A.R.S. tit. 37 ch. 2 — Arizona Revised Statutes Title 37 Chapter 2 — Administration Of State And Other Public Lands

37-201. Examination and selection duties of commissioner A. The commissioner shall: 1. Examine the public lands within the state for the purpose of assisting the selection board in selecting the lands granted to the state in quantity, or as indemnity, by the enabling act. 2. Prepare all lists, forms and papers required in the selection of the lands and securing title thereto. 3. Maintain such records and perform such duties as necessary to protect the rights of the state in the lands. B. The fees and expenses of selecting and securing title to the lands shall be paid from the general fund on claims approved by the commissioner. 37-202. Selection board; powers and duties; distribution of central Arizona project water to state trust lands A. There is established a selection board composed of the governor, the state treasurer exercising those powers of the surveyor-general with respect to the selection of lands as provided in this section and the attorney general. B. The selection board shall do all things necessary to comply with the laws of the United States and of the state in securing title to the lands granted to the state in quantity or as indemnity by the enabling act, or to any other lands which may be granted to the state. C. The board shall file upon and select, and cause to be withdrawn and surveyed for selection, lands the commissioner from time to time recommends for selection or for withdrawal and survey. D. The selection board shall cancel, relinquish and release the claim of the state and reconvey to the United States any tract of land erroneously listed to the state or any tract upon which, at the time of selection or withdrawal, a bona fide claim has been initiated by an actual settler. E. The board shall designate which of the lands selected shall be assigned to each specific fund designated in the grants made to the state by the United States. The selections shall be apportioned among the various grants so that each fund shall receive as nearly as possible its pro rata share of the different classes of land selected. F. The board shall determine the distribution of all central Arizona project water allocated for the benefit of state trust lands. All allocations of central Arizona project water made by the selection board shall be used on state trust lands except that if state trust lands to which central Arizona project waters have been allocated are sold, then the central Arizona project water allocated to those lands may be used on those lands. All allocations of central Arizona project water made by the selection board shall conform to the Arizona state water plan administered by the department of water resources. Allocations greater than ten per cent of the total amount of central Arizona project water available to the state for the benefit of state trust lands shall require legislative approval by concurrent resolution before such allocation is available for use. G. If state land is included in a proposed corporate limit of a municipality, the selection board, at the commissioner’s request, may render a determination approving or rejecting the inclusion of the state land in the proposed corporate limit. 37-203. Selection of lands; designation of land to institution or purpose; credit of receipts to specific funds A. Lands granted to the state shall be selected and filed upon by the selection board as expeditiously as the best interest of the state warrants. All lands selected and all lands specifically by description granted to the state shall be designated on the books, maps and plats of the state land department as lands of the institution, department or purpose to which the proceeds received therefrom will be credited. B. All money received from leases or grants of any land designated as belonging to any institution, department or purpose, and all monies received for forfeitures or penalties in connection therewith shall belong to the institution, department or purpose and shall be credited to a fund set up for such institution, department or purpose. 37-204. Advances for survey; repayment For the purpose of having public lands of the United States surveyed to satisfy any public land grants made to the state in the manner prescribed by the act of Congress approved August 18, 1894, and as that act was made applicable to this state by the enabling act, the governor may deposit to the credit of the treasurer of the United States at a United States depository designated by the commissioner of the general land office, monies necessary for the survey of any township for which application for survey has been made, and the director of the department of administration shall draw the necessary warrants for that purpose. Such warrants shall be paid from the general fund, and when the monies so advanced are returned to the state they shall be returned to the general fund. 37-205. Due diligence costs related to disposition of land A. In addition to other fees required by this title, and instead of the department performing advance due diligence pursuant to section 37-110, subsection A, the commissioner may require or allow an applicant to advance or incur the costs of the department's evaluating and processing an application and otherwise preparing land for a sale, lease, right-of-way or other use permit. Monies that are advanced by the applicant to the department pursuant to this subsection shall be deposited in a separate account of the state land department fund. B. If the successful bidder at an auction is not the applicant, the successful bidder shall reimburse the applicant for fees and costs paid pursuant to this section in amounts and on terms the commissioner directs in the auction notice. After receiving the reimbursement amounts, the commissioner shall remit them to the applicant. C. If an auction does not occur or a transaction is otherwise not completed as a result of a mistake or circumstances caused by the department, including issues arising out of concerns over title, misidentification of the parcel and factors affecting the commissioner's view of the timeliness or desirability of disposing of the parcel, then the commissioner, on the timely written request of an applicant, may reimburse or cause to be reimbursed to the applicant, on terms that the commissioner considers reasonable and appropriate, from monies of the department all or part of the costs paid pursuant to this section and application fees paid pursuant to section 37-107. Reimbursement for costs paid pursuant to this section may only be for costs that the commissioner determines to represent an enhancement of knowledge about the parcel or that tangibly or intangibly enhance the value of the parcel. The commissioner may refuse any reimbursement request for any reason. 37-211. Investigations of and experiments on state lands to determine possible uses; reclassification A. The state land commissioner may conduct investigations and experiments on the lands of the state to: 1. Determine which are suitable for agricultural purposes, or which may be suitable therefor by the development of water and otherwise. 2. Determine which are useful for grazing purposes only. 3. Ascertain the requirements of lands susceptible of agricultural development and the method or means best adapted to insure the development. 