2013 Arizona Revised Statutes
Title 42 - Taxation
§ 42-6206 Leases and development agreements; notice of tax liability; approval requirements; default
42-6206. Leases and development agreements; notice of tax liability; approval requirements; default
A. Each lease or development agreement between a prime lessee and a government lessor entered into after June 30, 1996 shall include:
1. A notice of the tax liability under this article.
2. A provision that failure by the prime lessee to pay the tax after notice and an opportunity to cure is an event of default that could result in divesting the prime lessee of any interest in or right of occupancy of the government property improvement.
B. Except as provided by subsection C of this section, each lease or development agreement between a prime lessee and a government lessor for a government property improvement located in a slum or blighted area that is established pursuant to title 36, chapter 12, article 3, that is entered into from and after May 31, 2010 and that does not meet the conditions provided in section 42-6203, subsection A:
1. Shall not be approved unless the government lessor:
(a) Notifies the governing bodies of the county and any city, town and school district in which the government property improvement is located at least sixty days before the approval. The notice must include the name and address of the intended prime lessee, the location and proposed use of the government property improvement and the proposed term of the lease or development agreement.
(b) Determines that, within the term of the lease or development agreement, the economic and fiscal benefit to this state and the county, city or town in which the government property improvement is located will exceed the benefits received by the prime lessee as a result of the development agreement or lease on the basis of an estimate of those benefits prepared by an independent third party in a manner and method acceptable to the governing body of the government lessor. The estimate must be provided to the government lessor and the governing bodies of the county and any city, town and school district in which the government property improvement is located at least thirty days before the vote of the governing body. A lease or development agreement between a prime lessee and a government lessor involving residential rental housing is exempt from the economic estimate analysis requirements of this subdivision.
2. Must be approved by a simple majority vote of the governing body without the use of a consent calendar.
C. A lease or development agreement that is subject to subsection B of this section must provide that the lease begins within ten years after approval of the development agreement and the term of the lease does not exceed twenty-five years, including any abatement period authorized under section 42-6209, and regardless of whether the lease is transferred or conveyed to subsequent prime lessees during that period. As soon as reasonably practicable but within twelve months after the expiration date of the lease the government lessor must convey to the current prime lessee title to the government property improvement and underlying land. Property conveyed to the prime lessee under this subdivision does not qualify for classification as class six property or for any other discounted assessment regardless of the location or condition of the property.
D. Subsections B and C of this section do not apply if the government lessor is acting as a commercial landlord without a development agreement in a lease for a use ancillary to a government property improvement used for a public purpose.
E. No later than June 30 of each year the government lessor shall provide the county assessor with a complete list of development agreements between the government lessor and the prime lessees, including the commencement and termination dates of the agreements, the names and addresses of the prime lessees and the locations of the properties that are subject to the agreements.
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