BEFORE THE BOARD OF LAND COMMISSIONERS AND

THE DEPARTMENT OF NATURAL RESOURCES

AND CONSERVATION OF THE STATE OF MONTANA

 

In the matter of the amendment of ARM 36.25.801, 36.25.802, 36.25.805, 36.25.808, 36.25.809, and 36.25.811 pertaining to the land banking program

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NOTICE OF PUBLIC HEARING  ON PROPOSED AMENDMENT

 

To:       All Concerned Persons

 

            1.  On September 15, 2011 at 2:00 p.m., the Department of Natural Resources and Conservation will hold a public hearing in the Director's Conference Room located at 1625 11th Avenue, Helena, Montana, to consider the proposed amendment of the above-stated rules.

 

            2.  The department will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice.  If you require an accommodation, contact the agency no later than 5:00 p.m. on September 6, 2011, to advise the department of the nature of the accommodation that you need.  Please contact John Grimm, Department of Natural Resources and Conservation, 1625 11th Avenue, Helena, MT; telephone (406) 444-1868; fax (406) 444-2684; e-mail jgrimm@mt.gov.

 

            3.  The rules as proposed to be amended provide as follows, stricken matter interlined, new matter underlined:

 

            36.25.801  DEFINITIONS 

            (1) through (16) remain the same.

            (17)  "Sale unit" means one or more parcels sold as a single sale.

            (17) remains the same but is renumbered 18.

 

            AUTH:  77-1-204, 77-2-308, 77-2-328, 77-2-362, MCA

            IMP:  77-2-328, 77-2-362, 77-2-363, MCA

 

REASONABLE NECESSITY:  The addition of the definition for a "sale unit" is necessary to describe more than one parcel sold as a group in a single land banking sale.  The amendments allow DNRC to sell state land in "sale units" that can be made up of multiple parcels when the total sale cost would be the same as if the parcels were sold on a parcel-by-parcel basis.

 

            36.25.802  LAND BANKING TRANSACTION COSTS  (1)  Except as provided in 77-2-362(2)(c) , MCA, the department may use up to ten percent of the proceeds deposited in the land bank fund to pay costs of transactions, as provided in 77-2-362(2)(b), MCA.

            (2) remains the same but is renumbered (1).

            (32)  The department shall:

            (a)  maintain a record of each transaction; and

            (b)  summarize transaction costs at the completion of each sale or acquisition.; and

            (c)  include an accounting of transaction costs in the report required by 77-2-366 (2) , MCA.

            (3)  Transaction costs as outlined in ARM 36.25.807(2) or 36.25.808(7) shall be paid by the nominator or the purchaser, respectively.

 

            AUTH:  77-2-362, MCA

            IMP:  77-2-362, MCA

 

REASONABLE NECESSITY:  Section 20, Chapter 465, 2009 Laws of Montana deleted any authority to use land bank funds to reimburse DNRC's costs incurred in conducting land banking transactions, but alternatively granted DNRC the authority to expend trust land administration account funds for those same purposes.  The rule amendments also clarify that transaction costs outlined in ARM 36.25.807 or 36.25.808 are to be paid by the lessee nominator if the sale is terminated by the lessee nominator, or the purchaser if the sale is consummated.

 

            36.25.805  PROCEDURES FOR NOMINATING AND EVALUATING STATE TRUST LANDS FOR SALE PURSUANT TO LAND BANKING

            (1)  The board shall, in its sole discretion, sell sale units in configurations   providing the best financial and management advantage to the affected trust beneficiary state trust land on a parcel-by-parcel basis.

            (2) through (3)(d) remain the same.

            (e)  when a parcel is nominated, the department shall notify:

            (i)  all persons holding a license on the parcel;,

            (ii)  the representative of the any affected trust beneficiary;, and

            (iii)  the lessee of the parcel if board or department nominated. Notice to the trust beneficiary must go to the representative identified for each trust affected by the proposed sale.

            (4)  If the department determines that a parcel meets the preliminary suitability requirements for sale, the department shall contract for an environmental review of the parcel under MEPA.

            (a)  If the MEPA analysis determines that the sale would result in a significant adverse impact on natural resources, the parcel is generally not suitable for sale unless the board determines otherwise.

            (b)  If the department conducts a checklist environmental assessment under MEPA, the department shall briefly explain in writing the potential impacts and mitigations for each resource and issue analyzed, including written explanations of resource or issue analysis conclusions of "no impact."

            (5)  After evaluation of the preliminary review and the MEPA analysis, the department shall determine whether a parcel is suitable for sale and report to the board on the parcel's suitability for sale.:

            (a)  Iif the department determines the parcel is not suitable for sale, the department may remove the parcel from nomination and eliminate the parcel from further review without board approval.;

            (b)  Tthe department shall post the report required by (4), including the MEPA analysis, in a dated notice on the department's web site or other equivalent electronic medium. The notice must be posted at least 15 days prior to before the meeting at which the board will consider the sale.; 

            (c)  Tthe department shall notify the lessee of the department's recommendation by certified mail, as provided in 77-2-363(3), MCA. As a courtesy, the department shall try to contact the lessee by telephone about the determination.         (i)  The notification must be mailed on or before the day the department posts the notice on its web site or other equivalent electronic medium.;

            (ii)  As a courtesy, the department shall try to contact the lessee by telephone about the determination.

