No. 27347 (Amendment): R850-80. Sale of Trust Lands

DAR File No.: 27347
Filed: 08/12/2004, 03:13
Received by: NL

 

RULE ANALYSIS

Purpose of the rule or reason for the change:

State statute creates temporary easements or rights-of-entry for roads that were constructed, maintained, or used on state trust lands prior to January 1, 1992. The temporary status of such easements or rights-of-entry remains in effect until they are made permanent through an application process formalized by administrative rule. The purpose of this amendment is to create a rule-based process that will provide a mechanism for receiving input and bringing closure to various claims and provide more certainty for prospective buyers of trust properties. This process is not intended to affect any valid RS2477 claims made by the counties.

 

Summary of the rule or change:

The amendments to this rule provide for notification to counties and other responsible authorities in order that the agency can receive input in determining the merits of perfecting easements or rights-of-entry for roads that cross trust properties proposed for disposal through sale. This process will permit any responsible authority to file an application to make the temporary easement or right-of-entry permanent. Upon receipt of an application, the agency will evaluate the request and provide the applicant with a decision at least 30 days prior to the sale of the subject property. If no application is received, or an application is not approved, the temporary easement or right-of-entry will be extinguished upon the execution of a certificate of sale.

 

State statutory or constitutional authorization for this rule:

Sections 53C-4-102 and 63-2-304; and Subsections 53C-1-302(1)(a)(ii); 53C-2-201(1)(a); 53C-4-101(1); 53C-4-202(6); 72-1-203(1)(a)(i); and 72-5-203(2)(a)

 

Anticipated cost or savings to:

the state budget:

It is anticipated that the additional advertising required by this rule change will cost the agency approximately $2,000 more per year.

 

local governments:

The notification required by this rule amendment does not add any additional costs to local government beyond the currently established costs for perfecting an easement. However, local governments may choose to hold public meetings or provide additional advertising as a result of this notification in order to obtain support for their decision of whether or not to perfect a temporary easement. These costs would be unquantifiable as they are dependent solely upon the decisions made by the local governments.

 

other persons:

The notification required by this rule amendment will not add any additional costs to other persons beyond the already established fees required for perfecting easements.

 

Compliance costs for affected persons:

The amendment to this rule which provides for additional notification concerning temporary easements will not add any additional costs for compliance to affected persons. If an affected person is eligible to perfect an easement, the regular fees and costs already established by rule would then apply.

 

Comments by the department head on the fiscal impact the rule may have on businesses:

If a business asserts that it is a "responsible authority" under the statute, and desires to convert a temporary easement to a permanent easement prior to the agency taking an action disposing of a parcel of land through sale, that business would be required to pay the standard easement fees that the agency imposes for all other easement requests across trust lands. The amount will depend upon the length and width of the easement requested. For easements up to 33 feet in width, the fee is $5 per rod. For easements greater than 33 feet in width, the fee is $10 per rod.

 

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

School and Institutional Trust Lands
Administration
675 E 500 S
SALT LAKE CITY UT 84102-2818

 

Direct questions regarding this rule to:

Kim S. Christy at the above address, by phone at 801-538-5183, by FAX at 801-355-0922, or by Internet E-mail at [e-mail]

 

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

10/01/2004

 

This rule may become effective on:

10/04/2004

 

Authorized by:

Kevin S. Carter, Director

 

 

RULE TEXT

R850. School and Institutional Trust Lands, Administration.

R850-80. Sale of Trust Lands.

R850-80-100. Authorities.

This rule implements Sections 6, 8, 10, and 12 of the Utah Enabling Act, Articles X and XX of the Utah Constitution, and [Sections]Subsections 53C-1-302(1)(a)(ii) and 53C-4-101(1) which authorize the Director of the School and Institutional Trust Lands Administration to prescribe the terms and conditions for the sale of trust land; and Subsection 72-5-203(2)(a) which directs the Administration to enact rules establishing a process by which responsible authorities may apply to convert permissive temporary easements or rights-of-entry to permanent easements or rights-of-entry.