4. Determine which trust lands are suitable for conservation purposes pursuant to article 4.2 of this chapter. 5. Obtain other information and data which will aid in the leasing, sale and administration of lands belonging to the state. B. If in the investigation the commissioner determines that lands have been erroneously classified, the classification shall be changed. 37-212. Classification of lands selected; reclassification A. The commissioner shall promptly classify all lands selected as provided in article 1 of this chapter. B. In classifying state lands, the commissioner shall maintain in the offices of the department plats, maps or books containing the description of lands and disclosing: 1. Lands suitable for agricultural purposes. 2. Lands suitable for grazing purposes. 3. Lands suitable for homesite purposes. 4. Lands suitable for commercial purposes. 5. Lands within the boundaries of any school district which may, within the discretion of the governing board of the applicable school district within which the lands are located and within the discretion of the commissioner, become adaptable to public educational purposes, provided such lands shall not exceed sixty acres for school buildings and grounds. 6. Lands suitable for exchange. 7. Urban lands suitable for urban planning. 8. Urban lands consistent with a development or secondary plan. 9. Lands suitable for multipurpose use. 10. Trust lands suitable for conservation purposes pursuant to article 4.2 of this chapter. C. The commissioner may reclassify lands if the commissioner determines that reclassification is in the best interest of the trust and of the state. D. Classification of urban lands as suitable for urban planning or for self-contained community site planning shall not cause an existing lease to be terminated under section 37-290, and such classification shall be accomplished pursuant to the requirements of article 5.1 of this chapter. E. Classification of trust lands suitable for conservation pursuant to subsection B, paragraph 10 of this section shall be accomplished pursuant to article 4.2 of this chapter and shall not cause an existing lease to be impaired or canceled under section 37-290. 37-213. Board of appeals A. There is established a board of appeals consisting of five members appointed by the governor pursuant to section 38-211. No more than three members shall be appointed from the same political party. Members shall be appointed as follows: 1. One member from each of three districts into which the state is divided as follows: (a) First district: Pima, Santa Cruz, Cochise, Graham and Greenlee counties. (b) Second district: Maricopa, Yuma, La Paz, Pinal and Gila counties. (c) Third district: Mohave, Yavapai, Coconino, Apache and Navajo counties. 2. The remaining two members of the board of appeals shall be appointed at large by the governor. B. To be eligible for appointment as a member of the board a person shall be experienced in the classification and appraisal of all types of real estate. C. The term of office of each member is six years, ending on the third Monday in January of the sixth year after his appointment. Appointments to fill vacancies resulting other than from expiration of term shall be for the unexpired portion of the term only. D. Each member of the board is eligible to receive compensation as determined pursuant to section 38-611. E. The board may adopt administrative rules necessary to perform its duties prescribed by law. 37-214. Board of appeals; approval of participation contracts; appeal A. Before approving a participation contract, the board of appeals shall review the report submitted by the commissioner pursuant to section 37-239. A majority vote of a quorum of the board is required for the adoption of the report. Upon the adoption of the report the proposed participation contract may be approved. The board shall act within one hundred twenty days after receiving the report. B. Land classified as suitable for commercial or homesite purposes after completing the planning process pursuant to article 5.1 of this chapter shall not be leased for a term greater than ten years unless the board determines that such lease will result in obtaining a higher benefit to the trust than would result if the land were sold. In making this determination, the board shall consider the sales price, the investment earnings potential, the property tax revenues obtainable once the land has been sold, the role of trust earnings in the financing of the activities of the beneficiaries, the potential earnings available through the lease or exchange of the lands in question, the potential long-term appreciation of the land and all other factors deemed relevant by the board. C. A final decision of the board may be appealed by the commissioner or by any person adversely affected by the decision pursuant to title 41, chapter 6, article 10. 37-215. Appeal from decision of commissioner or board of appeals A. An appeal from a final decision of the state land commissioner relating to classification or appraisal of lands or improvements may be taken to the board of appeals by any person adversely affected by the decision. Appeals shall be taken by giving notice in writing to the commissioner within thirty days from the date notice of the decision is mailed to the last known post office address of the appellant by the commissioner. B. As a condition for filing an appeal of an order regarding an appraisal conducted under section 37-285 or a reappraisal required by the terms of a lease, the appellant, with the notice of appeal, shall pay to the department all amounts of the billed rental during the pendency of the appeal. The disputed amount shall be held by the state treasurer in an impound fund to be invested subject to the final disposition of the appeal, and the undisputed amount shall be credited to the appropriate trust. If the appellant fails to pay any amount before the deadline for filing notice of the appeal and fails to provide proof of payment of the amount with the notice of appeal, any notice of appeal to the board of appeals or to superior court shall not be accepted for filing and the decision of the commissioner is final. If billed rental becomes due during the pendency of an appeal and is not paid on or before the due date, the appeal shall be dismissed and the decision of the commissioner is final. If the commissioner's decision is upheld on final disposition of the appeal, the monies in the impound fund, with interest, shall be paid to the appropriate trust. If the commissioner's decision is not upheld on final disposition of the appeal, the monies in the impound fund, with interest, shall be credited first to the accrued rent determined to be due and the remainder shall be paid to the appellant. C. The board of appeals, within one hundred twenty days from the date of the notice of appeal, shall conduct a hearing in the county in which the major portion of the land involved in the appeal is located, unless otherwise stipulated by the parties to the appeal. The board shall render its decision upon the hearing within sixty days from the date of the hearing unless the parties to the appeal otherwise stipulate. The board shall make its findings and decision in writing and shall furnish a copy to all parties to the appeal. A majority of a quorum of the board may render the decision. D. All records of the board of appeals shall be kept in the offices of the state land department. The department shall provide clerical assistants to the board as necessary to perform its duties. E. Except as provided in section 41-1092.08, subsection H, the commissioner or any person adversely affected by a final decision of the board of appeals may seek judicial review pursuant to title 12, chapter 7, article 6. F. Any person adversely affected by a final decision of the commissioner not relating to the classification or appraisal of lands or improvements is entitled to a hearing pursuant to title 41, chapter 6, article 10. G. If no appeal is taken, the decision of the commissioner or the board of appeals, as the case may be, is final and conclusive. 