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Why Goldwater Institute backs property tax refunds when cities don't manage 'public nuisances'

Arizona lawmakers are sending a measure to the ballot this year that would allow property owners to apply for property tax refunds if their local governments don’t address illegal camping, panhandling or other so-called “public nuisances.”

The measure passed on party line votes and you will get to decide if it goes into effect this November. Democrats opposed the measure, saying it would take away critical funding for cities

However, Jenna Bentley says it will provide relief to those who are paying the price for our city’s homeless crisis. Bentley is director of government affairs for the libertarian think tank the Goldwater Institute. She says the city of Phoenix left business and property owners near "The Zone” in downtown Phoenix to bear the brunt of the problem caused by the former homeless encampment.

Phoenix has said it was trying to balance the rights of the people living in the Zone and the property owners in the area. It was ordered by a judge in a lawsuit filed by some of those business owners to clean up the Zone last year.

Bentley joined The Show to talk about what it would do and about the Goldwater Institute’s motivation for backing it.

Full interview

JENNA BENTLEY: What this measure says is if you are a property owner and you have had to take mitigation expenses in direct response to a municipality's failure to enforce nuisance ordinances, then you are entitled to get a refund for those expenses. Now, they are capped at what you paid in property taxes the year before but you can get those essentially returned to you. And what happens is the funds are deducted from the municipality, state shared revenue. So we're not disrupting anything on the county side to where you pay property taxes or how those get distributed. These funds would just come out of the state shared revenue. And really what we're trying to do is to help compensate property owners who have really had their lives turned upside down by the city's kind of purposeful inaction to abate some of these nuisance crisises.

LAUREN GILGER: So talk a little bit more about the motivation here and why Goldwater wanted to take this particular issue on. I know your organization has been involved in what's happening around the zone downtown and, and pushing for clean up there.

BENTLEY: For sure. I mean, we're located, we're actually not that far from where The Zone happened. And, and so this is a very real thing that, that we kind of saw live and, you know, the zone was terrible for the property owners who were living there and it was also terrible for the unhoused individuals that were living there. We saw rampant crime, drug use. You know, you just do a simple Google search and you're going to see story after story about kind of the lawlessness that was happening there and you have them that are, you know, living in very unsafe conditions, you know, public health and safety services are being told not to respond to calls from the area. And then you have the property owners who, you know, they didn't move to the Zone.

The Zone was kind of created around them and that was really troubling for us to, you know, watch happen. And frankly, you know, all the while the property owners are still paying property taxes. And you know, one of the main reasons we pay property taxes is for public health and safety services. So, you know, taxpayers in the area are still paying their property taxes and essentially not receiving the services that the city was supposed to be providing for them. So that was the the impetus of, of where we kind of designed this measure.

GIILGER: And that's why it's tied to property tax. OK, so this also mirrors, I understand a proposition from almost a decade ago from 2006 Prop. 207, which limited the use of eminent domain.

BENTLEY: Yeah. And Goldwater Institute was actually a part of that, that was Prop. 207 the Private Property Protection Act and that's existing law. It says that if you are a property owner and the government has done something that has constitutes a regulatory taking. So they've adopted some sort of ordinance and it has diminished the value of your property regardless if you're using the property for that particular use. It doesn't have to physically touch the for corners of the property, but a regulatory taking like eminent domain, then the property owner is entitled to just and fair compensation. And we've seen this worked very effectively in, you know, Arizona. This is you know, something that hopefully no property owner has to go through. But if they do have a regulatory taking happen against them, they have this option.

And so we created a very similar process with this measure that's going to appear at this next upcoming election where it's saying that similar thing, you know, if through government inaction, if you know, you've had to incur mitigation expenses, you're entitled to receive those funds back. Because one of the things that you pay property taxes for is to that public health and safety services. And if the municipality is going to be derelict and providing those, it doesn't make sense that they should be charging the taxpayer for a service that they aren't actually giving to the taxpayer. And one of the things to note here is what happens is you go to the Arizona Department of Revenue, you request this, you know, refund, you submit your documentation. and then ADR will send you a check, but those dollars come out of the municipality state shared revenue. And so we're not actually doing anything to disrupt the collection or distribution of property taxes on the county level. This is coming out of state shared revenue.

GILGER: So, so essentially, you're responding there to some of the criticism that this received at the Legislature from Democrats from cities and towns. They said it would take away critical funding for cities funding that would normally go to like public safety police. Are you saying this, this shouldn't impact that?

BENTLEY: Correct. So two big points that, that I'll make there one. If the city is just doing its job and providing public health and safety services and enforcing nuisance ordinances, they shouldn't have a single claim against them, right?  Like if the city is doing their job, this will have zero impact on them whatsoever. But if you're talking about, OK, if someone does have to go, I saw a recent report out that said just the county of Maricopa in the amounts of money that they have spent trying to tackle this issue of unsheltered individuals in Maricopa County alone, upwards of $70,000 per person has been spent on this. $70,000. And that, that's just money that they have received that's been specifically earmarked for that purpose. So, I think it's somewhat disingenuous for the cities to say, you know, oh, we need more money to address this or, you know, somehow if, you know, we allow property owners to get a refund for services they're not receiving from us, that's going to worsen the problem. I just don't think that that is categorically true at all. There's, there's no merit to that.

GILGER: So, I mean, you're saying there that your goal here is that no one actually has to file under this, this is, won't have to be used. Any sense, Jenna, as to how Arizona voters might react to this. 

BENTLEY: You know, that's, that's an interesting question. And we did some polling early on when we were looking at this and it polled really high. You know, everyone across the state, not just people who are living in, you know, Phoenix or Tucson or these bigger cities, even the rural cities are saying that that this is a problem and Phoenix kind of garnered our state a very, you know, dubious reputation when the Zone happened. You know, everyone on both sides of the aisle said, hey, that is the wrong way to do things. We shouldn't go down that path again.

GIILGER: That was Jenna Bentley, director of Government Affairs for the libertarian nonprofit think tank the Goldwater Institute. The measure will be on your ballot in November.

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Lauren Gilger, host of KJZZ's The Show, is an award-winning journalist whose work has impacted communities large and small, exposing injustices and giving a voice to the voiceless and marginalized.