BILL REQ. #:  S-1678.3 

Read first time 02/19/2007.   Referred to Committee on Natural Resources, Ocean & Recreation.

     AN ACT Relating to state trust lands; amending RCW 79.13.010, 79.13.060, 79.13.110, 79.17.200, 79.19.010, 79.19.020, 79.19.030, 79.19.070, and 79.19.080; reenacting and amending RCW 79.17.010 and 79.17.020; adding a new section to chapter 79.10 RCW; adding a new section to chapter 79.17 RCW; and creating new sections.

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

NEW SECTION.  Sec. 1   (1) The legislature finds that state demographic, economic, environmental, and climate trends result in a need to change management policies of state lands. Recent studies indicate that a continuing loss of working timber lands may threaten the long-term outlook for the state's timber products industry. The majority of revenues from state lands are derived from the harvest of timber. The economic activity and jobs in the timber products industry also produce other tax revenues important to local communities and the beneficiaries of income from state lands. Continuation of this primary source of revenue is dependent on the continued viability of the state's timber products industry.
     (2) The legislature also finds that long-term growth in state population and pressures from environmental and climate changes will create important new values derived from state natural resource lands. In addition to income from the sustainable harvest of timber, these lands also provide water storage, improved water quality, carbon sequestration, habitat, and recreation. These additional values are likely to yield very significant long-term investment returns to the beneficiaries of state lands and to all the people of the state.
     (3) The legislature also finds that increased investment of state land assets in commercial properties over the past twenty years has not achieved a significant diversification of the state land portfolio. The acquisition of commercial properties has not sufficiently increased revenues to keep pace with the growth in the state school construction budget. Other state revenues have filled the gap between income from state lands and the total school construction budget. In order for commercial land holdings to provide sufficient revenues to reverse the decline in the percentage of the school construction budget that is supported by state land revenues, significant portions of state natural resource lands would have to be sold or transferred. The loss of those working natural resource lands would threaten the viability of industries and communities dependent on these lands and would threaten the main source of revenues to the beneficiaries of state lands. Furthermore, commercial land holdings yield none of the long-term benefits derived from state natural resource lands.
     (4) The long-term stewardship of state lands requires a planning and investment horizon that considers demographic, economic, environmental, and climate trends of fifty to one hundred years or more. Long-term stewardship of state lands balances the need for short-term income with an equal focus on long-term benefits from state lands for future generation.
     (5) The legislature intends to preserve and enhance state land holdings of working natural resource lands to achieve a sustained and perpetual return for current and future generations of beneficiaries of state lands. The long-term stewardship of state lands will also benefit the communities that depend on these lands, and all the people of the state.

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 shall not acquire additional commercial properties as state lands after the effective date of this section. The department, in cooperation with the state investment board, shall develop a plan to transition commercial properties to the state investment board or to land-holding firms on behalf of the state investment board, or to dispose of the commercial properties and reinvest the proceeds in working natural resource lands that are at high risk of conversion out of working timber land status. The department shall evaluate the investment return for these natural resource lands at risk of conversion by also including the value of leasing development rights as permitted in chapter 79.13 RCW. The legislature intends that this transition will be complete by June 30, 2013. The department shall submit the transition plan to the appropriate committees of the legislature by December 1, 2008, and shall submit progress reports showing implementation of the plan by December 1, 2010, and December 1, 2012.

Sec. 3   RCW 79.13.010 and 2003 c 334 s 366 are each amended to read as follows:
     (1) Subject to other provisions of this chapter and subject to rules adopted by the board, the department may lease state lands for purposes it deems advisable, including, but not limited to, commercial, industrial, residential, agricultural, and recreational purposes in order to obtain a fair market rental return to the state or the appropriate constitutional or statutory trust.
     (2) Notwithstanding any provision in this chapter to the contrary, in leases for residential purposes, the board may waive or modify any conditions of the lease if the waiver or modification is necessary to enable any federal agency or lending institution authorized to do business in this state or elsewhere in the United States to participate in any loan secured by a security interest in a leasehold interest.
     (3) Any land granted to the state by the United States may be leased for any lawful purpose in such minimum acreage as may be fixed by the department.
     (4) The department shall exercise general supervision and control over the lease of state lands for any lawful purpose.
     (5) State lands leased or for which permits are issued or contracts are entered into for the prospecting and extraction of valuable materials, coal, oil, gas, or other hydrocarbons are subject to the provisions of chapter 79.14 RCW.
     (6) The department may also lease state lands or development rights on state lands to public agencies, as defined in RCW 79.17.200.

