The State Board of Equalization, is an independent agency not subject to the control of the Department of Revenue or the County Assessors. The Board is a quasi-judicial body that acts much like a judge in that they make their decisions based on the evidence presented at the time of the hearing. Decisions are made from the bench and written decisions are mailed to all affected parties. The Board has the authority to change the value or legal classification which is determined by the use of the property. Their objective is to set a fair and equitable value on all property appealed to them and to assure that the property is properly classified.

General Board Policy is no rescheduling except for medical emergencies or similar unavoidable reason. Taxpayers should indicate any times they are not available for hearing at the time of filing a petition by attaching a separate note to the front of the appeal form. The Board will make attempts to accommodate scheduling requests when possible and reasonable.

Each case filed with the State Board is individually scheduled and heard. Two or more cases may be scheduled at the same time, upon request or at the convenience of the Board, if there is one owner and the properties are very similar or some other like circumstances exist. The Board will make an effort to accommodate requests of this type but will not always able to do so. Appeals are heard in the county where the property is located.

Neither party is required to attend a hearing. 

Attending a Hearing By Phone

 We are now offering phone hearings. Should you choose to attend the hearing by phone, please contact the Board no less than three business days in advance of the hearing to request a phone hearing.

Once you are approved for a phone hearing you will be notified via email.   Each party is responsible for the exchange of evidence prior to the hearing date.  To submit additional evidence, other than what was already provided with your petition, evidence must be filed to the SBOE no less than 3 business days prior to the date of the hearing via mail or hand delivered. The Board does NOT accept emailed evidence.

Choosing Not to Attend a Hearing

Should you choose not to attend a hearing, please notify the Board no less than three business before the scheduled hearing date.  To submit additional evidence, other than what was already provided with your petition, must be filed to the SBOE no less than 3 business days prior to the date of the hearing via mail or hand delivered. The Board does NOT accept emailed evidence.

At a hearing, the proceedings usually start with the petitioner (the taxpayer) presenting evidence to support their opinion of valuation or classification, unless a recommendation for reduction is being offered by the respondent (typically the assessor). The respondent then presents evidence in support of the existing valuation or classification. When the respondent has concluded testimony, the petitioner may offer rebuttal.The evidence presented by either side may be different than the evidence presented at the informal meeting with the assessor, provided the basis for the appeal remains the same (pursuant to Arizona Revised Statutes (A.R.S.) § 42-16056.D). There is one exception, if there is a factual error which was identified after the initial filing, that factual error may be raised (pursuant to A.R.S. § 42-16255).

No matter what basis you use to support your estimate of value, you may not raise any issue not stated in your initial appeal. This does not preclude you from bringing additional or new evidence, as long as it relates directly to the issues as stated in your initial appeal submitted to the Assessor's office (pursuant to Arizona Revised Statutes § 42-16056.D). There is one exception, if there is a factual error which was identified after the initial filing, that factual error may be raised (pursuant to A.R.S. § 42-16255).

The purpose of the Limited PROPERTY Value (LPV) was to create a hedge against inflationary increases in the market value of the property. The calculations by law limit the amount of increase that can occur from one year to the next. Limited Property Value is the one used against the Primary Tax Rate.

The Limited Property Value is determined by law. State statutes provide the formulas to be used in calculating the Limited Property Value (see Arizona Revised Statutes §§ 42-13301 through 13304).

Typically, for real property, the Limited Value will increase 5% over the prior year's Limited Property Value. The Limited Property Value can never exceed the Full Cash Value (otherwise referred to as "Rule A").

One exception to this calculation of the Limited Property Value is if there has been a physical change (new improvements, demolition, change in land size) or change in use of the property or an erroneous assessment in prior years. In these instances, the Limited Property Value is established by the relationship (percentage) of Full Cash Value to Limited Property Value of other properties within the same Legal Classification within a specified area (otherwise referred to as "Rule B").

In addition to Arizona Statute, the Arizona Department of Revenue has published a guideline on the application of Rule A and Rule B.

For property tax purposes, "Full Cash Value" (FCV) is synonymous with market value unless a statutory formula (formula required by state law to be used in establishing a value) exists. If Full Cash Value is not determined by statutory formula, only current market conditions determine the amount it may increase from one year to another. Arizona courts have interpreted the term "Full Cash Value" to mean the "cash equivalent value" of the property. Some methods of financing (such as inflating the value of a property to obtain a loan with a lower interest rate) is one of many reasons the county assessor may set a Full Cash Value lower than the sales price indicated on the affidavit of value. Many people are under the false impression that the Full Cash Value is limited in the amount of increase. Only the "Limited Value" has that requirement. Another misconception is that the "Full Cash Value" should be at a set percentage level below market value as has been stated in newspaper articles. The percentages referred to in the newspapers were related to "Sales Ratio" target levels (see What are Sale Ratios?).