 

R850-80-150. Planning.

Pursuant to [Section]Subsection 53C-2-201(1)(a), the Trust Lands Administration shall also undertake to complete the following planning obligations, in addition to the rule-based analysis and approval processes that are prescribed by this rule:

1. To the extent required by the Memorandum of Understanding between the State Planning Coordinator and the School and Institutional Trust Lands Administration, submit the proposal for review by the Resource Development Coordinating Committee (RDCC);

2. Evaluation of and response to comments received through the RDCC process; and

3. Evaluation of and response to any comments received through the solicitation process conducted pursuant to R850-80-400(1).

 

R850-80-250. Determination of the Status of Temporary Easements and Rights-of-Entry.

1. Prior to the sale of any trust land, the agency shall undertake the notification process set forth in R850-80-250(2) to evaluate whether any temporary easement or right-of-entry created under Subsection 72-5-203(1)(a)(i) exists on the subject property. This evaluation shall not adjudicate the status of any highway crossing trust land that may have been established pursuant to any federal statute, such as R.S. 2477. Highways established in accordance with the requirements of federal law, including R.S. 2477, prior to the state taking title to the underlying property are recognized as valid existing rights.

2. In order to determine the existence of a statutory temporary easement or right-of-entry on the subject property, the agency shall give notice to responsible authorities, as defined in Subsection 72-5-202(1), that the subject property is proposed for disposal through sale. This notice will permit any responsible authority asserting a temporary easement or right-of-entry pursuant to Subsection 72-5-203(1)(a)(i) to file an application to make such temporary easement or right-of-entry permanent (the "application"). The application shall contain a description of the facts which lead the applicant to believe that a statutory temporary easement or right-of-entry exists on the subject property, and other information that may be required by the agency to verify the assertion. Notice shall be provided as follows:

(a) Certified notice shall be mailed to the Attorney General and the executive body of the county in which the subject property is located. This notice shall include the legal description of the subject property proposed for sale and a map showing its location. The executive body of the county will have 90 days from the date of the notice within which to submit the application.

(b) Notice to other responsible authorities who may have an interest in the subject property will be given through publication at least once a week for three consecutive weeks in one or more newspapers of general circulation in the county where the subject property is located. In addition to the legal description of the subject property being considered for sale, the advertisement shall put responsible authorities on notice that the agency may take action extinguishing the temporary easement or right-of-entry upon sale of the subject property. Other responsible authorities will have 90 days from the first date of publication within which to submit the application.

3. Upon the receipt of an application to convert a temporary easement or right-of-entry into a permanent property easement or right-of-entry, the agency will evaluate the request pursuant to the fiduciary responsibilities of the agency as described in Section 53C-1-302. A decision on whether or not to approve the application will be made at least 30 days prior to the sale of the subject property. Prior to the agency approving or rejecting an application, if any, the agency will review the supporting documentation submitted by the applicant. The agency shall consider material submitted by any responsible authority pursuant to the applicant's appropriate statutory authority. If no application is received after notice is given pursuant to R850-80-250(2), or if an application to make the temporary easement or right-of-entry permanent is not approved, the temporary easement or right-of-entry granted pursuant to Subsection 72-5-203(1)(a)(i) on the subject property will be extinguished upon the execution of a certificate of sale.

 

R850-80-500. Sale Determination Procedures.

1. Preliminary Analysis

(a) The director may offer for sale, without further market analysis or sale determination, trust lands which have been:

i) designated for disposal in General Management Plans; or

ii) offered for sale within the previous three years but not purchased.

(b) The director may also offer for sale trust lands subject to market analysis and sale determination as provided in R850-80-500(2) and R850-80-500(3) when lands are not precluded from consideration under R850-80-500(1)(c).

(c) The director shall not further consider an application for sale when:

i) the sale results in an unmanageable or uneconomical parcel of trust land, or eliminates or materially restricts access to a remnant holding, without additional remuneration to cover any loss in value to the remnant parcel;

ii) the land has been, or is intended to be designated for development pursuant to R850-140;

iii) the director finds that withdrawing the parcel from public application to develop a marketing plan is justified by market trends or anticipated market demand in the area; or

iv) the director finds that the sale may lead to development which may have a negative effect on the value, developability or marketability of any remaining land holdings.

