HB2150 - 572R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 27, chapter 2, article 3, Arizona Revised Statutes, is amended by adding section 27-240, to read:

START_STATUTE27-240. Lease of state trust lands; minerals; renewals; indexed royalties

A. Notwithstanding any other law, the state land commissioner may renew an existing mineral or mineral materials lease without public auction if the state land commissioner determines all of the following:

1. The lessee is in substantial COMPLIANCE with the terms of the lease.

2. renewal is in the BEST INTEREST of the state land trust.

3. Renewal is supported by a written finding by the state land Commissioner that the renewal is consistent with the state land Commissioner's fiduciary duties.

4. The renewal is for a term that is allowed by the laws of this state.

b. a lease that the state land commissioner renews PURSUANT to this section shall provide for a royalty rate that is adjusted PURSUANT to a market-based indexing mechanism that the state land commissioner adopts. The indexing mechanism may include any of the following:

1. producer price indices.

2. regional or STATEWIDE construction aggregate price INDICES.

3. Other objective INDICATORS that are RECOGNIZED by the industry.END_STATUTE

Sec. 2. Section 37-102, Arizona Revised Statutes, is amended to read:

START_STATUTE37-102. State land department; powers and duties

A. The state land department shall administer all laws relating to lands owned by, belonging to and under the control of this state.

B. The department shall have charge and control of all lands owned by this state, and timber, stone, gravel and other products of such lands, except lands under the specific use and control of state institutions and the products of such lands.

C. The department, in the name of this state, may commence, prosecute and defend all actions and proceedings to protect the interest of this state in lands within this state or the proceeds of lands within this state. Actions shall be commenced and prosecuted at the request of the department by the attorney general, a county attorney or a special counsel under the direction of the attorney general.

D. The department shall be the official representative of this state in any communication between this state and the United States government in all matters respecting state lands or any interest of this state in or to the public lands within this state.

E. The summons in any action against this state respecting any lands of this state or the products of such lands and all notices concerning such lands or products shall be served on the commissioner. Summonses, warrants or legal notices served on behalf of the department may be served by the commissioner or the commissioner's deputy, or by the sheriff or a constable of any county of this state.

F. The department shall maintain as a public record in each of the department's offices a public docket and index of all matters before the department that may be subject to appeal to the board of appeals or to the courts and all sale, exchange and lease transactions subject to bidding by the public. The department shall list a matter on the public docket immediately after an application or other request for department action is received by the department. The department shall include in the public docket every formal action and decision affecting each matter in question. The department shall establish by rule a means by which any person may obtain a copy of the public docket at the current copying cost.

G. The department shall reappraise or update the department's original appraisal of property to be leased, exchanged or sold if the board of appeals' approval of the lease or sale occurred more than two hundred forty days before the auction.

H. To the extent possible, the state land department shall:

1. Prepare maps of the ancillary military facilities described in section 28-8461, paragraph 7, subdivisions (b) and (c).

2. Make a map of the ancillary military facility described in section 28-8461, paragraph 7, subdivision (a) available to the public in printed or electronic format and provide the map in printed or electronic format to the state real estate department.

3. On receipt of proper information from the military installation commander with responsibility for the military electronics range, prepare a map of the military electronics range as defined in section 9-500.28 and make that map available to the public in printed or electronic format and provide the map in printed or electronic format to the state real estate department. Within ninety days after receipt of notice of any change in the boundaries of the military electronics range from the military installation commander, the state land department shall revise its map and provide the map to the public and to the state real estate department.

4. On or before December 31, 2024 and on receipt of proper information from the applicable military installation's and range's and Arizona national guard site's commanders, prepare electronic legal descriptions and maps of the military installation and range and Arizona national guard site and their respective influence areas as defined in sections 9-500.50 and 11-818.01 and provide the legal descriptions and maps to the state real estate department and the public. The state land department shall make changes to the boundaries of the military installation and range and arizona national guard site and their respective influence areas and provide them to the state real estate department and the public within ninety days after receipt of those changes from the military installation's and range's and Arizona national guard site's commanders.

