BILL REQ. #:  S-0915.2 

Read first time 01/27/2005.   Referred to Committee on Natural Resources, Ocean & Recreation.

     AN ACT Relating to managing state granted lands for multiple benefits under long-term leases that compensate trust beneficiaries; and adding a new chapter to Title 79 RCW.

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

NEW SECTION.  Sec. 1   The legislature finds that the state's management of its federally granted lands and its financial strategies for assisting with the costs of education, corrections, mental health treatment, and other activities supported by revenues from granted lands have changed greatly since statehood. At statehood Washington received title to approximately three million acres of federal lands for the support of common schools and other governmental functions, similar to grants to other states entering the United States that as territories were predominantly in federal land ownership and thus lacking an adequate taxable land base to support state and local governmental functions through property taxes. Like most Western states, Washington initially derived most of its funding through the sale of these lands, although the Washington state Constitution placed limits on the pace at which such granted lands could be sold.
     Early in the twentieth century there was a growing recognition of the importance of forest lands in maintaining a continuous supply of wood products, flood water mitigation, drinking water supplies, storage of snowpack for late season irrigation supplies, hunting and fishing and other recreational opportunities, and providing many other benefits to adjacent communities and to the entire state. During this period many federal forest lands were reserved from public land disposition and state forest lands were reforested and managed for long-term public benefits. Today Washington retains one of the greatest percentages of its original federal granted lands, currently owning about two million two hundred thousand acres. About one million five hundred thousand acres of these lands are forest lands.
     Since the 1920s the state's policy has been to retain granted lands in state ownership and to manage the lands to maximize revenues from the lands for the trust beneficiaries. However, by the late twentieth century revenues derived from these lands were not keeping pace with the demands for funding for education and other trusts' purposes. For example, within the past twenty years, revenues derived from common school trust lands have declined from about two-thirds to about one-quarter of the state support for school construction. Similarly, the portion of the higher education construction budget supported by these lands has dropped from twelve percent in the late 1980s to seven percent in the current biennium. As a portion of the overall state support for education, trust land revenues provide less than two percent.
     At the same time as the relative value of the granted lands in financial returns has been diminishing for the trust beneficiaries, there is growing recognition by all citizens of the value of these lands in providing multiple public benefits. The highest value from these lands in serving the entire state will be achieved if a policy of multiple use and multiple compatible benefits is pursued. Therefore, it is the intent of this chapter to provide full compensation to the trust beneficiaries for the net present value of a long-term leasehold interest in these granted lands, and during the term of this lease to manage these lands for multiple uses and benefits.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Commissioner" means the commissioner of public lands.
     (2) "Department" means the department of natural resources.
     (3) "Granted lands" means state lands managed by the department for the benefit of educational, correctional, social services, and capitol buildings construction in the following designated trusts:
     (a) Common school, indemnity, and escheat;
     (b) Agricultural school;
     (c) Scientific school;
     (d) University;
     (e) Normal school;
     (f) Charitable, educational, penal, and reformatory institutions; and
     (g) State capitol.

NEW SECTION.  Sec. 3   (1) The department shall calculate full fair market compensation for a leasehold interest of a term of at least seventy-five years using simplified appraisal processes that minimize the administrative costs of calculating full fair market compensation while ensuring that the beneficiaries are appropriately compensated. The department shall place a priority upon calculating leasehold values for those parcels proposed for inclusion upon the priority lists required by section 4 of this act. The leasehold interest includes all rights to manage the lands consistent with the standards under section 7 of this act, including the sale of valuable materials and allowance of uses that derive monetary returns from the lands.
     (2) It is the intent of the legislature that because the beneficiaries are largely supported by state funds not derived from these granted lands, the added costs of detailed, parcel-specific appraisals, may not justify the added precision of such appraisals.

