school districts; lease agreements; requirements

HB2384 - 572R - H Ver

House Engrossed

school districts;
lease agreements; requirements

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HOUSE BILL 2384

AN
ACT

amending sections 15-342, 15-491,
15-1102 and 15-1105, Arizona Revised Statutes; amending title 41,
chapter 56, article 1, Arizona Revised Statutes, by adding section 41-5702.01;
amending sections 42-11104 AND 42-11133, Arizona Revised Statutes;
relating to school PROPERTIES.

(TEXT OF BILL BEGINS ON NEXT PAGE)

Be it
enacted by the Legislature of the State of Arizona:

Section 1. Section 15-342, Arizona Revised
Statutes, is amended to read:

START_STATUTE
15-342.

Discretionary powers

The governing board
of a school district
may:

1. Expel pupils for misconduct.

2. Exclude from grades one through eight children
who are
under six years of age.

3. Make such separation of groups of pupils as
it

the governing board
deems advisable.

4. Maintain such special schools during vacation as
deemed necessary for the benefit of the pupils of the school district.

5. Allow a superintendent or principal or representatives
of the superintendent or principal to travel for a school purpose, as
determined by a majority vote of the board. The board may allow
members and members-elect of the board to travel within or without the
school district for a school purpose and receive reimbursement. Any
expenditure for travel and subsistence pursuant to this paragraph shall be as
provided in title 38, chapter 4, article 2. The designated post of
duty referred to in section 38-621 shall be construed, for school
district governing board members, to be the member's actual place of residence,
as opposed to the school district office or the school district
boundaries. Such expenditures shall be a charge against the budgeted
school district funds. The governing board of a school district shall prescribe
procedures and amounts for reimbursement of lodging and subsistence expenses.
Reimbursement amounts shall not exceed the maximum amounts established pursuant
to section 38-624, subsection C.

6. Construct or provide in rural districts housing
facilities for teachers and other school employees that the board determines
are necessary to operate the school.

7. Sell or lease to the state, a county, a city,
another school district or a tribal government agency any school property
required for a public purpose if the sale or lease of the property will not
affect the normal operations of a school within the school district.
�A lease that a school district enters into pursuant to this paragraph
must be for a term of not more than ten years without voter approval or
not more than ninety-nine years with voter approval.

8. Annually budget and spend monies for membership
in an association of school districts within this state.

9. Enter into leases or lease-purchase
agreements for school buildings or grounds, or both, as lessor or as lessee,
for periods of less than twenty years subject to voter approval for
construction of school buildings as prescribed in section 15-341,
subsection A, paragraph 7
and voter approval for a lease
for a period of at least ten years
.
� A school district
may enter into a lease-purchase agreement as lessee pursuant to this
paragraph only if the school buildings or grounds are located within the
geographic boundaries of the school district.

10. Subject to title 41, chapter 56, sell school
sites or enter into leases or lease-purchase agreements for school
buildings and grounds, as lessor or as lessee, for a period of twenty years or
more, but not to exceed ninety-nine years
if
.� A school district may enter into a lease or lease-purchase
agreement as lessee pursuant to this paragraph only if the school buildings or
grounds are located within the geographic boundaries of the school
district. Before any sale, lease or lease-purchase agreement
is executed pursuant to this paragraph, the proposal must be
authorized
by a vote of the school district electors in an election called by the
governing board as provided in section 15-491, except that authorization
by the school district electors in an election is not required if
the lease or lease-purchase agreement is for a period of not
more than ten years or
one of the following requirements is met:

(a) The market value of the school property is less
than $50,000 or the property is procured through a renewable energy development
agreement, an energy performance contract, which among other items includes a
renewable energy power service agreement, or a simplified energy performance
contract pursuant to section 15-213.01.

(b) The buildings and sites are completely funded
with monies distributed by the
school facilities
division
of school facilities
within the department of administration or
at the direction of the school facilities oversight board, or its predecessor.

(c) The transaction involves the sale of improved or
unimproved property pursuant to an agreement with the school facilities
oversight board in which the school district agrees to sell the improved or
unimproved property and transfer the proceeds of the sale to the school
facilities oversight board in exchange for monies from the school facilities
oversight board for the acquisition of a more suitable school
site. For a sale of property acquired by a school district before
July 9, 1998, a school district shall transfer to the school facilities
oversight board that portion of the proceeds that equals the cost of the
acquisition of a more suitable school site. If there are any remaining proceeds
after the transfer of monies to the school facilities oversight board, a school
district shall only use those remaining proceeds for future land purchases
approved by the school facilities oversight board, or for capital improvements
not funded by the school facilities oversight board for any existing or future
facility.

(d) The transaction involves the sale of improved or
unimproved property pursuant to a formally adopted plan and the school district
uses the proceeds of this sale to purchase other property that will be used for
similar purposes as the property that was originally sold if the sale proceeds
of the improved or unimproved property are used within two years after the date
of the original sale to purchase the replacement property. If the
sale proceeds of the improved or unimproved property are not used within two
years after the date of the original sale to purchase replacement property, the
sale proceeds shall be used toward paying any outstanding bonded
indebtedness. If any sale proceeds remain after paying for
outstanding bonded indebtedness, or if the district has no outstanding bonded
indebtedness, sale proceeds shall be used to reduce the district's primary tax
levy. A school district shall not use this subdivision unless all of
the following conditions exist:

(i) The school district is the sole owner of the
improved or unimproved property that the school district intends to sell.

(ii) The school district did not purchase the
improved or unimproved property that the school district intends to sell with
monies that were distributed pursuant to title 41, chapter 56.

(iii) The transaction does not violate section 15-341,
subsection G.

