Bill Text: AZ SB1237 | 2011 | Fiftieth Legislature 1st Regular | Introduced
Bill Title: Energy authority of Arizona
Spectrum: Partisan Bill (Democrat 5-0)
Status: (Introduced - Dead) 2011-01-26 - Referred to Senate CE Committee [SB1237 Detail]
Download: Arizona-2011-SB1237-Introduced.html
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REFERENCE TITLE: energy authority of Arizona |
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State of Arizona Senate Fiftieth Legislature First Regular Session 2011
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SB 1237 |
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Introduced by Senators Landrum Taylor, Gallardo, Schapira: Aboud, Cajero Bedford
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AN ACT
Amending title 30, Arizona Revised Statutes, by adding chapter 2; amending sections 42-2003 and 42-12001, Arizona Revised Statutes; renumbering section 42-12010, Arizona Revised Statutes, as section 42-12011; amending title 42, chapter 12, article 1, Arizona Revised Statutes, by adding a new section 42‑12010; amending title 42, chapter 12, article 2, Arizona Revised Statutes, by adding section 42-12058; amending section 42-14151, Arizona Revised Statutes; amending title 42, chapter 14, Arizona Revised Statutes, by adding article 11; renumbering section 42-15010, Arizona Revised Statutes, as section 42-15011; amending title 42, chapter 15, article 1, Arizona Revised Statutes, by adding a new section 42-15010; relating to electrical energy.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 30, Arizona Revised Statutes, is amended by adding chapter 2, to read:
CHAPTER 2
ENERGY AUTHORITY OF ARIZONA
ARTICLE 1. ADMINISTRATION
30-401. Definitions
In this chapter, unless the context otherwise requires:
1. "Authority" means the energy authority of Arizona.
2. "Board" means the board of directors of the authority.
3. "Facility" or "facilities" means electric generation or transmission facilities.
4. "Generation facility" means an electric generation facility that is located in an energy park and rated for generation of at least two hundred fifty megawatts of electricity that is transmitted through a transmission facility to a grid connection with a public or private electric transmission or distribution utility system pursuant to a power purchase and delivery agreement.
5. "Obligations" means bonds, notes, bond anticipation notes, commercial paper or other evidences of indebtedness or lease, installment purchase or other agreements or purchasing programs or certificates of participation.
6. "Transmission facility" means real and personal property and improvements used to transmit electricity between a generation facility in an energy park and the first connection with a public or private transmission grid.
30-402. Energy authority of Arizona
A. The energy authority of Arizona is established. The authority has jurisdiction to operate throughout this state.
B. The authority is a corporate and political body, separate from the state of Arizona, and, except as otherwise limited, modified or provided by this chapter, has all of the rights, powers and immunities of municipal corporations. The authority is considered to be a public improvement district and a political subdivision for the purposes of article XIII, section 7, Constitution of Arizona.
C. The authority is regarded as performing a governmental function in carrying out the purposes of this chapter. Any property, monies and other assets, including electric energy and power, acquired by the authority is considered to be public property and, as such, is exempt from state and local taxation. If the authority is terminated, all its assets remaining after its obligations and liabilities have been satisfied or discharged shall be ceded and surrendered to this state.
D. The board of directors and the authority do not have the power to levy or otherwise impose any tax or assessment, other than as specifically authorized by this chapter.
30-403. Board of directors
A. The authority is governed by a board of directors consisting of the following members who must reside in this state:
1. The state land commissioner, or the commissioner's designee.
2. The director of environmental quality, or the director's designee.
3. The director of water resources, or the director's designee.
4. The state geologist, or the geologist's designee.
5. The state historic preservation officer.
6. One member of the board of supervisors of a county with a population greater than five hundred thousand persons, appointed by the governor.
7. One member of the board of supervisors of a county with a population not more than five hundred thousand persons, appointed by the governor.
8. One member of the governing body of a city with a population greater than five hundred thousand persons, appointed by the governor.
9. One member of the governing body of a city or town with a population not more than five hundred thousand persons, appointed by the governor.
10. One member appointed by the governor to represent electric utility public service corporations regulated by the Arizona corporation commission.
11. One member appointed by the governor to represent electric cooperative nonprofit membership corporations.
12. One member appointed by the governor to represent municipal electric utility providers.
13. One member appointed by the governor to represent agricultural improvement and power districts.
14. One member serving on the power plant and transmission line siting committee pursuant to section 40-360.01, subsection B, paragraph 6, appointed by the chairman of the committee.
15. One member appointed by the governor to represent federal land management agencies.
16. One member appointed by the governor to represent the federal power marketing administration under the United States department of energy that markets and delivers hydroelectric power to this state.
17. One member appointed by the governor to represent area electrical transmission planning organizations that promote interstate and intrastate transmission planning.
B. The governor shall appoint members of county boards of supervisors and governing bodies of cities and towns to produce a general geographically diverse representation of areas in this state. Appointive members of the board shall be appointed for terms of five years, and a member may be appointed for no more than one full subsequent term. The governor may remove an appointive member for cause or if the member no longer meets the criteria for appointment.
C. Members of the board are not eligible for compensation, but may be reimbursed from available monies of the authority for actual expenses in performing and attending to authority business as provided by title 38, chapter 4, article 2.
30-404. Administrative powers and duties
A. The board of directors shall:
1. Determine the organizational structure and procedure of the authority to meet the requirements of this chapter.
2. Appoint from among its members a chairman, a secretary and such other officers as may be necessary to conduct the business of the board.
3. Provide for a system of accounting for the assets and monies of the authority.
4. Provide for the necessary records of the authority, and maintain a complete and accurate record of all of the proceedings of the board. The board is a public body for purposes of title 38, chapter 3, article 3.1 and title 39, chapter 1.