37-221. Sale or lease of state lands for public education purposes A. Notwithstanding any other law, school districts may enter into leases of state land for more than ten years if the land is to be used for public education purposes. These leases shall be granted according to the constitution of this state and department rules. School districts shall apply for leases for educational purposes on forms prepared and furnished by the department, and an authorized agent of the governing board of the school district shall sign and swear to the application. A school district shall not use lands leased to it under this section except for public education purposes. B. The department shall develop procedures to give priority to the procedures used for school districts to lease state lands for public education purposes. The department shall develop procedures to simplify the procedures used for school districts to lease state lands for public education purposes. The procedures shall specify that any leases entered into and any improvements made to properties leased pursuant to this section using state monies shall comply with the requirements of title 41, chapter 56. C. The department shall develop procedures to give priority to the procedures used for school districts to purchase state lands for public education purposes. The department shall develop procedures to simplify the procedures used for school districts to purchase state lands for public education purposes. The procedures shall specify that any purchase of school lands by school districts using state monies shall comply with the requirements of title 41, chapter 56. D. Any monies received by the department from the lease of state public school land for public education purposes pursuant to this section shall be transferred for deposit in the new school facilities fund established by section 41-5741. E. For the purposes of this section, a school district shall be considered to have abandoned a lease when leased property and any improvements are no longer being used for public education purposes. 37-231. State lands subject to sale; rights reserved in lands sold; state lands not subject to sale; development agreements A. All state lands, except as otherwise provided for in this title, including all improvements made or placed on or connected with state lands, shall be subject to appraisal and sale as provided in this title. B. Any person over eighteen years of age is entitled to purchase any of the state lands. C. All sales, grants, deeds or patents to any state lands sold between July 9, 1954 and March 18, 1968 shall be subject to and shall contain a reservation to this state of an undivided one-sixteenth of all oil, gases and other hydrocarbon substances, coal or stone, metals, minerals, fossils and fertilizer of every name and description, together with all uranium, all thorium, or any other material that is or may be determined by the laws of this state or the United States or decisions of courts to be peculiarly essential to the production of fissionable materials, whether or not of commercial value, subject to the following: 1. For the purpose of promoting the sale of state lands and the more active cooperation of the owner of the soil, and to facilitate the development of its mineral resources, the state constitutes the purchaser of the land its agent for the purposes specified in this section, and in consideration hereof, relinquishes to and vests in the purchaser of the state land an undivided fifteen-sixteenths of all oil, gas and the value thereof that may be on or within any state land purchased after July 9, 1954 and before March 18, 1968. 2. The purchaser of the soil may sell or lease to any person, firm or corporation the oil and gas and other minerals that may be on or in the land, on terms and conditions the purchaser and the owner deem best, subject to the provisions and reservations of this section, but the lessee or purchaser shall pay to this state an undivided one-sixteenth of the mineral produced or the value of the mineral produced at the well or mine as determined by the state land department. 3. On discovery of oil and gas in paying quantities on land adjoining state lands purchased under the authority of this section, the purchaser or the purchaser's lessee shall drill and produce all wells necessary to protect the land so purchased from drainage by wells on lands in which this state has no royalty interest, or has a lesser royalty interest. If the purchaser or the purchaser's lessee fails to protect against such drainage, this state, acting through the department, three months after demand therefor in writing by the department to such purchaser and the purchaser's lessee, may enter on such lands and drill all wells necessary to protect this state against such drainage. 4. The interest reserved by this state in any state lands sold may be committed to a drilling unit or cooperative or unit plans of development and operation of oil and gas pools with the United States, its agencies and its and their lessees and permittees, and with private owners and persons holding oil and gas leases on private lands or on state lands. The department, insofar as the interest of this state may be affected thereby, may join in and consent to any such plan on behalf of this state. Such agreements shall provide for the equitable division on an agreed basis of the oil and gas produced from the unit, but such an agreement shall not relieve any operator from the obligation to develop reasonably the lands and leases as a whole committed thereto. The royalties to which this state is entitled on production from land purchased under this section shall be computed only on that part of the production allocated to such tract. When the agreements made under this section provide for the return of gas to a formation underlying the unit, they may provide that no royalties are required to be paid on the gas so returned. D. State lands known to contain oil, gases and other hydrocarbon substances, geothermal resources, coal or stone, metals, minerals, fossils and fertilizer of every name and description, in paying quantities, or uranium, thorium or any other material which is or may be determined by the laws of this state the United States or decisions of court to be peculiarly essential to the production of fissionable materials, whether or not of commercial value, and state lands adjoining lands on which there are producing oil, gas or geothermal wells or adjoining lands known to contain any of such substances in paying quantities, or uranium, thorium or any other material peculiarly essential to the production