The Trust for Public Land
Coconino County, Arizona
Land Conservation Funding Options
February, 2002
DRAFT
FOR COMMISSIONER REVIEW
Introduction
The Trust for Public Land (TPL) is a national nonprofit land conservation organization working to
protect land for human enjoyment and well-being. TPL helps conserve land for parks, greenways,
recreation areas, watersheds and wilderness. To date, TPL has helped protect some 1,500 properties,
totaling more than one million acres in 45 states.
To help public agencies or land trusts acquire land, TPL also assists local communities in identifying
and securing public financing. TPL’s conservation finance program offers technical assistance to
elected officials, public agencies and community groups to design, pass and implement public
funding measures that reflect popular priorities.
In Arizona, TPL has helped protect over 186,000 acres since 1980. Two years ago, TPL helped the City
of Prescott with three conservation acquisitions to protect both the prominent ridge of Thumb Butt and
an important preserve area in Granite Dells. These acquisitions follow TPL’s conservation financing
assistance to the City in which TPL polled Prescott voters and directed a campaign that led to the passage
in May 2000 of a 1% sales tax extension. Last year, TPL also worked with Coconino National Forest to
acquire the 90-acre Bradshaw Ranch and protect it from possible subdivision; this is the fifth property in
the Sedona area that TPL has conveyed to the National Forest under a program started in 1998 with the
support of the Arizona congressional delegation.
1
Coconino County: Overview
General Description1
Coconino County, established in 1891, is located in central
region of northern Arizona. Comprising 18,608 square
miles, Coconino is the largest county in the state, and the
second largest county in the United States, but it is one of
the most sparsely populated. It is characterized by rugged
mountains, deep canyons, and thick forests. Its many scenic
sites, including Grand Canyon National Park, the Navajo
National Monument, and the San Francisco Peaks, make
the county a year-round mecca for tourists and outdoor
enthusiasts.
There are six incorporated cities in the county: Flagstaff
(the county seat), Fredonia, Leupp, Page, Tuba City, and
Williams. Indian reservations comprise 38 percent of the
land and are home to Navajo, Hopi, Paiute, Havasupai and
Hualapai tribes. The U.S. Forest Service and the Bureau of
Land Management control 32 percent of the land, and the
state of Arizona owns another 9.5 percent. The central corridor of Coconino County has been
designated as an Enterprise Zone, as well as the central corridor of the City of Flagstaff.
Population
The current population of
Coconino County is estimated at
116,320. Roughly 40 percent of
county residents live in
unincorporated areas. The largest
city in the county is Flagstaff,
with 36,000 residents. Nearly 30
percent of county residents are
Native American.
Coconino County Population
1980
Arizona
1990
% Change
2000
%Change
2,716,546
3,665,228
35%
5,130,632
40%
Coconino County
75,008
96,591
29%
116,320
20%
Flagstaff
36,208
38,142
5%
36,160
-5%
Fredonia
1,040
1,207
16%
1,036
-14%
Leupp, Navajo Nation
1,298
1,503
16%
970
-35%
Page
4,907
6,598
34%
6,809
3%
Tuba City, Navajo Nation
5,045
7,323
45%
8,225
12%
Williams
2,266
2,532
12%
2,842
12%
Source: U.S. Census Burea, April 2000.
Economy
The economy of Coconino County is based primarily on government, the service industry, wholesale
and retail trade, and tourism. The county has the highest per capita tourism employment in the state,
accounting for 31 percent of its private sector employment (the average in the U.S. is 12-19 percent).
As such, the county is heavily dependent on tourism as a source of tax revenues. The median
household income is $26,112, below both the state ($38,537) and national ($41,343) average. The
average value of a single family home in the county is $124,994.2
1
2
Excerpted from Arizona Department of Commerce, Coconino County Profile.
Excerpted from Coconino County Adopted Budget FY 2001-2002.
