 |
ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
tax; distribution; county stadium district
Purpose
Redirects, to the Maricopa County Stadium District Fund (District Fund), specified transaction privilege tax (TPT) revenues collected from certain business activities at a Major League Baseball (MLB) facility or adjacent buildings that are owned by the Maricopa County Stadium District (Chase Field and its adjacent buildings) and redirects 82 percent of the state income tax from the professional baseball franchise organization domiciled in Arizona before the general effective date (Arizona Diamondbacks), Arizona Diamondback employees and any professional baseball franchise organizations from outside Arizona that render services at Chase Field. Requires the TPT and income tax to cease being transferred to the District Fund if the Arizona Diamondbacks leave the facility before 2055 and prescribes penalties for leaving before 2035, 2045 or 2050.
Background
The Maricopa County Stadium District was formed through action of the Maricopa County Board of Supervisors in September 1991 and is governed by a board of directors consisting of the five members of the Maricopa County Board of Supervisors (BOS). The Maricopa County Stadium District has the same boundaries as Maricopa County and owns Chase Field, home of the Arizona Diamondbacks, which opened in 1998 (MCSD). The Maricopa County Stadium District must maintain the District Fund consisting of all monies received by the district. District Fund monies may be used for any lawful district purpose (A.R.S. § 48-4231).
TPT is a tax on vendors for the privilege of doing business in Arizona. The state TPT rate for most classifications is 5.6 consisting of the state portion of 5 percent plus an additional 0.6 percent for education. City and town TPT rates vary by category and jurisdiction. In 2024, Maricopa County voters approved a countywide transportation excise tax levied at a rate of up to 10 percent of the state TPT (one-half cent transportation tax). Revenues from the one-half cent transportation tax are used for transportation projects. The Arizona Department of Revenue (ADOR) transmits TPT revenues to the State Treasurer, separately accounting for certain categories with dedicated uses. A portion of TPT is designated for distribution to counties, incorporated municipalities and the state General Fund and is referred to as the distribution base (A.R.S. Title 42, Chapter 5, Articles 2 and 4).
The Joint Legislative Budget Committee (JLBC) fiscal note estimates that H.B. 2704, as amended by the House Commerce Committee, would reduce state General Fund revenue by $9.2 million annually beginning in FY 2027. The local government impact would be an annual revenue loss of $5.8 million. The result is a combined state and local revenue loss of $15 million annually (JLBC fiscal note).
Provisions
Income Tax Distributions
a) any professional baseball franchise organization domiciled in Arizona;
b) resident and nonresident employees who are members of any professional baseball franchise organization domiciled in Arizona, including the spouse of any resident and nonresident employee regardless of the spouse to whom the income is attributable; and
c) resident and nonresident employees who are members of any professional baseball franchise organization that is domiciled outside Arizona for services rendered in Arizona at Chase Field.
2. Requires the State Treasurer, on instruction from ADOR and annually beginning January 1, 2026, until December 31, 2056, to transmit to the District Fund 82 percent of the amount of income tax reported to ADOR for the prior taxable year.
3. Defines member of any professional baseball franchise organization as an employee who is an active player, player on the disabled list and any other person required to travel and who travels with and performs services for the professional baseball franchise on a regular basis, including coaches, managers, trainers and broadcasters.
County Excise Tax Distributions
4. Requires the State Treasurer, on instruction from ADOR, to transmit to the District Fund the total amount of the one-half cent transportation tax collected from persons engaged in the following business activities at, or with respect to events held at, Chase Field and its adjacent buildings:
a) selling tangible personal property at retail;
b) operating or conducting theaters, movies, operas, shows of any type or nature, exhibitions, concerts, carnivals, circuses, amusement parks, menageries, fairs, races, contests, games, billiard or pool parlors, bowling alleys, public dances, dance halls, boxing and wrestling matches, skating rinks, tennis courts, video games, pinball machines or sports events or any other business charging admission or user fees for exhibition, amusement or entertainment;
c) operating a restaurant, dining car, dining room, lunchroom, mobile food unit, lunch stand, soda fountain, catering service or similar establishment where articles of food or drink are sold for consumption on or of the premises; and
d) prime contracting.
