ARIZONA STATE SENATE
Phoenix, Arizona
environmental releases;
impact analysis
(NOW: delinquent property tax reduction;
contamination)
Purpose
Allows the county board of
supervisors (Board) to reduce property tax liens when the taxes owed surpass
the value of the property and that property is substantially contaminated with
hazardous substances or petroleum.
Background
The Internal Revenue Service
ruled in 1994 to allow property owners who caused environmental contamination
on their property to deduct their environmental cleanup costs as a current
expense from their gross income.
However, other parties, such as developers who purchased contaminated
property, still had to capitalize their cleanup expenses and deduct them over
the life of the property. This disparity was thought to be a disincentive to
the redevelopment of abandoned or underutilized contaminated properties known
as "brownfields.”
In August 1997, President Clinton signed the Taxpayer Relief Act, which included a Brownfields Tax Incentive. The tax incentive applied to certain targeted areas, and gave developers and other parties who did not cause the contamination of the property the same tax advantage as parties responsible for the contamination. The tax incentive applied to environmental cleanup costs incurred from the date of enactment (August 5, 1997) through December 31, 2000.
The Taxpayer Relief Act of
1997 was subsequently amended and extended by the Taxpayer Relief Act of
2000. These amendments broadened the
eligibility by deleting the requirement that a site be in a targeted area. The
tax incentive was also extended to cover qualified expenses incurred between
December 21, 2000 (the date of enactment) through January 1, 2004.
Currently in Arizona, a Board may reduce a property tax lien on any property with a value that is lower than the amount of the lien. H.B. 2432 specifically allows a county board of supervisors to abate a portion, or the entire amount, of the lien for delinquent property taxes, interest, costs and penalties on properties that are substantially contaminated with hazardous substances or petroleum.
A fiscal note has been
requested from Joint Legislative Budget Committee staff.
Provisions
1. Allows the Board to reduce a lien for any delinquent taxes, interest, costs and penalties on a property:
·
Where
the taxes owed surpass the value of the property; and
·
Is
substantially contaminated with hazardous substances or petroleum.
2. Specifies that the lien reduction amount may not exceed the actual expenses needed to cope with the conditions at the property for the:
(a)
Cleanup
or removal of released hazardous substances under the federal Comprehensive
Environmental Response, Compensation and Liability Act (Superfund);
(b)
Preparation
and implementation of a remedial investigation and feasibility study under the
Water Quality Assurance Revolving Fund Program (WQARF);
(c)
Preparation
and implementation of a WQARF remedial action plan, including any agreements
for work entered into with the Arizona Department of Environmental Quality
(ADEQ);
(d)
Preparation
and implementation of an underground storage tank corrective action plan; and
(e)
Preparation
and implementation of an approved work plan under the Voluntary Remediation
Program.
3. Requires that for properties acquired after December 31, 2001, the cleanup expenses must be incurred within five years of property and title acquisition to be eligible for application toward the lien reduction. For properties acquired before January 1, 2002, the cleanup expenses must be incurred before January 1, 2006.
4. Specifies that only reasonable and necessary expenses to remediate the property contamination may be applied to the lien reduction.
5. Specifies that any expenses that violate or contradict ADEQ requirements may not be applied toward the lien reduction.
6. Specifies that the person responsible for the property contamination, or the responsible person’s partner, officer, employee or relative is not eligible to redeem the property from the reduced lien.
7. Specifies that a person seeking a reduced lien must submit an affidavit verifying that the incurred expenses were reasonable and necessary to address the property contamination and that they are not the responsible party for the contamination.
8. Requires the county treasurer to apply the lien reduction on a pro rata basis among the jurisdictions imposing the property taxes and note the reduction in the delinquent tax record.
9. Specifies that the personal liability of a property owner who caused or contributed to the contamination is not affected by the counties’ authority to reduce property tax liens.
10. Contains an effective date of January 1, 2002.
Amendments
Adopted by Committee
Clarifies that the remedial activities eligible for the reduction in a property lien includes agreements for work entered into to by ADEQ on voluntary remedial activities under the WQARF program.
House Action Senate
Action
ENV 3/6/01 DPA/SE 7-0-0-3 FIN 3/26/01 DP 8-0-0-0
3rd Read 3/14/01 52-0-8-0 NRAE 3/29/01 DPA 5-0-3-0
Prepared by Senate Staff
March 30, 2001