2
Government Overview
County Government
The county is governed by a five-member Board of County Supervisors. Members are elected by
district to four-year terms.
Coconino County Board of Supervisors
Name
Paul Babbit
Elizabeth Archuleta
Matt Ryan
Deb Hill
Louise Yellowman
Position
District 1, Chairman
District 2
District 3
District 4
District 5
Term Ending
Nov-04
Nov-04
Nov-04
Nov-04
Nov-04
Party
Democrat
Democrat
Democrat
Democrat
Democrat
Coconino County Fiscal Overview
County services and programs are funded through revenue that is derived from many different
sources including property tax, sales tax, fees, fines and intergovernmental agreements. While some
revenues may be spent on any countywide service, many revenue sources are limited to a specific
program or service. The single largest fund in the county is the General Fund, which accounts for 31
percent of the county’s budgeted revenue in FY 2002. The proposed 2002 budget for the General
Fund totals $37,232,706. Public safety and judicial services account for nearly half (48.8 percent) of
General Fund expenditures. Parks and recreation account for a very small portion of the General
Fund budget with just $465,765 budgeted for FY 2002. Approximately $4.5 million is provided for
parks and recreation in the capital projects budget.
The county’s most important revenue sources are:
Coconino County
Top Ten Revenue Sources
$16,000,000
State Shared Sales Tax – General Fund
Highway User Revenues – Public Works
County Sales Tax – General Fund
Jail Sales Tax – Jail District
County Property Tax – General Fund
Prisoner Housing Revenue – Jail District
Vehicle License Tax – General Fund
Library District Taxes – Library District
Forest Fees
Federal Transit Authority Sect: 5307
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
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3
Coconino County
General Revenue Fund Projections - Five-Year Plan
Average Annual
Dollars in Millions
Growth
2001
2002
2003
2004
2005
2006
FY 02-06
Revenues
36.6
37.2
37.8
38.6
39.6
40.5
2.2%
Expenditures
35.4
39.9
40.2
40.6
41.1
41.6
3.4%
2.4
4.4
5.9
7.0
Fund bal.
-2.6
-
Source: Coconino County Adopted Budget FY 2001-2002.
Land Conservation and Parks
Parks and Recreation
The Coconino Parks and Recreation Department consists of three divisions: Parks, County Fair, and
Racing. The Department has undertaken a strategic planning process to provide it with a clear
direction to guide operations and management of parks programs, events and facilities. The process
has included a series of public workshops. The preliminary needs assessment, based on the parks and
recreation resource inventory results, calls for additional historic sites and wildlife preserves, as well
as regional parks, particularly in more rural areas. Chief among the departments goals for recreation
and services in the county are to increase services to underserved areas, to improve trail
opportunities, and acquisition of additional natural areas and cultural resources.
The Parks and Recreation Department has embarked on a master plan aimed at the refurbishment of
the Fort Tuthill County Fairgrounds and the construction of three new parks. Within Fort Tuthill, a
new amphitheater is being constructed. Other major projects include the equestrian stables and
posse arena, the grandstands, fairgrounds, and campgrounds. Construction began in FY01 for Peaks
View Park, a major new park in the Doney Park area, Sawmill multi-cultural art and nature park
adjacent to the Rio de Flag, and the expansion of Raymond Park. Several new trials are also being
constructed. These trails will complement the Flagstaff Urban Trails System.3
3
Excerpted from the Coconino County Capital Improvement Plan FY 2002-2006.
4
Revenue Options for Open Space
Property Tax
Overview
The governing body of a county or municipality may levy a property tax for the acquisition and
maintenance of public parks or it may appropriate funds for such purpose.4 Counties and cities are
limited to an increase in total property tax levies of 2 percent over the previous year. Voter approval
is required to exceed these limits. The override measure must state the number of years in which the
tax will be effect, estimated tax costs, and the purpose for providing the revenue.
