By Roland Murphy for AZBEX
The Arizona House of Representatives and Rep. Gail Griffin announced last week that actions by the House and Senate Joint Legislative Committee of Reference could lead to major changes to Arizona State Land Department policies and practices following a year of controversy and questions about land management and sales practices.
ASLD is scheduled to sunset at the end of 2026. The Committee convened Jan. 20 “to conduct an in-depth review,” according to the release. “Following extensive testimony from the State Auditor General, the State Land Commissioner, and stakeholders from across Arizona’s land use industries, members resoundingly rejected approval of the agency for another eight years and instead opted for only a four-year continuation, conditioned on significant and enforceable reforms.”
Controversies with Department Policies
Controversy has increased around the Department’s management, policies and processes after a series of reports and reviews over the last year.
A July report from the Arizona Auditor General found several deficiencies with Department’s practices.
According to the report’s key findings, ASLD manages roughly 9.2 million acres of State Trust Land and sold more than 48,000 acres for a total of nearly $2.6B between June 2016 and Oct. 2024. Proceeds from sales, leases and use permits are used for Trust beneficiaries, primarily K-12 public schools.
The report found, however, the Department “did not develop statutorily required disposition plans for this land since 2016; absent a disposition plan, it risks not demonstrating its sales were transparent and in trust beneficiaries’ best interest.”
The report says, “…the Department’s practice of deciding to sell State trust land without a long-range disposition plan increases the risk that it will not achieve the highest and best use for State trust land. Further, because the Department does not proactively plan the disposition of State trust land, it may have difficulty demonstrating whether potential State trust land sales initiated by external stakeholders are in the best interest of the trust beneficiaries.” It also cites a 2011 disposition plan as an example of how having a plan in place benefits the process.
State law requires the sale of public land for the highest amount possible. There is currently an issue in Gilbert over interpretation of the law in which the Town is considering the sale of 18.9 acres to Christ’s Church of the Valley. The church’s proposed use fits with the existing land use designation. Concerns have been raised that other parties may bid more than the $6.39M appraisal price and then pursue amendments to the land use designation. Under the Town’s interpretation of the law, the sale must go to the highest bidder, regardless of the intended future use.
Another issue raised was the Department failing to “inspect State Trust Land used for mineral extraction/exploration to ensure the land was restored for leases/permits we reviewed, increasing public safety risk.”
A local news report explained when companies lease land for mineral exploration or extraction, they pay a security deposit in the form of bonds to ensure the land is restored after work is completed. If the site is properly remediated, the deposit bond is paid back. The Auditor General found ASLD did not conduct inspections in 14 of the 18 cases reviewed and paid back $45K in bonds for the uninspected sites.
Adding to the controversy, the non-partisan, non-profit research group Common Sense Institute Arizona reported in November that “restrictive policies and limited flexibility in how land is managed and sold” have resulted in billions of dollars in potential land sale revenue going unrealized.
In both the report and the public announcement, CSI’s estimates claimed if Arizona had “sold and reinvested its trust land more efficiently, total distributions could have reached $140B,” since achieving statehood in 1912. Instead, the land trust has distributed $5.8B to K-12 in that time period.
ASLD has also been criticized by a variety of outlets for the number of single-bidder auctions, suspected favoritism toward some applicants and prospective users, holding applications indefinitely and other issues of transparency.
The House announcement said, “Industry representatives whose members rely on state trust land to provide jobs, build homes, and generate revenue for Arizona’s trust beneficiaries, including K–12 education, testified that the Department’s persistent deficiencies have caused a significant backlog of pending applications, a lack of planning, and a seemingly subjective internal review process.”
Legislature Shortens Authorization, Demands Changes
Arizona law requires the Legislature to periodically review state agencies to ensure their continuation is warranted.
Agencies and programs are usually authorized/renewed for eight-year terms. Last week’s House announcement said, “However, based on substantial evidence submitted during the hearing, as well as a poor performance audit, members found deep, longstanding issues with the agency that warranted a significantly shorter renewal. The Committee determined that a continuation of only four years was appropriate and that any continuation must be conditioned upon the implementation of substantial internal administrative and policy reforms.”
The Committee’s reference list of recommendations for ASLD is extensive. In addition to the four-year continuation, it mandates the Department to return with a report and additional recommendations within two years, adopt all 51 recommendations for improvement from the Auditor General and open additional investigations into seven policy areas, including intentionally vacant land, solar lease processes and vacant land policies within various distances from municipalities.
It also made recommendations for 11 legislative changes and other items. Quoting directly from the announcement, these are:
- Create a conceptual land use plan and five-year disposition plan;
- Make urban land use planning committee appointments;
- Establish licensing timeframes and due process;
- Establish a transparent process for Commissioner-initiated sales;
- Establish a transparent procedure for all applications;
- Act in accordance with the legislative creation of an oversight and accountability committee;
- Work with industry to resolve all issues involving Salesforce improvement;
- Use third-party contracting to improve efficiency and timelines for all application types;
- Work with industry on:
- Mineral leases and instruments;
- Mineral invoicing; municipal annexation and zoning uses;
- Mineral sterilization, and
- Agricultural land appraisals/indexing;
- Clarify the capital improvement reimbursement process through procedure addressing timelines, and
- Create new language in all leases that permits biosolids use on State Trust Lands.
We have reached out to Rep. Griffin and to the spokesperson for the Arizona Senate Republicans for additional comment but had received no response by press time.