Or. Admin. Code § 141-082-0305

Current through Register Vol. 63, No. 12, December 1, 2024

Section 141-082-0305 - Lease Compensation Formulas, Methods and Annual Lease

Compensation Adjustments

(1) The Department has established three methods to determine the compensation owed for the use of state-owned submerged and submersible land. For some uses, more than one method is available.

(2) The three methods are termed the:

(a) "Flat Rate Method" (which is determined by multiplying the number of square feet of an area requested, or that has been authorized, by a specific rate unique to the use).

(b) "Riparian Land Value Rate Method" (which is based on a percent of the assessed value of the upland adjacent to the area which has been requested, or that has been authorized).

(c) "Percent of Gross Method" (which is based on the percent of the actual annual gross income received by the lessee from using the area that has been requested, or that has been authorized).

(3) Regardless of which method (OAR 141-082-0305(2)(a), (b) or (c)) is used, under no circumstances shall the compensation owed be less than the base minimum rate, set forth in OAR 141-082-0305(6).

(4) For many use classifications, an applicant has the option of choosing among the above three methods to determine the compensation owed for their use of state-owned submerged and submersible land. Under the circumstances identified in OAR 141-082-0305(7), the Department shall choose the method to be used to determine the compensation owed to the Department for a use of state-owned submerged and submersible land.

(5) Once an applicant or the Department has selected a method of determining compensation, that method shall remain in effect for the entire term of the lease unless there is a change in the use.

(6) The base minimum annual compensation for any lease shall be the greater of:

(a) $0.0085 per square foot times the lease area or four hundred and six dollars ($406) which is rate in effect in July 2017. The base minimum annual compensation rates shall be increased by three percent each year on July 1st; or

(b) The annual compensation resulting from a competitive the bid award.

(7) In the event the lessee and the Department cannot agree on the method of calculating the annual compensation or any aspect of the method to be used, the annual compensation owed by the lessee shall be determined by the Department using the flat rate method which shall remain in effect until such time as the a new rate is implemented at the next lease anniversary date. If, during the term of the lease, the lessee and the Department reach agreement on the method of compensation, the new lease rate shall be implemented on the next lease anniversary date.

(8) The annual compensation for individual non-commercial docks, boat houses, and floating recreational cabins not eligible for registration and that are not contained within marinas or moorages shall be calculated based on the area encompassed by the perimeter of the structures, excluding gangways, protective booms, pilings, and dolphins.

(9) The following eight use classifications and related lease compensation formulas described in OAR 141-082-0305(9)(a) through (h) shall be used to establish annual lease compensation payments or minimum bid, whichever is applicable, subject to the base minimum annual lease compensation payment established in OAR 141-082-0305(6). For the riparian land value method described below, utility, railroad or publicly-owned land shall not be used for establishing the assessed or appraised value [AV] unless the assessed value is readily available and reflective of comparable similarly situated tax lots. If not, the assessed or appraised value [AV] of privately owned comparable tax lots shall be substituted. In cases where the adjacent riparian tax lot is less than 100 feet deep, the Department shall assume the adjacent riparian tax lot has a depth of 100 feet and calculate the assessed or appraised value [AV] based on this derived area.

Formula Factors:

AV = Assessed value or appraised value (as defined in OAR 141-082-0255(8) and (10) of these rules) whichever is less except as stated in OAR 141-082-0305(14) and (15).

LA = Authorized lease area in square feet of state-owned submerged and submersible land.

AC = Annual compensatory payment

Uses and Compensation Determination Methodologies:

(a) Commercial marinas and docks, and commercial floating home moorages. The annual lease compensation payment calculation is the lesser of the:

(A) Flat rate method of $0.0298 per square foot (which shall increase each year on July 1st by three percent) x LA; or

(B) Three percent of actual annual gross income; or

(C) Riparian land value method of AV x LA x five percent = AC.

(b) Non-commercial marinas and docks. The annual lease compensation payment calculation is the lesser of the:

(A) Flat rate method of $0.0298 per square foot (which shall increase each year on July 1st by three percent) x LA; or

(B) Riparian land value method of AV x LA x five percent = AC.

(c) Non-commercial floating home moorages including those operated by ownership-oriented organizations. The annual lease compensation calculation is the lesser of the:

(A) Flat rate method of $0.0298 per square foot (which shall increase each year on July 1st by three percent) x LA; or

(B) Riparian land value method of AV x LA x five percent = AC.

