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. June 18, 2008DNR's Management of State-Owned Aquatic Lands2 Review Directed by 2007-09 Operating Budget Proviso Directed to include: 1. DNR’s role and resources; 2. Compliance with legal obligations for managing state-owned aquatic lands; and, 3. Comparison to other organizations: we look at the principles of sound asset management.  First of two reports today Overview Report page 3

3. June 18, 2008 Ownership of Aquatic Lands in Marine Areas – Tides are the Key Upland Ordinary High Tide Extreme Low Tide Tidal Range Bedland Tideland Source: DNR. Usually private ownership State or private ownership State ownership History and DNR’s Role Report pages 5-6 DNR's Management of State-Owned Aquatic Lands

4. June 18, 2008 Ownership in Navigable Rivers and Lakes: Line of Navigability is Key Upland Shoreland Line of Navigability Freshwater Bedland Bed of River or Lake Line of ordinary high water Shore- lands Source: DNR. State or private ownership Usually private ownership State Ownership History and DNR’s Role Report pages 5-6 DNR's Management of State-Owned Aquatic Lands

5. June 18, 2008DNR's Management of State-Owned Aquatic Lands5 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 Report pages 9-12

6. June 18, 2008DNR's Management of State-Owned Aquatic Lands6 Money From Using the Land Pays for Managing the Land Revenues Generated from State-Owned Aquatic Lands, 2005-07 Biennium Source: JLARC analysis of DNR data. Leases $16.8 M Geoduck $21.5M Other $3.3 M 8% 40% 52% Total: $41.6 M History and DNR’s Role Report pages 9-12

7. June 18, 2008DNR's Management of State-Owned Aquatic Lands7 DNR Does Not Fully Comply With Specific Statute in Three Areas Compliance Topic Areas and Specific Statute Report pages 13-15  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: Leases: Nonwater-Dependent Lease Rates Easements: Public Utility Fee Collection Environmental Issues: Plastic Debris Action Plan

8. June 18, 2008 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. Report pages 19-20 Compliance DNR's Management of State-Owned Aquatic Lands

9. June 18, 2008DNR's Management of State-Owned Aquatic Lands9 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: 1. Know where the asset is? 2. Understand legal mandates? 3. Know the condition? 4. Preserving the capacity? 5. Establishing clear goals? Asset Management Report Pages 22-25 Yes Limited In Process ?

10. June 18, 2008DNR's Management of State-Owned Aquatic Lands10 Recommendation for Asset Management: Condition  Knowing current condition is a key to sound asset management.  DNR’s knowledge, while increasing, is limited. Report pages 27-28 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

11. June 18, 2008DNR's Management of State-Owned Aquatic Lands11 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 Report Recommendations Report page 28-29 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]  DNR and OFM Concur

12. June 18, 2008DNR's Management of State-Owned Aquatic Lands12DNR's Management of State-Owned Aquatic Lands12 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 Report page 29 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

13. June 18, 2008DNR's Management of State-Owned Aquatic Lands13DNR's Management of State-Owned Aquatic Lands13 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. Report page 29 Recommendation: DNR should collect the fee for easements and 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

14. June 18, 2008DNR's Management of State-Owned Aquatic Lands14DNR's Management of State-Owned Aquatic Lands14 Recommendation for Complying with Statute: Plastic Debris Action Plan  Statute directs DNR to coordinate and implement the plastic debris action plan; DNR does not. Report pages 28-29 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: November 2008 ] Report Recommendation  DNR Partially Concurs: update plan before implementation  OFM Concurs

15. June 18, 2008DNR's Management of State-Owned Aquatic Lands15 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