HB2371 - 532R

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

Section 1. Title 9, chapter 4, Arizona Revised Statutes, is amended by adding article 7.2, to read:

ARTICLE 7.2. MOBILE FOOD VENDORS AND MOBILE FOOD UNITS

START_STATUTE9-485. Definitions

In this article, unless the context otherwise requires:

1. "mobile food unit" means a food establishment that is licensed by this state, that is readily movable and that dispenses food or beverages for immediate service and consumption and other incidental retail items from any vehicle as defined in section 28‑101.

2. "Mobile food vendor" means any person who owns, controls, manages or leases a mobile food unit or contracts with a person to prepare foods and vend from, drive or operate a mobile food unit. END_STATUTE

START_STATUTE9-485.01. Mobile food vendors; mobile food units; operation

A. In relation to a mobile food vendor or mobile food unit, a city or town by ordinance or resolution may:

1. Prohibit or restrict a mobile food vendor from operating at a public airport or public transit facility, in an area zoned for residential use or within two hundred fifty feet of an area zoned for residential use.

2. Continue to enact and enforce regulations and zoning codes on mobile food units or mobile food vendors that are not otherwise prohibited by law.

B. In relation to a mobile food vendor or mobile food unit, a city or town may not:

1. Require a mobile food vendor, property owner or lessee of a property to apply for and receive any special permit that is not required for other temporary or mobile vending businesses in the same zoning district.

2. Require a mobile food vendor or mobile food unit to operate a specific distance from the perimeter of an existing commercial establishment or restaurant, except as required by applicable building, fire, street and sidewalk codes.

3. Prohibit or restrict a mobile food vendor or mobile food unit from using any legal parking space, including metered parking, except to restrict the number of spaces, vehicle size and parking duration and the ability to occupy sites with insufficient parking capacity as prescribed by a local zoning ordinance of the city or town or as otherwise prohibited by federal law.

4. Require a mobile food unit to be inspected by a city or town fire department before operation if the mobile food vendor provides evidence that the mobile food unit passed a fire inspection by another city or town fire department in this state within the preceding twelve months.

C. A city or town with a population of more than fifty thousand persons shall make available all applicable license applications in an electronic format that is available online and may not require a mobile food vendor to apply in person. END_STATUTE

START_STATUTE9-485.02. Insurance requirement prohibited

A city or town may not require a mobile food vendor to maintain an insurance policy that names the city or town as an additional insured unless the mobile food vendor is attending an event sponsored by that city or town or is operating on public property, including the right‑of‑way or property owned by the city or town. END_STATUTE

Sec. 2. Title 11, chapter 2, article 4, Arizona Revised Statutes, is amended by adding section 11‑269.20, to read:

START_STATUTE11-269.20. Mobile food vendors; mobile food units; operation; insurance requirement prohibited; definitions

A. In relation to a mobile food vendor or mobile food unit, a county board of supervisors by ordinance or resolution may:

1. Impose operating hours only if they are the same as the operating hours imposed on restaurants in that county.

2. Restrict the operation of noisemaking devices during specific times of day.

3. Restrict or prohibit the operation of a mobile food unit in an area that is zoned as residential only.

4. Prohibit a mobile food unit that is operating on private property from blocking ingress to and egress from that property.

5. Prohibit a mobile food unit from blocking or inhibiting the use of a public sidewalk.

6. Prohibit a mobile food vendor or mobile food unit from blocking vehicular traffic on public streets and roads.

7. Require a mobile food vendor to obtain consent from a private property owner or lessee or the owner's or lessee's agent before beginning operation on that property.

8. Prohibit or restrict a mobile food vendor from operating at a public airport.

9. require a mobile food vendor with a state license that is not issued by that county to apply for a permit in order to conduct business within the county. The county may charge a fee for the permit. The permit shall be made available in an electronic format that is available online. The ordinance or resolution may not require a mobile food vendor with a state license to be inspected as a condition of receiving the permit.

10. Prohibit or restrict a mobile food vendor from operating at a county public park.

B. In relation to a mobile food vendor or mobile food unit, a county board of supervisors may not:

1. Restrict how long a mobile food vendor or mobile food unit may operate at a private property location, except that a mobile food vendor may not operate at a private property location for more than ninety‑six consecutive hours.

2. Require a mobile food vendor to operate a specific distance from the perimeter of an existing commercial establishment or restaurant, except as required for public safety purposes.

