Audit Committee Finds Hobbs’ Land Use Policy Conflicts with Housing Affordability

As young families continue to struggle with housing affordability, Arizona’s Joint Legislative Audit Committee held a special hearing to review the State Land Department’s management of Arizona’s trust lands and examine how Governor Katie Hobbs’ land-use policies are affecting the state’s housing supply and K–12 education funding.

The special hearing, called after a Performance Audit and Sunset Review of the Department, revealed significant concerns.

Those concerns include a lack of invoicing, returned checks, application backlogs, and what auditors believe are “deliberate decisions to shirk statutory requirements to develop comprehensive plans.”

The report made 51 recommendations, prompting lawmakers to send a joint letter to the Department asking for more information.

Members claim that testimony and documents presented at the hearing “showed a clear pattern: under Governor Hobbs, the State Land Department has adopted a harmful land-use agenda that actively limits productive use of trust lands, undermining the Trust’s ability to generate revenue for Arizona schools.”

“Arizona’s trust lands exist for one purpose: to generate revenue for our public schools,” said JLAC Co-Chair Representative Matt Gress. “Instead of putting these lands to economic use, the Governor is letting them sit idle. In her view, the ‘highest and best use’ of land is no use at all. That’s fiscally irresponsible, reducing the land available for new home construction and the funds available for K–12 education.”

Representative Michele Peña, Vice Chair of the House Land, Agriculture and Water Committee, told members that Hobbs’ policies sideline long-standing industries like farming and ranching, which have supported the Trust for generations and provided a steady stream of rent and royalties to the beneficiaries.

“Mining and agriculture have helped fund our schools for more than a century,” said Representative Peña.

Under the Hobbs administration, the Land Department has demonized these industries, allowing thousands of acres to sit intentionally idle to keep the desert barren rather than put it to economic use. Evidence presented at the hearing showed:

• Numerous agricultural leases were canceled or not renewed before a replacement leaseholder was secured.
• Hundreds of mineral lease applications were placed on hold indefinitely, many of which could generate substantial royalty payments to the Trust.
• Thousands of acres of developable land near urban centers were prevented from going to public auction, enough to support over 200,000 housing units.

“These internal delays and cancellations are not oversights,” Representative Peña added. “They come from a Governor who believes Arizona’s legacy industries are a problem to be eliminated, rather than an economic opportunity to be utilized, simply because her radical environmental allies oppose them.”

Representative Neal Carter, Speaker Pro Tempore, also noted that these land-use policies mirror the Hobbs administration’s approach to water, which imposed artificial growth boundaries around the Phoenix metropolitan area and constrained housing supply, raising housing costs and slowing job growth, impacting real GDP.

“As with the Governor’s water policies, her land-use policies directly conflict with the state’s housing needs and the need to fund education,” said Speaker Pro Tempore Neal Carter. “Her administration keeps putting far-left priorities ahead of Arizona’s students and families.”