ANNUAL REPORT 2014 - 2015 Douglas A. Ducey Governor Lisa A. Atkins Commissioner Serving Arizona’s Schools and Public Institutions Since 1915 Arizona Revised Statutes Section 37-103. Seal of state land department The state land department shall have a seal, and it shall be affixed with the signature of the state land commissioner to all instruments of conveyance, leases, certificates and other official acts. The signature of the commissioner and seal of the department upon the original or copy of any paper, plat, map or document from the state land department shall impart verity thereto. The Seal, adopted in 1972 and again in 2015 in commemoration of the Department's 100th anniversary, incorporates six colors: red, white, blue, gold and copper as they relate to the United States and Arizona and green for heritage from Mexico. 2 Mission Statement To manage State Trust lands and resources to enhance value and optimize economic return for the Trust beneficiaries, consistent with sound business management principles, prudent stewardship, and conservation needs supporting socio-economic goals for citizens here today and future generations. To act in the best interest of Trust for the enrichment of the beneficiaries and preserve the long term value of the State’s Trust lands. Contents Message From the Commissioner ................................................................................................................................ 5 About the Commissioner............................................................................................................................................... 6 Historical Overview ....................................................................................................................................................... 7 Revenues and Beneficiary Summary ............................................................................................................................ 11 Land Management Map..................................................................................................................................................12 FY 2015 Total Revenue ................................................................................................................................................. 13 Permanent Funds ..........................................................................................................................................................14 Expendable Revenue .................................................................................................................................................... 15 Revenue by Beneficiary ............................................................................................................................................... 16 State Trust Land Uses .................................................................................................................................................. 17 Revenue Generation on State Trust Land .................................................................................................................... 18 Fund and Beneficiary Summary: K-12 Education ......................................................................................................... 19 Fund and Beneficiary Summary: Universities ............................................................................................................. 20 Fund and Beneficiary Summary: Other Grants ...........................................................................................................22 About the Land Department: Divisions and Sections ................................................................................................... 24 Administration ............................................................................................................................................................. 24 Land Information, Title and Transfer .......................................................................................................................... 25 Real Estate Division .................................................................................................................................................... 25 Appraisal Section .................................................................................................................................................. 25 Planning and Engineering ..................................................................................................................................... 25 Rights of Way…………………………………………………………….…………………………………………………………………………………….……….....26 Sales and Commercial Leasing ..............................................................................................................................26 Information Systems and Resource Analysis .............................................................................................................. 27 Natural Resources Division ......................................................................................................................................... 27 Range, Agriculture and Conservation Section ....................................................................................................... 27 Environmental Program........................................................................................................................................ 28 Trespass Program ................................................................................................................................................ 28 Minerals ................................................................................................................................................................ 29 Water Rights ......................................................................................................................................................... 32 Natural Resource Conservation Districts............................................................................................................. 33 Board of Appeals......................................................................................................................................................... 34 Financial Schedules .................................................................................................................................................... 35 Receipts by Category................................................................................ ……………………………………………………….…….36 Rental Acreage and Receipts ............................................................................ ……………………………………………….…….37 Treasurer’s Formula Distribution……………………………………………………………………………………………………………..…….