Sec. 4   RCW 79.13.060 and 2003 c 334 s 323 are each amended to read as follows:
     (1) State lands may be leased not to exceed ten years with the following exceptions:
     (a) The lands may be leased for agricultural purposes not to exceed twenty-five years, except:
     (i) Leases that authorize tree fruit or grape production may be for up to fifty-five years;
     (ii) Share crop leases may not exceed ten years;
     (b) The lands may be leased for commercial, industrial, business, or recreational purposes not to exceed fifty-five years;
     (c) The lands may be leased for public school, college, or university purposes not to exceed seventy-five years; ((and))
     (d) The lands may be leased for residential purposes not to exceed ninety-nine years; and
     (e) The lands and development rights on state lands may be leased to public agencies, as defined in RCW 79.17.200, not to exceed ninety-nine years. The leases may also include provisions for renewal of lease terms.
     (2) No lessee of state lands may remain in possession of the land after the termination or expiration of the lease without the written consent of the department.
     (a) The department may authorize a lease extension for a specific period beyond the term of the lease for cropping improvements for the purpose of crop rotation. These improvements shall be deemed authorized improvements under RCW 79.13.030.
     (b) Upon expiration of the lease term, the department may allow the lessee to continue to hold the land for a period not exceeding one year upon such rent, terms, and conditions as the department may prescribe, if the leased land is not otherwise utilized.
     (c) Upon expiration of the one-year lease extension, the department may issue a temporary permit to the lessee upon terms and conditions it prescribes if the department has not yet determined the disposition of the land for other purposes.
     (d) The temporary permit shall not extend beyond a five-year period.
     (3) If during the term of the lease of any state lands for agricultural, grazing, commercial, residential, business, or recreational purposes, in the opinion of the department it is in the best interest of the state so to do, the department may, on the application of the lessee and in agreement with the lessee, alter and amend the terms and conditions of the lease. The sum total of the original lease term and any extension thereof shall not exceed the limits provided in this section.

Sec. 5   RCW 79.13.110 and 2003 c 334 s 368 are each amended to read as follows:
     (1) The department may authorize the use of state land by lease at state auction for initial leases or by negotiation for existing leases.
     (2) Leases that authorize commercial, industrial, or residential uses may be entered into by public auction or negotiations at the option of the department. Negotiations are subject to rules approved by the board.
     (3) Leases to public agencies, as defined in RCW 79.17.200, may be entered into by negotiations. The leases may allow for a lump sum payment for the entire term of the lease at the beginning of the lease. The department shall consider the appraised fair market value of the land minus the present value of the residual value of the land at the end of the lease in calculating the lump sum payment. Renewal terms for the leases must include provisions for calculating appropriate payments upon renewal.

Sec. 6   RCW 79.17.010 and 2003 1st sp.s. c 25 s 939 and 2003 c 334 s 452 are each reenacted and 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; or
     (b) Consolidate and block-up state timber, agricultural, or other natural resource lands((;
     (c) Acquire lands having commercial recreational leasing potential;
     (d) Acquire county-owned lands;
     (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, 2005)) To achieve the purposes of this section, the department, with approval of the board, may exchange any state land and any timber thereon for any land and proceeds of equal value. 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 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.

Sec. 7   RCW 79.17.020 and 2003 1st sp.s. c 25 s 937 and 2003 c 334 s 209 are each reenacted and 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, 2005,)) The department, with approval of the board, may exchange any state forest land and any timber thereon for any real property and proceeds of equal value. 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 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.

Sec. 8   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.
     (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. 9   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 have low potential for ((natural resource management or low income-generating potential)) long-term stewardship of state natural resource lands 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)) enhanced. 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,)) benefits of long-term stewardship of state natural resource lands are achieved in perpetuity. The department shall comply with local land use plans and applicable growth management principles when selling or acquiring state lands.

Sec. 10   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 income production of the property)) that has potential for long-term stewardship of natural resource values. The total acreage held in the land bank shall not exceed one thousand five hundred acres.

Sec. 11   RCW 79.19.030 and 2004 c 199 s 215 are each amended to read as follows:
     The department, with the approval of the board, may:
     (1) Exchange property held in the land bank for any other lands of equal value administered by the department, including any lands held in trust((.));
     (2) Exchange property held in the land bank for property of equal or greater value which is owned publicly or privately, and which has greater potential for ((natural resource or income production)) the long-term stewardship of state natural resource lands or which could be more efficiently managed by the department, however, no power of eminent domain is hereby granted to the department; and
     (3) Sell property held in the land bank in the manner provided by law for the sale of state lands without any requirement of platting and to use the proceeds to acquire property for the land bank which has greater potential for ((natural resource or income production)) long-term stewardship of state natural resource lands or which would be more efficiently managed by the department.

