HB4130 - 572R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 9, Arizona Revised Statutes, is amended by adding chapter 14, to read:

CHAPTER 14

Housing and economic GROWTH ZONES

ARTICLE 1. GENERAL PROVISIONS

START_STATUTE9-1501. Definitions

In this chapter, unless the context otherwise requires:

1. "Base value" means the assessed valuation of taxable property or the amount of municipal transaction privilege tax revenues within a housing and economic growth zone at the time of the designating the zone.

2. "Governing board" means the multijurisdictional body appointed pursuant to section 9-1502.

3. "Increment revenue" means the portion of property tax revenues or municipal transaction privilege tax revenues that exceed the base value.

4. "Project plan" means the plan adopted by a municipality that describes the public improvements, development activities, financing mechanisms and anticipated outcomes within a housing and economic growth zone.

5. "Qualified public improvement" includes:

(a) Attainable housing that serves households that are at or below two hundred percent of the county median family income in the county where the housing is located.

(b) Water, sewer, transportation and broadband infrastructure.

(d) Parks, open space and conservation projects.

(e) Improvements that support new or local businesses that create high-wage jobs or significant local economic activity.

(f) Redevelopment of parcels that are acquired from other governmental entities. END_STATUTE

START_STATUTE9-1502. Economic and housing growth zones; establishment; requirements; prohibited development; public hearing

A. A municipality may designate a housing and economic growth zone for the purpose of development or redevelopment as prescribed by this chapter. An area may be designated as a housing and economic growth zone for up to twenty years. A housing and economic growth zone may be designated for any of the following purposes:

1. Increasing attainable housing stock.

2. Constructing or upgrading critical physical infrastructure.

3. Revitalizing areas with no realistic prospect of economic development.

4. Supporting new or local businesses that either:

(a) Create high-wage jobs.

(b) Produce significant local economic impact.

5. Developing parcels that are newly acquired from other governments.

B. Before designating a housing and economic growth zone, the governing body of a municipality shall adopt written findings that demonstrate all of the following:

1. That the conditions within the proposed housing and economic growth zone substantially impair the sound growth of the municipality.

2. That a public investment is necessary to attract or retain private development.

3. That the proposed development or redevelopment would not reasonably be expected to occur without designating a housing and economic growth zone.

4. That the project plan is economically feasible and is consistent with the municipality's general plan.

C. A housing and economic growth zone designation may be established if at least one of the following exists:

1. Substandard, vacant or deteriorating commercial, industrial or residential structures.

2. Defective, aged or absent infrastructure, including water, sewer, sidewalks, streets or broadband.

3. Significant unserved or underserved broadband populations.

4. Unsanitary, unsafe or polluted conditions.

5. Conditions that endanger life or property, including high fire or flood risk areas.

6. Tracts of undeveloped land that lack infrastructure or significant private investment interest.

7. Any affordable housing project that is designated as a redevelopment area pursuant to any applicable state law.

8. Federal neighborhood revitalization strategy areas.

9. Areas that have proximity to large scale event spaces in rural areas.

10. Conditions that collectively constitute an economic or social liability to the municipality.

11. Conditions that substantially impair the municipality's tax base.

12. An area that has been designated as an area of redevelopment pursuant to applicable existing laws.

D. A housing and economic growth zone may not be used to develop any of the following:

1. Sports facilities or other similar developments.

2. Private luxury suites or premium seating areas that are located within a sports facility.

3. Facilities that are primarily used by a professional sports organization or entertainment corporation.

4. Any other project that would primarily benefit a single private entity and that does not have demonstrable public benefit.

E. Before designating a housing and economic growth zone, the governing body of a municipality shall hold at least two public hearings. The governing body of a municipality may only designate a housing and economic growth zone after holding a vote of the governing body of the municipality at a public hearing. The municipality shall provide written notice at least thirty days before the first public hearing to all of the taxing jurisdictions that may be affected by designating the housing and economic growth zone.

