State Trust Land

Former State Land Commissioner Mark Winkleman talks about his oversight of the State Land Department during a historic time for sales of State Trust Land.

Transcript:

Ted Simons: Former Phoenix city councilwoman Maria Baier is Arizona's new state land commissioner. Tonight, we'll hear from the person who previously held that post. Mark Winkleman led the Arizona Land Department through a period of record-setting land sales. The department is required by the state constitution to sell and lease state trust land to maximize revenue for schools. But some people would like to protect some of that land from future development, including former Arizona Governor and Interior Secretary Bruce Babbitt would like to see trust lands become a larger vision of land use planning in the state.

Bruce Babbitt: Planning has for the most part in Arizona, kind of been focused on the next subdivision, the details regarding the next shopping center. Kind of inward looking at development, piece by piece by piece. What gets lost in that is a larger vision of what the special relations ought to be. Communities in relation to the landscape. What landscapes do we want to preserve and have intact for our descendants, say, a hundred years from now? What should Arizona look like at the end of this century and what steps do we need to take now to protect those open spaces and make sure they relate to important natural features and wildlife and endangered species and just good planning?

Ted Simons: Here now to talk about the land department's role in managing Arizona's public lands is former State Land Commissioner, Mark Winkleman. Good to see you.

Mark Winkleman: My pleasure, good to be here again.

Ted Simons: The role of the state land department, what is it?

Mark Winkleman: That's a great question because very few people understand it. And as I was land commissioner, I had to speak all the time and educate people. It's a gift that the federal government gave to the state at statehood and this was common in the end of the states as we moved to the west, they were concerned about being able to take care of their citizens and educate the citizens, so the idea was let's set aside some land and generate as much revenue as you can and it goes to help fund education. That's what is going on.

Ted Simons: How does it work? Does the state land commission seize public land? I like it -- get the two to meet and make it beneficial for the state and schools?

Mark Winkleman: Well, the land was set aside at statehood. You didn't get to choose the land. It is what it was. And there was about 10 million acres set aside, so you've got a tremendous amount of land. The land commissioner is essentially a trustee of this. You do what's in the best interest of the trust, in terms do you sell some land, lease some land? You do the analysis -- is that the highest and best use, the right time and best piece? And that's the analysis that goes on.

Ted Simons: As far as what we had at statehood and what we have now, what are the numbers again?

Mark Winkleman: We started with a little over 10 million and now we've got 9.3 million. Most is still in trust.

Ted Simons: How does that compare to other states?

Mark Winkleman: We have more. New Mexico is about the same, a little bit less and all the other states have less.

Ted Simons: How much of this land we still have, how much is leased?

Mark Winkleman: More of it is still leased, but not for commercial purposes. About 8 million of the 9 million is leased for grazing purposes. You have ranches throughout the state in rural Arizona, most of which are on state trust lands or federal land and they act as stewards for the land. We don't make a lot of money, but they look after the lands. The department doesn't have the resources to do that.

Ted Simons: I guess the biggest -- most of the land would be the grazing in rural areas. A lesser amount would be commercial.

Mark Winkleman: Right.

Ted Simons: Leasing, but I'm guessing that's where the money is.

Mark Winkleman: Absolutely. That's where the money is.

Ted Simons: How much and where is this land?

Mark Winkleman: It's spread out. As a general rule, the department tries to lease land that's for commercial leases and sell land that's for residential uses. As a perpetual trust, you can argue we ought not to sell any. Lease it all. But the reality is you just -- people that are going to own homes and the lenders that are going to make loans, they want to own fee title so it's not practical. But on a commercial side, there's an industry that's very used to financing ground leases and building on ground leases and that's generally what we do and some of the biggest projects in the state are on state land trust leases.

Ted Simons: The best way, and it's interesting how you have to balance. It's quite a balance between environmental concerns and developmental and just getting the best deal you possibly can. Talk about that and what you look for when something's happening.

Mark Winkleman: Yeah, it is a balancing act and a lot of very serious competing interests. There's a group of people who would be happy if not another acre would be developed. They would like to save everything. And there's some who say it should go to education and we ought to develop all of it. The reality is you can't develop all 9 million and there's not enough water and not enough demand. Some is pristine land that ought to be preserved and others sit in the middle of urban growth and should be developed and can generate money for education.

Ted Simons: We saw Babbitt talking about his concerns and about setting aside some lands until you can figure out a better way to conserve. Let's hear that sound bite right now.

Bruce Babbitt: I think the Arizona legislature should pass a statute saying to each of the 15 counties you have the legal authority to look at the state lands in your county and to designate 50% of those lands for open space and those lands will be held off the market for 50 years.

Ted Simons: What do you think of that idea?

Mark Winkleman: I have respect for him, but the reality is, we don't need to have all of the land in every county in play. So he's saying let's just take some out automatically for 50 years. Well, you could certainly do that, but the reality is it wouldn't change the way the department operates much at all. In fact, that's what is happening anyway. We have a staff that, you know -- we can't keep up with the urban land. The land that nobody is particularly concerned with development -- should be developed and think we'll be able to go to all 16 counties and develop any significant amount is not realistic given the way the department is funded and the resources it has. So his idea, I can't argue with, but in effect, it exists already.

