New life possible for Smith bill creating low aggregate fee for tax liens

It’s not over ‘til it’s over for Senate Bill 1071. Though defeated last week in the Arizona House of Representatives, it could be reintroduced Wednesday.

The bill would change state law to limit the charges on certificates of purchase for multiple tax liens. Currently, county treasurers charge $50 per parcel. In the case of tax liens bought together, SB 1071 would limit that entire charge to $500 for 10 or more parcels.

At the center of the change, which has bipartisan support, are investor Wayne Howard and his Sonoran Land Fund LLC.

If SB 1071 succeeds, “it means this gentleman gets a huge discount,” Pinal County Treasurer Dolores “Dodie” Doolittle said.

After purchasing 2,922 liens on foreclosed properties in Pinal County last year, Sonoran Land Fund applied for new deeds. At $50 per parcel, it would have cost more than $145,000.

Doolittle said attorney Mark Manoil requested one deed for all of the Howard parcels. Doolittle said that was not a problem, but the county would still have to charge for each parcel, “because that’s in statute.”

Doolittle said she did not hear anything more on the matter for a while until she received a phone call from Joe Robison, once the chairman of the Pinal County Democrats, with an invitation to lunch about “a tax question.”

The luncheon was with Howard. Robison, now retired, said he was not interested in the topic but was willing to set up the meeting because Howard was a friend. The meeting ultimately resulted in SB 1071, and Robison said he knew little about that, either.

At the lunch meeting, Howard said he did not want to pay the thousands for the judgment deed. Doolittle said she told him she was charged with carrying out the statute. She also said she had already consulted with attorney Kevin Costello, “and he agrees with my position.”

Doolittle said Howard told her he would take up the matter with the Legislature.

The bill’s three primary sponsors were Sen. Steve Smith (R-District 11), Sen. Barbara McGuire (D-District 8) and Rep. David Stevens (R-District 14).

The bill passed in the Senate, 25-4, in February before failing in the House, 28-30, on March 18. Rep. Mark Finchem (R-District 11) requested and was granted reconsideration of the measure, and the date was set for Wednesday.

Smith did not return calls, and Finchem was unavailable for comment. On the Senate floor in February, Smith said accusations the bill came about only because of one person not wanting to pay fees was “not correct.” He did not elaborate.

In January, in a Senate Government Committee meeting, Smith said the issue had come to him from a constituent in Pinal County who paid millions of dollars for back taxes on property he acquired.

He said the Howard property historically had been treated as one parcel and “clearly there was some kind of an oversight somewhere.”

He said charging anyone $150,000 was “ridiculous.” He said the best way to fix it was legislatively.

“I think it’s very onerous to put this heavy of a fee on any one person,” Smith told the committee, adding there should be a reasonable cap.

“I don’t know this person. I don’t know who this person is,” he said. “I don’t know what kind of business they’re doing or what they want to do. I have no idea. All I know is that it’s quite a bit unfair.”

Lobbyist Stan Barnes, representing Sonoran Land Fund, said they approached Smith because the issue came out of Pinal County, which Smith represents.

“The county is always interested in collecting the fees it believes it is deserved,” Barnes told the committee. “It is our contention, and Sen. Smith agrees, that no matter how you cut it up, a $150,000 administrative fee … no matter how we got there, is not a good thing.”

Doolittle said she brought up the situation with the state’s 14 other county treasurers in a December meeting. When she learned about the bill creating aggregate fees, she began contacting legislators. She spoke at the same Senate Government Committee meetings on the bill to explain how treasurers process deeds.

“There is work on our side because the deed is the result of a tax lien process,” she said.

For each of the nearly 3,000 parcels purchased by Howard, for instance, the treasurer’s office must go back through the system to change each parcel’s record and do research to make sure each form and legal description is correct.

“For the legislation to suggest that our time is only worth $500 for this volume is unfortunate,” Doolittle said. “It basically comes down to the taxpayer making up the difference for what this gentleman is getting to transfer the deed.”

“This is not nor should it be a cash cow or a money maker for a county to simply execute a deed and to write up some parcels,” Smith said in committee.

“The significant cost is there because it’s a significant amount of parcels we’re talking about,” said Trey Williams of the Arizona Association of Counties, which opposes the bill.

Doolittle sees the bill aimed only at accommodating Howard.