Paradise Valley Doesn't Levy a Property Tax. Its Unfinished Ritz-Carlton Shows What Pays for That.

"Unlike neighboring Scottsdale and Phoenix, we do not pay Paradise Valley property taxes, in part because tourism funds 40% of our operating budget." Town Councilmember Anna Thomasson wrote that in a February 2025 opinion piece for the Daily Independent. In the same piece she said she looked forward to "further growth once the new Smoketree and Ritz-Carlton properties become operational."

Twenty months later, the Ritz-Carlton is still unfinished. Its developer is in Chapter 11, and a federal judge in Houston will consider a liquidation plan on December 15, 2026. The case explains a lot about how Paradise Valley works. The town pays for itself with what visitors spend, so a resort that never opens matters to the town's budget. If you are comparing Paradise Valley with Scottsdale or Arcadia, that funding model is worth understanding before you look at another listing.

The Line in the Budget Where a Property Tax Would Be

The Town of Paradise Valley's final budget for fiscal year 2027 runs from July 1, 2026, through June 30, 2027. It says the town "does not levy property taxes," so the state's property tax schedule is left out of the budget entirely. The money comes from somewhere else. The town estimates $52,964,921 in General Fund revenue for FY2027, and $37,678,398 of it, roughly 71%, is transaction privilege tax, Arizona's version of a sales tax. Permit and planning fees come to about $3.3 million and state revenue to about $5.4 million. Neither comes close to the sales tax.

The rates show who pays it. As of October 1, 2026, the Arizona Department of Revenue's rate table lists a 2.5% town rate on retail, restaurants and bars, construction contracting, and hotels. Hotel stays carry another 3.4% town tax on top of that. A hotel night in Paradise Valley therefore generates more than twice the town tax of a dollar spent at a shop.

The budget reports sales tax as one total and doesn't split out the resort portion. Thomasson's figures show how large it is. In the fiscal year that ended June 30, 2024, the town took in $15.7 million in retail and hospitality sales tax and $6.6 million in bed tax. That is $22.3 million of $55.6 million in General Fund revenue. She described that money as "a critical source of funding for police, public safety and all town services." Her numbers are FY2024 actuals and the budget figures above are FY2027 estimates. Measured either way, visitor spending covers the town's operating costs.

Why the Town Held Back Occupancy Permits for the Villas

The town's reliance on resort revenue helps explain how its approvals for the Ritz-Carlton Paradise Valley project were structured.

AZBEX reported in November 2025 that the town has a vested interest in seeing the resort completed so it can collect tax revenue. The town first let the residential villas go up ahead of the hotel, partly so the villas could help fund hotel construction. It attached a condition, "substantial progress" on the resort hotel. Once hotel construction stopped, according to the same report, the town stopped issuing certificates of occupancy for the villas. In August 2025, KJZZ reported Town Manager Andrew Ching's statement. He said the town supported approving condominiums as they were completed and as "substantial progress is made towards completion of the hotel."

This is the part of the story that matters most to a buyer. In Paradise Valley, the town's interest in getting a resort finished reached the residential units on the same site. A purchaser's move-in date depended on a hotel they would not own. The approval condition was tied to completing the hotel.

What the Plan in Court Actually Proposes

Five Star Development and affiliated entities filed Chapter 11 petitions on November 4, 2025. The jointly administered case is In re F-Star Socorro, L.P., No. 25-90607, in the U.S. Bankruptcy Court for the Southern District of Texas. The bankruptcy filing halted a foreclosure. AZBEX reported that the primary lender, Madison Realty Capital, had made a $585 million loan in 2023 to finish the resort and residences, and that the property was scheduled for auction that month.

