Sec 37-313. Conservation lease of trust lands suitable for conservation; definition

A. The commissioner may sell leases of trust land for conservation purposes to a qualifying lessee when it is in the best interest of the trust. The conservation lease may authorize the lessee to protect the conservation and open space value of the land in cooperation with other lessees of the land, consistent with the plan adopted under section 37-312. The commissioner retains the right to authorize other compatible uses of the land.

B. The term of the lease may be for less than ten years or for at least ten but not more than fifty years. The sale of any lease shall be:

1. At public auction.

2. Based on one independent appraisal and one independent review appraisal, both of which may be reviewed by the department, of the fair market value of the interest in the trust land that is being offered, including mineral, sand and gravel and oil and gas value.

3. Consistent with the requirements of the Constitution of Arizona, applicable provisions of this title and rules adopted by the commissioner.

C. If an existing lease is not renewed as a result of any action taken pursuant to this article and the conservation lessee and the existing lessee cannot agree on compensation, the commissioner shall determine the amount of reasonable compensation for damages sustained by the existing lessee after considering the following factors:

1. The actual use of the leased land.

2. The rentals paid during the term of the lease.

3. The actual amount of economic damage to the production unit caused by the failure to renew. In determining the amount of economic damage to the production unit, the commissioner shall not limit the scope of review to only that portion of the lands involved in the reclassification but shall take into consideration the impact of the loss of these lands on the overall production unit, including situations in which other leased or private lands are necessary and have been leased by the existing lessee for operation as a production unit.

4. Other factors that the commissioner or the existing lessee determine to be relevant.

D. The conservation lessee shall make payments for reimbursement or compensation, or both, as established in this section to the existing lessee at the time the lease is not renewed. This section does not prevent the payment for reimbursement or compensation, or both, from being made in installments if the former lessee and conservation lessee agree to installment payments.

E. If trust lands that are leased pursuant to this section are subject to a current planning permit under article 5.1 of this chapter, the succeeding lessee shall reimburse the holder of the permit as provided by section 37-338.

F. The department shall make application forms available for leases. The application form shall contain a statement under penalty of perjury that the person signing the application represents that the information in the application is complete and correct. A material false statement or omission of facts in the application is cause for canceling a conservation lease that was issued based on the application.

G. At the time of application the applicant shall post a bond pursuant to section 37-107. The bond is forfeit to this state if no bidder bids at the auction for the conservation lease.

H. The successful bidder shall pay the first year's annual rental and other costs pursuant to section 37-281.02, subsection D and section 37-107.

I. If the applicant did not bid at a previous auction where the applicant initiated the process, the department shall require the applicant to pay a deposit pursuant to section 37-281.02, subsection I.

J. A lessee under a conservation lease shall not:

1. Use the lands for any purpose other than that for which the lease was issued.

2. Sublease the lands except to another qualifying lessee and on approval by the commissioner.

3. Inhibit or interfere with other existing leases.

K. A state land trust beneficiary may lease trust land under this section but may not make payments on the lease from monies that were received from the state trust.

L. For purposes of this section "qualifying lessee" includes:

1. The United States or an agency or instrumentality of the United States.

2. An agency of this state, including a state land trust beneficiary.

3. A county, city, town, school district, community college district or special taxing district or any of their agencies or instrumentalities.

4. An individual or a private organization or entity that is legally empowered to own or manage real property in this state.