HB2126 - 532R

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

Section 1. Section 36-1474, Arizona Revised Statutes, is amended to read:

START_STATUTE36-1474. Powers of municipalities

A. Every municipality shall have all the powers necessary or convenient to carry out and effectuate the purposes and provisions of this article, including the following powers in addition to others granted by this article:

1. To prepare or cause to be prepared redevelopment plans and to undertake and carry out redevelopment projects within its area of operation.

2. To arrange or contract for the furnishing or repair, by any person or agency, public or private, of services, privileges, works, streets, roads, public utilities or other facilities for or in connection with a redevelopment project, and anything to the contrary contained in this article or any other provision of law notwithstanding, to agree to any conditions that it deems reasonable and appropriate attached to federal financial assistance and imposed pursuant to federal law relating to the determination of prevailing salaries or wages or compliance with labor standards, in the undertaking or carrying out of a redevelopment project, and to include in any contract let in connection with a redevelopment project, provisions to fulfill the conditions as it deems reasonable and appropriate.

3. Within its area of operation:

(a) To purchase, lease, obtain options on, or acquire, by gift, grant, bequest, devise, eminent domain or otherwise, any real or personal property or any interest in the property, together with any improvements on the property, necessary or incidental to a redevelopment project.

(b) To hold, improve, clear or prepare for redevelopment any such property.

(c) To sell, lease, exchange, transfer, assign, subdivide, retain for its own use, mortgage, pledge, hypothecate or otherwise encumber or dispose of any real or personal property or any interest in the property in a redevelopment project.

(d) To enter into contracts with redevelopers of property containing covenants, restrictions and conditions regarding the use of the property for residential, commercial, industrial, recreational or other purposes or for public purposes in accordance with a redevelopment plan and the other covenants, restrictions and conditions as the municipality deems necessary to prevent a recurrence of conditions that qualify an area as a slum or blighted area or to effectuate the purposes of this article. A municipality may not exercise the power of eminent domain unless the municipality makes a separate determination by a two‑thirds vote of the local governing body that the property is critical to the project and the existing use of the property is not compatible with the proposed use and cannot be incorporated into or excluded from the proposed redevelopment project.

(e) To make any of the covenants, restrictions or conditions of the foregoing contracts covenants running with the land and to provide appropriate remedies for any breach of these covenants or conditions, including the right in the municipality to terminate these contracts and any interest in the property created pursuant thereto.

(f) To borrow money and issue bonds and provide security for loans or bonds.

(g) To insure or provide for the insurance of any real or personal property or operations of the municipality in a redevelopment project of the municipality against any risks or hazards, including the power to pay premiums on the insurance.

(h) To enter into any contracts necessary to effectuate the purposes of this article.

No A statutory provision with respect to the acquisition, clearance or disposition of property by public bodies shall not restrict a municipality in these functions with respect to a redevelopment project, unless the legislature specifically so states.

4. To invest any redevelopment project funds held in reserves or sinking funds or any redevelopment project funds not required for immediate disbursement, in property or securities in which savings banks may legally invest funds subject to their control and to redeem the bonds that have been issued pursuant to section 36‑1481 at the redemption price established therein or to purchase the bonds at less than redemption price, all bonds so redeemed or purchased to be cancelled.

5. To borrow money and to apply for and accept advances, loans, grants, contributions and any other form of financial assistance from the federal government, the this state, a county or any other public body or from any sources, public or private, for the purposes of this article, to give such security as may be required and to enter into and carry out contracts in connection therewith. Notwithstanding any other law, a municipality may include in any contract for financial assistance with the federal government for a redevelopment project conditions imposed pursuant to federal law that the municipality deems reasonable and appropriate and that are not inconsistent with the purposes of this article.

6. Within its area of operation, to make or have made all surveys, appraisals, studies and plans, including the preparation of a general plan for the development of the municipality, necessary to carry out the purposes of this article and to contract or cooperate with any and all persons or agencies, public or private, to make and to carry out the surveys, appraisals, studies and plans.