11. Review the decision of a teacher to promote a
pupil to a grade or retain a pupil in a grade in a common school or to pass or
fail a pupil in a course in high school. The pupil has the burden of
proof to overturn the decision of a teacher to promote, retain, pass or fail
the pupil.� In order to sustain the burden of proof, the pupil shall
demonstrate to the governing board that the pupil has mastered the academic
standards adopted by the state board of education pursuant to sections 15-701
and 15-701.01. If the governing board overturns the decision of a teacher
pursuant to this paragraph, the governing board shall adopt a written finding
that the pupil has mastered the academic standards. Notwithstanding
title 38, chapter 3, article 3.1, the governing board shall review the decision
of a teacher to promote a pupil to a grade or retain a pupil in a grade in a
common school or to pass or fail a pupil in a course in high school in
executive session unless a parent or legal guardian of the pupil or the pupil,
if emancipated, disagrees that the review should be conducted in executive
session and then the review shall be conducted in an open meeting. If the
review is conducted in executive session, the board shall notify the teacher of
the date, time and place of the review and shall allow the teacher to be
present at the review. If the teacher is not present at the review,
the board shall consult with the teacher before making its
decision. Any request, including the written request as provided in
section 15-341, the written evidence presented at the review and the
written record of the review, including the decision of the governing board to
accept or reject the teacher's decision, shall be retained by the governing
board as part of its permanent records.

12. Provide transportation or site transportation
loading and unloading areas for any child or children if deemed
for

in
the best interest of the district, whether within or
without the district, county or state.

13. Enter into intergovernmental agreements and
contracts with school districts or other governing bodies as provided in
section 11-952. Intergovernmental agreements and contracts between school
districts or between a school district and other governing bodies as provided
in section 11-952 are exempt from competitive bidding under the
procurement rules adopted by the state board of education pursuant to section
15-213.

14. Include in the curricula
it

the governing board
prescribes for high schools in the
school district career and technical education, vocational education and
technology education programs and career and technical, vocational and
technology program improvement services for the high schools, subject to approval
by the state board of education. The governing board may contract
for the provision of career and technical, vocational and technology education
as provided in section 15-789.

15. Suspend a teacher or administrator from the
teacher's or administrator's duties without pay for a period of time of not
to exceed

more than
ten school days
,

if the board determines that
suspension is warranted pursuant to section 15-341, subsection A,
paragraph 21 or 22.

16. Dedicate school property within an incorporated
city or town to that city or town or within a county to that county for use as
a public right-of-way if both of the following apply:

(a) Pursuant to an ordinance adopted by the city,
town or county, there will be conferred on the school district privileges and
benefits that may include benefits related to zoning.

(b) The dedication will not affect the normal
operation of any school within the district.

17. Enter into option agreements for the purchase of
school sites
only if the school sites are located within the
geographic boundaries of the school district
.

18. Donate surplus or outdated learning materials,
educational equipment and furnishings to nonprofit community organizations if
the governing board determines that the anticipated cost of selling the
learning materials, educational equipment or furnishings equals or exceeds the
estimated market value of the materials.

19. Prescribe policies to assess reasonable fees for
students to use district-provided parking facilities. The fees
are to be applied by the district solely against costs incurred in operating or
securing the parking facilities. Any policy adopted by the governing board
pursuant to this paragraph shall include a fee waiver provision in appropriate
cases of need or economic hardship.

20. Establish alternative education programs that
are consistent with the laws of this state to educate pupils, including pupils
who have been reassigned pursuant to section 15-841, subsection E or F.

21. Require a period of silence to be observed at
the commencement of the first class of the day in the schools. If a
governing board chooses to require a period of silence to be observed, the
teacher in charge of the room in which the first class is held shall announce
that a period of silence not to exceed one minute in duration will be observed
for meditation, and during that time no activities shall take place and silence
shall be maintained.

22. Require students to wear uniforms.

23. Exchange unimproved property or improved
property, including school sites, if the governing board determines that the
improved property is unnecessary for the continued operation of the school
district without requesting authorization by a vote of the school district
electors and if the governing board determines that the exchange is necessary
to protect the health, safety or welfare of pupils or if the governing board
determines that the exchange is based on sound business principles for either:

(a) Unimproved or improved property of equal or
greater value.

(b) Unimproved property that the owner contracts to improve
if the value of the property ultimately received by the school district is of
equal or greater value.

24. For common and high school pupils, assess
reasonable fees for optional extracurricular activities and programs conducted
when the common or high school is not in session, except that fees shall not be
charged for pupils' access to or use of computers or related materials. For
high school pupils, the governing board may assess reasonable fees for fine
arts and vocational education courses and for optional services, equipment and
materials offered to the pupils beyond those required to successfully complete
the basic requirements of any other course, except that fees shall not be
charged for pupils' access to or use of computers or related materials. Fees
assessed pursuant to this paragraph shall be adopted at a public meeting after
notice has been given to all parents of pupils enrolled at schools in the
district and shall not exceed the actual costs of the activities, programs,
services, equipment or materials. The governing board shall
authorize principals to waive the assessment of all or part of a fee assessed
pursuant to this paragraph if it creates an economic hardship for a
pupil. For the purposes of this paragraph, "extracurricular
activity" means any optional, noncredit, educational or recreational
activity that supplements the education program of the school, whether offered
before, during or after regular school hours.

25. Notwithstanding section 15-341, subsection
A, paragraphs 7 and 9, construct school buildings and purchase or lease school
sites
for a term of not more than ten years
, without a
vote of the school district electors, if the buildings and sites are
located within the geographic boundaries of the school district and
are
totally funded from one or more of the following:

(a) Monies in the unrestricted capital outlay fund,
except that the estimated cost shall not exceed $250,000 for a district that
uses section 15-949.

(b) Monies distributed at the direction of the
school facilities oversight board established by section 41-5701.02 or by
the
school facilities
division
of school
facilities
within the department of administration pursuant to title 41,
chapter 56.

(c) Monies specifically donated for the purpose of
constructing school buildings.

This paragraph does not eliminate the
requirement for an election to raise revenues for a capital outlay override
pursuant to section 15-481 or a bond election pursuant to section 15-491.

�A school district governing board may purchase a school site
pursuant to this paragraph only if the school site is located within the
geographic boundaries of the school district.

26. Conduct a background investigation that includes
a fingerprint check conducted pursuant to section 41-1750, subsection G
for certificated personnel and personnel who are not paid employees of the
school district, as a condition of employment. A school district may
release the results of a background check to another school district for
employment purposes. The school district may charge the costs of fingerprint
checks to its fingerprinted employee, except that the school district may not
charge the costs of fingerprint checks for personnel who are not paid employees
of the school district.

