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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
AMENDED
property valuation; splits; subdivisions; consolidations
Purpose
Limits the circumstances that require a county assessor to reestablish a split, subdivided or consolidated property's limited property value (LPV) to splits, subdivisions and consolidations that create a new, independently usable and marketable economic or functional unit.
Background
County assessors use Rule A and B to calculate a property's LPV, which is used to calculate property tax. The Rule B calculation sets the LPV at the level or percentage of the full cash value (FCV) that is comparable to other properties of the same or similar use or classification. Rule B is used to calculate a property's LPV in certain circumstances, including when the property has been split, subdivided or consolidated from January 1 through September 30 of the valuation year.
In the case of property that is split, subdivided or consolidated after September 30 through December 31 of the valuation year, except for cases that result from a governmental entity-initiated action, the total LPV of the new parcel or parcels is the same as the total LPV of the original parcel or parcels. For the following valuation year, the LPV must be established at a level or percentage of FCV that is comparable to that of other properties of the same or a similar use or classification (A.R.S. § 42-13302).
If limiting the circumstances that require a county assessor to reestablish a split, subdivided or consolidated property's LPV results in a tax shift that affects the obligations of the state, there may be a fiscal impact to the state General Fund.
Provisions
1. Clarifies the criteria to trigger a Rule B valuation for property that has been split, subdivided or consolidated by specifying that the split, subdivision or consolidation must be a result of a property owner initiated action that constitutes a property split, subdivision or consolidation.
2. Specifies that a split, subdivision or consolidation does not require a Rule B valuation unless it results in the creation of a new, independently usable and marketable economic or functional unit.
3. Defines economic unit as real property that operates as a single income-producing or value-contributing entity in the marketplace, regardless of the number of parcel identifiers or ownership interests.
4. Defines functional unit as real property that operates together as a single site for a primary use, including land or improvements that provide a supporting, an incidental or a legally required utility for that use and do not function independently from the primary use in terms of use, access or operation.
5. Defines independently marketable as capable of being sold, leased or otherwise transferred as a separate interest in real property in the open market to a typical purchase or tenant, and not merely incidental or subordinate to an adjacent property.
6. Defines independently usable as capable of being used, occupied or developed for a permitted purpose without reliance on other real property for legally required access, essential infrastructure or site function as required by any law, ordinance or permit.
7. Makes technical and conforming changes.
8. Becomes effective on the general effective date.
Amendments Adopted by Committee
· Makes technical changes.
Senate Action
FIN 2/9/26 DPA 4-1-2
Prepared by Senate Research
February 10, 2026
MG/hk