Suppose you want to purchase property in a harbor area on which to construct a mixed-use development. None of the proposed use is water dependent. The current owner has a lease with the state for a non-water dependent use of the aquatic lands within the site, which fits nicely with your development plans. The term of the lease, however, is too short for your proposed development. Can the current owner assign the aquatic lands lease to you? If so, will you be able to renew the lease for an adequate term? Will you be able to expand the existing non-water dependent use in the way your mixed-use development envisions?
For purposes of this discussion, assume the property is in Washington. Leases of aquatic lands are governed by RCW Chapter 79.115. Regarding leases of aquatic lands in harbor areas, the only statutory mention of an initial lease term is with respect to an owner of an existing lease who “desires to construct any wharf, dock, or other convenience of navigation or commerce, or to extend, enlarge, or substantially improve any existing structure used in connection with the harbor area, and deems the required expenditure not warranted by the lessee’s right to occupy the harbor area during the remainder of the term of their lease,” in which case the owner may apply for a new lease of the harbor area for a period not exceeding thirty years. RCW 79.115.110. Construction must begin no later than two years from the date of the lease. RCW 79.115.100. State law also provides that upon expiration of an existing lease, the owner may apply for a lease renewal not to exceed thirty years. RCW 79.115.120.
On its face, state law supports both transfer and renewal of the lease. The existing lease should be examined carefully for other terms that may affect the transaction, such as a requirement for the State to approve any transfer or assignment.
With respect to continuing a non-water dependent use of aquatic lands, Washington’s regulations for aquatic land management are found at WAC Chapter 332-30. In particular, WAC 332-30-137 provides that non-water dependent uses “shall not be permitted to expand or be established in new areas except in exceptional circumstances and when compatible with water-dependent uses existing in or planned for the area.” Some of the qualifying “exceptional circumstances” include but are not limited to (1) mixed water-dependent and non-water dependent development where the water dependent component is a major project element and the non-water dependent use significantly enhances the water dependent use and/or resources of statewide value, and (2) those circumstances identified in local shoreline management master programs. WAC 332-30-137(1). Even if the proposed project does not fit within the exceptional circumstances set forth in the regulations, then, it may still be allowed if the applicable shoreline management master program allows it.
Per Washington Department of Natural Resources guidelines for leasing aquatic lands, the lease process takes 6-12 months from receipt of a complete application. No authorization will be granted until all necessary permits are obtained, such as a shoreline permit from the Washington Department of Ecology, a Hydraulic Project Approval from the Washington Department of Fish and Wildlife, and a Clean Water Act Section 404 permit from the U.S. Army Corps of Engineers (which would require a Section 401 water quality certification from the State). Each of these permitting processes has its own timeline which needs to be considered during project planning.
The bottom line here is that while there is authority in law and regulation for transfer of an aquatic lands lease to a new owner who intends to continue engaging in non-water dependent use of the leased land, the specific terms of the existing lease may add requirements such as state approval of the transfer. The details of the proposed development may also impact your ability to expand non-water dependent uses in a particular area, or extend those uses to new areas. In addition, the lease process cannot be completed until other necessary permits are obtained, making advance planning the key – as always – to keeping the development project on schedule.
Elizabeth Rosso is an attorney at Jordan Ramis PC who focuses her practice on environmental law. Contact her at firstname.lastname@example.org or (503) 598-7070.
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