B. The board of directors may:
1. Adopt and use a corporate seal.
2. Sue and be sued.
3. Enter into contracts, including intergovernmental agreements under title 11, chapter 7, article 3, as necessary to carry out the purposes and requirements of this chapter.
4. Adopt, amend and rescind administrative and substantive rules of procedure and operation. Rules adopted by the board are exempt from title 41, chapter 6, except that the board shall:
(a) Submit the rules for publication, and the secretary of state shall publish the rules in the Arizona administrative register.
(b) Provide thirty days for interested persons to comment on the proposed rules before adoption and after publication.
5. Retain legal counsel and other consultants as necessary to carry out the purposes of the authority.
30-405. Executive director; duties
A. The board of directors shall employ an executive director of the authority and prescribe the terms and conditions of employment.
B. The executive director is responsible for managing, administering and supervising the activities of the authority.
C. The executive director shall negotiate, make, execute, acknowledge and perform contracts and other agreements in the interest of the authority or to carry out or accomplish the purposes of this chapter. The board may prescribe that performance of specific contracts require further approval by the board.
D. The board may authorize the executive director to employ clerical, administrative and professional employees, define their duties and prescribe the terms and conditions of employment. All employment positions must be filled on nonpartisan and merit-based considerations. Employees of the authority are considered to be public employees for purposes of title 38.
E. The executive director shall:
1. Employ a treasurer or designate a fiscal agent to deposit, hold, invest and disburse the authority's monies.
2. Recommend to the board the retention of outside legal, technical, financial and fiscal advisors, agents, consultants and aides.
3. Direct the activities of outside consultants.
30-406. Functional powers and duties
A. The board shall administer this chapter to support, diversify and expand the Arizona energy economy through the development of electric generation facilities and the improvement and expansion of transmission facilities and related supporting infrastructure.
B. The authority, through the board, may:
1. Issue bonds and other obligations pursuant to this chapter.
2. Issue grant and revenue anticipation notes pursuant to title 35, chapter 3, article 3.2 or 3.3.
3. Provide financial assistance for the construction, development, acquisition, operation and maintenance of transmission facilities and related infrastructure in this state.
4. Investigate, plan, prioritize and establish financing plans for the transmission of energy in this state.
5. Apply for, accept and administer grants and other financial assistance from the United States government and from other public and private sources.
6. Contract and incur obligations as reasonably necessary or desirable within the general scope of authority activities and operations to allow the authority to adequately perform its duties under this chapter.
7. Establish, assess and collect fees, charges, rates and TARIFFS for the use of the facilities owned by the authority and to offset the administrative costs of the authority. Fees and charges may include financial assistance origination fees, annual fees, rentals and other charges. Any monies collected pursuant to this paragraph constitute governmental revenue and may be used for any purpose consistent with the mission and objectives of the authority under this chapter.
8. Enter into contracts with any person or entity for the management and operation of its projects.
9. Enter into partnerships with public or private entities.
10. Own projects by itself or jointly with other owners and develop operational and joint ownership protocols.
11. Pledge the revenues of the authority, state and federal monies and grants and related resources to a financing program.
12. Develop minimum credit guidelines to ensure adequate financing capacity and enhanced financing efficiency.
13. Levy override fees or charges to offset operation and maintenance costs of the authority.
14. Assess interest on loans of monies of the authority and use interest revenue for the operating costs of the authority.
15. In cooperation with the Arizona corporation commission, investigate, plan, prioritize and establish financing plans for the generation and transmission of electricity into and within this state.
16. Plan and identify transmission facility corridors within this state.
17. Plan, finance, construct, develop, acquire, own, maintain and operate within and outside this state, property, structures, equipment, facilities and works of public improvement necessary or useful to accomplish the purposes for which the authority was established, including obtaining permits and acquiring rights-of-way.
18. Except as limited by section 30-407, acquire by any lawful means and operate, maintain, encumber and dispose of real and personal property and interests in property within and outside this state.
19. Provide for the use, maintenance and operation of the properties, interests and other assets owned or controlled by the authority.
30-407. Eminent domain
A. The authority may acquire property in this state by the exercise of eminent domain except for mineral, oil and gas rights, interests, leases, supplies, reserves and refineries, water rights, pipelines and existing electric transmission, distribution and generation facilities.
B. When determining the market value of property to be taken by eminent domain and the market value of the remainder, if any, in the before condition, a decrease or increase in the market value of the property before the date of valuation caused by the project for which the property is to be acquired or by the likelihood that the property would be acquired for the project shall be disregarded. For the purposes of this subsection, "market value" means the most probable price estimated in terms of cash in United States dollars or comparable market financial arrangements that the property would bring if exposed for sale in the open market, with reasonable time allowed in which to find a purchaser, buying with knowledge of all of the uses and purposes to which it was adapted and for which it was capable.
30-408. Annual report
Not later than March 1 of each year, the board shall make a report of the authority's activities under this chapter in the preceding calendar year, including a copy of the annual audit, to the governor, the president of the senate and the speaker of the house of representatives. The report shall include a statement of:
1. The number and location of energy parks established as of the end of the calendar year pursuant to article 2 of this chapter.
2. The authority's success in attracting generation facilities to energy parks pursuant to article 2 of this chapter.
ARTICLE 2. ENERGY PARKS
30-431. Definitions
In this article, unless the context otherwise requires:
1. "Business entity" means an owner of an electric generation facility located in an energy park regardless of the form of the owner's ownership interest.
2. "energy park" or "park" means an energy park established under this article.
30-432. Energy parks; plan; hearing
A. The board of directors may establish energy parks as provided by this article.
B. The board shall hold at least one public hearing to consider a plan for each proposed park as provided by subsection D. The hearing shall be held in the incorporated city or town nearest to the proposed park. A notice of the hearing shall be published once a week for at least four consecutive weeks in a newspaper of general circulation in the city or town, shall be posted on the authority's official website for at least four weeks before the hearing and shall be sent by certified mail to the governing bodies of the county and of each city or town located within fifteen miles of the exterior boundaries of the proposed park. At the hearing the board shall hear and receive oral and written comments on the proposed park.
