Rule R850-140. Development Property.

As in effect on August 1, 2009

Table of Contents

• R850-140-100. Authorities.
• R850-140-200. Purpose of Development Property Rules.
• R850-140-250. Definitions.
• R850-140-300. Designation of Development Property.
• R850-140-400. Development Property Transactions.
• R850-140-500. Amendments to Development Transactions.
• R850-140-600. Exemption From Rules.
• KEY
• Date of Enactment or Last Substantive Amendment
• Notice of Continuation
• Authorizing, Implemented, or Interpreted Law

R850-140-100. Authorities.

This rule implements Sections 6, 8, 10 and 12 of the Utah Enabling Act, Articles X and XX of the Utah Constitution and Subsection 53C-1-302(1)(a) and Section 53C-4-101, which authorize the director of the School and Institutional Trust Lands Administration to establish rules and criteria for the disposition of trust lands.

R850-140-200. Purpose of Development Property Rules.

This rule permits the agency to designate trust land as development property and thereby (i) subject agency activities in connection with such properties to this rule; and (ii) exempt agency activities in connection with such properties from the rules listed in R850-140-600.

R850-140-250. Definitions.

For the purposes of this rule:

1. Development property: a parcel of trust land that has been designated a development property pursuant to the director's determination that the parcel meets the criteria established in R850-140-300(1).

2. Development transaction: a transaction entered into by the agency for the purpose of generating financial returns to the trust on a particular development property. Development transactions include sales, exchanges, ground leases, development leases, build-to-suit leases, joint ventures, and other business arrangements.

R850-140-300. Designation of Development Property.

1. The director may designate a property as a development property upon the director's determination that the following criteria are met:

(a) The property is located in or near to either a high growth or urban area of the State or, in more rural settings, the property is of a character suitable for commercial, industrial, resort, residential or other real estate development activities; and

(b) The agency has received inquiry from private parties concerning the potential for development of the property or the agency, after preliminary analysis, has determined that the probable highest and best use for the property is for development purposes; and

(c) The agency believes that it is timely and in the best interests of the trust to consider a development transaction involving the property.

2. The director shall maintain a listing of each property designated as a development property. The listing shall be available to the public and shall include the date of designation, together with a written finding designating the property to be a development property. If the agency fails to achieve a transaction involving a property designated as development property within a period of three (3) years following such property's designation, the property shall cease to be a development property and shall be removed from the development listing. Properties may be redesignated as a development property at a later time if the director finds it to be in the best interests of the trust.

R850-140-400. Development Property Transactions.

1. The agency may solicit and reject proposals, make offers, counter offers and otherwise negotiate freely with interested parties in its efforts to arrange development transactions that are in the best interests of the trust. Development transactions will be structured according to the circumstances of the market and the attributes of the particular development property. In undertaking such efforts, the agency shall consider the following criteria with regard to a proposed development transaction:

(a) The character, reputation, financial status, credit history and prior real estate development experience of the party with whom the development transaction is proposed.

(b) The financial attributes of the proposed development transaction.

(c) The legal structure of the proposed development transaction.

(d) The potential effects of the proposed development transaction upon nearby trust lands.

Development transactions shall result in the trust receiving not less than fair market value for the sale, use or exchange of the development property in question.

2. At such time as the agency determines that it is appropriate to seek a development transaction, the agency shall initiate an advertising program designed to effectively solicit interested parties. Advertising may be implemented through print media, signage, direct mail or other appropriate marketing methods.

3. After the agency has identified an interested party with whom to seek a development transaction and negotiated core business terms with the interested party, the director will deliver a summary description of the proposed development transaction to the board.

4. Prior to completing a development transaction, the agency shall conduct a financial analysis of the transaction. The financial analysis shall examine whether the development transaction provides for the return to the trust of at least fair market value for the sale, use or exchange of the property in question. Analysis of fair market value shall be based upon market research, staff experience or outside appraisals, or a combination of these factors as the agency determines necessary based on the particular circumstances of each development transaction.

5. Upon completion of the requirements set forth in R850-140-400(1)-(4), a development transaction shall be presented to the director or the board, as required by law, for final approval. The board or the director, as appropriate, may approve or reject a proposed transaction consistent with their fiduciary obligations.

6. Formal contract documentation of any development transaction shall be subject to approval by a representative of the attorney general's office. The party with whom the trust is negotiating a development transaction shall have no vested rights in and to the development property in question until the formal contract documents have been approved by the representative of the attorney general's office, approved by the board as appropriate, executed by the director and delivered.

7. If, as a result of a development transaction, a property is improved and/or subdivided, such property shall be conveyed or leased for consideration no less than the fair market value of such property as improved and subdivided. The consideration resulting from the transaction on such improved and/or subdivided property shall be allocated between the trust and the developing entity as provided for in the development transaction.

R850-140-500. Amendments to Development Transactions.

When promoting, negotiating, approving and documenting amendments to a development transaction, the agency shall adhere to the following conditions:

(a) No amendment shall be entered into which results in the trust receiving less than fair market value for the sale, use or exchange of the property in question.

(b) In connection with any amendment that materially modifies the financial terms of a development transaction, the director shall deliver a summary description of the terms of the proposed amendment to the members of the board.

(c) Upon completion of the requirements set forth in paragraph (b) above, the proposed amendment shall be presented to the director for final approval. Amendments to joint ventures and other business arrangements shall require approval by the board. The board or the director as appropriate may approve or reject a proposed amendment to a development transaction consistent with their fiduciary obligations.

(d) Formal contract documentation of any amendment to a development transaction shall be subject to approval by a representative of the attorney general's office. The party with whom the trust is negotiating the amendment shall have no vested rights in and to the terms of the proposed amendment until the formal contract documents are approved by the representative of the attorney general's office, approved by the board as appropriate, executed by the director, and delivered.

R850-140-600. Exemption From Rules.

The agency, in connection with its activities in promoting, negotiating, approving and documenting development transactions, shall be subject to all rules and board policies applicable to the agency, except the following, which shall not be applicable:

(a) Rule 850-3. Applicant Qualifications and Application Forms.

(b) Rule 850-4. Application Fees and Assessments.

(c) Rule 850-5. Payments, Royalties, Audits and Assessments.

(d) Rule 850-30. Special Use Leases.

(e) Rule 850-40. Easements.

(f) Rule 850-80. Sale of Trust Lands.

(g) Rule 850-81. Right of Noncompetitive Purchase.

(h) Rule 850-82. Preference Right Sales.

(i) Rule 850-90. Land Exchanges.

KEY

development, land sale, real estate

Date of Enactment or Last Substantive Amendment

September 16, 1996

Notice of Continuation

September 14, 2006

Authorizing, Implemented, or Interpreted Law

53C-4-101(1)