Senate Bill 1145, introduced in the 2025 Arizona state legislative session, sought to reform the operation of revitalization districts—an important tool municipalities use to finance public infrastructure like roads, sewers, and utilities. While the bill passed the Senate and was thoughtfully amended in the House, it ultimately died in the House of Representatives in May 2025 due to running out of time in the session and some lingering concerns from a few stakeholders. Despite its fate this year, the final amended version represents a carefully negotiated compromise, and the Arizona Chapter of the Associated General Contractors plans to bring it back in the 2026 legislative session.
Why Contractors Should Care
Revitalization districts are designed to finance public infrastructure, but flaws in current law have left leaving contractors unpaid and tied up in legal battles. SB 1145 was crafted to fix that. It maintains the financial viability of these districts for municipalities while adding critical payment protections for the contractors who build the infrastructure.
Key Provisions of SB 1145:
- Prompt Payment Compliance: Requires revitalization districts to follow Arizona’s private prompt pay statutes. If contractors aren’t paid, they can stop work after proper notice—just like in other private-sector jobs.
- Payment Comes First: Ensures bond proceeds or district reimbursements can’t be released to others until the contractor is paid in full.
- No Dissolution Without Payment: A district cannot be dissolved unless all contractors have been paid for their work—adding meaningful accountability.
- Prospective Only: Applies only to construction contracts entered into after the bill’s effective date to avoid retroactive liability.
Why the Bill Stalled—and What’s Next
SB 1145 stalled in the House for a few reasons. One being the legislature shifted towards tense budget negotiations but also because some stakeholders wanted more time to review the impacts, despite months of stakeholder meetings and substantial amendments. These amendments addressed concerns raised by the Arizona League of Cities and Towns, Homebuilders Association of Central Arizona, Arizona Association of Counties, Valley Partnership, and the bond attorney community.
The final amended version threads the needle: it preserves revitalization districts as a flexible financing tool for local governments while protecting contractors from non-payment risks.
AZAGC and our partners believe this is a common-sense solution and are committed to bringing it back in the 2026 session. This effort will start once again with a series of stakeholder meetings picking up where we left off in the 2025 legislative session before having the bill drafted yet again for 2026.
