Arizona Laws 37-322.01. Reimbursement for nonremovable improvements by succeeding lessee of lands not subject to auction; failure to pay; penalty
A. A lessee of state lands that are not subject to lease by auction shall be reimbursed by a succeeding lessee for improvements placed on the lands which are not removable.
Terms Used In Arizona Laws 37-322.01
- Amortized value: means the value for improvements established pursuant to Section 37-281. See Arizona Laws 37-101
- Appraisal: A determination of property value.
- Commissioner: means the state land commissioner. See Arizona Laws 37-101
- Department: means the state land department. See Arizona Laws 37-101
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- Improvements: means anything permanent in character which is the result of labor or capital expended by the lessee or his predecessors in interest on state land in its reclamation or development, and the appropriation of water thereon, and which has enhanced the value of the land. See Arizona Laws 37-101
- including: means not limited to and is not a term of exclusion. See Arizona Laws 1-215
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Person: includes a corporation, company, partnership, firm, association or society, as well as a natural person. See Arizona Laws 1-215
- Property: includes both real and personal property. See Arizona Laws 1-215
- State lands: means any land owned or held in trust, or otherwise, by the state, including leased school or university land. See Arizona Laws 37-101
B. If the retiring lessee and the new lessee do not agree upon the value of the improvements, or if there is no amortized value established for the improvements, either party may file with the state land department an application for appraisal of the improvements. If a lease is granted pursuant to section 37-284, a request for an appraisal shall be made more than ninety days before the expiration of the lease. Thereafter an appraisal of the improvements shall be made pursuant to section 37-322. For agricultural and grazing leases, the appraiser shall consider the following in determining the value of the improvements:
1. The impact to surrounding state land.
2. Replacement cost minus physical and functional obsolescence as it relates to agriculture and grazing.
3. Any other factors that the commissioner determines to be relevant.
C. Upon making the appraisal, the department shall give notice of the amount by certified mail to each person interested in the appraisal. The notice shall require that the new lessee pay to the department for the prior lessee the entire amount of the appraisal before issuance of the lease unless all parties agree to an extended payment schedule. If the improvements were placed on state lands subject to a commercial lease and if the commissioner determines that the value of the improvements is so great that it inhibits the commissioner’s ability to lease the property at fair market value, the commissioner may require reimbursement of the improvements pursuant to a payment schedule of not more than five years.
D. If the improvements are not paid for as agreed in an extended payment schedule, the succeeding lessee shall not be permitted to sell, assign or transfer his lease nor sell, assign or remove any improvements whatever from the land until the entire amount of the appraised value of the improvements has been paid. Upon default the succeeding lessee shall be subject to the same penalties and liabilities as provided by section 37-288 for failure to pay rents, including a cancellation of the lease.