Arizona House Bill HB2827

Arizona 2025 Regular Session

• Introduced: 2/11/25

Caption

Municipal tax increment financing; infrastructure

Impact

The implementation of HB2827 is expected to significantly affect local funding and planning processes. By enabling municipalities to capture tax increment revenues, the legislation aims to enhance municipal capabilities to invest in critical infrastructure projects without imposing new taxes. It allows for a long-term financial planning approach for local governments while aligning with broader economic development goals. However, the bill mandates that tax increment monies shall not be used for certain expenses, like debt service or circumventing tax laws, ensuring that funds are strictly utilized for the purposes laid out in the development plans.

Summary

House Bill 2827 proposes amendments to Title 9, Chapter 4 of the Arizona Revised Statutes by introducing Article 4.1, which relates to municipal tax increment financing (TIF) for infrastructure. The bill provides detailed definitions of terms associated with TIF, such as 'assessed value', 'municipal improvement area', and outlines the conditions under which municipalities can establish a TIF district. This framework is aimed at encouraging local governments to finance public infrastructure improvements by utilizing the increase in property tax revenues generated by new developments within these designated areas. The funds generated through TIF can be earmarked for various authorized project costs, including public improvements, affordable housing, and transportation infrastructure, among others.

Contention

While supporters of HB2827 argue that it presents a practical solution for financing municipal improvements and promotes economic development through strategic investments, critics express concerns regarding the potential diversion of tax revenues from essential public services. The diversion of property tax revenues to finance improvements could lead to budget constraints for schools and other local services reliant on stable tax funding. Additionally, the approval process for establishing TIF districts involves considerable oversight and procedural requirements that may deter some municipalities from utilizing the framework effectively.