5. Requires ADOR to separately account for one-half cent transportation tax revenues collected from the businesses prescribed above on the premises of Chase Field and its adjacent buildings.
City and Town TPT Distributions
7. Requires a city or town to transmit to the District Fund the first 2 percent of TPT, sales, use, franchise or any other similar tax or fee collected on behalf of the city or town from persons engaged in the following business activities at, or with respect to events held at, Chase Field and its adjacent buildings:
a) selling tangible personal property at retail;
b) operating or conducting theaters, movies, operas, shows of any type or nature, exhibitions, concerts, carnivals, circuses, amusement parks, menageries, fairs, races, contests, games, billiard or pool parlors, bowling alleys, public dances, dance halls, boxing and wrestling matches, skating rinks, tennis courts, video games, pinball machines or sports events or any other business charging admission or user fees for exhibition, amusement or entertainment;
c) operating a restaurant, dining car, dining room, lunchroom, mobile food unit, lunch stand, soda fountain, catering service or similar establishment where articles of food or drink are sold for consumption on or of the premises; and
d) prime contracting.
8. Caps the amount transmitted to the District Fund from city and town TPT revenues generated from certain business activities at Chase Field and its adjacent buildings at $3,500,000 annually.
9. Requires the annual city and town TPT diversion cap to be increased by 3 percent annually beginning in 2027 and until December 31, 2055.
10. Requires a city or town to stop transmitting TPT diversion monies if the aggregate cap is met.
11. Requires ADOR to separately account for the first 2 percent of TPT, sales, use, franchise or other similar tax or fee revenues collected from the businesses prescribed above on the premises of Chase Field and its adjacent buildings.
12. Repeals the TPT, sales, use, franchise or other similar tax or fee distribution and accounting requirements on April 1, 2056.
State TPT Distributions
13. Requires the State Treasurer, on instruction from ADOR, to transmit to the District Fund the state TPT revenues received from persons conducting retail, amusement, restaurant and prime contracting business at, or with respect to events held at, Chase Field or its adjacent buildings.
14. Excludes the state TPT diversions from the distribution base until December 31, 2055, and reverts to the current percentages for the outlined business classifications that are designated as the distribution base beginning January 1, 2056.
15. Repeals the state TPT diversion requirements on April 1, 2056.
Tax Diversion Cap
16. Caps the total TPT and income tax diversions at $500,000,000 and requires the Maricopa County Stadium District Treasurer to annually increase the cap by 3 percent beginning in 2027 and until December 31, 2055.
17. Requires the Maricopa County Stadium District Treasurer to notify the State Treasurer, the City of Phoenix and ADOR if the cap, as increased for inflation, is met.
18. Stipulates that, on receipt of the notice, the State Treasurer, the City of Phoenix and ADOR must stop transmitting the TPT and income tax diversions if the tax diversion cap is met.
19. Requires the Maricopa County Stadium District Treasurer to return any monies transmitted over the cap to the taxing jurisdiction from which the monies were generated.
Notice and Penalty for Leaving Chase Field
20. Requires the Arizona Diamondbacks to pay any remaining Maricopa County Stadium District debts for projects to reconstruct, equip, repair, maintain or improve Chase Field and its adjacent buildings that would have been paid for by the District Fund, if:
a) the Arizona Diamondbacks leave Chase Field; or
b) the Legislature repeals the TPT and income tax diversions before January 1, 2056, due to the failure of the Diamondbacks to contribute financially to the refurbishment of Chase Field and its adjacent buildings.
21. Stipulates that, if the Arizona Diamondbacks leave Chase Field, the district treasurer must:
a) notify the State Treasurer and ADOR that the Diamondbacks left Chase Field; and
b) return any remaining tax distribution monies that are unexpended and unencumbered to the taxing jurisdiction from which the monies were generated.
