Report of the Municipal Master Planned Development Study Committee

              REPORT OF THE
MUNICIPAL MASTIER PLANNED
DEMXOPMENT
STUDY COhillMITTEE
DECEMBER 1, 1989
TABLE OF CONTENTS
MSUTNUICDIYPA CLO MMAMSIT'ITEERE P L.A.N.N.ED. .D.E.V.E.L.O.PM. .EN. T. . . . . . . . . . . . . . . . . . . . . i i
11. HB 2019 COMMITTEE FINAL RECOMMENDATIONS . . . . . . . . . . . . . 3
111. SUMMARY OF DISCUSSION AND FINDINGS FOR HB2019 ISSUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
IV. PROPOSED LEGISLATIVE PACKAGES . . . . . . . . . . . . . . . . . . . . . . . 23
APPENDICES
MUNICIPAL MASTER PLANNED DEVELOPMENT
STUDY C0MMXTIE.E
CHAIRMAN: M. J. HASSELL, STATE LAND COMMISSIONER
MEMBERS: HONORABLE JANE D. HULL, SPEAKER
(Representing State House of Representatives)
HONORABLE JAMIE SOSSAMAN
(Representing State Senate)
JOE CONTADINO, COVENTRY HOMES
(Representing Homebuilders)
MIKE GOYER, CITY OF SIERRA VISTA
(Representing Cities and Towns)
MIKE HOUSE, CITY OF PHOENIX
(Representing Cities and Towns)
JALMA HUNSINGER, ARIZONA ASSOCIATION OF
REALTORS
(Representing Realtors)
BILL LARSON, G. WILLIAM LARSON & ASSOCIATES
(Representing Community Planners)
DON VIEHMANN, VIEHMANN, MARTIN & ASSOCIATES
(Representing Cornunity Developers)
The catalyst for the HB 2019 Committee occurred in early 1987 when the Land
Department instituted a series of meetings with staff from John F. Long Properties
and the Phoenix law firm of Streich, Lang, Weeks and Cardon, and the Attorney
General's office, in an effort to act on John F. Long's application to plan and
develop a self-contained community in rural north central Maricopa County.
Since this was the first self-contained community application proposed under
Article 5.2 of the Urban Lands Act, the goal of this series of meetings was to
perform an in-depth review of the self-contained community statutes in order to
gauge the viability and long-term financial impact of such a project, and to
determine the requisite steps to implement a self-contained community on Trust
land.
A further topic of discussion during this series of meetings was the implementation
of planned infrastructure prior to Trust land disposition. The State Land
Department is currently unable to implement a master planned development
because of the necessity to provide for the construction of infrastructure associated
with such a development. In the past, the Department has been criticized for
disposing of planned Trust land in parcels that are too large. The criticism of
selling land at wholesale prices (too cheaply) centered on those parcels purchased
"today" but not ready for development for many years and without any provision
for the infrastructure which will spur the development of this planned Trust land.
Historically the value of land increases when infrastructure is installed and it has
been the parcel end-users or developers that have captured this increased value
rather than the Trust.
It became apparent that several issues regarding Article 5.2 needed extensive
clarification and amendment. These amendments were proposed in conjunction
with House Bill 2019 and became part of a session law that dealt with master
planned developments on State Trust land within a municipality. This session law
also required the State Land Commissioner to empanel a committee representing
a broad cross-section of public and private sector development representatives to
study four basic issues:
1. The definition of master planned development.
2. The methodology and funding of the planning phase.
3. The phasing of development and disposition of state trust lands under
master development.
4. Issues related to infrastructure.
The HB 2019 Committee has been meeting on a regular basis since September,
1988, and has extensively studied and discussed the HB 2019 issues, as well as
several infrastructure implementation "tools." This report serves to summarize the
Committee's discussion, findings and final recommendations on each of the four
HB 2019 issues, and to present to the Legislature several statutory change
packages that will facilitate the implementation of master planned developments
for Trust land located within a municipality.
A. Issue #1: Definition of Master Planned Development
1. An approved development plan which includes a proposed master
plan area must meet the following criteria:
a. Is within the corporate boundaries of a city or town;
b. Has inadequate infrastructure to utilize state land for its
highest and best use; and
c. Is a minimum of 160 acres in size.
2. A development plan which includes a master plan area may include:
a. Proposed design guidelines and covenants, conditions and
restrictions (CC&R's);
b. Proposed infrastructure planning, implementation and hnding;
c. Proposed provisions for construction, maintenance and
enforcement of a community identity package;
d. Proposed phasing, timing and method of disposition and
infrastructure placement;
e. Conformance with municipal development ordinances, in
addition to those requirements pursuant to A.R.S. 537-335 (I)
and (MI;
f. Provisions for membership in a master property association
which is governed by a board of directors and has the
responsibility for the implementation and enforcement of the
master plan area;
g. Proposed marketing program description to promote the master
plan area and provisions for its funding.
B. Issue #2: Methodology and funding of the planning phase
1. Legislature should adopt proposed amendments to Article 5.1 of the
Urban Lands Act to provide a framework for preparation of a
development plan which may include a master plan area.
2. State Land Department should utilize Article 5.1, if amended by the
Legislature, to facilitate development plans which include master plan
areas on Trust land.
3. State Land Department should utilize planning permits, currently
allowed in Article 5.1, as the means for completing and funding the
master planning phases.
4. Master plan permit applicants may be required to pay costs associated
with the review and analysis of the application and that these costs
are not reimbursable.
C. Issue #3: Phasing of development and disposition of State Trust lands
under master development.
1. State Land Commissioner should have broader authority to enter into
agreements that provide for implementation of master plan areas
including the authoritv to approve subseauent appraisals and sales
under a varticipation contract.
2. A development phasing plan should be mandatory in any master plan
agreement.
3. Participation contract applicants may be required to pay costs
associated with the review and analysis of the application and these
costs are not reimbursable.
D. Issue #4: Issues related to infixstructure.
1. State Land Commissioner should have broader authority to enter into
infrastructure implementation agreements in conjunction with master
plan areas, and to negotiate the level of reimbursement for approved
infrastructure and land acquisition on a case-by-case basis.
2. Legislature should adopt proposed legislation which will facilitate the
use of participation contracts and infrastructure contracts used to
implement master planned developments on Trust land.
3. Legislature should adopt proposed legislation which will facilitate the
use of community facilities districts, provided that community
facilities districts prove to be successful over a period of years and
adequate safeguards are included in the proposed legislation to
protect the interests of the Trust.
E. General Recommendation
1. Legislature should provide an increased level of staff and resources
to the State Land Department to manage and monitor master plan
agreements, long-term leases and idi-astructure implementation
agreements issued in conjunction with development plans which
include master plan areas.
k Issue #1: Definition of Master Planned Development
1. Discussion
The Committee's discussion on this HB 2019 issue centered on a paper
addressing this issue prepared and presented at the request of the
Committee by Committee member Bill Larson. This paper encompassed
several topics including a number of possible definitions for master planned
development, the timing of annexation and zoning for master planned
developments and the minimum and maximum size for a master planned
development. The paper also included a listing of Arizona counties and
communities having master planning ordinances or zoning procedures that
are compatible with the planning permit scope of work addressed in Articles
5.1 and 5.2 of the Urban Lands Act.
The possible definitions of master planned development resulted from a
review of master planning and zoning ordinances from municipalities in
Arizona, California, Colorado and Florida. Definitions varied widely from
ordinance to ordinance, but similarities were extracted and were
recomposed into the following definition for master planned development:
"an integrated development plan which responds to social, economic and
physical determinants of the site, while maximizing aesthetics through
flexible design criteria."
Another topic contained in the paper, the timing of annexation and zoning
for a master planned development, generated a great deal of discussion by
the Committee. This discussion centered on whether the State's planning
process could begin while all or a part of a master planned development
parcel is located in an unincorporated area, and whether "hard" zoning for
an entire master planned development should be obtained prior to the
approval of the master plan by the State Land Commissioner.
The final topic encompassed by the paper and discussed by the Committee
dealt with both the minimum and maximum size of a master planned
development. A range of sizes were considered, and while a minimum size
of 160 acres was the consensus of the Committee, it was decided that the
maximum size for a master planned development should be predicated upon
sound planning principals and market trends.
A related topic that generated a great deal of discussion by the Committee,
but not covered by Mr. Larson's paper, was the difference between a master
planned development and a master planned community. Many ingredients
usually included in a master planned development are also common to
master planned communities, such as community identity packages, urban
design criteria and master infrastructure plans. From a definitional
standpoint, master planned developments are generally smaller in scale but
achieve the same goal as master planned communities.
As the Committee worked to frnalize a definition of master planned
development to address this issue, Mr. Larson also prepared and presented
to the Committee a menu of items that could be included in a community
identity package. This listing was grouped into several categories including
architecture, landscape, lighting, street furniture, walls and signage. Mr.
Larson hypothesized that this listing could be used by master developers
when preparing a concept statement for the State's planning permit
application.
After several discussions regarding this HB 2019 issue, the Committee
determined that a master planned development must meet the following
criteria:
a) is within the corporate boundaries of a city or town by the
time zoning is obtained, if necessary, and the final
development plan is approved by the Commissioner;
b) has inadequate infrastructure to utilize State land for its
highest and best use, and;
C) is a minimum of 160 acres in size.
The Committee also detennined that a development plan could contain one
or several master plan areas, and that each master plan area may include
design guidelines, plans for implementation and funding of infrastructure,
a community identity package with provisions for implementation and
enforcement, and a common marketing program with provisions for
funding.
Finally, the Committee decided that the State's planning process for a
master plan area, i.e., designation as suitable for urban planning and
general planning, could be accomplished even though all or part of the
master plan area had not yet been annexed. The Committee noted the
importance of coordinating these initial planning steps with the respective
municipality. The Committee also decided that the third step in the State's
planning process, development planning, could also commence, but
determined that the entire master plan area must be annexed prior to the
approval of zoning. The timing of annexation was deemed very crucial by
the Committee to promote consistency during both planning and
implementation of a master plan area on State Trust land.
B. Issue #2 Methodology and funding the planning phase
1. Discussion
The Committee's discussion on this issue initially centered on a draft Article
5.3, which was formulated by staff to serve as a methodology for planning
master plan areas and to incorporate various means of implementing
infrastructure. After several meetings, the Committee decided to extract the
infrastructure implementation language so that the draft Article 5.3 dealt
solely with the planning methodology for a master plan area. Once this
extraction was made, it became evident that much of the text of the draft
Article 5.3 was a repeat of the existing Article 5.1 with a master planning
overlay consisting of terms and concepts germane to master plan areas.
After further debate, the Committee instructed staff to draft amendments
to the existing Article 5.1 which would enable the State to prepare master
plan areas under a planning pennit or contract, or to utilize some master
plan area components, i.e., provisions for implementation and funding of
infrastructure, for projects completed or to be completed under Article 5.1.
These amendments were then drafted and submitted to the Committee for
further review and analysis.
Also discussed by the Committee were the advantages and disadvantages of
utilizing planning permits or contracts to formulate development plans with
one or several master plan areas. The biggest advantage to utilizing
planning pennits also turned out to be the biggest disadvantage to utilizing
contracts to formulate these development plans: the availability of State
funds. Under a contract, State appropriated funds are used to hire a
planning and engineering consultant team to prepare a development plan
according to a State-prepared Scope of Work. Under a planning permit,
however, these planning costs are borne by the planning permittee also
using a State-prepared Scope of Work with no State funds required.
The lack of State funds also spawned a discussion regarding the Land
Department's current staffing levels and staff expertise and whether staff
had the ability to review and analyze planning pennit applications that will
be much more complex than those applications submitted for current
planning projects completed under the existing Article 5.1. The Committee
discussed this lack of resources and the need for additional analysis to be
completed by outside consultants expert in the field of developer financial
capabilities and master planned development feasibility.
Upon further review and analysis, the Committee determined that the
amendments to Article 5.1 dealing with master plan areas would result in
less confusion for those individuals using the statutes, and would clarify
master planning techniques and components to be used for projects
completed or to be completed under the existing Article 5.1.
The Committee also determined that the planning phase and its funding
should be accomplished through the issuance of a planning permit with the
provision that planning could be completed utilizing State appropriated
funds if such funds were to become available. The Committee concluded
that utilizing the existing planning permit or contract processes were
adequate and would require only minor modification to the State's
application forms.
Finally, the Committee recognized that applications to formulate plans for
a master planned development would be more complex and would require
more staff or resources to complete the review of these types of
applications. In lieu of more staff and resources being appropriated by the
Legislature, the Committee determined that each applicant should pay for
the review and analysis of his application and that these costs would not
be considered to be reimbursable. If the applicant was not willing to pay
these costs, then the application would be rejected. These findings were
also incorporated into the amendments to Article 5.1.
Issue #3: Phasing of development and disposition of Trust lands under
master development
Discussion
At the request of Committee member Don Viehmann, Grady Garnmage of
Gammage & Burnham prepared and presented a paper to the Committee on
the advantages of preparing master plans for large blocks of Trust land
located adjacent to many of Arizona's cities and towns. Master plan areas
would work well on Trust land planning projects for several reasons, i.e.,
higher land values are achieved, land use assurances are provided to
potential end users and the State would be able to lease or sell smaller
"development ready" parcels and be able to capture land values closer to
the retail value of the Trust land. In addition, master plan areas could be
driven by large blocks of either commercial or residential land, but would
work best on large residential projects surrounding a large commercial core.
The Committee then discussed disposition and development in the context
of master planned developments. This discussion centered on master
planning and the phased construction of infrastructure. Because all master
plans contain this infrastructure component, Trust land dispositions could
become a function of development phasing and infrastructure availability
and could better respond to changing market conditions and trends over the
life of the master plan.
The Committee detennined that implementation of a master plan area is the
most efficient way to get infrastructure installed for Trust land projects, and
that value is added to land when infrastructure is installed prior to lease
or sale. In order to facilitate dispositions based on the availability of
infrastructure, the Committee determined that the planning phase for
master plan area must address infrastructure installation, reimbursement
and disposition schedules.
m spite of the fact that master plan areas would include components
addressing infrastructure phasing and funding, the Committee recognized
a potential problem that could arise in the event that the State and the
master developer would want to construct infrastructure before the
respective municipality is ready to accept the maintenance responsibility for
that infrastructure. To address this potential problem, the Committee
determined that the close relationship between the Land Department and
the State's municipalities, which is fostered by the Urban Lands Act, would
alleviate a problem of this nature during the planning phase. Once the
planning phase has been completed, the Land Department, the master
developer and the affected municipality would all know what to expect
regarding infrastructure plans and implementation schedules.
Issue #4: Issues related to infrastructure
In order to fully address this issue, the Committee decided to explore and
study a number of "tools" that would, if utilized, result in the installation
of infrastructure for master planned developments prior to disposition.
Since one of the Committee's findings under issue #3 was that value is
added to land when infrastructure is installed, the Committee focused on
a discussion of various tools as a way to garner these added values upon
disposition.