27. Unless otherwise prohibited by law, sell
advertising as follows:

(a) Advertisements shall be age appropriate and not
promote any substance that is illegal for minors such as alcohol, tobacco and
drugs or gambling. Advertisements shall comply with the state sex education
policy of abstinence.

(b) Advertising approved by the governing board for
the exterior of school buses may appear only on the sides of the bus in the
following areas:

(i) The signs shall be below the seat level rub rail
and not extend above the bottom of the side windows.

(ii) The signs shall be at least three inches from
any required lettering, lamp, wheel well or reflector behind the service door
or stop signal arm.

(iii) The signs shall not extend from the body of
the bus so as to allow a handhold or present a danger to pedestrians.

(iv) The signs shall not interfere with the
operation of any door or window.

(v) The signs shall not be placed on any emergency
doors.

(c) The school district shall establish an
advertisement fund that is composed of revenues from the sale of
advertising. The monies in an advertisement fund are not subject to
reversion.

28. Assess reasonable
damage deposits to pupils in grades seven through twelve for using textbooks,
musical instruments, band uniforms or other equipment required for academic
courses. The governing board shall adopt policies on any damage
deposits assessed pursuant to this paragraph at a public meeting called for
this purpose after providing notice to all parents of pupils in grades seven
through twelve in the school district. Principals of individual schools within
the district may waive the damage deposit requirement for any textbook or other
item if the payment of the damage deposit would create an economic hardship for
the pupil. The school district shall return the full amount of the
damage deposit for any textbook or other item if the pupil returns the textbook
or other item in reasonably good condition within the time period prescribed by
the governing board. For the purposes of this paragraph, "in
reasonably good condition" means the textbook or other item is in the same
or a similar condition as it was when the pupil received it, plus ordinary wear
and tear.

29. Notwithstanding section 15-1105,
expend

spend
surplus monies in the civic
center school fund for maintenance and operations or unrestricted capital
outlay if sufficient monies are available in the fund after meeting the needs
of programs established pursuant to section 15-1105.

30. Notwithstanding section 15-1143, spend
surplus monies in the community school program fund for maintenance and
operations or unrestricted capital outlay if sufficient monies are available in
the fund after meeting the needs of programs established pursuant to section 15-1142.

31. Adopt guidelines to standardize the format of
the school report cards required by section 15-746 for schools within the
district.

32. Adopt policies that require parental
notification when a law enforcement officer interviews a pupil on school
grounds. Policies adopted pursuant to this paragraph shall not
impede a peace officer from performing the peace officer's
duties. If the school district governing board adopts a policy that
requires parental notification:

(a) The policy may provide reasonable exceptions to
the parental notification requirement.

(b) The policy shall set forth whether and under
what circumstances a parent may be present when a law enforcement officer
interviews the pupil, including reasonable exceptions to the circumstances
under which a parent may be present when a law enforcement officer interviews
the pupil, and shall specify a reasonable maximum time after a parent is
notified that an interview of a pupil by a law enforcement officer may be
delayed to allow the parent to be present.

33. Enter into voluntary partnerships with any party
to finance with monies other than school district monies and cooperatively
design school facilities that comply with the adequacy standards prescribed in
section 41-5711 and the square footage per pupil requirements pursuant to
section 41-5741, subsection D, paragraph 3, subdivision
(b). The design plans and location of any such school facility shall
be submitted to the school facilities oversight board for approval pursuant to
section 41-5741, subsection 0. If the school facilities
oversight board approves the design plans and location of any such school
facility, the party in partnership with the school district may cause to be
constructed and the district may begin operating the school facility before
monies are distributed at the direction of the school facilities oversight
board pursuant to section 41-5741. Monies distributed from the
new school facilities fund to a school district in a partnership with another
party to finance and design the school facility shall be paid to the school
district pursuant to section 41-5741. The school district
shall reimburse the party in partnership with the school district from the
monies paid to the school district pursuant to section 41-5741, in
accordance with the voluntary partnership agreement. Before the
school facilities oversight board directs the distribution of any monies
pursuant to this subsection, the school district shall demonstrate to the
school facilities oversight board that the facilities to be funded pursuant to
section 41-5741, subsection O meet the minimum adequacy standards
prescribed in section 41-5711. If the cost to construct the
school facility exceeds the amount that the school district receives from the
new school facilities fund, the partnership agreement between the school
district and the other party shall specify that, except as otherwise provided
by the other party, any such excess costs shall be the responsibility of the
school district. The school district governing board shall adopt a
resolution in a public meeting that an analysis has been conducted on the
prospective effects of the decision to operate a new school with existing
monies from the school district's maintenance and operations budget and how
this decision may affect other schools in the school district. If a
school district acquires land by donation at an appropriate school site
approved by the school facilities oversight board and a school facility is
financed and built on the land pursuant to this paragraph, the school
facilities oversight board shall direct the distribution of an amount equal to
twenty percent of the fair market value of the land that can be used for
academic purposes. The school district shall place the monies in the
unrestricted capital outlay fund and increase the unrestricted capital budget
limit by the amount of the monies placed in the fund. Monies
distributed under this paragraph shall be distributed from the new school
facilities fund pursuant to section 41-5741. If a school
district acquires land by donation at an appropriate school site approved by
the school facilities oversight board and a school facility is financed and
built on the land pursuant to this paragraph, the school district shall not
receive monies for the donation of real property pursuant to section 41-5741,
subsection F. It is unlawful for:

(a) A county, city or town to require as a condition
of any land use approval that a landowner or landowners that entered into a
partnership pursuant to this paragraph provide any contribution, donation or
gift, other than a site donation, to a school district. This
subdivision only applies to the property in the voluntary partnership agreement
pursuant to this paragraph.

(b) A county, city or town to require as a condition
of any land use approval that the landowner or landowners located within the
geographic boundaries of the school subject to the voluntary partnership
pursuant to this paragraph provide any donation or gift to the school district
except as provided in the voluntary partnership agreement pursuant to this
paragraph.

(c) A community facilities district established
pursuant to title 48, chapter 4, article 6 to be used for reimbursement of
financing the construction of a school pursuant to this paragraph.