7. To prepare plans and provide reasonable assistance for the relocation of families displaced from a redevelopment project area to the extent essential for acquiring possession of and clearing the area or parts of the area to permit the carrying out of the redevelopment project.

8. To appropriate funds and make expenditures necessary to carry out the purposes of this article and to make expenditures from funds obtained from the federal government without regard to any other laws pertaining to the making and approval of appropriations and expenditures.

9. To exercise all or any part or combination of powers granted by this section.

B. A municipality must notify each owner of real property located within the boundaries of a proposed redevelopment project area of the time, date and location of a public meeting concerning the proposed adoption of the redevelopment plan if the municipality intends to acquire that owner's property or any interest in that property. The municipality must provide this notice by first class mail to the address stated on the most recent records of the county assessor.

C. The designation of an area as a slum or blighted area terminates ten years after this designation unless substantial action has been taken to remove the slum or blighted conditions. The termination does not affect existing projects as described in section 35‑701, paragraph 7, subdivision (a), item (xi) that are within that designated area.END_STATUTE

Sec. 2. Section 42-6209, Arizona Revised Statutes, is amended to read:

START_STATUTE42-6209. Abatement of tax for government property improvements in single central business district

A. A city or town may abate the tax provided for under this article for a limited period beginning when the certificate of occupancy is issued and ending eight years after the certificate of occupancy is issued on a government property improvement that is constructed either before or after July 20, 1996 and that meets the following requirements:

1. The improvement is located in a single central business district in the city or town and is subject to a lease or development agreement entered into on or after April 1, 1985. For the purposes of this section:

(a) A city or town shall not designate more than one central business district within its corporate boundaries.

(b) A city or town shall not approve or enter into a development agreement or lease for a government property improvement within one year after the designation of the central business district in which the improvement is located.

(c) "Central business district" means a single and contiguous geographical area that is designated by resolution of the governing body of the city or town and that is both of the following:

(i) Located entirely within a slum or blighted area that is established pursuant to title 36, chapter 12, article 3.

(ii) Geographically compact and no not larger than the greater of five two and one‑half percent of the total land area within the exterior boundaries of the city or town or six hundred forty nine hundred sixty acres.

2. The government property improvement resulted or will result in an increase in property value of at least one hundred percent.

B. The prime lessee shall notify the county treasurer and the government lessor and apply for the abatement before the taxes under this article are due and payable in the first year after the certificate of occupancy is issued.

C. Except as provided by subsection D of this section, each lease between a prime lessee and a government lessor for which the tax is abated under this section and that is entered into from and after May 31, 2010, and that does not meet the conditions provided in section 42‑6203, subsection A, must be approved by a simple majority vote of the governing body without the use of a consent calendar and shall not be approved unless:

1. The government lessor notifies the governing bodies of the county and any city, town and school district in which the government property improvement is located at least sixty days before the approval. The notice must include the name and address of the intended prime lessee, the location and proposed use of the government property improvement and the proposed term of the lease or development agreement.

2. The government lessor determines that, within the term of the lease or development agreement, the economic and fiscal benefit to this state and the county, city or town in which the government property improvement is located will exceed the benefits received by the prime lessee as a result of the development agreement or lease on the basis of an estimate of those benefits prepared by an independent third party in a manner and method acceptable to the governing body of the government lessor. The estimate must be provided to the government lessor and the governing bodies of the county and any city, town and school district in which the government property improvement is located at least thirty days before the vote of the governing body. A lease or development agreement between a prime lessee and a government lessor involving residential rental housing is exempt from the economic estimate analysis requirements of this paragraph.

3. The lease or development agreement provides that the government lessor may not approve an amendment to change the use of the government property improvement during the period of abatement unless:

(a) The government lessor notifies the governing bodies of the county and any city, town and school district in which the government property improvement is located at least sixty days before the approval. The notice must include the name and address of the prime lessee, the location and proposed use of the government property improvement and the remaining term of the lease or development agreement.