            (d)  Tthe department shall notify all persons holding a license on the parcel and the trust beneficiary about the determination.;

            (e)  Aany person may appeal the department's removal of a parcel from nomination to the board the department's removal of a parcel from nomination within 15 days of the department posting the report on the web site or other equivalent electronic medium. The board shall place the appeal on the next available agenda of a regularly scheduled board meeting no later than 15 days before the meeting.; and

            (f)  Oon a board or department-nominated parcel, the lessee may, within 60 days of the determination, notify the department that the lessee intends to propose a land exchange.

            (6) remains the same.

            (7)  Upon the department's report to the board under (4), the board shall approve or reject the proposed sale.:

            (a)  Iif the board rejects the proposed sale of the parcel, the department shall remove the parcel from nomination.; and

            (b)  Iif the board approves the proposed sale of the parcel, the department shall post the parcel on the department's web site or other equivalent electronic medium within 30 days of the board's approval.

            (8)  If the board has approved a proposed sale nominated by the lessee, the department will estimate the costs of the appraisal and will notify the lessee of the approval and request submission of the estimated costs of the appraisal and associated costs of preparing the parcel for sale.

            (a)  Payment must be made after the board has given preliminary approval of the sale under ARM 36.25.807(2)(b).

            (b)  Payment must be made ten days after the department has notified the lessee of the estimated costs.

            (9)  If the board has approved a proposed sale, land exchange, or acquisition, the department shall contract with a Montana-licensed certified general appraiser to appraise the parcel under consideration for sale in compliance with the Uniform Standards of Professional Appraisal Practice (USPAP), as adopted by reference by the state Board of Real Estate Appraisers in ARM 24.207.402. The department will review or contract the review of the appraisal conducted by the contract appraiser.

            (a)  through (b)(iii) remain the same.

            (iv)  include details of the value of the parcel with legal access and a discount in appraised value due to lack of access; and for a parcel that has legal access, provide the value;

            (v)  for a parcel that lacks legal access, the appraiser is to:

            (a)  provide a value with the hypothetical condition that the parcel has legal access;

            (b)  if there are comparable sales available to provide a credible opinion of the value without legal access, the appraiser is to provide that value as well; and  

            (c)  if comparable sales are not available to provide a credible opinion of value without legal access, the appraiser will note the unavailability of sufficient sales data.

            (v) remains the same but is renumbered (vi).

            (c) through (15) remain the same.

           

            AUTH:  77-1-204, 77-2-308, 77-2-362, MCA

            IMP:  77-2-328, 77-2-362, 77-2-363, 77-2-364, 77-2-366, MCA

 

REASONABLE NECESSITY:  The amendments to this rule are necessary to allow DNRC to sell state land in "sale units" where the appraised land value reflects the cumulative value of the individual parcels.  Selling multiple parcels as a single unit allows for greater efficiency in conducting sales.  The amendments clarify that DNRC will comply with the most recent version of Uniform Standards of Professional Appraisal Practice (USPAP) since the state Board of Real Estate Appraisers has adopted USPAP for standards of practice (37-54-403, MCA).  The amendments also correct minor formatting and grammatical errors.

 

            36.25.808  PROCEDURE FOR CONDUCTING STATE TRUST LAND SALES

            (1) and (2) remain the same.

            (3)  As required by 77-2-322, MCA, the department shall, at a minimum:,

            (a)  publish notice of the auction in a newspaper of general circulation in the county where the auction is to take place, once each week for four consecutive weeks preceding the due date for bid deposits; and. The department shall

            (b)  post the notice on the department's web site or other equivalent electronic medium and provide links to associated realty web sites, when feasible.

            (4)  A person wishing to bid upon a nominated state trust land parcel sale unit offered for sale at auction shall submit a bid deposit and execute a purchase agreement with the department. The bid deposit and purchase agreement must be postmarked no later than 20 days before the date of the auction.

            (5) through (7) remain the same.

            (8)  The department shall retain the bid deposit and processing costs of the successful bidder. The department shall return the bid deposits of all unsuccessful bidders within five 15 business days following the auction.        

            (9)  If the highest bidder fails to consummate the sale for any reason the bidder forfeits the bid deposit and processing costs. The department may then offer the state trust land sale unit parcel to the next highest bidder at the final sale price.

            (a)  If the next highest bidder, or a subsequent bidder, in sequence of bid amount, agrees to the terms of the sale, that bidder shall complete a purchase agreement and submit a bid deposit and processing costs to the department.

            (b)  The bid deposit and processing costs will be returned to the highest bidder if a subsequent bidder completes a purchase agreement and submits a bid deposit and processing costs.

            (10)  If the final bidder who agrees to consummate the sale fails to comply with the terms of the sale for any reason, that bidder's bid deposit and processing costs are forfeited.

            (a)  The bid deposit must be credited to the land banking trust fund.