A total of six (6) tools were examined by the Committee through the
formulation of implementation process outlines' and a listing of advantages
and disadvantages of each tool from the Trust's perspective. The six tools
studied included:
* State of Washington Transition Lands Program;
* Municipal impact fees;
* Infrastructure contracts;
t Participation contracts;
* Community facilities districts, and;
* Master property associations.
The following narrative includes a summary of the Committee's discussion,
the advantages and disadvantages of each tool and the Committee's findings
for each tool. It should be noted that all the infrastructure tools, with the
exception of the State of Washington Transition Land Program, could be
used either separately or in conjunction with one another to implement
infrastructure for master plan areas approved under the Urban lands
planning process.
State of Washinnton Transition Lands P r o m
1. Discussion
The Committee gathered information on this program by receiving
publications provided by the Real Estate Division of Washington's
Department of Natural Resources and through a telephone
conference call with division director Rod Hilden and project
managers Pat Harper and Don Vogt. During this conference c d ,
Mr. Hilden and his staff explained how the program's planning and
implementation process works and how the State participates in
various types of improvement districts which will benefit Trust lands.
The planning work done by Washington's Real Estate Division
adheres very closely to local land use plans and the State prefers to
dispose of a Trust land parcel prior to rezoning if that rezoning will
be controversial. It became obvious from the discussion that the
Arizona State Land Department places a much heavier emphasis on
A process outline was not formulated for the State of Washington Transitions Lands
Program. The process outline for each of the five other tools is included in the
Appendix
planning and zoning through the Urban Lands Act than does the
State of Washington because of the large acreages of urban land in
Arizona. It also became evident that the difference in the two
Enabling Acts (Washington Statehood preceded Arizona Statehood
by 23 years) made much of Washington's process inapplicable to
Arizona.
The discussion then shifted to infrastructure and the Committee
learned that the State of Washington enacted legislation that allows
the Department of Natural Resources to participate in local
improvement, or assessing, districts when such participation will
benefit adjacent Trust lands. These districts could install water or
sewer lines, streets, drainage facilities or some other public facility,
but there must be an obvious benefit to Trust lands before any State
participation occurs. This also benefits the local jurisdictions by
helping them to install infrastructure that will support and further
their growth goals. The State does not participate in improvement
districts if the benefit to Trust lands cannot be documented or if any
undue risk to the Trust land is possible. The State's primary policy
on improvement district participation is that the fee interest to the
land not be jeopardized in any way.
The State of Washington's process for determining whether or not
to participate in an improvement district is very rigid. The State
uses a net present worth analysis for proposed improvement districts
to determine if the investment is cost-effective and, in many cases,
appraisal-oriented infomation is used to justifv the Division's request
for funds from the Legislature.
The State also utilizes funds from the Resource Management Cost
Account (RMCA) to pay improvement district assessments. The
funds in the RMCA come from the department's administration of
leases and timber sales and the department can use up to 25 percent
of this account on a biennial basis to participate in local
improvement districts, although the amount usually averages 11 to
15 percent.
With respect to the improvement district bonding process, the fact
that Washington Trust land is to be included in the improvement
district has actually enhanced this bonding process. With State
participation, the bonds become an obligation of the State in the
event of default by a lessee. The district board would foreclose on
the leasehold interest and send the assessment to the State for
payment.
The final topic discussed was the timing of infrastructure installation.
Typically, Washington's Trust lands are disposed of prior to the
development of off-site and on-site infrastructure and the State
normally does not install infrastructure. In some instances, the State
has complied with local jurisdiction requirements to install facilities,
such as a water storage tank or water and sewer lines because this
requirement had to be fulfilled to get the desired increase in zoning.
To date, this has not been done too frequently, but legally the State
can make expenditures to these local requirements. Typically,
the State gets all permits in hand, and then makes it the
responsibility of the end-user of the parcel to install infrastructure
as development proceeds.
The Washington Transition Lands program includes a number of
advantages which could be transferred for use by Arizona. These
advantages include the ability to participate in improvement districts,
the ability to dedicate Trust land for rights-of-way, and the ability
to utilize funds generated by the State's leasing and disposition
programs for both regulatory functions and infrastructure
implementation programs.
This program also has several disadvantages when applied to
Arizona's current process. These disadvantages include a heavier
reliance on local land use plans, and the State's ultimate
responsibility to make improvement district assessment payments in
the event of default by a lessee or purchaser. Also, while
Washington is able to use funds fkom its RMCA, the Arizona
Legislature has been reluctant to authorize a portion of funds
generated by the Arizona State Land Department for regulatory and
administrative functions. Finally, Arizona's Enabling Act and
Constitution simply do not allow Arizona to implement infrastructure
for Trust lands in the same manner now being done by the State of
Washington.
The Committee found this process to be innovative and interesting
but concluded that the Washington Department of Natural Resources
in the context of its Transition Lands Program had a great deal more
flexibility with respect to participating in improvement districts and
using proceeds from land and product dispositions for regulatory and
implementation activities. It became obvious from the Committee's
discussion and from input from the Attorney General's office that the
Arizona State Land Department cannot currently follow Washington's
lead due to Federal Enabling Act and State constitution restrictions.
Municipal Impact Fees
Discussion
The Committee heard a presentation on this infrastructure and public
facility financing tool given by Bob Cafarella of the City of Phoenix.
This impact fee system was established in 1988 in conjunction with
the city's peripheral areas planning process, and will be utilized to
fund infrastructure and other public improvements, such as
police/fire stations and libraries.
The fees, which are based on the number of equivalent dwelling
units (EDUs) contained in the Phoenix Peripheral Area Plans, are
collected from developers when building pennits are issued. The
fees are then put into separate accounts and cannot be transferred
from one account that may have a surplus to cover a deficit in
another account.
The impact fee system also provides credits to a developer who
installs the required infrastructure and public improvements. This
installation can be accomplished utilizing private funds or through
an improvement or community facilities district. Each development
then receives credits to off-set development fees and utility hook-up
fees. These adjustments are made based on developer contributions
in the form of capital facilities, and the final net fee per EDU is then
calculated by making these adjustments.
Finally, the City of Phoenix will update and revise the gross fee for
each EDU, which is currently $4,496, on an annual basis to reflect
increasing construction costs and general plan amendments. Because
the system is relatively new, the city is in the process of phasing in
the impact fees over a five year period.
After hearing the presentation, the Committee discussed the fact that
only the City of Phoenix currently has an impact fee system, but that
other Arizona communities may be following this city's lead in
preparing and adopting such a system. Other topics of discussion
included application of an impact fee system on developing vs.
already developed areas and the use of community facilities districts
in conjunction with an impact fee system.
Perhaps the greatest advantage to using municipal impact fee
systems is that infrastructure and public facility costs are equally
distributed for either large master plan areas or for smaller
individual Trust land parcels. Another advantage is that impact fees
are compatible with improvement or community facilities districts.
In addition, impact fees are advantageous because each local
jurisdiction administers the fee system instead of the State or the
land owner.
The major disadvantage to impact fee systems is that many Arizona
municipalities do not have the adequate staff expertise and resources
to administer such a system. In addition, developer default could
result in unmanageable political and financial burdens for these
smaller communities. A final disadvantage that must be noted is
that impact fee systems could differ from one municipality to
another, and this could serve to impede the planning and
development of Trust land.
The Committee found the use of municipal impact fees to be very
compatible with and complementary to the State's urban lands
planning process, as well as with the other infrastructure
implementation tools studied by the Committee. The Committee
concluded that no legislative changes were needed to facilitate the
participation in impact fee systems by a master developer or by
individual Trust land parcel end users.
The Committee also concluded that, because current State statutes
allow each municipality to adopt impact fee systems, each
municipality, and not the Land Department, should be responsible
for instituting impact fee systems to implement and fund
infrastructure for future development.
Infrastructure Contracts
1. Discussion
The infrastructure contract concept would include provisions for the
installation of "backbone" infrastructure and could be used for Trust
land projects planned under the urban lands process. The
infrastructure contract would specify the type of infrastructure
required, the location of that infrastructure based on the approved
development plan, a construction phasing plan, a methodology for
calculating the infrastructure cost and interest, and a payback
system. The contract would be issued in conjunction with a long-term
lease or sale disposition and the lessee or certificate of
purchase holder would have the obligation to install the "backbone"
infrastructure according to the approved phasing plan.
The Committee's discussion of this tool centered on the payback
system and how such a system would work. Once the infrastructure
required by the contract has been installed, subsequent dispositions
of parcels served by the new infrastructure would occur. The parcel
developer, as a condition of the lease or certificate of purchase,
would remit to the infrastructure contractor a pro rata share of the
infrastructure costs and interest based on the size of the parcel
leased or purchased.
The Committee also discussed the issues of default under an
infrastructure contracts and how such contracts would be modified
or amended.
One of the primary advantages of utilizing infrastructure contracts
is that infrastructure would be installed at an early date, thus
enhancing the value of surrounding unauctioned parcels. The early
installation of infrastructure would also create a market demand for
these unauctioned parcels. Another advantage is that infrastructure
contracts could be used for large Trust land master plan areas and
would be compatible with a municipal impact fee system.
The Committee also discussed several disadvantages for this type of
infrastructure agreement. For instance, the phasing plan could
become skewed by fluctuating market conditions thus making some
parcels unmarketable despite the fact that infrastructure has already
been installed. This situation would result in delay of paybacks to
the infrastructure contractor.
Another disadvantage discussed by the Committee is that a large
tract of Trust land would need to be disposed of to serve as an
incentive to install the "backbone" infrastructure. This could fuel the
already prevalent perception that the State already disposes of
parcels that are so large that they negatively impact surrounding fee
land values.
Other disadvantages include the current lack of Land Department
staff and resources to negotiate, administer and monitor this type of
infrastructure agreement, and the difficulty of replacing a master
developer/infrastructure contractor in the event of default.
The Committee concluded that infrastructure contracts would be very
useful for both master planned Trust land projects as well as for
projects completed or to be completed under the existing Articles 5.1
and 5.2. Infrastructure contracts in conjunction with a long-term
lease or certificate of purchase could achieve the construction of
infrastructure to enhance the value of surrounding unauctioned
parcels.
The Committee determined that an infrastructure contract should
contain construction and reimbursement schedules, as well as
provisions dealing with default and non-performance. The legislative
changes drafted for various State statutes address these needs and
concerns.
Finally, the Committee concluded that the Land Department will
require more staff and resources to administer and monitor
infrastructure contracts that are issued in conjunction with long-term
leases, certificates of purchase, or participation contracts.
Participation Contracts
1. Discussion
Marriner Cardon of Streich, Lang, Weeks and Cardon, prepared and
presented to the Committee a paper on the participation contract
concept and explained to the Committee how such contract could be
applied to master planned developments on Trust land.
The first step of the process would entail planning and rezoning the
Trust land through the planning process under Article 5.1 or Article
5.2 of the Urban Lands Act. A participation contract would then be
negotiated with a potential master developer and could contain a
lease or a certificate of purchase, or both if no preference right
existed, along with the responsibility to install infrastructure based
on an infrastructure construction phasing plan.
As phases of the infrastructure construction are completed, the
master developer conducts subsequent sales or lease assignments.
After subtracting the approved infrastructure and initial disposition
costs, the master developer would remit to the Land Department a
share of the proceeds from these subsequent sales or lease
assignments.
After the presentation, the Committee discussed the increased risk
involved in utilizing a participation contract and how this risk could
be counteracted by receiving a share of the master developer's
proceeds that are generated as a result of the installation of
infrastructure. The Committee also discussed the perceived loss of
control of subsequent sales or lease assignments by the master
developer and how some degree of control could be retained. The
State statutes currently require Land Department approval for all
lease assignments but not for subsequent sales.
Other topics of discussion included how to analyze a participation
contract application and what such an application should include,
how a participation contract would impact smaller parcel end-users,
how to protect the Trust in the event that a master developer turns
out to be dishonest or defaults on terms included in the contract and
the current lack of Land Department staff and resources to negotiate
and manage a participation contract.
This type of agreement between a master developer and the State
Land Department, the Committee found, inherently involves a greater
degree of risk than current disposition techniques. Each agreement
must be carefully negotiated and must contain construction and
reimbursement schedules as well as provisions dealing with master
developer default and non-performance. The proposed legislative
changes to facilitate the use of this tool addresses these needs and
concerns.
The Committee also concluded that the planning and zoning for a
master planned development must be finalized and approved by the
Commissioner prior to the disposition of a participation contract.
In addition, because this tool is perhaps the most complex of any
tool studied, all members of the Committee agreed that the Land
Department will require more staff and resources to analyze
participation contract applications and to negotiate, administer and
monitor this type of agreement.
Community Facilities Districts
1. Discussion
Marriner Cardon and Steve Betts of Streich, Lang Weeks and Cardon
gave a presentation to the Committee on the background of
Arizona's Community Facilities District Act and how it could be
applied to Trust land projects completed or to be completed under
the Urban Lands Act planning process. Modeled after California's
Mello-Roos Act, the Community Facilities District Act (the "Act")
would be complementary to the Committee's mission to study master
planned developments on Trust land within a municipality.
The Act currently is available to serve as a vehicle for constructing
many types of infrastructure such as roads, water/sewer lines and
drainage facilities for fee lands located within the corporate
boundaries of Arizona's many municipalities. The district is
generated by developers but the municipality has the final say on
whether or not a district can be formed. There is no size limitation
for such a district, but the project must be large enough to go out
to the tax fee bond market.
The biggest advantage of forming a community facilities district is
that tax free bonds are utilized so that the cost of installing
infrastructure and the associated carrying costs are lower. Another
advantage is that the formation of a district takes a portion of the
infrastructure cost burden off both the developer and the
municipality. The bonds are issued utilizing the fee interest in the
land and the future development of the land as security.
The Act currently does not provide for the inclusion of Trust lands
in a district because encumbering fee interest in Trust lands with
assessments is prohibited by the Federal Enabling Act and State
constitution. It was Mr. Betts' assertion, however, that the district
could include Trust lands by utilizing the possessory interest
associated with a long-term lease or certificate of purchase, and that
there is no constitutional prohibition to backing the district's bonds
with this possessory interest.
The Committee then discussed the use of the possessory interest to
back the district's bonds and whether this possessory interest is
valuable enough to back both the district's bonds and to serve as
collateral for financing the projects on-site improvements. The
Committee also discussed the risk of participating in a district and
how to protect the future marketability of a lease or certificate of
purchase in the event of default.
Another disadvantage to utilizing this tool is the current lack of Land
Department staff and resources to analyze the possible inclusion of
Trust lands in a community facilities district and to monitor
infrastructure activities once the district is in place and underway.
3. Findings
While the Committee concluded that community facility districts
could be utilized for conventional or master planned Trust land
projects, several concerns were discussed, i.e., avoiding the problem
of a possessory interest lien becoming an encumbrance on the Trust
land and, as a practical matter, whether a possessory interest in the
form of a long-term lease, certificate of purchase or participation
contract would be valuable enough to back bonds issued by the
district 4 serve as collateral for funds borrowed to construct on-site
improvements.
The proposed legislative changes relating to community facilities
districts which are being forwarded to the Legislature for
consideration (Section IV: Proposed Legislative Packages) attempt
to address these concerns and to provide a more workable
framework for the inclusion of Trust lands within these districts.
