2000 Legislation
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SENATE BILL NO. 1446 – State land leases, payment method

SENATE BILL NO. 1446

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S1446..........................................by RESOURCES AND ENVIRONMENT
STATE LAND - LEASES - Amends existing law to provide that the State Board
of Land Commissioners may provide that rentals for commercial leases and
cottage site leases, and some other leases, may be paid by the date and
upon the terms set by the board in the lease.
                                                                        
02/17    Senate intro - 1st rdg - to printing
02/18    Rpt prt - to Res/Env
02/28    Rpt out - rec d/p - to 2nd rdg
02/29    2nd rdg - to 3rd rdg
03/07    3rd rdg - PASSED - 31-0-4
      AYES--Andreason, Boatright, Bunderson, Burtenshaw, Cameron, Crow,
      Danielson, Darrington, Deide, Dunklin, Geddes, Hawkins, Ingram,
      Ipsen, Keough, Lee, McLaughlin, Noh, Richardson, Riggs, Risch, Sandy,
      Schroeder, Sorensen, Stegner, Stennett, Thorne, Walton, Wheeler,
      Whitworth, Williams
      NAYS--None
      Absent and excused--Davis, Frasure, King-Barrutia, Parry
    Floor Sponsor - Schroeder
    Title apvd - to House
03/08    House intro - 1st rdg - to Res/Con
03/10    Rpt out - rec d/p - to 2nd rdg
03/13    2nd rdg - to 3rd rdg
03/23    3rd rdg - PASSED - 64-0-6
      AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Boe, Bruneel,
      Callister, Campbell, Chase, Cheirrett, Clark, Crow, Cuddy, Denney,
      Ellsworth, Field(13), Field(20), Gagner, Geddes, Hadley, Hammond,
      Hansen(23), Hansen(29), Hornbeck, Jaquet, Jones, Judd, Kellogg,
      Kempton, Kendell, Kunz, Lake, Linford, Loertscher, Mader, Marley,
      McKague, Meyer, Montgomery, Mortensen, Moss, Moyle, Pearce, Pischner,
      Pomeroy, Reynolds, Ridinger, Ringo, Robison, Sali, Schaefer, Sellman,
      Shepherd, Smith, Smylie, Stevenson, Stoicheff, Stone, Taylor, Tilman,
      Trail, Wheeler, Zimmermann
      NAYS -- None
      Absent and excused -- Black, Deal, Gould, Henbest, Wood, Mr Speaker
    Floor Sponsor - Field(20)
    Title apvd - to Senate
03/24    To enrol
03/27    Rpt enrol - Pres signed - Sp signed
03/28    To Governor
03/29    Governor signed
         Session Law Chapter 84
         Effective: 07/01/00

Bill Text


 S1446
                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-fifth Legislature                  Second Regular Session - 2000
                                                                        
                                                                        
                                       IN THE SENATE
                                                                        
                                    SENATE BILL NO. 1446
                                                                        
                           BY RESOURCES AND ENVIRONMENT COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO STATE LAND LEASES; AMENDING SECTION 58-304, IDAHO CODE, TO PROVIDE
  3        THAT THE STATE BOARD OF LAND COMMISSIONERS MAY LEASE ANY  PORTION  OF  THE
  4        STATE  LAND  AT A RENTAL AMOUNT FIXED AND DETERMINED BY THE BOARD, TO PRO-
  5        VIDE TERMS AND TO PROVIDE THAT GRAZING LEASES  SHALL  PROVIDE  FOR  ANNUAL
  6        PAYMENTS  UPON CERTAIN DATES; AMENDING SECTION 58-305, IDAHO CODE, TO PRO-
  7        VIDE THAT ALL LEASES OF STATE LAND EXCEPT MINERAL LEASES SHALL  BE  CONDI-
  8        TIONAL  UPON THE PAYMENT OF THE RENTAL; AND AMENDING SECTION 58-307, IDAHO
  9        CODE, TO DELETE LANGUAGE REGARDING ANNUAL RENTALS BEING DUE AND PAYABLE IN
 10        ADVANCE OF YEAR ONE OF THE LEASE AND BY JANUARY 1 OF EACH SUCCEEDING YEAR.
                                                                        
