SENATE BILL REPORT

ESB 6140

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

As Passed Senate, February 12, 2018

Title: An act relating to promoting the efficient and effective management of state-managed lands.

Brief Description: Promoting the efficient and effective management of state-managed lands.

Sponsors: Senators King, Van De Wege and Sheldon; by request of Department of Natural Resources.

Brief History:

Committee Activity: Agriculture, Water, Natural Resources & Parks: 1/15/18, 1/18/18 [DP].

Floor Activity:

Passed Senate: 2/12/18, 43-4.

Brief Summary of Engrossed Bill

  • Aligns lease terms for certain state-owned aquatic lands.

  • Makes the requirement for the Department of Natural Resources (DNR) to survey and plat certain aquatic lands permissive.

  • Authorizes a process for DNR to directly transfer land to a current home site lessee.

  • Provides additional authority for DNR to market uplands through a real estate broker.

  • Directs DNR to conduct an analysis on specified aspects of its uplands portfolio, revenue streams, management practices, and transaction processes.

  • Requires DNR to evaluate certain industrial and commercial leases and easements on state-owned aquatic lands relating to matters including terms, revenue, and inspection and compliance.

SENATE COMMITTEE ON AGRICULTURE, WATER, NATURAL RESOURCES & PARKS

Majority Report: Do pass.

Signed by Senators Van De Wege, Chair; McCoy, Vice Chair; Warnick, Ranking Member; Honeyford and Nelson.

Staff: Curt Gavigan (786-7437)

Background: Lease Terms for Certain State-Owned Aquatic Lands. The Legislature has designated DNR as the manager of state-owned aquatic lands. In managing these lands, DNR must support a balance of statutory goals including encouraging public access, fostering water-dependent uses, utilizing renewable resources, protecting the environment, and generating revenue. There are several different types of aquatic land, including:

Tidelands and shorelands that are in front of or within two miles of a city are considered first class, and those more than two miles from a city are considered second class.

Maximum lease terms for first class tidelands and shorelands differ depending on whether or not the land is platted. For example, generally tidelands and shorelands can be leased for 55-years, but this is limited to 10-years for unplatted first class tidelands and shorelands and 5-years for a re-lease of the land. Bedlands may generally be leased for 30 years, but this is limited to 10 years if the bedlands are in front of unplatted first class tidelands and shorelands.

Current statute directs DNR to plat all first class tidelands and shorelands not previously platted.

State Upland Sales and Transfers. The state Constitution and statute generally require DNR uplands to be sold at public auction to the highest bidder. In certain circumstances, statute allows the Board of Natural Resources (Board) to approve transfers that are for at least fair market value and are in the best interest of the state or affected trust. These include:

If lands are not sold at public auction, the Board may authorize DNR to market the lands through a real estate broker or other commercially feasible means at a price not lower than the appraised value.

Additionally, DNR currently manages a number of special leases that contain home sites. These home sites are generally adjacent to DNR-managed agricultural lands.

State Granted Lands. Upon statehood, the United States granted the State of Washington over 3 million acres to support various public institutions. DNR now manages over 2 million acres of federally granted trust lands to provide revenue for public schools, state universities, buildings on the capitol campus, and correctional facilities. The largest acreage category is for common schools, with almost 1.8 million acres.

State Forest Lands. DNR also manages more than 600,000 acres of state forest lands, which were acquired primarily through tax foreclosures in the 1920s and 1930s, and to a lesser extent through purchases by the state or gifts to the state. State forest lands are managed for the benefit of the counties in which the lands are located.

Summary of Engrossed Bill: Lease Terms for Certain State-Owned Aquatic Lands. Leases for both platted and unplatted first classs tidelands and shorelands are aligned under the same terms and processes. Maximum statutory lease terms are 55 years for first class tidelands and shorelands, and 30 years for bedlands in front of them. DNR's surveying and platting of tidelands and shorelands is made permissive. Technical changes are made.

State Upland Sales and Transfers. DNR may directly transfer land to a current home site lessee without the need for a public auction. These transfers must meet the same requirements as for other direct land transfers, such as the requirement for Board approval and sale for at least fair market value.

The requirement that lands not be sold at public auction before DNR may market the property through a real estate broker is removed.

DNR Upland Management Direction and Analysis. Subject to the availability of appropriations, DNR must analyze its state lands and state forestlands portfolios, management practices, and transaction processes for purposes including to:

DNR may use the services of a contractor for any portion of this work. A final report to the Legislature is due by June 30, 2020, with progress reports due by December 2018 and 2019.

DNR Aquatic Lands Lease and Easement Evaluation. Within existing appropriations, DNR must evaluate use leases and easements for industrial and commercial uses on state-owned aquatic lands.  The evaluation does not include leases for purposes of marinas or moorage. DNR must complete the evaluation by December 1, 2018. It must cover matters such as:

Appropriation: None.

Fiscal Note: Available.

Creates Committee/Commission/Task Force that includes Legislative members: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Staff Summary of Public Testimony: PRO: This is a small bill but will have important impacts. It will help DNR with administrative efficiency, help improve management outcomes, and help those dealing with potentially ending home site leases. The aquatic lands changes are focused on modernizing the statute and allowing lessees to have sufficient lease terms to recoup investments in property improvements. The upland changes are built around allowing DNR to utilize professional marking services for complicated real estate transactions, and providing flexibility to conduct direct transfers to home site lessees when that transaction is in the best interest of the trust.

Persons Testifying: PRO: Senator Curtis King, Prime Sponsor; Kristin Swenddal, DNR; Brock Milern, DNR; Joe Dacca, University of Washington.

Persons Signed In To Testify But Not Testifying: No one.