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Commercial Leasing Section
Sandy Kelley, Manager
The Commercial Leasing Section produced
revenues of $12.1 million during FY 2001. The figure does not include $11.7
million of school facility lease payments by school districts which is
distributed to the School Facilities Board (Student First legislation). The
Section completed five long-term leases, which represents two school leases,
a corporate office site, an electrical station, and an open space lease.
Revenue from these leases will total approximately $720 million over the
term of the leases.
The Section anticipates an increase in its
lease revenues during FY 2002 based on continued growth within Arizona and
its prime location of commercial Trust properties ready for development.
APPLYING FOR A COMMERCIAL LEASE
State Trust lands may be leased throughout
the State for a variety of commercial purposes including various retail,
industrial and other uses. Commercial leases are available for short and
long terms.
Both short and long term leases require an
application for a Commercial Lease to be filed with the Department.
EVALUATION CRITERIA
All Trust land transactions must be in
accordance with the State’s responsibility to assure the highest and best
use of the land in order to maximize revenues to the Trust’s
beneficiaries. Annual rental rates are based upon market rent.
The Land Department will review the proposal taking into consideration the
compatibility with surrounding uses, local zoning, hydrology, geology,
archaeology and economic factors.
SPECIAL LAND USE PERMITS
A Special Land Use Permit (SLUP) is a license, granted for
the temporary use of Trust land. A SLUP does not give the permittee a
leasehold interest in the land, and therefore, can be unilaterally revoked
by the permittee or the State Land Commissioner. A SLUP does not allow the
placement of permanent improvements on Trust land.
LONG-TERM LEASES
Leases in excess of 10 years and up to 99
years are considered long term leases and are obtained at public auction.
Terms, conditions and rents are established before the lease is auctioned.
The auction notice is prepared by the Department and is published once a
week for ten consecutive weeks in two publications, as required by the
Enabling Act.
The State Land Department is mandated by
Federal law and the State Constitution to generate revenue for the Trust
beneficiaries, public schools and other institutions throughout Arizona. The
Department, therefore, requires all Trust land lease transactions be in
accordance with that responsibility and be in the best interest of the
Trust. Further, the Trust cannot subsidize any purpose, no matter how
meritorious, at the expense of its beneficiaries.
The Land Department has the authority to
lease rural commercial trust lands for up to 99 years. The Department will
consider long term leasing in rural areas when and where appropriate.
SHORT TERM LEASES
Leases issued for up to ten years are
considered short term leases and do not have to go to public auction. These
leases can be for a variety of purposes and may allow for reimbursable
improvements.
BENEFITS OF COMMERCIAL LEASING
Not only are commercial leases available
for prime locations on Trust land, but the lessee is exempt from paying
property taxes on the land. Improvements are subject to taxation by the
local taxing authority. Lease rentals reflecting the market value are
structured to assist in making private financing feasible.
COMMERCIAL LEASE PROCEDURES
Submit a formal application to the State
Land Department with the appropriate filing fee. This application should
include
1. Legal
Description: A complete legal description of the land. Give the
subdivision, section, township, and range, the acreage and county the land
is located in (for instance, SWNW, Section 17, T1N, R3E, 40 acres, Maricopa
County). If the intended parcel is irregular in shape or has a curved side,
a certified land survey by a registered Arizona land surveyor may be
required, at applicants expense.
2. Development: If
development is intended for the parcel of land applied for and improvements
are anticipated, include a conceptual plan with the application. If a lease
is approved, a complete site plan will be required. A business plan and
evidence of financial capability may also be required.
3. Improvements: Approval
of this application does not constitute approval of any improvements. An
application to place improvements must be submitted to the Department
after a lease is obtained and PRIOR to any grading or construction of the
improvement(s).
4. Expenses: Depending
on the location of the land applied for as well as the use and type of lease
requested, there may be additional requirements. These requirements may
include but are not limited to: archaeological surveys, registered
land survey, advertising, or appraisals. Any expenses related to these or
additional requirements are the responsibility of the applicant.
5. Processing Time: Complexity
and term of lease are determining factors in the length of time it takes to
process your application. Processing time may vary from six months to two
years.
6. Rental: Rental
rates are based upon appraised market rent. Other factors may
be considered depending on the type of use. For example; a percentage of
gross sales may be appropriate for a retail business whereas the income
producing potential of the land may be more appropriate for other uses.
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