F. The governing body of the municipality that is designating the housing and economic growth zone shall appoint the governing board. The governing board shall meet at least two times per year. The governing board consist of THE following members:

1. The mayor of a municipality that is located in the housing and economic growth zone, or the mayor's designee.

2. A member of the county board of supervisors from a county that is located in the housing and economic GROWTH zone, or the supervisor's designee.

3. Two members of a local business or business organization LOCATED IN THE housing and economic growth zone.

4. Two residents who reside in the housing and economic growth zone.

5. A legislator who represents the area where the housing and economic growth zone is located.

G. The governing board shall:

1. Oversee the implementation of the project plans.

2. Approve the housing and economic growth zone's annual budget and expenditure of increment revenues.

3. Ensure the housing and economic growth zone's compliance with this chapter and the municipality's general plan.

H. A housing and economic growth zone project plan must include all of the following:

1. A description of proposed qualified public improvements and development activities.

2. A financing plan that identifies expected increment revenues and projected costs of the project plan.

3. Performance measures and anticipated economic impacts.

4. A schedule for implementation of the project plan.

5. A statement that indicates that the project plan is consistent with the municipality's general plan.

6. A study that indicates the financial feasibility of the project plan.

7. A cost-benefit analysis of the project plan.

8. A schedule of projected increment revenues and expenditures of the project plan.

9. A description of anticipated private investment in the project plan.

I. The governing board shall use projected increased tax revenues generated within the housing and economic growth zone to finance qualified public improvements. Increment revenues may be used only for housing and economic growth zone purposes prescribed in this section. Increment revenues may not be used for general governmental operating expenses or for prohibited uses prescribed in subsection D of this section.

J. A municipality may issue bonds or other obligations secured by increment revenues. Bonds issued pursuant to this subsection are not general obligations of the municipality, and the governing board may not pledge the municipality's full faith and credit. A bond issued pursuant to this subsection shall mature not later than the expiration of the housing and economic growth zone.

K. For property tax increment revenues and transaction privilege tax increment revenues, the county treasurer shall allocate the increment revenue to a separate fund that is established by the municipality for each housing and economic growth zone. Monies that are deposited in a fund established for a housing and economic growth zone shall be used exclusively for the purposes authorized by this section.

L. The department of revenue shall do all of the following:

1. Review and approve the methodology used to calculate housing and economic growth zone base values and increment revenues.

2. Publish annual reports on a housing and economic growth zone's project plans that include the information required pursuant to subsection H of this section.

3. Conduct audits of a housing and economic growth zone's financial practices once every five years. The department of revenue may conduct more frequent audits if irregularities are found during an audit of a housing and economic growth zone. END_STATUTE

Sec. 2. Delayed repeal

Title 9, chapter 14, Arizona Revised Statutes, as added by this act, is repealed from and after December 31, 2036.

Sec. 3. Section 42-1004, Arizona Revised Statutes, is amended to read:

START_STATUTE42-1004. General powers and duties of the department; res judicata; remedies; enforcement; special collections account

A. The department shall administer and enforce this title, title 43 and other laws assigned to it and has all the powers and duties prescribed by law for such purposes. In all proceedings prescribed by law the department may act on behalf of this state. In addition, the department shall:

1. Formulate policies, plans and programs to effectuate the missions and purposes of the department.

2. Employ and remove personnel subject to title 41, chapter 4, article 4 and, as applicable, articles 5 and 6, determine the conditions of employment and prescribe the duties and powers of administrative, professional, technical, secretarial, clerical and other personnel as may be necessary in the performance of its duties, and contract for the services of outside advisors, consultants and aides as may be reasonably necessary.

3. Make contracts and incur obligations within the general scope of its activities and operations subject to the availability of its funds monies.

4. Contract with or assist other departments, agencies or institutions of the state, local, Indian tribal and federal governments in the furtherance of its purposes, objectives and programs.