22. Prohibits the State Treasurer and the City of Phoenix, on receiving the notice that the Arizona Diamondbacks left Chase Field, from continuing to transmit the TPT and income tax distributions and requires the State Treasurer to assess a penalty against the Diamondbacks in the following amounts:
a) $10 million, if the Diamondbacks leave on or before October 1, 2035;
b) $5 million, if the Diamondbacks leave on or after October 2, 2035, and before October 1, 2045; or
c) $1 million, if the Diamondbacks leave on or after October 2, 2045, and before October 1, 2050.
23. Requires the State Treasurer to deposit 50 percent of the assessed penalty in the state General Fund and distribute 25 percent each to Maricopa County and the City of Phoenix.
24. Requires ADOR to stop separately accounting for tax revenues that were subject to transmittal, on receiving the notice that the Arizona Diamondbacks left Chase Field.
25. Repeals the notice and penalty requirements on January 1, 2056.
Conveyance of Real Property Owned by the Maricopa County Stadium District
26. Stipulates that ownership of the real property and improvements for the Maricopa County Stadium District are immediately and irrevocably conveyed to the municipality in which the district is located, at no cost to the municipality, if any of the following applies to an entity or individual or their successor that uses Chase Field:
a) the entity or individual, or their successor, terminates any lease or other agreement with the district for use of Chase Field, regardless of whether the lease or other agreement pertains to the use of Chase Field;
b) any lease or other agreement between the entity or individual, or their successor, and the district for the use of Chase Field expires, regardless of whether the district and the entity or individual were negotiating an extension to the existing lease or other agreement or negotiating a new lease or other agreement; or
c) the district gives up any ownership interest in Chase Field.
County Stadium District Fund
27. Specifies that TPT and income tax diversions to the District Fund may be used only for capital repairs, reconstruction, replacement, maintenance and improvements to the infrastructure of Chase Field and its adjacent buildings.
28. Defines infrastructure to include:
a) mechanical, electrical and plumbing systems;
b) heating, ventilation and air conditioning systems;
c) building structural elements, such as the roof;
d) vertical circulation and concourse circulation;
e) essential building components, such as the commissary;
f) spaces that are required for participation in the MLB;
g) health-related and safety-related repairs and improvements;
h) building security-related repairs and improvements;
i) building technology infrastructure; and
j) standard, upgraded and accessible seating and standing-room-only areas.
29. Requires a two-thirds majority vote of the Maricopa County Stadium District Board to use monies for infrastructure spaces that are required for participation in the MLB.
30. Excludes, from the definition of infrastructure, pool suites, suites or club seating.
31. Subjects that, for the Maricopa County Stadium District, any individual, including an employee of a professional baseball franchise organization, to statutes governing conflicts of interest for state officers and employees for the purposes of spending the TPT and income tax distributions.
32. Adds, to the county stadium district fund sources, monies transmitted from the prescribed:
a) income tax collections;
b) state TPT collections;
c) Maricopa County one-half cent transportation excise tax collections; and
d) 2 percent of city or town TPT collections.
Maricopa County Stadium District Board
33. Prohibits the Maricopa County Stadium District Board from acquiring real property by eminent domain.
34. Requires the Maricopa County Stadium District Board to designate a contracted person or board member with financial management or accounting experience as district treasurer.
35. Allows the Maricopa County Stadium District Board to enter into agreements with contractors, tenants and other users of Chase Field or its adjacent buildings as determined appropriate, including agreements for reconstructing, equipping, repairing, maintaining or improving Chase Field and its adjacent buildings.
36. Requires a two-thirds majority vote of the Maricopa County Stadium District Board to use monies for infrastructure spaces that are required for participation in the MLB.