of fissionable materials, whether or not of commercial value, shall not be sold. The prohibition against sale shall not operate to prevent the sale of lands known to contain, in paying quantities, common variety minerals as defined in section 27-201.01 or to prevent the sale of lands where this state does not own such substances, minerals or metals in the lands sought to be sold. This subsection shall not prohibit the sale of such lands located within the exterior boundaries of an incorporated city or town, in which case the commissioner may offer the land for sale, provided the land shall be used solely for a public purpose. Such land shall revert to this state if it is used other than for a public purpose. E. Notwithstanding subsection C of this section, all state lands sold after March 18, 1968 shall be sold with the reservation that all oil, gas, other hydrocarbon substances, helium or other substances of a gaseous nature, geothermal resources, coal, metals, minerals, fossils, fertilizer of every name and description, together with all uranium, all thorium or any other material that is or may be determined by the laws of the United States or of this state, or by decisions of court, to be peculiarly essential to the production of fissionable materials, whether or not of commercial value, and the exclusive right thereto, on, in, or under such land, shall be and remain and be reserved in and retained by this state, regardless of any sale under this section and the issuance of any certificate of purchase to any purchaser of state lands pursuant to this section, provided, that the reservation shall not include common variety minerals as defined in section 27-201.01, subject to the following: 1. The department shall adopt rules providing for the protection of the patentee or contract purchaser of state lands, or their successors in interest, and this state, against damage to the lands, livestock, water, crops, or other tangible improvements on lands held by such patentee or contract purchaser, and suffered by reason of the use or occupation of such lands by lessees or permittees engaged in mining and oil, gas and geothermal resource exploration and development under leases or permits executed by the department. The department, at any time, may require each of its lessees or permittees to execute a bond in a reasonable principal amount conditioned on payment for all such damages. 2. The mineral rights reserved to this state in the lands sold shall be closed to entry and location as a mineral claim or claims, but the department may issue, on application, mineral exploration permits embracing the reserved mineral rights when such issuance is deemed in the best interest of this state, provided that the surface owner or owners shall have the first right of refusal to acquire such mineral exploration permits. 37-232. Application to purchase state lands or for reimbursement for improvements; deposit A. A person desiring to purchase state lands, or the lessee of any leased school or university land entitled to reimbursement for improvements thereon, may make a verified written application to the state land department to purchase the land. B. In all cases, the application shall contain the name, age and residence of the applicant and a description of the land sought to be purchased. The application shall also contain the following information, as applicable: 1. If a lessee of school or university lands is the applicant, the application shall contain the date the lease of the land was issued to him. 2. If the applicant has or claims the right of possession by instrument in writing from a former lessee, the application shall contain the name of his assignor or grantor, the date of the original lease and the date of the assignment, and he shall attach to his application the original instrument of assignment, or if lost, furnish proof of loss. 3. If the applicant claims by judgment of a court or by operation of law, he shall attach to the application a certified copy of the instrument giving him such right. 4. If the application is by one claiming a right to reimbursement for improvements placed on leased school or university lands, he shall set forth in the application a list of improvements made upon the land. C. The department shall require an applicant to pay a deposit before beginning to process an application to purchase state trust lands if the applicant: 1. Has requested that a property be reappraised or advertised, or both, within two years of the most recent public auction of that same property. 2. Has previously held title to that same property under a certificate of purchase. 3. Is known to be a second time applicant on the same property that was previously offered at public auction. D. If the applicant is subject to a deposit pursuant to subsection C, the department shall place the deposit in a noninterest bearing account and the deposit shall be calculated on a percentage of the estimated value of the property. Monies must be deposited at the time of filing an application or at a time determined by the commissioner. If the applicant is not the successful bidder at public auction, the department shall refund the deposit to the applicant. If the applicant is the successful bidder, the department shall apply the deposit to the purchase price at auction. If there are no bids at the time of the auction, the department shall transfer the deposit made by the applicant to the appropriate trust beneficiary. 37-233. Sale of state lands; restriction on sale of timber land; expense of sale; procedures and criteria for sale of state lands by the commissioner A. On receiving an application, or on the commissioner's initiative, the department, under the rules of the department, may cause state lands to be sold if the sale of them is not prohibited by law. B. Land containing timber of a value which in the opinion of the commissioner should be sold separately from the land shall not be subject to sale until after the timber is sold. C. When an application is filed with the department for selection or sale of land under the laws of this state, and the department determines that the benefit to be derived from the selection or sale is less than the expense involved, the commissioner may accept from the applicant an amount of money sufficient to pay the expense incidental to the selection or sale. If the applicant fails to secure a lease after selection of land, or fails to purchase land after bidding for it, the successful lessee or purchaser shall reimburse the original applicant for all funds so advanced. D. The department shall establish a procedure and the criteria that the commissioner must use for determining whether to initiate the sale of state lands by the commissioner's own initiative and shall post the procedure and criteria on the department's website. E. The commissioner shall hire a third-party contractor to appraise and prepare state lands for public auction. The department may use either department staff or a third-party contractor to satisfy the notice requirements prescribed in section 37-237. F. This section does not prohibit the commissioner from selling state lands that have not been identified for sale in the five year disposition plan adopted pursuant to section 37-331.03 or restrict the use of state lands sold pursuant to this section to the uses identified in the conceptual land use plan approved pursuant to section 37-331.03. 