building renewal grants; procurement practices

HB2482 - 572R - S Ver

Senate Engrossed
House Bill

building
renewal grants; procurement practices

(now: building renewal grants; job-order-contracting)

State of Arizona

House of Representatives

Fifty-seventh Legislature

Second Regular Session

2026

HOUSE BILL 2482

AN
ACT

amending section 41-5702, Arizona
Revised Statutes; relating to school facilities.

(TEXT OF BILL BEGINS ON NEXT PAGE)

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

Section 1. Section 41-5702, Arizona Revised
Statutes, is amended to read:

START_STATUTE
41-5702.

Powers and duties; staffing; reporting requirements

A. The division shall:

1. Assess school facilities and equipment
deficiencies and approve the distribution of grants as appropriate.

2. Maintain a database of school facilities to allow
for the administration of the new school facilities formula and the building renewal
grant fund. The facilities listed in the database must include all
buildings that are owned by school districts. The division shall
ensure that the database is updated on at least an annual
basis. Each school district shall report to the division not later
than September 1 of each year information as required by the division to
administer the building renewal grant fund and by the school facilities
oversight board to compute new school facilities formula distributions,
including the nature and cost of major repairs, renovations or physical
improvements to or replacement of building systems or equipment that were made
in the previous year and that were paid for either with local monies or monies
provided from the building renewal grant fund. Each school district
shall report any school or school buildings that have been closed, that are
vacant or partially used pursuant to section 15-119 and that have been
leased to another entity or that operate as a charter school. The
division shall develop guidelines and definitions for the reporting prescribed
in this paragraph and may review or audit the information, or both, to confirm
the information submitted by a school district. Notwithstanding any other
provision of this chapter, if a school district converts space that is listed
in the database maintained pursuant to this paragraph to space that will be
used for administrative purposes, the school district is responsible for any
costs associated with converting, maintaining and replacing that space. If
a building is significantly upgraded or remodeled, the division shall adjust
the age of that school facility in the database as follows:

(a) Determine the building capacity value as
follows:

(i) Multiply the student capacity of the building by
the per pupil square foot capacity established by section 41-5741.

(ii) Multiply the product determined in item (i) of
this subdivision by the cost per square foot established by section 41-5741.

(b) Divide the cost of the renovation by the
building capacity value determined in subdivision (a) of this paragraph.

(c) Multiply the quotient determined in subdivision
(b) of this paragraph by the currently listed age of the building in the
database.

(d) Subtract the
product determined in subdivision (c) of this paragraph from the currently
listed age of the building in the database, rounded to the nearest whole
number. If the result is a negative number, use zero.

3. Inspect, contract with a third party to inspect
or certify school district self-inspections of school buildings at least once
every five years to ensure compliance with the building adequacy standards
prescribed in section 41-5711, the accuracy of the reporting of vacant
and partially used buildings pursuant to this subsection and routine preventive
maintenance guidelines as prescribed in this section with respect to
constructing new buildings and maintaining existing buildings. The division
shall randomly select twenty school districts every thirty months and provide
for them to be inspected pursuant to this paragraph.

4. Develop prototypical elementary and high school
designs. The division shall review the design differences between
the schools with the highest academic productivity scores and the schools with
the lowest academic productivity scores. The division shall also
review the results of a valid and reliable survey of parent quality rating in
the highest performing schools and the lowest performing schools in this state.
�The survey of parent quality rating shall be administered by the department of
education. The division shall consider the design elements of the
schools with the highest academic productivity scores and parent quality
ratings in the development of elementary and high school
designs. The division shall develop separate school designs for
elementary, middle and high schools with varying pupil capacities.

5. Develop application forms, reporting forms and
procedures to carry out the requirements of this article, including developing
and implementing policies and procedures to:

(a) Ensure that the division and the school
facilities oversight board, as applicable, notify school districts in a uniform
manner of the services and funding available for school districts from the
board or the division for facility construction, renovation and repair
projects. �The policies and procedures shall require the division and the board
to provide at least one annual communication to school districts in a manner
prescribed by the division and shall require each school district to develop
and maintain a list of persons who are responsible for facilities management at
that school district.