The current valuation has a presumption of correctness and it is the petitioner's burden to prove the current valuation is incorrect. Proof may include, but is not limited to: recent appraisals, affidavits of value or sale; written offers or listings for sale; contracts of building costs; topographical, FEMA floodplain, or other types of maps; photographs; contracts or leases; or any other type of written and/or verifiable proof. Evidence submitted at any other level of appeal is not transmitted or forwarded to the Board, therefore, it is recommended that you submit any evidence you want considered either at the time of hearing or before that date. If the property under appeal is legal class 3 or any other legal class, but under $3,000,000 Full Cash Value, two copies and an original of the evidence are recommended. For all other property appeals, 4 copies and an original are recommended. Grounds for an appeal include, but are not limited to:

1. A recent appraisal of the subject property which differs from the assessor's value;
2. Documented sales of similar properties (see Affidavit of Value), preferably in the same market area, which indicate a different value;
3. Any significant physical condition of your property other than normal maintenance or repairs;
4. A location problem specific to your property if it has an influence on market value and is not reflected in the valuation of other properties in the neighborhood or their selling prices;
5. Unusual characteristics of your property;
6. Adverse terrain features;
7. Limited accessibility to your property;
8. Governmental regulations or zoning which adversely affects your property;
9. Any other facts which should be considered to arrive at an accurate and equitable value.

In general, Full Cash Value should approximate market value defined by the Appraisal Institute as: "the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition are the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. Buyer and seller are typically motivated;
2. Both parties are well informed or well advised, and acting in what they consider their own best interest;
3. A reasonable time is allowed for exposure in the open market;
4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."

Note that the first sentence of the definition does not say the actual price paid for a specific property, but the most probable price, therefore, price does not always equal value.

Standard appraisal approaches to value (cost, sales comparison, income) and standard appraisal methods should be used to support your estimate of value. However, assessment by Arizona law requires the valuation to reflect consideration of the current use of the property, not the highest and best use. Classification is also based on the current use or the intended use of the property if the improvements are partially complete. In addition, equity or the value placed on similar properties is also considered.

The Sales Comparison (Market) Approach of estimating value is a direct comparison of the subject property and sales of properties similar in physical characteristics, location and market influences. Once sales of similar properties are identified and verified, they are adjusted to reflect the value of the subject property. Your county assessor may be able to assist you with current sales information. Be advised that averaging is not a standard appraisal technique.

The Cost Approach identifies the total cost to reproduce or replace the property at current prices less all forms of depreciation. Reproduction or replacement cost includes all direct and indirect costs such as, labor performed by you or a contractor, materials, permits, architectural drawings, construction financing, and other costs including the current value of the land and developers profit. There are four different types or forms of depreciation, physical depreciation, physical obsolescence (structural), functional obsolescence (a lack of usefulness) and external obsolescence (influences external to the property). This method is most easily and best used for newly constructed properties. This is the most difficult method on older property and requires that a market and income approach be utilized to measure the proper adjustments for physical, functional and economic obsolescence. However, if there is a lack of market or income information the cost approach may be the most applicable.

The Income Approach is typically used to value investment property such as, apartments, warehouses, and office and retail buildings. The income and expense form requests actual income and expense dollar amounts; however, the actual investment performance of the property may or may not reflect its true market value. It may only reflect an investment or business value which is not the purpose of the property tax assessment. Fee simple market value is derived from actual income and expense dollar amounts when those amounts are proven to fall within a "typical" and "current" range of income and expense parameters of similar properties.

You should be aware that proper methodology requires consideration of all three approaches to value, but the type of property typically determines which approach should be given the most weight.

An Affidavit of Value is a legal document which reports the conditions and terms of sale. These documents are filed with the County Recorder along with the Deed of Sale of the property. The affidavits are used by the Arizona Department of Revenue to generate sales ratio studies (see Sales Ratio Studies) and by county assessors to value other properties. The information contained in the Affidavits of Value is verified by the Department of Revenue and/or the county assessors before they are used to value other property.