37-234. Sale of agricultural lands without application; limitation on sales of agricultural lands The state land department may sell agricultural land without application. Sales of agricultural land with or without application shall not exceed two hundred thousand acres in any one year. No more than three hundred twenty acres of a section shall be sold in any one year. 37-235. Subdivision of state lands for sale; size and price limitations A. If any one lessee holds more than one hundred sixty acres of state lands susceptible of irrigation, or when the state land department determines that it is desirable that the land held under one lease be subdivided and sold in separate tracts, there shall be a separate appraisal made of such portions of the entire holdings under the lease together with the improvements thereon in such tracts, and the tracts and improvements thereon shall be separately described in the advertisement of sale and shall be separately sold. B. The department may subdivide any state land into small parcels not larger than ten acres each, or into town or city lots, record a map thereof in the county where the lands are located, and appraise and sell the lands in the manner provided in this article. A parcel of such land shall not be sold for less than ten dollars per acre and no town or city lot for less than ten dollars each, and for not less than the appraised value. 37-236. Order by department of sale of lands; sale at auction; electronic means; cancellation of sale; appeal; exception; department immunity A. On completion of the appraisal, if the department determines that the interests of this state will not be prejudiced by sale of the land, or when application for purchase was made by the lessee of agricultural land entitled to compensation for improvements on the land appraised, within sixty days after the time for taking an appeal expires and no appeal is taken, or if an appeal is taken and the decision is against appellant, within sixty days after the decision is received, the department shall order the sale of the lands to the highest and best bidder at public auction held at the county seat of the county in which the land or the major portion of the land is located, and the department shall give notice of the sale by advertisement. B. Notwithstanding any other law, the department may accept bids offered through electronic means during a public auction. If the department accepts bids offered through electronic means, the department is not liable for either: 1. The failure of a person's electronic means that prevents the person from participating in the auction. 2. The failure of the electronic means the department operates that is caused by an act of god or of nature, a superior or overpowering force or an event or effect that cannot be reasonably anticipated or controlled during or directly preceding the public auction that prevents a person from participating in the public auction. C. If the commissioner receives information that indicates a change in the circumstances regarding the benefits to the trust but before the acceptance of a final bid at the public auction, the commissioner may cancel the sale proceedings. D. A person adversely affected by a decision to terminate a sale pursuant to subsection C of this section may appeal such decision to the board of appeals pursuant to section 37-215, except a person may not file an appeal on the basis of an electronic means failure for which the department is not liable as prescribed in subsection B of this section. 37-236.01. Sale of lands suitable for conservation purposes and other purposes at single auction The department may offer for sale at a single auction trust land that has been classified as suitable for conservation purposes pursuant to article 4.2 of this chapter and land to be used for other purposes. 37-237. Notice required for sale of lands or lands and improvements; publication; electronic means Notice of sales of state lands shall be by advertisement, stating the time, place and terms of the sale and a full description of the land. The notice shall be published once each week for not less than ten successive weeks in a newspaper of general circulation published regularly at the state capital, and in a newspaper of like circulation regularly published nearest the location of the lands to be sold. If the notice is for the sale of lands and improvements, the advertisement shall also state the appraised value of the improvements, the name of the owner thereof and the terms on which compensation therefor shall be made. If the department accepts bids through electronic means, the department shall include in the notice a link or other instructions to access the electronic means through which a person can offer bids during the public auction. 37-238. Procedure for sale; report of sale; posting; rules A. A representative of the state land department shall attend at the time and place fixed for the sale and proceed by first announcing information relevant to the sale sufficient, in the representative's judgment, to begin the bidding process, then calling for bids and selling the lands for the highest and best bid. B. The department shall adopt rules to prescribe the procedure, method and means for the sale of state lands pursuant to this chapter, including rules for the following: 1. The sale of state lands through electronic means. 2. A requirement that any location where state lands are auctioned online includes internet access. 3. A method for persons to prove the person has sufficient monies to bid for a parcel before a public auction. 4. Reasonable qualifications and procedures to ensure a person is legally eligible to bid. C. The department shall prepare a written report of the sale and post the report on the department's website. D. The sale may be adjourned from day to day, or the department may dissolve the sale and readvertise the lands. 37-239. Participation contracts; planning and disposition proposals A. The commissioner may enter into participation contracts and may charge a fee to an applicant to retain one or more consultants to assist in negotiating or preparing a participation contract. If the applicant is not the successful bidder, the commissioner shall refund the fee. B. Before recommending any participation contract to the board of appeals, the commissioner shall consider and report on: 1. The methodology for determining any reimbursable infrastructure costs. 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 area by types of proposed land uses. 4. An analysis of the financial feasibility of the planned development's 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 determined by the commissioner, regarding alternative dispositions or no disposition of the lands. C. Each participation contract shall: 1. Provide that subsequent sales or leases of state land that are subject to 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 sale or lease. 