2. Market Analysis

(a) The agency shall contract for an appraisal in accordance with agency specifications for the purpose of estimating the fair market value of the trust land. The cost of the appraisal shall be borne by the successful purchaser of the parcel. The agency will determine the minimum acceptable selling price of the subject parcel using the appraisal, the data in (b) below and any other information which is deemed relevant. The minimum acceptable selling price of the parcel, as determined by the agency, shall be provided protected records status pursuant to [Section]Subsection 63-2-304(1) or 63-2-304(7) until the sale is consummated, unless otherwise ordered by the director.

(b) The agency shall conduct an economic analysis of the proposal, which shall include:

i) appraisal;

ii) real estate trends;

iii) market demand;

iv) opportunity costs including potential for appreciation; and

v) associated management costs of retention.

3. Sale Determination

If the market analysis conducted pursuant to R850-80-500(2) above indicates that the increase in income to the trust from leasing the parcel, or from retaining the parcel for appreciation purposes, can reasonably be expected to exceed the return to the trust beneficiaries from the sale of the parcel, the director shall deny the sale application.

 

R850-80-600. Public Sale Procedures.

1. If a sale is authorized pursuant to R850-30-500(2)(h) or R850-80-400(4), the applicant shall be required to submit an amount equal to 10% of the offer to purchase. This amount shall constitute the applicant's bid for the purchase of the parcel and shall be provided protected records status pursuant to [Section]Subsection 63-2-304(1) or 63-2-304(7) until sealed bids are opened at a subsequent auction. The applicant will be allowed to enter into oral bidding subject to R850-80-600(5).

2. All sales shall be advertised through publication at least once each week for three consecutive weeks in one or more newspapers of general circulation in the county in which the land is located. Notices shall also be posted in the local governmental administrative building or courthouse and other appropriate locations. This advertisement shall indicate when and where the sale will be held. It shall contain a general description of the parcel to be sold including township, range and section and a brief description of where the parcel is located. The advertisement shall also indicate the agency office where parties interested in purchasing the land can obtain more information.

3. At least 30 days prior to the sale, notice shall be sent by certified mail to each person who owns property adjoining the land proposed for sale.

4. In addition to the requirements of R850-80-600(2), the agency may advertise sales using commonly accepted methods to the extent which the director has determined may reasonably increase the potential for additional bidding at the sale. Applicant's deposit for advertising specified by R850-80-300(1) will not be used for additional advertising.

5. Public sales shall commence with:

(a) the submission of fixed price sealed bids. A sealed bid shall contain an amount equal to at least 10% of the total amount offered to purchase the property. The agency may require these funds to be in the form of a certified check. On cash sales the purchaser shall pay the purchase price in full with guaranteed funds. The agency reserves the right to reject any bid however submitted. No less than three of those submitting the highest bids shall be allowed to enter into oral bidding, beginning at the amount of the highest sealed bid. The number of additional parties allowed to participate in oral bidding shall be those parties who submit a sealed bid that is within 20% of the third highest sealed bid. In the event that a parcel is offered both as one piece, and broken into several sub-parcels, the prevailing bidders for each of the sub-parcels shall be allowed to participate in the oral bidding when the parcel is offered as one piece. Current Grazing Permittees, Material Permittees and Special Use Lessees who submit sealed bids shall automatically qualify to enter into oral bidding, even if their sealed bid does not otherwise meet the qualifications described above. A bidder shall be held to the value of the bidder's sealed bid; or

(b) the payment of an agency-established bidding deposit. When the sales method outlined in this subsection is used, the agency may waive the requirement to not disclose the minimum acceptable sales price imposed by R850-80-500(2)(a).

6. If no bid submitted pursuant to R850-80-600(5)(a) equals or exceeds the minimum selling price, then the sale shall not be made except as provided below.