Sales ratio studies are statistical measurements which attempt to monitor both the level and dispersion of property assessments within the state. The sales ratio targets (81% & 82% statistical mean) are many times misunderstood by the public as a predetermined assessment level. By definition, a mean or median is in the middle of a population under statistical study. The targets are for an entire population of properties, not specific properties.

Arizona is unique in that it uses two values and two tax rates for property taxation.

Values

1. Full Cash Value Is Synonymous With Market Value and is used in conjunction with secondary tax rates to establish taxes due.
2. Limited Value Is a Statutorily Established Value which is used in conjunction with primary tax rates to establish taxes due.

Tax Rates

1. Primary Tax Rates fund the maintenance and operation of budgets of state and local government entities. In most instances, primary tax rates represent the greater share of property taxes.
2. Secondary Tax Rates are used to fund such things as bond issues, budget overrides and special district funding.

Levy Limits, Homeowner's Rebate, Tax Deferral & Exemptions

The Arizona Constitution limits the total amount of primary property taxes that counties, cities, and community college districts can levy. In addition, there is a limitation on owner-occupied residences (Legal Class 3 property). The combined primary tax from all jurisdictions of Legal Class 3 property may not exceed 1% of their combined Limited Value. In cases where the tax exceeds that amount (a primary tax rate of $10 or more per $100 of assessed Limited Valuation), the school district taxes are reduced on the primary tax amount, and the state provides additional aid to the school district to make up the difference between the overall primary tax rate and $10.

The Arizona Legislature annually appropriates money to pay a percentage (35% in 1996) of the primary school district tax on owner-occupied homes (Legal Class 3 only). The "Homeowner Rebate" appears automatically on tax bills. That rebate is reflected on the tax bill on the line titled STATE AID TO EDUCATION. Thus, homeowners actually pay a lower primary tax rate than other property owners.

In addition, the legislature has provided qualified homeowners over age 69 the ability to request a property tax deferral. The qualifications and procedures are outlined in Arizona Revised Statutes (A.R.S.) §§ 42-17301 through 17313.

The Arizona Constitution also provides property tax exemptions in varying dollar amounts to some disabled persons and to some widows and widowers whose spouses died while they were residents of Arizona. The dollar amounts are scaled to the combined value of property owned, but eligibility is restricted to taxpayers with total incomes below prescribed levels. The dollar amounts of the exemptions apply to the assessed value of the property and are applied in the same amount to both the Full Cash and Limited Values. If the exemption amount qualified for is greater than the total assessed value of the real property, the remaining amount can be applied to the assessed value of a motor vehicle. The required application forms must be filed annually with the county assessors office ( See A.R.S. § 42-11111) 

A mobile home may be treated as real or personal property. Mobile homes which qualify under the following conditions may be treated as real property if:

The body width is greater than 8 feet wide, the body length is 32 feet or greater and the mobile is built on a permanent chassis,

or

Regardless of size the mobile home is used as a single family dwelling or for commercial purposes with or without a permanent foundation.

Persons owning a mobile home and the land may file an "affidavit of affixture" with the County Recorder's Office to have the mobile home considered real property, subject to real property liens. As real property the owner of the mobile home will be billed once a year, which is payable in two installments. If an affidavit of affixture is not filed and the person owning the mobile home owns the land, the owner will receive two tax bills, one for the land as secured real property and one for the mobile home as unsecured personal property. Filing an affidavit of affixture is optional; however, the taxes on unsecured personal property are delinquent 30 days after the billing date. In addition unsecured mobile homes are also subject to the $.50 per $100 of assessed value mobile home relocation tax. On the upside, the tax rate applied to personal property is one year in arrears. In other words, the tax rate used in any given year was established in the prior year. When considering whether to file an affidavit of affixture the taxpayer is warned that changing the mobile home from personal property to real property associated to the land may change the Limited Value calculation.

WARNING! Because the usage of property determines its classification, an increased tax liability could occur when the use of the property is changed. In addition, civil penalties may be assessed if an owner-occupied home is converted to rental property and the county assessor is not notified of the change. Converting an owner-occupied residence to rental property makes it ineligible for the "Homeowner's Rebate" and, therefore, increases the tax liability on the property. In addition, the Limited Value calculation may change due to new improvements being posted to the land or one of the other criteria outlined in the Limited Property Value section.