………...38 Doug Ducey Governor State of Arizona Please visit our website at w w w . l a n d . a z. g o v MESSAGE FROM THE COMMISSIONER September 1, 2015 Honorable Douglas A. Ducey Governor State of Arizona 1700 West Washington Phoenix, Arizona 85007 Dear Governor Ducey: It is my privilege to deliver to you the State Land Department’s (Department) Annual Report for Fiscal Year 2015 (FY 2015) as required by A.R.S. § 37132. The report contains a summary of the Department’s activities and revenue earned during the fiscal year. The Department’s primary and continuing goal is to increase revenue for the beneficiaries of the State Trust and to protect the Trust’s long term interest. As a result of careful planning and prudent stewardship, in FY 2015, a total of approximately $284,000,000 was generated for the Trust beneficiaries. Land sales generated more than $135,000,000 for the fiscal year. In May 2015, the Department conducted a land auction in Scottsdale that was bid to more than $1,300,000 dollars an acre, the largest per acre price in the Department’s history. The natural resources division generated more than $10,000,000 on agriculture, grazing and mineral leases, and another $13,000,000 on mineral royalties for the Trust beneficiaries in FY15. The Department continued to auction Trust land classified as suitable for conservation during FY 2015. The City of Phoenix purchased 85.15 acres of Trust land for open space, and Pima County added more than 100 acres of preserve land to its holdings. The conservation sales generated more than $3,000,000 for the Trust. Thank you for the opportunity to serve Arizona and the Trust beneficiaries as the State Land Commissioner. We will continue to make appreciable advancements of the interests of those we serve. Sincerely, Lisa A. Atkins Commissioner 5 ABOUT THE COMMISSIONER AND DEPUTY COMMISSIONER Lisa A. Atkins Commissioner Arizona State Land Department Wesley Mehl Deputy Commissioner Arizona State Land Department Lisa A. Atkins was appointed by Governor Douglas A. Ducey to serve as Commissioner of the Arizona State Land Department on June 15, 2015. Wesley Mehl was appointed as the Deputy Commissioner of the State Land Department on July 2, 2015. Wesley served as Vice President and General Counsel of Town West Realty, Inc., a real estate development company in Tucson from 2011 to 2015, and was previously in private legal practice. As an Arizona native, Lisa combines a wellrounded understanding of the State with more than 40 years of experience in the federal and State legislative and policy arenas. While serving more than 23 years as Chief of Staff to Congressman Bob Stump (R-AZ) , Lisa worked closely with residents, citizens groups, associations, and State and local governments on a diverse set of issues of importance to Arizona, particularly focusing on land, water and military issues. After her tenure with Congressman Stump, Lisa served as the Executive Director of County Supervisors Association of Arizona (CSA), representing the elected County Supervisors in Arizona on policy and budget matters. Prior to joining the Governors Administration in June 2015, Lisa served for eleven years as the Vice President for Public Policy for Greater Phoenix Leadership (GPL), a group of the Region’s top business and industry leaders. Wesley graduated from the University of Arizona with a B.A. in Political Science. He obtained his law degree from Pepperdine University, and an LL.M. in real property law from the University of Miami. Wesley serves on the Board of Directors of Good News Communications, Inc., a Christian radio broadcasting company. Mr. Mehl was born and raised in Tucson, Arizona. He and his wife, Elizabeth, and their children live in Phoenix, Arizona. Lisa is well respected in the Arizona community for her involvement in a variety of organizations. Among her current community activities, Lisa represents Maricopa County as an elected member of the Board of the Central Arizona Water Conservation District (CAWCD), and is a member of the Governor's Military Affairs Commission. Lisa is a graduate of the University of Arizona. She and her husband John reside in Phoenix. 6 Historical Overview LAND GRANT 1915: STATE L AND CODE ESTABLISHED Endowment of public lands for educational purposes was a practice established by the Northwest Ordinance in 1787. Congress established the Territory of Arizona on February 24, 1863 and granted sections 16 and 36 of each township for the benefit of the Common Schools. On May 20, 1912, an act of the First Legislature created the threemember State Land Commission to serve as Arizona’s temporary Land Department. The members were Mulford Winsor, Chairman; Cy Byrne, Secretary; and William A. Moody, member. The Enabling Act, passed on June 20, 1910, allowed for Arizona statehood. In addition to the previously designated sections of land, the Enabling Act assigned sections 2 and 32 of each township to be held in trust for the Common Schools. The needs of other public institutions were considered by Congress, and more than two million additional acres were allocated for their use. The Commission was charged with assessing, evaluating, and making recommendations about the Trust land granted by Congress to the State. The Commission was to report back to the Legislature with its findings and conclusions by the end of the second Legislative session. The Commission concluded that Arizona should not sell its Trust land outright, as other states had done. Instead, it should put the lands to their highest and best use. The decision to sell or lease the land should be based upon the potential use of each parcel. The Commission recommended the creation of a permanent State Land Department “... in order that the multitudinous detail attached to the State’s varied land interests may have constant attention and to prevent irretrievable loss.” The ASLD and the system by which Trust lands were to be managed were established in 1915 by the State Land Code. In compliance with the Enabling Act and the State Constitution, the State Land Code gave the ASLD authority over all Trust lands and the natural products from Trust land. Land Commission Members make camp during the Scripps Survey 1912-1913 CREATION OF THE LAND DEPARTMENT On May 20, 1912, an act of the First Legislature created the threemember State Land Commission to serve as Arizona’s temporary Land Department. The members were Mulford Winsor, Chairman; Cy Byrne, Secretary; and William A. Moody, member. The Commission was charged with assessing, evaluating, and making recommendations about the Trust land granted by Congress to the State. The Commission was to report back to the Legislature with its findings and conclusions by the end of the second Legislative session. Members of the Land Commission 7 Historical Overview INSTITUTIONAL LANDS The Enabling Act granted 2,350,000 acres of land to the State to be selected from the “surveyed, unreserved, unappropriated and non-mineral public lands of the United States” for the following purposes: Agricultural & Mechanical Colleges County Bonds 150,000 1,000,000 Legislative, Executive & Judicial Buildings 100,000 Military Institutes 100,000 Miners' Hospital 50,000 Normal Schools 200,000 Penitentiaries 100,000 School for the Deaf & Blind 100,000 School of Mines 150,000 State Charitable, Penal, & Reformatory 200,000 State Hospital 100,000 University Purposes 200,000 Congress granted an additional 50,000 acres of Institutional Lands for a Disabled Miners’ Hospital in 1929 and by 1930 all but about 35,000 Institutional acres had been selected. By 1967 Arizona had selected all of the Institutional Lands granted. Remaining Institutional Acres Agricultural & Mechanical Colleges Legislative, Executive & Judicial Buildings Military Institutes Miners' Hospital Miners' Hospital (1929) Normal Schools SELECTION OF INSTITUTIONAL LANDS The Enabling Act required the Institutional Lands to be selected by a commission composed of the Governor, Surveyor-General, and the Attorney General. In order to comply with the requirements of the Enabling act, the Legislature made the Chairman of the State Land Commission the Surveyor-General. A power that the State Land Commissioner continues to hold today. Penitentiaries School for the Deaf & Blind School of Mines State Charitable, Penal & Reformatory State Hospital University Land Code University of Arizona (Act of 2/18/1881) According to the 1914 Report of the State Land Commission, “every section of the State, regardless of the remoteness or inaccessibility...has been visited.” By 1914, 636,661 acres had been selected. In the 1950s and 1960s the ASLD had a Rain Making and Cloud Modification Division 8 2015 124,944 64,229 80,168 47,545 47,686 174,786 76,111 82,558 123,256 77,225 71,248 137,778 49,134 Historical Overview COMMON SCHOOLS GRANT 100 YEARS OF LAND COMMISSIONERS When the United States Congress established the Territory of Arizona on February 24, 1863, it granted sections 16 and 36 of each township for the benefit of the Common Schools. W.A. Moer 1915-1920 Rudolf Kuchler 1921-1922 Vernon Vaughn 1923-1928 The Enabling Act, passed on June 20, 1910, allowed for Arizona statehood. In