(b) Establish a project eligibility assessment for
all projects submitted for
funding from

the

building renewal grant
funding

fund
established by section 41-5731
or
the

emergency deficiencies correction
funding

fund established by section 41-5721
, including establishing
standardized criteria for project eligibility.
Notwithstanding
section 15-213, subsection M, chapter 23 of this title and the rules
adopted by the state board of education pursuant to section 15-213,
subsection a, the maximum dollar amount of an individual job order for job-order-contracting
for construction services is $1,000,000 for any project that receives monies
from the building renewal grant fund established by section 41-5731
and that is not an emergency, as determined by the division. �
Before
the division formally approves a project, the staff of the division
:

(
i
)
May
review the costs and scope of the proposed project with persons and entities
that have submitted bids on the project
.

(
ii
) shall
verify that requirements are not artificially divided or fragmented in order to
constitute a job order that satisfies the requirements of this subdivision
.

(
iii
) On
request by a school district, shall determine whether a project submitted for
funding from the building renewal grant fund is an emergency not later than
five business days after the date on which the division receives the
request. The division shall determine that A project is an emergency
if the school district demonstrates a serious need for materials, services or
construction or expenses that exceeds the school district's adopted budget for
the current fiscal year and that seriously threatens the functioning of the
school district, the preservation of property or public health, welfare or
safety. �This item does not authorize the division to approve funding from the
building renewal grant fund for a project that does not serve an academic
purpose as required by section 41-5731, subsection I.

(c) Ensure that the division and the school
facilities oversight board maintain standardized documentation of all projects
submitted to the board and the division for consideration to receive services
or a financial award from the board or the division. The board and
the division shall maintain standardized documentation of any project awarded
monies by the board or the division, including records of payments to school
districts in a manner prescribed by the division. The standardized
documentation shall include the following as part of the eligibility
determination criteria:

(i) Whether the problem that the proposed project
intends to address caused the building or facility to fall below the minimum
school facility adequacy guidelines prescribed in section 41-5711.

(ii) Whether the school district performed the
routine preventive maintenance required by section 41-5731 on the
building or facility.

(d) Require a school district to submit contact
information for each proposed project, including the name, email address and
telephone number of persons who are responsible for facilities management at
the school district.

(e) Require a school district to provide
justification for each proposed project, including all of the following:

(i) The school district's use or planned use of the
facility.

(ii) A detailed description of the problem and the
school district's recommended solution.

(iii) Any completed professional study regarding the
proposed project.

(iv) Any citation or report from government
entities.

(v) The estimated cost of the proposed project, with
documentation.

(vi) The project category.

(vii) A description of any local funding that will
be used for the proposed project.

(viii) Documentation on associated insurance
coverage, if applicable.

(f) Require that an initial application not be
considered complete until all necessary information is submitted.

(g) Allow a school district to submit an incomplete
application and request technical assistance from the staff of the board if the
school district is unable to provide sufficient information in the initial
application.

(h) If applicable, require that a complete
application be received by the board at least fifteen business days before the
next regularly scheduled board meeting in order for the application to be
considered at that meeting. An incomplete application may be
considered at that meeting if both the staff of the board and the
superintendent of the school district deem the project critical.

(i) Allow the staff of the board or the division, as
applicable, to notify a school district in writing before review by the board
or division that the proposed project does not meet eligibility criteria
prescribed in this chapter. The written notification shall include
documentation to support the determination that the proposed project does not
meet the eligibility criteria prescribed in this chapter. The school
district may directly appeal the determination of ineligibility to the director
of the division. The school district may directly appeal the
director's determination of ineligibility to the board.

(j) Prohibit the staff of the board or division from
requesting that a school district withdraw a project application from review by
the board or division if the initial review determines that the proposed
project may be ineligible for monies pursuant to this chapter.

