Cave Creek Doesn't Have a Property Tax. So Who's Paying for All That Open Space?

"We had one person misread the sign and say you're rezoning it from open space to residential," Cave Creek Development Services Director Luke Kautzman told the Town Council on October 6, as reported by the Cave Creek/Carefree Independent. "We're like, 'no turn your glasses upside down.' It's the other way around."

That night the council voted to rezone more than 400 acres as open space. Two weeks before, the town had announced a 13-acre shopping center at its busiest intersection. On November 3, voters will decide whether to add a quarter-cent sales tax to buy another 4,005 acres of State Trust land. All three draw on the same town budget, and that budget runs on sales tax, not property tax.

A town budget that runs through the register

Cave Creek's FY2026 official budget forms show zero primary property tax levy and zero secondary levy, and the document states plainly that the town does not levy property taxes. The town funds itself largely from transaction privilege tax, Arizona's version of a sales tax.

The rest comes from state-shared revenue, permits, licenses, fees and investment earnings. The Arizona Department of Revenue rate table effective October 1, 2026 lists Cave Creek's municipal retail rate at 3% and its rate for hotels and prime construction contracting at 5%.

This matters for anyone comparing Cave Creek with other north Valley towns. The local government's money doesn't come from what homes are worth. It comes from what gets bought, built and booked inside town limits. So decisions about commercial corners and decisions about empty desert are made with the same revenue in mind.

Why the shopping center lands at Carefree Highway

Black Mountain Marketplace is a 13-acre retail and restaurant project at the southeast corner of Cave Creek Road and Carefree Highway, just north of the Walmart. The developer, Evergreen Devco, markets it as a Mountainside Fitness-anchored center. The Town of Cave Creek's September 23 announcement says the corner was zoned commercial before the town incorporated in 1986. It says tenants are still negotiating and that the project "is expected to significantly enhance Cave Creek's sales tax base."

The site plan review was approved in March 2026, and building permit applications had been submitted for parts of the site by early May. No opening date has been published. KTAR reported in early October that the project was taking shape, with tenants still unannounced.

Two details in the town's announcement show how the corner was planned.

• Water. The City of Phoenix will supply water for development south of Carefree Highway. The town says this keeps Cave Creek's own water resources unaffected.
• Open space as a condition. To meet its open-space requirement, the developer acquired several acres of residential-zoned land on Black Mountain and preserved it through a Transfer of Density. The town says this protects "view corridors." In May, Kautzman said the exchange "will actually add more acreage to Black Mountain that'll be preserved as open space in the future."

So the town's newest source of sales tax was approved with protected hillside attached. The same May report also noted a hotel in plan review on the old Galloway Crossing site. Under the ADOR table, a hotel falls in the 5% class.

October 6 put five parcels in the open-space column

The rezoning that confused the person reading the sign covered five parcels the town and the Desert Foothills Land Trust already owned. Some were dedicated through development agreements and some were gifts.

1. Saguaro Hills, near the Desert Foothills Library
2. The Rosenus Parcel, near Cahava Springs
3. The Cahava Springs Tract Parcels
4. The P.A. Seitts Preserve, near Cave Creek Regional Park
5. The DFLT Black Mountain Preserve Parcel

Kautzman explained that three of the parcels were already marked as open space in the general plan but still carried residential zoning. The Rosenus and Black Mountain parcels needed general plan amendments as well. In all, the council passed seven motions. Two parcels return to the council on October 20 for final approval, and residents have 30 days to file a referendum.

Some of this land is open to the public on foot, and some is not. The Desert Foothills Land Trust lists its 4.3-acre Black Mountain Preserve as closed to the public because the terrain is steep and rough. Its separate Black Mountain Preserve North opened to the public in 2012 next to the Black Mountain Trail. The Caroline Bartol Preserve at Saguaro Hill has an interpretive nature trail and is open every day. About a mile of the Old Stage/Military Trail runs through the P.A. Seitts Preserve at Go John Canyon. The council's parcel names don't map exactly onto these DFLT preserve names. The rezoning settles the zoning on each parcel, but the town hasn't published trail access for each one.