C. An energy park:
1. Must be located in an unincorporated area in a single county and zoned for commercial, industrial, manufacturing, business park, research park or any other appropriate use consistent with the county's comprehensive plan.
2. Shall not:
(a) Include a geographical area larger than the actual site of the proposed generation facility or facilities and administrative and operational improvements that are necessary and ancillary to the generation and transmission process.
(b) Include any noncontiguous territory.
(c) Surround an area that is not part of the park.
D. The plan for a proposed park shall include:
1. A map showing the proposed boundaries of the park.
2. A written narrative explaining:
(a) the area and the development goals and strategy for the park, including prospective generation facilities to be located in the park and the identities of developers, promoters, owners and OPERATORS of the facilities.
(b) The legal, financial and physical ability to access necessary natural and economic resources and power grids to sustain and support the proposed generation facilities in the park and the impact of the facilities on natural, prehistoric and historic features in the park.
3. Appropriate incentives and initiatives that local governments could provide or establish to encourage the location of generation facilities in the park, including economic or financial incentives, increased public services, improved infrastructure and regulatory simplification and expedition.
E. Before establishing the park, the board shall consider all comments received at the public hearing and comments received from the county board of supervisors, the governing bodies of other local governmental entities and state agencies, and may amend or adjust the plan for the proposed park as appropriate.
30-433. Qualifying energy generation facilities
The board shall adopt by rule appropriate standards that a generation facility must meet to qualify for the state and local incentives provided pursuant to this article. The adopted standards may vary among the types of generation facilities, but must include:
1. Requirements for capital investment in physical plant located in the energy park.
2. Requirements for significant purchases of at least twenty-five per cent of capital investment from vendors and providers in this state.
3. Operational employment requirements, including number of full-time employees, wage standards and health insurance coverage standards.
30-434. Qualifying for tax incentives; certificate; procedure
A. Personal property and improvements that comprise generation facilities located in an energy park shall be assessed as class ten property as provided by section 42-12010. Real property located in an energy park on which a generation facility is located shall be classified and assessed as class one property as provided by section 42-12001.
B. The authority shall certify the eligibility of generation facilities for the tax incentives pursuant to this article. The business entity that owns a generation facility:
1. May not claim class ten classification unless the authority has issued certificate of qualification that is CURRENT and valid under this section.
2. Must apply to the authority for the certificate of qualification. The application shall include:
(a) The nature of the business organization and the ownership interest of each business entity in the generation facility.
(b) Documentation that the facility currently meets the requirements prescribed by the authority pursuant to section 30-433.
(c) A document that expressly waives the confidentiality of the entity's taxpayer information for the purposes of this section and directs and authorizes the department of revenue to disclose to the authority the business entity's state tax information that would otherwise be subject to confidentiality under title 42, chapter 2, article 1 or section 6103 of the internal revenue code. The authority shall transmit this document to the department of revenue, which shall then provide to the authority the information that the business entity authorizes. Taxpayer information that the department of revenue provides to the authority remains confidential and is not subject to disclosure by the authority under title 39.
C. If, after review of the information provided by the business entity and the department of revenue, the authority determines that the documentation provided by the business entity:
1. Is not substantially accurate or complete, the authority shall either:
(a) Deny the tax incentive certification.
(b) Inform the business entity that the documentation was inadequate and allow the entity thirty days to submit new documentation.
2. Is substantially accurate and complete, the authority shall Issue a tax incentive certificate to the business entity and provide a copy of the certificate to the department of revenue and the county assessor.
D. A business entity that claims tax incentives pursuant to this section must retain the tax incentive certificate as evidence of qualification.
E. A certificate issued under this section is valid for __________ years, after which the business entity that owns the generation facility must reapply for a new certificate to qualify for the available tax incentives.
ARTICLE 3. FINANCIAL PROVISIONS
30-451. Annual budget
A. On or before June 30 of each year the board shall hold a public hearing to adopt a budget for the following fiscal year that includes:
1. Receipts, by source, during the past fiscal year.
2. Expenditures during the past fiscal year.
3. Estimates of amounts necessary for expenses during the following fiscal year including amounts proposed for:
(a) Costs of planning, constructing, financing, maintaining, operating and managing the authority's facilities.
(b) Administrative costs of the authority.
4. Anticipated revenue to the authority, by source, in the following fiscal year.
5. A complete asset and liability statement.
6. Cash on hand as of the date the budget is adopted and the anticipated balance at the end of the current fiscal year.
7. An itemized statement of commitments, reserves and anticipated obligations for the following fiscal year.
B. The board may amend the budget on a finding of good cause.
30-452. Energy authority general fund
A. The energy authority general fund is established to be maintained in perpetuity consisting of:
1. Monies received from the United States government, including capitalization grants.
2. Monies received from the issuance and sale of obligations and notes under this chapter.
3. Interest and other income received from investing monies in the fund, including the investment of surplus revenues.
4. Ad valorem property tax revenues received from this state pursuant to section 42‑14554.
5. Monies appropriated by the legislature.
6. Monies received by the authority from rents, fees, charges, contracts and other payments.
7. Gifts, grants and donations received from any public or private source.
B. The fund shall include separate accounts for the purpose of:
1. Decommissioning nuclear generation facilities and reactors consisting solely of:
(a) Monies received from the issuance and sale of obligations and notes under this chapter for decommissioning purposes.
(b) Interest and other income received from separately investing monies in the account.
(c) Monies received for decommissioning purposes from the United states government, legislative appropriations and gifts, grants and donations from any public or private source.
2. Funding the storage, handling and containment of radiation treatment isotopes, consisting of not more than __ per cent of the total monies in the fund at any time.
