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BILL # SB 1407 |
TITLE: property tax assessment; greenhouses |
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SPONSOR: Dunn |
STATUS: As Amended by Senate FIN |
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PREPARED BY: Hans Olofsson |
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The bill, as amended, provides that greenhouses meeting certain conditions be valued as agricultural personal property rather than agricultural real property. The greenhouses must be used to grow and process vegetables, fruit, or citrus.
Estimated Impact
Based on data provided by Graham County, SB 1407 could increase the cost of Basic State Aid by $297,000, beginning in FY 2026. Otherwise, we cannot determine the fiscal impact with certainty as we lack information on whether other counties have greenhouses meeting these conditions. We have contacted the County Supervisors Association of Arizona (CSA) to find out if they have this information. However, as of the publication of this fiscal note, we have not received any information from CSA.
According to information provided by the Graham County Treasurer’s Office, there is one large owner of greenhouses in the county that would qualify under the bill. This business owns 3 large parcels of land and improvements (real property) in Graham County with a total net assessed value (NAV) of $11.4 million in Tax Year (TY) 2024. The greenhouses on the 3 parcels are located in one school district – Bonita Elementary School District – where they make up 67% of the total net assessed value.
Under SB 1407, greenhouses would no longer be valued as real property but rather as tangible personal property. The depreciation schedules applied to personal property result in lower assessments than the valuation methods used for real property. The Graham County Treasurer's Office estimates that the bill would result in a NAV reduction of $(9.5) million.
Under the K-12 Basic State Aid funding formula, any loss in local property tax revenue must be backfilled with state General Fund monies to ensure the same amount of total funding per pupil. Based on the information provided by Graham County, we estimate that a NAV reduction of $(9.5) million would increase the Basic State Aid cost for Bonita Elementary School District by $297,000 in FY 2026.
Local Government Impact
This bill would shift the tax burden to property owners not affected by this legislation and/or result in property tax losses for local governments.
2/24/25