THE ARIZONA RESILIENT INFRASTRUCTURE & CAPITAL COOPERATIVE FRAMEWORK ACT
THE ARIZONA RESILIENT INFRASTRUCTURE & CAPITAL COOPERATIVE FRAMEWORK ACT
A FRAMEWORK FOR ECONOMIC RESILIENCE THROUGH COMMUNITY OWNERSHIP
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PREAMBLE: BUILDING FROM THE GROUND UP
The Legislature of the State of Arizona hereby finds and declares:
1. That Arizona faces systemic challenges in providing universal access to essential goods and services—particularly in rural, low-income, and underserved communities where traditional markets consistently fail.
2. That approximately 1.2 million Arizona private-sector workers lack access to employer-sponsored retirement plans, creating both a retirement security crisis and a barrier to building in-state capital.
3. That the State possesses a practical necessity to create innovative mechanisms that convert perpetual public liabilities into productive, citizen-owned assets.
4. That existing Arizona businesses represent invaluable reservoirs of expertise, employment, and community trust that should be preserved during economic transitions.
5. That the principles of democratic ownership and subsidiarity offer effective paths to building lasting community wealth while respecting local control.
6. That building economic resilience requires securing basic necessities before pursuing higher-order investments, following a phased progression based on objective community metrics.
7. That organized labor unions hold essential expertise in workforce representation, sector-specific knowledge, and democratic governance, making them natural partners in building a resilient economy through cooperative ownership.
8. That resilience requires weaving Arizona's vital existing institutions—including public pension systems, universities, tribal nations, utilities, healthcare providers, and community organizations—into a coherent ecosystem, with each contributing their unique strengths toward common prosperity.
9. That the Arizona Legislature is a constitutionally limited citizen legislature, deliberately designed with constrained capacity to prevent the concentration of governmental power and to preserve democratic accountability through elected representation.
10. That this constitutional design, while essential to liberty, creates practical challenges in addressing complex, capital-intensive, long-term public needs such as water infrastructure, affordable housing, rural broadband, and healthcare access.
11. That the appropriate response to these capacity constraints is not to expand government through additional agencies, staff, and regulations—but to empower private, member-owned, democratically governed institutions that can receive public guidance, accept public capital, and execute public priorities without expanding the public payroll or the administrative state.
12. That ARICC and its Subchapters are such private institutions—created by the State, capitalized by the State, guided by elected officials, but governed by their member-owners and operated as private enterprises for public benefit.
13. That this structure enhances, rather than diminishes, the authority of Arizona's elected governing bodies by providing them with capable, accountable, and efficient partners in the private sector.
14. That nothing in this Act delegates legislative power, authorizes the exercise of police power, or creates any governmental entity. ARICC and its Subchapters are private cooperatives, fully subject to all applicable laws, and possess no authority to tax, regulate, or govern.
15. That the most powerful accountability mechanism in American law is not the ballot box—it is the fiduciary duty owed by directors to the corporations they serve and the members who own them.
16. That directors of ARICC and all Subchapters shall owe personal, legally enforceable fiduciary duties of care, loyalty, and obedience to their cooperatives and members.
17. That breach of these duties subjects directors to personal liability for damages, disgorgement of profits, removal for cause, and such other remedies as are available at law or in equity.
18. That this personal, financial accountability exceeds the accountability of any government official, who enjoys sovereign immunity and whose errors are paid by taxpayers, not personal assets.
19. That ARICC and its Subchapters therefore represent not a reduction in accountability, but an enhancement of accountability—vesting control in member-owners and enforcing performance through personal financial responsibility.
20. That this structure of private governance, democratic control, member ownership, and fiduciary duty creates permanent, self-sustaining, self-correcting institutions that serve public purposes without expanding public bureaucracy or exposing taxpayers to liability for official misconduct.
21. Therefore, it is in the public interest to establish a private, member-owned, democratically-governed foundational cooperative that shall create subchapters in every county, municipality, ward, district, precinct, and historically redlined neighborhood—building permanent common wealth for all Arizona residents through a parallel cooperative infrastructure, governed by its members, capitalized by the State and local governments, guided by elected officials, and answerable through fiduciary duty to the people who own it.
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ARTICLE 1: ESTABLISHMENT & DEFINITIONS
Section 1.1: Short Title
This Act shall be known as the "Arizona Resilient Infrastructure & Capital Cooperative Framework Act."
Section 1.2: Core Definitions
1. "ARICC" means the Arizona Resilient Infrastructure & Capital Cooperative established by this Act.
2. "Foundational Cooperative" means ARICC in its role as the parent cooperative that establishes, charters, capitalizes, and supports County Subchapters.
3. "County Subchapter" means a private, member-owned public benefit cooperative established by ARICC in each of Arizona's fifteen counties pursuant to Section 4.1.
4. "Municipal Subchapter" means a private, member-owned public benefit cooperative established by a County Subchapter in each incorporated municipality within that county pursuant to Section 4.2.
5. "Neighborhood Subchapter" means a private, member-owned public benefit cooperative established by a Municipal Subchapter to serve distinct geographic communities within the municipality, including but not limited to wards, districts, precincts, census tract clusters, and Historically Redlined or Disinvested Areas, pursuant to Section 4.3.
6. "Unincorporated Area Subchapter" means a private, member-owned public benefit cooperative established by a County Subchapter to serve residents of unincorporated county territory pursuant to Section 4.4.
7. "Tribal Subchapter" means a private, member-owned public benefit cooperative established by ARICC in consultation with federally recognized tribal nations pursuant to Section 4.5.
8. "Spinoff Cooperative" means a Partner Cooperative formed through the conversion of a government program, service, or enterprise pursuant to Section 6.6.
9. "Partner Cooperative" means any enterprise that completes conversion or formation with ARICC or Subchapter assistance and in which ARICC or a Subchapter may hold a non-controlling stewardship interest, including Spinoff Cooperatives.
10. "Local Stewardship Fund" means the capital pool maintained by each County, Municipal, Neighborhood, Unincorporated Area, and Tribal Subchapter for community investment.
11. "Critical Needs Index" means the objective scoring system developed by ARICC to prioritize deployment based on verifiable community needs.
12. "Foundational Necessities" means goods and services with price inelastic demand that are essential for basic human dignity and community functioning, including but not limited to: housing, water, food, energy, healthcare, safety, digital infrastructure, and transportation.
13. "Maslow Phasing" means the community development progression framework requiring basic needs be met before higher-order investments.
14. "Arizona Resilience Bonds" means fixed-income instruments issued to institutional investors.
15. "Sovereign Purpose Tranch" means a legally segregated capital pool for projects directly addressing constitutional or statutory duties of the State or any represented elected body, and for Civic Bounties as authorized in Article 2.
16. "Subchapter Bounty Fund" means a legally segregated account within a Subchapter, capitalized from member investments, retained earnings, donations, or other non-Sovereign sources, used exclusively for Member-Governed Civic Bounties pursuant to Section 2.10.
17. "Labor Integration Pathway" means a formal process by which a recognized labor organization may partner with, form, govern, or convert to a Partner Cooperative while preserving collective bargaining and extending benefits to represented workers.
18. "Institutional Integration" means the formal process by which Arizona's public, private, and civic institutions align their resources, governance, or operations with the Partner Cooperative ecosystem.