Ted Simons: In terms of reclassifying land for conservation needs, talk about that process and what's looked into a reclassification.

Mark Winkleman: There's a process that was passed by the legislature back in the '90s, the Arizona preserve initiative, and that allows cities to come in and apply for land to be suitable for reclassification. That's been done over the past years. 40,000 acres -- this is all urban lands and probably not what Babbitt is talking about. Let's set it aside, and part of this legislation, the legislation provides matching funds so a community or trust can come in and raise half the money and the state provides the other half. The city of Phoenix has been the one entity that's been successful in using that and acquired quite a bit of acreage for their preserves. The desert foothills land trust in the cave creek area and then Pima county used it earlier in southern Arizona.

Ted Simons: Are there legal concerns regarding all of this?

Mark Winkleman: Well, the program was suspended in terms of the way it used to operate because it probably should have gone back and had a constitutional amendment and the department used to deed restrict the lands before they sold it. We don't do that anymore and the cities have to worry about is a developer going to outbid me? Given the real estate economy in the last couple of years, that hasn't happened and I'm sure that's one of the reasons that the city of Phoenix has been as active because they were certain they would be able to accomplish their goals. The price they pay is the developable value of the land. It's not like they're getting a discount. But they've not had the fear that they're going to have a lot of homebuilders trying to outbid them.

Ted Simons: Indeed. I imagine right now, it's probably not the wisest time for a steward of the land to put some of that land for sale.

Mark Winkleman: That's why you've seen the department sell little land the last few years, the only land that's going to trade is at low prices and it's a perpetual trust. You have the ability to look to the long term. You could say, what makes sense for the next decade or the next 50 years? And there's few situations where somebody has the ability to look in that kind of long-term vision.

Ted Simons: In terms of long-term vision and the department itself, how is it funded? Because virtually everything is getting hammered right now. I know you're not the commissioner anymore, but how is the department funded and what are the future ideas for funding the department?

Mark Winkleman: I was the commissioner during most of this budgetary process and obviously, that hasn't been wrapped up yet. The department has chronically been under-funded and there needs to be a change. This year is a landmark situation. I've argued we're legally a trust and every trust I've ever dealt with funds its operations out of what it makes and there isn't any reason that the land department should be any different. And you've seen the last several years, we've produced sales of almost $2 billion, a huge amount. We certainly have enough to pay our own way. The annual budget has been going down, but as high as $17 million and down to $13 million now. But we easily can fund that from the proceeds that we generate. And I think that makes sense and the pitch this year and probably the one good thing that's come out of this is legislature, take us off the general fund. We can help you with your problem of balancing the budget. Let us use some of the money we generate to fund ourselves and it looks like that's going to succeed this time.

Ted Simons: Looks like, but you're not sure about that, are you?

Mark Winkleman: The governor vetoed most of the budget and there's a special session that's ongoing and unfortunately for the land department, its budget was caught up in some of the vetoes. That part is not controversial, so I expect it to be part of the budget that's ultimately passed. But, yes, right now they don't have an official budget.

Ted Simons: Your thoughts on your successor and advice you would give to her from what you have seen? It's a different world right now than it was for a lot of years you were in office. But what would you tell her?

Mark Winkleman: Maria and I had lunch the yesterday, and she asked me a lot of questions. I think she's a tremendous choice. She's got a great background. I expect her to do extremely well. When I took the job, I knew nothing about the land department. I needed all the help I could get. Maria has a wealth of knowledge and she doesn't need that kind of help. I wish her a lot of luck. The economy is terrible, the budget pressures are as bad as -- pressures are as bad as it's been. The staff is significantly lower than it had been and yet the tasks are much the same and so it's how do you do as much as you can with resources that are clearly inadequate? And that's not just the land department, that's a lot of agencies. But it's frustrating from the land department because you've got the ability to do so well and produce so much money, and by the way, it goes to education and that's a pretty good cause.

Ted Simons: Before we let you go, I know you've moved on and taken on responsibilities with Mortgages Limited and which is responsible for high-rise condos in Tempe and some things downtown. Troubled history to say the least. For those who are worried that those condos will never be finished, what are you seeing?

Mark Winkleman: Well, that deal's a heck of a mess. I guess you can say I enjoy challenges and this is a big one. I'm stepping in at the request of the board to help them go through these -- there's about 60 loans secured by some of the projects you mentioned. What happens to any particular one remains to be seen. We're going to come in and do what's in the best interest of the investors and there's about 1700 investors that put money in that organization. And so, you know, hopefully those projects will get finished but when and how, those are the things I'm going to be working on for the next two years. I've got my work cut out for me.

Ted Simons: Thanks for joining us.

Mark Winkleman: Thanks for having me.