Bill Summary – FastDemocracy

Z-0547.1
                                 HOUSE BILL 2299
     State of Washington         68th Legislature      2024 Regular Session
     By Representatives Street, Walen, Reed, Tharinger, and Simmons; by
     request of Department of Natural Resources
     Read first time 01/11/24.   Referred to Committee on Capital Budget.
      AN ACT Relating to the authority of the department of natural
  resources   to  lease   trust  assets   for  the   benefit of trust
  beneficiaries and the state; and amending RCW 79.13.010, 79.13.030,
  79.13.060, 79.13.110, 79.13.120, 79.13.130, and 79.13.140.
 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
     Sec. 1.   RCW 79.13.010 and 2007 c 504 s 1 are each amended to
 read as follows:
     (1) Subject to other provisions of this chapter and subject to
 rules adopted by the board, the department may lease state lands and
 trust assets, deemed by the department to be temporarily available
 for use on nonstate land, for purposes it deems advisable((,))
 including, but not limited to, commercial, industrial, residential,
 agricultural, and recreational purposes in order to obtain a fair
 market rental return to the state or the appropriate constitutional
 or statutory trust, and if the lease is in the best interest of the
 state or affected trust.
     (2) Notwithstanding any provision in this chapter to the
 contrary, in leases for residential purposes, the board may waive or
 modify any conditions of the lease if the waiver or modification is
 necessary to enable any federal agency or lending institution
 authorized to do business in this state or elsewhere in the United
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 States to participate in any loan secured by a security interest in a
 leasehold interest.
     (3) Any land granted to the state by the United States may be
 leased for any lawful purpose in such minimum acreage as may be fixed
 by the department.
     (4) The department shall exercise general supervision and control
 over the lease of state lands and trust assets for any lawful
 purpose.
     (5) State lands leased or for which permits are issued or
 contracts are entered into for the prospecting and extraction of
 valuable materials, coal, oil, gas, or other hydrocarbons are subject
 to the provisions of chapter 79.14 RCW.
     (6) The department may also lease or lease development rights on
 state lands held for the benefit of the common schools to public
 agencies, as defined in RCW 79.17.200.
     Sec. 2. RCW 79.13.030 and 2003 c 334 s 367 are each amended to
 read as follows:
     Every lease issued by the department must contain:
     (1) The specific use or uses to which the land or asset is to be
 employed;
     (2) The improvements required, if any;
     (3) Provisions providing that the rent is payable in advance in
 quarterly, semiannual, or annual payments as determined by the
 department, or as agreed upon by the lessee and the department;
     (4) Other terms and conditions as the department deems advisable,
 subject to review by the board, to achieve the purposes of the state
 Constitution and this chapter.
     Sec. 3.   RCW 79.13.060 and 2022 c 194 s 1 are each amended to
 read as follows:
     (1) State lands may be leased not to exceed ((ten)) 10 years with
 the following exceptions:
     (a) The lands may be leased for agricultural purposes not to
 exceed ((twenty-five)) 25 years, except:
     (i) Leases that authorize tree fruit or grape production may be
 for up to ((fifty-five)) 55 years;
     (ii) Share crop leases may not exceed ((ten)) 10 years;
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     (b) The lands may be leased for commercial, industrial, business,
 or recreational purposes not to exceed ((fifty-five)) 55 years,
 except:
     (i) Leases for commercial, industrial, or business purposes may
 extend to 99 years;
     (ii) All leases for commercial, industrial, or business purposes
 that extend beyond 55 years must provide for periodic rental
 reevaluation and adjustment, except leases with rentals based on a
 percentage of income;
     (iii) All leases for commercial, industrial, or business purposes
 that extend terms beyond 55 years must be reported to the office of
 financial   management  and   the  appropriate   committees  of   the
 legislature within 30 days of the date of execution of the lease. The
 report must include a financial analysis that justifies the financial
 benefit for the added term and the schedule for periodic rental
 adjustments;
     (c) The lands may be leased for public school, college, or
 university purposes not to exceed ((seventy-five)) 75 years;
     (d) The lands may be leased for residential purposes not to
 exceed ((ninety-nine)) 99 years; and
     (e) The lands and development rights on state lands held for the
 benefit of the common schools may be leased to public agencies, as
 defined in RCW 79.17.200, not to exceed ((ninety-nine)) 99 years. The
 leases may include provisions for renewal of lease terms.
     (2) Trust assets may be leased not to exceed 20 years.
     (3) No lessee of state lands may remain in possession of the land
 after the termination or expiration of the lease without the written
 consent of the department.
     (a) The department may authorize a lease extension for a specific
 period beyond the term of the lease for cropping improvements for the
 purpose of crop rotation. These improvements shall be deemed
 authorized improvements under RCW 79.13.030.
     (b) Upon expiration of the lease term, the department may allow
 the lessee to continue to hold the land for a period not exceeding
 one year upon such rent, terms, and conditions as the department may
 prescribe, if the leased land is not otherwise utilized.
