AN ACT Relating to railroad rights of way; and adding a new chapter to Title 81 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that railroads have historically enjoyed the protection and benefit of governmental assistance, including land grants and condemnation authority, to serve the public good. The legislature further finds it is beneficial to the welfare of the people and commerce of the state of Washington, especially the agricultural segment of the state, that a railroad, when leasing, licensing, or otherwise permitting persons to occupy land previously serviced by the railroad, or when dealing with its abandoned rights of way, do so in a manner that is fair to the occupant of such property.

NEW SECTION. Sec. 2. As used in this chapter, unless specifically defined otherwise or unless the context requires otherwise:

(1) "Adjoining real property" means real property owned by a railroad adjoining an abandoned railroad right of way, and previously was served by the right of way, and that is subject to a lease, permit, or similar possessory rights, or having leasehold improvements, on the property.

(2) "Disposal" means the sale, lease, exchange, or other disposition of adjoining real property formerly served by the abandoned right of way.

(3) "Fair market rental value" means the rental value a willing lessee would pay a willing lessor, with such value not including the enhancement value of leasehold improvements owned by the occupant.

(4) "Fair market value" means the price a willing buyer would pay a willing seller, with such value not including the enhancement value of leasehold improvements owned by the occupant.

(5) "Occupant" means a person or entity occupying adjoining real property under a lease, license, or permit, or owning leasehold improvements on the property.

(6) "Railroad" means a railroad or "railroad company" as defined in RCW 81.04.010. Railroad also means any trustee or any affiliated entity or subsidiary of the railroad which holds adjoining real property formerly owned by the railroad.

(7) "Right of first refusal" means the right to purchase or lease adjoining real property at its fair market value before sale or lease to any other person or entity.

NEW SECTION. Sec. 3. If adjoining real property is offered for disposal the railroad or an affiliated entity must extend to the occupant of said property a right of first refusal.

A person or entity entitled to a right of first refusal shall be given a written offer by the railroad to sell such property at its fair market value. The offer shall contain the legal description, the rights to be conveyed, and the price and terms of sale. The offer shall also contain the following statement: "You have a right of first refusal pursuant to section 3 of this act to accept, decline or appeal the reasonableness of this offer by so notifying the railroad within sixty days, and thirty days thereafter to file a notice of appeal to the board of equalization in the county in which the land is located." The recipient of the offer shall respond in writing within sixty days, either accepting, declining, or giving notice of its intent to appeal the offer to sell.

NEW SECTION. Sec. 4. In the event the holder of a right of first refusal appeals the reasonableness of the railroad's offer to sell, the offeree shall have the right to have the fair market value determined by the board of equalization of the county in which the property is located. Within thirty days after its notice of intent to appeal, the holder of the right of first refusal shall file an appeal with the board of equalization and the issue of fair market value shall be resolved either in accordance with the procedures and regulations of the board, or the board may hire an independent appraiser with no financial connections with either party to establish the fair market value. The costs of the appraisal shall be divided equally between the seller and the purchaser, and collected by the county at the time the sale of the property is recorded with the county.

Subject to such appeal rights as may exist in law, the decision and order of the board of equalization shall be binding upon the parties, provided, however, that either the railroad or the occupant may withdraw from the sale by giving written notice to the other party within fifteen days after issuance of the final order. Such a withdrawal by a railroad shall not eliminate rights of first refusal to persons or entities as provided for in this chapter.

NEW SECTION. Sec. 5. A charge for leaseholds, licenses, permits, or other similar possessory rights for real property adjoining abandoned railroad rights of way shall be just, reasonable, and nondiscriminatory. A renewal or extension of an existing lease, permit, or license shall contain the following statement, prominently displayed: "You have the right to appeal the reasonableness of the rental payment pursuant to section 5 of this act by notifying the railroad of your intent to appeal within thirty days after the payment is due, and thereafter, within thirty days of your notice of intent to appeal, by appealing to the board of equalization in the county where the property is located."

NEW SECTION. Sec. 6. In the event a holder of leasehold rights, licenses, permits, or similar possessory rights for real property adjoining abandoned railroad rights of way cannot agree with the railroad upon the fair market rental or other similar charges, a yearly fair market rental value shall be presumed to be twelve percent of the fair market assessed value as provided in the most recent tax assessment prepared by the tax assessor in the county in which the property is located. Such value shall be deemed the fair market rental value unless either party gives written notice to the other within thirty days after the date payment is due of its intent to appeal the fair market rental value of the property and unless such party thereafter appeals to the board of equalization within thirty days after the notice of its intent to appeal.

The board of equalization shall determine the fair market rental value of the property by hiring a person with expertise on determining fair market rental value of property. The cost establishing this determination shall be paid by the party making the appeal. The fair market rental value established by the board of equalization shall be applied from the date of the notice of intent to appeal and any balance due resulting from the determination shall be paid in full within thirty days of that determination.

The decision and order of the board of equalization is binding upon the parties on the issue of fair market rental value or other like charges, subject only to such appeal rights as may exist in law.

NEW SECTION. Sec. 7. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 8. Sections 1 through 6 of this act shall constitute a new chapter in Title 81 RCW.