6. Electronically submit an annual report on or
before December 15 to the speaker of the house of representatives, the
president of the senate, the superintendent of public instruction, the
secretary of state and the governor that includes the following information:

(a) A detailed description of the amount of monies
distributed by the division under this chapter in the previous fiscal year.

(b) A list of each capital project that received
monies from the division under this chapter during the previous fiscal year, a
brief description of each project that was funded and a summary of the
division's reasons for distributing monies for the project.

(c) A summary of the findings and conclusions of the
building maintenance inspections conducted pursuant to this article during the
previous fiscal year.

(d) A summary of the findings of common design
elements and characteristics of the highest performing schools and the lowest
performing schools based on academic productivity, including the results of the
parent quality rating survey. For the purposes of this subdivision,
"academic productivity" means academic year advancement per calendar
year as measured with student-level data using the statewide nationally
standardized norm-referenced achievement test.

7. On or before December 1 of each year, report
electronically to the joint committee on capital review the amounts necessary
to fulfill the requirements of section 41-5721 for the following three
fiscal years. In developing the amounts necessary for this report,
the division shall use the most recent average daily membership data
available. On request from the division, the department of education
shall make available the most recent average daily membership data for use in
calculating the amounts necessary to fulfill the requirements of section 41-5721
for the following three fiscal years. The division shall provide
copies of the report to the president of the senate, the speaker of the house
of representatives and the governor.

8. On or before June 15 of each year, electronically
submit detailed information regarding demographic assumptions and a proposed
construction schedule for individual projects approved in the current fiscal
year and expected project approvals for the upcoming fiscal year to the joint
committee on capital review for its review. A copy of the report
shall also be submitted electronically to the governor's office of strategic
planning and budgeting. The joint legislative budget committee
staff, the governor's office of strategic planning and budgeting staff and the
division staff shall agree on the format of the report.

9. Every two years, provide school districts with
information on improving and maintaining the indoor environmental quality in
school buildings.

10. Adopt rules regarding the validation of adjacent
ways projects pursuant to paragraph 11 of this subsection.

11. Validate proposed adjacent ways projects that
are submitted by school districts as prescribed in section 15-995
pursuant to rules adopted by the division under paragraph 10 of this
subsection.

12. Submit a monthly report to the school facilities
oversight board that details each adjacent ways project validated pursuant to
paragraph 11 of this subsection.

13. Brief the joint committee on capital review at
least once each year regarding the use of monies from all of the following:

(a) The emergency deficiencies correction fund
established by section 41-5721.

(b) The building renewal grant fund established by
section 41-5731.

(c) The new school facilities fund established by
section 41-5741.

B. The school facilities oversight board or the
division may contract for the following services in compliance with the
procurement practices prescribed in chapter 23 of this title:

1. Private services.

2. Construction project management services.

3. Assessments for school buildings to determine if
the buildings have outlived their useful life pursuant to section 41-5741,
subsection G or have been condemned.

4. Services related to land acquisition and
development of a school site.

C. The school facilities oversight board shall:

1. Review and approve student population projections
submitted by school districts to determine to what extent school districts are
entitled to monies to construct new facilities pursuant to section 41-5741.
�The board shall make a final determination within five months after receiving
an application from a school district for monies from the new school facilities
fund.

2. Certify that plans for new school facilities meet
the building adequacy standards prescribed in section 41-5711.

3. Review and approve or reject requests submitted
by school districts to take actions pursuant to section 15-341,
subsection G.

4. On or before December 15 of each year,
electronically submit a report to the speaker of the house of representatives,
the president of the senate, the superintendent of public instruction, the
secretary of state and the governor that includes the following information:

(a) A detailed description of the amount of monies
the board distributed under this chapter in the previous fiscal year.

(b) A list of each capital project that received
monies from the board under this chapter during the previous fiscal year, a
brief description of each project that was funded and a summary of the board's
reasons for distributing monies for the project.

(c) A summary of the findings and conclusions of the
building maintenance inspections conducted pursuant to this article during the
previous fiscal year.