5. Restrict the use of a lease or permit holdover provision to not more than ninety days. If a lease is in holdover status and the holdover tenant submits a lease renewal application pursuant to section 37-291 that the department does not take action on within the ninety days after the lease expires, the lease is automatically renewed for three years and ninety days after the date of natural expiration. A lease that is renewed pursuant to this paragraph is deemed in the best interest of the state trust pursuant to section 37-291. If the department terminates a holdover tenant's lease, the department shall provide immediate reimbursement for the fair market value, as determined by an independent third-party vendor, of any reasonable and customary improvements that the holdover tenant made to the state land.

6. For a lease renewal and special land use permit:

(a) Approve any improvements that are customary in the lessee's or permittee's course of business. If a tenant submits an application for permission to construct or make an improvement to state lands pursuant to section 37-321 and the department does not take action on the application within ninety days after receipt, the application is automatically approved. An improvement that is automatically approved pursuant to this subdivision is deemed in the best interest of the state pursuant to section 37-321. On conclusion of a lease renewal or special land use permit, the department shall reimburse the lessee or permittee for the lessee's or permittee's improvements on state lands with monies from the state land trust.

(b) Not less than six months before the expiration of a lease renewal or special land use permit, provide notice of expiration. The notice must include all of the following:

(i) Any PROPOSED rental increase or PROPOSED change to the terms and conditions of the lease renewal or special land use permit.

(ii) The intent of the department to renew or terminate the lease or special land use permit.

(iii) The justification for the commissioner's decision, as prescribed in section 37-133, to renew or terminate the lease or permit. If the department decides to not renew a lease or issue a special land use permit, the department shall include a statement that identifies the department's determination of the highest and the best use of the state lands, subject to the lease or special land use permit. If the state lands will not immediately generate revenue on the expiration of the lease or special land use permit, the notice shall include a statement identifying how long the department estimates that the state lands will generate monies for the state land trust and why the department believes foregoing the monies for the estimated time frame is in the best interest of the state land trust.

7. Restrict the use of special land use permits only to temporary land uses that do not have a dedicated land use lease or permit.

I. The state land department shall provide each map and the legal description of the boundaries of each ancillary military facility described in section 28-8461, paragraph 7 in electronic format to the state real estate department. Each map prepared by the state land department pursuant to this section shall:

1. Describe the ancillary military facility, the territory in the vicinity of the ancillary military facility and the high noise and accident potential zone, accident potential zone one and accident potential zone two associated with the ancillary military facility.

2. Be submitted to the county in which the ancillary military facility is located.

3. Be made available to the public.

J. The state land department shall prepare a military training route map. The map shall contain military training route numbers in this state that are used by various United States armed forces. The map shall be dated.

K. When preparing the military training route map, the state land department shall use information contained in the most current department of defense publication that is entitled "area planning military training routes for North and South America".

L. The military training route map shall be made available to the public.

M. Within ninety days after the department is notified of a change of a military training route in this state, the department shall prepare a revised military training route map. The map shall be dated and contain a statement that the map supersedes all previously dated maps. The state land department shall send the revised map to the state real estate department electronically and shall also send an accompanying letter specifying the military training route changes. The state land department shall send the revised map and an accompanying letter specifying the military training route changes to the municipalities affected by the changes and to all counties.

N. The department shall submit the military training route map prepared pursuant to this section to the counties in either an electronic or a printed format. The format shall be determined by the receiving county.

O. The state land department shall provide the legal description of the boundaries of the military training routes as delineated in the military training route map to the state real estate department in electronic format.

P. The state land department shall prepare a military restricted airspace map. The map shall contain military restricted airspace in this state that is used by various United States armed forces. The map shall be dated.

Q. When preparing the military restricted airspace map, the state land department shall use information contained in the most current department of transportation publication that is entitled "aeronautical chart".

R. The military restricted airspace map shall be made available in printed or electronic format to the public at the state land department and at the state real estate department.

S. Within ninety days after the department is notified of a change of military restricted airspace in this state, the department shall prepare a revised military restricted airspace map. The map shall be dated and contain a statement that the map supersedes all previously dated maps. The state land department shall send the revised map to the state real estate department electronically and shall also send an accompanying letter specifying the military restricted airspace changes. The state land department shall send the revised map and an accompanying letter specifying the military restricted airspace changes to the municipalities affected by the changes and to all counties.