The amended plan filed October 14, 2026, is a liquidation plan. The remaining assets of the Ritz project entities would go to a trust that sells them and pays out the proceeds. The plan gives the hotel two possible paths:

1. Equity purchase option. The current parent equity holders, or their designees, may buy the hotel, its fixtures and equipment, and the undeveloped land for a cash price of no less than $570 million, plus and minus specified adjustments. If they exercise the option on time, there is no auction.
2. Court-supervised auction. If the option is not exercised, the hotel is marketed and sold under court-approved bidding procedures. The project entities may include some or all of the undeveloped land in that sale, either with the hotel or as separate lots.

Both paths share a requirement that lines up with the town's interest. Every qualified bidder, including equity holders using the option, must identify an experienced hotel developer committed to completing the hotel, and must show the sources and uses of the money to finish it. The plan allows for a stalking-horse bidder, meaning an opening bidder whose offer sets the floor for an auction, but it does not name one. For the remaining unsold villas, the plan calls for commercially reasonable efforts to sell them, with any proceeds going solely to Madison. It also allows one or more villas to be transferred or abandoned to Madison instead.

The Dates That Set the Pace

On October 14, the court conditionally approved the disclosure statement, the plan summary sent to creditors, and allowed voting to begin. That is not approval of the plan itself. The hearing notice sets the next steps.

The last row matters most for anyone thinking about timing. With both extensions, the sale could run up to 18 months after the bidding procedures are approved. Under either path, the buyer still has to finish building the hotel after the sale closes. The notice also says the hearing may be continued without further notice. No source gives a completion date for the hotel.

What Stands at Scottsdale Road and Lincoln Drive Today

The project's disclosure statement describes a 122-acre development on the Paradise Valley and Scottsdale border. Its parts are at very different stages:

• The villas. The vast majority of the 80 villas are occupied.
• Estate homes. Several of the 32 estate homes are occupied, under construction, or under contract.
• The hotel. The planned 215-room resort includes a 16,000-square-foot spa and a 400-foot pool. It is still unfinished. Once it operates, the Ritz-Carlton Hotel Company, a Marriott subsidiary, is slated to run it.
• The Palmeraie. This fully entitled 29-acre district is planned for about 160,000 square feet of retail, dining, and experiential space. AZ Big Media reported in April 2026 that it had no opening date.

Set this against the town's budget. Each part of the project that isn't operating is a source of town tax that hasn't started yet. The hotel would pay the 2.5% hotel rate plus the 3.4% bed tax. The Palmeraie's shops and restaurants would pay the retail and restaurant rates. A plan that requires any buyer to finish the hotel helps the town and the occupied villas in the same way.

For a buyer weighing Paradise Valley, the practical point is how the town's finances work. A town without its own property tax depends on visitors spending money there. If a property shares a site, an entitlement, or a development agreement with a resort, it is worth asking how the town has tied the two together before you write an offer.

A Few Direct Questions

Is the Ritz-Carlton Paradise Valley open? The hotel is not complete. Most of the villas are occupied. The Palmeraie retail district is entitled but had no opening date as of April 2026.

Does "no property tax" mean a Paradise Valley home carries no property tax bill? The FY2027 budget says the town does not levy property taxes. That statement covers the town's own levy only. Ask a tax professional what a specific parcel will owe.

Who decides who finishes the hotel? Under the plan, either the equity holders use their purchase option or the project entities market the hotel under court-approved bidding procedures, and any sale needs the bankruptcy court's approval. Either way, the buyer must commit an experienced hotel developer to finishing it. The confirmation hearing is set for December 15, 2026.

Can buyers still purchase villas in the project? The plan calls for efforts to sell the remaining unsold villas, with any proceeds going to Madison, and it also allows villas to be transferred or abandoned to Madison instead. Anyone considering a purchase there should have counsel review how the plan affects that contract.

This post is general information about public filings and town budget documents. It is not legal, tax, or financial advice, so please confirm your own situation with the appropriate attorney or tax advisor.

If you are weighing a Paradise Valley purchase and want to understand how a nearby resort, an entitlement condition, or a development agreement could shape your timeline, Allison Cahill reads the contract terms and the town context together. Schedule a confidential consultation.