State land leases.

04LSO-0301.L1

                                                         

FISCAL NOTE (HB0122)

 

The fiscal impact, in the form of increased revenue, is indeterminable.

 

 

The Board of Land Commissioners/Office of State Lands and Investments lease state surface lands for a variety of purposes, including, in part, grazing, commercial, industrial, and recreational uses.  It is the experience of the Office that commercial, industrial, and recreational leases on appropriate parcels of state lands generate significantly greater lease income than grazing leases. 

 

This bill extends the maximum lease term for a lease of state lands for commercial, industrial, and recreational purposes.  Based on recent inquiries, the Office firmly believes that if this bill passes there will be increased long-term leasing of appropriate state lands for commercial, industrial, and recreational uses.  Based on the Office’s experience and the research of neighboring states’ commercial leasing programs, the anticipated increased long-term commercial leasing activity will lead to greater lease income deposits in to the appropriate permanent trust or permanent income fund.  (The ultimate fund that receives the benefit of increased lease income will depend on the identity of state land and the structure of the lease transaction).  The Office cannot predict, however, exactly how much additional lease income will be realized until it negotiates new long-term commercial, industrial, and recreational leases on state lands.

 

For comparative purposes, the Montana land office estimates that it receives on average $1/acre for an Ag./Grazing lease, whereas it can receive up to $6,500/acre on a large commercial lease of its state land.  The Oklahoma land office web page represents that the annual return on commercial properties is 14% of the properties’ fair market value.  Oklahoma also indicates that commercial leasing has increased income to its trust from 10 to 2,500 times over the income traditionally received on Agricultural Leases.

 

In addition, new commercial development resulting from long-term commercial, industrial or recreational leases on state lands will provide economic benefits to the State and local community in the form of increased property taxes (lessee pays taxes on the improvements it constructs on state lands; see W.S. § 39-11-105(a)(ii)) increased sales taxes, and, depending on the project, the possible creation of new or additional jobs.

 

Prepared by:   John Glode, State LandsPhone:   777-6642