More specifically, the Committee concurred with the proposed
changes to the Community Facilities District Act [Title 481 and to
the Urban Lands Act [A.R.S. 537-335.02 (A) through (C) and A.R.S.
937-335.03 (A) through (C)]. However, the Committee directed
staff to further rehe A.R.S. 537-335.03 (D) through (G) in order
to complete the proposed legislative package for community facilities
districts.
Master Property Associations
1. Discussion
Committee member Don Viehmann presented this infrastructure tool
to the Committee for its review and consideration. This concept was
devised in conjunction with the Desert Ridge urban lands project
currently being prepared for 5,700 acres of Trust land in north
Phoenix. This tool would provide for the retrieval of "backbone"
infrastructure costs and interest by the master developer through a
master property association. This type of association is already
prevalent in most master planned developments, but using such an
association to retrieve "backbone" infrastructure costs on Trust land
would be an added obligation of the association.
The process would begin by master planning and zoning a large
tract of Trust land through the existing urban lands process. Upon
approval of the master plan by the Commissioner, the Land
Department would auction a large tract of commercial or residential
land with the obligation to install infrastructure and a community
identity package, i.e., signage, entry features, etc.
The master developer would then install the infrastructure, and
community identity package if one is included, based on an approved
phasing plan and cost reimbursement schedule. When other parcels
adjacent to the newly installed infrastructure are leased or sold, each
end-user would be obligated to join the association and to reimburse
the pro rata share of the infrastructure costs and interest to the
master developer through this master property association
mechanism. The association would also serve as the regulatory body
for implementation of the master plan.
The Committee discussed further how this association would
function, whether there would be a cap on the interest associated
with the backbone infrastructure and community identity package
installation costs, the advantages and disadvantages of a commercial
land driven and residential land driven master planned development
and the enforcement of infrastructure reimbursement. Many of these
items would be addressed during the planning phase and would be
included as components of the approved development plan.
3. Findings
The Committee concluded that the utilization of this tool in
conjunction with any urban lands project would require no
legislative changes and would perhaps be the easiest to administer
since most, if not all, administrative tasks would be the responsibility
of the master developer. However, the Committee also concluded
that additional staff and resources would be needed to monitor such
an agreement over the entire term of project buildout.
A final conclusion of the Committee was that general provisions for
the use of a master property association should be addressed during
the planning phase.
IV. PROPOSED LEGISLATION PACKAGES
A. Amendments to Article 5.1
B. Amendments to A.R.S. 537-101
C. Participation Contracts
D. Infrastructure Contracts
E. Community Facilities Districts [ARS. 837-335.03 (D) through (G) still
being refined by HB 2019 Subcommittee]
PROPOSED CHANGES TO
ARTICLE 5.1 OF THE URBAN LANDS ACT
The following proposed changes to Article 5.1 would facilitate the use of master plan
areas within a development plan, and would establish procedures for selecting a planning
pennittee, and for master plan preparation and approval.
PROPOSED REVISIONS TO ARTICLE 5.1
URBAN LANDS ACT
ARS. 537-331 remains unchanged
kRS. 537-331.01, 332, 333, 334 A remain unchanged
A.R.S. 537-334 Development plan; desi-m ation: preparation; approval
B. Afler designating certain urban lands as suitable for a development plan,
the Commissioner may cause a development OR SECONDARY plan to be prepared. The
development OR SECONDARY plan may be submitted to the Department AFTER
ISSUANCE OF A DEVELOPMENT PLANNING PERMIT OR A SECONDARY PLANNING
PERMIT or may be prepared by a planning contract to the lowest and best bidder, with
monies appropriated by the legislature for the purpose of urban lands development
planning. A SECONDARY PLANNING PERMIT IS A PLANNING PERMIT ISSUED TO AN
APPLICANT, ON A PARCEL OR PARCELS THAT HAVE NOT YET BEEN DISPOSED OF
TO PREPARE A SECONDARY PLAN WHICH SUPPLEMENTS AND IMPLEMENTS THE
APPROVED DEVELOPMENT PLAN.
ARS. 537-334 C thugh D remain unchanged
REVISED 11/28/89
E. TO THE EXTENT the proposed development plan would require zoning
inconsistent with any existing zoning, the commissioner shall submit empe%4k
swmkg to the local government with jurisdiction over the lands in question A REQUEST
FOR:
1. REZONING CONSISTENT WITH THE DEVELOPMENT PLAN; OR
2. APPROVAL OF A LAND USE PLAN PURSUANT TO STATUTE OR
ORDINANCE WHICH WOULD INCLUDE DESIGNATIONS OF PROPOSED ZONING
CATEGORIES AND LAND USE INTENSITIES AND WHICH WOULD BE CONSISTENT
WITH THE DEVELOPMENT PLAN.
The local government shall act upon the request within six months, notifying the
commissioner as to the acceptance or rejection of the commissioner's request for rezoning
OR PLAN APPROVAL. Rejection of a request for rezoning OR PLAN APPROVAL may, at
the commissioner's discretion, be appealed in the manner provided to any owner of land
affected by a zoning decision. The local zoning GOVERNMENTS decision shall govern
the use of the lands unless the commissioner determines that such zoning OR PLAN is
detrimental to the interests of the trust. If the commissioner so determines, the
commissioner shall prepare a written statement of the reasons for the determination and
shall within ten days of such decision provide a copy of the written statement to the
REVISED 11/28/89
local planning authority. The local government within whose jurisdiction the lands are
located has thirty days from receipt of this statement to appeal the commissioner's
decision to the board of appeals as provided for in 537-215. If the local government fails
to act upon the commissioner's request for rezoning OR PLAN APPROVAL within the time
provided in this subsection, the commissioner may adopt the development plan, noting
that the requested rezoning OR PLAN APPROVAL has not been obtained from the local
government. The commissioner may, after compliance with the requirements of 537-
335, reclassify the lands and proceed with its sale or lease, noting in the call for bids
that the requested rezoning OR PLAN APPROVAL has not been obtained.
ARS. 537-334 F through H remain unchanged
I. FOLLOWING APPROVAL OF A SECONDARY PLAN BY THE
COMMISSIONER, NO AMENDMENT OR REVISION MAY BE MADE WITHOUT APPROVAL
BY THE COMMISSIONER. AFTER NOTICE TO THE DEVELOPMENT PLANNING
PERMITTEE IF ONE EXISTS AND ANY MASTER PROPERTY ASSOCIATION FOR THE
AFFECTED DEVELOPMENT PLAN, THE COMMISSIONER MAY APPROVE A PROPOSED
AMENDMENT OF THE SECONDARY PLAN ONLY IF IT IS CONSISTENT WITH THE
DEVELOPMENT PLAN. IF THE PROPOSED AMENDMENT IS INCONSISTENT WITH
THE DEVELOPMENT PLAN, THE DEVELOPMENT PLAN MUST BE AMENDED PURSUANT
TO A.R.S. 837-334.H.
REVISED 11/28/89
A.R.S 537-334.01 MASTER PLANS: PREPARATION: APPROVAL
A. THE COMMISSIONER MAY APPROVE A DEVELOPMENT PLAN WHICH
INCLUDES A PROPOSED MASTER PLAN AREA IF THE PROPOSED MASTER PLAN
AREA:
1. IS WITHIN THE CORPORATE BOUNDARIES OF A CITY OR TOWN;
2. HAS INADEQUATE INFRASTRUCTURE TO UTILIZE STATE LAND FOR ITS
HIGHEST AND BEST USE; AND
3. IS A MINIMUM OF 160 ACRES IN SIZE.
B. A DEVELOPMENT PLAN APPROVED PURSUANT TO THIS SECTION FOR
A MASTER PLAN AREA MAY INCLUDE:
1. PROPOSED DESIGN GUIDELINES AND COVENANTS, CONDITIONS AND
RESTRICTIONS (CC&R'S);
2. PROPOSED INFRASTRUCTURE PLANNING, IMPLEMENTATION AND
FUNDING;
3. PROPOSED PROVISIONS FOR CONSTRUCTION, MAINTENANCE AND
ENFORCEMENT OF A COMMUNITY IDENTITY PACKAGE;
4. PROPOSED PHASING, TIMING AND METHOD OF DISPOSITION AND
INFRASTRUCTURE PLACEMENT;
REVISED 1 1/28/89 4
5. CONFORMANCE WITH MUNICIPAL DEVELOPMENT ORDINANCES, IN
ADDITION TO THOSE REQUIREMENTS PURSUANT TO A.R.S. 537-335 (I)
AND (MI;
6. PROVISIONS FOR MEMBERSHIP IN A MASTER PROPERTY ASSOCIATION
WHICH IS GOVERNED BY A BOARD OF DIRECTORS AND HAS THE
RESPONSIBILITY FOR THE IMPLEMENTATION AND ENFORCEMENT OF
THE MASTER PLAN AREA;
7. PROPOSED MARKETING PROGRAM DESCRIPTION TO PROMOTE THE
MASTER PLAN AREA AND PROVISIONS FOR ITS FUNDING.
ARS. 537-335 A through P remain unchanged
ARS. 837335.01, 335.02, 335.03, 335.04, 37-336, 37-337 remain unchanged
A.R.S. 537-338 - M C PLANNING PERMITS. PLAN
COMPENSATION: APPLICANT SELECTION
REVISED 11/28/89
A. PRIOR TO THE ISSUANCE OF A DEVELOPMENT PLANNING PERMIT OR
SECONDARY PLANNING PERMIT, THE COMMISSIONER SHALL REVIEW ALL
APPLICATIONS. THE APPLICATION SHALL CONTAIN INFORMATION REGARDING
CONSULTANTS' EXPERIENCE AND EXPERTISE AND APPLICANT'S EXPERIENCE,
EXPERTISE AND FINANCIAL CAPABILITY TO PREPARE AND COMPLETE THE
DEVELOPMENT OR SECONDARY PLAN AND THE PROPOSED COST TO PREPARE THE
DEVELOPMENT OR SECONDARY PLAN. EACH APPLICANT'S PROPOSAL SHALL ALSO
INCLUDE A DEVELOPMENT CONCEPT STATEMENT SETTING FORTH THE PROPOSED
OR POTENTIAL LAND USES FOR LAND INCLUDED WITHIN THE PROPOSED
DEVELOPMENT OR SECONDARY PLAN AREA AND SUCH ADDITIONAL INFORMATION
RELATIVE TO THE DISPOSITION FEASIBILITY AND SCHEDULING OF THE PROPOSED
DEVELOPMENT PLAN AS THE STATE LAND COMMISSIONER MAY REQUIRE. THE
STATE LAND COMMISSIONER MAY RETAIN ONE OR MORE INDEPENDENT EXPERTS
TO ASSIST IN ASSESSING THE QUALIFICATIONS OF ANY APPLICANT AND
CONSULTANTS OR IN EVALUATING THE BENEFITS OF ANY PROPOSED
DEVELOPMENT CONCEPT. THE COMMISSIONER SHALL SELECT ANY SUCH
INDEPENDENT EXPERTS AND MAY REQUIRE EACH APPLICANT TO PAY THE FEES,
COSTS AND EXPENSES OF HIRING SUCH EXPERTS INCURRED IN THE ANALYSIS OF
THAT APPLICANT'S QUALIFICATIONS AND PROPOSAL. IF THE APPLICANT IS
UNWILLING TO PAY SUCH FEES, COSTS AND EXPENSES, THE APPLICANT SHALL
NOTIFY THE COMMISSIONER IN WRITING, PRIOR TO THE TIME THE FEES, COSTS
REVISED 11/28/89 7
EXPENSES ARE ACTUALLY INCURRED, IN WHICH EVENT THE APPLICANTS
APPLICATION SHALL BE AUTOMATICALLY WITHDRAWN FROM CONSIDERATION.
THE FEES COLLECTED FOR THE ANALYSIS OF APPLICATIONS WILL BE COLLECTED
AND DEPOSITED PURSUANT TO A.R.S. 537-338.01.
B. THE COMMISSIONER MAY DENY THE APPLICATIONS OR SELECT THE
BEST APPLICANT, TAKING INTO CONSIDERATION EACH CONSULTANT OR
APPLICANTS EXPERIENCE AND EXPERTISE, THE COST TO COMPLETE THE
DEVELOPMENT PLANNING UNDER THE PLANNING PERMIT OR SECONDARY
PLANNING PERMIT, AND THE BEST INTEREST OF THE TRUST.
C. NO COMPENSATION FOR PLANNING SHALL BE MADE UNLESS THE
DEVELOPMENT PLAN APPROVED PURSUANT TO THIS ARTICLE IS SELECTED FOR
IMPLEMENTATION AND THE PARTY MAS A DEVELOPMENT PLANNING PERMIT OR
A SECONDARY PLANNING PERMIT ISSUED BY THE DEPARTMENT THAT SPECIFICALLY
STATES WHAT COSTS THE COMMISSIONER WILL RECOGNIZE AS DEVELOPMENT OR
SECONDARY PLANNING COSTS AND THE MAXIMUM AMOUNT THAT WILL BE
ALLOWED AS COMPENSATION IF THE STATE LAND IS SUBSEQUENTLY LET TO BID
BASED ON THE DEVELOPMENT OR SECONDARY PLAN. IF THE PARTY IS NOT THE
SUCCESSFUL BIDDER FOR LEASE OR PURCHASE OF STATE LAND IMPLEMENTING
THE DEVELOPMENT OR SECONDARY PLAN, HE SHALL BE COMPENSATED BY THE
REVISED 11/28/89 8
SUCCESSFUL BIDDER AT THE TIME LEASES ARE GRANTED OR LAND SOLD. THE
COMMISSIONER SHALL DETERMINE THE AMOUNT OF COSTS TO BE RECOVERED
FROM EACH LEASE OR SALE.
A.R.S. 637-338.01 - DEPOSIT AND USE OF EXPERT FEES
MONIES PAID PURSUANT TO A.R.S. 537-338(A) SHALL BE DEPOSITED IN A SPECIAL
ACCOUNT TO BE USED TO PAY COSTS INCURRED IN HIRING INDEPENDENT EXPERTS
PURSUANT THERETO.
NOTE: ADD AS SESSION LAW TO END OF PLANNING BILL PROPOSING REVISIONS
TO ARTICLE 5.1:
THIS ACT SHALL NOT AFFECT THE VALIDITY OF ANY PLANNING PERMJT
ISSUED BY THE DEPARTMENT PRIOR TO THE EFFECTIVE DATE OF THIS ACT;
HOWEVER, BY MUTUAL CONSENT OF THE DEPARTMENT AND THE PLANNING
PERMITTEE, A DEVELOPMENT PLAN BEING PREPARED PURSUANT TO A PLANNING
PERMIT ISSUED PRIOR TO THE EFFECTIVE DATE OF THIS ACT FOR STATE LANDS
MEETING THE DEFINITION OF A MASTER PLAN AREA UNDER A.RS. 537-334.01(A)
MAY INCLUDE THOSE ITEMS LISTED IN A.R.S. 537-334.01(B).
