Bond sale brings closure for Xanterra tax case
GRAND CANYON, Ariz. - After more than five years, Tusayan taxpayers finally have closure on the Xanterra tax case.
Though School Board President Clarinda Vail said it was the best out of a bad set of options, she and other local property owners were glad for the April 15 sale of bonds that will give them five years to pay off the $977,411 that they owe to Coconino County.
Grand Canyon School District taxpayers were liable for $1.2 million, their share of a $3.6 million tax judgment levied against the county in favor of park concessioner Xanterra.
In 2003, Xanterra filed a lawsuit seeking relief from local property taxes, arguing that they didn't own the buildings they occupy. The concessionaire based its claims on similar successful suits filed in LaPaz County by the Havasu Springs Resort Co. in 1999 and in Coconino County by Aramark Sports and Recreation in 2001.
Xanterra prevailed in tax court and followed up by seeking refunds for tax years 2000-2003. Those refunds for 2000-2003 were $551,557.91, $558,707.22, $698,033.28 and $567,238.88.
Though taxpayers will see their secondary tax rate increase considerably more under the five-year plan, versus the 10-year schedule, it will cost about $400,000 less in interest over the life of the loan. It will raise the secondary rate to between $3.80 and $3.90 per $100 of valuation. Under the 10-year plan, the secondary rate ranged from a high near $3 at the start of the debt, dropping to about $1.50 in the final six years.
The county paid the entire $3.6 million settlement in the fall of 2007. Though county officials had discussed carrying Grand Canyon School District's debt over 10 years at an interest rate of about 5 percent, state law required the entire repayment within the following tax year.
While the county was interested in the bonds, under state law they could only purchase them for a five-year term. Faced with the option of passing up a certain buyer for five year bonds in favor of a buyer for a long term package seemed too uncertain. Five year bonds will add about 85 cents per $100 of valuation over the 10-year rate but result in about $400,000 less in interest.
School Superintendent Sheila Breen and Vail were working with the legislature on changing the law to allow the county to carry the debt. However, that that got bogged down in last year's legislative session and is at a standstill this year as legislators work on the budget. They also hope to change legislation so that in the future, when the county must pay a judgment, it collects it from all of the taxpayers in the county.
According Breen, the biggest hit on the district was the $6 million reduction in property values. Not only does it represent a permanent reduction in annual revenue, it limits the amount that the district can borrow. Under state law, they are limited to 10 percent of the assessed valuation, meaning they could only raise $1.5 million even if taxpayers are willing to raise more.
With Xanterra and other park concessions coming off the tax rolls, Tusayan's assessed valuation dropped from about $22 million to $14.8 million, representing a 32-percent decrease.