C. The board may adopt resolutions to establish, and segregate the fund into, additional accounts and subaccounts to secure bonds or other obligations under this chapter or to further segregate monies pledged for specific purposes and projects under this chapter.
D. Any account or subaccount of the fund may be pledged or assigned to obligation holders as security for specific obligations or to a trustee who may be appointed to act on behalf of the OBLIGATION holders.
E. The fiscal agent for the fund shall manage the monies in the fund as directed by the board.
F. Monies in the fund may be used for any purpose of the authority under this chapter, except that monies segregated in specific accounts and subaccounts may be used only for the specific objective of the account or subaccount.
G. Monies in the fund and its accounts and subaccounts are continuously appropriated and are exempt from the provisions of section 35‑190 relating to lapsing of appropriations.
30-453. Investments
A. The fiscal agent may invest any unexpended monies in the fund and in any account or subaccount as provided in title 35, chapter 2. Interest and other income from investments of monies in any account shall be credited to that account except as otherwise provided by law.
B. The authority's investments must mature when the assets of the fund, account or subaccount will be required for the purposes of this chapter. If the liquid assets in the fund or any account or subaccount become insufficient to meet the statutory obligations, the board shall direct the fiscal agent to liquidate sufficient securities to meet all of the current obligations and immediately notify the auditor general of the insufficiency. The auditor general shall investigate and audit the circumstances surrounding the depletion of the fund, account or subaccount and report the findings to the board of directors.
30-454. Annual audit
A. The board shall cause an audit to be made of any fund administered by the authority under this chapter. The audit shall be conducted by a certified public accountant within one hundred twenty days after the end of the fiscal year. The authority shall immediately file a certified copy of the audit with the auditor general.
B. The auditor general may make any further audits and examinations as necessary and may take appropriate action relating to the audit or examination pursuant to title 41, chapter 7, article 10.1. If the auditor general takes no official action within twenty days after the audit is filed, the audit is considered to be sufficient.
C. The authority shall pay any fees and costs of the certified public accountant and auditor general under this section from the funds administered by the board under this chapter.
ARTICLE 4. OBLIGATIONS OF THE AUTHORITY
30-471. Transmission facility bonds and other obligations
A. The authority, through its board of directors, may issue negotiable obligations in a principal amount that in its opinion is necessary to provide sufficient monies for accomplishing the purposes of this chapter, for maintaining sufficient reserves to secure the obligations, to pay the necessary costs of issuing, selling and redeeming the obligations and to pay other expenditures of the authority incidental to and necessary and convenient to carry out the purposes of this chapter. The obligations may be fixed rate or variable rate, federally tax exempt or taxable, or short term or long term to fund transmission facilities.
B. The board must authorize the obligations by resolution. The resolution shall prescribe:
1. The rate or rates of interest and the denominations of the obligations.
2. The date or dates of the obligations and maturity.
3. The manner of executing the obligations.
4. The medium and place of payment.
5. The terms of redemption.
C. The board shall provide notice of its intention to issue obligations in a manner consistent with current market practice.
D. The board may sell the obligations by competitive bid, including an online bidding process, or by negotiated sale for public or private offering at the price and on the terms prescribed in the resolution. If obligations are sold through an online bidding process, bids for the obligations that are entered into the system may be concealed until a specified time or disclosed in the bidding process. For the purposes of this subsection, "online bidding process" means a procurement process in which the commission receives bids electronically over the internet in a real-time, competitive bidding event.
E. All proceeds from the sale of the obligations shall be deposited in the appropriate account or subaccount of the energy authority general fund.
F. To secure any obligations authorized by this section, the board by resolution may:
1. Provide that obligations issued under this section be secured by a first lien on all or part of the monies paid into the appropriate account or subaccount of the energy authority general fund.
2. Pledge or assign to or in trust for the benefit of the holder or holders of the obligations any part or appropriate account or subaccount of the monies in the fund as is necessary to pay the principal and interest of the obligations as they come due.
3. Set aside, regulate and dispose of reserves and sinking funds.
4. Provide that sufficient amounts of the proceeds from the sale of the obligations be used to fully or partly fund any reserves or sinking funds set up by the resolution.
5. Prescribe the procedure, if any, by which the terms of any contract with holders of obligations may be amended or abrogated, the amount of obligations the holders of which must consent to and the manner in which consent may be given.
6. Provide for payment from the proceeds of the sale of the obligations of all legal and financial expenses incurred by the board in issuing, selling, delivering and paying the obligations.
7. Conduct any other matters that in any way may affect the security and protection of the obligations.
G. The members of the board or any person executing the obligations are not personally liable for the payment of the obligations. The obligations are valid and binding notwithstanding that before their delivery any of the persons whose signatures appear on the obligations cease to be members of the board. From and after the sale and delivery of the obligations, they are incontestable by the board.
H. The obligations issued under this chapter, their transfer and the income from the obligations are at all times free from taxation in this state.
I. The board may place any restrictions on reinvestment yield on the obligations or on any monies pledged to pay the obligations if necessary to comply with federal income tax laws and regulations to gain federal tax benefits available with respect to the obligations. Proceeds of the obligations shall be invested in a manner that avoids arbitrage penalties prescribed by federal law.
J. The board, out of any monies available for that purpose, may purchase obligations, which may be canceled, at a price not exceeding either of the following:
1. If the obligations are then redeemable, the redemption price then applicable plus accrued interest to the next interest payment date.
2. If the obligations are not then redeemable, the redemption price applicable on the first date after purchase on which the obligations become subject to redemption plus accrued interest to that date.
30-472. Bond obligations of the authority
A. Bonds and other obligations issued under this chapter are obligations of the energy authority of Arizona, are payable only according to the terms of the bonds and are not general, special or other obligations of this state.