19. "Anchor Institution" means a large, place-based organization such as a university, hospital, utility, or government agency that can strategically leverage its procurement, employment, land, and investment to support community wealth building.
20. "County Equity Reserve" means a capital pool within each County Subchapter designated for cross-community redistribution to under-resourced Municipal Subchapters and the Unincorporated Area Subchapter.
21. "Community Investment Board" means the resident-governed body exercising authority over Neighborhood Subchapter investments.
22. "Historically Redlined or Disinvested Area" means any census tract documented in:
a. 1930s HOLC redlining maps (any grade below "A" or "B");
b. Historical banking discrimination records;
c. Superfund or brownfield designations;
d. Prior urban renewal or highway construction displacement sites; or
e. Current federally designated Qualified Opportunity Zones.
23. "Member" means any Arizona resident who has established an account with ARICC or any Subchapter.
24. "Represented Elected Body" means any county board of supervisors, city or town council, tribal council, school district governing board, community college district governing board, special district board, or other local governmental entity whose members are elected by popular vote.
25. "Corresponding Subchapter" means:
a. For a county board of supervisors — the County Subchapter;
b. For a city or town council — the Municipal Subchapter;
c. For a tribal council — the Tribal Subchapter;
d. For a school district, community college district, or special district — the County Subchapter or Municipal Subchapter within whose jurisdiction the district is located, as determined by the Arizona Stewardship Council;
e. For any other represented elected body — the Subchapter designated by the Arizona Stewardship Council.
26. "Civic Bounty" means a payment deposited directly into the retirement or investment account of an ARICC or Subchapter member upon verification that the member has performed a designated activity that advances a public purpose or community benefit.
27. "Sovereign Tranch Civic Bounty" means a Civic Bounty funded by Sovereign Purpose Tranch capital, subject to the direction of a Represented Elected Body pursuant to Section 2.7.
28. "Member-Governed Civic Bounty" means a Civic Bounty funded by a Subchapter Bounty Fund, subject to the direction of a Subchapter board or Community Investment Board pursuant to Section 2.10.
29. "Designated Activity" means any behavior, action, or outcome that is lawfully performed, advances a public purpose or community benefit, is objectively verifiable, and is designated in advance by a Sovereign Purpose Tranch participant or Subchapter board.
30. "Qualifying Verifier" means a local government, qualified 501(c)(3) nonprofit organization, Partner Cooperative, or other entity designated by a Sovereign Purpose Tranch participant to verify performance of Designated Activities for Sovereign Tranch Civic Bounties.
31. "Peer Verifier" means a Partner Cooperative, trained member, Community Investment Board member, or other person or entity certified by a Subchapter board to verify performance of Designated Activities for Member-Governed Civic Bounties.
32. "Community Stewardship Cycle" means the positive feedback loop whereby members access sliding scale services, perform unpaid community volunteer labor, receive Civic Bounty payments, build retirement wealth, and sustain ongoing civic participation.
33. "Caregiver" means a resident who performs substantial unpaid household management and dependent care labor and is designated by an Employed Resident Worker pursuant to Section 2.9.
34. "Employed Resident Worker" means a resident who is engaged in substantial paid employment, is an ARICC or Subchapter member, and designates a Caregiver pursuant to Section 2.9.
35. "Dependent Household Member" means any person residing in the household who is under 18 and not emancipated, is incapable of self-care due to disability or chronic illness, is age 65 or older and requires assistance, or is otherwise dependent on the Caregiver for basic needs.
36. "Domestic Stabilization Bounty" means a recurring Civic Bounty payment deposited into the account of an eligible Caregiver in recognition of unpaid household management and dependent care labor.
37. "Government Program Democratization" means the conversion of a government-operated or government-contracted program, service, or enterprise to a member-owned, democratically governed Partner Cooperative pursuant to Section 6.6.
38. "Legislated Purpose" means the statutory or regulatory mission, objectives, and service obligations of the government program being converted, which shall be preserved in the Spinoff Cooperative's charter through charter lock provisions.
39. "Incumbent Workers" means employees of the government agency or its contractors who are primarily engaged in the operation of the program being converted.
40. "Incumbent Contractor" means a private for-profit or nonprofit entity currently holding a contract to operate or provide services for the program being converted.
41. "Fair Market Valuation" means the independently determined value of the program's tangible and intangible assets, customer relationships, and going-concern value, conducted by a qualified third-party appraiser.
42. "Competitive Challenge Right" means the right of an incumbent contractor or other qualified entity to demonstrate that it can meet or exceed the performance, cost, and social benefit standards of a proposed Spinoff Cooperative, as defined in Section 6.6(H).
ARTICLE 2: ESTABLISHMENT & CAPITALIZATION
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Section 2.1: Creation of ARICC
ARICC is established as a state-chartered, member-owned public benefit cooperative with perpetual succession, authorized to serve as a Pooled Plan Provider under the federal SECURE Act. ARICC is not an instrumentality of any county, municipality, or other local government. ARICC is a private cooperative governed by its members and the Arizona Stewardship Council.
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Section 2.2: State Sovereign Tranch
A. The sum of $85,000,000 is appropriated from the General Fund to purchase Series S (Sovereign) Preferred Shares in ARICC.
B. These shares create the Sovereign Purpose Tranch—a legally segregated capital pool governed by the following restrictions:
1. 100% of Tranch capital must be deployed to projects directly addressing constitutional or statutory state duties (public health, safety, water conservation, housing, environmental protection) or to Civic Bounties as authorized in this Article;
2. Investments must demonstrably reduce documented, recurring state liabilities or achieve measurable public benefits through member behavior change;
3. The State retains advisory rights on Tranch deployment decisions.
C. Series S Shares carry minimal (0-1%) dividend preference; financial return is secondary to public purpose fulfillment.
D. The State's investment shall be recouped through performance-based payments, dividends, and repayment provisions established by the Arizona Stewardship Council.
E. This appropriation constitutes adequate consideration under the Gift Clause.
F. Five-Year Sunset and Performance Review: The Sovereign Purpose Tranch appropriation shall sunset five years from the date of first deployment unless reauthorized by the Legislature following a comprehensive report demonstrating measurable success in fulfilling its public purpose mandate.
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Section 2.3: Member Capital Pathways
A. Arizona Secure Retirement & Stewardship Plan (ASRSP): Voluntary retirement accounts available to all Arizona workers, with automatic enrollment and opt-out provisions.
B. Subchapter Member Investments: Members may make additional investments in their County, Municipal, Neighborhood, Unincorporated Area, or Tribal Subchapters.
C. IRA & Qualified Plan Rollovers: The ASRSP shall accept direct rollovers from IRAs, 401(k)s, 403(b)s, 457 plans, and other eligible retirement accounts as permitted by federal law.
D. All member capital is governed by standard fiduciary duties to members.
E. Employer Adoption Pathways: Employers may offer ASRSP as a supplemental plan, primary plan, or conversion option, subject to employee protections including independent fiduciary review, affirmative employee consent, equal or better fee structures, and reporting to the Arizona Attorney General. ARICC shall provide streamlined processes including standardized plan documents, integrated payroll systems, and compliance support.
