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Senate Engrossed House Bill tourism improvement areas; municipalities; counties State of Arizona House of Representatives Fifty-seventh Legislature Second Regular Session 2026 HOUSE BILL 2950 AN ACT amending title 48, Arizona Revised Statutes, by adding chapter 38; relating to special districts. (TEXT OF BILL BEGINS ON NEXT PAGE) Be it enacted by the Legislature of the State of Arizona: Section 1. Title 48, Arizona Revised Statutes, is amended by adding chapter 38, to read: CHAPTER 38 TOURISM IMPROVEMENT AREAS ARTICLE 1. GENERAL PROVISIONS START_STATUTE48-6501. Definitions In this chapter, unless the context otherwise requires: 1. "board" MEANS the board of supervisors of the county. 2. "Destination marketing organization" means a nonprofit organization or governmental unit that is designated by the governing body as being responsible for the tourism promotion and marketing of the municipality or county. 3. "Governing body" means the governing body or board that by law is constituted as the legislative department of the municipality or county. 4. "Lodging business": (a) Means any business providing transient lodging as prescribed by section 42-5070. (b) Includes a property that begins providing transient lodging as prescribed by section 42-5070 after the establishment of a tourism improvement area that includes the property. 5. "lodging business assessment" means a levy on room rentals at a business that is classified under section 42-5070. 6. "Lodging business owner" means a person recognized as the owner of a lodging business that is subject to a lodging business assessment. 7. "municipality" means a city or town. 8. "owners' board" means the designated individuals that govern the activities of the tourism improvement area and may be the board of directors of the destination marketing organization or a committee of the destination marketing organization as long as the owners' board is composed of at least a majority of lodging business owners THAT ARE SUBJECT TO THE ASSESSMENT. 9. "Tourism improvement area" means an improvement area of contiguous or noncontiguous boundaries. 10. "Tourism improvement area activity": (a) Means any advertising, promotion or business recruitment that is directly related to lodging businesses in a tourism improvement area. (b) Does not include activities that are directly or indirectly related to construction and maintenance of physical infrastructure. 11. "tourism improvement area plan" means a proposal for a tourism improvement area that contains information required pursuant to section 48-6503. START_STATUTE48-6502. Petition; governing body approval; requirements A. On presentation of a petition pursuant to this section, the governing body may approve the formation of a tourism improvement area and the lodging business assessment rate. The petition for the formation of the tourism improvement area must include and identify the following: 1. The signature of lodging business owners of two or more lodging businesses WITHIN a proposed tourism improvement area that agreed to participate in the tourism improvement area pursuant to section 48-6507. 2. The geographic boundaries of the proposed tourism improvement area. 3. THE TYPES OR CLASSES OF LODGING BUSINESSES THAT WILL BE SUBJECT TO THE proposed lodging business ASSESSMENT. 4. THE proposed lodging business ASSESSMENT RATE FOR EACH TYPE OR CLASS OF LODGING BUSINESS THAT WILL BE SUBJECT TO THE lodging business ASSESSMENT. 