B. This state does not pledge its full faith and credit as security for any bonds or other obligations issued under this chapter.
C. The bonds and other obligations do not constitute a legal debt of this state and are not enforceable against this state.
D. Payment of the bonds and obligations is not enforceable out of any state monies other than the income and revenue pledged and assigned pursuant to this article to, or in trust for the benefit of, the holder or holders of the obligations.
30-473. Certification of bonds by attorney general
The board may submit any bonds and other obligations issued under this chapter to the attorney general after all proceedings for their authorization have been completed. On submission the attorney general shall examine and pass on the validity of the obligations and the regularity of the proceedings. If the proceedings comply with this chapter, and if the attorney general determines that, when delivered and paid for, the obligations will constitute binding and legal obligations of the authority, the attorney general shall certify, in substance, that they are issued according to the constitution and laws of this state.
30-474. Obligations as legal investments
A. Bonds and other obligations issued under this chapter are securities suitable for investment by:
1. Public officers and bodies of this state and of counties, municipalities and other political subdivisions of this state.
2. Insurance companies, associations and other persons carrying on an insurance business.
3. Financial institutions, investment companies and other persons carrying on a banking business.
4. Fiduciaries.
5. All other persons who are authorized to invest in government obligations.
B. Bonds and other obligations issued under this chapter are securities that may be deposited with public officers or bodies of this state and counties, municipalities and other political subdivisions of this state for purposes that require the deposit of government bonds or obligations.
30-475. Agreement of state
This state pledges to and agrees with the holders of the obligations that this state will not limit or alter the rights vested in the energy authority of Arizona or any successor agency to produce sufficient revenue to fulfill the terms of any agreements made with the holders of the obligations, or in any way impair the rights and remedies of the obligation holders, until all obligations issued under this chapter, together with interest, including interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceedings by or on behalf of the obligation holders, are fully met and discharged. The board as agent for this state may include this pledge and undertaking in its resolutions and indentures securing its obligations.
Sec. 2. Section 42-2003, Arizona Revised Statutes, is amended to read:
42-2003. Authorized disclosure of confidential information
A. Confidential information relating to:
1. A taxpayer may be disclosed to the taxpayer, its successor in interest or a designee of the taxpayer who is authorized in writing by the taxpayer. A principal corporate officer of a parent corporation may execute a written authorization for a controlled subsidiary.
2. A corporate taxpayer may be disclosed to any principal officer, any person designated by a principal officer or any person designated in a resolution by the corporate board of directors or other similar governing body.
3. A partnership may be disclosed to any partner of the partnership. This exception does not include disclosure of confidential information of a particular partner unless otherwise authorized.
4. An estate may be disclosed to the personal representative of the estate and to any heir, next of kin or beneficiary under the will of the decedent if the department finds that the heir, next of kin or beneficiary has a material interest which will be affected by the confidential information.
5. A trust may be disclosed to the trustee or trustees, jointly or separately, and to the grantor or any beneficiary of the trust if the department finds that the grantor or beneficiary has a material interest which will be affected by the confidential information.
6. Any taxpayer may be disclosed if the taxpayer has waived any rights to confidentiality either in writing or on the record in any administrative or judicial proceeding.
7. The name and taxpayer identification numbers of persons issued direct payment permits may be publicly disclosed.
B. Confidential information may be disclosed to:
1. Any employee of the department whose official duties involve tax administration.
2. The office of the attorney general solely for its use in preparation for, or in an investigation which may result in, any proceeding involving tax administration before the department or any other agency or board of this state, or before any grand jury or any state or federal court.
3. The department of liquor licenses and control for its use in determining whether a spirituous liquor licensee has paid all transaction privilege taxes and affiliated excise taxes incurred as a result of the sale of spirituous liquor, as defined in section 4-101, at the licensed establishment and imposed on the licensed establishments by this state and its political subdivisions.
4. Other state tax officials whose official duties require the disclosure for proper tax administration purposes if the information is sought in connection with an investigation or any other proceeding conducted by the official. Any disclosure is limited to information of a taxpayer who is being investigated or who is a party to a proceeding conducted by the official.
5. The following agencies, officials and organizations, if they grant substantially similar privileges to the department for the type of information being sought, pursuant to statute and a written agreement between the department and the foreign country, agency, state, Indian tribe or organization:
(a) The United States internal revenue service, alcohol and tobacco tax and trade bureau of the United States treasury, United States bureau of alcohol, tobacco, firearms and explosives of the United States department of justice, United States drug enforcement agency and federal bureau of investigation.
(b) A state tax official of another state.
(c) An organization of states, federation of tax administrators or multistate tax commission that operates an information exchange for tax administration purposes.
(d) An agency, official or organization of a foreign country with responsibilities that are comparable to those listed in subdivision (a), (b) or (c) of this paragraph.
(e) An agency, official or organization of an Indian tribal government with responsibilities comparable to the responsibilities of the agencies, officials or organizations identified in subdivision (a), (b) or (c) of this paragraph.
6. The auditor general, in connection with any audit of the department subject to the restrictions in section 42‑2002, subsection D.
7. Any person to the extent necessary for effective tax administration in connection with:
(a) The processing, storage, transmission, destruction and reproduction of the information.
(b) The programming, maintenance, repair, testing and procurement of equipment for purposes of tax administration.
(c) The collection of the taxpayer's civil liability.
8. The office of administrative hearings relating to taxes administered by the department pursuant to section 42‑1101, but the department shall not disclose any confidential information:
(a) Regarding income tax, withholding tax or estate tax.
(b) On any tax issue relating to information associated with the reporting of income tax, withholding tax or estate tax.
9. The United States treasury inspector general for tax administration for the purpose of reporting a violation of internal revenue code section 7213A (26 United States Code section 7213A), unauthorized inspection of returns or return information.