REVISED 11/28/89
NOTE: ADD AS SESSION LAW SECTION 1 (LEGISLATIVE PURPOSE) TO
BEGINNING OF ARTICLE 5.1 PROPOSING ADDITION OF MASTER PLANNING
PROVISIONS:
A. TO FULFILL ITS COMMITMENT TO THE MANAGEMENT OF STATE
LANDS IN THE BEST INTERESTS OF THE TRUST AND THE PEOPLE OF THIS
STATE, THE ARIZONA LEGISLATURE FINDS THAT THE MASTER PLANNING OF
UNDEVELOPED STATE LANDS IN THE PATH OF URBAN GROWTH WOULD
SUBSTANTIALLY INCREASE THE VALUE OF THESE LANDS AND THEREBY THE
POTENTIAL RETURN TO THE STATE TRUST FUND.
B. THE ARIZONA LEGISLATURE INTENDS BY THIS ACT:
1. TO CLARIFY THE COMMISSIONER'S AUTHORITY TO ENTER INTO
AGREEMENTS WITH OTHER PARTIES, PUBLIC OR PRIVATE, TO
FACILITATE MASTER PLANNING ON STATE LANDS; AND
2. TO ESTABLISH STANDARDS FOR PROVISIONS TO BE INCLUDED
IN SUCH AGREEMENTS, INCLUDING PROVISIONS FOR THE
REIMBURSEMENT OF THE COSTS OF THE MASTER PLANNING.
REVISED 11/28/89
PROPOSED ADDITIONS TO
TITLE 37 DEFINITIONS
The following definitions of "infrastructure" and "community identity package" are
required in A.R.S. 537-101 because of the tern' proposed use in Statutes prior to Article
5.1.
PROPOSED ADDITIONS TO
TITLE 37 DEFINITIONS
ARS. 537-101 (1) through (7) remain unchanged
8. "COMMUNITY IDENTITY PACKAGE" MEANS A DESIGN THEME WHICH MAY
INCLUDE ARCHITECTURE, LANDSCAPE, LIGHTING, STREET FURNITURE, WALLS AND
SIGNAGE.
ARS 537-101(8) through (11) are renumbered to (9) through (12)
13. "INFRASTRUCTURE" MEANS FACILITIES CONSTRUCTED OR AMENITIES
LOCATED ON STATE LANDS WHICH ARE INTENDED TO BENEFIT MORE THAN THE
LAND ON WHICH THEY ARE IMMEDIATELY LOCATED BY ENHANCING THE
DEVELOPMENT POTENTIAL AND VALUE OF THE STATE LANDS IMPACTED BY THE
INFRASTRUCTURE. EXAMPLES OF SUCH INFRASTRUCTURE MAY INCLUDE BUT ARE
NOT LIMITED TO STREETS, UTILITIES, LANDSCAPING AND OPEN SPACE.
kRS. $37-101(12) through (17) are renumbered to (14) through (19)
C.
PROPOSED LEGISLATION FOR THE USE
OF PARTICIPATION CONTRACTS FOR STATE LANDS
The following proposed legislative additions and changes will facilitate the use of
participation contracts for State lands. A participation contract would include a lease,
sale, or lease and sale together with other rights and obligations (i.e., the installation of
infrastructure and community identity package) by a master developer. The Department
would then receive a share of the master developer's revenues from subsequent sales and
lease assignments.
PROPOSED ARTICLE 3.1 - PARTICIPATION CONTRACTS
FOR STATE LANDS
A.R.S. 537-270 - DEFINITIONS
A. "PARTICIPATION CONTRACT" MEANS A CONTRACT ARISING OUT OF A
DISPOSITION TO A SUCCESSFUL BIDDER AT PUBLIC AUCTION OF A LEASE, SALE, OR
LEASE AND SALE TOGETHER WITH OTHER RIGHTS AND OBLIGATIONS IN THE
TRUST LANDS OBTAINED BY A MASTER DEVELOPER WHEREBY THE DEPARTMENT
RECEIVES A SHARE OF THE MASTER DEVELOPER'S PROCEEDS GENERATED BY
SUBSEQUENT SALES, LEASE ASSIGNMENTS, OR SUBLEASES.
B. "MASTER DEVELOPER" MEANS ANY PERSON WHO ASSUMES, AS A
CONDITION OF A LAND DISPOSITION, THE RESPONSIBILITIES SPECIFIED BY THE
DEPARTMENT FOR INFRASTRUCTURE OR COMMUNITY IDENTITY PACKAGE
AMENITIES, OR A COMBINATION OF BOTH, AND FOR IMPLEMENTING THE
DEVELOPMENT PLAN FOR THE MASTER PLANNED DEVELOPMENT
A.R.S 637-271 - SALE OR LEASE OF STATE LANDS IN DEVELOPMENT PLAN UNDER
A PARTICIPATION CONTRACT
A. PARTICIPATION CONTRACTS MAY BE ENTERED INTO ONLY FOR LANDS
SUBJECT TO A PLAN APPROVED PURSUANT TO ARTICLE 5.1 AND 5.2.
REVISED 10/26/89 1
B. THE PREFERRED RIGHT GRANTED A LESSEE IN A.R.S. 537-335 (C) SHALL
APPLY ONLY TO PARTICIPATION CONTRACTS WHICH DO NOT INCLUDE A SALE.
C. BEFORE RECOMMENDING A PARTICIPATION CONTRACT TO THE BOARD
OF APPEALS, IN ADDITION TO THE FACTORS LISTED IN A.R.S. 537-335(F), THE
COMMISSIONER SHALL ALSO TAKE INTO CONSIDERATION AND REPORT ON:
1. THE METHODOLOGY FOR DETERMINING REIMBURSABLE
INFRASTRUCTURE COSTS AND THE ESTIMATED AMOUNT THEREOF.
2. AN ANALYSIS OF THE STATE TRUST REVENUE TO BE DERIVED FROM
THE PROPOSED PARTICIPATION CONTRACT.
3. THE HISTORICAL TRENDS IN LAND VALUES IN THE RELEVANT AREA
BY TYPES OF PROPOSED LAND USES;
4. AN ANALYSIS OF THE FINANCIAL FEASIBILITY OF THE PLANNED
DEVELOPMENTS PROPOSED BUILD-OUT SCHEDULE;
5. AN EVALUATION OF THE POTENTIAL ECONOMIC RISKS AND BENEFITS
TO THE TRUST ARISING FROM THE PARTICIPATION CONTRACT;
6. AN ANALYSIS OF THE ECONOMIC AND FINANCIAL IMPACT AND OTHER
FACTORS AS DETERMINED BY THE STATE LAND COMMISSIONER, REGARDING
ALTERNATIVE DISPOSITIONS OR NO DISPOSITIONS.
REVISED 10/26/89
SUBSEQUENT SALES, LEASE ASSIGNMENTS OR SUBLEASES OF STATE
LAND UNDER A PARTICIPATION CONTRACT SHALL BE BASED ON THE CRITERIA
AND THE PHASING AND DISPOSITION PLAN INCLUDED IN THE PARTICIPATION
CONTRACT AND THE FORMULA FOR DETERMINING THE AMOUNT OF REVENUE TO
THE TRUST AS A RESULT OF THE SUBSEQUENT SALES, LEASE ASSIGNMENTS OR
SUB-LEASES.
A.R.S 537-527 PARTICIPATION CONTRACT PROCEEDS
THE STATE'S SHARE OF THE PROCEEDS RECEIVED FROM THE SALE OF LAND
UNDER A PARTICIPATION CONTRACT SHALL BE DEPOSITED IN THE APPROPRIATE
PERPETUAL FUND, AND THE STATE'S SHARE OF THE PROCEEDS RECEIVED FROM
THE LEASE OF LAND UNDER A PARTICIPATION CONTRACT SHALL BE USED.
A.R.S. 537-214. Board of appeals shall, before approving the sale, e lease, OR
PARTICIPATION CONTRACT of land classified for commercial or homesite purposes after
the completion of the planning process pursuant to article 5.1 or article 5.2 of this
chapter, review the report submitted by the commissioner pursuant to 537-335,
subsection F OR 537-339.03 AND 537-271 SUBSECTION C regarding the proposed sale,
REVISED 10/26/89
or lease. A majority vote of the board is required for the adoption of the report. Upon
the adoption of the report the proposed sale or lease, shall be approved. The board shall
act within one hundred twenty days after receiving the report.
A.R.S. 537-272 CONDITIONS OF DEFAULT UNDER A PARTICIPATION CONTRACT
THE PARTICIPATION CONTRACT SHALL CONTAIN PROVISIONS FOR DEFAULT,
RIGHTS TO CURE, AND FOR FORFEITURE AND OTHER APPROPRIATE REMEDIES IN
THE EVENT OF DEFAULT.
REVISED 10/26/89
PROPOSED CHANGES TO ARTICLES 5.1 AND 5.2
OF THE URBAN LANDS ACT
The following proposed changes to Articles 5.1 and 5.2 of the Urban Lands Act would
facilitate the use of infrastructure installation agreements, i.e., infrastructure contracts,
for State land projects approved under Article 5.1 or Article 5.2. These infrastructure
agreements would provide for the construction, operation and maintenance of
infrastructure and community identity package and for reimbursement of costs and
interest by subsequent purchasers or lessees.
PROPOSED CHANGES TO ARTICLES 5.1 AND 5.2
URBAN LANDS ACT
337-335.05 15.1)
837-339.05 (5.21 FUNDING. INSTALLATION AND PAYBACK OF INFRASTRUCTURE
ON STATE TRUST LANDS
THE COMMISSIONER SHALL HAVE THE AUTHORITY, BY AGREEMENT, TO PERMIT
THE CONSTRUCTION, OPERATION AND MAINTENANCE OF INFRASTRUCTURE ON
URBAN LANDS, INCLUDING A COMMUNITY IDENTITY PACKAGE FOR URBAN LANDS
WITH A PLAN APPROVED PURSUANT TO ARTICLES 5.1 OR 5.2.
A. ANY SUCH AGREEMENTS MAY PROVIDE FOR REIMBURSEMENT BY
SUBSEQUENT PURCHASERS OR LESSEES BASED UPON THE ACTUAL COSTS OF
INFRASTRUCTURE-RELATED LAND ACQUISITION AND CONSTRUCTION AND MAY
INCLUDE A REASONABLE RATE OF INTEREST TO FINANCE THE COSTS AS
DETERMINED BY THE COMMISSIONER. THE COMMISSIONER SHALL IMPOSE SUCH
LIMITATIONS IN THE AGREEMENT AS DEEMED NECESSARY TO PROTECT THE
MARKETABILITY OF THE AFFECTED TRUST LAND.
B. ANY SUCH AGREEMENT SHALL IDENTIFY THE TYPE, QUALITY AND
LOCATION OF INFRASTRUCTURE, THE SCHEDULE FOR INSTALLATION, AND THE
REVISED 11/20/89
METHODS FOR CALCULATING THE REIMBURSABLE COSTS AND THE METHODS FOR
REPAYMENT.
C. NO PARTY TO AN AGREEMENT UNDER THIS SECTION MAY DELEGATE
THEIR OBLIGATIONS UNLESS WRITTEN APPROVAL IS OBTAINED FROM THE
COMMISSIONER. THE COMMISSIONER MAY REQUIRE PERFORMANCE AND PAYMENT
BONDS OR OTHER SUFFICIENT SURETY.
D. THE RIGHT TO REIMBURSEMENT FOR INFRASTRUCTURES INSTALLED
PURSUANT TO AN AGREEMENT UNDER THIS SECTION IS LIMITED TO THIS SECTION,
NOTWITHSTANDING THE PROVISIONS OF A.R.S. 537-342, A.R.S. 537-293 OR ANY
SUCCESSOR STATUTES THERETO.
E. NO AGREEMENT ISSUED PURSUANT TO THIS SECTION GIVES RISE TO
PREFERRED RIGHTS OR ANY OTHER RIGHTS GENERALLY ACQUIRED BY A LESSEE
OF STATE LANDS UNLESS OTHERWISE STATED IN THE AGREEMENT.
F. ANY AGREEMENT UNDER THIS SECTION SHALL INCLUDE PROVISIONS
FOR THE MAINTENANCE AND REPAIR OF THE INFRASTRUCTURE, AND ANY
AGREEMENT SHALL ALSO ADDRESS THE ISSUE OF WHICH PARTY OR PARTIES
REVISED 11/20/89
SHALL BE LIABLE FOR ANY DAMAGE OR ACCIDENTS RESULTING FROM THE DESIGN,
CONSTRUCTION MAINTENANCE OR REPAIR OF THE INFRASTRUCTURE.
G. ANY AGREEMENT UNDER THIS SECTION SHALL INCLUDE PROVISIONS
FOR AMENDMENT OF THE AGREEMENT AND SHALL ALSO ADDRESS DEFAULT
UNDER THE AGREEMENT AND THE RIGHT TO CURE, THE PROVISIONS GENERALLY
APPLICABLE TO DEFAULTS UNDER STATE LAND LEASES OR CERTIFICATES OF
PURCHASE ARE INAPPLICABLE TO AGREEMENTS ISSUED PURSUANT TO THIS
SECTION.
NOTE: ADD AS SESSION LAW SECTION 1 (LEGISLATIVE PURPOSE) TO
BEGINNING OF INFRASTRUCTURE BILL PROPOSING ADDITION OF
INFRASTRUCTURE PROVISIONS:
A. TO FULFILL ITS COMMITMENT TO THE MANAGEMENT OF STATE
LANDS IN THE BEST INTERESTS OF THE TRUST AND THE PEOPLE OF THIS
STATE, THE ARIZONA LEGISLATURE FINDS THAT THE INSTALLATION OF
INFRASTRUCTURE ON UNDEVELOPED STATE LANDS IN THE PATH OF URBAN
GROWTH WOULD SUBSTANTIALLY INCREASE THE VALUE OF THESE LANDS
AND THEREBY THE POTENTIAL RETURN TO THE STATE TRUST FUND.
REVISED 11/20/89
B. THE ARIZONA LEGISLATURE INTENDS BY THIS ACT:
1. TO CLARIFY THE COMMISSIONER'S AUTHORITY TO ENTER INTO
AGREEMENTS WITH OTHER PARTIES, PUBLIC OR PRIVATE, TO
FACILITATE THE INSTALLATION OF INFRASTRUCTURE ON STATE
LANDS; AND
2. TO ESTABLISH STANDARDS FOR PROVISIONS TO BE INCLUDED
IN SUCH AGREEMENTS, INCLUDING PROVISIONS FOR THE
REIMBURSEMENT OF THE COSTS OF INSTALLING THE
INFRASTRUCTURE.
NOTE: ADD AS SESSION LAW TO END OF INFRASTRUCTURE BILL PROPOSING
ADDITION OF INFRASTRUCTURE PROVISIONS:
THIS ACT SHALL NOT AFFECT THE VALIDITY OF ANY
AGREEMENTS RELATING TO INFRASTRUCTURE ENTERED INTO BY THE
COMMISSIONER PRIOR TO THE EFFECTIVE DATE OF THIS ACT.
REVISED 1 1/20/89
E.