5. INFORMATION SPECIFYING WHERE THE COMPLETE tourism improvement area PLAN may BE OBTAINED and that the complete tourism improvement area plan is AVAILABLE on request. B. A LODGING BUSINESS owner MAY APPOINT AN AUTHORIZED AGENT TO ACT AS the lodging business owner's REPRESENTATIVE FOR THE PURPOSES OF THIS chapter. The lodging business owner's Representative is CONSIDERED THE LODGING BUSINESS OWNER FOR THE PURPOSES OF ANY SIGNATURE REQUIRED for a petition prescribed by this section, serving on a board or committee OR FOR ANY OTHER PURPOSE AUTHORIZED BY THE LODGING BUSINESS OWNER. THE governing body has NO OBLIGATION TO OBTAIN OTHER INFORMATION AS TO THE OWNERSHIP OF the LODGING BUSINESS, AND ITS DETERMINATION OF OWNERSHIP SHALL BE FINAL AND CONCLUSIVE FOR THE PURPOSES OF THIS chapter. END_STATUTE START_STATUTE48-6503. Tourism improvement area plan; information A. A tourism improvement area PLAN must BE PREPARED BEFORE THE PUBLIC HEARING ON THE PROPOSED Tourism improvement area held pursuant to section 48-6504. The tourism improvement area plan must INCLUDE all of THE FOLLOWING: 1. A MAP THAT IDENTIFIES THE BOUNDARIES of the proposed tourism improvement area IN SUFFICIENT DETAIL TO ALLOW A LODGING BUSINESS OWNER TO REASONABLY DETERMINE WHETHER the LODGING BUSINESS IS LOCATED WITHIN THE proposed tourism improvement area BOUNDARIES. 2. THE NAME OF THE PROPOSED TOURISM IMPROVEMENT AREA. 3. THE planned tourism improvement area activities of the proposed tourism improvement area AND an estimate of the annual cost of the planned tourism improvement area activities. 4. A DEFINITION DESCRIBING THE TYPE OR CLASS OF LODGING BUSINESSES TO BE INCLUDED IN THE proposed tourism improvement area AND the lodging businesses that will be SUBJECT TO THE proposed LODGING BUSINESS ASSESSMENT pursuant to section 48-6507. THe definition MAY INCLUDE THE SIZE OF THE LODGING PROPERTY OR NUMBER OF ROOMS AT THE LODGING PROPERTY. 5. THE PROPOSED SOURCE OF FINANCING, INCLUDING THE PROPOSED METHOD AND BASIS OF LEVYING THE LODGING BUSINESS ASSESSMENT IN SUFFICIENT DETAIL TO ALLOW EACH LODGING BUSINESS OWNER TO ESTIMAte THE AMOUNT OF the LODGING business ASSESSMENT TO BE LEVIED AGAINST THE LODGING BUSINESS. 6. THE ESTIMATED total proposed LODGING BUSINESS ASSESSMENTS TO BE spent FOR Tourism improvement area ACTIVITIES DURING THE FIRST YEAR OF OPERATION OF THE proposed tourism improvement area AND THE FORMULA USED TO DETERMINE EACH lodging business OWNER'S LODGING BUSINESS ASSESSMENT, WHICH SHALL BE BASED ON BENEFIT. 7. THE TERM OF THE proposed tourism improvement area. B. Lodging business assessments that are levied to CONDUCT Tourism improvement area ACTIVITIES must PROVIDE BENEFITS TO LODGING BUSINESSES and associated industries that are LOCATED WITHIN THE tourism improvement area and THAT ARE SUBJECT TO THE LODGING BUSINESS ASSESSMENT. LODGING BUSINESS ASSESSMENTS MAY VARY BY TYPES OR CLASSES OF LODGING BUSINESSES AS DESCRIBED IN THE TOURISM IMPROVEMENT AREA PLAN, INCLUDING THE SIze OF THE LODGING PROPERTY OR NUMBER OF ROOMS AT THE LODGING PROPERTY. A LODGING BUSINESS ASSESSMENT MAY BE LEVIED BASED ON either of the following: 1. FIXED RATE PER lodging room rental of not more than $5 per night. 2. PERCENTAGE OF receipts from lodging room rentals of not more than five percent by the lodging business. C. THE VALIDITY OF A lodging business ASSESSMENT LEVIED by a formed tourism improvement area MAY NOT BE CONTESTED IN AN ACTION OR PROCEEDING UNLESS THE ACTION OR PROCEEDING IS COMMENCED WITHIN thirty DAYS AFTER THE RESOLUTION LEVYING THE LODGING BUSINESS ASSESSMENT IS ADOPTED. ANy APPEAL FROM A FINAL JUDGMENT IN AN ACTION OR PROCEEDING contesting the validity of a lodging business assessment must BE PERFECTED WITHIN thirty DAYS AFTER THE ENTRY OF JUDGMENt. D. tourism improvement area activities must be DESIGNED TO PROMOTE TOURISM AND LODGING TO ENHANCE THE ECONOMIC DEVELOPMENT CLIMATE IN THE tourism improvement AREA in accordance WITH ALL APPLICABLE LAWS, REGULATIONS AND REQUIREMENTS OF THis state AND THE UNITED STATES. START_STATUTE48-6504. Formation; public hearing a. On receipt of a valid petition, THE GOVERNING BODY may ADOPT A RESOLUTION OF INTENTION TO CONSIDER THE formation OF A tourism improvement area, if adopted by the governing body. THE RESOLUTION OF INTENTION must STATE all of the following: 1. The date, TIME AND PLACE OF A public HEARING TO CONSIDER the petition for formation of a tourism improvement area. 2. THE proposed Tourism improvement area ACTIVITIES. 