S-4281.2  _______________________________________________


                    SUBSTITUTE SENATE BILL 6156



State of Washington      55th Legislature     1998 Regular Session


By Senate Committee on Natural Resources & Parks (originally sponsored by Senators Swecker, Fraser and Spanel; by request of Department of Natural Resources)


Read first time 01/30/98.

Studying methods for calculating water-dependent lease rates on state-owned aquatic lands.

    AN ACT Relating to studying methods for calculating water-dependent lease rates on state-owned aquatic lands; amending RCW 79.90.480; creating new sections; and making an appropriation.




    NEW SECTION.  Sec. 1.  (1) The legislature finds that the current method for determining water-dependent rental rates for aquatic land leases may not be achieving the management goals in RCW 79.90.455.  The current method for setting rental rates, as well as alternatives to the current methods, should be evaluated in light of achieving management goals for aquatic lands leases.  The legislature further finds that there should be no further increases in water-dependent rental rates for marina leases before the completion of this evaluation.

    (2) The department of natural resources shall study and prepare a report to the legislature on alternatives to the current method for determination of water-dependent rent set forth in RCW 79.90.480.  The report shall be prepared with the assistance of appropriate outside economic expertise and stakeholder involvement.  Affected stakeholders shall participate with the department by providing information necessary to complete this study.  For each alternative, the report shall:

    (a) Describe each method and the costs and benefits of each;

    (b) Compare each with the current method of calculating rents;

    (c) Provide the private industry perspective;

    (d) Describe the public perspective;

    (e) Analyze the impact on state lease revenue; and

    (f) Evaluate the ease of administration.

    (3) The report shall be presented to the legislature by November 1, 1998, with the recommendations of the department clearly identified.  The department's recommendations shall include draft legislation as necessary for implementation of its recommendations.


    Sec. 2.  RCW 79.90.480 and 1984 c 221 s 7 are each amended to read as follows:

    Except as otherwise provided by this chapter, annual rent rates for the lease of state-owned aquatic lands for water-dependent uses shall be determined as follows:

    (1)(a) The assessed land value, exclusive of improvements, as determined by the county assessor, of the upland tax parcel used in conjunction with the leased area or, if there are no such uplands, of the nearest upland tax parcel used for water-dependent purposes divided by the parcel area equals the upland value.

    (b) The upland value times the area of leased aquatic lands times thirty percent equals the aquatic land value.

    (2) As of July 1, 1989, and each July 1 thereafter, the department shall determine the real capitalization rate to be applied to water-dependent aquatic land leases commencing or being adjusted under subsection (3)(a) of this section in that fiscal year.  The real capitalization rate shall be the real rate of return, except that until June 30, 1989, the real capitalization rate shall be five percent and thereafter it shall not change by more than one percentage point in any one year or be more than seven percent or less than three percent.

    (3) The annual rent shall be:

    (a) Determined initially, and redetermined every four years or as otherwise provided in the lease, by multiplying the aquatic land value times the real capitalization rate; and

    (b) Adjusted by the inflation rate each year in which the rent is not determined under subsection (3)(a) of this section.

    (4) If the upland parcel used in conjunction with the leased area is not assessed or has an assessed value inconsistent with the purposes of the lease, the nearest comparable upland parcel used for similar purposes shall be substituted and the lease payment determined in the same manner as provided in this section.

    (5) For the purposes of this section, "upland tax parcel" is a tax parcel, some portion of which has upland characteristics.  Filled tidelands or shorelands with upland characteristics which abut state-owned aquatic land shall be considered as uplands in determining aquatic land values.

    (6) The annual rent for filled state-owned aquatic lands that have the characteristics of uplands shall be determined in accordance with RCW 79.90.500 in those cases in which the state owns the fill and has a right to charge for the fill.

    (7) For leases for marina uses only, beginning on the effective date of this section, the annual rental rates in effect on December 31, 1997, shall remain in effect until July 1, 1999, at which time the annual water-dependent rent shall be determined by the method in effect at that time.  In order to be eligible for the rate to remain at this level, a marina lease must be in good standing, meaning that the lessee must be current with payment of rent, the lease not expired or in approved holdover status, and the lessee not in breach of other terms of the agreement.

    (8) For all new leases for marinas, or any other water-dependent use, issued after December 31, 1997, the initial annual water-dependent rent shall be determined by the methods in subsections (1) through (6) of this section.


    NEW SECTION.  Sec. 3.  In order to facilitate the participation of affected stakeholders in the preparation of the report to the legislature, the department of natural resources shall form two committees:  The report preparation committee and the report evaluation committee.

    (1) The report preparation committee consists of one representative with knowledge of waterfront industries and economic principles from each of the following groups:  Private marina operators, northwest marine trade association, association of Washington cities, association of Washington counties, Washington public ports association, commercial waterfront business other than marinas, and the aquatic resources division of the department of natural resources.  The report preparation committee will work with the staff and consultants of the department of natural resources to assemble and evaluate relevant data, develop alternatives, and draft the report.

    (2) The report evaluation committee consists of the manager of the aquatic resources division, three representatives of the marina industry state-wide nominated by the Northwest marine trade association, three representatives of other commercial users of aquatic lands state-wide chosen by the department of natural resources in consultation with the Northwest marine trade association, the executive director of the Washington public ports association, and one representative selected jointly by the association of Washington cities and the association of Washington counties.  The report evaluation committee shall review the draft report submitted by the report preparation committee and assist the department of natural resources in identifying economic impacts of the various alternatives and in selecting a preferred alternative to present to the legislature.


    NEW SECTION.  Sec. 4.  The sum of one hundred fifty thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1999, from the aquatic lands RMCA fund balance to the department of natural resources for the purposes of defraying staff costs, committee expenses, economic consultant and appraisal consultant costs, and report production expenses incurred in the preparation of the study in section 1 of this act.


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