PROPOSED CHANGES TO
COMMUNITY FACILITIES DISllU(TT ACT
The following proposed amendments to the existing Community Facilities District Act will
serve to facilitate the use of community facilities districts on State Trust land. Under the
Enabling Act, Trust lands cannot be encumbered, therefore, these amendments would
allow participation if the State Land Commissioner finds this in the best interests of the
Trust, and the possessory interest of the State's long-term lease could be utilized to back
the bonds issued by a community facilities district.
The HB 2019 Committee concurred with the proposed changes to the Community
Facilities District Act nitle 4-81 and to the Urban Lands Act [ARS. 537-335.02 (A)
through (C) and ARS. 537-335.03 (A) through (C)]. However, the Committee directed
staff to firher refine ARS. 537-335.03 (D) through (G) in order to complete the
proposed legislative package for community facilities districts.
PROPOSED CHANGES TO
COMMUNITY FACILITIES DISTRICT ACT
1. Amend A.R.S. 642-684(7) to add the following underlined
"7. Except as provided in 548-723.01, leases
or permits for lands under the jurisdiction I of
the State Land Department."
2. Amend A.R.S. 648-701(10) to include the underlined language:
"10. "Owner" means the person who, on the day
the action, election or proceeding is begun or
held, appears to be the owner of real property
as shown on the assessment roll for state and
county taxes, or in the case of state lands,
the lessee under a long-term lease pursuant to
s37-281.02 or other law."
3. Add definitions of "possessory interest" and "state Ian&"
to A.R.S. $48-701 as follows:
"11. "Possessory interest" means an interest
in state lands held under a certificate of
purchase pursuant to §37-241 or a long-term
lease pursuant to 937-281.02 or other law."
[Renumber accordingly] an6 add:
"15. "State lands" means state lands as
defined in §37-101(15)."
4. Amend A . R . S s 4 8 - 7 0 5 ( A ) to include the underlined lanquaue:
"A. After the hearing, the governing body may
adopt a resolution ordering the formation of
the district, deleting any property determined
not to be benefited by the district or
modifying the general plan and then ordering
the formation of the district or determining
that the district not be formed. If state
lands are included within the boundaries of
the proposed district, such lands shall be
deleted by the resolution unless (i) the
governing body finds that such lands would be
f
under one or more long-term leases or
certificates of purchase or will be under one
or more lona-term leases or certificates of
purchzise at the time the district is *formed:
and (iii) the qovernin body receives from the
state land commissioner written approval of
the inclusion of such lands within the
district after a finding by the commissioner
that such inclusion is in the best interests
of the trust. A resolution ordering formation
of t h e i i s t r i c t s h a l l s t a t e whether t h e
d i s t r i c t w i l l be governed by a d r s t r i c t board
comprised of the members of the governing
body, ex o f f i c i o , o r , a t the option of the
governing body and i f t h e t o t a l area included
i n t h e d i s t r i c t is l a r g e r than s i x hundred
a c r e s , f i v e d i r e c t o r s appointed by t h e
governing body. I f t h e d i s t r i c t board w i l l be
comprised of appointed d i r e c t o r s , t h e
r e s o l u t i o n s h a l l contain t h e names of t h e f i v e
i n i t i a l d i r e c t o r s and t h e terms of o f f i c e of
each,"
5. Amend A.R.S. 548-707(B) t o include the following underlined
languaqe:
"B. The d i s t r i c t board or t h e governing body,
as a p p l i c a b l e , s h a l l determine t h e p o l l i n g
places f o r t h e e l e c t i o n and may c o n s o l i d a t e
county p r e c i n c t s . For other than a formation
e l e c t i o n pursuant t o §48-705, subsection B,
p r e c i n c t r e g i s t e r s s h a l l be used. The county
recorder s h a l l submit p r e c i n c t r e g i s t e r s on
t h e request of t h e c l e r k , and i f t h e d i s t r i c t
includes land l y i n g p a r t l y i n and p a r t l y out
of any county e l e c t i o n p r e c i n c t , t h e p r e c i n c t
r e g i s t e r s may contain t h e names of a l l
r e g i s t e r e d v o t e r s i n t h e p r e c i n c t and t h e
election boards at those precincts shall
require that a prospective elector execute an
affidavit stating that the elector is also a
qualified elector of the district. For
formation elections a prospective elector
shall execute an affidavit stating that the
elector is the owner of land in the proposed
district, is a qualified elector of this state
or otherwise qualified to vote pursuant to
§48-3043 and stating the area of land in acres
owned by the elector. For formation
elections, a prospective elector who is a
holder of a possessory interest in state lands
located within the district shall execute an
affidavit stating the area of land in acres
possessed by the elector and further stating
that the elector is the holder of a
certificate of purchase or long-term leasehold
in state lands located within the proposed
district, is a aualified elector of this state
or otherwise aualified to vote pursuant to
548-3043 and has not by proxy or ogherwise
relinauished its voting rights hereunder. If
the formation election voting rights of a
possessory interest holder in state lan2s
within a proposed district are conveyed by
written proxy to the state land department,
the state land department shall be deemed
a u a l i f i e d and e n t i t l e d t o vote on behalf of
t h e s t a t e l a n d s t r u s t i n t h e manner ~ r o v i d e d
i n 6 4 8 - 7 0 7 ( B ) . Election board members may
administer oaths or take a l l affirmations f o r
these purposes.
Add a new provision the Community F a c i l i t i e s D i s t r i c t Act
as follows:
"Section 48-723.01 Taxation and assessment of
possessory i n t e r e s t s : n o n - l i a b i l i t y of s t a t e .
A. Notwithstanding 942-684, 48-582 and
48-920, any possessory i n t e r e s t i n s t a t e lands
l o c a t e d within the d i s t r i c t s h a l l be subject
t o a l l ad valorem taxes and special
assessments levied by the d i s t r i c t and any
l i e n s incident thereto in the same manner and
t o the same extent as the property of other
owners under t h i s a r t i c l e i n accordance with
937-335.02 and 37-335.03.
B. Nothing i n t h i s a r t i c l e s h a l l be construed
as c r e a t i n g a l i e n against t h e i n t e r e s t of the
s t a t e in any s t a t e lands, nor an obligation
against the s t a t e t o pay any taxes, charges,
assessments or debts incurred by the d i s t r i c t
against s t a t e lands located within the
d i s t r i c t .
7. Amend A.R.S. 548-709 ( A ) (11) to add the followinc underlined
lanauacre :
"11. By resolution, levy and assess the costs
of any public infrastructure purpose on any
land benefited in the District, or, in the
case of state lands, on any certificate of
~urchase or lono-term lease held pursuant to
g37-281.02 or other law." -
Amend A.R.S. 548-721 as follows:
948-721 Special assessments; assessment lien bonds
A. The district board, by resolution and
' pursuant to the procedures prescribed by
9548-576 through 48-589, as nearly as
practicable, and such additional procedures as
the district board provides, may levy an
assessment of the costs of any public
infrastructure purpose, any operation and
maintenance of public infrastructure or any
enhanced municipal services on any lands OR
POSSESSORY INTEREST in the district based on
the benefit determined by the district board
to be received by the land OR POSSESSORY
INTEREST. The assessment may be based on
estimated costs and amended to reflect actual
costs. An owner of land OR HOLDER OF A
POSSESSORY INTEREST on which an assessment has
been levied may seek judicial review of
whether the land OR POSSESSORY INTEREST is
benefited by the proposed infrastructurel on
the merits, by special action filed with the
court of appeals pursuant to the procedures of
948-706, within thirty days of the effective
date of the resolution.
B. After adoption by the district board of a
resolution levying a special assessment on
property in the district pursuant to 548-709,
subsection A, paragraph 11 the district board
may issue and sell special assessment lien
bonds payable solely from amounts collected
from the special assessments. The assessment
shall be a first lien on the property assessed
subject only to general property taxes and
prior special assessments. In the event of
nonpayment of an assessment the procedures for
collection of delinquent assessments and sale
of delinquent property prescribed by §§48-601
through 48-607 apply, as nearly as
practicable, except that neither the district
nor the municipality is required to purchase
the delinquent land OR POSSESSORY INTEREST at
the sale if there is no other purchaser.
C. On adoption of the resolution, but before
issuance of the special assessment lien bonds,
the district may direct the treasurer to make
demand on the owners of the property so
assessd, ~ - s k e m - ~ ; t h - t a n - % 4 - A - - ~ - - s h a k e
a r + d - ~ ~ - p u ~ p e sfoers ~ad vance payment of
the amount assessed. The demand shall state a
date not less than twenty days after the date
of adoption of the ordinance after which the
t r e a s u r e r may r e f u s e t o accept advance
payments of t h e assessment. The t r e a s u r e r
s h a l l c e r t i f y t o t h e c l e r k on or a f t e r t h e
d a t e s p e c i f i e d i n t h e demand t h e amount
c o l l e c t e d and t h e assessments remaining unpaid
a g a i n s t each p a r c e l of l a n d OR POSSESSORY
INTEREST a s s e s s e d . S p e c i a l assessment l i e n
bonds may not be issued i n an amount i n excess
of t h e amount a s s e s s e d i n t h e ordnance o r , i f
advance payments are demanded, t h e amount
c e r t i f i e d t o t h e c l e r k .
Amen? A.R.S. s 3 7 . 3 3 5 . 0 2 i A ) as follows:
A.R.S. 537-335.62. Off-site inprovement of urban lanes
A. The uoverning body of an incorporated city or town or the
board of directors of a County improvement district OR A COMMUNITY
FACILITIES DISTRICT may submit to tne commissioner for approval an
improvement plan to be carried out by the city, town, or county
improvement district OR COMMUNITY FACILITIES DISTRICT for some or
all of the urban lands within its corporate or district
boundaries. The plan shall be submitted before any assessment has
been levied for construction of off-site improvements which will
be on or adjacent to and benefit the urban land. The plan may
provide for the imposition of TAXES OR special assessments only
against the leasehold interest of the lessee or the interest in
the certificate of purchase of the purchaser of urban lands which
ARE OR will be subject to sale or long-term lease pursuant to
937-281.02 or other law. The plan shall include the following:
1. A description of the work proposed.
2 . An estimate of the cost of such work and the costs to be
imposed against the leasehold interest of the lessee or the
interest in the certificate of purchase of the purchaser of urban
land within the area of the plan.
3. A map and legal description of the area showing the urban
lands benefited by the work proposed.
4 . A method of charging the cost to any long-term lessee or
certificate of purchase holder of the urban lands benefited.
5. A schedule or alternative schedules for payment of the
costs so charged by-r-e holders of certificates of purchase or
lease on such urban land, including the manner in which charges
under such schedules will be held in abeyance for urban lands not
subject to a certificate of purchase or lezse. The schedule for
payments shall state the maximum TAX RATE OR assessment amount,
excluding interest, which may be imposed against the leasehold
interest of the lessee or the interest in the certificate of
purchase of the purchaser of urban land involved in the plan.
6. The maximum interest rate to be charged on the unpaid
charges, including the maximum rate at which i-nterest, if any,
will accrue for urban lands benefited but not subject to a
certificate of purchase or lease.
7. Information showing that the urban land involved in the
plan will be benefited in an amount equal to or greater than the
proposed maximum TAX OR assessment amount.
8. Such other terms as the governing body deems necessary or
appropriate.
9.1 Amen2 A.R.S. 5 3 7 - 3 ? 5 . 0 2 ( C 1 as follows:
C. The commissioner shall cooperate if requested by the
governing body of the city, town, COMMUNITY FACILITIES DISTRICT or
county improvement district in the preparation and revision of the
improvement plan. The commissioner may hold such public hearings
as the commissioner determines are necessary and may approve the
~ l a n if it is in compliance with the development plan for the &
urban lands a£ f ected.
10. Amend A.R.S. 6 3 7 - 3 3 5 . 0 3 as follows:
A.R.S. 537-335.03 - A s - s e IMPROVEMENT district assessments and
eity-rmprevement-p~4~-d33e38mentsT AXES as llen on urban
lands within district; enforcement
A. Officially certified descriptions of all urban lands
included within the boundaries of a city special assessment
DISTRICT, A COMMUNITY FACILITIES DISTRICT or A county imwrovement
district subject to an approved improvement plan, with thi amounts
of TAXES, assessments and charges of every character made against
the leasehold interest of the lessee or the interest in the
certificate of purchase of the purchaser of such lands, shall be
furnished to the state land department as soon as the TAXES,
assessments or charges are levied. A promise by the lessee or
purchaser to make timely payment of all TAX OR assessment charges
and an acknowledgement of the TAX OR assessment shall be inserted
in any certificate of purchase or lease for such lands. -25
assessments-haae-been-3evie1-against-arban-3ancs-p~re~-to-p~rch~se
e r - i e a s e - - p i r 1 3 ~ & - t e - n n - i ~ ~ - p i - ~ r r , - ~ ~ % ~ s h m r - s h a 3 : &
req~~re-that-eii-unpeitd-ir!3t:eIIments-an-e~se~~ment~-be-pe~d-te-ehe
e P t y ~ - ~ , - - . o r - - e e a n t y - - K . p ~ - ~ ~ - i i ~ - - ~ e f e ~ e - ~ ~ - i r p - u
ieese-vr---erry--instrument--oS--d.e.- +hered+e~ The proceedings
leading to the LEVYING recording of A TAX OR an assessment by the
city, town, COMMUNITY FACILITIES DISTRICT or county improvement
district may treat the lessee's or purchaser's interest in state
land as land subject to A TAX OR an assessment notwithstanding
542-684, 548-582 or 48-920.
B. IF AND TO THE EXTENT THE STATE AT ANY TIME SUBSEQUENT TO
THE FORMATION OF THE DISTRICT ISSUES A PATENT OR PARTIAL PATENT ON
LANDS LOCATED WITHIN THE DISTRICT, ALL OF THE BURDENS,
OBLIGATIONS, LIABILITIES AND LIENS EXISTING AGAINST OTiiER LANDS
LOCATED WITHIN THE DISTRICT BY REASON OF THE FORMATION OF THE
DISTRICT OR IN ANY bSNNER CONNECTED WITH, INCIDENT TO OR ARISING
FROM OR BY REASON OF THE EXISTENCE OF THE DISTRICT OR ANY
OBLIGATION THEREOF SHALL IMMEDIATELY, BY OPERATION OF LAW, ATTACH
TO AND THEREAFTER CONTINUE TO EXIST AGAINST AND UPON TEE PATENTED
LAND TO THE SAME EXTENT AND WITH LIKE FORCE AND EFFECT AS IF SUCH
LAND HAD BEEN IN PRIVATE OWNERSHIP AT TBE TIME OF THE FORMATION OF
THE DISTRICT.
