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DES MOINES — Tax records in Arizona show that Democratic gubernatorial candidate Fred Hubbell received a homeowner tax credit there at the same time he claimed a homestead tax exemption in Iowa.

The Arizona tax benefit likely initially was through no fault of Hubbell’s, according to the Maricopa County assessor. But despite notices from that office, Hubbell didn’t correct classification on his $2 million Scottsdale home from “primary” to “non-primary.” That would have made the house ineligible for a credit that allowed him to pay a lower primary tax rate than other property owners.

“I’m learning new things all of the time (because) I didn’t know it was wrong to begin with,” Hubbell said Friday. “They classified the house. We didn’t.”

That’s correct, according to Maricopa County Assessor Paul Petersen.

“The problem is that we sent him multiple letters saying it was our understanding (his property) was not his primary residence and asked him to give us any information,” he said. “He never responded to any of them.”

Eventually, a civil penalty was assessed.

Tax records in Polk and Maricopa counties show that the retired businessman and his wife, Charlotte, claimed the Iowa Homestead Tax Credit on a Des Moines residence that sold for $650,000 in 2015. At the same time, the Hubbells received an Arizona “State Aid Credit” on a 4,300-square-foot Scottsdale home that estimates is worth $2.8 million. The county Treasurer’s Office shows the Hubbells paid $15,939 in property tax on their Arizona home for 2017.

To qualify for the tax credits in both states, a property owner must live in each home for at least six months of each year. State and county officials in both states concede that’s not something they regularly monitor.

“It’s always been the case that it’s the duty of the homeowner to change that designation,” Petersen said.

The dual tax credits, which lasted for seven years, plays into the argument Republican Gov. Kim Reynolds’ campaign is trying to make to voters — that Hubbell cares only about his own bottom line.

“Once again, Fred Hubbell is hiding something — taking two tax credits from two different states because he was claiming to be a resident of both,” campaign spokesman Pat Garrett said. “Fred talks about ending wasteful tax ‘giveaways,’ but when no one is looking he lines his pockets with our tax dollars every chance he gets. Fred Hubbell only cares about his pocketbook, not yours.”

The Hubbell campaign initially said the candidate “on his own, changed the classification to ‘non-primary’ status, with no penalty for any wrongdoing.” But Hubbell acknowledged Friday that wasn’t true.

The notices in 2015 coincided with the Hubbells moving from one Des Moines residence to another and may have gone to the wrong address, he said.

“To be honest, I don’t know if we notified them at the proper time or I got the notices and didn’t recognize what they were,” he said. “However, at the end of the day, we paid the tax they assessed us.”

The misclassification was not unique to Hubbells, Petersen said. When they took ownership of their Scottsdale house in 2007, the default classification for residential property was owner-occupied primary residence. But to qualify for the State Aid Credit, an owner had to live in the home for at least six months of the year.

After an investigation found that as many as 25 percent of Arizona homes were misclassified, the Arizona Legislature changed the law in 2012 “so the state would stop subsidizing people’s property tax who didn’t deserve it or qualify for it,” said Petersen, a Republican who said he doesn’t know Hubbell or Reynolds and, when interviewed, asked if Terry Branstad still was governor of Iowa.

According to a parcel history report, the Assessor’s Office began updating what it calls the legal classification verification in 2015. It shows that “due to no first and final notice response” from Hubbell, the matter was referred for action.

In 2016 the incident was referred to the treasurer for “assessment of civil penalty. Failure to respond to first or final notice.” The record also shows the Hubbells were assessed a civil penalty on their 2016 assessment equal to the $600 credit.

“So he had to pay that back, but there were probably six years they got the credit when they shouldn’t,” Petersen said. He explained that credit is capped at $600. The credit on an average Maricopa County home, he estimated, is about $250 on a $2,000 tax bill.

Hubbell said he never changed his residency on the Arizona home to take advantage of lower taxes there. He laughed at the suggestion that owning multiple homes makes him a part-time Iowan.

“We never spent more than 30 or 40 nights a year in Arizona,” he said. “Ever since we moved back to Iowa in 2007 we’ve been residents of Iowa and paying all of our income taxes in Iowa.”

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Statehouse reporter for The Courier

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