 11    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 12        SECTION 1.  That Section 58-304, Idaho Code, be, and the  same  is  hereby
 13    amended to read as follows:
                                                                        
 14        58-304.  LEASES.  The state board of land commissioners may lease any por-
 15    tion of the state land of the state, at an annual a rental the amount of which
 16    shall be fixed and determined by the state board. The rental amount  shall  be
 17    due  and payable by the date and upon the terms set by the board in the lease.
 18    Provided however, all grazing leases shall provide for annual  payments  which
 19    shall  be due and payable by the date set by the board in the lease, but in no
 20    case shall the rental for grazing leases be due and payable earlier than Janu-
 21    ary 1 or later than May 1 of each succeeding year.
 22        (2)  The state board of land commissioners shall notify the lessee of  any
 23    increase  in  the applicable rental rate six (6) months in advance of the date
 24    the rent is due and payable.
 25        (3)  The lessee shall pay the annual rental to the director of the depart-
 26    ment of lands, who shall receipt for the same in the name of the board,.  Upon
 27    receiving such annual rental, the director shall immediately transmit the same
 28    to the state treasurer.
                                                                        
 29        SECTION  2.  That  Section  58-305, Idaho Code, be, and the same is hereby
 30    amended to read as follows:
                                                                        
 31        58-305.  PAYMENT OF RENTAL IN ADVANCE -- EXTENSION OF TIME  --  ADJUSTMENT
 32    OF  COMPETITIVE  BID  RENTAL  RATES.  All leases of state land, except mineral
 33    leases, shall be conditional upon the payment of rental, annually, in advance,
 34    and a violation of this condition shall work a forfeiture of the lease, at the
 35    option of the state board of  land  commissioners,  after  thirty  (30)  days'
 36    notice to the lessee, such notice being sent to the post office of the lessee,
 37    as  given by himself to the director of the department of lands when the lease
 38    is issued: provided however, that upon the application of  any  person,  firm,
 39    corporation  or association from whom such rent is or will be owing, the state
 40    board of land commissioners is hereby given authority and  power  to,  in  its
 41    discretion,  extend the time of payment of such moneys for said leases for not
                                                                        
                                           2
                                                                        
  1    to exceed two (2) successive years: provided, that the applicant  enters  into
  2    an agreement with the said state board of land commissioners to pay the inter-
  3    est  on  said  amount of rent money from January first 1 of the year which the
  4    same is otherwise due, to the date of payment, at the rate per  annum  set  by
  5    the  state  board  of  land commissioners; that this authority shall extend to
  6    amounts due on outstanding leases, leases renewed  and  new  applications  for
  7    leases.  Lease  rental  rates  established  by  competitive bidding may not be
  8    adjusted during the term of a lease, except that the state board of land  com-
  9    missioners  upon  a  finding  of a material change of circumstances from those
 10    existing at the time of auction, may, after a majority vote of those  present,
 11    reduce the rental to no less than fair market value.
                                                                        