5. On or before December 1 of each year,
electronically report to the joint committee on capital review the amounts
necessary to fulfill the requirements of section 41-5741 for the
following three fiscal years. �In developing the amounts necessary for this
report, the board shall use the most recent average daily membership data
available. �On request from the board, the department of education shall make
available the most recent average daily membership data for use in calculating
the amounts necessary to fulfill the requirements of section 41-5741 for
the following three fiscal years. The board shall provide copies of
the report to the president of the senate, the speaker of the house of
representatives and the governor.

6. Adopt minimum school facility adequacy guidelines
to provide the minimum quality and quantity of school buildings and the
facilities and equipment necessary and appropriate to enable pupils to achieve
the educational goals of the Arizona state schools for the deaf and the blind.
The board shall establish minimum school facility adequacy guidelines
applicable to the Arizona state schools for the deaf and the blind.

7. On or before June 15 of each year, electronically
submit to the joint committee on capital review for its review detailed
information regarding demographic assumptions, a proposed construction schedule
and new school construction cost estimates for individual projects approved in
the current fiscal year and expected project approvals for the upcoming fiscal
year. �A copy of the report shall also be submitted electronically to the
governor's office of strategic planning and budgeting. �The joint legislative
budget committee staff, the governor's office of strategic planning and
budgeting staff and the board staff shall agree on the format of the report.

8. On or before December 31 of each year, report to
the joint legislative budget committee on all class B bond approvals by school
districts in that year. �Each school district shall report to the board on or
before December 1 of each year information required by the board for the report
prescribed in this paragraph.

9. Determine whether any interest disclosed pursuant
to subsection D, paragraph 13 of this section is a substantial interest as
defined in section 38-502 and maintain a record of all substantial
interests that are identified pursuant to this paragraph.

D. The director of the division shall serve as the
director of the school facilities oversight board. The director may
hire and fire necessary staff subject to chapter 4, article 4 of this title and
as approved by the legislature in the budget. The staff of the
school facilities oversight board is exempt from chapter 4, articles 5 and 6 of
this title. �The director:

1. Shall analyze applications for monies submitted
to the board and to the division by school districts.

2. Shall assist the board and the division in
developing forms and procedures for distributing and reviewing applications and
distributing monies to school districts.

3. May review or audit, or both, the expenditure of
monies by a school district for deficiencies corrections and new school
facilities.

4. Shall assist the board and the division in
preparing the board's and division's annual reports.

5. Shall research and provide reports on issues of
general interest to the board and the division.

6. May aid school districts in developing reasonable
and cost-effective school designs in order to avoid statewide duplicated
efforts and unwarranted expenditures in the area of school design.

7. May assist school districts in facilitating the
development of multijurisdictional facilities.

8. Shall assist the board and the division in any
other appropriate matter or method as directed by the division and the members
of the board.

9. Shall establish procedures to ensure compliance
with the notice and hearing requirements prescribed in section 15-905. The
notice and hearing procedures adopted by the board shall include the
requirement, with respect to the board's consideration of any application filed
after July 1, 2001 or after December 31 of the year in which the property
becomes territory in the vicinity of a military airport or ancillary military
facility as defined in section 28-8461 for monies to fund the
construction of new school facilities proposed to be located in territory in
the vicinity of a military airport or ancillary military facility, that the
military airport receive notification of the application by first class mail at
least thirty days before any hearing concerning the application.

10. Shall expedite any request for monies in which
the school district governing board submits an application that shows an
immediate need for a new school facility.

11. Shall determine administrative completeness
within one month after receiving an application from a school district for
monies from the new school facilities fund.

12. Shall provide technical support to school
districts as requested by school districts in connection with constructing new
school facilities and maintaining existing school facilities and may contract
directly with construction project managers pursuant to subsection B of this
section. �This paragraph does not restrict a school district from contracting
with a construction project manager using district or state resources.