Arizona’s property tax rate is based on the assessed value of the property and is levied using a
combination of primary and secondary rates. Primary taxes are used to meet operating expenses of
local jurisdictions. Secondary taxes are used to meet special obligations, such as the repayment of
bonds and special district levies and voter-approved overrides. Total property tax liability is
calculated by adding primary and secondary tax rates for all jurisdictions in which the property tax
payments are located.5
Under the primary system, the full cash value of locally-assessed property may not increase by more
than 10 percent per year. Primary taxes levied on residential property only are limited to 1.0 percent
of the full cash value of the property. In addition, primary taxes collected on all types of property are
limited to a maximum increase of 2 percent over the prior year’s levy plus new construction.
The average real and personal property tax in the state is $12.70 on $100 of assessed valuation. An
example of a property liability calculation follows:6
$ 100,000
x 10%
$ 10,000
x .0570
$
770
Secondary – full cash value7
Residential assessment ratio
Secondary net assessed value (NAV)
Secondary tax rate $5.70/$100
Secondary tax liability
$
Primary net assessed value (NAV)
Primary tax rate $7.00/$100
Primary tax liability
$
9,300
x .0700
651
$
1,421
Total Taxes Owed
4
Arizona Revised Statutes: 11-937.
“Taxation: City and State Requirements,” The Business book; www.abgnews.com.
6
General Tax Information, Arizona Department of Commerce; www.commerce.state.az.us.
7
Full cash value is essentially equal to market value.
5
5
The Property Tax in Coconino County
Coconino County uses primary property taxes to fund a portion of its General Fund budget;
secondary taxes are levied to fund libraries, fire districts, and flood control projects. The county
currently does not levy its primary tax levy to the maximum allowed under the law. If the county
were to raise its primary property tax levy to the maximum, based on 2001 assessed valuation, the
increase would result in additional revenue of approximately $1.6 million.
The adopted 2002 budget calls for a total tax rate of 0.5977 per $100 of assessed value. The primary
tax rate of $0.3433 is expected to generate roughly $3.5 million for general county operations. This
tax rate has remained unchanged since 1999. Two secondary taxes are levied by the county for
libraries and the fire district assistance
Property Tax Levy Rates 2001
fund. The total secondary tax rate is
(Special districts not included.)
0.2544. Municipalities, school districts and
Taxing District
Rate
other special districts impose additional
Coconino County
$ 0.5977
property taxes.
The typical homeowner ($125,000 home
value) pays approximately $830 a year in
property taxes.
Education Equalization (State & County)
City of Flagstaff
City of Williams
1.0951
1.7127
1.3995
Source: Coconino County Adopted Budget 2001-2002.
Using the Property Tax to Fund Land Conservation
A county can establish a parks operation and enhancement fund with monies budgeted by the county
board of supervisors, grants, gifts and donations, parks user fees, concession fees, and revenues from
county parks publication and souvenirs. This fund can be used to acquire real estate for new parks
or expansion of existing parks.8
Coconino County could raise a substantial amount of money on an annual basis for open space
acquisition by increasing the county secondary tax rate for that purpose. Based on a total assessed
valuation in the county of $1.06 billion, an increase of 0.1 percent in the tax rate would contribute
approximately $1 million annually for open space. This tax increase would cost the average
household in the county an additional $13 per year.
Estimated Revenue & Costs of Property Tax Increase
Coconino County
Tax Rate
Assessed
Annual
Cost / $125K
Increase
Valuation
Revenue
House
0.05
$1,062,082,181
$531,041
0.10
$1,062,082,181
$1,062,082
$12.50
$6.25
0.15
$1,062,082,181
$1,593,123
$18.75
0.20
$1,062,082,181
$2,124,164
$25.00
The county Board of Supervisors may conduct an election to authorize a property tax levy that is not
within the limitations on primary property taxation. The board must adopt a resolution by a vote of
8
Arizona Revised Statutes: 11-941.