 12        SECTION  3.  That  Section  58-307, Idaho Code, be, and the same is hereby
 13    amended to read as follows:
                                                                        
 14        58-307.  TERM OF  LEASE  --  APPLICATION  FOR  RENEWAL  --  ALLOWANCE  FOR
 15    IMPROVEMENTS.  (1) No lease of state public school endowment lands, other than
 16    those valuable for stone, coal, oil, gas or other minerals,  shall  be  for  a
 17    longer term than ten (10) years.
 18        (2)  Notwithstanding  any  other provisions of law, all state lands may be
 19    leased for a period of up to twenty-five (25) years to the federal government,
 20    to federal agencies, state agencies, counties, or cities, school districts  or
 21    political subdivisions when leased for public purposes. Such leases for public
 22    purposes  may  be entered into by negotiation and shall secure a rental amount
 23    based on the fair market value of the state land.
 24        (3)  Notwithstanding any other provisions of law, only the state endowment
 25    lands, other than public school endowment lands, described below may be leased
 26    for a period of up to forty-nine (49) years  for  commercial  purposes,  under
 27    such  terms and conditions as may be set by the board, provided that the board
 28    consults with the county commissioners of the county in which  the  lands  are
 29    located  before  leasing  the lands described below, and the use for which the
 30    land is leased shall be consistent with the local planning  and  zoning  ordi-
 31    nances  insofar  as is reasonable and practicable. The department shall hold a
 32    hearing, on each of the parcels described below, in the community in which the
 33    parcel is located.
 34        (a)  One (1) parcel - E1/2, Section 5, T2N, R2E, Boise Meridian,  contain-
 35        ing  three  hundred twenty (320) acres, more or less, and located south of
 36        the Boise Airport on Pleasant Valley Road.
 37        (b)  One (1) parcel - SWSWNW, Section 27, T3N, R2E, Boise  Meridian,  con-
 38        taining  eight (8) acres, more or less, located northeasterly of the Boise
 39        Airport and north of the Boise Interagency Fire Center.
 40        (c)  Four (4) parcels - E1/2SW, W1/2SE, NESE, Section 31;  SW1/4,  Section
 41        32,  T3N,  R2E,  Boise  Meridian, all containing three hundred sixty (360)
 42        acres, more or less, located south of the Boise Airport and west of Pleas-
 43        ant Valley Road.
 44        (d)  Three (3) parcels - SWSW, Section 28; Pt. SESE, Section 29  (east  of
 45        the  Railroad  R/W, now a bikepath); W1/2NW, Section 33, all in T3N, R18E,
 46        Boise Meridian, all containing one hundred twenty-five (125)  acres,  more
 47        or  less,  located  two  (2)  miles  northerly of Hailey, Idaho, excepting
 48        therefrom, a parcel of land, containing twenty (20) acres, more  or  less,
 49        at  a  location to be determined with access to the sheep driveway located
 50        on the county road.
 51        (e)  One (1) parcel - SWNE, Section 32, T3N, R2E, Boise Meridian, contain-
 52        ing forty (40) acres, more or less, located southerly and westerly of  the
 53        Boise Airport off Gowen Road; Public Building Endowment.
                                                                        