3. An ESTIMATED AMOUNT OF FUNDING necessary to implement the tourism improvement area plan. 4. THE BOUNDARIES OF THE PROPOSED Tourism improvement area. 5. THE AMOUNT OF THE PROPOSED lodging business assessment. B. If a resolution consistent with subsection A of this section is adopted by the governing body, THE NOTICE OF THE PUBLIC HEARING SHALL BE sent BY MAIL TO EACH LODGING BUSINESS owner SUBJECT TO ASSESSMENT IN THE proposed tourism improvement area AND PUBLISHED IN A NEWSPAPER OF GENERAL CIRCULATION IN THE MUNICIPALITY or county OR ON THE MUNICIPALITY'S or county's PUBLIC WEBSITE at least thirty DAYS before THE DATE OF THE HEARING. THE NOTICE must ALSO CONTAIN A DESCRIPTION OF THE proposed tourism improvement area AS SET FORTH IN THE RESOLUTION OF INTENTION. c. THE GOVERNING BODY SHALL CONDUCT THE PUBLIC HEARING at least Thirty DAYS AFTER MAILING THE NOTICE TO all LODGING BUSINESS OWNERS identified pursuant to subsection b of this section. D. THE GOVERNING BODY SHALL CONSIDER PUBLIC TESTIMONY REGARDING THE PROPOSED Tourism improvement area. ANY LODGING BUSINESS PROPOSED TO BE SUBJECTed TO A lodging business ASSESSMENT MAY SUBMIT A WRITTEN OBJECTION TO THE governing body AT ANY TIME BEFORE THE CONCLUSION OF THE PUBLIC HEARING. IF WRITTEN OBJECTIONS ARE RECEIVED FROM LODGING BUSINESS OWNERS THAT REPRESENT fifty percent OR MORE OF THE TOTAL ROOMS THAT ARE SUBJECT TO THE ASSESSMENT, THE governing body shall end the HEARING AND THE MUNICIPALITY or county may not hold any FURTHER PROCEEDINGS on the formation of the proposed tourism improvement area FOR A PERIOD OF ONE YEAR after THE DATE OF THE HEARING. E. The governing body of a MUNICIPALITY MAY NOT FORM A proposed tourism improvement area WITHIN THE UNINCORPORATED TERRITORY OF A COUNTY WITHOUT THE CONSENT OF THE BOARD OF SUPERVISORS OF THAT COUNTY. the governing body of a MUNICIPALITY MAY NOT FORM A proposed tourism improvement area WITHIN THE TERRITORIAL JURISDICTION OF ANOTHER MUNICIPALITY WITHOUT THE CONSENT OF THE GOVERNING BODY OF THE OTHER MUNICIPALITY. the board of supervisors may not form a proposed tourism improvement area within the territorial jurisdiction of another county without consent of the board of supervisors of the other county. F. The initial term of a formed tourism improvement area may NOT EXCEED TEn YEArs and subsequent renewals of the tourism improvement area may not exceed ten years per renewal. START_STATUTE48-6505. Management; annual report a. EACH Tourism improvement area SHALL BE governed BY AN OWNERS' board composed of a majority of the ASSESSED lodging business owners located within the tourism improvement area or their authorized representatives. A representative of the municipality or county may have a nonvoting, ex officio seat on the owner's board. B. THE governing body SHALL CONTRACT WITH its destination marketing organization TO manage and implement THE TOURISM IMPROVEMENT AREA ACTIVITIES SPECIFIED IN THE TOURISM IMPROVEMENT AREA PLAN. C. The destination marketing organization managing the tourism improvement area has all of the POWERS POSSESSED BY A NONPROFIT CORPORATION ORGANIZED PURSUANT TO the laws of this state, INCLUDING THE AUTHORITY TO ACCEPT DONATIONS OR GIFTS OF MONies AND PROPERTY, TO APPLY FOR AND RECEIVE GRANTS FROM PUBLIC AND PRIVATE SOURCES AND TO CARRY OVER monies FROM ONE FISCAL YEAR TO THE NEXT. D. ON GOVERNING BODY APPROVAL of the tourism improvement area AND ANNUALLY