Sec. 12   RCW 79.19.070 and 1984 c 222 s 7 are each amended to read as follows:
     (1) There is created a land bank ((technical)) advisory committee, consisting of ((three)) eight members. Membership shall consist of: One member qualified by experience and training in matters pertaining to land use planning and real estate appointed by the commissioner of public lands, one member qualified by experience and training in public trust matters appointed by the superintendent of public instruction, ((and)) one member qualified by experience and training in financial matters appointed by the state treasurer, and five members appointed by the governor representing a small forest landowner, an industrial forest landowner, a land conservancy organization involved in preserving working timber lands, a local government representative from a high growth urban area, and a local government representative from a rural area with a significant timber products industry.
     (2) The ((technical)) advisory committee shall provide professional advice and counsel to the board of natural resources regarding land bank sales, purchases, and exchanges involving urban property.
     (3) Members of the ((technical)) advisory committee shall be appointed for five-year terms and shall serve until a successor is appointed. In the case of a vacancy the vacancy shall be filled by the appointing authority. The initial term of the appointee of the commissioner shall expire in three years. The initial term of the appointee of the superintendent shall expire in four years. The initial term of the appointee of the treasurer shall expire in five years. The initial terms of two appointees by the governor shall expire in three years. All terms expire December 31st.
     (4) Members of the ((technical)) advisory committee shall be reimbursed for travel expenses incurred in the performance of their duties under RCW 43.03.050 and 43.03.060.

Sec. 13   RCW 79.19.080 and 2003 c 334 s 531 are each amended to read as follows:
     Periodically, at intervals to be determined by the board, the department shall identify trust lands which are within urban growth boundaries or which are expected to convert to commercial, residential, or industrial uses within ten years. The department shall adhere to existing local comprehensive plans, zoning classifications, and duly adopted local policies when making this identification and determining the fair market value of the property. The department shall prepare a list of such properties with the amount of acreage, the approximate value as working natural resource lands compared to the approximate value if the land converts to an alternative use, the long-term natural resource values of the land, and proposed alternative uses of the land. For properties with significant natural resource values, the department shall estimate the price for leasing development rights under chapter 79.13 RCW that would be required to retain the lands as working natural resource lands while providing a rate of return comparable to other natural resource lands. The land bank advisory committee shall review the list of properties and shall recommend the appropriate future use of these properties. The land bank advisory committee shall prioritize retention of working natural resource lands at risk of conversion through the use of transfers or leases of development rights. The land bank advisory committee may also recommend lands within urban growth boundaries for the high growth school district land pool specified in section 14 of this act.
     The department shall hold a public hearing on the proposal in the county where the state land is located. At least fifteen days but not more than thirty days before the hearing, the department shall publish a public notice of reasonable size in display advertising form, setting forth the date, time, and place of the hearing, at least once in one or more daily newspapers of general circulation in the county and at least once in one or more weekly newspapers circulated in the area where the trust land is located. At the same time that the published notice is given, the department shall give written notice of the hearings to the departments of fish and wildlife and general administration, to the parks and recreation commission, and to the county, city, or town in which the property is situated. The department shall disseminate a news release pertaining to the hearing among printed and electronic media in the area where the trust land is located. The public notice and news release also shall identify trust lands in the area which are expected to convert to commercial, residential, or industrial uses within ten years.
     A summary of the testimony presented at the hearings shall be prepared for the board's consideration. The board shall designate trust lands which are expected to convert to commercial, residential, or industrial uses as urban land. Descriptions of lands designated by the board shall be made available to the county and city or town in which the land is situated and for public inspection and copying at the department's administrative office in Olympia, Washington and at each area office.
     ((The hearing and notice requirements of this section apply to those trust lands which have been identified by the department prior to July 1, 1984, as being expected to convert to commercial, residential, or industrial uses within the next ten years, and which have not been sold or exchanged prior to July 1, 1984.))

NEW SECTION.  Sec. 14   A new section is added to chapter 79.17 RCW to read as follows:
     The legislature finds that high growth school districts are often unable to acquire lands best suited for siting new schools because current funding capacity is devoted to current needs. Once a new school is required in a community, districts that were unable to purchase land in advance of population growth must piece together multiple parcels at a high cost and in locations that are not optimal considering transportation needs and proximity to neighborhoods. The department shall coordinate with the superintendent of public instruction to assist high growth school districts in acquiring land suitable for future school sites. The superintendent of public instruction shall identify high growth school districts and shall accept applications from these school districts for land acquisition assistance. The department may use existing state land parcels if appropriate, may acquire preferred parcels with land replacement funds, or may trade state lands for preferred parcels. The department shall hold these future school site parcels as state lands based on an agreement reached with the school districts for future development. The agreements must define the methodology for determining fair market value of the land at the time the school district desires to develop the site. The agreements must also specify how long the land will be held as state land and the means of disposing of the land if it no longer is desirable as a school location.

NEW SECTION.  Sec. 15   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. 16   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.