Current through Register Vol. 24-18, September 15, 2024
All requirements in this section shall apply to the
department and to port districts managing aquatic lands under a
management agreement (WAC
332-30-114) . The
annual rental for water-dependent use leases of state-owned aquatic
land shall be: The per unit assessed value of the upland tax parcel,
exclusive of improvements, multiplied by the units of lease area
multiplied by thirty percent multiplied by the real rate of return.
Expressed as a formula, it is: UV x LA x .30 x r = AR. Each of the
letter variables in this formula have specific criteria for their use
as described below. This step by step presentation covers the typical
situations within each section first, followed by alternatives for
more unique situations.
(1)
Overall considerations.
(a) Criteria for use of formula.
The formula:
(i) Shall be applied to
all leases for water-dependent uses, except as otherwise provided by
statute;
(ii) Shall not
be used for areas of filled state-owned aquatic lands having upland
characteristics where the department can charge rent for such fills
(see WAC
332-30-125) , renewable
and nonrenewable resource uses, or areas meeting criteria for public
use (see WAC 332-30-130); and
(iii) Shall cease being used for
leases intended for water-dependent uses when the lease area is not
actively developed for such purposes as specified in the lease
contract. Rental in such situations shall be determined under the
appropriate section of this chapter.
(b) Criteria for applicability to
leases. The formula shall be used to calculate rentals for:
(i) All new leases and all pending
applications to lease or re-lease as of October 1, 1984;
(ii) All existing leases, where the
lease allows calculation of total rent by the appropriate department
methods in effect at the time of rental adjustment. Leases in this
category previously affected by legislated rental increase limits,
shall have the formula applied on the first lease anniversary date
after September 30, 1984. Other conditions of these leases not
related to rent shall continue until termination or amendment as
specified by the lease contract. Leases in this category not
previously affected by legislated rental increase limits and
scheduled for a rent adjustment after October 1, 1985, shall have the
option of retaining the current rent or electing to pay the formula
rent under the same conditions as specified in (iii) of this
subsection.
(iii) Leases
containing specific rent adjustment procedures or schedules shall
have the rent determined by the formula when requested by the lessee.
Holders of such leases shall be notified prior to their lease
anniversary date of both the lease contract rent and formula rent. A
selection of the formula rent by the lessee shall require an
amendment to the lease which shall include all applicable aquatic
land laws and implementing regulations.
(2)
Physical
criteria of upland tax parcels.
(a) The upland tax parcel used
shall be used in conjunction with the leased area and have some
portion with upland characteristics. The upland tax parcel shall be
waterfront, except that if the waterfront parcel's assessed value is
inconsistent with the purposes of the lease as described in
subsection (3) of this section, and there is a landward parcel also
used in conjunction with the leased area that meets all the criteria
in this subsection (2) and is consistent with the purposes of the
lease as described in subsection (3) of this section, then such
landward parcel shall be used. If no upland tax parcel meets these
criteria, then an alternative shall be selected under the criteria of
subsection (4) of this section. For the purposes of this section,
"upland characteristics" means fill or other improvements or
alterations that allow for development of the property as if it were
uplands and that have been valued by the county assessor as
uplands.
(b) For leases
without a physical connection with upland property (for example, open
water moorage and anchorage areas, or mitigation or conservation
sites not abutting the shoreline), the upland tax parcel used shall:
(i) If the lease is associated with
a local upland facility, be an appropriate parcel at the facility;
or
(ii) If the lease is
of the same use class within the water-dependent category (as listed
in subsection (4) of this section) as at least one other lease within
the county that is associated with a local upland facility, be an
appropriate parcel at the nearest such facility; or
(iii) If there is no such local
upland facility, be an alternate parcel selected under the criteria
of subsection (4) of this section.
(c) Priority of selection. If more
than one upland tax parcel meets the physical criteria, the priority
of selection shall be:
(i) The
parcel that is structurally connected to the lease area;
(ii) The parcel that abuts the
lease area;
(iii) The
parcel closest in distance to the lease area.
If more than one upland tax parcel remains after this
selection priority, then each upland tax parcel will be used for its
portion of the lease area. If there is mutual agreement with the
lessee, a single upland tax parcel may be used for the entire lease
area. When the unit value of the upland tax parcels are equal, only
one upland tax parcel shall be used for the lease area.