T. The department shall submit the military restricted airspace map prepared pursuant to this section to the counties in either an electronic or a printed format. The format shall be determined by the receiving county.

U. The state land department shall provide the legal description of the boundaries of the military restricted airspace as delineated in the military restricted airspace map to the state real estate department in electronic format.

V. The department may accept title to and manage real estate, property rights and related infrastructure acquired pursuant to section 26-262, subsection K for preserving or enhancing military installations in this state. END_STATUTE

Sec. 3. Section 37-132, Arizona Revised Statutes, is amended to read:

START_STATUTE37-132. Powers and duties

A. The commissioner shall:

1. Exercise and perform all powers and duties vested in or imposed on the department and prescribe such rules as are necessary to discharge those duties.

2. Exercise the powers of surveyor-general except for the powers of the surveyor-general exercised by the state treasurer as a member of the selection board pursuant to section 37-202.

3. Make long-range plans for the future use of state lands in cooperation with other state agencies, local planning authorities and political subdivisions.

4. Promote the infill and orderly development of state lands in areas beneficial to the trust and prevent urban sprawl or leapfrog development on state lands.

5. Classify and appraise all state lands, together with the improvements on state lands, for the purpose of sale, lease or grant of rights-of-way. The commissioner may impose such conditions and covenants and make such reservations in the sale of state lands as the commissioner deems to be in the best interest of the state trust. The provisions of this paragraph are subject to hearing procedures pursuant to title 41, chapter 6, article 10 and, except as provided in section 41-1092.08, subsection H, are subject to judicial review pursuant to title 12, chapter 7, article 6.

6. Have authority to lease for grazing, agricultural, homesite or other purposes, except commercial, all land owned or held in trust by this state.

7. Have authority to lease for commercial purposes and sell all land owned or held in trust by this state, but any such lease for a term longer than ten years for commercial purposes or any such sale shall first be approved by the board of appeals.

8. Except as otherwise provided, determine all disputes, grievances or other questions pertaining to the administration of state lands.

9. Appoint deputies and other assistants and employees necessary to perform the duties of the department and assign their duties subject to title 41, chapter 4, article 4 and require of them such surety bonds as the commissioner deems proper. The compensation of the deputy, assistants or employees shall be as determined pursuant to section 38-611.

10. Make a written report to the governor annually, not later than September 1, disclosing in detail the activities of the department for the preceding fiscal year and publish it for distribution. The report shall include an evaluation of auctions of state land leases held during the preceding fiscal year considering the advantages and disadvantages to the state trust of the existence and exercise of preferred rights to lease reclassified state land.

11. Withdraw state land from surface or subsurface sales or lease applications if the commissioner deems it to be in the best interest of the trust. This closure of state lands to new applications for sale or lease does not affect the rights that existing lessees have under law for renewal of their leases and reimbursement for improvements.

12. Provide a quarterly update of the activities of the department and the actions that the department is taking to improve the internal and administrative workings of the department to the chairperson of the house of representatives natural resources, energy and water committee of reference, or its successor committee of reference, and the senate natural resources committee of reference, or its successor committee of reference.

B. The commissioner may:

1. Take evidence relating to, and may require of the various county officers information on, any matter that the commissioner has the power to investigate or determine.

2. Under such rules as the commissioner adopts, use private real estate brokers to assist in any sale or long-term lease of state land and pay, from fees collected under section 37-107, subsection B, paragraph 1, a commission to a broker that is licensed pursuant to title 32, chapter 20 and that provides the purchaser or lessee at auction. The purchaser or lessee at auction is not eligible to receive a commission pursuant to this paragraph. A commission shall not be paid on a sale or a long-term lease if the purchaser or lessee is a political subdivision of this state.