Property that changes due to new construction, additions, deletions or changes in use that occur after January 1 of the valuation year may be added to the roll up to and including September 30 of the valuation year. The assessor is required to notify the property owner of any change in the valuation on or before September 30. Within 25 days of the assessor's notice, the property owner may appeal the valuation to the State or County Board of Equalization. The County and State Boards of Equalization are required to rule on these appeals by the third Friday in November. A further appeal to Maricopa Superior Court or Tax Court must be filed within 60 days from the date of mailing of the decision.

Note: All tax court appeals of properties located in Maricopa and Pima Counties are held at the Maricopa Surperior Court, also referred to as Tax Court.

A NEW OWNER of property that was valued by the assessor and that changed ownership before December 15 of the valuation year may appeal the valuation or legal classification to court on or before December 15 of the valuation year (ARS 42-16205.01.A.1). If the change of ownership occurs after December 15 of the valuation year, the new owner may appeal to tax court by December 15 of the year in which the taxes are levied (ARS 42-16205.01.A.2).

On or before October 1 of each year, the County Treasurer sends a notice to the owner (and/or the mortgage company if there is one) of all taxes assessed against the property. Property taxes are levied on a calendar year, although Arizona governments work on a fiscal year. Property values are established as of January 1 of each year. Tax rates for those values are set on the third Monday in August of the following year. Therefore, values are set in the year prior to the year taxes are due.

The first installment on the tax bill is due on October 1 and is considered delinquent after November 1. The entire amount may be paid in October if the taxpayer so desires, and taxes of $25 or less must be paid in full in October. The second installment is due March 1 of the year following and is delinquent after May 1.

Arizona's property tax system "classifies" property according to its usage. Each class of property is assigned an assessment ratio, pursuant to state law, ranging from 1% to 16.5% (as of tax year 2024). The assessment ratios are applied to both the Full Cash and Limited Values of a property and determine a property's "net assessed value (NAV)." All classifications within a taxing jurisdiction use the same tax rates.

Note: The information herein provided is generally correct, however, the Arizona Classification scheme is by exception. Property that does not fit into a specific classification defaults to class 2)

Reference Arizona Revised Statutes A.R.S. §§ 42-12001 through 42-12011 and 42-15001 through 15011.

Class One Property (A.R.S. § 42-12001)

For purposes of taxation, class one is established consisting of twelve subclasses as follows:

1. Producing mines and mining claims, personal property used on mines and mining claims, improvements to mines and mining claims and mills and smelters operated in conjunction with mines and mining claims that are valued at full cash value pursuant to section § 42-14053.

2. Standing timber that is valued at full cash value.

3. Real and personal property of gas and electric utility companies that are valued at full cash value or pursuant to section § 42-14151, as applicable.

4. Real and personal property of airport fuel delivery companies that are valued pursuant to section § 42-14503.

5. Real and personal property that is used by producing oil, gas and geothermal resource interests that are valued at full cash value pursuant to section § 42-14102.

6. Real and personal property of water, sewer and wastewater utility companies that are valued at full cash value pursuant to section § 42-14151.

7. Real and personal property of pipeline companies that are valued at full cash value pursuant to section § 42-14201.

8. Real and personal property of shopping centers that are valued at full cash value or pursuant to chapter 13, article 5 of this title, as applicable.

9. Real and personal property of golf courses that are valued at full cash value or pursuant to chapter 13, article 4 of this title.

10. All property, both real and personal, of manufacturers, assemblers or fabricators valued under the provisions of this title.

11. Real property and improvements that are devoted to any other commercial or industrial use, other than property that is specifically included in another class described in this article, and that are valued at full cash value.

12. Personal property that is devoted to any other commercial or industrial use, other than property that is specifically included in another class described in this article, and that is valued at full cash value.

13. Real and personal property that is used in communications transmission facilities and that provides public telephone or telecommunications exchange or interexchange access for compensation to effect two-way communication to, from, through or within this state.

Class Two Property (A.R.S. § 42-12002)

For purposes of taxation, class two is established consisting of two subclasses:

1. Class two (R) consists of:

(a) Real property and improvements to property that are used for agricultural purposes and that are valued at full cash value or pursuant to chapter 13, article 3 of this title, as applicable.

(b) Real property and improvements to property that are primarily used for agricultural purposes to produce trees other than standing timber, vines, rosebushes, ornamental plants or other horticultural crops, regardless of whether the crop is grown in containers, soil or any other medium, that are not included in class one, three, four, six, seven or eight and that are valued at full cash value or pursuant to chapter 13, article 3 of this title, as applicable.

