Arizona Bill Aims to Reimburse Business Owners for Property Damage

Cities will have to reimburse local business owners if the city failed to act.

March 11, 2024

Arizona business owners may soon be entitled to compensation for expenses incurred to keep their stores safe and clean when the government fails to address crime and sanitation issues related to illegal public camping, loitering and intoxication of the homeless population.

The Arizona state senate passed the Taxpayer Protection Against Government Inaction Act last week, a bill that aims to reimburse business owners who have experienced property damage and vandalism, or had to make extra investments themselves to protect their store (such as installing fencing or hiring extra security) when the city government doesn’t enforce the law.

The reform bill (HCR 2023/SCR 1006) was sponsored by Senate President Warren Petersen and Speaker of the House Ben Toma, and will head to the general election ballot in November 2024.

The local government is supposed to “protect public health and safety” by providing services to keep public areas safe from crime and vandalism, as well as clean of garbage and waste, but its failure to enforce laws has meant Arizona businesses owners “were forced to pay those taxes [for those services]—but got none of the services they were entitled to in exchange,” said the Goldwater Institute, a public policy research and litigation organization.

Under the new legislation, property owners who spent money to combat those problems themselves would be entitled to “a refund for damages up to the amount of their property tax liability. The funds are then deducted from the offending municipality’s state shared revenue and sent to the property owner,” said the Goldwater Institute.

According to the Goldwater Institute, “whenever a municipality fails to enforce existing laws regarding illegal camping, loitering, pollution, and other nuisances, this referral:

  • Allows property owners to claim a refund up to the amount of their property tax liability for
    • The resulting reduction in the value of their property, or
    • Any expenses incurred mitigating the effects of the government’s inaction to abate the homeless crisis.
  • Requires the Department of Revenue to deduct the amount claimed by the taxpayer from the municipality’s state shared revenue.
  • Permits the property owner to roll over any refund exceeding his or her tax obligation for that year.

The bill follows a recent court case in which Phoenix business owners sued the city over its creation of “The Zone,” the nation’s largest homeless encampment housing over 1,000 people, citing the area as a “public nuisance” that was causing a rise in crime and property damage to nearby stores. The court ruled in favor of the business owners and ordered the city to clear out the encampment.