BILL REQ. #:  S-1528.1 

Read first time 02/10/09.   Referred to Committee on Natural Resources, Ocean & Recreation.

     AN ACT Relating to the department of natural resources' authority to manage urban commercial lands; amending RCW 79.17.010, 79.17.020, 79.17.200, 79.19.010, and 79.19.020; adding a new section to chapter 79.10 RCW; adding a new section to chapter 79.19 RCW; and creating new sections.

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

NEW SECTION.  Sec. 1   The legislature finds that fundamental state legal obligations with respect to state lands managed for designated trust beneficiaries can continue to be met, while adapting to the changing circumstances of the state and of management of state lands. Most western states owning and managing federally granted trust lands are examining the management constraints and opportunities for these lands and making prudent adjustments that are in the ongoing interests of the beneficiaries of the lands and of the state.
     The legislature finds that the state department of natural resources has traditional and long-term strengths as a manager of natural resources and lands on behalf of trust beneficiaries and the people of the state, and that these strengths are well-suited to the general natural resource character of the state lands and state forest lands. This general natural resource character is expected to predominate on these lands in the future.
     The legislature finds that it is in the interest of the trust beneficiaries of these lands and of the state for the department to pursue a prudent land asset management strategy of diversification within and among various types of natural resource land assets.
     The legislature finds that prior to and following passage of chapter 222, Laws of 1984, the department pursued a limited series of acquisitions of urban commercial real estate property, as part of a broader property diversification strategy directed by that 1984 legislation. Recent studies, including the 2006 report to the legislature, "A Review of the Department of Natural Resources' Commercial Lands Program," confirmed the general prudence of a land asset diversification strategy for state lands, but recommended that to be truly diversifying in effect, the department's program would need to be larger and possessing greater capabilities in professional commercial real estate management. These enhanced capabilities are inconsistent with the traditional and desirable strengths of the department in natural resources and land management.
     The legislature finds that increases in state population and urban development are putting pressure on working forest and farmlands. Continuing loss of these working lands threatens the many environmental, social, and economic benefits these lands provide to the citizens of the state.
     The legislature finds that on state lands managed by the department of natural resources, there is the potential for long-term economic value from nontraditional products and services derived from the natural resources associated with these lands. In addition to income from the sustainable harvest of timber, agricultural products, energy, and other natural resource commodities, these lands also provide water storage, improved water quality, carbon sequestration, biodiversity, habitat, and recreation. These additional values may yield significant long-term returns to the beneficiaries of state lands in the future. The legislature further finds that beneficiaries of these trust lands will have a continuing need for revenue from these lands in the future, and that diversifying in both traditional and new sources of natural resource revenue is a prudent trust management strategy.
     It is the intent of the legislature to confirm the long-term natural resource and land management authority and direction for the department of natural resources, to provide new direction to focus state land management attention on natural resource and land management opportunities best suited to current and future circumstances, and to facilitate land transactions that are in the interests of the state and the beneficiaries of these lands.

NEW SECTION.  Sec. 2   A new section is added to chapter 79.10 RCW under the subchapter heading "general provisions" to read as follows:
     The department may not acquire additional urban commercial properties as state lands after the effective date of this section. The department shall develop a long-term strategy to dispose of the nine existing urban commercial properties and reinvest the proceeds in working natural resource lands that are at risk of conversion or working natural resource lands that will protect and enhance the value of existing trust land holdings. The department shall provide a progress report on the status of divestiture of the urban commercial properties to the appropriate committees of the legislature by December 1, 2012, and shall submit progress reports every five years thereafter.
     When acquiring lands at risk of conversion, the department shall evaluate the investment return for these natural resource lands at risk of conversion by separately determining the investment value of the lands for natural resource management and the value of the lands for development. The department shall provide a report listing the purchases made, and detailing the difference in investment values for the purpose of selling, transferring, or leasing the development rights as permitted in chapter 79.13 RCW. The report must be submitted to the appropriate committees of the legislature by December 1, 2009, and every even year thereafter.
     The department shall also identify in its biennial budget request any added purchase costs from these lands due to the investment in the development value of lands at risk of conversion.

Sec. 3   RCW 79.17.010 and 2008 c 328 s 6012 are each amended to read as follows:
     (1) The department, with the approval of the board, may exchange any state land and any timber thereon for any land of equal value in order to:
     (a) Facilitate the marketing of forest products of state lands;
     (b) Consolidate and block-up state lands;
     (c) Acquire lands having commercial recreational leasing potential;
     (d) Acquire county-owned lands; or
     (e) ((Acquire urban property which has greater income potential or which could be more efficiently managed by the department in exchange for state urban lands as defined in RCW 79.19.100; or
     (f))) Acquire any other lands when such exchange is determined by the board to be in the best interest of the trust for which the state land is held.
     (2) Land exchanged under this section shall not be used to reduce the publicly owned forest land base.
     (3) The board shall determine that each land exchange is in the best interest of the trust for which the land is held prior to authorizing the land exchange.
     (4) ((During the biennium ending June 30, 2009,)) For the purposes of maintaining working farm and forest landscapes or acquiring natural resource lands at risk of development, the department, with approval of the board of natural resources, may exchange any state land and any timber thereon for any land and proceeds of equal value, when it can be demonstrated that the trust fiduciary obligations can be better fulfilled after an exchange is completed. Proceeds may be in the form of cash or services in order to achieve the purposes established in this section. Any cash received as part of an exchange transaction shall be deposited in the resource management cost account to pay for ((administrative)) expenses incurred in ((carrying out)) implementing an exchange transaction. The amount of proceeds received from the exchange partner may not exceed five percent of the total value of the exchange. The receipt of proceeds shall not change the character of the transaction from an exchange to a sale.
     (5) Prior to executing an exchange under this section, and in addition to the public notice requirements set forth in RCW 79.17.050, the department shall consult with legislative members, other state and federal agencies, local governments, tribes, local stakeholders, conservation groups, and any other interested parties to identify and address cultural resource issues and the potential of the state lands proposed for exchange to be used for open space, park, school, or critical habitat purposes.