6
at least 2/3rd to put the issue to a vote. The question shall be submitted to the qualified electors of
the county at a special election held on the third Tuesday in May before the beginning of the fiscal
year in which the taxes are to be levied. In the resolution requesting the voters to approve the levy,
the board shall state:




The number of years in which the authority to levy taxes in excess of the limitations
otherwise prescribed is to be in effect. The board shall not request authority from
the voters for a period of less than two years nor more than seven years.
The purpose for providing revenue to the county.
The maximum dollar amount of secondary property tax that may be collected in
each year of the authority if voters approve the levy.
The estimated secondary property tax rate that will be levied in the first year if the
voters approve the levy.
If the levy is approved by the voters, the maximum amount of taxes that the board may levy for any
year in which the authority is in effect is the amount stated in the resolution requesting voter
approval of the levy
7
Transaction Privilege Tax (Sales Tax)
Overview
Although it’s usually passed onto the consumer, the state sales tax is actually a tax on the vendor for
the privilege of doing business in Arizona. Some counties and most cities impose additional taxes
above the state levy. The state transaction privilege and use tax rate is 5.6 percent; the range of local
rates is 0 to 4.5 percent. The state average is 7.3 percent. All sales tax revenues are directed to the
general fund unless they are dedicated as transportation sales tax funds.
However, counties with fewer than 2 million people may impose a capital projects tax with majority
voter approval. With a unanimous vote, the board of supervisors may submit a proposal for
approval at a countywide special or general election. The tax rate may not exceed 10 percent of the
state transaction privilege tax rate, either by itself or together with a roads tax. The county may only
use the revenues for capital projects, including the purchase of property or development rights for
open space. The ballot measure shall list each project to be financed with the tax collected and the
estimated costs of each project. The tax terminates if and when the total amount of estimated costs
for all of the projects has been raised.9
(There is also a state bill this year to authorize a special district, funded by a ¼-cent sales tax, for
open space, recreation, parks, and cultural activities. There are currently no bill sponsors.10)
Using the Capital Projects Sales Tax for Land Conservation
The transaction privilege tax levy in Coconino County is 0.8 percent, 0.5 percent for the general fund
and 0.3 percent for the jail fund. Most Arizona counties levy between 0.5 and 1.0 percent. City rates
in Coconino range from 1.51 percent in Flagstaff to 3.0 percent in Williams. The county has the
capacity under state law to levy a capital projects tax of up to 0.56 percent. Based on current county
sales tax collections, a capital projects tax of 0.25 percent could be expected to raise roughly $4.6
million for this purpose. The tax must be submitted to the voters by the Board of Supervisors.
Approval by a majority of the voters is required.
Estimated Revenue & Costs of Sales Tax Increase
Coconino County
Tax Rate
Annual
Cost Per
Increase
Revenue
Household
1/16
$1,150,000
$9.75
1/8
$2,300,000
$19.50
1/4
$4,600,000
$39.00
9
Arizona Revised Statutes 42-6111.
Phone conversation with Sally Bender, Associate Director of the Arizona County Supervisors Association, December 21,
2001.
10
8
Impact of 0.25 Percent Sales Tax Increase
Coconino County Arizona
Total County Personal Income (PI) - 1999
PI spent on taxable items (25%)
divided by
Number of households in county (est. 1999)*
equals
Dollars spent on taxable items per household
multiplied by
Sales tax levy
Per household impact of sales tax
$2,438,492,000
$609,623,000
39,478
$15,442
0.25%
$39
Sources & assumptions
Personal income and number of households for county from US Census.
Personal income spent on taxable items from Bureau of Economic Analysis,
Personal Consumption Expenditure by Type of Product.
*1999 households estimated from 2000 census figure 40,448, and 1999 population.