addition to the previously designated sections of land, Congress, through the Enabling Act assigned additional sections 2 and 32 of each township to be held in trust for the Common Schools. Don C. Babbit 1928-1929 Howard J. Smith 1931-1934 Charles P. Mullen 1934-1937 The Enabling Act stipulated that if any of the sections granted were mineral lands, previously sold, reserved or otherwise appropriated by Congress, or if there homesteads present, the State would not receive that land, but would be allowed to reselect other land. These were known as indemnitylieu selections. William P. Alberts 1937-1941 O.C. Williams 1941-1949 W.W. Lane 1049-1953 Rodger Ernst 1953-1957 Obed M. Lassen 1957-1970 Andrew L. Bettwy 1970-1978 Historical Note Joe T. Fallini 1978-1982 The Land Ordinance of 1785 established the basis for the Public Land Survey System. Under this system each western township contained six square miles of land which was divided into 36 square mile lots. The Ordinance reserved lot 16 specifically to public education. Robert K. Lane 1983-1987 M. Jean Hassell 1987-1997 J. Dennis Wells 1997-1999 Michael E. Anable1999-2003 Mark Winkleman 2003-2009 IN LIEU SELECTION PROCESS Maria Baier 2009-2012 The original in-lieu selection right constituted about 3 million acres to be selected from public domain land that was surveyed, unreserved and unappropriated. By 1979 the State Selection Board, which is now made up of the Governor, Attorney General, and the State Treasurer, had selected about 2.8 million acres with final selection being completed by 1982. Vanessa P. Hickman 2012-2015 Lisa A. Atkins 2015- 9 Acres Per Beneficiary Common Schools (K - 12)* Since the ASLD’s inception, its mission has been to manage the Land Trust and to maximize its revenues for the beneficiaries. All uses of the land must benefit the Trust, a fact that distinguishes it from the way public land, such as parks or national forests, may be used. While public use of Trust land is not prohibited, it is regulated to ensure protection of the land and compensation to the beneficiaries for its use. 1912 2015 9,400,000 8,061,037 Normal Schools 200,000 174,786 University Land Code 200,000 137,778 Agricultural & Mechanical Colleges 150,000 124,944 School of Mines 150,000 123,256 School for the Deaf & Blind 150,000 82,558 Military Institutes 100,000 80,168 State Charitable, Penal & Reformatory 200,000 77,225 Penitentiaries 100,000 76,111 State Hospital 100,000 71,248 Legislative, Executive & Judicial Buildings 100,000 64,229 University of Arizona (Act of 2/18/1881) 60,000 49,134 Miners' Hospital (1929) 50,000 47,686 Miners' Hospital 50,000 47,545 10,960,000 9,217,704 Total BENEFICIARIES Today there are 13 beneficiaries of State Trust land revenues. The Common Schools is the beneficiary with the largest Trust land acreage, originally receiving about 9.4 million acres of land. A 14th beneficiary, County Bonds, was funded by Trust revenues until it was eventually paid. Revenues derived from County Bond lands are now added to the Common Schools’ grant. Original Endowment Pattern Today, the original school section pattern exists only in a few locations such as the remote Arizona Strip. About threequarters of the school section acreage was relocated through selections and exchanges that have consolidated the Trust lands into large blocks. TRUST LAND DISTRIBUTION Today the Arizona State Land Department is responsible for 9.2 million acres of Trust land. 10 REVENUES AND BENEFICIARY SUMMARY Revenues earned from Trust land are classified as either permanent or expendable receipts. Revenues derived from the sale of State Trust land and natural products are referred to as permanent receipts which are deposited into the permanent funds and invested in stocks, bonds, and interest-bearing securities by the State Treasurer. The Treasurer distributes money from the funds to the beneficiaries according to a constitutional formula. Expendable revenue includes lease revenue from Trust land leases and permits, interest from sales contracts, and the Treasurer’s formula distribution. This revenue is distributed directly to the beneficiaries for their use. Proposition 301 (passed by voters in the 2000 election) created a Classroom Site Fund whereby particular sources of funds, including revenue from the fiduciary management of State Trust land, are directed to fund items such as teacher salaries, classroom size reduction, and dropout prevention programs. According to Proposition 301, the first $72.3 million in expendable revenue for common schools can be used to fund the basic State Aid Formula, which funds education. Expendable revenue in excess of $72.3 million is deposited into the Classroom Site Fund. TRUST LAND GRANT BENEFICIARY 1st $72.3 million of expendable receipts State Aid Formula for K - 12 Common Schools (K - 12) (Includes County Bonds) Receipts over $72.3 million Classroom Site Fund Normal Schools Agricultural & Mechanical Colleges Military Institutes School of Mines Board of Regents to Distribute to Universities University Land Code University of Arizona (Act 0f 2/18/1881) School for the Deaf & Blind School for the Deaf & Blind Legislative, Executive & Judicial Buildings Legislature, Executive & Judicial Branch State Hospital State Hospital Miners’ Hospital (2 Grants) Pioneers' Home 50% Pioneers' Home State Charitable, Penal, & Reformatory Penitentiaries 25% Department of Corrections Department of Corrections 11 25% Department of Juvenile Corrections Land Management in Arizona Legend Public Land Ownership CATEGORY Private State Trust BLM Forest Service Indian Reservation Military City or County Parks State Parks Wildlife Refuge Other Natl. Parks 12 FY 2015 Total Revenue Natural Resources Total $ 10,773,394 Commercial Leasing Total $ 33,045,345 Rights of Way $ Miscellaneous Rental $ Rental Total $ 1,447,173 51,282,201 Sales Total $ 135,358,125 Royalties Total $ 13,225,322 Fees $ Total ASLD Receipts $ 203,263,485 Total Trust Revenue FY 2005-2015 $450 $400 $350 $300 Millions 6,016,287 $250 $200 $150 $100 $50 $0 Land Department Earnings 13 3,397,836 Permanent Funds  The ASLD deposited $136 million into the Permanent Funds in FY 2015.  In FY 2015 the combined value of the Permanent Funds exceeded $5.1 billion.  The Permanent Funds consist of revenues earned from the sale of State Trust land and assets such as minerals or other natural products.  Each beneficiary has its own Permanent Fund.  The State Treasurer manages the Permanent Funds and invests the funds in stocks, bonds and other interest bearing securities. Distributions from the Permanent Funds to the beneficiaries are based on a constitutional formula.  In FY 2015 the Treasurer distributed $81,729,429 to the Trust beneficiaries. Permanent Endowment Fund FY 2005-2015 $6 $5 Billions $4 $3 $2 $1 $0 Total Trust Endowment 14 Expendable Revenue  Expendable revenue includes revenue from Trust land leases and permits, interest from sales contracts, and the Treasurer’s Formula Distribution of the Permanent Funds.  Expendable revenues are distributed directly to the beneficiaries.  Expendable revenue totaled $145 million in FY 2015.  