Prop. 106 financial impact debated - East Valley Tribune: News

Prop. 106 financial impact debated

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Posted: Thursday, August 17, 2006 11:29 am | Updated: 3:14 pm, Fri Oct 7, 2011.

Critics of Proposition 106 say voters should reject the ballot measure, also known as Conserving Arizona’s Future, because it would create a financial burden on the state during an economic slump.

The initiative, which would allow the Arizona Land Department to beef up its staff with proceeds from state trust land sales, was drafted during — and for — an economic boom, they said, and Arizona’s real estate market already has begun a downward slide.

According to the anti-Prop. 106 coalition Arizonans for Responsible Planning, if the Land Department used onetime sales revenue to hire more employees, and then a recession hit, the state would have to subsidize their salaries or get rid of them.

“If sales were not to happen, meaning you’ve depleted your resources, the General Fund would have to pick it up,” said Spencer Kamps, lobbyist for the one of the measure’s chief opponents, the Home Builders Association of Central Arizona.

But Prop. 106 framers say it would merely create an alternative funding source if market conditions warranted it. It would allow up to 5 percent of land sale proceeds to go to the Land Department instead of the state’s permanent trust, which is invested primarily to fund public schools.

“The revenue will be available,” said Patrick Graham, state director of the Nature Conservancy in Arizona and one of the measure’s advocates. “The Legislature still has to approve their budget.”

As the trust fund grows, Graham said, sales revenue used to add staff would be replaced with recurring revenue from land leases and accrued interest, which would be more predictable.

The Land Department held an auction Aug. 8 for 325 acres of state land in northeast Phoenix, but no builder or investor agreed to the $150 million asking price.

The land was appraised at nearly $462,000 an acre early this year, when trust land there was selling for up to $1 million an acre. Now the department must reappraise it at a lower value and hold another auction.

The Land Department might now lower the asking price for a 1,276-acre parcel in Fountain Hills currently appraised at $130 million.

Most real estate experts agree Arizona is likely to suffer a continued downturn in the housing market.

But Jay Butler, director of the Arizona Real Estate Center at Arizona State University Polytechnic, said a downturn is the perfect time for the Land Department to make changes and add staff.

“If you’re in a hot, super market trying to institute these new things, then good luck,” Butler said.

Prop. 106 also would result in the creation of a governorappointed board of trustees for the department, which manages more than 9 million acres of trust land, and it would set aside up to 694,000 acres of that land for preservation.

About 300,000 acres automatically would be preserved in perpetuity, and the remainder would be “provisional” reserves that would be bought at market value.

State legislators have engineered a competing referendum measure, Proposition 105, which allows for up to 400,000 acres of open space but favors preservation in rural areas and requires legislative approval on a case-bycase basis.

The Home Builders Association and the Arizona Cattle Growers Association are backing Prop. 105, but Conserving Arizona’s Future supporters say the referendum is simply a spoiler to confuse voters into defeating the more progressive initiative.

- The Associated Press contributed to this report

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