€7--A$&-*--&-ussessments-i~i~--~-aqb+ts;-the
leasehold interest of the lessee or the interes,t--~; the
certificate of purchase of the purchaser of urban-& subject to
an improvement plan approved by the comm,i-o'n'er which are not
held under a certificate of purchase,~'lease by the assessment
district or pursuant to an improvaTl~Gt plan shall be a continuing
0 charge, and such land seM2 not be leased or sold until the
purchaser or lesseg,-of0 the land presents to the state land
department a c-dicate from the superintendent of streets of the
city or --or county improvement district in which the land is
loCaeedc showing that all assessments due have been paid as
6r'evided-in-sabseckien-~-af-this-seetien:
C. If any TAX OR installment of any assessment or charge
against the leasehold interest of the lessee or the interest in
the certificate of purchase of the purchaser of urban land subject
to an improvement plan is not paid when due, the superintendent of
streets of the city or town or THE DISTRICT CLERK OF THE COMMUNITY
FACILITIES DISTRICT OR county improvement district where the urban
land is located SHALL ~ a y ,af ter not less than thirty days' notice
to the named purchaser or lessee, notify the state land department
of the nonpayment, Such nonpayment is a default under any
certificate of purchase or long-term lease under which such lands
are held AND MAY RESULT IN CANCELLATION OF SUCH CERTIFICATE OF
PURCHASE OR LONG-TERM LEASE PURSUANT TO SUBSECTION D OF THIS
SECTION. The interest of any purchaser or lessee of any urban
lands within a municipal assessment district, OR COMLMUNITY
FACILITIES DISTRICT OR A COUNTY IMPROVEMENT DISTRICT is subject to
the enforcement and sale, redemption and forfeiture provisions of
title 48, chapter 4, article 2 or title 48, chapter 6, article 1.
W e ~ p a ~ m e ~ t - e f - e h a r y e 3 - d u e - p u f ~ u a ~ t - t e - ~ ~ e v e m e ~ + - ~ 3 a ~ - s ~ b ~ t k e - ~ - i ~ - e ~ - ~ - t e - M & - + - p ~ e e e e d & ~ ~ s - e - ~ - w M - b y
tk&s-ehaprert--~f-eke-deii~tque~+-ameu~C~-a~a&~s~-suek-&a~&-s~e-~ek
p e i d - ~ G c + 1 t ~ - ~ 5 ~ ~ - d a y 3 - < i m ~ - u a L L e - + ~ = - - - - b y
tke--eemiss&e~ef~--tke--tke--ee~&ss&e~e~--3ha&3--ae+--ke--ea~ee~--khe
ee~tif&eeie-ef-pu~eha9e-ef-iease~
D. NOTWITHSTANDING ANY OTHER STATUTE, THE COMMISSIONER SHALL
NOT CANCEL ANY CERTIFICATE OF PURCHASE OR LEASE SUBJECT TO
TAXATION OR ASSESSMENT FOR SO LONG AS ALL PAYMENTS DUE TEE STATE
UNDER SUCH CERTIFICATE OF PURCHASE OR LEASE ARE TIMELY MADE; AND
BEFORE ANY CERTIFICATE OF PURCHASE OR LEASE SUBJECT TO TAXATION OR
ASSESSMENT UNDER THIS SECTION IS CANCELLED:
1. THE COMMISSIONER SHALL CAUSE NOTICE OF DEFAULT TO BE SENT
BY CERTIFIED MAIL TO THE CERTIFICATE OF PURCHASE HOLDER OR LESSEE
AND TO THE CITY, TOWN OR DISTRICT THAT LEVIED THE APPLICASLE TAX
OR ASSESSMENT. THE NOTICE SHALL INFORM THE CERTIFICATE OF
PURCHASE HOLDER OR LESSEE AND THE CITY, TOWN OR DISTRICT OF THE
SPECIFIC NATURE OF SUCH DEFAULT AND THEIR RIGHT TO CURE ANY
CURAElLE DEFAULT;
2. THE CERTIFICATE OF PURCHASE HOLDER OR LESSEE THAT IS IN
DEFAULT AND TEE AFFECTED CITY, TOWN OR DISTRICT SHALL HAVE SIXTY
DAYS TO CURE THE DEFAULT. IN THE EVENT SUCH DEFAULT IS NOT CURED
WITHIN THE SIXTY-DAY TIME PERIOD, THE AFFECTED CITY, TOWN OR
DISTRICT SHALL HAVE AN ADDITIONAL TEIRTY DAYS TO FILE KITH THE
DEPARTMENT WRITTEN NOTICE OF ITS INTENT TO PROCEED WITH A
FORECLOSURE ACTION;
3 . IN THE EVENT THE AFFECTED CITY, TOWN OR DISTRICT TIMELY
FILES NOTICE OF ITS INTENT TO PROCEED WITH A FORECLOSURE ACTION,
SUCH CITY, TOWN OR DISTRICT SHALL HAVE SIXTY DAYS FROM THE DATE OF
SUCH FILING TO COMMENCE A FORECLOSURE ACTION IN COURT AND TO
PROVIDE THE DEPARTMENT WITH A CERTIFIED COPY OF THE COMPLAINT;
4. IN THE EVENT THE AFFECTED CITY TOWN OR DISTRICT TIMELY
FILES A FORECLOSURE ACTION IN COURT AND PROVIDES THE DEPARTMENT
WITH A CERTIFIED COPY OF THE COMPLAINT, THE CITY, TOWN OR DISTRICT
SHALL BE ENTITLED TO CURE THE DEFAULT BY BRINGING CURRENT ANY
DELINQUENCIES UNTIL THE LATER OF:
( a ) THE FINAL RESOLUTION OF THE FORECLOSURE ACTION;
(b) ONE YEAR FROM THE DATE OF THE NOTICE OF DEFAULT IN THE
CASE OF A LONG-TERM LEASE, PROVIDED ANY RENTAL OR INSTALLMENT
PAYMENT DELINQUENCIES HAVE BEEN CURED AND SUCH PAYMENTS ARE KEPT
CURRENT FROM THE DATE OF THE FINAL RESOLUTION OF THE FORECLOSURE
ACTION; OR
(c) TWO YEARS FROM THE DATE OF THE NOTICE OF DEFAULT IN THE
CASE OF A CERTIFICATE OF PURCHASE, PROVIDED ANY RENTAL OR
INSTALLMENT PAYMENT DELINQUENCIES HAVE BEEN CURED AND SUCH
PAYMENTS ARE KEPT CURRENT FROM THE DATE OF THE FINAL RESOLUTION OF
THE FORECLOSURE ACTION.
E- IF THE DEFAULT IS NOT CURED WITHIN THE APPLICABLE TIME
PERIOD, THE COMMISSIONER MAY MAKE AN ORDER CANCELING THE
CERTIFICATE OF PURCHASE OR LEASE, AND IF IT APPEARS THAT THE
CERTIFICATE OF PURCHASE OR LEASE WAS PROCURED THROUGH FRAUD,
DECEIT OR WILFUL MISREPRESENTATION, THE IMPROVEMZNTS ON THE LAND
SHALL BE FORFEITED TO THE STATE. IF THE CERTIFICATE OF PURCHASE
OR LEASE IS CANCELED FOR ANY OTHER REASON, THE CERTIFICATE HOLDER
OR LESSEE SHALL BE PERMITTED TO REMOVE HIS IMPROVEMENTS AT ANY
TIME WITHIN SIXTY DAYS AFTER THE DATE OF CANCELLATION. A COPY OF
THE CANCELLATION ORDER SHALL BE MAILED BY CERTIFIED MAIL TO THE
LAST KNOW POST-OFFICE ADDRESS OF THE CERTIFICATE OF PURCHASE
HOLDER OR LESSEE AND THE =FECTED CITY, TOWN OR DISTRICT.
F. IF A DEFAULT NOTICE HAS BEEN SENT TO A CERTIFICATE OF
PURCHASE HOLDER OR LESSEE PURSUANT TO THIS SECTION AND THE
CERTIFICATE OF PURCHASE HOLDER OR LESSEE OR THE AFFECTED CITY,
TOWN OR DISTRICT THEREAFTER APPLIES TO ASSIGN THE CERTIFICATE OF
PURCHASE OR LEASE TO THE CITY, TOWN OR DISTRICT HAVING A TAX OR
ASSESSMENT LIEN THEREON BEFORE THE DATE A CANCELLATION ORDER
BECOMES FINAL AND CONCLUSIVE, THE DEPARTMENT SHALL APPROVE THE
ASSIGNffiNT IF ALL RENT PAYMENTS ARE CURRENT.
G. THE CERTIFICATE OF PURCHASE HOLDEX OR LESSEE AND THE
AFFECTED CITY, TOWE OR DISTRICT WAY APPEAL A CANCELLATION ORDER
PURSUANT TO TITLE 12, CHAPTER 7 , ARTICLE 6. IF NO APPEAL IS MADE
WITHIN THE PRESCRIBED TIME, THE ORDER SHALL BECOME FINAL AND THE
CERTIFICATE OF PURCHASE OR LEASE, TOGETHER WITH ANY TAX OR
ASSESSMENT LIEN THEREON, SHALL BE CANCELED ON THE RECORDS OF THE
DEPARTMENT.
Jmpact Fee Svstem
Process
1. Local jurisdiction formulates land use/infrastructure plan
2. Impact fee system established
3. Trust lands planned/rezoned via Urban Lands process/impact
fees established
4. Trust lands long-term leased or sold at public auction to
master developer
5 . Master developer installs infrastructure per impact fee plan
in lieu of payment or pays impact fees to local jurisdiction
6. Parcel developer: a) installs on-site infrastructure: b) pays
parcel-specific impact fees or constructs planned community
facilities, and c) pays back parcel-specific off-site
infrastructure costs to master developer per impact fee
schedule
1
APPROVED MAY 9, I989
-Im ~actF ee System
.~-.v aluationf rom State Trust/Land DePartment Pers~ective
1. Pros: -) Already in place for phoenix
-) Results in equitable distribution of
infrastructure costs for large scale master
planned developments or individual parcel
developments
-) Impact fees can serve as contributions towards
infrastructure to be installed by an
improvement district
-) Local jurisdictions already have legal
authority to levy paybacks for future
uses/developers
-) Results in greater reliance on local land use
plans
-) Local jurisdictions regulate/administer impact
fee/payback system rather than land owner
Jm~act Fee Svstem
\
2. Cons: -) Heavy f ront-end land use/inf rastructure
planning at local level
-) Might meet with low level of acceptance in
smaller jurisdictions because of
staffing/funding constraints
-) Results in greater reliance on local land use
plans
-) Need master developer or individual parcel
developer to get infrastructure installed
-) Developer default could result in unmanageable
political/financial burden for smaller
jurisdictions
Participation Lease
Process
1. Trust lands master planned/rezoned via Urban Lands process
2. Legal advertisement noticing participation lease negotiation
period (includes listing of bidder qualifications)
3. Participation lease negotiated with potential master
developer(s). Lease would include disposition schedule,
profit sharing formula, flexible performance standards and
default provisions
4. Participation lease and certificate of purchase disposed of
at public auction (combined bid)
5. Master developer installs backbone infrastructure via
community facilities district or some other mechanism
6. Master developer pays all carrying costs for parcels under
certificate of purchase until secondary disposition (backbone
infrastructure servicing parcel must be installed prior to
secondary disposition)
7. Master developer expends own funds to market or lldrivell
pro j ect .
APPROVED JULY 18, 1989
Participation Lease
Page 2
8. Master developer assigns/subleases leased land or sells
certificate of purchase land with net profits shared by Trust
and master developer. One alternative for calculating net
profit is:
Parcel bid price-(master developer initial pro-rata bid price
+ pre-approved infrastructure costs)-(pre-approved primary and
secondary planning/zoning/administrative costs) = net profit
to be split equally between Trust and master developer
Evaluation
1. Pros: -) Trust/master developer share net profits as
smallerparcels are subleased, assigned or sold
-) SLD maintains control of primary/secondary
planning/rezoning
-) Master developer provides equity for master
planned communityby installing infrastructure/
amenities
-) Master developer applies private sector
marketing expertise and dollars
Participation Lease
Page 3
-) Could result in more timely disposition of
individual parcels after installation of
llbackbonew infrastructure
2. Cons: -) Trust's real profits are speculative at time
of participation lease disposition and at
subsequent disposition
-) Potential economic loss because of default or
marginal performance by participation lessee
-OR individual parcel developers
-) Could constitute excessive delegation of
Commissioner's authority
-) SLD lacks resources to evaluate bidder
qualifications
-) Negotiation of participation lease could prove
difficult and time-consuming
-) SLD lacks auditing/monitoring resources
Participation Lease
Page 4
-) Could result in premature secondary disposition
because of financial pressures on participation
lessee
-) Would require substantial legislative changes
i.e. provisions for and establishment of bidder
qualifications
-) Master developer's infrastructure/planning
costs (see process step #8) could be greater
than parcel's actual appraised value, making
disposition difficult
Infrastructure Lease
Process
1. Trust lands planned/rezoned via Urban Lands process
2. Development planning phase includes preparation of:
a) C C & Rs (for architecture/landscaping/streetscape)
b) Disposition strategy/schedule
c) Infrastructure plans/approved infrastructure costs
3 . Dispose of large commercial parcel through long-term lease
Dispose of large residential parcel
4. Require successful bidder, as part of long-term lease or sale
agreement, to obtain infrastructure lease for purpose of
installing "backbonett infrastructure (based on previously
approved phasing schedule/infrastructure costs)
5. Infrastructure lease may require successful bidder to
establish identity (landscaping/lighting/signage)/marketing
program
1
APPROVED MAY 9, 1989
Jnfrastructure Lease
I
6. Infrastructure lessee installs infrastructure to open up
parcels for subsequent development
7. Auction subsequent commercial and/or residential parcels with
payback agreement attached
8 . Parcel developer pays back previously approved infrastructure
costs to infrastructure lessee
Evaluation from State Trust/Land Department Pers~ective
1. Pros: -) Gets infrastructure installed at early date and
enhances value of surrounding unauctioned
parcels
-) Infrastructure lease serves as potential
vehicle for master planned development
identity/marketing program
-) Easily conforms to impact fee system concept
-) Applicable to large blocks of Trust land that
are suitable for master planned developments
Jnfrastructure Lease
-) may result in enhanced long-term project
viability
-) may create increased market demand for parcels
adjacent to "backbonen infrastructure
2. Cons: -) Could result in infrastructure lessee carrying
infrastructure costs for longer period of time
than anticipated if market cycle turns downward
-) Installation of infrastructure could be too far
ahead of future market if construction
timetable is not established in infrastructure
lease
-) Payback agreements may be cumbersome for SLD
to track and administer
-) May result in negative public perception of
SLD/master developer arrangement
-) Could be difficult to replace master developer
in the event of default/new master developer
may not like previous deal
Infrastructure Lease
-) Timing schedule and cost limits for "backbone"
infrastructure could be difficult to negotiate
-) SLD lacks staff to evaluate/verify ttbackbonew
infrastructure costs
-) Current statutes for reimbursement do not allow
accrual of interest
-) May require disposition of large parcel as the
incentive for a master developer to obtain
infrastructure lease
-) Uncertainty in appraisal technique for
reimbursement of infrastructure costs
Community Facilities District Act (Improvement Districts)
Process
1. Trust lands planned via Urban Lands Act process. Development
Plan includes disposition schedule based on market timing in
best interest of Trust and on phased installation of
infrastructure.
2. Parcels sold or leased at public auction with commitments to
install infrastructure as part of sale or lease.