10. The financial management service of the United States treasury department for use in the treasury offset program.
11. The United States treasury department or its authorized agent for use in the state income tax levy program and in the electronic federal tax payment system.
12. The department of commerce for its use in:
(a) Qualifying motion picture production companies for the tax incentives provided for motion picture production under chapter 5 of this title and sections 43‑1075 and 43‑1163.
(b) Qualifying applicants for the motion picture infrastructure project tax credits under sections 43‑1075.01 and 43‑1163.01.
(c) Qualifying renewable energy operations for the tax incentives under sections 42‑12006, 43‑1083.01 and 43‑1164.01.
(d) Fulfilling its annual reporting responsibility pursuant to section 41‑1511, subsections U and V and section 41‑1517, subsections S and T.
13. A prosecutor for purposes of section 32‑1164, subsection C.
14. The state fire marshal for use in determining compliance with and enforcing title 41, chapter 16, article 3.1.
15. The department of transportation for its use in administering taxes and surcharges prescribed by title 28.
16. The energy authority of Arizona for its use in qualifying business entities for tax incentives pursuant to section 30-434.
C. Confidential information may be disclosed in any state or federal judicial or administrative proceeding pertaining to tax administration pursuant to the following conditions:
1. One or more of the following circumstances must apply:
(a) The taxpayer is a party to the proceeding.
(b) The proceeding arose out of, or in connection with, determining the taxpayer's civil or criminal liability, or the collection of the taxpayer's civil liability, with respect to any tax imposed under this title or title 43.
(c) The treatment of an item reflected on the taxpayer's return is directly related to the resolution of an issue in the proceeding.
(d) Return information directly relates to a transactional relationship between a person who is a party to the proceeding and the taxpayer and directly affects the resolution of an issue in the proceeding.
2. Confidential information may not be disclosed under this subsection if the disclosure is prohibited by section 42‑2002, subsection C or D.
D. Identity information may be disclosed for purposes of notifying persons entitled to tax refunds if the department is unable to locate the persons after reasonable effort.
E. The department, upon the request of any person, shall provide the names and addresses of bingo licensees as defined in section 5‑401, verify whether or not a person has a privilege license and number, a distributor's license and number or a withholding license and number or disclose the information to be posted on the department's website or otherwise publicly accessible pursuant to section 42‑1124, subsection F and section 42‑3201, subsection A.
F. A department employee, in connection with the official duties relating to any audit, collection activity or civil or criminal investigation, may disclose return information to the extent that disclosure is necessary to obtain information which is not otherwise reasonably available. These official duties include the correct determination of and liability for tax, the amount to be collected or the enforcement of other state tax revenue laws.
G. If an organization is exempt from this state's income tax as provided in section 43‑1201 for any taxable year, the name and address of the organization and the application filed by the organization upon which the department made its determination for exemption together with any papers submitted in support of the application and any letter or document issued by the department concerning the application are open to public inspection.
H. Confidential information relating to transaction privilege tax, use tax, severance tax, jet fuel excise and use tax and rental occupancy tax may be disclosed to any county, city or town tax official if the information relates to a taxpayer who is or may be taxable by the county, city or town. Any taxpayer information released by the department to the county, city or town:
1. May only be used for internal purposes.
2. May not be disclosed to the public in any manner that does not comply with confidentiality standards established by the department. The county, city or town shall agree in writing with the department that any release of confidential information that violates the confidentiality standards adopted by the department will result in the immediate suspension of any rights of the county, city or town to receive taxpayer information under this subsection.
I. The department may disclose statistical information gathered from confidential information if it does not disclose confidential information attributable to any one taxpayer. The department may disclose statistical information gathered from confidential information, even if it discloses confidential information attributable to a taxpayer, to:
1. The state treasurer in order to comply with the requirements of section 42‑5029, subsection A, paragraph 3.
2. The joint legislative income tax credit review committee and the joint legislative budget committee staff in order to comply with the requirements of section 43‑221.
J. The department may disclose the aggregate amounts of any tax credit, tax deduction or tax exemption enacted after January 1, 1994. Information subject to disclosure under this subsection shall not be disclosed if a taxpayer demonstrates to the department that such information would give an unfair advantage to competitors.
K. Except as provided in section 42‑2002, subsection C, confidential information, described in section 42‑2001, paragraph 2, subdivision (a), item (iii), may be disclosed to law enforcement agencies for law enforcement purposes.
L. The department may provide transaction privilege tax license information to property tax officials in a county for the purpose of identification and verification of the tax status of commercial property.
M. The department may provide transaction privilege tax, luxury tax, use tax, property tax and severance tax information to the ombudsman‑citizens aide pursuant to title 41, chapter 8, article 5.
N. Except as provided in section 42‑2002, subsection D, a court may order the department to disclose confidential information pertaining to a party to an action. An order shall be made only upon a showing of good cause and that the party seeking the information has made demand upon the taxpayer for the information.
O. This section does not prohibit the disclosure by the department of any information or documents submitted to the department by a bingo licensee. Before disclosing the information the department shall obtain the name and address of the person requesting the information.
P. If the department is required or permitted to disclose confidential information, it may charge the person or agency requesting the information for the reasonable cost of its services.
Q. Except as provided in section 42‑2002, subsection D, the department of revenue shall release confidential information as requested by the department of economic security pursuant to section 42‑1122 or 46‑291. Information disclosed under this subsection is limited to the same type of information that the United States internal revenue service is authorized to disclose under section 6103(l)(6) of the internal revenue code.
R. Except as provided in section 42‑2002, subsection D, the department of revenue shall release confidential information as requested by the courts and clerks of the court pursuant to section 42‑1122.
S. To comply with the requirements of section 42‑5031, the department may disclose to the state treasurer, to the county stadium district board of directors and to any city or town tax official that is part of the county stadium district confidential information attributable to a taxpayer's business activity conducted in the county stadium district.