The Treasurer distributed $81.7 million to the beneficiaries according to the constitutional Formula. Beneficiaries Agricultural & Mechanical Colleges Common Schools Military Institutes Normal Schools School for the Deaf & Blind School of Mines University Land Code University of Arizona (Act of 2/18/1881) Subtotal Education ASLD Ex- Treasurer's Distripendable bution $ 217,104 $ 227,961 $ 53,240,913 $ 75,984,425 $ 70,975 $ 12,784 $ 214,465 $ 82,066 $ 308,074 $ 116,300 $ 241,752 $ 257,994 $ 1,746,397 $ 429,026 $ 530,225 $ 1,129,225 $ 56,569,905 $ 78,239,781 $ $ $ $ $ $ $ $ $ Legislative,Executive & Judicial Buildings Miners' Hospital Penitentiaries State Charitable,Penal & Reformatory State Hospital Subtotal Other Institutions Grand Total $ 201,097 $ 1,592,405 $ 1,100,059 $ 3,315,307 $ 562,581 $ 6,771,448 $ 63,341,353 $ $ $ $ $ $ $ 15 $ $ $ $ $ $ $ 185,230 388,978 282,456 2,494,572 138,412 3,489,648 81,729,429 Total Expendable 445,065 129,225,338 83,759 296,531 424,374 499,746 2,175,423 1,659,450 134,809,686 386,327 1,981,383 1,382,515 5,809,879 700,993 10,261,096 145,070,782 16 $ $ 3,315,307 562,581 $ $ $ $ $63,341,353 Miners' Hospital* Penitentiaries State Charitable, Penal & Reformatory State Hospital Total $ 1,100,059 *This chart shows the Miners’ Hospital Grant and the Miners’ Hospital Grant 1929 revenues combined Expendable receipts include lease revenue from Trust land leases and permits, interest from sales contracts, and the Treasurer’s formula distribution. $ 1,592,405 $ $ $ $ 201,097 56,569,905 530,225 $ $ Legislative, Executive & Judicial Buildings 1,746,397 $ 241,752 $ $ School of Mines $ 308,074 Subtotal Education $ School for the Deaf & Blind $ 214,465 $ $ Normal Schools $ 70,975 University of Arizona (Act of 2/18/1881) $ Military Institutes $ 53,240,913 $ $ $ Common Schools** 217,104 $ 282,456 $ 81,729,429 145,070,782 700,993 5,809,879 1,382,515 1,981,383 386,327 134,809,686 1,659,450 2,175,423 499,746 424,374 296,531 83,759 129,225,338 445,065 Total Expendable $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 3 136,347,977 91,271 1,559,005 232,971 190,950 19,239 34,254,540 228,119 123,028 36,349 1,618 253,661 133,610,192 1,570 Permanent Fund Receipts **Because the County Bond Grant and Common Schools Grant were combined after the county bonds were paid off, they are generally shown combined as Common Schools. 446,635 1,887,569 2,298,451 536,095 425,992 550,192 83,762 792,264 7,368,884 1,615,486 2,172,333 405,566 $ 281,418,759 $ $ $ $ $ $ 269,064,226 $ $ $ $ $ $ $ 262,835,530 $ Total Receipts Permanent receipts are derived from the sale of State Trust land and natural products and are deposited into the permanent funds by the State Treasurer. $ 138,412 $ $ 388,978 2,494,572 $ $ $ $ $ 185,230 78,239,781 1,129,225 429,026 257,994 $ $ 82,066 116,300 $ $ $ 12,784 75,984,425 227,961 ForTreasurer's Distribution mula University Land Code $ Agricultural & Mechanical Colleges Beneficiaries ASLD Expendable FY 2015 REVENUE BY BENEFICIARY State Trust Land Uses SURFACE Grazing Use Permits Rights of Way Agriculture Commercial U.S. Government Institutional Taking Commercial School Leases Homesite Recreational Subtotal NO. OF LEASES SUBSURFACE Oil & Gas Mineral Exploration Mineral Mineral Material Subtotal Total Leases NO. OF LEASES % OF LEASES 1,196 639 7,650 341 295 157 10 21 1 7 10,317 TOTAL ACREAGE 11.59% 6.19% 74.15% 3.31% 2.86% 1.52% 0.10% 0.20% 0.01% 0.07% 100.00% % OF LEASES 495 385 54 19 953 11,270 % OF ACREAGE 8,323,685.95 451,003.36 259,639.45 153,517.38 69,984.10 18,268.68 12,891.56 1,142.93 5.63 0.01 9,290,139.05 TOTAL ACREAGE 51.94% 40.40% 5.67% 1.99% 100.00% 89.60% 4.85% 2.79% 1.65% 0.75% 0.20% 0.14% 0.01% 0.00% 0.00% 100.00% % OF ACREAGE 900,260.46 182,987.32 29,169.61 1,813.13 1,114,230.52 10,404,369.57 80.80% 16.42% 2.62% 0.16% 100.00% COUNTY DISTRIBUTION OF STATE TRUST LAND COUNTY ACRES Apache 652,660.27 Cochise 1,370,628.00 Coconino 1,120,086.22 Gila Graham 496,321.00 Greenlee 171,823.84 La Paz Maricopa Misc 254,386.70 621,651.86 2,522.66 Mohave 565,127.77 Navajo 369,899.68 Pima 844,271.48 Pinal 1,205,384.15 Santa Cruz Yavapai Yuma TOTAL 17 31,231.07 61,153.97 1,263,718.34 186,837.45 9,217,704.46 REVENUE GENERATION ON TRUST LAND Leases and Permits/Revenue Production Activity Acres Agriculture Commercial Grazing Institutional Taking Rights of Way U.S. Government Use Permits Mineral Mineral Exploration Mineral Material Oil & Gas 153,517 71,127 8,323,686 12,892 109,343 18,269 490,537 29,170 182,987 1,813 900,260 Activity Leases 341 295 1,196 10 7,650 157 639 54 385 19 495 $ $ $ $ $ $ $ $ $ $ $ Income 4,301 Stock pond Registrations 130 Certificated Surface Water Rights 2,933 Well Registrations 7,006 Adjudication Statements of Claimant 7,455 Water Right Registrations 264 Grandfathered Groundwater Rights Public Auction Water Sales $ 292,865 Lease Water Charges $ 149,103 18 Income 4,514,994 26,988,140 3,283,572 419,777 6,016,287 107,671 5,529,756 436,004 726,946 311,764 1,500,112 FUND AND BENEFICIARY SUMMARY Common Schools Public K-12 Education Public education is by far the largest beneficiary of Trust land managed by the Department. Congress granted two sections of each township to common schools when Arizona became a territory and another two sections when Arizona became a state. The State was able to select federal lands equal to the sections that could not be granted due to the establishment of federal forests, parks and Indian reservations. Today, approximately 8 million acres remain in the Trust for common schools. In FY 2015, $133.6 million from sales and royalties was deposited into the Permanent Fund for common schools . In FY 2015, $134.8 million was generated in expendable receipts. According to A.R.S. § 37521 B, expendable receipts are distributed first to the School Facilities Board for revenue bonds, second to the New School Facilities Fund, if appropriated, third for basic state aid, and fourth, any receipts in excess of $72.3 million are deposited into the Classroom Site Fund, which is used for teacher raises, classroom size reduction and dropout prevention programs. Surface Leases Acres Income Agriculture 111,663 $ 3,303,345 Commercial 15,631 $ 23,350,045 7,329,233 $ 2,790,502 Grazing Home site 6 $ - Rights of Way 94,056 $ 4,672,845 Use Permits 419,763 $ 3,609,560 Institutional Taking 5,406 $ 325,351 U.S. Government 17,429 $ 102,072 0 $ 7,993,187 $ 22,600 38,176,319 28,830 $ 164,097 $ 298,124 694,567 1,059 $ 128,564 Oil & Gas 780,623 $ 1,352,062 Total Subsurface 974,609 $ 2,473,317 Penalty & Interest $ 1,390,604 Sales Interest $ 11,200,674 Treasurer's Formula Distribution $ 75,984,425 Grand Total Expendable $ 129,225,339 Permanent Fund Receipts $ 133,610,192 Permanent Fund (Book) $ 2,783,121,000 Permanent Fund (Market) $ 4,805,966,000 Other Total Surface Subsurface Leases Mineral Prospecting Permit Mineral Material COMMON SCHOOLS Acres and Income FY 2015 19 FUND AND BENEFICIARY SUMMARY Total University Grants Arizona’s three universities (Arizona State University, Northern Arizona University, and the University of Arizona) are the beneficiaries of six Trust grants. The total expendable revenue distributed to the Board of Regents and then to the universities to fund their operations was $XX million in FY 2015. An additional $XX million was earned and added to the permanent funds for the six grants, bringing the total Permanent Fund balance to $XX million. Surface Leases Acres Income Agriculture 12,332 $ 381,573 Commercial 51,432 $ 572,610 593,436 $ 289,767 Grazing Rights of Way 8,195 $ 617,311 Use Permits 26,064 $ 964,170 Institutional Taking 5,151 $ 1,051 U.S. Government 299 $ 5,600 Total Surface 696,909 $ 2,832,082 Subsurface Leases Board of Regents Distribution of Trust Revenues to the sities Mineral Univer- Prospecting Permit Agricultural & Mechanical Colleges Grant 1/2 to UA and the other 1/2 split between the three universities based on engineering credit hours Mineral Material Oil & Gas Total Subsurface 9,126 $ 9,416 284 $ 54,960 82,174 $ 109,977 91,584 $ 174,353 14,482 Military Institutes Grant Split between the three universities based on credit hours Penalty & Interest $ Sales Interest $ - University Land Code Grant Split between the three universities based on credit hours Treasurer's Formula Distribution $ 2,139,056 Grand Total Expendable $ 5,159,973 Permanent Fund Receipts $ Permanent Fund (Book) $ 89,269,000 Permanent Fund (Market) $ 148,288,000 Normal Schools Grant 1/3 to each university UA 1881 Grants UA School of Mines Grant UA UNIVERSITY GRANTS Acres and Income FY 2015 20 642,731 21 86 $ U.S. Government $ $ $ $ 6,491,000 $ 12,705,000 Treasurer's Formula Distribution Grand Total Expendable Permanent Fund Receipts Permanent Fund Balance (Book) Permanent Fund Balance (Mrkt) 1570.28 227,961 445,065 140 $ $ $ $ $ $ $ 14,201 $ 25,324 Penalty & Interest 14,201 $ 22,928 