NEW SECTION.  Sec. 4   (1) The state granted lands lease program is created. The program must include state granted lands for which a leasehold is executed under the provisions of this chapter to provide compensation for the support of the beneficiaries in the following designated trusts:
     (a) Common school, indemnity, and escheat;
     (b) Agricultural school;
     (c) Scientific school;
     (d) University;
     (e) Normal school;
     (f) Charitable, educational, penal, and reformatory institutions; and
     (g) State capitol.
     (2) By December 31, 2006, the department shall develop a prioritized list of parcels suitable for inclusion in the state granted lands lease program. A prioritized list must be prepared for each category of designated trusts specified in subsection (1) of this section. Each list must include sufficient parcels so that the aggregated acreage of parcels exceed the following acreage:
     (a) Common school, indemnity, and escheat, five hundred thousand acres;
     (b) Washington State University, forty thousand acres;
     (c) Agricultural school, twenty thousand acres;
     (d) Scientific school, twenty thousand acres;
     (e) Normal school, twenty thousand acres;
     (f) Charitable, educational, penal, and reformatory, twenty thousand acres; and
     (g) State capitol, twenty-five thousand acres.
     (3) The department shall prioritize parcels for each category of designated trust by considering the parcels most suitable for management for maximizing multiple benefits from uses of the lands, without placing as the highest priority the monetized economic returns that may be obtained in the near term from the lands. In selecting parcels for inclusion on the list and in establishing a priority order, the department should consider the opportunities for managing for such benefits as: Fish and wildlife habitat and production; improving forest health conditions; satisfying diverse recreational demands in the region; protecting drinking water supplies of nearby communities; mitigating storm water flows; and protecting forest stands with special biological diversity or geological or scenic values.
     (4) In considering candidates and selecting parcels for listing, the department shall provide the public, including representatives of trust beneficiary interests, an opportunity to provide comments to the department and to participate in the department's deliberations. This must include at least three public meetings in different regions of the state at which draft lists are provided to the public in advance for comment.
     (5) Prior to final adoption of the list the department shall receive the approval of the board of natural resources.
     (6) In developing the initial prioritized lists proposed for funding in the 2007-2009 biennial capital budget, the department shall consider lands suitable for management consistent with the standards in section 7 of this act and which would further the following objectives:
     (a) In eastern Washington, meaning east of the crest of the Cascade mountain range, a contiguous forest stand of no less than ten thousand acres to be managed primarily for the improvement of forest health conditions, with contractors for implementing forest health treatment activities to be sought in communities in the vicinity of the forest; and
     (b) In western Washington, a forest stand near urbanizing areas in which there is increasing demand for recreational uses of the forest and for which the department may derive significant revenues from recreational uses.
     (7) The department shall remove from the lists those parcels for which leases are executed under section 6 of this act. By December 31, 2008, the department shall make additions of parcels to each list such that the total parcels on each list exceed in aggregate amount by at least fifty percent the lease values appropriated in the current biennial capital budget for each designated trust.

NEW SECTION.  Sec. 5   The department shall include a prioritized list of parcels proposed for leasing and inclusion in the state granted lands lease program in the capital budget request submitted to the governor. No lease under the state granted lands lease program authorized by this chapter may be executed without prior approval and funding by the legislature.

NEW SECTION.  Sec. 6   Beginning July 1, 2007, the department shall execute leases for a term of at least seventy-five years for trust lands on the priority lists developed under section 4 of this act. The lease agreement must include the right for automatic renewal. The calculation of full fair market compensation for renewed leases must ensure that the value of the resources on the land that were used to compensate beneficiaries in the initial lease not become a part of the calculation for compensation for the renewed lease.

NEW SECTION.  Sec. 7   (1) The granted lands placed in the state granted lands lease program must be managed by the department under existing management statutes, policies, and agreements to the extent not inconsistent with the management criteria of this section. The valuable materials on the granted lands may be sold in the same manner and for the same purposes as is authorized for state lands, and charges may be made for recreational or other uses of the lands, provided that the value of the lands at the expiration of the lease will not be significantly diminished thereby.
     (2) The multiple use lands in the granted lands lease program must be managed with all the various renewable resources in mind so that they are utilized in the combination that will best meet the needs of all of the state's citizens. The department should manage the multiple use forests with the entire land base in mind so that some resources or services may be emphasized on parts of the lands and some land may be used for less than all of the resources or services. The department should seek a harmonious and coordinated management of the various resources of the lands, each with the other, without impairment of the productivity of the land, with consideration being given the relative values of the various resources, and not necessarily the combination of uses that will give the greatest dollar return or the greatest unit output. Among the values and uses that should be considered by the department in managing the multiple use lands are the economic and environmental aspects of various systems of renewable resource management, including: Silviculture and protection of forest resources; providing for outdoor recreation, range, timber, watershed, wildlife, and fish; providing for a diversity of plant and animal communities; and providing for protection of streams, streambanks, shorelines, lakes, wetlands, and other bodies of water from detrimental changes in chemical, biological, or hydrological characteristics.

NEW SECTION.  Sec. 8   The state granted lands lease program account is created in the state treasury. All receipts from revenues derived from lands in the program and other moneys appropriated to the account or received by the state for the benefit of such lands must be deposited in the account. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used for all purposes related to management of lands included in the state granted lands lease program.

NEW SECTION.  Sec. 9   (1) The granted lands review commission is established. The commission membership shall be jointly formed by appointments by the governor and the commissioner of public lands. The purpose of the commission is to review the history and contemporary management and disposition of lands granted to the state by the federal government at statehood for the support of education and other governmental activities, and to analyze alternative methods by which the state could ensure equivalent or greater financial support for these governmental activities while at the same time allowing management of these lands for multiple benefits to all citizens of the state. The commission shall involve the active participation of the interests representing the beneficiaries of state financial assistance derived from revenues from these lands, as well as the interests of others who derive income from or use of these state lands.
     (2) The granted lands review commission shall submit a report with its recommendations to the appropriate committees of the senate and house of representatives by December 31, 2007.
     (3) The granted lands review commission and its powers and duties terminate June 30, 2008.

NEW SECTION.  Sec. 10   Sections 1 through 9 of this act constitute a new chapter in Title 79 RCW.