3. Require a permittee, lessee or grantee to post a surety bond or any form of collateral deemed sufficient by the commissioner for performance or restoration purposes. The commissioner shall use the proceeds of a bond or collateral only for the purposes determined at the time the bond or collateral is posted. For agricultural lessees, the commissioner may require collateral as follows:

(a) As security for payment of the annual assessments levied by the irrigation district in which the state land is located if the lessee has a history of late payments or defaults. The amount of the collateral required may not exceed the annual assessment levied by the irrigation district.

(b) As security for payment of rent, if an extension of time for payment is requested or if the lessee has a history of late payments of rent. The collateral shall be submitted at the time any extension of time for payment is requested. The amount of the collateral required may not exceed the annual amount of rent for the land.

4. Withhold market and economic analyses, preliminary engineering, site and area studies and appraisals that are collected during the urban planning process from public viewing before they are submitted to local planning and zoning authorities.

5. Withhold from public inspection proprietary information received during lease negotiations. The proprietary information shall be released to public inspection unless the release may harm the competitive position of the applicant and the information could not have been obtained by other legitimate means.

6. Issue permits for short-term use of state land for specific purposes as prescribed by rule.

7. Contract with a third party to sell recreational permits. A third party under contract pursuant to this paragraph may assess a surcharge for its services as provided in the contract, in addition to the fees prescribed pursuant to section 37-107.

8. Close urban lands to specific uses as prescribed by rule if necessary for dust abatement, to reduce a risk from hazardous environmental conditions that pose a risk to human health or safety or for remediation purposes.

9. Notwithstanding subsection A, paragraph 4 of this section, authorize, in the best interest of the trust, the extension of public services and facilities either:

(a) That are necessary to implement plans of the local governing body, including plans adopted or amended pursuant to section 9-461.06 or 11-805.

(b) Across state lands that are either:

(i) Classified as suitable for conservation purposes pursuant to section 37-312.

(ii) Sold or leased at auction for conservation purposes.

10. Contract with a qualified third-party reviewer that is selected by the commissioner to review any application submitted to the department if the commissioner determines that the department will not be able to take action on the application within sixty working days after the application is submitted to the department. A third-party reviewer that reviews an application pursuant to this paragraph shall do both of the following:

(a) Review the application and take all other related actions in accordance with all requirements that are adopted by the department.

(b) Notify the department and the applicant of the findings of the review.

C. The commissioner or any deputy or employee of the department may not have, own or acquire, directly or indirectly, any state lands or the products on any state lands, any interest in or to such lands or products, or improvements on leased state lands, or be interested in any state irrigation project affecting state lands.END_STATUTE

Sec. 4. Section 37-233, Arizona Revised Statutes, is amended to read:

START_STATUTE37-233. Sale of state lands; restriction on sale of timber land; expense of sale; rules

A. On receiving an application, or on the commissioner's initiative, the state land department, under the rules of the department, may cause state lands to be sold if the sale of them is not prohibited by law.

B. Land containing timber of a value which in the opinion of the commissioner should be sold separately from the land shall not be subject to sale until after the timber is sold.

C. When an application is filed with the department for selection or sale of land under the laws of this state, and the department determines that the benefit to be derived from the selection or sale is less than the expense involved, the commissioner may accept from the applicant an amount of money sufficient to pay the expense incidental to the selection or sale. If the applicant fails to secure a lease after selection of land, or fails to purchase land after bidding for it, the successful lessee or purchaser shall reimburse the original applicant for all funds so advanced.

D. RULES ADOPTED PURSUANT TO SUBSECTION A OF THIS SECTION SHALL ESTABLISH A PROCEDURE AND CRITERIA THAT THE COMMISSIONER MUST USE FOR DETERMINING WHETHER TO INITIATE THE SALE OF STATE LANDS BY THE COMMISSIONER'S RULES ADOPTED PURSUANT TO SUBSECTION A OF THIS SECTION SHALL ESTABLISH A PROCEDURE AND CRITERIA THAT THE COMMISSIONER MUST USE FOR DETERMINING WHETHER TO INITIATE THE SALE OF STATE LANDS BY THE COMMISSIONER'S OWN INITIATIVE. END_STATUTE

Sec. 5. Section 37-331.03, Arizona Revised Statutes, is amended to read:

START_STATUTE37-331.03. Conceptual land use plans; five year disposition plans; definitions

A. The commissioner shall create and approve conceptual land use plans for all urban state trust land in this state and other state trust lands the commissioner considers to be appropriate. The commissioner shall:

1. Prioritize the creation of conceptual land use plans to the extent possible to:

(a) Correlate with the rate of population growth in the urban areas in this state.