22,724 $ 0 $ 1,200 Total Subsurface 0 $ 1,196 82,180 $ 191,640 21,964 $ 0 $ 760 $ 126,491 $ 0 $ 0 0 $ 0 $ 0 0 3,486 $ 14,231 76,749 $ 50,950 268 $ 1,677 $ 6,183 116,833 0 $ Acres Military Institutes 3,442 Income Oil & Gas Mineral Material Prospecting Permit Mineral Subsurface Leases Total Surface 0 $ 1,917 $ Institutional Taking Other 5,075 $ Use Permits 107,163 $ Grazing 1,827 $ 10,173 $ Commercial Rights of Way 251 $ Acres A&M Colleges Agriculture Surface Leases 4,582 $ 2,721 $ 184 $ 4,409 0 0 12,197 $ 20,024 $ $ 16,622 16,622 308 689,000 352,000 3 253,661 82,066 246,756 554 31,186 16,504 10,560 4,122 182,724 0 5,600 0 (682) 77,779 72,996 23,336 3,695 Income $ 5,125,000 $ 2,875,000 $ $ $ 120 $ 0 12,784 83,759 7,707 $ 0 178,845 $ 1,679 $ 2,222 54,044 146,974 $ 45,013 0 $ 22,539 $ 2,400 0 165 $ Acres Normal Schools 0 Income University Grants FY 2015 0 0 0 7,724 80,803 53,388 29,271 35,668 Income 0 594 34,302 31,541 2,761 36,349 $ 14,370,000 $ 7,745,000 $ $ 257,994 $ 499,746 $ 19,442 $ 19,442 $ 0 $ 0 $ 126,261 $ 206,855 0 $ 17 $ 0 $ 4,081 $ 1,104 $ 110,769 $ 8,486 $ 1,805 $ Acres School of Mines FUND AND BENEFICIARY SUMMARY 63,651.65 Income 55,886.11 0 0 1,050.65 228,118 429,026 2,175,423 1162 22,917 22,382 0 535 $ 26,101,000 $ 14,674,000 $ $ $ $ 14,628 $ 14,369 $ 0 $ 259 $ 138,209 $ 1,722,317.87 0 $ 8 $ 107 $ 6,246 $ 896,586.95 2,505 $ 326,292.56 117,859 $ 8,250 $ 378,849.95 3,233 $ Acres University Land Code 123,028 1,129225 1,659,450 11,723 44,000 0 43,200 800 474,502 0 0 0 41,901 13,382 11,533 132,570 275,116 Income $ 89,298,000 $ 57,132,000 $ $ $ $ 564 $ 0 $ 164 $ 400 $ 44,924 $ 0 $ 4 $ 406 $ 2,594 $ 811 $ 33,923 $ 308 $ 6,879 $ Acres University of Arizona 1881 FUND AND BENEFICIARY SUMMARY Institutional Grants The remaining six Trust beneficiaries are the School for the Deaf and Blind; the Legislative, Executive and Judicial Buildings; the State Hospital; the Pioneers’ Home; the Department of Juvenile Corrections; and the Department of Corrections. These six beneficiaries were authorized in the Enabling Act and received 100,000 acres, except for the State Charitable Grant which received 200,000 acres.  The Pioneers’ Home received a total of $4,886,939 in expendable receipts in FY 2015.  The Department of Juvenile Corrections received $1,452,469 in expendable receipts in FY 2015.  Arizona Department of Juvenile Corrections Black Canyon School (BCS) operates intake and secure programming for youth. BCS houses all female youth and is located in Phoenix. (Photo courtesy of the Arizona Department of Juvenile Corrections) The Department of Corrections received a total of $2,834,985 in expendable receipts in FY 2015. OTHER GRANTS Acres and Income FY 2015 Arizona State Schools for the Deaf and Blind Henry C. White was the first principal, appointed by Governor George W. P. Hunt, and classes began in October, 1912. Nineteen children with hearing loss were the first students, and classes were held in a converted residence on the campus of the University of Arizona in Tucson. (Photo courtesy of the Arizona State Schools for the Deaf and Blind) Grant Beneficiary School for Deaf & Blind ........................................................ ………….. School for Deaf & Blind Legislative, Executive & Judicial Buildings…………. Legislature, Executive & Judicial Branch State Hospital ...................................................................... ………….. State Hospital Miners’ Hospital (2 Grants) .................................................. ………….. Pioneers’ Home State Charitable, Penal & Reformatory................................ ………….. 50% Pioneers’ Home 25% Dept. of Juvenile Corrections 25% Dept. of Corrections Penitentiaries....................................................................... ………….. Dept. of Corrections 22 23 0 $ 0 $ 5,571,000 $ 10,463,000 Permanent Fund Balance (Book) Permanent Fund Balance (Mrkt) *Miners' Hospital and Miners' 1929 Combined $ Permanent Fund Receipts 19,239 386,327 185,230 0 $ 0 $ 0 $ $ $ 28,773,000 18,161,000 190,949 282,456 - 3,948 14,114 7,920 0 6,193 0 232,971 $ 18,866,000 $ 10,995,000 $ $ 1,383,515 $ $ 1,004 1,981,383 10,550 $ 41,539 388,978 7,920 $ 9,540 $ 0 $ 2,629 $ 0 $ 20,240 11,330 429 0 1,156 1,618 424,374 $ 6,813,000 $ 3,651,000 $ $ 0 10,604 9,241 0 1,364 0 $ 296,314 0 0 2,483 0 13,781 $ 116,300 $ $ 9,522 $ 8,841 $ 0 $ 682 $ 0 $ 84,954 0 $ 32 $ 1 $ 0 8,385 $ 0 $ 0 38,807 9,758 67,398 Income 1,035 $ 164,087 72,860 $ 6 $ 2,636 $ Acres 1,559,005 5,809,879 2,495,572 999,798 1,705 216,360 7,479 $ 142,340,000 $ $ $ $ $ $ $ 1,027 $ 641 $ 77 $ 249 $ 0 88,000 60 $ 72,411 $ 0 $ 108 $ 80 $ 0 $ 7,167 $ 936 $ 60,003 $ 135 $ 3.981 $ Acres 120,880 2,097,445 0 0 76,929 820,009 82,406 32,725 990,411 94,966 Income $ 79,115,000 $ $ $ $ $ 7,777 $ 7,479 $ 138 $ 0 $ 160 $ 79,355 $ 0 $ 117 $ 475 $ 7,949 $ 1,139 $ 62,941 $ 2,835 $ 3,898 $ Acres State Charitable, Penal, & ReformSchool for the Deaf & Blind atory State Hospital 0 13,324 79,866 34,922 766,188 187,697 Income 79,297 $ 1,081,997 5 $ 0 1,549,861 1,778 $ 0 $ 0 1,964 5,736 $ 40,090 66,025 $ 30,441 578 $ 458 $ 975,886 160,768 4,717 $ Acres Penitentiaries 340,713 Income $ $ 0 $ $ Sales Interest $ 14,891 $ 5,592 1,969 9,217 $ 3,252 $ $ Penalty & Interest 230 $ Grand Total Expendable 4,245 $ Total Subsurface 5,324 $ 0 119 $ 2,339 0 Treasurer's Formula Distribution 3,365 $ 0 $ 879 $ 0 $ 99,791 $ 168 $ 0 1 $ 0 $ 0 0 11,027 $ 1,826 73,322 $ 28,436 1,827 $ 581 $ 60,720 72,299 12,866 $ Acres Miners’ Hospital* 30,254 Income 63,488 $ 193,535 Oil & Gas Mineral Material Prospecting Permit Mineral Subsurface Leases Total Surface 0 Other $ 92 U.S. Government $ $ 0 Institutional Taking $ $ 4,227 Use Permits $ $ $ $ Public Education 1,443 Rights of Way 56,406 5 Commercial Grazing 1,315 Acres Agriculture Surface Leases Legislative, Executive, & Judicial Buildings Institutional Grants FY 2015 FUND AND BENEFICIARY SUMMARY 8,331,000 4,448,000 91,271 493,739 138,412 0 9,216 29,949 641 11,000 1,736 16,572 523,416 325 0 12,001 0 26,793 159,080 33,730 187,965 103,522 Income ABOUT THE LAND DEPARTMENT Divisions and Sections ADMINISTRATION From 2009-2014 the ASLD generated over $1,525,120,721 for the Trust beneficiaries Administration Division The Administration Division is responsible for the operational & administrative functions of the Arizona State Land Department, including accounting, travel, budget, procurement and human resources. and acts as the Department’s liaison with the State Procurement Office www.azdoa.gov/spo to meet the Department’s procurement needs. Human Resources Section Accounting Section The Human Resources Unit is responsible for recruiting, hiring, and conducting other personnel actions involving State Land Department employees. It is also a resource for employees regarding Department and state employee benefits. The Accounting Section ensures the Department’s finances are handled in accordance with the Generally Accepted Accounting Principles and follow the rules and procedures adopted by the Department of Administration’s General Accounting Office www.gao.az.gov Administrative Procedures & Information Section The Public Records area assists and instructs the public and Department staff, in person, telephonically and by e-mail in the research of computer records, interpretation of title documentation, microfiche records and case files. The Section’s primary purpose is to properly bill, receive, and distribute Trust receipts. The Section also processes the Department’s expenditures. Budget & Procurement Section The Administrative Procedures area is responsible for scheduling hearings related to appeals of Commissioner Decisions, either with the Office of Administrative Hearings or the Board of Appeals. The Budget & Procurement Unit is responsible for the development and monitoring of the Department’s budget and for procurement activities. Budget activities include developing the Department’s budget request for submission to the Governor’s Office of Strategic Planning and Budgeting