Falling under the category of “probably not news to anyone,” the real estate development market in Arizona is RED HOT. One aspect of the market that is unique in Arizona is the fact that the Arizona State Land Department (ASLD) holds the proverbial key to unlocking millions of acres of developable land throughout the state. In fact, the ASLD currently holds 9.2 million acres – or 12.7% of the entire state – in its trust. Those who follow the news in Arizona have likely seen the record-high sales prices obtained at auction for ASLD properties, as well as the landmark new developments on the horizon for Arizona as a result of these land sales. But what all is involved in the ASLD process, and where does all that auction money go?
In recent years, RVi has served as an on-call consultant to the State Land Department – working closely with their professional staff of planners and engineers to identify opportunities on selective Trust properties through targeted master planning and entitlement processes. Our end goal on these projects is to enhance the land’s value and increase certainty of its future use prior to bringing these sites to auction. In a recent example of this process, the State Land Department in partnership with the City of Phoenix approached RVi to assist with the entitlement (rezoning and General Plan Amendment) of a 3,500 acre site in North Phoenix to allow for large scale manufacturing, employment and commercial uses. Taiwan Semiconductor Manufacturing Company (TSMC), one of the world’s largest chip manufacturers, had been exploring sites in the Phoenix area with a requirement for approximately 1,100 acres that could allow for a new fab plant. RVi, in conjunction with team assembled by the State, was able to secure zoning on the property ahead of TSMC’s winning bid to procure and advance development plans for the site. Originally announced at $12B, the TSMC campus represented the largest capital investment project in the nation in 2020, though more recent announcements put the potential investment at nearly triple this initial amount. Following on the heels of the TSMC auction, RVi assisted the State Land Department in bringing forward three additional sites with similar zoning. These sites, all located proximate to the Deer Valley Airport, are primed to allow for uses that can support the TSMC site or other similar manufacturers. Combined, these four sites include nearly 4,000 acres of newly-entitled land and were processed through the City of Phoenix inside of a seven month timeframe. This critical groundwork has set the stage for an unprecedented investment in the Arizona economy coupled with high-skill/high-wage jobs that will have a ripple effect throughout the regional economy for many decades to come.
On the flip side, RVi will also represent clients/interested buyers who wish to pursue an ASLD property at auction. In these situations, RVi provides due diligence, master planning, constraints mapping, jurisdictional coordination, and specific site plans to assist the potential buyer in understanding if the property will meet their development goals. In these situations, RVi’s relationships and experience with ASLD can be invaluable to our clients. The benefit of our expertise also extends to our clients who have property that touches or is in some way influenced by State Trust Land. In short, we are experts at navigating the ASLD process and have strong relationships in place to help get deals done.
So it’s pretty clear at this point that ASLD plays a huge role in land development in Arizona – but where did all this land come from and who profits from its sale? State Trust Land is land that was granted to the state by the Federal Government in preparation for Arizona’s statehood. It is a popular misconception that ASLD must be overflowing with cash from State Trust Land that has sold at auction. In reality, ASLD’s role is to hold, manage, and bring the land to auction. But once the land is sold, every acre has a pre-designated beneficiary. These beneficiaries include Arizona’s K-12 public schools, public universities, state-level departments, and other public institutions. You can see a list of State Land Trust Beneficiaries here. With market demand for developable land intensifying, the next time you read about a record setting land auction, know that there are a host of taxpayer-funded entities that will benefit from these dollars, and that the Arizona economy as a whole will benefit for many years to come.