            (b)  The processing costs will be credited to the land banking administration account.

 

            AUTH:  77-1-204, 77-2-308, 77-2-362, MCA

            IMP:  77-2-328, 77-2-363, MCA

 

REASONABLE NECESSITY:  The amendments to this rule are necessary to allow DNRC to sell state land in "sale units" where the appraised land value reflects the cumulative value of the individual parcels.  Selling multiple parcels as a single unit allows for greater efficiency in conducting sales.  Section 20, Chapter 465, 2009 Laws of Montana deleted any authority to use land bank funds to reimburse DNRC's costs incurred in conducting land banking transactions, but alternatively granted DNRC the authority to expend trust land administration account funds for those same purposes.  The amendment to (8) increases the time for DNRC to return bid deposits from five to 15 days because the interplay between DNRC and Department of Administration accounting processes generally requires additional time.  The amendments also correct minor formatting and grammatical errors.

 

            36.25.809  SETTLEMENT FOR AND REMOVAL OF IMPROVEMENTS

            (1) through (5) remain the same.

 

            AUTH:  77-1-204, 77-2-308, 77-6-302, 77-6-303, 77-6-304, 77-6-305, 77-6-306, MCA

            IMP:  77-2-328, MCA

 

REASONABLE NECESSITY:  The 2001 Legislature repealed 77-6-304 and 77-6-305, MCA.  The pertinent authorizing statutory language now exists in 77-6-302 and 77-6-303, MCA.

 

            36.25.811  THE LAND BANKING TRUST FUNDS

            (1) and (2) remain the same.

            (3)  Proceeds from the sale of land from trusts may be pooled to acquire tracts of land to add to state trust land, if approved by the board after consultation with the affected beneficiaries. Using funds from multiple trusts allows the department to acquire land for more than one trust or to ultimately purchase land for a single trust if sufficient funds are not available from that trust at closing.  

            (a)  Where land has been acquired in common for several trust beneficiaries, and the department wishes to transfer the beneficial ownership of the land to a single trust, or another trust, the department may do so by purchasing the property interests held for the other trust or trusts by remitting to their trust accounts:

            (i)  the initial purchase funds attributable to their undivided ownership in the land; and

            (ii)  the interest that would have accrued to the divesting trust or trusts as invested with the Board of Investment (BOI) short-term investment pool (STIP).  The interest shall be paid from the date that the parcel was acquired for the benefit of a trust or trusts up to the date of the transfer of the beneficial ownership by the department to another trust or trusts and the transfer of funds from the acquiring trust account(s) to the divesting trust account(s); provided that,

            (iii)  such trust transfer purchases shall be restricted to a one-year period of time after the initial acquisition of the land for two or more trust beneficiaries.

            (4) If land banking expires in 2011, any proceeds remaining in the state trust land bank fund must be expended by the tenth year after the effective date of each sale.

            (5) Any remaining proceeds must be deposited in the appropriate permanent trust fund.

            (6) remains the same but is renumbered (4)

            (7) If land banking is authorized beyond 2011, the proceeds in the land banking trust funds must remain intact and available for land banking acquisitions.

 

            AUTH:  77-1-204, 77-2-308, 77-2-362, 77-2-366, MCA

            IMP:  77-2-328, 77-2-362, 77-2-366, MCA

 

REASONABLE NECESSITY:  These amendments removed obsolete language since the 2009 Legislature repealed the sunset date of the land banking program in Chapter 209 of the 2009 Montana Session Laws.  The amendments also account for the process for using funds from multiple trusts to purchase tracts.

 

            4.  Concerned persons may submit their data, views, or arguments, either orally or in writing, at the hearing.  Written data, views, or arguments may also be submitted to John Grimm, Department of Natural Resources and Conservation, 1625 11th Avenue, Helena, MT; telephone (406) 444-1868; fax (406) 444-2684;  e-mail jgrimm@mt.gov, and must be received no later than 5:00 p.m. on September 22, 2011.

 

            5.  John Grimm, Department of Natural Resources Real Estate Management Bureau, has been designated to preside over and conduct the public hearing.

 

            6.  An electronic copy of this Notice of Public Hearing on Proposed Amendment is available through the department's web site at http://www.dnrc.mt.gov.  The department strives to make the electronic copy of this Notice of Public Hearing on Proposed Amendment conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered.

 

            7.  The department maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency.  Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies that the person wishes to receive notices regarding conservation districts and resource development, forestry, oil and gas conservation, trust land management, water resources, or a combination thereof.  Notices will be sent by e-mail unless a mailing preference is noted in the request.  Such written request may be sent or delivered to the contact person in 4 above or may be made by completing a request form at any rules hearing held by the department.

 

            8          .  The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled.  The bill sponsors were contacted by e-mail on August 12, 2011.

 

DEPARTMENT OF NATURAL RESOURCES AND CONSERVATION

 

 

/s/  Mary Sexton                                                        /s/  Tommy Butler

MARY SEXTON                                                       Tommy Butler

Director                                                                      Rule Reviewer

Natural Resources and Conservation

 

 

Certified to the Secretary of State on August 15, 2011.