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Section 2.4: Arizona Resilience Bonds
A. ARICC may issue "Arizona Resilience Bonds" to qualified institutional investors with these mandatory terms:
1. Term: 10-year minimum, amortizing structure;
2. Returns: Fixed rate, 3-5% based on project risk tier;
3. Minimum: $1,000,000 per investor;
4. No Voting Rights: Pure financial instrument, no governance rights;
5. No Equity Conversion: No path to ownership or control.
B. Bond proceeds must be deployed exclusively to Foundational Necessities projects.
C. Bonds must be project-specific with bankruptcy-remote structures.
D. ARICC may issue dedicated series of bonds for SVGR acquisition, Conversion Facilitation, or other purposes consistent with this Act.
E. Bond Issuance Authority: ARICC fiduciaries may issue and sell Arizona Resilience Bonds to any purchaser, on such terms and conditions as they deem appropriate, in such amounts and at such times as they deem prudent, to such purchasers as they deem suitable, all within the confines of all applicable federal and state law and consistent with their fiduciary duties and the governing principles of this Act.
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Section 2.5: Performance Contracting
ARICC may enter Master Services Agreements with state agencies and receive a percentage of independently verified state cost savings achieved through its investments. Such payments shall fund operational costs and member benefit programs.
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Section 2.6: Sovereign Tranch Access for Represented Elected Bodies
A. Any represented elected body may enter a Sovereign Purpose Tranch participation agreement with its corresponding Subchapter, appropriating funds to purchase Series S Preferred Shares or make capital contributions. Such agreements constitute adequate consideration under the Gift Clause.
B. Minimum Terms:
1. Funds shall be held in a legally segregated account;
2. 100% must be deployed to projects addressing the elected body's constitutional or statutory duties or to Civic Bounties;
3. Investments must demonstrably reduce documented, recurring public liabilities or achieve measurable public benefits;
4. The elected body retains advisory rights over deployment decisions, including the right to define project nature, scope, and priority;
5. The Subchapter shall provide quarterly reports on capital deployment, project outcomes, and cost savings achieved.
C. Prohibited Terms: No agreement may confer voting rights or governance control, permit commingling of funds, or authorize investments prohibited by this Act.
D. Tribal Nations: Federally recognized tribal nations may enter such agreements with Tribal Subchapters. Such agreements shall honor tribal laws, ordinances, and resolutions. Nothing in this Act abrogates tribal sovereignty.
E. Reporting: Each Subchapter shall maintain a public registry of all Sovereign Purpose Tranch participation agreements.
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Section 2.7: Civic Bounties
A. Any Sovereign Purpose Tranch participant may, by public resolution or ordinance, establish Civic Bounty programs offering payments to member accounts for verified performance of designated activities that advance public purposes.
B. Verification and Payment: Upon verification by a Qualifying Verifier, the corresponding Subchapter shall deposit the bounty amount directly into the member's account. Payments are fully vested, owned immediately by the member, and not subject to forfeiture except for fraud.
C. Permissible Categories: Without limiting participant discretion, Civic Bounties may be offered for activities including environmental stewardship, public health, housing and neighborhood stability, workforce development, civic participation, water and energy conservation, food security, digital inclusion, unpaid community volunteer labor, and domestic stabilization (caregiving).
D. Gift Clause Compliance: Civic Bounty payments constitute adequate consideration because the member performs a verified activity that advances a public purpose, the public receives measurable benefit, and payment is proportional to value performed.
E. Prohibited Uses: No Civic Bounty may be offered for any activity already required by law and subject to criminal penalty, any activity that violates law or constitutional rights, voting, campaign activity, or any activity creating impermissible entanglement between government and religion.
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Section 2.8: Community Stewardship Cycle
A. The Legislature finds that unpaid community volunteer labor is economically inaccessible to many Arizonans, resulting in civic participation stratified by wealth. The Community Stewardship Cycle—accessing sliding scale services, performing volunteer labor, receiving Civic Bounties, building retirement wealth, and sustaining ongoing civic participation—creates a permanent, self-sustaining, intergenerational pipeline of community leaders.
B. Authorization: Sovereign Purpose Tranch participants and Subchapter boards are expressly authorized to designate categories of Unpaid Community Volunteer Labor as Civic Bounty-eligible activities, including but not limited to neighborhood and community governance, mutual aid, emergency services, youth and education, culture and arts, environmental stewardship, faith-based service, senior and disability services, and veterans and military family support.
C. Youth Community Steward Programs: Subchapters are encouraged to establish Youth Community Steward programs offering age-appropriate Civic Bounty opportunities for minors, with deposits held in custodial accounts until age of majority.
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Section 2.9: Domestic Stabilization Bounty
A. The Legislature finds that unpaid care work is economically invisible, carries no Social Security credit, and creates lifelong economic penalties for caregivers—disproportionately women. The Domestic Stabilization Bounty recognizes this labor as economically valuable and capitalizes it into permanent retirement wealth.
B. Definitions:
1. "Caregiver" means a resident age 18 or older who cohabits with an Employed Resident Worker, is not engaged in substantial paid employment (presumptively fewer than 20 hours per week), performs substantial unpaid household management and dependent care labor, and is designated by the Employed Resident Worker as the bounty recipient.
2. "Employed Resident Worker" means a resident age 18 or older engaged in substantial paid employment (presumptively 30+ hours per week), who cohabits with the Caregiver, consents to the designation, and is an ARICC or Subchapter member.
3. "Dependent Household Member" means any resident household member under 18 not emancipated, incapable of self-care due to disability or chronic illness, age 65 or older requiring assistance, or otherwise dependent on the Caregiver.
C. Authorization: Any Sovereign Purpose Tranch participant or Subchapter board may establish Domestic Stabilization Bounty programs.
D. Verification: Domestic Stabilization Bounties shall be verified by joint, sworn attestation of the Employed Resident Worker and Caregiver. The attestation constitutes prima facie evidence of eligibility. Material misrepresentation constitutes fraud and shall result in forfeiture, recoupment, and referral for criminal prosecution. No caseworkers. No home visits. No surveillance. No discretion. No delay.
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Section 2.10: Member-Governed Civic Bounties
A. The Legislature finds that Sovereign Purpose Tranch Civic Bounties represent representative democracy's allocation of civic bounty capital, while Member-Governed Civic Bounties—funded by Subchapter Bounty Funds and governed by Subchapter boards and Community Investment Boards—enable direct democracy's allocation based on community-identified needs and values.
B. Authorization: Every Subchapter is authorized to establish Member-Governed Civic Bounty programs, funded exclusively from member investments, retained earnings, donations, grants, or other non-Sovereign sources. Such programs are not subject to Sovereign Purpose Tranch participation agreement requirements.
C. Peer Verification: Member-Governed Civic Bounties may be verified by Peer Verifiers, including Partner Cooperatives, trained members, Community Investment Board members, Subchapter staff, or such other persons or entities as the Subchapter board may certify.
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Section 2.11: Strategic Vital Goods Reserve
A. The Legislature finds that cyclical recessions, inflationary episodes, supply chain disruptions, and currency depreciation disproportionately harm low-income and working-class households. A strategic reserve of vital goods—food, water, energy, housing, medicine, and other foundational necessities—owned collectively by ARICC members through their Subchapters and Partner Cooperatives, preserves member wealth during inflationary periods, stabilizes supply during disruptions, provides recession-proof returns, attracts institutional investment, democratizes access to real assets, and strengthens community resilience.
B. Authorization: ARICC and each Subchapter are authorized to establish and manage Strategic Vital Goods Reserves, capitalized from Sovereign Purpose Tranch allocations, Arizona Resilience Bond proceeds, member investments designated for SVGR participation, retained earnings, donations, and grants.
