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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
property tax assessment; greenhouses
Purpose
Requires greenhouses that meet outlined requirements to be valued and assessed as agricultural tangible personal property.
Background
Class 2 property consists of three subclasses:1) subclass (R); 2) subclass (P); and 3) subclass (C). Subclass (R) consists of real property and improvements used for agricultural purposes, subclass (P) consists of personal property that is used for agricultural purposes and subclass (C) consists of real property and improvements burdened by a conservation easement. The assessed valuation of class 2 property is 15 percent of the full cash value or limited value.
Statute broadly defines agricultural real property to include cropland, grazing land and land and improvements devoted to multiple uses, including land devoted to high density use for producing commodities, land devoted to use in processing cotton, wine grapes and citrus and land devoted to algaculture and agritourism.
Generally, processing agricultural commodities is considered a commercial activity and the land and improvements used to process agricultural commodities are classified as commercial property, or class 1. Statute prescribes exceptions that include cotton processing, wine grape processing, citrus processing, fruit or vegetable packing and commodity processing carried out by dairy cooperatives. If agricultural real property is used both to produce and to process an agricultural commodity, not including the outlined exceptions, the producing portion of the property is classified as agricultural and the processing portion is classified as commercial. These instances require a mixed-use assessment. The assessed valuation of class 1 property is currently 16 percent of the full cash value or limited value (A.R.S. §§ 42-12002; 42-12151; 42-15001; and 42-15002; ADOR).
If requiring greenhouses to be valued and assessed as class 2 (P) property results in a tax shift that affects the obligations of the state, there may be a fiscal impact to the state General Fund.
Provisions
1. Requires greenhouses to be valued and assessed as agricultural tangible personal property, if the greenhouse:
a) is at least 50,000 square feet in area;
b) is composed of components designed to be movable and detachable;
c) can be reconstructed and reused after removal; and
d) is used for growing and processing vegetables, fruit or citrus.
2. Defines greenhouse to:
a) include all property that comprises or creates an environment where humidity, temperature, irrigation and contamination are precisely controlled within specified parameters for the purpose of cultivating vegetable, fruit or citrus crops, without regard to whether the property is actually contained within that environment or whether any of the property is affixed to or incorporated into real property; and
b) exclude administrative office buildings or auxiliary storage buildings associated with the greenhouse.
3. Becomes effective on the general effective date.
Prepared by Senate Research
February 13, 2025
MG/ci