(d) Individual floating homes and similar structures and uses. The annual lease compensation calculation is the lesser of the:

(A) Flat rate method of $0.0298 per square foot (which shall increase each year on July 1st by three percent) x LA; or

(B) Riparian land value method of AV x LA x five percent = AC.

(e) Historical vessels or structures not eligible for registration. The annual lease compensation is $348 (which shall increase each year on July 1st by three percent) per structure or combination of structures at a single location or facility.

(f) Log boom areas, log raft storage areas. The annual lease compensation calculation is the lesser of the:

(A) Flat rate method of $0.0148 per square foot (which shall increase each year on July 1st by three percent) x LA; or

(B) Riparian land value method of AV x LA x five percent = AC.

(g) Marine industrial and marine service commercial uses/structures. The annual compensation payment calculation is the lesser of the:

(A) Flat rate method of $0.5109 per square foot (which shall increase each year on July 1st by three percent) x LA; or

(B) Riparian land value method of AV x LA x five percent = AC.

(h) Non-Marine Uses. The annual compensation payment calculation is the lesser of the:

(A) Flat rate method of $0.5967 per square foot (which shall increase each year on July 1st by three percent) x LA; or

(B) Riparian land value method of AV x LA x five percent = AC.

(10) The above described flat rate method factors (OAR 141-082-0305(9)(a) through (h)) are those in effect in July 2017. Each flat rate method factor shall be increased by three percent every year on July 1st. Annual lease compensation shall be billed on the basis of the adjustments described in OAR 141-082-0305(9). For any newly executed lease, the applicable flat rate that shall be applied is that which is in effect at the time of the execution of the lease. The annual compensatory payment for executed leases shall also be adjusted/redetermined annually on each lease anniversary date by increasing the annual lease compensation payment by three percent. This annual compensatory payment adjustment/redetermination for executed leases shall not apply to those calculated based on actual annual gross income.

(11) Compensation rates for each use within each authorized area shall be calculated by the Department on a square foot basis of state-owned submerged and submersible land as applicable for each use classification (for example, non-commercial marina), and based on the lessee's choice of rate calculation methods except as noted in OAR 141-082-0305(7) above. More than one use (known as a mixed use) may be permitted by the Department within an authorized area. Compensation rates shall be calculated for each use area based on the most applicable use classification, as specified in OAR 141-082-0305(9)(a) through (h), and added together to derive the total annual compensation payment or minimum bid for the entire leasehold. Compensation for each use classification is subject to the base annual minimum compensation as specified in OAR 141-082-0305(6).

(12) Documentation supporting the annual reporting statement submitted to the Department by a lessee must be available upon request by the Department if the lessee reports annual compensation based on three percent of actual annual gross income.

(13) The Department shall notify lessees in writing of the new annual compensatory payment not less than 60 calendar days in advance of the lessee's lease anniversary date.

(14) In calculating the initial annual compensatory payment using the riparian land value method, a lessee or lease applicants may substitute an appraised value of the adjacent riparian tax lot or as determined by the Department, a comparable tax lot. The Department reserves the right to evaluate, review, and challenge the appraisal. If required, the appraisal shall be conducted at the lessee or lease applicant's expense and prepared by a state-certified appraiser. The Department shall provide instructions to the appraiser prior to conducting the appraisal. In the event of a dispute between the Department and the lessee or lease applicant, the value shall be determined through the three-appraiser method specified in ORS 274.929(3).

(15) If in the process of using the riparian land value method for calculating the initial annual compensation payment, the AV is found to be artificially depressed due to the presence of hazardous materials or some other extenuating circumstance(s) as determined by the Department, another comparable upland tax lot shall be selected by the Department as the basis for calculating the initial annual lease compensatory payment.

(16) The Director reserves the right to establish a rate of compensation due to the Department for all other structures and uses that do not fit into any of the above categories, or which are unique. However, the rate of compensation shall not be less than the base minimum annual compensatory payment as defined by OAR 141-082-0305(6).

Or. Admin. Code § 141-082-0305

DSL 5-2012, f. 10-16-12, cert. ef. 1-1-13; DSL 5-2016, f. 11-3-16, cert. ef. 1/1/2017

Stat. Auth.: ORS 183, 273, 274

Stats. Implemented: ORS 274