SB1490 - 542R

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

Section 1. Section 42-11054, Arizona Revised Statutes, is amended to read:

START_STATUTE42-11054. Standard appraisal methods and techniques

A. Subject to subsection B of this section, the department shall:

1. Prescribe guidelines for applying standard appraisal methods and techniques, including guidelines for a property with multiple uses, that shall be used by the department and county assessors in determining the valuation of property.

2. Prepare and maintain manuals and other necessary guidelines, consistent with this section, reflecting the standard methods and techniques to perpetuate a current inventory of taxable property and the valuation of that property.

B. Before they are adopted, the department shall submit each substantive proposed guideline, table and manual that is developed, amended or otherwise modified from and after December 31, 2006 to the joint legislative oversight committee on property tax assessment and appeals. The department shall not finally adopt, amend or otherwise modify a substantive guideline, table or manual for at least thirty days after submitting the measure to the committee. The committee may hold one or more informational hearings on the proposed measure within thirty days after submission. In adopting, amending or modifying the measure, the department shall consider the committee's comments. If the committee fails to hold a hearing within thirty days after submission, the department may adopt, amend or modify the measure without further consideration.

C. In applying prescribed standard appraisal methods and techniques:

1. Current usage shall be included in the formula for reaching a determination of full cash value.

2. Solar energy devices, as defined in section 44‑1761, grid‑tied photovoltaic systems and any other device or system designed to produce solar energy primarily for on-site consumption are considered to add no value to the property on which such a device or system is installed.

3. If characterized as personal property, subject to any applicable constitutional exemption from taxation, solar energy devices, as defined in section 44‑1761, grid‑tied photovoltaic systems and any other device or system designed to produce solar energy primarily for on‑site consumption shall be valued as provided in section 42‑13056.

4. Energy efficient building components, renewable energy equipment and combined heat and power systems are considered to add no value to the property, if the property owner provides the county assessor with documentation of all elements that qualify pursuant to this paragraph, including documents showing actual acquisition and installation costs. The documentation must be submitted to the county assessor not later than six months before the notice of full cash value is issued for the initial evaluation year pursuant to section 42‑15101 or, if the component is added after September 30 of the preceding year, not later than March 31 of the initial valuation year. For the purposes of this paragraph:

(a) "Combined heat and power system" means a system that generates electricity or mechanical power and useful thermal energy in a single, integrated system such that the useful power output of the facility plus one‑half the useful thermal output during any twelve-month period is not less than 42.5 percent of the total energy input of fuel to the facility.

(b) "Energy efficient building components" means high performance sustainable building components installed so that the buildings or building components meet or exceed the energy efficiencies prescribed by the United States environmental protection agency energy star program or by a leadership in energy and environmental design green building rating standard developed by the United States green building council, or an equivalent green building standard, or that are at least fifteen percent more energy efficient than the international energy conservation code in effect at the time of building permit issuance.

(c) "Renewable energy equipment" means equipment that is used to produce energy primarily for on-site consumption from renewable resources, including wind, forest thinnings, agricultural waste, biogas, biomass, geothermal, low-impact hydropower and solar energy not included under paragraph 2 of this subsection.

D. If the methods and techniques prescribe using market data as an indication of market value, the price paid for future anticipated property value increments shall be excluded.

E. For the purposes of determining full cash value the department and county assessors shall use and apply the ratio standard guidelines issued by the department for tax year 1993 in the same manner as they were applied in tax year 1993. This subsection does not apply to property that is valued according to prescribed statutory methods or to property for which values are determined in the year after an appeal pursuant to section 42‑16002.END_STATUTE

Sec. 2. Section 42-12001, Arizona Revised Statutes, is amended to read:

START_STATUTE42-12001. Class one property

For the purposes of taxation, class one is established consisting of the following subclasses:

1. Producing mines and mining claims, personal property used on mines and mining claims, improvements to mines and mining claims and mills and smelters operated in conjunction with mines and mining claims that are valued at full cash value pursuant to section 42‑14053.

2. Standing timber that is valued at full cash value.

3. Real and personal property of gas distribution companies, electric transmission companies, electric distribution companies, combination gas and electric transmission and distribution companies, and companies engaged in the generation of generating electricity that are valued at full cash value pursuant to section 42‑14151.

4. Real and personal property of airport fuel delivery companies that are valued pursuant to section 42‑14503.

5. Real and personal property that is used by producing oil, gas and geothermal resource interests that are valued at full cash value pursuant to section 42‑14102.

6. Real and personal property of water, sewer and wastewater utility companies that are valued at full cash value pursuant to section 42‑14151.