3. Prohibit or restrict a mobile food vendor from using any legal parking space, including metered parking, to the same extent as any other commercial vehicle.

4. Require a mobile food vendor to maintain an insurance policy that names the county as an additional insured unless the mobile food vendor is attending an event sponsored by that county or is operating on public property.

5. Require a mobile food vendor to be fingerprinted.

C. A county with a population of more than five hundred thousand persons shall make available a business license application in an electronic format that is available online and may not require a mobile food vendor to apply in person.

D. For the purposes of this section:

1. "Mobile food Unit" means a food establishment that is licensed by this state, that is readily movable and that dispenses food or beverages for immediate service and consumption and other incidental retail items from any vehicle as defined in section 28‑101.

Sec. 3. Title 36, Arizona Revised Statutes, is amended by adding chapter 15, to read:

CHAPTER 15

MOBILE FOOD VENDORS AND MOBILE FOOD UNITS

ARTICLE 1. GENERAL PROVISIONS

START_STATUTE36-1751. Definitions

In this chapter, unless the context otherwise requires:

1. "Department" means the department of health services.

2. "Director" means the director of the department of health services.

3. "Mobile food unit" means a food establishment that is licensed by this state, that is readily movable and that dispenses food or beverages for immediate service and consumption and other incidental retail items from any vehicle as defined in section 28‑101.

4. "Mobile food vendor" means any person who owns, controls, manages or leases a mobile food unit or contracts with a person to prepare foods and vend from, drive or operate a mobile food unit. END_STATUTE

ARTICLE 2. LICENSURE AND REGULATION

START_STATUTE36-1761. Mobile food vendors; mobile food units; rules; health and safety licensing standards

A. The director shall adopt rules that do all of the following:

1. Establish health and safety licensing standards for mobile food vendors and mobile food units that apply on a statewide basis. The licensing standards shall:

(a) Include three categories of mobile food units that are based on the type of food dispensed and the amount of handling and preparation required.

(b) Include general physical and operation requirements of a mobile food unit, including:

(i) Installation of compressors, generators and similar mechanical units that are not an integral part of the food preparation or storage equipment.

(ii) Necessary commissary or other servicing area agreements.

(iii) Vehicle and equipment cleaning requirements.

(iv) Waste disposal requirements during and after operation on public or private property, which may not include the size or dimensions of any required solid waste receptacle.

2. Establish statewide inspection standards that are based on objective factors for use by the county health departments.

3. Establish a licensing process for mobile food units that does all of the following:

(a) Requires a separate license for each mobile food unit.

(b) Requires a license to be renewed annually.

(c) Delegates to the county health department in the county where the mobile food vendor's commissary is located the licensing and health and safety inspection for state licensure using the statewide inspection standards adopted pursuant to this section. The licensing process shall require random inspections by county health departments at no additional cost except as provided in section 11‑269.20. A mobile food unit license issued by a county health department pursuant to this section shall have reciprocity in each county of this state. A county health department may enforce the statewide inspection standards regardless of where the license was issued.

(d) Requires all employees of a mobile food vendor to have a valid food handler card or a certificate from an accredited food handler training class as specified in rule by the department.

(e) Requires that the license be displayed in the mobile food vendor's operating location in a conspicuous location for public view.

B. The rules adopted pursuant to this section may not do either of the following:

1. Require a mobile food vendor or mobile food unit to operate a specific distance from the perimeter of an existing commercial establishment or restaurant.

2. Address the operating hours of a mobile food unit.

C. Except as otherwise specified in this chapter, the director may adopt rules that are substantively the same as the regulations that are in place on the effective date of this section in Maricopa county regarding mobile food establishments.

D. This section does not preclude a city, town or county from requiring a mobile food vendor to be licensed if the licensing system includes a background check or identification and fingerprinting of the owner of the mobile food vending operation. END_STATUTE

Sec. 4. Title 41, chapter 3.1, article 1, Arizona Revised Statutes, is amended by adding section 41-626, to read:

START_STATUTE41-626. Mobile food vendors; insurance requirement prohibited; definition

A. This state or any department or agency of this state may not require a mobile food vendor to maintain an insurance policy that names this state as an additional insured unless the mobile food vendor is attending an event sponsored by this state.