13. Shall require each employee of the school
facilities oversight board to disclose in writing to the board at least once
per year any interest that the employee has in any contract, sale, purchase,
service or other transaction of the board or division or of a school district.

E. When appropriate, the board and the division
shall review and use the statewide school facilities inventory and needs
assessment conducted by the joint committee on capital review and issued in
July 1995.

F. The school facilities oversight board shall
contract with one or more private building inspectors to complete an initial
assessment of school facilities and equipment and shall inspect each school
building in this state at least once every five years to ensure compliance with
section 41-5711. A copy of the inspection report, together
with any recommendations for building maintenance, shall be provided to the
school facilities oversight board and the governing board of the school
district.

G. The division or the board, as applicable, may
consider appropriate combinations of facilities or uses in assessing and curing
deficiencies pursuant to subsection A, paragraph 1 of this section and in
certifying plans for new school facilities pursuant to subsection C, paragraph
2 of this section.

H. The board shall not award any monies to fund new
facilities that are financed by class A bonds that are issued by the school
district.

I. The board or the division shall not distribute
monies to a school district for replacing or repairing facilities if the costs
associated with the replacement or repair are covered by insurance or a
performance or payment bond.

J. The division may contract for construction
services and materials that are necessary to correct existing deficiencies in
school district facilities. The division may procure the
construction services necessary pursuant to this subsection by any method,
including construction-manager-at-risk, design-build,
design-bid-build or job-order-contracting as provided
by chapter 23 of this title
, except that the maximum dollar
amount of an individual job order for job-order-contracting for
construction services is $1,000,000 for any project that is funded by monies
from the building renewal grant fund established by section 41-5731
and that is not an emergency, as determined by the division
. The
construction planning and services performed pursuant to this subsection are
exempt from section 41-791.01.

K. The division may enter into agreements with school
districts to allow division staff and contractors access to school property for
the purposes of performing the construction services necessary pursuant to
subsection J of this section.

L. Each school district shall develop routine
preventive maintenance guidelines for its facilities. The guidelines
shall include plumbing systems, electrical systems, heating, ventilation and
air conditioning systems, special equipment and other systems and for roofing
systems shall recommend visual inspections performed by district staff for
signs of structural stress and weakness. The guidelines shall be
submitted to the division for review and approval. If on inspection
by the division it is determined that a school district facility was
inadequately maintained pursuant to the school district's routine preventive
maintenance guidelines, the school district shall return the building to
compliance with the school district's routine preventive maintenance
guidelines.

M. The division may temporarily transfer monies, or,
if applicable, the board may direct the division to transfer monies, between
the emergency deficiencies correction fund established by section 41-5721
and the new school facilities fund established by section 41-5741 if all
of the following conditions are met:

1. The transfer is necessary to avoid a temporary
shortfall in the fund into which the monies are transferred.

2. The transferred monies are restored to the fund
where the monies originated as soon as practicable after the temporary
shortfall in the other fund has been addressed.

3. The board and the division report to the joint
committee on capital review the amount of and the reason for any monies
transferred.

N. After notifying each school district, and if a
written objection from the school district is not received by the board or the
division within thirty days after the notification, the board or the division
may access public utility company records of power, water, natural gas,
telephone and broadband usage to assemble consistent and accurate data on
utility consumption at school facilities to determine the effectiveness of
facility design, operation and maintenance measures intended to reduce energy
and water consumption and costs. Any public utility that provides
service to a school district in this state shall provide the data requested by
the board or the division pursuant to this subsection.

O. The division or the board shall not require a
common school district that provides instruction to pupils in grade nine to
obtain approval from the division or the board to reconfigure its school
facilities. A common school district that provides instruction to
pupils in grade nine is not entitled to additional monies from the division or
the board for facilities to educate pupils in grade nine.

P. A school district may appeal the denial of a
request for monies pursuant to this chapter or any other appealable agency
action by the division or the board pursuant to chapter 6, article 10 of this
title. For the purposes of this subsection, "appealable agency
action" has the same meaning prescribed in section 41-1092.
END_STATUTE