Glossary · Thresholds & Valuation
Commercial property
In short
Everything the residential paragraph does not name. The threshold there is a flat $750,000 that does not move with the property's value.
In full
Commercial is a residual, not a category. A.R.S. § 42-5075(S)(1)(b) applies to all existing property other than the property described in subdivision (a), and sets the alteration threshold at $750,000.
ADOR's worksheet names the classes it covers: one, five, six, seven, eight and nine. Reading the two statutes together, one more category belongs on this side — class two property outside the two nonprofit subdivisions the residential paragraph names, including the residual "all other real property and improvements" at § 42-12002, paragraph 1, subdivision (f).
The practical difference is that the commercial figure is fixed. The residential threshold is a percentage, so it rises with the parcel's value; a valuable lot carries a high threshold and a modest one carries a low threshold. The commercial threshold does not move at all. An alteration of more than $750,000 exceeds the threshold on a small building and on a large one alike, and a contractor working commercial property gets no benefit from the property being worth more.
That also means the commercial threshold requires no valuation lookup. There is no denominator to obtain from the county assessor and no bid-date-against-contract-date comparison to run.
A.R.S. §§ 42-5075(S)(1)(a), (S)(1)(b), 42-12002; ADOR Evaluating Mixed Construction Contracts worksheet, step 2