(a) The bidders who participated in the oral bidding may, at the discretion of the officer conducting the sale, be allowed to enter into additional oral bidding, with the starting amount being the previous high bid. In the event that more than one sealed bid was submitted, but there was no oral bidding, those persons having submitted a sealed bid who would have been allowed to enter into oral bidding pursuant to R850-80-600(5) shall be allowed to enter into oral bidding with the starting amount being the highest sealed bid. To facilitate the sale of the parcel, the officer conducting the sale may divulge the minimum acceptable selling price;

(b) if there is still not a successful bidder, the person submitting the highest bid, whether it be sealed or oral, may request the agency to reevaluate the minimum selling price. If the agency chooses to accept the request of the person submitting the highest bid, it shall contract for an independent appraisal, the cost for which shall be borne by the requesting party. If this appraisal indicates a value less than the highest bid, then the agency may elect to notify the highest bidder by certified mail and give him two weeks from the date of notice in which to purchase the property pursuant to R850-80-600(7).

7. At the consummation of the sale, the agency shall collect at least 10% of the total sale price, interest on the unpaid balance from the date of sale to the first day of the following month, the advertising and appraisal costs, and a sales closing charge. The balance shall be payable in no more than 20 annual payments. The first payment shall be payable one year from the first day of the month following the sale; subsequent payments shall be payable on the first day of the same month each year thereafter until the balance is paid in full. Payments in excess of the current obligations shall be applied to principal. Any unpaid balance, plus interest to date, may be paid in full at any time without penalty.

8. The interest rate which shall be charged against any unpaid balance at the time of sale shall be the prime rate, as published by Zion's First National Bank, plus 2 1/2% (Prime Rate + 2 1/2%) as ascertained on the date that the sale is approved. Interest shall be calculated on a 365-day basis. Every year thereafter, the interest rate which shall be charged against the unpaid balance shall be the prime rate, as published by Zion's First National Bank, plus 2 1/2% (Prime Rate + 2 1/2%) as ascertained on the Monday prior to the first of the month previous to the due date of the annual installment.

9. Third parties owning authorized improvements on the parcel at the time of the sale shall be allowed 90 days to remove the improvements.

 

R850-80-700. Certificates of Sale.

1. As soon as reasonably possible following the sale, the agency shall prepare and deliver a certificate of sale to the purchaser. This certificate shall contain a legal description of the land purchased, and shall include information regarding the amount paid, the amount due, the time when the principal and interest shall become due, the beneficiary of the land, and any other terms, covenants, deed restrictions, or conditions which the agency finds appropriate. Upon payment in full, the agency shall issue a patent pursuant to [Section]Subsection 53C-4-102(7).

2. Certificates of sale shall be executed by the purchaser and returned to the agency within 30 days from the date of the purchaser's receipt of the certificate. If the certificate is not received by the agency within the 30 day period, certified notice will be sent to the purchaser giving notice that after 30 days the sale will be canceled with all monies received, including the down-payment, forfeited to the Trust Lands Administration. Notification by certified mail, return receipt requested, of this forfeiture provision shall accompany the transmittal of the certificate to the purchaser.

3. A certificate of sale shall be signed by the director after it has been signed by the purchaser and returned to the agency. The certificate and the agreement of sale shall not be final and no rights shall vest in the purchaser until the certificate is executed by the director. The agency reserves the right to reject bids for any reason prior to execution of the certificate by the director.

4. A certificate of sale may be assigned to any person qualified to purchase trust lands, provided that the assignment is approved by the agency, and that no assignment is effective until approval is given by the director in writing.

5. An assignment must be consistent with these rules, executed by the assignee and assignor and acknowledged, and clearly set forth the certificate of sale number, the land involved, and the name and address of the assignee.