General Obligation Bonds
Legal Background on Bonds
To raise funds for capital improvements, such as land acquisition or building construction, counties may
issue bonds. There are two types of bonds: general obligation (G.O.) bonds, which are guaranteed by the
county’s property taxing authority, and revenue bonds that are paid by project-generated revenue. General
obligation bonded indebtedness for counties or general municipal purposes may not exceed 15 percent of
the secondary assessed valuation of the taxable property. The public entity is authorized to levy property
taxes or to draw from other unrestricted revenue streams such as sales or income taxes to pay the bond’s
principal and interest. Interest rates on these bonds are generally the lowest of any public securities due to
this superior security.
The process for passage of G.O. bonds is as follows:11
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11
An election to approve bonded indebtedness can be called by the governing body of a
local government or initiated by petition of 15 percent of the voters. A majority of
voters must approve the bond question for passage.
The county board or governing body must order the election to be held not less than 30
nor more than 150 days from the date of the order.
Not less than 10 days and not more than 40 days before the bond election, an
informational pamphlet must be mailed to each voter. This pamphlet outlines the
amount of the bond, maximum interest rate, estimated debt retirement schedules, source
of repayments, estimated issuance costs, estimated tax rate impact on the average
assessed valuation or residential and commercial property, purpose for which the bonds
are to be issued, current outstanding general obligation debt and constitutional debt
limitation and election information.
At the election the ballot shall contain the phrases “for the bonds” and “against the bonds”.
The voter shall be indicated by inserting the mark “x: in the square opposite such phrase. No
other question, word or figure need be printed on the ballot. The ballot need not be any
particular size, nor need sample ballots be printed, posted or distributed.
Arizona Revised Statutes 48-806.
9
Coconino County Debt
Since 1998, Coconino County has issued debt (in the form of Certificates of Deposit, “COPS”12, and
Pledged Revenue Obligations) to finance a new jail, make general facility infrastructure
improvements, and begin a multi-year overhaul of its park facilities. These debt issues will be repaid
over 15 years. In accordance with its debt policy, when the county committed to financing these
capital projects it set up specific reserve accounts using accumulated General Fund cash balances to
be used for debt repayment. Current balances are invested for the length of the debt maturity
schedule. The debt issued for the new jail, however, will use local sales tax revenue for repayment. A
3/10 of a cent tax was approved by the voters for this purpose in July 1997.13
A maximum amount of debt outstanding has not been formally adopted by the Board of Supervisors,
but it is the policy of executive management to not accumulate a principal amount outstanding that
exceeds an amount of cash that can be set aside for repayment.
Issuing G.O. Bonds for Land Conservation
With regard to the statutory debt limits the
county has ample capacity to issue bonds for
land conservation (nearly $160 million). The
chart illustrates the estimated annual debt
service, required property tax increase and
annual household cost of different general
obligation bond issues. For instance, a $20
million, twenty-year, general obligation bond
for parks and open space would require a levy
of roughly 0.16 ($0.16 per $1,00 of taxable
value) to meet the annual debt service. This
would cost the owner of a $125,000 home, the
average home value in the county, just over
$20 per year in additional property taxes.
Bond Financing Costs
Coconino County
20-year Bond Issues at 6.0% Interest Rate
Assessed Value = $1.06 billion
Bond Issue Size
Annual
Tax Rate
Cost/ Year/
Debt Svce
Increase
$125K House
10,000,000
871,846
0.08
$10.26
20,000,000
1,743,691
0.16
$20.52
30,000,000
2,615,537
0.25
$30.78
40,000,000
3,487,382
0.33
$41.04
50,000,000
4,359,228
0.41
$51.31
Other Potential Options
Revenue bonds are issued to finance a specific revenue-generating project. The issuing entity pays debt
service from either user fees, tolls, concessions, lease-back arrangements or revenues from the
acquired or constructed facility, depending on the type of project financed. Approval by a majority
of the voters voting is required. For municipalities of 75,000 people or less, recreational facilities
covered by this statute include swimming pools, parks, playground, municipal gold courses, and ball
parks.