                                           3
                                                                        
  1        (f)  Two  (2) parcels - Part NESWNE, Section 35, T3N, R2E, Boise Meridian,
  2        containing three and fifteen hundredths (3.15) acres, more or  less;  Part
  3        NENESE,  Section  35,  T3N, R2E, Boise Meridian, containing one and eight-
  4        tenths (1.8) acres, more or less;  both located northerly and easterly  of
  5        I-84  between the Broadway Interchange and the Gowen Road/State Highway 21
  6        Interchange; Normal School Endowment.
  7        (g)  One (1) parcel - Part Lot 1, Section 1,  T2N,  R2E,  Boise  Meridian,
  8        containing five (5) acres, more or less, located near the Gowen Road/State
  9        Highway 21 Exit from I-84; Penitentiary Endowment.
 10        (h)  One  (1)  parcel  -  N1/2NW1/4SW1/4, SW1/4NW1/4SW1/4, Section 4, T2N,
 11        R2E, Boise Meridian, excepting that portion deeded to  Ada  County  for  a
 12        public  road,  containing twenty-eight and seventy-nine hundredths (28.79)
 13        acres, more or less, located south of the Boise Airport and east of Pleas-
 14        ant Valley Road; Normal School Endowment.
 15        (4)  Notwithstanding any other provisions of law, only  the  state  public
 16    school  endowment lands described below may be leased for commercial purposes,
 17    for a term not to exceed ten (10) years, and the board may grant, upon payment
 18    of good and valuable consideration, a preferential right to renew  said  lease
 19    not  more  than four (4) times, provided that the board shall consult with the
 20    county commissioners of the county in which the lands are located before leas-
 21    ing the lands described below, and the use for which the land is leased  shall
 22    be consistent with the local planning and zoning ordinances insofar as is rea-
 23    sonable  and  practicable. The department shall hold a hearing, on each of the
 24    parcels described below, in the community in which the parcel is located.
 25        (a)  One (1) parcel - All, Section 16, T3N, R18E, Boise Meridian, contain-
 26        ing six hundred forty (640) acres, more or less, and located in Ohio Gulch
 27        some five (5) miles northerly of Hailey, Idaho.
 28        (b)  One (1) parcel - E1/2NE, Section 16, T18N, R3E, Boise Meridian,  con-
 29        taining  eighty (80) acres, more or less, and located northwesterly of the
 30        intersection of Deinhard Lane and Sampson Trail in McCall, Idaho.
 31        (c)  One (1) parcel - S1/2NW, NESW, Part NWSW, Part SWSW, Part SESW,  Sec-
 32        tion  36,  T3N,  R2E, Boise Meridian, containing one hundred seventy-eight
 33        and seventy-one hundredths (178.71) acres, more or less, located northerly
 34        and easterly of I-84  between  the  Broadway  Interchange  and  the  Gowen
 35        Road/State Highway 21 Interchange; Public School Endowment.
 36        (d)  One  (1)  parcel  - NE1/4SW1/4, SE1/4NW1/4SW1/4, Section 4, T2N, R2E,
 37        Boise Meridian, containing fifty (50) acres, more or less,  located  south
 38        of  the  Boise  Airport  and  east  of Pleasant Valley Road; Public School
 39        Endowment.
 40        (e)  Two (2) parcels - Lot 14 (Pt. NESE), Lot 16 (Pt. N2SE), SWSE, Lot  17
 41        (SESE),  Section 22, Township 6 North, Range 36 East, Boise Meridian, con-
 42        taining one hundred twenty-seven and seventeen hundredths  (127.17)  acres
 43        more or less; NWSW, Pt. SWSW, Section 23, Township 6 North, Range 36 East,
 44        Boise  Meridian,  containing forty-eight (48) acres, more or less, located
 45        fifty (50) miles north of Idaho Falls at the junction of State Highway  28
 46        and Interstate Highway 15.
 47        (f)  One  (1)  parcel  - Lot 9 (Pt. NWNE, Pt. NENW), Lot 10 (Pt. SWNE, Pt.
 48        SENW), Section 12, Township 2 North, Range 37 East, Boise  Meridian,  con-
 49        taining  nineteen and twenty-seven hundredths (19.27) acres, more or less,
 50        located adjacent to the U of I/ISU Center in Idaho Falls.
 51        (g)  One (1) parcel - Lots 1 and 2, Section 8, Township 2 North, Range  38
 52        East, Boise Meridian, containing seven and seventy-seven hundredths (7.77)
 53        acres, more or less, located on Lincoln Street in Idaho Falls.
 54        (h)  One  (1) parcel - W1/2, Section 16; Lot 1 and 2 (E2NE), W2NE, Section
 55        17, Township 3 South, Range 18 East, Boise Meridian, containing four  hun-
                                                                        