(b) Coincide with the production of municipal general plans under title 9, chapter 4, article 6 and county plans under title 11, chapter 6, article 1.

2. Revise and update each conceptual land use plan at least every ten years. The COMMISSIONER shall issue a written order approving each conceptual land use plan and conceptual land use plan revision.

3. Consult with the city, town or county in which the land is located and with any regional planning organization regarding integrating the conceptual land use plan into the general land use plan of the city, town or county.

4. Submit post each conceptual land use plan, and revision of the a conceptual land use plan, to the urban land planning oversight committee for review and the Commissioner's written approval of each CONCEPTUAL land use plan and conceptual land use plan revision on the department's website.

B. On approval of the conceptual land use plan by the commissioner under this section, the conceptual land use plan is considered to be a state general plan for the purposes of this article.

C. The commissioner may create the conceptual land use plans under subsection A of this section by any of the following methods:

1. Using department staff or private consultants.

2. Entering into participation contracts pursuant to section 37-239.

3. Issuing planning permits for urban lands pursuant to section 37-338.

4. Entering into planning contracts for urban lands or other state trust lands the commissioner considers to be appropriate, including compensation as provided by section 37-338, subsection D.

d. On the commissioner's approval of a conceptual land use plan, the conceptual land use plan, as applied to state lands that have not been annexed as of the effective date of this amendment to this section:

1. is the COntrolling land use designation for state lands.

2. Supersedes any conflicting county or municipal zoning.

D. E. The commissioner shall create a five year disposition plans plan for all state trust land in each county in this state, based at a minimum on market demand, anticipated transportation and infrastructure availability. The commissioner shall do all of the following:

1. Review and update each five year disposition plan for each county each year as may be necessary.

2. Consult with the city, town or county in which the land is located and with any regional planning organization.

3. Submit post each five year disposition plan and, each five year disposition plan revision to the urban land planning oversight committee and each written order that adopts or approves a five year disposition plan or five year disposition plan revision AVAILABLE on the department's website to ensure conformity with the conceptual land use plan under subsection A of this section.

4. Ensure that each five year disposition plan and five year disposition plan revision conforms with the conceptual land use plan.

5. Issue a written order that approves and adopts each five year disposition plan and five year disposition plan revision.

E. f. For the purposes of this section:

1. "Conceptual land use plan" means a plan that is developed for urban state trust land and other state trust lands the commissioner considers to be appropriate and that identifies:

(a) Appropriate land uses, including commercial, industrial, residential and open space uses.

(b) Transportation corridors and infrastructure requirements.

2. "Five year disposition plan" means a plan that identifies the land projected to be sold, leased, reclassified for conservation purposes, master planned or zoned during the next five years.END_STATUTE

Sec. 6. Repeal

Section 41-3026.05, Arizona Revised Statutes, is repealed.

Sec. 7. Title 41, chapter 27, article 2, Arizona Revised Statutes, is amended by adding section 41-3030.19, to read:

START_STATUTE41-3030.19. State land department; termination July 1, 2030

A. The state land department terminates on July 1, 2030.

b. Title 37, chapters 1 and 2 and this section are repealed on January 1, 2031.END_STATUTE

Sec. 8. State land department; auditor general report; recommendations; implementation; checklist; notification; delayed repeal

A. Within two years after the effective date of this section, the state land commissioner shall implement all fifty-one recommendations in the auditor general's July 2025 performance audit and sunset review of the state land department.

B. Until the state land commissioner implements all of the auditor general's recommendations, the state land commissioner shall meet with the auditor general quarterly and report on the progress of the state land department's implementation of the recommendations.

C. The auditor general shall maintain a checklist of the recommendations and shall update the checklist after each meeting consistent with the completion of any of the recommendations to the satisfaction of the auditor general.

