Assigned to NRRA                                                                                                      AS PASSED BY THE SENATE

ARIZONA STATE SENATE

Forty-seventh Legislature, Second Regular Session

AMENDED

FACT SHEET FOR S.B. 1554

state trust land lease renewal

Purpose

            Adds notification requirements for state land leases that are near term expiration.

Background

            The State Land Department (SLD) has authority over all state trust lands and the natural products derived from the land. The mission of SLD is to manage the trust lands and maximize revenues for the beneficiaries. In 1981, the Urban Lands Management Act was passed, giving SLD new authority to plan, zone and merchandize the urban trust lands surrounding the state’s major population centers. SLD issues leases for a variety of uses on state lands, including special land use, apiary (bee), mineral leases, mineral exploration and recreational access.

The Arizona State Constitution, in accordance with the federal Enabling Act of 1910, allows leases issued for up to 10 years to be considered short-term leases that do not have to go to public auction.  These leases can be for a variety of purposes and may allow for limited reimbursable improvements.  Leases in excess of 10 years and up to 99 years are considered long-term leases and are conveyed at public auction.  Terms, conditions and rents are established before the lease is auctioned.  SLD has the authority to lease commercial  trust lands for up to 99 years.

            Statute requires that no later than 90 days before the expiration of a lease term, SLD must notify the lessee by mail of the pending expiration and send a copy of the notice to anyone who has registered with the SLD as mortgagees or lien holders of the lessee’s interest by certified mail.

            There is no anticipated fiscal impact to the state General Fund associated with this measure.

Provisions

1. Requires the SLD, if the lessee has failed to substantially comply with the lease and the lease is pending expiration, to notify the lessee that SLD found that the lessee failed to substantially comply and that the lease will expire unless the lessee applies for renewal and corrects the deficiency.

2. Becomes effective on the general effective date.

Amendments Adopted by Committee

· Requires a mineral lease to be renewed if the lessee has substantially complied with the terms of the lease, unless the lessee has notified the SLD Commissioner of an intention not to renew.

Amendments Adopted by Committee of the Whole

1. Removes the requirements for automatic renewal of state land leases and mineral leases.

2. Adds notification requirements.

Senate Action

NRRA             2/16/06     DPA     6-1-0

3^rd Read           3/14/06                  20-9

Prepared by Senate Research

March 22, 2006

FB/DA/ac