C. Permissible Asset Classes: Without limiting fiduciary discretion, permissible SVGR asset classes include agricultural land and water rights; commodity reserves (grains, legumes, dried goods, shelf-stable products); energy generation and storage assets; housing stock held by community land trusts and housing cooperatives; strategic materials essential to water, energy, and digital infrastructure; and productive infrastructure including food processing, cold storage, and water treatment facilities.
D. Community Resilience Buffer: Each Subchapter maintaining an SVGR is encouraged to establish a Community Resilience Buffer comprising liquid or near-liquid assets held for stabilizing local prices, mitigating shortages, and meeting emergency needs during disruptions.
E. Global Diversification Authority: ARICC fiduciaries may, in the exercise of their professional judgment and consistent with their fiduciary duties, diversify SVGR holdings to include strategic and critical goods from ethical interstate and international sources, and may establish logistical contingencies outside of Arizona, to further reinforce the state against large-scale systemic collapses and further insulate the people of Arizona from mismanagement of global supply lines. This authority is permissive and creates no mandate.
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Section 2.12: Advance Capital Participation
A. The Legislature finds that Sections 4.6 and 4.7 establish a deliberate prioritization framework: rural, high-need, skeptical counties first; urban, lower-need, Democratic counties later. However, wealthier jurisdictions have expressed interest in accelerating their participation through early investment, relationship building, and preparation for their own Subchapter establishment.
B. Authorization: Any Tier 3 Jurisdiction or other represented elected body awaiting Subchapter establishment is authorized to:
1. Purchase Arizona Resilience Bonds;
2. Purchase SVGR Participating Shares;
3. Enter participation agreements with existing Subchapters, contributing Sovereign Purpose Tranch capital to projects in those Subchapters' jurisdictions;
4. Prefund member accounts on behalf of their residents;
5. Provide grants or donations to Subchapter Bounty Funds, Community Stewardship programs, or Youth Community Steward programs.
C. Host Subchapter Protections: No Host Subchapter shall be required to accept Advance Capital Participation. Acceptance is voluntary. Host Subchapters retain full governance authority. Advisory rights are advisory only. Host Subchapters shall prioritize their own members' needs over the advisory preferences of participating jurisdictions.
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Section 2.13: Retirement Plan Conversion Facilitation Program
A. The Legislature finds that approximately 1.6 million Arizona workers have access to employer-sponsored retirement plans, yet many such plans impose excessive fees, limited investment options, proprietary fund mandates, and outdated plan designs. The ASRSP offers institutional-class investment fees, unique asset classes (SVGR), transparent pricing, best-practice plan design, portability, community ownership, and Civic Bounty integration.
B. Authorization:
1. Any employer offering a qualified retirement plan may elect to terminate such plan and offer ASRSP as the primary retirement benefit. Such conversion is voluntary.
2. Any employer may offer ASRSP as a supplemental retirement savings vehicle.
3. ARICC may offer Conversion Incentive Grants to Converting Employers to offset reasonable costs of plan termination, fiduciary review, and employee education.
4. ARICC may offer Rollover Matching Contributions to Converting Employees who roll over IRA, 401(k), or other qualified retirement account balances to ASRSP.
5. ARICC may offer a fiduciary safe harbor in the form of a rebuttable presumption that an employer who completes an independent fiduciary review, obtains a Superiority Determination from the Arizona Stewardship Council, and provides required employee notice and education has satisfied its fiduciary duties with respect to the conversion decision.
C. Employee Protections:
1. No conversion shall result in a reduction of any employee's vested accrued benefit.
2. Employees shall have the right to opt out of automatic rollover to ASRSP and instead roll over to an IRA of their choice or leave their balance in the existing plan (if permitted).
3. All transferred assets shall receive equal or better fee structures and investment options in ASRSP.
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Section 2.14: Fee Structure — Fiduciary Determination
A. The Legislature finds that the ASRSP is a public benefit cooperative established to maximize retirement wealth for Arizona workers, not to generate profits. Every basis point of fees reduces retirement wealth. The ASRSP enjoys unique cost advantages including no profit margin, no marketing expenses (Subchapter Outreach Duty), no sales commissions, no executive compensation, economies of scale, and cross-subsidization from SVGR management fees, bond underwriting fees, and performance contract revenue.
B. However, prescriptive statutory fee mandates may become obstacles to fiduciary judgment. What is optimal in 2027 may be suboptimal in 2037. What works for a $500M plan may not work for a $50B plan.
C. Therefore, the Arizona Stewardship Council and ASRSP fiduciaries shall determine the ASRSP fee structure in the exercise of their fiduciary duties, with the goal of minimizing member fees to the maximum extent consistent with long-term sustainability, reserve adequacy, investment in growth and innovation, availability of alternative revenue sources, and the overarching fiduciary mandate of Section 2.15.
D. Fiduciary Fee Determination:
1. The Council shall establish and may revise the ASRSP fee schedule.
2. In establishing fees, the Council shall seek to minimize fees to the maximum extent consistent with prudent fiduciary administration, consider the long-term compound impact of fees on member wealth, participation elasticity, reserve adequacy, and alternative revenue sources, conduct public hearings prior to any material fee change, and document fee decisions in writing.
3. The Council may establish differentiated fee structures, temporary counter-cyclical fees, a zero-fee baseline for some or all members, and premium tiers offering enhanced services for reasonable fees.
E. Transparency: ARICC shall provide every member with an annual Fee Impact Statement and maintain a public Fee Dashboard. The Council shall include comprehensive fee analysis in its Annual Mandate Report.
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Section 2.15: Fiduciary Mandate — Universal Participation with Sustainable Revenue
A. The Legislature finds that no statute can anticipate every future circumstance, market condition, or technological innovation that may affect the ASRSP's ability to achieve its core mission. ARICC's leadership are fiduciaries, owing duties of care, loyalty, and obedience to the cooperative and its members, including the affirmative obligation to maximize member welfare, minimize costs, expand participation to all eligible Arizonans, ensure sustainability across economic cycles, and innovate continuously in service of the mission.
B. Therefore, the Legislature declares that the ARICC Stewardship Council and ASRSP fiduciaries shall be governed by a single, overriding mandate:
"Universalize participation in ASRSP for any Arizona worker who desires retirement security, while maintaining sufficient revenue for ARICC to perform its core mission, achieved in the most practicable and sustainable span of time consistent with fiduciary duties to members."
C. All specific provisions of this Article are permissive authorities, not mandatory requirements; illustrative examples, not exclusive options; baseline expectations, not maximum aspirations; and subject to fiduciary override upon written findings that an alternative approach better serves the mandate.
D. Fiduciary Override: The Council may, by majority vote and documented written findings, modify, suspend, or supersede any provision of Sections 2.2 through 2.14 if the Council determines that such action better serves the mandate. Override decisions shall include the specific provision modified, the alternative approach, the factual basis, expected impacts, and opportunity for member and public comment. Fiduciary override does not immunize the Council from fiduciary duty liability, legislative oversight, or public accountability.
E. Limitations on Override: No override shall impair vested rights of members, violate applicable law, exceed the Council's authority, discriminate against any protected class, or convert ARICC to for-profit status. Any override that would materially increase member fees or reduce member benefits shall require a super-majority vote of at least 14 of 21 Council members, a public hearing with at least 30 days' notice, and a written economic impact analysis.
