SENATE BILL REPORT

SSB 5075

BYSenate Committee on Natural Resources (originally sponsored by Senators Peterson and Owen)

Making historic preservation a priority use of state-owned aquatic lands.

Senate Committee on Natural Resources

Senate Hearing Date(s):January 27, 1987; January 28, 1987

Majority Report:  That Substitute Senate Bill No. 5075 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Owen, Chairman; DeJarnatt, Vice Chairman; Barr, Craswell, McDonald, Metcalf, Stratton.

Senate Staff:Kaleen Cottingham (786-7415)

                  March 11, 1987

AS PASSED SENATE, MARCH 10, 1987

BACKGROUND:

Article 17 of the State Constitution asserts Washington's ownership of its aquatic beds and shores.  With the exception of tidelands associated with harbor areas, there was no constitutional provision prohibiting the sale of tidelands or shorelands.  Shortly after attaining statehood, amidst an atmosphere of intense growth and development, the state began selling these lands into private ownership.  Between 1889 and 1971, the state sold an estimated 61 percent of its tidelands and 30 percent of its shorelands.

In 1971, the state Legislature prohibited further sale of first and second class tidelands, except to public entities.  The Legislature determined that the state should retain and wisely manage its remaining aquatic lands for the public.

The Department of Natural Resources (DNR) management statutes during the 1970's required aquatic lease rental fees be adjusted every five years.  The rental fees were calculated as a percentage of the appraised value.  During the mid-1970's, rapid inflation, in addition to the great escalation of waterfront value, caused the fair market value appraisal to skyrocket.  The DNR was mandated to adjust the rental rates accordingly.

In 1979, in response to these skyrocketing five-year reappraisals of harbor leases, the Legislature passed SSB 2284 which limited the annual rent increases for harbor area leases to a rate of not more than 6 percent per year.  In 1982, the Legislature expanded the 6 percent limitation to all aquatic leases.

In 1984, the Legislature adopted 2SHB 1231 (codified in RCW 79.90).  The Aquatic Land Act establishes the management philosophy for the state's aquatic lands, establishes lease rates, and sets up an informal appeals process.

The 1984 aquatic lands legislation established rents based on water-dependent or nonwater-dependent uses.  Water-dependent uses (shipping piers, marinas, launching facilities, etc.) are given a special lease rate based on 30 percent of the unimproved upland assessed value and a capitalization rate which will begin at 5 percent the first years and later fluctuate based on the mortgage and inflation rates.  Traditional waterfront uses such as timber, fish or oil processing, which have been historically located on the waterfront, are not technically water-dependent uses but are grandfathered at water-dependent use rates.  Nonwater-dependent uses (hotels, restaurants, etc.) are to be charged rent based on fair market value.  Public recreation is exempt from lease payments.

The upland value, upon which the rates are based, is determined by the county appraiser in each county.  The appraisal is bare land value (i.e., exclusive of improvements).

The DNR is required to provide for an administrative review of any proposed rent to be charged.  Additionally, nothing in the 1984 act precludes a lessee from either administrative review under the Administrative Procedure Act (RCW 34.04) or any other legal remedies.

Building owners in the town of La Conner feel that the aquatic lease rental rates established for the west half of this historic town may impact its continued viability as a "tourist attraction."

SUMMARY:

State-owned aquatic land within fourth class cities which lies below property listed on the National Register of Historic Places shall be leased at rates determined for water-dependent uses rather than rates for nonwater-dependent uses.

Fiscal Note:      available

Senate Committee - Testified: Representative Spanel; Dan O'Donnell; Fred Martin; Larry Collings; Kirby Johnson; Pat McElroy, Department of Natural Resources; David Bortz, Department of Natural Resources