B. For the purposes of this section, "mobile food vendor" means any person who owns, controls, manages or leases a mobile food unit or contracts with a person to prepare foods and vend from, drive or operate a mobile food unit. END_STATUTE

Sec. 5. Section 42-5074, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5074. Restaurant classification

A. The restaurant classification is comprised of the business of operating restaurants, dining cars, dining rooms, lunchrooms, mobile food units, lunch stands, soda fountains, catering services or similar establishments where articles of food or drink are sold for consumption on or off the premises.

B. The tax base for the restaurant classification is the gross proceeds of sales or gross income derived from the business. The gross proceeds of sales or gross income derived from the following shall be deducted from the tax base:

1. Sales to a person engaged in business classified under the restaurant classification if the items sold are to be resold in the regular course of the business.

2. Sales by a congressionally chartered veterans organization of food or drink prepared for consumption on the premises leased, owned or maintained by the organization.

3. Sales by churches, fraternal benefit societies and other nonprofit organizations, as these organizations are defined in the federal internal revenue code (26 United States Code section 501), that do not regularly engage or continue in the restaurant business for the purpose of fund‑raising.

4. Sales by a nonprofit organization that is exempt from taxation under section 501(c)(3), 501(c)(4) or 501(c)(6) of the internal revenue code if the organization is associated with a major league baseball team or a national touring professional golfing association and no part of the organization's net earnings inures to the benefit of any private shareholder or individual.

5. Sales at a rodeo featuring primarily farm and ranch animals in this state by a nonprofit organization that is exempt from taxation under section 501(c)(3), 501(c)(4), 501(c)(6), 501(c)(7) or 501(c)(8) of the internal revenue code and if no part of the organization's net earnings inures to the benefit of any private shareholder or individual.

6. Sales by any nonprofit organization organized and operated exclusively for charitable purposes and recognized by the United States internal revenue service under section 501(c)(3) of the internal revenue code.

7. Sales to qualifying hospitals as defined in section 42‑5001.

8. Sales to a qualifying health care organization as defined in section 42‑5001 if the tangible personal property is used by the organization solely to provide health and medical related educational and charitable services.

9. Sales of food, drink and condiment for consumption within the premises of any prison, jail or other institution under the jurisdiction of the state department of corrections, the department of public safety, the department of juvenile corrections or a county sheriff.

10. Sales of articles of prepared or unprepared food, drink or condiment and accessory tangible personal property to a school district or charter school if the articles and accessory tangible personal property are served to persons for consumption on the premises of a public school in the school district or charter school during school hours.

11. Prepared food, drink or condiment donated by a restaurant to a nonprofit charitable organization that has qualified under section 501(c)(3) of the internal revenue code and that regularly serves meals to the needy and indigent on a continuing basis at no cost.

12. Sales of articles of food and drink at low or reduced prices to eligible elderly, disabled or homeless persons or persons with a disability by a restaurant that contracts with the department of economic security and that is approved by the food and nutrition services of the United States department of agriculture pursuant to the supplemental nutrition assistance program established by the food and nutrition act of 2008 (P.L. 110-246; 122 Stat. 1651; 7 United States Code sections 2011 through 2036a), if the purchases of the articles of food and drink are made with the benefits issued pursuant to the supplemental nutrition assistance program.

C. The tax imposed on the restaurant classification pursuant to this section does not apply to the gross proceeds of sales or gross income from tangible personal property sold to a commercial airline consisting of food, beverages and condiments and accessories used for serving the food and beverages, if those items are to be provided without additional charge to passengers for consumption in flight. For the purposes of this subsection, "commercial airline" means a person holding a federal certificate of public convenience and necessity or foreign air carrier permit for air transportation to transport persons, property or United States mail in intrastate, interstate or foreign commerce.

D. The department shall separately account for revenues collected under the restaurant classification for the purposes of section 42-5029, subsection D, paragraph 4, subdivision (b).

E. For the purposes of section 42‑5032.01, the department shall separately account for revenues collected under the restaurant classification from businesses operating restaurants, dining rooms, lunchrooms, lunch stands, soda fountains, catering services or similar establishments:

1. On the premises of a multipurpose facility that is owned or operated by the tourism and sports authority pursuant to title 5, chapter 8 for consumption on or off the premises.