2. Prescribe rights and remedies in the case of default including rights to cure, forfeiture and other appropriate remedies. D. This state's share of the revenues from the sale of land under a participation contract shall be deposited, pursuant to sections 35-146 and 35-147, in the appropriate perpetual fund. E. A participation contract may be offered on lands that do not have a development plan approved by the commissioner or on land that may require the successful bidder to further plan and zone property after the auction. Before auctioning a contract requiring planning and zoning, the commissioner may solicit planning and disposition proposals, through advertisement for at least five consecutive days in a newspaper of general circulation in the county in which the lands are located, or if there is no daily newspaper of general circulation in that county, the advertisement shall be published as many times within a thirty-day period as the newspaper is published but not more than five times. The commissioner may require information regarding the projected planning and zoning, the estimated costs of the planning and zoning and the financial feasibility of the proposal. The proposals shall also contain proposed participation payments. The commissioner may provide that some of the information that is contained in the proposals will remain confidential, if the information is proprietary, until the commissioner recommends a contract to the board of appeals. After the proposals are received, the commissioner may conduct preauction conferences regarding the proposals. The commissioner may then auction a participation contract that, at the commissioner's option, may incorporate information that was acquired through the proposal process. A participation contract that is entered into pursuant to this subsection shall: 1. Require the successful bidder to pay a nonrefundable down payment of at least two and one-half per cent of the minimum bid for the property, plus the required fees prescribed pursuant to section 37-107 and, if the successful bidder did not pay the consultant fee pursuant to subsection A of this section, any fee charged pursuant to subsection A of this section, by cashier's check at the time of the auction. The down payment does not include participation payments. 2. Require an additional payment to be made within thirty days if the amount bid for the land exceeds the minimum bid, so that the total down payment, including the down payment paid on the date of the sale, will equal the required percentage down payment of the total amount bid. The additional payment does not include participation payments. 3. Require the successful bidder to post within thirty days after the auction a surety bond or another form of collateral that the commissioner considers to be sufficient to cover the costs of the required planning and zoning. 4. Provide for the forfeiture of the contract and any accompanying certificate of purchase or lease if the successful bidder fails to provide the required collateral. 5. Describe the land to be planned and zoned, which may include land that is retained by the department and not auctioned with the contract. 6. Contain guidelines for expected planning and zoning and time frames for the planning and zoning consistent with the guidelines. 7. Provide for the forfeiture of the contract and any accompanying certificate of purchase or lease if the successful bidder fails to accomplish the planning and zoning within the prescribed time, unless extended in writing by the commissioner based on good cause shown. 8. Require at least ten per cent of the total purchase price to be paid by the time the planning and zoning are completed, unless extended in writing by the commissioner based on good cause shown. 9. Provide for absolute approval authority by the commissioner of any planning and zoning actions. 10. Deny the successful bidder the right to physically develop the property, including grading or leveling, until at least ten per cent of the purchase price has been paid. 11. Deny the issuance of partial patents for the property until at least ten per cent of the purchase price has been paid and the requirements of section 37-251 have been met. 12. Contain such other terms that the commissioner considers to be necessary or appropriate. F. After it is accepted by the commissioner, a planning and zoning proposal submitted to the local governing body by the successful bidder shall be administered as a state general plan or development plan as appropriate, according to the procedures described in article 5.1 of this chapter. 37-240. Limitations on amount of land one person may purchase A. No person may purchase more than six hundred forty acres of grazing land, or more than one hundred sixty acres of agricultural land. B. No sales, leases or subleases of state lands shall be made to corporations or associations not qualified to transact business in the state. 37-241. Terms of sale of state land; payment; interest rate A. The terms of sale of state land are as follows: 1. At least ten percent, but not more than twenty-five percent, of the appraised value, as stated in the auction notice, which shall be applied to the principal and associated rights-of-way, together with the required fees prescribed pursuant to section 37-107, shall be paid by cashier's check or any other form of payment approved by the commissioner on announcement of the successful bidder. 2. If the amount bid for the land exceeds the appraised value, further payment shall be made within thirty days so that the total amount paid, including the amount paid on the date of sale, equals the percentage of the bid, as stated in the auction notice, which shall be allocated to the principal and associated rights-of-way, together with the required fees prescribed under section 37-107. B. On payment of the amounts provided in subsection A of this section, on compliance by the purchaser with the requirements of this article and on payment of the fees under section 37-107, a certificate of purchase shall issue as provided in section 37-244. On full payment for the entire tract of land sold within thirty days after the auction, the department shall issue a patent as provided in section 37-251. C. If the purchaser fails to complete the payment of the percentage of the bid stated in the auction notice, together with the fees required pursuant to section 37-107, or to enter into a contract of sale within the time provided in the certificate of purchase offered by the department: 1. The purchaser forfeits all amounts paid, including: (a) All payments made on the purchase price, which shall be deemed to be rental for the land. (b) All amounts paid under section 37-107. 2. The commissioner may declare that the bid placed before the final bid accepted is the highest bid and that bidder has five business days after notification by the department to pay by cashier's check or any other form of payment approved by the commissioner all amounts due under this section and section 37-107. D. The balance of the purchase price is payable as follows: 1. The commissioner shall establish before the notice of sale the length of the term over which the balance shall be paid and whether a variable or fixed interest rate is appropriate or whether the entire balance without interest is due and payable within thirty days after the auction. This determination shall be based on the nature of the land being sold and general market conditions in effect at the time. 2. After establishing the length of the term and whether a fixed or variable rate is appropriate, the commissioner shall notify the state treasurer to establish the interest rate after consideration of local prevailing prime interest rates and mortgage rates and the maximum amount of interest set by statute by this state, if any. 3. If a variable rate is established, the interest rate charged to a purchaser may vary from year to year. The department shall annually notify each purchaser of the interest rate specified by the state treasurer to be paid by the purchaser for the following year and the total amount of interest payable the following year with the purchaser's annual payment. E. The commissioner shall establish before the notice of sale the length of the term over which the balance shall be paid. The term shall not exceed twenty-five years. F. The length of term and interest rate and whether the rate is variable or fixed shall be considered terms of the sale to be included in the notice required by section 37-237. G. The purchaser may discharge the entire debt at any time and be entitled to a patent for the land if the purchaser pays the entire purchase price, together with the applicable fees, and demonstrates that all terms and conditions of the certificate of purchase have been satisfied. 