(d) A school district to enter into an agreement
pursuant to this paragraph with any party other than a master planned community
party. Any land area consisting of at least three hundred twenty acres that is
the subject of a development agreement with a county, city or town entered into
pursuant to section 9-500.05 or 11-1101 shall be deemed to be a
master planned community. For the purposes of this subdivision,
"master planned community" means a land area consisting of at least
three hundred twenty acres, which may be noncontiguous, that is the subject of
a zoning ordinance approved by the governing body of the county, city or town
in which the land is located that establishes the use of the land area as a
planned area development or district, planned community development or
district, planned unit development or district or other land use category or
district that is recognized in the local ordinance of such county, city or town
and that specifies the use of such land is for a master planned development.

34. Enter into an intergovernmental agreement with a
presiding judge of the juvenile court to implement a law-related education
program as defined in section 15-154. The presiding judge of
the juvenile court may assign juvenile probation officers to participate in a
law-related education program in any school district in the
county. The cost of juvenile probation officers who participate in
the program implemented pursuant to this paragraph shall be funded by the
school district.

35. Offer to sell outdated learning materials,
educational equipment or furnishings at a posted price commensurate with the
value of the items to pupils who are currently enrolled in that school district
before those materials are offered for public sale.

36. If the school district is a small school
district as defined in section 15-901, and if allowed by federal law, opt
out of federal grant opportunities if the governing board determines that the
federal requirements impose unduly burdensome reporting requirements.

37. Prescribe and enforce policies and procedures
for the emergency administration of inhalers by trained employees of the school
district and nurses who are under contract with the school district pursuant to
section 15-158.

38. Develop policies and procedures to allow
principals to budget for or assist with budgeting federal, state and local
monies.

39. Subject to article IX, section 7, Constitution
of Arizona, the laws pertaining to travel and subsistence, gifts, grants,
including federal grants, or devises and policies adopted by the department of
education, provide food and beverages at school district events, including
official school functions and trainings.
END_STATUTE

Sec. 2. Section 15-491, Arizona Revised
Statutes, is amended to read:

START_STATUTE
15-491.

Elections on school property; exceptions

A. The governing board of a school district may, and
on petition of fifteen percent of the school electors as shown by the poll list
at the last preceding annual school election shall, call an election for the
following purposes:

1. To locate or change the location of school
buildings.

2. To purchase or sell school sites or buildings or
sell school sites pursuant to section 15-342 or to build school
buildings, but the authorization by vote of the school district shall not
necessarily specify the site to be purchased.
� A school district
governing board may not purchase a school site or building that is located
outside the geographic boundaries of the school district.

3. To decide whether the bonds of the school
district shall be issued and sold for the purpose of raising monies for purchasing
or leasing school lots, for building or renovating school buildings, for
supplying school buildings with furniture, equipment and technology, for
improving school grounds, for purchasing pupil transportation vehicles or for
liquidating any indebtedness already incurred for such purposes. Bonds issued
for furniture, equipment and technology, other than fixtures, shall mature not
later than the July 1 that follows the fifth year after the bonds were issued.
A school district shall not issue class B bonds until the school district has
obligated in contract the entire proceeds of any class A bonds issued by the
school district. The total amount of class A and class B bonds
issued by a school district shall not exceed the debt limitations prescribed in
article IX, sections 8 and 8.1, Constitution of Arizona.

4. To lease for
twenty or more

at least ten years but not more than
ninety-nine

years, as lessor or as lessee, school buildings or grounds.� Approval by a
majority of the school district electors voting authorizes the governing board
to negotiate for and enter into a lease. The ballot shall list the
school buildings or grounds for which a lease is sought.� If the governing
board does not enter into a lease
of twenty or more

that is at least ten years but not more than
ninety-nine

years of the school buildings or grounds listed on the ballot within
twenty

ten
years after the date of the
election and the board continues to seek such a lease, the governing board
shall call a special election to reauthorize the board to negotiate for and to
enter into a lease
of twenty or more

that
is at least ten years but not more than
ninety-nine

years.

5. To change the list of capital projects or the
purposes authorized by prior voter approval to issue bonds.

6. To extend from six to ten years the time period
to issue class B bonds authorized in 2009 or earlier.� Elections pursuant to
this paragraph may not be held later than the sixth November after the election
approving the issuance of the bonds.

B. A petition is not required for holding the first
election to be held in a joint common school district for any of the purposes
specified in subsection A of this section. The certification of
election results required by section 15-493 shall be made to the board of
supervisors of the jurisdictional county.

C. When the election is called to determine whether
or not bonds of the school district shall be issued and sold for the purposes
enumerated in the call for the election, the question shall be submitted to the
vote of the qualified electors of the school district as defined in section 15-401
and subject to section 15-402.

D. The governing board shall order the election to
be held and the election notice and procedures to be conducted in the manner
prescribed in title 35, chapter 3, article 3. If a petition for an
election has been filed with the governing board as provided in subsection A of
this section, the board shall act on the petition within sixty days by ordering
the election to be held as provided in this subsection. If a school
district bond election is scheduled for the same date a school district will
hold an override election, the governing body shall deliver a copy of the
notice of election and ballot to the county school superintendent who shall
include the notice of election and ballot with the informational pamphlet and
ballot prepared for the override election. Mailing of the
information required for both the override and bond elections shall constitute
compliance with the notice provisions of this section.

E. The elections to be held pursuant to this section
shall only be held on dates prescribed by section 16-204, except that
elections held pursuant to this section to decide whether class B bonds shall
be issued, or any other obligation incurred that will require the assessment of
secondary property taxes, shall only be held on the first Tuesday after the first
Monday of November.

F. Subsection A, paragraph 2 of this section does
not apply to the sale of school property if the market value of the school
property is less than $50,000.

G. Bond counsel fees, financial advisory fees,
printing costs and paying agent and registrar fees for bonds issued pursuant to
an election under this section shall be paid from either the amount authorized
by the qualified electors of the school district or current operating funds.�
Bond election expenses shall be paid from current operating funds only.