12
Unlike general obligation bonds, COPs are not secured by the full faith and credit of the government issuer and do not
require voter approval. COPs are secured by the particular capital project for which they are issued are are repaid by project
revenues or monies appropriated annually by the local government.
13
Excerpted from the Coconino County Adopted Budget FY 2001-2002.
10
The bed tax or transient lodging tax is an additional 2 percent tax imposed on the gross income from
business activity on any hotel within a city. With voter approval, counties with less than 2 million but
more than 500,000 people may levy a hotel tax. This tax is in addition to any tax imposed by a city or
town in the county and applies to both incorporated and unincorporated areas of the county. The
tax shall be in effect for 30 years unless extended by voters. The tax rate is 1 percent of the tax base.
Bed tax revenues are generally directed to the general fund. Often, cities dedicated the revenue to
the local chamber of commerce for tourism promotion, as well as other projects.
The government property lease excise tax is utilized when the city or town owns property that is leased by a
commercial for-profit business. The tax is almost like an in-lieu or property tax and is collected by
the city and then distributed among all of the entities that would be receiving property tax from the
property. Revenues generated by this become general fund revenues. Excise tax incentives may be
used to fund growth-related roads, parks, and other services.14
An open space checkoff has just been approved by the Tucson city council. Residents will now have the
option of donating funds on their monthly water bills, replacing the checkoff for public funding of
political campaigns which raises only about $6,000 a year. The Arizona Daily Star reported in
November 2001 that advocates believe the voluntary conservation checkoff will raise more funds
than the political checkoff, although significant revenue is not expected. Republican Mayor Walkup
supported the proposal, calling it a good gauge of public support for open space preservation.15
An improvement district is a city- or county-run district of property owners who jointly pay for new
projects.i The district’s purposes include the acquisition, maintenance, repair, or improvement of any
real or personal property for a community center, park or recreational area.16 A district may have
many other purposes and a district can’t be formed exclusively for park/recreation purposes.
(According to the League of Arizona Cities and Towns, these districts have been used at the
municipal level almost exclusively for road/street improvements and lighting.)
Below are examples of some of the voter-approved mechanism used for funding parks and open
space in other Arizona communities.
Selected Examples of Local Financing Referenda
for Parks and Open Space
DATE OF
PASS/
FISCAL
JURISDICTION
ELECTION
FAIL
TECHNIQUE
Gilbert
Prescott
Glendale
Phoenix
Scottsdale
Scottsdale
Pima County
Nov-01
May-00
Nov-99
Sep-99
Sep-99
Sep-99
May-97
69/31
51/49
68/32
80/20
77/23
69/31
68/32
General obligation bond
1-cent sales tax (portion)
General obligation bond
1/10-cent sales tax
General obligation bond
Dedication of sales tax
General obligation bond
14
AMOUNT
$20.3 million
$40.7 milion
$53.7 million
$256 million
$200 million
n/a
$36 million
Email message from Byron Smith, Arizona League of Cities and Towns, January 2, 2002.
Joe Burchell, “Council Oks Open Space Checkoff,” Arizona Daily Star, November 6, 2001.
16
Arizona Revised Statutes, 48-909.
15
11
Elections
Election Dates
Information about specific election requirements is included with the financing option descriptions
in the previous sections. Generally, voter-approved tax or bond questions may be placed on the
ballot at any (or a specific) general or primary election. Voter information pamphlets are mailed to
every household with a registered voter before the earliest date for receipt of a requested early mail
ballot. Arguments supporting or opposing a county measure must be filed with the county elections
office not less than ninety days before the elctions at which the issue is to be voted upon. The
election dates for calendar year 2002 are as follows:
Primary Election
March 12, 2002
September 10, 2002
General Election
May 21, 2002
November 5, 2002
Recent Election Results & Turnout
Pending
12
13