THEREAFTER, THE OWNERS' BOARD SHALL SUBMIT to the department of revenue THE APPROVED TOURISM IMPROVEMENT AREA MAP WITH DETAILS ON THE ASSESSED PROPERTIES IN A FORM AND MANNER REQUIRED BY THE DEPARTMENT of revenue. E. THE destination marketing organization that manages the TOURISM IMPROVEMENT AREA SHALL FILE AN ANNUAL REPORT WITH THE governing body WITHIN one hundred twenty DAYS after THE END OF THE TOURISM IMPROVEMENT AREA'S FISCAL YEAR. THE REQUIREMENT FOR FILING AN ANNUAL REPORT SHALL begin IN THE FIRST FULL FISCAL YEAR AFTER TOURISM IMPROVEMENT AREA FORMATION. F. The ANNUAL REPORT required pursuant to subsection E of this section must INCLUDe all of the following: 1. THE TOURISM IMPROVEMENT AREA ACTIVITIES PROVIDED FOR THE PREVIOUS FISCAL YEAR. 2. THE AMOUNT OF TOURISM IMPROVEMENT AREA monies spent ON TOURISM IMPROVEMENT AREA ACTIVITIES FOR THE PREVIOUS FISCAL YEAR. 3. THE ESTIMATED AMOUNT OF ANY SURPLUS OR DEFICIT monies TO BE CARRIED OVER FROM THE PREVIOUS FISCAL YEAR. START_STATUTE48-6506. Tourism improvement area plan; amendments A. ON THE WRITTEN REQUEST OF THE destination marketing organization managing the TOURISM IMPROVEMENT AREA and after approval by a majority of the owners' board, THE governing body MAY AMEND THE TOURISM IMPROVEMENT AREA PLAN PURSUANT TO THIS SECTION. B. If THE tourism improvement area plan AMENDMENT INCLUDES A NEW OR INCREASED LODGING business ASSESSMENT, THE GOVERNING BODY shall do all of the following: 1. HOLD A PUBLIC HEARING ON THE AMENDMENT at least thirty DAYS AFTER MAILING THE NOTICE TO THE ASSESSED LODGING BUSINESS OWNERS that is required pursuant to paragraph 2 of this subsection. 2. PROVIDE NOTICE OF THIS MEETING BY MAIL TO EACH LODGING BUSINESS owner that is SUBJECT TO lodging business ASSESSMENT IN THE TOURISM IMPROVEMENT AREA AND PUBLISH THE NOTICE IN A NEWSPAPER OF GENERAL CIRCULATION IN THE MUNICIPALITY or county OR ON THE MUNICIPALITY'S or county's PUBLIC WEBSITE at least thirty DAYS before THE DATE OF THE HEARING. 3. Provide notice of any approved tourism improvement area plan amendment to the department of revenue in the manner required by the department of revenue. c. IF THE AMENDMENT DOES NOT INCLUDE A NEW OR INCREASED ASSESSMENT, THE GOVERNING BODY is not required to HOLD A PUBLIC HEARING ON THE AMENDMENT. D. Amendments to a tourism improvement area plan may not include any changes to the tourism improvement area's boundaries. END_STATUTE START_STATUTE48-6507. Lodging business assessments; withdrawal; rescission; collection; disbursement A. Except as prescribed by subsection B of this section, a lodging business owner who signed the petition for the formation of the tourism improvement area pursuant to section 48-6502 is deemed to have joined the tourism improvement area on its establishment. An owner of a lodging business located within the tourism improvement area who did not sign the petition for the formation of the tourism improvement area is not a participant in the tourism IMPROVEMENT area but may join the tourism improvement area within sixty days after the establishment of the tourism improvement area by filing a notice of joinder. B. ANY LODGING BUSINESS OWNER MAY join or withdraw from THE TOURISM IMPROVEMENT AREA DURING THE same annual SIXTY-DAY PERIOD PROVIDED for dissolution IN section 48-6508, subsection B BY FILING A WRITTEN NOTICE OF joinder or withdrawal WITH THE OWNERS' BOARD. A LODGING BUSINESS OWNER that FILES A NOTICE OF withdrawal is NOT SUBJECT TO THE LODGING BUSINESS ASSESSMENT AND is NO LONGER ELIGIBLE FOR MEMBERSHIP ON THE OWNERS' BOARD. A LODGING BUSINESS OWNER that HAS withdrawn from the TOURISM improvement area MAY RESCIND its WITHDRAWAL BY FILING A WRITTEN NOTICE OF RESCISSION WITH THE OWNERS' BOARD AND, on DOING SO, is SUBJECT TO THE LODGING BUSINESS ASSESSMENT BEGINNING ON