The Department of Natural Resources (DNR) manages a number of different categories of land, each for a specific purpose and under different management requirements. This includes approximately 3 million acres of federally granted lands and state forestlands, which the DNR manages to support common schools, counties, and other public institutions.
The DNR has the authority to lease state lands for various purposes, including commercial, industrial, residential, agricultural, and recreational uses, in order to obtain a fair-market rental return to the state or appropriate trust.
The DNR generally may not lease state lands for longer than 10 years, although longer leases are specifically authorized in multiple instances. Leases for general agricultural purposes may not exceed 25 years, and leases for tree fruit or grape production may be for up to 55 years. Leases for commercial, industrial, business, or recreational purposes may also be for up to 55 years.
The maximum length of a lease of land managed by the Department of Natural Resources, where the purpose of the lease is for commercial, industrial, business, or recreational purposes, is changed from 55 years to 99 years.
(In support) The bill is intended to make the Department of Natural Resources (DNR) more competitive when trying to lease trust property for commercial purposes. The DNR manages a portfolio of land assets granted to the state at statehood and is required to put them to their most productive use. Some lands managed by the DNR are zoned for commercial or industrial uses. The construction of a building on leased land requires financing and banks want to see longer lease terms in order to finance the construction. For banks, a 55-year lease is too short; the term needs to be longer. This change in the law would result in increased lease rates and revenue to the trust.
One of the biggest challenges in land development is getting financing. Long-term leases are much more attractive for development and financing than short term leases. This change would make state properties much more competitive in the marketplace. With a short-term lease, when the lease nears the end of its term, building owners tend to stop investing in maintenance because they know they are going to lose the lease.