H. For any election conducted to decide whether
class B bonds will be issued pursuant to this section:

1. Except as provided in paragraph 2 of this
subsection, the ballot shall include the following statement:

The capital improvements that are proposed to be funded
through this bond issuance are to exceed the state standards and are in
addition to monies provided by the state.

__________ school district is proposing to issue class B
general obligation bonds totaling $__________ to fund capital improvements over
and above those funded by the state. Under the students first capital funding
system, _________ school district is entitled to state monies for new
construction and renovation of school buildings in accordance with state law.

2. For a school district that is a career technical
education district, the ballot shall include the following statement:

________, a career technical education district, is proposing
to issue class B general obligation bonds totaling $_________ to fund capital
improvements at a campus owned or operated and maintained by the career
technical education district.

3. The ballot shall conform to the requirements of
title 35, chapter 3, article 3.

4. At least eighty-five days before the
election, the school district shall submit proposed ballot language to the
county school superintendent and the director of the Arizona legislative
council. The director of the Arizona legislative council shall
review the proposed ballot language to determine whether the proposed ballot
language complies with this section. If the director of the Arizona
legislative council determines that the proposed ballot language does not
comply with this section, the director, within ten calendar days after
receiving the proposed ballot language, shall notify the school district and
the county school superintendent of the director's objections, and the school
district shall resubmit revised ballot language to the director for approval.

5. Not later than thirty-five days before a
class B bond election conducted pursuant to this section, the school district
shall mail an informational pamphlet prepared by the county school
superintendent to each household that contains a qualified elector in the
school district.� The informational pamphlet shall contain, at a minimum, the
following information:

(a) An executive summary of the school district's
most recent capital plan submitted to the school facilities oversight board.

(b) A complete list of each proposed capital
improvement that will be funded with the proceeds of the bonds and a
description of the proposed cost of each improvement, including a separate
aggregation of capital improvements for administrative purposes as defined by
the school facilities oversight board.

(c) The tax rate associated with each of the
proposed capital improvements and the estimated cost of each capital
improvement for the owner of a single family home that is valued at $100,000.

I. For any election conducted to decide whether
impact aid revenue bonds shall be issued pursuant to this section:

1. The ballot shall include the following statement:

The capital improvements that are proposed to be funded
through this bond issuance are to exceed the state standards and are in
addition to monies provided by the state.

__________ school district is proposing to issue impact aid
revenue bonds totaling $__________ to fund capital improvements over and above
those funded by the state. Under the students first capital funding system,
_________ school district is entitled to state monies for new construction and
renovation of school buildings in accordance with state law.

2. The ballot shall contain the words "bond
approval, yes" and "bond approval, no", and the voter shall
signify the voter's desired choice.

3.
At least eighty-five
days before the election,
the
school district
shall submit proposed ballot language to the director of the legislative
council.� The director of the legislative council shall review the proposed
ballot language to determine whether the proposed ballot language complies with
this section. If the director of the legislative council determines
that the proposed ballot language does not comply with this section, the
director, within ten calendar days
after receiving
the proposed ballot language, shall notify the school
district of the director's objections
,
and the
school district shall resubmit revised ballot language to the director for
approval.

4. Not later than thirty-five days before an
impact aid revenue bond election conducted pursuant to this section, the school
district shall mail an informational pamphlet prepared by the county school
superintendent to each household that contains a qualified elector in the school
district.� The informational pamphlet shall contain, at a minimum, the
following information:

(a) The date of the election.

(b) The voter's polling place and the times it is
open.

(c) An executive summary
of the school district's most recent capital plan submitted to the school
facilities
oversight
board.

(d) A
complete list of each proposed capital improvement that will be funded with the
proceeds of the bonds and a description of the proposed cost of each
improvement, including a separate aggregation of capital improvements for
administrative purposes as defined by the school facilities
oversight
board.

(e) A statement that impact aid revenue bonds will
be fully funded by aid that the school district receives from the federal
government and do not require a levy of taxes in the district.

(f) A statement that if the bonds are approved, the
first priority for the impact aid will be to pay the debt service for the bonds
and that other uses of the monies are prohibited until the debt service
obligation is met.

(g) A statement that if the impact aid revenue bonds
are approved, the school district shall not issue or sell class B bonds while
the district has existing indebtedness from impact aid revenue bonds, except
for bonds issued to refund any bonds issued by the board.

J. If the voters approve the issuance of school
district class B bonds or impact aid revenue bonds, the school district shall
not use the bond proceeds for any purposes other than the proposed capital
improvements listed in the informational pamphlet, except that up to ten
percent of the bond proceeds may be used for general capital expenses,
including cost overruns of proposed capital improvements. The
proposed capital improvements may be changed by a subsequent election as provided
by this section.

K. Each school district that issues bonds under this
section shall hold a public meeting each year between September 1 and October
31, until the bond proceeds are spent, at which an update of the progress of
capital improvements financed through bonding is discussed and at which the
public is allowed an opportunity to comment. At a minimum, the
update shall include a comparison of the current status and the original
projections on the construction of capital improvements, the costs of capital
improvements and the costs of capital improvements in progress or completed
since the prior meeting and the future capital bonding plans of the school
district. The school district shall include in the public meeting a
discussion of the school district's use of state capital aid and voter-approved
capital overrides in funding capital improvements, if any.

L. If an election is held to change the purpose or
list of capital projects authorized by prior voter approval to issue bonds
pursuant to subsection A, paragraph 5 of this section, the following
requirements apply:

1. The election may be held only on the first
Tuesday after the first Monday in November.

2. Not later than thirty-five days before the
election, the school district shall mail an informational pamphlet prepared by
the county school superintendent to each household in the school district that
contains a qualified elector. The informational pamphlet shall contain, at a
minimum, the following information:

(a) The date of the election.

(b) The voter's polling place and the times it is
open.

(c) A statement as to why the election was called.

(d) A complete list of each proposed capital
improvement that is in addition to the initial capital improvements presented
in the informational pamphlet when the bonds were approved and the proposed
cost of each improvement, including a separate aggregation of capital
improvements for administrative purposes as defined by the school facilities
oversight board.

