The State Legislature has made a major change in the way common areas for planned communities, other than golf courses, are assessed for real estate tax purposes.

Beginning with the tax year 1999, all common areas, including land and all improvements, will be valued at a rate of $500.00 per tax parcel. The new provisions do not apply to golf course parcels.

For the purpose of this change, common areas consist of improved or unimproved real property that is intended for the use of owners and residents of a residential subdivision or development.

In order to qualify, the property must meet the following requirements:

1. The property must be owned by a nonprofit homeowner's association or community association or corporation.

2. The nonprofit homeowner's association or community association or corporation must be organized and operated to provide for the maintenance and management of the common area property.

3. The owners of the lots, parcels and areas in the development must be members of the nonprofit association or community association or corporation.

4. All property owners in the development must be required to be members of the homeowner's association, community association or corporation.

5. All members of the association, their immediate families and, if provided by association rules, guests, must have a right to use and enjoy the common areas. This right must be appurtenant to and pass with title to each lot and parcel. The organization or association may assess fees for particular uses of individual common areas.

6. The common areas must be deeded to the association.

In order to take advantage of these provisions, the developer, at the time of the approval of the public report by the Department of Real Estate, or the association, shall record a deed restriction and file a copy of the restriction with the county assessor restricting the property to use as a common area.

The association may combine all of its common area parcels into one tax parcel by filing a one-time request with a list of parcel numbers with the assessor on a form to be provided by the Department of Revenue.

This new taxation scheme should be of great benefit to associations, particularly to larger associations with many common area tax parcels.

Dyekman, Curtis,

Cohen ~ Karow, P.L.C.

6750 East Camelback Road

Suite 104