurer, the bill was crafted specifically to benefit Phoenix lawyer and real-estate investor Wayne Howard, cutting his cost to $500 from $146,100 for recording 2,922 property deeds.
Pinal County Treasurer Dolores “Dodie” Doolittle opposes the bill, along with other county treasurers and the Arizona Association of Counties, which lobbies on behalf of county governments.
“We’re giving special consideration to one individual,” Doolittle said Tuesday. “He wants to transfer nearly 3,000 parcels for $500. That would be giving a huge discount to one individual.”
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Doolittle said Howard recently sought a waiver of a $50-per-parcel charge required under state law and requested Pinal County bill him a total of $50 for all 2,922 properties.
When the county rejected Howard’s request, Doolittle said he threatened to get the fee reduced another way.
“He said he would go and get the law changed,” Doolittle said. “That’s what he’s trying to do.”
SB 1071 was sponsored by Sen. Steve Smith, R-Maricopa. Smith did not return calls Tuesday about the measure.
Howard did not respond to interview requests Tuesday. Nor did lobbyist Stan Barnes, who represents Howard’s company, Sonoran Land Fund LLC. Barnes testified in support of the bill during Senate hearings in February.
SB 1071 passed the Senate in February and moved to the House, where it cleared another hurdle Tuesday with little opposition. The bill now awaits a formal vote by the House, which could take place any day before it is sent to the Governor’s Office to be signed into law.
The bill specifically deals with the purchase of county tax liens. Liens are placed on properties when owners fail to pay property taxes. The liens prevent owners from selling until the taxes are repaid.
Unpaid tax liens can be bought by a third party after three years. The third party can initiate foreclosure proceedings if original property owners don’t pay what they owe along with penalties.
Once the third party obtains a court-ordered judgment on the foreclosure, the third party is required to obtain a deed transferring the property from the debtor to the third party. In 2004, state law increased the fee to $50 from $10 for each deed.
The bill is opposed by at least six county treasurers in the state. It is supported by Howard’s company, southern and central Arizona homebuilders associations and the Arizona Association of Realtors.
Supporters’ testimony focuses on cutting costs for future buyers of tax liens. But county treasurers say the circumstances occur so rarely that Howard is the only person who benefits. They say their research shows only a few cases in Arizona history in which hundreds of tax liens have been purchased at the same time.
They also say the bill’s provisions are written specifically for Howard, including a retroactive clause that would apply only to Howard’s 2,922 parcels.
The bill would cover anyone who already has obtained foreclosure judgments and has not yet obtained a treasurer’s deed. That precisely fits Howard’s circumstances, said Jen Marson, executive director of the state counties association.
“It’s like the county saying, ‘We appreciate you investing in our county, sir. So we’re going to give you a 99 percent discount,’ ” Marson said. “County government is not like shopping at Costco. We have no economy of scale.”
Any suggestion that the bill would benefit anyone other than Howard is “wordsmithing” to make the bill publicly palatable, Marson said.
Records show beginning in 2011, Howard purchased tax liens for parcels of a failed subdivision called Desert Carmel west of Casa Grande. The subdivision is next to the Francisco Grande Hotel and Resort and was planned around the site of the San Francisco Giants’ old spring-training facility.
Records show Howard’s company paid about $865,000 for the tax liens, an average of $296 per parcel.
Marson said there was no stated reason for the $500 cap when the legislation was introduced. She said county officials offered a $25,000 compromise but it was rejected by the bill’s originators.
“They said no, even though they admitted their $500 number was arbitrarily submitted,” Marson said.
County treasurers said the $50 transfer fee for each deed was not arbitrary. They said that amount only covers about half of the actual costs associated with processing deeds and transferring the title.
Doolittle said a breakdown of the costs of researching the deeds and preparing paperwork show it is about $97 per deed. She said the county will spend as much as $283,434 to process Howard’s 2,922 deeds.
Doolittle said state legislators don’t give average taxpayers special reductions to help them avoid paying taxes or government fees.
“People like us, who pay our taxes on time, don’t get special consideration,” she said. “Why should they (legislators) be giving such a huge break to one person?”
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