(c) Real property and improvements to property that are owned and controlled by a nonprofit organization that is exempt from taxation under section 501(c)(3), (4), (7), (10) or (14) of the internal revenue code if the property is not used or intended for the financial benefit of members of the organization or any other individual or organization, unless the financial benefit is for charitable, religious, scientific, literary or educational purposes, and that are valued at full cash value.

(d) All other real property and improvements to property, if any, that are not included in class one, three, four, six, seven or eight and that are valued at full cash value.

(e) Real and personal property of golf courses that are valued at full cash value or pursuant to chapter 13, article 4 of this title.

2. Class two (P) consists of:

(a) Personal property that is used for agricultural purposes and that is valued at full cash value or pursuant to chapter 13, article 3 of this title, as applicable.

(b) Personal property that is primarily used for agricultural purposes to produce trees other than standing timber, vines, rosebushes, ornamental plants or other horticultural crops, regardless of whether the crop is grown in containers, soil or any other medium, that is not included in class one, three, four, six, seven or eight and that is valued at full cash value or pursuant to chapter 13, article 3 of this title, as applicable.

(c) Personal property that is owned and controlled by a nonprofit organization that is exempt from taxation under section 501(c)(3), (4), (7), (10) or (14) of the internal revenue code if the property is not used or intended for the financial benefit of members of the organization or any other individual or organization, unless the financial benefit is for charitable, religious, scientific, literary or educational purposes, and that is valued at full cash value.

(d) Personal property of golf courses that are valued at full cash value or pursuant to chapter 13, article 4 of this title.

(e) All other personal property that is not included in class one, three, four, six, seven or eight and that is valued at full cash value.

Class Three Property (A.R.S. § 42-12003)

For purposes of taxation, class three is established consisting of real and personal property and improvements to the property that are used for residential purposes, that are not otherwise included in class one, two, four, six, seven or eight and that are valued at full cash value.

Class Four Property (A.R.S. § 42-12004)

A. For purposes of taxation, class four is established consisting of:

1. Real and personal property and improvements to the property that are used solely as leased or rented property for residential purposes, that are not included in class one, two, three, six, seven or eight and that are valued at full cash value.

2. Child care facilities that are licensed under title 36, chapter 7.1 and that are valued at full cash value.

3. Real and personal property and improvements to property that are used to operate nonprofit residential housing facilities that are structured to house or care for persons who are handicapped or sixty-two years of age or older and that are valued at full cash value.

4. Real and personal property and improvements that are used to operate licensed residential care institutions or licensed nursing care institutions that provide medical services, nursing services or health related services and that are structured to house or care for persons who are handicapped or sixty-two years of age or older and that are valued at full cash value.

5. Real and personal property consisting of no more than four rooms of owner- occupied residential property that are leased or rented to transient lodgers at no more than a fifty per cent average annual occupancy rate, together with furnishing no more than a breakfast meal, by the owner of the property and that is valued at full cash value.

6. Real and personal property consisting of residential dwellings that are maintained for occupancy by agricultural employees as a condition of employment or as a convenience to the employer, that is not included in class three and that is valued at full cash value. The land associated with these dwellings shall be valued as agricultural land pursuant to chapter 13, article 3 of this title.

7. Real and personal property of residential common areas valued at full cash value pursuant to section § 42-13353.

B. Subsection A, paragraphs 3 and 4 of this section shall not be construed to limit eligibility for exemption from taxation under chapter 11, article 3 of this title.

Class Five Property (A.R.S. § 42-12005)

For purposes of taxation, class five is established consisting of:

1. Real and personal property of railroad companies used in the continuous operation of railroads that are valued at full cash value under chapter 14, article 8 of this title.

2. Real and personal property used in the operation of private car companies that are valued at full cash value under chapter 14, article 7 of this title.

3. Flight property that is valued at full cash value under chapter 14, article 6 of this title.

Class Six Property (A.R.S. § 42-12006)

For purposes of taxation, class six is established consisting of:

1. Noncommercial historic property as defined in section § 42-12101 and valued at full cash value.

2. Real and personal property that is located within the area of a foreign trade zone or subzone established under 19 United States Code section 81 and title 44, chapter 18, that is activated for foreign trade zone use by the district director of the United States customs service pursuant to 19 Code of Federal Regulations section 146.6 and that is valued at full cash value.

3. Real and personal property and improvements that are located in a military reuse zone that is established under title 41, chapter 10, article 3 and that is devoted to providing aviation or aerospace services or to manufacturing, assembling or fabricating aviation or aerospace products, valued at full cash value and subject to the following terms and conditions:

(a) Property may not be classified under this paragraph for more than five tax years.