F. The fiduciary mandate is enforceable. Members have standing to challenge ARICC fiduciaries in superior court for failure to pursue universal participation without reasonable justification, imposition of excessive or unreasonable fees, failure to consider alternative approaches, or arbitrary or capricious override decisions. The Arizona Attorney General may investigate and bring enforcement actions for breach of fiduciary duty, violation of this Act, misuse of member funds, or self-dealing.
G. Reporting: The Council shall annually publish a Universal Participation & Sustainable Revenue Report addressing progress toward universal participation, progress toward sustainable revenue, fiduciary override actions, and member wealth impact.
ARTICLE 3: GOVERNANCE STRUCTURE
Section 3.1: Arizona Stewardship Council
A 21-member Council shall govern ARICC with staggered four-year terms:
1. Five (5) Participant Stewards elected by ASRSP participants.
2. Three (3) State Stewards appointed by the Governor (advisory only on Sovereign Tranch matters).
3. Three (3) Regional Stewards elected by County Subchapter boards.
4. Two (2) Worker Stewards elected by employees of Partner Cooperatives.
5. Two (2) Community Stewards appointed by recognized community organizations.
6. Six (6) Specialized Stewards with expertise in water, housing, energy, healthcare, finance, and democratic governance.
Section 3.2: Charter Lock & Fiduciary Duty Provisions
A. ARICC's founding charter and bylaws shall include provisions that:
1. Cannot be amended to:
a. Eliminate democratic member governance;
b. Remove the public benefit mandate;
c. Convert to a for-profit corporation; or
d. Abandon the Maslow Phasing framework.
2. May be amended only by:
a. Supermajority vote of at least 67% of the Arizona Stewardship Council; and
b. Affirmative referendum of at least 60% of participating members voting.
B. Fiduciary Duty Enforcements:
1. ARICC directors and officers owe fiduciary duties to the cooperative and its members to preserve and protect the charter provisions enumerated in subsection A.
2. Breach of these duties shall subject directors and officers to personal liability for damages, removal for cause, and such other remedies as are available at law or in equity.
3. Members have standing to enforce these duties through derivative actions in superior court.
C. Legislative Intent:
Nothing in this section limits the power of the Legislature to amend or repeal this Act. This section establishes governance requirements for ARICC as a state-chartered public benefit cooperative and imposes fiduciary duties on its directors and officers consistent with Arizona cooperative corporation law.
Section 3.3: Subchapter Governance
A. County Subchapters shall be governed by boards elected by county residents who are members.
B. Municipal Subchapters shall be governed by boards elected by municipal residents who are members.
C. Neighborhood Subchapters shall be governed by Community Investment Boards composed of:
1. 51% resident members elected by neighborhood residents who are members;
2. 25% community-based organization representatives; and
3. 24% technical experts appointed by the Municipal Subchapter board, provided that no elected official may serve as a technical appointee.
D. Unincorporated Area Subchapters shall be governed by boards elected by unincorporated area residents who are members, with reasonable representation from distinct unincorporated communities within the county.
E. Tribal Subchapters shall be governed by tribal members in accordance with tribal laws and governance structures.
F. All Subchapter boards owe fiduciary duties to their members and shall operate under charters consistent with the principles of this Act.
Section 3.4: Charter Mandate — Capital Optimization & Cooperative Support
A. ARICC's charter shall include the following permanent provision:
"ARICC and its fiduciaries shall develop and pursue such investment and revenue streams as are consistent with the governing principles of this Act and their fiduciary duties, and shall take all measures they deem best to facilitate by all means available the successful creation of and support the continuity of all Partner Cooperatives within their purview."
B. This provision is non-waivable and non-amendable. It shall not be subject to the fiduciary override authority established in Section 2.15(C)(2). No vote of the Stewardship Council, no referendum of members, and no subsequent legislative act shall diminish or eliminate this mandate except through the dissolution of ARICC and the winding up of its affairs.
C. Fiduciaries owe enhanced duties to preserve, protect, and implement this charter mandate. Breach of these duties shall subject directors and officers to personal liability, removal for cause, and such other remedies as are available at law or in equity.
D. Fiduciaries shall document their material decisions in furtherance of this mandate and shall report annually on such activities as part of the Annual Mandate Report required by Section 2.15.
Section 3.5: Export Authority — Global Replication
ARICC fiduciaries may, in the exercise of their professional judgment and consistent with their fiduciary duties, export the cooperative framework established by this Act to other cities, states, and countries through such means as they deem appropriate, prioritizing jurisdictions according to likelihood of adoption.
E. Construction:
Nothing in this section shall be construed to:
1. Require fiduciaries to pursue any specific investment or revenue stream;
2. Require fiduciaries to accept any capital source that would impair their fiduciary duties or the cooperative's public benefit mission;
3. Limit the authority of Subchapter boards to govern their own affairs;
4. Create any entitlement to ARICC funding or technical assistance;
5. Impair the fiduciary duties of Subchapter directors.
ARTICLE 4: SUBSIDIARY & SUBCHAPTER ESTABLISHMENT — GOVERNING PRINCIPLES
Section 4.1: County Subchapter Establishment
A. ARICC shall establish a County Subchapter in each of Arizona's fifteen counties.
B. Each County Subchapter shall be chartered as a private, member-owned public benefit cooperative, organized under Title 10, and governed by a board elected by its members.
C. County Subchapters are not instrumentalities of county government. No county approval, ordinance, resolution, or other authorization is required for their establishment or operation.
D. County Subchapters shall receive capital from ARICC's Sovereign Purpose Tranch and other ARICC investment pools according to the Critical Needs Index.
E. County Subchapters may accept voluntary member investments.
Section 4.2: Municipal Subchapter Establishment
A. Each County Subchapter shall establish a Municipal Subchapter in every incorporated municipality within that county.
B. Each Municipal Subchapter shall be chartered as a private, member-owned public benefit cooperative, organized under Title 10, and governed by a board elected by its members.
C. Municipal Subchapters are not instrumentalities of municipal government. No municipal approval, ordinance, resolution, or other authorization is required for their establishment or operation.
D. Municipal Subchapters shall receive capital from their County Subchapter according to allocation methodologies developed by the County Subchapter board consistent with the governing principles of this Article.
E. Municipal Subchapters may accept voluntary member investments.
Section 4.3: Neighborhood Subchapter Establishment
A. Each Municipal Subchapter shall establish Neighborhood Subchapters to serve distinct geographic communities within the municipality.
B. Each Neighborhood Subchapter shall be chartered as a private, member-owned public benefit cooperative, organized under Title 10, and governed by a Community Investment Board composed of a majority of resident members elected by neighborhood residents who are members.
C. Every Historically Redlined or Disinvested Area shall have its own Neighborhood Subchapter. No variance or extension shall exempt any such area.
D. Neighborhood Subchapters are not instrumentalities of municipal government. No municipal approval, ordinance, resolution, or other authorization is required for their establishment or operation.
E. Neighborhood Subchapters shall receive capital from their Municipal Subchapter according to allocation methodologies developed by the Municipal Subchapter board consistent with the governing principles of this Article.
F. Neighborhood Subchapters may accept voluntary member investments.
Section 4.4: Unincorporated Area Subchapter Establishment
A. Each County Subchapter shall establish an Unincorporated Area Subchapter to serve residents of unincorporated county territory.