2. At professional football contests that are held in a stadium located on the campus of an institution under the jurisdiction of the Arizona board of regents. END_STATUTE

Sec. 6. Section 42-5102, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5102. Tax exemption for sales of food; nonexempt sales

A. Except for the gross proceeds of sales or gross income from the sale of food for consumption on the premises, the taxes imposed by this chapter do not apply to the gross proceeds of sales or gross income from sales of food by any of the following:

1. A retailer who conducts an eligible grocery business.

2. A retailer who conducts a business whose primary business is not the sale of food but who sells food which is displayed, packaged and sold in a similar manner as an eligible grocery business.

3. A retailer who sells food and does not provide or make available any facilities for the consumption of food on the premises.

4. A retailer who conducts a delicatessen business either from a counter which is separate from the place and cash register where taxable sales are made or from a counter which has two cash registers which are used to record taxable and tax exempt sales or a retailer who conducts a delicatessen business and who uses a cash register which has at least two tax computing keys which are used to record taxable and tax exempt sales.

5. A retailer who is a street or sidewalk vendor and who uses a pushcart, mobile facility, motor vehicle or other such conveyance.

6. Vending machines and other types of automatic retailers.

B. The taxes imposed by this chapter do not apply to the gross proceeds of sales or gross income from sales of food by a state university or community college or its designee on its campuses to students using a validated meal ticket or to patients purchasing or consuming food at the Arizona health sciences center.

C. The taxes imposed by this chapter do not apply to the gross proceeds of sales or gross income from sales of food by a retailer to:

1. A regularly organized private or parochial school that offers an educational program for grade twelve or under which may be attended in substitution for a public school pursuant to section 15‑802.

2. A child care facility that is licensed under section 36‑882 or a child care group home certified under section 36‑897.01.

3. A facility which provides on a regular basis care and supervision of persons who, because of age or a mental or physical condition, are incapable of caring for themselves and where they are unaccompanied by their custodians or guardians for periods of less than twenty-four hours a day.

4. An organization which is tax exempt under section 501(c)(3) of the internal revenue code and which provides the articles to persons with a nominal charge or without a monetary charge.

5. A prison, jail or other institution under the jurisdiction of the state department of corrections, the department of public safety, the department of juvenile corrections or a county sheriff for consumption on the premises.

D. Notwithstanding subsection A of this section, the taxes imposed by this chapter do not apply to the gross proceeds of sales or gross income from sales of low or reduced cost articles of food or drink to eligible elderly, disabled or homeless persons or persons with a disability by a business subject to tax under section 42‑5074 that contracts with the department of economic security and that is approved by the food and nutrition service of the United States department of agriculture pursuant to the supplemental nutrition assistance program established by the food and nutrition act of 2008 (P.L. 110-246; 122 Stat. 1651; 7 United States Code sections 2011 through 2036a), if the purchases are made with the benefits issued pursuant to the supplemental nutrition assistance program.

Sec. 7. Title 42, chapter 6, article 1, Arizona Revised Statutes, is amended by adding section 42-6015, to read:

START_STATUTE42-6015. Mobile food vendors; definitions

A. A city, town or other taxing jurisdiction may levy a transaction privilege, sales, use, franchise or other similar tax or fee as provided by the model city tax code on a person engaging in business as a mobile food vendor subject to the restaurant classification pursuant to section 42-5074 for sales of food or beverages for immediate service and consumption and the retail classification pursuant to section 42‑5061 for sales of incidental retail items if the adopted tax:

1. Applies only with respect to transactions that occur within the jurisdictional boundaries of the city, town or taxing jurisdiction.

2. Is administered in a manner that is consistent with the treatment of restaurants or similar establishments where food or beverages are prepared and served for consumption on or off the premises.

3. Is administered, collected and enforced by the department and remitted to the city, town or other taxing jurisdiction in a uniform manner.

B. The taxpayer shall maintain records that show separately the taxable receipts from transactions in the respective cities, towns or other taxing jurisdictions in which the taxpayer conducts business. If the taxpayer fails to comply with this subsection, the department shall collect the tax based on the taxpayer's total receipts, applying the highest tax rate levied by any city, town or other taxing jurisdiction.

C. For the purposes of this section:

1. "Mobile food unit" means a food establishment that is licensed by this state, that is readily movable and that dispenses food or beverages for immediate service and consumption and other incidental retail items from any vehicle as defined in section 28‑101.

Sec. 8. Rulemaking; exemption

For the purposes of title 36, chapter 15, Arizona Revised Statutes, as added by this act, the department of health services is exempt from the rulemaking requirements of title 41, chapter 6, Arizona Revised Statutes, for one year after the effective date of this act.