The 4,005 acres, and what Proposition 440 would fund

The larger purchase is still ahead. The town is working to buy 4,005 acres of State Trust land in 12 parcels, grouped as Apache Wash, Core Site, Rogers Wash and Willow Springs. The town's FY2025 Annual Comprehensive Financial Report places the 4,005 acres within town limits. The town's task force map places Rogers Wash parcels east of New River and south of Spur Cross. It places Willow Springs next to Spur Cross and School House Road, and other parcels near Cave Creek Regional Park, Cahava Springs, the rodeo grounds and the P.A. Seitts Preserve.

State Trust land is sold at Arizona State Land Department auction, so the town has to win it, and pay for it, like any other bidder. The current status:

"The current contract is for all 12 parcels," Kautzman said, according to the Cave Creek/Carefree Independent's September 15 report. "But the auctions could be parceled out due to the funding we have available." The same report described several funding pieces. The town applied for a Land and Water Conservation Fund grant of up to $2 million, which it would have to match dollar for dollar. Seventeen applicants are competing for $9 million. The town has also held preliminary talks with Maricopa County about buying a parcel or two. The Desert Foothills Land Trust serves as the town's agent for private donations.

Then there is the ballot. Proposition 440 is a citizen initiative submitted by Acquire State Land PAC. It would add a 0.25% transaction privilege tax, "1 cent for every $4.00 spent," starting January 1, 2027. The money would be limited to buying State Trust land zoned for open space within town limits and administering those purchases. The tax would end after 25 years or once enough money is collected, whichever comes first. The text bars spending it on planning, maintenance, operations or trail construction, and it allows bonds but doesn't require them. The full text is in the Town of Cave Creek publicity pamphlet, which also lists in-person voting at Cave Creek Council Chambers from October 23 through November 3.

So the funding follows the same logic as the shopping center. A town with no property tax would pay for land preservation through sales tax.

Where the statewide grocery measure meets the local one

There is one more piece on the November ballot. Proposition 316, referred by the Legislature, would retroactively bar local governments from adopting or increasing a grocery tax from July 1, 2025 through June 30, 2027. After that, any new or increased grocery tax would need voter approval and could not exceed 2%. Cave Creek's food-for-home-consumption rate has been 3% since April 2009. Under the measure's rules, a town already at or above 2% keeps its existing rate but can't raise it. In calendar year 2024, Cave Creek collected $1,035,491.51 from its food tax, according to state-sourced collections data.

Finance Director Cherie White had prepared a presentation on how the two propositions would affect each other. On October 6 the council voted 4–3 to table it until after the election, the Cave Creek/Carefree Independent reported. Council member Cynthia Driskell, who requested the presentation, said it was "certainly not to advocate or influence the merits of either proposal." The town's official analysis of how the two measures interact is expected at a council meeting after the vote.

What this changes when you compare homes here

For a buyer, it changes what a "view lot" means. In much of the Valley, open land next to a house is just land that hasn't been developed yet. In Cave Creek, the town is actively deciding which land stays open, through rezonings like October 6, density transfers like the one tied to Black Mountain Marketplace, and an auction it is still working to fund. The State Trust parcels near Spur Cross, School House Road, Cahava Springs and Cave Creek Regional Park won't have a final answer until an auction expected no earlier than mid-2027. The task force's executive summary maps every parcel, and it's the most direct way to see which homes sit next to land that's still undecided.

A short FAQ

Does Cave Creek charge a town property tax? No. The FY2026 budget shows zero primary and secondary levies. Other taxing jurisdictions are separate from the town's own budget.

When will Black Mountain Marketplace open? No date has been announced. Mountainside Fitness is the named anchor, and other tenants were still negotiating as of late September.

Is the 4,005-acre purchase final? No. ASLD has not completed its appraisal. The earliest possible auction window is July or August 2027, and the funding depends partly on grants, partners and the November vote.

Tiffany Burks has spent more than 30 years in Arizona real estate, including a career in title and escrow, and that's the experience you want when the land next to a house is still on a town agenda. If you're comparing Cave Creek homes near Spur Cross, Cahava Springs or Black Mountain, Premier Realty Group can walk you through what is settled on each parcel and what is still pending, before you write an offer. Get in Touch.

This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.