Arizona local governments may approve lodging-funded tourism areas

A city, town, or county may approve a tourism improvement area and an assessment on lodging businesses. The area may have connected or separate boundaries and covers the lodging businesses identified in its plan. At least two lodging business owners must petition and agree to participate; the petition must identify the proposed boundaries, covered types of lodging businesses, and assessment rates. The area plan must explain the activities, costs, and assessment formula, which must be based on benefit. The assessment may be up to $5 per room night or 5% of room rental receipts. A public hearing is required. If objections represent at least half of the rooms subject to assessment, the hearing must end and formation proceedings must pause for one year. The plan must be ready before the public hearing. Assessments begin on the first day of the first month that is 90 days after local approval of the petition.

Lodging owners govern each area through a board, while the local government's tourism marketing organization manages its planned activities and reports on its work. These rules apply to each formed tourism improvement area. A majority of the board must be assessed lodging business owners or their authorized representatives. The organization must report the area's activities, spending, and expected surplus or deficit to the local governing body. The annual report is due within 120 days after the area's fiscal year ends. Reporting starts after the first full fiscal year following formation.

Lodging business owners may join or withdraw from an area, and eligible owners may ask the local government to dissolve it. These options apply to lodging business owners within an established tourism improvement area. Owners who signed the formation petition join when the area is established. Other lodging owners in the area may join within 60 days after establishment. Owners may join or withdraw during the annual 60-day period. An owner who withdraws stops paying the assessment and cannot serve on the owners' board. Owners representing at least half of the assessed rooms may petition for dissolution during the annual 60-day period. The local government must hold a hearing; it may dissolve the area after debts are paid, or if it finds misappropriation, malfeasance, or a legal violation. Nonpetitioning owners may join within 60 days after formation. The annual period for joining, withdrawing, or requesting dissolution begins one year after formation.