6. Assignment of a certificate of sale does not relieve the assignor from responsibility under the original contract.

7. Partial releases of property sold under certificates may be allowed at the discretion of the agency. The following conditions must be met:

(a) A partial release may only be made for parcels ten acres or larger;

(b) Access to the remainder of the land must be preserved without restriction;

(c) All utilities and infrastructure, including water, sewer and storm drains, electric power, and natural gas, installed on land covered by the certificate must have the capacity and capability to service all lands covered by the certificate;

(d) Unless the director makes a written finding that waiver of this condition would be in the best interests of the trust beneficiaries, payment shall be made to the agency in an amount equal to 125% of the price per acre paid by the purchaser under the certificate of sale, multiplied by the number of acres to be released, plus interest on that amount to the date payment is received. The payment shall be in the form of guaranteed funds, and shall be applied to principal. This payment shall not affect the amount or due dates of annual payments;

(e) Unless the director makes a written finding that waiver of this condition would be in the best interests of the beneficiaries, the 125% payment required by paragraph (d) above shall not include the 10% down payment required by statute or any other payment not designated by the payor, and accepted by the agency for that purpose;

(f) The buyer shall provide a survey and legal description prepared and sealed by a Utah Registered Land Surveyor of the parcel to be released; and

(g) The value of the remaining land shall not be reduced below the remaining principal balance of the certificate.

8. Certificates issued pursuant to this section shall contain provisions for remedies that the agency may elect in the event of default. Those remedies shall include, without limitation, acceleration of the debt, forfeiture, any remedy which the agency may pursue under the contract of sale, suit for judgment, foreclosure as provided for under Section 57-1-19 et seq. for trust deeds, and any other remedies afforded at law or equity. Purchasers who have defaulted on certificates of sale may be required to make larger down-payments on subsequent sales.

 

R850-80-800. Agency-Initiated Sales.

1. The agency may also offer lands for sale when they have been:

(a) Subdivided by the agency pursuant to [Section]Subsection 53C-4-102(4); or

(b) Otherwise subdivided pursuant to state law; and the subdivision is accepted by the director.

2. Sales of parcels pursuant to this section shall be made according to the following procedures:

(a) The agency may offer the subject parcels for sale after advertising pursuant to R850-80-600(2).

(b) The minimum acceptable sales price shall be no less than the appraised fair market value of the parcel and shall be disclosed.

(c) Sales shall be by public oral auction, with the minimum acceptable sales price as the starting bid. Buyers may be represented by third parties.

(d) Bidders must qualify by placing a deposit with the agency for each parcel on which they bid. The amount of the deposit shall be established by the agency for each public auction. Deposits shall be returned to unsuccessful bidders.

(e) Sealed bids shall be accepted from those unable to attend the auction and, if they equal or exceed the minimum acceptable sales price, shall be the starting bids in the oral auction. Sealed bids must clearly designate the lot on which the bid is made, and must include the qualifying deposit.

(f) Payment by the successful bidder shall be made pursuant to the applicable provisions of R850-80-600(7).

(g) In addition to the sales price, each purchaser of a parcel shall pay:

i) a prorated portion of the appraisal costs; and

ii) an application and sales processing charge.

(h) Other provisions of the sale shall be administered pursuant to R850-80-600(8), R850-80-600(10) and R850-80-700.

3. Over the Counter Sales

(a) Following a public auction, the director may designate any unsold parcel for over the counter sale. The designation shall continue in force for a period determined by the director, but not to exceed two years.

(b) The minimum acceptable price of an unsold parcel on an over the counter sale shall be set by the director, using one of the following:

i) The average price of at least three parcels closest in size and characteristics which were sold at the related public auction under R850-80-800(2); or

ii) A reappraisal.

4. At the discretion of the director, unsold parcels may be retained for offering at a subsequent public auction.

5. At the discretion of the director, unsold parcels may be listed with a realtor at the minimum acceptable price plus an amount equivalent to the commission which the realtor will charge on the sale.

 

KEY: administrative procedures, sales

[November 1, 2002]October 4, 2004

Notice of Continuation June 27, 2002

53C-1-302(1)(a)(ii)

53C-2-201(1)(a)

53C-4-101(1)

53C-4-102

53C-4-202(6)

63-2-304

72-5-203(1)(a)(i)

72-5-203(2)(a)