www.ospb.state.az.us/, the allocation of the enacted budget, and monitoring expenditures for compliance with legislative and executive intent as well as ensuring the Department’s adherence to the budgeted amount. (Continued on page 25) The unit also ensures the Department’s compliance with the State Procurement Code. It assists staff with procurement questions From 1912 to 2001 the Trust generated $1 Billion –the Trust now stands at over $5.1 billion 24 ABOUT THE LAND DEPARTMENT Divisions and Sections REAL ESTATE DIVISION Appraisal Section This area coordinates the issuance of Commissioner Orders. Records of bankruptcy filings affecting Trust land leases, outstanding rental collection, complex records requests, administrative and litigation issues are maintained in this area. All 5 Year Rule Reviews and rule amendments for each of the 15 rules in Title 12, Chapter 5 that govern the Department are prepared here as well as amendments to all Department Instruction, Policy and Procedural Memos. This area also conducts settlement conferences and hearings related to oil and gas agreements, conservation of Trust lands and fact finding hearings. The Appraisal Section is tasked with the responsibility of determining land value for the Arizona State Land Department’s vast land holdings. While not all of the Trust land is appraised every year, appraisals are required when applicants become interested in leasing or purchasing Trust land. Further, appraisals are needed when utilities, private individuals and other entities require access over Trust Lands. Ultimately, the Appraisal Section is in place to assure that the Trust and its beneficiaries are adequately compensated. Planning & Engineering Section Title & Contracts Section The Planning & Engineering Section handles land planning, entitlement, drainage and engineering issues affecting State Trust land throughout Arizona. Our primary mission is to handle technical and land use entitlement matters related to the management and disposition of State Trust land in the best interests of the State Trust’s beneficiaries while advancing the mission of the Trust. Our staff is based in Phoenix and Tucson and is composed of AICP-certified planners, registered Professional Engineers, engineering technicians, planning project managers, and Geographic Information Systems analysts. The Title & Contracts Section is responsible for ensuring that electronic and paper records for the State’s title to 9.2 million acres of Trust land accurately reflect each acquisition, disposition, lease, permit and right of way that has transpired. This entails application processing, research and preparation of title reports for proposed transactions, legal issues or legislative proposals. Application and lease documents are constantly updated not only to adhere to the Arizona Administrative Code and Arizona Revised Statutes but also to assist customers in providing valuable information to the Department. County records are researched to verify payment of water assessment taxes as well as sales of Trust parcels. The various disciplines that make up our staff work in tandem to leverage entitlement and technical opportunities to protect and enhance State Trust land values and to maximize the resulting return to the Trust. Typical activities include Clean Water Act Section 404 Permitting and technical coordination, development of regional drainage and infrastructure solutions, and revisions to existing zoning entitlements to accommodate shifting market needs. (Continued on page 26) 25 ABOUT THE LAND DEPARTMENT Divisions and Sections Since its inception the Land Department has deposited over $3,000,000,000 into the Permanent Funds FY 2015 TRANSACTIONS Rights of Way Section A right of way is an encumbrance on the property it crosses. Rights of Way are granted across State Trust land for a variety of public and private uses, such as access roads, infrastructure, power lines, communication lines, and public roadways. Rights of Way are issued for terms ranging from one year to perpetuity. All rights of way in excess of 10 years must be approved by the Board of Appeals. Sales and Commercial Leasing Section The Sales and Commercial Leasing Section of the Real Estate Division of the ASLD processes the transactions of special land use permits, commercial leases, and sales of State Trust land. The Section not only processes all new and renewal applications but also administers the active leases that generate ongoing revenue for the Trust. The Section works closely with other Sections within the ASLD as well as with private sector and jurisdictional entities to meet its purpose. The majority of the revenue generated by the Section comes from sales and longterm commercial leases. Commercial leases vary in scope, from retail, industrial, office, mixed use, and public purposes, and vary in length, from 1 to 99 years. All sales and commercial leases must be approved by the Board of Appeals. Furthermore, all sales as well as commercial leases for more than 10 years must be granted to the highest and best bidder at a public auction, per the Enabling Act. All transactional decisions assure the highest and best use of the Land and are made in the best interests of the Trust. 26  Northeast corner of Lake Pleasant Parkway and Happy Valley Rd. to Carlyle Cypress Lake Pleasant, LLC for $10,330,000.  Auction of a parcel at Pima and Los Gatos in North Scottsdale to Camelot Homes for $11,000,000.00.  Auction of Paradise Ridge Parcel at the Northeast corner of 68th St. and Mayo Blvd. for $31,864,356.00.  Auction of parcel at Southeast corner of Scottsdale Rd and Chauncey Lane for $16,600,000. The appraised value and initial minimum bid for this property was $10,000,000, and after more than 50 bids, the successful bidder was declared at the price of $16,600,000. ABOUT THE LAND DEPARTMENT Divisions and Sections INFORMATION SYSTEMS AND RESOURCE ANALYSIS DIVISION NATURAL RESOURCES DIVISION Range, Agriculture and Conservation Section The Information Systems and Resource Analysis Division (IS/RAD) consists of three major sections. As legislated, the Resource Analysis Division is headed by the State Cartographer who is tasked with a number of Geographic Information Systems (GIS) sharing duties. The State Cartographer also works closely with the Arizona Geographic Information Council. The IS/RAD division’s other sections consist of Information Technology which enabled the ASLD to effectively and securely manage the State Trust and provides innovative and reliable business systems to track ASLD’s assets. The GIS section is the first leg of the IS/RAD division. This section aids ASLD and at times other agencies in the complex analysis and visualization of spatial issues, for example determining which Trust lands have the highest potential for solar energy development. The GIS section also provides services that protect the interests of the trust and ensure that all land is put to the highest and best use. The Range, Agriculture & Conservation Section oversees the Department’s agriculture and grazing leases, which generate roughly $7,000,000 in revenue each year from lease rental payments. Grazing leases amount to over 8,000,000 acres of State Trust land and can be found in every county in the state. Agriculture leases are predominantly in four counties: Pinal, Yuma, Maricopa and Cochise. These four counties make up over 75% of state agriculture leases. The Section has 5 Range Resource Area Managers, who work closely with grazing lessees on range improvement projects like fencing and water pipelines, and on land treatment projects such as grassland restoration or prescribed burning. An Agriculture Leasing Specialist is responsible for the state-wide agriculture leasing program. The Range, Agriculture & Conservation Section also includes a Natural Resource Conservation District (NRCD) Manager. This person administers funding to both NRCDs and their associated environmental education centers. NRCDs are managed by a