property tax increment; affordable housing

SB1555 - property tax increment; affordable housing

Education Housing Labor Taxes

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: Wendy Rogers
Last action: 2026-02-04
Official status: Senate second read
Effective date: Not listed

Plain English Breakdown

The official text does not specify an effective date or when counties must begin collecting these funds.

SB1555: Property Tax Increment for Affordable Housing

This law requires counties to create a fund using extra taxes collected from newly built homes before they are fully revalued, which can be used to help certain workers buy homes and support affordable housing construction.

What This Bill Does

Requires each county board of supervisors to establish a 'housing affordability fund'.
Directs the deposit of property tax revenue generated from new home valuations into this specific fund until the first full year of taxation at the new value.
Allows funds to pay for down payments or closing costs for employees working in government, schools, public safety, health care, and education sectors.
Permits grants, loans, or incentives for builders constructing smaller units, entry-level housing, workforce housing, or middle housing.
Enables counties to use the money for infrastructure projects or fee offsets that help develop affordable housing.

Who It Names or Affects

County boards of supervisors who must establish and manage the new funds.
Employees of state agencies, cities, towns, school districts, charter schools, public safety, health care, or education employers seeking home buying assistance.
Builders and developers constructing affordable residential units such as middle housing or workforce housing.

Terms To Know

Property tax increment: The difference in property taxes collected between a new home's initial valuation and its higher value after being sold, which is deposited into the fund until full revaluation occurs.
Housing affordability fund: A separate county account that holds tax revenue from new construction to pay for housing assistance and development projects.

Limits and Unknowns

Money in the fund cannot replace existing funding for current housing programs.
Funds must be kept separate from other county money and cannot be used for general government purposes.
The extra tax deposit only applies to taxes collected between the initial valuation date and the first full year of taxation at the new value.

Bill History

2026-02-04 Senate
Senate second read
2026-02-03 Senate
Senate Rules: None
2026-02-03 Senate
Senate Finance: None
2026-02-03 Senate
Senate first read

Official Summary Text

SB1555 - property tax increment; affordable housing

Current Bill Text

Read the full stored bill text

SB1555 - 572R - I Ver

REFERENCE TITLE:
property tax increment; affordable housing

State of Arizona

Senate

Fifty-seventh Legislature

Second Regular Session

2026

SB 1555

Introduced by

Senator
Rogers

AN
ACT

Amending Title 11, chapter 2, article 13,
Arizona Revised Statutes, by adding section 11-382; amending title 42, chapter
13, article 2, Arizona Revised Statutes, by adding section 42-13057; relating
to housing.

(TEXT OF BILL BEGINS ON NEXT PAGE)

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

Section 1.
Heading change

The article heading of title 11,
chapter 2, article 13, Arizona Revised Statutes, is changed from "COUNTY
HOUSING TRUST FUND" to "COUNTY HOUSING FUNDS".

Sec. 2. Title 11, chapter 2, article 13,
Arizona Revised Statutes, is amended by adding section 11-382, to read:

START_STATUTE
11-382.

Housing affordability fund

A. The board of supervisors of each
county shall establish a housing affordability fund consisting of monies
deposited pursuant to section 42-13057.

B. Monies in the fund may be used to
provide:

1. Down payment or closing costs
assistance for residential property purchased by an employee of any of the
following:

(
a
) This state
or a city, town, county, school district or other political subdivision of this
state.

(
b
) A charter
school.

(
c
) A public
safety, health care or education employer.

2. Grants, loans or incentives to
builders or developers for constructing more affordable housing units,
including:

(
a
) Residential
units with a reduced square footage.

(
b
) Entry-level
housing.

(
c
) Workforce
housing.

(
d
) Middle
housing.

3. Infrastructure or fee offsets for
affordable housing development.

C. A county may enter into an
intergovernmental agreement with a city or town or a housing authority to
administer the fund and distribute the monies in the fund.

d. Monies in the fund shall be
accounted for separately from other monies of the county and may not be used to
supplant funding for EXISTING housing programs or for general governmental
purposes.
END_STATUTE

Sec. 3. Title 42, chapter 13, article 2,
Arizona Revised Statutes, is amended by adding section 42-13057, to read:

START_STATUTE
42-13057.

Valuation of new residential construction

A. Notwithstanding any other law, the
county assessor shall value newly constructed residential property within sixty
days after the sale of the property.

B. the taxpayer shall pay the amount
of tax on the property based on the new valuation on a prorated basis based on
the days remaining in the tax year.

C. The county treasurer shall deposit
an amount equal to the difference between the property's new valuation and the
property's initial valuation in a housing affordability fund established
pursuant to section 11-382.

D. The deposit required by subsection
C of this section applies only to property tax revenues attributable to the
period between the initial valuation of newly constructed residential property
and the tax year in which the property is first fully assessed and taxed at the
property's new valuation. Beginning the first tax year in which the
property is fully taxed at the property's new valuation, all property tax
revenues shall be distributed to applicable taxing jurisdictions in the same
manner as other property tax revenues.
END_STATUTE