To: The Honorable Chair and Members From: Stephanie N.B. Kopplin

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1 SUMMARY REPORT CHANGING LANDSCAPES: LOT SPLITS AND LOSSES IN COCHISE COUNTY Date: May 6, 200 To: The Honorable Chair and Members From: Stephanie N.B. Kopplin Cochise County Board of Supervisors NASA Space Grant Intern University of Arizona SUMMARY OF FINDINGS Currently, lot split development is a common practice in exurban and rural Cochise County; however, up until now, there have been no studies conducted that would indicate the effects of such wildcat development on county resources. In an effort to assess the fiscal impact of lot splits and unregulated development on county revenue and services, Cochise County entered into an IGA with the University of Arizona in November, 200. Through collaboration with the Office of Arid Land Studies and the University of Arizona s Cooperative Extension Program, a study was conducted that compared the assessed total full cash value of residential units in planned subdivisions to residential units in non-subdivided developments in the Three Canyons Area south of Sierra Vista. Utilizing GIS analysis, the study was able to show that residential units in lot split developments tend to be valued lower than comparable units in developments that have gone through the county s formal subdivision process. In many circumstances, this is true despite the larger acreage of wildcat parcels. These findings imply that it would behoove the county to push for reformation of State land use statutes to account for revenue lost in unregulated developments. STUDY BACKGROUND The inspiration for the research conducted in Cochise County was the study carried out by Maeveen Beehan, PhD, and John Regan, GISP, CPM for Pima County titled Distribution of Fiscal Resources (200). In their analysis, Dr. Beehan and Mr. Regan examined the assessed total full cash value and tax revenue from properties within the Pima County service boundaries, to properties in exurban or wildcat developments beyond official city limits. They found that

2 overall, wildcat development cannot contribute enough to the tax base to make up for its service demands, and presents a significant strain on county revenue. These detrimental tax implications build upon a list of growing concerns surrounding unregulated development that include the encouragement of sprawl, environmental degradation, and the loss of access to public lands and open spaces. STUDY COMPONENTS For Cochise County, a similar study was developed and specially tailored for the Three Canyons Area. The site was selected due to its mixture of formally subdivided and nonsubdivided (lot-split) developments under the same Home Owner s Association regulations and CCNR s. Unlike in Pima County, most of the developments in this exurban region are serviced by private septic and water, so the concept of service boundaries is not as applicable. However, the assessed total full cash value of residential units is still relevant and provides an excellent basis for comparison of potential revenue back to the county since all homes in this area are under similar service arrangements. Given this, the study was designed to compare the assessed total full cash value of custom homes in formally subdivided versus non-subdivided areas, as well as single family residences 2 in non-subdivided areas on parcels greater than five acres. The guiding hypothesis was that those homes in non-subdivided (lot-split) developments might be assessed lower than those homes in formally subdivided areas despite the larger acreage of many of the non-subdivided units. Formally Subdivided I Deer Ridge Estates La Pradera Covey Run Los Ranchos* THREE CANYONS DEVELOPMENTS Non-subdivided (lot-split) Fairfield Estates Various un-named and miscellaneous parcels METHODOLOGY In order to facilitate a joint spatial and data-based analysis of the region, parcel data was supplied by the Cochise County Tax Assessor for the Three Canyons region, and was uploaded into ArcGIS to facilitate geospatial analysis. The parcel data provided included a diverse range of property types and use codes, so the data was culled with a query to select only custom homes in formally subdivided or non-subdivided developments, as well as single family residences in non-subdivided areas on parcels greater than five acres. The attribute utilized to perform this * An exception to this uniformity is the Los Ranchos development that is not under the same HOA or CCNR s but was included due to its proximity and integration with surrounding developments. 2 Not manufactured homes SFR s on parcels > acres were included to assess whether land size made a significant difference in assessment even if parcels were in non-subdivided areas. The assumption was that larger parcel size might lead to a higher assessed value; however, the findings of this study do not substantiate that hypothesis and actually show that larger parcel size in non-subdivided areas does not actually result in a higher assessed value.

3 filter was USE_CODE with selections based on: = subdivided custom homes, 0 = lot split custom homes, and = single family residences on parcels greater than five acres. FINDINGS After the data was filtered, 0 parcels remained and their total full cash value was sorted from lowest assessed value to highest assessed value. Comparisons were made and evaluated by examining the location and parcel size of the different residential units. In general, data suggests that the lowest assessed value parcels tend to be single family residences on parcels greater than five acres or custom homes in non-subdivided areas, and that the highest assessed value parcels tend to be those in formal subdivisions. An examination of the 2 lowest and highest assessed parcels in table format illustrates this trend: 2 LOWEST ASSESSED TOTAL FULL CASH VALUE PARCELS TOTAL FULL CASH VALUE DEVELOPMENT NAME DEVELOPMENT TYPE USE CODE PARCEL SIZE,662 92,20 2, 2,22 229, 2, 26,29 26,6 2,0 2, 2,2 2,0 2,2 292, 29,22 02,00 0, 0,66 06,22 0,26 0, 09,6,0 2,2,09 Los Ranchos *Bolded developments are those miscategorized by use code. Based on their non-subdivided status, they would be more appropriately categorized as 0s. *Parcel size is in acres.

4 2 HIGHEST ASSESSED TOTAL FULL CASH VALUE PARCELS TOTAL FULL CASH VALUE 6,96,60 0,0 6,00,6,6 6,0 0,0 2,,002 0,96 2,9 9, 90, 92,0 9,626 02,09 0,00 0,0 2,6 0,66,06,99 2,29 69, DEVELOPMENT NAME I I Deer Ridge I I Deer Ridge I I I I DEVELOPMENT TYPE USE CODE PARCEL SIZE A comparison of the parcel size of the lowest assessed values and highest assessed values reveals that larger parcel size in non-subdivided areas does not significantly increase assessed value. Several homes on parcels of or more acres were actually assessed lower than comparable homes on parcels of lesser acreage (i.e. - acres). CONCLUSIONS Based on these preliminary findings, one can assert that there is a difference in assessed valuations of otherwise equal units depending on whether they are in formally subdivided or non-subdivided developments. Furthermore, larger parcel size does not result in higher assessments of homes in non-subdivided areas, and formally subdivided homes on smaller acreage tend to be assessed higher than their non-subdivided, more expansive counterparts.

5 Although there are no conclusive results, one can speculate that the higher assessments of homes in formally subdivided areas can be attributed to amenities included in subdivided developments such as paved roads, open space, and fire service infrastructure. These findings imply that it would be in the best interest of Cochise County to push for reformation of State statutes to account for lot split development. Lower assessments of homes in non-subdivided areas result in a decrease in potential tax revenue for the county.