T. The department shall release confidential information as requested by the attorney general for purposes of determining compliance with and enforcing section 44‑7101, the master settlement agreement referred to therein and subsequent agreements to which the state is a party that amend or implement the master settlement agreement. Information disclosed under this subsection is limited to luxury tax information relating to tobacco manufacturers, distributors, wholesalers and retailers and information collected by the department pursuant to section 44‑7101(2)(j).
U. For proceedings before the department, the office of administrative hearings, the board of tax appeals or any state or federal court involving penalties that were assessed against a return preparer, an electronic return preparer or a payroll service company pursuant to section 42‑1103.02, 42‑1125.01 or 43‑419, confidential information may be disclosed only before the judge or administrative law judge adjudicating the proceeding, the parties to the proceeding and the parties' representatives in the proceeding prior to its introduction into evidence in the proceeding. The confidential information may be introduced as evidence in the proceeding only if the taxpayer's name, the names of any dependents listed on the return, all social security numbers, the taxpayer's address, the taxpayer's signature and any attachments containing any of the foregoing information are redacted and if either:
1. The treatment of an item reflected on such return is or may be related to the resolution of an issue in the proceeding.
2. Such return or return information relates or may relate to a transactional relationship between a person who is a party to the proceeding and the taxpayer which directly affects the resolution of an issue in the proceeding.
3. The method of payment of the taxpayer's withholding tax liability or the method of filing the taxpayer's withholding tax return is an issue for the period.
V. The department may disclose to the attorney general confidential information received under section 44‑7111 and requested by the attorney general for purposes of determining compliance with and enforcing section 44‑7111. The department and attorney general shall share with each other the information received under section 44‑7111, and may share the information with other federal, state or local agencies only for the purposes of enforcement of section 44‑7101, section 44‑7111 or corresponding laws of other states.
W. The department may provide the name and address of qualifying hospitals and qualifying health care organizations, as defined in section 42‑5001, to a business classified and reporting transaction privilege tax under the utilities classification.
Sec. 3. Section 42-12001, Arizona Revised Statutes, is amended to read:
42-12001. Class one property
For purposes of taxation, class one is established consisting of the following subclasses:
1. Producing mines and mining claims, personal property used on mines and mining claims, improvements to mines and mining claims and mills and smelters operated in conjunction with mines and mining claims that are valued at full cash value pursuant to section 42‑14053.
2. Standing timber that is valued at full cash value.
3. Real and personal property of gas distribution companies, electric transmission companies, electric distribution companies, combination gas and electric transmission and distribution companies, companies engaged in the generation of electricity and electric cooperatives, other than property that is specifically included in class ten, that are valued at full cash value pursuant to section 42‑14151.
4. Real and personal property of airport fuel delivery companies that are valued pursuant to section 42‑14503.
5. Real and personal property that is used by producing oil, gas and geothermal resource interests that are valued at full cash value pursuant to section 42‑14102.
6. Real and personal property of water, sewer and wastewater utility companies that are valued at full cash value pursuant to section 42‑14151.
7. Real and personal property of pipeline companies that are valued at full cash value pursuant to section 42‑14201.
8. Real and personal property of shopping centers that are valued at full cash value or pursuant to chapter 13, article 5 of this title, as applicable, other than property that is included in class nine.
9. Real and personal property of golf courses that are valued at full cash value or pursuant to chapter 13, article 4 of this title.
10. All property, both real and personal, of manufacturers, assemblers or fabricators, other than property that is specifically included in another class described in this article, that are is valued under this title.
11. Real and personal property that is used in communications transmission facilities and that provides public telephone or telecommunications exchange or interexchange access for compensation to effect two‑way communication to, from, through or within this state.
12. Real property and improvements that are devoted to any other commercial or industrial use, other than property that is specifically included in another class described in this article, and that are valued at full cash value.
13. Personal property that is devoted to any other commercial or industrial use, other than property that is specifically included in another class described in this article, and that is valued at full cash value.
Sec. 4. Renumber
Section 42-12010, Arizona Revised Statutes, is renumbered as section 42-12011.
Sec. 5. Title 42, chapter 12, article 1, Arizona Revised Statutes, is amended by adding a new section 42-12010, to read:
42-12010. Class ten property
A. For the purposes of taxation, class ten is established consisting of personal property and improvements that are located in an energy park established pursuant to title 30, chapter 2, article 2, consisting of:
1. An electric generation facility that has the capacity to generate at least two hundred fifty megawatts of electricity that is transmitted through a transmission facility to a grid connection with a public or private electric transmission or distribution utility system pursuant to a power purchase and delivery agreement and that is valued pursuant to chapter 14, article 11 of this title.
2. Administrative and operational improvements that are necessary and ancillary to the generation and transmission process.
B. Property may not be classified under this section for more than twenty years except that any new addition or improvement to property already classified under this section qualifies separately for classification under this section for not more than twenty years.
C. Property that is originally classified under this paragraph shall not thereafter be classified as class six under any paragraph of section 42‑12006.
Sec. 6. Title 42, chapter 12, article 2, Arizona Revised Statutes, is amended by adding section 42-12058, to read:
42-12058. Qualifying sustainable energy development park property
To qualify sustainable energy development park property as class six pursuant to section 42-12010, the owner of the property must annually provide documentation to the department, the county assessor and the energy authority of Arizona that the electric generation facility:
1. Is operational.
2. Has the current capacity to generate at least two hundred fifty megawatts of electricity.
3. Has a grid connection to and a current power purchase and delivery agreement with a public or private electric transmission or distribution utility system.
Sec. 7. Section 42-14151, Arizona Revised Statutes, is amended to read:
42-14151. Annual determination of valuation; definition
A. The department shall annually determine the valuation, in the manner prescribed by this article, of all property, owned or leased, and used by taxpayers in the following businesses:
1. Operation of a natural gas distribution system.
2. Operation of a water utility system.
3. Operation of a sewer system or wastewater treatment facility.
4. Operation of an electric generation facility, except for facilities that are subject to valuation and taxation under article 11 of this chapter.
