Arizona HB 2999 Signed Into Law: A Win for Infrastructure Investment and Contractor Payment Protection

Arizona HB 2999 Signed Into Law: A Win for Infrastructure Investment and Contractor Payment Protection

On June 4, Governor Katie Hobbs signed House Bill 2999 into law, establishing a new framework for Infrastructure Finance Districts in Arizona.

For the Arizona Chapter of the Associated General Contractors, HB 2999 is a strong example of how AZAGC works at the Capitol to protect contractors, reduce risk, and expand opportunities for Arizona’s construction industry.

What House Bill 2999 Does

House Bill 2999 creates a statutory framework for Infrastructure Finance Districts, or IFDs, that can help finance, construct, and deliver public infrastructure needed to support housing, economic development, and responsible growth across Arizona.

AZAGC supported the concept of creating additional financing tools for infrastructure development. Arizona continues to face housing affordability challenges, infrastructure cost pressures, and growth-related needs across the state. Tools like IFDs can help support new housing and economic development projects by financing critical public infrastructure.

AZAGC’s Initial Concerns

While AZAGC agreed with the overall goal of the legislation, the original version of HB 2999 raised significant concerns for Arizona contractors.

As introduced, the bill relied heavily on project-generated revenues rather than traditional public backing. That structure could have left contractors, subcontractors, suppliers, and construction workers exposed to nonpayment risk — a concern AZAGC has seen in other special taxing district structures, including revitalization districts.

AZAGC’s priority was simple: if contractors are building Arizona’s infrastructure, they must have confidence they will be paid for the labor, materials, and services they provide.

How AZAGC Improved the Bill

Throughout the legislative process, AZAGC worked closely with stakeholders, including the Home Builders Association of Central Arizona, industry representatives, labor organizations, and legislative proponents to strengthen HB 2999.

Those efforts resulted in meaningful amendments that added strong contractor payment protections and helped transform the bill into a more balanced and responsible infrastructure financing tool.

The final version of HB 2999 includes several key protections:

Mandatory Financial Assurances Before Construction Begins

Before construction starts, the project owner must provide financial assurances demonstrating the ability to pay the full contract amount. These assurances may include a payment bond, letter of credit, guaranty, deed of trust, proof of funds, or comparable financial security.

Additional Protection for Cost Increases

If change orders increase the contract price by more than 10%, additional financial assurances are required. This helps ensure that expanded project scope remains properly funded.

Preservation of Contractor Rights

The legislation clarifies that construction contracts for public infrastructure under this framework are treated as private construction contracts subject to Arizona’s private prompt pay laws, preserving mechanics’ lien rights and related protections.

Why HB 2999 Matters for Arizona Contractors

The final version of HB 2999 represents a substantial improvement over earlier versions of the bill.

Rather than leaving financial assurances optional or subject to negotiation, the law now establishes clear, mandatory requirements tied to both the base contract and significant change orders. These changes reduce nonpayment risk and give contractors greater confidence that funding is in place before work begins.

For Arizona contractors, HB 2999 is more than an infrastructure financing bill. It is a model for how Arizona can encourage growth, expand housing opportunities, support economic development, and protect the construction professionals who build the projects that make that growth possible.

Building Arizona While Protecting Contractors

AZAGC appreciates the collaboration of stakeholders who worked to improve HB 2999 and ensure the final legislation includes meaningful payment protections for contractors, subcontractors, suppliers, and construction workers.

House Bill 2999 demonstrates that Arizona can support infrastructure investment while also protecting those who do the work.

As Arizona continues to grow, AZAGC will remain focused on advancing policies that expand opportunities, reduce risk, and ensure contractors are paid for building Arizona.