7. Real and personal property of pipeline companies that are valued at full cash value pursuant to section 42‑14201.

8. Real and personal property of shopping centers that are valued at full cash value or pursuant to chapter 13, article 5 of this title, as applicable, other than property that is included in class nine.

9. Real and personal property of golf courses that are valued at full cash value or pursuant to chapter 13, article 4 of this title.

10. All property, both real and personal, of manufacturers, assemblers or fabricators, other than property that is specifically included in another class described in this article, that is valued under this title.

11. Real and personal property that is used in communications transmission facilities and that provides public telephone or telecommunications exchange or interexchange access for compensation to effect two‑way communication to, from, through or within this state.

12. Real property and improvements that are devoted to any other commercial or industrial use, other than property that is specifically included in another class described in this article, and that are valued at full cash value.

13. Personal property that is devoted to any other commercial or industrial use, other than property that is specifically included in another class described in this article, and that is valued at full cash value.

14. Real and personal property of electric cooperatives that are valued at full cash value pursuant to section 42‑14159.

15. Real and personal property and improvements that are rented to lodgers for periods of less than thirty days for a total of more than one hundred twenty days in a calendar year and that are valued at full cash value, except for:

(a) property that is occupied by the owner of the property as the owner's primary residence and that is included in class three.

(b) Property that the owner of the property attests to the county assessor that the owner occupies the property for at least sixty days in a calendar year. If the owner of the property will no longer meet the sixty‑day occupancy requirement, the owner of the property shall notify the county assessor.

Sec. 3. Section 42-12004, Arizona Revised Statutes, is amended to read:

START_STATUTE42-12004. Class four property

A. For purposes of taxation, class four is established consisting of:

1. Real and personal property and improvements to the property that are used for residential purposes, including residential property that is owned in foreclosure by a financial institution, that is not otherwise included in another classification and that is valued at full cash value. The homesite that is included in class four may include:

(a) Up to ten acres on a single parcel of real property on which the residential improvement is located.

(b) More than ten, but not more than forty, acres on a single parcel of real property on which the residential improvement is located if it is zoned exclusively for residential purposes or contains legal restrictions or physical conditions that prevent the division of the parcel. For the purposes of this subdivision, "physical conditions" means topography, mountains, washes, rivers, roads or any other configuration that limits the residential usable land area.

2. Real and personal property and improvements to the property that are used solely as leased or rented property for residential purposes, that are not included in class one, two, three, six, seven or eight and that are valued at full cash value.

3. Child care facilities that are licensed under title 36, chapter 7.1 and that are valued at full cash value.

4. Real and personal property and improvements to property that are used to operate nonprofit residential housing facilities that are structured to house or care for persons with disabilities or who are sixty‑two years of age or older and that are valued at full cash value.

5. Real and personal property and improvements that are used to operate licensed residential care institutions or licensed nursing care institutions that provide medical services, nursing services or health related services and that are structured to house or care for persons with disabilities or who are sixty‑two years of age or older and that are valued at full cash value.

6. Real and personal property consisting of no more than eight rooms of residential property that are leased or rented to transient lodgers, together with furnishing no more than a breakfast meal, by the owner who resides on the property and that is valued at full cash value.

7. Real and personal property consisting of residential dwellings that are maintained for occupancy by agricultural employees as a condition of employment or as a convenience to the employer, that is not included in class three and that is valued at full cash value. The land associated with these dwellings shall be valued as agricultural land pursuant to chapter 13, article 3 of this title.

8. Real property and improvements to property constituting common areas that are valued pursuant to chapter 13, article 9 of this title.

9. Real and personal property that is defined as timeshare property by section 32‑2197 and valued pursuant to chapter 13, article 10 of this title, except for any property used for commercial, industrial or transient occupancy purposes and included in class one to the extent of that use.

10. Real and personal property and improvements that are used for residential purposes, and that are leased or rented to lodgers for periods less than thirty days for either a total of one hundred twenty days or less in a calendar year or a total of more than one hundred twenty days in a calendar year and the owner of the property occupies the property for at least sixty days in a calendar year, except for:

(a) Property occupied by the owner of the property as the owner's primary residence and included in class three.

(b) Property used for commercial purposes and included in class one pursuant to section 42‑12001, paragraph 15.

B. Subsection A, paragraphs 4 and 5 of this section shall do not be construed to limit eligibility for exemption from taxation under chapter 11, article 3 of this title. END_STATUTE

Sec. 4. Applicability

This act applies to tax years beginning from and after December 31, 2020.