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ARIZONA STATE SENATE
Fifty-Fifth Legislature, First Regular Session
REVISED
class 2 property; guest ranches
Purpose
Classifies, as class 2 property, real property and improvements to property and the personal property of a qualified guest ranch. Requires the owner of a guest ranch to record a deed restriction restricting the property to guest ranch use for at least 10 years.
Background
Class 2 property consists of three subclasses:1) subclass (R); 2) subclass (P); and 3) subclass (C). Subclass (R) and subclass (P) consist of real property and improvements and personal property that are used for agricultural purposes. Subclass (C) consists of real property and improvements to real property that is burdened by a conservation easement. The assessed valuation of class 2 property is 15 percent of the full cash value or limited value (A.R.S. §§ 42-12002 and 42-15002).
The Joint Legislative Budget Committee fiscal note estimates H.B. 2376 would have a minimal impact on the state General Fund (JLBC fiscal note).
Provisions
1. Requires the owner of a guest ranch, to qualify for the class 2 property classification, to record a deed restriction with the county recorder and file a copy of the restriction with the county assessor that restricts the property to use as a guest ranch for at least 10 years.
2. Classifies, as class 2 (R) property, real property and improvements to property of a qualified guest ranch.
3. Classifies, as class 2 (P) property, personal property of a qualified guest ranch.
4. Defines guest ranch as real property and improvements to property being used as a guest ranch that:
a) consists of at least 1,000 contiguous acres that are:
i. private property adjacent to the headquarters;
ii. leased property adjacent to the headquarters, including riding rights; or
iii. public land that is subject to a riding permit;
b) provides recreational activities, including horseback riding, hiking, biking or a working cattle ranch experience for guests;
c) has an organized and supervised horse program on the property with a horse herd whose number is equal to or greater than the total number of guest accommodations;
d) uses at least one permanent structure that has running water, sewage disposal and a kitchen;
e) provides guests with three meals each day as part of the guest ranch's primary package commonly referred to as the American Plan; and
f) includes the word ranch or rancho in the guest ranch's name.
5. Requires the deed restriction to be refiled as necessary to ensure that the deed restriction always applies for at least 10 years.
6. Requires, for initial valuation, the deed restriction to be filed on or before August 31 of the year preceding the valuation.
7. Specifies that the valuation of a guest ranch constitutes a covenant between the county assessor and the owner of the guest ranch that the property's use will remain unchanged for the duration of the deed restriction.
8. Requires the property owner to notify the county assessor if the property is converted to a different use in violation of the covenant.
9. Requires the county assessor to maintain a record of the guest ranch's value as class 2 property and the guest ranch's value if it had not been classified as class 2 property.
10. Requires the county assessor to maintain records of the property's value for at least 10 years for use in computing the penalty if the property is converted to a different use in violation of the covenant.
11. Requires the county assessor, if the property owner violates the covenant, to add to the property tax due a penalty that equals the difference between the amount of property tax that would have been levied if the property was not valued as class 2 property and the amount of property taxes that were actually paid for the shorter of the preceding 10 years or the time period the property was valued as class 2 property.
12. Requires the penalty to be paid before the next property tax roll is completed and specifies that the penalty is enforceable and subject to the same penalties and interest as if the penalty were a tax levied against the property.
13. Makes conforming changes.
14. Becomes effective on the general effective date.
Revisions
· Updates the fiscal impact statement.
House Action
WM 2/17/21 DP 9-1-0-0
3rd Read 2/23/21 45-13-2
Prepared by Senate Research
March 15, 2021
MG/FDR/gs