THE FIRST DAY OF THE TOURISM IMPROVEMENT AREA FISCAL YEAR AFTER THE NOTICE OF RESCISSION IS FILED. C. IF A LODGING business OWNER joins or WITHDRAWS from THE TOURISM IMPROVEMENT AREA DURING THE SIXTY-DAY PERIOD prescribed by subsection B OF THIS SECTION, THE OWNERS' BOARD SHALL NOTIFY THE DEPARTMENT of revenue AND THE GOVERNING BODY. D. The destination marketing ORGANIZATION managing the tourism improvement area shall notify the lodging business owners that are within the tourism IMPROVEMENT area that any LODGING business owner may join or withdraw from the TOURISM improvement area during the annual sixty-day period prescribed by subsection B of this section. The destination marketing organization shall provide the notice annually to the lodging business owners six months before the beginning of the sixty-day period. E. THE lodging business ASSESSMENT SHALL BE LEVIED BEGINNING ON THE FIRST DAY OF THE FIRST MONTH NINETY DAYS AFTER THE governing body's approval of the petition pursuant to section 48-6502. The assessment shall be paid to the department of revenue. THE DEPARTMENT of revenue SHALL REPORT TO THE STATE TREASURER THE AMOUNT OF lodging business assessments COLLECTED PURSUANT TO THIS SECTION. F. THE STATE TREASURER SHALL TRANSMIT TO THE TREASURER OR OFFICER EXERCISING THE FUNCTIONS OF TREASURER OF THE MUNICIPALITY or county where the tourism improvement area is located on a monthly basis THE AMOUNT COLLECTED FROM lodging business assessments WITHIN THE TOURISM IMPROVEMENT AREA. G. THE TREASURER OR the OFFICER EXERCISING THE FUNCTIONS OF TREASURER OF THE MUNICIPALITY or county in which the tourism improvement area is located shall TRANSMIT on a monthly basis the amount RECEIVED from the department of revenue to the DESTINATION MARKETING organization managing the tourism IMPROVEMENT area. H. ThE destination marketing organization managing the tourism improvement area AND the governing body THAT IS PARTICIPATING IN THE TOURISM IMPROVEMENT AREA SHALL REPORT TO THE DEPARTMENT OF REVENUE THE amount of the lodging business ASSESSMENT AND SUPPLY THE DEPARTMENT OF REVENUE AND THE STATE TREASURER WITH ALL REQUESTED INFORMATION NECESSARY TO ADMINISTER THIS SECTION. I. The department of revenue and the governing body that is participating in the tourism improvement area shall enter into an intergovernmental agreement that provides for the department of revenue to receive monies for the costs of administering the lodging business assessment from the proceeds of that lodging business assessment. J. Unless the context otherwise requires, title 42, chapter 5, article 1 governs the administration of the lodging business assessment, except that: 1. A separate license is not required for the lodging business assessment imposed by this section. 2. A separate bond is not required for employees of the department of revenue for administering this section. START_STATUTE48-6508. Renewal; dissolution; remaining revenue a. An established TOURISM IMPROVEMENT AREA MAY be renewed for a new term. A renewed TOURISM IMPROVEMENT AREA may engage in different tourism improvement area activities than the original tourism improvement area. On RENEWAL of a tourism improvement area, the governing body shall transfer any remaining monies held by the tourism improvement area TO THE RENEWED TOURISM IMPROVEMENT AREA. B. DuRING THE term of THE TOURISM IMPROVEMENT AREA, THERE SHALL BE A sixty-DAY PERIOD EACH YEAR IN WHICH LODGING BUSINESS OWNERS that have paid lodging business ASSESSMENTS MAY REQUEST DISSOLUTION OF THE TOURISM IMPROVEMENT AREA. THE initial sixty-day period shall BEGIN ONE YEAR AFTER THE DATE OF ESTABLISHMENT OF THE TOURISM IMPROVEMENT AREA. ON receipt of a PETITION submitted by THE LODGING BUSINESS OWNERS THAT REPRESENT fifty percent OR MORE OF THE TOTAL number of assessed ROOMS