Sec. 4   RCW 79.17.020 and 2008 c 328 s 6013 are each amended to read as follows:
     (1) The board of county commissioners of any county and/or the mayor and city council or city commission of any city or town and/or the board shall have authority to exchange, each with the other, or with the federal forest service, the federal government or any proper agency thereof and/or with any private landowner, county land of any character, land owned by municipalities of any character, and state forest land owned by the state under the jurisdiction of the department, for real property of equal value for the purpose of consolidating and blocking up the respective land holdings of any county, municipality, the federal government, or the state of Washington or for the purpose of obtaining lands having commercial recreational leasing potential.
     (2) ((During the biennium ending June 30, 2009,)) For the purposes of maintaining working farm and forest landscapes or acquiring natural resource lands at risk of development, the department, with approval of the board of natural resources, may exchange any state land and any timber thereon for any land and proceeds of equal value, when it can be demonstrated that the trust fiduciary obligations can be better fulfilled after an exchange is completed. Proceeds may be in the form of cash or services in order to achieve the purposes established in this section. Any cash received as part of an exchange transaction shall be deposited in the forest development account to pay for ((administrative)) expenses incurred in ((carrying out)) implementing an exchange transaction. The amount of proceeds received from the exchange partner may not exceed five percent of the total value of the exchange. The receipt of proceeds shall not change the character of the transaction from an exchange to a sale.
     (3) Prior to executing an exchange under this section, and in addition to the public notice requirements set forth in RCW 79.17.050, the department shall consult with legislative members, other state and federal agencies, local governments, tribes, local stakeholders, conservation groups, and any other interested parties to identify and address cultural resource issues, and the potential of the state lands proposed for exchange to be used for open space, park, school, or critical habitat purposes.

Sec. 5   RCW 79.17.200 and 1992 c 167 s 2 are each amended to read as follows:
     (1) For the purposes of this section, "public agency" means any agency, political subdivision, or unit of local government of this state including, but not limited to, municipal corporations, quasi-municipal corporations, special purpose districts, and local service districts; any agency of the state government; any agency of the United States; and any Indian tribe recognized as such by the federal government.
     (2) With the approval of the board of natural resources, the department of natural resources may directly transfer, lease, or dispose of real property, without public auction, in the following circumstances:
     (a) Transfers in lieu of condemnations;
     (b) Transfers or leases to public agencies; ((and))
     (c) Transfers to resolve trespass and property ownership disputes; and
     (d) Transfers to convey currently leased homesites to the owner of the home and improvements.
     (3) Real property to be transferred, leased, or disposed of under this section shall be transferred, leased, or disposed of only after appraisal and for at least fair market value, and only if such transaction is in the best interest of the state or affected trust.

Sec. 6   RCW 79.19.010 and 2003 c 334 s 525 are each amended to read as follows:
     The legislature finds that from time to time it may be desirable for the department to sell state lands ((which)) or development rights from state natural resource lands at risk of conversion that have low potential for natural resource management or low income-generating potential or which, because of geographic location or other factors, are inefficient for the department to manage. However, it is also important to acquire lands for long-term management to replace those sold so that the publicly owned natural resource land base will ((not)) be ((depleted)) enhanced and the publicly owned forest land base will not be reduced. The purpose of this chapter is to provide a means to facilitate such sales and purchases so that the diversity of public uses on the trust lands will be maintained. In making the determinations, the department shall comply with local land use plans and applicable growth management principles.

Sec. 7   RCW 79.19.020 and 2003 c 334 s 526 are each amended to read as follows:
     The department, with the approval of the board, may purchase property at fair market value to be held in a land bank, which is hereby created within the department. Property so purchased shall be property which would be desirable for addition to the public lands of the state because of the potential for natural ((resource or)) resource-based income production of the property. The total acreage held in the land bank shall not exceed one thousand five hundred acres.

NEW SECTION.  Sec. 8   A new section is added to chapter 79.19 RCW to read as follows:
     The department shall manage forest lands acquired under this chapter under the sustainable harvest plan. Lands that were at risk of conversion, and that were acquired or retained as working forest lands, and for which development rights were transferred or leased must be managed at a level equal to or greater than seventy-five percent of the expected harvest under the sustainable harvest plan. The department shall identify in its biennial budget request any shortfall in income from these lands due to harvest levels less than the expected sustainable harvest level.

NEW SECTION.  Sec. 9   This act does not affect any existing right acquired or liability or obligation incurred under the sections amended or under any rule or order adopted under those sections nor does it affect any proceeding instituted under those sections.

NEW SECTION.  Sec. 10   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.