fiveperson board composed of 3 elected supervisors and 2 appointed supervisors approved by the State Land Commissioner. Each district has the same responsibility, but in a different area of the state: to protect and conserve natural resources within their boundaries. Environmental Program The Environmental program is responsible for protection of soil, surface and groundwater, and air quality on State Trust land. The program responds to and investigates environmental contamination by regulated substances from illegal activities and lessee operations on State Trust land. The program reviews lease applications, contractor proposals, Phase I and II and remedial action reports and manages contaminated land remediation projects and fugitive dust issues on Trust Land. 27 ABOUT THE LAND DEPARTMENT Divisions and Sections NATURAL RESOURCES DIVISION Trespass Program The Environmental Program The Trespass Program is responsible for investigating reports of illegal occupancy of Trust land ranging from minor to major offenses. Most involve native plant damage or theft, mineral theft, roads or utilities placed without a right-of-way, and commercial or agricultural trespass. The more serious offenses are usually resolved through negotiations. Trespass Investigators also respond to numerous other concerns including; OHV complaints, dust, squatters, historic issues, trash and solid waste, target shooting, insect complaints, fire fuel complaints, weeds, and myriad of other matters. Cleaned up over 500 gallons of waste oil and other regulated substances and removed 260 tons of tires from a former commercial lease in the northwest valley. Removed 53 tons of tires near the Gila River in the west valley. Demolished several buildings on a former commercial lease in Gila Bend.    The Trespass Program Partnered with City of Buckeye to clean an area where unpermitted target shooting was occurring in preparation for development of Skyline Park. Partnered with City of Tucson Parks and Recreation Department and Tucson Clean and Beautiful to clean an area that was experiencing a high volume of illegal dumping and other criminal activity. Installed barricades in Desert Hills due to excessive off-highway vehicle activity in the residential area.    Did You Know?     28 The Department processed 1,192 new customer applications; issued 8,670 recreational use permits and retrieved 7,814 lease and contract files for customers. The Department’s Public Records area answered more than 3,500 e-mail and telephone customer inquiries. Over 4,977 customers visited the Department in FY 2015. There are currently 7,628 rights of way and 4,043 leases or permits. ABOUT THE LAND DEPARTMENT Divisions and Sections NATURAL RESOURCES DIVISION Minerals Section The Minerals Section primarily supports five State-wide permitting and leasing programs:  Mineral Exploration Permits.  Mineral Leases for Hardrock and Industrial Minerals Mining.  Mineral Materials Leases for Common Variety Sand and Gravel or Aggregates.  Energy Minerals Leases for Oil and Gas or Geothermal Resources.  Special Land Use Permits for Split Estate Operations with ASLD Surface only. The Minerals Section also supports minerals-related functions for the ASLD:  Review and Comment on Land Sales or Leases.  Review and Comment on Land Use Plans and Preserve Initiatives.  Review and Comment on Annexation Proposals.  Review and Comment on Possible Land Exchanges.  Evaluate Proposed Legislation for Impacts to the Trust or on Mining in General. In addition, the Minerals Section works with other State Agencies in support of the Abandoned Mines Program with the Arizona State Mine Inspector’s Office, the Geological Mapping Advisory Committee with the Arizona Geological Survey, and legal Issues involving mining and minerals with the State Attorney General’s Office. 29 ABOUT THE LAND DEPARTMENT Divisions and Sections NATURAL RESOURCES DIVISION Minerals Section 2015 Highlights The Department received income of $15.11 million in FY 2015 from mining and minerals-related activities, making it the seventh best year ever for the Minerals Section. The majority of this income was from a mineral lease for copper with ASARCO’s Mission Mine in Pima County that generated $8.79 million in mineral royalty payments to the Trust, about 58% of the total revenue for the Minerals Section in FY 2015. The Department’s other significant mineral lease, also for copper, is with Freeport McMoRan for their Morenci Mine in Greenlee County, which generated $1.28 million in mineral royalty income, or about 8.5% of the Mineral Section’s total revenue in FY2015. The Department was able to finalize a mineral lease for potash mining with The Karlsson Group. The Mineral Lease was signed on June 23, 2015 as one of the first official acts of the new State Land Commissioner, Lisa Atkins. The effective date of this mineral lease is July 1, 2015, and it covers 21,406.19 acres in 34 sections in Apache County. The mineral lease provides for an annual rental payment of $69,284.61 and a minimum annual royalty payment that will escalate to $214,061.90 by the fifth anniversary of the lease. Royalty income from mineral materials leases for common variety sand and gravel and other aggregates operations, was $1.66 million in FY2015. The Department held one mineral materials auction during FY2015 on December 1, 2014, for 58.62 acres. The winning bidder was Granite Construction of Tucson with an annual surface rental of $5,000.00 for mining a minimum of 11,111 cubic yards per year at a royalty rate of $0.45 per cubic yard. Interest in Mineral Materials leasing activity picked up considerably during FY2015, with the Minerals Section receiving six new applications, and processing two more under the new Lean Process developed in early 2015 as part of Governor Ducey’s Government Transformation Initiative. In comparison, the Minerals Section had received a total of six new Mineral Materials Lease applications in the past five years combined. Minerals Section FY 2015 Summary of Permits, Leases, and Revenue Exploration Permits Mineral Leases Mineral Material Leases Oil and Gas Leases Mineral SLUPs Total Number 385 53 19 495 59 1,011 Acres 182,987 7,763 1,813 900,260 33,398 1,126,222 $ $ $ $ $ $ 30 Rental 726,946 436,004 311,765 1,500,112 255,043 3,229,870 Royalty $ $ 10,219,685 1,657,502 $ 11,877,187 $ $ $ $ $ $ Total Income 726,946 10,655,689 1,969,267 1,500,112 255,043 15,107,057 31 ABOUT THE LAND DEPARTMENT Divisions and Sections NATURAL RESOURCES DIVISION Water Rights Section The Water Rights Section administers several programs related to use of water on State Trust land or extraction of water from State Trust for use on other land. The Water Rights Section:  Maintains water right registrations for stockponds and surface water rights and claims including maintaining compliance with state regulatory programs.  Assists lessees with development of new water supplies to ensure issuance of water rights in the name of the ASLD.  Administers grandfathered groundwater rights within Active Management Areas including compliance with reporting and conservation requirements.  Maintains the registry of wells and review applications for new wells to evaluate long-term impact to water resources on Trust land.  Monitors water levels on Trust land through a cooperative agreement with the Arizona Department of Water Resources, allowing sharing of equipment and data.  