(d) The unit
value of the upland tax parcel shall be expressed in terms of dollars
per square foot or dollars per acre, by dividing the assessed value
of the upland tax parcel by the number of square feet or acres in the
upland tax parcel. This procedure shall be used in all cases even if
the value attributable to the upland tax parcel was assessed using
some other unit of value, e.g., front footage, or lot value. Only the
"land value" category of the assessment record shall be used; not any
assessment record category related to improvements.
(3)
Consistent
assessment. In addition to the criteria in subsection (2) of
this section, the upland tax parcel's assessed value must be
consistent with the purposes of the lease. On this basis, the
following situations are examples, but are not an exclusive list, of
what the department will consider inconsistent and shall either
require adjustment as specified, or selection of an alternative
upland tax parcel under subsection (4) of this section:
(a) The upland tax parcel is not
assessed. (See
chapter 84.36 RCW
Exemptions);
(b) Official
date of assessment is more than four years old. (See
RCW 84.41.030
);
(c) The "assessment"
results from a special tax classification or other adjustment by the
county assessor not reflecting fair market value as developable
upland property. Examples include classifications under:
State-regulated utilities (chapter 84.12 RCW), Timber and forest
lands (chapter 84.33 RCW), and Open space (chapter
84.34 RCW). This
inconsistency may be corrected by substituting the fair market value
for the parcel if such value is part of the assessment
records;
(d) If the
assessed valuation of the upland tax parcel to be used is under
appeal as a matter of record before any county or state agency, the
valuation on the assessor's records shall be used, however, any
changes in valuation resulting from such appeal will result in an
equitable adjustment of future rental;
(e) The majority of the upland tax
parcel area is not used in conjunction with a water-dependent use.
This inconsistency may be corrected by using the value and area of
the portion of the upland tax parcel that is used in conjunction with
water-dependent use if this portion can be segregated from the
assessment records; and
(f) The size of the upland tax
parcel in acres or square feet is not known or its small size results
in a nominal valuation, e.g., unbuildable lot; and
(g) The assessed value reflects the
presence of contamination on the uplands, when the contamination on
the uplands does not impair the use of the leasehold. This
inconsistency may be corrected by substituting the full value for the
upland parcel as if there were no contamination, if such value is
part of the assessment records.
(4)
Selection of the nearest
comparable upland tax parcel. When the upland tax parcel does
not meet the physical criteria or has an inconsistent assessment that
can't be corrected from the assessment records, an alternative upland
tax parcel shall be selected which meets the criteria. The nearest
upland tax parcel shall be determined by measurement along the
shoreline from the inconsistent upland tax parcel.
(a) The alternative upland tax
parcel shall be located by order of selection priority:
(i) Within the same city as the
lease area, and if not applicable or found;
(ii) Within the same county and
water body as the lease area, and if not found;
(iii) Within the same county on
similar bodies of water, and if not found;
(iv) Within the state.
(b) Within each
locational priority of (a) of this subsection, the priority for a
comparable upland tax parcel shall be:
(i) The same use class within the
water-dependent category as the lease area use. For the purposes of
this section, some examples of use classes include:
(A) Marinas and recreational
moorage, including recreational boat launches and local upland
facilities for open water moorage;
(B) Industrial and commercial
shipping terminals and moorage;
(C) Conservation and natural
resource protection areas;
(D) Mitigation sites; and
(E) For water-oriented floating
homes, the same use class means any floating home;
(ii) Any water-dependent
use within the same upland zoning;
(iii) Any water-dependent use;
and
(iv) Any
water-oriented use.
(5)
Aquatic land lease area.
The area under lease shall be expressed in square feet or
acres.
(a) Where more than one use
class separately exist on a lease area, the formula shall only be
applied to the water-dependent use area. Other use areas of the lease
shall be treated according to the regulations for the specific
use.
(b) If a
water-dependent and a nonwater-dependent use exist on the same
portion of the lease, the rent for such portion shall be negotiated
taking into account the proportion of the improvements each use
occupies.
(6)
Real rate of return.
(a) Until July 1, 1989, the real
rate of return to be used in the formula shall be five
percent.
(b) On July 1,
1989, and on each July 1 thereafter the department shall calculate
the real rate of return for that fiscal year under the following
limitations:
(i) It shall not
change by more than one percentage point from the rate in effect for
the previous fiscal year; and
(ii) It shall not be greater than
seven percent nor less than three percent.