3 . Parcel end-users participate in improvement district
Evaluation from State Trust/Land De~artment Perspective
1. Pros: -) Provides framework for parcel end-users to
jointly install off-site infrastructure
improvements
-) Results in equitable distribution of off-site
infrastructure costs
-) Improvement district formation processed
through local jurisdictions
-1
APPROVED APRIL 4, 1989
Community Facilities
District Act
-) Conforms to master planned community concept
-) Patent holder can participate in improvement
districts
-) Lessee may participate in improvement district
if value of leasehold interest is determined
to be sufficient for bonding purposes
-) Lessee could provide additional collateral in
lieu of leasehold interest
2, Cons: -) Community Facilities District Act and Enabling
Act/Constitution do not allow State to directly
participate in improvement districts (fee
interest in Trust land cannot be subordinated)
-) Leasehold interest may not be sufficient to
back bonds at required value-to-debt ratios I
Community Facilities
District Act
-) Potential risk to Trust lessees/certificate of
Purchase holders if any participant in
improvement district fails to make assessment
payments
-) A.R.S. 542-684 exempts State Trust leasehold
interests from taxation or foreclosure if
assessments or taxes for improvement district
are not paid
-) Using leasehold interest to obtain funds for
improvement district participation could
inhibit lessee's ability to get financing for
on-site improvements: a because of
insufficient or diluted value of leasehold
interest, and b) lenders not willing to assume
second position behind commitment already made
to participate in improvement district
-) Community Facilities District Act still
relatively new with wbugsts to be worked out
during current negotiations for first
districts to be formed.
Community Facilities
District Act
Summary Statement
Community Facilities District Act could work for Trust lands if:
a) leasehold interest is determined to be of sufficient
value to secure bonds;
b) Community Facilities District Act is amended to allow
inclusion of Trust land in districts;
c) A.R.S. 842-684 is amended to allow taxation and
foreclosure of State Trust land leasehold interest. It
has not been determined, however, that this is in the
best interest of the Trust.
INFRASTRUCTURE INSTALLATION THROUGH
MASTER ASSOCIATION
Process
1. Trust land master planned/rezoned via Urban Lands process, 5.1 or 5.3
2. SLD disposes of significant portion of land within master planned
community at initial auction--either major commercial area or large block
of residential land. Successful bidder at this auction is designated as
"master developer" with specified obligations.
3. Master Property Association (MPA) is created, governed by Board of
Directors controlled by master developer. All purchasers/lessees of land
within master planned community are members.
4. Master developer causes installation of "backbone" infrastructure on phased
schedule and with cost previously agreed to by SLD. Funding supplied by
master developer.
5. SLD and master developer agree on infrastructure reimbursement formula
to be applied when property within the master planned community is
subsequently sold or disposed of by long-term lease. Formula is intended
to reimburse master developer for its costs in installing infrastructure, plus
appropriate interest rate, within reasonable time frame.
6. MPA also responsible for maintenance of infrastructure (unless dedicated to
municipality) and for collecting monthly maintenance fees from parcels
within master planned community after disposition of those parcels by SLD.
Evaluation
1. -Pros:
a) Enables SLD to benefit from enhanced land values within master
planned community at an earlier time.
b) Provides for installation of backbone infrastructure in timely manner.
C) Apart from initial auction (which must include significant enough
parcel to justify burdens going along with role as master developer),
SLD is able to dispose of "retail-sized parcels within master planned
community, thus increasing return to Trust.
APPROVED 9/ 19/89
Infrastructure Installation Through
Master Association
Page 2
d) Utilizes same entity (MPA) for installation of infrastructure as would
have to be created regardless to oversee maintenance of community
identity infrastructure.
e) Does not require legislative change.
f) Is intended to approximate private sector model for installation and
maintenance of infrastructure in master planned communities.
g) SLD does not split its "profits" with master developer, thus
minimizing potential criticism and legal questions.
h) If municipality has impact fee system, reimbursement amounts at
state land auctions can be relatively small because the backbone
infrastructure can be installed by master developer, can be
reimbursed through the impact fee mechanism.
2. Cons:
a) Requires substantial early disposition of land within master planned
community to master developer, potentially subjecting SLD to
criticism for what might appear to be "premature disposition."
b) SLD needs additional personnel to monitor master planned
conxnunity process.
c) Interest on infrastructure costs might accumulate to a high level if
disposition of land within master planned community develops more
slowly than expected. Protection from this can be provided by
proper phasing based on absorption.
NO
PUBLIC MEETING
MINUTES/COMMENTS
PUBLIC MEETING MINUTES
MUNICIPAL MASTER PLANNED DEVELOPMENT
STUDY COMMITTEE
November 9, 1989
Present: M. H. Hassell, State Land Commissioner
Mike House, City of Phoenix
Don Viehmann, Viehmann, Martin & Associates
Joe Contadino, Coventry Homes
Bill Larson, G. William Larson & Associates
Absent: Speaker Jane Hull
Senator Jamie Sossaman
Mike Goyer, City of Sierra Vista
Jalma Hunsinger, Arizona Association of Realtors
1. Call To Order
Jean Hassell opened the public meeting by thanking those in
attendance for coming to today's meeting and for showing an
interest in how Trust lands, and in particular urban Trust
lands, in Arizona will be utilized in the future.
2. Presentation on HB 2019 Backaround/Issues
Jean Hassell stated that State lands should be more
appropriately referred to as Trust lands because the Federal
government set aside four sections of each township to provide
for a long-term revenue stream to support the State's common
schools as well as the other thirteen beneficiaries.
These Trust lands came about when the U. S. Congress granted
four sections out of each township to be held in Trust by the
State of Arizona for the support of the public school system.
At the same time other lesser grants were made to support the
other beneficiaries. The current Trust encompasses 9.5
million acres, and 8.3 million acres of this total are in the
School Trust. The Congress very specifically spelled out in
the Federal Enabling Act how these Trust lands are to be used.
Jean Hassell continued by saying that revenues are generated
for the beneficiaries through the sale, lease or use of the
Trust land or its resources, such as minerals and timber. The
revenues derived from leases go into the expendable fund while
the revenues from the sale of Trust lands or its resources go
into the permanent fund and it is the interest that the
permanent fund generates that can be used by the
Municipal Master Planned Development Study Committee
Public Meeting--November 9, 1989
beneficiaries. In the past, the majority of these revenues
came from farming and ranching operations on Trust land, or
from the sale of raw, undeveloped land. This revenue
generation picture has changed in the recent past, however,
because an increasing amount of revenues are being generated
by the lease or sale of planned and zoned Trust land.
Jean Hassell stated that this shift in revenue generation
started in 1981 when the Urban Lands Act was approved by the
Legislature. This Act provides a mechanism for the planning
and development of Trust lands in cooperation with local
governments. It also incudes provisions to ensure quality
growth and development of Trust land and to capture the
increased value of these planned Trust lands upon disposition.
At this point in time, approximately 1,600 acres of planned
and zoned Trust land have been sold and another 1,000 acres
have been leased to the benefit of the beneficiaries. These
parcels have been disposed of in a very discreet manner and
have been relatively small in size. Mr. Hassell added that
the planning and disposition provisions included in Article
5.1 of the Urban Lands Act have worked very well since the Act
was adopted.
Jean Hassell added that the Urban Lands Act also contains an
Article 5.2 with provisions for the planning and development
of self-contained communities. The crafters of this article
envisioned a large master planned development away from
existing urban centers with well planned infrastructure and
public facilities. John F. Long, a Phoenix-based developer,
has had a long-standing application to master plan a large
block of Trust land in north central Maricopa County, under
Article 5.2. This was and continues to be the only
application for a self-contained community. During a long
series of meetings with Mr. Long, the Land Department staff
formulated a list of steps necessary to implement this type
of master planned development. Much of the discussion at
these meetings centered on infrastructure and specific
disposition methods which would be fair to both the master
developer and the Trust, and it became apparent from these
discussions that Article 5.2 needed clarification and
amendment. These amendments were proposed as part of House
Bill 2019 and became session law dealing with master planned
developments on Trust land located within a municipality.
This session law also required the State Land Commissioner to
empanel a committee representing a broad cross-section of
public and private development interests to study four issues
related to master planned development. These issues included:
Municipal Master Planned Development Study Committee
Public Meeting--November 9, 1989
1. The definition of master planned development.
2. The methodology and funding of the planning phase.
3 . The phasing of development and disposition of State
Trust lands under master development.
4. Issues related to infrastructure.
Jean Hassell concluded his presentation by stating that the
HB 2019 Committee has been conducting meetings on a regular
basis since September of 1988, and the conclusions of the
discussions held at these meetings are contained in the
packets that were sent out prior to this public meeting. The
Committee is here today to present an overview of its
conclusions and recommendations and to address concerns and
suggestions from those in attendance.
3 . Presentation on Draft Committee Report Outline and Preliminary
Recommendations
Committee member Bill Larson stated the HB 2019 Committee made
every attempt to be comprehensive but concise during its study
of the four HB 2019 issues over the past several months. Mr.
Larson then presented a brief overview of the Committee's
draft report, lending special emphasis to the Committee's
preliminary recommendations (Handout #I). Mr. Larson read
each of the Committee's issue-specific recommendations, and
added that a final general recommendation was drafted by the
Committee regarding the Land Department's need for more staff
and resources to negotiate, manage and monitor infrastructure
agreements issued in conjunction with master planned
development projects.
4. Presentation on Draft Leqislation for Article 5.1
Nicki Hansen presented the draft amendments to Article 5.1
(Handout #2) by first giving an overview of the Urban Lands
Act. Ms. Hansen stated that the State's planning process
begins with a designation as being under consideration as
suitable for urban planning by the Commissioner. The State
then addresses 16 issues encompassed by the statutes before
the Trust lands are designated as suitable for urban planning,
and some of these issues include potential revenue generation
for the Trust, assured water supply, and local/regional growth
and development trends.
Municipal Master Planned Development Study Committee
Public Meeting--November 9, 1989
Nicki Hansen continued by saying that the second step in the
State's planning process is the formulation of a general plan
if the lands have been designated as suitable for urban
planning. The general plan incudes a general discussion of
land uses based on the respective municipality's adopted
general plan, as well as a series of policy statements
regarding potential land uses. As was the case with the
designation step, this general planning step requires a public
hearing before approval by the State Land Commissioner.
Nicki Hansen stated that the next step in the State's process
prior to disposition is development planning, typically done
under Article 5.1 of the Urban Lands Act. This development
planning is accomplished by contract utilizing State funds,
or by permit utilizing the planning permittee's funds. Those
monies expended by a planning permittee are then reimbursed
at the time of disposition if the planning permittee is not
the successful bidder. Ms. Hansen pointed out that a typical
development plan includes a site and area analysis, a market
and marketability study, alternative plans and a feasibility
study, and that a public hearing is required before the
Commissioner approves the development plan.
Nicki Hansen then referred to Handout #2 which includes the
proposed changes to Article 5.1. Ms. Hansen pointed out that
no modifications to ARS 837-331, 332 and 333 are proposed at
this time, and that the proposed changes to article 5.1 will
facilitate the use of master plan areas within a development
plan. Ms. Hansen then briefly reviewed these changes which
include new statutory language for development plan and
secondary plan preparation, and approval (5 37-334 (B) and (I) ,
master plan preparation and approval (537-334.01), planning
permit issuance, compensation and applicant selection (537-
338), and the deposit and use of expert fees (537-338.01).
5. Presentation on Draft Leaislation for Particination Contracts.
Infrastructure Contracts and Community Facilities Districts
Greg Keller stated that legislative changes are being proposed
for the various infrastructure tools which, after study by the
Committee, were found to need such changes in order to work
for Trust land projects (Handouts #3, #4, #5, and #6) .
Greg Keller first addressed the proposed addition of
definitions for wcommunity identity packagew and
I1infr astructure" (Handout #3) , and stated that these
definitions are needed in ARS 537-101 because the use of these
terms will occur in several statutory sections within Title
37.
Municipal Master Planned Development Study Committee
Public Meeting--November 9, 1989
Greg Keller stated that the proposed legislative additions and
changes for participation contracts (Handout #4) will
facilitate the use of participation contracts for Trust land
projects. Mr. Keller explained that a participation contract
would include a lease, a sale, or a combined lease and sale
if no preferential right exists, together with the obligation
to install infrastructure. The proposed legislation includes
criteria to be considered by the Commissioner prior to making
a recommendation to the Board of Appeals, provisions for
receiving a negotiated share of the master developer's
proceeds generated by subsequent sales and lease assignments,
and provisions dealing with default by a master developer
under a participation contract.
Greg Keller then referred to the proposed legislative changes
for infrastructure contracts (Handout #5) and stated that the
proposed changes will provide the authority needed by the Land
Commissioner to enter into infrastructure agreements. In
addition, these proposed changes include a listing of the
primary components required in any infrastructure agreement,
i.e., identification of the type and location of
infrastructure, and a method for determining the cost and
interest of the infrastructure. The draft legislation also
includes provisions for curing a default under an
infrastructure agreement, and limits of State liability for
the design, construction and maintenance of the proposed
infrastructure.
Greg Keller then addressed the proposed legislative changes
for community facilities districts (Handout #6) . These
proposed changes to the Community Facilities District Act
include provisions for the inclusion of Trust land in a
community facility district, and for taxation of the
possessory interest associated with a long-term lease,
certificate of purchase or participation contract.
Discussion/Public Comment
Guy Householder, representing Cabe-Pollack of Flagstaff,
referred to the phrase contained in ARS 837-338 (A) (Handout
#2) which reads "and (the Commissioner) may require each
applicant to pay the feesw associated with the review of
planning permit applications. Mr. Householder stated that the
word "may" should be changed to vtshallws o that the State is
not burdened with these costs.
Municipal Master Planned Development Study Committee
Public Meeting--November 9, 1989
Nicki Hansen responded that, the way the proposed language is
written, the commissioner would have the discretion to require
each applicant to pay the fees or to use State appropriated
funds, but, in either case, the State would hire these
experts. Since the State does not currently have an
appropriation for this purpose, the Commissioner needs the
ability to charge the applicants if analysis is needed.
Patty Boland stated that it would also be at the
Commissioner~s discretion to hire such experts if the Land
Department staff did not have the expertise to perform this
review task. Ms. Boland added that, ideally, the Commissioner
would use State funds so that there is no question as for whom
these experts are working, but, if State funds are not
available and the Land Department staff did not have the
appropriate expertise, then the Committee wanted to provide
the Commissioner with a way to get this analysis completed and
paid for.
Dean Wingert, representingthe Forest City Scottsdale Company,
asked if secondary planning permits would be used to make
modifications to the already approved development plan, if
such modifications became necessary because of changing market
conditions.
Nicki Hansen responded that a secondary planning permit could
be utilized to address changing market conditions since the
buildout for a master plan area could be 20--30 years and
conditions and markets do change over time. Ms. Hansen added
that secondary planning permits could also be used to obtain
zoning prior to disposition for individual parcels within a
master plan area after the initial development plan has been
approved.
Dean Wingert then asked whether the various infrastructure
tools, if approved by the Legislature, can only be used for
projects planned as master plan areas.
Nicki Hansen responded that the proposed legislation
facilitates the use of these tools for projects completed or
to be completed under the existing ~rticle 5.1 or ~rticle 5.2
as well as for master plan areas if approved by the
Legislature.
