ALJDEC

00F-020-LAN · State Land Department · 2000-02-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 2, 2000 APPEARANCES: Donald Mapes and Shirley Mapes on their own behalf; Assistant Attorney General William Fay on behalf of the State Land Department ADMINISTRATIVE LAW JUDGE: Lewis D. Kowal _____________________________________________________________________

FINDINGS OF FACT On May 18, 1999, Donald R. Mapes and Shirley Mapes (“Appellants”) filed an application (the “Application”) with the Arizona Land Department (“Department”) to purchase approximately 151.70 acres of State Trust land located three miles east of Spring Valley Road and five and a half miles north of I-40, on the Kaibab National Forest in Coconino County (the “Land”), more fully described above in the caption to this matter, which description is hereby incorporated by this reference. The Department issued a Denial of Application with respect to the Application on November 15, 1999. Upon a request for reconsideration of the above-mentioned denial, the Department determined to uphold the denial of the Application. Appellants appealed that denial resulting in the instant hearing. 4. The Denial of the Application was based on four grounds: a. Legal public access does not exist to the subject parcel; b. There is a large inventory of private land to the west of the subject parcel that is currently undeveloped; c. The subject parcel lacks the necessary infrastructure to support development; and d. A sale at this time is considered premature. 5. As a result of the above-mentioned grounds, the Department concluded that it was not in the best interest of the State Trust to approve the Application. 6. Appellants contend that the Application was to purchase some portion(s) or all of the Land and that the Department did not consider the Application with that in mind, that the Department’s determinations are based on erroneous information and are therefore incorrect, and that Appellants believe that the Application was not given proper consideration. 7. With respect to the legal public access issue, Appellants present credible evidence that Forest Service Road 107 provides access to the Land. Charles Hudson, a sales administrator for the Department, reconsidered the denial of the Application and agreed with the determination to deny the Application. Mr. Hudson testified that the Department does not consider Forest Service Roads to be sufficient legal public access because such roads are subject to closures and maintenance schedules of the Forest Service. At best, Mr. Hudson conceded the Land has limited legal public access. 8. In addressing the issue of undeveloped land, Mr. Mapes testified that within 2 to 3 miles of the Land there are no properties for sale. Either parcels of land already have houses built on such properties, or houses are intended to be constructed on the properties in the future, or the land is Federal or privately held that are not for sale. Mr. Mapes’ testimony of specific surrounding parcels established that the properties surrounding the Land are not available for Appellants to purchase. Therefore, Appellants contend that the surrounding area is developed to the extent that it can be in the foreseeable future. 9. Mr. Hudson testified that in determining whether an area is developed or undeveloped, consideration is given to the condition of the area and not whether parcels are available for sale on the marketplace. Mr. Hudson also testified that the Department is concerned with what the status of development is on the parcels, i.e., whether they are vacant or whether houses exist. 10. The evidence of record establishes that the parcel to the west of the Land is undeveloped land. 11. Appellants presented credible evidence that the Land has electrical power and telephone lines and that due to the nature of the area surrounding and including the Land, there will not be any sewer service. During the hearing, Mr. Hudson conceded that the Land has about as much infrastructure as it is going to have and represented that, based on the evidence presented by Appellants, the lack of infrastructure would be insufficient to constitute grounds for denial of the Application. 12. Appellants believe the fourth reason cited by the Department for the denial of the Application, that it is premature to sell the Land, is a conclusion based on the three other reasons provided by the Department for denial of the Application. Appellants believe that the time is ripe for sale of the Land or a portion thereof while the Department believes that the Land will continue to appreciate in value and for the reasons set forth in the Notice of Denial, excepting the lack of infrastructure, determined that a sale should not occur at this time. 13. Mr. Hudson testified that the Forest Service has expressed an interest in obtaining the Land because it contains a portion of the Beale Trail, a trail of historic significance that is currently used as a hiking trail. Additionally, Mr. Hudson testified that there has been no interest shown in the Land by persons other than Appellants, indicating to the Department that the Land is still appreciating in value. According to Mr. Hudson, the number of persons interested in a parcel of land is an indicator that it may be time for sale of a parcel to maximize profit for the State Trust. 14. In support of the above-mentioned contentions, Appellants presented evidence showing that some areas of the Land contain unrestricted development that in their opinion is junk. Appellants argued that if they were successful in purchasing the Land, they intend to build a house on a portion of the Land and preserve the remaining area, with the possibility of subdividing and selling lots for future development with deed restrictions to preserve the integrity of the Land. While Appellants presented photographs of the Land showing that some of the development of the parcels around the Land may be considered as not maintaining or improving the integrity and value of the area because there are no restrictions as to the use and development of the surrounding area, Donald Mapes (“Mr. Mapes”) admitted during the hearing that the surrounding area also contains some nice houses and development. Addressing the issue of whether it is premature to sell the Land, Appellants assert that the Land has appreciated about as much as it is going to without development on the Land. They contend that if they are able to purchase the Land or a portion thereof and build a home on it, the Land will benefit and appreciate in value, thus maximizing the benefit to the State Trust. Despite Appellants’ belief, they failed to present any credible evidence, such as expert opinions, to