(b) The government lessor determines that, within the remaining term of the lease or development agreement, the economic and fiscal benefit to this state and the county, city or town in which the government property improvement is located will exceed the benefits received by the prime lessee as a result of the change in the lease or development agreement on the basis of an estimate of those benefits prepared by an independent third party in a manner and method acceptable to the governing body of the government lessor. The estimate must be provided to the government lessor and the governing bodies of the county and any city, town and school district in which the government property improvement is located at least thirty days before the vote of the governing body. A change in use under a lease or development agreement between a prime lessee and a government lessor to residential rental housing is exempt from the economic estimate analysis requirements of this subdivision.

4. Beginning with development agreements, ordinances or resolutions for the lease of government property improvements that are approved by the governing body of the government lessor from and after June 30, 2018, the government lessor determines that, within the term of the lease or development agreement, a public benefit to this state and the county, city or town in which the government property improvement is located will occur because, within the current location of the proposed improvement or any existing improvement therein or within four hundred feet of the project, one or more of the following exist:

(a) A structure that is dilapidated, unsanitary, unsafe or vermin‑infested and unfit for habitation or use.

(b) An abandoned STRUCTURE OR land that is government-owned because of eminent domain.

(c) A site that is identified by the United States environmental protection agency pursuant to the comprehensive environmental response, compensation, and liability act of 1980, as amended (P.L. 96‑510; 94 Stat. 2767; 42 United States Code sections 9601 through 9675), commonly known as "superfund" or the parcel requires environmental remediation or the project requires substantial historical or cultural heritage management that adds significant costs to the project.

(d) Without limiting the provisions in section 42-6208, paragraph 2, a property that is used for public housing.

(e) A parcel that is functionally obsolete or held in fractured ownership for the use for which the property is designated by zoning or a use in the general plan.

(f) The tax or special assessment delinquency exceeds the fair value of the land.

D. Subsection C of this section does not apply if:

1. The tax is not abated under this section.

2. The government lessor is acting as a commercial landlord without a development agreement in a lease for a use ancillary to a government property improvement used for a public purpose.

E. A city or town that has designated a central business district pursuant to this section on or before August 31, 2018 shall modify the central business district, if necessary, to comply with subsection A, paragraph 1, subdivision (c), item (ii) of this section. A signed development agreement for a government property imporvement located within a central business district that must be modified to comply with subsection A, paragraph 1, subdivision (c), item (ii) of this section is considered to be within the central business district for the purposes of this section.

F. In a judicial action that interprets this section, the court shall narrowly construe all powers conferred on government lessors in this section to ensure that the requirements prescribed in subsection C of this section are not used capriciously or ignored, resulting in the gift of public monies to a private entity and in the additional burden on all other taxpayers of the jurisdiction.

E. G. Notwithstanding section 42‑6206, subsection C, beginning with development agreements, ordinances or resolutions for the lease of government property improvements approved by the governing body of the government lessor from and after December 31, 2016, the lease period for a property for which the tax is abated under this section may not exceed eight years, including any abatement period, regardless of whether the lease is transferred or conveyed to subsequent prime lessees during that period. As soon as reasonably practicable but within twelve months after the expiration date of the lease, the government lessor must convey to the current prime lessee title to the government property improvement and the underlying land. Property conveyed to the prime lessee under this subsection does not qualify for classification as class six property or for any other discounted assessment regardless of the location or condition of the property. This subsection does not apply to leases or the development agreements for the lease of government property if either of the following occurred before January 1, 2017:

1. A corresponding resolution or ordinance for the lease or intent to lease such property subject to this section was approved by the governing body of the government lessor.

2. A proposal was submitted to the government lessor in response to a request for proposals. END_STATUTE

Sec. 3. Review of areas designated as slum or blight for over ten years; renewal or termination; exception; delayed repeal

A. Within one year after the effective date of this act, each municipality shall review each area within its boundaries that has been designated as slum or blight for over ten years and either renew or terminate the slum or blight designation.

B. If a municipality does not review an area's designation as slum or blight pursuant to subsection A of this section, the designation terminates one year after the effective date of this act.

C. This section does not affect existing projects as described in section 35‑701, paragraph 7, subdivision (a), item (xi), Arizona Revised Statutes, that are within that designated area.

D. This section is repealed from and after December 31, 2019.