                                           4
                                                                        
  1        dred  eighty  and  fifty-seven  hundredths  (480.57)  acres  more or less,
  2        located on State Highway 93 north of Shoshone at Shoshone Ice Caves.
  3        (5)  The term "commercial purposes" means industrial  enterprises,  retail
  4    sales  outlets, business and professional office buildings, hospitality enter-
  5    prises, commercial recreational activities, multifamily  residential  develop-
  6    ments and other similar businesses. For purposes of this section, agricultural
  7    leases,  grazing leases, oil and gas leases, mineral leases, geothermal leases
  8    and single family, recreational cottage site and homesite leases are not  con-
  9    sidered leases for commercial purposes.
 10        (6)  The board may require that all fixed  improvements  constructed  upon
 11    land  leased  for commercial purposes be removed or become the property of the
 12    state upon termination of the lease,  and  that  any  heirs,  encumbrances  or
 13    claims  of  third  parties with respect to any improvements shall be expressly
 14    subordinate and subject to the rights of the state under this section.
 15        (7)  Except for geothermal, oil and gas, and  mineral  leases,  the  lease
 16    year shall run from January 1 through December 31, and all leases shall expire
 17    on December 31 of the year of expiration.
 18        (8)  The  annual rental shall be due and payable in advance of year one of
 19    the lease and by January 1 of each succeeding year, except for grazing  leases
 20    which shall be due and payable by the date set by the state board of land com-
 21    missioners in the lease, but in no case shall the rental for grazing leases be
 22    due  and payable earlier than January 1 or later than May 1 of each succeeding
 23    year.
 24        (9)  All applications to lease or to renew an existing lease which expires
 25    December thirty-first 31 of any year, shall be filed  in  the  office  of  the
 26    director  of  the  department of lands by the thirtieth day of April preceding
 27    the date of such expiration. Such applications will be considered by the state
 28    land board and be disposed of in the manner provided by law; except  that  the
 29    board  may reject conflicting applications for a lease for commercial purposes
 30    if the lessee exercises the preference right to renew clause.
 31        (109)  Where conflicts appear upon leases which do not contain a preferen-
 32    tial right to renew clause, such applications shall be  considered  as  having
 33    been  filed simultaneously. However, nothing herein shall be construed to pre-
 34    vent the state board of land  commissioners  from  accepting  and  considering
 35    applications for new leases at any time.
 36        (110) In  case improvements have been made on land while under lease which
 37    is expiring, and the former lessee is not the successful bidder, but the  land
 38    is  leased  to  another,  the amount of such improvements shall be paid to the
 39    former lessee. The following shall be considered  improvements:  plowing  done
 40    within one (1) year, provided no crop has been raised on the plowed land after
 41    such plowing, fencing, buildings, cisterns, wells, growing crops and any other
 42    asset which shall be considered an improvement by the director.
 43        (121) Commercial leases of the state lands described in this section shall
 44    not  be  subject  to  the conflict auction provisions of section 58-310, Idaho
 45    Code. The board may, at its discretion, call for proposals and sealed bids  by
 46    public  advertisement,  and may evaluate said proposals and award the lease to
 47    the bidder whose proposal achieves the highest return over  the  term  of  the
 48    lease and who is capable of meeting such terms and conditions as may be set by
 49    the  board;  in  the alternative, the board may call for lease applications by
 50    public advertisement and if more than one (1) person files an  application  to
 51    hold  an auction in the same manner as provided in section 58-310, Idaho Code.
 52    In either case, the board must obtain a reasonable  rental,  based  upon  fair
 53    market  value  of  the  state  land, throughout the duration of the lease. The
 54    board may reject any or all proposals and any or all bids, and may reoffer the
 55    lease at a later date if the board determines that the proposals  or  bids  do
                                                                        
                                           5
                                                                        
  1    not achieve the highest and best use of the land at market rental.

Statement of Purpose / Fiscal Impact


                 STATEMENT OF PURPOSE
                       RS09942C1

This RS would change Idaho Code Sections 58-304, 58-305 and 
58-307 to provide that rentals for commercial leases and 
cottage site leases, and some other leases may be paid on a 
monthly, quarterly, semi-annual or annual basis -- rather 
than just annually.

It is common practice in the commercial leasing sector to pay 
rents monthly.  This is particularly true when office building 
rentals exceed $200,000 to $300,000 per year. It is also common 
practice in commercial leasing that a requirement to pay rent 
annual, in advance, also includes a three percent discount in 
rental.

Removing the word "annual" in I.C. 58-304 leaves the Land Board 
the latitude to determine frequency of payment based on the amount 
of rental due and as fixed in the lease. Small commercial leases 
could still be paid on an annual basis. Allowing monthly, quarterly 
or semi-annual payment would eliminate the three percent discount 
on rentals.

                    FISCAL IMPACT

There are no additional costs associated with this legislation. 
Existing staff would administer monthly payments. There is a benefit 
to those lessees that have large commercial leases because they will 
not have to borrow money to make a large annual payment. There is a 
benefit to the endowments because there is no need to allow a 
discount on rent. The public would benefit because the endowments 
will realize more income, which acts as an offset to taxes.

CONTACT: Stan Hamilton, Director
Department of Lands
334-0200

STATEMENT OF PURPOSE/FISCAL IMPACT                       S 1446