     (c) Upon expiration of the one-year lease extension, the
 department may issue a temporary permit to the lessee upon terms and
 conditions it prescribes if the department has not yet determined the
 disposition of the land for other purposes.
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     (d) The temporary permit shall not extend beyond a five-year
 period.
     (((3))) (4) If during the term of the lease of any state lands
 for agricultural, grazing, commercial, residential, business, or
 recreational purposes, or of the lease of any trust asset, in the
 opinion of the department it is in the best interest of the state so
 to do, the department may, on the application of the lessee and in
 agreement with the lessee, alter and amend the terms and conditions
 of the lease. The sum total of the original lease term and any
 extension thereof shall not exceed the limits provided in this
 section.
     (((4))) (5) The department must include in the text of any
 grazing leases language that explains the right of access, and
 associated assumption of liability, created in RCW 76.04.021.
     Sec. 4.   RCW 79.13.110 and 2007 c 504 s 3 are each amended to
 read as follows:
     (1) The department may authorize the use of state land by lease
 at state auction for initial leases or by negotiation for existing
 leases.
     (2) Leases that authorize commercial, industrial, or residential
 uses of state lands, and leases of trust assets, may be entered into
 by public auction or negotiations at the option of the department.
 Negotiations are subject to rules approved by the board.
     (3) Leases to public agencies, as defined in RCW 79.17.200, may
 be entered into by negotiations. Property subject to lease agreements
 under this section must be appraised at fair market value. The leases
 may allow for a lump sum payment for the entire term of the lease at
 the beginning of the lease. The department shall calculate lump sum
 payments using professional appraisal standards. Renewal terms for
 the leases must include provisions for calculating appropriate
 payments upon renewal.
     Sec. 5. RCW 79.13.120 and 2003 c 334 s 369 are each amended to
 read as follows:
     (1) The department must give ((thirty)) 30 days' notice of
 leasing by public auction. The notice must:
     (a) Specify the place and time of auction, bid deposit if any,
 the appraised value, describe each parcel or asset to be leased, and
 the terms and conditions of the lease;
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     (b) Be posted in some conspicuous place in the county auditor's
 office and the department's regional headquarters administering the
 lease, or the department's office administering the lease of trust
 assets, not including state lands; and
     (c) Be published in at least two newspapers of general
 circulation in the area where the state land or trust asset subject
 to public auction leasing is located.
     (2) Notice of intent to lease by negotiation must be published in
 at least two newspapers of general circulation in the area where the
 state land or trust asset subject to lease negotiation is located.
 The notice must be published within the ((ninety)) 90 days preceding
 commencement of negotiations.
     (3) The department is authorized to conduct any additional
 advertising that it determines to be in the best interest of the
 state.
     Sec. 6. RCW 79.13.130 and 2003 c 334 s 372 are each amended to
 read as follows:
     (1) When the department decides to lease any state lands or trust
 assets at public auction it is the duty of the department to fix the
 date, place, and time when such lands or assets shall be offered for
 lease.
     (2) The auction must be conducted between the hours of 10:00 a.m.
 and 4:00 p.m.
     (3) The auction must take place:
     (a) At the department's regional office administering the lease
 of state lands; ((or))
     (b) For leases of trust assets, not including state lands, at the
 department's headquarters or regional office in the area where the
 trust asset is located; or
     (c) When leases are auctioned by the county auditor, in the
 county where the state land or trust asset to be leased is situated
 at such place as specified in the notice.
     Sec. 7. RCW 79.13.140 and 2003 c 334 s 373 are each amended to
 read as follows:
     (1) All leasing by public auction shall be by oral bid or by
 sealed bid. Leases will be awarded to the highest bidder on the terms
 prescribed by law and as specified in the notice of leasing described
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 in RCW 79.13.120. No lease may be awarded for less than the appraised
 value.
     (2) The public auction must be conducted under the direction of
 the department or by the auditor for the county in which the land or
 asset to be leased is located. The person conducting the auction is
 called the auctioneer.
     (3) The person to whom a lease of state lands or trust assets is
 awarded shall pay the rental in accordance with that person's bid to
 the auctioneer in cash or by certified check or accepted draft on any
 bank in this state.
     (4) The auctioneer shall send to the department such cash,
 certified check, draft, or money order received from the successful
 bidder, together with any additional report of the auction proceeding
 as may be required by the department.
     (5) The department may reject any and all bids when the interests
 of the state justify it. If the department rejects a bid, it must
 refund any rental and bid deposit to the bidder upon return of the
 receipts issued.
     (6) If the department approves any leasing made by the
 auctioneer, it must proceed to issue a lease to the successful bidder
 upon a form approved by the attorney general.
     (a) All leases must be in duplicate and both copies signed by the
 lessee and the department.
     (b) One signed copy must be forwarded to the lessee and one
 signed copy must be kept in the office of the department.
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Statutes affected: 
Original Bill: 79.13.010, 79.17.200, 79.13.060, 76.04.021, 79.13.120, 79.13.130, 79.13.140