WITHIN THE TOURISM IMPROVEMENT AREA, THE GOVERNING BODY SHALL PASS A RESOLUTION OF INTENTION TO DISSOLVE THE TOURISM IMPROVEMENT AREA. THE GOVERNING BODY SHALL hold a hearing on the petition to dissolve the tourism improvement area and shall provide NOTICE of the hearing pursuant to the notice requirements of section 48-6504. C. The governing body may adopt a resolution to dissolve A TOURISM IMPROVEMENT AREA. The governing body may only adopt a resolution to dissolve a tourism improvement area WHEN THE tourism improvement area has satisfied all debts of the tourism improvement AREa. The governing body may also dissolve a tourism improvement area if tHE GOVERNING BODY FINDS THERE HAS BEEN MISAPPROPRIATION OF monies, MALFEASANCE OR A VIOLATION OF LAW IN CONNECTION WITH THE MANAGEMENT OF THE TOURISM IMPROVEMENT AREa. D. THE RESOLUTION adopted by the governing body pursuant to subsection b or c of this section SHALL STATE THE REASON FOR THE DISSOLUTION and THE TIME AND PLACE OF THE PUBLIC HEARING AND SHALL CONTAIN A PROPOSAL TO DISPOSE OF ANY ASSETS ACQUIRED WITH THE monies OF THE lodging business ASSESSMENTS LEVIED WITHIN THE TOURISM IMPROVEMENT AREA. THE NOTICE OF THE HEARING ON DISSOLUTION REQUIRED BY THIS SECTION SHALL BE GIVEN BY MAIL TO each lodging business owner that is SUBJECT TO a lodging business ASSESSMENT IN THE TOURISM IMPROVEMENT AREA AND PUBLISHED IN A NEWSPAPER OF GENERAL CIRCULATION IN THE MUNICIPALITY or county OR ON THE MUNICIPALITY'S or county's PUBLIC WEBSITE at least thirty DAYS before THE DATE OF THE HEARING. THE GOVERNING BODY SHALL CONDUCT THE PUBLIC HEARING at least thirty DAYS AFTER mailing the notice of hearing. THE PUBLIC HEARING SHALL BE HELD NOT MORE THAN sixty DAYS AFTER THE ADOPTION OF THE RESOLUTION OF INTENTION to dissolve the tourism improvement area. E. On THE DISSOLUTION OR EXPIRATION WITHOUT RENEWAL OF A TOURISM IMPROVEMENT AREA, any monies that remain AFTER ALL DEBTS of the tourism improvement area ARE PAID SHALL BE SPENT IN ACCORDANCE WITH THE TOURISM IMPROVEMENT AREA PLAN OR SHALL BE REFUNDED TO THE lodging business OWNERS OF THE LODGING BUSINESSES that are LOCATED AND OPERATING WITHIN THE TOURISM IMPROVEMENT AREA at the time of dissolution of the tourism improvement area. remaining monies that are to be refunded to lodging business owners shall be refunded using THE SAME METHOD AND BASIS THAT WAS USED by the destination marketing organization TO establish THE lodging business ASSESSMENTS LEVIED IN THE FISCAL YEAR IN WHICH THE TOURISM IMPROVEMENT AREA IS DISSOLVED OR EXPIRES. END_STATUTE Sec. 2. Legislative findings The legislature finds that: 1. Many tourism and lodging businesses located and operating in municipalities and counties in this state struggle to compete with destinations in other states in attracting overnight visitation. 2. Tourism improvement areas will help municipalities within this state to grow leisure, convention and event visitor demand by promoting tourism, business activities, economic growth and employment within this state. 3. Because additional services and activities will provide direct benefits to the lodging businesses that choose to participate within a tourism improvement area, the most equitable method of financing tourism improvement area activities is to levy a lodging business assessment on lodging businesses that will benefit from a tourism improvement area. 4. Tourism and lodging demand generated by a tourism improvement area will increase revenue for this state. 5. Tourism lodging business owners should be encouraged to create a tourism improvement area to enhance the local tourism business climate. 6. Tourism improvement area activities are intended to supplement and not replace existing governmental activities and services.
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