(e) A complete list of each capital improvement that
was presented in the informational pamphlet when the bonds were initially
approved and that is proposed to be eliminated or to have its cost reduced, and
the proposed cost of each improvement, including a separate aggregation of
capital improvements for administrative purposes as defined by the school
facilities oversight board.

(f) Arguments for and against the proposed change,
if submitted, as provided by section 15-481, subsection B, paragraph
9. The ballot arguments for the proposed change shall be signed as
the governing board of the school district without listing any member's
individual name for the arguments for the proposed change.

3. The ballot shall contain the words "change
capital improvements, yes" and "change capital improvements,
no", and the voter shall signify the voter's desired choice.

4. If the election is to add a purpose that was not
on the initial ballot, the ballot shall list the purpose that is proposed to be
added.

M. If an election is held to extend the time to
issue bonds pursuant to subsection A, paragraph 6 of this section, the
following requirements apply:

1. The election may be held only on the first
Tuesday after the first Monday in November.

2. Not later than thirty-five days before the
election, the school district shall mail an informational pamphlet prepared by
the county school superintendent to each household in the school district that
contains a qualified elector. The informational pamphlet shall contain,
at a minimum, the following information:

(a) The date of the election.

(b) The voter's polling place and the times it is
open.

(c) A statement as to why the election was called.

(d) Arguments for and against the proposed change,
if submitted, as provided in section 15-481, subsection B, paragraph
9. The ballot arguments for the proposed change shall be signed as
the governing board of the school district without listing any member's
individual name for the arguments for the proposed change.

3. The ballot shall contain the words "extend
time to issue bonds, yes" and "extend time to issue bonds, no",
and the voter shall signify the voter's desired choice.
END_STATUTE

Sec. 3. Section 15-1102, Arizona Revised
Statutes, is amended to read:

START_STATUTE
15-1102.

Disposition of proceeds from sale or lease of school property;
school plant monies; payment of bonded indebtedness; definition

A. The governing
board, or the superintendent or chief administrative officer with the approval
of the governing board
:

,

1.

May
expend

spend

the proceeds
from the sale
or lease
of school property for the payment of any outstanding bonded
indebtedness of the school district or for the reduction of school district
taxes.

2. Shall spend the proceeds from the
lease of school property for the payment of any outstanding bonded indebtedness
of the school district or for the reduction of school district taxes.

B. A common
school district or a high school district that has an outstanding bonded
indebtedness of seven percent of the current year's assessed valuation or less
or a unified school district that has an outstanding bonded indebtedness of fourteen
percent of the current year's assessed valuation or less may
expend

spend

the proceeds from the
sale
or lease

of school property as follows:

1. The total sum
of the proceeds from the sale of school property executed before July 1, 2016
, for

or

the total sum of the proceeds from
the sale of property to a school
or the total sum of the
proceeds from the lease of school property to persons or entities other than
schools for more than one year
:

(a) May be
expended

spent

for
maintenance and operation in an amount that does not exceed fifteen percent of
the revenue control limit for that year as provided in section 15-947,
subsection A in any year.

(b) May be
expended

spent

for capital
outlay in any amount.

2. From and
after June 30, 2016, proceeds from the sale of school property that exceed
one hundred thousand dollars

$100,000
per
sales transaction to persons or entities other than schools may not be
expended

spent

for
maintenance and operation and may be
expended

spent

for capital outlay in any amount.

C. A common
school district or a high school district that has an outstanding bonded
indebtedness of greater than seven percent of the current year's assessed
valuation or a unified school district that has an outstanding bonded
indebtedness of greater than fourteen percent of the current year's assessed
valuation may
expend

spend

the
proceeds from the
lease or
sale of school property as follows:

1. For the total
sum of the proceeds from the sale of school property executed before July 1,
2016
,

or
for the total sum of the proceeds from the sale
of property to a school
or for the total sum of the
proceeds from the lease of school property to persons or entities other than
schools for more than one year
:

(a) Up to twenty-five
percent of the sales proceeds may be
expended

spent

for maintenance and operation in an amount that
does not exceed fifteen percent of the revenue control limit for that year as
provided in section 15-947, subsection A in any year.

(b) The sales
or lease
proceeds may be
expended

spent

for capital
outlay in any amount.

2. From and
after June 30, 2016, for proceeds from the sale of school property that exceed
one hundred thousand dollars

$100,000
per
sales transaction to persons or entities other than schools:

(a) The sales
proceeds may not be
expended

spent

for
maintenance and operation.

(b)
the school district shall use

at least thirty-eight percent of the sales proceeds
shall be used
for the
payment of any outstanding bonded indebtedness of the school district or for
the reduction of school district taxes.

(c) The
remainder of the sales proceeds that are not obligated pursuant to subdivision
(b) of this paragraph may be
expended

spent

for capital outlay in any amount.

D. The governing
board, or the superintendent or chief administrative officer with the approval
of the governing board, shall promptly deposit monies received for and derived
from the sale or lease of school property with the county treasurer who shall
establish a school plant fund. Monies placed to the credit of the school plant
fund may be expended as provided in this section. The school plant fund is a
continuing fund that is not subject to reversion.

E. Proceeds from
sales by condemnation or sales under threat of condemnation may be deposited
with the county treasurer for deposit in the condemnation fund or the school
plant fund of the school district. The condemnation fund is a
continuing fund that is not subject to reversion, except that after ten years
any unspent monies shall be placed in the school plant fund to be used as
prescribed in this section. The governing board, or the superintendent or chief
administrative officer with the approval of the governing board, may apply the
proceeds in the condemnation fund to:

1. The payment
of any outstanding bonded indebtedness of the school district that is payable
from the levy of taxes on property within the school district.

2. Construct,
acquire, improve, repair or furnish school facilities or sites after notice and
a hearing.

F. Proceeds from
a right-of-way settlement shall be deposited with the county treasurer for
deposit in the condemnation fund of the school district. The
governing board, or the superintendent or chief administrative officer with the
approval of the governing board, shall apply those proceeds in the condemnation
fund to construct, acquire, improve, repair or furnish school facilities or
sites after notice and a hearing.

G. The
restrictions prescribed in subsections B and C of this section do not apply to
the proceeds from
:

1. Leases of school property to other
schools.

2. Leases of school property for less
than one year.

3.

sales of school property of less than
one hundred
thousand dollars

$100,000
per transaction.