Dean Wingert also asked whether master plan areas have to be
within a municipality to ensure that the associated
infrastructure will be maintained once construction has been
completed.
Municipal Master Planned Development Study Committee
Public Meeting--November 9, 1989
Greg Keller responded that the infrastructure tools studied
by the Committee could be used in both incorporated or
unincorporated areas, with the exception of community
facilities districts which must be located in a municipality.
Mr. Keller added that master plan areas and the associated
planned infrastructure must be located within a municipality
before any zoning and development plan approval by the
Commissioner can occur.
Guy Householder stated that the legislative changes reviewed
here today appear to provide the Land Department with the
necessary authority and tools to get infrastructure installed
on Trust land in conjunction with Article 5.1 or Article 5.2
projects and for master plan area-type projects.
Jean Hassell stated that the Land Department will accept
written comments on the HB 2019 Committee's work until 5 p.m.
on Thursday, November 16, 1989, and that any comments will be
greatly appreciated by the Committee. Mr. Hassell added that
the Committee will have at least one more meeting on Tuesday,
November 14, 1989 at 9 a.m., and perhaps one more after that
on November 28, 1989, also at 9 a.m. if needed.
Dean Wingert asked if the Department will submit the proposed
legislative packages presented here today to the Legislature
for consideration during the upcoming legislative session.
Jean Hassell responded that the Committee's final report must
be submitted the Legislature by December 1, 1989, and that
the legislative packages will be submitted to the Legislature
by the Committee for consideration during the upcoming
legislative session.
Jean Hassell thanked everyone for attending and adjourned the
public meeting.
HB 2019 COMMITTEE
REPORT OUTLINE
The following report outline contains the Committee's proposed recommendations and
includes a synopsis of the Committee's discussion and findings regarding the four (4) HB
2109 issues.
NOTE : PLEASE REFER TO THE PROPOSED
LEGISLATIVE PACKAGES CONTAINED I N
SECTION I V OF THIS REPORT FOR THE
TE2CT OF THE FOLLOWING HANDOUTS:
(NOS. 2 THROUGH 6 ) .
PROPOSED CHANGES TO
ARTICLE. 5.1 OF THE URBAN LANDS Am
The following proposed changes to Article 5.1 would facilitate the use of master plan
areas within a development plan, and would establish procedures for selecting a planning
pennittee, and for master plan preparation and approval. I
I
I
I
ii
I
B
I
PROPOSED ADDLTIONS TO
?ITLE 37 DEFINITIONS
The following definitions of "infrastructure" and "community identity package" are
required in ARS. 537-101 because of the terms' proposed use in Statutes prior to Article
PROPOSED LEGISLATION FOR THE USE
OF PARTICIPATION CONTRACIS FOR STATE LANDS
The following proposed legislative additions and changes will facilitate the use of
participation contracts for State lands. A participation contract would include a lease,
sale, or lease and sale together with other rights and obligations (i.e., the installation of
infrastructure and community identity package) by a master developer. The Department
would then receive a share of the master developer's revenues from subsequent sales and
lease assignments.
PROPOSED CHANGES TO ARTICLES 5.1 AND 5.2
OF THE URBAN LANDS ACT
The following proposed changes to Articles 5.1 and 5.2 of the Urban Lands Act would
facilitate the use of infrastructure installation agreements, i.e., infrastructure contracts,
for State land projects approved under Article 5.1 or Article 5.2. These infrasmcture
agreements would provide for the construction, operation and maintenance of
infrastructure and community identity package and for reimbursement of costs and
interest by subsequent purchasers or lessees.
PROPOSED CHANGES TO
COMMUNITY FACEJTE3 DISTRICT Am
The following proposed amendments to the existing Community Facilities District Act will
serve to facilitate the use of community facilities districts on State Trust land. Under the
Enabling Act, Trust lands cannot be encumbered, therefore, these amendments would
allow participation if the State Land Commissioner h d s this in the best interests of the
Trust, and the possessory interest of the State's long-term lease could be utilized to back
the bonds issued by a community facilities district.
ROSE MOFFORD
I GOVERNOR
1616 WEST ADAMS
PHOENIX. ARIZONA 85007
M J HASSELL
STATE LAND COMMISSIONER
NOTICE OF PUBLIC MEETING
OF
ARIZONA STATE LAND DEPARTMENT
MUNICIPAL MASTER PLANNED DEVELOPMENT STUDY COMMI?TEE
In conformance with Arizona Revised Statutes, Section 38-431.02, Notice is hereby given to the
Municipal Master Planned Development Study Committee and the general public that there will
be a public meeting conducted by the Master Planned Development Study Committee on
NOVEMBER 9, 1989 at 1:30 p.m. The meeting will be open to the public and is being held to
gain public input on the Committee's preliminary recommendations and on proposed legislation
which will address the issues called for in House Bill 2019 and as identified on the attached
agenda.
The meeting will be held at the following location:
Information concerning this public meeting of the Committee may be obtained by calling 542-
DATED THIS 31th day of October, 1989
ARIZONA STATE LAND DEPARTMENT
M. J. HASSELL
STATE LAND COMMISSIONER
AGENDA
PUBUC MEET,lNG
To be conducted by
MUNICIPAL MASTER PLANNED DEVELOPMENT
STUDY COMMfTTEE
NOVEMBER 9, 1989 7-30 P.M.
MEMENT AUDTTORIUM-1616 W. ADAMS
PHOENK AZ
2. Presentation on HB 201 9 Backgroundllssues
3. Presentation on Draft Committee Report Outline and Preliminary
Recommendations
4. Presentation on Draft Legislation for Article 5.1
5. Presentation on Draft Legislation for Participation Contracts, Infrastructure
Contracts and Community Facilities Districts
6. DiscussionlPublic Comment
Executive Session: The Committee may vote to go into Executive Session on any of the
above-agenda items for discussion or consultation for legal advice
with its Attorney, pursuant to ARS 938.437.03.A.3.
COMMITTEE ADJOURNS
- - -
Pnoenix, Arizona E5007
DATE : heL\eb\r?>in_ 7,\( \eT I - MEETING REGARDING: / " \ U ~ ~ I C I ~ ~bCIP i,r(- YL&+w~.(<\%? i'~p*~k%- <T\'(>Q
\
ROOM: f h ~ t b t i < - A'"i\:-b, \ ~ , 7 \ \\-\L- h k k 9 p W 5
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l e a s e s i g n i n below:
I I I
I BUSINESS, FIRH, AGENCY I ADDRESS 1 PHONE
/&MU I 13875 d ~ t z ItT ftf-g 1I ~ a o p d
ARLZONA STATE LAKD DEPAETFLNT
1616 kesr Adams
Phoenix, Arizona C5007
Please sign in below:
ARlZONk STATE LAXD ULYAK'LELK'L
1616 best A a a m s (3x-K 3
Phoen~x, Arlzona E5007
DATE : L,CF. N; 6 17- '1 , ICti 'i u ~ . ~ E T I NREGG AR3ING : F r \ u r 4 , c , r y . ~ k p ~ n x&t -\~ly,r~, X L ;I L L . ,SJ7 ;~, , . jC ~C ~Tr r \ w \ , T t ~ :
ROOM: %F\s+'G3L-T h ~ ' r h n r . (l v l q . ILK- - LC. f i p r ~i . H-4 X F\2
ATTENDANCE
Please s i g n in below:
1-1 I I I
~ 1 0F0IRS T INTERSTATE BANK PLAZA
100 WEST WASHINGTON
PHOENIX, ARIZONA 85003-1887
(602) 229-5200
TUCSON OFF ICE
!$OD SLCURJ~' PACIFIC BANK PIAZA
33 NQRTH STONf AVENUE
TUCSON ARIZON~65 701.1413
(so;) ara.lrlo
FAX (602) 6L39118
~ L N E REPLY TO PHOENIX OFFICE
WRITER'S DIRECT LINE
229-5615
November 16. 1989
VIA TELECOPIER
Greg Keller
STATE LAND DEPARTMENT
State Compensation Building
1 6 1 6 West Adams, F i r s t Floor
Phoenix. Arizona 85007
Re: Comments on tho Report of t h e Municipal
Master Planned Development Study Committee
Dear Greg:
I f i n a l l y had a chance to read through t h e f i n a l r e p o r t
of the 2019 Study Committoe, and, having been unable to roach you
by phone, I thought I would provide you with a few w r i t t e n
comments,
As you might have a l r e a d y guessed, my comments r e l a t e to
t h e d i s c u s s i o n of community facilities c ? i , s r r i c t s commencina on
page 19 of the report. Generally, I t h i n k t h a t Chis s e c t i o n r e a d s
f a i r l y w e l l . You may wish t o c o r r e c t what I b e l i e v e i s a
t y p o g r a p h i c a l error i.n t h e l a s t 1,ine of t h e second paragraph of
t h e d i s c u s s i o n ( "fee" should be "free" ) .
The only s u b s t a n t i v e comments t h a t I have r e l a t e t o t h e
"Findings" s e c t i o n . It appears that the d e s c r i p t i o n of the
Committee's f i n d i n g s may have been d r a f t c d p r i o r t o some of our
more r e c e n t discussions. While the Cornnittee members and t h e Land
Department s t a f f have raised s e v e r a l concerns about the use of
CFD's on S t e t e l a n d s . X had hoped t h a t by now t h e r e would he fcw,
if any, "unanswered q u e s t i o n s . " I fear t h a t a reader might
conclude t h a t t h e Committee must not have heen d o i n g its job if,
after a year's t i m e , there remained "many unanswered q u e s t i o n s . ' '
W e both know t h i s is not case, Also, the repor-, as it now
reads, i m p l i e s t h a t t h e l i e n i n g of a possessory interest on State
lands may be u n c o n s t i t u t i o n a l . There shoulci be no q u c s t i o n about
STREICHL,A NC, WEEKS0 CARUON
A PLIOFESSIONAL ASSOCICTI~U
ATTORNEYS AT LAW
Greg Kcller
November 16, 1989
Page Two .a.
this. Leasehold and certificate of purchase interests in State
lands arc lienable. What may not be encumbered is the underlying
fee interest. Finally, in the second paragraph of the Committee's
findings on community facilities districts, the report appears to
recommend that legislation not be submitted to t h e Lcgislaturc
until "more study and legal analysisvare performed. I w a s under
the impression t.hat the draft l~gislation on which I am currently
working was, upon approval by the Committee, to be submitted as
part of the CPD legislative package. In othcr words, I thought we
were trying to wrap up the additional study and analysis prior to
submitting this report. Please let me know if I am mistaken.
With the foregoing comments in mind, 1 would suggest
revising the "Findings" section of the Committee ' s report on CFD I s
to read as follows:
While the Committee concluded that community
facilities districts could be utilized for
conventional or master pl.anne-d Trust land
projects, several concerns were discussed, i.e.,
avoiding the problem of a possessory interest
lien becoming an encumbrance on the trust's fee
title and, as a practical matter, whether a
possessory interest in the form of a long-term
lease, certificate of purchase or participazion
contract would be valuable enough t c both back
bonds issued by the district and serve as
collateral for funds borrowed to construct
on-site improvements.
The proposed legislative changes relating to
community facilities districts attempt to address
these concerns and to provide a more workable
framework for the inclusion of Trust lands within
improvement districts generally.
If you have any questions concerning any of the
foregoing comments or these suggested revisions, please contact
me- Thank you for your consideration.
Very truly yours, r..
BLC : cla
c c : Jim Rothschild
Barr
c c : A ' Y r E - p @ l i G @ Q : K , % K C .
R E A L T Y & M A N A G E M E N T
I WAS PRESENT AT THE NOVEMBER ~ T MHEE TING AT YOUR OFFICE AND VOICED CONCERNS
ABOUT VERBIAGE WHICH ALLOWS DISCRETION IN CHARGING FEES FOR MASTER PLAN
PERMIT APPLICANTS,
IT IS MY FEELING THAT ALL APPLICANTS SHOULD PAY FEES AND CONSIDER THESE FEES
AS A PART OF MASTER PLAN COSTS, HITH THE DEVELOPERS ABSORBING THI s COST,
YOUR OFFICE MAY NOT BE DEPENDENT UPON APPROPRIATIONS FOR THESE EXPENSES,
518 North Beaver Street, Flagstaff, Arizona 86001, 6021779-7115
3625 N. 16th Street, Suite D100, Phoenix, Arizona 85016 6021274-1931
November 16, 1989
Mrs. N i c k i Ransen
Arizona State Land Department
1616 W, Adams
Phoenix, AZ 85007
Dear Mrs. Hansen:
Southwest Community Resources compliments you and your s t a f f
for the professional e f f o r t put forth i n developing a response
to issues addressed in Rouse B i l l 2019. Your presentation of
the issues and recommended solutions during the Hovcmber 9 ,
1989 public bearing was well done.
I wholeheartedly support the legislature propose J s cont.n i ned 4 n
the final recommendations of the Municipal Master Planned
Development Study Committee. Legislative approval of the
recommended additions and modifications to current S t a t e
Statutoc t ' ~ l J , cz,7p;1 f 3 ~ a h + 7 Y &nHaht?b The T.anfl nnpattmenr's
ability to professionally manage development of Arizona State
T r u s t Lands while maximizing the economic value of those lands
for the benefit of education in Arizona.
Uurlng me 1990 legislature S ~ S Y ~ U I I I w i l l dcLively s u p p ~ r t
adoption of the study committee's recommendations to the State
Legislature.
Sincerely,
SOUTHWEST COMMUNITY RESOURCES, INC.
President
8767 E. Pinnacle Peuk Rud, Suite 200, Scu~isriuleA, ri20rta 85255 602-585-364 * FAX 602-535-0643
November 14, 1989
Gregory Keller, Project Manager
Urban Planning Division
STATE LAND DEPARTMENT
1616 W. Adams Street
Phoenix, AZ 85007
Re: MUNICIPAL MASTER PLANNED DEVELOPMENT STUDY COMMITTEE
Dear Mr. Keller:
Forest City is a national development company that has been involved
with the Arizona State Land Department on several parcels of land
throughout the past four years. As their representative, I have
been following the activities of the Study Committee with great
interest.
We support the basic premise of the Committee's report,
that legislative changes are recommended to facilitate the ability
to install infrastructure within State Trust Urban Lands, and
believe that the new legislation proposed by the Committee will
achieve that goal and benefit the Trust.
We look forward to progress on the Committee's recommendations.
Sincerely,
FOREST CITY SOUTHWEST
A
Dean F. Wingert
Project Director
DFW : dl
6450.036
333 E. Wetmore Rd., Suite 250, Tucson, Arizona 85705-1758 (602) 888-3962
CiTY OF
MESA November 13, 1989
Ms. Nicki Hansen
Director Urban Planning Division
Arizona State Land Department
1616 West Adams
Phoenix, Arizona 85007
Dear Nicki:
We have been following the a c t i v i t i e s of your HB 2019 Committee, via the material
you have been sending t o our office. (See, someone actually reads i t . )
I have read the report of the Municipal Master Planned Development Study Committee
dated November 1989, and am writing to t e l l you of our support for the recommenda-