In a major win for Arizona taxpayers, the Arizona Tax Court issued two significant rulings reaffirming a fundamental principle of Arizona property tax law: real property must be valued based on its current use—not its potential future development.
The cases involved two neighboring properties in west Phoenix that have long been used for agricultural and recreational purposes, including farming, sports fields, seasonal attractions, and other outdoor activities. In both cases, Maricopa County argued that the properties should be valued based on their anticipated future development as mixed-use commercial projects rather than how they were actually being used on the valuation date. The Tax Court rejected that approach.
In its April 2025 ruling, the Court held that the first property had to be valued according to its current recreational use and excluded the County’s appraisal from being admitted at trial because it relied on the property’s “highest and best use” for future development instead of its actual current use. The Court also concluded that there was no evidence the property was being held solely for speculative development, distinguishing an earlier Arizona Supreme Court case involving vacant land purchased purely for anticipated increases in property value.
Unhappy with that result, the County went to the legislature this year and proposed rewriting the law on current use. The County’s legislative proposal would have gutted the definition of current usage, essentially allowing the County to consider future plans for the property in its valuation regardless of whether the current use of the property reflected those plans. The County’s proposal also required assessors to “[d]etermine a property’s current use from the totality of the circumstances…” which would have opened a Pandora’s Box of litigation related to current usage. Unsurprisingly, the legislature rejected the County’s effort.
Undeterred by the Tax Court’s April 2025 ruling and its failure to amend the law, the County persisted in making the same arguments using the same appraiser in the adjoining property. In a second ruling issued in July 2026, the Tax Court again confirmed that Arizona law requires property to be valued according to its objectively verifiable current use, regardless of an owner’s future plans or the possibility of future development. The Court again excluded the County’s appraisal because it was based on future development rather than the property’s existing recreational use.
These decisions are important because they reaffirm that county assessors must focus on how property is actually being used on the valuation date. The Court emphasized that an owner’s future intentions—or the possibility that land may someday be developed—do not change the property’s current use for valuation purposes.
These rulings reinforce longstanding protections for property owners across Arizona, but especially for Arizona’s farming and ranching community, that current use remains the cornerstone of Arizona’s property tax valuation system.
Douglas S. John and James M. Cool represented the taxpayers in this case. If you have questions about this issue, please contact Mr. John by email at djohn@frgalaw.com.
