Glossary · Change & Conversion
Substantial completion
In short
The point at which a project is usable for its intended purpose though minor work remains. Arizona's tax statute uses the term without defining it.
In full
Substantial completion is the point at which a project is complete enough for the owner to use it for its intended purpose, with only minor items outstanding. The meaning comes from construction contract practice, not from Arizona tax law.
A.R.S. § 42-5075(O) uses the term twice without defining it. It bounds the punch list at (O)(1)(b) — minor items of modification work performed after substantial completion and before final completion — and it appears at (O)(1)(e), where inspection to determine the dates of substantial completion or final completion is listed as a construction phase service.
So the statute makes the date matter without saying how it is fixed. In practice the date is established by the contract between the parties and by the inspection the statute contemplates at (O)(1)(e), which is itself taxable as a construction phase service.
ADOR's Speculative Builder page describes property outside the enumerated categories as reached prior to completion or before the expiration of twenty-four months after substantial completion. Model City Tax Code §§ 416, 416.1 and 416.2 contain no such clause. The twenty-four-month period in the code runs from substantial completion to Owner-Builder liability at § 417(a), so the term carries a second sense in city tax.
A.R.S. § 42-5075(O)(1)(b), (O)(1)(e)