H. A lease of school property for less
than one year that includes an automatic lease renewal resulting in a total
lease duration that exceeds one year is considered a lease for more than one
year for the purposes of this section.

I.

H.
For the
purposes of this section, "capital outlay" means unrestricted capital
outlay as prescribed in section 15-903, subsection C.

END_STATUTE

Sec. 4. Section 15-1105, Arizona Revised
Statutes, is amended to read:

START_STATUTE
15-1105.

Lease
of school property; immunity; fee schedule; use of monies; prohibition; tax
exemption; definitions

A. The
school district
governing
board, or the superintendent or chief administrative officer with the approval
of the governing board, may lease school property, including school buildings,
grounds, buses and equipment,
for a term of not more than ten
years without voter approval or
not more than ninety-nine

years with voter approval
to
any person, group or organization for any lawful purpose, including
any
recreational, educational, political, economic, artistic,
moral, scientific, social, religious or other civic or governmental purpose in
the interest of the community, including extended day resource programs.� The
governing board, superintendent or chief administrative officer shall charge a
reasonable use fee for the lease of the school property, which may include
goods contributed or services rendered by the person, group or organization to
the school district.

B. The governing board, or the superintendent or
chief administrative officer with the approval of the governing board, may
permit
allow
the uncompensated use of
school buildings, grounds, buses, equipment and other school property by any
school related
school-related
group,
including student political organizations
,
or by any
organization whose membership is open to the public and whose activities
promote the educational function of the school district as determined in good
faith by the school district's governing board, or the superintendent or chief
administrative officer with the approval of the governing board, including
extended day resource programs, except as provided in section 15-511.

C. A school district
and its employees, including the governing board, superintendent or chief
administrative officer, are immune from civil liability with respect to all
decisions made and actions taken to allow the lease or use of school property,
unless the school district or its employees are guilty of gross negligence or
intentional misconduct. This subsection does not limit any other immunity
provisions that are prescribed by law.

D. A person, group or organization that is otherwise
eligible to lease school property shall not be denied use of or charged
differentiated fees for school property on the basis of the person's, group's
or organization's beliefs, expression of beliefs or exercise of the rights of
association that are protected under the laws of this state, the Constitution
of Arizona, the laws of the United States
or
and
the United States Constitution.

E. The governing board shall annually approve a fee
schedule for the lease of school property. The fee schedule shall
include a designation of the persons, groups or organizations that
shall
have uncompensated use of the school property
,

and a procedure for determining
the value of goods and services being provided as compensation for the use of
school property. The governing board, superintendent or chief
administrative officer shall require proof of liability insurance for such use
or lease of school property.

F. Except as provided in section 15-1102,
monies received for and derived from the use or lease of school property under
this section shall be promptly deposited with the county treasurer
,
who shall credit the deposits to the civic center school fund
of the respective school district. Monies placed to the credit of a
civic center school fund may be
expended

spent
for civic center school purposes by warrants drawn
upon
on an
order of the school district governing board, or the
superintendent or chief administrative officer with the approval of the
governing board. The civic center school fund of a school district or multiple
school district civic center school program is a continuing fund not subject to
reversion, except
upon
on

termination of a civic center school program.
Upon
On
termination of a civic center school program, any remaining

funds shall

monies
revert to the
school plant fund of the school district or districts.

G. Notwithstanding sections 15-342,
15-491, 15-789 and 41-5704 and subsection A of this section,
a school district governing board may not lease, or approve the lease, of
school property to any person or for any person if the school district leased
that property, in whole or in part, from another person.

H. Property and buildings that are
leased from a school district pursuant to section 15-342, 15-491,
15-789 or 41-5704 or this section are:

1. Eligible for a tax exemption
pursuant to section 42-11104 only if the property and buildings are used
for education purposes.

2. Not eligible for a tax exemption
pursuant to section 42-11133.

G.

I.
For
the purposes of this section:

1. "Educational function" means
uses
a use
that
are
is
directly related to the educational mission of the school
district as adopted by the school district governing board and includes parent-teacher
organizations, youth organizations and school employee organizations.

2. "Extended day resource programs" means
activities offered on school property before or after school or at times when
school is not customarily in session for children who are of the age required
for kindergarten programs and grades one through eight. The program may be
offered for children who are of the age required for a kindergarten program or
for one grade or for any combination of kindergarten programs and
grades. Activities may include physical conditioning, tutoring,
supervised homework or arts activities.

3. "Reasonable use fee" means an amount
that is at least equal to the school district's cost for utilities, services,
supplies or personnel that the school provides to the lessee pursuant to the
terms of the lease.
END_STATUTE

Sec. 5. Title 41, chapter 56, article 1,
Arizona Revised Statutes, is amended by adding section 41-5702.01, to read:

START_STATUTE
41-5702.01.

School district real estate holdings; reporting requirements;
definition

A. On or before october 1, 2026 and
each year thereafter, each school district shall report to the division all of
the following information about each real estate holding that is owned or
leased by the school district during the immediately preceding school year:

1. The address of the real estate
holding.

2. A description of the real estate
holding, including any structure, building or other improvement that is part of
the real estate holding. The description required by this paragraph must
include the size of the lot and the square footage of any structure that is
located on the lot.

3. A description of the current use
of each building that is part of the real estate holding.

4. Whether the real estate holding,
or any part of the real estate holding, is located outside the geographic
boundaries of the school district.

5. The owner of the real estate
holding.

6. If the real estate holding is
subject to a lease agreement, all of the following:

(
a
) The parties
to the lease agreement.

(
b
) The term of
the lease.

(
c
) An estimate
of the total amount of revenue that will be generated by the lease agreement.

(
d
) The total
amount that was received or paid by the school district pursuant to the lease
agreement during the immediately preceding school year.

B. The division shall compile the
reports received from each school district pursuant to subsection A of this
section into a single comprehensive report for the previous school year and, on
or before december 1, 2026 and each year thereafter, shall submit this report
to the governor, the president of the senate and the speaker of the house of
representatives and shall provide a copy to the secretary of state.