(b) Any new addition or improvement to property already classified under this paragraph qualifies separately for classification under this paragraph for not more than five tax years.

© If a military reuse zone is terminated, the property in that zone that was previously classified under this paragraph shall be reclassified as prescribed by this article.

4. Real and personal property and improvements that are located in an enterprise zone, that are owned or used by a small manufacturing business that is certified by the department of commerce pursuant to section § 41-1525.01 and that are valued at full cash value. Property may not be classified under this paragraph for more than five tax years. This paragraph applies only to classification of property for primary property tax purposes unless this limitation is finally adjudicated to be invalid, in which case this paragraph applies to classification of property for both primary and secondary property tax purposes.

5. Real and personal property and improvements or a portion of such property comprising a qualified environmental technology manufacturing, producing or processing facility as described in section § 41-1514.02, valued at full cash value and subject to the following terms and conditions:

(a) Property shall be classified under this paragraph for twenty tax years from the date placed in service.

(b) Any addition or improvement to property already classified under this paragraph qualifies separately for classification under this subdivision for an additional twenty tax years from the date placed in service.

© After revocation of certification under section 41-1514.02, property that was previously classified under this paragraph shall be reclassified as prescribed by this article.

6. That portion of real and personal property that is used on or after January 1, 1999 specifically and solely for remediation of the environment by an action that has been determined to be reasonable and necessary to respond to the release or threatened release of a hazardous substance by the department of environmental quality pursuant to section § 49-282.06 or pursuant to its corrective action authority under rules adopted pursuant to section § 49-922, subsection B, paragraph 4 or by the United States environmental protection agency pursuant to the national contingency plan (40 Code of Federal Regulations part 300) and that is valued at full cash value. Property that is not being used specifically and solely for the remediation objectives described in this paragraph shall not be classified under this paragraph. For purposes of this paragraph, "remediation of the environment" means one or more of the following actions:

(a) Monitoring, assessing or evaluating the release or threatened release.

(b) Excavating, removing, transporting, treating and disposing of contaminated soil.

© Pumping and treating contaminated water.

(d) Treatment, containment or removal of contaminants in groundwater or soil.

Class Seven Property (A.R.S. § 42-12007)
For purposes of taxation, class seven is established consisting of real and personal property and improvements that meet the criteria for property included in class one, paragraphs 11 and 12 and also the criteria for commercial historic property as defined in section § 42-12101.

Class Eight Property (A.R.S. § 42-12008)

For purposes of taxation, class eight is established consisting of real and personal property and improvements that meet the criteria for property included in class four and also the criteria for commercial historic property as defined in section § 42-12101.

Class Nine Property (A.R.S. § 42-12009)
A. For purposes of taxation, class nine is established consisting of:

1. Improvements that are located on federal, state, county or municipal property and owned by the lessee of the property if:

(a) The improvements become the property of the federal, state, county or municipal owner of the property on termination of the leasehold interest in the property.

(b) Both the improvements and the property are used primarily for athletic, recreational, entertainment, artistic, cultural or convention activities.

2. Improvements that are located on federal, state, county or municipal property and owned by the lessee of the property if:

(a) The improvements become the property of the federal, state, county or municipal owner of the property on termination of the leasehold interest in the property.

(b) Both the improvements and the property are:

(I) Used for or in connection with aviation, including hangars, tie-downs, aircraft maintenance, sales of aviation related items, charter and rental activities, parking facilities and restaurants, stores and other services located in a terminal.

(ii) Located on a state, county, city or town airport or a public airport operating pursuant to sections §§ 28-8423, 28-8424 and § 28-8425.

3. Property that is defined as "contractor-acquired property" or "government- furnished property" in the federal acquisition regulations (48 Code of Federal Regulations section 45.101) and that is leased to or acquired by the government and used to perform a government contract.

4. Property of a corporation that is organized by or at the direction of this state or a county, city or town to develop, construct, improve, repair, replace or own any property, improvement, building or other facility to be used for public purposes that the state, county, city or town pledges to lease or lease-purchase with state, county or municipal special or general revenues and that is not otherwise exempt under chapter 11, article 3 of this title.

B. Improvements that are located in an area defined as a research park pursuant to section § 35-701 may not be classified under this section.

C. All property classified as class nine is subject to valuation at full cash value.

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