B. The Unincorporated Area Subchapter shall be chartered as a private, member-owned public benefit cooperative, organized under Title 10, and governed by a board elected by unincorporated area residents who are members.
C. Unincorporated Area Subchapters are not instrumentalities of county government. No county approval, ordinance, resolution, or other authorization is required for their establishment or operation.
D. Unincorporated Area Subchapters shall receive capital from their County Subchapter according to allocation methodologies developed by the County Subchapter board consistent with the governing principles of this Article.
E. Unincorporated Area Subchapters may accept voluntary member investments.
Section 4.5: Tribal Subchapter Establishment
A. ARICC shall establish Tribal Subchapters in consultation with federally recognized tribal nations. Tribal nations may elect to participate or not participate.
B. Tribal Subchapters shall be chartered as private, member-owned public benefit cooperatives, organized under Title 10, and governed by tribal members in accordance with tribal laws and governance structures.
C. Tribal Subchapters are not instrumentalities of tribal government but operate in consultation with tribal nations.
D. Tribal Subchapters shall receive capital from ARICC according to the Critical Needs Index and such other allocation methodologies as are developed in consultation with tribal nations.
E. Tribal Subchapters may accept voluntary member investments.
Section 4.6: Governing Principles for Subchapter Establishment and Operation
All Subchapters and their fiduciaries shall be governed by the following principles in establishing, operating, and allocating capital among subsidiary Subchapters:
A. Principle of Universal Coverage:
The cooperative infrastructure established by this Act shall extend to every county, every municipality, every neighborhood, and every unincorporated community in Arizona. No community shall be permanently excluded. The question is not whether a Subchapter will be established, but when and how.
B. Principle of Needs-Based Prioritization:
Communities with the most severe deficits in Foundational Necessities—as measured by the Critical Needs Index—shall receive priority in Subchapter establishment and capital deployment. Resources shall flow first to where need is greatest. No community shall advance to higher-order investments while neighboring communities lack basic necessities.
C. Principle of Democratic Governance:
Every Subchapter shall be governed by a board elected by its members. Neighborhood Subchapters shall be governed by Community Investment Boards with resident majorities. Fiduciaries shall owe personal, enforceable duties to the members they serve.
D. Principle of Local Autonomy and Subsidiarity:
Decisions shall be made at the most local level practicable. Municipal Subchapters shall determine how to allocate capital among Neighborhood Subchapters. County Subchapters shall determine how to allocate capital among Municipal and Unincorporated Area Subchapters. ARICC shall determine how to allocate capital among County Subchapters.
E. Principle of Accelerated Establishment:
Formation is infrastructure, not deliberation. Subchapters shall be established as rapidly as practicable. Presumptive, automatic, and pro tempore governance mechanisms are authorized and encouraged. The default shall be existence, not non-existence.
F. Principle of Local Succession:
Governance shall be transferred to local residents at the earliest practicable opportunity. Temporary leadership by non-residents is a bridge, not a destination. The goal is locally elected, member-accountable boards in every Subchapter.
G. Principle of Mutual Aid and Solidarity:
Subchapters are not competitors. They are cooperators. Surplus capital in one Subchapter may be deployed to meet needs in another. Urban and rural Subchapters are partners, not rivals. Resources and capacity shall be shared across jurisdictional lines.
H. Principle of Historical Repair:
Communities that have suffered systematic disinvestment—including but not limited to Historically Redlined or Disinvested Areas—shall receive enhanced investment and accelerated Subchapter establishment. The effects of past discrimination shall be affirmatively remediated.
I. Principle of Outreach and Access:
Every Subchapter shall actively promote awareness of and enrollment in ASRSP and other ARICC programs. No eligible Arizonan shall remain unaware of the retirement wealth available to them due to inadequate outreach.
J. Principle of Fiduciary Accountability:
All Subchapter directors and officers are fiduciaries. They owe duties of care, loyalty, and obedience to their members. They shall be personally liable for breach of these duties. They may be removed by members and sued in court.
K. Principle of Adaptive Execution:
The specific methods, timelines, allocation formulas, and governance mechanisms by which these principles are implemented shall be determined by ARICC and Subchapter fiduciaries in the exercise of their professional judgment, subject to the fiduciary mandate of Section 2.15. What matters are outcomes, not prescriptions.
Section 4.7: Fiduciary Authority and Responsibility
A. ARICC and Subchapter fiduciaries shall have plenary authority to establish, operate, and allocate capital among Subchapters in a manner consistent with the governing principles set forth in Section 4.6 and the fiduciary mandate of Section 2.15.
B. Without limiting the generality of the foregoing, fiduciaries may:
1. Establish timelines for Subchapter establishment, provided that such timelines are consistent with the principle of accelerated establishment and the fiduciary mandate of universal participation;
2. Develop allocation methodologies for the distribution of capital among subsidiary Subchapters, provided that such methodologies are consistent with the principle of needs-based prioritization and the Critical Needs Index;
3. Implement pro tempore, presumptive, and automatic governance mechanisms to accelerate Subchapter establishment, provided that such mechanisms incorporate the principle of local succession;
4. Create programs for the sharing of capacity, expertise, and volunteer leadership across Subchapters, including urban-to-rural and rural-to-urban partnerships;
5. Establish outreach and education programs to promote ASRSP enrollment and Subchapter participation;
6. Modify or supersede any specific deadline, formula, or procedure set forth in prior drafts of this Article, upon written findings that such modification better serves the governing principles and fiduciary mandate.
C. Fiduciaries shall document their material decisions in writing, including the factual basis for such decisions and an explanation of how the decision advances the governing principles and fiduciary mandate.
D. Fiduciaries remain subject to:
1. All applicable federal and state laws;
2. Their fiduciary duties to members;
3. Member enforcement through derivative lawsuits;
4. Removal for cause by member vote;
5. Oversight by the Arizona Attorney General;
6. The charter lock provisions of Section 3.2.
Section 4.8: No Local Government Interference
A. No county, municipality, or other local government may prohibit, restrict, or impede the establishment or operation of any Subchapter created pursuant to this Act.
B. Any ordinance, resolution, or policy purporting to do so is void as contrary to state law.
C. ARICC and any Subchapter may seek injunctive relief and damages in superior court against any local government that violates this subsection.
Section 4.9: Reporting and Transparency
A. ARICC shall publish regular reports on the status of Subchapter establishment, capital deployment, and member participation, in a manner accessible to the public.
B. Such reports shall include, at a minimum:
1. The number and location of all established Subchapters;
2. The status of Subchapter establishment in each county, municipality, and Historically Redlined or Disinvested Area;
3. Aggregate capital deployed to and by Subchapters;
4. Member participation and account growth metrics;
5. Such other information as the Arizona Stewardship Council deems appropriate to demonstrate progress toward the governing principles and fiduciary mandate.
C. The Arizona Stewardship Council shall include in its Annual Mandate Report required by Section 2.15 a comprehensive assessment of Subchapter establishment and performance.