support such contention. Mr. Mapes’ testified that he had a conversation with F. Dwan Utley of the United States Forest Service wherein he learned that the Forest Service is interested in obtaining the Land but that it does not have any funding to purchase it, nor do plans exist to purchase or obtain funding for such a purchase. According to Mr. Mapes, the Forest Service hopes that the Department will give it the Land. Regardless of that conversation, the weight of the credible evidence shows that the United States Forest Service has expressed an interest in the Land which, in and of itself, constitutes sufficient reason to delay any sale of the Land in the near future why the Land Department awaits to learn of the Forest Service’s intentions with respect to the Land. Appellants contend that due consideration was not given to the Application in that it was not considered as an application for sale of some or all of the Land but just considered for sale of all of the Land, and that the assigned sales administrator, Peggy Brocato, did not follow the applicable time frames in processing the application and did not conduct a proper investigation. While Mr. Hudson testified that if he had reviewed the Application initially, he would have contacted the Lessee of the Land who has grazing rights as well as other interested agencies such as the Forest Service and Arizona Game & Fish for comment. Mr. Hudson’s review of the Department’s file on this matter revealed that Ms. Brocato did not contact such persons for comment on the Application. While it may have been prudent for Ms. Brocato to have performed such activity, her failure to do so does not mean that she failed to give proper consideration to the Application. Neither Appellants nor the Department produced Ms. Brocato as a witness at the hearing so this tribunal cannot ascertain what Ms. Brocato’s thought processes were in reaching a recommendation on the Application. Initially, when Mr. Mapes contacted the Department about the application process, Mr. Hudson provided a general time frame within which an application is processed in terms of either being accepted for further consideration or being rejected. The time frame that Mr. Hudson provided to Mr. Mapes was not given as an actual time frame that the Department had to adhere to but was general information as to what occurs, depending on the particular facts and circumstances of each application, the location of the land in question as well as the extent of information already available to the Department about the land. In the instant matter, due to the location of the Land, it took Ms. Brocato more than the 60 to 90 days initially indicated to Appellants for her to inspect the Land, an inspection that Mr. Hudson testified is necessary and appropriate in order to reach a recommendation on the Application. Once a sales administrator reaches a recommendation about an application, the recommendation is presented to the administrator’s manager for review. If the manager agrees with the recommendation, it is presented to the sales division’s director for consideration. If the director agrees with the recommendation, then it is presented to a processing evaluation panel consisting of directors from divisions within the Department for a determination. If the recommendation is supported by the panel, it is presented to the Commissioner of the Department for review. In the instant matter, the above-mentioned evaluation process was followed and the recommendation was made at each level to deny the Application. The Commissioner of the Department agreed with the denial of the Application. 24. During the reconsideration process, Mr. Hudson reviewed the Department’s file on the Application, he contacted the United States Forest Service for comment, he contacted the Lessee of the Land for comment, and he performed an evaluation of the Land based on a Tiering Evaluation System formulated by the Department several years ago. The evaluation system is a rating system based on factors to be considered resulting in a number describing whether the land is ready for sale. A property that receives a rating of 1 indicates that it is ready to be sold and a rating of 4 indicates it is in the lowest category to be considered for sale. In applying the Tiering Evaluation System to the Land, Mr. Hudson derived a rating of 4 for the Land, indicating that it is in the lowest category for consideration for sale. 25. Mr. Hudson learned that the Forest Service had an interest in purchasing the Land because a portion of the Beale Trail is located on the Land, there are three historical homesites existing on the Land, and a water tank located on the Land is important for grazing rights to a Lessee of the Land and of some surrounding property. The Lessee wrote to Mr. Hudson objecting to the Application however, he did not appear at the hearing. In his written objection, the Lessee stated that the water tank is important for grazing of cattle in the area. 26. Mr. Mapes testified that he visited the Land and observed that the above-mentioned three historic homesites are not located on the Land as he observed the homes in relation to the Forest Service stakes that exist to delineate property lines. While Appellants presented evidence that other water tanks exist in the area, they did not present credible evidence to refute the representation that the above-mentioned water tank of concern to the Lessee and the Forest Service is important to grazing rights in that locale. CONCLUSIONS OF LAW 1. The management and sale of state trust lands by the Department is to be in the best interest of the Trust and its beneficiaries. Berry v. Arizona State Land Dept., 133 Ariz. 325, 651 P.2d. 853 (1982). 2. Appellants fail to meet their burden of showing by a preponderance of the evidence that the denial of the Application should be reversed and that it is in the best interest of the State Trust to approve the Application. 3. The weight of the evidence of record supports the Commissioner’s determination to deny the Application because sale of the Land at this point in time is not in the best interest of the State Trust for the reasons set forth above in subsections a, b, and d of paragraph 4 of the Findings of Fact. RECOMMENDED ORDER Based on the above, it is recommended that the Denial of the Application be affirmed. Done this day, February 16, 2000

______________________________________ Lewis D. Kowal Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2000, to:

State Land Department Michael E. Anable, Commissioner 1616 West Adams ATTN: Merv Mason Phoenix, AZ 85007

By ___________________________ -----------------------

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826