C. For the purposes of this section,
"real estate holding" means any real property if the school district
either owns the property or leases the property as lessee and any of the
following applies:

1. The school district leases the
property as lessor.

2. The property, or any part of the
property, is used for nonacademic purposes.

3. The property, or any part of the
property, is located outside the geographic boundaries of the school district.
END_STATUTE

Sec. 6. Section 42-11104, Arizona Revised
Statutes, is amended to read:

START_STATUTE
42-11104.

Exemption for educational and library property

A. Libraries, colleges, school buildings and other
buildings that are used for education, with their furniture, libraries and
equipment and the land that is appurtenant to and used with them, are exempt
from taxation if they are used for education and not used or held for profit.

B. Property and buildings are exempt from taxation
if leased from:

1. A school district pursuant to a lease or lease-purchase
agreement under section 15-342, paragraph 9 or 10
if the
property and buildings are used for education purposes
.

2. A community college district pursuant to a lease
or lease-purchase agreement under section 15-1444.

C. Property and buildings, including land,
improvements, furniture and equipment, that are owned by a nonprofit
organization that is recognized under section 501(c)(3) of the internal revenue
code and that operates as:

1. A charter school pursuant to section 15-183
are exempt from taxation beginning on the date the nonprofit organization
acquires ownership of the property and buildings if the property and buildings
are used for education and are not used or held for profit.

2. A trap and skeet shooting club that teaches,
trains, sponsors, coaches or hosts or sponsors clinics, shooting leagues,
competitive tournaments or other events, including hunter and firearm safety
classes, are exempt from taxation if the property and buildings are used for
education purposes and not used or held for profit.

3. A residential
treatment and education facility are exempt from taxation beginning on the date
the nonprofit organization acquires ownership of the property and buildings if
the property and buildings are used for education and are not used or held for
profit.

D. Within ten days after receiving an
initial

affidavit of eligibility submitted under section 42-11152
,
subsection A, paragraph 1
by a nonprofit organization described under
subsection C of this section, the county assessor, on request, shall issue a
receipt for the affidavit.

E. A nonprofit organization described under
subsection C of this section shall file with the assessor the affidavit
required by section 42-11152 and evidence of the organization's
tax exempt

tax-exempt
status under
section 501(c)(3) of the internal revenue code when initially claiming the
exemption.

F. A nonprofit organization described under
subsection C of this section that acquires ownership of property that was
previously owned by another nonprofit organization and used primarily for
education shall comply with the requirements of section 42-11152 to
qualify and establish eligibility for exemption.

G. If a nonprofit organization described under
subsection C of this section that holds title to property used primarily for
education fails to file the affidavit required by section 42-11152 in a
timely manner, but otherwise qualifies for exemption, the county board of
supervisors, on petition by the organization, shall direct the county treasurer
to:

1. Refund any property taxes paid by the
organization for a tax year if the organization submits a claim for the refund
to the county treasurer within one year after the date the taxes were paid. The
county treasurer shall pay the claim within thirty days after it is submitted
to the treasurer. The county treasurer is entitled to a credit for
the refund in the next accounting period with each taxing jurisdiction to which
the tax monies may have been transmitted.

2. Forgive and strike off from the tax roll any
property taxes and accrued interest and penalties that are due but not paid.
END_STATUTE

Sec. 7. Section 42-11133, Arizona Revised
Statutes, is amended to read:

START_STATUTE
42-11133.

Exemption for affordable housing projects; definition

A. Property that is used exclusively for affordable
rental housing pursuant to section 42 of the internal revenue code or another
recorded restrictive covenant imposed by financing for affordable housing and
related facilities
are

is
exempt
from taxation if:

1. The property is owned and operated by, or is a
wholly owned subsidiary of, a corporation that is qualified pursuant to section
501(c)(3) or 501(c)(4) of the internal revenue code or a limited partnership or
limited liability company in which the general partner or the managing member,
as applicable, is an eligible nonprofit corporation or a single purpose entity
that is wholly owned by one or more eligible nonprofit corporations.

2. Either of the following applies:

(a) The acquisition, rehabilitation, development or
operation of the property, or any combination of these factors, is financed
with
tax exempt

tax-exempt
mortgage
revenue bonds or general obligation bonds or is financed by local, state or
federal loans or grants and the amount of rent paid by or on behalf of the
occupants does not exceed the amount of rent that is prescribed by deed
restrictions or by regulatory agreements pursuant to the property's financing
or financial assistance terms.

(b) The owner of the property is eligible for and
receives tax credits for low-income or moderate-income residential
housing established under section 42 of the internal revenue code and the
amount of rent paid by or on behalf of the occupants does not exceed the amount
that is prescribed by deed restrictions or by regulatory agreements pursuant to
the property's financing or financial assistance terms.

3. The property is not leased from a
school district.

B. To qualify under this section, the owner of the
property must:

1. For any claim that is filed in any fiscal year,
certify and ensure, subject to paragraph 2 of this subsection, that there is an
enforceable and verifiable agreement with a public agency, a recorded deed
restriction or any other legal document that restricts the use of the property
and requires that the rents do not exceed the terms that are prescribed by the
financing or financial assistance terms.

2. Certify that the monies that would have been
necessary to pay the property taxes are used to maintain the affordability of
or otherwise reduce the rents of the units that are occupied by eligible low-income
households.

C. For the purposes of this section, "eligible
nonprofit corporation" means a corporation that is qualified pursuant to
section 501(c)(3) or 501(c)(4) of the internal revenue code and for which one
of its exempt purposes includes providing affordable housing.
END_STATUTE

Sec. 8.
Existing leases; applicability; tax exemption

A. Sections 15-342,
15-491 and 15-1105, Arizona Revised Statutes, as amended by this
act, apply to any lease that is executed, renewed or amended after the
effective date of this act.

B. Property,
buildings and improvements are exempt from taxation pursuant to section 42-11104,
subsection B, paragraph 1, Arizona Revised Statutes, if all of the following
apply:

1. The
buildings and improvements are constructed on land that is leased from a school
district.

2. The lease
was executed
on or before January 1, 2026
.

3. The
buildings and improvements become the property of the school district on
termination of the lease.