Section 4.10: Construction
Nothing in this Article shall be construed to:
1. Create any private right of action except as otherwise provided by law;
2. Limit the authority of ARICC or Subchapter fiduciaries to exercise their professional judgment;
3. Impair the fiduciary duties of Subchapter directors;
4. Authorize any Subchapter to exercise police power or regulatory authority;
5. Permit discrimination against any protected class;
6. Preempt any applicable federal or state law.
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ARTICLE 5: INVESTMENT & COMMUNITY PRIORITIZATION FRAMEWORK
Section 5.1: Foundational Principles
ARICC and all Subchapters shall operate on four core investment principles:
1. Needs-Based Hierarchy: Communities must secure basic survival needs before pursuing higher-order investments. Need determines destination at every tier. Proximity to poverty, not proximity to power, governs distribution.
2. Foundational Necessities Focus: Priority given to essential goods and services for human dignity and community functioning.
3. Prudent Innovation: Favors mature, proven solutions that enhance community resilience over speculative ventures.
4. Strategic Collaboration: Seeks partnerships that expand capacity, share knowledge, and build regional and interstate resilience.
Section 5.2: Critical Needs Index
A. Within 90 days of the effective date of this Act, ARICC shall develop and publish the Critical Needs Index using publicly available data, transparent weighting methodology, annual updates with opportunity for public comment, and objective scoring for all Arizona counties, municipalities, census tracts, and unincorporated areas.
B. The Critical Needs Index shall measure deficits in housing affordability and quality, water security and infrastructure, food access and security, energy reliability and affordability, healthcare access and outcomes, public safety and environmental health, digital infrastructure and broadband access, and transportation and mobility.
C. The Critical Needs Index shall be binding on all State capital allocation decisions by ARICC and shall serve as the primary determinant of Subchapter funding distributions.
Section 5.3: Allocation Authority
A. ARICC shall determine the methodology for allocating Sovereign Purpose Tranch capital and other statewide resources among County Subchapters, consistent with the Critical Needs Index and the governing principles of Section 4.6.
B. Each County Subchapter shall determine the methodology for allocating capital among its Municipal Subchapters and Unincorporated Area Subchapter, consistent with the Critical Needs Index and the governing principles of Section 4.6.
C. Each Municipal Subchapter shall determine the methodology for allocating capital among its Neighborhood Subchapters, consistent with the Critical Needs Index and the governing principles of Section 4.6, provided that Historically Redlined or Disinvested Areas receive enhanced investment.
D. All allocation methodologies shall be documented in writing and published in a manner accessible to members and the public.
Section 5.4: Investment Criteria & Restrictions
A. Foundational Necessities shall be prioritized where traditional markets fail.
B. Income-based sliding scale pricing shall ensure universal access to essentials.
C. Technology adoption shall follow precautionary principles, favoring mature, maintainable solutions.
D. All investments shall satisfy operability, durability, and local maintainability tests to the extent practicable.
E. Non-essential investments may only be funded after Foundational Necessities thresholds are reasonably met within the Subchapter's jurisdiction.
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ARTICLE 6: COOPERATIVE DEVELOPMENT FRAMEWORK
Section 6.1: Vertical Integration Strategy
ARICC and all Subchapters shall foster development of mutually supporting but independent cooperatives across essential sectors, with the long-term goal of creating a vertically integrated network that reduces external dependencies while maintaining democratic control at each level.
Section 6.2: Priority Sectors for Development
The Council shall prioritize cooperative development in water security and conservation, housing affordability and stability, food production and distribution, energy reliability and sustainability, healthcare access and prevention, digital infrastructure and sovereignty, transportation and mobility, education and workforce development, financial services and insurance, and community information and media.
Section 6.3: Business Continuity & Succession
A. ARICC and Subchapters may provide technical and financial assistance for owner-initiated conversions to worker/community ownership when:
1. The current owner voluntarily initiates the conversion process;
2. No active labor dispute exists at the business;
3. Conversion preserves jobs and community service; and
4. Independent valuation determines fair market price.
B. ARICC and Subchapters may acquire distressed businesses or assets only when:
1. The business has ceased operations or filed for bankruptcy protection;
2. The previous owner has voluntarily relinquished control;
3. No employment relationship exists between potential buyers and the former business at time of acquisition; and
4. Acquisition serves documented community need.
C. ARICC and Subchapters may provide ongoing technical assistance, training, and mentorship to converted cooperatives during their first five years of operation.
D. Stewardship Equity.
ARICC and Subchapters may, in connection with providing formation assistance or capitalization to Partner Cooperatives, receive and hold non-controlling equity stakes in such cooperatives. Such equity may entitle ARICC or the Subchapter to dividends, patronage distributions, or other returns on investment, which shall be used exclusively to further the public benefit purposes of this Act. No equity stake shall confer voting control or the power to direct the daily operations of the Partner Cooperative. Such equity stake may be used to enforce charter adherence, secure a right of first refusal in the event of a buyout, and upon dissolution or conversion, to reestablish the cooperative with new members or return the assets to use with another Partner Cooperative.
Section 6.4: The "Arizona Benefit Covenant"
All Partner Cooperatives receiving ARICC or Subchapter capital must include in their charters:
1. Universal Access Commitment: No Arizona resident denied essential service for inability to pay.
2. Income-Based Pricing: Sliding scale for all Foundational Necessities.
3. Service Continuity: No discontinuation for non-payment without hardship assessment.
4. Community Reinvestment: Minimum 30% of surplus reinvested in price reduction or service expansion.
5. Community Stewardship Promotion: Partner Cooperatives shall, to the extent practicable, outreach to low-income residents regarding sliding scale eligibility, serve as Qualifying Verifiers and Peer Verifiers for Civic Bounty programs, consider Community Stewards for employment and leadership opportunities, and participate in Youth Community Steward programs.
Section 6.5: Strategic Institutional & Labor Integration
A. Mandate: ARICC shall develop mechanisms and pathways for the strategic integration of Arizona's vital institutions into the Partner Cooperative ecosystem.
B. Target Institutions: ARICC shall create specific integration protocols for labor organizations and unions, public pension funds, public universities and community colleges, federally recognized tribal nations, rural electric and telecommunications cooperatives, Community Development Financial Institutions, healthcare systems and hospital districts, agricultural associations and extension services, faith-based and community organizations, utility regulators and municipal utilities, K-12 school districts, credit unions, and professional associations.
C. Labor-Specific Provisions: Protocols for labor organizations shall include pathways for unions to form, sponsor, or convert to Partner Cooperatives; model agreements for mutual support and standards alignment; standards for portable benefit platforms for union-represented independent contractors; governance pathways for union representation; and protection of existing collective bargaining rights.
D. Tribal Nation Provisions: ARICC shall establish Tribal Subchapters in consultation with federally recognized tribal nations. Tribal Subchapters shall be governed by tribal members and shall receive capital allocations based on the Critical Needs Index. Nothing in this Act abrogates tribal sovereignty.
Section 6.6: Public Program Democratization
A. Findings and Purpose:
The Legislature finds that state and local governments in Arizona operate hundreds of programs, services, and enterprises that could be more efficiently, equitably, and accountably delivered through member-owned, democratically governed cooperative enterprises. Converting appropriate government programs to cooperative enterprise offers democratic accountability, operational efficiency, wealth building, mission permanence, workforce stability, and taxpayer savings.
B. Authorization:
Any state agency, county, municipality, school district, special district, or other political subdivision of the State of Arizona may, by resolution or ordinance, identify a government program suitable for cooperative conversion, conduct a feasibility study, negotiate a conversion agreement with a proposed Spinoff Cooperative, transfer program assets and personnel, enter into a master services agreement, and appropriate funds to capitalize the Spinoff Cooperative.