37. Requires the Maricopa County Stadium District Board to consist of the following members, rather than the Maricopa County BOS, as follows:
a) two members who are appointed by the Phoenix Mayor;
b) one member who is appointed by the Chairperson of the Maricopa County BOS;
c) one ex-officio member without the power to vote who represents the Arizona Diamondbacks and who is appointed by the Governor;
d) four members who are Maricopa County residents with experience in construction, redevelopment, architecture, economic development or commercial or public finance, two of whom are appointed by the Governor, one of whom is appointed by the President of the Senate and one of whom is appointed by the Senate Minority Leader; and
e) two members who own businesses located within three miles of Chase Field, one of whom is appointed by the Speaker of the House of the Representatives and one of whom is appoint by the House Minority Leader.
38. Requires initial Maricopa County Stadium District Board members to be appointed before January 1, 2026, and assign themselves to staggered two, three or four-year terms at the first Board meeting, with three initial members serving two years, three initial members serving three years and four members serving four years.
39. Specifies that subsequent board terms are four years and that a member may be reappointed for one subsequent full term.
40. Requires Maricopa County Stadium District Board vacancies to be filled within 30 days in the same manner as the initial appointment.
41. Requires the Chairperson of the Maricopa County Stadium District Board to notify the Governor, President of the Senate and Speaker of the House of the Representatives of the initial terms.
42. Requires the Maricopa County Stadium District Board, by November 1 each year through 2055, to report to JLBC and the Governor's Office of Strategic Planning and Budgeting (OSPB) regarding all new projects for reconstructing, equipping, repairing, maintaining or improving Chase Field and its adjacent buildings that are paid for by the district from the District Fund.
43. Requires the report to JLBC and OSPB to indicate which projects the professional baseball franchise organization contributed monies toward and the amount of the contribution.
Miscellaneous
44. Specifies that the TPT distributions to the District Fund begin on the first month after the general effective date and continue each month through March 31, 2056.
45. States that the Legislature intends that the professional baseball franchise organization that occupies Chase Field and its adjacent buildings will contribute at least $250 million of the organization's own monies for the purposes of reconstructing, equipping, repairing, maintaining or improving Chase Field and its adjacent buildings.
46. Requires ADOR, beginning the first day of the month after the general effective date and each month thereafter December 31, 2055, to separately account for the following revenues:
a) for the purposes of distributing revenues for city or town infrastructure improvements related to manufacturing facilities, prime contracting TPT revenues from any prime contractor engaged in constructing any buildings and associated improvements for the benefit of Chase Field and its adjacent buildings;
b) restaurant revenues collected from businesses operating restaurants, dining rooms, lunchrooms, lunch stands, soda fountains, catering services or similar establishments on the premises of Chase Field and its adjacent buildings;
c) for the purposes of distributing state TPT revenues to the Maricopa County Stadium District, amusement revenues collected from the sales of admissions to Chase Field and its adjacent buildings; and
d) retail revenues from each business selling tangible personal property at retail on the premises of Chase Field and its adjacent buildings.
47. Requires the Arizona Diamondbacks and other professional baseball franchise organizations that compensate individuals for services rendered at Chase Field to provide ADOR the federal taxpayer identification number for each employee who rendered services in Arizona for the organization during the tax year and to pay a $5 civil penalty for each number that the organization fails to provide.
48. Defines professional baseball franchise organization as an organization that has the right to field a team for participation in professional baseball contests scheduled by a nationwide league during a regular season held in the months of March through October each year.
49. Defines adjacent building and MLB facility.
50. Makes technical and conforming changes.
51. Becomes effective on the general effective date.
Amendments Adopted by Committee
1. Removes the diversion of income tax.
2. Caps the total amount of TPT diversions at $500 million and requires the cap to be adjusted for inflation annually.
3. Requires TPT diversions to cease once the cap is met and allows the diversions to resume after the cap is adjusted for inflation.
4. Establishes a calculation that requires the county TPT diversion to match the city TPT diversion by requiring amounts above the county half-cent transportation tax to be paid from the county's portion of the distribution base.
5. Includes one-half cent transportation tax monies from 2025 in the monies that Maricopa County must transmit to the District Fund.