37-243. Payment of rent in arrears; payment for use of land If the owner of improvements upon leased school or university lands sold as provided by this article is the purchaser of the lands and is in arrears for rent due under a permit or lease, or if he has failed to take out a permit or to pay rent, then before a certificate of purchase is issued to him he shall, in addition to the payments required by this article, pay to the department all rent for which he is in arrears, and if no rent has been stipulated, he shall be charged for the use and occupation of the land. Interest at the rate of five per cent per annum shall be charged on all such amounts, and added to the amount to be paid. A like charge shall be made against the occupant, if some other party is the purchaser of the land and improvements. 37-244. Certificate of purchase; conditions A. Upon compliance by a purchaser of state lands with the requirements of this article, the department shall make and deliver to the purchaser a certificate of purchase, which shall set forth: 1. The name of the purchaser. 2. A description of the entire tract of land purchased. 3. The amount paid. 4. The amount paid for improvements, if any. 5. The amount remaining due. 6. The date when each of the deferred payments falls due, the amount of each deferred payment and the rate of interest on the first deferred payment. 7. An agreement by the purchaser that he will pay taxes, water assessments and other charges which may be assessed against the land. B. Each certificate of purchase shall be signed by the commissioner or his deputy and by the purchaser, and shall contain the following covenants in addition to any others imposed pursuant to section 37-132: 1. That the purchaser will not permit any loss or commit any waste to or upon the lands. 2. That any right to the use of water appurtenant to the lands shall be maintained to prevent the forfeiture or abandonment of the right. 3. That all taxes levied against the land and all construction and maintenance charges of a United States reclamation project from which the lands may receive water will be promptly paid. 4. That all things will be done to insure the acquisition and maintenance of the rights and the use of the water, except if the successful irrigation of lands susceptible to irrigation from works constructed or controlled by the United States government is not dependent upon the irrigation works it shall not be necessary to acquire and maintain water rights on such lands. C. After sale of state land and issuance of a certificate of purchase, the department shall not issue a certificate of purchase that covers only a part of the entire tract of land sold for the purposes of obtaining a patent to part of the land. 37-245. Rights conferred by certificate of purchase; recording of certificate A. The certificate of purchase shall entitle the purchaser and his heirs, or in case of an assignment filed with and approved by the department, the assigns of the purchaser, to possession of the lands therein described, to maintain actions for injuries thereto or to recover possession thereof, unless the certificate has become void by forfeiture. B. The certificate may be recorded as deeds of conveyance are recorded. 37-246. Sale of natural products of lands by purchaser under certificate of purchase; disposition of proceeds; violation; classification A. If a purchaser of state land under a certificate of purchase sells or contracts to sell directly or indirectly any sand, gravel, stone or other natural product from the land described in the certificate, he shall file with the department within ten days after the sale or making the contract, a statement under oath on a form furnished by the department, of the kind and quantity of natural product sold, the terms of the sale, and the amount received or to be received therefor. B. Upon receipt of any money from a sale or contract described in subsection A, the holder of the certificate shall promptly pay the money to the department. The money shall be applied by the department first to payment of the interest accrued under the certificate, and the remainder, if any, to payment of the principal amount owing on the land described in the certificate. If the payment is sufficient to discharge the total debt owing under the certificate, with accrued interest thereon, the department shall issue a patent to the purchaser as provided in this article. C. The department shall cancel the certificate of purchase of a purchaser of state land who fails or refuses to make or knowingly makes any false statement in any statement required by subsection A, or who fails or refuses to pay to the department any money required to be paid by subsection B. The land described in the certificate, together with all improvements thereon, shall revert to the state, and all amounts theretofore paid for the land by the purchaser shall be forfeited to the state. D. A person who violates a provision of this section is guilty of a class 2 misdemeanor. 37-247. Purchaser's default; forfeiture and cancellation of certificate of purchase; extension of time for payments A. When a purchaser defaults in a payment of principal or interest, as provided in the certificate of purchase, or fails to comply with a condition, covenant or requirement thereof, the certificate shall be declared subject to forfeiture. Within sixty days after default or failure the department shall give notice of the default or failure by certified mail to the purchaser's last known address of record in the department. B. If the payment is not made, or the condition, covenant or requirement is not complied with, within sixty days from the date of notice, the certificate of purchase and all rights of the purchaser to the land and improvements thereon may be canceled. In the event of cancellation, the commissioner shall make a formal order canceling the certificate of purchase and a copy of the order shall be mailed to the last known post-office address of the holder of the certificate of purchase. If no appeal is made within thirty days from the date a copy of the order is mailed to the holder of the certificate of purchase, the order shall become final and the certificate of purchase shall be canceled on the records of the department, and the improvements and all payments made on the purchase price deposited in the respective permanent fund under article 13 of this chapter shall be deemed rental for the land. C. On the purchaser's written request, the commissioner may extend the time for payment of the amount delinquent for a period of not more than five years on terms that the commissioner considers to be appropriate as follows: 1. The commissioner may grant an extension in response to a request made within sixty days before the due date of the payment. An extension under this paragraph begins on the date the payment was due and continues for the period stated in a written notice to the purchaser. 