D. The auditor general may enter any premises, conduct any investigation or inspect any documents in possession of the state land department to ensure the state land department implements the recommendations to the auditor general's satisfaction.

E. Each fiscal quarter, the auditor general shall provide an update of the current status of the recommendation checklist to the following:

1. Each member of the joint legislative audit committee.

2. The governor.

3. The chairperson of the committee of reference that the president of the senate tasks with oversight of the state land department.

4. The chairperson of the committee of reference that the speaker of the house of representatives tasks with oversight of the state land department.

F. If the state land department fails to implement the auditor general's recommendations within two years after the effective date of this section, the auditor general shall:

1. Notify the following:

(a) Each member of the joint legislative audit committee.

(b) The governor.

(c) The chairperson of the committee of reference that the president of the senate tasks with oversight of the state land department.

(d) The chairperson of the committee of reference that the speaker of the house of representatives tasks with oversight of the state land department.

2. Request a special meeting of the joint legislative audit committee to evaluate potential remedies and future action.

G. This section is repealed from and after December 31, 2028.

Sec. 9. Legislative findings

The legislature finds that this act is necessary to ensure the best interest of the state land trust, state land trust beneficiaries and this state.

Sec. 10. Public hearing; notification; committees of reference; state land department's strategic plan; delayed repeal

A. On or before April 1, 2028, the auditor general shall notify the state land department and the chairpersons of the senate natural resources committee of reference and the house of representatives natural resources, energy and water committee of reference, or their successor committees of reference, of the requirement to hold a public hearing as prescribed in subsection B of this section.

B. On or before July 1, 2028, the senate natural resources committee of reference and the house of representatives natural resources, energy and water committee of reference, or their successor committees of reference, shall hold a public hearing during which the state land department shall provide an update regarding the state land department's strategic plan.

C. This section is repealed from and after December 31, 2028.

Sec. 11. Five year disposition plans; conceptual land use plan; requirements; delayed repeal

A. Within two years after the effective date of this section, the state land commissioner shall:

1. Complete the five year disposition plans for state trust lands and update the conceptual land use plan for state lands pursuant to section 37-331.03, subsection E, Arizona Revised Statutes, as amended by this act.

2. Adopt written policies and procedures for updating:

(a) The five year disposition plan every five years.

(b) The conceptual land use plan every ten years.

3. Adopt written policies and procedures on how the state land department will use the five year disposition plans and the conceptual land use plan for determining whether state trust lands are or will be sent to public auction.

4. Provide a copy of the five year disposition plans and the conceptual land use plan and the policies and procedures adopted pursuant to this section to the president of the senate and the speaker of the house of representatives.

B. This section is repealed from and after June 30, 2029.

Sec. 12. Legislative findings

The legislature finds that:

1. According to the auditor general's performance audit and sunset review of the state land department completed on July 9, 2025, the state land department has failed to develop the statutorily required five year disposition plans since 2016.

2. According to the auditor general's performance audit and sunset review, all five members of the urban land planning oversight committee have been vacant since at least 2018.

3. Pursuant to section 37-331.02, Arizona Revised Statutes, and section 37-331.03, Arizona Revised Statutes, as amended by this act, the urban land planning oversight committee serves in an advisory role only and is not required for the commissioner to fulfill the commissioner's obligations to create a five year disposition plan pursuant to statute.

4. The fact that the governor has not appointed any members to the urban land planning oversight committee has not absolved the commissioner of the commissioner's obligations to create a five year disposition plan as prescribed in section 37-331.03, Arizona Revised Statutes, as amended by this act.

5. The creation of a five year disposition plan is necessary for housing affordability and to ensure the highest and best use of the land for the beneficiaries of the trust.

Sec. 13. Purpose

Pursuant to section 41–2955, subsection B, Arizona Revised Statutes, the legislature continues the state land department to have charge of and control over all lands owned by this state, except lands under the specific use and control of state institutions, and the resources in and on those lands and to regulate the use of and access to those lands and resources as prescribed by the enabling act, the Constitution of Arizona and state law and to perform such other functions as prescribed by law.

Sec. 14. Retroactivity

Sections 6 and 7 of this act apply retroactively to from and after July 1, 2026.