5. Operation of an electric transmission or distribution system.
B. For the purposes of this article, "generation of electricity" means the process of taking a source of energy, including coal, natural gas, oil, nuclear fuel or renewable sources and converting the energy into electricity to be delivered to customers through a transmission and distribution system.
Sec. 8. Title 42, chapter 14, Arizona Revised Statutes, is amended by adding article 11, to read:
ARTICLE 11. VALUATION AND TAXATION OF
ENERGY PARK ELECTRIC GENERATION PROPERTY
42-14551. Annual determination of valuation; definition
A. The department shall annually determine, as prescribed by this article, the valuation of personal property and improvements that are used in an energy park for generating electricity. Real property that is located in an energy park shall not be valued or subject to taxation under this article.
B. For the purposes of this article, "business entity", "energy park" and "generation facility" have the same meanings prescribed by sections 30‑401 and 30‑431.
42-14552. Annual report for purposes of determining valuation; failure to file; penalty; forfeiture of appeal rights
A. On or before April 1 of each year, a business entity that operates an electric generation facility in an energy park and that is valued pursuant to this article shall file a report with the department, under oath, stating the information that the department requires to enable it to make a valuation of the property. On or before February 1 of each year, the department shall mail to the business entity the forms for filing the report. On written request and for good cause shown, the director may extend the time for filing the report required by this section.
B. If a business entity fails to file the report on or before April 1 of the valuation year, or the extended due date if an extension is granted, the department shall both:
1. Estimate the value of the property based on one hundred five per cent of the preceding year's valuation or on any information that is available to the department.
2. Assess a penalty in the amount of the lesser of:
(a) One‑half of one per cent of the value that is estimated by the department.
(b) One hundred dollars per day for each day the business entity fails to file the report beyond the due date.
C. If the report is not filed on or before May 20 of the valuation year, the business entity forfeits its right to appeal the valuation and classification pursuant to section 42‑14005.
42-14553. Valuation of electric generation facilities located in energy parks; definitions
A. The department shall determine the valuation of generation facilities for the purposes of this article in the manner prescribed by this section.
B. The valuation of personal property and real property improvements that are used in a generation facility is twenty per cent of the depreciated cost of the property. In addition, the business entity may submit documentation showing the need for, and the department shall consider, an additional adjustment to recognize obsolescence using standard appraisal methods and techniques.
C. The department shall not value personal property construction work in progress until the property is first placed in commercial service. For the purposes of this subsection, "commercial service" means:
1. For machinery and equipment used in the generation of electricity being valued and placed on the tax roll for the first time, the official assumption of operation and ownership of the machinery and equipment from the contractor by the plant operator.
2. For machinery and equipment added to existing generation facilities, that the construction work has progressed to a sufficient degree for the machinery and equipment to be useful for the purpose for which it is being constructed.
3. For machinery and equipment related to self‑constructed facilities, that the construction work has progressed to a sufficient degree for the machinery and equipment to be useful for the purpose for which it is being constructed.
D. For the purposes of this section:
1. "Personal property" includes all tangible property except for land and real property improvements. Personal property includes foundations or supports for the machinery or apparatus for which they are provided, including water cooling towers.
2. "Real property improvements" includes buildings, including administration buildings, maintenance warehouses and guard shacks, water retention ponds, sewage treatment ponds, reservoirs, sidewalks, drives, curbs, parking lots, tunnels, duct banks, canals, fencing and landscaping.
42-14554. Assessment, levy and collection of tax; debt; lien
A. The department shall annually:
1. Enter in its records the valuation of electric generation facilities as determined under section 42-14553.
2. Determine the assessed valuation of the property as provided by sections 42‑12010 and 42‑15010.
3. Levy a tax against the assessed valuation at a rate that equals the average of the rates for primary and secondary property taxes in the taxing jurisdictions in this state for the current tax year.
4. Collect the taxes according to the schedules prescribed by section 42‑18052.
5. Transmit the tax revenues to the energy authority of Arizona for deposit in the authority's general fund pursuant to section 30‑452, subsection A. Revenues attributable to new construction of, or additions to, property collected in the first tax year shall be credited to the decommissioning account in the general fund.
B. The tax imposed by this section is in lieu of all other ad valorem taxes on personal property and improvements constituting electric generation facilities located in energy parks. Property that is classified as class ten under this section is not subject to the levy of tax by any county, city, town, community college district, school district or special taxing district.
C. Delinquent taxes under this section bear interest at the rate determined pursuant to section 42‑1123.
D. The valuations that are used for tax purposes pursuant to this article are a matter of public record and are not confidential information under chapter 2, article 1 of this title.
E. The tax imposed by this article:
1. Is a debt of the business entity that owns the generation facility.
2. May be collected by an action instituted and prosecuted by the attorney general on the director's request.
3. Is a lien pursuant to section 42‑17154 against the assessed generation facility.
Sec. 9. Renumber
Section 42-15010, Arizona Revised Statutes, is renumbered as section 42-15011.
Sec. 10. Title 42, chapter 15, article 1, Arizona Revised Statutes, is amended by adding section 42-15010, to read:
42-15010. Assessed valuation of class ten property
A. For tax years through December 31, 2012, the assessed valuation of class ten property is the same percentage of full cash value or limited valuation as prescribed by section 42-15001.
B. For each tax year beginning from and after December 31, 2012, the department shall annually adjust the assessment percentage of class ten property, rounded to one-tenth of one per cent, to maintain the same aggregate statewide assessed valuation of all property in class ten as in the preceding valuation year plus forty per cent of the assessed valuation attributable to any new construction of, or additions to, class ten property during the preceding valuation year.
