Review of Department of Natural Resources’ Management of State-Owned Aquatic Lands

1. Review of Department of Natural Resources’ Management of State-Owned Aquatic Lands Proposed Final Report Joint Legislative Audit & Review Committee June 18, 2008 Joy Adams, Ruth White, John Woolley JLARC Staff

2. Review Directed by 2007-09 Operating Budget Proviso Directed to include: • DNR’s role and resources; • Compliance with legal obligations for managing state-owned aquatic lands; and, • Comparison to other organizations: we look at the principles of sound asset management. • First of two reports today Overview DNR's Management of State-Owned Aquatic Lands Report page 3

3. Ownership of Aquatic Lands in Marine Areas – Tides are the Key Upland Usually private ownership Ordinary High Tide History and DNR’s Role Tideland Tidal Range State or private ownership Aquatic Lands Extreme Low Tide Bedland State ownership Source: DNR. DNR's Management of State-Owned Aquatic Lands Report pages 5-6

4. Ownership in Navigable Rivers and Lakes: Line of Navigability is Key Line of Navigability Upland Shore-lands Shore-lands Line of ordinary high water Usually private ownership Shoreland History and DNR’s Role State or private ownership Bed of River or Lake Aquatic Lands Freshwater Bedland State Ownership Source: DNR. DNR's Management of State-Owned Aquatic Lands Report pages 5-6

5. DNR’s Aquatic Resources Manages the 2.6 Million Acres of State-Owned Aquatic Lands • 2005-07 expenditures of $29.8 million, equals 8% of $381 million DNR operating expenditures • DNR authorizes various uses of the lands • Lease lands and manage leasing process; monitor ongoing land uses • Manage and monitor state geoduck harvest • Other statewide programs and activities • Clean up environmental contamination • Remove derelict vessels • Conduct scientific monitoring History and DNR’s Role DNR's Management of State-Owned Aquatic Lands Report pages 9-12

6. Revenues Generated from State-Owned Aquatic Lands, 2005-07 Biennium Money From Using the Land Pays for Managing the Land Other $3.3 M 8% History and DNR’s Role Leases $16.8 M 40% 52% Geoduck $21.5M Total: $41.6 M Source: JLARC analysis of DNR data. DNR's Management of State-Owned Aquatic Lands Report pages 9-12

7. DNR Does Not Fully Comply With Specific Statute in Three Areas • Summarized specific statutes into eight topic areas, each with multiple sections of statute • Complying in five of eight areas, not complying with three specific statutes: Compliance Topic Areas and Specific Statute Leases: Nonwater-DependentLease Rates Easements: Public Utility Fee Collection Environmental Issues: Plastic Debris Action Plan DNR's Management of State-Owned Aquatic Lands Report pages 13-15

8. Statute Also Has Broad Direction: “Four Plus Benefits” DNR to provide a balance of: Encouraging direct public use and access; Fostering water-dependent uses; Ensuring environmental protection; and Utilizing renewable resources. When consistent with above, revenue generation also considered a public benefit: the “Plus.” DNR activities fall in all Four Plus categories. Not able to measure if they are balanced. Compliance DNR's Management of State-Owned Aquatic Lands Report pages 19-20

9. Yes Yes Limited ? In Process Complying with the Principles of Sound Asset Management • Reviewed literature to find benchmarks or best practices in the management of public property assets • Five common threads: • Know where the asset is? • Understand legal mandates? • Know the condition? • Preserving the capacity? • Establishing clear goals? Asset Management DNR's Management of State-Owned Aquatic Lands Report Pages 22-25

10. Recommendation for Asset Management: Condition Knowing current condition is a key to sound asset management. DNR’s knowledge, while increasing, is limited. Recommendation:DNR should develop a feasibility study to identify time and resources needed to determine condition of state-owned aquatic lands. Study should include the framework DNR intends to use to define condition. [DNR report due: June 2009] Report Recommendation • DNR and OFM Concur DNR's Management of State-Owned Aquatic Lands Report pages 27-28

11. Recommendation for Asset Management: Strategic Plan • Aquatic lands not a fiduciary trust with trusts’ clearer goals • Clear & measurable goals needed to manage aquatic lands asset Recommendation: DNR should develop a strategic plan specific to aquatic resources. The plan should include measurable goals and performance measures, and how DNR is balancing the Four Plus benefits. [DNR report due: January 2009] Report Recommendations • DNR and OFM Concur DNR's Management of State-Owned Aquatic Lands Report page 28-29

12. Recommendation for Complying with Statute: Nonwater-Dependent Leases • Statute directs DNR to set fair market value in accordance with appraisal techniques for nonwater-dependent leases. • DNR negotiates rents that are different from the appraised value. Report Recommendation Recommendation: DNR should clarify what is required to arrive at fair market value. If techniques other than appraisal are required, DNR should report any needed changes. [DNR report due: November 2008] • DNR and OFM Concur DNR's Management of State-Owned Aquatic Lands DNR's Management of State-Owned Aquatic Lands 12 Report page 29

13. Recommendation for Complying with Statute: Fees for Public Utility Easements • Statute directs DNR to collect fees for public utility easements: DNR does not collect the fee for public utility easements if it has not determined ownership. Recommendation:DNR should collect the fee for easementsand report to Legislature how this will be accomplished, including barriers, costs and benefits of enforcing fee collection, and administrative costs to collect fees. [DNR report due: November 2008] Report Recommendation • DNR Partially Concurs: establishing ownership • OFM Concurs DNR's Management of State-Owned Aquatic Lands DNR's Management of State-Owned Aquatic Lands 13 Report page 29

14. Recommendation for Complying with Statute: Plastic Debris Action Plan • Statute directs DNR to coordinate and implement the plastic debris action plan; DNR does not. Recommendation: DNR should coordinate and implement the plastic debris action plan and report to the Legislature on how this will be accomplished. [DNR report due: November2008] Report Recommendation • DNR Partially Concurs: update plan before implementation • OFM Concurs DNR's Management of State-Owned Aquatic Lands DNR's Management of State-Owned Aquatic Lands 14 Report pages 28-29

15. Contact Information Joy Adams (360) 786-5297 Adams.Joy@leg.wa.gov Ruth White (360) 786-5182 White.Ruth@leg.wa.gov John Woolley (360) 786-5184 Woolley.John@leg.wa.gov www.jlarc.leg.wa.gov DNR's Management of State-Owned Aquatic Lands