6. Makes technical and conforming changes.
Amendments Adopted by Committee of the Whole
1. The committee amendment was withdrawn.
2. Caps the amount transmitted to the District Fund from city and town TPT revenues generated from certain business activities at Chase Field and its adjacent buildings at $3,500,000 annually.
3. Requires the annual city and town TPT diversion cap to be increased by 3 percent annually beginning in 2027 and until December 31, 2055.
4. Requires the State Treasurer to annually transmit to the District Fund the total net revenues collected during the preceding calendar year from income tax on all sources of income from resident and nonresident employees who are members of any professional baseball franchise organization domiciled outside Arizona for services rendered at Chase Field.
5. Clarifies that the Arizona Diamondback employee income tax that must be directed to the District Fund is only income tax from resident and nonresident employees who are members of the franchise.
6. Defines member of any professional baseball franchise organization as an employee who is an active player, player on the disabled list and any other person required to travel and who travels with and performs services for the professional baseball franchise on a regular basis, including coaches, managers, trainers and broadcasters.
7. Reduces the percentage of income tax transmitted to the District Fund from 100 percent to 82 percent.
8. Removes the specification that the amount of the state TPT diversion must be transmitted from the amount designated as the TPT distribution base.
9. Excludes the state TPT diversions from the distribution base until December 31, 2055, and reverts to the current percentages beginning January 1, 2056.
10. Includes Maricopa County one-half cent transportation tax monies generated after the general effective date and before January 1, 2026, at Chase Field and its adjacent buildings in the monies that the State Treasurer must transmit to the District Fund.
11. Caps the total TPT and income tax diversions at $500,000,000 and requires the Maricopa County Stadium District Treasurer to annually increase the cap by three percent beginning in 2027 and until December 31, 2055.
12. Stipulates that the State Treasurer, the City of Phoenix and ADOR must stop transmitting the TPT and income tax diversions if the tax diversion cap, as adjusted for inflation, is met.
13. Outlines circumstances that result in the conveyance of the real property and improvements of the Maricopa County Stadium District to the City of Phoenix at no cost to the City.
14. Narrows the authorized uses of all tax distributions to the District Fund to uses for capital repairs, reconstruction, replacement, maintenance and improvements to the infrastructure of Chase Field and its adjacent buildings.
15. Requires the Arizona Diamondbacks to pay any remaining Maricopa County Stadium District debts for projects to reconstruct, equip, repair, maintain or improve Chase Field and its adjacent buildings that would have been paid for by the District Fund, in specified circumstances.
16. Prescribes membership of the Maricopa County Stadium District Board in place of the Maricopa County BOS.
17. Requires initial Maricopa County Stadium District Board members to be appointed before January 1, 2026, and prescribes term length and appointment requirements.
18. Prohibits the Maricopa County Stadium District Board from acquiring real property by eminent domain.
19. Requires the Maricopa County Stadium District Board to designate a contracted person or board member with financial management or accounting experience as district treasurer.
20. Allows the Maricopa County Stadium District Board to enter into agreements with contractors, tenants and other users of Chase Field or its adjacent buildings as determined appropriate, including agreements for reconstructing, equipping, repairing, maintaining or improving Chase Field and its adjacent buildings.
21. Requires a two-thirds majority vote of the Maricopa County Stadium District Board to use monies for infrastructure spaces that are required for participation in the MLB.
22. Removes the requirement for the aggregate amount of income tax reported to ADOR for a taxable year to be included when determining the net proceeds of state income taxes for the fiscal year for the purposes of Urban Revenue Sharing Fund distributions.
23. Repeals the state TPT diversion requirements on April 1, 2056.
24. Defines infrastructure, adjacent building and MLB facility.
25. Makes technical and conforming changes.
House Action Senate Action
COM 2/4/25 DPA 8-1-1-0 FIN 3/24/25 DPA 4-3-0
3rd Read 2/26/25 35-25-0 APPROP W/D
Prepared by Senate Research
June 18, 2025
MG/ci