2. The commissioner may grant an extension in response to a request made within sixty days after the date of the default or failure notice provided in subsection A. An extension under this paragraph begins on the date of the notice and continues for the period stated in a written notice to the purchaser. 3. If the department does not act on a request for extension within thirty days after receiving the request, the request is considered to be denied. If the purchaser fails during the period of the extension to complete all delinquent payments, including principal and interest, the certificate of purchase is subject to default and cancellation pursuant to subsections A and B, except that if the last day of the last period of extension expires on the last day of the five-year period and all delinquent payments have not been paid by the last day of the five-year period, the certificate of purchase shall automatically be canceled on the last day of the five-year period and noted on the records of the department. D. If a payment of principal or interest is made after the due date, payments shall be made according to the extension granted by the commissioner under subsection C. If no extension was granted, delinquent interest shall be added at a rate set by the state treasurer. 37-249. Actions to rescind sales A. The commissioner or any other person may rescind a sale based on fraud only by filing an action in the superior court. An action based on fraud shall be filed within three years after the date of the auction of that property. If the court voids the sale pursuant to this subsection because the buyer has committed fraud, the buyer at that sale shall not receive a refund of the monies paid for the fraudulent sale. B. A person may rescind a sale based on failure to comply with the enabling act, the Constitution of Arizona or the statutes only by filing an action in the superior court. An action based on the failure to comply with the enabling act, the Constitution of Arizona or the statutes shall be filed within two years after the date of the auction of that property, unless a shorter period of limitations applies. If the court voids the sale pursuant to this subsection, the buyer at that sale shall reconvey the property to the state land department. The department shall refund the money paid thereon to the buyer at that sale, and make compensation to the buyer for the actual value of the improvements placed on the land by the purchaser. The value shall be determined by the department and paid from the general fund. C. A person who files suit pursuant to this section shall record a notice of lis pendens in the county or counties in which the property is located. Suit shall not proceed to trial unless the court receives a copy of the recorded lis pendens. D. This section does not apply to actions to protest auctions pursuant to section 37-301. 37-250. Replacement of lost or destroyed certificate of purchase When a certificate of purchase is lost, destroyed or wrongfully withheld by any person from the owner thereof, the state land department may receive evidence of the loss, destruction or wrongful withholding, and issue a new certificate of purchase, or patent, to the person entitled thereto. 37-251. Issuance of patents for state lands A. On filing the certificate of purchase, together with evidence of full payment of principal and interest, for the entire tract of land sold, and evidence that all terms and conditions of the certificate of purchase have been satisfied, the department shall issue to the purchaser a patent under the seal of this state, signed by the governor and countersigned by the secretary of state. B. On application by the purchaser, a patent for less than the entire tract may be issued to the purchaser if the commissioner finds that it is in the best interest of the applicable trust, subject to the following: 1. The parcel to be patented may consist of one or more pieces of land, described either by metes and bounds or by legal subdivision. 2. Before any parcel less than the entire tract is patented, the department shall determine that the remaining lands are of greater value than the unpaid balance of the certificate of purchase and that the remaining lands have development potential independent of the acreage that is being patented. Before patenting, the commissioner shall require to be paid an amount, on the lands to be patented, in excess of the purchase price per acre of the entire tract until the total price of the entire tract has been paid. In establishing the amount to be paid for the partial patent, the commissioner shall take into account the amount of the down payment made on the entire tract. This paragraph does not affect certificates of purchase issued before September 30, 1988. 3. When paid, the partial purchase price shall be credited on the total purchase price stated in the certificate of purchase. The department may issue a supplement to the certificate of purchase deleting the land patented and reducing the amount of each of the remaining annual installments to that amount which, when all installments are paid in full, will discharge the entire unpaid balance due on the original certificate of purchase. C. Any land patented under this section is subject to existing valid rights-of-way. D. If the purchaser has died and the land described has been sold and confirmed by order of court, the patent shall be issued to the purchaser to whom confirmation of sale was made. If the estate of the deceased person is distributed by order of the court, the patent shall be issued to the heirs of the deceased person, or to the person to whom the lands are distributed. Patents issued to a deceased person shall inure to the benefit of the heirs or assigns of the deceased person. E. If an assignment of the certificate of purchase has been filed with and approved by the department, the patent shall be issued to the assignee, and if proper evidence of a transfer of the certificate by operation of law is filed with the department, the patent shall be issued to the transferee. F. A record of all patents issued shall be kept in the records of the department. 37-252. Taxation of lands sold A. All lands sold under the provisions of this article shall not be subject to taxation until the department issues a patent for such lands pursuant to section 37-251 or until seven years after the date of auction, whichever occurs first. B. If a patent for such lands pursuant to section 37-251 has not been issued within seven years after the department issued a certificate of purchase for such lands under section 37-244, all lands sold under the provisions of this article shall be taxed, and the taxes assessed on those lands shall be collected and enforced as against other lands. The department shall not issue a pat