(7)
Annual
inflation adjustment of rent. The department shall use the
inflation rate on a fiscal year basis e.g., the inflation rate for
calendar year 1984 shall be used during the period July 1, 1985
through June 30, 1986. The rate will be published in a newspaper of
record. Adjustment to the annual rent of a lease shall occur on the
anniversary date of the lease except when the rent is redetermined
under subsection (9) of this section. The inflation adjustment each
year is the inflation rate times the previous year's rent except in
cases of stairstepping.
(8)
Stairstepping rental
changes.
(a) Initial
increases for leases in effect on October 1, 1984. If the application
of the formula results in an increase of more than one hundred
dollars and more than thirty-three percent, stairstepping to the
formula rent shall occur over the first three years in amounts equal
to thirty-three percent of the difference between each year's
inflation adjusted formula rent and the previous rent.
|
Example
|
|
|
|
Previous rent = $100.00
|
Formula rent = $403.00
|
Inflation = 5%/yr.
|
|
Yr.
|
Formula
Rent
|
Previous Rent
|
Difference
|
33%
|
Stairstep
Rent
|
|
1
|
$403.00
|
|
$100.00
|
|
$303.00
|
|
$100.00
|
|
$200.00
|
|
|
2
|
423.15
|
|
100.00
|
|
323.15
|
|
106.64
|
|
306.64
|
|
|
3
|
444.31
|
|
100.00
|
|
344.31
|
|
113.62
|
|
420.26
|
|
|
4
|
466.52
|
|
-
|
|
-
|
|
-
|
|
466.52
|
|
(b) Initial decreases for leases in
effect on October 1, 1984. If the application of the formula results
in a decrease of more than thirty-three percent, stairstepping to the
formula rent shall occur over the first three years in amounts equal
to thirty-three percent of the difference between the previous rent
and each year's inflation adjusted formula rent.
|
Example
|
|
|
Previous rent = $403.00
|
Formula rent = $100.00
|
Inflation = 5%/yr.
|
|
Yr.
|
Previous Rent
|
Formula Rent
|
Difference
|
33%
|
Stairstep
Rent
|
|
1
|
$403.00
|
|
$100.00
|
|
$303.00
|
|
$100.00
|
|
$303.00
|
|
|
2
|
403.00
|
|
105.00
|
|
298.00
|
|
98.34
|
|
204.66
|
|
|
3
|
403.00
|
|
110.25
|
|
292.75
|
|
96.61
|
|
108.05
|
|
|
4
|
-
|
|
115.76
|
|
-
|
|
-
|
|
115.76
|
|
(c) If a lease in effect on October
1, 1984, contains more than one water-dependent or water-oriented use
and the rental calculations for each such use (e.g., log booming and
log storage) result in different rentals per unit of lease area, the
total of the rents for those portions of the lease area shall be used
to determine if the stairstepping provisions of (a) or (b) of this
subsection apply to the lease.
(d) If a lease in effect on October
1, 1984, contains a nonwater-dependent use in addition to a
water-dependent or oriented use, the stairstepping provisions of (a)
or (b) of this subsection:
(i) Shall
apply to the water-dependent use area if it exists separately (see
subsection (5)(a) of this section);
(ii) Shall not apply to any portion
of the lease area jointly occupied by a water-dependent and
nonwater-dependent use (see subsection (5)(b) of this
section).
(e)
Subsequent increases. After completion of any initial stairstepping
under (a) and (b) of this subsection due to the first application of
the formula, the rent for any lease or portion thereof calculated by
the formula shall not increase by more than fifty percent per unit
area from the previous year's per unit area rent.
(f) All initial stairstepping of
rentals shall only occur during the term of existing
leases.
(9)
The annual rental shall be redetermined by the formula every four
years or as provided by the existing lease language. If an existing
lease calls for redetermination of rental during an initial
stairstepping period, it shall be determined on the scheduled date
and applied (with inflation adjustments) at the end of the initial
stairstep period.
Statutory Authority:
RCW 79.105.360,
79.105.320. 06-18-082,
§ 332-30-123, filed 9/5/06, effective 10/6/06. Statutory
Authority:
RCW 79.105.360.
06-06-005 (Order 724), § 332-30-123, filed 2/16/06, effective
3/19/06. Statutory Authority: RCW 79.90.540. 05-23-033, §
332-30-123, filed 11/8/05, effective 12/9/05. Statutory Authority:
1984 c 221 and RCW 79.90.540. 84-23-014 (Resolution No. 470), §
332-30-123, filed
11/9/84.