Administers the sale of water for use off of Trust land, through water auction, and lease water charges. Conducts water right evaluations and comment on land sales and lease applications. Administers ASLD’s domestic and agricultural contracts for mainstream Colorado River water on Trust land including      32 coordination with lessees and the Bureau of Reclamation regarding water scheduling, reporting and payment of administrative and water charges. Monitors Colorado River regulatory activities and drought and comments on potential impacts to lessees and the Trust. Administers ASLD’s Central Arizona Project’s contract including scheduling deliveries, payment of administrative charges and monitoring regulatory changes in order to comment on potential impact to the Trust. Maintains statement of claimants for water uses on STL and assist the Attorney General’s office in this and other court proceedings. ABOUT THE LAND DEPARTMENT Divisions and Sections NATURAL RESOURCE CONSERVATION DISTRICTS Natural Resource Conservation Districts (NRCDs) were created following the dust bowl era to ensure participation in conservation efforts spearheaded by the newly formed Soil Conservation Service (SCS). Arizona passed the Conservation District Law in 1942 (Laws, 1941, Ch. 43, § 2.) NRCD laws are codified in Title 37, Chapter 6 of the Arizona Revised Statutes. Reorganized in 1994, SCS adopted the name Natural Resources Conservation Service (NRCS). The 32 State sponsored NRCDs are composed of a five person board that provides local voluntary leadership and knowledge. The NRCDs make available technical, financial, and educational assistance to provide for the conservation of their Districts’ natural resources. Conservation Districts are not aligned with any particular commodity. Many organizations and agencies utilize the neutral status of the Districts to implement projects and disseminate information regarding the changing environmental and natural resource management issues in Arizona. As a result of this state, federal, private partnership, NRCDs play a pivotal role in organizing, implementing, and coordinating with a variety of agencies concerning natural resource initiatives within their districts. In addition, state law empowers NRCDs to establish Education Centers. NRCD Education Centers provide practical, hands-on learning experiences that encourage critical thinking and demonstrate the necessity of individual stewardship and rural & urban interdependency. The programs are based on current scientific information, include discussions of economic and social implications, offer delivery of national & regionally recognized environmental education programs, and offer integrated experiential curriculum that motivate students (improving test scores). Currently, 30 Districts sponsor 23 education centers. The State Land Commissioner also serves as the State Natural Resource Conservation Commissioner. 33 ABOUT THE LAND DEPARTMENT Board of Appeals BOARD OF APPEALS BOARD OF APPEALS MEMBERS Board Actions FY 2014 Member-at-Large Arizona Revised Statute §37-215 requires all land sales and commercial leases to be approved by the Board of Appeals, which also serves as an Administrative Review Board. Norman Chappell, Vice-Chair Phoenix Applicants and lessees may appeal to the Board a final decision of the State Land Commissioner that relates to appraisals and classifications. Jolene U. Dance, Chair Phoenix Represents the Second District: Maricopa, Pinal, Gila, Yuma The State Land Department Board of Appeals consists of five board members selected by the Governor and confirmed by the Senate for six-year terms. Three members represent the 15 counties in the State, which is divided into three districts. Two members hold positions-at-large. Sandra B. Kelley Scottsdale Member-at-Large The current board members are Sandy Kelley (Chairperson), Jolene Dance (Vice-Chairperson), Norman Chappell and Richard Poynter. Richard Poynter Prescott The Board meets monthly unless special circumstances warrant additional sessions. Meetings are usually held in Phoenix. Represents the Third District: Mohave, Yavapai, Coconino, Apache and Navajo counties During this fiscal year, the Board approved 6 new commercial leases, 19 renewal leases, 62 rights-of-way sale appraisals, and 11 land sale appraisals. Vacant Tucson Represents the First District: Pima, Santa Cruz, Cochise, Graham and Greenlee counties The Commissioner and the staff of the ASLD appreciate the considerable time and effort Board of Appeals members invest in serving the Trust and the citizens of Arizona. Current Trust acreage Surface 9,217,704 Oil/Gas 8,964,103 Mineral 8,978,114 34 Financial Schedules Receipts by Category..…………………....…..36 Rental Acreage and Receipts………………...37 Treasurer’s Formula Distribution…………..38 35 36 $ $ $ $ $ $ $ $ 199,127 70,666 1,591,400 213,911 1,096,111 306,918 241,158 2,313,804 $ $ $ $ $ $ $ $ $ $ 518,502 1,745,235 49,716,797 $ $ 3,397,837 $ $ $ $ $ 4,843 9,072 105,54 141,156 $ $ $ $ - $ 21,718 - - - - - - - - - - - - $ $ $ 553,365 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 35 - 128 163 $ 1,162 1,424,085 $ $ $ $ 11,723 9,216 594 1,705 $ 1,156 $ $ 554 3,948 $ $ 309 1,004 $ $ $ $ 3 $ 1,618 35,000 - 35,000 - - 999,798 - - - - - - - - - $ 12,200,471 $ $ $ $ $ $ $ 12,200,471 $ 123,028 110,587 13,190,603 $ 91,271 $ $ $ 36,349 205,850 $ 117,215 88,746 $ $ 8,643 187,171 $ $ 11,200,674 SALES INTEREST 1,570 12,218,551 ROYALTY 1,969 141 $ $ 1,390,604 RE- PENALTY & INTEROTHER CEIPTS EST 216,963 $ $ 40,649,636 RENTAL $ 49,857,953 $ 3,397,837 $ 1,424,248 $ 13,225,603 TOTAL RECEIPTS *Miners' Hospital & Miners' Hospital 1929 Combined - **Common Schools (K-12) Including County Bonds F.E.M.A. Lands Farm Loan Lands Lands Held in Trust Navigable Streambeds Total General Fund Trust Land Management Fund A&M Colleges Common Schools** Leg., Exec & Judicial Military Institutes Miners' Hospital* Normal Schools Penitentiaries School for the Deaf & Blind School of Mines St Char., Pen. & Ref State Hospital University of Arizona (1881) University Land Code Total School & Institutions LEASE Receipts by Category FY 2015 FINANCIAL SCHEDULES $ $ $ $ $ $ -$ -$ -$ -$ -$ 117,532 $ 123,157,373 $ -$ -$ -$ 1,353,155 $ -$ 144,226 $ 105,652 176,319 4,877 9,072 56,718 1,974,516 199,689,330 653,253 653,852 278,101 4,874,312 309,692 1,333,031 468,126 1,783,354 3,779 $ 136,447 $ 70,978 220,335 -$ 10,595 $ $ 123,157,373 $ 203,263,486 $ $ $ $ $ $ $ $ $ $ $ TOTAL 218,674 -$ 21,391,640 $ 186,851,105 PRINCIPAL $ $ SALES RENTAL ACREAGE AND RECEIPTS BY TYPE OF LEASE FY 2015 SURFACE LEASES ACRES Agriculture Commercial Grazing Homesite Rights of Way Use Permits Institutional Taking U.S. Government Other Total Surface 153,517 71,127 8,323,686 6 109,343 490,537 12,892 18,269 0 9,179,377 RECEIPTS $ 4,514,994 $ 26,988,141 $ 3,283,573 $ 0 $ 6,016,288 $ 5,529,756 $ 419,777 $ 107,672 $ 22,925 $ 46,883,126 SUBSURFACE LEASES Mineral Prospecting Permit Mineral Material Oil & Gas Total Subsurface 29,170 182,987 1,813 900,260 1,114,231 $ $ $ $ $ 436,004 726,946 311,765 1,500,112 2,974,828 NON-LEASE REVENUES Penalty & Interest Sales Interest Royalty Land Sales Principal Rights of Way Sales Principal Settlements Fees Total Non-Lease Revenues $ Grand Total $ 203,263,487 37 $ 1,424,248 $ 12,200,471 $ 13,225,603 $ 118,672,769 $ 4,482,853 $ 1,752 $ 3,397,837 153,405,533 38 $ $ $ $ $ $ School for the Deaf & Blind School of Mines State Charitable, Penal & Reformatory State Hospital University Land Code University of Arizona (Act of 2/18/1881) $ $ Penitentiaries *Common Schools and County Bonds combined **Miners’ Hospital and Miners’ Hospital 1929 combined TOTAL $ $ Military Institutes Normal Schools $ Legislative, Executive & Judicial Buildings $ $ Common Schools* Miners' Hospital** $ Agricultural & Mechanical Colleges $ $ $ $ $ $ $ 82,066 282,456 116,300 257,994 2,494,572 138,412 429,026 1,129,225 81,729,429 $ $ $ $ $ $ $ $ $ 74,618 246,012 106,667 241,653 2,353,835 126,639 972,149 73,032,624 398,034 $ $ $ 388,978 $ 12,784 $ 12,041 $ $ 185,230 $ 172,401 333,014 $ 75,984,425 $ 67,781,808 8,696,805 157,076 30,992 11,773 140,737 16,341 9,633 36,444 7,448 55,964 743 12,829 8,202,617 14,208 $ 227,961 $ Increase FY Ending June 30, 2015 213,753 FY Ending June 30, 2014 Treasurer’s FY 2015 Formula Distribution FINANCIAL SCHEDULES $ 27,044,125 12,836,873 4,034,989 36,329,009 2,037,415 4,902,424 5,622,933 2,816,453 8,221,193 1,261,081 7,944,334 1,446,553,099 9,417,071 $ 1,569,020,999 $ $ $ $ $ $ $ $ $ $ $ $ 1912-2015 39 1616 West Adams ● Phoenix, Arizona 85007 www.azland.gov