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Assigned to FIN & COMPS FOR
COMMITTEE
ARIZONA STATE SENATE
Fifty-Third Legislature, Second Regular Session
mobile food vendors; state licensure
Purpose
Establishes statewide licensure for mobile food vendors while delineating permissible municipal and county regulations, and reclassifying mobile food vendors for tax purposes.
Background
Transaction privilege tax (TPT) is a gross receipts tax levied by the State of Arizona for the privilege of conducting business in the state. Unlike a true sales tax imposed by many other states, TPT is imposed upon the seller of the item being taxed, rather than the purchaser. While the burden of the tax may be passed on to the purchaser, the seller is the party that is ultimately liable for payment of the tax to the state. TPT is currently imposed under 16 separate business classifications, including mining, retail, commercial lease, restaurant and personal property rental. The Arizona Department of Revenue (DOR) is the statewide collection agency for TPT, including local excise taxes that mirror statewide TPT. The restaurant classification has a state tax rate of 5.6 percent, and consists of the business of operating restaurants, dining cars, catering services or similar establishments where food or drink are sold for consumption on or off the premises. The sale of food by a retailer who is a street or sidewalk vendor and who uses a pushcart, mobile facility, motor vehicle or similar conveyance is currently exempt from the TPT restaurant classification (A.R.S. §§ 42-5074 and 42-5102).
Licensing and regulation of mobile food establishments is currently performed at the county and municipal levels. For example, Maricopa County recognizes three primary types of mobile food units based upon the level of preparation required for the food served. These classifications of mobile food units are: 1) Type I, formerly Food Peddler; 2) Type II, formerly Pushcart; and 3) Type III, formerly Mobile Food Unit (Maricopa County Environmental Health Code, Chapter VIII, Section 3).
The responsibilities and powers of the Arizona Department of Health Services (DHS) include protecting the health of the people of Arizona, coordinating local nutrition programs and directing the issuance of licenses and permits required by law (A.R.S. § 36-132). As the statewide public health agency, DHS manages the Food Safety and Environmental Services Program, which engages with county health departments to manage the sanitation of food establishments, schools, bottled water facilities, public swimming pools and others (A.A.C. Title 9, Chapter 8).
There may be a positive fiscal impact to the state General Fund associated with this legislation due to the realignment of mobile food vendors from exempt food to the TPT restaurant classification.
Provisions
Local Governments
1. Permits a municipality to issue ordinances or resolutions that:
a) impose operating hours on mobile food vendors that are consistent with operating hours imposed on restaurants;
b) restrict the use of noisemaking devices during specific hours;
c) restrict operation of a mobile food unit in a residentially-zoned area, public airport or public transit facility;
d) prohibit a mobile food unit from blocking ingress and egress to private property, public sidewalks, and vehicular traffic on public roads;
e) require a mobile food vendor to obtain consent from the owner or lessee of private property before beginning operations at that property;
f) restrict a mobile food vendor from using a legal parking space to the same extent as existing limitations on other private vehicles, including number of spaces, size and duration;
g) enact zoning codes that are substantially similar to zoning requirements for other businesses in the applicable zoning district;
h) require an annual fire inspection of mobile food units, provided that such inspection is accepted by other municipalities; and
i) enact codes to protect public health, safety and welfare, provided that they do not conflict with rules adopted by DHS.
2. Prohibits a municipality from:
a) restricting the length of time that a mobile food vendor may operate on private property, unless the period of time exceeds 96 hours;
b) requiring mobile food vendors or the owners or lessees of property on which the mobile food vendor is operating to receive a special permit, not otherwise required for businesses in the same zoning district;
c) limiting operation of a mobile food vendor within a specific distance of an existing restaurant or commercial establishment, except as required by building and fire codes;
d) restricting a mobile food vendor from using a parking space to the same extent as any other commercial vehicle;
e) requiring a mobile food vendor to be fingerprinted; and
f) requiring a mobile food vendor to list the municipality as an additional insured on an insurance policy unless the vendor is attending a municipality-sponsored event or operating on public property.
3. Allows a county Board of Supervisors (BOS) to:
a) impose operating hours on mobile food vendors that are consistent with operating hours imposed on restaurants;
b) restrict the use of noisemaking devices during specific hours;
c) restrict operation of a mobile food unit in a residentially-zoned area or at a public airport;
d) prohibit a mobile food unit from blocking ingress and egress to private property, public sidewalks, and vehicular traffic on public roads;
e) require a mobile food vendor to obtain consent from the owner or lessee of private property before beginning operations at that property; and
f) require a mobile food vendor with a state license not issued by the county to apply for a permit, provided that such permit is available electronically and does not require inspection as a condition of receiving the permit.
4. Prohibits a BOS from:
a) restricting the length of time a mobile food vendor may operate on private property, unless the period of time exceeds 96 hours;
b) limiting operation of a mobile food vendor within a specific distance of an existing restaurant or commercial establishment, except as required for public safety purposes;
c) restricting a mobile food vendor from using a parking space to the same extent as any other commercial vehicle;
d) requiring a mobile food vendor to list the county as an additional insured on an insurance policy unless the vendor is attending a county-sponsored event or operating on public property; and
e) requiring a mobile food vendor to be fingerprinted.
5. Requires a municipality with a population of over 50,000 and a county with a population of over 500,000 to provide an electronic, online business license application. Such jurisdictions would be prohibited from requiring a mobile food vendor to apply for a business license in person.
Statewide Regulation
6. Requires DHS to adopt rules that:
a) enact health and safety licensing standards for the three categories of mobile food units, require fire extinguishers and meet specified physical and operation requirements;
b) create statewide inspection standards based on objective factors;
c) establish a licensing process that requires separate, conspicuously-displayed licenses for each mobile food unit that must be renewed annually with each employee possessing a valid food handler card; and
d) prohibit customers from entering the street or entering the mobile food unit.
7. Delegates statewide licensing and health and safety inspection authority to the county health department of the county where the mobile food vendor's commissary is located.
8. Establishes statewide reciprocity for licenses issued by an Arizona county, provided that any county is allowed to enforce the statewide inspection standards.
9. Restricts DHS from issuing rules that either require a mobile food vendor to operate at a specified distance from an existing restaurant or address the hours of operation for a mobile food unit.
10. Allows DHS to adopt other regulations that are substantively identical to those issued by Maricopa County relating to mobile food establishments that are in effect on the effective date of this bill.
Taxation
11. Includes mobile food vendors under the TPT restaurant classification.
12. Repeals the TPT exemption for food sold by a retailer who uses a mobile facility, motor vehicle or similar conveyance.
13. Allows a municipality to levy an excise tax on mobile food vendors, to be collected by DOR, provided that such tax is administered consistently with treatment of restaurants and is limited only to transactions that occur within the taxing jurisdiction.
14. Requires a mobile food vendor to maintain sales records that show sales in each taxing jurisdiction separately.
15. Authorizes DOR to assess a tax based on the total receipts, applying the highest tax rate levied by any taxing jurisdiction, for mobile food vendors who do not maintain separate sales records.
Miscellaneous
16. Prohibits the state from requiring a mobile food vendor to have an insurance policy listing the state as an additional insured, except at state-sponsored events.
17. Exempts DHS from rulemaking requirements for one year after the effective date of this bill.
18. Defines mobile food unit, mobile food vendor, department and director.
19. Makes technical and conforming changes.
20. Becomes effective on the general effective date.
House Action
MVRA 2/12/18 DP 7-2-0-0
3rd Read 2/22/18 45-11-4
Prepared by Senate Research
March 5, 2018
FB/AF/lb