C. Charter Lock — Preservation of Legislated Purpose:
Each Spinoff Cooperative shall include in its articles of incorporation and bylaws charter lock provisions that expressly adopt the legislated purpose of the converted government program as a permanent mission of the cooperative, prohibit amendment of such legislated purpose except by supermajority board vote and member referendum, prohibit conversion to for-profit status, and require ongoing compliance with applicable statutory and regulatory requirements.
D. Worker and Community Ownership Requirements:
Spinoff Cooperatives shall be structured to maximize worker ownership and control. A minimum of 51% of voting control shall be held by workers of the cooperative, unless the authorizing government agency determines that a different governance structure better serves the public interest. If incumbent workers are represented by a labor organization, the Spinoff Cooperative shall recognize the labor organization and honor the existing collective bargaining agreement.
E. Competitive Challenge Right:
Any qualified private contractor, incumbent contractor, or other entity that can demonstrate the capacity to perform the services provided by a Spinoff Cooperative may challenge the Spinoff Cooperative's exclusive right to provide such services. A competitive challenge shall be sustained if the challenging entity demonstrates, by clear and convincing evidence, that it can meet or exceed the performance standards of the Spinoff Cooperative, match or beat the total cost, and match or exceed the social benefits provided by the Spinoff Cooperative.
No competitive challenge may seek to eliminate or weaken the charter lock provisions of a Spinoff Cooperative. The legislated purpose, democratic governance, and nonprofit/cooperative structure of Spinoff Cooperatives are not subject to competitive challenge.
Section 6.7: Cooperative Support — Consultant Expertise
ARICC and Subchapter fiduciaries may support Partner Cooperatives by providing or facilitating access to relevant consultant expertise.
Section 6.8: Cooperative Charter Mandate — Most Preferred Trading Partner
A. Findings and Purpose:
The Legislature finds that cooperation among cooperatives is a fundamental principle of the ARICC ecosystem. To strengthen the network and maximize the value of cooperative enterprise, ARICC fiduciaries shall develop and require a Most Preferred Trading Partner provision in the charters of all Partner Cooperatives.
B. Charter Mandate:
ARICC fiduciaries shall develop and require inclusion of a Most Preferred Trading Partner provision in the charters of all Partner Cooperatives receiving ARICC or Subchapter capital. Such provision shall require Partner Cooperatives to extend to other Partner Cooperatives in good standing the most favorable pricing, terms, and access offered to any customer or member, consistent with the cooperative's fiduciary duties and operational sustainability.
C. Fiduciary Discretion:
ARICC fiduciaries shall determine the specific terms, implementation timelines, and any exceptions to the Most Preferred Trading Partner provision in the exercise of their professional judgment, consistent with their fiduciary duties and the governing principles of this Act.
D. Charter Lock:
The Most Preferred Trading Partner provision shall be included in Partner Cooperative charters as a non-waivable, non-amendable charter lock provision, subject to the same amendment restrictions as the Arizona Benefit Covenant.
E. Construction:
Nothing in this section shall be construed to:
1. Require any specific pricing, terms, or access that would impair a cooperative's fiduciary duties or operational sustainability;
2. Create a private right of action except as otherwise provided by law;
3. Impair the authority of Subchapter boards to govern Partner Cooperatives within their purview.
ARTICLE 7: IMPLEMENTATION AUTHORITY
Section 7.1: Rulemaking Authority
ARICC Council shall promulgate detailed rules within 180 days for specific phase metrics and thresholds, investment criteria and procedures, cooperative certification standards, performance measurement systems, sliding scale administration procedures, Strategic Institutional & Labor Integration mechanisms, Critical Needs Index maintenance and updates, Subchapter chartering and governance certification, County Equity Reserve administration, Civic Bounty verification standards, Community Stewardship programs, Domestic Stabilization Bounty attestation and fraud prevention, government program democratization and competitive challenge procedures, and such other matters as are necessary to implement this Act.
Section 7.2: Phased Implementation
ARICC and Subchapter fiduciaries shall determine the appropriate phasing of Subchapter establishment, capital deployment, and program implementation, consistent with the governing principles of Section 4.6 and the fiduciary mandate of Section 2.15.
Section 7.3: Reporting Requirements
ARICC shall annually report to the Legislature detailing phase progression by community, investment performance and adherence to restrictions, cost savings to state and local governments, job creation and preservation, wealth building metrics, compliance with prohibitions and priorities, number and type of institutions integrated, capital deployed through institutional partnerships, county-by-county Sovereign Tranch allocations, Subchapter formation status, redlined area investment and deployment, Community Investment Board composition and certification, Civic Bounty program metrics, Community Stewardship metrics, Youth Community Steward participation, Domestic Stabilization Bounty participation, opponent conversion metrics, government program democratization activity, and the Universal Participation & Sustainable Revenue Report required by Section 2.15.
Section 7.4: Enforcement & Remedies
A. State Oversight:
ARICC Council shall maintain public dashboards displaying Subchapter establishment compliance, allocation distributions, redlined area investment, Community Investment Board certification, and Civic Bounty program metrics. ARICC Council may withhold technical assistance or administrative subsidies for non-compliant Subchapters.
B. Private Right of Action:
1. Any member of a Subchapter may petition ARICC Council for review of Subchapter actions alleged to violate the governing principles or fiduciary duties.
2. Any member may challenge Subchapter non-compliance with charter or statutory requirements in superior court.
3. Members have standing to enforce fiduciary duties through derivative actions.
C. No Local Interference:
1. Any county, municipal, or other local government ordinance, resolution, or policy purporting to prohibit, restrict, or impede the establishment or operation of any Subchapter created pursuant to this Act is void.
2. ARICC and any Subchapter may seek injunctive relief and damages in superior court against any local government that violates this subsection.
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ARTICLE 8: LEGAL PROVISIONS
Section 8.1: Gift Clause Compliance
State and local government investments provide adequate consideration through performance of core governmental duties, contractual financial returns on investments, retirement security for taxpayers, measurable cost savings through performance contracts, measurable public benefits through Civic Bounty programs, measurable public savings through Domestic Stabilization Bounties, and fair market valuation and consideration for asset transfers under Section 6.6.
Section 8.2: Constitutional Framework
This Act establishes framework authority. ARICC and Subchapters are private, member-owned public benefit cooperatives organized under Title 10. Nothing in this Act limits the power of the Legislature to amend or repeal this Act.
Section 8.3: Subchapter Independence
County Subchapters are not instrumentalities of county government. Municipal Subchapters are not instrumentalities of municipal government. Neighborhood Subchapters are not instrumentalities of municipal government. Unincorporated Area Subchapters are not instrumentalities of county government. Tribal Subchapters are not instrumentalities of tribal government but operate in consultation with tribal nations. Spinoff Cooperatives are private enterprises, not instrumentalities of government. No local government retains appointment, approval, veto, audit, or dissolution authority over any Subchapter or Spinoff Cooperative.
Section 8.4: Fiduciary Duty Preservation
The fiduciary duties of Subchapter and Spinoff Cooperative directors to their members shall not be impaired by any provision of this Act. Directors and officers owe enhanced fiduciary duties to preserve charter lock provisions.
Section 8.5: Severability
If any provision is invalidated, others remain in full force.
Section 8.6: Five-Year Review
Comprehensive legislative review beginning 2030 to assess implementation and consider modifications.
