BILL REQ. #:  Z-0229.3 

Read first time 01/13/2003.   Referred to Committee on Natural Resources, Energy & Water.

     AN ACT Relating to lease rates for marinas on state-owned aquatic lands that provide public moorage; and amending RCW 79.90.480.

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

Sec. 1   RCW 79.90.480 and 1998 c 185 s 2 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 1st 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 June 11, 1998, 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.)) Annual rent rates for the lease of state-owned aquatic lands for qualifying marinas must be determined in the following manner:
     (a) For the purposes of this section, a qualifying marina is defined as a facility that is principally designed and operated to provide in-water vessel moorage that is available for lease or rent to the general public. It may include mixed commercial and general public uses, provided that at least seventy-five percent of the lineal feet of moorage is available for use by the general public to moor vessels. It does not include moorage facilities that allocate slip spaces to members or owners rather than the general public. Unqualified facilities include, but are not limited to, moorage associated with apartments, yacht clubs, moorage condominiums, and associations formed to provide moorage to a limited or defined group. Marinas must have leases that are in good standing in order to qualify.
     (b)(i) Annual rent for qualified marinas must be determined initially using a base rent. Thereafter, base rent shall be adjusted as provided in (c) of this subsection.
     (ii) For the purposes of this section, the base year's rent is the water-dependent rent in effect for the year the marina qualifies. For qualifying marinas in existence as of the effective date of this section, the base year's rent is the rent that was charged by the department on June 30, 2002, adjusted from that date in the manner provided in (c) of this subsection. For qualifying marinas that are first constructed after the effective date of this section, the base year's rent per square foot must be computed as the average rent per square foot of the five closest qualifying marinas. Rent computed under this section shall be applied on the first anniversary date of the lease after the marina qualifies or at the start of any new lease for a qualifying marina.
     (iii) Any qualifying marinas that cease to qualify by allowing their lease to fall out of good standing, or by otherwise failing to operate as described in (a) of this subsection, must have their rent computed in accordance with the provisions of subsections (1) and (3) of this section, or RCW 79.90.500, as applicable, beginning with the next billing period for the lease. A marina that subsequently requalifies must use a new base rent equal to the water-dependent rent computed under subsection (1) of this section at that date.
     (c)(i) The department must adjust the rent for qualifying marinas on the anniversary date established by the lease based upon any increase in the consumer price index for Seattle-Tacoma-Bremerton as published by the United States department of labor. If the United States department of labor ceases to publish the Seattle-Tacoma-Bremerton index the department must use the most appropriate price index available.
     (ii) The annual adjustment to rent is capped at five percent in any given year. Any percentage increase in the consumer price index that exceeds five percent must be carried forward and added to the consumer price index in subsequent years when the consumer price index increase is less than five percent until the rental rate charged incorporates all potential adjustments arising from increases in the consumer price index.
     (d) In those cases where a portion of an otherwise qualified marina is utilized for nonwater-dependent purposes, or is used for some purpose not directly related to qualified vessel moorage, the portion of the leased premises associated with this activity must be apportioned and rent must be computed in accordance with RCW 79.90.500, or with subsections (1) and (3) of this section, as applicable.
     (e) For the purposes of this section, a marina lease is in good standing if it is within its term or under a holdover agreement, the rent has been properly revalued in accordance with subsections (1) and (3) of this section, the rental computations are current, all lease payments due under the properly valued lease have been paid, and there are no other outstanding defaults under the lease.
     (f) The provisions of this subsection (7) are intended to apply where the department's direct lessee operates the qualifying marina to provide moorage to the general public. In those cases where the department's direct lessee subleases the leased premises to another entity, or otherwise contracts with a concessionaire, to operate the qualified marina, rent for that facility is the rent computed in accordance with (b) and (c) of this subsection, and thirty percent of the portion of the gross rents or fees that the department's direct lessee charges to the sublessee or concessionaire that is greater than the computed rent.
     (g) To maintain the public benefit of generating revenue consistent with RCW 79.90.455, at a rate greater than the cost of management of these lands, qualifying marinas must pay a rent of no less than five hundred dollars. This minimum amount must be adjusted annually in the manner described in (c) of this subsection.
     (h) If the rent of a qualifying marina is revalued between July 1, 2002, and the effective date of this section pursuant to subsection (3)(a) of this section, and if that revaluation results in an increase in the rental rate by more than ten percent, the amount of the rental increase that is in excess of ten percent must be computed and applied as a rental credit against future rental payments. The rental credit must be applied against any future rental amounts billed by the department in equal amounts over the next ten years of the lease for so long as the lease is in good standing. If the lease terminates without renewal, if the lease terminates early for cause, if the marina no longer qualifies under (a) of this subsection, or if the lease is not maintained in good standing, any unused rent credit lapses.
     (i) The rate and annual adjustments provided in this subsection (7) must be used to determine the change in rent between the end of a lease term and the beginning of a renewed lease. If the lease is not in good standing at the time of renewal the base rent upon renewal shall be computed in accordance with the provisions of subsection (1) of this section.
     (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.