5. Accept grants, matching funds monies and direct payments from public or private agencies for the conduct of programs which that are consistent with the overall purposes and objectives of the department.

6. Provide information and advice within the scope of its duties subject to the laws on confidentiality of information and departmental rules adopted pursuant to such laws.

7. Advise with and make recommendations to the governor and the legislature on all matters concerning its objectives.

8. Have an official seal, which shall be judicially noticed.

9. Provide an integrated, coordinated and uniform system of tax administration and revenue collection for the this state, including a coordinated electronic method of collecting state and municipal transaction privilege and affiliated excise taxes.

10. Pursuant to section 9-1502, do all of the following:

(a) Review and approve the methodology used to calculate housing and economic growth zone base values and increment revenues.

(b) Publish annual reports on a housing and economic growth zone's project plans that include the information required pursuant to section 9-1502, subsection H.

B. The department may:

1. With the approval of the attorney general:

(a) Abate any balance owed by a taxpayer if the balance is uncollectible. Related liens, if any, are extinguished on abatement.

(b) Abate all or part of the unpaid portion of any tax if the director determines that the administration and collection costs involved would exceed the amount of the tax.

2. Offer publications relating to the administration of state taxes for sale at a price equal to the pro rata cost of publication and distribution. Monies received from the sale of publications shall be placed in a revenue publications revolving fund. Monies in the fund:

(a) Shall be used to meet publication and distribution expenses.

(b) Are exempt from the provisions of section 35-190 relating to lapsing of appropriations.

3. Enter into contingent fee contracts to collect delinquent state taxes, penalties, interest and other amounts owed to the department under title 43 and chapter 5, article 1 of this title, consistent with the requirements of chapter 2, article 1 of this title. No contract may be entered into for the hiring of auditors on a contingent fee basis except auditors that are hired to enforce title 44, chapter 3.

C. In the determination of any issue of law or fact under this title or title 43, neither the department, nor any officer or agency having any administrative duties under this title or title 43, nor any court is bound by the determination of any other executive officer or administrative agency of this state. In the determination of any case arising under this title or title 43, the rule of res judicata is applicable only if the liability involved is for the same year or period as was involved in another case previously determined under this title or title 43.

D. The remedies of this state provided for in this title and title 43 are cumulative, and no action taken by the department constitutes an election by this state to pursue any remedy to the exclusion of any other remedy provided by law.

E. The attorney general shall prosecute in the name of this state all actions necessary to enforce this title and title 43. The attorney general may defend all actions brought against this state or an officer or agency of this state arising under this title and title 43. The attorney general may delegate the prosecuting authority to any county attorney for prosecution in that county.

F. A special collections account is established in the state general fund. All monies collected pursuant to contracts authorized by subsection B, paragraph 3 of this section shall be deposited in the special collections account. The department shall pay from the account all fees and court costs provided for in the contracts authorized under subsection B, paragraph 3 of this section. The department shall allocate the remainder of the amounts collected under subsection B, paragraph 3 of this section to the this state or the political subdivision in the proportion that the monies would have been distributed pursuant to chapter 5 of this title or section 43-206, respectively. END_STATUTE

Sec. 4. Legislative findings and intent

A. The legislature finds that:

1. Many communities in this state face aging or insufficient infrastructure, limited economic development opportunities and shortages of attainable housing.

2. Certain areas experience conditions that substantially impair the sound growth of the municipality, including deteriorated structures, inadequate infrastructure, unsafe conditions or lack of private investment.

3. Public investment in targeted areas can stimulate private investment, expand attainable housing options and support long-term economic growth.

4. Housing and economic growth zones, when subject to appropriate oversight and transparency, provide a mechanism for municipalities to finance public improvements using projected increases in tax revenues generated within designated areas.

B. The legislature intends to authorize municipalities to designate housing and economic growth zones to support attainable housing, critical infrastructure, economic development and community revitalization.