 |
ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
state land use; highest; best
Purpose
Allows the Arizona State Land Commissioner (Commissioner) to renew an existing mineral or mineral materials lease without public auction if the Commissioner makes outlined determinations and prohibits the Arizona State Land Department (ASLD) from restricting the use of a holdover lease to more than 90 days.
Background
The ASLD must administer all laws relating to lands owned by, belonging
to and under control of Arizona and have charge and control of all lands owned
by Arizona, and timber, stone, gravel and other products of such lands (A.R.S.
§ 37-102). The Commissioner must: 1) exercise and perform all powers and
duties vested in or imposed on the ASLD and prescribe such rules as are
necessary to discharge those duties; 2) make long-range plans for the future
use of state lands in cooperation with other state agencies, local planning
authorities and political subdivisions;
3) have the authority to lease for commercial purposes and sell all land owned
or held in trust by Arizona; and 4) fulfill all other statutorily prescribed
duties (A.R.S.
§ 37-132).
All state lands are subject to lease for a term of not more than 10 years for agricultural, commercial and homesite purposes, without advertising. The leases must be granted according to the Arizona Constitution, state law and ASLD rules. Leases may not be granted without an application and all applications for leases must be: 1) made upon forms prepared and furnished by the ASLD; 2) signed and sworn to by the applicant or their authorized agent or attorney; and 3) filed with the ASLD (A.R.S. § 37-281).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Allows the Commissioner to renew an existing mineral or mineral materials lease without public auction if the Commissioner determines that:
a) the lessee is in substantial compliance with the terms of the lease;
b) renewal is in the best interest of the trust;
c) renewal is supported by written fiduciary findings; and
d) the renewal term is for a term that is authorized by state law.
2. Requires a renewed mineral or mineral materials lease to provide for a royalty rate that is adjusted using a market-based indexing mechanism adopted by the ASLD.
3. Allows the indexing mechanism to include producer price indices, regional or statewide construction aggregate price indices or other objective, industry-recognized market indicators.
4. Requires the Commissioner to review indexed royalty rates at intervals of not more than five years.
5. Requires the ASLD, to the extent possible, to restrict the use of a holdover lease to not more than 90 days.
6. Requires a holdover tenant whose lease is terminated by the ASLD to receive immediate reimbursement for the fair market value of any reasonable and customary improvements that the holdover tenant made to the state land.
7. Requires the ASLD, for a lease renewal and special land use permit and to the extent possible, to:
a) approve any improvements that are reasonable and customary in the lessee's or permittee's course of business; and
b) provide ample notice to a lessee or permittee before the termination of the lease or special land use permit.
8. Requires the ASLD, on conclusion of the lease or special land use permit, to reimburse the lessee or permittee for the improvements with monies from the state land trust.
9. Contains a statement of legislative findings.
10. Becomes effective on the general effective date.
House Action
NREW 2/12/26 DPA 6-4-0-0
3rd Read 2/26/26 30-23-7
3rd Read 3/3/26 32-22-5-0-1
*on reconsideration
Prepared by Senate Research
March 20, 2026
SB/hk